China is hoping that an upcoming visit by President Xi Jinping to Serbia will help it to establish a greater presence in the European construction market.
According to Nin Ling, director general of the UK office of the China Council for the Promotion of International Trade, President Xi will "shortly" make an official visit to Belgrade, accompanied by more than 400 Chinese entrepreneurs – a greater number than accompanied Prime Minister Li Keqiang on his trip to the UK earlier this year.
Nin Ling was speaking in London at a conference last month to launch a report into China’s investment plans for the UK.Â
China’s state-owned enterprises see Serbia as good entry point into the European market. The country is in need of external finance – it is presently in talks with the International Monetary Fund over a loan – and is outside the EU, with its strict rules on public procurement.Â
The interest aroused in the entrepreneurs relates to the willingness of the Serbian business and political class to accept Chinese help. It also reflects the opportunities offered to external investors by the government’s privatisation programme. Stakes in more than 500 public enterprises are being auctioned off, including Belgrade’s Nikola Tesla airport.
In the past, Chinese firms have tried to take on infrastructure schemes in eastern and central Europe, but with little success. A motorway in Poland being built by the China Overseas Engineering Group came to grief in 2011, and in the same year, a number of bids for highway projects made by China State Construction Engineering in the Czech and Slovak republics were rejected. At the time, Jan Figel, Slovakia’s minister for transport, told local media that Chinese construction companies, especially those backed by the government, were "unlikely" to succeed in Eastern Europe.
In an interview this week with the Financial Times, Zeljiko Sertic, the minister for the economy, said many of these companies were barely viable and 99 had not received bids, but many will also be available for low prices, and may represent a way of entering the market with minimal regulatory inconvenience.
On Monday a delegation from the China Development Bank (CDB) arrived in Belgrade for talks about a series of new projects in the region, in particular the funding of a high-speed railway line from Belgrade to Budapest, capital of Hungary.
Zorana Mihajlovic, the deputy prime minister, who also has responsibility for construction, transport and infrastructure, said the project would mark a deepening of relations between Serbia and China. She held a press conference to welcome the delegation, and gave them a guided tour of Belgrade, accompanied by the Serbian press.
She said: "It is very significant that the Chinese see the railway line as a regional project for linking southern and central Europe, and with this railway line Serbia would have the possibility of selling goods on the European market."Â
She also commented that the Chinese bankers said they were eager to become involved in Serbia’s development and expressed a readiness to participate in more projects.
As well as the Hungarian rail link, they said they were interested in helping to expand Serbia’s ports on the Danube River. Mihajlovic said this was welcome as Serbia lacked modern technology for handling shipping.
Serbia and China have already begun a number of large-scale infrastructure schemes. These include a bridge across the Danube in Belgrade and two sections of a motorway from Belgrade to the Montenegrin border.
The CDB is one of China’s three state-owned development banks. It mostly funds projects in the fields of electric power, road construction, railways, oil and petrochemical products, coal, telecommunications and agriculture.
China’s Exim Bank has already agreed to finance a section of a $1bn motorway between Montenegro and Serbia.Â
China Communications Construction Company and China Road and Bridge Corporation will build the project, between the Adriatic port of Bar and the Serbian border. China will provide $867m and the government of Montenegro will come up with $153m. The total cost of that road is estimated to be $2bn: the mountainous terrain will require intensive engineering work, including 50 tunnels and 95 bridges.
Photograph: Chinese president Xi Jinping with Serbian president Tomislav Nikolic during Xi’s last state visit in August 2013 (China Embassy)