The Dragon is Knocking at our Doors

Read the Life in Transition special report


Bogdan Góralczyk

About Bogdan Góralczyk

Professor Bogdan Góralczyk is Director at the Centre for Europe, University of Warsaw, and a former Ambassador of Poland to Thailand, the Philippines and Republic of the Union of Myanmar, former Head of Cabinet of the Polish Foreign Minister and a long-term diplomat in Hungary; specialist in Hungarian and Asian (Chinese) affairs, prolific writer, author of many books and articles in Polish, English and Hungarian.

The assertive and ambitious leader of the ‘People’s Republic’s fifth generation of leadership’ and charismatic president, Xi Jinping (in power since the end of 2012) is attracting worldwide attention. However, because we are quite a distance from China, mixed unfortunately with a lack of strategic thinking and a certain neglect of the ‘emerging markets’ phenomenon on the European side, our understanding of the strategic impact of a China’s new role remains below expectations and needs.

This is also visible in the Central and Eastern Europe (CEE) countries, even if the previous Chinese leadership (of the Fourth Generation) already came out with a new blueprint for their relationship with the region, in the form of the then-famous 12 steps, which was proposed by Prime Minister, Wen Jiabao, in Warsaw, in April 2012. Not much was implemented from this ambitious plan – to inaugurate stronger economic ties – but at least, since then, we have a new framework of cooperation known as 16+1, with its own Secretariat and annual summit meetings.

Even the flagship of this new cooperation — a high-speed Chinese bullet-train route from Belgrade to Budapest, which was announced with some excitement at the third Summit in 2014 – is not ready to start and the European Commission has expressed some doubt concerning the transparency of the deal, with its latest concerns being expressed in February this year.

Nevertheless, and not taking into account such obstacles and complications, China is pushing forward – especially after the inauguration of another ambitious strategic project in late 2013; the visionary One Belt, One Road (OBOR). It is supported by an institutional framework and includes a special OBOR Fund. It is ‘Asian’ by name but Chinese by money and design and the funding comes from the Asian Infrastructure Investment Bank (AIIB). Thus, another important stimulus was added to the growing and ever-rich agenda of China-CEE cooperation.

The crucial problem is that, as in the EU, almost all the countries of the CEE region didn’t prepare or present their own blueprints and strategy for China. Only Hungary under the leadership of Prime Minister Viktor Orbán – also a strong and charismatic leader (although controversial in the EU) – has announced its own ‘keleti nyitás’ meaning ‘Opening to the East policy’. Results, up until now, have been disappointing and even foreign minister, Péter Szijártó, has publicly confessed, as late as last year that almost nothing from this strategy was implemented, least of all the 350 km of Chinese high-speed railway to Belgrade.

There is an array of difficulties and obstacles: we start from different business mentalities on both sides – we believe in institutions, rules and regulations, including public procurements and the Chinese believe in personal relations, mutual trust and win-win strategy, etc. Despite this, Hungar is pressing for further cooperation. In December 2016, a first step in the bilateral cooperation for OBOR was taken in Beijing, with Szijártó and his counterpart, Wang Yi’s signatures, and earlier this year Hungary joined Poland to be the second country from the CEE region to be represented in the AIIB.

Budapest is ready to give two-year long visas to Chinese businessmen (others in the region are usually given around 90 days), and it is also expanding its programme of settlement for Chinese citizens (although it is not directly transparent: this will cost some 300-350 thousand Euro). It is not a coincidence then, that Hungary is emerging as a leading trade and investment partner for China in the region (true – Poland has replaced it in last two years, but no one knows for how long), and — on the other hand — it is also no surprise that a special think-tank network was just established in Budapest, on April 24th, with a prominent role being taken by the Chinese Academy of Social Sciences in Beijing’s Institute of European Studies that published recently a series of important volumes (both in English and Chinese) on bilateral relationship with the CEE region.

From reading those publications, as well as the official announcements, we know that Poland will be a crucial partner for the Chinese because of its geopolitical position and location between Russia and Germany (this was once a curse historically, but now it is an advantage from the Chinese perspective). Poland also has the biggest economic potential in the region. This was confirmed by the visit of President Xi Jinping to Warsaw in June 2016, when the bilateral relationship was upgraded to the highest possible level, i.e. a comprehensive strategic partnership.

However, as we now see, not too many of the agreements that were signed were implemented, and the creation of a regional communication hub in the town of Łódź – very important in the Chinese plans — has been postponed. The Polish Minister of Defence decided not to allow the military territory, which belonged to the army, to be given over for new Chinese investments. However, the Chinese response is significant and pragmatic — if we cannot manage with the government, we will turn towards the alternative government (in the opposition’s hands mainly), who are usually more eager to cooperate or invest. So, plans for the railway hub have shifted, recently, from Łódź to nearby Kutno and we can identify one local investment after the other beginning to take shape: after earlier investments in the steel works in Stalowa Wola or the rolling bearing factory in Kraśnik, we saw fusion and mergers with the Nuctech company (medical equipment), movement in the energy sector in Gdańsk (Piinggao Group) or Lublin (Sinohydro), and electronics in Żyrardów or plastic goods in Tarnów.

As for Western Europe, which is the main direction of the new Chinese investment fever (some $170 billion in 2016, as much as 44 per cent more than a year earlier) the Chinese are eager to get some trademarks established, which is not necessarily what the CEE partners expected. For instance, in Romania, only one greenfield project coming from Chinese investment was inaugurated, in the port city of Constanța. All the other investments are fusions with existing industry or companies (such as air terminals, sea ports, etc.).

