Serbia began work on a China-funded railway line on Tuesday to try to improve the Balkan country’s infrastructure, an effort also expected to strengthen Beijing’s influence in Europe.

In May Serbia borrowed $297.6 million from China’s Exim Bank to modernize a stretch of the railway line between Belgrade and the Hungarian capital of Budapest.

Beijing sees Serbia, an EU membership candidate and Hungary, an EU member, as part of its One Belt, One Road initiative, intended to open new foreign trade links for Chinese firms.

The high-speed rail link between Belgrade and Budapest is expected to cost 3.2 billion euros ($3.80 billion) and is slated to become the main transport route for Chinese goods that arrive by sea at the Greek port of Piraeus to other parts of Europe.

At the construction site in Belgrade’s Zemun neighborhood, Prime Minister Ana Brnabic said that the 30km-long (18.6 miles) stretch of the railway line from Belgrade to the northern town of Stara Pazova is a key step forward.

“This project … is the first cross-border project within the 16+1 framework, … it is the first project between China and EU, involving Serbia,” she said.

Earlier on Tuesday, at the 16+1 summit of Central and Eastern European countries and China, Brnabic met her Chinese and Hungarian counterparts Li Keqiang and Viktor Orban and discussed further cooperation.

Serbia has enjoyed good relations with China since the 1990s, when Belgrade was economically isolated for its role in the Yugoslav wars.

On Monday, Hungary also invited a procurement tender for a modernized railway link with Belgrade. The construction of the Hungarian stretch, worth around 550 billion forints ($2.1 billion), is expected to start in 2020, with China’s Exim Bank providing 85 percent credit coverage.

($1 = 261.4100 forints)

($1 = 0.8413 euros)

Reporting by Aleksandar Vasovic; Editing by William Maclean.
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