Sat, Oct 27, 2018 - Page 9 News List

Eastern Europe growing disenchanted with China’s promises

By Alan Crawford and Peter Martin  /  Bloomberg

China’s efforts to make inroads in eastern Europe are being hindered by what nations see as failed promises on money materializing and the strings attached to investments.

The so-called “16+1 framework” was established by China as a means to deepen its footprint in eastern Europe.

Its members — 11 EU countries, from Poland to Hungary and Estonia, plus five Balkan states — saw the annual forum as a means to attract Chinese investment in infrastructure like roads and rail networks to boost their economies.

However, many of those states are disenchanted with the lack of investment from China, people with direct knowledge of the forum said.

Members are also unhappy at Beijing’s preference to provide loans rather than cash, and now recognize that better deals are available within the EU framework, such as via the European Bank for Reconstruction and Development.

Some of those projects that have materialized with Chinese help have attracted unwelcome attention.

Mounting costs for a highway development in Montenegro prompted the Washington-based Center for Global Development to single out the country as “at particular risk of debt distress,” while the tender for an unfinished high-speed rail link between Budapest and Belgrade prompted an EU commission probe.

“Some feeling of unease about the whole scheme has been brewing for some time,” said Jan Weidenfeld, head of European affairs for the Mercator Institute for China Studies in Berlin.

The conditions attached to projects are seen by 16+1 members as similar to those offered to African states, meaning that some countries “even feel insulted,” he said.

“The package just isn’t quite as attractive as China would make believe it is,” he added.

Trade and investment links between China and central and eastern Europe have improved over the past decade, yet growth “has not hit declared values and did not meet the expectations” of some countries, Erste Group said in a report in May.

Chinese Premier Li Keqiang (李克強) was to have an opportunity to raise the matter when he met European leaders in Brussels yesterday during an EU-Asia summit.

The 16+1 framework has been controversial from its inception in 2012. Armed with its own secretariat staffed by Chinese diplomats, the forum features an annual summit of member state leaders, offering them the chance of bilateral talks with the Chinese premier.

The focus is on projects that fall under the umbrella of China’s vast Belt and Road Initiative.

From the outset, EU officials were concerned that it was an attempt by China to split off the bloc’s poorer east rather than deal with Brussels.

A European Council on Foreign Relations report from December last year on EU-China ties concluded there was “no doubt that the 16+1 is part of a broad ‘divide and rule’ practice.”

The troubles surrounding the forum might be welcomed by Brussels, as well as by core member states, such as Germany and France, which have been at the forefront of efforts to tighten up screening of Chinese investments in critical infrastructure and companies in the bloc. Germany in particular has been increasingly vocal in its criticism of the 16+1.

Germany is fine with countries in eastern Europe pursuing closer economic ties with Beijing, but not at the cost of undermining joint EU policy on China, a senior government official in Berlin said.

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