China’s presence in the Western Balkans is noticeable, but quite unevenly distributed. In the general context, we can talk about China’s participation in certain infrastructure and energy projects and cultural cooperation without significant influence on politics and security, in the case of Serbia we are talking about an extensive and developed strategic partnership.
For the European Union, China’s influence on the region is a challenge that is becoming increasingly difficult to adequately address.
Context
In 2012, China and 16 countries of Central, Eastern, and South-Eastern Europe founded the 16+1 economic cooperation initiative. Albania, Bulgaria, Bosnia and Herzegovina, Latvia, Lithuania, North Macedonia, Poland, Romania, Serbia, Slovakia, Slovenia, Croatia, the Czech Republic, Montenegro, Hungary, and Estonia joined the project. Greece became part of the project in 2019, turning it into 17+1.
Almost every year, China would organize summits in a bid to develop cooperation with the members of the initiative – through investments in infrastructure and tech.
The “16/17+1” format was initiated for another Chinese strategic foreign policy project, which is One Belt, One Road, which later became more commonly known as Belt and Road.
The Silk Road Economic Belt, based on the principle of the ancient trade route that connected the East and the West centuries ago, was launched in 2013. Ten years on, more than 120 countries and almost 30 international organizations have joined the project.
The 16/17+1 became a component of Beijing’s strategic plan to develop China’s ties with Europe and increase China’s presence there, and the Western Balkans became part of this geopolitical process.
Nothing has changed for the Western Balkans even after Lithuania withdrew from the project in May 2021, and Latvia and Estonia followed suit in August 2022.
Albania
Of course, Beijing’s key partner in the Western Balkans is Belgrade, but relations with some other capitals in the region can be considered special and theoretically have potential for growth. It’s about Albania.
In the middle of the 20th century, relations between Tirana and Beijing were really friendly. In fact, Albania has been China’s main European partner for some time.
Today, there is no close cooperation between Tirana and Beijing.
In early 2023, Prime Minister Edi Rama, speaking during a visit to Japan, said that the framework program (formerly the 17+1) had its merits, but “in terms of economic impact, I would say it’s zero”.
In this sense, only one case can be considered.
In 2016, China’s Geo-Jade Petroleum acquired Canada’s Bankers Petroleum for US$441 million (C$575 million), along with a concession for a large oil field in Albania. After an investment of more than $2 billion, the company’s share in Albania’s crude oil output reached over 90%. Bankers Petroleum currently positions itself as the largest foreign direct investor and largest taxpayer in Albania, as well as one of the major employers.
There is currently no significant flow of Chinese petrodollars into Albanian political circles. For the past decades, Tirana has been pursuing a clear pro-Western, even more so, pro-American policy, and individual Chinese companies, even such powerful ones, seemed not to be able to change this. At the same time, it can’t be assumed that Chinese investors are totally idle in areas that are very little related to the oil business, and very much so – to the promotion of China’s interests. For example, Bankers Petroleum supports the projects run the Confucius Institute in Tirana.
Currently, Albania is not going to withdraw from Beijing’s projects in Europe. At least, this is what Edi Rama claims.
Bosnia and Herzegovina
China has invested about $3 billion in Bosnia and Herzegovina, including investments worth $610 million from 2019 to 2021 and $2.44 billion in loans from 2010 to 2022. Moreover, this is about both parts of BiH, both Republika Srpska and the Federation of BiH. It is significant that the Confucius Institute works both in Banja Luka (RS) and in Sarajevo (FBiH).
Chinese investments and loans in BiH are aimed primarily at the transport, energy and steelmaking sectors and have been tarred with scandals related to corruption allegations, lack of transparency, broken deadlines, and some projects that have failed altogether.
According to local investigative journalists, corrupt politicians and anti-Western forces are primarily interested in attracting Chinese money. After all, it’s thanks to their cooperation with China that they can continue their policy, snubbing the reforms required for European integration and receiving transparent European money.
Kosovo
There is no cooperation between Beijing and Pristina, which is not surprising as Beijing does not recognize Kosovo’s independence, and Kosovo considers China its adversary.
North Macedonia
Positive perception of China has been growing in North Macedonia in recent years, even without significant Chinese investment in the economy, only through “soft power” – cultural, educational and media cooperation projects. The process became so visible and distinctive that a separate study was run under the title “Understanding the Tools, Narratives, and Impact of Chinese Soft Power in North Macedonia”.
Researchers consider the Confucius Institute to be a pillar of Chinese soft power as it provides scholarships for R&D, signs memorandums of cooperation, and holds conferences and fairs.
Separately, cooperation between North Macedonian and Chinese universities is being intensified.
Local media made a significant contribution to increasing China’s influence on Macedonian public opinion. A number of newspapers regularly publish op-eds penned by the Chinese ambassador and share the pieces originally published by Chinese media – thanks to content sharing agreements.
Another field of cooperation is literature. In recent years, there has been an explosive activation of translation and publishing work in North Macedonia, especially in the part of translations from Chinese to Macedonian, with a significant part of the books intended for a children.
Researchers say North Macedonia has become a kind of experimental ground where China studies how soft power works when applied to a democratic society.
Croatia
Construction of the Pelješki bridge, an almost 2.5 km long structure that connected southern Croatia (Dubrovnik region) with the rest of the country, bypassing the land passage through the territory of Bosnia and Herzegovina, became the country’s largest infrastructure project in recent years. Some 85% of the funding came from the EU. However, the tender for constructing the bridge was won in 2018 by the China Road and Bridge Corporation amid fierce competition. It is clear that this is not a Chinese investment, but a serious image project for Beijing. The work was completed on time at high-quality technical level. The opening of the bridge became Croatia’s main event in 2022.
