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Dragan Pavlićević

February 1st, 2022

An emerging “all-lose” scenario – China, the Western Balkans and the EU

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Estimated reading time: 10 minutes

Dragan Pavlićević

February 1st, 2022

An emerging “all-lose” scenario – China, the Western Balkans and the EU

0 comments | 2 shares

Estimated reading time: 10 minutes

  • China-Western Balkan relations have been widely interpreted as reflecting China’s intention to change the balance of power internationally, prompting counter-policies by the EU.
  • China’s interest in developing relations with the Western Balkans originates in China’s domestic political economy, while the Western Balkans approaches relations with China in strategic but utilitarian terms, with a comparatively limited set of objectives.
  • The above perception gap prevents each of the parties from achieving their goals, building tensions in all directions within this triangular relationship and, unless addressed, threatening to result in an “all-lose” scenario for all involved parties.

Western Balkans (WB) is a relatively recent concept which defines not just the geographical but also political status of Albania, Bosnia and Herzegovina, North Macedonia, Montenegro, Kosovo and Serbia. Contrary to the other states in the Balkans which have already joined the European Union (EU), WB’s accession is effectively at a standstill with no finish line in sight. However, the EU still considers WB its “backyard” which will eventually accede to the European Union. This is reflected in an EU-centric engagement framework meant to expedite reform and development in WB that will ensure compliance and synchronisation with the EU’s normative, regulative and policy frameworks.

As China’s ties with WB have been rapidly developing under the Belt and Road Initiative (BRI) and China-CEE Cooperation Framework (16/17+1) from the early 2010s onwards, how they fit in such a context has come under growing scrutiny.

The brief analysis offered here outlines the substantially different understandings of China-WB relations by all three main stakeholders in the relationship – China, WB and the EU – and of the goals and role they seek and play in the relationship. Such a perception gap makes the engagement strategies and goals they individually pursue within the relationship incompatible. The result is that China-WB relations are an irritant for all three, with potentially long-term adverse impact not only on China-WB relations but on all three relationships within the triangle as well as the regional politics.

Domestic sources of China’s foreign policy toward WB

At the source of China’s foreign policy toward the Balkans are priorities formed in China’s domestic context, that is, attempts to overcome challenges related to China’s growth model and prospects of China’s economy identified in late 2000s and early 2010s.  As argued elsewhere, these include the capital investment-driven model of economic growth, including investment in infrastructure, running its course; overcapacity in strategically important industries which are among the pillars of China’s economy and social stability; growing production costs, including of labour, which were progressively diminishing the competitiveness of Made-in-China products; over-reliance on developed countries’ markets for China’s export-oriented sectors; difficulties in fostering firms which can become globally competitive and able to serve as conduits of knowledge and technology transfer to and in China; and the high environmental price of reliance on export-oriented and heavy industries.

In such a context, China adjusted its foreign policy by more intensively pursuing relations with those parts of the world where it was not previously substantially engaged. This adjustment aimed to seek new opportunities for growth that would resolve or compensate for the difficulties outlined above while supporting economic restructuring and upgrading at home.

Chiefly, it wanted to create new markets for China’s strategic industries, including those with overcapacity, not least by promoting and facilitating infrastructure projects internationally. Some of this infrastructure was supposed to become a part of a global logistic network which would facilitate trade by linking in different markets and reducing costs, as such boosting China’s manufacturing’s competitiveness and trade overall. This also aimed to create a favourable environment for the inflow of Chinese FDI and relocation of manufacturing, another broader focal point. This logic has crystallised in the BRI, and also drives 17+1, within both of which WB occupies a prominent role.

Accordingly, China’s relationship with WB is centred on China-financed and China-built transportation and energy infrastructure; investment in strategic industries and attempts to set-up industrial and commercial hubs to attract investment from and relocation of Chinese companies; and facilitating trade with WB and Europe. Of course, as the economic and policy context in China evolved, new industries such as digital technologies increasingly grew in importance for the China-WB relationship.

From Beijing’s perspective, the relationship is still defined within these parameters. China’s diplomacy toward WB has essentially been geared toward reaping economic benefits and supporting economic transition at home. China defines the role of WB, as well as the EU, predominantly within this context.

The gEUpolitics of it all

Yet, within the EU, China’s approach toward WB is essentially understood as geopolitical and expansionary. Economic exchange is not a goal but a means to an end. China is identified as “one of the great challenges of Europe” due to its “strategic concept” of using financial clout to gain political sway over WB.

Moreover, the EU perceives China to strategically employ debt traps, corruption-fuelling state-to-state deals and other means which not only disproportionately benefit China but also inflict high economic and social costs on WB. WB is perceived as susceptible to China’s “cash for influence” strategy, at the expense of the EU’s central role in the region and in Europe, in particular its status as political, economic and normative centre for the region, and, by extension, the regional order built upon that.

