This chapter focuses on China’s approach to the Western Balkans in the economic, political and security domains. What are the Chinese government’s objectives for the Western Balkans region as a whole, and what are the main characteristics of its relations with the region’s countries at a bilateral level?

1.1 The regional level

The Chinese government does not have a foreign policy framework for the Western Balkans as a region. Rather, China deals with Western Balkans countries mainly at the bilateral level. Still, to understand the context in which these bilateral relations have been developing, it is relevant to take into account the multilateral level, where the 17+1 mechanism is the platform for China’s collective approach to the Central and Eastern Europe (CEE) region. Five of the Western Balkans countries (Bosnia and Herzegovina, Montenegro, Albania, Serbia and North Macedonia) are members of the 17+1 mechanism. China maintains no diplomatic relations with Kosovo, which it does not recognise as an independent state.

China participates in a range of regional groupings related to various parts of the world. In most (but not all) cases, these groupings are based on the ‘+1’ model – that is, a set of countries from a specific region plus China as the only extra-regional participant. The regional forums are linked to activities financed by China’s so-called policy banks: the China Development Bank (CDB) and the China Export–Import Bank (Exim Bank). Thus, ‘17+1’ does not constitute an exception to China’s foreign policy methods of institutionalising cooperation at the regional level. What sets the 17+1 platform apart from the other regional groupings is that the others are mainly aimed at the developing world.

A distinctive common characteristic of the CEE countries, from a Chinese point of view, is that most were under a socialist regime during the Cold War. The only exception is Greece, which joined the 17+1 later than the rest.[9] China has refrained from deploying a narrative aimed at highlighting the shared socialist past towards either the CEE as a whole or the Balkans in particular, despite the existence of some degree of post-socialist nostalgia in the Balkans.[10] The Chinese government has generally referred to its relationship with the whole 17+1 group only in general terms as one of ‘traditional friendship’ and ‘shared past’.[11]

Within the 17+1, the five non-EU countries of the Western Balkans that are members do not constitute a formal sub-grouping. As such, while these five countries are the only non-EU members in the 17+1, China’s approach at the CEE level ignores this distinction. Still, at the bilateral level, the approach of China to the Western Balkans countries involves infrastructure financing more prominently than its approach to the other 17+1 countries. China’s involvement with the Western Balkans thus resembles its interaction with developing countries, in which infrastructure financing plays a central role. In a way, relations between China and the Western Balkans as a region may be regarded as a hybrid category that combines elements from China’s approach to developing countries with its interaction with member states of the European Union. Chinese activities in Asia, Africa and Latin America are relevant for the Western Balkans in two regards. First, Chinese companies that engage in infrastructure financing and construction in the WB6 have often acquired experience and advantages of scale through their activities elsewhere. Experiences from elsewhere are likely to have an impact on their behaviour in the Western Balkans, for instance with regard to dealing with risks and managing relations with local actors. Second, China’s involvement in infrastructure development in the WB6 is part of a near-global network of transport, communications and energy infrastructure that Chinese governmental and business actors are building as part of China’s ‘Belt and Road Initiative’ (BRI). Infrastructure projects in the WB6 should not be seen as stand-alone activities. Rather, their strategic relevance for China is related to the BRI’s overall progress.

Indeed, China’s main interest in the Western Balkans relates not primarily to the region’s countries as such, but to their proximity to the European Union, which is a major export market for China. Consequently, the main region-wide initiative of the Chinese government for the Western Balkans is the China–Europe Land–Sea Express Route (LSER).[12] The LSER, a component of the BRI, is a transport corridor that connects China and Europe via Greece and the Western Balkans. Containerised goods travel by sea from China to the port of Piraeus in Greece, from where they are transported by train through North Macedonia and Serbia into Hungary and the Czech Republic.[13] China COSCO Shipping, a state-owned enterprise that is China’s largest shipping company, has been developing Piraeus into a major regional hub since 2009. COSCO has a majority stake in the port authority of Piraeus, while a subsidiary operates the port’s container terminal. In late 2019 COSCO bought a majority stake in the Greek railway company Piraeus Europe–Asia Railway Logistics (PEARL) and a minority stake in a train terminal at Budapest in Hungary.[14] Under COSCO’s influence, Piraeus has become the busiest container port in the Mediterranean. The train link between Piraeus and Central Europe is linked to the network of China–Europe rail services via Budapest. In May 2020, during the corona crisis, the Chinese government dispatched a train with medical supplies directly from Wuhan in central China to Belgrade in Serbia. Several rail companies subsequently announced plans to establish a permanent rail connection between China and Belgrade.[15]

