Chinese Investment in Serbia—Joint Pledge for Future of the “New Silk Road”

  • 2017-08-30
  • Duško DIMITRIJEVIĆ
  • 148

Chinese Investment in Serbia—Joint Pledge for Future of the “New Silk Road” 

Duško DIMITRIJEVIĆ, PhD[1], Nikola JOKANOVIĆ, LLM [2]

 

Abstract

China’s tremendous economic development during the previous 35 years has made China an increasingly attractive economic partner in the first and second decade of the 21st century. During this period, idea of renewing the ancient”Silk Road“that was created during the Han Dynasty has received new attention and became a source of inspiration for the trade and investment ties between the China, Central and South Asia, Europe, the Middle East and Africa. In geopolitical sense, the new plan of the Silk Road which has been inspired by this ancient trade route consists of two political initiatives. First one is ”the New Silk Road Economic Belt” which indicates stronger economic relations with Central Asia with a special focus on trade and transport and the second one is the ”Maritime Silk Road”  which is perceived to be an attempt to improve trade relations with South and Southeast Asia. The Belt and Road Initiatives are not without political and economic consequences. If they are conducted properly, they will result in better political understanding and common economic interests for all participating countries. However, both initiatives will have consequences on the US’ dominance in international relations.  While there are opinions (based in the US, its Asian allies and parts of the EU) viewing the two initiatives in a negative sense and doubting the China’s motivation, some parts of EU (especially the countries of Central and Eastern Europe in the framework of political platform 16+1) and ASEAN have extended a warm welcome and have high expectations from them. A successful realization of these initiatives which is planed until 2025, should thus contribute to the reassuring of the concerned countries. To use China’s favorite foreign policy catchphrase, it’s a “win-win” situation – China can foster a softer image for itself even while boosting its regional influence.

Keywords: New Silk Road, Maritime Silk Road, Silk Road Economic Belt, China, EU, ASEAN.

 

1) The Concept of the “New Silk Road”

 

The concept of the “New Silk Road” is not a new idea. This idea was seriously taken into consideration in the 1990s after the disintegration of Soviet Union. At that time, Deng Xiaoping confirmed his vision of economic reforms based on China’s coastal development (e.g. special economic zones in coastal provinces, open coastal cities, eastern comprehensive development zones). In this idea there were no visions to develop the inland parts of China. Nowadays, the situation is different. China is facing with economic threats. The global economic crisis and domestic social problems have made the current export- and FDI-driven economic model less effective. Against this backdrop, China needs to find new export markets or preserve existing ones, as well as narrow development gaps between the well-developed coastal areas and the less-developed inland parts of the country and preserve stability inside China and its neighborhood. This is the main reason why actual Chinese Government and Chinese leaders has created the concept of “New Silk Road,” which is widely quoted by political experts and prominent world media.

 

From the political model of “Chinese Dream,” which could be briefly defined as a great rejuvenation of the Chinese nation, the concept of ”the New Silk Road” which have been inspired by ancient trade route consists of two geopolitical initiatives. First one is the ”Silk Road Economic Belt”  which indicates stronger economic relations with Central Asia with a special focus on trade, and the second one is ”Maritime Silk Road” which is perceived to be an attempt to improve trade relations with South and Southeast Asia on the basis of maritime security. Both initiatives were mentioned in a document exposed after the 3rd plenary session of the 18th Central Committee of the Chinese Communist Party held in mid-November 2013, in Beijing.[3]

 

With its “Western Development Policy” and two “New Silk Road” initiatives China could promote its own economic growth through trade routes that satisfy the Chinese demand for better regional cooperation, trade diversifications, investing in transportation, and in mining and energy sectors. With realization so called “New Silk Road diplomacy” China will preserve stability on its borders and in the western part of China. She will secure export markets and energy supplies, develop inland transport routes as an alternative to unstable sea lines, and to narrow the development gap between the eastern and western parts of China.

 

In February 2015, Chinese Vice-Premier Zhang Gaoli distinguished their common priorities as: transport infrastructure building; trade and investment facilitation; financial cooperation; cultural exchanges and environment protection and social responsibility.[4] Hence, “the New Silk Road” initiatives indicate a positive climate for building a new international system that could bring prosperity much like the ancient Silk Road.

 

2) Introduction of the “Belt and Road Initiatives”

The initiative of the “Silk Road Economic Belt” was presented during President Xi Jinping official visit to four Central Asian states: Turkmenistan, Kazakhstan, Uzbekistan and Kyrgyzstan, in September 2013. The concept was announced in his speech in Astana and reiterated in his address at the 13th Shanghai Cooperation Organization (SCO) summit in Bishkek. On this occasion President Xi Jinping put forward major initiatives of "jointly build the Silk Road Economic Belt with innovative models of cooperation”, between China, Central Asia and Europe. They are: 1. strengthen policy communication, which may help “switch on a green light” for joint economic cooperation; 2. strengthen road connections, with the idea to establish a great transport corridor from the Pacific to the Baltic Sea, and from Central Asia to the Indian Ocean, then gradually build a network of transport connections between eastern, western and southern Asia; 3. strengthen trade facilitation, with a focus on eliminating trade barriers and taking steps to reduce trade and investment expenses; 4. strengthen monetary cooperation, with special attention to currency settlements that could decrease transaction costs and lessen financial risk while increasing economic competitiveness; 5. strengthen people-to-people relation.[5]

 

According to the initiative,”the Silk Road Economic Belt” is expected to include countries located along the ancient Silk Road trade route (China, Central Asia, the Middle East and on to Europe). The Silk Road Economic Belt as a lend route begins in Xi’an, in central China, before stretching to the border with Kazakhstan. The Silk Road then heads southwest to Iran before passing through Iraq, Syria and Turkey. The new Silk Road then crosses the Bosporus and heads through Europe, traversing Bulgaria, Romania, the Czech Republic, Germany and Rotterdam in the Netherlands – from which the path runs south to Venice where it converges with the planned Maritime Silk Road route.

