China looks at options for financing large-scale projects in Baltics and CEE region

China has invested more than EUR5bn in Central and Eastern European countries, although according to data provided by the Chinese Ministry of Commerce, this accounts for only 2 per cent of the country's investments in the European Union.
China looks at options for financing large-scale projects in Baltics and CEE region

(China Supertrends, CC BY-NC-ND)

China is establishing an investment fund and plans closer cooperation between its banks and the Baltic states, Wang Wengang, Counselor at the Secretariat for coordination of the 16+1 format, said. „I am sure that this financial initiatives will greatly boost our cooperation on major projects,” Wengang said.

The project is coordinated by the state-controlled Industrial and Commercial Bank of China (ICBC), which is the largest in the country, with an initial investment sum of EUR1bn. „This is a joint 16+1 endeavor. Now Poland, the Czech Republic and Hungary have demonstrated interest and readiness to invest (…). Its ultimate goal is to leverage EUR50bn from private business and banks from various countries. The fund will be mainly used in two areas: infrastructure and production capacity,” said Wengang.

ICBC recently opened a subsidiary in Warsaw, which will coordinate the bank’s expansion in Central and Eastern Europe. In late May, the Chinese bank granted a EUR130m loan to the Polish bank mBank, the first loan in the region.

China’s Exim Bank has established an investment fund of China and Central and Eastern European countries, its initial financial portfolio was USD500m, of which some have already been employed in, for instance, renewable energy projects. „The first phase is almost concluded, so now we are working on the second phase trying to get USD1bn,” he added.

Banking union

A banking union of China and Central and Eastern Europe is also being considered by the National Development Bank of China (NDBC), and it would also be implemented in cooperation with regional partners, Wengang said.

„This banking union is, relatively speaking, a new measure, it won’t have an instant effect but it is beneficial to our exchange of views and ideas. In the long term, it will focus on experience sharing and long-term benefits of our projects,” he noted.

A similar banking cooperation model has been implemented between China and the Shanghai Cooperation Organization (SCO), which includes China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. India and Pakistan should join SCO later in 2016.

(China Supertrends, CC BY-NC-ND)

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