In relation to the Belt and Road Initiative, the two Western Balkans countries most significant to China are Serbia and North Macedonia (with Serbia being the more relevant of the two). Improved transport connections linking the Adriatic ports of Albania, Montenegro and Bosnia and Herzegovina could potentially enhance these countries’ strategic importance. However, all three countries have only minor seaports and are not well connected to the main north–south transportation routes through North Macedonia and Serbia. The ongoing construction project financed through a Chinese loan that aims to connect the port of Bar, Montenegro’s main seaport, to Belgrade in Serbia is an attempt by Montenegro to enhance its role in cross-regional transportation.

Map of the China–Europe Land–Sea Express Route [16]
Map of the China–Europe Land–Sea Express Route

For China, the LSER is only one among several corridors that Chinese companies are developing to improve Sino–EU trade and to increase their role in international logistics. It is not even the only avenue to improve transportation from China into Central Europe via South-East Europe. Other regional entry points to reach the EU are seaports in the northern Adriatic Sea: Trieste (Italy); Koper (Slovenia); and Rijeka (Croatia). Moreover, Chinese state-owned companies have also invested in the Turkish port of Kumport near Istanbul and have a minority stake in the Port of Thessaloniki in Greece. Apart from long-distance seaborne trade, South-East Europe and China are also connected through shipping across the Black Sea and by train across Turkey, via the Caucasus and Central Asia. The Belt and Road Initiative provides China’s foreign trade with a gradually expanding network of alternative and complementary routes. Beyond South-East Europe, Chinese actors also have interests in seaports in the western Mediterranean (such as Vado Ligure and Valencia) and in Western Europe (such as Zeebrugge, Antwerp and Rotterdam), as well as in train traffic via Russia and Belarus. Yet China’s close diplomatic relations with Greece, Serbia and Hungary provide both the Chinese government and Chinese companies with an incentive to continue to develop the Land–Sea Express Route across the Western Balkans as one of the main China–EU trade corridors of the future. Although focused on trade, investment and development, the BRI serves China’s geopolitical interests. It links countries more closely with China, strengthening its economy and international reputation. By enhancing mutual trust through economic dependency, the BRI seeks to ensure a favourable strategic space for China in the long term. The BRI constitutes a core component of China’s foreign policy.

1.2 The economic domain

China’s Belt and Road Initiative is the main framework for China’s foreign policy towards most parts of the world, including the Western Balkans. Consequently, China’s relations with this region’s countries are to a large degree shaped by this framework, which aims to increase international trade and the role of Chinese companies, in particular in transport, energy and communication infrastructure.

Western Balkans’ trade in goods with the EU and China, as percentage of the total trade, 2019 [17]








58% (1)

76% (1)

9% (3)

2% (4)


61% (1)

72% (1)

7% (3)



49% (1)

33% (1)

10% (3)



47% (1)

37% (1)

8% (3)

4% (5)

N. Macedonia

50% (1)

79% (1)

6% (4)

2% (4)


59% (1)

68% (1)

9% (2)

2% (7)

The dynamics of the volume of exports and imports above demonstrates that the region’s direct trade exposure to China is ambiguous and consistent among all the countries. While engagement as a percentage of the total trade is less than 10 per cent, China has risen to be the second or third most important import partner. In other words, while the EU is still by far the most important partner, China has managed to offset other traditional partners of the region like Russia or Turkey.