 

On the other side, initiative of a “21st century Maritime Silk Road” was first suggested in President Xi Jinping’s speech in the Indonesian parliament in early October 2013. Initiative was revealed during Li Keqiang’s attendance at the 16th ASEAN+China summit in Brunei. Two Chinese leaders used the 10th anniversary of the ASEAN-China strategic partnership to emphasize this idea. The content of both speeches are similar to the viewpoints presented in President’s Astana address. The main emphasis was placed on stronger economic regional cooperation, which mean realization of President Xi suggestion of the establishing of Asian Infrastructure Investment Bank (AIIB), with the purpose of financing infrastructure construction (e.g., building roads and railways), and promoting regional interconnectivity and integration.[6] The idea strengthened maritime economy, environment technical, scientific and security cooperation.

 

According to the recent information, published by the Xinhua state agency, it begins in Quanzhou (Fujian) and hits other southern Chinese ports (Fujian, Zhejiang and Guangdong) before heading to the Malacca Strait. From Kuala Lumpur, the Maritime Silk Road heads to Kolkata then crosses the rest of the Indian Ocean to Nairobi and, from there, around the Horn of Africa and into the Mediterranean – with a final stop in Greece before reaching Italy. The route will deliver Chinese goods and services to ASEAN countries, Sri Lanka, the Horn of Africa, the Middle East and the Mediterranean. Both of these initiatives are expected to become fully operative by 2025.[7]

 

A particularly important aspect of the development of Silk Road Economic Belt is the construction of the railway network and rail corridors that need to connect China with other continents.

 

Currently, there are 3 railway freight corridors in China, connecting Asia and Europe, namely through the northern Eurasian corridor (via Trans-Siberian railway), through Central Eurasian railway corridor (part of the Second Eurasian Continental Bridge), through Southern Eurasian railway corridor (being planned). China has already opened 8 international railway lines related respectively to Eurasian corridor and the Silk Road Economic Belt, connecting national railways of 4 countries. With three in line with the Russian Railways (Manchuria, Suifenhe and Hunchun), one in line with Mongolia railways (Erenhot), those 4 cross-border railway lines are connected with the northern Eurasian railway corridor (Trans-Siberian railroad). There are 2 railway lines in line with Kazakhstan railways (via Alashankou and Huoerguosi), which is part of the Central Eurasian railway corridor through China’s Longhai railway line and Lanxin railway line. There are also 2 cross-border railway lines connected with Vietnam Railways (via Ping Xiang and Estuary), which belongs to the South Eurasian railway corridor, namely the Trans Asian Railway Passage. Under joint efforts of China, Mongolia, Russia, Kazakhstan, Germany and other countries, China’s railway authorities have organized several direct container trains, travelling to European countries.

 

At present, there are 9  Eurasian direct container trains, respectively “Hohhot-Frankfurt" container train, “Foxconn” international intermodal train, “Beijing-Hamburg“ container demonstration train, “Urumqi– Hamburg” container train, "Yu-Xin-Ou" container trains (the city  of Chongqing in Sichuan province, through the city of Urumqi in Xinjiang Province, and finally arriving the city of Duisburg, Germany), "Su-Man-Ou" container train (Suzhou (China) – Manzhouli (China) - Poland), "Han-Xin-Ou" railway international freight train (Wuhan (China) - Czech Republic), "Rong European fast iron" through the container train (Chengdu (China) - Poland) and "Zheng-Xin-Ou" (Zhengzhou (China) – Xinjiang (China) – Hamburg (Germany)) international freight train.

 

One of the good results achieved by the Silk Road Economic Belt and the economic cooperation between China and European Union was launched in November 2014 with the establishing of the regular freight line connecting Yiwu (an important wholesale centre for small consumer goods located in Zhejiang Province) and Madrid, capital of Spain. The countries along the way, in addition to China and Spain, include Kazakhstan, Russia, Belarus, Poland, Germany and France. The freight train covered a distance exceeding 13 thousand kilometers over three weeks’ period.[8]

 

The railway transport does however enjoy certain advantages over the maritime option. These include a CO2 emission which is 62 percent lower, but also the evasion of several naval chokepoints along the maritime way (the most notable being the Malacca Strait and the Gulf of Aden), and the potential terrorist attacks.[9]

 

 

3) The possible economic benefits

 

The Silk Road Economic Belt, the world's most potential of economic growth, covers parts of Central, South and West Asia and Europe, connecting two major economic circles, both Asia and Europe's together. The area consists of more than 50 countries, with a combined population of 3.6 billion, accounting for 51.4% of the total world population. As it was already mentioned, the “Belt and Road Initiatives” are expected to become fully operative by 2025. According to some estimates, their aggregate worth is expected to surpass 21 trillion US dollars, which could easily make it one of the landmark projects of the 21st century. These initiatives have been proposed with the purpose of benefiting both China and the countries along the land and maritime route. The most important economic benefits include: 1. improvement of trade and investment flows (facilitated through greater use of local currencies in cross-border exchange, and through currency swap arrangements between the People’s Bank of China and other central banks); 2. improvement and upgrade of transport infrastructure (the railway and highway network, and the deep water port facilities), and greater economic integration; greater access to Chinese market for all countries along the route, and vice versa.

 

There is, in addition, an economic benefit that will affect the still-developing provinces in China’s west. The infrastructure improvement, coupled with foreign trade and investment and cross-border exchange are expected to benefit regions (the today’s provinces of Gansu, Qinghai, Xinjiang, etc.) which have remained far from the main economic activity during the 35 years of China’s economic reforms.

 

The “Belt and Road Initiatives” are already being compared to the Marshall Plan, suggested and enacted by the US after the World War II. Some western political analysts see the deployment of economic strengths in order to achieve foreign policy goals (among which a particular place belongs to the sustaining of the domestic economy) as the common feature of both initiatives.

