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IRI Western Balkans Poll Cited by Financial Times

June 17, 2020

Pandemic and EU neglect tighten Serbia bonds with China

Financial Times

By Valerie Hopkins 

In mid-May, as most European countries were just beginning to contemplate the slow process of reopening national borders in the wake of Covid-19, Serbia’s tourism board launched a campaign to attract visitors from China.

President Aleksandar Vucic became the face of the campaign, which the board hoped would “save” the tourist season. Chinese citizens have been able to travel to Serbia visa-free since 2017, a sign of growing ties. In the first half of 2019, the country registered a 36 percent rise in visitors from China compared to the same period in 2018.

The relationship is not limited to tourism. Serbia’s top football league was last year named the “Linglong Superliga” after its sponsor, a Chinese tyremaker. In March 2019 Linglong started work on its first European factory in Serbia’s northern city of Zrenjanin. The nearly $1bn project is emblematic of Chinese businesses’ view of Serbia, a candidate for EU membership, as a hub for investment.

Since 2012, the western Balkan country of 7m people has received $9.5bn of publicly announced Chinese funding and investment, more than half of China’s stated investment in the region. In 2019, Chinese companies announced 16 greenfield projects in Serbia, worth $625m, making China the country’s biggest source of such investment, according to fDi Markets, an FT data service. In 2018, Chinese companies accounted for about 20 percent of all FDI into Serbia.

Serbia is part of China’s Belt and Road Initiative and the 17+1 format, a partnership with central and eastern European countries. The western Balkans’ largest economy is at the center of Beijing’s “hub and spoke” strategy, according to the Center for Strategic and International Studies (CSIS), a US think-tank, which described Serbia as a “strategic anchor for China in the [EU’s] semi-periphery, where it can invest heavily without EU regulatory burdens and showcase its technological and infrastructure projects to neighboring states”.

Chinese companies have bought some of Serbia’s largest industrial facilities, including a steel factory in Smederevo, and a copper mine in Bor. Now, Chinese investors are focusing on a wave of digital infrastructure, including a “Safe Cities” project with 1,000 facial recognition cameras in 800 locations, mostly in Belgrade. Of 15 information and communications technology projects in the region, nine were started in 2018 and 2019, mostly in Serbia, according to the CSIS. However, there remains a big discrepancy between projects announced and completed: according to CSIS, only a quarter have come to fruition. “Chinese financing often occurs under opaque conditions and through non-competitive contracts, reinforcing low governance standards and exacerbating endemic corruption, underscoring . . . why western investment was not present at the outset,” wrote CSIS.

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