Change of leadership in Serbia will not affect its B&R cooperation with China

Source:Global Times Published: 2017/5/16 22:33:39

Local relationships vital for B&R progress

Li Manchang. Photo: Courtesy of Li Manchang

Editor's Note:

From Azerbaijan to Serbia, many countries and regions are included in the Belt and Road (B&R) initiative. Most countries along the route are small-sized nations, with limited populations and economic scale. They have accumulated a lot of experience about how to maximize their interests against the background of complicated geopolitical games played among regional big powers, and are always alert to possible threats. This ingrained wariness poses certain challenges for the B&R initiative. Will China be able to dispel the doubts? How should the B&R initiative be implemented at the local level? To find answers to these questions, Global Times reporter Hu Weijia (GT) talked to Li Manchang (Li), Chinese ambassador to Serbia, in an exclusive interview during the Belt and Road Forum for International Cooperation.

GT: Some observers say the driving force or at least one factor behind the B&R initiative is the intention to export China's outdated and excess capacity to countries along the route. Has Serbia expressed such concerns?

Li: Not at all. Those who hold this view do not know the local situation. It is the local enterprises that are counted on to realize the initiative. Last year, the Chinese embassy in Serbia facilitated the signing of a contract between HBIS Group, a major Chinese steel maker, and the Serbian government, in which the Smederevo steel factory in Serbia was acquired for 46 million euros ($51 million). In June last year, China officially took over the factory and by December the factory had become profitable, which saved the steel factory and the livelihoods of 5,000 homes related to Smederevo. Serbia has a total population of just over 7 million. If we take the upstream and downstream enterprises involved into account, saving this steel factory is equal to saving a small city, as it provides vital jobs for local people.

This year, Serbia's unemployment rate is expected to be 14 percent. Given this economic predicament, many of the local people feel grateful toward the B&R initiative.

Previously, the US had acquired Smederevo and maintained it for roughly seven to eight years, under poor management. Finally they returned the factory to the Serbian government, at a time when the country was not capable of reviving the factory. Under these circumstances, China took over the business. Currently, it is expected that the contribution of the factory to the local economy this year will account for about 2 percent of Serbia's GDP. The steel produced by Smederevo will not only supply Serbia, but also neighboring countries, which means it will stimulate the growth of Serbian exports. So from the government to the public, Serbians have expressed heartfelt gratitude to China.

GT: How could the Smederevo steel factory turn losses into profits within such a short time after being acquired by HBIS Group, especially in the context of sustained losses seen in previous years when it was run by Western enterprises? Is this a common phenomenon for B&R projects in Serbia?

Li: So far as I know, HBIS Group invested a lot of money to increase productivity after it took over the factory. Second, HBIS brought technology and advanced management experience to the factory in a bid to improve efficiency. Third, there is a management team from China numbering just over 10 people, and all the other employees are local Serbian people, ensuring a smooth handover after HBIS took over the factory.

Chinese enterprises have taken part in numerous projects in Serbia, like the construction of the bridge on the Danube between Zemun and Borca. There are a lot of projects involving Chinese companies in Asia and Africa but Chinese enterprises used to be less competitive than US firms in European markets. However, with the B&R initiative having been promoted in Serbia, we can now see the first bridge built by Chinese enterprises in Europe has opened to traffic; construction of the first high-speed railway built by Chinese firms in Europe is likely to begin at the end of this year in Serbia; and the first thermal power station built by Chinese companies in Europe is also in Serbia.

GT: Currently, there are numerous B&R projects in Serbia. What are the challenges that the two countries may face in strengthening pragmatic cooperation in the future?

Li: Enterprises are worried about the "unacclimatized" aspect of overseas investment. Some Chinese companies are not familiar with the Serbian language, and have limited understanding of local laws and regulations. A large number of Chinese engineers are very competent, but if they do not hold local certificates, they cannot take part in some projects, which is a big challenge at present.

GT: Current Serbian President Tomislav Nikolic will end his tenure at the end of May. Do you think this change will bring uncertainty for Sino-Serbian economic and trade cooperation?

Li: This will not be a problem. Strengthening Sino-Serbian economic and trade cooperation is something the public wants, and the leaders of the two countries have established mutual political trust. Serbian Prime Minister Aleksandar Vucic, who is to be the next president of the country, attended the Belt and Road Forum for International Cooperation in Beijing earlier this week. In fact, lots of pragmatic cooperation between the two countries has been facilitated by Vucic. Now the two countries are sharing a strong friendship. Serbia has become the first visa-free country in Europe for Chinese passport holders, and further cooperation between the two countries in political, economic, trade, science and technology, sports, tourism, health and other fields will be continued.

Newspaper headline: Local relationships vital for B&R progress


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