 

Analyzing the possible economic benefits of the initiatives, Tiezzi concluded that the Chinese authorities hope to achieve it in the same extent as it was with the Marshall Plan after World War II. She points through the “Belt and Road Initiatives” the status of China as bona fide super power. [10]

 

On the other side, Chen acknowledges the common features between China’s “one belt, one road” and the U.S. Marshall plan, describing the most important of them as the ambition to export the country’s capital, technology, and capacity to the countries in need. In addition, he notes three major differences between them. First difference is motivation – Chen believes that China is not motivated to become a hegemonic actor in Asia and beyond. It is his claim that China is satisfied with achieving a “win-win” situation with other participants in the initiative. As a result, Chen underlines the fact that the “Belt and Road Initiatives” are open to all countries, despite the fact that some of the participants would be inclined to take a ‘free ride’ on the initiative. Second difference is challenges – Chen describes the challenges ahead of China’s “Belt and Road Initiatives” as far more abundant than in the case of Marshall Plan. He believes that in order to achieve success, China’s initiative has to overcome the differences in values and beliefs and the potential resistance and distrust from the countries involved (none of which existed to such an extent in the case of Marshall Plan). Third difference is the potential impact – Chen highlights the potential scope of the “Belt and Road Initiatives” as much broader than any of the results achieved by the Marshall Plan. Contrary to the Marshall Plan, the “Belt and Road Initiatives” could include the whole world, i.e. any country willing to cooperate with China and to benefit from its economic growth. An economic development without hidden political requests is appealing to many developing countries and the “Belt and Road Initiatives” seem, according to Chen, to be better suited to such a purpose than the Marshall Plan. [11]

 

 

4) The possible political and security effects

 

While it is certain that the “Belt and Road Initiatives” were launched with a purpose of achieving economic goals, at the time of their realization they will imminently cause some political and security effects. According to Asanga Abeyagoonasekera (executive director of the Lakshman Institute of International Relations and Strategic Studies, Sri Lanka), the most important political effects, involving all participating countries, will amount to an increased political understanding and trust, but also to broader political channels of communication through which it will be possible to exchange political viewpoints and the values and norms in their basis.[12] Finally, the likelihood of achieving a common political position will be increased. It is also worth mentioning that mutually beneficial economic cooperation will also raise awareness of the security threats that could undermine the successful functioning of the trade routes. As a result, the countries concerned will dedicate more attention to combating terrorism threats, and to achieving greater stability along the trade routes.

 

 

5) The US response

 

Flynt Leverett and some other political analysts have also analyzed the political and strategic calculus behind the “Belt and Road Initiatives”, as well as Chinese Government’s advocacy of greater influence of Asian countries in strictly Asian affairs. They have described the initiatives as China’s response to US “pivot to Asia”, a landmark policy during both Barack Obama presidencies – as they believe, Chinese political elites are aware of US’ ambition to contain China by using economic, political and military means. They view the transformation of the contemporary international relations as the long-term goal of the Chinese leadership. The Chinese leadership strives for a truly multipolar international order and the ability to match the US dominance. The “Belt and Road Initiatives” could (after reaching the proclaimed goals) contribute to the decline of US supremacy, especially in the Middle East and other regions along the trade routes. The conclusion made by Leverett and other analysts is that a successful implementation of the “Belt and Road Initiatives” will almost inevitably lead Beijing to ignore US displeasure on multiple fronts in the near-to-medium future (with one of the examples being the Iran policy – Chinese Government will be in position to choose between greater understanding for the Iran-bound US and forthright deepening of Sino-Iranian relations). [13]

 

Christina Lin, former visiting fellow at the Washington Institute for Near East Policy, determined the China government call on “the Silk Road” strategy desire to diversify and increase its energy supplies via natural gas and other options that has led it to greater engage­ment with countries rich in resources, in Central Asia, the Caucasus, and the Middle East. She believes that inclusion of the foreign affairs, security, and military intelligence apparatus reflects the government’s deep con­cerns about energy security. To address these concerns, Beijing has turned to the Shanghai Cooperation Organization (SCO). Estab­lished in 2001, the SCO consists of China, Russia, and the four Central Asian republics of Kazakhstan, Kyr­gyzstan, Tajikistan, and Uzbekistan, along with four observer states (Iran, Pakistan, India, and Mongolia). China has used the organization to achieve gradual economic integration with the Central Asian/Caspian region and meet three main goals: 1. pacifying the restive Xinjiang province, home to significant Mus­lim-Uyghur separatist forces; 2. diversifying energy sources from the Persian Gulf and hedging against any maritime embargoes; 3. projecting Chinese hege­mony across Eurasia. This strategy has largely centered on using financial means to create dependency among regional governments, building on increased political, military, and hydrocarbon cooperation.[14] 

 

Other American experts for foreign affairs point out to the potential competitor status of the China-supported Asian Infrastructure Investment Bank against the World Bank and Asian Development Bank, the institutions in which the US and its Asian allies have the crucial influence.[15]  Chinese Government has, however, praised the experience of the World Bank and Asian Development Bank as precious, pointing to the sufficient number of projects available for all lenders.

 

Jeremy Page is one of the reputable political analysts who are noting the debate among Western and Asian governments regarding the “Belt and Road Initiatives”.  In his study abut this topic, he exposed the positive view and great expectations of China’s ambitions, but also he highlighted the critical posture towards China’s initiatives (with arguments focusing around the strategic dimension of the initiatives and the potential undermining of the governance standards at existing lending institutions, such as the World Bank or the Asian Development Bank).[16]

6) The EU’s internal debate

As regards the European Union’s posture towards the “Belt and Road Initiatives”, a number of analysts have highlighted the positive effects of these initiatives, expressing belief that they will reinforce China-EU ties.

