For the Baltic states in northeastern Europe, the dream of increased prosperity through trade and investment from China has run its course, analysts tell VOA.
“This was the debate that happened in Latvia, Estonia and Lithuania around 2016, that we should get some investment from China, we should attract this ‘One Belt, One Road’ initiative, as well as railway cargo from China, but those voices have gone down,” said Martins Hirss, a political scientist teaching at the University of Latvia, in a phone interview from Riga.
Latvia and Estonia’s recent exit from a Beijing-led grouping known informally as the 16+1, comprising 16 European countries plus China at its inception in 2016, is a tell-tale sign that that debate is over as far as the Baltic countries are concerned, Hirss said. “Since 2019, 2020, the whole discussion about China has changed,” he said.
While Chinese authorities’ conduct towards citizens in Hong Kong and the Muslim population in Xinjiang have raised eyebrows, Beijing’s conduct overseas, including in the Baltic nations, also aroused concerns.
The Latvia state security service published a report in 2020 “essentially saying that Chinese activities in Latvia are very similar to Russian intelligence activities,” Hirss said. By then, Chinese investments no longer stood for “unlimited economic opportunities,” he added. “Quite the contrary.”
Hirss said China’s image in the region took a further blow last year when Beijing imposed stiff punitive measures against Latvia’s Baltic neighbor Lithuania, after that country became the first to leave the China-Central and Eastern European Cooperation (China-CEEC) forum and later expanded trade ties with Taiwan.
“If our southern neighbor has been targeted by China, political leaders and also regular people took notice,” Hirss said. “Countries in this part of the world, we’ve had our experiences with the Soviet Union, with this entity that dictated how to live, what to think; and if someone behaves similarly as the Soviet Union did, then it immediately triggers people from this region, you can say.”
The Latvian government maintained a diplomatic approach when announcing the country’s exit from the China-CEEC forum last month, saying it was still quite interested in maintaining ties with China. But a statement issued by Latvia’s foreign ministry made clear that membership in the Beijing-led group fell far short of expectations, starting with the economics.
“The format since its inception, as well as Latvia’s subsequent participation, was introduced as a means of strengthening economic cooperation with China,” read a statement provided to VOA by the Latvian Embassy in Washington. “Latvia viewed it as an opportunity to increase and diversify its exports to China, attract direct Chinese investments and be integrated into Europe-Asia connectivity chains.”
Latvia embraced the chance to get closer to Beijing and hosted the 16+1 summit in Riga in 2016. However, six years later, Latvia’s exports to China constituted only 4.4% of the country’s total exports in 2021 On top of that, Latvia is running a significant trade deficit with China and has not been able to “shift the structure of exports towards higher value-added products and services,” the official statement said.
Hirss, the political scientist at the University of Latvia, noted that Latvia also had to wrestle with China on maintaining EU standards for investments in the country. China offered to build a high-speed rail in the Baltics but backed out after the Latvian government insisted that it go through a competitive bidding process. There were “a couple of occasions similar to this,” he told VOA.
A Romania-based analyst thinks Latvia and Estonia’s exit from the Beijing-led China-CEEC forum, a year after Lithuania departed the group, signals an end to what he calls “China’s global charm offensive.”
Going forward, “I think China will work in a more ‘targeted’ way, enhancing its profile where it already exists in a positive manner, for example, Hungary, Serbia,” said Horia Ciurtin, an expert with the Bucharest-based New Strategy Center and an independent consultant on political risk and international investment law, in a written interview.
Beijing, he says, “will try to create a success story” in countries like Hungary and Serbia, “stirring up some dilemmas to the reluctant players, such as Romania or Poland. I do not think China is any longer on an all-across-the-globe charm offensive.”
He added that “some countries — such as the Baltics — have made it clear” that the charm offensive wasn’t bought.