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Home/News/The Belt and Road Initiative brings both investments and risks

The Belt and Road Initiative brings both investments and risks

China’s Belt and Road Initiative can facilitate the implementation of major infrastructure projects in European countries and link the economies of the Western Balkans. However, governments in the region and the EU should be cautious and have a balanced approach, Belgrade Security Forum said.

In a panel on China’s Belt and Road Initiative – European Perspectives, Central European University’s Center for European Neighborhood Studies (CENS) researcher Hana Semanic indicated that China has no doubt made its presence deeper into the region and plans to stay there longer.

She said that China is investing heavily in the Western Balkan countries that have not yet become EU members, most notably in infrastructure, telecommunications, IT and other areas, and that they are particularly focused on large infrastructure projects.

“Citizens are highly divided on this issue, whether it is good or not. It also raises the question of whether it will be good for the regional countries in the long run,” Semanic said.

She said China’s large investments in Montenegro could be bad for the country, given how much it has borrowed to build the highway, and that the public is not sufficiently aware of the possible consequences.

As she said, China is here to offer something on their terms and is not here for altruism but for its interests and needs.

“On the other hand, you have authorities in Montenegro who say that this will be a successful project and that this is what the country need,” Semanic said, warning that it could still be a “debt trap” for Montenegro.

The same goes in the case of B&H, which will build a thermal power plant in Tuzla with the Chinese, and for which it has borrowed a lot, Semanic said, adding that neither Montenegro nor B&H have many independent media that could warn about the risks.

She emphasized that Chinese investments can help regional countries to realize projects, but that a balanced approach by regional governments to these investments is needed.

“They didn’t come here because it was very nice for them, but to make money”

New Silk Road researcher from the United Kingdom Jacob Mardel said that Chinese investments and interest in Serbia are probably a bigger problem than anywhere, and that it is precisely Chinese investments in Serbia that are of most concern in Europe.

He says Serbia is a good place for Chinese investments as it invests in infrastructure development, while China has large funds to invest.

As he said, this initiative can bring benefits to the countries, but also some bad things, because European project implementation regulations are not respected.

“Also, China’s political influence on a regional country is growing. The Chinese did not come here because it was very nice for them, but to make money,” Mardel said.

He said that when it comes to Serbia, there is a friendship between the two peoples, but also strong ties between Belgrade and Beijing.

He reminded that the Chinese company CRBC has a lot of experience in Serbia and Montenegro and that it will apply this experience in Croatia where it will build the Pelješac Bridge and added that the project will also be financed by EU funds.

“CRBC has a much higher turnover than Montenegro’s GDP, so it is difficult for them to negotiate with that company, while Serbia, on the other hand, has a much better situation and institutional capacity to negotiate and implement projects with China,” Mardel added.

“Fear of China is overrated”

Researcher at the Polish Academy of Sciences, Anastas Vangeli, believes that the Belt and Road Initiative is accelerating China’s growth process.

“It is a broad vision of connecting the regional economies. One of the key ideas in this process is that if you build the path, you will develop both the economy and the investments,” Vangeli said.

He explains that it is about advancing the integration of local economies because, as he states, Chinese politicians really believe in the concept of interdependence.

“But it is a discourse that is really challenging. The fear of China is overrated, because we already have competitions in Europe at multiple levels, both within the European market and economic competition between the EU and China,” Vangeli said.

In this regard, Vangeli points out, it is difficult for Europeans to speak with one voice because there are different national economic interests, which in this case is not related to China’s economic interests.

“The Belt and Road Initiative, however, is not the main and only option in Europe. China needs to expand its market not only to work with the US, but also with Europe, the rest of Asia and Latin America,” Vangeli explains.

However, he also added that reaching a trade agreement between the US and China would not be favorable for Europe, because, he says, if China agrees to large US imports or large exports to the US this will diminish its interest in expanding into the European market.

He says launching the 17 + 1 initiative is just a two-speed depiction of reality in Europe.

In fact, part of this initiative are European countries that have a lower intensity of economic relations with China, because, for the most part, Western European countries have 80 percent of economic relations with China, Vangeli noted.

“Hungary may be the most pro-Chinese country”

The head of the Research Group on Economic Development and Regional Studies at the Hungarian Academy of Sciences, Agnes Szunoma, estimated that European countries did not have the same approach to the Belt and Road Initiative.

She also says that Hungary is perhaps the most pro-Chinese country in the Visegrad Group.

“We are indeed connected with China both politically and economically. On the other hand, within the Visegrad Group, Slovakia is least connected to Beijing, given that there are no major Chinese investments in that country, and they are the most restrained in this regard.” Szunoma explains.

When asked about a message she would send to countries in the Western Balkans region based on Hungary’s experience of co-operation with China, Szunoma said that the Western Balkans states must be patient.

“You need to know Chinese business philosophy, because if you don’t know it, it will be hard for you to work with them. The authorities in the Western Balkans should be patient as the Chinese think long-term about their investments, not just five or four years ahead,” Szunoma stresses.

She also added that it is not easy to negotiate with China for a small Western Balkan country.