Relations with East Asia – A View from Romania
The situation of the world today makes it difficult to even agree on whether we, as humanity, are going towards the right or the wrong direction. This is indeed a time of increasing fluidity, fake news, rapidly rising populism, which all makes vision and clarity of decision very uncertain for even the most educated and informed persons. Are democracy and advanced capitalism failing or are they being following various routes all heading eventually towards progress? And what does progress mean nowadays when artificial intelligence (AI) is offering blurred visions of some utopias and clearly lots of dystopias for a large number of people?
Last spring Romania was troubled by the #șîeu public campaign which started as a protest against the country’s notorious incapacity to build its road infrastructure and has turned into a national protest against the government’s incompetence. Romania has been considered as one of the generally problematic Member States of the European Union (EU). Nonetheless, in spite of its own obvious internal problems, in spite of its positioning in times of shifting influences and power games, Romania apparently manages to have a good economic growth and a steady upward trend in general development.
With Brexit finally starting to unfold, there are more and stronger voices mainly in Europe, but not only, arguing out in the open for the benefits or liabilities of membership in the EU.
In order to make sense of this turbulent picture we are going to take the following roadmap in this article: a critical approach to Romania’s presence in the EU, Romania’s position towards Asia and mainly China, a brief discussion on the way China is perceived in the EU against the background of the international scene provided by the United States (US) and Russia. We will do so in order to make sense, if at all possible, of the future challenges and opportunities that lie ahead for Romania and the larger EU.
Romania – an EU member state with an accent
As in almost all cultures, in the present Romanian public sphere there are some prevalent stereotypes according to which Romania and therefore its inhabitants are “different” (Boia, 2002a; 2002b; 2012; Djuvara, 2008) from a perceived ideal which is obviously different in different ages, or on the contrary similar to what are considered ideal models of citizenship or best practices again in various times (Mihăilescu, 2017). Positions are not really that clear cut and controversies are many, passionate and inflamed from time to time by various political moments considered more appropriate than others to have such public discussions which sooner or later lead to labelling or ranking the country according to the intentions of the agency doing the appraisal. Irrespective of the positions researchers take on the “similarity” or “dissimilarity” of Romanians, they seem to generally agree on the fact that there has been a desire or dream for the West European and US values and lifestyles on the part of the great majority of Romanians. That desire or dream may be related to what Lucian Boia (2002b, p. 60) calls the European mystique, or more generally known as eurocentrism, that is the superiority of the European civilization to the rest of the world. This may be an explanation for the easy sell of the European accession project of the political elites to the Romanian voters who, for more than a decade, have been waiting for the benefits of the EU membership. And there have been clearly some benefits, mainly in terms of the free circulation of labour (the freedom of movement for workers) which has, wickedly, led not only to the depopulation of entire areas in Romania, but also to a massive and socially painful brain drain. And these phenomena together with the increasing incapacity of the various governments to offer a convincing and coherent development plan for the large majority of the population against the current international developments have led to increasing Euroscepticism among Romanians.
So where is the country compared to itself and to the rest of the EU members? According to the Economic Complexity Index (ECI) , Romania is the 41st largest export economy in the world and the 31st most complex economy. In 2017, Romania exported $70.5B and imported $81.4B, resulting in a negative trade balance of $10.9B. In 2017, the GDP of Romania was $211B and its GDP per capita in PPP terms was $26.7 thousand. Apparently, Romania manages to have a good economic growth and a steady upward trend in general development. This continuous and significant economic growth from 2012 onwards is accompanied by the paradox of Romania declining in global competitivity rankings, as pointed out in the first Report on Romania’s competitiveness, published by INACO. The trade deficit has surpassed €6.7B in 2018, an increase of over two thirds as compared to the previous year and the imbalances continued to grow (Paul et al, 2019, p. 2).
