The presentation of the “16 + 1 Cooperation”

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Author: Viktor Eszterhai

The “16+1 Cooperation” is a transregional platform established with the aim of deepening the relationship between China and 16 Central and Eastern European states. In November 2017 Hungary will host the summit of the mechanism for prime ministers; therefore, it is worth studying the history and operation of the “16+1 Cooperation” as well as the arising problems and challenges.

Antecendents

On his official visit to Hungary in 2011, Wen Jiabao, the former Premier of the People’s Republic of China stated that China was committed towards the development of the relations with the Central and Eastern European countries (CEE), and for this purpose he also announced the formation of a new mechanism.[i]  One year later in Warsaw China and the 16 CEE states established a platform called “16 + 1 Cooperation” for the institutional coordination of their relations.[ii] The 16 CEE countries involved in the mechanism include Albania, Bosnia-Herzegovina, Croatia, Macedonia, Montenegro, Serbia, Slovenia, Bulgaria, Romania, the Czech Republic, Hungary, Poland and Slovakia, Latvia, Lithuania and Estonia. The “16 + 1 Cooperation” harmonises with China’s recent endeavour to set up new international institutions in order to increase its influence in world politics. Another important feature of the “16 + 1 Cooperation” is that it explicitly forms a part of the One Belt One Road initiative, i.e. China’s grandiose foreign political plan.

The History of the “16 + 1 Cooperation”

At the Warsaw Summit held for the Prime Ministers of China and the Central and Eastern countries in 2012, the member states of the mechanism adopted the Twelve Measures, which determined the main objectives and form of the cooperation. The most significant point is the establishment of the Secretariat in Beijing, subject to the Chinese Ministry of Foreign Affairs. China announced to establish a special credit facility to the amount of 10 billion dollars, which can partly be accessed in the form of preferential loans for the implementation of common projects, primarily in the fields of infrastructure, green economy, etc. The CEE countries can apply to Chinese financial institutions (National Development Bank of China, Export and Import Bank of China, Industrial and Commercial Bank of China, Construction Bank of China, Bank of China, China Citic Bank) for the financing of projects. A The parties agreed to establish a development fund to the amount of 500 million dollars and the member states scheduled to increase the trade between the region and China to USD 100 billion by 2015. Furthermore, the agreements specified cooperation in the fields of finance, tourism, culture and science, and China promised to provide a scholarship for 5,000 students from the region in the following five years.[iii]

The most important result of the Summit organised in Budapest in November 2013 is that the parties laid down that the heads of government of the relevant states would meet annually in order to study the results of the cooperation and specify the directions of future development. Furthermore, they agreed to elaborate the medium-term program of the “16 + 1 Cooperation”. As for the field of economic cooperation, a decision was passed on holding investor and scientific forums and setting up chambers of commerce for China and the CEE countries, which can be joined by the member states on a voluntary basis. Several new forums were announced in the fields of science and education (China-CEEC high-level symposium of think tanks, China-CEEC Young Political Leaders’ Forum, China-CEEC Education Policy Dialogue, etc.) and the members also agreed on the preparation for the establishment of coordination centres in various fields.[iv] Finally, Hungary, Serbia and China announced to jointly reconstruct the railway system between Budapest and Belgrade.[v]

At the Belgrade Summit held in December 2014 the parties stated that they deem the basic principles of the document entitled “China 2020 Strategic Agenda for Cooperation” and the EU legislation as the basis for cooperation. As the first large-scale infrastructure project of the “16 + 1 Cooperation”, the reconstruction of the Budapest-Belgrade railway line was signed. At the Summit the parties declared that they would support the set-up of the China-CEEC Business Council) in Warsaw, which the regional economic organisations can join on a voluntary basis. A decision was passed on the formation of the first sectoral coordination centres: the China-CEEC Tourism Promotion Agency[vi] in Budapest and the China-CEEC Investment Promotion Agency in Warsaw and Beijing.[vii]

