China and the Visegrad Group. Transformation and future of the cooperation

Marcin Przychodniak

The relations with the Visegrad Four (V4) are an important element of the Belt and Road Initiative that is China’s umbrella project in their global engagement since 2013. A comprehensive analysis of China’s contacts with Poland, the Czech Republic, Slovakia and Hungary should also take into consideration relations between China and the EU that – due to their economic importance – are China’s priority.

The relations with the Visegrad Four (V4) are an important element of the Belt and Road Initiative that is China’s umbrella project in their global engagement since 2013. A comprehensive analysis of China’s contacts with Poland, the Czech Republic, Slovakia and Hungary should also take into consideration relations between China and the EU that – due to their economic importance – are China’s priority.

The following analysis of the 2012-2019 politics of the Visegrad Group towards China was based on the examination of public documents, political declarations as well as economic data on trade exchange and China’s investments in the V4. In addition, the article uses the EU sources, Chinese analyses and governmental publications on the Visegrad Group.

 

The EU context

The main reason for China’s interest in the V4 comes from the fact that all its members are the EU members. China appreciates the influence that Poland, the Czech Republic, Slovakia and Hungary already have – and may have in the future – on the EU politics, especially those regarding China itself. In this respect 2019 deserves to be seen as a milestone for that is when the European Commission’s recommendations for the European Council was published. This strategic document set forth areas of potential cooperation with China, but it also pointed out identified conflicts of interest that make China a “systematic rival” of the EU.[1] The EU-China summit brought a similar conclusion.[2] Further important meetings are scheduled for 2020: apart from a summit in Beijing, another meeting in China will gather the “17+1” leaders (most likely at the heads of state rather than the heads of government level). In addition, a visit of the Chinese leader, Xi Jinping in Germany in September 2020 will be an occasion for another session – this time in the “China + 28” set up. Following the recent political changes, relations between China and the EU are shaped by a new European Commission, including the High Representative for Common Foreign and Security Policy, whose first meeting with Wang Yi, the Chinese trade minister, run smoothly.[3] Also China emphasizes the willingness to tighten the cooperation.[4] However, those positive declarations do not translate into practical steps such as accelerating negotiations of the investment agreement. An additional stimulus could help and indeed, in the eyes of China, their dealings with the Visegrad Group serve first and foremost as an important additional channel of communication with the EU members in times that are crucial for the Chinese-EU relations.

The most particular – and, so far, the only – sign of the Chinese attention towards the V4 Group was the meeting that took place in 2018 between Wang Yi, the then Minister of Foreign Affairs[5], and the representatives of the foreign offices of Poland, Slovakia, the Czech Republic and Hungary. During the meeting the Chinese minister identified the Visegrad Group as the structure of great importance for strengthening European integration and shaping the EU-China relations as well as the politics within “17+1” (“16+1”) format.[6] China’s willingness to meet in this setting was a clear signal of the growing diversification of China’s relations with Central Europe as well as the warning to France and Germany, who were the strongest opponents of the “17+1” cooperation and also the strongest supporters of tightening the EU policies on trading with China.[7]

The cooperation between the Visegrad Group and China has been taking on a new significance since 2017, especially in the context of a growing competition between China and the USA that now exceeds trade issues it originated from.[8] Thus, Central Europe becomes a new area of rivalry between China and the USA; an area where China tries to present itself as a counterbalance to the USA. In its communication (including official statements, social media posts etc), China highlights its multilateral approach and collaborative attitude, as well as its aversion to hegemonic ambitions. While China does not push on the region’s countries too hard, it expects them to reject the anti-Chinese concepts pushed forward by the Americans. At the same time, China seems to understand that the matter of security and cooperation within NATO (and, thus, cooperation with the USA) is of vital importance for Poland, the Czech Republic and Slovakia, especially considering the presence of the NATO forces in Eastern Europe. At the same time, China encourages the USA’s partners in Europe to adopt the “two wheels” perspective – with the USA seen as the guarantor of peace and China as the champion of economic growth; while it is impossible to move on one wheel, both wheels do not need to belong to the same set. This rhetoric carries very practical assumptions – and so, China expects the Visegrad Four to allow Chinese companies to build 5G, to refrain from criticism on human rights and on the situation in Hong Kong, to support the application of free market principles to Chinese companies and to oppose possible restrictions, such as protectionist measures.

