Free Markets, Free People

China Enters Eastern Europe: Advantages for All

Beijing is on the march.  At least Chinese Premier Wen Jiabao has been busy, last week completing a four-nation tour of Eastern Europe.  He concluded with a trade summit in Warsaw attended by the prime ministers of 16 states in the region, including Estonia, Latvia, and Lithuania.

The conference was a big deal, attracting 300 Chinese companies and 450 firms from Eastern Europe.  Heretofore Beijing’s involvement in the region has been modest, with just $821 million invested since 2004.  However, China wants to do more.  Reports the International Herald Tribune:

“Warsaw-based economist Witold Orlowski believes that with ‘mountains of euros and dollars they really want to spend,’ the Chinese are eager to capitalize the region’s stability, growth and competitive prices to gain ‘perfect access to the West European market’—still Beijing’s top export destination.”

The prospect of greater Chinese economic involvement in the former Soviet sphere is win-win all-around.  First, money from China will promote economic development at a time when American and European investment remains hampered by slow growth and other economic troubles at home.  Second, Chinese investment will offer an alternative to Russian money, constraining Moscow’s influence. 

Third, dealing more with Europe will reinforce Beijing’s understanding of the importance of legal norms in economic relationships, which have not been as evident when China invests in authoritarian states in Africa and Asia.  Fourth, investments in the West will more tightly tie Beijing to the existing peaceful order.  The Chinese government knows that any conflict with America would risk its relations with Europe, with which the U.S. remains strongly linked through culture, economics, and security.

Increased Chinese investment in Eastern Europe will take time and may face unexpected challenges.  However, China’s involvement in nations once dominated by the Soviet Union should be welcomed, including in America.

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