China and Japan in CEEC: competition, cooperation and co-existence?

ABSTRACT

China’s long-term cooperation with Central and Eastern European countries (CEEC) has received a great number of academic debates for being part of China’s Belt and Road Initiative and component of China-EU relations. It’s noted China is not the only external “game player” in the CEEC region. After the end of the Cold War, Japan also enhanced its relations in the region through diplomacy and the provision of developmental assistance, which led to a deepening cooperation in the region within the Japan-EU framework of the 2010s. This article aims to form a comparative study of the strategies that China and Japan deploy in the CEEC in the historical review up to the present day, and to evaluate the approaches from institutional perspective as well as the infrastructure aspect when the two Asian countries dealing with the CEEC. It argues that China-launched cooperative scheme with the CEEC also draws the attention from Japan and Japan’s relevant policies in CEEC cast significant implications on the development of China-CEEC cooperation. The comparison also rises some greater political landscape by not only involving the BRI and PQI, but also in QUAD and EU-relevant strategies.

In discussing the above approaches and comparisons, the article concludes that China’s various domestic and foreign policies towards CEEC present a “charming attraction” to Japan even in the context of China-US rivalry. Both Japan and CEEC need to be more pragmatic and positive towards cooperative mechanisms with China and embrace more opportunities to mutually support both China’s and Japan’s regional presences and influence for the continued development of the CEEC region.

KEYWORDS:

• China
• Japan
• CEEC
• competition
• cooperation
• co-existence

1 Research background

The “Belt and Road Initiative” proposed by China in 2013 received positive responses in CEEC, and the interplay between the two sides has achieved remarkable results in the first decade of China-CEEC cooperation. Meanwhile, in recent years, Japan has continuously built on its strategic influence in CEEC since the early 1990s by offering enormous investments in CEEC which, among other approaches, has inevitably led to intensified regional competition as well as opportunities for both China and Japan to enter into a co-existing atmosphere.

This article aims to assess China and Japan’s engagements with CEEC through a comprehensive review of their respective approaches, and shows how Japan’s relevant strategic deployment in CEEC can be perceived as a response to the decade-long China-CEEC cooperation. The recent diplomatic tension between China and CEEC caused by the political alignment of countries like Lithuania and Slovenia toward Taiwan, who has profound associations with Japan and USA, is a clear challenge to China’s core national interest. Therefore, the question of what kind of future geo-economic landscape will be shaped by all these “clear-target” strategies in CEEC such as BRI, FOIP and QUAD within the broader context of competition, cooperation and co-existence between China and Japan remains to be answered.

This article also aims to contribute to the existing debate between China and Japan in CEEC by providing a historical review and also focusing on the less-explored issue of how China, Japan and CEEC have forged their relations within a “strategy cauldron” of BRI, QUAD and AUKUS. Concretely, it seeks to understand the different approaches between China and Japan in CEEC and how CEEC manifests a broad acceptance of these approaches, thereby dragging them into a larger international strategic landscape. This article is structured as follows: the research background will be followed by a two-part analysis of China and Japan’s approaches in recent engagements with CEEC; then, a comparison will be made from institutional and infrastructural perspectives, culminating in a prediction of their interplay within the broader context of BRI and QUAD. The documents cited in this article are exclusively from public sources, including primary and secondary data, official government statements, as well as academic and policy papers. With regards to research methodology, this research applies a mixed method approach by combining descriptive observation, evidence-based analysis and macro-level perspectives on the specific strategies adopted by the aforementioned countries and (sub)regions.

The presence and involvement of China and Japan in Central and Eastern European countries (CEEC) received little scholarly attention until 2012, when China implemented the “16 + 1” initiative to improve its relations with the stakeholders in the region. The initiative functioned as a supplementary multilateral forum alongside China-EU relations, providing a useful platform for leaders from the CEEC region to “regularly meet with the top Chinese leaders” outside of the annual EU-China summits¹. Twelve EU countries that abide by the EU normative format and system of governance took part in the initiative, along with another five Balkan states, thereby transforming the bilateral relations into a multilateral one. For both China and Japan, CEEC is not only a geographical region but also an open and institutional market regulated by relevant European laws.

The recent tension between China and several CEEC members in the “17 + 1” initiative² has caused a fierce debate regarding China’s strategy and role in CEEC. Lithuania declared its withdrawal from the “China-CEEC” cooperation, and Slovenian Prime Minister Janez Janša issued a statement pertaining to the country’s relationship with Taiwan which noticeably challenged China’s core national interest. By contrast, such value-driven diplomatic skirmishes are a very feature of Japan’s engagement in the region, namely, to maintain a value-driven and democracy-oriented partnership. In particular, Japan held a leaders’ summit with the EU in May 2021 which was followed by a joint statement expressing their shared concern on various topics, including several “crucial concerns” regarding China’s engagement with the EU, thereby reflecting Japan’s new role in Europe within institutional and non-institutional mechanisms following the two-year anniversary of the implementation of the EU-Japan Economic Partnership Agreement and Strategic Partnership Agreement (EPA and SPA). Thus, the divergence in institutional formation provides a comparison between the features of China’s cooperation with CEEC and Japan’s value-driven engagement with CEEC.

In terms of infrastructural construction, there is a significant demand in CEEC for energy resources and the improvement of transport infrastructure. For example, the infrastructure in the western Balkans is outdated, lagging far behind countries in western Europe and in urgent need of upgrade and development; in light of this, Visegrad Group has expressed its commitment to further optimize the transportation network and improve connectivity with old EU members while gaining more connectivity with Asian markets in various aspects such as energy facilities, coal consumption reduction, renewable energy application etc. Following the overall slowdown in economic growth in the EU, first due to Brexit and then the pandemic, CEEC began to look for more funds and investments in the infrastructure market from external players outside of the EU, a demand which China and Japan have played vital roles in satisfying.

The China-CEEC cooperation is perceived as part of the Belt and Road Initiative (BRI), which Japan has also shown interest in. Japan has attempted to enhance its impact in the CEEC region by various approaches such as investment, cultural exchange and inter-government visits. This indicates that Japan is trying to compete with China; at the same time, the two countries also realize that, as two Asian powerhouses, their cooperation and co-existence is necessary to balancing instabilities and crises in the region by offering the possibility of a third-party resolution beyond the EU’s rule-based operations.

