3. Constructing the Balkan Silk Road
The following sections seek to deepen our understanding of equity funding and debt financing
across central and south-eastern Europe (CSEE). This will first involve an analysis of the
pipeline of Chinese BRI projects in selected countries along the “Balkan Silk Road”. In a second
step the inquiry will discuss existing obstacles and how they could be overcome in order to
achieve mutually beneficial outcomes for countries participating in the Balkan Silk Road.
The level of engagement by Chinese state-owned companies, political leaders, diplomatic
representations, lending institutions, universities and cultural organisations in central, eastern and
southeast Europe is gradually redefining the relationships between China and these regions of the
European continent. In particular in countries comprising the Balkans, China is identifying
opportunities, while various EU member states currently regard the region primarily through the
prism of political instability, refugees and migration as well as the threat of terrorism and drug
trafficking.
By contrast, China is establishing new institutional settings for cooperation. Under the umbrella
of the BRI exists the “16+1” initiative. The 16+1 framework seeks to improve trade and
economic relations between China and 16 countries in Central and Eastern Europe, inclusive of
south-eastern Europe. The participating countries are Albania, Bosnia and Herzegovina,
Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, FYR Macedonia,
Montenegro, Poland, Romania, Serbia, the Slovak Republic and Slovenia.
The first 16+1 summit was held in 2012 in Warsaw, Poland. Since then, four further summits
have been held in Bucharest (2013), Belgrade (2014), Suzhou (2015) and in Riga (2016). These
summits are embedded in the Cooperation between China and Central and Eastern European
Countries organisation, whose secretariat is located in Beijing (http://www.china-ceec.org/eng/).
On the summit occasion in 2012, the Chinese government delegation proposed the establishment
of the China-CEE Investment Cooperation Fund (http://china-ceefund.com/). A year later it
became operational. The Fund is registered in Luxemburg. Its two main investors are Chinese: (i)
Export Import Bank of China (US$ 470 million), and (ii) Exim Bank Hungary (US$ 30 million).
In November 2016, a second Sino – CEE Investment Cooperation Fund was launched with a
total volume of USD 11 billion. Industrial and Commercial Bank of China (ICBC) is the main
funding contributor. The fund will be run by Sino-CEE Financial Holdings Ltd, a subsidiary of
ICBC). The fund was formally launched by Premier Li Keqiang during his visit to Riga on the
occasion of the fifth Cooperation between China and Central and Eastern European Countries
summit. The fund seeks to raise 50 billion euros in project finance for sectors such as
infrastructure, high-tech manufacturing and consumer goods.
The first of these two funds established CEE Equity Partners Ltd., its investment advisory arm
(http://cee-equity.com/). Some of its most recent activities have been an investment by the Fund
in Javna Razsvetljava d.d. and JRS d.d. The two companies are market leaders in design and
implementation of public lighting and signalling solutions in Slovenia. In January 2017, the Fund