Slowly, but steady as she goes

November’s 5th summit of between China and Central and Eastern European Countries held in Riga, Latvia, delivered no breakthrough but then again, no one really expected one nor it was needed. The 16+1 format proved itself a stable platform of cooperation between China and CEE countries and who if not the Chineses are the ones playing the long game here.

riga snow bi night

As there is no true institutionalization of 16+1 format, the main decision making instrument is a summit of the heads of the governments, hence the need for periodical high-level meeting. This time it took place in Riga – the capital of Latvia – and resulted with Riga Declaration and Riga Guidelines. While the latter states activities undertaken in previous year and goals for the next one, the former is a first in 16+1 history. The Declaration presents the “Three seas initiative” (namely Baltic, Adriatic and Black seas) announced in previous year in Suzhou arguing for the development of local ports, logistic hubs, economic zones and transport corridors. It was no coincidence the Declaration was drafted in Riga which is a Baltic port as Latvia is interested in reviving its maritime exchange that has dwindled due to sanctions put on Russia after the conflict in Ukrainian Donbas region. But the will of cooperation voiced in Riga has to be kept in line with European Union strategic policy and here come the Guidelines making sure there is a synergy between 16+1 format and general EU-China relations. To achieve it the 16+1 projects have to be in line either with EU initiatives like EU-China Connectivity Platform or Trans-European Transport Network or with EU regulation, as it is the case with the format’s flagship – the high-speed rail connection between Belgrade in Serbia and Budapest in Hungary.

While being one of the biggest 16+1 projects, there’s not much high-speed about left on the table. Conceived as proving ground of Chinese high-tech engineering prowess the project quick grinded to a halt. The first obvious obstacle was the profitability – it needs at least 6 million passengers to break even but the projections show mere 100 thousands passengers utilizing the connection per year. It should be no surprise to anyone as the combined population of the two connected cities amounts to only 3,1 million people. But here comes the best example of China’s long game strategy with emphasis on “win-win solutions”. As China needs that connection as part of strategic transport corridor for goods being shipped to Mediterranean port of Piraeus and Serbia badly needs to improve their transport infrastructure to strengthen their bid to join European Union, a compromise was possible. The planned line was downgraded to less expensive medium-speed one (albeit “high-speed” label was kept for PR reasons). Moreover, Serbian negotiators were able to secure a condition to source at least 46% of good and services domestically which should provide a significant boost to stagnant local economy.

But there are more challenges to overcome. The price of broad inclusion of regional states in 16+1 format is their conflicting interests, resulting in not only lack of cohesive position in negotiation with China but even a local competition. On top that there are both EU and non-EU states involved that have vastly different needs. For example, due to abundance for EU-originated financing, the regional EU members are less willing to use Chinese credits offered to them as the EU money is both easier to obtain and not required to be returned. Hence the traditional tool of Chinese diplomacy with developing countries is not well suited to the task in CEE region. Despite those differences both neither EU nor China are going to take a step back from 16+1 format as it proved to be useful to both sides. For example, China carefully played its hand switching the place of 2017 summit from Prague in Czech Republic to Budapest in Hungary, therefore showing China’s dissatisfaction with visit of Dalai Lama in Czech Republic while at the same time applauding Hungarian prime minister Victor Orban for his pro-Chinese policy.