China likely to shrug off Baltic states’ withdrawal from economic grouping
- The decision by Latvia and Estonia to follow Lithuania in leaving the former 17+1 grouping probably came as little surprise to Beijing
- Participants have complained that they are not gaining the expected benefits while China was already looking to refine its approach to foreign investment
Laura Zhou
Published: 8:48pm, 12 Aug, 2022
Lithuania quit the grouping last year and urged the other Baltic states to follow suit. Photo: Shutterstock
The
withdrawal of the Baltic states from China’s economic grouping for central and eastern European countries is unlikely to have a big impact on Beijing’s overseas infrastructure drive, according to Chinese diplomatic observers.
They said China had already been adjusting the projects funded under the
Belt and Road Initiative – its signature intercontinental infrastructure initiative – and the decision by Latvia and Estonia to follow Lithuania in leaving the
former 17+1 group had been expected.
Wang Yiwei, director of the Centre for European Union Studies at Renmin University, said the decision “came as no surprise” as the three countries often aligned their diplomatic approach.
The cooperation platform – consisting of projects to build bridges, railways, power plants, as well as fostering trade links – is seen by Beijing as a way to built connections to Europe.
But participants have complained about a lack of tangible economic progress from the group, which was established as the 16+1 in 2012 and became the 17+1 after Greece joined in 2019.
“There were some over-expectations over China’s overseas infrastructure investment, but now as the Chinese economy is slowing down, the belt and road is also being refined to become more focused on small projects with higher quality,” Wang said.
However, he said China and Europe would continue cooperating on supply chains, energy infrastructure and the digital economy.
When Lithuania, a country with a population of around 2.8 million, announced its decision to leave the group last year, it
cited fewer-than-expected trade benefits and urged its Baltic neighbours to follow.
Near identical statements announcing the decision from the two countries said they would continue to “strive for constructive and pragmatic relations with China” both on a bilateral level and through the European Union. Estonia’s statement added that it had “not attended any of the meetings of the format after the summit last February”.
Relations between
Lithuania and China have worsened dramatically in the past year since Taiwan was allowed to open a de facto embassy in Vilnius, something Beijing regards as a major breach of its sovereignty.
There is also growing suspicion in eastern Europe about Beijing’s closeness to Russia – with the refusal to condemn the invasion of Ukraine causing alarm in the Baltic states, which were occupied by the Soviet Union for decades.
Taiwanese supporters queue up to buy Lithuanian rum held up by mainland China
The US has urged countries not to take part in Chinese infrastructure projects and, when asked about the Baltic withdrawals, State Department spokesman Vedant Patel said: “We respect and support Estonia and Latvia’s sovereign decision to no longer participate.
“Estonia and Latvia are important and valued Nato allies and key US partners across a number of issues, including through our strong defence ties, our strong economic ties, as well as the promotion of democracy and human rights.”
Ding Chun, a European affairs specialist at Fudan University in Shanghai, noted that both Latvia and Estonia had said they would continue to seek “constructive and pragmatic relations”.
“This is much more moderate compared with Lithuania, and I think this also reflects their hopes to strike a balance [between China and the US],” Ding said.
“There will be some negative impacts on the Cooperation between China and Central and Eastern European Countries, but it’s normal for countries to join and quit.”
China’s investment in the central and eastern European region was described as “moderateand concentrated” in an analysis published by the Mercator Institute for China Studies, a German think tank, in April.
In 2020, central and eastern Europe accounted for only 3 per cent of China’s overall investment in the continent, the study found, with much of the pre-pandemic investment concentrated in the Czech Republic, Hungary and Poland.
The cooperation platform now has 14 remaining members: nine European Union states – Bulgaria, Croatia, the Czech Republic, Greece, Hungary, Poland, Romania, Slovakia and Slovenia – and five non-EU countries, Albania, Bosnia-Herzegovina, Montenegro, North Macedonia and Serbia.
Additional reporting by Associated Press
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