The pattern for foreign direct investment (FDI) is similar to that for trade. Engagement is growing, but China is not the largest direct investor in any of the region’s countries. Which country is the top investor varies from country to country and from year to year, but for the period 2013–2018 it was always a European country. In 2018 the top investors were France (for Serbia), Austria (Bosnia and Herzegovina), the United Kingdom (for North Macedonia and Kosovo), Switzerland (Albania) and Italy (Montenegro).[18] Bosnia and Herzegovina has no recent reliable data available for Chinese FDI. For Albania and Montenegro, Chinese FDI is low, accounting for just 2.27 per cent and 0.36 per cent respectively in 2018 (although a Chinese oil firm is a major investor in Albania via its Canadian subsidiary; see below).[19] North Macedonia recorded a slightly higher figure, with Chinese FDI accounting for 3.75 per cent of the total investment in 2018.[20] The rates in previous years were similar for all three countries – Chinese FDI did not see an exponential rise.

Important recipients of Chinese FDI in the region are Serbia and Albania. In 2016, Chinese FDI represented 7.32 per cent of the total FDI in Serbia, while the top investor – the Netherlands – had a 13.18 per cent share.[21] In 2018, Chinese investments in Serbia had risen to a 14.82 per cent share, coming close to (then the main investor) France’s 16.24 per cent.[22] China’s FDI is based mainly on acquisitions rather than greenfield investments. In 2016, Hesteel Group, a Chinese state-owned enterprise, purchased the Zelezara Smederevo steel-manufacturing conglomerate for EUR 46 million. Zelezara Smederevo (also known under its formal name of HBIS Group Serbia) has become the biggest Serbian exporter and has been responsible for a rise in local employment in the area where its facilities are located. The company operates a steel plant, tin mill and a river port.

Also in Serbia, Zijin Mining Group, in which the Chinese government holds a controlling stake, bought a 63 per cent interest (for EUR 279 million) in the RTB Bor copper factory (which was then renamed Zijin Bor Copper) in 2018. Recently, in April 2020, Zijin Bor Copper announced a EUR 731 million investment to expand its capacity.[23]

In Albania, Chinese state-owned company China Everbright Group bought TIA, the operator of Albania’s national airport, in 2016. The take-over sum was not disclosed, but media reports suggest that it amounted to roughly EUR 81 million.[24] Investments by Chinese entities in foreign airports are in line with the Belt and Road Initiative, as they potentially contribute to improved transport links between China and other regions, and/or to a great role for Chinese companies in international air transport.

Another instance of Chinese FDI related to Albania occurred in 2016 when Geo-Jade Petroleum bought the Canadian firm Bankers Petroleum for EUR 385 million.[25] Geo-Jade is a Chinese private company that entered the oil business only in 2013. The company currently has oil fields in Albania and Kazakhstan and is listed on the Shanghai stock exchange. Although the purchase of Bankers Petroleum formally constituted an investment in Canada (and therefore tends not to show as a China-related investment in Albania in many statistics), the deal created a significant linkage between China and Albania. Bankers Petroleum’s main asset is an exclusive concession to produce oil at the Patos-Marinza oil field in Albania, the biggest onshore oil field in Europe. It also has exclusive concessions in two further oil fields in Albania (which are known as Kucova and Block F). Bankers Petroleum, which derives all of its oil revenues from Albania, is the country’s largest oil producer. The company produces 95 per cent of Albania’s crude oil, and in 2018 ‘mineral fuels including oil’ accounted for almost 11 per cent of the country’s exports (with roughly 85 per cent of extracted crude oil being exported).[26] According to Bankers Petroleum’s website, it is the largest foreign investor, largest taxpayer and one of the largest employers in Albania.[27]

The aspect of China’s economic ties with the region that has drawn most international attention relates not to trade or direct investment, however, but to loans for infrastructure construction. While Chinese construction companies are among the world’s largest and active in many parts of the world, their role in Europe is largely limited to the Western Balkans (including Croatia).[28] China’s infrastructure-related lending to the WB6 countries includes the following:

Montenegro’s sovereign debt to China is the highest in the region. China’s Export–Import (Exim) Bank has financed the construction of the Bar–Boljare highway. As of 2019, Montenegro owes EUR 671 million, which is 22 per cent of its total foreign debt of EUR 3.1 billion, with its total foreign debt standing at 63 per cent of its Gross Domestic Product (GDP).[29] China is the second biggest lender to Montenegro, and it is the single biggest bilateral lender.

