Interview and commentary by Marco Uncini and Andrea Bogoni.
A phenomenon that illustrates the grasp of China’s ‘Belt and Road Initiative’ (BRI) in the region is the fact that Serbia has become one of the primary receivers of Chinese investments in the Balkans over the course of the past years. Large-scale infrastructure projects, such as the development of highways, trains, and power plants, would not have been possible without the collaboration between Beijing and Belgrade. “Some examples are the Smederevo steelworks, a company that offers many jobs, has always been a mainstay of the country in terms of industrial production and offers investment opportunities to the Chinese and, of course, jobs for Serbia as a welcoming country. Another interesting example is the production of tyres in Zrenjanin, where Linglong has opened its own company” says Giorgio Fruscione, ISPI analyst for the Balkans, with whom we discussed the subject.
1. China’s gateway to the Balkans
Because Serbia is able to access the European market without being required to accept all of the restrictions that are imposed by the European Union, the country has become an excellent destination for Chinese businesses that are trying to expand their operations. Chinese businesses have contributed to the modernisation of Serbia’s infrastructure by offering funding at attractive interest rates. These companies have also brought short-term advantages in the form of economic growth and the creation of new job opportunities.
On the other hand, China is experiencing a very high amount of debt that is significantly increasing at an exponential rate: “since investments started arriving from China in Serbia, at the end of 2009-2010, the debt has increased more than tenfold. So, I believe that the debt to China makes Serbia particularly dependent on Beijing, especially because China has a recent history of what is called a ‘debt trap’, whereby in the event of default on a specific project or in a specific context, Beijing can take possession of portions of sovereignty of the territory concerned. So, in this case there is a geo-economic and geopolitical dependency” Fruscione emphasises.
There is a delicate geopolitical framework in which the European Union and the United States are watching Beijing’s expansion in the Balkans, a crucial region for Europe, with anxiety. The influence of China in Serbia is a part of this setting.
“The main and most important impact of Chinese influence is certainly the simultaneous one; therefore, as Chinese influence grows in Serbia and in the region, there is a simultaneous move away from European Union standards. Let me give you a few examples. The Linglong factory I mentioned earlier, where according to several journalistic investigations many workers who worked there did not enjoy basic rights, some of them had even had their passports and documents seized, and they lived, in fact, in conditions of slavery. Factories where journalists cannot enter to do their simple job. In Smederevo, the Chinese presence, and therefore the Smederevo steelworks, have led to an increase in the incidence of tumours in the local population due to the fact that the fine particles released by the factory are the externalisation of a factory that does not respect European standards on environmental protection, which Serbia should have been respecting for about ten years, that is, since it became a candidate country for the European Union.” Says Fruscione
2. The good and bad of the Belgrade-Beijing partnership
Serbia, while maintaining an historical alignment with Russia, is now balancing its position between East and West, trying to obtain maximum benefits from its relations with China without compromising its prospects of joining the EU.
Indeed, according to Fruscione, “the impact of Chinese influence in the Balkan region is both a distancing from the European standards to which the countries have committed themselves, being all candidate countries for entry into the European Union, and an increase in geopolitical penetration in the contexts concerned through the aforementioned «debt trap».”
China’s attempt to penetrate the Balkans, on the other hand, has not been without debate. Among European allies and the United States, there have been concerns regarding the transparency of the projects, the conditions of the loans, and the potential loss of sovereignty, as well as the risk that the influence of China could generally harm the stability of the region. As an illustration, consider the recent demonstrations that took place in Serbia: “It all started with the collapse of a railway station roof in Novi Sad, which is part of the Beijing-funded Belgrade-Budapest high-speed railway. The railway station had been renovated by the Chinese consortium CRIC-CCCC (China Railway International Co. Ltd and China Communications Construction Company Ltd” explains Fruscione. “Clearly we don’t have the evidence to say that the Chinese consortium is to blame for the collapse of the roof, but we are free to say that the renovation work was most likely not carried out in a transparent manner, thus not guaranteeing that the public contract was awarded in the most correct way possible.”
Citizens have developed a sense of injustice as a result of the effects of economic challenges, which have been exacerbated by corruption and unemployment. As a result, demonstrations have also evolved into a method of expressing opposition to the involvement of outside powers, particularly China, in the internal affairs of the nation. The Novi Sad incident “casts a shadow over the relationship between Serbia and China, raising some doubts about the types of projects and how they are carried out. It would be wrong or in any case premature to say that China is to blame for the collapse of that canopy. The way in which Serbia carries out public projects, including bilateral relations with China, is to blame for the collapse of that canopy; therefore, corruption and the lack of transparency with which public works are carried out by the Serbian authorities, including the commercial partnership with China, are certainly to blame” Fruscione points out.
