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China and the River Danube

Author:
Nikola Jokanović
LLM in International Relations, China Foreign Affairs University. E-mail: [email protected]

The Danube as a waterway and tourist attraction

In this text, I will focus my attention on the countries of the Danube River basin, and on the topics of regional infrastructural and industrial projects, the development of tourism, and on the announced arrival of individuals and companies from People’s Republic of China. The Danube is Europe’s second longest river (measuring 2860 km in length), but it is also the longest river flowing through southeastern Europe. When we talk about the interests of the Danube River countries, we are talking about ten European countries (19 if one counts countries along Danube’s tributaries are). The river is usually divided into three sections, which are the Upper Danube (from the river’s source to Devín Gate), the Middle Danube (from Devin Gate to Iron Gate between Serbia and Romania), and the Lower Danube (from Iron Gate to the Black Sea).

The importance of the river as an international waterway is obvious through the various ports that are situated along its course and auxiliary waterways. Some of these ports include: Regensburg, Vienna, Bratislava, Budapest, Novi Sad, Belgrade, Smederevo, Vidin, Brăila and Galaţi. The passage of traffic bound towards the Black Sea is made easier through the notable Constanţa – Cernavodă canal in Romania. If we take a look at the annual traffic of goods in the Danube’s ports, it is even clearer just how important the river is: the estimates for the year 2007 indicate that 273,765 tons and 579,275 tons pass through Budapest Ferroport and Brăila, respectively, while the estimates for the year 2010 indicate 240,000 tons and 210,723 tons for Bratislava and the Smederevo Tomi Trade Port, respectively.

The immense growth potential of the Middle and Lower Danube regions has yet to be fully realized. The river’s dominant position amongst European inland waterways would be cemented with an improvement in the littoral states’ living standards and increased development in their industrial activity, as well as that of their port, road, railway, and other such infrastructure. Last but not least, the Danube has always been a major tourist attraction – a cruise on this river allows people from all over the world to experience the natural beauty and cultural, historical, and other types of heritage of the littoral countries.

A comparison with Maritime Silk Road
Another important international waterway exists; one that stretches from eastern and southern China towards southeastern Asia, southern Asia, and then to eastern Africa, before finally reaching the eastern Mediterranean through the Suez Canal. This route is known as the Maritime Silk Road (Hăishang Sīchou Zhī Lu), and is part of an initiative was launched by Chinese Government in 2013. This initiative aims at the improvement of infrastructure (the construction and modernization of ports, roads, and railways), a better use of natural resources, and industrial and financial cooperation between all countries involved. The financial backbone of the initiative is the 2015-founded Asian Infrastructure Investment Bank, currently counting on no less than $40 billion in support.


This initiative has seen the launch of several infrastructure projects. One of these is the planned Hambantota port facilities in Sri Lanka (named after Sri Lanka’s previous president, Mahinda Rajapaksa), which includes the construction of a shipbuilding and repair dockyard The Chinese side of this venture has since 2008 been represented by the China Harbour Engineering Company (CHEC). After the electoral victory of Sri Lanka’s new president, Maithripala Sirisena, the new authorities announced a revision (and possible termination) of the agreement with CHEC due to suspected corruption. Nonetheless, the project received the green light eventually, with supervision over the project put in hands of the Sri Lankan Urban Development Authority UDA. The estimated capacity of Hambantota port, upon successful completion, will be 33 vessels, thus making it the biggest port of South Asia). The completed port will also bear some strategic importance: the prospective presence of the People’s Liberation Army Navy vessels in the port has already begun to raise concern in New Delhi.

The contacts and exchange between China and CEE countries
It is true that Maritime Silk Road initiative focuses mostly on the countries along this important waterway. Still, similar projects in southeastern Europe have also managed to garner the attention of Chinese financial institutions. The quite recent cooperation between China and Central and Eastern European (CEE) countries is indicative. One of the main features of this initiative—created in 2012 during the China-CEE Warsaw summit—is a $10 billion credit line intended for infrastructural projects, technology, and green economy development, mostly consisting of preferential loans. The 2013 China-CEE summit held in Bucharest, and the agreed-upon “Bucharest Guidelines for Cooperation between China and CEE countries”, opened the door for the construction of roads, railways (especially the China-CEE railway link), ports, and airports, as well as distribution centres along the route. An additional emphasis of the Bucharest Guidelines was also on improving conditions for bidirectional investment and trade, and people-to-people contacts and exchange.

A further deepening of China-CEE ties ensued with the 2014 adoption of the “Belgrade Guidelines for Cooperation between China and CEE countries”. The Belgrade Guidelines opened the door for all CEE countries to join the China-EU Smart and Secure Trade Lines pilot project. The Belgrade China-CEE summit also saw the announcemed facilitation of customs clearance, a number of new China-CEE air links, and the initializing of logistics cooperation. The financial aspect of the Belgrade Guidelines is also worth mentioning, for China-CEE currency swap agreements and opening up of new branches of financial institutions are soon to be expected.

