For so long out of sight out of mind for Chinese investment strategists, central and eastern Europe may finally be visible, writes Alice Gartland
In April, Premier Wen Jiabao announced a US$10 billion credit line for central and eastern European (CEE) countries during a visit to Warsaw, a proportion of which will be loans for joint investment projects in infrastructure, high and new technologies, and green economy.
While this signals a shift towards a more strategic approach to the region, Chinese investment to date has, for many of these countries, fallen short of expectations. By way of example, the China Overseas Engineering Corporation’s (COVEC) construction of a key section of the A2 motorway in Poland was supposed to showcase China’s excellence in getting the big projects done – instead its failure to complete its work after three years did the opposite.
So it’s with cautious optimism that Wen’s announcement has been greeted, in hopes it may herald a new era of co-operation in a region hungry to modernise its infrastructure and upgrade often creaky legal systems stifled by remnants from bygone regimes.
“Much of CEE has been undervalued, for historical reasons. Over time the region’s intrinsic value is becoming apparent and getting a foothold is important,” says Henry Su, a senior associate at Zhong Lun Law Firm who has been researching potential deal partners in the region for his Chinese clients. “Many countries have vibrant economies, despite the general economic situation in Europe,” he says, “and it’s time to educate both sides about one another.” Investments in energy and infrastructure are set to increase and CEE’s agricultural land may also play an important role in China’s food security.