At the Summit held in Suzhou in November 2015 the order of the institutional operation of the “16 + 1 Cooperation” was ultimately consolidated: the Chinese party and the national coordinators made preliminary preparations for the summit meeting (National Coordinators’ Meetings), and at the summit the parties agreed on the next venue of the meeting, discussed the objectives of the community and examined the realisation of the earlier plans.[viii] The “Suzhou guidelines” highlighted the further strengthening of the relationship between the “16+1 Cooperation” and the EU, identifying the China-EU Connectivity Platform besides the forms of cooperation mentioned previously. It was confirmed that the Chinese party handles the “16+1 Cooperation” as a mechanism organically related to the grandiose One Belt One Road plan of the mechanism; therefore, the Memorandum of Understanding signed between Hungary and China received special attention. In order to strengthen the commercial relations, the parties agreed to develop the railway connection between the two regions – to the model of the goods transport that already operated between Lodz and Chengdu cities. The customs clearing cooperation mechanism started working among Greece, Macedonia, Serbia and Hungary, in order to transport the goods from the port of Piraeus to the EU as smoothly as possible (China-Europe Land-Sea Express Line). The parties supported the plan for the cooperation of the Adriatic-, the Balti- and the Black-sea harbours and related industrial parks as well as their connection with economic corridors (Adriatic-Baltic-Black Sea Seaport Cooperation). The common platform called “Medium-term Agenda was adopted in order to finally consolidate the fields of cooperation: economy; connection and infrastructure; industry and the processing industry; finance; agriculture and sylviculture; science, research and environmental protection; culture, education, youth exchange, sports and tourism; healthcare and finally local cooperation.[ix]

The most important result of the Riga Summit organised in November 2016 was the foundation of the China-CEEC Investment Cooperation Fund.[x] The parties agreed to harmonise their infrastructure developments with the routes of the Trans-European Transport Network (TEN-T). In Riga the China-CEEC Secretariat on Logistics Cooperation was established and provided a virtual platform (www.ceec-china-logistics.org). The parties support the second large-scale infrastructure project of the mechanism, i.e. the modernisation of the Belgrade-Bar railway section.

The Description of the “16 + 1 Cooperation”

Based upon the experience of recent years, the “16 + 1 Cooperation” has numerous interesting features that distinguish it from other international institutions.

The first important feature of the “16 + 1 Cooperation” is that it is operated according to consciously loose institutionalisation.[xi] The involvement in the work of the organs of the mechanism is decided upon by each country on a voluntary basis. The mechanism has three levels: 1.) the level of heads of state; 2.) the level related to the key areas of expert discussions and cooperation (e.g. infrastructure development, agriculture); 3.) and finally, the most important level is the Secretariat, i.e. the central organ operating in Beijing and continuously fostering relations with the embassies of the relevant countries (they supervise the completion of the initiatives and commitments, convene the meetings and elaborate topic proposals).[xii] This loose institutionalisation corresponds to the different interests and motivations of the participating countries and promotes the concentration on the fields improving cooperation. Furthermore, this essentially makes the mechanism more acceptable for the EU and reduces the critical voices according to which China aims to set up its own international organisation within the EU. Interestingly, although the loose institutionalisation tends to be a characteristic feature of weak organisations, it obviously has a benefit under the rapidly changing conditions of the past decade: it makes the mechanism more flexible and result-oriented.

Another characteristic feature of the cooperation is the conscious recognition of the heterogeneity of the countries involved. Concerning the 16 CEE countries, 11 are state members of the European Union (EU) and 12 belong to the North Atlantic Treaty Organisation (NATO). The 16 countries have most different kinds of experience in terms of geography and history, and their one and only common historical factor is that they all used to be parts of the socialist block. Heterogeneity should be accepted with respect to the functionality of the “16 + 1 Cooperation”. However, by not enforcing the member states to compulsory homogeneity, it also increases efficiency to a certain extent. Undoubtedly, however, China is suggested to divide the 16 countries as an internal block in the near future, keeping the existing institutional frames (Balti countries, West and East Balkan, Visegrad countries), for the purpose of more successful cooperation.

Third, the “16 + 1 Cooperation” has become a common regional forum that necessarily brings the Central and Eastern European countries together. Up to present, all this has not reduced the Western European focus of the region traditionally, but in the longer term it is expected to strengthen a regional identity. Considering the political processes within Europe, its significance is not to be dismissed lightly in the long term.

The fourth feature is that although the cooperation covers nearly all fields of the relations, it is economy that still dominates. The main aspect of economic relations is financial cooperation (preferential loans or investments) and infrastructure support such as the Budapest-Belgrade railway. The organs and forums of the economic cooperation tend to be the most active and significant, including the “China–Central and Eastern Europe Business Council” and the “China-Central and Eastern Europe Business Forum”. The focus of the relation on the economic cooperation enhances the result-orientedness of the two organisations. This character of the “16 + 1 cooperation” clearly reflects the pragmatic, less value-based feature of the Chinese foreign policy, which at the same time is also suitable to increase the acceptability of the mechanism within the EU.

