China's president looks to boost relations with Serbia visit

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Chinese President Xi Jinping arrives in Serbia this week in an effort to further boost relations with the friendly nation and assert China's intention to radically increase its presence in the Balkans and Europe.

The first visit by a Chinese president in more than 30 years, Xi's trip to Belgrade has been hailed here as "historic." During his three-day stay starting Friday, Xi will hold meetings with top officials and visit a Serbian steel plant purchased by a Chinese company.

The visit is "a significant milestone for consolidating the traditional friendship between China and Serbia, deepening mutual political trust and promoting the practical cooperation between the two countries," Assistant Foreign Minister Liu Xinghai said in Beijing.

Serbia's Prime Minister Aleksandar Vucic said some twenty economic and other agreements will be signed during Xi's stay. "It is a big event for us," Vucic said.

From Serbia, Xi will travel to Poland where he will ink deals on finance, aviation, science and education. Xi will wrap the tour in Uzbekistan, where he will attend a Shanghai Cooperation Organization summit focusing on the fight against terrorism and crime.

China has been seeking opportunities to deepen ties to the region — several meetings of southeast European countries and China have been held in the past years and accompanied by investment projects — and boost relations with the EU.

The Asian economic power is interested in energy, infrastructure and other big projects to fuel its economy at a time when labor costs are rising at home, undermining its exports, its traditional economic strength. Chinese investors have hoped to increase their presence in the region where Western companies may be reluctant to take too many financial risks.

In Serbia, China has built a bridge over the Danube in Belgrade, moved to revitalize a power plant and agreed to help modernize the railway connecting Hungary's capital, Budapest, with Belgrade. Some local financial experts have complained that the infrastructure projects have been financed by Chinese credit and built using a Chinese workforce without much actual cash investment in the local economies.

In April, China's Hebei Iron and Steel Group signed a 46 million-euro ($52 million) agreement to buy the loss-making Zelezara Smederevo near Belgrade that was previously owned by Pittsburgh-based U.S. Steel and which has long struggled to find a buyer.

The deal was closely watched by the EU — Serbia is a candidate country for EU membership — amid concerns about overcapacity in the steel sector, which European steelmakers blame partly on a glut of cheap Chinese steel.

Foreign policy expert Aleksandra Joksimovic explained that by investing in infrastructure and other projects in southeast Europe China is seeking to "position itself strategically toward Europe with regards to economy."

"China's interest in Europe has grown significantly in recent years," Joksimovic said. "The EU does not mind Serbia's cooperation (with China) as it is also looking for common interests with China in the economic sphere."

Chinese Assistant FM Liu noted that Serbia is well-placed geographically, bordering seven countries. Serbia is pushing for reindustrialization while Chinese companies have the technology and experience, which hails a win-win future, Liu said.

Liu praised Serbia's role in helping build cooperation between China and countries of southeast Europe and supporting China's "One Belt One Road" initiative — a sweeping plan to deepen trade relations with neighboring countries and open new markets.

Eager for foreign investment, Serbia has been struggling economically since the wars of the 1990s' when the country was under international isolation for its war-mongering policies. Belgrade has proclaimed joining the EU its strategic goal, but it has also sought to maintain close ties with both its traditional ally Russia and China.

China's HBIS group has pledged a multi-million investment in the Zelezara Smederevo plant, which employs some 5,000 workers. U.S. Steel ran the company from 2002-2012, before reselling it to the Serbian state for a symbolical price of $1 due to losses.


Associated Press writer Louise Watt contributed to this report from Beijing.