2 China’s engagement with CEEC since 1989

For a long time, China and CEEC had been familiar “comrades” belonging to the same bloc from the Cold War era, but gradually became “strangers” following the political and economic transformation that took place across the Central and Eastern European countries. Since then, both sides have been lacking in mutual understanding and trust as a result of their long-time separation and varying transition paths³. On the one hand, CEEC entered into a period of transformation in the 1990s, which resulted in closer ties with western Europe. China was initially absent during this transformation process, and it was Japan who took on the role of external contributor in the region by offering necessary funds as a founding member of the European Bank for Reconstruction and Development (EBRD). On the other hand, China also underwent its own process of deepening domestic reform and expansion policies, thereby achieving remarkable economic growth since the mid-1990s as well as political victory in the handover of Hong Kong and Macao at the turn of the new century. These developments caused CEEC to reevaluate China’s economic capability and growing global presence. Therefore, in the first decade of the new century, when most of the former Soviet-bloc states had successfully gained access into the European Union, the countries in Central and Eastern Europe started to redefine their policies toward China and sought an alternative cooperative source beyond traditional loan contributors such as Japan and the EU.

In the process of CEEC transformation, foreign direct investment (FDI) has played a central role in a profound change in motivation from the Soviet pattern of “central planning to market-oriented economy.”⁴ The euro zone debt crisis caused the CEEC region to cast doubt on the reliability of so-called “core EU countries,” driving CEEC to increasingly seek for opportunities and resources for economic development beyond Europe. Some of the CEEC have generally adopted an “Open to the East” policy to actively attract investment from countries outside the EU, particularly since the EU is unable to satisfy all the investment demands of infrastructural upgrade. China has abundant foreign exchange reserves, and the implementation of a “going out” strategy has made it possible for both China and CEEC to strengthen their cooperation after a lengthy separation; as such, the inception of the “16 + 1” initiative turned both sides from “old comrades” to “new partners.” China has also perceived their cooperation with CEEC as a great example of a new form of South-South cooperation to promote regional integration and convey the voices of developing countries. The China-CEEC cooperative scheme has played a significant role in the grand strategy of sustainable economic development since its inception in 2012 and is even more salient in the post-COVID-19 era. In 2020, trade volume between China and CEEC reached a record 103.45 billion USD, breaking the 100 billion USD mark for the first time in history⁵.

China and CEEC have established various forms of institutionalized cooperation such as leaders’ meetings, regular meetings at various levels, economic and trade cooperation, and cultural exchanges. It is an important form of deepening international multilateral cooperation in order to adapt to the new trend of regional integration. In April 2012, the China-CEEC leaders’ meeting was launched, marking the official inception of the “16 + 1” initiative, a holistic and goodwill cooperation established between the two sides. Chinese President Xi Jinping has stated and demonstrated a desire to shape the international landscape by using China’s power to influence others and establish the global rules of the game⁶. This cooperative mechanism was perceived as China’s pilot run in terms of multilateral cooperation embedded into a region where the majority of cooperative partners were normative and non-normative stakeholders within the EU. It also provided a platform for CEEC to have regular meetings at various levels – apart from the Visegrad group (Poland, Hungary, Czech Republic and Slovakia, otherwise known as V4), the integration of sub-regional groups was still at a low level in comparison to their western counterparts. Moreover, the China-CEEC cooperation is considered a component of China-EU relations as all the CEEC are EU members except for Serbia, Montenegro, Macedonia, Bosnia and Herzegovina, and Albania, all of which are working toward EU membership. Nevertheless, this hybrid nature still positions the China-CEEC cooperation under the overall framework of China-EU relations. It constitutes a platform at the sub-regional level for bilateral exchanges between China and CEEC whilst enriching and improving overall China-EU relations.

Most recently, two signals indicating “firm” political support for China are: taking China’s side regarding “vaccine diplomacy” and more importantly, supporting the Beijing 2022 Winter Olympic Games. Based on this, Poland, Serbia, Bosnia and Herzegovina, and Hungary are on the first level. Generally speaking, these countries demonstrated a great willingness to deepen their pragmatic cooperation with China by playing the role of “bridgehead” to some extent. Some scholars believe that Hungary has developed an “advanced” all-round strategy toward China as a result of multiple strategic considerations. Under Viktor Orban in recent years, Hungary has become one of the most China-friendly EU countries, having repeatedly prevented the EU from making critical remarks against China⁷, which in turn highlights the severe challenges faced by transatlantic alliances. China’s relationship with Hungary and its presence in the CEEC region has raised concerns about unity and security within the transatlantic alliance as it seeks to counter China⁸. The Hungarian government has set up a special committee specifically responsible for Chinese affairs, which reveals the orientation of its foreign policy. The Serbian government has always maintained close cooperative ties with China on regional and global affairs. Through their “two gateway” policy, the Serbian government has sought to deepen relations with Russia and China in a balance of both political cooperation as well as developmental aspects including economy and trade. In line with this, several other CEEC have maintained moderate relations with China, such as Romania, Czech Republic, Slovakia, Greece and other west Balkan countries which are normally considered “free riders” in terms of China’s economic development.

It is evident that the furthest relations within the China-CEEC cooperation is with Lithuania and Slovenia, as both have challenged China’s core national interests by siding with Taiwan’s authorities and are therefore normally considered “cold” to the China-CEEC cooperation, leading China to conduct comprehensive sanctions on Lithuania as punishment for “going outlaw” with Taiwan.

Based on this classification of the CEEC region, China has also utilized the BRI during the pandemic by socializing others to the “Chinese way of doing things” in order to gain “vaccine reputation” in CEEC, particularly in Hungary and Serbia. This has allowed China to move one step closer from being a rule-follower to a norm-setter capable of reshaping global governance. The issue “is not merely about being and becoming a normative power, but also about being recognized by others.”⁹ Supporters of the BRI tend to minimize China’s geopolitical and geo-economic intentions by arguing that this potential hegemony is merely an “unintended consequence of China’s development trajectory.”¹⁰ The ongoing COVID-19 pandemic has further helped China in its global strategy of creating a “Chinese horizon of influence” within the BRI with a new “health silk road” policy¹¹, through which China has also initiated cooperation with CEEC on the public health issues¹². Since the outbreak of COVID-19 in Europe, China has provided extensive medical assistance to Serbia when the latter’s rejection by the EU for the necessary assistance revealed “European Solidarity” to be “a fairy tale”¹³.

