Port in Anaklia , Georgia, under construction (photo credit:
Evelina Gambino)
I am no expert of Chinese infrastructure investments in Eastern Europe and Eurasia. I have only been systematically going through existing research on the topic lately to find, much to my disappointment, that most of academic discourse on the topic (let alone media and political narratives) is devoid of critical approaches (exceptions apply, see: Gambino, 2019; Rogelja, 2020) . We can see how easily ‘the China threat’ narrative can be racialized, and how easily in turn such racialized narrative can be utilised to construct a phantom enemy in service of existing power structures. Therefore, I want to highlight a range of problematic characteristics of dominant approaches to understanding Chinese Infrastructure loans and Foreign Direct Investment (FDI) in Eastern Europe and Eurasia, in the hope of mobilising critical research to counter these narratives.
To start with, everybody agrees that Chinese engagement in EE and Eurasia is significant and also insignificant. That is, on the one hand, we see previously unprecedented rise in Chinese investments to EU and its southeast neighbourhood since 2010s (in Central Asia already since 2000s). On the other hand, compared to Western European, or broadly conceived Western, investments, Chinese investments in EE are not particularly impressive. Yet, it obviously warrants research interest, and given the scope of China’s Belt and Road Initiative (BRI) project, probably for a good reason. To give a very brief summary of what kind of developments are observed and then evaluated, I could say that [1] China’s FDI to Europe has risen dramatically but the lion’s share of it, particularly mergers and acquisitions, or joint ventures in high-tech sectors, goes to Western Europe; [2] relative to the rest of EE, the Visegrad four also receive a greater sare of the Chinese FDI; [3] Southeast Europe and post-Soviet peripheries rather receive transport infrastructure loans and investments in energy (often coal-mining) sector.
In terms of evaluations of such FDI and infrastructure loans, media, political and academic discourses are fairly synchronised. I believe some headlines will serve well to illustrate the spirit of existing debates. On the one hand stand the publics scared of China worried about ‘How much of Europe does China own?’ (BBC Reality Check team, 2019), ‘Chinese Octopus: How China is Taking Over the Post-Soviet Space’ (Lambert, 2019), or ‘China’s grand geopolitical project threatens a new East-West divide in Europe’ (Jakimów, 2017). On the other hand stand those who try to counter the perceived panic behind this engagement with further derogatory attitude towards both, EE and China : ‘Central and Eastern Europe Is Not in Bed With China’[1] (Brînză, 2020), ‘Beijing’s engagement with the region is not nearly as strong as the headlines suggest’ (Urcosta, 2020). While politicians have waxed poetic in portraying Balkans as China’s ‘Trojan Horse’ against EU, academic accounts also don’t lack creative vocabulary, arguing that ‘China would be careful not to “trade a horse for a donkey” by courting CEE with policies that are granted to weaken its relationship with the EU’ (Pavlićević, 2019, p. 271). In sum then, it is still a subject of debate whether Chinese investments carry geopolitical or geoeconomic intentions; whether they represent a threat or an opportunity; whether they engender ‘new’ East-West divides; whether China is a worse lender than the WB; whether they are convincing EE political leaders in benefits of authoritarianism; whether EE governments prefer Chinese loans because they are lazy (to follow EUs and World Banks’ amazing socially and environmentally sensible regulatory standards), corrupt and ungrateful to EU. Sometimes those trying to tone down these debates, come up with amusing, even if painfully inaccurate arguments suggesting how ‘Logically, it is not in China’s interest to profit at the expense of CEE economies because these economies are emerging rather than fully developed and need more time and encouragement to grow’ (Garlick, 2019, p. 20).
In all this debate, China is exceptionalised and singled out as a suspicious beast, nation-states serve as the ultimate units of analysis, as we just need to figure which of those nation states are honourable or dishonourable agents of this messy business. While it is impossible to really address a full range of debates Chinese investments in EE and Eurasia have triggered, let me focus on a few aspects in more detail.
Infrastructures
When talking of infrastructure investments (and those are the largest type of investments for most of EE and Eurasia), the literature will point out how China is an untrustworthy and risky donor, in contrast to the WB, or EU’s generous non-refundable grants. They will talk of this difference as if infrastructures has not been financialized for the past few decades, and especially so after the 2008 financial crises in Europe and (with help of the EU) in the rest of the world (Hildyard, 2016). This benevolent EU discourse continues as if public financing of infrastructures didn’t dry up (Buier, 2020); as if financialisation was not turning infrastructures ‘from a public and collective good into an alternative asset class within the international investment landscape’ (O’Brien et al., 2019, p. 1293), as if private finance didn’t target large-scale, supposedly profitable economic infrastructures while social infrastructures remaining underfunded (Inderst, 2020). Instead, the scholarly literature will go around praising the active role EU has played in promoting (often primarily transport) infrastructures as the developmental heyday in its peripheries, leading to the overproduction of so called so called ‘white elephants’ (Robinson and Torvik, 2005), ‘underused motorways, closed high-speed railway lines, and empty airports’ (Rodríguez-Pose et al., 2018, p. 228), often ‘rooted in capital’s tendency to geographical expansion’(Buier, 2020, p. 2). How such projects – Spanish High Speed Rail project being one of the exemplary cases – were indeed often triggered by non-refundable EU grants, the rest of construction cost being kindly loaned by the European Investment Bank (Ibid, 2020). How particularly in Eastern Europe, local governments have relied on such grants to cover basic local services and infrastructure costs, and the co-financing requirements of these grants have contributed to ‘the deterioration of local government finances in Eastern Europe’ (Medve-Bálint and Bohle, 2016, p. 23). Indeed, one can understand Western Europe’s frustration as it laboured hard to expose Eastern Europe and Eurasia (and well many other parts of the world) to extractive opportunities for the western financial capital and now China comes and wants to get in on the act.
