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$3bn Economic Agreements Boost China’s Role in Serbia

September 18, 201813:35
Belgrade and Beijing agreed on a $3 billion package of economic investments and military purchases which will boost China’s growing influence in Serbia.
Serbian President Aleksandar Vucic and Chinese President Xi Jinping in Beijing in May 2017. Photo: EPA/WANG ZHAO/POOL

Serbian officials on Tuesday signed agreements with China worth $3 billion during a two-day visit to Beijing, which include Chinese economic investments and the purchase of new military equipment by Belgrade.

“The contracts we signed dramatically change the position of Serbia; we will be the port for Chinese investments throughout the region,” Serbian President Aleksandar Vucic said in Beijing.

Vucic, who made the trip to Beijing with several of his ministers, called the agreements “big injections into our economy”.

Serbian state news agency Tanjug reported that Chinese President Xi Jinping said during the meeting with Vucic on Tuesday that Serbia is a “good, honest friend, and good partner”.

“You are sincerely advocating long-term good relations with China, working in the long-term to improve our relations and our cooperation, and I really appreciate that,” Xi said. 

The signed agreements include one worth $900 million with the China’s Shandong Linglong Tire Co to build a factory in the northern Serbian city of Zrenjanin, and also with the Chinese company Zijin Mining Group which will, as a strategic partner, invest $1.46 billion in the Serbian RTB-Bor mines over the next six years.

Other agreements are related to infrastructure building, such as the construction of roads and bridges across Serbia, as well as the reconstruction of the country’s railways. 

Serbia also signed a deal with the Chinese company CRBC to build an industrial park near Belgrade, which will involve more than 1,000 Chinese companies, it was announced.

“It will be China’s largest industrial park in Europe,” Serbian Economy Minister Sinisa Mali said in a press release on Tuesday.

Serbian media also reported that during Vucic’s visit to China it was agreed that Serbia will buy six military drones from China’s Chengdu Aircraft Industry Group, of which two will be armed. 

Vucic said Serbia is also negotiating with one Chinese company that is interested in investing in the north of Kosovo. 

According to the Serbian Statistical Office, trade between Serbia and China has been growing. 

In the period from January-June 2017, there were $29.4 million of Serbian exports to China. This figure grew to $38.1 dollars in the same period this year. 

Imports from China grew even more. The total amount was $779.3 million in the first six months of 2017, which rose to $1,026 million in the same period this year. 

A report by the European Bank for Reconstruction and Development, EBRD, published in September 2017, claimed that there are “legitimate concerns” about the Chinese investments because Chinese companies serve as proxies for the Chinese state, and employ few locals, while infrastructure projects and lending agreements burden governments with large debt obligations.

In 2015, a BIRN investigation demonstrated how Energoprojekt Niskogradnja, the company tasked with building a section of the Chinese-funded Belgrade-Montenegro Corridor 11 route, quietly handed a $75 million contract to a consortium of three firms linked to Serbia’s ruling parties and which had little or no road-building experience.

The 2009 inter-state agreement between Serbia and China on the construction of Corridor 11 did not require public oversight or the publication of a tender in the appointment of subcontractors, a clause exploited by Energoprojekt Niskogradnja, according to documents obtained by BIRN.

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Maja Zivanovic