China

The Balkans are becoming China’s highway into Europe

BY Gabriel Gavin | tweet GabrielCSGavin   /  4 September 2020

China isn’t often credited with bringing countries together. But, in Croatia, that is exactly what is happening.

Since the breakup of Yugoslavia in the early nineties, the Balkan nation has been split in two, with its southmost territories separated from the mainland by Bosnia-Herzegovina. Whether by car or by train, it is impossible to travel from the capital, Zagreb, to the historic, cultural and tourist centre of Dubrovnik without a 20-minute detour out of the country – though not for much longer.

A new infrastructure project, currently being built by a Chinese company, the China Road and Bridge Corporation, is set to solve this political and geographical conundrum. Once completed, the Pelješac Bridge will stretch two and a half kilometres across the Adriatic Sea to link both parts of the country for the first time since it gained its independence.

For China, the bridge is an historic moment as well. It represents the first time a Chinese company has won a contract through a European Union tender process, a significant step forward for Xi Jinping’s goal of tying the continent into its global trade network. As China Road and Bridge Corporation work on tying the two parts of Croatia together, Beijing is betting that China’s own trade and political relations with the continent will grow closer as well.

Across Eastern Europe and the Balkans, Chinese state-owned businesses are the driving force behind similar projects in industry, infrastructure and energy. China General Nuclear Power, for example, has propelled itself into becoming a key competitor in the European market, vying for contracts to construct reactors across the region. Telecommunications has also been a major focus, with the implementation of new and upgraded networks across Southern Europe being backed by Chinese firms; they are filling a gap previously occupied by schemes and ventures led by the United States, the United Kingdom, and the EU.

China’s aims are clear from the colossal highway and railway building programmes in Bosnia, Serbia and Montenegro that are being delivered by Chinese companies. These link the Greek shipping port of Piraeus – currently leased by China – with wealthier economies in the north. This enables China to turn its foothold in the Mediterranean into a ladder, allowing for the transfer of Chinese goods, and Beijing’s geopolitical influence, throughout the Balkans and into the heart of Europe.

As well as being potentially profitable ventures in their own right, these projects are among the furthest reaches of Xi Jinping’s Belt and Road Initiative. China’s early-modern history was dominated by European trading enclaves which connected to vast global commercial networks. Now, it is China’s turn to shape the continent of Europe to deliver more favourable environments in which it can do business. By increasing Western dependence on Chinese goods and services, the hope is to turn Europe’s consumer base into an even more profitable export market.

A side effect of China’s involvement in infrastructure projects of national significance in the Balkans is that it builds a political bulwark on the continent. With state and ministerial visits, China has put a premium on closer relations with countries like Albania, Serbia, Montenegro and Croatia, which can sometimes feel neglected by the West. At the same time, the presence of Chinese companies, along with an influx of investment and Chinese-backed loans to fund infrastructure projects makes China a valuable – even necessary – ally.

This means that, while the US and UK scramble to build a coalition against China’s interests, they will have a hard time finding willing participants in the Balkans.

In Western European countries, the COVID-19 pandemic has led to a rise in anti-Chinese political sentiment. But it has also led to a new and more positive era of Sino-Balkan relations. Much-publicised donations of Chinese medical supplies have played a significant role in pandemic responses in nations like Albania, where healthcare systems were otherwise unprepared for outbreaks.

But the pandemic has offered China more than just opportunities for good PR. A recent report by the European External Action Service found that the idea that the EU had “turned its back” on its southern neighbours was taking hold in many parts of the region. This narrative was fuelled further by the contrasting responses of Brussels and Beijing: while China flew in personal protective equipment for healthcare workers, the EU restricted its export outside of member states.

There is no clearer indication of the effect this has had than in the words of Serbian President Aleksandar Vučić, who announced a state of emergency saying: “European solidarity does not exist. That was a fairy tale on paper. I have sent a special letter to the only ones who can help, and that is China.”

China’s growing role in the Balkan region isn’t entirely unexpected. Even the most ardent supporters of US influence across the globe agree that successive American administrations have overlooked and underestimated the importance of South-Eastern Europe.

The end of the 20th century saw the region, and communist Yugoslavia, turn away from Eastern influence and – in name and form at least, if not always in practice – embrace liberal democratic models. But the start of the 21st century has seen many of those countries stagnate, with living standards rising more slowly than their northern neighbours. It is no wonder then that a number of these countries have looked for economic and political support from elsewhere, turning once again away from the West.

That influence won’t just stop in the Balkans, however. South-Central European nations will also increasingly feel the benefit of access to the trade networks that the Belt and Road Initiative sets out to strengthen. For example, in Austria, trade with China has become more and more valuable, jumping by more than 15 per cent each year to be worth nearly $10 billion USD. With Chinese State-owned enterprises showing that they can be competitive in EU tenders in the south, it might not be long before many member states rely on Chinese-built infrastructure in fundamental markets.

Now that this gateway to Europe has opened in the Balkans, it will enable Beijing to focus on relationships with thornier potential partners. Germany, for example, has sought to rely less on economic exchange with China where possible. Earlier this year, China dropped out of the top three foreign investors in their economy. In many cases, such as with the UK, suspicion and political disagreement are driving a reluctance to welcome closer business ties.

However, as China’s investments extend upwards from southern Europe, it is unclear how long the resistance to Beijing’s growing economic influence can hold out elsewhere. The Balkans could only be the testing ground for China’s expanding soft and hard power throughout the continent.

Gabriel Gavin is a London-based policy consultant and an analyst of Eurasian politics.


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