EU-China Briefing - 19 October 2020
YOUR WEEKLY SHOT OF EU-CHINA NEWS
BY FLAVIAN BERNEAGĂ AND GRZEGORZ STEC
1. Of Sanctions and Export Controls - EU Gets Tougher on China
The EU has been moving to target China with export controls on a variety of sensitive technologies and sanctions on imported aluminum and optical-fiber cables.
► On October 15, reports emerged stating that the EU is expected to publish a plan that would tighten export control regulation for espionage and surveillance technology.;
► Just a few days before, the EU also moved to impose anti-dumping duties on imports of aluminum from China;
► Furthermore, late last month the European Commission also started an investigation into Chinese exporters of optical-fiber cables.
Export Controls
According to reporting, the restrictions on tech exports in the new plan would primarily impact “dual use” technologies, such as hacking software and facial recognition systems.
The new regulation would allegedly allow companies to sell such sensitive tech only if they have a license to sell such products abroad, while member states would be required to maintain full transparency on the licenses they give out.
This also implies the EU will establish a list of technologies that fall under the jurisdiction of the law, applying extra pressure on member state governments to report their export data (an action they often did not undertake in the past, or did so without accuracy).
However, it appears under this regulation, the legal power to stop exports will reside with member states, which may allow untransparent governments to cover up improper exports done by companies under their tutelage.
This topic of bringing together tech, trade, and human rights issues has been ping-ponging between institutions for some years now, but the German presidency of the Council gave it impetus, arguing it wants the legislative file to be closed by the end of Berlin’s time in the rotating chair, in December.
A leading MEP working on the file, Markéta Gregorová, said the EU needs to “make sure that authoritarian regimes such as China or Russia are not simply given the newest technology for our short term profit. They have [been] shown to copy, steal and use this technology against us and other democratic countries”.
The concern with sensitive technology is also likely linked to protest clampdowns in Hong Kong and political surveillance in Xinjiang, Tibet, and Inner Mongolia. Recall that in July, bans on exporting sensitive tech were a core component of the EU’s response to the Hong Kong national security law.
On October 17, China took similar steps, as the National People’s Congress Standing Committee passed a law that restricts exports of sensitive products and technologies that could have repercussions on national security. This allows it to provide a response to US decisions on WeChat, Huawei, or Bytedance.
Aluminum Sanctions
On October 13, the EU announced that it will be placing provisional duties on Chinese exporters accused of selling aluminum at overly low prices.
The dumping complaint was made in February by the European Aluminum consortium and resulted in duties ranging from 30.4% to 48%.
The duties will apply at least until April 2021, when the investigation will be finalized. After that, the EU could apply duties for the upcoming 5 years.
We know three of the companies affected: Guangdong Haomei New Materials Co Ltd (30.4% tariff), Guangdong King Metal Light Alloy Technology Co Ltd (30.4% tariff), and Press Metal International Ltd (38.2%). In addition to these, other unspecified companies are also targeted.
The New Optic 5G Battle
In a low-key move in late September, the European Commission began an investigation into a potential case of dumping by Chinese exporters of core broadband gear.
Specifically, the EU is looking into whether or not the low price of optical-fiber cables imported from China pose a threat to competition within the EU optical-fibre market, which is set to grow amid 5G rollouts. The investigation stems from an anti-dumping complaint raised by Europacable, an umbrella association for European producers including Prysmian, Nexans, and Leoni.
European optic-fibre cable producers started being suspicious when they saw a 150% increase in optic-fibre imports from China between 2016 and 2019. This allowed Chinese companies to muster 15% of the market.
The optic-fiber cable market is by no means small, amounting to €1 billion per year. With the coming of 5G technology, this market is also poised to go up.
The EU now has 8 months to investigate the matter, after which it will decide if it will impose anti-dumping duties. If it wants to apply “definitive” levies (which last for 5 years), the investigation will take a minimum of 14 months.
TAKEAWAYS
► SHIELDS UP!
