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Serbia starts building Chinese-funded rail link to Hungary

by Janne Suokas Nov 29, 2017 10:30 TRADEINVESTMENT LI KEQIANG

The Serbia-Hungary railway is the first to be build by a Chinese company in Europe.Yantai Ming China Daily




Serbia on Tuesday began reconstruction work on a rail link to Hungary, a project that is financed by China as part of its new Silk Road trade routes across Eurasia.

Serbian prime minister Ana Brnabic attended the launch of the project at a construction site in Belgrade after meeting with Chinese premier Li Keqiang and Hungarian prime minister Viktor Orban earlier during the day in Budapest.

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.

China is largely financing the project, which is expected to speed up the transport of Chinese goods from the Chinese-owned Greek port of Piraeus to markets in Central and Eastern Europe.

Brnabic said at the launch ceremony that the rail project will change Serbia into a transportation center within the Balkan region.

According to the Serbian government, the total value of construction of the railroad in Serbia is about €2bn (US$2.4bn). In May, Serbia borrowed US$297.6 million from the Export-Import Bank of China to finance the reconstruction of first section of the railroad between Belgrade Centre and Stara Pazova, in the length of 34.5 kilometres.

The Serbian section of the project will be build by a consortium founded by China Railway International and China Communications Construction Company.

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Hungarian part of the rail link opened for public bidding

The Belgrade-Budapest rail link, first agreed upon by China, Serbia and Hungary in 2013, is a showcase for the US$900bn Belt and Road initiative(OBOR) proposed by President Xi Jinping for boosting trade through infrastructure investments from across Asia to Europe and Africa.

Progress on the project has however been slower in Hungary, which on Monday opened a public tender for the Hungarian part of the rail link following an EU probe into the project.

The European Commission said in February that it was investigating whether Hungary was complying with EU procurement rules, which require public tenders for large transport projects.

According to Hungarian Foreign Minister Péter Szijjártó, the value of the modernisation of the Hungarian part of the rail link stands at 550 billion florints (US$2.1bn), 85 percent of which will be financed with a 20-year loan from China’s Exim Bank.

The construction on the Hungarian side could start in late 2020 after the tendering, planning and licensing processes have been completed.

Representatives from Hungary, Serbia and 14 other countries in the region gathered yesterday in Budapest for their annual meeting with China.

At the two-day meeting, Chinese premier Li Keqiang pledged US$3bn worth of Chinese funds to investments and development projects in Central and Eastern Europe.

While Chinese money for much-needed infrastructure investment is welcomed in the region, diplomats in Brussels are concerned that Beijing’s increased involvement may undermine EU rules and unity


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