Countering Chinese Influence in Europe

I was a data lead and policy analyst for the Harvard Undergraduate Foreign Policy Initiative during Spring 2021. Tasked by the White House National Security Council, my team researched the state of the U.S.-Europe relationship and the region’s increasing vulnerability to China. The objective: determining how the U.S. can lead the West to effectively counter China, starting in Europe.

In a data-driven effort, I developed an index to measure the approximate level of potential for bilateral economic cooperation between each E.U. member state and China or the United States. This involved coding a multivariate metric and several visualizations built with R (Tidyverse, BaseR), Excel, Lucid, 11+ variables, 28 countries, 1230+ data points, data-mapping, z-scoring/percentile conversions/correlate pairing, 8+ databases including UN/WTO/UNCTAD/OECD records. In sum, the index revealed the vulnerability of Eastern/Central Europe as a Chinese “backdoor” to the continent.

I’ve outlined my contributions below.

China Cooperation Index

Summary

In total, 11 indicators constitute each composite index outcome. We selected variables across three pillars: Economics, Western Ties, and Political Health — weighted at 50%, 20%, and 30%, respectively. Economic statecraft remains the dominant policy tool across Europe relative to the U.S. and China (and much of China’s global strategy generally), but we also recognize the role of political and social currents in shaping the economic landscape and the receptiveness of a country to a Chinese partnership. Broadly, we assume being less Western-affiliated, less developed, less democratic, more politically fragile, domestically unstable, and more economically at-need renders a state more inclined to potential cooperation with China as opposed to the U.S.

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Methodology

The Indicators

The 11 indicators selected fell under the three pillars of Economics, Western Ties, and Political Health. Economics was weighted at 50% to establish an economically dominant index outcome and baseline for other non-economic outcomes to refine. It holds three indicators:

The difference between each country’s United States and Chinese WTO Trade Intensity Index Score from 2018, the latest data available. More positive difference values indicate a higher trade intensity with China relative to trade with the world and more negative values indicate higher trade intensity with the United States relative to trade with the world.
The percentage level of growth in stock values of Chinese investment in each country, comparing the total stock from the time period 2005-2012 and the full time period 2005-2020 with data obtained from the American Enterprise Institute Chinese Global Investment Tracker (CGIT). The dividing year 2012 was selected because it split the interval in two equal time frames, the first 16+1 Summit convened the same year, and the formal announcement of the Belt and Road Initiative followed in 2013. Since the CGIT incorporates primarily large transactions, some EU states lacked Chinese investment data over the initial time period from 2005-2012. In an attempt to roughly substitute some of the missing data, we located smaller Chinese FDI investments within those countries over the interval using data from UNCTAD to supplement accordingly. After obtaining raw growth percentages for each state, we sorted each country into four Investment Growth Tiers with an assigned value 1-4. A score of 1 indicates “Modest Growth” below 100%, 2 indicates “Sizable Growth” between 100% and 750%, 3 indicates “Heavy Growth” at 750% or above, and 4 indicates “Rapid Induction” representing recently targeted countries — those with either a zero or near-zero case over 2005-2012 and accelerating to heavy investment levels after 2012 through 2020.
A binary affiliation of a state with the Belt and Road Initiative, or specifically whether a state has signed a BRI Memorandum of Understanding or has committed to a BRI project.

Western Ties holds three indicators. The first two are membership in NATO and membership in OECD. Values of zero were assigned to membership in the respective organizations while values of 1 were attributed to absences of respective membership. Western Ties holds the least weight in the index as a category, since every country examined already falls within the EU, and that economically many countries in Europe are likely to cooperate with China under the basis of “strategic autonomy” and market concerns independent of membership in democratic or security-based networks. However, while simply being in NATO or the OECD will not preclude a country from China in its own right — although it can be helpful in the interest of marrying security and economic interests (see Baltic States) — we believe the absence of NATO or OECD membership increases the likelihood of vulnerability to China. The third indicator incorporates United Nations voting record data to rank every nation in terms of their strength of correlating alignment with China over the period 2004 to 2019.

Political Health holds five indicators. The first three are drawn from fragility sub-indicators within the 2020 Fragile States Index (FSI): human rights, external intervention, and economic decline. The FSI Economic Decline indicator was included within Political Health as opposed to our Economics pillar because of the context of its use in originally contributing to “fragility” in the FDI index, which we believe helps measure domestic vulnerability in key areas relevant to China within the broader report. The final two indicators are drawn from the Corruption Perceptions Index and The Economist’s Democracy Index. Specific backgrounds and methodology for the respective indices included above can be located in their original sources.

Construction

Our approach began with inspiration from the USAID and their willingness to share best practices in index construction. In order to standardize the individual indicators across countries, we opted for converting each variable’s data via z-scoring, which conveys how distant from the mean a particular data point is relative to its peers. Each z-score was weighted at the pillar, sub-pillar, and indicator level via multiplication to a weight constant, and then added across variables to distill a final composite value. More positive values imply a greater potential for cooperation with China and more negative implies less potential for cooperation with China (and thus more potential cooperation with the U.S.). As a result, our outcomes are not “absolute” per se, in that the scores for each country are relative to its peers in the E.U. This being said, a country could theoretically be “close” to China in an absolute sense and receive a negative z-score in our data, but this still implies the country is less at-risk than its fellow E.U. peers.

The question of weighting individual indicators within sub-pillars, sub-pillars, and pillars overall to their respective percentages necessarily included a mix of qualitative assessments on behalf of our research team to create a model reflecting the qualitative nature of much political decision-making, our collective analytical intuition, and to maintain simplicity.

For a more intuitive understanding of the final index outcome for each country, we converted the z-score composites to percentiles and then divided them by ten to achieve a relative ranked scale from 1-10.