Thewesternbalkans
Beijing demonstrates an individual approach to each of the countries of the Western Balkans.
Chinese investment interests are pragmatically focused on the countries with a future place in the EU – Serbia, the Republic of North Macedonia and Montenegro, in anticipation of political returns for Beijing. Beijing’s long-term strategy is aimed at access to the EU market, and future membership of these countries could represent a political surplus for Beijing.
Serbia
In Beijing’s strategy for entering the WB, Serbia has been assigned the role of a key partner in the region. The focus of Chinese projects is on the country’s infrastructure – the transport sector, the steel industry and energy projects. The emphasis is on “loans for infrastructure” rather than direct investment (although Serbia holds the record for China’s private direct investment in the region), i.e. economic cooperation develops on the basis of the Chinese approach – Chinese loans and construction of the sites by Chinese companies. China’s “soft power” has been very effective, especially in the field of public diplomacy, which has roots since the time of the Non-Aligned Movement.
Republic of North Macedonia
The role of RNM in the context of the BRI is as a link between Piraeus and the markets of Central and Western Europe. However, Chinese investments in PNM for the last 20 years do not exceed a modest 2% of the total volume of foreign direct investment in this country, but they have a strategic focus.
Bosnia and Herzegovina
The main focus of the Chinese presence in BiH is on financial results, particularly in mining and electricity production. BiH is also seen as a possible alternative to transport connections via Piraeus. Although BiH is not among China’s economic priorities, Chinese involvement in BiH is only at its beginning (the composition of the Chinese embassy in Sarajevo is comparable to the composition of the Russian embassy).
Chinese activities in Bosnia and Herzegovina are limited due to political instability, complicated political-administrative system, constitutional challenges. Major regional infrastructure projects sidestep BiH. There is a sharp contrast between the declared intentions and the actually planned and implemented projects with Chinese participation. China’s economic activities are concentrated in loans from political banks for the construction of lignite-fired thermal power plants. Most Chinese investments are at the stage of preliminary arrangements and intentions.
Montenegro
China is currently involved in the financing and construction of sections of transport Corridor 11, respectively the Belgrade-Bar highway. The Chinese loan from Exim Bank is worth USD 500 million (about a quarter of Montenegro’s GDP) and is becoming more expensive due to exchange rate fluctuations, making it difficult to get out of the Chinese “debt trap”. The state-owned Chinese corporation COSCO is investing in port infrastructures in Montenegro.
Albania
Albania’s importance is related to its geographical location and energy resources. Despite a certain skeptical attitude of local elites towards China, the state-owned COSCO has periodically renewed its interest in the Albanian ports of Durres and Vlora. China Pacific Construction Group is building the Albania-Montenegro highway. China North Industries Group Corporation Limited (Norinco) operates in Albania (and also in Macedonia and Montenegro), which is directly subordinate to the Chinese People’s Liberation Army.
In addition to a differentiated approach to each of the states of the WB, China’s strategy is also characterized by great flexibility, manifested in China’s use of naturally occurring opportunities to generate influence in the region. Beijing does not try to impose solutions on the various Balkan governments, but in exchange for economic preferences it seeks political support on issues related to sovereignty (South China Sea, Taiwan), human rights (Xinjiang) or other foreign policy issues.
Similar to the Western democratic model of field work with civil societies, China actively promotes the generation of horizontal partnerships and direct links between media, universities, research institutes, think tanks, business structures, NGOs in the WB countries, with a view to promoting the BRI and the Chinese agenda. In this way, institutional Chinese entry points and organizationally structured communities in Southeast Europe are being created, which acquire their own inertial dynamics of development, without special efforts from the Chinese side.
Taking into account the specifics of the territorial organization in each of the countries in the WB, Beijing actively works with municipal and regional authorities, especially where decentralized management and enhanced powers of local authorities are observed (Albania, BiH). For their part, Chinese provinces have great freedom to implement their own joint projects.
