China, EU – Baltic States, Financial Services, Forum, Investments, Legislation, Markets and Companies

Wang Wengang, Counselor at the Secretariat for coordination of the 16+1 format, says that this implies a special financial company, an investment fund and closer cooperation between China and banks of countries in the region.

"I am sure that this financial initiatives will greatly boost our cooperation on major projects (…). Honestly speaking, we have yet to see a big project in 16+1 cooperation and one of the main reasons is that we do not have enough financial resources," Wengang told journalists in Beijing last week.

In his words, the project of the joint financial company of China and Central and Eastern European countries is coordinated by a state-controlled Industrial and Commercial Bank of China (ICBC), which is the largest in the country, with the initial investment sum of 1 billion euros.

"This is joint 16+1 endeavor. Now Poland, the Czech Republic and Hungary have demonstrated interest and readiness to invest (…). Its ultimate goal is to leverage 50 billion euros from some private business and banks of a different countries. The fund will be mainly used in two areas: infrastructure and production capacity," said Wengang.

ICBC recently opened a subsidiary in Warsaw, which should coordinate the bank's expansion in Central and Eastern Europe. In late May, the Chinese bank granted a 130 million euro loan to the Polish bank mBank, the first loan in the region.

In Wengang's words, China's Exim Bank has established an investment fund of China and Central and Eastern European countries, its initial financial portfolio was 500 million US dollars, of which some have already been employed in, for instance, renewable energy projects.

"The first phase is almost concluded, so now we are working on the second phase trying to get 1 billion dollars," he added.

The project of the so-called banking union of China and Central and Eastern Europe is also considered by the National Development Bank of China (NDBC), and it would also be implemented in cooperation with regional partners, Wengang told journalists.

"This banking union is, relatively speaking, a new measure, it won't acquire a very instant effect but it is beneficial to our exchange of views and ideas. In the long term, it will focus on experience sharing and for long-term benefits of our projects (…). This banking union between China and CEE countries relevant discussions are just started, I think we will forward smoothly," he noted.

In his words, a similar banking cooperation model has already been implemented between China and the Shanghai Cooperation Organization (SCO), which includes China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan and Uzbekistan. India and Pakistan should join SCO later in 2016.

China has invested more than 5 billion US dollars in Central and Eastern European countries, however, according to data provided by the Chinese Ministry of Commerce, this accounts for merely 2 percent of the country's investments in the European Union (EU). Total Central and Eastern European investments in China total 1.2 billion US dollars.

The BNS journalist's trip to China was paid for by the Secretariat of China, which coordinates 16+1 cooperation with Central and Eastern European countries. This has no impact upon the content of the story.