GeoPrism

Over the past decade, Chinese investment and trade in the Balkan region of Europe has sharply increased, facilitating the construction of over a hundred major projects totalling tens of billions of Euros. This investment is part of China’s Belt and Road Initiative, which seeks to expand China’s economic and strategic influence by financing and building infrastructure that connects China to key markets across the World. Many Balkan countries have been keen to accept Chinese projects to fill longstanding gaps in infrastructure and access sources of financing that are often unavailable through EU mechanisms, and the unique political, geographic and economic conditions of the region make it an attractive place for China to invest.

For centuries the Balkan region has been a strategic location connecting Europe to Asia and lies along long established trade routes, offering proximity to EU markets for Chinese goods. Chinese state owned company COSCO bought a controlling share (67%) of the Greek port of Piraeus in 2016, and since then it has become the primary port of entry for Chinese goods entering Europe, which then travel through the Balkans and across Europe. This process has been aided by the construction of highways and railways from Greece to Central Europe by Chinese companies.

Although the EU remains the largest trading partner of the Balkans, China is now its second largest, and continues to expand its economic footprint in the region. As a share of the region’s GDP, Chinese foreign direct investment (FDI) jumped from just 0.2 to 4.2% from 2015 to 2024, while EU FDI has gradually declined. The vast majority of Chinese investment and trade among Balkan countries has been with Serbia, which has had historically close ties with China and the two countries signed a Strategic Partnership in 2009.

Ties between the two countries date back to the Cold War Era in which Yugoslavia, which Serbia emerged from in the 1990s, established relations with China. Yugoslavia and China in this period were both non-aligned socialist states outside the main power blocs of NATO and the USSR, and relations gradually grew from the 1970s onwards. Later on during the Kosovo War, China opposed NATO air strikes on Serbia, with leader Xi Jinping stating in 2024 that “The friendship between China and Serbia” is “soaked in blood that the two peoples spilled together” which will “encourage both parties to make together huge steps forward”.

Serbia also diverged from most European countries in using Chinese CoronaVac vaccines during the COVID pandemic, and has supported China at the UN on issues such as its policies in Xinjiang and its National Security Law for Hong Kong. Additionally, in 2019 Serbia purchased FK-3 air defence systems from China, which led the US to warn that striking deals with Beijing may put its proclaimed objective of becoming an EU member at risk.

Serbia’s willingness to enhance trade and investment with China is also likely motivated by slow and uncertain accession negotiations with the EU. While Serbia has been an EU candidate country since 2012, negotiations have stalled. The EU has made normalisation with Kosovo, a former region of Serbia which declared independence in 2008, a condition for Serbia’s membership, while Serbia refuses to recognise Kosovo as an independent state. Additionally, the EU has raised persistent concerns over rule of law issues and democratic standards in Serbia, and has condemned Serbia’s refusal to sanction Russia after its invasion of Ukraine in 2022.

Serbia has still benefitted from billions of Euros in pre-accession funds from the EU since 2007, providing grants to aid areas such transport and energy infrastructure as well as environmental protections. Despite this, Serbia has still shown willingness to accept funding from Beijing to continue development in areas where this aid has not been sufficient. Public perceptions of the EU in the country are mixed, with much of the population still keen to maintain good relations with countries such as Russia and China, in part due to their support of Serbia’s position on Kosovo. Polling from March 2025 suggests that only 39% of voters would support joining the EU if a referendum were to take place.

While Chinese projects in the Balkans have been welcomed with open arms by many Balkan countries, there have also been concerns about the conditionalities of these projects. Unlike EU grants, many of the deals China has struck with countries in the region have come in the form of loans and concessional lending to Chinese banks. For example, the Bar-Boljare Highway in Montenegro was financed with a $1 Billion loan to China’s Exim-Bank in 2021, straining government finances to the point where further loans and grants from the EU were needed to restructure the debt and ensure the highway’s completion. There have also been concerns over a lack of transparency in the deals countries in the region are signing with China, potentially opening them up to corruption and worker exploitation.

Thus far, the EU has not yet developed a “China conditionality” – an implementation of conditions or expectations they have for EU candidate countries making deals with China, instead often providing vague condemnations or warnings about such agreements. Until such a policy is constructed, these countries will likely continue to deepen economic ties with China, and potentially lead to greater political alignment with Beijing.