China's Xi weaves Poland into 'new silk road' plan

The presidents of China and Poland greeted a Chinese freight train as it rolled into the Polish capital on Monday, part of a drive to drum up business between the Asian giant and the European Union's largest eastern economy.

China's Xi Jinping and his Polish counterpart Andrzej Duda were on hand as the China Railway Express ended its 13-day journey from Chengdu, capital of central Sichuan province.

Experts say Warsaw wants to use the rail link with China launched in 2013 to correct a chronic bilateral trade imbalance by exporting more farm products like milk, meat and apples.

Poland is China's largest trade partner in the eastern EU and in 2015 bilateral trade reached $17.1 billion (15.2 billion euros), according to Chinese figures.

The rail link -- one of the world's longest -- is part of China's "new silk road" for trade with Europe and is touted as a revival of the ancient Silk Road trade route.

Around 20 freight trains run between China and Poland each week carrying electronics, food stuffs, alcohol and car parts, according to Poland's PKP state railways. The journey takes 11-14 days, a fraction of the 40-50 day transit by sea.

Xi and Duda also bit into rosy Polish apples as they greeted the train. One of the EU's leading apple producers, Poland has been hit hard by a Russian import ban on the fruit, levelled in retaliation for EU sanctions on Moscow following its 2014 annexation of Crimea from Ukraine.

Thanks to deals sealed during Xi's visit, Poland can now start exporting apples to China.

- 'Multi-billion sums' -

Poland is also eyeing financing by the Asian giant.

Xi and Duda inked a broad strategic partnership deal on political and economic cooperation, part of Beijing's much vaunted efforts of establishing land and sea links for European trade, known as the "Belt and Road" policy.

China's head of state urged Poland to "fully take advantage of its position as a founding member of the Asian Infrastructure Investment Bank" (AIIB) to do business.

Launched by China in January, the AIIB includes several European countries among its members, but the United States and Japan declined to join. Some view it as a rival to the World Bank.

Calling the AIIB the "world's largest investment fund", Polish Deputy Prime Minister Mateusz Morawiecki told reporters that Warsaw was discussing "massive investments" with Beijing.

"It (Other OTC: ITGL - news) is certainly still too early to say we've reached some kind of conclusion," he said, revealing only that "multi-billion sums" were involved.

Warsaw's drive for closer ties with Beijing is rooted in its "need for capital and export markets beyond Europe, because of the upcoming decrease in EU funds and saturation of the European market," said Justyna Szczudlik, an analyst with the Warsaw-based Polish Institute of International Affairs.

- 'Lack of spectacular investment' -

Xi, who is on a three-nation tour, and Duda attended the New Silk Road Forum 2016, an international trade fair bringing together Chinese and European entrepreneurs.

Poland's Deputy Development Minister Radoslaw Domagalski said Warsaw was prepared to set up special investment zones "as gateways for Chinese capital into Poland."

A nation of 38 million people, Poland remains one of the EU's most vibrant economies, clocking uninterrupted annual growth since it shed communism in 1989. GDP is set to expand by around 3.7 percent this year and next.

Chinese activity in central and eastern Europe is rooted in the "16+1 Forum" for cooperation between 16 ex-communist eastern European states and China, launched in 2012 in Warsaw.

At the time, Beijing vowed to commit a total of $10.5 billion in credit lines and funds to boost economic ties with the region, but analysts say the capital injections have been slow to materialise.

According to Poland's PAIZ foreign investment agency chief Bartlomiej Pawlak there are currently around 900 companies with Chinese capital registered in Poland, but he admits that so far, there has been a "lack of spectacular Chinese investment".

Source: AFP