Dialogue needed for strong Sino-CEE cooperation

Source:Global Times Published: 2017/6/4 19:33:39

Illustration: Luo Xuan/GT





There are three ways for a country to expand global investment. The first is war, which is rarely used in modern times. The second is bilateral economic and trade cooperation, which is the major method of global investment. Driven by profits, investors are always concerned about the investment environment, which is why most of China's overseas investments are made in developed countries. The third is government-led investment, which works more efficiently in developing countries. Often impacted by the relationship between countries, such investment usually covers areas like ports, energy, infrastructure and other public projects that benefit the local population.

Before 2011, China's investment in Central and Eastern European (CEE) countries had grown relatively slowly. But since 2011, Chinese investment in CEE regions has increased greatly, thanks in large part to government-led investment. In 2012, the Chinese government offered a credit line worth $10 billion for funding projects in CEE countries. China also established an investment fund of $3 billion to encourage financial institutions and companies to participate in investment projects in CEE countries through Public-Private Partnerships.

Last year, China set up a 10 billion euro ($11.2 billion) investment fund for projects in CEE countries, which aims to raise 50 billion euros to finance regional projects in such sectors as manufacturing, energy and consumer goods. The fund is government-backed but will be operated according to business principles and be guided by the market, according to media reports. Against such a backdrop, China's investment in CEE countries has seen rapid development, especially in infrastructure construction. For instance, the bridge over the Danube, which was completed in 2014 and described as the first major Chinese-built infrastructure project in Europe, has become a model for cooperation between China and CEE countries. In the field of energy, a Bosnian power plant started operation in August 2016, which is so far the largest infrastructure cooperation project between China and CEE countries.

There has also been investment in other areas. In 2016, China's Hebei Iron & Steel Group purchased a loss-making Serbian steel plant for 46 million euros, and it took only half a year for the plant to turn a profit after the Chinese steel giant helped it tackle its problems. This is just one example of promoting local employment and economic development.

Besides cooperation on the political level, the China-CEE cooperation has also seen strengthened ties in terms of economic development. Economic exchanges have further promoted the deepening cooperation between China and CEE countries. Despite the diverse political backgrounds and various geopolitical problems, China should always adhere to the voluntary, independent, and positive cooperation principles to push forward investment projects in CEE countries.

While it is inevitable that some economic and political conflicts will be encountered as well as some historical and cultural issues, China needs to have dialogue with the CEE countries so as to effectively promote partnership with these countries.

Of course, China would like to carry out more large projects with CEE countries in the future, to build on the progress that has already been seen. It should also be pointed out that such development requires strong support from local governments. More technology cooperation will also be needed, including some research projects, and all parties should assess the real effects of their cooperation in a better way.

We suggest that governments should take a very pragmatic attitude to really put the strategy into practice and to actually promote the partnership. In addition, some Chinese companies should comply with local customs in CEE countries instead of simply following their domestic practices. They need to make appropriate adjustments to their way of doing business in foreign countries. Companies need to do their homework in advance by studying local laws and regulations and politics, as well as the local economy, society and cultural conditions so as to avoid potential risks in CEE countries.

The article was compiled based on a speech made by Xiang Zuotao, an associate professor with the School of International Studies at Peking University, at the Shanghai Forum 2017 Roundtable on May 27. bizopinion@globaltimes.com.cn

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