China's Li Keqiang cements new export corridor into Europe

China's Premier Li Keqiang speaks during the Third Meeting of Heads of Government of China and Central and Eastern European Countries in Belgrade Dec 16, 2014. -- PHOTO: REUTERS
China's Premier Li Keqiang speaks during the Third Meeting of Heads of Government of China and Central and Eastern European Countries in Belgrade Dec 16, 2014. -- PHOTO: REUTERS

BELGRADE (AFP) - Chinese Prime Minister Li Keqiang met 16 central and eastern European leaders on Tuesday in a summit to cement Beijing's plans for a new transport network to funnel exports into Europe.

The two-day meeting in Belgrade gathered prime ministers from 16 central and eastern European countries, with infrastructure and transport top of the agenda.

Beijing hopes to turn the Greek port of Piraeus - where the Chinese shipping giant Cosco has a 35-year concession to hugely expand its two container terminals - into a new hub for trade with Europe.

Despite being hit hard by the economic crisis, Greece still has the world's largest merchant marine fleet, with China one of its key customers.

Li discussed huge investment into Greece's crumbling railways during a visit to Athens in August, including a high-speed rail project.

"We will propose construction of a rapid land and maritime route based on the Budapest-Belgrade railroad and the Greek port of Piraeus to improve regional connectivity," Li told Serbian media ahead of the summit in Belgrade.


The signing of a deal for a high-speed bullet train link between Budapest and Belgrade, to be built by 2017, with Li's Hungarian and Serbian counterparts, Viktor Orban and Aleksandar Vucic, is the centrepiece of the gathering.

"Cooperation between China and Eastern Europe is a cooperation between two highly complementary parties, we have a good opportunity to improve this cooperation," Li said at the opening of the summit, the third of its kind.

"Eastern Europe has a development potential, our complementarity will help us to develop our cooperation," he said stressing a "great potential in the field of infrastructure."

Beijing said it was interested in investing in energy, agriculture and industry as well as infrastructure projects in the 16 countries.

Trade between China and the region, which has expanded five-fold since 2003, was also on the agenda.

Chinese Commerce Minister Gao Hucheng said trade with the region could exceed US$60 billion (S$78 billion) this year, up US$4.9 billion on last year.

However, Chinese investment remained below targets set during two previous summits - in Warsaw in 2012, when China pledged loans of €10 billion, and last year in Bucharest.

China has invested billions of euros in Hungary and Serbia, but much less so in the Czech Republic, Slovakia, Slovenia and the Baltic states.

However, some countries including Poland hope to increase exports to China, in particular of food, after Russia slapped a ban on food imports in retaliation for European Union sanctions over Moscow's role in the Ukrainian conflict.


"We hope to sell a lot of Polish food to China because we have problems with Russia right now and Russia was rather a huge market for Polish fruit, vegetables and meat," Professor Bogdan Goralczyk of the Central & Eastern Europe Development Institute (CEED) said.

In Poland, Chinese funds amounted to only 0.2 per cent of inward investment in 2013, according to the National Bank of Poland, and even less in Romania.

China has so far concentrated on transport infrastructure and the energy sector in the Balkans.

In Serbia, China has already signed a US$1.25 billion deal to overhaul the main power plant, while in neighbouring Bosnia, Chinese firms have been involved in two power plants projects worth over €1 billion (S$1.6 billion).

They also signed a preliminary €600 million deal on construction of 62km of a highway leading to Croatia's Adriatic coast.

During his stay in Belgrade, Li, the first Chinese prime minister to visit Serbia in almost 30 years, will open a 1.5km bridge over the Danube river.

The US$170 million project was China's biggest infrastructure investment in Europe when it was first announced.

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