China's engagement in SE: Constructing the Balkan Silk Road

By George N. Tzogopoulos
0 Comment(s)Print E-mail, November 10, 2017
Adjust font size:

Balkan Peninsula [File photo]

European interest in China has been growing over the past few years. Today, China constitutes the second-biggest market for the EU, but this new focus is not only about trade and economics. It is also driven by research on how Sino-European relations could develop in the near future, and in particular what the implementation of China's Belt and Road Initiative (BRI) means for the Old Continent.

The institutional framework is already in existence. In 2015, the European Commission welcomed China's participation in its 315-billion-euro Investment Plan for Europe. Significant opportunities have arisen since then. Last year, for instance, China became a shareholder in the European Bank for Reconstruction and Development (EBRD) as its 67th member. Subsequently, the EBRD and the Asian Infrastructure Investment Bank (AIIB) agreed to deepen their cooperation. A memorandum of understanding was signed between the EBRD and the Silk Road Fund at the Belt and Road Forum in Beijing in May 2017.

China is paying particular attention to the rollout of the BRI towards the Balkan Peninsula and in Central and Eastern Europe. The EBRD is simultaneously exploring further possibilities for collaboration. A report authored by economist Jens Bastian for the EBRD sheds new light on the Balkan Silk Road dimension of the BRI.

Bastian, a former professor at the University of Oxford and an appointee of the European Commission to the Task Force for Greece, offers useful insights about how Europe should see Chinese investment and lending for infrastructure projects in the Balkans. His report notes that, "Chinese investments in EU and non-EU member states create leverage for acquisitions and infrastructure innovation on an unprecedented scale." It is thus possible for the region to benefit from increased trade with China and diversify its sources of capital.

According to the study, the total trade volume between China and certain western Balkan economies reached 3.3 billion euros in 2015-16. Serbia accounts for almost half of that total trade volume. China's ranking as a trading partner in 2016 after the EU's 28 countries was as follows: second in Albania, third in Montenegro and Bosnia-Herzegovina, and fourth in Macedonia and Serbia.

This gradual rebalancing of trade relations for countries in southeast Europe opens up opportunities for the EBRD. One illustration from Bastian's report is the purchase of four diesel and two electric trains by Macedonia from the Chinese CSR Corporation, which was financed by a loan of 50 million euros secured by the EBRD. He also highlights a project in Serbia with the China Railway Construction Corporation, and another on a hydro power plant turbine.

Undoubtedly, a project relationship between the EBRD and Chinese companies is emerging in the Balkans. For Bastian, the willingness of both sides to cooperate is evident. More importantly, the ongoing process can test the waters on issues such as "how EBRD procurement rules are adhered to by Chinese counterparties." For their part, Chinese companies could benefit from the EBRD's know-how and support for local economies, including the development of small- and medium-sized enterprises.

Bastian's study has been published during a period in which the EU and the U.S. are closely monitoring the Belt and Road Initiative. There is a growing question inside the commission in Brussels and among national governments whether the acquisition of European companies by Chinese ones should be subject to increased vetting procedures. In his 2017 "State of the European Union" address, European Commission President Jean-Claude Juncker proposed a new EU framework for investment screening. He connoted China without mentioning it by name.

Joining the debate, Bastian believes that "it is more appropriate to consider China a complement to, rather than a substitute for, the Balkan countries’ European partners." Bastian argues that Chinese loans for infrastructure modernization in Serbia, Macedonia and Bosnia-Herzegovina have provided these countries with a welcome source of project financing and diversification. This development can foster dialogue between the two sides in good faith. Differences between the partners do exist, but what matters more is to build on a common will to bridge them.

On the whole, Bastian draws on realism. He sees no homogenization of Chinese investments in the Balkans and refrains from anticipating whether spillover benefits for the region will be similar to those of Central and Eastern Europe. He discusses the added value of future infrastructure works such as the proposed construction of a high-speed railway connecting Belgrade with Budapest. But his report does not ignore the ongoing European Commission investigation on the flagship project linking Serbia with Hungary.

Perspectives for the future remain promising. China's footprint in southeast Europe will continue to grow in the coming years. This requires, as Bastian argues, that multilateral organizations such as the EBRD, the European Commission or the Regional Cooperation Council in Sarajevo harness collaboration with China.

George N. Tzogopoulos is a columnist with For more information please visit:

Opinion articles reflect the views of their authors, not necessarily those of

Follow on Twitter and Facebook to join the conversation.
ChinaNews App Download
Print E-mail Bookmark and Share

Go to Forum >>0 Comment(s)

No comments.

Add your comments...

  • User Name Required
  • Your Comment
  • Enter the words you see:   
    Racist, abusive and off-topic comments may be removed by the moderator.
Send your storiesGet more from