Weekly Briefing, Vol. 17, No. 4 (RO), April 2019
The implications of China-EU events in April for Romania
The positive feedback in further strengthening the bilateral relationship with China following the events in the month of April came from all of the three most important governing bodies in Romania: the Presidency, the Government and the Parliament. In addition, the private environment is continuously seeking collaboration opportunities with China. Besides the China-EU and the 16+1 summits, Romanian officials also had several other contacts with Chinese representatives, occasioned by the meeting with the new ambassador of China in Romania, Ms. Jiang Yu, and the visit to Bucharest of the delegation headed by the First Vice-President of the Chinese People’s Political Consultative Conference, Zhang Qingli.
- The China-EU summit
The China-EU summit which took place on the 9th of April ended, among others, with the common engagement of the two parties for consolidating the commercial and investment relationships on the basis of close mutually beneficial cooperation, with the guarantee of compliance with international standards. In the plenary debate on relations between the EU and China, which took place before the Summit, Romania supported the restoring of balance in EU-China relations, based on reciprocity in all areas for the benefit of the common economic interests, as China is an important strategic player both in the area of goods and services, and in the field of investment. In addition, China is an important partner in finding solutions to the global challenges.
The results of the summit could represent a signal for smaller EU countries for strengthening the cooperation with China, as such countries tend to be more prone in seeking for EU agreement before acting by themselves.
Regarding Romania, the Prime Minister Viorica Dancila stated that its interest is in achieving a balanced growth of bilateral trade exchanges, as well as actively participating in economic missions, fairs and thematic international exhibitions. Romania’s plan for this year is to increase the exports to China up to 1 billion USD, which would represent an increase of 66% as compared to the last year, in order to decrease the trade deficit. The total value of trade between Romania and China exceeded 4 billion USD in the first eight months of 2018, of which 604.02 million USD represented exports to the Chinese market (a 14.8% increase over the same period of the previous year) and 3.43 billion USD were imports from China (corresponding to an increase of 26.31%). A growth in Romanian exports of agricultural products can be one of the solutions to reduce the trade deficit, especially in the light of the trade dispute between China and the US, which has generated new opportunities for the European markets.
Moreover, smaller EU countries are in strong need of funds for financing different large projects, from infrastructure to industry. EU countries need investment and resources, as disparities between them are growing and the amounts allocated for research and development expenditures are less important than in the US and China, especially in the field of artificial intelligence. The Chinese investments, especially in projects meant to develop motorways, railways and to provide other type of solutions for the poor infrastructure, will provide benefits for all the partners of that respective countries.
Still, following the EU reticence related to the Chinese investment projects in Central and Eastern Europe, the US warnings that political interests are trying to be imposed through economic projects, the different economic model of China and the usual resistance towards new partners and ways of doing things, some of the projects announced several years ago have not started yet. For example, the construction of a high-speed rail link between Belgrade and Budapest has just begun in Serbia five years after the announcement of the project. The same is the situation in Romania. Therefore, although the large projects announced several years ago are not yet implemented, the experts’ opinion is that the bureaucratic difficulties and delays in decisions will be surpassed and China will become an important player in Romania, as it is in other countries, not only in infrastructure, energy, agriculture, but also in other fields.
In addition, a major step in the relationship with China is expected to be made in the first part of May, following the signing of the agreement between Nuclearelectrica and China General Nuclear Corporation regarding the construction of reactors 3 and 4 in Cernavoda Nuclear Power Plant, an investment of about 6 billion euro.
The President of the Romanian Senate expressed his satisfaction with the results of the EU-China Summit and considers in this context that Romania will continue to contribute to the consolidation of the EU-China Comprehensive Partnership and will closely follow the progress made in implementing EU’s strategy on the connectivity between Europe and Asia.
- The 16+1 summit in Dubrovnik, Croatia
The 16+1 summit in Dubrovnik was an opportunity for a bilateral meeting between the Romanian Prime Minister and the Premier of the State Council of the People’s Republic of China, Li Keqiang, in which the heads of the two governments have expressed their commitment to pursue the political dialogue and the cooperation projects.