According to David Gosset of Shanghai's China Europe International Business School, the proposal made by Chinese President Xi should not be ignored, for successful realization of the initiatives would reshape Eurasia. Gosset foresaw the new levels of prosperity and cohesiveness for all Eurasian actors if the two initiatives are fully embraced. Bai Ming of Chinese Academy of International Trade and Economic Cooperation pointed to the contribution of two trade routes to greater China’s openness to the West and the EU's openness to the East, describing it as a real “win-win” deal. Bai noticed the likelihood of an increase in business opportunities in Asia available to the EU. Finally, Zhu Dan of European Union Chamber of Commerce in China highlighted the policy dividends of the “Belt and Road Initiatives”, and their attractiveness given the economic hardships the European economy is facing. She pointed to the complementary economic structure of China and Europe, describing it as a good starting point for bilateral trade and cooperation, and an increase in Chinese investments abroad (especially in the EU).[17]

 

On the other hand, Dragan Pavlićević highlighted the ambiguous attitude of the EU toward China’s growing involvement in its backyard. He noted the intra-EU discussion regarding the nature of China-Central and Eastern Europe cooperation, and the existing concerns that it could be used to split the EU in a way that could benefit China. In December 2014, Chinese Premier Li Keqiang attempted to allay such concerns by reiterating China’s support to the European integration process and the European unification. According to Li, the EU would benefit from successful China’s cooperation with Central and Eastern Europe (an important part of overall China-Europe cooperation) due to the narrowing of the development gap between different parts of the EU. In addition, Li announced the adherence to EU laws and standards in conduction of China’s infrastructure projects in Europe. As a conclusion, Pavlićević described the future China’s relations with Central and Eastern Europe as dependent on the overall EU posture towards China’s interests in the region. Due to the Brussels’ political leverage over the EU’s east, the China-CEE relations will deteriorate should the EU decide to treat China’s incursions as harmful.[18]

If we have considered the expressed opinions, making the final assessment of the relationship between China and the EU, it would be necessary to appreciate the following facts. China has been always attaching great importance to developing relations with the EU not only because EU’s development represents an important trend of multipolarization in line with China’s belief to the international order, but also because Europe is the largest trade partner to China. A prosperous Europe can provide overseas market, advanced technology and investment for China’s economy. Nowadays Chinese leadership regards China-Europe relationship as the focal point and growth point. This positioning is proven by frequent diplomatic actions taken by the new Chinese leadership since 2013.

 

7) CEE-China “16+1” platform

According to the Joint Statement made during President Xi’s trip to EU headquarters, China and EU decided to develop synergies between China’s “Silk Road Economic Belt” initiative and EU policies and jointly to explore common initiatives along these lines.[19] Due to the fact that Central and Eastern Europe (CEE) is an important part of Europe and is located as the gateway for China to Europe, China also calls on CEE countries to join “the New Silk Road” Initiative.[20] “The New Silk Road Economic Belt” Initiative and the China-CEE cooperation, both in their objectives and pathways, are accommodating and complementary to each other. And the later is expected to become a positive driving force to the development of this large strategic plan.[21]

Relations between China and the CEE, have been increasingly attracting attention around Europe since the opening-up of the “16+1” platform. The first steps towards this platform were taken by Chinese Premier Wen Jiabao in 2011 in Budapest, at the China-CEE Economic and Trade Forum, where he announced a “5-point proposal” to enhance bilateral cooperation. A year later, in Warsaw during the first summit of leaders of China and CEE, this became the “12-point initiative“. This document is perceived as China’s new engagement strategy in the region.[22]

 

The first point from the ”12-points initiative“ was the establishment of a Secretariat for Cooperation between China and the 16 CEE countries which was officially established in September 2012, in Beijing, in the presence of the National Coordinators of all 16 European countries, and China. The other 11 points included the establishment of a 10 billion US$ special credit line for the CEE countries; setting up an investment cooperation fund between China and CEE countries with the goal of raising 500 million US$ in the first stage; increase of the total trade volume between China and CEE to 100 billion US$ by 2015; stimulation of Chinese enterprises to invest in special economic and technology zones in CEE; exploration of potential financial cooperation such as “currency swap, local currency settlement for cross-border trade, and establishment of bank branches in each other’s countries”; establishment of an expert advisory committee on the construction of transportation network between China and CEE countries (e.g. regional highway or railway through joint venture, joint contracting and other means); expansion of cultural cooperation; provision of scholarships to the CESEE countries and support of the Confucius Institutes and Confucius Classrooms programs, and invitation of Chinese language students to China; establishment of a tourism promotion alliance between China and CESEE countries, coordinated by the China Tourism Administration; establishment of a research fund on relations between China and CESEE; hosting of the first young political leaders forum of China and CESEE in 2013.[23]

On 26 November 2013, the Meeting of Heads of Government of China and Central and Eastern European Countries were held in Bucharest, Romania. To further improve China-CEEC cooperation, parties at the meeting jointly formulated and issued the “Bucharest Guidelines for Cooperation between China and CEE“. ”The Bucharest Guidelines” are focused on the theme of the ”win-win“ cooperation, which implies increased investment and trade volumes, as well as increased cooperation in the fields of science, technology, innovation, environmental protection and energy (especially in the matter of nuclear power, wind power, hydro power, solar power and other sources of clean power). The document promotes people to people exchanges and cultural exchanges and cooperation. Special emphasis is given to infrastructure development such as construction of roads, railways, ports and airports based on the principle of mutual benefit. The “Bucharest Guidelines” encourage China and CEE countries to build an international railway transportation corridor connecting China with CEE countries; along this railway corridor, distribution centers will be established in order to build a new logistics passage between China and Europe.

The document particularly supports the establishment of cooperation in the area of free movement of capital and financial services of China and CEE countries financial institutions. It establishes the obligation of their financial institutions to engage in cooperation in flexible and diverse forms and bring into full play the role of the 10 billion US$  special credit line in promoting China-CEE economic cooperation and trade. It welcomes the official launch of the China-CEE Investment Cooperation Fund, commends the efforts made by Chinese, Polish and Hungarian financial institutions, supports the relevant financial institutions in launching stage two of the fund at an appropriate time and encourage more financial institutions and businesses to contribute to the fund.  ”The Bucharest Guidelines” also support the People's Bank of China and the central banks of CEE countries in signing agreements of currency swaps as they see necessary and promote local currency settlement as one of the means to promote trade and investment.[24]

