Building A Favourable Foundation For Chinese Investment In CEE Under The '16+1' Cooperation Mechanism

China entered the new millennium determined to reinvent itself.In Central and Eastern Europe,Beijing has initiated in 2012 the '16+1' cooperation mechanism between China and sixteen CEE countries,in a 'pilot' programme of the later announced 'New Silk Road' initiative.This development has raised hopes on both sides of building a favourable foundation for Chinese investment in the region.However,more than five years of '16+1' cooperation have revealed a series of both opportunities and challenges for their successful fulfilment.This paper sets out to assess the level of efficiency of the '16+1' cooperation mechanism in promoting and facilitating Chinese investment in CEE,and aims to offer guidance on the next steps China and CEE countries need to take to ensure the creation and perception as such of a strong incentives basis that can stimulate long-term Sino-CEE investment relations.Adopting an innovative two-stage research approach,this paper examines the rationale behind the establishment of the '16+1' from the perspective of investment,and the relations between '16+1' activity level and focus,on the one side,and amount and sectorial distribution of Chinese OFDI stocks in CEE,on the other side.Taking John Dunning's IDP theory as a starting point,the subsequent analysis confirms that Sino-CEE rapprochement through investment belongs to a wider Chinese outward investment engagement trend,although Western Europe continues to receive a larger amount and more evenly distributed Chinese investment than CEE.Also,it emerges that a relationship exists between the amount of Chinese OFDI stock received and the CEEC with both highest activity levels within the '16+1' and the greatest number of sectors that have received Chinese investment.Based on these findings,the paper succeeds in offering a clearer perspective on'16+1' investment cooperation opportunities,challenges and priorities,and makes a significant contribution towards filling the gap in extant research on Chinese investment in CEE and overall Sino-CEE rapprochement through the '16+1' cooperation mechanism and the 'New Silk Road'initiative.