If Huawei and other Chinese tech firms have big plans for Serbia, it’s clearly not because of the size of the local market but because of its unique location, and role as a ‘test’ for the rest of the region.
We live in an age of US-China great power rivalry. At the moment, this rivalry is being manifested in the form of tech war. This new rivalry revolves around who controls global tech standards, and the fact that both powers want to be independent when it comes to the technology on which the global economy and defence systems will be based.
At the centre of this clash is the Chinese telecommunications company Huawei. In May 2019 US President Donald Trump’s administration imposed sanctions, banning US companies from selling technology to Huawei both because of its transactions with Iran and because its products can be used in espionage by the Chinese government.
Some limited reprieve on technology sales provides breathing space for Huawei and its US partners, but the sanctions are nevertheless causing harm to Huawei.
However, there is one place where China and Huawei have been performing well on the digital front, which is the Balkans, and its geographically most central country, Serbia.
When China established its “16+1” format as a cooperation forum between Beijing and the countries of Central and Eastern Europe in 2012, what was forgotten was that its purpose was not just to boost economic and infrastructural ties but also the technological and informational ties between the two sides.
There is a rationale for both sides to cooperate on the tech front. For Huawei and China, the wider Eastern European market is one of the markets where they can try to avoid a shortfall in revenues in light of the US sanctions. On the other hand, for the Balkan countries that are desperate to repair their backward physical infrastructure, the opportunities offered by China and Huawei might be too tempting to miss out.
However, market logic alone is not enough to explain this new dynamic. The Balkans, as a market, gathers only around 18 million people, which is not much for China. So, why Serbia and the Balkans? China has recognized that Serbia is the largest and strategically most consequential country in the Balkans. The practice and model that succeeds in Serbia has a good chance of directly or indirectly being adopted in the neighbouring countries. We are seeing a strong indication of this as Huawei plans to launch a digital transformation hub for the Western Balkans in Serbia, using the extant smart city projects in the country as benchmarks.
Moreover, the point of China’s Belt and Road Initiative, the BRI, is to connect China with a whole of Eurasian landmass, including with Europe, and promote itself as a rising great power with its own strategic vision, and its own set of standards, including in the technological domain.
In that vision, the Balkans are a very useful platform. Namely, the Balkans offer to the Chinese the asset of their geography, as the region lies at the crossroads between East and West, Europe and wider Eurasia, but also to the fact that most of the countries in the region are candidates for EU membership. For a China that wants to connect with Europe and its markets, the Balkans are a useful test, a pilot project on how far they can go in the wider European markets.
We have seen this pattern in several other industry sectors. In the construction sector, Chinese state-owned enterprises, SOEs, are using their Balkan project as a way to acquire references through which they can afterwards bid for EU tenders. By providing advanced defence systems to Serbia, such as drones, China’s defence industry tries to penetrate Europe. The technological domain is no different as Europe itself is not sure how to position itself in the tech rivalry between China and the US.
There are three types of risks associated with Chinese tech penetration of the region. First, there is a risk that increased technological capabilities will allow local authorities to intrude on the privacy of their citizens. Secondly, it is not clear whether this leaves local surveillance systems exposed to Chinese monitoring.
The third challenge, which might prove the decisive one, concerns US sanctions. If the tech war goes further, local countries could be faced with a wave of US financial sanctions due to their ties with Chinese tech companies. The media in Serbia have noted that although Dahua Technology is blacklisted by the US, the company is present in Serbia as its video surveillance products can be found at Belgrade airport.
All of this is happening as we are seeing this increased tech-related activity by China and Huawei throughout the region. In Albania in 2018, Huawei, assisted in upgrading Albania’s power transmission network, proving the further potential for cooperation. During the “16+1” summit in.
Source; BIRN