At the third meeting between China and the CEE countries, held on 16 and 17 December 2014, On 16 December 2014 in Belgrade, the parties annonced ”the Belgrade Guidelines for Cooperation“ . According ”the Guidelines“, the parties will expand trade, investment, and economic cooperation.[25] They will also support the establishment of the executive body of the China-CEE countries business council in Warsaw, Poland, and urge ”relevant business organizations from both sides to cooperate on a voluntary basis“. The ”Belgrade Guidelines for Cooperation“ welcome the founding of the secretariat of the contact mechanism for China–CEE investment promotion agencies in Beijing and Warsaw. Inter alia, the document supports the role of Bulgaria in leading joint efforts to set up a Chinese-CEE consortium on promoting agricultural cooperation in the first half of 2015, and calls on the parties to fully utilize 10 billion US$ in special loans and other financing tools, provided by China, for the promotion of trade and economic cooperation. The document considers the signing of currency swap agreements between China and Hungary and Albania, with the use of RMB by business circles as the settlement currency in cross-border trade and investment, notes the parties’ common will to boost cooperation in science, technology, innovation, environment protection and energy, among other fields, and pledges to deepen people-to-people exchanges and cooperation at various levels.[26]

At the third meeting in Belgrade under the platform ”16+1“, China announced the provision of new funds to pursue new ventures with the CEE countries, ”stressing that the cooperation will be in line with European standards“. The most discussed project at the summit was the modernization of the Belgrade-Budapest railroad, in connection with which China, Serbia, and Hungary signed agreements at the meeting. The project, which would cost between 1.5 and 2 billion € (about 1.8 -2 billion US$) and shorten travel time from 8 to 2.4 hours, is scheduled for completion in two years, with a subsequent planned extension to Skopje and then Athens. China sees the railroad as an eventual ”land and maritime express line“ between China and Europe.[27]

When analyzing all effects of all of these summits between China and CEE countries, it can be concluded that the “16+1” platform may serve as a catalyst which would bring some new approaches to development and strategic partnership in various productive spheres. Evenmore, the cooperation between China and CEE countries is in line with China’s objective of being a partner for growth with the EU. In other words, China regards the renewal of its relationship with CEE countries as a growth driver in the framework of China-EU relations, and believes that, by enhancing the overall level of China’s relations with CEE countries, she will be promoting a more stable and healthy China-Europe relationship as well.

 

8) Xinjiang province and the Russian reaction

 

In order to preserve its territorial integrity, the Chinese government has made combating what it calls the “three evils” - religious extremism, separatism and terrorism. To achieve its aims and reduce local discontent, the Chinese government has replaced its policy of ‘stability above all else’ – with a strategy of regional economic development. Part of this strategy entails promoting the export of goods produced in Xinjiang to China’s Central Asian neighbors - Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. Considering that 78% of the province’s exports already go to Central Asian states, the creation of a Silk Road Economic Belt would allow the consolidation of long-term export hubs in Central Asia for Xinjiang’s goods, thereby guaranteeing further economic development in the region. In order to improve trade flows between Xinjiang and Central Asian countries, the Chinese government has already invested more than 91 billion US$ in trade-related infrastructure in the Western province (including in roads, hydropower plants, and primary industry facilities). These investments in the infrastructure of Central Asian states, as well as the development of border cities, are designed to stabilize the wider region both economically and politically.[28] Hence, security and stability in Central Asia is not only a matter of protection of China investments but also a matter of protection of possible spillover effects that insecurity and instability might have within China’s north-western region of Xinjiang. Furthermore, China has started to become a player, although until now only tentatively, in Central Asia’s security landscape.

 

Australian analyst Colin Mackerras from the Griffith University has shed light on China’s stance towards its Xinjiang province in the aftermath of the July 2009 terrorist attacks. He recognized the aim of China’s domestic economic policies related to the Xinjiang province as the attempt to improve the economic performance of the province, as well as the living standard of its inhabitants (with the purpose of at least mitigating the ethnical tensions). Such policies are matched with initiatives to improve the cross-border economic and cultural exchange with the neighboring Central Asian countries (which, as such, originated long before the “Belt and Road Initiatives” were officially proclaimed). Mackerras pointed to the Central Asian countries’ stance towards the Xinjiang ethnic tensions and July 2009 terrorist attacks, which caused China’s concern. China’s attempt to alleviate the economic causes of the tensions led China to forge strong economic ties with Central Asian countries. As a result, China’s influence in the region increased substantially, coinciding with the decline of Russia’s influence and the expected US withdrawal from Afghanistan. While Mackerras acknowledged the absence of China’s plans for establishing hegemony among these countries, he described China’s overwhelming influence in the region as the inadvertent consequence of China’s economic policies aimed at Xinjiang and the bordering areas. Finally, Mackerras is among the analyst who noticed the unease on the Russian side regarding China’s initiatives as well as the possibility of Sino-Russian competition for the dominant position in the region (which still lingers on despite examples of successful Sino-Russian cooperation).[29]

 

Sino-Russian relations and Russia’s perception of the “Belt and Road Initiatives” has been particularly explained by experts such as Yu Bin of Wittenberg University. Yu stressed the coinciding of the Silk Road Economic Belt with Russia’s attempts to gather the former Soviet republics under the auspices of the institutions such as the Commonwealth of Independent States (CIS), Collective Security Treaty Organization (CSTO) and the Eurasian Economic Space, in which Russia will have the most say. Yu described Russia’s approach towards the region as geopolitics-laden and facing competition from the West (accessing the region with a mixture of economic aid and political conditions to be fulfilled) and China (mostly restraining itself to achieving economic goals). Yu also noted the Russian unease related to the fact that China and Central Asian countries have become economically intertwined over the last 20 years, with an example in trade volume between China and the region (which rose from 460 million US$ in the early 1990s to the 46 billion US$ in 2012) as well as billions of US$ in Chinese investment. As in other regions, an important share of Chinese investment is directed at the infrastructure. Yu had highlighted Russia’s particular sensitivity to China’s attempts at constructing a railway connection between China’s Xinjiang province, Kyrgyzstan and Uzbekistan (due to Chinese attempts to replace the existing Russian track gauge of 1,520 mm with Chinese-standard 1,435 mm gauge). After all, Yu explained the subsequent Kyrgyzstan withdrawal from the project as a consequence of strong Russian lobbying.[30]

