Chinese construction projects in the Balkans: a baseline study
“The STSM was an enriching and productive opportunity to conduct fieldwork and collect data, as well as network and exchange knowledge with academics and practitioners in Belgrade, as well as the wider region. I completed the STSM in the autumn of 2020, at a time when fieldwork was particularly challenging given the COVID-19 situation. I was therefore fortunate to be granted the opportunity to do in-person site visits, which yielded otherwise inaccessible insights regarding how local, on-the-ground, political and social dynamics impact the developmental footprint of Chinese construction projects in the Balkans.”
Chinese financing and construction of infrastructure projects has become a major component of inter-Sino-Balkan linkages. The focus of the STSM was to provide an on-the-ground firm-centred perspective of ongoing Chinese construction projects and their developmental footprint in the Western Balkans. The outcomes of the STSM, compiled over a six-week period at the Belgrade Institute of Economic Sciences in Belgrade, Serbia, was a baseline survey of 24 active projects as of October 2020, including their estimated value, financing, sub-contracting arrangements and timeline for completion. In addition, six site visits, yielding three illustrative case studies of a rail, highway and coal-fired power plant were conducted in Serbia, which reveals the embeddedness of these projects within the political, economic and legal context of the host state. I found that Chinese firms face a number of constraints that limits the commercial viability of these projects including the presence of other foreign market players in the infrastructural sector, institutional and infrastructural capacity that is a legacy of socialist Yugoslavia and the application of EU frameworks and standards on construction that are linked to the accession process. At the same time, the Western Balkans is a springboard for Chinese state-owned construction firms to learn from and ultimately compete with European firms. While these projects meet the demand for infrastructure and mobilise economic development in the region, there are three principle issues that impact the long-term sustainability of these projects. First, there are limited fiscal transfers to the host state. Second, there are capacity constraints in mitigating their environmental and social impacts, as well as the effective application and administration of local and Chinese labour participation. Third, the slowdown of governance reform and accelerated processes of democratic backsliding that are a result of legislative reforms intended to expedite project implementation.
Imogen T. Liu is a PhD Candidate at Maastricht University where she works on the ERC project SWFsEUROPE. Her research interests cover subjects including state capital, sovereign wealth funds, foreign investment and the political economy of China and the focus of her dissertation is the transnationalization of Chinese state capital in Europe. Her research has taken her on fieldwork to Hong Kong and Beijing, where she was a visiting fellow at the National Academy of Development and Strategy, Renmin University of China.