What we can derive from these three cases is that the EU is moving ahead on putting up defences against the uneven playing field with China. These measures are in line with other recent decisions, such as the White Paper on foreign subsidies (which seeks to tackle distortions to critical sectors of the common market) or the tariffs slapped on indirect subsidies (which punish third countries going through intermediaries to deploy subsidies in the EU single market).
On the other hand, limits on tech exports have a political nuance as well. They may pertain more to the EU’s decision to pursue Strategic Autonomy by protecting its competitiveness in the tech sector (by retaining an edge in tech) and forming a move to protect EU values also abroad.
READ MORE
Europe to crack down on surveillance software exports, Politico (Laurens Cerulus), Oct 15
EU imposes tariffs on aluminium products from China, Reuters, Oct 13
EU Considers Tariffs in Probe of China’s 5G Telecom Gear, Bloomberg (Jonathan Stearns), Oct 14
2. MEPs Take Huawei Head On
Last week, a fresh batch of bad signals were sent Huawei’s way from the European Parliament and Slovakia, though the company’s presence in the German 5G market could still be on the table.
► On October 14, MEPs from 5 political groups signed a letter arguing that Huawei’s proximity to the Chinese government makes it a ‘high risk’ vendor;
► Adjacent to Huawei, Slovakia announced this week that it will join other Central and Eastern European counterparts and sign a 5G joint declaration with the US;
► In Germany, the 5G debate takes a new turn potentially leaving more room for Huawei.
EP Boards the 5G ‘High Risk’ Debate Train
The letter, signed by 41 MEPs, argues there is “no question that Huawei and ZTE are ‘high-risk’ vendors, whose technology in Europe’s 5G networks would constitute a security threat”.
The letter came ahead of the Transport, Telecommunications, and Energy Council (TTE) on October 15, which brought together the EU27 ministers on these respective files.
Some of the 41 signatories include prominent MEPs, such as Reinhard Bütikofer, Nathalie Loiseau, Radosław Sikorski, and Miriam Lexmann, and it addresses the Commissioners for Competition, Internal Market, and Trade, respectively: Margrethe Vestager, Thierry Breton, and Valdis Dombrovskis.
The letter also decried that Huawei enjoys full and free operation in Europe, sometimes even benefiting from EU subsidies, urging the Commissioners to allow “no European funding [...] to cover the use of technology from 'high-risk' telecom equipment vendors”.
The MEPs argue it is paradoxical to China’s telecom market, where European providers such as Nokia and Ericsson have been left on the sidelines with limited market share. Recall our briefing in April, where we showed you how for example only one European company (Ericsson) received a stake in a major 5G tender of China Mobile - the largest Chinese telecom provider - winning 11.4% of it.
The MEP’s also highlighted that Huawei is subjected to the laws of “China’s undemocratic authoritarian regime” that seek “to control its own population and to spy on Western governments, companies and citizens”.
The letter ends by recommending that the Commission intensify assessments of high-risk vendors, balance the uneven playing field by approving the International Procurement Instrument, and push forward with policies restricting market access to companies that have received substantial state subsidies from their home countries.
Bratislava Has Joined the Chat
On October 14, the Slovak government announced it will sign a joint declaration with the US on the security of 5G networks.
The Slovak Ministry of Foreign Affairs indicated, nonetheless, that the joint declaration is based on security advice provided by the European Commission in the 5G Toolbox.
Slovakia thus joins other Central and Eastern European countries that have signed similar documents with the US: Czech Republic, Estonia, Latvia, Lithuania, Poland, Romania, and Slovenia. It also comes just one week after Huawei was barred from sponsoring a summit on defence held in Bratislava.
Even though the document is non-binding, it offers the Slovak government 4 screening criterias for high-risk providers: lack of independent judicial review for a government control of supplier; ownership transparency; respect for IP rights; and ethical corporate behaviour. These seem to be at least partially aimed at Chinese providers.
