1. SIMPLE FORMULA: The “16+1”makes —1
BSSB.BE jamestown.org 25/02/2019
* “We all live in a house on fire, no fire department to call; no way out, just the upstairs window to look out of while the fire burns the house down with us trapped, locked in it.” ― Tennessee Williams
The China—Central and Eastern European Countries Cooperation Initiative (China—CEEC), organized in 2012, is an ambitious program intended to facilitate economic, technological, and cultural exchanges between the PRC and partner nations in Europe. The program is also frequently referred to as the “16+1” Initiative, in reference to the sixteen European countries who have joined the program.
Poland was one of the initiators, and a prospective leader, in the 16+1 Initiative: as a regional power and participant in multiple regional initiatives, as well as an important hub in the transportation corridors between China and Europe, Poland seemed to be well positioned to become a major partner for China.
Additionally, Poland is a country with a rapidly-growing market economy, which has displayed openness to Chinese economic activities—to include a significant presence for the Chinese telecommunications company Huawei (China Brief, February 1; Sinopsis, February 2).
- These factors have all made Poland a key partner for China in the 16+1 Initiative. However, the progress of bilateral cooperation within the China-CEEC framework has been slow and ineffective. Boosting economic cooperation is one of the key goals of the 16+1 Initiative, but the program’s declarations have not yet translated into tangible benefits for Poland and other CEEC countries.
- The 16+1 Budapest summit in November 2017, and a subsequent summit in Sofia in July 2018, have not offered significant practical solutions and viable opportunities for member countries. In addition, the ripples of tension between Beijing and Washington have also been felt in the Central and East European (CEE) region, as the White House has pressed states to choose sides in the conflict.
- The Polish government has decided to align its foreign policy with the United States at the expense of ties with China—which may create serious impediments for the development of the 16+1 Initiative.
Poland Distances Itself from the “16+1”
Polish officials first began to signal disappointment with the 16+1 program in autumn 2017. Following the 16+1 Budapest summit in November 2017, then-Prime Minister Beata Szydło highlighted positive opportunities within the program, but she also admitted that China is “a demanding partner” (Polskie Radio, November 27 2017).
In January 2018, Prime Minister Mateusz Morawiecki expressed his dissatisfaction with Poland’s trade deficit with China, and praised U.S. President Trump for his contrasting “free and fair trade approach” (Forsal.pl, January 28 2018). In July 2018, Morawiecki chose to attend a gathering in Czestochowa organized by the influential Roman Catholic Radio Maryja, leaving Vice Premier Jaroslaw Gowin to represent Poland at the 16+1 summit in Sofia, Bulgaria (TVP Info, July 8 2018; Office of the Polish Premier, July 7 2018).
Recent comments have moved beyond the economic sphere. At the “Future of Trans-Atlantic Relations” (FOTAR) conference held in November in the German city of Hamburg, PM Morawiecki said that China poses a challenge to NATO, as well as the wider democratic world (Dziennik.pl, November 17 2018). Just prior to Christmas, the Polish Foreign Ministry issued a communiqué on cybersecurity threats from China (Twitter, December 21 2018).
Such concerns were further reinforced in January, when two men were arrested in Poland on charges of alleged espionage linked to Huawei (Sinopsis, February 2). Leading Polish officials announced a review of the use of Huawei equipment in the public sector (CRN.pl, January 15)—although officially, the recent ABW (Polish Internal Security Agency) operations targeted individuals and are not aimed at Huawei as a company (TVP Info, January 11; Radio Wnet, January 16).
Disappointments in the Economic Relationship with China
The lack of expected economic benefits has been a primary reason for Poland’s disengagement from China. Exports to China from “16+1” members have seen ups and downs: mediocre results in 2014 (.35% increase) turned into a slump in 2015 (down 16.15%), followed by promising up-ticks in 2016 (up 7.57%) and 2017 (up 22.39%).
However, there is a bleaker picture behind these numbers. The value of exports to China increased from 10.5 billion U.S. dollars (USD) in 2013 to merely 11.7 billion USD in 2017. By contrast, imports from China grew much faster: from 57.8 billion USD in 2013 to 73.2 billion USD in 2017.
The “Visegrad Four” countries (Czech Republic, Hungary, Poland, and Slovakia), or V4, have more than a 75% share of total exports to China among 16+1 members, and around 80% of imports. The average trade deficit growth pace rate for the V4 was higher than for other countries in 16+1, with Poland recording the highest growth rate. Hungary was the only V4 country recording a moderate trade deficit decrease.
Polish exports to China, which gained a little momentum in 2017 with 20% growth, lagged in the first ten months of 2018, growing only 11%. Poland’s trade deficit with China grew steadily between 2013 and 2017 (seeing a minor slip only in 2015), with imports exceeding exports roughly by a factor of ten.
The cumulative trade deficit was above 106 billion USD for the years 2013-2017 (Asia Research Centre, July 2018). Dissatisfaction with the growing trade deficit has been expressed on many occasions by senior Polish officials—to include PM Morawecki, the Ministry of Foreign Affairs, and Poland’s ambassador to China (Polska Agencja Prasowa, November 23 2017; Polish Ministry of Foreign Affairs, April 6 2018).
Additionally, overall Chinese foreign direct investments (FDI) in Poland through the end of 2017 were mediocre at best, with a range between as much as $1 billion USD or as low as $130 million USD, depending on the methodology (Sinopsis, August 25 2018).
FDI that occurred in 2018, with a declared value of over $50 million USD, doesn’t make a significant difference (Bankie.pl, January 21). Chinese financing for infrastructure projects is also not an attractive option for the Polish government, which has better options—with EU funding as a primary choice (OSW, September 15 2017).
- The publication is not an editorial. It reflects solely the point of view and argumentation of the author. The publication is presented in the presentation. Start in the previous issue. The original is available at: jamestown.org