Other dimensions of China’s relationship with WB have all been understood through the same lens. Of note, provision of medical expertise, equipment, vaccines, and related technology in the aftermath of the outbreak of the COVID-19 pandemic has been understood as a part of an influence-building agenda to grow China’s role in WB to the detriment of the EU, and – in representatively misguided yet influential stream of analysis – to nurture “client states”.

In response, directly referencing the “China factor” as driving such an approach, the EU embarked on a diplomatic offensive to condition WB to scale down their engagement with China, while also signalling that it is ready to strengthen its commitment and support to both WB’s accession and economic development. Given that the EU now regards China as a competitor and rival, and that with its current administration Brussels intends to embrace geopolitics and “relearn the language of power”, China’s relationship with WB will likely continue to be framed and tackled within such an adversarial strategic framework and a corresponding policy toolbox.

Whither WB?

So, as China seeks to deepen economic engagement, while the EU seeks to constrain it and pre-empt the perceived influence-building on the back of it, where does WB stand?

For one, WB countries do not see relationship-building with China as alternative to Brussels and the EU. The divergences from the EU’s liberal norms in WB notwithstanding – these reflecting a broader trend in the EU rather than a local outlier – accession to the EU remains the strategic goal for all WB countries.

For WB, the relationship-building with China serves comparatively limited, albeit important, goals.  China’s interest in economic engagement is welcome as it provides resources, economic and otherwise, which address specific needs of WB which have not or cannot be met through the relationship with the EU nor solely by WB states on their own.

In particular, China responds to WB’s developmental aspirations and fills in the longstanding and yawning gaps in their ability to pursue them. For example, investments and infrastructure projects are understood as of critical importance for the economic development of WB countries, yet, particularly during the financial squeeze of 2010s, these were not in the focus of EU and its enlargement and economic policies.

Beyond economic aspects of the relationship, WB leaders have likely noted the pattern whereby WB’s relationship-building with China, even if it also invites criticism and pressure from the EU, also results in the EU increasing its efforts to engage WB, as discussed above. Additionally, the financial and PR efforts to establish the EU as the key provider of assistance in the struggle against the pandemic, delivered in a rather urgent fashion following Beijing’s channelling of its support to Serbia, illustrates such a logic at work.

Prospects

Therefore, China-WB relations are being shaped by a perception gap between China, WB and the EU, whose different interpretations of the China-WB relationship are creating an “all-lose” environment.

Given that Brussels now defines its relationship with China as the one of competition and rivalry, the more China is involved in WB the more China-WB relationship will stoke concerns in the EU, and trigger responses which limit space for Beijing and WB to pursue and realise their objectives in the bilateral relationship.

Moreover, the two-pronged strategy of WB to deepen economic exchange with China while also advancing its relations with the EU appears less and less tenable in a context defined as geopolitical competition and rivalry.

Going forward, as long as WB remains strategically committed to the EU, while the EU perceives China as a rival in the region, WB’s relationship with China is likely to find itself with increasingly constrained space to develop and grow. Also, given the scrutiny the relationship-building with China invites from the EU as well as the emergence of locally critical responses to China on issues such as environmental degradation, labour standards, financial sustainability and others, it remains to be seen whether WB’s enthusiasm is beginning to cool off.

For now, there is an awareness in WB that these issues are not specific to the “Chinese” projects, companies and finances. WB is indeed in need of greater monitoring and enforcement capacity in these areas, something which may offer an opportunity to be addressed collaboratively within a triangular framework. Simultaneously, perceptions that the EU aims to reverse what is an important relationship for WB without taking into account WB’s preferences and by limiting WB’s agency and autonomy, while failing to conclusively follow up on the enlargement pledge, is likely to fuel dissatisfaction with the EU much more than mistaken fears around the economic and normative impact of China.

In such a context it appears necessary to resolve the perception gap and reimagine this triangular relationship so as to establish a common understanding of WB-China relations. What could follow from such a reconciliation are rules of engagement that would more effectively recognise, balance and satisfy different interests, address existing concerns, and shift the momentum within this triangular relationship. Whether the vision and skills necessary to achieve that are present remains to be seen.


This article gives the views of the author, and not the position of the China Foresight Forum, LSE IDEAS, nor The London School of Economics and Political Science.

About the author

Dragan Pavlićević

Dragan Pavlićević is Associate Professor at the Department of China Studies at the Xi’an Jiaotong – Liverpool University. Most recently, his research has been focused on China-Europe relations, the politics of China's infrastructure projects and investments abroad, and China's multilateral initiatives. Together with Nicole Talmacs, Dragan is the editor of the forthcoming book The China Question: Contestations and Adaptations with Palgrave Macmillan.

Posted In: Diplomacy

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