Date
18 October 2017
With the Western powers preoccupied with their own problems
With the Western powers preoccupied with their own problems

POLICY WATCH: Tapping new markets in Eastern Europe

With the major powers in the Western World mired in economic woes, China is seeking new markets and trade partnerships to keep the nation’s growth on a stable footing. After major initiatives in resource-rich Africa in recent years, the Asian giant is now seeking to open up a new front — the emerging economies in Central and Eastern Europe.

The game plan was made clear this week at a high-level summit in Bucharest where Beijing outlined ambitious trade and investment targets, laying out China’s strengths in aspects ranging from technology to capital.

At the two-day China-Central and Eastern Europe summit that concluded on Tuesday, China and 16 Central and Eastern European countries pledged to boost two-way investment and trade flows, and enhance cooperation in sectors such as energy, environmental protection and scientific innovation.

Trade between China and the region has grown from US$3 billion in 2000 to US$41 billion in 2010. Chinese Premier Li Keqiang {李克強} said at the summit that they aim to double the trade volume within five years.

Among various plans outlined by Li, the two sides would promote cooperation on transportation and communication infrastructure as they open up interconnected land and sea channels between China and Europe. Priority areas include high-speed and regular railway, nuclear and other forms of power, road, port and telecommunications, Li said.

Leaders also mapped out a plan to build a transport “artery” for China-Europe logistics, which will pave way for a strong boost in the bilateral trade volume.

China, Hungary and Serbia have reached an agreement to jointly build a railway between Hungary and Serbia. In another breakthrough, ZTE Corp, one of China’s largest telecommunications equipment makers, inked a deal with the region to build a 4G network.

In September, Chinese President Xi Jinping {習近平} proposed to build a Silk Road Economic Belt to link the Asian country to its Central Asian neighbors. Closer ties with the Central and Eastern European nations should extend such new economic belt further to the European continent.

In fact, China had pledged to provide US$10.5 billion credit lines last year during former Premier Wen Jiabao’s {溫家寶} visit to Poland. The facility is yet to be used. Li said he hoped the credit lines would be put to use to fund the projects committed during his visit, which will help drive bilateral investment and business ties.

Apart from infrastructure cooperation, China and Central and Eastern European countries are also seeking to expand financing channels. Li urged the two sides to set up branches of their financial institutions in each other’s markets, and also called for currency swap and settlement agreements.

Strengthening people-to-people exchanges is also part of the action plan as such exchanges will go a long way in fostering ties between the two sides.

From Beijing’s perspective, enhancing the relations with Central and Eastern European nations fits well amid the current international situation. By enlarging its footprint into the developing economies of Europe, the Asian giant can enhance its status as a global power and also spread its market risks.

– Contact the reporter at jeffpao@hkej.com

RC

EJ Insight writer

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