16+1 Platform: Extent and Limit of China’s Global Influence
By Dragan Pavlićević

16+1 Platform: Extent and Limit of China’s Global Influence

Jun. 08, 2016  |     |  0 comments


As President Xi Jinping has recently visited the Czech Republic and his visits to Serbia and Poland are expected in the upcoming weeks, it is the right time to assess the state of the relationship between China and Central and Eastern Europe (CEE), and the developments within the so-called 16+1 framework.


China surprised everyone in 2012 — including the 16 countries themselves — when it grouped together 16 countries of Central and Eastern Europe (CEE) and established the 16+1 multilateral platform.1 Previously, the CEE region had been mostly absent from China's foreign policy calculations and initiatives, and was at the time probably one of the regions of the world that had the least engagement with the rising China. However, that Xi will have visited three CEE countries by roughly the mid-year testifies to the growing importance of the region for China.


In recent years, China has to a great extent relied on various types of multilateral platforms to grow its global presence and advance its relationships with other regions, including Central Asia, Southeast Asia, and Latin America. In Africa particularly, the China-initiated multilateral forum, FOCAC, has facilitated stellar development of the ties between China and this continent. China’s approach, which is based on providing loans and expertise for infrastructure and strategic projects, increasing FDI inflows, and restraining from lecturing on the issues of governance, has proved effective for deepening economic and political exchange with Africa. From Beijing’s standpoint, establishing a multilateral platform in the same mould to jump-start relations with the CEE region seems a logical choice. The CEE region’s overall high levels of reliance on foreign capital to keep their economies afloat, and their inadequate transportation and energy infrastructure, were seen as providing a particularly opportune point for China’s diplomatic entrance into the region and were duly made the focal point of the newly-established platform.2


Now in its fifth year, 16+1 has already greatly contributed to the development of China-CEE ties, even if this is customarily downplayed by observers. Among others, the initiative institutionalized an annual meeting of the Head of the States, as well as regular meetings at the ministerial level. Secretariats focused on particular aspects of cooperation, such as investment or agriculture, have been established, while a plethora of exchange mechanisms, including trade and investment fairs, are regularly held. China has taken out its cheque book and put on disposal USD 13 billion in loans and another USD 3 billion in a fund marked for equity investment. Trade volume has been on the upward trajectory, and more than just a few big-ticket infrastructure projects and private sector investments have been facilitated by the framework and the climate created by it.3 Furthermore, numerous initiatives that promote exchange in education and research, culture and media, tourism, and business-to-business and people-to-people exchanges are underway on the back of China-designed programs and funding.4


In spite of such a solid track record, the frustration and dissatisfaction with the evolution of 16+1 is palpable among both the practitioners and observers concerned with the platform. In fact, it would be hard to find anyone closely following developments under 16+1 who would give the platform high marks for its progress so far. The existential questions about its nature and purpose, and calls to substantially reorganize and refocus the initiative, are often heard nowadays. To explain such uncertainties surrounding 16+1, I summarize the most acute challenges below.5


Complicated Regional Context


To start with, the CEE countries are confronted with a series of ever-more pressing issues. Across the region, EU-level instability and uncertainty is often coupled with tensions on the domestic front. The rise of strongmen and anti-European forces in some of the countries, the refugee crisis, and the security-level implications of the Ukrainian crisis, have all contributed to increasingly uneasy relations with Brussels and Berlin. Stagnant economies and frequent popular protests have occupied the attention of governments in the region, in some cases challenging their legitimacy. Even in the best of times, many of the CEE countries are known for the chronic inability to establish long-term developmental and foreign policy strategies. In such a context, China, despite its dynamic diplomacy through 16+1, has struggled to establish itself as an important foreign policy topic and capture the attention, imagination and resources of the CEE countries that are necessary to decisively move the relationship forward.


