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Foreign Investment – China’s influence in Eastern Europe is growing

“Thank you, brother Xi!”, Or in Serbian: “Hvala, brate Xi!” Serbia thanks for the Chinese support on large billboards in the capital Belgrade and thus celebrates a relatively young, high-turnover Serbian-Chinese friendship. The country in the Balkans leads the way when it comes to vaccinations, also because it vaccinates its population with the Chinese vaccine from Sinopharm and was generously supplied with FFP2 masks from China. In addition, according to the Serbian media, there are 10 billion euros in direct investments.

China is expanding its economic and thus its political influence not only in Serbia, but in all of Central and Southeastern Europe. Economic exchange has increased significantly in recent years, especially with the four Visegrad countries, Hungary, Poland, the Czech Republic and Slovakia. “China has come to the realization that individual countries are differently cooperative,” said Agnes Szunomar from the “Center for Economic and Regional Studies” in Budapest as part of a discussion event on China’s economic and political influence in Eastern Europe of the “Forum Journalism and Media” (fjum ) on Monday. “China’s presence in the region is increasing,” said Vladimir Shopov from the European Council on Foreign Affairs (ECFA) think tank.

Visegrad countries in focus

Hungary’s Prime Minister Viktor Orban in particular makes no secret of his friendship with China. Hungary is the only EU country to vaccinate with the Chinese Covid vaccine Sinopharm. Chinese direct investment has risen from just over a billion US dollars in 2013 to around two billion. According to the “China Global Investment Tracker”, investments and contracts concluded in Hungary since 2005 even amounted to 5.88 billion US dollars (4.93 billion euros). In addition to the economic exchange, Hungary also relies on a scientific one. In 2024, the Shanghai elite university Fundan is slated to open a campus in Budapest.

A total of almost 360 billion euros has flowed from China to Europe since 2005. Most of the money went to Great Britain and Germany, whether in terms of economic sizes. As far as political influence is concerned, according to Szunomar, the Visegrad states, including Austria’s eastern neighbors, play a not insignificant role.

“China doesn’t have a specific expansion strategy. It’s just expanding,” said Shopov. The investment portfolio is a little different depending on the region. While state-owned and state-affiliated Chinese companies in Northern and Western Europe rely on participation in the renewable energy sector, the projects and takeovers in Central, Eastern Europe and the Balkans focus on the chemical industry, the telecommunications and electronics sector as well as on infrastructure and coal-fired power plants in individual Balkan countries .

Influence on media increased

In Belgrade, for example, the security authorities installed 1,000 Huawei cameras with facial recognition at 800 locations, which was heavily criticized by Serbian data protectionists. The majority takeover of one of the largest Czech advertising companies, Médea, by the Chinese state-owned company Citic was also controversial. Médea supplies the Czech media with advertising worth the equivalent of 110 million euros.

Ivana Karásková from the Czech Association for International Affairs (AIM), a research institute, is critical of this takeover. “In this way, China can indirectly influence the media through advertisements,” she said at the discussion event. A media analysis by the institute showed that there were hardly any negative reports about China or Chinese activities in the country, whereas more positive reports were reported about investments and projects such as the new Silk Road. There is hardly any criticism of China in the media landscape in most of the CEE countries.

The EU is concerned about China’s growing influence, particularly in Eastern Europe. In 2019, as part of the so-called FDI screening, the EU countries agreed on more investment control for foreign direct investments from third countries. And third countries, in addition to the USA, primarily mean China. Takeovers by investors from third countries in sensitive areas such as technology, telecommunications, infrastructure and public security are subject to notification and approval. The implementation of this guideline came into force in Austria at the beginning of the year.

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