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China’s investment in Eastern Europe may extend to Western Europe

China’s massive investments in Central and Eastern Europe will help it get to Western Europe, says former official

In its effort to invest more in Western Europe, China is spending in Central and Eastern European countries, a former economic advisor to the Serbian government has said. Vladimir Krulj, who is also the president of Serbia's Komercijalna Bank said that Beijing's interest in Central and Eastern Europe is because they see big potential in their return regarding their path to the European Union. He explained that China was forging relationships with countries that were more embracing (of) European values. He said that Serbia is enabling a clearer path for Chinese investment into Western Europe and hoped that Chinese investment will aid Serbia’s economic growth and help it easier for Serbia to make it to the European Union.

Meanwhile, China’s state-run news outlet, Xinhua, has reported that China has invested $9 billion into Central and Eastern European nations. At present, 16 countries in Central and Eastern Europe have already signed up to the Belt and Road Initiative by China which is aimed at increasing its exports and global political power.

China's gross domestic product data released Thursday beat expectations and the government's own target by revealing 6.9 percent growth in 2017.

According to a report by law firm Baker McKenzie, China’s investment last year was focused on the developed economies of Western Europe such as Switzerland, the U.K. and the Netherlands which topped the list of countries in the part of Europe which saw most Chinese investment. Foreign direct investment in Europe was boosted by the delayed finalising of ChemChina's acquisition of Swiss agribusiness Syngenta which resulted in a 76 percent increase to Chinese investment in Europe. This took the total investments by China in Europe to $81 billion. Barring the deal, the figure would have been $30 billion or down 22 per cent.

The rise of China as global economic and political power is being recognised by many countries and attracting leaders of many European countries to Beijing. The list includes French President Emmanuel Macron who visited China earlier this month as well as a visit to Beijing by U.K. Prime Minister Theresa May which is rumoured to take soon.

Tim Gee, global head of mergers and acquisitions at Baker McKenzie said that there is a clear pull-back in the desire of China to invest overseas. He attributed that to China's intention to exert some control over foreign exchange flows. He added that future spending may focus on real economy investments rather than hotels, resorts, entertainment (and) football clubs. Gee said that he will not overplay One Belt, One Road at the moment in terms of foreign direct investment, saying that the construction and infrastructure contracts the plan is currently known for does not translate into permanent capital investment into those countries. He said there are still opportunities for investment of that sort (one-off contracts) in advanced economies which can support the development of construction in One Belt, One Road countries.