Beijing forges ties with eastern Europe

Beijing is nothing if not adept at identifying gaps in the world economy market that boost China's status on the international stage. Hence its interest in various countries in eastern and southeastern Europe, that tend to feel like the EU's poor relations - that's if they're even members in the first place. While Brussels, Paris and Berlin are playing dangerous games with Moscow, Beijing is on the ground signing off new investment deals.

This week sees the third summit of China and 16 Central and Eastern European countries (CEECs) take place in the Serbian capital of Belgrade. China's Premier Li Keqiang is set to agree to a raft of new cooperations between China and CEECs. Five of the 16 countries represented at the meeting are not members of the EU – which is one reason why Albania, Bosnia-Herzegovina, Macedonia, Montenegro and Serbia are especially receptive to both political and economic attention.

But their burgeoning relationships with China are a thorn in the side of Brussels. EU politicians noted with consternation that, ahead of the summit, China's premier announced that Bejing and CEECs are hoping to double trade by 2018. Even last year, it already amounted to $60 billion worth of goods.

Largely unnoticed by the West, the Chinese government has spent the last two years ploughing billions into the region, sealing a range of new friendships in the process. Virtually no country in the region is in a position to fund its own infrastructure renovations - from repairing bridges to run-down train tracks - or to revamp its telecommunications sector. Not even those that belong to the EU. Brussels is keeping them on a short leash in the wake of the economic crisis. Without Chinese help, they have little chance of getting on their feet.

With Li Keqiang earmarking $10 billion of credit for infrastructure projects in CEECs, Milan Bacevic, the Serbian minister in charge of the mining industry got a bit over-excited and started talking about $10 trillion. Not even China is willing to spend that much in the region. Nonetheless, these marginalized countries still feel as though a gold rush is underway.

On top of the $10 billion of credit put aside for infrastructure projects, they can also look forward to benefiting from China's plans to fund development of a "New Silk Road", pouring billions of dollars into projects to revive intercontinental land routes and maritime links through central Asia. In the long run, Beijing is keen to reduce China's dependence on freight lines dominated by European shippers, plus develop new markets for Chinese exports. This will come at a price, even beyond the sheer number of new ports, streets, train tracks, telecommunication networks and power plants the undertaking requires. Clearly, a few projects in eastern and southeastern Europe will also be paid for from the fund.

The Chinese have already invested over $2 billion in Serbia alone – financing not only the new bridge across the Danube in Belgrade but also reaching into their pockets for 1.5 billion euros to cover the modernization of the railway line between Belgrade and Budapest. China is also giving Montenegro, home to a population of 620,000, 690 million euros to build a new 110-kilometer highway, and investing 375 million euros in Macedonia's expansion of a highway in the west of the country – as well as serving as the building contractor. No wonder Nikola Gruevski, the Macedonian leader, is singing China‘s praises and hailing "the biggest investment in infrastructure for 50 years" – which is not happening courtesy of the EU.

Meanwhile, ahead of the summit in Belgrade, Romanian Prime Minister Victor Ponta gave his guests from China a handsome welcome. It was, after all, the first time in almost 20 years that a Chinese premier visited Romania. Ponta was quick to stress that Romania, a member of the EU, was willing to serve as China's gateway to Europe. An offer that is unlikely to make him popular in Brussels, which Beijng doesn't involve in any of its deals – however often Li Keqiang reiterates they all abide by EU law.

Fears are growing that Beijing's investments will provide it with increasing influence and ultimately divide the EU. In future, its members might well dig in their heels were Brussels to start trying to introduce anti-dumping regulations against China. Needless to say, they will be keen to defend their wealthy friend from Asia against their small-minded relatives in Europe.

One of Germany's leading experts on China, Frank Sieren has lived in Beijng for 20 years.