By Xhelal Neziri
China’s presence in the Western Balkans has continued to grow, filling the gap left by Russia, whose economy continues to decline in importance due to its aggression in Ukraine. Russia’s influence, particularly in terms of its economic presence, continues to wane due to tough sanctions imposed by the US and the EU. The latest blow was directed at two strategic Russian energy companies in the Balkans – Lukoil and Rosneft – which are among the most important players in the energy markets of Serbia, Bulgaria, Romania, Bosnia and Herzegovina, Montenegro, and North Macedonia. The elimination of Russia’s presence is particularly focused on Serbia, where the US has fully enforced sanctions against the oil company NIS, a predominantly Russian-owned company that supplies Serbia with energy. These sanctions not only damage Russian interests in the region, but also carry the risk that Serbia will be left without energy at the beginning of next year when the state’s supply reserves are exhausted. Serbia now faces a major dilemma: it must choose between Russia, with which it has traditionally been friendly, and the West, on which its economy depends.
This puts an end to the two-chair policy, as Belgrade must decide which strategic partner it wants to continue with. Reason leads Belgrade toward the West, which would mean nationalizing and selling the NIS Group to a Western company. This would anger Russia, as the Russian owners, who hold the majority of shares, would have to be driven out. Populist sentiment is pushing Belgrade toward fraternization with Russia, a close connection between peoples with great ethnic and cultural similarities that has been cultivated since 1878, when Serbia gained independence from the Ottoman Empire with Moscow’s help.
CHINA COMPLEMENTS RUSSIA
The fact that China is attempting to establish its influence in a region previously dominated by Russia does not mean that there is competition between the two Eastern powers. On the contrary, both countries are working closely together in the face of a united West, from Ukraine to the wars in the Middle East. This synergy between Moscow and Beijing is also evident in the Western Balkans, where Russia continues to expand its influence through the Orthodox Church, while China extends its influence in the economy and media.
In recent years, Chinese direct investment has grown rapidly, reaching 32 billion in 2025. According to data from Geo-Power EU, most of this investment went to Serbia, making the country an important gateway for Chinese capital into the EU. Looking at the figures for 2023, it can be seen that of the 5.6 billion euros invested in the region, 96% was invested in Serbia, mainly in industries with problematic environmental and social impacts such as metallurgy, mining, and low-tech manufacturing. In 2024, Chinese investment in this country reached about 9% of gross domestic product (GDP), while in other Western Balkan countries it is negligible, accounting for less than 1% of GDP in Albania, Bosnia and Herzegovina, Kosovo, Montenegro, and North Macedonia. Although Chinese direct investment in the region is growing rapidly, its presence remains modest compared to European Union capital. Data from Geo-Power EU shows that Chinese investment still accounts for a small share of regional economies, while the EU remains the most important source of foreign capital. In contrast to Chinese investment, EU investment in the region averages between 23% and 38% of GDP.
According to the Vienna Institute for International Economic Studies, the growth of China’s economic presence reflects Beijing’s shift toward renewable energies and the automotive supply industry.
WHY THE WESTERN BALKANS?
This region, consisting of six small countries with a total population of nearly 18 million, seems insignificant and unattractive to an economically powerful country. Not so for China. The Balkans continue to be of high strategic interest as they are part of the “One Belt, One Road” initiative, a Chinese megaproject that aims to connect Asia and Europe in order to become a hegemonic power. Opinion polls show that the countries in the region have a more favorable perception of China, which can be attributed to the period of mutual cooperation between 1945 and 1990.
The governments in the region were attracted by China’s commitment because they expect immediate economic benefits such as investment, infrastructure projects, and technology. According to publicly available data, Albania and Kosovo have not received Chinese loans for infrastructure projects and have not become part of the megaproject. In Bosnia and Herzegovina, two major projects were financed by China: the Tuzla power plant and the highway in Republika Srpska. However, both projects were not completed due to non-compliance with EU environmental and financial standards. Montenegro received Chinese loans worth €975 million for the Bar-Podgorica highway project, significantly increasing its national debt. This is the most visible case of “trap loans” that jeopardize the financial sovereignty of borrowers, as arbitration proceedings take place under Chinese jurisdiction, excluding domestic or European institutions.North Macedonia has benefited from Chinese loans totaling €909 million for the construction of the Miladinovci–Shtip and Kicevo–Ohrid highways, with the same clauses and risks as Montenegro. This is particularly true given that the projects have been plagued by delays, cost overruns, and allegations of corruption. After several delays, the Kicevo-Ohrid highway is still not complete and is considered one of the most expensive roads in Europe. In addition to record Chinese investment, Serbia is also the largest beneficiary of
Chinese capital in the region. It has a loan from the Chinese bank of over €7.7 billion, which it has used for projects in the energy, transport, and defense sectors.
The development aid offered by China to countries in the region is not only economic in nature, but also represents an effective tool for diplomatic and strategic purposes. These goals include transforming the Western Balkans into an important Chinese port on the European continent, which is the world’s largest market in terms of size and potential. Another, no less important goal is to promote the “One China” concept throughout the world. This means preventing countries in the region that dare to establish diplomatic relations with Taiwan, the island state that Beijing considers part of its territory, and imposing sanctions on them. Through its Exim Bank, China offers attractive low-interest loans (3%), but on condition that Chinese companies carry out the projects and that the recipient countries are excluded from jurisdiction.
In this way, Chinese investments become not only economic problems, but also geopolitical ones. By excluding the laws and institutions of the investment countries, China makes it impossible to harmonize the laws and standards of the accession countries with those of the EU. In this way, China also becomes an influential player that hinders the EU integration of the Western Balkans because it wants to protect its investments and maintain the region as a haven for Europe.
Source: The Geopost