 

From this analyses it can be make subsequent conclusions. Russia and China obliviously have different strategies, different interests, and different priorities in Central Asia that at times appear irreconcilable with China’s emerging role. While cooperation between them in energy, investment, high technology, and military equipment has significantly increased over the past two decades, given Russia’s strategic rapprochement to Central Asia it is too early to say whether the phenomenon of collaboration or competition between Russia and China will lead to reaching an agreement on jointly controlling the region, or whether the region will serve as a field of confrontation between them.[31] The new Silk Road and the rationale(s) behind it show the extent of the wariness that exists between Russia and China, but it would be wrong to assume that Beijing is pushing the project just to counter-balance or limit Russian influence in Central Asia. It is oblivious that the new Silk Road allows China to bypass Russia economically, politically, and geographically. It also has domestic (development in Xinjiang), regional (cross-border trade and infrastructure) and global benefit potentials (creation of supply lines). By creating a fast inland route to the European continent, it puts China in direct contact with countries that have long been in Russia’s alleged “zone of influence”. This includes Europe itself, where China has already become much more active – as shown by the participation of Prime Minister Li Keqiang in the second and third China-CEE leaders’ summits in Bucharest 2013 and in Belgrade 2014 under the platform of the 16+1 which has injected new impetus into mutually beneficial cooperation.

 

 

9) The ASEAN countries – between approval and wariness

 

ASEAN countries are the most interested in the success of China’s initiatives. On the other hand, China is interested to enhance the idea which has been promoted as the “2+7” cooperation framework (suggestion drawn by Li Keqiang during his attendance at the 16th ASEAN+China summit in Brunei). The idea “2+7” means consensus on two issues - strategic trust as part of the good neighbor principle and economic cooperation based on mutual benefits. It also means seven plans: 1) Signing the China–ASEAN good neighbor treaty; 2) More effective use of the China–ASEAN Free Trade Agreements (FTA) and intensive Regional Comprehensive Economic Partnership negotiations (the FTA between ASEAN and China, Japan, South Korea, India, Australia and New Zealand); 3) Acceleration of joint infrastructure projects; 4) Stronger regional financial and risk-prevention cooperation; 5) Closer maritime cooperation; 6) Enhanced cooperation on security; 7) More intensive people-to-people contacts along with increased cultural, scientific and environmental protection cooperation.[32]

 

A number of analysts from ASEAN countries expect the sooner establishing of Asia-Pacific economic community and growth of the emerging markets as a consequence of the initiatives.

 

Political analyst Zhao Hong from the Singapore Institute of Southeast Asian Studies described the transportation infrastructure and connectivity in the region as hungry for improvements and large-scale investments. To support this argument, Zhao quoted an estimate by Asian Development Bank, according to which as much as 730 billion US dollars will need to be invested in infrastructure throughout Asia by 2020 (which would, by his opinion, leave sufficient room for all lending institutions interested). [33]

 

Another analyst in support of China’s initiatives is Zheng Yongnian from the Singapore East Asian Institute. He argued that China preferred “win-win” cooperation with countries in Asia, Africa and Latin America to hegemony, adding that the Maritime Silk Road could be used as a vehicle to transfer capital and technology to developing countries, but also as a mean to reduce trade friction between China and the developed countries (through redirecting Chinese investments away from the developed countries and to the developing countries).[34]

 

Some experts, however, point out to the ongoing maritime dispute in South China Sea as a possible hindrance to “the Maritime Silk Road” initiative. After noting that the South China Sea is an important corridor for the initiative, Irene Chan pointed out to the Southeast Asian countries’ concerns that in return for economic benefits from the initiative, they will be compelled to give in to China’s interpretations and viewpoints of the South China Sea dispute (that is to say, if China remained stiff in its policy towards the dispute, “the Maritime Silk Road” initiative would cause more concessions of these countries to the US with the purpose of protecting them from China).[35]

 

Taking into account the maritime disputes in the South China Sea that have been aggravated since 2011, the China's leaders’skilfully used “New Silk Road“policy for defusing tensions. Although its elements are not entirely new the fact that this approach is based on a lucrative economic offer which includes security guarantees to the ASEAN states. Despite this foreign policy raison d'être, this allows the Chinese stronger presence in the region as a response to the U.S. pivot to Asia-Pacific.[36]

 

 

10) Relevance to the China’s energy security

 

Between 1989 and 2011, China enjoyed an average economic growth rate of 10%, and its energy needs have grown accordingly. The country has gone from self-sufficiency in the 1980s to dependence on external sources for approximately half of its domestic consumption today.

 

According to thought Camille Brugier from the EU Institute for Security Studies, the “New Silk Road” initiatives have relevance to the China's energy security. She gives rational assessment of the two initiatives’ energy aspects is constrained to the assessment of Sino-Russian energy relations since the early 2000s. Brugier described the increase of Chinese energy imports from Russia in early 2000s as an attempt to limit China’s energy dependency on the Middle East and sub-Saharan Africa (due to the lack of political stability in the two regions and the possibility of terrorist attacks during the sea-based transportation of energy resources to China). She describes the recent China’s stance towards Russia as more cautious, resulting in greater importance given to the Central Asian states (most notably, Kazakhstan and Turkmenistan). By her words, China has taken the same cautious approach towards Russia that it had earlier towards Middle East and Africa. Finally, Brugier expects the New Silk Road to result in greater energy imports to China originating in Central Asian states.[37]

 

Nadège Rolland of the National Bureau of Asian Research also acknowledged China’s ambition to redirect transportation corridors for its energy away from the Malacca Strait, attributing it however to China’s fear of US naval blockade, which would be likely to happen in case of a conflict between East Asian nations.[38]

 

When we knows that almost 85% of imports to China are transported along this route, including 80% of it’s energy imports, then the Malacca Strait is in fact one of the busiest littoral sea lanes to Malaysia, Indonesia and Singapore. Hence, China not only strives to secure those sea lanes but also to boost inland transport or find the means to gain access to the Bengal Bay and Indian Ocean and bypass Malacca. This is the reason for China’s great engagement in Myanmar, which is seen as a gate to Bengal Bay and the Indian Ocean. It is also worth mentioning China’s relations with Pakistan. Close cooperation with Islamabad on such infrastructure projects such as roads, railways and pipelines, and the recent decision by Pakistan to give operational control and management of the Gwadar port on the Arabian Sea to a Chinese company, offer China access to the Persian Gulf and the whole Middle East. The additional attention to an inland transport network is meant to shorten transport times and make trade less dependent on those unstable littoral sea lanes. Through enhancing relations mainly with Central Asia, China not only tries to circumvent Malacca and decrease dependence on sea transport but also to establish an inland transport network (construction of roads, railways, pipelines) to ensure a stable supply of energy and raw materials from Central Asia and the Middle East.