The fifth feature is the scheduled framework of the “16 + 1 Cooperation”, which was already clear at the time of foundation (e.g. “Twelve Measures”) but took an institutional form upon the Suzhou Summit, supplemented with the middle-term schedule of the mechanism. The specification of the purposes and the follow-up of the results further increases the typically success-oriented feature of the platform.

The sixth feature is that the engine of cooperation is China, while the Central and Eastern European countries are unable to take a uniform standpoint. This asymmetry can partly be observed in the establishment and operation of institutions.  China consciously pays attention to the interests of smaller participating states, however, in practice the competition to win the Chinese investments is still heavy among the states of the region, which is unlikely to change in the near future.

The seventh characteristic feature is that the “16 + 1 Cooperation” is definitely not contrary to the European Union; what is even more, it harmonises the relevant acts and decrees”.[xiii] The “16 + 1 Cooperation” has to comply with the Union legislation and strategic documents (China-EU 2020 Strategic Cooperation). It is essential to highlight this in order to avoid criticism to the mechanism. Nevertheless, the “16 + 1 Cooperation” is not totally free from political objectives and is more than just an international economic institution.

Finally, thanks to the “16 + 1 Cooperation”, the cooperation between Central and Eastern Europe and China harmonises with China’s other new mechanisms and cooperation coordinating the state-level relations of China and other regions (e.g. Forum on China-Africa Cooperation), which suggests that the Chinese government builds its transregional institutions according to a certain model, presenting a basis for the operation of the One Belt One Road.[xiv]

Assessment of the “16 + 1 Cooperation”

According to certain Chinese opinions, the “16+1 Cooperation” is one of the most significant diplomatic result of China’s Europe policy, which can serve as a model for other regions or even the EU, too.[xv] Other experts point out that the cooperation has achieved considerable results in a relatively short time and has already entered a new developmental stage; while earlier the establishment of institutional frames took priority, by today the adding of substance has  become important.[xvi]

On the contrary, certain experts suppose that the different historical pasts and political situations of the sixteen countries questions the functioning of the cooperation.[xvii] Undoubtedly, the initial aim set at the time of forming the mechanism, in particular, the increasing of the trade between China and the CEE region to USD 100 billion, could not be achieved: China’s export reached 42.2 billion dollars in 2015, while its export from the 16 countries amounted to USD 14.1 billion.[xviii] The data clearly show that trade keeps to be rather asymmetrical and the efforts to enter the SMEs of Central and the Central and Eastern European countries have not been able to appear at the Chinese market effectively.[xix]

Another disappointment, primarily for the CEE countries, it that despite the “16+1 Cooperation” no considerable run-up can be observed in the Chinese investments.[xx] The lack of green field investments is primarily acute because their job creating ability makes them a most popular instrument in internal policy.[xxi]However, the “16+1 Cooperation” is still assessed positively by the governments of the CEE – despite the critical voices. This primarily can be thanked to the One Belt One Road project, which, according to the optimist opinions, is suitable for the region to break out of its semi-peripheral position within Europe by expanding commerce.[xxii]

Actually, the greatest risk threatening the “16+1 Cooperation” is coming from outside, from the direction of the EU. Although the cooperation is not deemed as a matter of priority (as opposed to the issues of trade, investments, human rights, etc.) in the EU-China relations, certain leading circles of the EU (and the governments of member states such as Germany) believe that the region needs no new channels outside the EU for the management of the relations with China. This guiding principle applies to both the member states and the five Balkan countries as member candidates. Within the EU, three concerns tend to arise with respect to the “16 + 1 Cooperation”.

According to the first concern, the common projects within the frames of the mechanism – primarily the infrastructure investments and their form of financing – are contrary to the legal provisions of the EU. According to the representatives of this standpoint, the projects are not transparent and violate the internal market rules of the EU (public procurement, environmental impact study, technical standards, etc.). The European Commission examines the high-priority project of the cooperation, i.e. the reconstruction of the Budapest-Belgrade railway right for these reasons. Second, the critics suppose that the mechanism fails to comply with the European principles and follow the model represented by the EU within the CEE region.[xxiii]Third, certain critical voices emphasize that China endeavours to drive a wedge within Europe and enforce the “divide and rule” principle with the mechanism.[xxiv] Certain extreme views deem the “16+1 Cooperation” as China’s Trojan horse.[xxv] All these critical remarks, even if they are sometimes exaggerated and partly result from the preservation of the CEE market, need to be considered for the further development of the “16 + 1 Cooperation”.