While China is eager to discuss the role of the Visegrad Group, it realizes politics through bilateral rather than regional projects. The V4 countries themselves treat China individually, unlike other non-European partners such as Japan and South Korea, whom the V4 talks to as one corporate body. The apparent multilateralism that stands in contrast to the real bilateralism is also one of the chief characteristics of the “17+1” relations, clearly testified by the status of the group’s flagship project – modernization of the Belgrad-Budapest rail line; the only truly multilateral project of the “17+1” has been taking years to complete.[9] 

 

The beginnings of cooperation

Both the circumstances and attitudes of Central Eastern European countries have changed greatly since 2012, when China first launched the initiative of deepen cooperation with the region that ultimately turned into the “16+1” format. China’s original intentions were expressed by the prime minister Wen Jiabao in Warsaw in 2012, in so called “12 steps”. This declaration of China’s readiness for close collaboration with the region was positively received. First and foremost, the PRC was eager to find new markets for their products, but they also seek to expand their project of cooperation with developing countries. Consequently, China’s engagement in Europe was meant to replicate the model of cooperation used with the Global South (as in Africa or the Middle East) and to strengthen China’s diplomatic presence in this part of Europe. Previously, China has treated Europe with sympathy, but without any notion of turning their relationship into a business relationship. Currently, China’s attitude started to change and while their political position was evolving, so grew their hope for economic benefits. In the eyes of Chinese public officials and authorities, Central Eastern Europe have been influenced by and informally dependent on the Russian Federation. This perception has changed slightly after 2004, following the admittance of the V4 countries to the EU and their rapid economic development. On the other hand, the Visegrad Group’s members welcomed the Chinese initiative – Poland saw it as a chance to assert its position as the regional leader and to use it as a diplomatic leverage; for the Czech Republic it was an occasion for reviving their relations with China, after they have been “freezed” for human rights reasons. Hungary hoped to use the initiative to diversify its foreign policy and to open up to Asia in general. The most skeptical reaction came from Slovakia, but even this country showed an interest in China’s proposition.

It took five years for the initiative to shape into the “17+1” format. The V4 countries easily found their place within this platform, especially in the political context.  Their leaders continued to meet with the Chinese prime minister at the “17+1” summits (though communication possibilities thus offered had its limitations) and Xi Jinping, the PCR’s leader, visited both Poland (June 2016) and the Czech Republic (March 2016) – clearly confirming China’s interest in the region. The Chinese accentuated positive aspects of the “17+1” cooperation and stressed their willingness to deepen this collaboration, but the PR and political rhetoric aside, the real results, especially in the context of economy, were scanty.

The gap between declarations and outcomes is the main reason for the attitude shift towards both the “17+1” and the Belt and Road initiatives, and to China itself. The Visegrad Group’s growing discouragement and skepticism take various forms (for instance, lowering the rank of national representatives visiting China), which mostly stem from the realization that the focus on multilateral relations inevitably weakens bilateral relations. Hungary is the only member of the V4 who takes a different view on the situation and continues to declare the strong support for the “17+1” format and collaboration with China in general. With craftiness that marks their diplomacy, the Hungarians navigate through the relations with the USA (which they want to uphold) and China (whose precedency in the Central Europe politics they support). Notably, Hungary is the only V4 member who opposes the EU’s critical position on China’s handling the situations in Hong Kong and Xinjiang, having itself no reservations about the developments there.

