China-CEEC cooperation boosting European economy
Liu Zuokui: China-CEEC cooperation boosting European economy
By Liu Zuokui Source:Global Times Published: 2017/11/27
Illustration: Peter C. Espina/GT
The global financial crisis and the European sovereign debt crisis have limited the EU's ability to support the development of Central and Eastern European Countries (CEECs). But CEECs have enjoyed rapid economic growth in recent years because of adopting the policy of "opening up to the east." Earlier this month, the Vienna Institute for International Economic Studies released its latest forecast, which estimated CEECs would have economic growth of 3 to 4 percent from 2017 to 2019. The development of China-CEEC relations could also help to bring about a rebound for the EU's economy.
Overall, Europe welcomes the China-CEEC cooperation. The development appeal of CEECs is beyond the reach of the EU and China's participation fills the gap. Macedonia has been reportedly applying for EU funding to build a road from the capital, Skopje, to Lake Ohrid for a long time. China is now building this road together with Macedonia. The number of tourists to Lake Ohrid will increase significantly after the construction is completed. The investment cooperation with CEECs, especially with the Balkan countries has improved their economies and balanced the development of the overall European region.
Western Balkan countries have been struggling to join the EU since their economies, especially their infrastructure, cannot meet EU standards. The development of a region relies on the infrastructure construction and increasing the supply of public goods, and the achievements on infrastructure construction in the CEECs have been notable over the past five years. Notable examples are the Zemun-Borca bridge in Serbia, the Bar-Boljare motorway in Montenegro, and the Stanari Thermal Power Station in Bosnia and Herzegovina. Most of these investments have been concentrated in the western Balkan region, helping to speed up the process of joining the EU.
The combined investment between China and the CEECs was almost 80 percent greater in 2015 than in 2008. Acquisitions and green field investment have been two important investment methods. In 2012, China issued a $10 billion special loan to support the construction of infrastructure, capacity and the green economy in the CEECs. The China-CEEC Investment Cooperation Fund has also rolled over to the second phase.
China's investment and financing model may have differed from that of the EU. The rules also may not be compatible with those of the EU. But there is no absolute standard for which method is better or more advanced. In the future, China will adjust its financing and investment model according to the demands of the international market. The investment should flow to developing countries, not only as an exploration to enter the European market but also helping the countries in need.
The EU has some doubts about the 16+1 cooperation mechanism between China and the CEECs, and is concerned the investment projects and the cooperation may bypass its rules. Another concern is that the development of close China-CEEC political and economic ties might jeopardize unity within the EU.
Such suspicions are not necessary. The China-CEEC cooperation has always maintained transparency, and the EU is invited as an observer nation for almost every important summit. China has been actively communicating with the EU over the progress made under the cooperation framework. China does not intend and does not need to make another set of rules behind the EU's back.
China-CEEC cooperation still faces challenges. Since there is considerable variety among the CEEC countries in terms of size and development stage, policies should be tailored to each country. Also, most countries in the region regard the EU instead of China as their main economic and trading partner. What's more, the CEEC trade deficit with China has drawn attention. There is space and potential to solve these problems, but there is still a long way to go.
The author is director of the Department of Central and Eastern European Studies at the Institute of European Studies under the Chinese Academy of Social Sciences. email@example.com