(TibetanReview.net, Sep10’21) – There has been a correlation between the influx of Chinese capital into a country and a negative impact on the latter’s environment and quality of governance, including in terms of rise in corruption level, according to a new report published by the Bulgaria-based Center for the Study of Democracy on Sep 9.
The report says Beijing’s growing economic footprint in Central and Eastern Europe over the last decade has coincided with a drop in legal and governance standards and raised concerns about the environment and rising debt levels in the region.
The report says China’s influential footprint was made possible by the influx of an estimated $14 billion in grants, loans, mergers, and economic concessions since 2009 and an estimated $50 billion investment in infrastructure, energy, and telecommunications projects that are either currently under way or awaiting implementation.
The research is also stated to show that the more financially tied to China a nation becomes and the higher the share of its gross domestic product is made up of Chinese investment, “the higher is the likelihood” that China has exploited problems with the rule of law in it to expand “its economic and political influence.”
“It’s a vicious cycle where authoritarian countries like China take advantage of legal loopholes and corrupt practices to expand their influence on the ground,” Martin Vladimirov, one of the report’s authors who directs the Center for the Study of Democracy’s energy and climate program, has told rferl.org Sep 9. “These networks allow for more capital to enter, which leads to a greater drop off. The data shows a very strong correlation between the flow of Chinese money and a declining quality of governance.”
This connection, the report says, is measured through the institution’s Chinese Economic Power Index, which aims to show the full scope of China’s economic influence. Regional growth has been seen to be uneven, with the bulk of Beijing’s expanded clout focused on the Czech Republic, Hungary, and the Western Balkans – primarily Bosnia-Herzegovina and Serbia.
The report has found that Bosnia-Herzegovina, Hungary, Montenegro, and Serbia have experienced the most noticeable drops in those categories in connection with increased Chinese investment. Beijing-backed companies are stated to have received tax exemptions, the ability to bypass local labor laws, and other forms of preferential treatment.
In the Western Balkans, in particular, the study adds, “local companies with close ties to the governments in the region have been lobbying directly for the implementation of [Chinese] projects,” with many of these local businesses holding a strong commercial interest to act “as a bridge between China and the national governments.”
“All these activities are technically legal,” Vladimirov has said. “The overall effect is that government institutions no longer regulate the Chinese companies, and these institutions stop serving the public interest and instead help private ones in the form of politically connected conglomerates or local oligarchs.”
“Central and Eastern Europe have been a very effective backdoor for Chinese businesses to expand across Europe and the European Union,” he has said. “It’s part of a long-term strategy.”
While China isn’t trying to stop countries in the area from joining the EU, the laws and policies that are being adopted by them to facilitate Chinese investment indirectly undermine the accession process for many countries, Vladimirov has added.
