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Sunday 28.05.2017 | Name days: Vilhelms, Vilis
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Lithuanian PM: Lithuania will hush Latvia in pursuit of Chinese investments

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Lithuania’s Prime Minister Saulius Skvernelis

Linas Jegelevičius for the BNN

Lithuanian Prime Minister Saulius Skvernelis must have scratched Latvia‘s ego. «In the competition for Chinese investments, Lithuania should overcome Latvia,» the head of Lithuanian Government declared after meeting Zhang Dejiang, China‘s Parliament Speaker.

Both men focused mostly on collaboration opportunities in the field of transport and logistics during their meeting in Vilnius.

Klaipėda seaport in focus

In PM‘s words, the third officer in the Chinese Communist Party has shown an especial interest for the ice-free Lithuanian Baltic seaport, Klaipėda.

«Klaipėda seaport is a most rapidly growing port in the Baltic Sea region. This has been universally acknowledged. If we manage to successfully carry out the project which aims to expand it to the scope that has been approved by the Government‘s Strategic Committee, then it will be hard for all even to speak about a competition from our little brothers, Latvians…China could haul large amounts of its production through Klaipėda seaport to Western Europe,» Skvernelis shone with confidence.

With some journalists jumping in to remark that Chinese investments have been pretty tepid over not a single recent year, although Lithuania has done much in the pursuit, PM chalked the cautiousness, among other things, up to the «political situation and the political foundation» that China is known for.

«It is rather a specific country, and we have to assess it when talking of their investments,» he underscored.

Efforts are needed, but size matters

According to Skvernelis, it is also very important that Lithuania continues collaborating with Chinese companies in the field of agriculture – supplying Lithuanian goods to them. China has issued permits for a number of Lithuanian dairy companies, which now , PM says, have to «capitalize» on the accomplishment.

However, Sigitas Besagirskas, president of Vilnius Industry and Business Association (VIBA), notes that the steps have been very initial and, note, with some setbacks.

The upbeat Lithuanian premier insisted in the meeting that the trade potential is big, yet Lithuania has to take into account that it is a small country with a limited production capacity.

«As I said, the potential is big, however, our investors and businessmen comprehend the importance of size…We can talk to the Chinese from a perspective of a small market,» PM inferred.

China is the world‘s second-largest economy, which has grown over 6 per cent last year and a similar growth rate is expected this year.

Some has come forward already

Among the large Chinese companies that have shown interest in the Lithuanian seaport, as well as Klaipėda’s Free Economic Zone, is China Merchants Group, which has said it is interested in investing in the port’s expansion and construction of a deep-water port.

The company sees Klaipėda as a hub for its further expansion into Eastern and Central European countries. The national railways, Lietuvos geležinkeliai, has also expressed endeavour to work with the Chinese in attempting to attract cargoes from an industrial park under construction in Belarus.

Unlike Lithuania, Belarus does not have an access to sea, thence Lithuania‘s appetite for Belarusian shipments.

Not Baltics, but Poland and Belarus benefit

However, Sigitas Besagirskas, of VIBA, tends to believe that behind the politicians‘ rosy outlook looms a lot grimmer reality.

«Let‘s face it: Chinese investments in both Baltic countries, as well as in Estonia, are little noticeable and the status quo will remain in the near future,» the expert is convinced.

According to him, China has clearly chosen Poland and Belarus as its business hubs.

«In the latter, for example, it builds a major investment park. When built, it aims to flood the Eurasian union countries as well as the Baltic States with cheap Chinese goods. The three Baltic States cannot boast of any major Chinese investment meanwhile,» the analyst told BNN. «We are just too tiny for China.»

Poland, he claims, has the advantage of not only a larger population, but also the availability of niche markets and the required workforce for them.

«I frankly do not see China coming with an attention-worth investment any time soon,» Besagirskas concluded. «Meanwhile, Belarus can offer thrice cheaper workforce than the three Baltic States, so, again, ourchances in the regard are slim.»

Expert: Lithuania is no better than Latvia

And what about the Lithuanian PM cheery striving to take over China‘s investments in Latvia?

«I don‘t think it is very simple to redirect them from Latvia, or anywhere else, to Lithuania. Both Lithuania and Latvia are in a similar situation, investment-wise, with none having an advantage over the other,» claimed Besagirskas.

Yet it is Latvia, who some analysts believe, can see a major breakthrough with Chinese investments if China will follow up on its intention to extend its Belt and Road Initiative, a super-ambitious railway project, westward, possibly to Latvia, too.

Far-reaching Chinese railway endeavours

In November 2016, a trial container train from Yiwu City in Zhejiang province in China arrived in Latvia after completing an 11,000 km journey over 12 days through northeastern China and Siberia. It was a major logistical achievement and, possibly, a hint on the far-reaching China logistics plans.

To give a deeper glimpse in the plan, China will hold a high-profile Belt and Road Forum in May 2017.

Maris Andzans, a researcher at the Latvian Institute of International Affairs, believes that Latvia has numerous advantages in terms of transport and cargo shipping: «Including geographic location, experience in East-West transit, professional and multi-lingual personnel, part of the EU single market, (and) enhanced multi-modality with Riga International Airport, with its cargo handling capabilities and experience, e.g. cargo transportation to and from Afghanistan, compared to Estonia or Lithuania,“ he said recently in a recent interview.

Rail Baltica hopes

The Baltics‘ passenger and heavy haul rail system is expected to receive a major boost from the Rail Baltica project, which, when implemented, will link Tallinn, Riga, Kaunas, Warsaw and Berlin and might potentially be extended even to Venice.

As part of the North Sea–Baltic core network corridor, it is expected to attract some major European rail powers, like Germany and France and, well, China, too.

Whether it will connect China with Latvia –not Lithuania- remains yet to be seen.

Ref: 020/111.111.111.4542


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