Xi set to sign pacts in Serbia and Poland

Chinese President Xi Jinping (centre, left) and Serbian President Tomislav Nikolic reviewing an honour guard during a welcome ceremony at Nikola Tesla airport in Belgrade on June 17.
Chinese President Xi Jinping (centre, left) and Serbian President Tomislav Nikolic reviewing an honour guard during a welcome ceremony at Nikola Tesla airport in Belgrade on June 17.PHOTO: EPA

Deals range from trade to civil aviation as China seeks to boost presence

BEIJING • Chinese President Xi Jinping is expected to sign a series of agreements in areas ranging from trade to civil aviation during a visit to Serbia and Poland starting yesterday, diplomats said, as China looks to bolster its presence in central and eastern Europe.

Central and eastern European countries are competing for Chinese investment in everything from banking to beer, looking to lure firms in need of new markets while securing a foothold for their own products in the huge but difficult Chinese market.

Mr Xi is expected to sign agreements in education, finance and technology, among other fields.

Chinese foreign direct investment in Europe hit a record high last year of around €20 billion (S$30 billion), a 44 per cent annual rise. Germany, Britain and France accounted for almost half the total, according to a report by Germany's Mercator Institute for China Studies and the United States-based Rhodium Group.

Only snippets of investment went to central and eastern Europe, but as Chinese firms look to diversify as the economy slows, volumes are growing, thanks to deals in infrastructure, energy, finance, real estate and travel.

Last year, only snippets of investment went to central and eastern Europe, but as Chinese firms look to diversify as the economy slows, volumes are growing, thanks to deals in infrastructure, energy, finance, real estate and travel.

The firms are finding a warm welcome in central and eastern Europe. In Hungary, the Chinese have a currency-clearing centre. Hungary and Serbia have signed a deal with China to build a high-speed railway from Belgrade to Budapest. Hungary has also issued bonds in the Chinese currency.

In April, China's Hebei Iron and Steel Group signed a €46 million deal to buy a Serbian steel plant.

That month, China Everbright Group, a state-backed financial firm, bought into Albania's international airport.

In Germany, by contrast, there are political concerns about losing key expertise to China as a growing number of Chinese companies seek to buy German industrial technology.

"This (visit) shows the great importance China's leaders and government place on the development of China-Europe relations," said Assistant Foreign Minister Liu Haixing.

"We believe this visit will push forward the development of China-European relations to a great extent."

The Chinese have created a "16+1" forum - their way of communicating with multiple central and eastern European states, with a total population of around 120 million. But the relationship has not been all plain sailing.

Before Mr Xi's visit to the Czech Republic in March, activists defaced dozens of Chinese flags with black paint. Police arrested 12 people who replaced Chinese flags with Tibetan ones along the main route from Prague's airport.

Mr Xi will also visit Uzbekistan, where he will attend a summit of the Chinese and Russia-led security bloc, the Shanghai Cooperation Organisation.

REUTERS

A version of this article appeared in the print edition of The Straits Times on June 18, 2016, with the headline 'Xi set to sign pacts in Serbia and Poland'. Print Edition | Subscribe