So, instead of a having a normal trade in goods, we in the CEE region have almost all the Chinese banks here already; we have new investment projects and visible activity. It is time to wake up and to respond in a more inclusive way to this new phenomenon.

Participation in the upcoming first Summit meeting of OBOR, scheduled for mid-May is probably is not enough, even at Prime Ministerial level, as in the case of Poland, the Czech Republic or Hungary. We should have our own think tanks and our own ideas about what to do with the new Chinese initiatives. Especially given that the lack of trust and mutual knowledge remains the main obstacle in this constantly growing exchange.

But what are the Chinese’s expectations? We’d better be ready, because a dragon is knocking at our doors!



The views expressed in this opinion editorial are the author’s own and do not necessarily reflect Emerging Europe’s editorial policy.


Fear of Hostilities Holds Back Bosnia and Herzegovina’s FDI Performance

ebrd bosnia emerging europe

Legal Reforms are Improving the Existing Problematic Situation in the Ukrainian Agro Market

ukraine agriculture

Innovation and Consolidation — Key Trends in Polish Banking

Emerging Europe Makes Great Strides in Improving Business Regulation for Entrepreneurs

Skopje Macedonia

Georgia on My Mind – Where Beauty Meets Business

georgia ebrd emerging europe

Poland Government’s Development Plan and the EBRD’s Role

Warsaw EBRD annual meeting

UniCredit Focusses on Organic Growth in Central and Eastern Europe

unicredit ebrd

Leszek Balcerowicz: Ukraine Can Learn from Poland’s Economic History

Globalisation Needs to Work, Not Only for the Few but for the Most and in Demonstrable Ways

Global Spread

The Cyprus Dispute: Recognising the Changing Rules of the Conflict

cyprus emerging europe ebrd

Belarus is Bringing Opportunities for European Companies

Great Stone

CEE NPL Resolutions – Now and Then

NPL central and eastern europe

Greener and More Resilient: Energy Sector Reforms in Serbia for the Benefit of All

Belgrade, Serbia - confluence of the Danube and Sava rivers

The Bucharest Stock Exchange Has Started the Year on a Promising Note

stock exchange bucharest

EBRD Annual Meeting 2017 — EBRD President’s Press Conference

Improving the Business Environment Is Vital for Moldova’s Government

ebrd moldova

The Fight Against Corruption in Europe’s Emerging Economies


Harris Georgiades: Cyprus’s Restored Business Environment Offers Investment Opportunities

Emerging Europe EBRD Sea port city of Larnaca, Cyprus. This picture was taken through the window of the plane.

EBRD Annual Meeting 2017 — Board of Directors’ Opening Session

Sir Suma Chakrabarti: The Opportunities of Challenge

suma chakrabarti ebrd

Innovation Is the Key Growth Driver

innovation ebrd

Strengthening the Resilience of the Economy of Bosnia and Herzegovina

Montenegro EBRD annual meeting

Small Businesses – the Backbone of the Egyptian Economy

women egypt emerging europe

Ukrainian Agribusiness — a Jewel in a Crown

Wheat ukraine agriculture ebrd

Emerging Europe Has Already ‘Emerged’ for the Most and it’s a Transition to Be Proud Of

Albania’s Agribusiness Support Facility – With a Little Help From Your Friends

View of the central square with the monument of Skanderbeg in the Albanian capital Tirana

Moldova: a Regional Economic Platform Vision

Aerial Landscape View Of Chisinau, Moldova

Ukraine’s Banking Sector Reconstruction Brings Asset Sales and Opportunities in Equal Measure

Gavel and Ukrainian hryvnias on a wooden table

Cyprus: The Green Economy Shows the Way Forward

Cyprus coastline view, turquoise sea, white beaches

Growth is Greater Across Emerging Europe, Despite Risks and Global Challenges

ebrd gdp

Lower Imbalances Should Support more Inclusive Growth Going Forward

Mixed currency notes

Will we Ever Overcome the Innovation Deficit in CEE?

Europe IT Map

Georgia’s Hospitality Sector Is Starting to Develop

georgia hospitality

Switched on Heads of Expansion Are Developing their Own Business Rankings, Adjusted to Their Companies’ Realities

global expansion

Günter Verheugen: Populist Politics and Euroscepticism Will Have an Impact on CEE

eu guenter verheugen

Kazakhstan is Beginning to Explore Belt and Road Opportunities

Astana Kazakhstan

High Dollarisation the Largest Challenge for Georgia’s National Bank

EU Membership Offers Real Prospects of Social Progress Gains

Beautiful view on cute backyard in sunny day, fresh green grass

Sergei Guriev: Emerging Europe Countries are Happy Alike and Unhappy in Their Own Ways

PRAGUE, CZECH REPUBLIC - 21 JUNE 2014: People on the streets of Prague, Czech Republic. Prague is one of the most visited city in Europe with over 5 million visitors every year.

Divided Economy That May Unite (Or Draw Apart)

An Independent Judicial System is Essential to Attract FDI

legal system CEE

Winning the Fight for Female Talent in Central and Eastern Europe

pwc women

Transition in Government and the Economy Remains Vital in CEE

Cloudy skies above the Hungarian Parliament Building Budapest.

Cautious Upturn in Emerging Europe Haunted by the Spectre of Uncertainty

Donald Trump

Lithuania’s Focus on SME Growth and the EBRD’s Role

View on Vilnus

Montenegro: Joining up Agriculture and Tourism

montenegro ebrd emerging europe

The EBRD Helps Jordan’s Infrastructure to Accommodate an Influx of Refugees

ebrd jordan refugees

EBRD Annual Meeting 2017 — EBRD Chief Economist’s Press Briefing

Leave a Reply

Your email address will not be published. Required fields are marked *