China-V4 complicated relations. Interview with Stanisław Niewiński

04.08.2017 | By Stanisław Niewiński and Izabela Wojtyczka

Q: The People’s Republic of China and the Three Seas Initiative. How is the initiative connected to Chinese expansion plans in the Three Seas region? Is this concept perceived as a chance or a threat by the Chinese authorities?

A: In 2013 Chairman Xi Jinping announced ‘The Belt & Road Project’ (commonly referred to in Poland as ‘The New Silk Road’) In short, this project envisions joining China with the rest of Asia, Africa and Europe through the network of railways, highways, logistics hubs, airports and ports. It consists of two main routes: the land route and the sea route. From the perspective of this conversation, the land route is the most crucial one. Its aim is to connect China with Western Europe and due to that, it runs through the territory of the countries forming The Visegrad Group and the Three Seas Initiative. While creating its own geopolitical and geoeconomic project, China must simultaneously take heed of the efforts undertaken by the Central European countries aimed at deepening the integration in this part of the continent. In order to address this issue, in 2012 China launched the 16+1 cooperation framework . At present, one can not answer the question whether the Three Sea Initiative wil turn out to be a positive or a negative concept from the point of view of China’s interests. A lot depends on the political power on the international arena with which the Three Seas region will decide to ally itself in the future. Besides China, also the US as well as Russia and Germany are competing for close relations with the countries of our region.

Q: Can The Silk Route, which was greeted in Poland with great optimism, contribute to the
deepening of the relations between the Visegrad countries and Chinese partners or will it rather
become the arena of ever-increasing, internal competition between V4 countries?

A: Certainly, the countries belonging to the Visegrad Group and to the Three Seas Initiative will strive to deepen their economic relations with China. We can observe this on our own example. Our elites have had high hopes for substantial cooperation with the PRC. We want to increase our exports to the PRC and to attract investment from China. Poland would like to become the most important partner of the PRC in this part of Europe. The problem is that, it is not only us who have such plans. The cooperation with China is also crucial for Hungary which is the most advanced country in this regard – by mid-2016, China invested € 2.1 billion (462 million euros in Poland). Other countries in our region will also most likely seek to maximize their cooperation with the PRC. For this reason, individual countries of both the Visegrad Group and the Three Seas Initiative will compete with with each other for contacts with China.

Q: What strategic projects are already being implemented in China and V4 countries? Can they contribute to the integration of the countries from this part of Europe?

A: The most important Chinese initiative in relation to the states of our region is the 16 + 1 framework. Apart from China, it includes Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary, Romania, Bulgaria, Slovenia, Croatia, Serbia, Bosnia and Herzegovina, Montenegro, Albania and Macedonia. It was brought to life in 2012 during the visit of Chinese prime minister Wen Jiabao in Poland. From then on, the summits of this format have been taking place every year. Last 16 + 1 framework’s summit was held last November in Riga. Through 16 + 1 cooperation framework, China is coordinating its policy in relation to our region. Thanks to that framework, China is trying to involve our region in The Belt & Road project. It allows for the operation of institutions and instruments of economic cooperation such as the investment support fund, or a special credit line. 16 + 1 framework led to the implementation of certain regional projects e.g. the modernization of the Budapest-Belgrade railway line. Projects like this serve the integration of the countries in the region.

Q: The Visegrad Group countries often do not agree on strategic policies, so can these countries
forge a common front towards China and the One Belt One Road project? May the V4 countries
reach a consensus in this context?

A: The above question really comes down to the essential issue of the unity of the states forming the Visegrad Group with regard to various problems. I think that such a common front of the Group’s countries towards China would be possible, but only in extremely controversial circustances and by this I mean such hypothetical situations when the V4 countries would feel threatened by the Chinese expansion. Nowadays, such fears are quite marginal. The V4 countries count on the benefits of the involvement in the Belt &Road initiative. Beijing is aware of that and may potentially take advantage of this fact in order to destroy the unity of V4 format.

Q: Will the potential tightening of relations between the V4 countries and China result in the withdrawal from the concept of the EU integration and at the same time lead to creating a Europe of two speeds (which is something that the Visegrad countries are afraid of)?

A: This issue should be looked at in two ways: short-term and long-term. In the short-term perspective the involvement of the Visegrad Group countries in the Belt & Road will not hinder the integration of these countries with the rest of the EU. All the V4 countries are economically linked with other EU countries, especially with Germany. All the countries of the group largely base their economic development on exports and for each of them Germany is the main target export market. In Poland, as much as 27.1% of
exports go to Germany. Czech Republic sends 32.4% of its exports to Germany. In case of Slovakia it is 22.7% and Hungary 28%. The V4 countries are developing their relationship with China counting on an alternative market for their exports as well as a new investor. This does not mean, however, moving away from cooperation within the EU.

The long-term perspective raises many questions. There is a possibility that in the distant future the V4 countries will start to see the PRC as a much more serious partner. However, in order for this to happen, some esssential conditions must be fulfilled. First of all, China must maintain dynamic economic growth. Secondly, it must succeed in creating a stable geoeconomic architecture in the form of The Belt & Road. Thirdly, there must be further decline in the economic importance of the Western European countries. If these three conditions are met, then the V4 countries may treat their cooperation with China and the geoeconomic architecture it has established, as a more beneficial solution than staiyng within the EU structures. Nevertheless, it is a debatable and a very distant perspective.