One of the few national projects in Romania after 1989 was NATO membership, materialized in 2004, and the accession to the European Union. This developed a large expectation in a significant part of the Romanian people for European funding as a panacea for the country’s many weaknesses and needs. It did not happen. The INACO report underlines and explains this phenomenon. A weak institutional capacity leads to modest performance in managing development projects as can be indicated by the poor absorption of European funds, in its 6th year of multiannual budgetary execution within the EU, which is below 12% for the Operational Programme of Administrative Capacity, under 13% for regional development, a bit above 13% for the Operational Programme Human Capital and over 15% for Operational Programme Competitiveness. The prospects for intellectual capital and knowledge do not appear favourable for Romania in the European context of innovation which shows that we are modest innovators and have the fastest speed of degradation of innovative capacity for the past 5 years in the EU. According to the European Innovation Scoreboard 2018, Romania has an innovation capacity of only 31.1% of the EU average. At the opposite end, Sweden has an innovation capacity of 140.8% of the EU average.
A brief overview of Romania’s evolution is useful in order to remind ourselves both of some historical facts and of their results on the Romanian public mythology and stereotyping under communism and later on, affecting a large part of society until today.
Romania reaches the level of development of a middle-income economy following the industrialization process of the communist regime, which transforms the economy almost overnight. The GDP per capita in 1945, which was at lower levels than in 1920, doubles until 1950 and in each of the next two decades until 1970. In the 1970s, Romania reached a development ceiling that placed it at about 0.6 % of world exports, which would deteriorate rapidly in the coming period and remain a difficult target to date despite gradual recovery since 1992. At the end of the communist period, the average monthly income was about $80, just like in Bulgaria, Belarus and Ukraine, but much lower than $400 in Poland and the Czech Republic. The decline was important due to effects and duration of impact. In 2000, among the former Communist countries only Romania and Bulgaria still had to recover the level of economic activity from the 1980s. In 1999, per capita income was still below the level of 1989, within still a predominantly state-run economy, declining in real terms with 3.6% between 1993 and 1998, but increased by over 400% through underground activities (Paul, 2019, p. 3).
The solutions that the INACO Report (pp. 40-42) put forward are to increase the country’s competitiveness through: investing in people in order to ensure their health, education and abilities to cope with the turbulent economic and technological environment of today; developing the country’s road, railroad, maritime and air infrastructure, and financial system; developing (state) institutions, in other words the social capital of the country capable of supporting innovation and competitiveness both formally and informally. We are looking at an all-encompassing process of improving the quality of personal and social relations, the influence of social norms and the degree of citizen involvement in civic life, the freedom of the press, intellectual rights protection. All these are clearly universal issues in today’s world; however, they are more significant and acute in Romania due to the country’s undeniable and often unadmitted development gaps compared with some of the other EU members. It is clear that those issues may be solved only through proactive and eco-innovative leadership, in other words long term goal setting and partnerships between civil society, government and business. The authors of the Report strongly advocate the creation in Romania of the Work Group for the Economy of the Future [Grupul de Lucru pentru Economia Viitorului (GLEV)] to review the social and economic strategies of the country and make it capable of coping and meeting with the new challenges in today’s and tomorrow’s world.
The challenges and insecurities as well as the successes of Romania’s present situation are at the same time opportunities for local and/or international business and social entrepreneurs.
China and the EU, the US and Russia
The researcher who wants to study China and its transformations on the international stage has an important methodological drawback – the difficulty of direct access to the language and culture of the country under study. The easy solution is to read in the available lingua franca of today’s world, English, either from Western sources or from the Chinese themselves, with the obvious caveats of bias, even if sometimes that bias may be involuntary and not clearly recognized. Starting from this understanding, we will look at both sides in order to form a more comprehensive image of how China is positioned and is moving on the international scene at present.
Very crudely put, the US sees China’s Belt and Road Initiative (BRI), the huge infrastructure project meant to be the ambassador of China’s soft power, as an almost failure (Balding, 2019) while the EU considers it is a relative success (The Economist, 2018). Both sides are worried, in different degrees, by China’s views on corruption, human rights and financial sustainability and its indirect involvement in sensitive local problems. Europe loves China’s investments which have increased to nearly €36B ($40B) in 2016. Even if Chinese FDIs fell in 2017 (see Figure 1), the share spent in Europe rose from a fifth to a quarter. But this comes at the price of China’s receiving some political favours from individual countries in the EU. For example, in 2017, Greece stopped the European Union from criticising China’s human-rights record at a UN forum and so did Hungary.
