China pledges billions to build infrastructure and influence in Europe

Brussels fears Beijing’s economic clout and facilities portfolio could undermine EU

Hungary’s Viktor Orban and China’s prime minister Li Keqiang: “China has the resources to enable developments that would be impossible with EU funding alone,” says Mr Orban  Photograph: Attila Kisbenedek/AFP/Getty Images

Hungary’s Viktor Orban and China’s prime minister Li Keqiang: “China has the resources to enable developments that would be impossible with EU funding alone,” says Mr Orban Photograph: Attila Kisbenedek/AFP/Getty Images

 

China plans to pump billions of euro into economic projects in central and eastern Europe, where the European Union fears Beijing’s growing influence could deepen divisions between some member states and Brussels.

Chinese prime minister Li Keqiang and the leaders of 16 states stretching from the Baltic to the Black Sea met in the Hungarian capital, Budapest, on Monday for the sixth China-Central and Eastern European Countries (CEEC) summit.

They were joined by more than 1,000 business people from China and central Europe, who were expected to discuss a vast range of projects on the sidelines of a summit where 23 bilateral deals were due to be signed.

Mr Li announced that China’s development bank would provide €2 billion to a new China-CEEC interbank association and $1 billion (€840 million) to the second phase of a co-operation fund linking Beijing and central European states.

The cash injection will help China expand a portfolio that already includes major investments in roads, railways, ports, factories and power stations across a region that until now has relied on the EU to finance much-needed modernisation of industry and infrastructure.

Political disputes

The EU fears that its members could ignore the bloc’s competition rules when striking deals with China, and use close ties with the economic giant as leverage in political disputes with Brussels.

“If a foreign-owned company wants to purchase a European harbour, part of our energy infrastructure or a defence technology firm, this should only happen with transparency, with scrutiny and debate,” European Commission president Jean-Claude Juncker said in his state-of-the-union speech this year, in what was seen as a swipe at Chinese firms.

EU officials are already scrutinising the legality of a deal between Hungary and China as part of a €2.4 billion upgrade of the railway joining the Hungarian capital with Belgrade in Serbia, which is to be 85 per cent funded by Beijing.

The new high-speed line would help bring China’s goods into the heart of Europe from the majority Chinese-owned Greek port of Piraeus, as part of Beijing’s vast Belt and Road plan to improve its links with Africa, the Middle East and Europe along ancient trade routes.

Piece of the pie

China’s leaders say the scheme shows their country is committed to globalisation, and will benefit everyone involved – including some of Europe’s poorest states.

“In the next five years we believe China will import as much as $8 trillion (€6.7 trillion) of products. We hope central and eastern European countries can take a larger piece of this pie and win more consumers,” Mr Li said through a translator. “Our co-operation is open and transparent. We have seen to it that it is conducted in the broader context of China-EU relations, by keeping the relevant EU regulations,” he added in an apparent effort to soothe the concerns of Brussels.

Hungarian premier Viktor Orban, who frequently clashes with Brussels and accuses it of meddling in countries’ affairs, said “the EU shouldn’t close its doors”.

“The world is changing. China has the resources to enable developments that would be impossible with EU funding alone.”