China's ties with eastern EU will come under strain

Significance

Despite Beijing’s outreach to the region, Central and Eastern European (CEE) countries are disillusioned because of the absence of meaningful Chinese investment as well as due to China’s stance on Ukraine.

Impacts

• Large countries in Western Europe will remain more attractive destinations for Chinese FDI than the eastern EU.
• Should US-China tensions escalate, more CEE countries may leave the 14+1 initiative, following the example of the three Baltic states.
• Eastern European automakers will step up the transition to electric vehicles (EVs) in order to compete effectively with China.
• CEE countries will look for other Asia-Pacific markets beyond China.