The numbers speak for themselves: China in the Balkans from industry to culture

Without the conditions set by the European Union in the member states, mostly non-transparent projects by Chinese companies have been implemented in the Balkans.

Montenegro has thus come to the very edge of debt slavery due to a loan for the construction of a highway taken from a Chinese bank.

Serbia has recorded the highest level of Chinese investment among the countries in the region. Serbian experiences range from accusations of the use of dirty technologies and exploitation of workers, as was the case with the "Linglong" factory in Zrenjanin, to gratitude for the sleeping belt provided to workers in Smederevo, in the form of the arrival of the Chinese "Hbis" in the steel plant facilities, shortly after the American "US Still" left it.

The low level of Chinese investment in Bosnia and Herzegovina (BiH) will be remembered for its only investment, the Ivovik wind farm, which is operating "in vain".

 

Why is responsibility on both sides?

The Chinese side cannot be held solely responsible for the controversies that follow.

In the six countries of the Balkan Peninsula (Serbia, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia and Albania), all of which have set membership in the European Union as their priority, the secrecy of the agreements we are talking about is guaranteed by state institutions. Local political elites themselves have opened the door wide to economic and political power from the Far East.

In doing so, they have fitted into the "Belt and Road" or "Silk Road" project of the 21st century. This is an international initiative of Beijing, which was first called by Chinese leader Xi Jinping during his visit to Indonesia in 2013.

Today, it is a project that, primarily through economic cooperation, connects 65 countries and international organizations (almost 4.5 billion people).

When it comes to Europe, 17 countries, including the Balkans, have in the meantime expressed their willingness to cooperate with China. Over time, arrangements with EU countries were adjusted, and in some cases sanctioned, while in the Balkans the process became slippery and questionable.

 

Radio Free Europe (RFE) provides a numerical overview of the influence of Chinese companies, investments, and projects in the Balkans, with an emphasis on Bosnia and Herzegovina, Montenegro, and Serbia.

Locations of key industrial projects in the Western Balkans involving China and Chinese companies

The map shows only some of the projects in which China was involved in Serbia, Bosnia and Herzegovina, and Montenegro. Also, some of the selected projects were not fully implemented or Chinese companies withdrew from the project.

 

 

A country that struggled to escape the brink of debt bondage, precisely because of Chinese loans.

In 2014, Montenegro took out a 20-year loan with a total debt of 944 million dollars from the Chinese Exim Bank. And then another 90 million for access roads. The contractor was the Chinese state-owned company ChinaRoad and Bridge Corporation (CRBC).

The construction of the first section of the highway in Montenegro (Bar-Boljare) was accompanied by non-transparency, fiscal and environmental problems, which the European Union (EU) has repeatedly warned about.

The first 41-kilometer section was built for seven years, the completion of the works was postponed five times, the final price is not yet known, except that it exceeded one billion euros. The first section was opened to traffic on July 13, 2022.

The second section, under construction, will be 21.4 kilometers long.

Due to fiscal problems in repaying the debt, with the mediation of the EU, the state of Montenegro had to enter into a hedging arrangement to protect the public debt from currency risk with two American and two European banks.

Compared to debts to Chinese investors, China, for example, was second in terms of investments in 2020 (behind the Russian Federation) with 71.2 million euros.

The largest inflow of Chinese investments into Montenegro was recorded in 2020.

Montenegro owes China's Exim Bank 8.54 percent of its gross domestic product (GDP), the second-largest percentage on the list of foreign debt relative to the country's GDP, according to a report by the Government of Montenegro published on September 30, 2024.

Through strengthening cooperation, Montenegro wants to increase exports of high-quality products to the market of the People's Republic of China, but the export-import ratio is uneven with 12% of total imports falling to China, while exports in 2024 were only 4%.

 

 

Since 2020, the presidents of China and Serbia, Xi Jinping and Aleksandar Vučić, have been boasting about the "iron friendship" between their nations. China has invested billions of euros in mining and factories in Serbia. What do the numbers say about this "iron friendship"?

In the middle of 2024, the Free Trade Agreement between Serbia and China, signed a year earlier in Beijing, entered into force.

The largest part of Serbia's external debt is loans from the Chinese Export-Import Bank.

Chinese loans, according to a 2023 RFE/RL study based on data from the National Bank of Serbia, account for 8.4 percent of Serbia's total external debt. This means that for every 100 euros the country owes to foreign creditors, eight euros are owed to China.

 

Bosnia and Herzegovina

According to data obtained by RFE/RL from the Foreign Investment Promotion Agency, 19.4 billion convertible marks, or almost 10 billion euros, flowed into Bosnia and Herzegovina by December 2023.

The People's Republic of China ranks 19th among the most significant foreign investors in Bosnia and Herzegovina. Its investments amounted to 0.6% of total foreign investments by December 2023.

For comparison, here is a graphic overview of investments from the European Union, the United States, and the People's Republic of China.

China's 'soft power' cultural tools in the Balkans

There are currently 123 Confucius Institutes active in the European Union. The largest number is in Germany (21) and France (19).

The United States (US) considers Confucius Institutes to be "an entity that promotes Beijing's global propaganda and malign influence". In 2019, more than 100 institutes named after the Chinese philosopher were active in America, while today there are only 17.

In August 2020, the State Department designated Confucius Institutes as "foreign missions".

The key reason for this was the lack of transparency of these institutions. The statement states that the US government will not ask universities to close Confucius Institutes.

In Serbia, one such cultural center has sprung up in New Belgrade, on the site where the then Chinese Embassy building was razed to the ground during the NATO bombing in 1999.

Where are all the Confucius Institutes and Chinese Cultural Centers present in the Western Balkan countries?

 

 

 

 

The text analyzes China's presence in the Western Balkan countries (Montenegro, Serbia and Bosnia and Herzegovina) through its economic (lending and investments) and cultural activities. Combining economic and cultural influence ("soft power") is a practice that China implements worldwide, as a means of achieving geopolitical influence.

In the Western Balkan countries, as in other countries in the world, China's economic presence is accompanied by suspicions of non-transparency, violation of domestic legislation and international norms and standards. The content of contracts signed with Chinese companies, whether creditors or investors, is regularly unknown to the general public, and their controversial provisions are most often warned about by non-governmental organizations and independent media.

The fact is that the authorities of the Western Balkan countries agree to the secrecy of these contracts, regardless of the fact that, when it comes to loans, they are repaid from public budgets, that is, with citizens' funds that should be transparent. So part of the blame for the non-transparency of the contracts lies with the domestic authorities.

Numerous public appeals, and even in the case of BiH, a court ruling to publicly disclose the details of the contract with a Chinese lender for the construction of the Banja Luka-Prijedor highway, have not yielded results, which justifies suspicions of corruption when it comes to these contracts.

Therefore, additional pressure is needed on the authorities in the Western Balkan countries to publicly disclose such contracts (especially those on loans) and to remove the secrecy label from them.