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Opinion
May 10, 2019 www.intellinews.com I Page 22
Chinese engagement in CESEE: paper dragons and false inevitabilities?
Gunter Deuber of Raiffeisen Research in Vienna, Marcus How of Vienneast in Vienna
The Belt and Road Initiative (BRI) is no less than an attempt by the Chinese to reshape the international order, but so far it has acted opportunistically and has no clear plan.
Bilateral investments with high interest as op- posed to rules-based conformity are the condi- tions associated with the BRI up to now. Europe- ans’ knobbly knees knock at the realisation that they cannot possibly compete in such conditions and can only survive through co-option.
The internationalisation of China’s economic strategy has been met with an alarmist fanfare
in Europe and particularly the US. Certainly, through the BRI, Beijing is seeking to establish
a geopolitical foothold in the industrial policies
of the countries that it is integrating into the global supply chain it is building, as it attempts
to outsource certain industries in order to allow greater domestic focus on high-value sectors. One regional avenue in this respect is Central Eastern and Southeastern Europe (CESEE), where Chinese influence is proliferating.
While the BRI is no yellow brick road that terminates in Beijing, Western public discourse over China – with respect to CESEE especially – often conflates the types of economic interactions and the creation of its own Wizard of Oz. We need to think about the BRI in a different way.
Tomato, tomato
In most of the analysis China’s presence in CESEE
At best, China has positioned itself with strategic opportunism in CESEE, without any clear grand plan.
is the misconception that Chinese investment is
a fire spreading through the region in the form of infrastructure investment, for which the host states can never pay. There are two key points here.
First, construction, infrastructure and project financ- ing are just one part of the overall investment and FDI picture – and here, Chinese influence is discern- ible, but overstated. But some interesting differen- tiations are recognizable. Within CESEE, Chinese construction and infrastructure commitment is split on a ratio of 70:30 between SEE and CE, respectively, even though the distribution of regional GDP is ex- actly the opposite. In selected SEE countries, such as Serbia and Bosnia, the sum of Chinese investment in infrastructure is on a par with pre-accession funding by the European Union (EU) and other development financing institutions. Elsewhere, in CEE, Russia is dominant in regional projects and financing, accounting for 55% of the total.
Second, with respect to FDI more generally, Chi- nese influence is limited but hardly indicative of
a ‘rush’ despite favourable investment conditions. Accounting for 1% of total direct investments in CEE, China is well behind Germany and France, which make up 4% and 10%, respectively. Fur- thermore, only 25% of the Chinese FDI portfolio in CESEE is concentrated outside of Russia, Turkey and EU member states. Even within the EU, Chi- nese FDI in the CESEE region accounts for a max- imum of 5% of the total investment volume, which is below the GDP weight of the CESEE countries relative to their economic power in the EU.