Security fears, political tensions souring China’s relations with Central Europe

This story is part of a CBC News series exploring China’s expanding influence around the world and how Canada and other countries are contending with China’s power.

A half-decade ago, China planted an economic flag in Central Europe with its multi-billion-dollar plan to build a vast infrastructure network of roads, railways, pipelines and ports. 

Just like elsewhere in the world, China touted its Belt and Road Initiative as a deal that would stretch far into the future and bind countries together under Chinese investment and benevolent guidance. 

Five years on, though, some of those countries are finding the Chinese embrace increasingly uncomfortable. 

Case in point: early this year, Polish authorities arrested two people suspected of espionage. One of those was Wang Weijing, a Chinese senior manager in Poland for the telecom manufacturer Huawei Technologies. The other man arrested was a Pole, a friend of Wang’s who had access to a highly sensitive Polish telecommunications work.

“I am wrongfully accused,” Wang said to Reuters in July. “Not to mention that finding a spy in Huawei is a perfect excuse to kick Huawei out of Poland.”

Polish President Andrzej Duda, left, picture with Xi in November 2015, has said relations with China are at an impasse. (Damir Sagolj/Reuters)

Wrongfully accused or not, Huawei almost immediately said it had fired him. The Poles have held him in prison for 11 months.

“The case is unequivocal,” said Polish President Andrzej Duda in July.

That’s not good news for Wang or China.

The stakes in Poland are major. Huawei has invested more than $1 billion US in the country and has promised to invest hundreds of millions more if it gets a prized 5G contract from the Polish government next year.  

A senior manager with Huawei’s operations in Poland was recently arrested on charges of espionage. (Kacper Pempel/Reuters)

But Poland now finds itself at the centre of a power struggle between China and the United States. The U.S. in May effectively banned the purchase of Huawei equipment by U.S. telecoms, arguing that the equipment made the U.S. vulnerable to Chinese spying. It also urged allies to impose similar bans.

Duda has gently referred to “an impasse” in Poland’s relations with China, which could lead to China losing the big 5G contract. The Chinese have hinted quietly that they could move their investments elsewhere if they do.

‘Our conscience is not for sale’

Meanwhile, next door in the Czech Republic, the stakes are lower but the argument is much louder and more public. It revolves around a sister city agreement between Prague and Beijing that collapsed in recriminations and reprisals in October. 

The Chinese insisted on including in the sister city accord a clause saying both cities endorsed the One China policy, which implicitly recognizes China’s sovereignty over Taiwan, as well as Hong Kong and Tibet. 

The mayor of Prague, Zdenek Hrib, said politics had no place in a sister city agreement and wanted it removed.

“Our conscience is not for sale,” said Michael Kraus, a leading member of the governing party of the Prague city council.

Supporters gather in Prague’s Old Town Square to hear the Dalai Llama, the exiled leader of Tibet. Tibetan sovereignty was one of the issues that has led to tensions between city officials and China. (David W. Cerny/Reuters)

The Chinese refused despite the fact that sister city agreements between Beijing and other Western cities, notably London, Riga and Cologne, contained no such clause.

Hrib is a new mayor from the ranks of a new party, the Pirate Party, which was set up to shake up Czech politics. He took office last year and five months later, visited Taiwan. He also flew the Tibetan flag over Prague city hall. The Chinese were not amused. 

Matters were not improved when the Czech cybersecurity watchdog warned against using Huawei equipment, saying it posed security threats.

Hrib’s symbolic actions infuriated the Chinese government. In the spring of 2019 it abruptly cancelled a tour of China by the Prague Philharmonic Orchestra.

“Prague’s inappropriate behaviour is the fundamental reason that the city’s leaders are not welcome by the Chinese people,” said Geng Shuang, the Chinese Foreign Ministry spokesman.

Other cultural tours were also cancelled. In October, the Prague city council definitively rejected the sister city accord, and the Chinese Embassy talked openly of reprisals.

The Czech foreign minister, Tomas Petricek, responded angrily: “Diplomacy is not conducted with threats.” 

$800M in investment withdrawn from Czech Republic

Hrib went further.

“China would do better to concentrate on its previous promises of investment,” he said. “They weren’t fulfilled. Refusing the Prague Philharmonic tour after the contract was signed shows that China is not a reliable economic partner.”

That was a direct slap in the face of the Chinese. It was also aimed at Czech President Milos Zeman. Over four years, he had carved out a very China-friendly policy, much to the annoyance of the European Union. The Pirate insurgency threatens it. 

A woman walks past Czech National Bank in Prague. The bank estimates that China invested more than $1.3 billion into the country in 2015-2016 but has withdrawn almost $800 million in the last two years. (David W. Cerny/Reuters)

“It’s very easy to create unfriendly relations,” Zeman told the Chinese ambassador in September. “The mayor of Prague has little experience in such affairs, but I must say the Chinese response was excessive.”

Zeman had invited massive Chinese investment and in the beginning got it. According to the Czech National Bank, there were Chinese investments of more than $1.3 billion in 2015-2016.  But these have been reversed. In the last two years, almost $800 million has been withdrawn.

One of the reasons is that the head of the big investment company pouring the money in, Ye Jianming, has been detained for corruption by the Chinese. His company has imploded. This is particularly embarrassing to Zeman because he had made Ye an economic adviser, a high-profile if symbolic role.

Zeman said in October that one of the investments that did materialize, a major stake in Prague’s biggest professional soccer team, has been sold off as part of the Chinese reprisals. To add to the confusion, the team itself doesn’t seem to know about this.

Chinese reprisals might lead to a large drop in the number of Chinese tourists to Prague. Last year, 650,000 people from China visited the city. Czech sinologist Olga Lomova professed herself unconcerned in an interview with Czech radio in October.

“We have too many tourists already. I don’t think it would be a loss.”

Who benefits next?

The Chinese have hardly given up on their overtures to central and southern Europe. Instead, they hint they could move their Polish investment to Hungary, run by the hard-right Prime Minister Viktor Orban. 

The Hungarian government would be delighted. It’s already the largest recipient in Central Europe of Chinese investment with more than $5 billion, and in 2017 signed a strategic partnership agreement with China.

As China’s disagreements with Poland and the Czech Republic have grown, Hungarian Prime Minister Viktor Orban, pictured with Xi in April, has been more than eager to take their place. (Andrea Verdelli/Reuters)

Within days of the arrest of Wang in Poland, Gergely Gulyas, a senior Hungarian minister attached to the prime minister’s office, announced: “The Hungarian government sees no security risk” in Huawei technology. 

In other words, bring it on.

And the Chinese leader, Xi Jinping, continues to do the rounds, most recently in Italy and Greece, promising enticing new investments and stirring up old quarrels by suggesting the Elgin marbles — priceless sculptures from the Parthenon now in the British Museum —  belong in Athens.

And in Brussels, the EU does little but wring its hands. To do more would risk further alienating the leaders of Central Europe, who are openly critical of the union that has showered subsidies on them for 15 years. 

Central European leaders have shown you can bite the hand that feeds you. With, so far, few consequences.

Read the stories in this series: