* Rail upgrade part of Chinese strategy to accelerate trade
* Chinese premier on three-day visit to Belgrade
* Plan for construction to begin mid-2015, last two years
By Aleksandar Vasovic
BELGRADE, Dec 17 (Reuters) - Chinese construction of a new rail link between Belgrade and Budapest should begin by the middle of next year, Serbia’s prime minister said on Wednesday, as China pursues plans to accelerate the flow of goods through the Balkans.
China, Serbia and Hungary signed a memorandum of understanding on the 370-km (230 mile) rail route on the second day of a summit in Belgrade between China and 16 central and eastern European states.
“This will put in place a corridor between China and Europe,” Chinese Premier Li Keqiang said after the signing ceremony. “With more such express lanes, the scale of our trade will be greater. We are confident we will complete this within two years.”
The rail upgrade fits with a Chinese plan to turn Greece’s main port of Piraeus -- where Chinese shipping giant Cosco Pacific holds a 35-year concession to upgrade and run two container cargo piers -- into a regional hub for trade with Europe.
The rail programme was first agreed a year ago, but it remains unclear how it will be financed.
“We are dedicated to this project,” Serbian Prime Minister Aleksandar Vucic said following talks with his Hungarian counterpart, Viktor Orban.
“Our aim is for the feasibility study and all plans to be completed by June next year so that the railway could be built by June 2017,” he said.
Vucic said the upgrade would cut train travel times between Belgrade and Budapest from eight hours to under three.
On Tuesday, Li said China would create a $3-billion investment fund for central and eastern Europe, seeking to strengthen its foothold in the region.
China sees the region, comprising some of the EU’s newest members and others in the Western Balkans that are trying to join the bloc, as a potentially lucrative market and bridgehead to the wider EU, drawn by relatively low wages, educated workforces and scope for development on the EU’s fringes. (Additional reporting by Ivana Sekularac and Matt Robinson; Writing by Matt Robinson; Editing by Crispian Balmer)