Poland's decision on June 13 to cancel the contract with Chinese Overseas Engineering Group (COVEC), a subsidiary of the state-owned China Railway Engineering Corp., to build a 50-km (31-mile) stretch of the key east-west A2 Highway has dealt a blow to Chinese ambitions to break into the lucrative European construction market.
COVEC was awarded the contract in late 2009 after submitting a bid of $447 million, more than 50% below the project's budgeted cost, making it the first Chinese company to win such a large project in Europe. The decision to award the contract to a Chinese state-owned firm surprised many, in light of what observers considered the Polish government's almost fundamentalist commitment to a free market since the fall of communist rule in 1989.