 

 

Summary

After entering into the new century, with the rise of the comprehensive national strength, China has become more widely and deeply involved in the international affairs. While sticking firmly to its position as a developing country, China began to be more willing to identify itself as a “great power” and committed to “play its due role of a major responsible country,” especially since President Xi Jinping has promoted the concept of “major-country diplomacy with Chinese characteristics”.[39] China’s diplomacy in the new era is now taking on a more global perspective with a more enterprising and innovative spirit. This diplomatic strategy contains many new concepts and new thoughts, including the concept of “a new model of major-country relationship”, which refers to China-Russia relationship and China-US relationship, the principles of “amity, sincerity, mutual benefit and inclusiveness” regarding China’s periphery policy, and also the new concept of “morality and interest” when China promotes the relations with other developing countries.[40]

The proclaimed economic, political and social goals of the “Belt and Road Initiatives” are very ambitious, with potential of being among the most important phenomena of the 21st century. If conducted properly, the initiatives would amount to a good choice (in a political, economic, cultural and any other sense) to all participant countries. Although the initiatives are open to all the countries along the old Silk Road trade route and have the potential of reaching out to all the countries in the world, they have also stirred some concern among the developed countries, especially when it comes to China’s real motives. The achieved success of the “Belt and Road Initiatives” (measured through an improvement of infrastructure and living standard, greater cross-border exchange and greater observing of the environment protection standards) will make it easier for Chinese Government to convince the countries concerned into their non-aggressive nature. These conclusions are particularly important for cooperation between China and the countries of Central and Eastern Europe (CEE) in the framework of political platform “16+1”. Established in Warsaw in 2012 and developed greatly after the second and third China-CEE leaders’ meeting in Bucharest 2013 and in Belgrade 2014, the platform “16+1” has injected new impetus into bilateral ties and mutually beneficial cooperation. This mechanism may serve as an engine for strengthening business cooperation between China and CEE countries and basis for their comprehensive strategic partnership.

 

[1] Professorial Fellow, Institute of International Politics and Economics,

[2] LLM in International Relations, China Foreign Affairs University, Beijing

[3] Central Committee’s Decision on Major Issues Concerning Comprehensively Deepening Reforms, Xinhua, 15 November 2013.

[4] China Focus: China sketches out priorities of Belt and Road Initiatives, Xinhua, 2015, available at http://news.xinhuanet.com/english/china/2015-02/01/c_133962709.htm, last accessed on 14 February 2015.

 

[5] Xi Jinping zai Shanghe zuzhi fenghui fabiao jia tichu 4 dian zhuzhang, Xinhua, 13 September 2013.

[6] Chronology of China’s “Belt and Road Initiatives”. Xinhua, 2015, available at http://news.xinhuanet.com/english/china/2015-02/05/c_133972101.htm, last accessed on 14 February 2015.

 

[7] Pepe Escobar, ”China Is Building a New Silk Road to Europe, And It’s Leaving America Behind”, Mother Jones 2014, available at http://www.motherjones.com/politics/2014/12/chinas-new-silk-road-europe-will-leave-america-behind, last accessed on 16 February 2015.

[8] World’s longest train journey reaches its final destination in Madrid, Xinhua, 2014, available at http://news.xinhuanet.com/english/china/2014-12/10/c_133843552.htm, last accessed on 16 February 2015. Also See: Amanda Macias, “The World’s Longest Railway Is Stalled in Madrid”, Business Insider, 2014, available at http://www.businessinsider.com/the-longest-railway-in-the-world-2015-1, last accessed on 14 February 2015.

[9] Stephen Burgen, “The Silk Railway: freight train from China pulls up in Madrid”, The Guardian, 2014, available at http://www.theguardian.com/business/2014/dec/10/silk-railway-freight-train-from-china-pulls-into-madrid, last accessed on 17 February 2015.

[10] Shannon Tiezzi, “The New Silk Road: China’s Marshall Plan?”, The Diplomat, 2014, available at http://thediplomat.com/2014/11/the-new-silk-road-chinas-marshall-plan/, last accessed on 15 February 2015.

 

[11] Irene Chan, “China’s Maritime Silk Road: Emerging Domestic Debates”, S. Rajaratnam School of International Studies, RSIS Commentary, 2015, no. 53, available at http://www.rsis.edu.sg/rsis-publication/rsis/co15053-chinas-maritime-silk-road-emerging-domestic-debates/#.VSMvGOFQ3IU, last accessed on 7 April 2015.

[12] China to share economic development with countries along maritime Silk Road, Xinhua, 2015, available at http://news.xinhuanet.com/english/china/2015-02/12/c_133990766.htm, last accessed on 7 April 2015.

 

[13] Flynt Leverett, Hillary Man Leverett, Wu Bingbing, “China’s Drive for a ‘New Silk Road’”, Consortium News, 2015, available at https://consortiumnews.com/2015/01/29/chinas-drive-for-a-new-silk-road/, last accessed on 17 February 2015.

[14] Christina Lin, “The New Silk Road China’s Energy Strategy in the Greater Middle East”, Policy focus, Washington Institute for Near East Policy, 2011, no.109, pp. 9-10.

