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China Begins Construction of High-Speed Railway Connecting Belgrade and Budapest

Serbia was the original actor to begin construction of a controversial railway line connecting Belgrade and Budapest. As part of the “One Belt, One Road” initiative, China is now funding the project to build a high-speed –200km/h – railway between the two European capitals.

The projected cost of the railway is 3.2 billion euros ($3.80 billion) and is expected to become the main transport route for Chinese goods that are shipped to the central Greek port of Piraeus and others throughout Europe.

Meanwhile, the construction of the Hungarian stretch of the railway is expected to start in 2020. The projected cost is 550 billion forints ($2.1 billion), 85% of which is funded by China’s Exim Bank.

 

Credit: voanews.com

Credit: voanews.com

Chinese engineers are expected to carry out the majority of the planning, land surveying, and preparatory work. In addition, there will also be one Hungarian engineer working on the project, for every 1 to 2 Chinese engineers. The construction will also be Chinese led; the Chinese will use their own modern, highly efficient machinery, which can lay down 100 meters of rails in one hour. Thus, they will be expected to complete the 160-kilometer section in Hungary within a couple of months.

The railroad construction is highly controversial due to its high cost, which will be paid by the Hungarian government.

Photo of Varga Mihály Credit: index.hu/ Photo taken by: Máthé Zoltán

Photo of Varga Mihály

Credit: index.hu/ Photo taken by: Máthé Zoltán

However, Deputy Minister of National Economy, Mihály Varga, defended the project by highlighting its advantages: efficiency and profitability.

Hungarian customs officers carry out customs clearance for an average of 23 minutes, while elsewhere it takes hours or even days. Hence, Varga believes that China will execute customs clearance for goods imported to the EU in Hungary. 

Varga also explained that there is tremendous competition over who clears customs for Chinese goods. Even though the revenue from customs is given to the EU, 20 percent of it remains within the member state.

Uncertainty over how much potential revenue will go to the Hungarian government from the Budapest-Belgrade line remains. Many Hungarians believe that the project is over-priced and will not live up to expectations.