The success of China’s economic investments abroad, with all its inevitable fluctuations, make analysts and countries rather uneasy towards “the emerging undemocratic superpower” which is seen as a potential economic and military threat. Italy’s joining in 2019 of the BRI rekindled the discussions about the desirability and reality of Chinese money without apparently any strings attached. According to China’s Italian affairs expert Sun Yanhong, “It is normal for China to cooperate with the EU and with countries within the EU at the same time. Italy is an independent country. The cooperation between China and Italy is mutually beneficial and a win-win situation.” [Emmott & Koutantou (2017)].
China’s increased FDIs in the last decade to the EU (Figure 1 and Figure 2) shows a change in the international political economic relations in the sense that the Chinese companies have developed new roles and economic strength built on their innovation capacities that have been denied for a long time by most analysts. The Berlin based Mercator Institute for China Studies has been analysing China’s economy and providing data on it since 2013 as an independent think tank. The researchers at Mercator point out that the differences between outgoing and incoming Chinese FDIs is a source of important tensions in the trade of the EU with China. Equal access to markets is not materializing as China continues to limit the access of foreign companies in many of its economic sectors while Chinese companies enjoy equal rights with European ones in the EU. Analysts [Hanemann & Huotari (2018)] show that, informally, the Chinese authorities widely discriminate against foreign firms and propose a strong bilateral investment agreement with China, being also aware that it is not easy to conclude because of, among others, China’s lack of sincere desire or ability to implement strong reforms.
Figure 1. Chinese FDIs in EU during 2000-2017 (€M)
Source: Mercator Institute for China Studies, March 2019
The new roles of the Chinese companies that analysts call “challenger multinationals”, referring to Huawei and ZTE, have transformed those companies into global market leaders in their fields. Both their own respective corporate strategies and the strong support of the Chinese government to “go abroad” favoured this development. The two companies were able to meet the needs of developing markets by providing the necessary telecommunications equipment, well developed customer support and, mainly, low prices. We will refer to the situation in Romania of those companies in the next section.
McCaleb and Szunomár analyse Chinese FDIs in Central and Eastern Europe from an institutional perspective [Drahokoupil (2017, pp. 121-137)] and underline that Chinese outward FDIs are impressive due to their accelerated growth, geographic diversity and takeover of established Western assets. They point out the shift of Chinese outward FDIs from the regions in which they sought natural resources and new markets, such as Asia, Latin America and Africa, towards the developed world (EU and USA) where they are looking for assets that apparently, mainly from the Western analysts’ perspectives, the Chinese companies are in short supply of – for example, advanced technologies, managerial knowledge and distribution networks.
McCaleb and Szunomár also point out that the “Visegrád countries” (V4 – Czechia, Hungary, Poland and Slovakia) as well as Romania and Bulgaria have become popular destinations for China’s FDIs though the Chinese presence in these regions is still fairly small but increasing. This process is strengthened and expected to increase due to several political factors: Poland became China’s strategic partner (end of 2011), the Chinese–Hungarian relations have warmed up and strengthened, the China-CEE (Central and Eastern Europe) Cooperation Secretariat was set up in 2012 in Budapest to support the cooperation between the 16 CEE countries (since grown to 17 with the addition of Greece in 2018) and China and to promote the Chinese BRI.
Why is this happening? Analysts consider that the main causes for these developments are, on the one hand, the transformation of the world and of the global economy, then China’s own economic restructuring which pushes Chinese interest into CEE. At the same time, CEE presents new challenges and new opportunities for China. The European Union “inner crisis” has made CEE governments more open to non-European entities, including Chinese business opportunities to be used to recover from the period of recession.
Brattberg (2019, p. 33) points out that Estonia, Latvia and Lithuania (which have registered increases in Chinese FDIs and which are involved in the BRI framework) are used by China to interact with countries in CEE and he underlines that some EU officials consider this an attempt to divide European countries.
