Dealing with Chinese Influence in Central & Eastern Europe: Lessons from Australia

Written by | Wednesday, July 10th, 2019

The Chinese Communist Party’s (CCP) expanding influence in Europe, particularly Central and Eastern Europe (CEE), has been the source of increasing global attention and scrutiny. There are two noteworthy areas where Australia has counteracted China’s growing influence, which can serve as lessons to Central and Eastern European countries.

  1. Screen and block Chinese FDI in strategic industries and critical infrastructure

China has clearly demonstrated its capability to secure influence in Central and Eastern Europe using Chinese foreign direct investment. For example, it announced the construction of a €2.1 billion railway line from Budapest to Belgrade in 2017. Another example would be Poland, the recipient of Chinese funding for a highway and two power plants. Meanwhile, in the Czech Republic, CEFC China Energy went on a brief spending spree, purchasing assets in sectors such as soccer, finance, and airlines.

In this respect, the EU’s proposed Europe-wide framework for screening foreign direct investment (FDI) is a step in the right direction, as it encourages FDI information sharing for nations with screening policies. However, it does not provide a real screening mechanism with the power to block problematic FDI for each member state. It leaves the creation and implementation of any screening measures up to the EU member states. While there has been a movement towards screening policies in some countries, such as the Czech Republic, which is drafting a rather strong mechanism, there is an absence of the urgency and extensiveness shown by Australia.

In 2018, Australia passed the Security of Critical Infrastructure Act, which targets sabotage, espionage, and coercion in the electricity, gas, water and port industries. In addition, the government introduced the Telecommunications Sector Security Reforms, which obliged all telecommunications carriers and affiliates to improve their protection of networks and facilities from unauthorized access and interference.

  1. Increase transparency in political relations with foreign entities

Publicity and concern about Chinese influence in Australia reached its height in 2016-17 after the discovery that powerful CCP affiliates in Australia used political donations to establish connections with Australian political elites. Therefore, Australia has been proactive and vocal in responding to growing Chinese influence. In 2018, it introduced new espionage and intelligence laws, whose aim is to increase transparency in the donation process by requiring the registration of all foreign donations from actors with foreign government links.

In  Central and Eastern Europe, Chinese cultivation of CEE elites begins with national leaders, whereby these efforts have been facilitated by the 16+1 platform. It then trickles down through economic, political, academic and journalistic circles. The goal of this influence is the same as in Australia: to try and spread a pro-China narrative through society. Nowhere is this influence more evident than with Czech President Miloš Zeman who is one of the most vocal pro-Chinese voices in the country. However, Hungarian Prime Minister Viktor Orbán has also been publicly cozying up to China in the last few years. Research into the topic shows that Orbán and his FIDESZ party used to be fierce China bashers while in opposition that changed in 2010 with their election victory and announcement of the ‘Eastern Opening’ policy.

While Central Europe may not have been as popular a target as Australia for direct political influence by the CCP, the Chinese infatuation by some of the Central and Eastern Europe’s highest officials may indeed be harder to shake than those in Australia. It would be wise for CEE countries to use Australia’s model of counter-influence as inspiration to find their own unique strategies to pushback against the expanding Chinese influence.

‚Dealing with Chinese Influence in Central and Eastern Europe: What Can We Learn from Australia‘ – Analysis by Josh Hickman – China Observers in Central and Eastern Europe.

(The Policy Paper can be downloaded here)

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