The China Railway Express linking China’s port city of Xiamen and Budapest. Photo: Xinhua
by Tom Holland
by Tom Holland

China’s sinister plan to buy Eastern Europe is exaggerated

  • The EU fears Beijing is trying to drive a wedge between its members to neutralise its policy towards China
  • But the attention paid to China’s pledges far outweigh its investments. And where it has invested, its projects have often run into trouble

The railway which winds its way from Piraeus and Athens northwards to Thessaloniki and on towards Macedonia has a certain antiquated charm. Passing Thermopylae off to the north and Mount Parnassus away to the south, passengers can reflect that they are trundling slowly through the very heart of Western civilisation’s cultural cradle.

There is more recent history too. Rattling across the spectacular Gorgopotamos viaduct, passengers can clearly see where in 1942 the vital supply route was blown up at its most inaccessible point by a ragtag band of Greek partisans and British agents. Travellers of a nervous disposition may not wish to look too closely, however. Some three-quarters of a century later, the repairs effected after the war still look alarmingly temporary.

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Now, if you believe the hype, history is once again knocking. It may surprise passengers snoozing their way north towards Mount Olympus, but the railway line along which they are sedately swaying is a key link in a grand strategic infrastructure initiative known as the China-Europe Land-Maritime Intermodal Express Route.

The Piraeus port in Greece. Photo: Xinhua

The idea is to create a freight transport corridor that links the Chinese-operated container port at Piraeus on the Mediterranean with the investment-hungry countries of central Europe. Train services between Piraeus and the Hungarian capital Budapest began last year. Cosco, which operates the transshipment port at Piraeus, says the route shaves a week off the month-long freight journey that connects China with central Europe via ports on the North Sea, such as Rotterdam and Hamburg.

But the train services are only part of a broader plan – a plan which is causing considerable disquiet in the European Union’s corridors of power. Over the last few years, China has signed up 12 EU members and five prospective members, all from central and eastern Europe in a band running from Estonia on the Baltic to Greece on the Mediterranean, to its “17+1” forum.

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To Beijing, this grouping brings together at one table the eastern European participants in its Belt and Road Initiative influence-building programme. All the members have endorsed the initiative.

And to the European countries that have signed up, China represents a source of much-needed infrastructure funding – funding that they have struggled to obtain at home in Europe.

“Central Europe needs capital to build new roads and pipelines,” Hungary’s combative prime minister Viktor Orban told European leaders in Berlin last year. “If the EU is unable to provide enough capital, we will just collect it in China.”

Hungary’s combative prime minister Viktor Orban. Photo: AP

And, on paper at least, China is happy to oblige. In recent years Chinese state companies have pledged funding for dozens of projects across Central Eastern Europe.

The US$1 billion and more that Cosco has spent to transform Piraeus into the Mediterranean’s second busiest container port is merely China’s most high-profile investment in the region. Chinese companies have also been contracted to build highways in Poland, a railway between Belgrade and Budapest, a bridge across the Danube, and a giant power station in Serbia, among other projects.

China’s involvement in the region is making waves in Western Europe. In Brussels, EU officials fear China is pursuing a divide-and-rule strategy towards Europe. They worry Beijing is dangling the lure of investment dollars before the bloc’s poorer eastern members to secure the diplomatic influence needed to water down EU criticisms of its protectionist economic policies and human rights abuses.

In short, the concern is that Beijing is using its investments to drive a wedge between EU members in order to neutralise European policy towards China.

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It would be a troubling idea – if it did not massively overstate what is actually happening in Eastern Europe.

As Tom Miller, author of China’s Asian Dream: Empire Building Along The New Silk Road, points out in a recent paper, the attention paid to China’s pledges far exceeds the investments it has so far made on the ground. And where China has invested, its projects have frequently run into trouble.

For example, the main Chinese contractor was kicked off a 50km highway contract in Poland after it struggled to meet its obligations to local subcontractors. In Romania and Hungary, US$18 billion of contracts to build new power stations have yet to see construction begin some six years after they were signed. And the railway between Belgrade and Budapest is already two years overdue, with construction work yet to begin on the Hungarian section.

Altogether in the last two decades, China has pledged investments of only US$5 billion to US$10 billion to the EU’s eastern members (different estimates give different amounts). Those sums may be significant locally, but on a European scale they are small. In comparison, China has invested some US$47 billion in Britain.

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China has also invested an estimated US$10 billion in non-EU countries in the region, notably Serbia, which are not subject to EU rules on public tendering or EU environmental standards. Perhaps unsurprisingly, many of these projects are clouded by allegations of corruption and misappropriated funds, and even charges that they will have to be closed down to comply with environmental rules once the host countries finally join the EU.

In short, fears that Beijing is buying sinister political influence in the EU with lavishly funded infrastructure projects in the bloc’s poorer eastern members are greatly overstated.

That may have been Beijing’s original plan. But investing in viable infrastructure projects is no easier in eastern Europe than anywhere else in the world.

And in many ways that’s a shame. After 75 years, it’s probably about time someone reconstructed the Gorgopotamos viaduct in a fashion built to last.

Tom Holland is a former SCMP staff member who has been writing about Asian affairs for more than 25 years