At the same time, US pundits consider that the world is going to be either in danger of wars or, at best, in chaos if the American political establishment does not continue its role of leadership and defender of the liberal order. There are many explanations and narratives for the current state of affairs in which the US is confronted by revisionist powers and there are also some visions for the American political establishment, with or without its current president, and all of them ask for a change in the American foreign policy and a return to its traditional allies and institutional commitments. Mandelbaum (2019, p. 123) considers that the US should use its old containment policy once again in relation to Russia, China, and Iran. However, that is not easy as Russia and China cooperate, while they also compete with each other. They both cultivate good relations with Iran, while they have also reasons for concern as both China and Russia have large and not easy to control Muslim populations that might be looking at Iranian power and influence. Mandelbaum concedes that containment in the new world is not easy to perform, mainly in relations to China which has become slowly but clearly the world’s second largest economy and has developed intricate and still growing connections to countries all over the world. The economic interdependence of the two countries makes containment even more complicated as the US depends on China to finance its deficits, while China depends on the US to buy its exports [Mandelbaum, (2019, pp. 15-126)].
Skylar Mastro (2019, pp. 31-32) reviewing a long line of Chinese public statements of the country’s disinterest in seeking hegemony, considers that Chinese leaders are telling the truth and that Beijing truly does not want to replace Washington at the top of the international system (which would imply assuming the costs for global leadership). What China wants, in Skylar Mastro’s argumentation, is at global level “to leave the United States in the driver’s seat”, but “to be powerful enough to counter Washington when needed” and its “ultimate goal is to push the United States out of the Indo-Pacific”.
Skylar Mastro considers the BRI as evidence of Beijing’s innovative use of economic power in order to attract and create dependent foreign governments by financing infrastructure in the developing world. She agrees that Chinese aid is not accompanied by the usual Western requirements for market reforms, improved governance or social/political liberalisation. Instead, China demands loyalty from the BRI partners on issues relevant for Chinese interests.
Looking at the relations between China and the US from a Chinese perspective, Yan Xuetong (2019, p. 40) considers that China wants new clarifications due to its own increasing influence and economic power in the world and to the “United States’ abdication of its global leadership under President Donald Trump”.
Yan Xuetong considers that “the much-touted Belt and Road Initiative” is a major undertaking far larger than a regular investment project or a usual foreign policy and as such it was made part of the constitution at the 2017 National Congress of the Chinese Communist Party. Yan Xuetong (2019, p. 42) underlines that the future will bring a bipolar US-Chinese order and the uncertainties are around what that order will look like. He states that at the top of Beijing’s priorities is a liberal economic order built on free trade. And points out some steps China took and is ready to continue such as opening its domestic markets to foreign goods in exchange for greater access abroad. China lowered its general tariff from 10.5 percent to 7.8 percent. He considers that the concept of a revisionist China that part of the Western world adopted is not based on reality. He considers that caution, not assertiveness or aggressiveness, will be Beijing’s foreign policy strategy in the coming years. Unlike Skylar Mastro (2019, p. 39) who considers that China will test its reformed and modernized army most probably after 2025 when the reform of the military is supposed to be complete, Yan Xuetong (2019, p. 44) considers that, in spite of these military reforms, China will be careful in avoiding tensions “that might lead to war with the United States, such as those related to the South China Sea, cybersecurity, and the weaponization of space”.
Martin Jacques controversially continues to argue the incapacity of the non-Oriental specialists to go beyond their Occidental mind frame and cultural stereotyping and correctly understand China’s ascent in today’s world economically, politically and culturally, including its capacity to change the world as we know it.
Romania and China
As highlighted before, Romania has had a relatively paradoxical development in the last two decades. The same is somehow true for Romania’s relations with China. Nicolae (2017) presents an overview of the present day relations between China and Romania, showing that, in spite of the official mainstream media narratives of Romania’s expected need to focus on the Western world and especially on NATO, there is a genuine interest at personal level towards the country with one of the most dynamic economies in the world, backed by the strong temptation of still small prices and better quality, as well as by the pragmatic attitude of Romanian people in general and business people in particular. Nicolae shows that there is still an important capital of goodwill and empathy at various levels in China towards Romania that could be capitalized on more pragmatically for the common benefit of the people in the two countries, which in 2019 marked the celebration of 70 years of diplomatic relations. However, such capitalization on goodwill cannot be done at individual levels, even at institutional level. There needs to be enough official and significant political support and administrative encouragement to further develop business relations with China.