In terms of a concrete cooperative approach, considering the asymmetric size between China and CEEC, the most singular approach would be local cooperation, which has been highly promoted by both sides. With the advancement of the BRI, CEEC has benefitted from both sub-regional cooperation as well as international collaboration. Both sides have cultivated greater market capacity and goodwill for further cooperation, including the social mobilization of promising and proactive elements in the implementation of relevant policies. Throughout this process, several established cooperative projects have already demonstrated enhanced connectivity at the sub-regional and inter-city level; to name a few, Ningbo city of Zhejiang province is now the permanent host of the China-CEEC Expo; Sichuan has become well-known for its “Chengdu-Lodz” pairing as part of the public diplomacy between China and Poland; and China’s energy investment in its “old friend” in Europe is well represented by close relations between Hebei and Serbia. In his speech at the China International Friendship Conference in conjunction with the 60th Anniversary of the Chinese People’s Association for Friendship with Foreign Countries, President Xi Jinping declared that “China must vigorously carry out its international friendship city work, promote exchanges between Chinese and foreign local governments, and promote resource sharing, complementary advantages, and win-win cooperation.”¹⁴

China’s presence and strategic deployment in CEEC has drawn differing opinions. Some analysts have expressed suspicion and criticism toward China’s utilization of the China-CEEC cooperation; for example, there is the presumption that China conceived this miscellaneous convention of countries as a gateway to gain more political leverage in the EU by economic and cultural means, thereby raising concerns over Beijing’s existing geopolitical intentions. Some have characterized Chinese investments and trade relations in the CEEC region as a “Trojan horse.”¹⁵ When the “16 + 1” scheme was initiated, a clear division was formed between “Sinophile and Sinophobe” countries through perceptions of China as shaped by central issues such as human rights and democratic accountability¹⁶. The initiative was seen to have the intention of driving a wedge within an already divided EU and even of undermining the EU’s reformist agenda¹⁷. By 2019, the “17 + 1” mechanism had become the key reason for the EU’s decision to perceive China as a “systemic rival.”¹⁸ Other perspectives have affirmed China’s regional contribution and undeniable presence in CEEC – “One thing has become increasingly clear, namely that anything approximating global or even regional governance is no longer possible without the participation and cooperation of China.”¹⁹ Furthermore, the “17 + 1” cooperative scheme has enabled countries within the EU to test China’s claim of supporting its “responsible power diplomacy.”²⁰

China’s rise to the ranks of the world’s major powers has stirred a worldwide debate on how the country, led by the Communist Party of China (CCP), would utilize its expanded capabilities in its interactions with other countries and, as a result, what effects this would have on the international stage²¹. Thus, another wave of ongoing debate has been focused on the solidity of China’s success and influence in CEEC, particularly in comparison to other external players in the region. Unsurprisingly, Japan is often compared with China as another moving force for economic and developmental issues within the broader context of EU-China-Japan triangular relations, the Free and Open Indo-Pacific (FIOP) and the reconstruction of global liberal order.

3 Long-term relations between Japan and CEEC

Scholars who are of the opinion that Japan implemented and adjusted its strategy in CEEC based on China’s policies would soon find opposing evidence in Japan’s economic assistance and engagement with CEEC right after the collapse of the Soviet Union in the early 1990s. Since the 1980s, Japan has sought to become a political power and enhance its international influence by means of foreign aid in order to reestablish the international image of Japan. Japan associates the peace and prosperity of developing countries with its main developmental vision of providing official development assistance, at the same time emphasizing good governance and the independence of their nation-building. This is in response to the prevalence of global governance in the 1990s, thus indicating that Japan has begun to take on an international perspective regarding the implementation of foreign aid. In addition to economic interests, Japan has come to realize the value of foreign aid in enhancing social benefits and safeguarding “freedom and democracy” as a reflection of the consistency of their policies with the Western model. Since then, Japan has beefed up its ties with CEEC by pledging to contribute to the ODA, and was privileged enough to be a founding member of the European Bank for Reconstruction and Development in 1991. Thus, Japan’s involvement in CEEC from the very beginning helped the region’s economic institutions walk out of the Soviet pattern by actively taking part in the rebuilding of a new CEEC region post-Cold War, whereas China only gained access to the EBRD in 2015, more than twenty years behind Japan. It has been well noted that despite being a non-European player, Japan helped establish guidelines and set the tone for the development of market reforms and entrepreneurship early on, in addition to providing more in-depth support for the social transition to democracy in the CEEC region, in particular by casting significant financial contributions for the reconstruction and pacification of the west Balkans in the 1990s. Therefore, Japan’s firm support of the democratic transition and emerging market economy within the relevant CEEC further encouraged their reform and openness to Japan. For example, in an address to the diplomatic corps in 2014, Slovenian President Borut Pahor acknowledged India and Japan as the country’s most important non-EU and non-NATO partners in Asia²².

Normative compatibility has played a role in determining Japan’s engagements with CEEC²³. Tokyo “channeled the assistance through the Conference on Security and Cooperation in Europe.”²⁴ Furthermore, after Poland, Hungary and the Czech Republic joined NATO in 1999 and the EU Commission granted EU membership to a number of Central and Eastern European countries, Japan suspended the ODA in 2004 in accordance with EU regulations. Following this first expansion “Eastward” by the European Union, Japan included the EU states in the CEEC region as part of Japan-EU relations in general, which was additional incentive for Japan to establish closer bilateral and multilateral ties with other European countries – thereafter, Japan paid more attention to various investment approaches in the Balkans and GUAM (Georgia, Ukraine, Azerbaijan and Moldova). The decade from 2002 to 2012 was the “honeymoon” period between Japan and the new EU members from CEEC, with approximately 200 high-level visits contributing to the development of bilateral relations which solidified Japan’s influence in the region. Japan adhered to three principles in fulfilling its ODA to the CEEC, including providing reconstruction funds and contributing to the EBRD. The two primary areas of investment from Japan in CEEC (especially V4 and Romania) are transportation and electrical equipment, with the automobile industry serving as the crucial investment market²⁵.

Regarding specific diplomatic approaches and discourses, Japan has established various sub-regional institutional cooperative mechanisms instead of “placing them into the same pot.” The three cooperative frameworks are “V4+ Japan,” “the Baltic+Japan” and “the Balkans+Japan.” In addition, Japan has also deepened its relations with GUAM in an effort to project its influence in the East European periphery and secure the frontline against its territorial dispute with Russia. By leveraging on CEEC, Japan has sought to catch Russia’s eye and make it take Japan more seriously²⁶.