Moreover, there are vast differences among the countries and sub-regions of the CEE region in historical, political, and economic contexts, as well as in terms of their degrees of integration in the multilateral political and security arrangements in Europe such as the EU and NATO.6 Many have difficult relationships with one another due to historical or current disputes. Furthermore, some of the CEE countries are competing with one another to engage foreign — including China’s — capital and markets. For example, several countries are vying to attract China’s FDI on the grounds of the low costs of labor and favorable policies for foreign companies. Diverging capacities and agendas come to the fore when transnational projects such as railways or the use of shared resources such as rivers are discussed. Such context breeds mutual distrust and indifference towards 16+1. The inability of the CEE countries to formulate and coordinate joint policies within the platform has become widely acknowledged as a key obstacle to multilateral cooperation within the 16+1 framework.


Expectations Mismatch


There is growing frustration on both sides as the promise of dramatic improvements in the scope and quality of economic exchange has remained unfulfilled. China sees cooperation on infrastructure projects as a natural backbone of a “win-win” relationship due to the perceived compatibility of the needs of the CEE countries for new infrastructure and China’s matching resources and capabilities. Beijing is ready to bankroll and implement many such projects in the region and is puzzled by the lack of progress towards their realization.



More than a few CEE countries are disappointed by what they see as a fixed “set-menu” offered by China. These countries are interested in developing cooperation in other areas they judge to be more important for their economic well-being.



However, more than a few CEE countries are disappointed by what they see as a fixed “set-menu” offered by China, consisting of preferential loans and expertise for implementation of big infrastructure projects, especially in transportation and energy. These countries are interested in developing cooperation in other areas they judge to be more important for their economic well-being. In fact, the divergences in calculations and expectations attached to China among the 16 countries are substantial and are illustrated by, for example, the largely “leave me alone” attitude of Croatia; Poland’s expectations for increased Chinese investments in the country’s private sector; Bulgaria’s hope that China will open its market for agricultural products; and Slovenia’s intention to draw hordes of Chinese tourists to the country.


The calls from the CEE countries to refocus on other areas of economic engagement and to give a larger role to the other types of cooperative projects and models, such as greenfield and equity investments and public-private partnerships and joint-ventures, have so far gone unanswered. As another major disappointment, the hope that 16+1 will facilitate much higher volumes of CEE exports to China has also not yet materialized.


Perceptions of the China Threat


Simultaneously, the thesis that China is using 16+1 to divide and conquer Europe has gained traction and inspired caution, at least for the moment, in the approach of most of the CEE countries towards the 16+1 mechanism. According to this view, China is keen on engaging CEE countries because it intends to leverage its economic might to influence the EU’s policy-making, especially with regards to the EU’s policy toward China. This view has been widely harbored in EU and CEE policy-making and policy-watching circles. They hence see that buying influence, rather than providing developmental opportunities in the CEE region under the “win-win” model is central to the Chinese focus on expensive projects in CEE. Also, many observers see increased exchanges in the fields of culture and education as potentially dangerous soft power tools aiming to warm recipient countries towards authoritarian China, rather than as initiatives to facilitate the capacity-building of the CEE countries.


Perceptions of threat also often emerge when China’s big-ticket infrastructure projects are discussed. Prospects of low quality, delays in implementation, the import of Chinese labor, and the negative impacts on the long-term health of the host countries’ budgets have all been repeatedly put forward as arguments to steer clear from engaging China despite the scant amount of evidence to confirm these fears.


Given such a climate, unsubstantiated reports that the EU — a political and economic reference point for all CEE countries — is discouraging them from engaging China economically and politically are not surprising. Based on the current evidence, such lobbying has not had a desired impact. However, a rather sinister atmosphere has been created by these assumptions about China’s intentions and capabilities, and this has adversely affected the prospects for deepening China-CEE cooperation.7


China’s Capabilities and Policies


As an initiator of the platform, China must take the biggest share of the blame for the 16+1’s troubles. At the most fundamental level, China has struggled to understand and adapt to the regional context described above, as well as to the unique characteristics of each CEE country. Beijing did not foresee the challenge that bringing together a group of such disparate countries would pose to the formation of a functional multilateral platform. It has hitherto failed to provide a set of adequate policies to tackle this challenge.