Finally, the declaration urges a rigorous screening of FDI in critical infrastructure, which came about despite Slovakia’s sluggish implementation of EU FDI investment screening standards.
German Update
In Germany, the process of evaluation of the trustworthiness of 5G equipment providers that we informed you about in a recent briefing has encountered a bump in the road, as Ministries and Chancellery now clash over key details of the assessment procedure.
More specifically, the procedure to determine whether a provider should be classified as “high-risk” will involve the Chancellery and 3 German ministries—of Economy, Interior and Foreign relations—following an initial assessment by the Federal Office for Information Security.
Chancellor Angela Merkel (CDU), Minister of Economy Peter Altmaier (CDU), and Minister of Interior Horst Seehofer (CSU) support a mechanism that would be based on a joint assessment and would require joint disapproval by the Chancellery and the ministries to exclude a provider (unlikely given anti-Huawei-exclusion comments by Merkel and Altmaier).
However, Foreign Minister Heiko Maas (SPD) is allegedly against such a solution and has demanded the procedure require unanimous, active approval by all the ministries involved (hence, granting him a de facto veto power) to classify a 5G vendor as safe.
As a result of this difference in opinion, Germany’s 5G law will be further delayed, meaning it is not likely to be released until the first half of 2021. In the absence of a security check, Huawei’s operations in Germany currently continue at the same pace as before, bolstering the company’s position through facts “on the ground”.
TAKEAWAYS
► MAKING THE CASE FOR THE IPI
Sentiments on Huawei in Europe (save for the German Chancellery) seem to be clear, as we have shown in previous weeks. This week, we would like to draw attention to one aspect of the MEPs’ letter—the International Procurement Instrument—which could be the next big thing after the FDI investment screening mechanism.
Here’s what we know and how it would work!
The Procurement Instrument would serve to even out imbalances in procurement, with particularly important effects on Chinese investments into Europe. It was first put to debate in 2012, when the EU realized it provided much more opportunities in public procurement (€352 billion) to countries as part of the Government Procurement Agreement (GPA) than other large economies, such as the US (€178 billion), Japan (€27 billion), not mentioning the relatively closed China. However, the Instrument was left to gather dust for many years, until 2019, when it gained salience once again, in the context of the uneven playing field with China.
How would it work?
Not unlike the instrument on foreign subsidies, the Procurement Instrument allows the Commission to initiate a public investigation if a third country is believed to have discriminated against an EU company in a foreign procurement market. If discrimination is indeed proved, the Commission can invite the country in question to consultations on the level of openness of its procurement market. Based on the outcome of the consultations, the Commission can then discuss with member states and apply price penalties to bids from the targeted country. The instrument is currently still in the works.
If you’re interested in more details about this topic, we strongly suggest a report by MEP Daniel Caspary - 09 2020 | International Trade - INTA | A new EU International Procurement Instrument (IPI)
READ MORE
Letter to EU telecom and trade ministers and to European Commissioners Thierry Breton, Margrethe Vestager and Valdis Dombrovskis, Reinhard Bütikofer’s Website, Oct 14
Vetorecht: Außenminister Maas blockiert 5G-Einigung zu Huawei, Golem.de (Achim Sawall), Oct 16
A NEW EU INTERNATIONAL PROCUREMENT INSTRUMENT (IPI), European Parliament (Daniel Caspary)
3. The Second Wave Disrupts EU Leaders’ Meetings - Including on China
An upcoming EU27 leaders’ summit on China that was expected to be held in Berlin has been cancelled amid a growing second wave of COVID-19 across Europe.
► The summit was planned for mid-November, but no additional information has been provided on when a replacement meeting will take place;
► The spread of the virus has also reached the European Council’s upper echelons, prompting a debate on whether in-person summits are feasible;
► To streamline COVID-19 tracking across Europe, the EU also adopted a common criteria on travel, which will help member states make decisions on travel based on the epidemiological situation in each member state.
Summit Postponed
On October 16, Angela Merkel announced the EU27 “will have to do without” a summit focused on EU-China relations, originally scheduled for November 16.
