Since the Belt and Road Initiative was launched in 2013, China has financed a number of notable construction projects in the Western Balkans. Chinese investment projects in the Western Balkans are financed by loans from the Chinese Exim Bank. It is easier for the Western Balkans countries to obtain loans from Chinese creditors, as, unlike the EU, they do not have lending conditions such as government reforms, transparency and cost-effectiveness of projects. However, unsustainable financing investments could be a tool of China debt-trap diplomacy which poses a risk for Western Balkan countries. In the event of countries’ inability to repay their debts, China may acquire ownership of the indebted assets. The infamous example of China debt-trap diplomacy is the Sri Lanka port of Hambantota. From the Balkan countries, is Montenegro in trouble because of issues with repaying an unprofitable highway project. According to data in 2018, 40% of total Montenegro’s debt is towards China. This percentage is 20 for North Macedonia, 14 for Bosnia and Herzegovina and 12 for Serbia.(3) In most of the cases are infrastructure projects designed from China, and their construction uses Chinese workforce and materials, which does not help local companies and local development.
Serbia is the country in which China makes the largest investments in the Western Balkan region. From 2013 to 2020, China invested more than 9,93 billion Euro in Serbia, according to data from the China Global Investment Tracker.(4) One of the most significant investments is the construction of a 350 km long high-speed railway line between Belgrade and Budapest, which will cost Serbia more than 2 billion Euro. This route is of great importance to China, especially because it connects the Greek port of Piraeus with Eastern Europe, which is an important transport hub for Chinese goods. The 150 million Euro investment with the Chinese company Huawei in providing high-speed broadband in Serbia is also significant. Huawei is also linked to a project to install 1,100 security cameras in Belgrade with facial recognition technology.(5) There are other significant investments include highways and power plants.
China invested more than 2,24 billion Euro in Bosnia and Herzegovina in 2013-2020.(4) In Bosnia, China invests primarily in the energy sector. The largest single post-war investment in the country is the thermal power plant in the town of Tuzla, which costs 785 million Euro.(6) The construction of the Tuzla power plant was criticized by European officials because of the choice of energy technology, which is not with the European policy of carbon reduction as well as for missing transparent cost-benefit analysis.(7) Another significant energy investment in Bosnia is the Stanari coal power plant in the Republika Srpska part of the country, with which are also concerns connected about pollution levels.(8) One of the most significant Chinese transport investments in Bosnia is the construction of the Banja Luka-Prijedor highway section worth 540 million Euro.(1)
In Montenegro, there is a 1,22 billion Euro of Chinese investments in 2013-2020.(4) China is present in Montenegro primarily through the construction of a highway linking the port of Bar and Serbian capital Belgrade. 165km long highway from Bar to Serbian border is one of the most expensive highways in the world, which costs 20 million Euro per km.(9) It is the most expensive project in the recent history of Montenegro, which, when completed, will cost 45% of GDP and increase the country’s debt from 63% (2012) to 91%. Former Prime Minister Milo Djukanovic has decided to sign the contract, despite the EU’s repeated warnings to Montenegro that the project is not financially sustainable.(10)
China’s total investment in North Macedonia since 2013 is 650 million Euro. Chinese companies are currently working on the construction of two highways, the Miladinovici-Shtip section in the eastern part of the country and the Kicevo-Ohrid section in the west. North Macedonia is very important in the context of China’s BRI strategy because it is on the most important route connecting the Port of Pireus in Greece and Budapest in Hungary.(1) In 2015 there was a corruption scandal connected with construction, and the Special Prosecutor’s Office opened a case against four high-level government officials.(11)
There are also Chinese investments in Albania. Canada’s Banker’s Petroleum, which has been since 2014 the largest company in Albania, decided to sell two oil fields to the Chinese company for 442 million Euro.(12) China is also building a nearly 200 million Euro highway from Tirana to Dibar in western Macedonia.(13) In 2016 Chinese Asset Management group purchased the airport shares in Tirana International Airport, expanding thus their influence and control over the transportation and logistics companies in the Balkans.(1)
The level of foreign direct investments in Kosovo remains extremely low. A China-led consortium submitted a bid to construct a new coal-based power plant in Kosovo, but the government selected another company. China doesn’t recognize Kosovo as an independent state, which is an obstacle to a proper bilateral relationship between the two countries.(14)