As to the change of heart of Poland, the Czech Republic and Slovakia, it comes from the lack of positive economic results, China’s changing politics (for instance, undermining the position of international law, which is vital for the V4’s security and welfare) and the EU’s increasingly critical attitude towards China. The Chinese-American strategic rivalry is also weighing greatly on the V4, especially that it does not impact only economic choices (eg. Deciding on the 5G provider), but it has also broader political ramifications. The pressure to choose one of the two main partners poses a great challenge to the EU members and EU institutions (especially the new European Commission and the High Representative for Common Foreign and Security Policy) and – by extension – to the Visegrad Group as well.

 

Key aspects of the cooperation

A good example of the V4’s evolving position towards China is the matter of 5G infrastructure, specifically the participation of Chinese companies in the project. It shows the complexity of political interests and the pressure the V4 is under – on one hand, the USA discourages the Central European partners from entering into collaboration with Huawei, on the other hand – the European Commission hotly debates the matter and even issues recommendations on 5G (October 2019). The EU’s biggest concern is the dependence of Chinese telecommunication companies on the Chinese government whose interests do not converge with those of the EU, but also of Poland, the Czech Republic and Slovakia. Naturally, the participation of the Chinese companies is not tantamount with taking over the data (data encryption being a key issue); moreover, it may provide solutions that are cheaper than those currently offered by European companies (especially that Ericson and Nokia are not up to speed). As it happens, the existing 4G infrastructure, which will be the foundation block for 5G, is in many EU countries based on Chinese equipment. The situation should be seen in the broader context of challenges the EU is facing – it urgently needs to formulate an industrial policy and to adopt a position towards technologies in Europe. The EU also has to decide about potential support for other parties, such as Ericsson and Nokia, in their competition with Chinese companies. Those are not easy choices, especially that they will also influence the USA – EU relations, which are crucial for the EU endeavors to build a strong position in the global IT sector.

            The V4 countries differ in their approach to the participation of Chinese companies in the 5G project, though it is only Hungary that made a final decision on the matter. In turn, both Poland and the Czech Republic officially opposed implementation of the unilateral prohibition which discriminates against entities of one country. Recently they issued a declaration that makes it impossible for the Chinese to get involved in the process. Also, the Polish-American declaration on 5G that was signed during Michael Pence’s, the USA vice president’s visit in Poland, makes specific references to the Prague conference’s announcements (May 2019).[10] Telecom operators in Poland and the Czech Republic continue their cooperation with Huawei on the 5G project. Slovakia bides its time, awaiting a decision of Germany and the EU recommendations.[11] Finally, Hungary, having rejected the claims of alleged security threats, officially declared itself ready to cooperate with Chinese companies, especially Huawei.[12]

 

It should be noted that no V4 member managed to improve the economic cooperation with China. The main reason behind the negative economic results are the disadvantageous conditions of the Chinese offer: China’s loans are too expensive and their model of cooperation too far from European standards. All V4 countries show high trade deficit (irrespectively of the methodology accepted to assess it and of the considered production chains) and the volume of Chinese full value investments is hardly impressive. In most cases the investments take form of merges and acquisitions, which neither create new jobs nor offer any added value to the local economies. China is interested in quick returns rather than long-term investments. The same model of engagement applies to Hungary, despite its emphasis on China’s important role in their economy. The claim that China is supposedly capable of repositioning the EU as Hungary’s chief trade partner is purely politically-based, but finds no confirmation in the financial statistics.[13] Undoubtedly, the Hungarians’ positive approach to China (for instance, they were the first to sign the agreement about the Road and Belt cooperation) made them seen as the chief partner of the “17+1”, yet with no visible economic effects (according to Rhodium Group, since 2000, China has invested in Hungary around 2 billion EUR).[14] Their mutual trade exchange is growing and, according to the EU statistics (2018), it is over 8 billion EUR, with the Hungarian deficit of 5 billion EUR.[15] Among the V4 countries, Poland recorded the highest trade deficit – over 15 billion EUR, yet the export to China was higher in each of the remaining V4 countries.[16] Since 2012 they have been occurrences that undermined trust in Chinese partners and the “17+1” collaboration, for example, the arrest of the CEFC founder, one of the largest investors in the Czech Republic, leading in a result to the withdrawal of the group’s investments. Another incident happened in Poland, where the Chinese company, COVAC, refused to execute the contract for construction of a motorway. No available data allows to conclude that the political investments within the “17+1” turned into real economic gains, therefore it is difficult to argue that the relations between China and the Visegrad Group have any special meaning.

Legal issues are also one of the important factors that influence the V4 – China relations. Differences resulting from the diverse political regimes as well as China’s refusal to respect human rights law have bearing especially in the Czech Republic. Firstly, the country’s relations with China are a permanent feature of national debates, secondly, the Czechs uphold the tradition of diplomatic fights for human rights that had been started during Vaclav Havel’s presidency, and thirdly, there exist political circles that oppose China’s narrative about Taiwan and Tibet. Their influence is strong, as testified by the cancellation of the partnership agreement with Beijing in favour of Taipei. Similarly, the new president of Slovakia voiced criticism towards China for its disrespect of human rights during her meeting with the Foreign Minister of China. Notably, her predecessor decided on the meeting with Dalai Lama, that led to curbing of Slovakian-Chinese relations. While Poland expresses its position with caution, it relies on the EU initiatives to emphasize the importance of legal matters. It includes commentary on the Chinese position on human rights (particularly towards the Uyghurs in Xinjiang and the Tibetan minority), but also their actions that undermine the global order (developments in Hong Kong, territorial disputes over the South Chinese Sea). The V4’s reactions, though stronger than earlier, still are within the limits, therefore there seems to be no risk of antagonizing China. Their criticism is mild and informative in nature; it is channeled through the wide array of experts, journalists and politicians, including those who think positively about China and are ready to endorse its politics publicly.

 

Conclusions

The relations between the V4 and China continue to fluctuate and China, as usual, adapts to changing circumstances. In the past, it was Poland whom the Chinese considered an informal leader in the region. However, the situation changed in 2018 in favor of Hungary, whose position of China’s main partner was earned through their expression of political good will and support for China’s interests on the EU forum.[17]

“The exceptional status” of the V4 is essentially declarative, as it does not come with any unique, bespoke political or economic instruments that somehow distinguish the Chinese engagement in the region from their transactions in the Balkans or the Baltic states. As it remains exclusively the matter rhetoric, it has little appeal to the V4 members (with the exception of Hungary) and discourage them from deepening the relations with China. Insignificant economic benefits, substantial political impositions, problematic international demands (a result of the EU membership and the relationship with the USA) are off-putting and might prompt the region to turn away from China and the “17+1” format. Already most of the Central European societies find China’s politics in the region inauspicious. The poll conducted by the Pew Research Center reveals that 34-47% of Poles and 37-40% of Hungarians are moderately in favor of the collaboration with China, 40-48% of Slovakians support it only slightly, whereas 27-57% of Czechs were not at all in favor of this cooperation.[18]

China itself will need to make decisions about the future of the “17+1” format, especially its relation to the Belt and Road Initiative – should they co-exist or be referred to when fitting in the context of the EU-China relations? China’s assumption that those two initiatives could operate in synergy, co-exist and complete each other ignores indisputable disproportions between Poland, Slovakia, the Czech Republic, Hungary and their partners within the EU (Germany, France, Italy). The imbalance in exchanges with China – disadvantageous to Central Europe – clearly shows that allegations about the “17+1” as a Chinese Trojan horse which could be used to divide the EU, are an exaggeration.

            Most likely China is going to use the next “17+1” summit to boast of its successes – as both the location and the rank of event (at the heads of state level) suggest. Also, it may be expected that China will pressure the V4 countries to make pro-Chinese statements against the backdrop of China’s rivalry with the USA and the EU opposition. It is unlikely though that the summit will bring any breakthrough resolutions; more likely, the position of the V4 within the “17+1” format will systematically decrease.

 

 

[1] “EU-China – A strategic outlook. European Commission and HR/VP contribution to the European Council”, https://ec.europa.eu/commission/sites/beta-political/files/communication-eu-china-a-strategic-outlook.pdf, accessed 12 March 2019.

