Our Head of Europe looks at how China is moving into Western Europe from the east, facilitated by infrastructure such as the "New Silk Route".
Stepping in as a new partner, bringing fresh funds and opportunities, China is being welcomed into many Central and Eastern European (CEE) countries. The injection of support comes at a crucial time, when EU support for some of the smaller or struggling economies of Eastern Europe has been limited due to the challenging post-crisis landscape.
For China, the CEE region offers more than just a market for its own industries and exports. In fact, there's a much bigger picture. Beijing sees CEE as an essential gateway to expanding its presence in Western Europe.
Like China, most CEE countries are experiencing a transition to market economies and are pushing for modernisation, economic restructure and major infrastructure improvements.
While growth across CEE lands remains mixed, China can offer just what some countries need to kick-start key infrastructure, telecommunications and energy projects – capital, technology and equipment.
Since the first China-CEEC leaders' summit in 2012, the region has been fast building stronger ties with their new Asian sovereign investor, whose support has not been limited to EU-member countries only.
Serbia, in particular, has developed an especially close and strategic relationship. In December last year, the first bridge project built in Europe by Chinese enterprises – a 1.5km bridge across the Danube River in Belgrade - was officially opened by the Chinese premier and Serbian prime minister.
In 2012, China offered a $10 billion credit line for CEE countries to spend on infrastructure projects; less than $1.7 billion remains according to reports. There are also plans for a new investment fund worth $3 billion and they're striving to double trade by 2018.
On top of that, China is set to invest billions to realise its vision of establishing a new trade expressway between Europe and Asia. This is where the big picture really takes shape.
The so-called "new Silk Road" would have two components:
- A high-speed rail network over land from China to Europe, traversing Bulgaria, Romania, the Czech Republic, Germany and Rotterdam in the Netherlands, before linking south to Venice
- Improved ports and connections over sea for their so-called "21st Century Maritime Silk Road", which is planned to converge with the land route in Venice.
An agreement has already been signed for the construction of the Serbia- Hungary Railway, to be completed in the next two years. The line will reduce train travel time between Belgrade and Bucharest from eight hours to less than three. The construction also aims to connect the Serbia-Hungary Railway with Skopje (Macedonia) and the Piraeus Port of Greece, which will also be part of the maritime link.
These projects would not only see major investment in CEE, but also boost China's connectivity with the rest of Europe, opening up even more markets for Chinese imports, especially in Western Europe. They would also help to reduce China's reliance on freight lines dominated by European shipping companies.
China itself has become a world leader in high-speed railways after developing its own domestic rail network. It has also increased capacities in nuclear energy, telecommunications, steel and glass production and the cosmetics industry.
The EU is already the China's largest trading partner, with more than $1 billion in exports to Europe every day. Aside from railways and other infrastructure projects across the region (especially in Serbia, Lithuania, Latvia, Romania and Hungary), China is particularly keen to cooperate with CEE on education, science and research (Serbia, Croatia and Hungary), and energy (Serbia, Lithuania and Romania). Other focus areas in Serbia include agriculture, the information industry and the automobile industry.
The opportunities to combine Chinese industrial might with advanced European technology and research and development are especially promising, and China is keen to explore the potential right across Europe.
It is hoped this new era of cooperation will bring, as China has often proclaimed, mutual benefits and "win-win" results for all, with increased trade throughout the region. And with roots firmly in CEE, it is expected that Chinese investors would have even easier access to spring-board into other European countries
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