Infrastructure
The infrastructural investment coming from China has been extended a warm welcome throughout the Danube Region. Usually, it is the large companies (such as the China

Road and Bridge Corporation) and their local partners who perform the construction of infrastructure, and for this they receive financial backing from China’s crucial financial institutions (such as the Export-Import Bank of China). Some projects have already been completed: in December 2014, during the Belgrade China-CEE summit, €170 million euro Pupin Bridge in Belgrade opened (the construction of this bridge lasted only three years).
Several projects have been announced; with their successful completion, the China-
CEE ties will become especially strong. In addition to the much-expected high-speed railway link between Belgrade and Budapest (with a possible extension to Macedonia and to the Greek port of Piraeus), and the high-speed railway link between Constanţa and Bucharest (with plans for furthering it towards Budapest and Vienna), soon to be expected are new highways: the Banjaluka-Doboj highway, serving as the link between Banjaluka and the Croatian port of Split, as well as a highway along the Bulgarian Black Sea coast.

Industry

We have seen a number of forthcoming Chinese attempts to improve the Danube Region’s infrastructure. However, infrastructure improvement must be accompanied by Chinese companies’ entrance into the CEE countries’ industry, the improvement of productivity and of the standard of living. Nowadays, the most targeted sectors are agriculture, energy, mining, IT industry, and logistics. The logistics sector will have particularly favourable development conditions in circumstances when Chinese products assembled or fully made in this region are transported to the developed economies of Western Europe.


The media has paid a lot of attention to some of the expected Chinese investment in
Serbia, Hungary, Bulgaria, and Romania. The industry sectors in Serbia deemed attractive to
Chinese investors are agriculture, energy, and telecommunications, with companies such as
China Machinery Engineering Corporation (CMEC) and ZTE Corporation already being present or planning their presence in Serbia. CMEC has been charged with the reconstruction of coal power plant in Kostolac, while also showing interest in constructing a meat processing facility in Kragujevac; ZTE Corporation has, on the other hand, approached Serbia’s Ministry of Trade and Telecommunications with a pitch to modernise the country’s telecommunications equipment.
The focal point of Chinese presence in Hungary (with value of already over billions of dollars) includes logistics, telecommunications, and chemicals. The key Chinese players in

Hungary include the Huawei Corporation (keen on expanding its Hungarian distribution
centre) and Waihua Industrial Group (and its $1.6 billion investment in the BorsodChem biochemical company). Finally, China has been hoping to turn the little-used Szombathely airport into important centre for air cargo transportation.

If we look at the Lower Danube countries such as Bulgaria and Romania, we may notice that agriculture is a sector of interest to Chinese partners in both countries. One of the major players in Bulgaria’s agriculture sector is Tianjin State Farms Agribusiness Group, with its €100 million investment in a food processing industrial park and a lease of about 2,000 hectares of land in northwest Bulgaria intended for agriculture. On the other hand, the Sino- Romanian agricultural cooperation is already a fruitful one: a major player from China includes the Cofco Company, interested in the acquisition or construction of granaries in the Romanian ports of Corabia and Constanţa (the expected value exceeds €3 million). In addition, China and Romania have agreed upon meeting China’s mounting meat needs through imports of beef and pork from Romania.


Apart from agriculture, there are other possibilities for cooperation in these countries.
Bulgaria’s automotive sector embarked on a path towards growth with the arrival of China’s Great Wall Motors and its investment into production facility in Lovech (capable of delivering 50 thousand vehicles per year). At the same time, China has attempted to enter the Romanian energy sector (offering to support a nuclear power plant in Cernavoda and to construct a new power plant in Tarnita at an estimated value of at least €6 billion), and has been invited to build a number of industrial parks in Constanţa.

Tourism
The aforementioned Bucharest Guidelines also addresses people-to-people contact and cultural exchange, and one of their first aims is to establish a China-CEEC association of tourism promotion agencies and businesses. They continue by indicating the possible effective measures to allow for an easier movement of people; when it comes to China, CEEC nationals have been offered 72-hour visa-free transit in Beijing, Shanghai, and other locations of ports or airports (which opens the door for these tourists to experience China first-hand), while the Chinese Government greeted the simplification of visa procedure for Chinese citizens in Romania and Czech Republic. The rest of CEE countries are expected to follow their example (which means that a 48 or 72 hour visa exemption for Chinese tourists that would allow them to embark on a boat cruise along the Danube and enter several Danube Region countries).


A step further was taken with the Belgrade Guidelines; the announced China-CEEC Association of Tourism Promotion Agencies and Businesses is expected to organize promotion events, open a webpage with tourist information in English and Mandarin, and offer travel routes according to Chinese and CEEC tourists’ desires. To offer a symbol of this new cooperation, the Belgrade Guidelines called for an organized visit of 1000 Chinese tourists to CEEC countries. If all of these provisions are to become reality, Chinese tourists will be allowed to experience what the Danube Region has to offer.


* The views and opinions expressed in the articles posted on this page do not necessarily represent the views and opinions of CIRSD

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