When pollsters asked Serbs to name the countries most friendly toward Serbia, the top three were Russia, Greece – staunch friends since the end of Yugoslavia both – and China. China? True, the Chinese were among Serbia’s loudest supporters during the Milosevic period and like Russia and Greece have not recognized Kosovo’s independence. But could China’s increasing economic presence in Serbia have something to do with it?

Is China’s growing economic clout across Southeastern Europe (leaving aside the rest of the continent) something to arouse concern? Two reports I’ve read recently go into these questions, asking how the presence of this rising economic force, eager for new export markets and new sources of the raw materials its manufacturers need, will transform a market where the United States is an ever-less dominant player.

The author of one report says there are reasons for concern. As the Balkan countries increasingly look to China to invest in much-needed infrastructure projects, shopping centers, etc., a situation could develop where Beijing “can directly influence state policies in Southeastern Europe,” the report for the Washington-based Center for Strategic and International Studies warns. Authored by Loïc Poulain, a research intern at the center, the report notes that China still lacks close ties to regional countries beyond Greece and Serbia, but foresees the possibility of a “regionwide movement appealing for deeper economic and political cooperation” with China that could “create a relation of dependency with countries expected to join the EU within the next 10 to 15 years.” That seems to overstate things a bit – unless, as seems far from unlikely, EU membership becomes an ever-more distant dream for countries like Albania, Bosnia, and Macedonia.

The fact is, however, that China has been seeking new investments in the region, especially in Serbia, Romania, and Bulgaria. Here are some of its recent ventures:

Great Wall Motors plans to open a Bulgarian plant this month, Europe’s first assembly plant for Chinese cars, such as the Voleex pictured above. (Where do they come up with these names?)

Guangdong Nuclear Power Group said in October it might enter a project to build two new reactors at the Cernavoda nuclear power plant in Romania.

China National Nuclear Corporation last year was reported to be interested in helping build a new unit at Bulgaria’s Kozloduy nuclear plant.

A consortium of Chinese companies signed an agreement with Serbia’s EPS power utility for a package of investments worth more than 2 billion euros.

A Chinese company is building a 1,500-meter bridge over the Danube near Belgrade. One story says the bridge will be called “Friendship Bridge,” another refers to it as “China Bridge.”

The Chinese may have in mind that bridges can have great symbolic significance. Recall NATO’s destruction of most of Serbia’s Danube bridges, as “military” targets, during the Kosovo war.

A bit closer to the EU heartland, Hungary has also been angling for Chinese trade and investment, as a policy brief from the European Council on Foreign Relations points out. As Europe continues to reel from the effects of the financial crisis and recession, and number highly indebted countries in the south are “increasingly desperate for Chinese investment,” argues the report with a telling title, “The Scramble for Europe.” “[T]he need for cash now takes precedence over their concern for their labour-intensive industries,” it goes on. “Meanwhile, Central and Eastern European member states such as Bulgaria and Hungary, which were already vying for Chinese investment, are now seeing European flows of investment drying up and are thus increasingly dependent on China.”

For an instance of how keen Hungary is to attract Chinese investment, take a look at the fascinating remarks the country’s conservative-statist premier Viktor Orban delivered at a June economic forum in Budapest. Orban practically kowtowed to the Chinese guests of honor. (Switch to the English version and scroll down to 27 June.) Careful to give the communist-statist country its full name, Orban praised the People’s Republic as first among the world’s economic champions of today. Why? Because China has stayed loyal to “a few principles, which we here in the West have turned our backs on in recent times.” For instance, the principle that “we cannot continuously consume more than what we produce. Or that the basic building block of the economy is value created by work.” The West once knew this but has forgotten. “It is enough to recall that the words ‘sin’ and ‘debt’ in the original text of the Lord’s Prayer were still synonymous with each other.” An odd way to praise the delegation from an officially atheist country, but there you go.

The ECFR report is not immune from the kinds of stark warnings Poulain delivers. Beijing has concentrated its efforts in Europe on the debt-strapped southern EU countries and the even poorer EU aspirants in the Balkans: “From a European perspective, it may seem as if the Chinese are exploiting Europe’s soft underbelly. The danger for Europe is that there will be a kind of ‘China lobby’ of smaller member states within the EU,” the authors say.

All this needs to be kept in perspective. Chinese investment and trade in Southeastern Europe is well below its levels of involvement in Western Europe. As Poulain notes, China’s bilateral trade in 2010 with Romania and Bulgaria together, with a combined population of 30 million, amounted to some 3.2 billion euros, while 7-million-person Austria registered 8.2 billion euros in two-way trade with China.

And the fact is that countries outside the EU, like Serbia, and some inside the union, need more investment in infrastructure than the EU can provide. Is it any wonder they are looking to China?

Ky Krauthamer

Ky Krauthamer is a senior editor at Transitions Online. Email: ky.krauthamer@tol.org

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