Not only do these demonstrations represent the frustration that exists within Belgrade, but they also show the difficulty that Belgrade is having in striking a balance between its European goals and its growing connections with China, which is prompting Western democracies to be concerned. The demonstrations are a clear indication that Serbia is at a turning point, where the government will be required to respond to the calls for greater democratic engagement, transparency, and social justice without losing its geopolitical position. This is a situation that has been brought about by the circumstances.
3. Chinese competition with Rome and the regional role of Italy
In this complex context, Italy maintains a significant presence in the Serbian geopolitical landscape. “In Serbia there are about 800 companies with Italian capital or participation; therefore, there are jobs in various sectors” shows Fruscione.
Piazza Italia store in Novi Sad
With Russia’s presence in the Balkans remaining stable and China’s influence having diminished – though still holding onto specific relationships and key projects – Italy finds itself in a shifting geopolitical landscape. Traditionally one of Serbia’s most significant European commercial partners, Italy now has the opportunity to reinforce its strategic position in the region. Having aligned itself with the United States in opposing both Chinese and Russian influence, Italy is well-placed to emerge as a fourth actor alongside the European Union, particularly shaping developments in Serbia through its historical ties and economic engagement.
In fact, from a business perspective, Italy remains one of the most important export markets for Serbia. Trade with Italy encompasses a wide range of industries, including mechanical engineering, the food sector, design, and fashion, among others. Italian businesses have a strong presence in Serbia, as was previously indicated, and they have made several investments in a variety of industries, including automobiles, infrastructure, and consumer products manufacturing. This relation is particularly stable “because (something that doesn’t happen with China) many Italian companies and companies from other European Union countries decide to transfer parts of their production units, or in any case open factories, on site, such as Fiat in Kragujevac. In fact, this increases both imports and exports between the two countries, because the parent factory is created in Italy and the subsidiary, so to speak, in Serbia, and this contributes to creating the commercial relationship between the two countries” explains Fruscione. What distinguishes the Italian approach from the Chinese one, in fact, is the quality and specialisation of its investments – which also contribute to knowledge transfer, in contrast to the scope of the Chinese ones.
“Having said that, Italy also has another role and it’s an important diplomatic role on two fronts: the first is to lead the process of enlargement of the European Union among member countries. Italy promotes this objective within the European Union and leads those countries among the 27 that support the relaunch of enlargement, unlike other member countries that instead consider this process as something secondary to the Union’s priorities: this is certainly of key importance for our country’s foreign policy” points out Fruscione.
The diminishing influence of China and Russia in the Balkans presents Italy, as a member of both the EU and NATO, with an opportunity to contribute to regional stability and foster sustainable development. Italy should play a leading role in promoting the establishment of regulatory standards – covering environmental protection, labour rights, transparency, and anti-corruption measures – while also supporting its businesses to effectively compete with Chinese counterparts.
However, as the experience with China demonstrates, economic engagement alone is insufficient to secure a stable and lasting presence. Rome must renew its broader role in the region, leveraging not only economic but also diplomatic and security channels. Italy’s strong commitment to regional stability is evident through its leadership in the KFOR peacekeeping mission in Kosovo, where it has historically held command and resumed leadership in October 2024 following a Turkish parenthesis. This renewed leadership underscores Italy’s potential to assert itself as a key stabilising force in the Balkans.
“The second front on which this government in particular is moving a lot is diplomacy in crisis contexts and in the process of stabilising the Balkan region, first and foremost with regard to the Kosovo dossier; in recent years Kosovo and Serbia have returned to very high levels of tension and our country, both at the level of bilateral diplomacy and through collective platforms such as the Quint, has tried to offer mediation or dialogue with the parties to resolve the various crises and offer ad hoc solutions” continues Fruscione.
4. Conclusion
Serbia is currently at a crucial crossroads, where it must navigate the delicate balance between its aspirations for membership in the European Union and the strengthening of its connections with China. The rise in the number of demonstrations that have taken place within Serbia is illustrative of the growing dissatisfaction inside the country as well as the requirement for increased accountability, transparency, and social fairness in response to the presence of foreign nations. At the same time, Italy’s role as a crucial partner in Serbia’s development, both economically and politically, emphasises the need of preserving strategic partnerships with the EU. The ability of Serbia to successfully manage these intricate ties while simultaneously protecting its long-term interests will ultimately determine the course that Serbia’s geopolitical trajectory will take in the future.