Japan has associated “technical advantage” with the “industrial chain” in targeting the CEEC market and has placed the enterprise at the forefront. Through this approach, Japanese enterprises entered the CEEC market with the purpose of integrating Japan’s advantageous industries, paying significant attention to the enhancement of corporate competitiveness and market acuity, coupled with the necessary assistance from the Japanese government. Japan amended its guidelines for foreign aid and proposed “appropriateness” as a core investment principle in addition to profit-driven factors. Japan’s strategy in CEEC involved a normative logic as well as addressing international norms and values, which was consistent with EU policy and thus resulting in Japan’s investment in CEEC being far less challenged than China’s by both the respective countries and the EU. Since 2015, Japan has remarkably reinforced the “appropriateness” of promoting democratization in accordance with the rules of each recipient country. Moreover, Japan has kept a close watch on military expenditure within the target markets, such as the import and export of weapons, in an effort to achieve international peace and stability as well as prevent terrorism by guiding the recipient nations to prioritize resources for their own social and economic development, an approach that is quite different from that of China’s engagement with CEEC. Non-governmental parties and civil society have played a salient role in terms of acquiring the funds and relevant knowledge to cultivate local talent from within CEEC, thereby forming a Japanese-aided coordinative style between the government and civil society as reinforcement against China’s counterparts.

In 2003, Japan made the first revision to the ODA guidelines, in which five new elements were added to ensure the independent efforts of developing countries, namely “human security,” fairness, flexibility, coordination and cooperation with the international community. In 2015, Japan revised the ODA guideline for the second time and renamed it the “Development Cooperation Charter.” The charter proclaimed that foreign aid would be integrated with broader global governance issues rather than being a single-goal implementation. Regarding regional aid policies and goals, the charter paid more attention to the non-EU members in the CEEC region than the previous implementation, which implied that Japan’s foreign aid has entered into a more mature stage.

In 2008, between the first and second amendments to the ODA guidelines, the former international cooperation agency and the loan department of the Japan Bank for International Cooperation were combined to form the new Japan International Cooperation Agency (JICA) in order to carry out various supporting tasks within a unified system for foreign aid. Since then, the Japan International Cooperation Agency has added new functional departments through internal organizational reforms as well as improved the efficiency of implementation by refining the provision of aid. The formation of JICA aims to utilize Japan’s relevant experience in sustainable economic growth and humanitarian aid in the target region by engaging with value-driven, rule-based and democratically-oriented issues related to human rights. The amendment to the charter and JICA’s role has allowed Japan to address current global challenges in a timely and proper manner, indicating Japan’s willingness to take the lead across more platforms and thereby corroborating Japan’s potential to contend with China in CEEC and other regions across the three Cs: competition, cooperation and co-existence.

The statistics from 2008 to 2020 in Table 1 reflects Japan’s unique geopolitical perspective and regional vision for further interaction within CEEC in order to demonstrate its value-driven diplomacy and the rising liability of playing a vital role in Central and Eastern Europe.

Table 1. JICA’s policy toward CEEC (2008–2020).

Year	Key Policy/Initiative	Priority nation/region/case
2008	democratization support, transition to market economy, peace consolidation, environmental conservation	west Balkans, Ukraine, Moldova, Romania
2009	peace consolidation and ethnic reconciliation, support for countries’ access into the EU	Bulgaria, Bosnia and Herzegovina
2010	Support for access into the EU and ethnic co-existence in the western Balkans, environmental protection in the private sector and post-conflict peacebuilding	railway through Turkey connecting Japan and CEEC, Bosnia and Herzegovina
2011	Support for access into the EU and ethnic co-existence in the western Balkans, and post-conflict peacebuilding	Kosovo, Turkey (earthquake disaster preparedness)
2012	support for EU membership, environmental protection, peace consolidation and market-oriented economic support	west Balkans, Moldova and Ukraine, Turkey (environmental and human resources)
2013	support for EU membership, environmental protection, peace consolidation and private sector development	western Balkans, Moldova, Ukraine, Turkey
2014	better and stabler regional and economic development, environmental protection, peace consolidation and industrial development	western Balkans, Moldova, Ukraine, Turkey
2015	better and stabler regional and economic development, environmental protection, peace consolidation and industrial development	western Balkans, Turkey, Ukraine
2016	Peace consolidation, industrial development and environmental preservation	western Balkans, Turkey
2017	stabilization through humanitarian and reconstructive assistance and dialogue	west Balkans, Moldova, Ukraine
2018	regional stability through quality growth, reconstruction, capacity development, dialogue, etc.	western Balkans, Ukraine, Moldova
2019	regional stability, quality growth, human security and capacity development	west Balkans, Ukraine, Moldova
2020	regional stability and quality growth through human resources development	west Balkans, Ukraine, Moldova

Japan’s initiatives and operations in Central and Eastern Europe in the 1990s and 2000s included:

• dispatching election observers to the Council of Europe Elections Observation Mission in Kosovo in August 2004;

• deploying specialists to train local police;

• providing significant Official Development Assistance (ODA) funding to the

Balkans and contributing financially to the Trust Fund for Human Security;

• becoming a participant in the Steering Committee of the Peace Implementation Council for Bosnia-Herzegovina;

• supporting the establishment of the International Tribunal for War Crimes in

Bosnia and Herzegovina

• contributing more than US$200 million to the reconstruction of Kosovo;

• jointly hosting the Ministerial Conference on Peace Consolidation and Economic Development of the Western Balkans in Tokyo in April 2004²⁷.

From the table, it is safe to say that Japan’s geopolitical perspective in the CEEC region differs from that of China’s in that Japan has incorporated more peripheral actors within Europe into its own version of CEEC. From 2010 onwards, Turkey was included into JICA’s regional development policy along with the other Central and Eastern European countries, something that has never been discussed in China’s “17 + 1” cooperative mechanism. The inclusion of Turkey demonstrated Japan’s perspective on land connectivity and apparent adherence to a broader concept of “Eurasia” when it comes to their cooperation with CEEC. JICA’s involvement in the CEEC has not been limited to assisting the region’s economic development, but it has also persistently and intensively made efforts in “low profile” areas such as education, human resource management, disaster control and reconciliation in peace-building, thereby justifying Japan’s presence in the region. It has demonstrated a particularly strong advocacy for candidate countries attaining the EU standard for membership, specifically in the Balkan and GUAM region, by facilitating peaceful resolutions to ethnic conflict toward regional stability.

