China to give E. Europe US$10 bil. credit line

China will set a US$10 billion credit line and a US$500 million investment fund dedicated to Eastern European states as it aims to increase trade with the region to US$100 billion in 2015, Premier Wen Jiabao said on Thursday.

Wen, in Poland as part of a European tour, also said the global economic situation had been improving this year, but that the recovery was still fragile.

“The global economic situation has shown some improvement so far this year, but the basis for such recovery is fragile and there are still relatively big uncertainties,” Wen told an economic forum in Warsaw, bringing together Eastern European countries from Estonia in the north to Macedonia in the south.

“The Chinese side understands concerns among Eastern European countries over trade imbalances and will boost imports from those countries,” he said. Wen was a member of the last Chinese prime ministerial delegation to visit Poland in 1987.

China is also ready to seal currency swap agreements and conduct trade settlements in local currencies with its eastern and southeastern European partners, and wants to launch a dedicated US$10 billion credit line for them, as well as a special investment fund worth US$500 million initially, Wen said.

Cash-rich China has signed a string of bilateral currency agreements, including with Mongolia and Kazakhstan, to promote the use of Chinese yuan in cross-border trade and investment.

The CEEU/SEEU fund will offer loans on favorable terms to support infrastructure, high-tech and green energy projects.
Engines of Growth

Earlier this week Wen also promised to increase bilateral trade volumes with Germany and Poland as part of a drive to diversify its foreign currency reserves, the world's largest at US$3.3 trillion.

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Wen also discussed his visits to Germany, Iceland, Sweden and Poland in a phone call with European Commission President Jose Manuel Barroso, in which he reiterated China's support for European efforts to tame the eurozone debt crisis.

Poland, the largest eastern EU member and still outside the single currency area, is engaged in a large-scale infrastructure building program and struggling to modernize its energy sector to curb reliance on highly polluting coal.

Warsaw hopes for Chinese investments in those fields.

China is interested in Poland's banking sector and wants to open branches of its banks, including Industrial and Commercial Bank of China, its biggest lender, in Poland.

In inviting regional leaders and business representatives to Warsaw for multilateral talks with Wen, Poland is also trying to present itself as a regional leader offering economic stability to other parts of Europe.

“We are pleased that Poland today is China's largest partner in Central Europe, with trade volumes exceeding 14 billion euros in 2011,” said Polish Prime Minister Donald Tusk, adding that the potential for trade between China and Poland and its regional peers was much bigger.

“Today, partners with no reason to feel inferior are meeting ... (they) represent success and development in the world today,” Tusk told the forum.

Poland is the only European Union member to have avoided recession since the 2008 start of the global financial crisis.
The ChinaPost