Joining the European Union remains Serbia’s strategic goal, as two-thirds of its trade transactions are conducted with the European Union. However, Serbian journalist Darko Čačić wrote that in recent years, Serbia has become closer to China in many areas.
This article originally appeared in EURACTIV Bulgaria.
Giorgio Fruscione of the Italian Institute of International Politics said that the Balkans has become a strategic hub for China and can finally connect the Greek Port of Piraeus, which China acquired in 2016, with Central European countries and the EU market. Therefore, China is gaining influence in Serbia, trying to surpass Russia, Turkey and the Gulf countries, mainly the United Arab Emirates. Serbia still relies on Russia for energy and has military cooperation with Russia. In the past nine years, the UAE has become Belgrade’s main partner in the Arab world, and its partnerships in aviation, urban construction, agriculture, and defense continue to expand.
On the other hand, Beijing has recently expanded its cooperation with Belgrade in various fields. In the past ten years, the total trade volume between Serbia and China has been steadily increasing. According to data from the Serbian Development Agency, China accounts for 8.9% of total foreign direct investment. In 2016, after Chinese President Xi Jinping visited Serbia, China’s Hegang took over a troubled steel mill previously owned by U.S. Steel.
In 2018, China Zijin Mining acquired the country’s only copper complex under heavy debt. China Linglong, the main sponsor of Serbia’s top football league, is building a tire factory worth nearly US$1 billion. In January 2021, the China Power Construction Corporation and the French companies Alstom and Egis signed a memorandum with the Serbian government on the construction of the first two lines of the Belgrade Metro.
Although the government welcomes Chinese investors taking over old industrial land, locals and activists say they are suffering environmental consequences. In a recent report, the European Parliament expressed concern about the lack of transparency in Chinese investments and loans in Serbia and the entire Western Balkans, and the lack of transparency in environmental and social impact assessments.
No public bidding
In the past ten years, many large-scale infrastructure projects in Serbia were funded by Chinese loans, and all contracts were awarded to Chinese companies without public bidding. Mauro Giorgio Marrano, a senior Central and Eastern European economist at UniCredit Research, pointed out in April that China is not a major external creditor, but if loans are issued in accordance with the contract, its share of government foreign debt may increase. These loans usually have a maturity of 15-20 years, with a grace period of 5 years, and interest rates ranging from 2% to 3%. The contract amount of China’s loan to Serbia is equivalent to 7% of last year’s GDP. These projects include the modernization and reconstruction of the two parts of the Hungary-Serbia railway connection.
Beijing recently expanded its cooperation with Serbia in the security field. Belgrade has installed more than a thousand cameras with facial recognition software from the Chinese giant Huawei, although these security devices do not meet the EU standards adopted by Serbia. Intelligence sources, city officials, academic experts, and security industry executives interviewed in Europe, the United States and Asia told the Financial Times that China’s “safe” and “smart” city systems have a large number of potential security and human rights threats.
China is also strengthening military cooperation with Serbia. In June 2020, the Serbian Air Force received 6 combat drones equipped with laser-guided missiles. This is the first time a Chinese drone has been deployed in Europe.
China’s “soft power”
The cooperation between Chinese and Serbian universities and schools has continued unabated. Three Serbian universities have signed a cooperation agreement with Shanghai Jiao Tong University. Serbia also has two Confucius Institutes operated by the Chinese government. These examples of soft power expansion should be seen as part of China’s broader efforts to promote its culture and values. In addition, the Chinese Cultural Center in Belgrade was built on the site of the former Chinese Embassy that was destroyed by NATO in 1999.
The new Sino-Serbian partnership also includes close political ties. Serbian President Alexander Vucic often talks about the “steel friendship” between the two countries. Belgrade does not support the European Union’s strong criticism of Beijing’s resolution. China refuses to recognize Kosovo’s independence. In exchange, Belgrade supports China’s Taiwan policy.
Last month, Wu Qiqi emphasized the achievements of the Chinese Communist Party in the past 100 years, calling it a successful example for the world.
“I am very grateful for the good cooperation between the Communist Party of China and the party under my leadership. We have seen how you can establish this connection and cooperation between citizens, the party and state institutions. This is what we really learned from the Communist Party of China. We I believe we can build it in the future,” Vucic told CGTN.
During the coronavirus pandemic, this relationship deepened and China provided medical assistance and doctors. Almost overnight, China became Serbia’s greatest friend in the Serbian media. A video of Vucic kissing the Chinese flag enthusiastically went viral on the Internet. Thanks to the Chinese giant Sinopharm Group, the launch of Serbia’s COVID-19 vaccine has accelerated significantly in the first few months. Serbia imported 4.2 million doses of national medicine vaccines, accounting for nearly 60% of the doses obtained so far.
In early June, the Torlak Institute in Belgrade became the first institution outside Russia to produce a satellite V vaccine. A month later, the Serbian government signed a memorandum of understanding with partners in China and the UAE to produce Sinopharm’s COVID-19 vaccine in Serbia.
The rise of Chinese power in Serbia is mainly based on state support. Chinese investors have seen Serbia’s advantages. Serbia has a trade agreement with Brussels, but it is not subject to strict EU rules because it is not a member of the EU. China’s influence in Serbia is undoubtedly growing and is expected to continue, but its further strengthening will depend on the country’s progress on the European road.