Japan’s economic framework varies across different regions of Central and Eastern Europe. The V4 is at the center of Japan’s trade and investment in CEEC. Bilateral relations between Japan and V4 was consolidated in 2013 and shifted from “an asymmetrical donor-recipient towards a weaker but still asymmetric partnership.”²⁸

Besides Japan’s enduring commitment to the ODA within CEEC, the official diplomatic ties which Japan has established with V4 for more than a century also cannot be ignored. These relations clearly indicate a historical connection to cultural and interpersonal exchange, as well as social interaction with high-level officials, the royal families and ordinary citizens. Japan’s more than 100 years of uncut diplomatic ties with all the V4 countries exerts a significant influence in the region, as demonstrated through a number of relevant events in recent years. The third “V4 plus Japan” Summit Meeting was held in Slovakia when Prime Minister Abe visited Europe in April 2019 as a pre-celebration of its long-term diplomatic ties with the V4 countries, as 2020 marked the 150th and 100th anniversary of the establishment of Japan’s diplomacy with Hungary and Poland respectively.

4 A comparison between China and Japan in CEEC after 2012

To date, there has been limited Chinese literature and studies on the comparison between China and Japan in CEEC. Liu Zuokui and Li Ruqing²⁹, both from the Chinese Academy of Social Sciences, are the two primary scholars studying Japan’s developmental strategy in the CEEC region from the perspectives of both China and Japan, with a focus on economic investment and trade relations. Werner Pascha, also considered a key scholar on this subject³⁰, holds a similar view that Japan’s proactive and robust involvement in the region was in response to the inception of China’s “16 + 1” initiative in 2012. Upon closer analysis, two fundamental comparisons can be made between China and Japan in CEEC after 2012: institutional formation and infrastructural investment.

4.1 Institutional formation

In terms of China’s institutional formation within CEEC, active attempts to practice great power diplomacy peacefully has resulted in a holistic cooperative diplomacy, which is essentially a new diplomatic model that combines bilateral and multilateral diplomacy at regional and sub-regional levels. China utilizes holistic cooperative diplomacy to enhance its international influence in other regions and as a practical mechanism for achieving mutually beneficial cooperation with various partners toward building a community of shared destiny. The history of China’s overall cooperation with CEEC has shown that multilateral cooperation between partner countries is helpful to the development of comprehensive cooperation between China and CEEC. The extent of institutionalization is determined by the specific needs of the cooperation as well as the comfort level of both parties. China has attempted to diversify and expand its multilateral cooperation through the establishment of so-called “sub-regional cooperative platforms” (ciquyu hezuo)³¹. Nevertheless, there are many problems and challenges in advancing pragmatic cooperation between China and CEEC, which is a non-homogeneous region and hence poses a challenge to forming a holistic strategic policy. The CEEC region has also diversified its demands toward China; moreover, major countries in the European Union continue to impose pressure on China due to the China-CEEC cooperation. Thus, China’s potential to influence CEEC through economic diplomacy in pursuit of national objectives is “higher than before.”³² The cooperative scheme of “17 + 1” has also enabled China to deploy more ambitious China-led global development initiatives and strategies as it works to rebuild a global order amidst the challenges from existing institutions, norms and international order³³. Beijing’s strategy with the BRI, which consists of the “17 + 1” initiative and other institutional mechanisms, “is collecting allies, utilizing excessive capacities, creating jobs for foreign workers and channeling existing Chinese financial reserves into a world where the US can no longer be a hegemonic power.”³⁴

As for Japan’s response to China’s GDP achievement and specific initiatives in CEEC, a brand-new counter strategy was initiated through institutional adjustments to its regional development policy. In 2018, the Economic Partnership Agreement (EPA) and Strategic Partnership Agreement (SPA) stepped into a landscape more promising than ever, as the concepts of unity, stability, freedom and prosperity upheld by the EU overlapped with Japan’s strategic interests in the region, and hence Japan did not face the same troubles as China in implementing specific cooperative plans. JICA and other Japanese institutes in CEEC have provided effective aid to Japan’s strategy from within the private sector, much more so than in the case of the BRI, which is mainly run by state-owned enterprises in China³⁵. Moreover, Japan’s strategic efforts in CEEC are not only aimed at China, but are also in response to the EU’s sanction of Russia’s eastern frontline. In other words, to “bring [… Russia] to the negotiation table while enriching the diplomatic capital of Japan’s ally the United States in areas such as Eastern Europe, that were critical to its global strategy.”³⁶ In sharp contrast, China’s basis for an atmosphere of cooperation and dialogue is established on much closer ties with Russia; in fact, the “iron-clad” relationship between China and Russia has brought about a series of troubles in Europe. Meanwhile, Japan’s perception of CEEC is not confined to a subregional level, but it has also attempted to encompass a broader geopolitical and geo-economic zone by multiplying its institutional connections in the Eurasian region. For example, JICA’s annual report interestingly expanded into the greater region of Middle East, and associated Turkey with Europe as a “case demonstration” for Middle Eastern countries such as Iraq and Jordan.

4.2 Infrastructure competition between China and Japan in CEEC

The improvement of infrastructure has been a significant aspect of the overall development in CEEC after the Cold War. A positive correlation between infrastructure and GDP growth is undeniable, although the direction of causation is more difficult to establish³⁷. Infrastructural investment accounts for around 14% of the global GDP, and is likely to gain even more importance in the years to come³⁸. The concept of infrastructural development within a region involves both a deepening economic integration as well as narrowing developmental gaps³⁹. Meanwhile, better transport infrastructure and connectivity are not only crucial factors for the growth of the region’s international trade and economy, but also for other concerns such as regional integration and the fulfillment of Sustainable Development Goals (SDG)⁴⁰. Prior to EU membership, infrastructural investment throughout the CEEC region was outdated, resulting in a considerable disparity between CEEC and major EU countries. Since 1995, nearly €210 billion has been invested in transport infrastructure in CEEC. Whilst much progress has been made, particularly with road networks, CEEC still require further infrastructural investment in order to be on par with the EU. This has been part of the mind-set for both China and Japan, and they have seized the opportunity to promote their leading technology in infrastructure, such as China promoting its railway technology through the high-speed railway connecting Hungary and Serbia. The increased connectivity due to improved infrastructure can then further leverage on declining transport and communication costs, as infrastructural construction is otherwise a sort of oligopolistic public amenity that only superpowers can afford.

