On February 9, Polish President Andrzej Duda represented his country at the ninth Summit of Central and Eastern European Leaders with China, which was held via video link for safety reasons due to the Covid-19 pandemic.
Duda, whose country is the only CEE founding member of the Asian Infrastructure Investment Bank (AIIB) and was the host of the first China-CEE leaders’ meeting in 2012, also hosted a two-day summit of the presidents of the Czech Republic, Hungary, Poland and Slovakia, starting later on February 9 and aimed at commemorating the 30th anniversary of the establishment of the Visegrad Group (V4).
In this context, as Poland holds the presidency of the V4 group until the end of June, Duda felt obliged to speak on behalf of the entire region and make Chinese President Xi Jinping aware of its high ambitions.
“We do not intend to be just a transit area. We want to actively increase the share our country and region has in global supply chains,” he said.
Furthermore, he expressed an urgent need to make mutual “trade relations more balanced” in order to speed up economic recovery.
The same tone could be heard in an interview of Polish government spokesman Piotr Müller on Polskie Radio Program 1 just before the “17+1” video summit, where the secretary of state at the Chancellery of the Prime Minister of Poland informed his listeners that Poland is “open to economic cooperation with China … but of course this cooperation must be based on fair, clear and transparent rules.”
This visible grievance comes from the fact that Poland has quite a high deficit in its trade with China, as Warsaw currently imports US$30.41 billion from and exports $2.7 billion to Beijing, which many government officials (including Prime Minister Mateusz Morawiecki) and affiliated policymakers perceive as a serious obstacle to Polish-China relations.
As a matter of fact, in my opinion, the trade deficit with the Middle Kingdom should not be reason for worry, as the statistics of exchange between the two countries are irrelevant when we approach the matter from the perspective of global supply chains.
In fact, Poland has recorded a historically high surplus in foreign trade, which widened to €333 million (US$401 million) in December 2020 from €118 million in the corresponding month of the previous year.
As Professor Grzegorz Kołodko, the former deputy prime minister and finance minister of Poland, and a key architect of the economic reforms that carried Poland into the Organization for Economic Cooperation and Development (OECD) in the 1990s, argues in his recent book China and the Future of Globalization: The Political Economy of China’s Rise, “Poland has a relatively much higher deficit in its trade with China but is able to balance this in total foreign trade, recording surpluses in other relations.
“Statistics tend to simplify the reality. It’s a fact that in bilateral trade relations there are 12 times fewer dollars paid to Poland by China for its direct exports going there than for imports from China. At the same time, cars, whose components are manufactured in Poland, are a substantial portion of German exports to China,” Kołodko writes.
Therefore, “if we conduct a comprehensive analysis, it turns out that the trade exchange with China creates a lot more jobs, income and budgetary revenues in Poland than it would seem on the surface of things,” concludes the academic.
The question that then arises is why Poland, which as President Duda himself argued in 2015, wanted to become Beijing’s “serious partner and China’s door to Europe,” has not done its macroeconomic homework properly.
The answer to this question seems to be obvious, yet still baffling.
Since the “extreme competition” between Washington and Beijing is rapidly approaching – as I argued with former vice-prime minister and economy minister Janusz Piechociński, in our article for Policy Network last year – Poland seems to be writhing around in diplomatic convulsions without knowing which side to pick (as if picking a side should be the case at all).
Although the Ministry of Digital Affairs has presented a new version of a draft amendment to a bill on the country’s national cybersecurity system, which is said to be less severe than its predecessor, the mechanism still can be used to exclude Huawei from building 5G (fifth generation) telecom infrastructure in Poland.
According to a report prepared jointly by Audytel and Dentons last month titled “Legal and Economic Consequences of Restricting Competition Among 5G Network Equipment Suppliers in Poland,” the estimated cost of excluding Huawei from the Polish telecommunications industry may amount to nearly 15 billion zloty ($4 billion) over five years, and for the entire economy as much as 44 billion zloty in the period between 2021 and 2030.
Another move supporting my argument is the fact that of all the EU member states, only Poland raised objections to the EU-China investment deal agreed in December, suggesting that Europe should have consulted with the incoming Biden administration before committing itself to the arrangement with Beijing.
Moreover, on January 28, President Duda decided to approve a controversial cooperation agreement on criminal matters signed between Taiwan and Poland in June 2019, which further puts in doubt his sincerity toward President Xi and the Chinese people, who consider Taiwan to be a province of the PRC.
In fact, Poland was among the first countries to recognize and establish diplomatic ties with the PRC, as the two countries forged diplomatic ties in October 1949.
Since the two countries upgraded their bilateral ties to strategic partnership in 2011, Duda would be well advised to return to his bold development vision for the country from the first weeks of his presidency and set it on a clear course to help further align the Belt and Road Initiative with Poland’s development plans, and promote Poland as a true engine to boost China-CEE cooperation.
If he fails to rise to this challenge, he will not only squander his previous efforts and impressive achievements establishing his solid relationship with the leader of the world’s second greatest superpower, but also runs the risk of reducing Poland’s status on the world stage to the role of nothing but “a front in the cold war between the US and China.”