In addition, the representatives of the Romanian Parliament appreciated the signing of the three important documents for the development of Romanian-Chinese cooperation in areas of common interest:
- The Memorandum of Understanding on the Establishment of an Expert Working Group to Promote Unrestricted Trade between Romania and the Republic of China, between the Ministry of Business, Commerce and Entrepreneurship of Romania and the Ministry of Commerce of the Republic of China;
- The Sanitary Veterinary and Food Safety Protocol concluded between the General Customs Administration of the Republic of China and the National Sanitary Veterinary and Food Safety Authority of Romania concerning the export of honey from Romania to China;
- The Cooperation agreement between China Development Bank and Eximbank Romania on guaranteeing loans.
In addition, Romania restated that among the priorities of its Presidency of the EU Council, there are subjects of common interest for the countries participating in the 16+1 format of cooperation, such as the Western Balkans region. Romania supported Greece’s adhesion to this format of cooperation and also suggested the further integration of the Republic of Moldova in this large partnership. Moreover, Romania will struggle to increase European investments in the 17+1 projects and to involve the European financial institutions, following the opportunities created by the Europe-Asia Connectivity Strategy, the EU-China Connectivity Platform and the TEN-T (Trans-European Transport Network) Program. In this way, Romania is trying to ameliorate the tensions between EU and China and to increase the transparency level.
The private business environment in Romania was also eager to harness the opportunities of collaborating with China. Among the over 900 representatives from the countries participating in the Europe-China Economic and Trade Forum, the Romanian participants represented the fields of energy, IT & C, oil, tourism, education, the local public authorities and non-governmental organizations with economic profile. Their presence at the Forum is part of the larger effort to stimulate the involvement of Romanian companies in cooperation within the 16+1 format, given the opportunities offered by this mechanism to develop connectivity between Asia and Europe.
Besides this, the institutions in the field in different regions in the country seek to enhance the collaboration with China. The relations between the Prahova Chamber of Commerce and Industry and various provinces in China have led to the establishment of a new collaboration strategy, in the format of a branch of the Romania-China Chamber of Commerce and Industry which was inaugurated in the region and will serve the needs of the business environment in that area. 13% of the Romanian institution’ agreements with similar organizations around the world, are made with representatives from China.
In another part of the country, the Chamber of Commerce, Industry and Agriculture from Timis plans to participate in the China Brand Fair 2019 event, which will take place at the beginning of June in Budapest. The advantages are the Romanian companies have the opportunity to meet Chinese businessmen from 16 economic areas, to establish contact with over 800 Chinese suppliers and to benefit of the large presence of foreign participants. In addition, Romanian companies will have the opportunity to be enlisted in the Chinese database so that buyers to access to the Romanian specialties, food, agricultural and cosmetic products and to find the contact details of the suppliers.
In addition, the recent changes on the law of Private-Public Partnership could enhance the Chinese presence. In fact, at the beginning of April, the Romanian Association for Smart City and Mobility (ARSCM), which is the main organization of the Smart City Industry in Romania, and China National Electric Engineering Co., Ltd. (CNEEC) signed the financing agreement for smart city projects valued at 500 million euro. The financing agreement provides for investments in the main areas of the industry – energy, environment and infrastructure, and support ARSCM projects for the development of creative-intelligent communities in Romania. The agreement has a ten-year implementation period, with the first projects being announced in the near future, following the first rounds of discussions with the municipalities, companies and institutions interested in accessing the funds. The intentions are to assess the feasibility of investing in major sector priority projects, such as highways or high-speed rail sections. This agreement represents the first stage of a comprehensive investment plan, with representatives of CNEEC expressing their interest in creating a long-term partnership in Romania.
- The Second Belt and Road Forum
The Second Belt and Road Forum in Beijing, which took place at the end of April, was less spotlighted than the previous two events which were located in Europe. However, Romania is among the countries with which China and other 32 countries set up the Maritime Silk Road Port Cooperation Mechanism and cooperation will continue in the field of culture and cultural property. The President Klaus Iohannis stated his opinion that Romania is willing to work with China to promote the further development of bilateral relations and while holding the rotating EU presidency, Romania will make efforts for expanding and deepening the EU-China relations.