As the global pandemic raged, the EU and China concluded in principle the negotiations for a Comprehensive Agreement on Investment (CAI) on 30 December 2020. According to the EU, the CAI will “guarantee an unprecedented level of access to EU investors in China”. Although the CAI’s fate has been hanging by a thread since the diplomatic row over Xinjiang, Brussels and Beijing can proceed with the Agreement.
Scholars observed the CAI with mixed feelings of optimism and worries. For political scientist Robert Basedow, the agreement could level the investment playfield, which was previously unfavourable to European investors. On the other hand, researcher Philippe Le Corre contended that a growing Chinese presence in Europe was likely to unsettle the EU, which had already been beset by multiple crises, such as Brexit, the migration crisis and the pandemic.
The EU identified China as a “systemic rival” in 2019. The term rival, in the parlance of realists, implies competition for influence. In this light, it is in a way surprising to see that the EU and China were able to negotiate the CAI. Nevertheless, instead of chiming in with dominant realist opinions, I would like to add a dose of sobriety to the yet-to-be-ratified CAI by studying the EU’s and China’s engagements in the Western Balkans (WB). Specifically, I examine how the EU can strike a balance between material considerations, such as China’s funding and expertise, and moral credibility closely related to the rule of law and human rights.
China’s WB engagement has been widely reported since the launch of the 16+1 (now 17+1) and the Belt and Road initiatives in the early 2010s. Whereas the China ‘threat’ hype mostly prevails in Western media, Chinese media is inclined to paint a rosy picture of regional cooperation. Such polarised discourses risk entrenching the already divided societies of the EU and China. To make a positive change, the EU, instead of obstinately sticking to the oversimplified either/or logic, should follow a both/and pathway. As to China’s engagement, the EU should learn to politicise it in its neighbourhood by raising awareness of the potential ramifications such as debt traps and environmental issues.
Constructive politicisation calls for caution and contemplation. Without sufficient caution, China’s different governance model is likely to be centrifugal to the Europeanisation in the WB; meanwhile, the EU stubbornly emphasising the difference in governance risks triggering further diplomatic rows. To handle it wisely, the EU should learn to integrate China into the Europeanisation agenda by familiarising Chinese actors with EU norms. Therefore, instead of politicising issues and causing disputes, a constructive move would be to exploit the conflicts over investment rules for possible policy convergence.
In the WB, China’s engagement is characterised by its favourable funding conditions deprived of political conditions and the ready-to-use expertise provisions. Since the EU’s financial capability has been gravely weakened by global and regional crises, integrating China into the EU’s agenda can lessen its burden to a degree. More importantly, China has also expressed the willingness to cooperate with the EU. As far as the WB countries are concerned, foreign investment is essential for further development. After the momentum of Europeanisation was dashed by the eurozone crisis and the Greek sovereign debt crisis, other sources of external funding, including from China, are crucial for sustainable development in the WB.
This is the case not least since the WB is a pivotal passage whereby Chinese goods can enter the EU. By connecting the Maritime Silk Road of the 21st Century, China, valuing the WB’s geo-economic significance, has encouraged more companies to invest in the region. From transport infrastructure (the Kicevo–Ohrid highway and Budapest-Belgrade railway), oil exploration (Patos-Marinze and Kucova), power plants (Stanari), steel plants (Smederevo, Sabac and Kucevo), mining (RTB Bor) and car parts factories (Obrenovac, Zrenjanin), a host of projects have already got off the ground in the WB and the neighbouring EU member states, such as Hungary and Croatia.
Of particular interest to China’s WB engagement is transport infrastructure development. This development, in one way or another, overlaps with the EU’s TEN-T (the Trans-European Transport Network) Core Networks, which have also been prioritised in the EU’s connectivity projects in the WB. In this aspect, although a complete overlap between China and the EU’s transport infrastructure projects is rather rare, partial ones are possible, and there have been many. Among other projects, the Kichevo–Orhid highway contracted to Sinohydro is one part of the EU’s Corridor VIII, and the Budapest–Belgrade railway overlaps with Corridor Xb. In this reading, should the EU integrate China’s engagement into its Europeanisation agenda, it cannot only continue Europeanising the WB countries, but must also find an appropriate route for further Sino-EU cooperation.
Dented by multiple crises, the EU’s transport infrastructure schemes on paper have either been delayed or diverted. Compounded by the US’s capital flight after the 2008 financial crisis, the WB’s post-conflict development does not bode well. If anything, China’s engagement has at least alleviated the WB countries’ anxiety for continuous financial support. In doing so, China, of course, is not an altruistic saviour, since both long-term economic benefits and the above-mentioned geo-economic considerations are decisive for its increasing engagement. As far as EU norms are concerned, because political stability in the WB is one of the premises on which Chinese companies decide to invest, China, as stated above, embraces Europeanisation and underlined such a necessity in the Sofia Guidelines (2018).
To summarise, it would be reductive to interpret rivalry as sheer antagonism. As a region whose members are waiting to join the EU, the WB is a field of battle and bonding at the same time. As a field of battle, the EU and China are conflictual in terms of governance models; as a field of bonding, they share a common interest in investing in the WB. That said, apart from exercising caution, the EU, for the sake of Europeanisation and the WB countries’ further development, should regularise dialogues with the Chinese government and investors. Among others, the European Union Chamber of Commerce in China is a ready-made conduit. Apart from that, to make their voices concerted and heard, the WB governments are encouraged to add the new agenda concerning China’s engagement in the Ministerial Councils’ meetings annually organised by the Energy Community and the Transport Community.
About the Author:
Pengfei Hou is a PhD student at the School of International Relations, University of St Andrews. His main research interests are centred on foreign affairs, energy security and cultures in the broad region of Central, Eastern, and Southeastern Europe.