Tuesday, August 23, 2022

China is not an honest player

Why are the Baltics becoming skeptical of relations with China?

Estonia, Latvia and Lithuania are no longer part of China’s 16+1 Central and Eastern Europe cooperation group. Lithuania is also edging closer to Taiwan as tensions with China escalate.

China's "no limits partnership" with Russian President Vladimir Putin and continued obfuscation of Russia's actions in Ukraine, has made the Baltic nations rethink their relationship with China.

On August 11, Estonia and Latvia announced that they were quitting the 16+1, an economic forum set up by China with central and Eastern European governments 10 years ago to boost business relations.

The announcement came just after China intensified its military activities around Taiwan — which Beijing considers its territory — following US House Speaker Nancy Pelosi's trip to Taiwan on August 2.

Lithuania became the first country to quit the forum in November. The country is now set to open its Economic and Trade Office in Taiwan's capital Taipei on September 12, according to local media reports, signaling further cracks in the Baltics' relations with China.

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China boycotts Lithuania over Taiwan

Francesca Ghiretti, an analyst at the Berlin-based think tank Mercator Institute for China Studies (MERICS), told DW that China's closeness with Russia and inaction following the invasion of Ukraine added to the already existing skepticism about Beijing in the Baltics.

"There is an ongoing transformation in Europe," she said, "which is making many rethink their relationship with China."

But Ghiretti said the recent decisions by Baltic nations would not dent the European Union's business relations with China.

What is the impact of leaving the forum?

"Estonia and Latvia leaving the 16+1 does not mean that the door for business relations with China is closing. This is not the case with them, nor with other EU nations," she said.

In a statement released by the Foreign Ministry, the government highlighted that "Estonia will continue to work towards constructive and pragmatic relations with China, which includes advancing EU-China relations in line with the rules-based international order and values such as human rights."

Latvia also released a similar statement, saying the country "will continue to strive for constructive and pragmatic relations with China both bilaterally, as well as through EU-China cooperation."

The Baltics, Bulgaria, Croatia, the Czech Republic, Greece, Hungary, Poland, Romania, Slovakia, Slovenia and non-EU countries such as Albania, Bosnia-Herzegovina, Montenegro, North Macedonia and Serbia joined the forum. It came to be called 17+1 when Greece joined the forum in 2019.

Though the Baltics initially saw it as an opportunity to boost trade relations with China, in recent years the forum began losing its popularity as tensions with China and Lithuania began simmering.

Lithuanian Foreign Minister Gabrielius Landsbergis also called the platform divisive.

"China's 17+1 format was already redundant and divisive long before Lithuania quit. Latvia and Estonia are now closing the door too. 14+1 should be replaced with EU27+1," he said in a tweet.

A shaky relationship

The relationship between Vilnius and Beijing has been on the brink since November 2021, when Lithuania allowed Taiwan to open its de facto embassy in the country, making Beijing block exports from Lithuania and slap sanctions on Lithuanian officials.

Lithuania is preparing to open a trade office in Taiwan in September. Ming-Yen Tsai, of the Taipei Representative Office in the EU and Belgium, told DW that Lithuania's enhanced economic and trade cooperation with Taiwan is fully in line with the European Union's policy toward Taiwan.

"The EU has publicly stated that Taiwan is a like-minded partner and supports the development of relations between Lithuania and Taiwan, and has stressed that it will assist Lithuania in resisting China's political pressure and economic coercion," he said.

Estonia and Latvia have not specified their reasons for distancing themselves from China's economic forum, but, in a statement released by Tallinn, the government noted that Estonia had "not attended any of the meetings of the format after the forum's summit last February."

Zsuzsa Anna Ferenczy, assistant professor at the National Dong Hwa University in Taiwan and a former political adviser in the European Parliament, told DW that the 16+1 framework was never a popular initiative.

"It wasn't even a successful one as far as investment in central and Eastern Europe is concerned," she said.

"The Baltic states remain vulnerable to Russia's aggression, and Beijing's diplomatic support to Moscow against Ukraine hasn't exactly helped raise China's profile in the Baltic states. So a rethink of how the Baltic states relate to both Russia and China is not an option, but a must from the perspective of national interest," she added.

Will Baltic exodus affect EU-China trade relations?

Though Beijing has yet to respond to the departure of Baltic countries from the framework, the China Chamber of Commerce to the European Union (CCCEU) told DW that the development will not cause major investment or business panic for Chinese companies in the EU.

"The China-CEEC cooperation per se is voluntary and serves as one of many factors that businesses will consider in their European expansion strategies. However, the long-term impact on business remains to be seen, and it may be influenced by what happens in bilateral relations,” according to the CCCEU.

The EU and China recently held trade talks in July, with both parties agreeing to coordinate their macroeconomic policies and promote global economic stability.

According to Eurostat, the EU's statistics office, in 2021, China was also the third-largest partner for EU exports of goods (10.2%) and the largest partner for EU imports (22.4%).

The CCCEU said business relations with Lithuania would be very different because of the country's close ties with Taiwan.

Ghiretti said the growing tensions between China and Lithuania could be detrimental for the EU.

"As we have long established that European supply chains are highly interconnected, it is difficult for a member state to be hit and have no repercussions on other member states," she said. "In that regard, the EU anti-coercion instrument would be fundamental to be able to push back against coercive instances."

Though Ferenczy expects China to continue using instruments such as economic coercion, aggressive rhetoric and disinformation campaigns targeted at countries that engage with Taiwan, she doesn't think China intends to damage relations with the EU.

"China wants stability in its ties with Europe," she said. "Further endangering market access and trade with EU member states doesn't serve Beijing's interests."

"The EU also wants to stay open to business with China, but be able to defend its interests with defensive tools and diversify its trade partners,” she said.

Edited by: Leah Carter

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