China accounts for a relatively small share of outside investment in the western Balkans compared to the European Union, but observers say there is growing concern about the scope of Chinese influence tied to the billions of dollars Beijing has invested in the region since 2005.
Others, however, say China's regional influence is overblown.
The financial estimates vary. The London-based International Institute for Strategic Studies says China on average has invested roughly $1 billion in the region annually since 2011, while The American Enterprise Institute estimates roughly the same amount annually since 2005. The Washington-based Center for Strategic and International Studies put the figure at closer to $1.8 annually since 2012.
Experts agree, however, that about 80% of Chinese western Balkan investment, including projects in Albania, Bosnia and Herzegovina, Kosovo, Montenegro, and North Macedonia, goes to Serbia.
While China accounts for an estimated 1% of annual foreign investment in Serbia, dwarfed by the EU's 70%, a June 2020 poll by the International Republican Institute showed that 71% of Serbians identified China among the region's important economic partners.
Regional experts concerned
At a recent Belgrade conference on Chinese influence in the region, some experts said public opinion favoring Beijing's investments over those from Western Europe are skewed by a politicized narrative.
"A good part of the pro-Chinese narrative comes from the Serbian political elites and the media, which are under the direct or indirect control of the Serbian elite," said Vuk Vuksanović, an expert on China, the EU and the western Balkans at the Belgrade Center for Security Policy. "So, in that respect, China did not have an excessive campaign to shape its image in Serbia, for the simple reason that it did not have to. China has the Serbian government [do] all that for her, and, realistically, the perception of China is positive in Serbian public opinion."
Stefan Vladisavljev of the Belgrade Fund for Political Excellence said some regional lawmakers and officials prefer Chinese investments because Beijing requires fewer obligations from regional officials and actors on the ground.
"When [China] approaches countries — these are usually developing countries — [China] offers infrastructure projects that are often agreed [upon in] some non-transparent [way] … they come without many conditions, and that is attractive," said Vladisavljev, referring to EU investment guidelines that require regional governments and businesses to prove they're in compliance with EU standards.
"If someone does not politically pressure you … to undergo certain reforms, [to show] respect for competition or rule of law, you will be very happy to implement such projects," Vladisavljev said.
Officials at the Chinese embassy in Belgrade did not respond to multiple requests for comment.
In 20 years, Vladisavljev added, Serbia is projected to hold more than $7.9 billion in Chinese loans. Before accruing any additional debt from Beijing, he said, Serbia should ensure safeguards are in place for Serbian laborers, pointing to allegations of exploitative labor practices at China's Shandong Linglong Tire Co. in Zrenjanin — less than an hour's drive from Belgrade — where Vietnamese migrant workers have gone unpaid, living in unheated barracks.
"Now we are talking about the workers' rights of the Vietnamese, and tomorrow maybe our own Serbian workers," Vladisavljev said.
Linglong did not respond to multiple requests for commentary on accusations of poor labor practices, nor did officials at the Chinese embassy in Belgrade.
Serb leaders such as Prime Minister Ana Brnabic have played down the tire factory exposé, claiming the bad press coverage was organized "by those against Chinese investments" in Serbia, alluding to frequent criticism from the West that Chinese projects there are bureaucratically opaque, ecologically questionable and designed to bolster Beijing's political influence in Europe.
"At the beginning, it was the environment. Now … they focus on workers there. After tomorrow there will be something else," she said in news reports.
Serbian President Aleksandar Vucic said a Serbian labor inspector has been sent to the Zrenjanin site but was blunt about expected findings.
"What do they want? Do they want us to destroy a $900 million investment?" Vucic asked, largely echoing advocates for Chinese investment who say it stabilizes the region through job creation.
Until recently, the Western response to Chinese influence in the region was minimal. EU officials only recently branded investments in the western Balkans, such as the newly unveiled $46 billion earmarked for regionally targeted technology and infrastructure spending, as a key part of the West's response to China's Belt and Road Initiative.
But Igor Novakovic of the Belgrade-based International and Security Affairs Centre said EU funding is often more difficult to secure than Chinese investments.
"With [long-established Serbian-Chinese] cooperation, money was quickly obtained and the work was carried out quickly, but the question of the price and the negative aspect for the environment remain," he told VOA. "Cooperation with the EU is slow, but thorough."
Economic consultant Jens Bastian said China often seizes on public infrastructure projects rejected or unrealized by EU players.
"China is [compelled] to come to southeast Europe and invest because others have not done so," Bastian told VOA. "Beijing is strategically determined to stay in the region for a long time."
Montenegrin financial consultant Miloš Vuković said the havoc wrought on Podgorica's public finances caused by a Belt-and-Road loan — a $1 billion highway project that went to bid without tender and pushed the national debt higher than GDP — should serve as a stark warning to neighboring countries vulnerable to China's so-called debt-trap diplomacy.
If Montenegro defaults, Vuković said, public assets such as the nation's electrical grid or industrial ports could become collateral for Chinese debts.
"Later, if we can't pay ... they can say, 'We will take the state electricity [and] invest in renewable energy sources,'" he told VOA. "So, they replace the unprofitable project for them with a profitable project — and we know that energy is the future, especially renewables."
University of Belgrade economist Ivan Vujacic, Serbia's ambassador to the U.S. from 2002 to 2009, said regional corruption, specifically local political elites who deliberately misrepresent Chinese loans as investments, is partially to blame for China-funded projects that put state assets, workers' rights or the environment at risk.
"I assume that for the investments [that China has] calculated, it pays off for them and … they are on the way to achieving a [profitable] result," said Vujacic, referring to China's 2018 acquisition of a debt-saddled copper mine in Bor.
"As for Serbia, I assume and I hope that the feasibility studies have been done properly and that they will give results," he said. "But we do not have a guarantee for that."
This story originated in VOA's Serbian Service.