Q: To what extent do political conditions in the world affect the future of the relations between Central and Eastern Europe and China?

A: The influence of global conditions on the relations of Central and Eastern Europe is very big. Recently, two crucial events have taken place in Poland: the visits of President Donald Trump and Zhang Dejiang – the Chairman of Standing Committee of the National People’s Congress (No. 3 in the Chinese political elite). In Warsaw, President Donald Trump met the representatives of states constituting the Three Seas Initiative. He also proposed selling American shale gas to Poland and mentioned the American willingness to support various infrastructural projects in our region. One week later, Zhang Dejiang attempted to overbid American proposals to some extent. Poland and China have agreed on the construction of the first nuclear power plant in our country. Asian Infrastructure Investment Bank expressed its willingness to co-finance The Central Communication Port. There is a visible American- Chinese competition in Central and Eastern Europe. We must also remember that both Germany and Russia have traditionally had strong influence in our region.

Q: What about the relations with the United States, in the context of One Belt One Road ? After all, the US is an important partner for both China and European countries? Can the interests of both the US and China and China and Europe be reconciled?

A: The United States’ relationship to the Belt & Road project remains puzzling. The administration of Barack Obama tried to stop the development of this initiative , but failed to do so. President Donald Trump changed the US policy towards the Belt & Road. He decided that the United States may conditionally get involved in this project. The American delegation was present at the Belt & Road summit in Beijing (14th-15th May). America joins in a Chinese project in order to gain economic profits and be able to control China. The United States also wants to trade its consent to the construction of the Belt & Road in exchange for Chinese concessions in other areas, primarily commercial relations. The American- Chinese talks are currently being held: on July 19th began another round of negotiations on trade (so far they have not brought any settlement) and on July 20th, the Trade and Investment Forum US- China will begin in Seattle. One should keep a close eye on the results of these negotiations, because a lot depends on them. If these two major world powers will not come to agreement there will be more competition. Poland and other V4 / Three Seas Initiative countries will be faced with a difficult choice between the two competing superpowers. Both Washington and Beijing are striving to increase their influence in our region. The growing American-Chinese conflict may potentially break the unity of the Visegrad Group or the Three Seas Initiative.The question of whether the US and the PRC’s interests may be reconciled is the question of which trend is going to be more sustainable and more profitable for the global game makers – the development of free trade or protectionism. Some centers of power have gained more from globalisation than others. China should be regarded as the biggest winner of globalization processes. These processes originated in the US, however this country stopped to be their main beneficiary long time ago. The US is losing their leading position and will be soon superseded by China. The EU powers (Germany and France) are concerned about China’s economic expansion. Does this mean that we will witness trade wars between the superpowers? I think that all parties have too much to lose. The global actors involved are interconnected economically. The powers of the western world wanting to stop Chinese development should have done this 10, 12, or even 15 years ago. Today it is probably too late for this. I do not think that a series of economic wars will take place between the leading powers. However, I may be wrong.

Q: In the context of energy policy. In 2016, doubling of gas shale gas mining was noted in China. What is the importance of raw materials from this region for Europe and the V4 countries ?

A: It is estimated that China has the world’s largest shale gas reserves. According to the EIA the shale gas deposit located in the territory of China amounts to 36 trillion m3. In March , the mining of shale gas in China increased by 50.4% compared to the previous year. When the mining of this raw material in PRC will begin on a commercial scale – it is estimated that this will occur in the beginning of the next decade – this country will become a very important player on the gas market. The Chinese will strive to sell this raw material to different customers, including European countries.

Q: Does the gas coming from China constitute a real export potential and can contribute to a possible diversification of raw materials in Poland and other V4 countries?

A: Chinese shale gas will have real export potential. However, it is still the issue of the future. China will begin shale gas mining on a commercial scale at end of this, or at the beginning of the next decade. When this moment comes, the Chinese will offer selling their gas to other countries. Chinese shale gas can contribute to the diversification of raw materials in Poland and other V4 countries.

Q: Does China consider the co-operation with western countries to be more attracive than the Visegrad Group?

A: In this case one does not exclude the other. While building the land route of the Belt & Road project China assumes that it will end in Western Europe: Germany, Benelux, France or Spain. Nevertheless, on the way to the West it passes through Central and Eastern Europe. In order to safeguard its sustainability, China is in dialogue with the countries of our region. It is aware of the integration processes such as the Visegrad Group, or Three Seas Initiative and engages in cooperation with them. At the same time, Beijing is conscious of the success of the countries belonging to the Visegrad Group or Three Seas Initiative . A decent economic growth in these countries is pushing China to seek economic joint ventures.The fact that the countries of our region are open to a relationships with China is also significant. In Western Europe it is not so obvious. Germany or France fear China’s economic expansion. There is a tendency in these countries to try to limit this process e.g. in the form of imposing customs duties on various products from China, or obstructing the Chinese investment. A Chinese company establishing its own factory in Poland, or the Czech Republic may sell its products in the so-called “old EU” bypassing the potential impediments imposed on Chinese capital.

Interviewee: Stanisław Niewiński – PhD candidate on the Opole University, associate of  Confucius Institute in Opole, periodical ‘Stosunki Międzynarodowe’ and web portals: as well as
Interviewer: Izabela Wojtyczka

International_Visegrad_Fund,_emblemo_bluaThis text was created thanks to support of International Visegrad Found.