To play with China might be dangerous for Central Europe

There was a pre-Christmas news storm in the Czech Republic last year. The Czech cyber- defence agency (NUKIB) published a warning to the state administration that hardware provided by the Chinese companies Huawei and ZTE could pose a potential danger to national security. Immediately thereafter a clash broke out among Czech politicians, between those who share a similar opinion about China and those who support a closer relationship with the Chinese regime.

The trouble is that the second group includes President Miloš Zeman, whose official advisors include Ye Jianming, the head of the Chinese CEFC group, who is now jailed somewhere in China and has had his company taken over by the state.

Meanwhile the Czech Huawei affair continued. Prime Minister Andrej Babiš, a super-pragmatic businessman who lost a great deal of money in China some years ago, was privately visited by the Chinese ambassador in Prague. No official statement was produced, but the ambassador published a picture and a couple of sentences on the Embassy’s webpage in which he said that the Czech government did not share its security services’ critical opinion of Huawei. That was later denied by Czech officials. The Chinese ambassador, for his part, was simply acting as a protector of the interests of a great empire in a faraway province.

But then, a Huawei employee was arrested in neighbouring Poland and accused of spying, together with a former Polish intelligence officer. The US secret services have received the support of some of their allies in Central Europe in their quest to check the worldwide expansion of Chinese influence. During heated debates in both Czechia and Poland, the local elites have started to realise what had previously only been apparent to experts, some intelligence services and a minority of democratic politicians: China’s influence in the region is expanding, and could pose a threat in the future as the Asian country develops powerful modern technologies which will offer its leadership almost total control over its population (as has recently been reported in much of the global media).

China has already been courting Central European states for some time as part of a broader attempt to increase its economic, cultural and political influence, to build up long-term positions and relationships with local politicians, to divide the common stance of the European Union, and ultimately to create vassal relations with smaller states which need investments and business opportunities. This is the underlying logic behind the Belt and Road (BRI) initiative; countries such as Sri Lanka or Pakistan have given China opportunities to build great infrastructure projects, but these indebted the local governments to such an extent that the recipients of the loans had to yield to Beijing’s will – for example, leasing its own port (Pireus) to the Chinese as it happened in Sri Lanka. In the Balkans, Montenegro with its ambitious project to run a highway through the mountains is on the way to a similar outcome.

According to the French expert Nadège Rolland, the BRI serves China’s overall long- term interests – the achievement of China’s unimpeded economic and geopolitical rise.
“It should be understood as Beijing’s principal instrument to expand its political influence outwards, to (re-)establish itself as the preponderant power of a region where US and Western influence has considerably receded, and to reclaim its historical position as the leader of a Sino-centric order,” Rolland said in an interview with Hospodařské Noviny, the Czech economic daily.

According to Rolland, Beijing is not seeking to change the politicalregimes of thecountries involved inthe BRI, nor does itwant other countriesto become replicas of the Soviet Union;but it is using its economic power, including investment and financial rewards (and the withdrawal thereof) as leverage to influence the decision-making processes of local countries in a way that is more favourable to Beijing’s interests. In Europe, the PRC does not use military coercion to achieve its political aims, but rather its economic power, which can be used both as incentive and coercion.

The 16+1 family picture

In order to facilitate this kind of relationship, Beijing has created the 16+1 group, including the states that stand between Germany and Russia Petr Kellner, already conduct a great deal of business in China and need a friendly environment to continue doing so; that is why they support politicians like Zeman who have close ties to Beijing. Hungary’s close relations are still founded on the creation of a visa-free regime with China between 1988 and 1992; that resulted in the creation of a several thousand- strong Chinese diaspora in Budapest, where thousands of Chinese companies are still registered and operational. The first branch of any Chinese bank in Central Europe was opened in the Hungarian capital, as well. These state banks are now expanding elsewhere, in Poland and Czechia among others. In his quest for contacts and allies around the globe, under the umbrella of the ‘Eastern opening’ policy after he gradually lost his support among Western allies, Hungarian PM Viktor Orbán also courted Beijing, but with limited success; China was unable to help him with direct loans, but has promised to make investments, as it does elsewhere.

While the Russians showcase their tanks and missiles, China is working on the de- velopment of ultra- modern technologies like 5G networks and artificial intelligence, which – if they master them well ahead of the US or Europe – will give Beijing an enor- mous advantage, if not global dominance.

