LISD Convenes Colloquium on China in Europe II, Continuation of a Series

 

The Liechtenstein Institute on Self-Determination at Princeton University, LISD, convened a private Liechtenstein Colloquium, LCM, on “China in Europe II: Multiple Interconnected Dimensions,” in Triesenberg, Principality of Liechtenstein, August 19-21, 2018. The meeting focused on Chinese relations with European Regions, especially, South Eastern Europe – the Balkans; on the One Belt one Road Initiative; on European Security Concerns in North and South East Asia; and on the effects for the Transatlantic Relationship.  It also built upon the conclusions of the LCM, “China in Europe: Chinese Interests from Lisbon to Vladivostok,” of last August 2017. The LCM brought together senior governmental officials, academics, diplomats, experts, and civil society representatives from China, the European Union, United Kingdom, Italy, South Eastern Europe, Russia, Central Asia, and the United States. The colloquium was chaired by Prof Wolfgang Danspeckgruber, Founding Director of LISD.

In the Session, “China in Europe: Regional Dimensions,” the discussion focused on the EU, as a strong ally of the United States, serving possibly also as a “bridge” between the Chinese and American governments. In relation to both China and the USA, the EU urges both to use the WTO to facilitate legal international trade and investment. It was highlighted in this session that while the old international order may be gone, the new one has not arrived yet. In the spirit of Albert Hirschman, it has also been argued that economic interests over time typically lead to strategic interests. This means the interaction between the different international stakeholders will determine their future relationships – most importantly, gauging the receptiveness of international cooperation will help each stakeholder determine their ability to join a newly working international system.

 

(Courtesy of Katherine Elgin Photography 2018.)

 

This conversation developed further in a continuation on the specific issue of “Chinese Investment in Europe,” taking the specific case of China’s 16 + 1 Initiative, which includes 11 EU Member States and 5 Balkan countries (Albania, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Montenegro, Poland, Romania, Serbia, Slovakia, Slovenia). Participants focused on the manner in which the EU investment monitoring framework has developed in response to Chinese controls on foreign direct investment into China. In particular, the EU is making a values-based argument that there should be reciprocity for European companies investing in China. The conversation did approach the root of the impetus behind Chinese investment, whereby participants highlighted the way in which China has filled the gap which resulted from a reduction in EU investment after the Global Financial Crisis. It was also pointed out that China may be investing in the countries addressed by 16 + 1 to create an ‘Eastern Gate’ into Europe – thereby developing relations with those still outside the EU, before they join it.

Nevertheless, it was made clear that China has not imposed its investments and programs on its European partners. While possible political influence within specific countries can be a natural consequence of economic investment, the greater goal of the People’s Republic of China is growth in the global economy through enterprise. Another point highlighted the importance of a careful and methodological approach to understanding financial direct investment. It is crucial that analysts do not conflate investment that is proposed with investment that is actually realized and it requires to take the time needed to examine the specific terms of each deal.

In the Session on “European Security Concerns in Asia,” the conversation focused on the manner in which the security of Europe and Asia are increasingly seen as intertwined with heightened stakes in a militarized Korean Peninsula with a possible nuclear arms race and the related great power politics. Participants explored the distinction in EU strategy in Asia as increasing in pragmatism and importance while focus on globalized security and trade has increased overall. Another discussion highlighted the doubts about North Korean reverse engineering in missile technology and suggested that outside suppliers might indeed enable the enhanced missile activity since 2014.  Soviet/Russian missile plans, parts, and technology could have been the one to enable North Korean long-range missile testing.

(Courtesy of Katherine Elgin Photography 2018.)

 

In the Working Session “Emerging Relationship: China-EU-Russia/US,” participants discussed the methods and stakes of North Korean denuclearization. A highlight of the discussion was the need for direct US-DPRK dialogue in order to build confidence in a US commitment to an agreement – especially since the United States left the Joint Comprehensive Plan of Action (JCPOA) denuclearization agreement. The focus of the session then turned to an assessment of the current Trump administration and its approach to China, the EU, North Korea and Iran. Specifically, the Trump administration has the potential to cooperate closely with the EU in their efforts to promote democracy in the Balkans, as well as develop a comprehensive energy strategy. Overall, participants highlighted the need to develop common strategies, rather than bilateral attacks, on issues of trade and denuclearization.

China’s “One Belt One Road Initiative,” was extensively discussed considering all important aspects from cultural historic to strategic, economic, political and even environmental. This ranged from the intended One Belt One Road Initiative to how it can be best be framed within an understanding of the ancient Silk Road, whereby specific commerce routes created powerful connections between goods/services and cultures/interests and people.  This also laid bare the complexity of the “Belt and road” initiative, and the many potential pitfalls.  As populations, interests, commerce, and finances are exchanged, the need for a dynamic, highly adaptable system has increased dramatically. Furthermore, participants highlighted the cultural history in Central Asia and how it should inform the West’s approach to Chinese investments in those countries. This might however bring into conflict different cultures and ways of life – high sensitivity towards these issues might be a requirement to avoid conflict. With a specific eye on the Belt and Road Initiative, the discussion addressed the ways in which banks are internationalizing along the OBOR - specifically opening branches in capitals within Eurasia; concerns about indebtedness; issues regarding values; and the economic and political effects of OBOR on Russia.

 

(Courtesy of Katherine Elgin Photography 2018.)

 

In the final working session, “A Constructive Way Forward,” participants discussed the need for avenues for cooperation as well as negotiation. In a prescriptive approach, some participants highlighted the need to be more proactive about what more the European Union and European countries can do to address the new order, rather than focus on Chinese policies and reactive measures. The potential for multilateral cooperation was discussed and in particular the need for multilateral settings for communication and future dialogues. In order to avoid situations where international organizations compete, there is an increasing need for an ear to realities on the ground while bearing in mind the importance of internationalism.

A Chair’s Summary of this colloquium is forthcoming from the Institute.