Conclusion

In recent years the “16 + 1 Cooperation” has considerably developed and become a transregional platform. The institution established can be considered a flexible and pragmatic mechanism that has largely improved the relations between China and the CEE region and shows a guideline to the operation of the relations of China and other regions under the One Belt one road. Thanks to this, it might even become a model of the cooperation between the EU and China in the longer term, especially if the USA and the EU keeps moving off from each other. However, a precondition for this is that the “16 + 1 Cooperation” gives an efficient answer to the numerous challenges piling up before it.

Notes

[i] “Full text of Chinese Premier’s speech at China-Central and Eastern European Countries Economic and Trade

Forum”, Xinhua, June 26, 2011.  http://news.xinhuanet.com/english2010/china/2011-06/26/c_13950035.htm(last download: 1 October 2017)

[ii] SIMURINA, Jurica: China’s Approach to the CEE-16, Europe China Research and Advice Network (ECRAN) Short Term Policy Brief 85. January 2014. http://eeas.europa.eu/archives/docs/china/docs/division_ecran/ecran_is107_paper_85_chinas_approach_to_the_cee-16_jurica_simurina_en.pdf (last download: 1 October 2017)

[iii] “China’s Twelve Measures for Promoting Friendly Cooperation with Central and Eastern European Countries”, Cooperation between China and Central and Eastern European Countries, January 26, 2015.  http://www.china-ceec.org/eng/zdogjhz_1/t1410595.htm (last download: 1 October 2017)

[iv] “The Bucharest Guidelines for Cooperation between China and Central and Eastern European Countries”, Cooperation between China and Central and Eastern European Countries 26 January, 2015. http://www.china-ceec.org/eng/zdogjhz_1/t1410594.htm (last download: 1 October 2017)

[v] “China, Hungary, Serbia Agree on Railway Project”, Cooperation between China and Central and Eastern European Countries 26 January, 2015

http://www.china-ceec.org/eng/ldrhw_1/2013bjlst/tpxw/t1411113.htm (last download: 2 October 2017)

[vi] “China – Central and Eastern Europe Tourism Promotion Agency”, Embassy of Hungary Beijing Magyarország Nagykövetsége Peking, 2017. https://peking.mfa.gov.hu/page/kina-koezep-kelet-europa-turisztikai-koordinacios-koezpont

[vii] “The Belgrade Guidelines for Cooperation between China and Central and Eastern European Countries”, Cooperation between China and Central and Eastern European Countries 26 January, 2015. http://www.china-ceec.org/eng/zdogjhz_1/t1410596.htm (last download: 2 October 2017)

[viii] “The Suzhou Guidelines for Cooperation between China and Central and Eastern European Countries”, Ministry of Foreign Affairs of the People’s Republic of China, November 24, 2015. http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1318039.shtml (last download: 2 October 2017)

[ix] “The Medium-Term Agenda for Cooperation between China and Central and Eastern European Countries”, Cooperation between China and Central and Eastern European Countries, 24 November 2015. (http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1318038.shtml (last download: 2 October 2017)

[x] “The Riga Guidelines for Cooperation between China and Central and Eastern European Countries”, The State Council of the People’s Republic of China, 6 November 2016. http://english.gov.cn/news/international_exchanges/2016/11/06/content_281475484363051.htm (last download: 2 October 2017)

[xi] KONG Tianping: The 16+1 Framework and Economic Relations Between China and the Central and Eastern European Countries, Council for European Studies, 14 December 2015. (KONG, 2015.)

[xii] LIU Zuokui: The Pragmatic Cooperation between China and CEE: Characteristics, Problems and Policy Suggestions Working Paper Series on European Studies of Institute of European Studies, Chinese Academy of Social Sciences, 7. (6), 2013. 5-6. http://ies.cass.cn/webpic/web/ies2/en/UploadFiles_8765/201311/2013111510002690.pdf (last download: 2 October 2017)

[xiii] “China’s Twelve Measures for Promoting Friendly Cooperation with Central and Eastern European Countries”, Cooperation between China and Central and Eastern European Countries, January 26, 2015.  http://www.china-ceec.org/eng/zdogjhz_1/t1410595.htm (last download: 1 October 2017)

[xiv] ESZTERHAI Viktor: A transzregionális együttműködés új modellje a változó nemzetközi rendben, geopolitika.hu, 28 September 2017. http://www.geopolitika.hu/hu/2017/09/28/a-transzregionalis-egyuttmukodes-uj-modellje-a-valtozo-nemzetkozi-rendben/#_edn25 (last download: 2 October 2017)

[xv] Kong, 2015.

