China is rapidly expanding its presence in the Western Balkans through infrastructure loans and economic partnerships, challenging the European Union’s longstanding position as the region’s dominant financial partner, Austria’s Die Presse reported on Tuesday.
Although the EU remains the largest single provider of financial aid and investment in the six Western Balkan states — Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia — China has made significant inroads, particularly through its Belt and Road Initiative (BRI). The BRI, Beijing’s flagship global infrastructure strategy, has found a receptive audience among governments in the region seeking fast financing with fewer political and bureaucratic constraints.
According to a recent study by the Vienna Institute for International Economic Studies (WIIW), Chinese investments and credit lines have grown substantially in recent years, with Serbia emerging as the primary recipient. In fact, China has already overtaken the EU as Serbia’s largest bilateral creditor, the report said.
“China is catching up fast,” said Branimir Jovanovic, an economist at WIIW and the lead author of the study. “The EU is still the most important creditor in the region, but its lead is shrinking.”
Between 2008 and 2023, the EU provided roughly 25 billion euros in loans for infrastructure and development projects across the Western Balkans, sourced from European financial institutions and private investors. In comparison, China pledged around 17 billion euros through the BRI over the same period. While the EU has also supplied approximately 13 billion euros in grants since 2007, China’s support has consisted almost entirely of loans — with just 350 million euros in grants between 2000 and 2021, according to WIIW data.
Jovanovic noted that while most regional governments would prefer borrowing from European institutions, Chinese loans are often the more attractive option due to their speed, flexibility, and limited conditionality. “It’s not fair to blame governments in the region for working with China,” he told Die Presse. “They need capital to modernize their infrastructure and stimulate development.”
However, China’s growing presence is not without geopolitical and economic implications. Beijing typically insists that infrastructure projects be implemented by Chinese companies and built with Chinese labor, raising concerns about labor practices, transparency, and environmental standards.
Jovanovic warned of potential side effects, including corruption, poor-quality construction, and violations of workers’ rights and environmental regulations. “There is a price for speed and simplicity,” he said.
Moreover, while the EU’s financial involvement in the region is more comprehensive — combining loans, grants, and technical assistance — implementation is often slow and bogged down in bureaucracy. “Many projects that have EU funding commitments proceed very slowly,” Jovanovic said. He argued that the EU needs to become faster, more strategic, and less bureaucratic in order to maintain influence.
Die Presse noted that the region has become a battleground for global powers, not through military conflict, but through financial diplomacy. While Russia seeks political influence, particularly in Serbia and parts of Bosnia, China is pursuing economic leverage, often without taking an overt political stance.
The report concludes that Europe must rethink its engagement with the Western Balkans, not solely through the lens of future EU enlargement but through a broader geopolitical and geo-economic strategy. “If the EU continues to move slowly,” Jovanovic said, “others will fill the gap.”
