China National Electric Engineering Co. plans to invest $1.2 billion in Serbia and create as many as 15,000 jobs in what would be the country’s second biggest inflow of foreign direct investment from a single source.
Company president Jin Chunsheng, who is also vice president of China Machinery Engineering Corp. (1829), pledged to develop an industrial park, upgrade at least one power plant and invest in three companies facing closure as Serbian Prime Minister Aleksandar Vucic met businessmen during a trip to China, Serbia’s government said in a statement from Belgrade.
Vucic’s government has turned to state-owned Chinese companies to improve infrastructure, create jobs, consolidate public finances and jump start an economy flirting with recession.
“Chinese companies have great interest in developing business in Serbia,” Serbia’s government said in an e-mail, citing Vucic. ZTE Corp. (000063) will also explore possibilities of developing a 4G network in Serbia, the government said.
Vucic, whose party of former nationalists have looked eastward for business ties and funding even as the country strives to join the European Union by 2019, is trying to spur growth as indicators point to a third recession in five years. The government must rein in budget deficit seen at 8 percent of gross domestic product this year and has taken infrastructure loans from Russia and China, two allies that have helped block full international recognition of the breakaway province Kosovo.
Other Projects
Vucic offered public-private partnership and concessions to China Railway Construction Corp. (1186) for an overhaul of a rail link between Belgrade and Budapest to avoid more pressure on public debt through new sovereign guarantees. Serbia’s debt to GDP ratio is expected to exceed 70 percent this year.
China is not among top 25 investors in Serbia, where foreign investment totaled 540 million euros ($696 million) in the six months through June. Bilateral trade figures for the same period show Serb exports to China at 4.5 million euros and imports at 563 million euros, according to official statistics.
The biggest Chinese ventures in Serbia include a $260 million bridge in Belgrade, two highway sections in western Serbia worth $334 million, and a $716 upgrade and expansion of the Kostolac thermal power plant and lignite mine. All are financed by loans from Export-Import Bank of China.
Vucic will meet Chinese Premier Li Keqiang tomorrow and ask him to take part in a summit of 16 leaders from central and eastern Europe in Belgrade later this year.
“I cannot return to Belgrade without Premier Li’s promise to visit Belgrade and organize that meeting,” Vucic said according to the statement. A previous summit was held in Bucharest last November, when China offered $10 billion in loans for project financing.
Source Bloomberg