In 2013 North Macedonia borrowed EUR 714 million from China’s Exim Bank for the construction of two highways: Miladinovtsi–Stip and Kicevo–Ohrid.[30] This is approximately 14 per cent of the current 2020 level of government debt, which stands at EUR 5.2 billion.

Bosnia and Herzegovina (BiH) has welcomed involvement by Chinese construction companies in the construction of the 12-kilometre-long Počitelj–Zvirovići section of a highway at a cost of EUR 66 million, which is being financed by the European Investment Bank (EIB).[31] Nonetheless, Bosnia and Herzegovina has received loans from China with regard to two energy projects, the Stanari coal plant and the Tuzla lignite power plant, which accumulated a total debt of EUR 1.1 billion.[32] This equals 13 per cent of Bosnia’s total external debt.[33] In May 2020, the government of the Republika Srpska (one of the two political entities that make up BiH) signed an agreement with China Gezhouba Group, part of the Chinese state-owned conglomerate China Energy Engineering Corporation (CEEC), to build a large-scale hydropower plant in the south of BiH.[34]

Serbia borrowed EUR 195 million from the Exim Bank for the Pupin bridge and EUR 1.08 billion for the two sections of the Belgrade–Budapest railway.[35] Additionally, EUR 538 million were borrowed for the construction of the Kostolac B3 coal power plant.[36] This equals 7.91 per cent of Belgrade’s EUR 24.5 billion government debt.[37] This amount is approximately equal to what Belgrade owns to the EIB, or half of its debt to the International Bank for Reconstruction and Development (IBRD).

Albania has registered a decreasing level of indebtedness to China, owing Beijing EUR 13.7 million in 2010 and EUR 1.6 million in 2019.[38]

There is no data on Kosovo, which presumably has no debt with China as the countries do not have official relations.

Debt to China, accumulated by loans for infrastructure and energy projects, as a percentage of the total foreign government debt, 2019 levels
Debt to China, accumulated by loans for infrastructure and energy projects, as a percentage of the total foreign government debt, 2019 levels

In infrastructure financing China is an alternative provider to the EU, one that countries in need can turn to if the EU is not willing to help. In Montenegro, China’s Exim Bank was the only available actor to finance a highway that Montenegro’s government has deemed of national significance for decades.[39] The highway is to complement the existing railway that links the port of Bar to Belgrade and that requires significant upgrading. In late 2019, the Serbian government and Russian rail company RZD signed an agreement to modernise the Bar–Belgrade railway.[40] It is unlikely that the Exim Bank’s loan will result in a Chinese entity at some point taking ownership of the highway. Through a 2014 law passed by the Montenegrin parliament, a third party cannot acquire ownership or any other property rights over it. Consequently, while the conditions of the bilateral loan agreement with Exim Bank are not disclosed, seizure of the highway, or parts of it, in the case of debt default would not be possible.

The only completed infrastructure construction project in the Western Balkans is the Pupin bridge in Serbia since 2016, with the other bigger and more complex projects still under construction or delayed. The Bar–Boljare highway in Montenegro, the Belgrade–Budapest railway, the two motorways in North Macedonia – Miladinovtsi–Shtip and Ohrid–Kicevo – and the Pochitel–Zvirovici section of motorway in Bosnia and Herzegovina remain under construction. The identified economic sectors for cooperation are infrastructure, natural resources and energy, and engagement is primarily on a government-to-government basis.

Apart from the actual economic interaction between China and the region, the potential of what China could offer in the future is also relevant. Just like the expectation of future EU accession for the Western Balkans region’s countries is a key aspect of the EU’s approach, so too the region’s expectations of China as an emerging economic power may play a part in the Chinese approach.