On a micro-level, China’s diplomatic efforts are often ineffective and China’s diplomats in the region are often named in the Chinese policy-watching community as being responsible for what is regarded as the slow progress of Chinese projects and initiatives in the region. This view is shared by at least some of the China’s enterprises vying for business in the region, who feel disadvantaged as China’s diplomats cannot provide support that can effectively match the breadth and depth of the local networks that Western governments and businesses have developed. On the other hand, although visits of Chinese business delegations to the region have become frequent since inception of 16+1, these delegations often appear to the hosts as being randomly assembled with participants just going through the motions following “orders” from above, rather than genuinely seeking local opportunities.


Finally, in a dramatically securitized environment in Europe that has emerged as a consequence of ongoing turmoil in Ukraine, China’s decision to test its blue-water capabilities by teaming up with Russia in a joint naval exercise in the Mediterranean in 2015 was a very poorly calculated move. The event inevitably raised the question whether China’s growing involvement in the CEE region has a military and security component, and the question of where China stands in the context of the current EU/NATO-Russia divide weighs heavily on many a CEE country. Needless to say, the exercise has blown fresh winds to the sails of the China Threat proponents.


A Way Forward


Taking all into account, China’s 16+1 platform shows both the increasing scope and depth as well as the limits of China’s global presence. The overall progress that has been made in setting up and institutionalizing mechanisms for exchange and simultaneously broadening and deepening engagement, economic and otherwise, is balanced by severe challenges. To maintain the positive prospects for the 16+1 platform, the here-identified issues related to the complex regional environment, diverging expectations, and unproductive policies must be urgently tackled.


While it is a task to be taken up by all members, China as the driving force behind the 16+1 should take the lead in addressing these challenges. Beijing should accept that it has not read the regional peculiarities very well and must act quickly to rectify its approach so as to become more responsive to the diversity and complexity of the CEE region. Particularly, a new set of policies designed to broaden the scope and modalities of economic cooperation and go some way towards satisfying the different preferences of individual CEE countries will be crucial to reinvigorating the initiative. Such a course of action will require skilful diplomacy and compromises on the Chinese side. Whether it can be successfully carried out will be a good indicator of China’s ability to exercise leadership and live up to the billing as a true global power in the making.


Notes


1. The European members of 16+1 include Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Macedonia, Montenegro, Latvia, Lithuania, Romania, Poland, Serbia, Slovakia and Slovenia.


2. See for example, “Pragmatic Cooperation Between China and CEE: Characteristics, Problems and Policy Suggestions”, and “Central and Eastern Europe in Building the Silk Road Economic Belt”, Institute for European Studies, CASS, Working Paper Series.


3. China freely combines bilateral initiatives with the multilateral ones, and her “going out” state-owned and private companies exercise some independent agency too, so most of the concrete agreements between China and CEE are struck in venues other than 16+1.


4. A snapshot of the depth and breadth of China-CEE ties is offered by implemented and planned measures for the period 2015-2016 listed in the so called “Suzhou Guidelines,” the official communique of the Fourth Summit of China and Central and Eastern Europe. Retrieved from http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1318039.shtml


5. My analysis has greatly benefited from conversations with think tankers and academics, business representatives and diplomats from 16+1 countries over the last year. I am thankful to all of them for sharing their views and insights.


6. Among 16 CEE countries, 11 are members of the EU, while other 5 include both those that are in accession process and those that are not. Also, 10 of CEE countries were members of Soviet Union or Warsaw Pact, while other 6 of CEE countries were members of Yugoslavia. Furthermore, 12 of the CEE countries are currently members of NATO. The region has a rich history of major powers such as Germany, Russia, UK, US and France, competing for influence and shaping developments in the region.


7. See, for example: Jaroch, E. (2016, March 19). China’s foreign policy towards CEE countries: determinants, development and problems. People’s Square. Retrieved from http://peoplessquare.pl/2016/03/19/chinas-foreign-policy-towards-cee-countries-determinants-development-and-problems/

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