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16+1: A sum That Makes for Great Business Potential

Government heads from most of the region came together in Budapest on November 27 for the China-Central and Eastern European Countries 16+1 summit to discuss trade and financial matters. 

Chinese premier Li Keqiang.

They were joined by an estimated 1,700 business people and politicians for a day-long economic, trade and financial forum at the Papp László Budapest Sportaréna.  

Organized by the Hungarian National Trading House, the Hungarian Investment Promotion Agency (HIPA), the Ministry of Foreign Affairs and Trade, and Exim Bank, supported by the Bank of China, the summit also featured B2B matchmaking meetings and a number of parallel panel discussions. These included agriculture and environmental technology, SMEs, and finance. The E-commerce, Logistics and Customs panel was moderated by Budapest Business Journal editor-in-chief Robin Marshall. The summit, now in its sixth year and having toured around the region, was described by several speakers as a “win-win” scenario; China is looking for new business and investment opportunities, while the 16 CEE countries (eleven of them EU members, the other five candidate states) hope to become a foothold for Chinese expansion into Western Europe.

Highlights around the summit included Hungary publishing a procurement tender for modernizing the rail link with Serbia’s capital Belgrade in order to bring Chinese goods into Western Europe. The upgrade is being 85% financed with a 20-year loan from Exim Bank of China, with Hungary paying an annual interest rate of 2.5%, the government has said.

In Hungary, the project will upgrade the 152 km of railway line stretching between Soroksár, on the outskirts of Budapest, and Kelebia, on the Serbian border. Construction of the Hungarian stretch, estimated by the state at HUF 550 billion (though has reported that this has increased to HUF 750 bln since last year), is expected to start in late 2020.  

Unique Project

In his keynote speech, Hungarian Prime Minister Viktor Orbán described the infrastructure project as unique, in that it is the first time China has partnered with an EU member and an EU candidate. But the plan, and other deals announced, make economic sense for all parties, he argued.

“We 16 are the region of Europe that is also the engine of economic growth in Europe,” he told delegates. “The 16 of us have always been open and would like to remain so. We look at Chinese cooperation as a huge opportunity.”

He added that the days when European finance, knowhow and technology were exported to China were long since gone. “The situation has changed; a new star of the East is up high. Asia, China included, is on the rise.” This was a new period of globalization “where the world is no longer divided into teachers and pupils, but is instead based on mutual trust and opportunities.”

The Hungarian prime minister was due to sign 11 bilateral agreements with China on Tuesday (November 28). Other participating countries and businesses from the region and China signed dozens more; there were 13 alone signed at the E-commerce, Logistics and Customs panel.

Other deals signed at the summit included a USD 500 million credit line from the Exim Bank of China to its Hungarian counterpart to finance lending. Hungary has also decided to join the China-Central and Eastern Europe Investment Cooperation Fund, a private equity fund organized by the Export-Import Bank of China, with a EUR 50 mln contribution, according to Hungarian state news agency MTI.