Dr. Christopher A. Hartwell and Dr. Katarzyna W. Sidlo from Center for Social and Economic Research (CASE) write in the Balancing the European gateway open that historically speaking, relations between Serbia and China has been cordial for the better part of the past century.
These days Serbia, although by no means a major Chinese investment destination in the Central and Eastern Europe (CEE), is a crucial element of its Belt and Road (B&R) Initiative.
Strategically placed in the Balkan Peninsula, it shares a border with four European Union member states (Croatia, Hungary, Romania, and Bulgaria) and so is an ideal potential air, road, rail, and water transportation hub for the purpose of the B&R Initiative implementation.
As such, Beijing has been spending both its political capital and large sums of money on carrying out a number of conspicuous investment projects, mostly in the area of infrastructure.
Characteristic of Chinese involvement in Serbia is a rather blurry line between the foreign direct investment (FDI) and foreign aid projects, as a number of initiatives are conducted by state-owned corporations and are funded by loans (as opposed to grants), not infrequently under state guarantees.
These quasi-private investments include, among others, prominent projects such as the yet-to-be-completed Belgrade-Budapest high-speed railway, arguably the most important and one of the most costly projects of the entire B&R Initiative.
The above-mentioned project has as recently as in March 2017 put China in at loggerheads with the European Union, as the European Commission set off an investigation to assess the project’s “financial viability” and potential collisions with the EU public procurement laws. Although the Serbian leg of the project was less of an issue, as the country is not a member of the EU and so does not have to comply with the rules regarding public tenders issuance laws yet, its candidate country status means it falls under the EU observance as well.
In the long run China might need to rethink its strategy while dealing with EU member and prospective member states. Unpleasant situations can easily be avoided by virtue of developing an investment strategy in line with Brussel’s laws and procedures, and perhaps getting Brussels more involved in the B&R Initiative in general. Granting European Union an observer status to the 16 plus 1 meetings was a good example of such a move.
Various surveys show that although Serbians in general do have positive connotations with China, its image is somehow complex. For instance, a study published in March 2017 by the Belgrade Centre for Security Policy (BCSP) showed 36% of Serbians view China as a credible investor. At the same time, however, 34% did not agree with that statement. The same survey showed that 54% of Serbians considers China a technological power and 46% considers China an economic power as well.
Serbians acknowledge China’s economic stance. Their opinion on its political environment, however, is less positive. According to the same BCSP study, only 14% of Serbia’s citizens saw Beijing as a political power. 52% saw China’s influence on Serbian foreign policy as a positive one. If pressed to choose only one country with whom Serbia should keep strong relationship, only 8% of Serbians would choose China.
One interesting attempt at winning the hearts of the Serbian public was promoting free movement of people across the borders. In November 2016, China approved Serbia’s proposal to abolish the need for visas between the two countries for short-term stays (under 30 days), a move seen as a first step towards broader visa liberalization between the two countries in the future. Given that only 7000 visas were issued for Serbians in China in 2015, it is rather unlikely that this liberalisation would lead to an influx of Serbians to China. However, relaxation of the visa restrictions may help to increase tourism in the Balkans from China. Additionally, as the agreement if first one of this kind between China and a European country, it does underscore the importance that China places on Serbia as a gateway to the European continent.
Taking all that into consideration, in order to make the relationship between the two countries more successful, China could learn a thing or two from its partner’s strategy. For Serbia, at least for the time being, has admittedly been quite successful in performing a balancing act and maintaining good relationships will all the major powers in China, EU, United States and Russia.
Brussels, while in principle happy to attract foreign investment to the continent, will not want to watch from the distance the talks that 16 plus 1 club holds behind closed doors. Involving the EU official bodies more in the B&R Initiative, while potentially burdensome in the short term, in the long perspective will mean less problems, such as a need to re-negotiate deals with Serbia once the country becomes a EU member. So while Serbia may need to stop its balancing act now, it may be time for China to begin one of its own now.
Balancing the European gateway open.pdf
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