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Chinese President Xi Jinping is eager to expand China's economic influence into Central and Eastern Europe. (Nikkei Montage/ Getty Images)
China up close

China's new Great Wall rises in the heart of Europe

Beijing reaches out to ex-Communist countries on the periphery of the EU

KATSUJI NAKAZAWA, Nikkei senior staff writer | China

DUBROVNIK, Croatia -- In a hotel room facing the strikingly blue Adriatic Sea, the handful of English-language TV channels available to guests do not include CNN or BBC. Instead, there are two channels operated by China.

Guests have the choice of watching either the news channel or the documentary channel of state-run broadcaster China Global Television Network. Naturally, the programs on the CGTN channels are politically charged and serve as propaganda for the Chinese government.

The coverage of the Hong Kong mass protests, therefore, come with a Beijing spin.

The TV channels are just an example of China's rising influence in the Balkans.

The walled city of Dubrovnik, a Unesco World Heritage center, in April hosted a big conference between China and Central- and Eastern-European countries. Premier Li Keqiang and many economic ministers from China sat down with their counterparts in the region. It was the eighth annual conference.

With the addition of Greece this year, the conference became "17 (Central and Eastern European countries) plus 1 (China)."

Of the 17 countries, 12 are members of the European Union.

Croatian Prime Minister Andrej Plenkovic, right, and Chinese Prime Minister Li Keqiang speak during the 8th Summit of Heads of Government of Central and Eastern European Countries and China in Dubrovnik, Croatia in April.(EPA/Jiji)

If the 17 countries were marked in one color on a map, it would reveal a stunning reality. China is building a new "Great Wall" on the periphery of the EU economic zone.

The countries China is befriending are the former communist countries in Central and Eastern Europe, as well as the Balkans.

The original Great Wall is a long brick structure that was built to keep northern barbarians out of China during ancient times.

The modern-day Great Wall in Europe is economic. As if it were covered with a flexible bamboo forest, this economic wall would not look like a fortress at first glance.

At the end of World War II, Winston Churchill warned of an "Iron Curtain" dividing Europe into east and west.

"From Stettin in the Baltic to Trieste in the Adriatic, an Iron Curtain has descended across the continent," the former British prime minister said in a speech delivered in Fulton, Missouri.

Today, Stettin is better known as Szczecin, a river port city in northwestern Poland. Trieste is an Italian city northeast of Venice.

Thirty years after the fall of the Berlin Wall, the Iron Curtain is morphing into a new Great Wall for China.

In Trieste, the southern end of Churchill's Iron Curtain, China is extending its Maritime Silk Road under the Belt and Road Initiative.

If Trieste is linked to the Port of Piraeus, Greece's biggest port now operated by a state-run Chinese company, China's influence in the Adriatic and Mediterranean seas will grow.

Chinese Shipping containers are seen at Port of Piraeus in Greece. The port is controlled by China Ocean Shipping (Group) Company.   © Kyodo

Symbolically, the new Great Wall in Europe looks as if it is blocking the expansion of traditional Western values such as freedom and democracy, and instead installing a Chinese-style economic development model under the Belt and Road Initiative.

In early October, China and the 17 Central and Eastern European Countries gathered in Belgrade, the capital of Serbia, to hold a conference on innovation cooperation. The conference's theme was the promotion of digitization with China as a role model.

It was 20 years ago when Belgrade suddenly became a front line in U.S.-China tensions.

In 1999, U.S.-led NATO forces bombed Belgrade, then the capital of Yugoslavia, in connection with the Kosovo conflict. At the time, a U.S. military plane mistakenly bombed the Chinese embassy, killing three Chinese people.

Tens of thousands of angry Chinese students and protesters gathered in front of the U.S. embassy in Beijing to protest the bombing.

The walls of the embassy were defaced due to plastic bottles of paint thrown by the protesters. Windows were smashed.

Today, state-owned Chinese companies are active in Serbia. The country's only steel mill was acquired by China's Hesteel Group three years ago. Last year, the country's only copper mine was also bought by a Chinese company.

There is a cold calculation behind China's recent move into Europe. In case its enormous trade with the U.S. is forced to contract due to the trade war, a new economic sphere that extends west of China through the Belt and Road can serve as an alternative economic engine.

China's influence has already penetrated into Central Asian countries. Its success in former communist countries in Europe will be crucial for Xi as he braces for a protracted battle with the U.S.

EU countries had assumed a tolerant posture toward China's advancement into their region, taking into consideration the enormous benefits that the Chinese market holds. But the mood is now changing, especially since Beijing signed a memorandum of cooperation with Italy regarding the Belt and Road.

Earlier this year, French President Emmanuel Macron, with Italy in mind, made remarks indirectly warning China over its move to drive a wedge into the EU. "The period of European naivete is over," he said.

German Chancellor Angela Merkel has also touched on the differences in basic values with China, saying that "although China is a partner, it is also a competitor with a different political system."

The U.S. has also made a move. In early October, Secretary of State Mike Pompeo visited Montenegro and North Macedonia on the Balkan Peninsula and warned Balkan leaders of possible Belt and Road risks.

An expressway construction project financed by loans from China is underway in Montenegro. International organizations have pointed out the possibility of the Balkan country falling into a "debt trap."

U.S. Secretary of State Mike Pompeo, right, meets with North Macedonia's President Stevo Pendarovski in Ohrid, North Macedonia on Oct. 4.   © Reuters

That said, China has its own concerns coming at it in the form of a slumping economy.

According to figures released on Oct. 18 by the Chinese government, the country's economy grew 6% in real terms in the July-September quarter from a year earlier, marking the lowest rate of increase in data going back to 1992.

In China, there is no public scrutiny of how tax revenues are spent. It has so far been possible for China to divert huge amounts of funds overseas. But if its economy sharply slows, China would lose its financial leeway and have no choice but to gradually cut back on its overseas aid.

Japan was once the world's top aid donor. But the country was also forced to significantly slash its official development assistance after its bubble economy imploded in 1990.

The end of money is the end of love. China could follow a similar path, albeit a less noticeable one.

Going forward, the Great Wall in Europe and the Belt and Road Initiative will feel the repercussions of China's economy.

Katsuji Nakazawa is a Tokyo-based senior staff writer and editorial writer at Nikkei. He has spent seven years in China as a correspondent and later as China bureau chief. He is the 2014 recipient of the Vaughn-Ueda International Journalist prize for international reporting.

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