China ready to purchase Hungary bonds

China again confirmed its growing interest in Europe Saturday as Prime Minister Wen Jiabao announced Beijing would buy Hungarian government bonds and extend a billion euros in credit to the country. The announcement came during his visit to Budapest, the first stage in Wen's second European tour in nine months. At a press conference with Hungarian Prime Minister Viktor Orban after the two had held talks, Wen did not specify how much it would spend on Hungarian government bonds. But he said the one-billion-euro ($1.4-billion) credit would be extended by the China Development Bank towards common projects. China has in recent years invested heavily in Africa, Australia, Latin America and the United States. More recently, Beijing has taken a closer interest in Europe which, as the continent battles a currency and sovereign debt crisis, has been welcome news for some countries. Nine months ago, Wen made a first tour of Europe, travelling to Greece, Italy and Turkey and announcing investment in Greece and Poland -- though at least one major project with Poland, Chinese involvement in a public works deal, has since stalled over a funding dispute. Hungary's Orban welcomed the bonds deal as "historic aid" from China. The country's finances were now "guaranteed" at least in the medium term, even if the country could generate its own capital on the markets, he added. He hailed the agreement as a "new and very important deal", which would include a dozen projects. Beijing, he added, had chosen Hungary as its new "logistics platform". Projects included a collaboration between the Bank of China and Hungarian chemical group Borsodchem, and a new European distribution centre for Chinese technology firm Huawei. China also wants to build a citric acid manufacturing plant in Szolnok, 100 kilometres (60 miles) east of Budapest, with a production capacity of 60,000 tons per year. And Chinese company Canyi was looking to build a European production centre for lamps, although its location has yet to be decided. China and Hungary also signed more general deals to develop transport, promote investment and create several cultural centres. The Chinese leader also invited 150 Hungarian youths to visit China to further promote cultural ties. In a speech Saturday, Wen called for greater cooperation with Central and Eastern Europe, China's official Xinhua agency reported. "Currently, trade between us takes up less than 4 percent in our respective total foreign trade and less than 10 percent in China-EU trade," he said. Noting that "much potential remains to be tapped" he called on both sides to open up their markets further to each other and to promote two-way investment. Ahead of the visit, Hungary's Minister of National Development Tamas Fellegi had said Budapest hoped to become a "stepping stone" for China in Europe as a logistics and commercial distribution centre. China, the world's second largest economy, has already started to rebalance its commercial and financial relations, today tilted toward the United States and Japan, more towards Europe. Wen Jiabao's European tour continues on Sunday when he will travel to Britain, followed by a visit to Germany. Wen was accompanied in Budapest by a large Chinese contingent that included 300 business delegates and a 110-strong press service.