According to François Godement, director of the Asian and Chinese section of the European Council on Foreign Relations, the 16+1 format is only a way of taking group pictures. “China manages the real negotiations one to one because that gives it the whip hand. And if those countries do not know what their neighbour is doing with China, then they compete with each other,” said Godement in an interview with the portal managed by the Association for International Affairs, a Czech NGO, which monitors Chinese activities in Central Europe. There one can find also interactive analyses of Chinese influence among the elites in some countries of Central Europe, such as Czechia, Slovakia and Hungary, as well as reports of the influence of Chinese media investment on the content of media companies.

Central European politicians – the Czech president included – have a feeling that they have gained exclusive access and cooperation, even though in the Czech case – and not only – the promised investments have yet to materialise. Yet those same politicians are more than willing to compromise when dealing with Chinese politics or business. This could result in an increase of Chinese influence in Europe at the expense of relations with liberal democracies and allies in the Euro- Atlantic space. Such an outcome could affect the global position of the European Union in the future, at a time when the bloc could be struggling with its unity, demography and economic prosperity.

Not just the Russians

Central Europe has so far been primarily focused on the Russian threat, which seems both more brutal and more imminent. The geographical proximity of the threat also plays a role. American experts have developed a new frame of understanding for both Russia and China’s attempts to increase their global outreach – the concept of ‘sharp power’, as opposed to the older American idea of ‘soft power’. In this perspective both the Russian and Chinese approaches are similar in the sense that they use power to achieve their ultimate strategic goals in the global ‘great power’ competition which is becoming increasingly visible and potent. The authoritarian Chinese government, in comparison with the Russian Tsarist autocracy, thinks more conceptually and in the longer term, following its long civilisational tradition measured in thousands of years. While the Russians showcase their tanks and missiles, China is working on the development of ultramodern technologies like 5G networks and artificial intelligence, which – if they master them well ahead of the US or Europe – will give Beijing an enormous advantage, if not global dominance. The recent development in China, where President Xi Jinping obtained almost absolute power, might lead to an assumption of what kind of regime Beijing wants to support.

Huawei has become a symbol of the struggle that democratic states face, as to whether to allow or not a proxy company connected with a totalitarian state and rising geopolitical power to build the most modern communication technologies, on which the infrastructure, economy and security of those same states will depend.

The recent Central European tour by US State Secretary Mike Pompeo has drawn attention to US-China relations. According to official and unofficial proclamations, the reason for the visit and the return of the US interest to Central Europe is China’s increasing activity in the region. The Huawei case was an example of how to attract attention in Washington D.C.: the Czech Prime Minister was ‘rewarded’ with a long- awaited visit to the White House. Czechia and Hungary are seen as more pro-Chinese by the Americans than Slovakia or Poland, but there are no big differences in the approaches of these governments to possible Chinese investment – all of them would welcome it. The Huawei case has only demonstrated that the Czechs (and others as well) are aware that in their relations with the US, a transactional policy is more important than a values-based one. Definitely, after Pompeo’s visit, Poland in particular will ease off on its previous Chinese-oriented economic activity because the government in Warsaw considers its relations with the US as its most important strategic relationship.

We should look at the spat over Huawei in Czechia and Poland through this global optic of great-power competition, as it could be decisive in establishing who will impose the next world order, using revolutionary technologies that seem to change the way we live, work, think and vote. This struggle for influence goes far beyond the borders, not only of a single state, but the European Union itself. And this issue also goes beyond current trade issues and the incentives of the Chinese market, where – despite all the external pressures – China keeps foreign companies in a less privileged position than domestic ones, while Chinese companies are given equal status to local ones on European markets. This will most likely change, as a result of pressure to introduce legislation which would check foreign investment in critical infrastructure throughout the EU, as well as
at the member states level. In this respect, again, the Chinese have tried to influence the upcoming regulatory framework through their allies in the 16+1 group; yet more proof that Europe needs to develop such a framework as a necessary form of strategic defence.

Huawei has become a symbol of the struggle that democratic states face, as to whether to allow or not a proxy company connected with a totalitarian state and rising geopolitical power to build the most modern communication technologies, on which the infrastructure, economy and security of those same states will depend. This is a struggle for our freedom in the future, because these tools have the ability to control not only the political system, but also the economy and society in general. To understand how China uses its modern technology, closer attention must be paid to how China is increasing its control over its population, thanks to the development of artificial intelligence and the use of social credit and other methods.

Relatively small countries such as those in Central Europe should look around and choose what they would prefer in the long term, even if that means that the introduction of superfast 5G networks as a backbone of future economies is postponed. Even Germany has admitted that security reasons trump technology.

Such strategic thinking requires the support and involvement of both politicians and the public in this debate, especially in the year when we commemorate the events of three decades ago which led to the fall of Communism in the name of freedom.

MARTIN EHL is the chief analyst for the Czech economic daily Hospodařské noviny.