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Europe

China knocking at Europe's back door

Central and Eastern Europe are hoping to expand their business ties with China. Even before the start of a summit in Bucharest, Chinese Premier Li Keqiang has signed numerous letters of intent.

Sixteen government heads from eastern and central Europe, one Chinese prime minister and about 1,000 business leaders, including 300 from China are gathered in the Romanian capital, Bucharest, to kick-start their economic ties.

There is a long wish-list of favorite projects worth billions of euros to be signed, sealed and financed by China. The hosts were already toasting the success of the business forum as a new chapter in economic relations, even before the summit got under way on Tuesday (26.11.2013).

The meeting is the third of its kind so far, following Budapest in 2011 and Warsaw in 2012.

China's money

The business forum is also an important meeting for the Chinese leadership.On the website of the Chinese foreign ministry the summit is described as a sign of improving relations between China and the region.

The official Chinese media have also taken note that the eastern and central European region - like China - is currently going through a phase of economic transition and consolidation and that the dialogue between the two is driven by mutual and complementary issues.

A giant flag of the European Union (EU) lays in front of the Parliament building in Bucharest May 9, 2013. A private TV station installed a EU flag weighing 800 kilograms and measuring 100 meters wide and 140 meters long to mark The Europe Day. Huge pieces of cloth were put together by a few seamstresses from a flags factory. The stars, symbol of the European Union, were sewn by hand after the flag was dropped on Aerodrome Clinceni near Bucharest. AFP PHOTO / DANIEL MIHAILESCU (Photo credit should read DANIEL MIHAILESCU/AFP/Getty Images)

Romania, like other countries in the region, urgently needs foreign investment

The partners in central and eastern Europe are looking for more Chinese investment to make their economies more competitive and to overcome the consequences of the global economic crisis, according to Chinese media.

An initial injection of capital was first discussed by former Chinese Prime Minister Wen Jiabao at the business forum in Warsaw last year. China expressed its willingness then to provide some $10 billion (6.6 billion euros) in loans for infrastructure projects, environmental technology and other technological upgrades in Eastern Europe.

According to the Romanian website cursdeguvernare.ro, the volume of trade between China and the 16 former communist states of eastern and central Europe grew from three billion euros in 2000 to more than 40 billion in 2010.

And the need and desire for investment is far from exhausted. The current trade volume is still only roughly equivalent to that between China and Italy. Chinese investment in the region is lower than in Sweden and the total investments of the 16 central and eastern European countries in China is less than Austria's.

Irritation and rivalry in Brussels

Karel De Gucht, the European Commissioner for Trade holds a news conference on the EU-China solar panels case, at the EU Commission headquarters in Brussels, Belgium, 29 July 2013. Report states the EU Commission and China's solar panel exporters found an amicable solution that will result in a new equilibrium on the European solar panel market at a sustainable price level. EPA/JULIEN WARNAND +++(c) dpa - Bildfunk+++

EU Trade Commissioner, Karel De Gucht, is skeptical of China's overtures

Despite all the economic potential, Chinese forays into Eastern Europe are viewed with concern in Brussels. EU Trade Commissioner, Karel de Gucht, said during the last bilateral EU-China summit that Beijing was playing one side off against one another in Europe.

"We have the duty to defend our interests," de Gucht said at that summit in mid-November in Beijing.

Earlier, the British daily, "Financial Times", quoted an unnamed European diplomat as saying that the business forum in Bucharest was part of China's strategy "to divide and conquer" Europe.

For the Romanian political scientist Claudiu Degeratu from the Center for Security Analysis and Prevention in Prague,the Brussels position is the result of rivalry within the EU itself.It is essentially an attempt by some EU countries to control the European-Chinese dialogue, says Degeratu. "In reality, there is no risk of any 'divide and conquer' strategy from Beijing's side," he said. Evidence of that, he stressed, is the wide open door for Chinese and South Korean firms in the Visegrad Group of countries (Hungary, Czech Republic, Slovakia and Poland). And this has "not led to any economic invasion into the EU," said Degeratu.

Key role for Romania

Bulgaria's Prime Minister Plamen Oresharski (L) is welcomed by China's Premier Li Keqiang and Romanian Prime Minister Victor Ponta (R) at the meeting of heads of government from Central and Eastern European countries and China in the lobby of the Parliament building in Bucharest November 26, 2013. REUTERS/Radu Sigheti (ROMANIA - Tags: POLITICS)

China has been wooing eastern Europe for several years

Speaking ahead of the Bucharest forum, Romanian Prime Minister Victor Ponta called the planned arrival of Chinese Premier Li Keqiang "a historic visit." Romania, he said, wanted to become China's most important partner in Europe, both economically and politically.

During his visit to Beijing last summer, Ponta labeled the bilateral partnership as "strategic." Now, the Romanian side has presented projects worth some 8.5 billion euros that could be realized with an infusion of Chinese money. Among those projects are reactors 4 and 5 of the Cernavoda nuclear power facility on the Black Sea. Technology parks producing for the European market are also on Romania's list.

Since 2012, the Chinese foreign ministry has been operating a special secretariat for cooperation with central and eastern Europe – a clear sign that Beijing intends to intensify its relations with this part of Europe.

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