New Divides
The literature will wonder whether China is endangering new East-West divides as if Europe was not marked already by multiplicity of divides; as if Eastern Europe was not already defined by its ‘relative backwardness’ (Stenning and Hörschelmann, 2008), and institutional or cultural ‘deficiencies’ (Thelen, 2011). Now counting all the gender, racial, class and spatial divides, processes of peripheralisation and polarisation (Lang et al., 2015), recalling how the pandemic times illustrated in all its brutality the longer-standing process of dehumanisation of East European seasonal migrant workers would perhaps take me too far here. Yet, I need to pause with the story of FDI as the EU has become especially alert on direct investments from its alleged ‘systemic rival’ China, with the European Commission issuing guidance in March 2020 calling for more FDI control: ‘to preserve EU companies and critical assets, notably in areas of health, medical research, biotechnology and infrastructures that are essential for the security and public order’ (Schmidt and Sachs, 2020). No one will mention how the making of Eastern Europe into FDI-dependent economies is at heart of EU’s East-West divides. It is a somewhat forgotten story that many of now-EU member EE states were initially quite sceptical of opening to FDI (Bohle and Greskovits, 2012). Yet, the EU pacified EE governments’ concerns by [1] supporting the set-up of the national investment promotion agencies already by mid-1990s, [2] making FDI openness into an important membership conditionality and [3], even ‘specifically suggested privatisation via foreign ownership in a number of strategic sectors’ (Bohle, 2018, p. 242). Not only did this process shape EE’s dependence on West European capital but also EU’s cohesion policy ultimately failed in alleviating deep territorial disparities and polarisation resulting from the largely West European FDI inflow to select few economic centres (Medve-Bálint and Bohle, 2016). The EU cracked open East European economies; but clearly China was never meant to benefit from this opening.
Belt and Road Initiative (BRI) and ‘opportunities’
The saddest story yet (in my opinion) is the contemplation over how Chinese investments and the BRI in particular can serve as opportunities, how becoming ‘infrastructure corridors’ can be great for Eurasian peripheries, and how Europe should remain open to these opportunities but also be careful about it, as if we have learned nothing from the centuries of the Western imperialism, how the geographic expansion of capitalism never goes painless and who the BRI-like debt-financed mega spatial fixes benefit. If one looks at it from the EU perspective, fear combined with the willingness to tap into the opportunities of this project is not so surprising – in the end it is a promised gigantic accumulation machine that the EU will not want to entirely miss out on. If we look at it with even a mild empathy for societies impacted and possibly tossed around this project, if we ask who will be reaping benefits and who will be carrying the burden of the debt repayment and environmental destruction, then perhaps we take a little more care with the ‘opportunities’ side. This brings us of course to the most obvious and painful absence in the existing literature on China and Eastern Europe, namely, the absence of working and dispossessed populations. In this nation-state focused debate, while the local political and financial elites are eagerly signing up for infrastructure loans, we are rarely reminded that ‘the debt is not a legitimate burden acquired by the bulk of the people in any country,’ that the borrowing is usually ‘done by capital, for capital and against workers’ (Cleaver, 2016, p. 39), and that ‘usually the people who end up paying the debt are the least privileged and most marginalized population’ (Harvey and Nak-chung, 2017, p. 253).
To summarise my argument briefly: we should be cautious of BRI (and also of Chinese DFI), it is even astonishing there is not so much resistance to it already (with the exception of so far most impacted Central Asian societies). But we don’t need to fear BRI because China is an authoritarianism spreading predatory evil socialist state, but because China (with the acknowledgment to specificities of Chinese imperialism) is now part of and pushing through the same capitalist accumulation dynamic that we should have learned to distrust and resist. So yes, it’s important to learn more of China – EE and Eurasia engagements. We can start with critical accounts on Chinese investments beyond EE and Eurasia (Ayers, 2013), and with so far marginal yet powerful accounts about and from within the region, refusing to single out China, instead illustrating how Western and Chinese capital operate side by side in their search for new spaces of accumulation overwrite local non-capitalist economies (Gambino, 2019), how Chinese (and also Russian) capital comes handy for some of EE states to support their new regimes of accumulation, reduce dependence on EU funds, and engage with ‘new geopolitics of indebtedness’ (Gagyi and Gerőcs, 2021). I really hope more research, moved away from futile simplifications, will follow.
Lela Rekhviashvili is a post-doctoral researcher at Leibniz Institute for Regional Geography, Leipzig. Her research interests include the political economy of transition, informal economic practices, social movements, everyday resistance, and urban mobility. Her academic publications discuss post-soviet shared taxies in a comparative perspective with ride-sharing and informal transport, the role of everyday resistance in production of public space, and the impact of institutional change, particularly of marketization policies on informal economic practices.
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[1] Here mind the sexualised language on how Eastern Europe could ‘prostitute’ itself to China, hinting to weakness and penetrability of the region.