COSCO’s activities in Piraeus signal to Western Balkans nations that upgrading their infrastructure with the assistance of China may bring subsequent activities by which a country can more directly benefit from China’s economic growth. This may take the form of increased tourism, trade or manufacturing-related investment. Once the Chinese government and Chinese multinationals have a vested interest in the long-term development of a country’s infrastructure, this enhances the likelihood that they use their ability to coordinate related activities to the benefit of that country. To date, the actual economic benefits to Greece of Chinese activities in Piraeus remain mostly limited to rapid growth in trans-shipment (resulting in the port becoming the Mediterranean’s largest by 2019). Whether the Greek case is unique or may to some degree be replicated in the Western Balkans is difficult to determine. Nevertheless, it seems inevitable that the prospects and expectations of China’s future economic capabilities play a role in its relations with the Western Balkans.

1.3 The political domain

In its approach to South-Eastern Europe, like many other regions, China’s official rhetoric emphasises equality and mutually beneficial economic interaction, thereby directing attention away from values and politics.[41] Yet although China is an economic rather than a political actor in the countries of the Western Balkans, the political dimension also plays a role in bilateral relations. While Chinese–Albanian diplomatic ties were very close during the 1960s, after the Cold War and the disintegration of Yugoslavia, Serbia emerged as China’s primary diplomatic partner in the region. Serbia is the only Western Balkans country visited by Xi Jinping in his capacity as president of China (in June 2016). China’s regional focus on Serbia mirrors its approach to other parts of the world, where its main diplomatic and economic partners tend to be the largest regional countries in terms of economic and demographic size. During the 1998–1999 Kosovo War, China was supportive (and has remained so) of the Serbian position on Kosovo and objected to the North Atlantic Treaty Organisation’s (NATO) military intervention. The attack on the Chinese Embassy in Belgrade by NATO bombers during that war, which killed three Chinese journalists, brought China and Serbia closer together and continues to serve as a symbol of their relationship.

The main political pillar under Sino–Serbian relations is China’s role in the United Nations Security Council (UNSC), where China has the power to back Serbia’s opposition to Kosovo’s status as a sovereign state through a veto against possible United Nations (UN) membership for Kosovo.[42] Serbia is also supported on this matter by Russia, which likewise has veto power, thus diminishing Serbia’s dependence on China. Beijing has not recognised Kosovo as an independent state (although it maintains unofficial relations with Kosovo, see chapter 2) and abstained in the voting for UN Security Council Resolution 1244, which laid the basis for Kosovo’s role internationally. From the viewpoint of the Chinese government, Kosovo's unilateral declaration of independence conflicts with China’s principled approach to territorial integrity. This approach stems from concerns over political stability in autonomous regions such as Tibet and Xinjiang, as well as China’s resolute rejection of an independent Taiwan. China eventually accepted Resolution 1244 as a legal basis for the settlement of the Pristina–Belgrade dispute.[43] So far, however, China has not pursued anything similar to the EU-led negotiations and has refrained from addressing the bilateral dialogue between the two Balkans countries on a level different than through the UN.

China has at times used its influence to prevent Kosovo’s participation in international organisations. In 2015, for example, China voted against Kosovo’s United Nations Educational, Scientific and Cultural Organisation (UNESCO) membership bid.[44] In 2017, Kosovo withdrew its Interpol application as the assembly was hosted in China, with the reason being lack of international support but also the unfriendly environment.[45] In 2018, Serbian media outlets reported that China had voted against Kosovo’s Interpol application, but as the voting is by secret ballot this claim cannot be verified.[46] China took no active position on the 2018 Prespa Agreement, which settled the name dispute between Greece and North Macedonia, and which China probably welcomed as a step towards a more stable environment for the LSER. It also continued the construction of the Croatian Peljesac bridge, in spite of Bosnian claims that the bridge obstructs access to Neum, Bosnia and Herzegovina’s only seaport.[47]

In February 1999, China used its veto power in the UN Security Council, one of the first times it had done so, to veto the proposed extension of a UN preventive deployment force’s mandate in North Macedonia (then still known as the Former Yugoslav Republic of Macedonia),[48] which was seriously destabilised by the inflow of more than 300,000 refugees from Kosovo during the Kosovo War. The fact that North Macedonia maintained diplomatic relations with Taiwan, whose independence China opposes, was the likely reason for why the Chinese government used its veto. North Macedonia later declared the government of the People’s Republic of China (PRC) as the sole legal government of China, and relations were re-established.