Recall that the summit was planned in a special European Council on October 1-2, when leaders agreed to meet so that they could comprise a coherent common response to China.
Such a meeting is absolutely essential for the EU to fix remaining internal disagreements before a summit between EU27 and Xi Jinping. Recall that this summit is expected to take place in Brussels in 2021, although- an exact date is yet to be determined.
April Deja Vu?
With some EU27 heads having possibly entered contact with individuals carrying the virus, the format of European Council summits could switch back to videoconference, as it was in April.
On October 16, Charles Michel said the leaders will “decide on the wisest way to proceed and organize our meetings to ensure that the European institutions can function but guarantee as far as possible everyone’s safety”.
His statement came after a European Council on October 15-16, which focused primarily on Brexit negotiations, the EU’s 2050 pledge for carbon neutrality, and external relations with Africa, Belarus, and Turkey (China was not mentioned).
Three EU leaders were directly affected by COVID exposure:
President Ursula von der Leyen entered self-isolation just minutes before a briefing on Brexit
Finnish PM Sanna Marin entered self-isolation on the 2nd day of the summit, after coming into contact with an infected Finnish MP ahead of the Summit
Polish PM Mateusz Morawiecki did not come to Brussels at all. He remained in Warsaw following news of infection risk.
The principle of sending European Councils back to a remote basis is fairly grounded. The effects of a super spreader at a European Council summit could endanger the health of all EU leaders at a time when leadership is most needed, both in the capitals and in Brussels.
Common Travel Criteria
Notably in the context of virus risks, on October 13, the Council of the EU adopted a common criteria on travel measures, to minimize disrupting freedom of travel within the Schengen zone while maintaining safety from a health perspective.
The criteria is split into three categories: testing rate; testing positivity rate; and 14-day cumulative cases. This data will be fed from national governments to the European Centre for Disease Prevention and Control (ECDC), which will then compile a weekly colour-coded map that will lay out risk levels in each EU region.
Areas will be split into green, orange, and red. It will be forbidden to restrict travel between green areas. For travel between orange and red regions, entry will not be restricted, but authorities will have the power to ask travelers to self-isolate or get tested upon arrival. Red will indicates regions with more than 50 new infections per 100,000 incidents and with test positivity over 4% in the previous 14 days.
Here you can see the colour-coded map, region by region.
TAKEAWAYS
► VIRTUAL CHALLENGE
The cancellation of the leaders’ summit on China is unfortunate. The last European Council saw the EU27 gain traction on “speaking with one voice” and another summit in such a short interval would have helped further establish that cohesion. Of course, outlooks on China do not change simply because leaders stay at home, but at least one other summit is necessary before they meet with Xi.
Outside of China talk, the wider problem here is that online communication doesn't quite “cut it”. The whole purpose of a European Council is to have the most powerful women and men in Europe sitting down and sorting out what is and is not an area of compromise. Sometimes, that compromise is not achieved at the roundtable, but during lunch or a coffee break. The irreplaceable trust element of seeing one another face-to-face is diluted through a videoconference, which both makes coordination more difficult and adds significant cybersecurity challenges.
READ MORE
Merkel: EU summit on China called off as virus resurges, The Hamilton Spectator, Oct 16
EU to review summits after coronavirus closes in on Council, Politico (David Herszenhorn), Oct 16
COVID-19: travel and transport, European Council
4. Xi’s Southern Tour - Opening Up or Self-Reliance?
On October 12, Xi Jinping started a tour of Guangdong province in southern China, reminiscent of a similar tour by Deng Xiaoping in 1992.
► The high point of the tour was his visit in Shenzhen, marking 40 years since the special economic zone set up there turned Shenzhen from a fishing village into a major global tech hub;
► Xi also met with leaders of the Greater Bay Area, showcasing his will to further expand the project and incorporate the poorer areas of Guangdong province;
► In the wider perspective, Xi’s visits and speeches align with China’s shift towards relying less on external tech and more on domestic production and demand.
