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Pandemic and EU neglect tighten Serbia bonds with China

Valerie Hopkins 12 hours ago

6-8 minutes

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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 per cent 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 per cent 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 centre 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 neighbouring 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.

The investment has come with foreign policy and political alignment. Beijing supports Belgrade's refusal to recognise Kosovo, which declared independence in 2008, while Serbia backs China's stance on Taiwan and territories in the South China Sea. In December, Serbia's top official for Kosovo lauded China's "level of protection of minority rights" in Xinjiang, where an estimated 1m Uighurs are believed to be in detention. Last year, Chinese police came to three Serbian cities for joint patrols.

Stefan Vladisavljev, a foreign policy analyst for the annual Belgrade Security Forum, fears that as EU influence is questioned in the region, "the space for malign third actors coming from the outside could increase. I am not afraid of China coming to do damage, but I am afraid of how Serbian officials could misuse the tools they are given."

Serbia has been an EU candidate since 2012, but has completed only two of 35 chapters of its accession protocol, and many accuse it of backsliding on democratic indicators. Independent US-based watchdog Freedom House no longer describes Serbia as a democracy. After the EU updated enlargement methodology in February, many like Mr Vladisavljev, wonder if Serbia will ever join.

Elsewhere in the region, Chinese loans have sent public debt soaring. In neighbouring Montenegro, a Chinese-built and financed highway has raised the country's debt to 80 per cent of GDP.

Covid-19 has brought Serbia closer to China. The western Balkans were originally not exempt from an EU permit scheme for exports of critical medical equipment. President Vucic proclaimed that "European solidarity doesn't exist, that was just a fairytale on paper." The decision "was made by the people who lectured us here that we are not supposed to purchase goods from China". people from around Europe who wanted us to adjust the terms of tenders so that price should not be the primary condition as their [EU] goods were supposedly much better quality. When they needed money, it was like, make tenders and adopt conditions so the European companies can get Serbian money. When there is torment and pain, the Serbian money is no good."

He complained that Brussels was paying close Serbian tenders purely for its own economic hegemony and accused EU leaders of hypocrisy.

In the post-coronavirus battle of narratives, the "global Chinese propaganda was amplified by a Serbian offensive", says Mr Vladisavljev, who noted that in Serbia, it is still unknown how much of the Chinese medical equipment and personal protection was donated compared to how much was purchased.

A poll by the International Republican Institute, a US nonprofit focused on promoting democracy, found in March that 20 per cent of Serbs saw China as the largest donor, and 71 per cent as the most important economic partner. The EU is actually Serbia's largest donor.

After Serbian premier Ana Brnabic called for a monument of appreciation for China, a banner in front of parliament proclaimed: "Serbs and Chinese: Brothers Forever". Serbia now waits to see whether the Chinese tourists will return.

Miners in Bor, eastern Serbia © AFP via Getty Images Chinese and Serbian police officers attend a launching ceremony for their first joint patrol in Belgrade © Alamy