ACTIVITIES OF CHINA WORRY WESTERN COUNTRIES: Chinese Becoming Favorite Partners to Authorities in Republika Srpska

Representatives of G7 member countries have expressed concern over the economic activities of Chinese companies, with the French finance minister stating that the entire global economy is at risk from oversaturation due to cheap Chinese exports. On the other hand, goods worth 1,033,207,000 BAM entered Bosnia and Herzegovina from China last year, but there are no concerns. Moreover, Chinese are becoming favored business partners to authorities in Bosnia and Herzegovina, especially in the entity of Republika Srpska.

The European Union and other Western countries are becoming increasingly concerned about the economic activities of Chinese companies. French Finance Minister Bruno Le Maire recently stated during a meeting with colleagues from the Group of Seven (G7) countries that the entire global economy is at risk from oversaturation due to cheap Chinese exports.
Representatives of G7 member countries agreed that they need to "respond to harmful practices and consider taking steps to ensure fair conditions for market competition."
This is another indication of a changing attitude towards Chinese companies and trade with Chinese partners. Leading industrialized nations, as reported by global media, are joining forces to resist the challenge posed by excessive Chinese manufacturing capacities, which they say threaten their domestic producers.
One of the latest moves was the imposition of high tariffs by the European Union on Chinese electric vehicles, similar to earlier actions taken by U.S. President Joe Biden.

CHINESE FIRST CHOICE OF AUTHORITIES IN REPUBLIKA SRPSKA

When it comes to Chinese exports to countries in this part of Europe, there's noticeable growth, including for Bosnia and Herzegovina. According to data from the Indirect Taxation Authority, goods worth 1,033,207,000 BAM entered Bosnia and Herzegovina from China last year. This is more than double compared to, for example, 2020, when imports from China amounted to 477,724,000 BAM.
But European and Western concerns don't seem to be shared by countries like Serbia and Bosnia and Herzegovina. Amidst the recent visit of Chinese President Xi Jinping to Serbia, where relations between the two countries were further solidified, it was announced that the Chinese multinational company Zijin Mining Group plans a significant investment in Serbia.
As reported by the media, this company specializes in mining operations. They plan to increase copper mining in Serbia to 450,000 tons annually, and Zijin also intends to expand gold mining operations in Serbia, potentially raising annual production to ten tons.
At the same time, economic analysts and politicians, guided by precise data, warn that Serbia is increasingly sliding into debt bondage to China.
The policy of the Republic of Serbia and its president Aleksandar Vučić, particularly regarding relations with China and companies from this country, is closely monitored by entities like Republika Srpska in Bosnia and Herzegovina.
Let's recall once more the reconstruction of the main road Foča - Šćepan Polje, a road that connects Bosnia and Herzegovina with Montenegro and has long been dubbed the "road of death."
State Minister of Communications and Transport Edin Forto recently discussed with representatives of the World Bank in Washington, emphasizing to them the importance of financing this road.
"It is very important to me that they undertake the project of connecting the capital cities of Bosnia and Herzegovina and Montenegro, primarily through the Šćepan Polje route. This is a project that needs to be funded with 100 million euros, with non-refundable European funds that are necessary," Forto said, among other things.
While the state minister discusses financing this costly project with the World Bank, authorities in the Bosnian entity of Republika Srpska would prefer to involve Chinese partners in the entire project, even if it means higher costs for the budget.
The Prime Minister of this entity, Radovan Višković, admitted that the RS government favors China Road and Bridge Corporation (CRBC) as a potential contractor for building this main road, valued at around 100 million euros. Funding is expected to be provided by the Chinese Exim Bank. After signing a memorandum with representatives of this Chinese company, he practically acknowledged that CRBC would have an advantage in the selection of the contractor for the project.

"The memorandum implies that CRBC will secure financing, and based on a public tender, a contractor will be selected. When you have secured financing, you also have an advantage in the public procurement process," said Višković.

How and whether these announcements will be implemented in a lawful manner is not yet known, but this represents another clear indication that the authorities of this entity are increasingly turning to Chinese companies and creditors.

In this context, entity president Milorad Dodik recently held a meeting at the Jahorina Economic Forum with the Vice President of Huawei for Europe, hinting at the possibility of further cooperation.
Concrete meetings have also been held by the Minister of Energy and Mining of the Bosnian entity Republika Srpska, Petar Đokić. During his meeting with representatives of the Chinese company TBEA International Engineering, he emphasized the goal of establishing cooperation to find an appropriate model for long-term partnership.
It is worth noting that TBEA International Engineering primarily engages in the reconstruction and development of distribution and transmission networks. Additionally, they undertake projects in renewable energy sources, energy storage, coal exploitation, and the construction of thermal power plants.

