BELGRADE (REUTERS) - Serbia and China are set to sign at least 20 trade and investment deals this weekend during a visit by President Xi Jinping, as the cash-strapped Balkan country seeks funds for infrastructure projects to spur growth.
Serbia has enjoyed good relations with China since the 1990s, when Belgrade was economically isolated for its role in the wars that accompanied the break-up of Yugoslavia.
China sees the visit as part of its One Belt, One Road initiative, which is intended to open new trade links for Chinese firms as the domestic economy slows.
"Within the One Belt, One Road initiative, which includes cooperation between Central and Eastern Europe, cooperation between the two countries is constantly improving," Xi wrote in the Serbian daily Politika before his arrival on Friday (June 17).
Xi's ambitious initiative is for a new "Silk Road" from Western China to Central Asia and on to Europe via the Balkans.
Central and east European countries are competing for Chinese investment, looking to lure firms in need of new markets whilst securing access for their own products in China.
Serbian and Chinese officials are expected to sign at least 20 trade and investment deals, including agreements on building highways and waste-to-power plants.
The two countries will also reaffirm their commitment to build a high-speed railway between Serbia and the Hungarian capital Budapest.
On his latest trip, Xi will also visit Poland and Uzbekistan, the latter for a regional summit of the Chinese and Russia-led security bloc, the Shanghai Cooperation Organisation.
To cement good relations with Serbia, the foundation stone for a Chinese cultural centre will be laid and a monument to Confucius will be erected where Chinese embassy stood until it was destroyed by Nato bombs in 1999.
Since 2009, when China and Serbia signed a strategic partnership agreement, China has invested more than US$1 billion (S$1.4 billion) in Serbia, mostly in soft loans including finance for a bridge in Belgrade, the renovation of coal-fired power plant and construction of a new plant due to come online in 2018.
A €46 million (S$70 million) deal to buy Serbia's sole steel plant by Hebei Iron & Steel announced in April is seen by Serbian officials and analysts as a major breakthrough that could pave the way for other Chinese companies.
But the purchase of a steel-works in an EU candidate country by a state-owned Chinese enterprise raises serious concerns about unfair competition from state-backed enterprises, the European Steel Association said in a statement ahead of Xi's arrival.
Serbian President Tomsilav Nikolic gave a more optimistic assessment of the visit. "After so many years the Chinese president is visiting Serbia. That is like spring after a long winter," he told Chinese media.