This unique benefit has attracted both China and Japan, two giants on the playing field of non-EU international infrastructural initiatives⁴¹, and both countries are famous for their effective domestic transportation networks in East Asia and beyond. China and Japan have also been “setting the pace for the recent trend in regional and inter-regional integration, which is associated with multilateral infrastructure connectivity initiatives.”⁴² Nevertheless, connectivity and infrastructure involve different types of networks, ranging from visible facilities such as transportation, roads and railways, to digital data streams, financial structures and people-to-people networks.⁴³

The landscape of global developmental strategy has become more complicated in recent years. The European Union launched a new connectivity initiative called the “Global Gateway” in December 2021 aimed at mobilizing 300 billion euros as a strategic “alternative to China’s BRI.” This new strategy is projected to be implemented until 2027 and will notably involve connectivity projects within the digital, environmental, energy, transport, health, education and research sectors, which implies a broader and more comprehensive framework of connectivity as opposed to the mere construction of roads, railways or ports. The Global Gateway program has also been perceived as a follow-up to the 2018 EU-Asia Connectivity Strategy. Under this strategy, EU states are able to choose their own projects of interest while operating as part of a European team that includes not only the EU and its member states, but also EBRD, the European Investment Bank (EIB) and national investment banks from various countries and private companies. The inclusion of all these potential partners amplifies Japan’s advantage as a member of EBRD, especially within the private sector. The Global Gateway initiative also requires support from political leaders and like-minded partners, which offers a chance for Japan to demonstrate its cooperation in adherence to democratic and value-driven principles. Only selected projects are slated to receive subsidies, whereas most of them have to rely on loans, as in the case of the Belt and Road Initiative.

So far, there has been little response from China toward the Global Gateway Initiative, but China’s attention toward it is rising. At the very least, it is safe to say that China perceives the outcome of the Global Gateway Initiative to be in line with the commitment made by the leaders of G7 in June 2021 to share a “value-driven, high-standard, and transparent” approach toward infrastructural implementation globally, which reinforces Japan’s stance within the Partnership of Quality Infrastructure alongside like-minded teammates such as USA’s Build Back Better World and the UK’s Clean Green Initiative. As such, global competition and interplay is inevitable not only between China and other external players but also among G7 members themselves. According to the analysis of Andrew Small, member of a USA think tank called the German Marshall Fund, the Global Gateway project could be “troubled” by the bureaucracy inherent in the EU and could fall prey to budget problems and high expectations in an unstable post-pandemic era⁴⁴.

Since 2012, infrastructural investment and construction has played a pivotal role and has been a highlight of bilateral trade between China and CEEC. Both sides have achieved several symbolic, mega-projects in their respective countries, such as the Belgrade Bridge across the Danube in Serbia, the Stanari Thermal Power Station in Bosnia and Herzegovina, the Milatinovich-Steep and Kicevo-Ohrid highways in Macedonia, and the railway connecting Belgrade to Budapest. Through these infrastructural investments, China has established a standard for cooperation with the EU countries in CEEC. However, several initiatives have also been postponed due to the constraints of relevant EU laws. For example, the A2 expressway project in Poland funded by the China Overseas consortium has been shut down due to project losses, resulting in serious damage to its reputation, and Hungary’s portion of the Hungary-Serbia railway project has been delayed without a definite completion date. The potential risks of these projects need to be carefully considered by China’s construction enterprises in the process of investing in the infrastructure of Central and Eastern European countries so as to make it more local- and environmental-friendly while creating more job positions. Thus, China still has a long way to go in terms of familiarizing itself with rule-based infrastructural investment in CEEC.

By comparison, Japan’s various investments including that of infrastructure in the CEEC region are more “free of suspicion,” as Japan shares so-called common values with the EU and is rarely perceived by European countries as a “global competitor.” Moreover, Japan is quite cautious in investing in other countries and strictly operates on rule-based and market-orientated movements. Japan has emphasized “quality growth” as demonstrated by its PQI initiative in 2015, with a focus on “quality infrastructure” in terms of sustainability, good governance and rule-setting, rather than the mere construction of roads or ports. The PQI addresses Japan’s trajectory of economic development and its reputation in delivering “quality” industries as well as in “soft” aspects such as technology transfer and human resource management.⁴⁵

It should also be noted that in spite of the furious competition, Japan’s attitude toward China’s presence in the region has become more practical and cooperative as Japan also recognizes China’s strength and global reputation in infrastructural construction. Japan eventually decided that it was wiser to be involved with the BRI rather than “ignore it until it was implemented in more and more countries.” Japan has been shifting toward a more positive attitude toward China-led initiatives, for instance by considering and eventually joining the AIIB⁴⁶. Therefore, many Japanese companies have started to reap the benefits from the express connectivity between China and CEEC, including the train routes between various cities in China and CEEC, which has been perceived as an effective cost-cutting measure. The freight trains under the BRI initiative connecting a span of important markets across China, Russia and Central Asia with CEEC hold enormous business development potential that Japan is unable to ignore. Nippon Express Co., Ltd, the leading transportation and communication company in Japan, has been utilizing the China-Europe freight train for budget-cutting purposes since as early as July 2017, thereby reducing the entire duration of transit from forty days to roughly twenty-eight days. Thus, Japan has been benefitting from the BRI initiative and has overcome to some extent the various constraints posed by sea transportation.

5 China’s BRI and Japan’s QUAD in CEEC: a tug-of-war

At the African Development Conference held in Kenya in August 2016, Shinzo Abe formally put forward the concept of a “Free and Open Indian Ocean-Pacific Strategy,” which more clearly addressed the need to strategically coordinate with the Asia-Pacific and Indian Ocean regions as a holistic geographic space. The “free and open” concept refers mainly to the rule of law, freedom of navigation, and free trade⁴⁷.

