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China’s Silk Road rail project moves forward in Serbia - Serbia Business

China’s Silk Road rail project moves forward in Serbia

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Construction of the Serbian part of the Belgrade-Budapest high speed railway – the first built by China in Europe – is expected to begin in November, Serbia’s Minister of Construction, Transport and Infrastructure Zorana Mihajlovic said on Tuesday.

The 350km rail link connecting Serbia’s capital Belgrade with Hungary’s Budapest is a showcase for Chinese rail expertise in Europe and part of Beijing’s ambitious new Silk Road trade project.

The US$2.89bn project, agreed between China, Hungary and Serbia, faced a setback earlier this year when the European Commission launched an investigation into whether it had violated EU procurement rules, with particular focus on Hungary as it is a full EU member country.

But the probe has not prevented China and Serbia, neither of which is an EU member, from moving on with the project.

Mihaljovic told Chinese media in Belgrade that Serbia and China have signed all the necessary contracts to start construction of the first stage of the rail project, which links Belgrade to Stara Pazova.

“I expect the work to begin in November, when the next summit of China and 16 countries of Central and Eastern Europe will take place in Budapest,” Mihaljovic said, according to the ministry’s website.

“Based on talks between the Chinese and Serbian presidents, we expect the entire section to be completed in two and a half years.”

Upgrading the 350km rail connection between Belgrade and Budapest, of which 184km is in Serbia, is expected to cut travel times between the capitals from eight hours to just three.

The existing monorail link, originally built at the end of the 19th century, will be upgraded by Chinese contractors into a modern railway capable of handling electrified passenger and cargo trains with a maximum speed of 200km/h.

The Serbian section of the project is financed by the Export-Import Bank of China, and will be built by a consortium founded by the China Railway International and China Communications Construction Company, according to Xinhua.

Serbia hopes to benefit from Belt and Road investments

The Serbia-Hungary railway is a landmark project for China’s Belt and Road initiative in Europe, which aims to boost economic integration between Asia, Europe and Africa through massive investments in ports, roads, railways and other transport infrastructure.

The railway is part of the so called Land Sea Express Route that runs from the Chinese-owned port of Piraeus in Greece through Macedonia and Serbia to Hungary, and is expected to provide a shorter route in terms of the transportation of Chinese products from Greece to Central and Western Europe.

In her interview, Mihaljovic said Serbia is located on the route of the Belt and Road project and is willing to do its utmost to contribute to the project as well as taking full advantage of its potential.

She said Chinese investments in Serbian infrastructure are expected to increase from US$2.5bn currently to as much as US$6bn when all contracts currently underway are signed.

According to her, China would then account for almost half of the total infrastructure investment in the Balkan country.

“One of the following tasks should be the reconstruction and modernisation of the railway from Belgrade to the south of Serbia, towards Macedonia and Greece, in order to get the fastest possible connection between the port of Piraeus, Belgrade and Western Europe,” the Serbian minister of construction, transport and infrastructure said.

Li Manchang, the Chinese ambassador to Serbia, confirmed to China Daily on Wednesday that the two countries are expected to sign an agreement to construct the second phase by the end of this year.

EU requirements

In Hungary, the European Commission is investigating whether the Hungarian part of the Belgrade-Budapest rail link violated EU rules that require public tenders for large transport projects.

Hungary and China signed a bilateral treaty in November 2015 for the construction of the US$1.8bn Hungarian section of the railway, 85 percent of which will be financed by a 20-year loan from China.

The section will also be constructed by a consortium founded by the China Railway Corporation, China Railway Group and Hungarian State Railway.

For its part, Serbia is an EU member candidate and also needs to consult with Brussels, Mihaljovic said. According to her, all Serbian and Chinese joint infrastructure projects are in line with European standards.

“We are a small country that needs investments and does not have time to lose. Our road to the EU will not jeopardise the cooperation that we have with China,” she said.