While all countries in the Western Balkans region adhere to a One China policy by refraining from political interaction with Taiwan, the extent to which they support China on other issues, such as matters relating to Xinjiang, Hong Kong and the South China Sea, has remained limited. Serbian officials have supported China's position on Hong Kong, but have refrained from comments on the South China Sea issue, beyond calling for a peaceful settlement.[49] In Serbia, Marko Djuric, in his capacity as vice-president of the ruling Serbian Progressive Party, stated in an interview with China’s press agency Xinhua: ‘I can tell you that the level of protection of minority rights in Xinjiang is something that many countries in my part of the world could envy’.[50]

Milorad Dodik, the Serb member of the Presidency of Bosnia and Herzegovina, has expressed support for China over the issue of Hong Kong.[51] Montenegro's foreign ministry issued a statement on the ruling of the Permanent Court of Arbitration in The Hague on the dispute between China and the Philippines in the South China Sea, classifying the Philippines’ appeal as a unilateral measure and calling for dialogue instead.[52] Albania, Bosnia and Herzegovina, and North Macedonia have not issued any statements on these issues.

In 2019, a group of 22 states issued a joint letter to the UN Human Rights Council, condemning China’s mass detention of Uyghurs in Xinjiang. This was followed by a letter from a group of 55 states that backed the PRC’s policies in the Xinjiang region. None of the Western Balkans countries joined either letter, but a second letter from October 2019 supporting China was co-signed by Serbia.

The extent to which the WB6 have so far been willing to engage openly in political quid pro quos in return for Chinese economic or diplomatic support seems rather limited and there is no evidence of a diplomatic push from China in this regard. However, Serbia’s support to China on the Xinjiang case could form a precedent for increased quid pro quos from the region to China. The absence of critical voices from the region towards China does indicate, however, that the WB6 put their interests first when dealing with China and therefore remain wary about criticising it over human rights or other issues that the Chinese government regards as sensitive.

1.4 The security domain

Like in the economic and political domains, Serbia is the country with the most extensive cooperation with China in security-related sectors. These include police cooperation, military equipment purchases and certain telecommunications operations. A joint Sino–Serbian police exercise aimed at disabling terrorists and releasing hostages was held in late 2019 at a facility of the Zelezara Smederevo steel company.[53] From the Chinese side, the exercise involved 180 police officers, 20 vehicles and three helicopters. The rise of Chinese tourists in Serbia, which draws more Chinese tourists than the other Western Balkans countries, prompted the start of joint police patrols in the Serbia capital, Belgrade, in 2019.[54] Apart from Belgrade, Chinese police officers were also deployed to Novi Sad and Smederovo, according to the Serbian Minister of the Interior out of security considerations.[55] These deployments may be related to the prevalence of Chinese workers at major Chinese industry and infrastructure investments in those regions: the Zelezara Smederevo steel mill and the Budapest–Belgrade railway. Chinese police officers in the three Serbian cities number only six in total, with no power to arrest or to use coercive means. In recent years, the Chinese government also deployed police officers to cities in some other European countries, including Italy and France.