Invoking Deng
38 years after Deng Xiaoping undertook a tour of southern China that assured the stabilization of economic reform and opening up, Xi has undertaken a similar visit.
Xi first visited Shantou and Chaozhou in eastern Guangdong, moving afterwards to Shenzhen to celebrate the 40th anniversary of the Shenzhen Special Economic Zone.
In his Shenzhen speech, Xi said China will continue to open up to the global market (though the ‘dual circulation economy’ focuses on growing domestic demand) and he tasked Shenzhen to “plan innovation chains around its industries and plan its industries around innovation chains”.
Among other deliverables, he said he expects Shenzhen to bring about “another miracle” by delivering sustainable growth, pursuing capital market reform, and attracting more foreign and domestic talent.
To accomplish this, Shenzhen will be given greater autonomy to implement reforms without the need for approval from Beijing, with the hope that the beneficial final results could be implemented in other parts of China.
Specifically, the new regulation gives the city decision-making powers on land use, hiring global talent, and developing the digital yuan (which we told you about in April) among other things. However, the reforms fall short of the expectation to allow the free flow of information or money.
Greater Bay Area Context
Xi also met with local leaders from poorer cities in the Greater Bay Area (GBA), thus sending a message that the eastern extremities of the province are also part of the development plan.
FYI: the GBA is a project launched in February 2019 meant to connect the most essential economic cities in Guangdong (Guangzhou, Shenzhen, Foshan, Dongguan, and others) with Hong Kong and Macao, thus creating a megacity and an economic powerhouse connected to all parts of the region.
To put this in perspective, the GBA is currently home to 70 million people, 12% of China’s GDP, and 3 of the world’s top 10 container ports. Slightly oversimplifying, under GBA plans, Hong Kong would become a green bond market hub, Macau would become an entertainment hub, Guangzhou a transport hub, and Shenzhen a hi-tech hub.
The plans would also mean that Hong Kong becomes more integrated with Shenzhen, as the latter’s economic boost has come to challenge the former’s status as a financial hub. The spurring of the digital currency in Shenzhen is also meant to trigger more competition from Hong Kong to retain its financial status.
Shenzhen’s enhanced powers may also be meant to portray how traditional governance on the mainland results in better outcomes than the governance of “One Country, Two Systems” used in Hong Kong, at the same time attracting more young Hong Kongers to work on the Mainland.
It’s All Part of the Plan
In his speeches, Xi made sure to mention “drastic changes in the world”, signalling that increased powers for Shenzhen are part of the wider plan to increase the resilience of the Chinese economy and reduce dependence on external providers.
The focus on innovation and hi-tech mirrors Beijing’s worries about US tech protectionism. The new tech export controls planned by the EU, which we covered in a previous news bite, can further add to Beijing’s uneasiness and its intent to increase domestic capabilities.
Though he did not explicitly mention US sanctions, Xi decried “protectionism, unilateralism, economic downturn and a drastic shrinking of international trade and investment”.
This came just weeks before the Fifth Plenum, which will see the CCP discuss the economic strategy of the 14th Five Year Plan, whose focus is expected to be on spurring domestic demand and the ‘dual circulation economy’.
When talking of the wider context, we should also note Xi’s message to the navy in Shantou to “raise training standards and combat ability” and focus their “minds and energy on preparing to go to war”.
The statement was understood to have an implied connotation for Taiwan, which became targeted by even more fierce rhetoric from the Mainland after reports that Taiwan was considering purchasing weapons from the US.
TAKEAWAYS
► NOT YOUR TYPICAL SOUTHERN TOUR
There were many non-coincidental connotations to Deng’s Southern Trip in Xi’s Tour (including Xi presenting flowers in front of Deng’s statue). Deng’s trip put economic reform and opening up back on track in 1992 after international uproar over his decision to send tanks to Tiananmen Square in 1989. However, Xi’s trip may be more about self-reliance and closing ranks than the earlier Southern Tour.