Besides the figures showing the trade dynamics between China and Romania (Figure 3), and China, Romania and the EU, which show increases of Romanian exports to China, there have been an increasing number of significant political meetings and many agreements have been signed. And there are some important success stories of major Chinese FDIs in Romania such as Huawei’s Global Service and Global Network Operation Centres in Bucharest, which provides technical assistance for deployment services around Europe.
Figure 2. Trade dynamics between China, Romania and EU (share in value in %).
Source: International Trade Center, March 2019
Romania is catching up fast with the rest of the EU and V4 countries in terms of its economic relations with China which is obviously its main partner in Asia and ranks in 19th place in terms of FDIs in Romania. The Romanian Ministry of Foreign Affairs points out on the Romanian version of its website that Romania’s interests in relations with China are, among others, to reduce the trade deficit, to involve the Chinese part in large projects in energy, infrastructure, agriculture, ITC, cooperation within BRI, exploring possibilities for cooperation with third parties with which Romania has a good history, etc. At the same time, Romania is very well aware that the Chines interests are “integrated into the general drive to promote its own products on the EU/European market, to identify entrance points to other markets with consumer potential and to get involved in large investment projects, mainly transportation infrastructure and energy”.
Figure 3. Trade dynamics between Romania and China in terms of volume of merchandise.
Source: International Trade Center, March 2019,
Conclusions – challenges and opportunities
We have looked at the position of Romania and its relations with China. We did so by taking into account Romania’s position in the EU and in CEE and we pointed out some of the strong points Romania is perceived to have by its international partners.
We have documented that in spite of its own visible internal problems, in spite of its positioning in times of shifting influences and international power games, Romania manages to register good economic growth and a steady upward trend in general development.
We have also looked at the larger international scene and explored the various perceptions of China’s ascent by taking stock of some relevant literature on the visions and interests that the US, the EU, the V4 and Russia have on the issue.
We consider, along the lines of other researchers and analysts, that it is difficult to predict new developments in such turbulent times. However, it is clear that such times offer both challenges and opportunities for all players and it is mainly through better knowledge and understanding of the culture and history of all the stakeholders in this process that we may hope to avoid conflicts. We want to be optimistic and hope, through constant reality checks, that as China rises and continues to develop it will be cautious rather than aggressive on the international scene. We also hope that the US will find the strength to commit to the American values that made it great by making sure that its leadership benefits all its partners in the world, old and new, rather than pursue a strategy based on “America first”.
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 http://www.ziare.com/stiri/sieu/studentii-bucuresteni-la-protestul-sieu-dezvoltati-romania-si-dati-ne-sansa-sa-crestem-frumos-la-noi-acasa-1553658 ; http://www.ziare.com/stiri/sieu/doua-ambasade-din-romania-marcheaza-ironic-protestul-sieu-video-1553623
 The Economic Complexity Index (ECI) is a measure of the relative knowledge intensity of an economy by considering the knowledge intensity of the products it exports. It was developed by The Observatory of Economic Complexity supported by The MIT Media Lab consortia for undirected research. https://atlas.media.mit.edu/en/rankings/country/eci/
 Erik Brattberg is a Director of the Europe Program Carnegie Endowment for International Peace in Washington, D.C.
 Michael Mandelbaum - Professor Emeritus of American Foreign Policy, Johns Hopkins School of Advanced International Studies.
 Oriana Skylar Mastro - Assistant Professor of Security Studies at Georgetown University.
 Distinguished Professor and Dean of the Institute of International Relations at Tsinghua University, a major research university in Beijing, and a member of the elite League of Chinese universities, http://www.tsinghua.edu.cn/publish/thu2018en/index.html.
Martin Jacques - senior fellow at the Department of Politics and International Studies at Cambridge University.