[xvi] KUSAI Sándor: A New Look at Some Lessons of Prospects for the 16+1 Cooperation, In: Chen Xin (ed): How Hungary Perceives the Belt and Road Initiative and China-CEEC Cooperation, National Think Tank 2017 (1), China Social Sciences Press, 2017. 39-42.

[xvii] PAVLIĆEVIĆ, Dragan: China in Central and Eastern Europe: 4 Myths, The Diplomat, June 16, 2016. https://thediplomat.com/2016/06/china-in-central-and-eastern-europe-4-myths/  (last download: 2 October 2017); LIU Zuokui: The Pragmatic Cooperation between China and CEE: Characteristics, Problems and Policy Suggestions Working Paper Series on European Studies of Institute of European Studies, Chinese Academy of Social Sciences, 7. (6), 2013. 5-6.

 http://ies.cass.cn/webpic/web/ies2/en/UploadFiles_8765/201311/2013111510002690.pdf (last download: 2 October 2017)

[xviii] “Belt and Road Opportunities in Central and Eastern Europe” Hong Kong Trade Development Council, October 5, 2016. http://economists-pick-research.hktdc.com/business-news/article/Research-Articles/Belt-and-Road-Opportunities-in-Central-and-Eastern-Europe/rp/en/1/1X000000/1X0A7MSE.htm (last download: 2 October 2017)

[xix] KACZMARSKI, Marcin: China on Central-Eastern Europe: ‘16+1’ as seen from Beijing, Ośrodek Studiów Wschodnich, April 14, 2015. https://www.osw.waw.pl/en/publikacje/osw-commentary/2015-04-14/china-central-eastern-europe-161-seen-beijing (last download: 2 October 2017)

[xx]  TURCSANYI, Richard Q. : Obor’s Older Brother: Lessons Learned from the China-CEE 16+1 Platform, IAPS Dialogue: The Online Magazine of the Institute of Asia & Pacific Studies, July 19, 2017. https://iapsdialogue.org/2017/07/19/obors-elder-brother-lessons-learned-from-the-china-cee-161-platform/(last download: 2 October 2017)

[xxi] KRATZ, Agatha: “The best of both worlds? CEE’s place in China-Europe economic relations” In: KRATZ, Agatha – STANZEL, Angela: “China’s Investment in Influence: the Future of 16+1 Cooperation”, The European Council on Foreign Relations, China Analysis, December 2016. 8. http://www.ecfr.eu/page/-/China_Analysis_Sixteen_Plus_One.pdf (last download: 2 October 2017)

[xxii] ESZTERHAI, Viktor: The Central and Eastern European countries’ attitude toward the OBOR initiative: hopes and reality, In: Chen Xin (ed.): How Hungary Perceives Belt & Road Initiative and China-CEEC Cooperation, China Social Sciences Press, Beijing, 2017.

[xxiii] GUY de Jonquières: “The European Union’s China Policy: Priorities and Strategies for the New Commission”, European Centre For International Political Economy, Policy Brief 3. 2015. 2-3.

http://ecipe.org//app/uploads/2015/04/The-European-Union%E2%80%99s-China-Policy.pdf (last download: 2 October 2017)

[xxiv] HEILMANN, Sebastian – MORITZ, Rudolf – HUOTARI, Mikko – BUCKOW, Johannes “China’s Shadow Foreign Policy: Parallel Structures Challenge the Established International Order,” Mercator Institute of China Studies, China Monitor 18, 28 October, 2014.http://www.merics.org/fileadmin/user_upload/downloads/China-Monitor/China_Monitor_No_18_en.pdf  (last download: 2 October 2017) BURNAY, Matthieu – CARBONNET, Adrien – RAUBE, Kolja – WOUTERS, Jan: „China’s foreign policy and external relations”, European Parliament’s Committee on Foreign Affairs, July 2015. http://www.europarl.europa.eu/RegData/etudes/STUD/2015/549057/EXPO_STU(2015)549057_EN.pdf (last download: 2 October 2017); European Parliament resolution of 16 December 2015 on EU-China relations.

[xxv] TURCSÁNYI, Richard: Central and Eastern Europe’s courtship with China: Trojan horse within the EU?, European Institute for Asian Studies, January 2014.

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