Attitude of the local elites in the WB towards China
Local elites in the WB countries perceive China as an opportunity to balance the EU and NATO, as well as other interested players such as Russia and Turkey. The WB countries wish to attract Chinese investments as an additional economic partnership and as an alternative to the EU’s investment intentions (but not on an either-or basis). In this way, governments reduce the sense of risk and dependency.
There is not enough convincing evidence that “divide-and-conquer” tactics are primarily embedded in China’s “Balkan Silk Road” concept, but in practice it is a reality, based on the different readiness and active role of the respective country in attracting Chinese funding and investments due to political and financial calculations of individual Balkan governments.
Local elites are interested in doing business with China due to economic benefit, the lack of set conditions (compared to the EU) and due to the specificity of the person-oriented decision-making process, which is most visible in the example of BiH. There is an unspoken competition between individual Balkan countries for Chinese attention.
There is insufficient evidence that Chinese investment directly translates into influence (i.e. that China “buys” friendship), even more so that the governments of Western Balkan countries use ties with China as leverage in relations with the EU.
Despite Chinese loans, local elites are increasingly frustrated by China’s uneven economic interest, focused only on certain sectors, and the region’s lack of economic progress. In some of the countries of the WB – Serbia, Montenegro and RNM, there is an intertwining of Chinese investments with criminal and economic interests, as well as with the personal interest of the rulers. This violates the market principles of investment activity in the Balkans, and there are prospects that this will continue in the future.
The membership of some of the Western Balkan countries in NATO and the process of European integration are giving results: more and more countries in the region are starting to define and implement different counter-strategies towards China depending on their own goals. Beijing was forced to comply with some rules of European business. China has failed to expand its presence along the Atlantic coast in Albania and Montenegro and in terms of 5G networks in BiH and Albania.
The countries of the Western Balkans are turning to China because of the lack of sufficient Western investment and frustration with the delay in their European integration. If there is no positive decision to start negotiations on membership of the RNM and Albania in the EU, the vacuum can be used by China and other countries with interests in the region.
Perspectives
Beijing inevitably realizes that it has overstepped its bounds with the initial ambitions of the BRI. There are indications of a change in the scope and nature of the BRI initiative, with the focus not so much on large investments in infrastructure, transport and energy, but moving to a more sophisticated form of cooperation by attracting new technologies. The soft options of BRI – Digital Silk Road and Health Silk Road will be prioritized. Overall, the BRI will be developed with a smaller budget in the medium term.
As in other regions, BRI projects in the WB followed the line of least resistance and appeared rather chaotic dispersed, subject to a mix of local and Chinese interests and only partially linked to major infrastructure projects such as the transport corridor Piraeus-Skopje-Belgrade-Budapest. The Chinese side acted to a certain extent cautiously with regard to various elements of the strategic infrastructure in the WB, against the background of denied Chinese access to infrastructure (airports, ports, telecommunications, nuclear facilities) in the EU and NATO member states surrounding the WB.
However, China seems to be emerging from the initial stage of cautious entry into the region and, on the basis of accumulated institutional, horizontal, group and personal ties, is moving to a stage of increased political activity. Having learned from the mistakes of “Covid diplomacy”, which did not lead to a better perception of China in the Balkans, Beijing will apply much more sophisticated forms of influence in the region.
China will continue to increase its political and economic influence in the WB, under the auspices of the BRI, which is a leading instrument for China’s global ambitions for influence through the use of investment, loans and economic pressure. China is not in retreat and is undertaking long-term adjustments and derricking of its credit politics.
Beijing’s interest in the WB countries will be limited by the lack of administrative capacity and weak state structures, which is why these countries fail to develop projects attractive to China in a timely manner or delay them. The Balkan countries are heavily indebted and have limited opportunities to take on new loans. Another factor with a negative impact on China’s interest in the WB is the negativity of the USA and major European countries towards Chinese initiatives. Beijing will comply more strongly with EU norms and regulations and target countries with sufficient administrative project capacity to avoid the risk of unfinished projects and unfulfilled investment promises.
