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
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
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
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
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
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
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
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
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Developing Asia is facing considerable headwinds. Delayed recovery in major industrial economies and moderating prospects for the large economies of the China and India weigh on region's project growth forecasts.
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