Serbia
Serbia is China’s main strategic partner not only in the region, but also across Europe.
Special relations between the two countries developed after a missile hit the Chinese embassy in Belgrade during a NATO air raid against Yugoslavia in 1999.
Cooperation between Serbia and China develops in all directions without exception – cultural, educational, trade, economic, political, and security.
The two nations are officially strategic partners, which involves intensive bilateral political dialogue and exchange of visits at the highest level.
In 2006, the First Confucius Institute in the Balkans was launched in Belgrade.
In 2016, a Chinese company officially became the owner of a metallurgical plant in Smeredevo.
China has become Serbia’s most important trading partner as the volume of bilateral trade in 2022 exceeded $6 billion.
In October 2023, Serbia and China signed the Free Trade Agreement, an unprecedented step for a European nation.
China has been gradually increasing its presence in Serbia’s economy over the recent years. The projects that are being implemented and planned are rather diverse, ranging from a bridge over the Danube for a new railway line between Belgrade and Budapest to a EUR 3.2 billion contract to improve sewage systems in 60 local communities.
China’s foreign direct investment last year stood at EUR 1.4 billion, slightly behind the EUR 1.44 billion invested by the European Union. By the end of 2023, given the current trend, Chinese investments will for the first time equal the total amount of investments by all EU member states.
At the same time, there is a fundamental difference between Chinese and European investments – unlike the European Union, China does not put forward conditions for reforms and does not require Serbia to de facto recognize Kosovo. On the contrary, Beijing is a staunch supporter of Serbia’s territorial integrity and, as a member of the UN Security Council, provides Belgrade with reliable support during the consideration of the Kosovo issue.
The military cooperation of the two countries should be highlighted separately. Over the past decade, China has repeatedly provided the Serbian army with various defense capabilities: from IT equipment to rubber boats, trucks, and excavators.
Cooperation between the armed forces of Serbia and the Chinese army is developing in various directions. These are, first of all, military-technical cooperation, as well as cyber security, military education, and combat medicine.
The most notable step was Belgrade’s acquisition of weapons from Beijing, which became a breakthrough for Serbian air defense – the FK-3 medium-range anti-aircraft missile system and CH-95 and CH-92A unmanned aerial vehicles, indispensable for modern warfare. The Serbian army became the only owner of the FK-3 system in Europe, which is the Chinese counterpart of the Russian S-300 and the American Patriot.
Currently, the Serbian Ministry of Defense is in negotiations with Chinese partners on new acquisitions of both uncrewed platforms and air defense capabilities.
Serbia can be seen as China’s main strategic partner in Europe, a Chinese outpost on the European continent. On the other hand, for Belgrade, Beijing is a leading ally supporting Serbia’s stance on the international arena regarding unrecognition of Kosovo’s independence.
Montenegro
In neighbouring Montenegro, China’s presence is not so comprehensive.
The largest Chinese project in Montenegro was the construction of the Bar-Boljare Highway.
In 2014, Montenegro borrowed more than $900 million from the Export-Import Bank of China to finance a 41-kilometer section of the expressway, which was to connect the port city of Bar with neighbouring Serbia. The contract was awarded to China Road and Bridge Corporation (CRBC) without an open tender.
Although the deadline was set for late 2019, the motorway was not launched until July 2022, and the Montenegrin government in Podgorica found itself saddled with debts amounting to more than one-third of the country’s annual budget. In the end, Podgorica was forced to ask the EU for help to refinance the loan and concluded agreements with the French Societe Generale, Germany’s Deutsche Bank, and U.S.-based Merrill Lynch and Goldman Sachs.
The construction of the Montenegrin highway was accompanied by negative outlooks, which warned of a possible scenario of the state property or even part of state territory being forced to be transferred to China. Ultimately, the intervention of Western partners rescued Podgorica from this worst-case scenario.
However, the problems related to the construction of the expressway did not destroy Chinese-Montenegro relations. The arrival of a new president, parliament and government in 2023 did not stand in the way of cooperation between Montenegro and China. The recently appointed head of the country’s Ministry of Economy has already met with the Chinese ambassador, who vowed more investments.
As the head of the Montenegrin parliament, Andrija Mandic, stated at a meeting with the head of the Chinese diplomatic mission in Podgorica, “Montenegro aspires to become a full member of the European Union as soon as possible, but remains committed to further cooperation with China.”
It is worth adding that the Confucius Institute works successfully in Montenegro and is a partner of the State University in Podgorica.
Conclusions
China’s influence on the Western Balkans region is on the rise. The region has become Beijing’s target because of the limited ability of governments to find money for economic development in Western capital markets due to widespread corruption and people in power who are interested in opaque investment and lending conditions, as well as due to specific characteristics such as people’s nostalgia for the socialist past, anti-Western moods in countries that were defeated in the war, and special geopolitical interests of countries that have not yet overcome the consequences of recent military conflicts.
For the European Union, and the West in general, the influx of Chinese money into the Western Balkans, combined with Chinese soft power, is a complex challenge. The abundance of money that does not require reform and transparency will be a factor that will block the implementation of transformations necessary for European integration. At the same time, if the inhibition of the region’s European integration continues, the problem of China building a bridgehead in the Western Balkan will become more and more difficult to solve.
