China’s Eastern Europe Bonds

By+John+Ross

There has recently been a major increase in economic and diplomatic exchanges between China and Central and Eastern Europe. In March， Xi Jinping paid the first state visit by a Chinese president to the Czech Republic. In April， Polands Foreign Minister Witold Waszczykowski visited Beijing and specifically underlined the importance of Chinas Silk Road Economic Belt and 21stCentury Maritime Silk Road （Belt and Road） Initiative. As Poland is the largest economy in Eastern Europe after Russia， the Polish Governments conclusions are worth looking at.

Waszczykowski said， “With regard to the economic aspect of EU-China contacts， I would single out the Belt and Road Initiative as the most promising platform for cooperation between Europe and China. Poland has high hopes for this major initiative… The Belt and Road introduces a new dimension into Europe-Asia relations. If the initiative succeeds， it will work out a new formula for a strategic relationship between our two continents.”

Slawomir Majman， President of the Polish Information and Foreign Investment Agency， similarly analyzed China and Polands major common opportunities， “Chinas initiative to strengthen the economy along the Silk Road is very much in our interest because Poland is interested in operating in the EuroAsia region with our trade and investment. We are very interested to be much more active in Pakistan， Azerbaijan， Turkmenistan and all the countries along the Silk Road.”

After the disintegration of the Soviet Union， Central and Eastern Europe experienced drastic fragmentation. The former Soviet Union went from one state to 15， Yugoslavia from one to five （six if the disputed status of Kosovo is included）， and Czechoslovakia split in two.

The outcome has been dominated by Russian economic influence among individual East European states. Russias 2015 GDP of $1.325 trillion at current prices is 69 percent of the former Soviet Unions and 5 percent larger than the whole of the rest of Eastern Europe outside the former Soviet Union put together. Russia also dominates logistical aspects of the Belt and Road Initiative. Goods can pass from China almost to the borders of Eastern Europe， and vice versa， exclusively on Russian territory.

If Russia forms a firm land bridge for China with Eastern Europe， Poland is the key state in Central and Eastern Europe outside the former Soviet Union—having 34 percent of the regions population and 38 percent of its GDP. This far exceeds any other state. Excluding Albania， whose population is less than 3 million， Poland also has had the regions most rapid economic growth—greatly aided by budget transfers from the EU. It is for this reason that the strong support given by Poland to the Belt and Road Initiative is so significant.