China proposes firm to fund projects in Europe

Shanghai: China is proposing a financial firm to fund projects in central and eastern Europe, Premier Li Keqiang said today, extending the Asian giant's global reach as it flexes its economic muscles.

Beijing scored a major diplomatic success earlier this year when it set up the Asian Infrastructure Investment Bank, with key European countries signing up over objections from Washington.

Shanghai is also home to a new multilateral bank dedicated to the emerging BRICS countries of Brazil, Russia, India, China and South Africa, which is expected to go into operation soon.

Li told officials from 16 central and eastern European countries gathered for a regional summit in nearby Suzhou that Beijing was "ready to work with all parties to explore the possibility of setting up a 16+1 financial company to support cooperation".

Li dangled the offer of cheap Chinese funds from both the government and commercial banks to the area, which has lagged behind more prosperous nations in the western part of the continent.

"We can provide financing for central and eastern European countries in line with your needs," state television showed him saying.

"As long as these projects use Chinese products and Chinese equipment, China is willing to provide low-cost financing support."

The country's biggest lender Industrial and Commercial Bank of China and the government policy-directed China Export Import Bank, which serves as an export credit agency, would spearhead efforts to boost lending, Li said.

But he played down the possibility of competition with other multilateral organisations, such as the European Bank for Reconstruction and Development, saying Chinese financial institutions were encouraged to "strengthen exchanges and cooperation".