Serbia is the only country in Europe that has bought unmanned aerial vehicles (UAV) from China. It bought nine Chengdu Pterodactyl-1 drones in late 2019, with a possible future order of an additional fifteen UAVs.[56] These drones can be employed for reconnaissance tasks or be fitted with a variety of weapons, such as laser-guided bombs, air-to-surface anti-tank missiles and guided rockets.[57] Purchasing UAVs from China is attractive, as they cost less than half as much as American UAVs with similar capabilities.[58]

Beyond Serbia, the scope for security cooperation with China is limited, with Albania, Montenegro and North Macedonia being NATO members and Kosovo having no diplomatic ties with China. Cooperation with Chinese communications and technology company Huawei has so far remained limited to Serbia. While the government of Bosnia and Herzegovina signed a cooperation agreement with Huawei in 2018, no further cooperation followed.[59] In Albania, the main telecommunications provider chose Swedish company Ericsson as the sole supplier to modernise Albania’s core networks for the next five years.[60]

1.5 Conclusions

China’s main foreign policy objectives in the Western Balkans region may be summarised as: 1) to develop the Land–Sea Express Route, as a component of the Belt and Road Initiative, in order to strengthen the capacity of the port of Piraeus to act as a hub for EU–China trade; 2) to maintain and deepen diplomatic and economic relations with countries in the region, with Kosovo as an exception at the diplomatic level as it is not recognised by China, and with Serbia as China’s main regional partner. There is substantial differentiation among individual countries with regard to China’s engagement with the region. China has no collective approach to the five Western Balkans countries with which it maintains diplomatic relations. Instead, China deals with them on a bilateral basis and through the 17+1 mechanism (which has a much broader geographical coverage). China’s extensive relationship with Serbia corresponds with its approach in other regions. It frequently focuses attention on larger countries with which it has stable and collaborative relations over a long period of time. Serbia and, to a lesser extent, North Macedonia are also important to China’s largest strategic regional interest, the LSER, which connects the Chinese-run port of Piraeus to Central Europe and Germany. Other Chinese activities in the region, such as operating the Albanian national airport, building the Bar–Boljare motorway and other regional motorways, resource extraction and steel production can potentially contribute to the future development of the LSER. The recently announced establishment of direct rail transportation between China and Serbia, as well as Chinese activities in the logistical field in countries bordering the WB6 (such as port activities in Greece, Croatia and Slovenia), are also relevant to the further development of the LSER as a transport network that supports Chinese economic interests in the EU.

Throughout the Balkans, the economic activity for which China is most relevant as a complementary and potentially alternative actor to the EU is infrastructure financing. Although the number of actual instances where Chinese banks have provided financing for large-scale construction projects in the Western Balkans remains limited, China has demonstrated its ability to provide significant loans. The most politically salient instance of Chinese lending relates to the Bar–Boljare highway project in Montenegro, because of the ratio of the loan amount, which is large compared to the size of Montenegro’s economy. Significant instances of Chinese direct investment exist only in Serbia and (although not visible in official statistics) in Albania. Given the size of Serbia and Albania, the relative impact of Chinese FDI in Albania exceeds that of in Serbia.

The two main potential economic sources for Chinese political leverage over national governments in the Western Balkans are debt (in the case of Montenegro) and direct investment in oil production (Albania). It should also be noted that in the Albanian case, the investment was made by a private Chinese firm, Geo-Jade, without the apparent involvement of the Chinese government. While there is undoubtedly a degree of dependence of the Albanian government on Geo-Jade (as a major provider of tax revenue and foreign currency through oil exports), the reverse applies as well. For Geo-Jade, Albania is one of only two countries where its main oil extraction operations are located. Various international oil companies are active in Albania, including oil giant Royal Dutch Shell, which could potentially replace Geo-Jade if it withdraws. The possibility of China exercising political influence through its economic involvement appears to be relevant in the case of Montenegro (for example, by granting debt relief in return for political concessions), more so than in the Albanian case. Still, there are no signs so far that the Chinese government has attempted to use this leverage (or will ever do so) for political purposes in either country (both of which are NATO members).

China’s leverage in the region based on political or security ties is also limited. The main factor in this respect is Serbia’s need for Chinese support in the UN Security Council in order to prevent Kosovo from becoming a member of the United Nations. However, Serbia is not exclusively dependent on China, as Russia plays the same role, and here again there is no information available to suggest that this potential source of leverage has ever been put to use by China.

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