China wants to set closer economic ties with the European Union after a trade war has erupted between the East Asian powerhouse and the US, it became apparent at the 16+1 summit in Sofia.
In a sign of Beijing’s efforts to show goodwill towards the EU, Chinese officials pledged to study and implement EU laws at a new partnership centre that is to be opened in Bulgaria. The proposal, made by China’s Prime Minister Li Keqiang at the summit, came days after the US imposed sweeping tariffs on Chinese goods and China immediately did the same towards US goods.
“The countries of the 16+1 [initiative] must make a joint statement for openness. We have already talked with [Bulgarian] Prime Minister [Boyko] Borissov that we have to study the rules and laws of the EU and of the member states,” Keqiang was quoted as saying following a meeting with Bulgaria’s Prime Minister Borissov within the 16+1 summit.
The Global Partnership Centre of CEEC and China should help Chinese companies to be aware of the rules they have to follow in Europe and what risks to avoid, and will be financed by China.
Besides the agreement on the new centre, little concrete information has come out of the Sofia summit. During the summit 18 bilateral agreements and memorandums were signed, but without specific results or projects being announced. Within those memorandums, however, China has promised to invest billions of dollars into development projects in the region as part of its Belt and Road Initiative (BRI).
More than 1,000 businesspeople from China and Europe attended an economic forum alongside the summit, but no deals have yet been announced following the forum.
The 16+1 initiative brings together 16 CEE countries: 11 EU member states (Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia) and five Western Balkan states (Albania, Bosnia & Herzegovina, Macedonia, Montenegro and Serbia). Croatia will host the next 16+1 summit in 2019.
Divide and conquer?
Despite the conciliatory tone towards Brussels, some EU member states believe that the 16+1 summits could help China to divide Europe on topics like the EU’s single market.
There are also among international institutions that Chinese investments are to be partially blamed for the mounting debts of East European countries without contributing to their economic growth.
The Vienna Institute for International Economic Studies (wiiw) said that Chinese investments could drive major investment improvement, securing a much-needed infrastructure upgrade of Eastern Europe, but it comes with high risk.
However, wiiw said in a statement ahead of the summit, “we note the potential for an unsustainable build-up of public debt, unwelcome political influence, increased corruption, and limited growth spillovers if local labour and materials are not used.”
On the other hand, wiiw has estimated that the planned projects with Chinese participation would generate a 10% of GDP boost for Montenegro and Bosnia & Herzegovina, 7% for Serbia, and 2% for Macedonia.
“For the rest of CESEE the effects are lower, but still over 1% of GDP in the case of Hungary. We also find that the investments would reduce transport times, diversify the region’s economic structure, improve inter-regional cooperation, and have positive trade effects,” the statement noted.