Russia’s invasion of Ukraine clouds picture for China’s central and eastern European trade expo
- Ministry of Commerce says it expects more exhibitors and delegates this year
- But European nations are believed to have stepped back from official participation
China’s attempt to boost ties with central and eastern European countries through a trade expo this week will meet with mixed reactions due to mounting trade and political challenges following Russia’s invasion of Ukraine, analysts said.
The China-CEEC Expo & International Consumer Goods Fair, starting on Tuesday in the eastern port city of Ningbo, comes as Beijing has pledged to shore up trade to support China’s economic recovery.
“It has not been easy to meet our Chinese counterparts, of course due to Covid as well, but there has not been much substantial progress on how the grand plans can actually be realised,” a central European diplomat said, requesting anonymity.
“I don’t think China is exactly clear about how they want to deal with us yet.”
There are many issues that still need to be worked on in trade with CEE countries
Zhang Min, a central and eastern Europe specialist at the Chinese Academy of Social Sciences, said the expo represented a good start for improving trade after the coronavirus pandemic, but it would “not grow overnight”.
“Trade takes both sides, it is not just the problem from one side,” she said. “There are many issues that still need to be worked on in trade with CEE countries.”
The Ministry of Commerce said it expected 30 per cent more exhibitors and business and diplomatic delegates at this month’s expo than there were two years ago.
“When global trade growth has slowed, the long-term growth trend in trade between China and CEE countries has not changed,” vice-minister for Commerce Li Fei said last week.
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China’s move to draw up a cooperation framework with central and eastern Europe was perceived by some geopolitical observers as a move to grow its influence in Europe, while sceptics said it aimed to divide European opinion towards China.
Lithuania withdrew from the 17+1 cooperation mechanism before the 2021 expo, saying it had brought “almost no benefits”.
A trade showdown with the European Union followed when China started to block Lithuanian goods after Vilnius announced moves to boost relations with Taipei.
Analysts said the Baltic states appeared to be especially wary of China’s “no limits partnership” with Russia following Russia’s invasion of Ukraine, which was originally part of the 17+1 framework.
Beijing’s policy of leaning to Russia’s side made CEE countries see China affairs even more strongly through a security lens
“Beijing’s policy of leaning to Russia’s side made CEE countries see China affairs even more strongly through a security lens,” said Grzegorz Stec, an analyst at the Mercator Institute for China Studies in Berlin who focuses on central and eastern Europe.
“After all, Beijing’s position on the security architecture in Europe challenges some of the fundamentals of national security of many CEE countries.”
Stec said not all central and European countries had a fractious relationship with China, as the likes of Hungary and Serbia had not significantly changed their policies in the aftermath of the Russian invasion of Ukraine.
Poland, the Czech Republic and Hungary were China’s biggest trading partners in central and eastern Europe last year, with electronic and mechanical products the most traded items.
China’s agricultural exports to the two regions grew by 69 per cent last year, while it imported 5.9 per cent less agricultural products from them.
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Rudolf Fuerst, a senior researcher at the Centre for the Study of Global Regions in Prague, said Polish wariness of China did not seem to be harming economic ties, but the “rising ideological disgust with China” in the Czech Republic could complicate that country’s economic relations.
“The CEE countries have never been united in their relationship with China and probably never will be,” he said. “China is certainly an important partner, but not to the extent that it might replace CEE economic ties with western Europe and the US.”
He said central and eastern European countries’ trade deficits with China were “natural” as they followed a liberal approach to trade rather than mercantilist one.
Fuerst said that despite some gestures of goodwill from China about boosting imports from central and eastern European countries, their involvement in EU supply chains meant they were unable to compete with Europe’s top technology exporters, and that left investment as the main area to explore.
In February 2021, President Xi Jinping set a target of importing more than US$170 billion worth of goods from central and eastern European countries in five years.
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China’s overall trade with them has grown an annual average of 8.1 per cent since 2012, with imports up by an average of 9.2 per cent a year in the same period.
The volume of trade between China and central eastern European countries reached US$33.3 billion in the first quarter of the year, Li said, up 1.6 per cent year on year, with the trend “stable and heading in a good direction”.
China’s foreign direct investment in central and eastern Europe grew by 148 per cent in the first quarter, the vice-minister added, with areas including automotive parts, home appliances and pharmaceutical goods attracting “strong investment interest” from Chinese companies.
But China’s trade surplus with central and eastern Europe is widening. Imports from the two regions were worth 20.7 billion yuan (US$2.98 billion) last year, down 4.9 per cent year on year, while exports to them increased by 13.8 per cent to 71.5 billion yuan.
