China, CEE leaders make considerable progress on stepping up infrastructure collaboration

Pragmatic and result-oriented initiatives and positive vibes were the highlights of the discussions at this year's China-Central and Eastern Europe leaders' meeting in Bucharest, Romania.

The China-CEE initiative covering 16 countries plus the People's Republic of China has moved on significantly since its introduction in Warsaw last year. Within a year it has come out with its first deliverables and continues to strengthen its channels.

Clearly it has already met its unspoken objective of giving countries in the Central and Eastern Europe a stronger voice as well as a platform for an open discussion with the Chinese government.

There has been an intense debate in the past few weeks on how the China-CEE initiative fits into the broader scope of the EU-China partnership, especially among the EU member states. This debate was a useful one in two aspects.

First, it made the CEE countries think through their stand and in most cases, come to the conclusion that the China-CEE initiative is welcomed and desirable.

Second, it enabled the initiative to look for a platform to complement the other ongoing EU-China dialogues. Complementary it is indeed. Opportunity and sufficient space to express ideas, issues and cooperation proposals have been given to all members at the multilateral and bilateral levels.

The key driving force behind the initiative from every participating country's perspective is economic cooperation. Chinese Premier Li Keqiang proposed two major areas where China is offering its assistance - infrastructure and agricultural resources - which is a combination that could be seen in some African countries.

The infrastructural gap in the CEE countries is enormous. Both highway and railway networks are desperately insufficient, which on a daily basis affects citizens and businesses.

China has proven in its homeland that when it comes to infrastructure development no companies can match Chinese ones in speed, complexity, quality and technology. Therefore filling this gap is nothing but logical. Projects in Serbia, Macedonia and soon in Hungary show that the gap can be filled.

The bottleneck seems to be the financing model. Even though a credit line worth $10 billion (7.4 billion euros) is being offered within the China-CEE initiative, the implementation mechanism does not fit with common practice in most Central and Eastern European countries.

The model should be tailored to private public partnerships rather than to loans covered by a state guarantee. Without such an adjustment we will hardly see a major takeoff.

The financing bottleneck has been preventing mushrooming of new infrastructure projects in CEE.

It has, however, showed an aspect of the China-CEE initiative that will be important in the next few years. It has revealed the region is a heterogeneous one when it comes to areas where Chinese companies can actively participate. Some countries provide infrastructure investment opportunities, some offer low-cost manufacturing in Europe and some can assist in fulfilling the goals of the Chinese government to invest in green technologies.

The spectrum is aligned according to the development level of the CEE countries, and even though they're all in Europe their technological capabilities are quite different. Therefore the Chinese government can achieve various objectives within the single China-CEE initiative ranging from rather low-tech agricultural cooperation, through infrastructure development cooperation to innovative research and development cooperation.

The CEE countries were keen to explore all these areas during the summit. Let's hope that the next China-CEE Summit taking place in Prague, Belgrade, Sofia or elsewhere will present some concrete achievements that all parties are hungry for.

The author is the founder of China Investment Forum in Prague and was the Economic Adviser to the Czech foreign minister at the Bucharest summit.

(China Daily European Weekly 11/29/2013 page9)