[2] „Joint statement of the 21st EU-China summit”, https://eeas.europa.eu/delegations/china_en/60836/Joint%20statement%20of%20the%2021st%20EU-China%20summit, accessed 10 April 2019 r.

[3] „China: press statement following the bilateral meeting between HR / VP Josep Borell and Minister of Foreign Affairs of China Wang Yi”, eeas.europa.eu, accessed 16 December 2019.

[4] „Enhancing mutual trust and cooperation to embrace an even better future of China-EU relations”, https://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1725036.shtml, accessed 16 December 2019.

[5] In March 2018 Wang Yi became also a member of the State Council that is the Central People’s Government. The member of the State Council is higher in rank than the vice-prime minister.

[6] “Wang Yi Meets with Deputy Foreign Ministers of V4 Countries”, https://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1545685.shtml, accessed 9 December 2019.

[7] B. Kowalski, Co dalej z formatem “16+1”? Ośrodek Spraw Azjatyckich, http://osa.uni.lodz.pl/?p=8358, accessed 9 December 2019.

[8] As shared in strategic documents published by the current American government, especially „National Security Strategy” (2017), https://www.whitehouse.gov/wp-content/uploads/2017/12/NSS-Final-12-18-2017-0905.pdf.

[9] “Hungarian-Chinese group to build Budapest-Belgrade rail line”, railway-technology.com, https://www.railway-technology.com/news/hungarian-chinese-group-to-build-budapest-belgrade-rail-line/, accessed 11 December 2019; M. Ferchen, “China`s Troubled Hungary-Serbia Railway Project: a case study”, Carnegie-Tsinghua Center for Global Policy, https://carnegietsinghua.org/2018/12/12/china-s-troubled-hungary-serbia-railway-project-case-study-pub-78100, accessed 11 December 2019.

[10] “U.S.-Poland Joint Declaration on 5G”, https://www.premier.gov.pl/files/files/deklaracja_en-1.pdf, accessed 2 September 2019.

[11] “Political and security implications of Chinese investment in Slovakia”, https://www.chinfluence.eu/wp-content/uploads/2019/06/SK-BP-ChinfluenCE-1.pdf, accessed 25 April 2019.

[12] G. Szakacs, K. Than, “Hungarian minister opens door to Huawei 5G network rollout”, Reuters, https://www.reuters.com/article/us-hungary-telecoms-huawei/hungarian-minister-opens-door-to-huawei-for-5g-network-rollout-idUSKBN1XF12U, accessed 5 November 2019.

[13] “Orban: if EU doesn`t pay Hungary will turn to China”, Budapest Business Journal, https://bbj.hu/economy/orban-if-eu-doesnt-pay-hungary-will-turn-to-china_143836, accessed 11 January 2018.

[14] T. Matura, ”Chinese investment in Hungary: few results but great expectations”, Chinfluence, https://www.chinfluence.eu/chinese-investment-hungary-results-great-expectations/, accessed 14 February 2018.

[15] “China-EU – international trade in goods statistics”, https://ec.europa.eu/eurostat/statistics-explained/index.php/China-EU_-_international_trade_in_goods_statistics#Trade_with_China_by_Member_State, accessed 18 December 2019. 

[16] “Political and security implications of Chinese investment in Slovakia. Briefing paper”. Central European Institute of Asian Studies, Chinfluence, https://ceias.eu/wp-content/uploads/2019/06/Chinfluence_event_summary.pdf, accessed 5 December 2019.

[17] Cui Hongjian, “China-EU Relations: Seeking the Convergence of Interests, Managing the Divergences” in The CIIS Blue Book on International Situation and China`s Foreign Affairs (2018), World Affairs Press (Beijing, 2019), pp.413-438.

[18] L. Silver, K. Devlin, C. Huang, “People around the globe are divided in their opinions of China”, Pew Research Center, https://www.pewresearch.org/fact-tank/2019/12/05/people-around-the-globe-are-divided-in-their-opinions-of-china/, accessed 5 December 2019. NB, the answers “I don’t were” were not included in the results.