In March 2021, US President Joe Biden, Japanese Prime Minister Yoshihide Suga, Indian Prime Minister Narendra Modi and Australian Prime Minister Morrison held the first leaders’ summit ever under the QUAD initiative regarding developmental trends in the Indo-Pacific region, which has once again been dragged into the limelight amidst recent geopolitical topics. The two Asian countries in QUAD are in conflict with China’s “core interests” due to US-Japan’s continuous pressure in the East China Sea and India’s all-out attempt to suppress China, particularly in South Asia.⁴⁸

As key partners in the joint construction of the “Belt and Road,” CEEC has become more closely connected with China. However, in 2020, Japan’s “Diplomatic Bluebook” stated that the European Union and European countries are important partners that share Japan’s basic values and principles, which is more salient in the context of current international affairs. Japan’s relations with the Baltic and Western Balkans have also strengthened and will to some extent heighten the competition and cooperation between China and Japan in Central and Eastern Europe. To prevent other countries from choosing sides between Beijing and Washington, US officials have repeatedly maintained that QUAD is not a new Indo-Pacific version of NATO; rather, the four nations “brought different perspectives and contributed to a free and open Indian Ocean … based on the democratic values and free from coercion … to promote a rule-based order on international law of security and prosperity and to respond to threats in the Indo-Pacific region … and strengthen democratic resilience based on universal values … address the most urgent global challenges, common challenges, high-quality infrastructure investment, humanitarian assistance and disaster relief, and challenges in the maritime field.”⁴⁹

US’s stance presented a strong rebuke against China’s use of coercive measures and urged NATO allies to work with US to mount a pushback on Beijing. The US has attempted to drag more NATO members into the affairs of the Indo-Pacific region by perceiving Beijing’s coercive behavior as a threat to so-called “collective security and prosperity” as well as by “actively working to undercut the rules of the international system and the values that USA’s allies share,” and that they “should respond as allies and work together to reduce our vulnerability by insuring our economies are more integrated with each other when one of the allies is coerced.” The meeting between QUAD’s foreign ministers is critical toward advancing their shared goals of a free and open Indo-Pacific and rising to present challenges.

6 Conclusion

This article examined China and Japan’s respective strategic approaches in CEEC within the wider context of Sino-US relations. Pragmatic practices on bilateral and multilateral platforms in CEEC has allowed China to achieve greater regional influence, not only by allowing China to successfully reenter the arena of institutional formation and economic growth in chosen Central and Eastern European countries, but also by drawing attention away from Japan and its engagement model in the region. Such competition, cooperation and co-existence pave a potential landscape for regional integration in CEEC.

Firstly, China’s enormous investments in the past decade in the China-CEEC cooperation has led Japan to reconsider its strategic approach. The year 2022 marks the 10^th anniversary of the China-CEEC cooperation, and it is high time for both parties to learn from old lessons and look forward to new cooperative experiences. From 2010 to 2019, China’s total investment in Central and Eastern Europe increased from 310 million USD to 14.69 billion USD, with an average annual growth rate of up to 53.4%⁵⁰. Furthermore, according to statistics from 1980 to 2021, a total of 212 pairs of sister provinces (cities) between China and CEEC have been formed, the majority of them since at least 2012⁵¹. At present, the strategic plan from the leaders’ summit between China and CEEC is steadily being implemented, and local cooperation has enjoyed unique advantages and potential in terms of stability and the accuracy of demand matching in promising industries such as digital economy, green environmental protection and culture. Japan-CEEC relations have also been widely evident in various industries, and more than 4,500 Japanese companies have invested in the fast-growing economies of CEEC. Japanese investors are the third largest group of foreign investors in CEEC, with preferred sectors that include manufacturing, automotive supplies and business services. The achievements of China and Japan imply that both sides have established closer economic ties with CEEC, and that most of the investment and foreign trade have been oriented toward cooperation and economic benefit rather than geopolitical competition.

Secondly, China’s presence in CEEC has encountered challenges such as the “China threat” discourse and the core national interests of Taiwan, Hong Kong as well as issues in Xinjiang, which have also been used by Japan to reinforce its competition with China. However, recent attitudes from Lithuania and Slovenia have to some extent indicated that the enthusiasm of some Central and Eastern European countries with China have cooled after the EU’s declaration of China as a “systemic competitor” in 2016⁵². The CEEC region is still observing and having to make choices regarding the global rivalry between China and USA by either siding China or Japan during the recent formation of QUAD and AUKUS while taking NATO and many other cross-layer security and rule-based considerations into account. Within the fields of economy and security, Japan, the United States, Australia, India have aimed to continue countering the BRI, the “21st Century Maritime Silk Road” and the militarization of the South China Sea. The two Asian countries in QUAD are in conflict with China’s “core interests,” including US-Japan’s continuous pressure in the East China Sea⁵³. Even though CEEC are key partners in the joint construction of the “Belt and Road” with China, some Central and Eastern European countries are also member states of NATO which proactively advocate the FOIP. The EU labels China as “a partner, a competitor, and a systemic rival” while still exercising trust in Japan. At the same time, problematic issues like China’s potentially divisive role in the “17 + 1” scheme or in the west Balkans have to be noted. In more general terms, the EU intends to “more robustly” “preserve its interest in stability, sustainable development and good governance.”⁵⁴

On the other hand, Japan has had to implement policy changes concerning the role of government involvement in direct response to China’s presence in CEEC. Several recent political events have given Japan the opportunity to reinforce its impact in CEEC. Lithuania and Slovakia have both made “vaccine donations” to Taipei, thus fueling the competition in vaccine diplomacy. In October 2021, a delegation of Taiwanese government officials and business owners visited Slovakia, the Czech Republic and Lithuania in defiance of Beijing’s opposition to any diplomatic ties with Taipei, seemingly to create a political triangle of “CEEC-Japan-Taiwan” to counteract mainland China. NATO’s perception of China as a threat encompasses various aspects including the threat to freedom of navigation, militarization in the South China Sea, and the targeting of the entire Indo-Pacific region with increasingly advanced military capabilities. In line with this, Japan has expressed its intension to contribute to regional strategies dedicated to the sub-region of CEEC. Although the Covid-19 pandemic proved China’s rise to global dominance to be unstoppable⁵⁵, the recent “Lithuanian accident” as well as Hungary and Serbia’s support of China’s vaccines significantly corroborate the conclusion that “the countries with the strongest negative perceptions of China in the region appear to be Czechia, Slovakia, and the Baltic states, while those with the most positive are Serbia, Hungary, and Greece.”⁵⁶ Meanwhile, Japan has also been proactively taking part in several sub-regional mechanisms. In May 2021, Bulgarian president Radev made a statement on behalf of the Three Seas Initiative (3SI) that Japan, South Korea, and Qatar were invited to join the 3SI to foster connectivity with CEEC in terms of energy, infrastructure, and digitization. The 3SI allows USA to strengthen transatlantic relations in terms of energy and geopolitical ties across the region as a counterbalance against China and Russia⁵⁷, which is also consistent with Japan’s global strategy.