First and foremost, Xi told the crowd in Shenzhen that the city must spearhead China’s process of becoming more self-reliant (i.e., less dependent on external actors). This is understandable, given the US’s sanctions and the EU’s plans to control tech exports to China. Xi’s comments strengthen the expectation that ‘dual circulation’ will be at the core of the next Five Year Plan.
Secondly, regarding the Greater Bay Area, the plan itself is enormous and the fact that poorer regions also stand to benefit is commendable. That being said, the GBA also serves the goal of ‘Mainland-izing’ Hong Kong and closing ranks around it. Closer economic integration will bring the benefit of enhanced ease of doing business, but it will also result in political alignment and a further dilution of One Country, Two Systems (to that end, Carrie Lam decided to postpone a policy address in Hong Kong on October 14 so that she could join Xi in Shenzhen).
Finally, we suggest keeping an eye on the Mainland’s actions on Taiwan. Threats have become more obvious, potentially signifying that a messy election in the US could be enough for China to make a move. A “move” does not necessarily mean an invasion of Taiwan itself (that would likely be too risky), but perhaps of some smaller islands under Taipei’s territory, which could lead to a Fourth Taiwan Strait Crisis.
READ MORE
Chinese President Xi Jinping starts southern tour with call to have confidence in future, SCMP (William Zheng), Oct 12
Shenzhen granted new role in ‘one country, two systems’, Global Times (Li Xuanmin, Chen Qingqing, Bai Yunyi), Oct 14
China showers policy incentives on Shenzhen as Xi Jinping pushes to create model city, SCMP (Zhou Xin, Sidney Leng), Oct 12
5. Romania Chooses US Over China on Major Energy Project: A CEE Case Study
On October 9, the Romanian government signed an accord with the US which includes an investment from Washington to build and recondition the Cernavodă Nuclear Power Plant.
► Initially, the investment was supposed to be done through a Chinese state-owned enterprise, but the deal fell through in June 2020;
► China’s missed opportunity on a flagship project highlights the downward trajectory of Sino-Romanian relations;
► It comes in the context of the wider fallout trend across the CEE signaling China’s dwindling status in a region.
All You Need to Know About Cernavodă
The Cernavodă Nuclear Power Plant is majority-owned (82.4%) by Nuclearelectrica, a Romanian SOE. It currently uses only 2 of its 5 available reactors (generating 20% of Romania’s energy production). The story of this project shows the challenging position of China in CEE.
In 2009, a joint venture (involving RWE, GDF Suez, ENEL, CEZ, ArcelorMittal, and Iberdrola) was set up to build the other 3 reactors, but all partners gradually left the deal within 3 years.
At the 16+1 summit in 2013, the Romanian government signed an intention letter with China General Nuclear Power (CGN) to develop 2 other units for an estimated cost of $8 billion. CGN won the procurement tender as the sole competitor; it was the only company interested.
The negotiations did not go smoothly. Between the signing of a memorandum (2015) and the setting up of the joint venture (2019), 3 factors contributed to the stalling of the negotiation process:
Domestic Politics: Between 2013 and 2020, Romania had 6 prime ministers and 9 governments, making it impossible to streamline a single negotiation strategy with CGN.
CGN’s Position: CGN wanted a promise that, if the market price dropped under a determined threshold, Bucharest would have to pay the difference. The Romanian government did not agree.
External Pressure: Romania was further disincentivized to push forward with negotiations by EU regulations on state subsidies, as well as by tensions between Washington and Beijing.
In November 2019, a new centre-right government had less tolerance for state subsidies and sought better relations with Washington. As a result, the deal with CGN was dropped in June 2020.
On October 16, Romanian Energy Minister Virgil Popescu met with US counterpart Dan Brouillette and Exim Bank President Kimberley Reed to sign a memorandum pledging $8 billion in US investments towards the building of Reactors 3 and 4 and the reconditioning of Reactor 1.
