Foreign Policy For Sale? Analysis of China’s Relations with Poland and Hungary Master’s Thesis Faustas Domarkas 515478 International Public Management & Public Policy Erasmus University Rotterdam First Reader: Dr. S. R. Grand Second Reader: Dr. M. Onderco 29 July 2019 Word Count: 24.824 1 Summary Today, decisions taken in Beijing have a direct impact on foreign policy-makers from Tokyo and Manilla to Warsaw and Budapest. The emergence of the Belt and Road initiative shows that China has global ambitions that expand beyond its geographical periphery. Namely, the formation of the 17+1 summit, a forum for policy coordination and investment facilitation between China and Eastern and Central European countries, has triggered a debate whether China is carving out a piece of Europe. However, the extent of China’s involvement in Hungary and Poland has not been extensively analysed. Therefore, this thesis aims to establish a comprehensive overview of China’s hard and soft power in the two EU member states and interpret foreign policy making through the lenses of realism and liberalism. I based this qualitative research on a wide range of indicators, from economic relations to cultural influence, as well as gathered data on Chinese FDI and infrastructure projects. I also compiled data on all major Chinese projects and China-related foreign policy decisions. Contrary to the prevailing discourse, the research reveals contradictory results – the more Chinese investments a country receives, the less likely it is to take pro-China foreign policy positions. I conclude that although Chinese capital can reinforce already existent policy positions and domestic interests, China so far cannot combine its hard and soft power to achieve preferred outcomes, but it can entrench existing preferences. 2 Acknowledgments I would like to thank my thesis supervisor Dr. Grand for his guidance during the whole writing process and helping to polish crude thesis ideas. I would like to express my gratitude to the second reader Dr. Onderco for his critical insights and important comments that shed light on the thesis from a different perspective. I would also like to thank all the teachers and tutors in Rotterdam, The Hague, Leiden, and Taipei that taught me throughout my study years. You inspired me to never stop learning about the world surrounding us. I want to say thank you to my friends in The Netherlands and Lithuania. Your contribution to the thesis and my studies was invaluable. Finally, I would like to thank my family. You made this possible. It was a great journey. Thank you. Faustas The Hague 29 July 2019 3 Table of Contents Summary ................................................................................................................................... 1 Acknowledgments ...................................................................................................................... 2 List of Tables ............................................................................................................................. 5 List of Figures ............................................................................................................................ 5 1. Introduction .......................................................................................................................... 6 1.1 The Belt and Road Initiative .............................................................................................. 6 1.2 Research question ............................................................................................................ 8 1.3 Structure ........................................................................................................................... 9 1.4 Theoretical Relevance ...................................................................................................... 9 1.5 Social Relevance .............................................................................................................10 2. Literature Review ................................................................................................................11 2.1 Motivations Behind BRI: Economic, Financial, Developmental ........................................11 2.2 China’s BRI Objectives ....................................................................................................12 2.3 China’s Grand Strategy? .................................................................................................13 2.4 China and CEECs ...........................................................................................................17 2.5 My Contribution ...............................................................................................................19 3. Theoretical Framework .......................................................................................................21 3.1 Liberal Theory of IR .........................................................................................................21 3.1.1 Commercial Liberalism propositions: .........................................................................24 3.2 Realist Theory of IR .........................................................................................................25 3.2.1 Neorealist proposition ...............................................................................................27 4. Methodology ........................................................................................................................28 4.1 Case Study Research: Congruence Analysis ..................................................................28 4.2 Case and Theory Selection .............................................................................................28 4 4.3 Validity and Reliability ......................................................................................................29 4.4 Analysing National Interest ..............................................................................................30 4.5 Measuring influence and power .......................................................................................31 4.5.1 Indicators ..................................................................................................................33 4.6 Data Collection ................................................................................................................36 5. Analysis ...............................................................................................................................37 5.1 Chinese Foreign Policy Goals in Europe .........................................................................37 5.2. Hungary ..........................................................................................................................39 5.2.1 Chinese FDI and commerce in Hungary .......................................................................40 5.2.2 China’s soft power in Hungary ......................................................................................46 5.2.4 Eastern Winds in Hungarian Foreign Policy ..................................................................49 5.3 Poland .............................................................................................................................53 5.3.1 Chinese FDI and commerce in Poland .........................................................................54 5.3.2 China’s Soft Power in Poland .......................................................................................60 5.3.3 Poland’s China Policy ...................................................................................................62 6. Discussion ...........................................................................................................................65 6.1 Liberalism ...........................................................................................................................65 6.2 Realism ...........................................................................................................................71 7. Conclusion ............................................................................................................................73 7.1 Further Research .............................................................................................................74 7.2 Limitations .......................................................................................................................74 8. Works Cited ..........................................................................................................................76 Annex 1: Chinese FDI and infrastructure projects in Hungary after the establishment of 17+1 summit ......................................................................................................................................96 Annex 2: Chinese FDI and infrastructure projects in Poland after the establishment of 17+1 summit .................................................................................................................................... 100 5 List of Tables Table 1: Chinese Modes of Influence ...................................................................................................... 15 Table 2: Economic Relationships Indicators .......................................................................................... 33 Table 3: Cultural/Diplomatic Influence Indicators ............................................................................... 34