Summit signals growing Chinese investment in regional energy and road infrastructure
December 2014
The prime ministers of 16 Central and
Eastern European countries on 16 and 17 December met with a Chinese
delegation led by Premier Li Keqiang at the fourth economic forum
between China and the region held in Belgrade
(Serbia).
The two-day summit of leaders from
China and Central and Eastern Europe aimed at fostering relations
between the countries. Serbia’s Prime Minister Alexsandar Vucic
underlined the region’s need for closer relations with China. Premier Li
Keqiang announced a “new phase in co-operation between China and
Central and Eastern European countries”.
With trade between China and Central
and Eastern Europe already up by 10% year on year in January-October
2014, at $50bn, the summit outcomes indicate growing Chinese interest in
investing in the region. In particular, China is interested in
investing in improving transport infrastructure – better networks will
facilitate China’s access to these markets, boosting its trade flows to
this part of Europe.
Thanks to these investments, the
region’s rail and road infrastructure is likely to gradually improve
over the next few years, reducing the operational obstacles that poor
transport networks pose to businesses. Affordable Chinese loans are
likely to provide much-needed funds for infrastructure development at a
time when many governments in the region are struggling to secure such
funding.
Similar improvements are likely to take
place in energy infrastructure, another area in need of investment in
many Central and Eastern European states. In particular, Chinese
investment is likely to boost power production capacities and improve
electricity supply in the coming years in non-EU members in the Balkans,
which have limited access to EU funds for the energy sector.
Railway link
One of the key projects discussed at
the summit was the construction of a high-speed rail link between
Budapest (Hungary) and Belgrade, which could be further extended to
Thessaloniki in Greece, to which goods aimed at the Central and Eastern
European markets can be shipped from China. The existing rail links
between Thessaloniki, Belgrade and Budapest allow for only very slow
trains, with journeys from Budapest to Belgrade taking more than eight
hours. Preparations for the project are expected to start in early 2015,
with a tentative completion date set for June 2017.
Energy projects
China has already invested in power
plant projects in the region, and the thermal power plant at Stanari in
Bosnia and Herzegovina was among the key projects discussed during the
summit, along with several hydro-power projects along the Drina river.
Bosnia was also awarded an €8m grant to help it complete the feasibility
studies for these projects to accelerate their implementation.
China’s growing interest in Central and
Eastern Europe mirrors its expanding links elsewhere in Europe, with
the EU now its largest trading partner. Strengthening these ties,
whether through modernising transport and energy infrastructure or
opening up new export markets, is a priority for both sides.
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