Popescu was not the only Minister visiting Washington last week. According to US Ambassador to Romania Adrian Zuckerman, the Romanian Defence Minister Nicolae Ciucă was also meeting with his US counterpart Mark Esper, to sign a bilateral agreement on security cooperation until 2030 and Romanian Minister of Foreign Affairs Bogdan Aurescu will be visiting Washington next Monday.
Transatlantic > The New Silk Road
In general, in the past years Romania has taken steps showing that it values ties with Washington much more than those with Beijing.
From the get-go of the 16+1 (now 17+1), Romania did not always display interest in the format, either. To that end, in 2015, 2017, and 2018, the Romanian side did not consider the format important enough to send the Prime Minister.
In August 2019, Romania and the US signed a memorandum of understanding on 5G technologies. The document did not name Huawei, but Romanian President Klaus Iohannis said at the time that it will help clarify criteria on transparency and compatibility with the rule of law.
Furthermore, it should be noted that Romania has a 20-year old strategic partnership with the US that has helped it enter NATO and build a US military base and missile-defence shield on Romanian soil with US support.
The Wider CEE Context
Bucharest’s skepticism on China is proof of the wider belief in CEE that, given unsatisfactory outcomes of engagement with China in recent years, it is sensible to sacrifice relations with Beijing for other gains, e.g., vis-a-vis the US.
This has partially resulted from disillusionment with China (as its infrastructure proposals often are unattractive for the CEE countries or clash with EU norms). It has also resulted from US pressure which, though it began late, has focused steadily since 2018 on distancing CEE from Beijing.
On 5G too, CEE countries (Czech Republic, Estonia, Latvia, Lithuania, Poland, Romania, Slovenia, Slovakia) signed, one after another, joint declarations or memorandums of understanding with the US. Similarly, Mike Pompeo relied heavily on partners in CEE to garner support for the US agenda captured in his speech on “Communist China and the Free World’s Future”.
Further proof of this estrangement could be seen in the visit of the Czech Senate leader to Taiwan, in Estonia’s refusal of Chinese cash for an infrastructure project or Slovakia’s anti-Huawei rhetoric.
Similarly, we should note the US’s involvement in the Three Seas Initiative, which seeks to increase connectivity within the CEE region. It is particularly noteworthy as a summit of the Three Seas Initiative is taking place today October 19th, in Estonia. For more details on the Initiative, we recommend a report by the Polish Economic Institute among the authors of which you can find our recent podcast guest, Jakub Jakóbowski.
TAKEAWAYS
► THE TWILIGHT OF 17+1?
The case study of Cernavodă can serve as an example of a wider trend in relations with China across the CEE region. After initial interest in the 16+1 initiative and the willingness to explore the possibility of attracting investment inflow from China, many CEE countries, like Romania, have found that memoranda signed and visits made to both Beijing and 16+1 summits have not translated into the economic results they had hoped for. In a time of increasing rivalry between the US and China, Sino-European tensions, and the intent to secure US support amid growing Russian activity, the CEE countries have been open to sacrificing ties with Beijing for other purposes.
In this backdrop, we start seeing the diminishment (though not the dissolution) of the 17+1. As of now, the next summit remains unscheduled. In a world where the EU-China Summit, European Councils, and the UN General Assembly have been turned into videoconferences, this silence about the China-CEE summit is note-worthy.
Does this mean that the 17+1 is dead? Not really. Its umbrella format still allows local level projects (i.e., between cities or regions) to operate, but it is unlikely we will see CEE leaders as excited about China as they were in 2012-2013.
READ MORE
Romania & US to sign €6.8bn agreement for Cernavoda nuclear plant, Emerging Europe, Oct 14
Ambasadorul Adrian Zuckerman la Forumul Institutului Aspen de la București, US Embassy in Romania, Oct 8
Building closer connections, Polish Economic Institute, Aug 2020
Central and Eastern Europe and Joint European China Policy: Threat or Opportunity?, MERICS (Grzegorz Stec), Oct 1