CHINESE INTEREST IN PROJECTS IN FBiH

Although more prevalent in the Bosnian entity of Republika Srpska, Chinese companies and creditors are also showing interest in the other entity – the Federation of Bosnia and Herzegovina.
According to reports from CAPITAL portal, the Chinese company Norinco International plans to acquire 80% of the shares in Aurora Solar, a company in Stolac, from the Nikolić family based in Banja Luka. Aurora Solar has been granted a 30-year concession by the Government of the Herzegovina-Neretva Canton to build a solar power plant with a capacity of 125 megawatts, valued at 200 million KM.
The acquisition is set to be carried out through Norinco's subsidiary in Hungary for 13 million euros (25.5 million KM), with the estimated total investment value of the project being 109.86 million euros (214.2 million KM). According to the concession and plans, the solar power plant is planned to be constructed on Mount Komanje near Stolac, where the Nikolić family has acquired over 146 hectares of land.
The recent meeting between the Acting Director of the Foreign Investment Promotion Agency of Bosnia and Herzegovina (FIPA), Marko Kubatlija, and a delegation from the Chinese company VEICHI Electric, led by President Mr. Song Qixun, along with the director of the Chinese company HD Development, Dajana Majmunović, and representatives from the Sino-European Association for Technical and Economic Cooperation (CEATEC), demonstrates that the Chinese are indeed interested in solar energy.
As reported, the meeting emphasized promoting the use of solar energy and exploring potential development opportunities in the market of Bosnia and Herzegovina.
The caution required in doing business with Chinese partners is exemplified by the case of the never-built Block 7 of the Tuzla Thermal Power Plant. According to media reports, Elektroprivreda BiH terminated the contract with Chinese partners after years of delays, and millions of public funds were lost.

The initial project for Block 7, with a capacity of 370 MW and valued at 760 million KM, escalated over time to a cost of 1.5 billion KM and a capacity of 450 MW. These characteristics favored the Chinese partner.

Almir Muhamedbegović, an energy expert, emphasizes that the Block 7 project was never a secure endeavor:
"We reached the point where around 2014, the Federation of Bosnia and Herzegovina government finally started pushing forward with a project that would have 450 MW, with all guarantees, costing nearly 1.8 billion, even 1.9 billion KM with all guarantees. All of this led to a situation where it was never a secure project at any moment. Because, ultimately, you had Chinese contractors involved, and you always need to be cautious about what might happen. They are major players in the energy field, they know how to get the job done, but if they see an opportunity to make extra profit, like anyone else, they will take it."
It's important to recall that Chinese investments and loans in Bosnia and Herzegovina are primarily directed towards sectors like transportation, energy, and metals, often accompanied by controversies, suspicions of corruption and favoritism, lack of transparency, delays, and objections from activists... It's crucial to note that these are mostly conventional loans that taxpayers will ultimately have to repay, rather than straightforward investments.
Stories of billions in Chinese investments are relative, with actual investments in the post-war period rarely exceeding 18 million KM. Most of the funds are investment loans, typically tied to the involvement of Chinese companies and workers.
At the same time, analyses show that Chinese economic investments are deeply intertwined with politics, and that Chinese influence is pulling Western Balkan countries further away from the European Union. 

CONCLUSION

While governments across the civilized world intensely work to protect their markets and producers from Chinese goods (often heavily subsidized by the state), this is not the case in the Western Balkans region and Bosnia and Herzegovina. Here, it is precisely the authorities (especially in the entity of Republika Srpska) that in a certain way prefer Chinese companies as contractors for infrastructure projects and project creditors, even when there are more favorable loans available from global financial institutions.

The focus on Chinese creditors and contractors in the Republika Srpska entity can partly be justified by the fact that due to excessive indebtedness and sanctions imposed by the EU, RS is not in a position to find favorable funds or offer assets as collateral for additional borrowing. However, it should not be overlooked that Chinese loans are regularly accompanied by non-transparent contracts, corruption, and procedures often not in line with existing legal regulations. All of this suits the authorities (especially in Serbia and Republika Srpska) to repeatedly incur debt under terms often unknown to the public. In doing so, little consideration is given to the interests of domestic companies or citizens.

The alarm long raised in the West regarding Chinese loans and investments is something that authorities in most Western Balkan countries do not want to hear. On the contrary, they highlight these as their political achievements, while few representatives of the opposition, civil society, and media warn that the cost of these "achievements" will be too high and that there is a possibility that countries (such as Serbia) will end up in debt bondage to China.