[15] China presses on with new Silk Road plan, Daily Star, 2014, available at http://www.thedailystar.net/china-presses-on-with-new-silk-road-plan-49386, last accessed on 17 February 2015.

[16] Jeremy Page, “China Sees Itself at Center of New Asian Order”, Wall Street Journal, 9 November 2014, available at http://www.wsj.com/articles/chinas-new-trade-routes-center-it-on-geopolitical-map-1415559290, last accessed on 1 February 2015.

[17] Silk Road initiatives to boost China-EU ties, Xinhua, 2015, available at http://www.china.org.cn/world/2015-02/11/content_34799054.htm, last accessed on 8 February 2015.

[18] Dragan Pavlićević, “China’s New Silk Road Takes Shape in Central and Eastern Europe”, Jamestown, 2015, available at http://www.jamestown.org/single/?tx_ttnews%5Btt_news%5D=43374&tx_ttnews%5BbackPid%5D=7&cHash=dcf45d3bf99b47d32fcb982a34e81371#.VONnPS5A_IU, last accessed on 1 February 2015.

 

[19] Joint Statement Deepening the China-EU Comprehensive Strategic Partnership for Mutual Benefit, available at http://www.fmprc.gov.cn/mfa_eng/wjdt_665385/2649_665393/t1145387.shtml, last accessed on 31 March 2014.

[20] The 16 CEE countries, which are involved in the Chinese initiative present heterogeneous group – there are 11 EU members (Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia) and 5 countries with ambition to become EU members (Albania, Bosnia and Herzegovina, Macedonia, Montenegro, and Serbia).

[21] China calls on CEEC to join Silk Road project, China Daily, 2014, available at http://www.chinadaily.com.cn/china/2014-05/14/content_17507780.htm, last accessed on 6 June 2014; See: L. Jing, ”Cooperation between China and CEE countries: features, significance and prospect”, Diplomacy Journal, 2015,  available at http://diplomacy.bg/archives/1438?lang=en, last accessed on 17 May 2015

[22] Justyna Szczudlik-Tatar, “China’s Charm Offensive in Central and Eastern Europe: The Implementation of Its ’12 Measures’ Strategy”, Bulletin of the Polish Institute of International Affairs, 2013, no. 106, pp. 1-2.

[23] Anastas Vangeli, “Beijing via Warsaw: The growing importance of China – CESEE relations”, Perspectives Internationales, available at http://perspectivesinternationales.com/?p=511, last accessed on 10 December 2014.

[24] The Bucharest Guidelines for Cooperation between China and Central and Eastern European Countries, Secretariat for Cooperation between China and Central and Eastern European Countries, 29 November 2013, available at  http://www.china-ceec.org/151/2014/01/02/41s1569.htm, last accessed on 10 December 2014.

[25] China Boosts Investment in Central and Eastern Europe, EurActiv, 2014, available at http://www.euractiv.com/sections/europes-east/china-boosts-investment-central-and-eastern-europe-310997, last accessed on 10 December 2014.

[26] China, CEE Countries Outline Blueprint for Further Economic Cooperation, Xinhua, 2014, available at http://news.xinhuanet.com/world/2014-12/17/c_1113667695.htm, last accessed on 17 December 2014.

[27] Wendy Zeldin, “China: New Guidelines for Cooperation Signed with Central and Eastern European Countries”, available at http://www.loc.gov/lawweb/servlet/lloc_news?disp3_l205404250_text, last accessed on 14 May 2015.

[28] Camille Brugier, “China’s Way: the new Silk Road”, European Union Institute for Security Studies, 2014, pp. 3-4.

[29] Colin Mackerras, “Xinjiang in China’s Foreign Relations: Part of a New Silk Road or Central Asian Zone of Conflict?”, Springer Science + Business Media Dordrecht, 2015, pp. 4, 12-13.

[30] Yu Bin, “China-Russia relations: Putin’s Glory and Xi’s Dream”, Comparative Connections, available atcsis.org/files/publication/1303qchina_russia.pdf, last accessed on 17 December 2014.

[31] Bernardo Mariani, “China’s role and interests in Central Asia”, Saferworld, London, 2013, pp. 16-17.

[32] Prashanth Parameswaran, ”Beijing Unveils new Strategy for ASEAN-China Relations“, China Brief, 2013, vol. 13, p. 10.

[33] “Experts say ‘Maritime Silk Road’ will stimulate economic potential of developing countries”, Association of International Accountants, 2015, available at http://www.aiaworldwide.com/news/experts-say-maritime-silk-road-will-stimulate-economic-potential-developing-countries, last accessed on 17 December 2014.

[34] Ibid.

[35] Dingding Chen, “China's 'Marshall Plan' Is Much More”, The Diplomat, 2014, . available at http://thediplomat.com/2014/11/chinas-marshall-plan-is-much-more/, last accessed on 17 December 2014. For international legal and security analysis see: Duško Dimitrijević, “Territorial Disputes in the South China Sea and Regional Security”, The Review of International Affairs, Institute of International Politics and Economics, Belgrade, 2013, no. 1151,  pp. 87-103.

[36] Justyna Szczudlik-Tatar, ”China’s Response to the United States’ Asia-Pacific Strategy“, PISM Policy Paper, 2012, no. 41, pp. 1-8.

[37] Camille Brugier, op. cit., pp. 3-4.

[38] Nadège Rolland, “China’s New Silk Road”, The National Bureau of Asian Research, Seattle, 2015.

[39] Hu Jintao’s report at 18th Party Congress, available at http://www.china.org.cn/chinese/18da/2012-11/19/content_27152706_12.htm, last accessed on 17 December 2014.

[40] Wang Yi, “Exploring the Path of Major-Country Diplomacy With Chinese Characteristics”, 2013, available at http://www.fmprc.gov.cn/mfa_eng/wjdt_665385/zyjh_665391/t1053908.shtml, last accessed on 17 December 2014.



From Huang Ping, Liu Zuokui, eds., China-CEEC Cooperation and the “Belt and Road Initiative”, Beijing: China Social Sciences Press, 2016.