All in all, China’s various domestic and foreign policies toward CEEC present a “charming attraction” to Japan even in the context of China-US rivalry. Both Japan and CEEC need to be more pragmatic and positive toward cooperative mechanisms with China in CEEC, as well as embrace more opportunities to mutually support both China and Japan’s regional presence and influence for the continued development of the CEEC region.

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Additional information

Notes on contributors

Qichao Wang

Qichao Wang is currently a lecturer at Polish Studies Center, School of International Relations, Xi’an International Studies University. He holds a Ph.D. in Political Science from the University of Macau and B.A. in Minzu University of China and M.A. in International Politics from China Foreign Affairs University. He has been selected to the visiting fellow in CSIS Jakarta and PAIGEO Institute in Budapest, Hungary. His teaching and research focus on Area Studies, China’s foreign Policy and Guangdong-Hong Kong-Macau Greater Bay Area.

Jianwei Wang

Jianwei Wang is Emeritus Professor in the Department of Government and Public Administration at the University of Macau and has served as senior analyst in Hong Kong and Macau. He holds a Ph.D. in Political Science from the University of Michigan and a B.A. and M.A. in International Politics from Fudan University (Shanghai). Previously, he was Distinguished Professor of Political Science at the University of Wisconsin-Stevens Point. He has also served as a research fellow and visiting scholar at George Washington University’s Sigur Center for Asian Studies, the Atlantic Council of the United States, the East-West Center (Hawaii), and the United Nations Institute for Disarmament Research in Geneva. His teaching and research focus on East Asian politics and security, Chinese and American politics and foreign policy, Sino-American and Sino-Japanese relations, and UN peacekeeping operations. He has published extensively in these areas.

Notes

1. Gerstl, “Governance Along the New Silk Road.”

2. After Lithuania’s statement of withdrawal from the “17 + 1” cooperation between China and CEEC, Chinese scholars and think tanks are precautionarily using the name of “17 + 1”. In this paper, “17 + 1” or “16 + 1” is used interchangeably to convey the same meaning, i.e., China-CEEC cooperation.

3. Song and Wang, “Toward a More Promising Partnership”.

4. Cieslik and Ryan, “Characterizing Japanese Direct Investment.”

5. The People. “The Trade Volume between China and CEEC Exceeds US$100 Billion for the First Time.”

6. Economy, “The Third Revolution”.

7. Tursanyi and Simalcik, “Hungarian Policy Toward China Might Be Facing a Seismic Shift”.

8. Venne,“China in Hungary: Real Threat or False Alarm?”.

9. Kavalski, “The Struggle for Recognition.”

10. Xing, Mapping China’s One Belt.

11. Akon and Rahman, “Reshaping the Global Order.”

12. Kawashima, “China and Eastern Europe.”

13. Campbell and Doshi, “The Coronavirus Could Reshape.”

14. China National Radio. “Xi Attended the China International Friendship Conference and Delivered Speech.”

15. Horváth, “The Geopolitical Role of China.”

16. Kavalski, “Quo Vadis Cooperation between China and Eastern Europe in the Era of Covid-19”.

17. Pepe, “China’s Inroads into Central.”

18. Mayer and Kavalski, “How to Make the Most.”

19. Beeson and Li, “China’s Place in Regional,” 491.

20. Gao, “Navigating Around the Chinese hegemon.”

21. Macikenaite, “China’s Economic Statecraft.”

22. AIES, policy paper.

23. Kitade, “Why Does Eastern Europe Matter.”

24. Berkofsky, “EU-Japan Relations.”

25. Liu and Li, “A Comparative Study of Chinese and Japanese Investment in Central and Eastern Europe.”

26. See note 23 above.

27. Berkofsky, “EU-Japan relations.”

28. Bertalanic, “V4+ Japan.”

29. Liu and Li published two respective articles in 2019 and 2021 to discuss Sino-Japan relations and CEEC, and they also coauthored an article in 2021 to discuss investment features of China and Japan in CEEC. These three Chinese articles represent the general views and opinions within Chinese academia on this topic. The three articles are: “Japan’s Policy towards CEEC and Its Impact on China’s 16 + 1 Initiative” by Liu in 2019, “Japan’s strengthening Economic and Trade Ties with Central and Eastern Europe: Motivation, Layout and Influence” by Li in 2021, and the coauthored “A Comparative Study of Chinese and Japanese Investment in Central and Eastern Europe.”

30. Pascha, “Belts, Roads, and Regions: The Dynamics of Chinese and Japanese Infrastructure connectivity initiatives and Europe’s Responses.”

31. Parepa, “The Belt and Road.”

32. See note 21 above.

33. Mayer, China’s Rise as Eurasian Power.

34. Forgács and Csillik, “China – A robotizing East-Asian.”

35. Deloitte, “Embracing the BRI Ecosystem.”

36. Taniguchi, “Beyond ‘The Arc of Freedom and Prosperity’.”

37. ADB, “Meeting Asia’s Infrastructure Needs.”

38. McKinsey Global Institute, “Bridging Infrastructure Gaps.”

39. ERIA, “History of CADP.”

40. OECD, “Enhancing Connectivity through Transport.”

41. Pascha, “The Quest for Infrastructure Development.”

42. Pascha, “Belts, Roads and Regions.”

43. GICA, “Why Connectivity Matters.”

44. Seibt, “With Its ‘Global Gateway’, EU Tries to Compete with China’s Belt and Road Initiative”.

45. See note 41 above.

46. Iida, “Japan’s Reluctant Embrace of BRI?”.

47. Japan’s Ministry of Foreign Affairs, “Free and Open Indo-Pacific.”

48. Grissler and Vargo, “The BRI vs FOIP: Japan’s Countering of China’s Global Ambitions.”

49. 2021 EU-Japan Summit Joint Statement.

50. CGIT.

51. Liu, “Cooperation between China.”

52. European Commission, “Joint Communication to the European.”

53. Grissler and Vargö, “The BRI vs FOIP.”

54. EC-HR, “EU–China Strategic Outlook.”

55. AIE, “Policy Paper.”

56. See note 41 above.

57. Bromund and Kochis, “The Top Five U.S. Priorities.”