BOFIT Viikkokatsaus / BOFIT Weekly 2017/48

At the 16-country CEE summit with China (16+1) this week in Hungary, last three CEE countries completed their signing of memoranda of understanding concerning China's Silk Road Project. A dozen other deals were also signed at the get-together, mainly in the areas of transportation, investment cooperation, infrastructure and financing. Chinese sources claim China has already invested about 9 billion dollars in the CEE area. The deals made at the summit add another 3 billion dollars in new investment commitments.

The 16+1 group, first convened in 2012, is a Chinese initiative to bolster cooperation with eleven EU member states and five non-EU states in the Balkans. China has prioritised three areas for cooperation: infrastructure, advanced technology and environmental technology.

The 16+1 group, which long operated under the radar, now finds itself in the media spotlight. Part of the reason for the change is soaring Chinese foreign investment and the overall attention this raises in Europe. Moreover, some circles in the EU worry that inundation of Chinese FDI may result that China gains too much influence in the CEE region which in turn may indirectly shape EU-China policy. These suspicions have only increased with EU's problems with certain CEE countries. In the end, however, the financing assistance offered by China is small compared, for example, to EU structural funds available to CEE countries.