Chinese Building European Market Share
BMI View: We expect that rising levels of Chinese infrastructure investment in Central, Eastern and South-eastern Europe to persist over the coming years. China has begun targeting the region's infrastructure to develop new routes for Chinese goods into Europe and to gain greater access to European infrastructure projects for Chinese companies.
China has steadily been growing its economic engagement with the Balkan and Eastern European countries. As the trade relationship has grown, so has Chinese investment in the infrastructure and related industries. In 2012, the Chinese government announced a USD10bn credit line for the region, along with announcing USD500mn of capital investment with a view to boost trade. This has come at a time when the EU has faced serious economic headwinds and has put more emphasis on managing internal economic and financial affairs within its member states, limiting attention given to periphery markets.
In tandem with credit lines, as we have noted across other developing market's construction industries, major Chinese infrastructure firms have also begun to carve out a market share in South-eastern Europe and the Balkans. Although the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB) are still major financiers in regional infrastructure, cheap Chinese loans as part of the USD10bn credit line along with technically proficient, yet inexpensive in comparison to European construction firms, Chinese construction firms are proving extremely attractive to cash strapped and infrastructure poor countries. By positioning in Eastern Europe, we expect that Chinese construction firms will use the region as a platform to win more opportunities in Western Europe, where projects are likely to be more lucrative to the companies involved as there will be less reliance on cheap Chinese credit.
|China's Growing Importance|
|Key Chinese Infrastructure Investments 2008-2014 By Market, USDmn|