Modernization of Belgrade-Budapest railway line as One Belt One Road initiative

Keleti railway station, Budapest, Hungary (monostory, CC BY-NC)

The railway line between Budapest and Belgrade will be an important part of the One Belt One Road Initiative, the project proposed by Xi Jinping, President of the People's Republic of China.

The Initiative is a long-term strategy of development and cooperation between Eurasian countries, including the countries of Central and Southeast Europe (CSE). If the project is successfully completed, China will be able to play a more important role in global affairs, especially in an international trade.  Since the strategy was announced in 2013, it has been realized mostly through investments in infrastructure, real estate, and the power grid development.   

 A very important part of the One Belt One Road initiative is the development of cooperation between China and CSE. In November 2015, in Suzhou, an intergovernmental agreement on the upgrade of the Belgrade-Budapest railway line was signed. In the agreement China committed to granting a loan which will cover 85 per cent of the costs of modernizing the section of the line between Soroksár, on the outskirts of Budapest, and Kelebia, on the border with Serbia. Péter Szijjártó, Hungary’s Minister of Foreign Affairs, said that this is “the first concrete success” of the partnership between China and CSE countries. The remaining 15 per cent of the investment is to be covered by Hungary. The loan from China is granted for 20 years with a 5-year grace period. Thanks to the modernization trains will be able to achieve the speed of 160km/h.

In late November of 2017, Li Keqiang, the Chinese Prime Minister, paid an official three-day visit to Budapest, as Hungary was hosting the CSE-China Forum. The business forum was attended altogether by about 1,000 businessmen from China, Hungary, as well as other CSE countries. In the opening address, Hungarian Prime Minister Victor Orbán emphasised how 16 of CSE countries can play a significant role in the economic growth of Europe. He appreciated the strength of the “Orient” in the global economy and expressed hopes that the rapidly developing economy of China will positively affect Europe. The Hungarian PM called to grasp opportunities for development at a time when Europe “faces historic challenges which it cannot meet unless it has powerful allies”. Meanwhile, during the opening ceremony, the Chinese PM Li Keqiang stressed the benefits of co-operation for all participants and pointed out that such co-operation between China and countries of CSE has been increasing over recent years. Thus, the distance between Europe and Asia has been reduced and Chinese enterprises have gained new possibilities to transport Chinese products quicker.           

Simultaneously with the forum, new details of the Belgrade-Budapest railway line’s modernization have been revealed. The total cost of the upgrade of 166 kilometers of the track is currently estimated at EUR1.76bn and the USD 20-year loan has a 2.5 per cent interest rate. If everything goes as planned, the implementation of the project is expected to begin by the end of 2020, according to Hungary’s Minister of Foreign Affairs. It will be a new chapter for Chinese enterprises, as China intends to make the Belgrade-Budapest railway line a very important part of the corridor for exporting its goods to Europe. During the China-CSE forum in Budapest, January 2018 was set as the deadline for companies to request to participate in the tender which will select companies tasked with upgrading the Hungarian section of the Belgrade-Budapest line. The prescribed period of the contract is 86 months to complete the construction of 374 kilometers of track, 107 crossings (18 grade-separated and 89 level crossings), over 590 meters of bridges, as well as to reconstruct about 444 kilometers of catenary wire and supply wire.          

 Meanwhile, in late November, almost simultaneously with the China-CSE forum in Budapest, Serbia began work on its section of the Belgrade-Budapest railway line, using the EUR266m borrowed by the Serbian government from China’s Exim Bank in May 2017. Serbia, as Hungary, participates in the One Belt One Road initiative, and both countries appear to be important partners in the Chinese strategy. The whole cost of the high-speed railway connecting the capitals of the two states is estimated at about EUR3.2bn. The line can become the most important transport route for Chinese products arriving in Europe by sea in the Greek port of Piraeus. The upgraded railway between Budapest and Belgrade can also effectively stimulate trade between both countries, one of which is a member of the European Union and the other is currently a candidate for membership, as well as between members of the Visegrad Group and the Balkans in general.  

Michał Kowalczyk is a PhD student at the History and Social Science Department of the Cardinal Stefan Wyszyński University in Warsaw. He specializes in Hungarian and Central European politics.

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