Summit signals growing Chinese investment in regional energy and road infrastructure
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.
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.
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.