CHINA HAS emerged as Serbia’s primary partner outside the Western world, and the political ties between the two governments are intense. As U.S.-China relations are becoming adversarial, and as China’s relations with the EU are shaken, it will become increasingly difficult and risky for Belgrade to continue attempting to navigate the middle and maintain its ties with Beijing.

LIKE MUCH of Serbia’s foreign policy, Belgrade’s partnership with Beijing was shaped by two events that occurred in 2008: the unilateral declaration of Kosovo’s independence and the global financial crisis. When Kosovo declared its independence from Serbia, counter-secession became the dominant strain of Serbian foreign policy. For Belgrade, the fact that China—a rising global power, the world’s most populated country, and a permanent member of the UN Security Council—did not recognize Kosovan independence was a welcoming development.

There was also a broader systemic logic at play. The 2008 global financial crisis diverted the EU and the United States’ attention from the Balkan region, creating a power vacuum filled by the non-Western players, with China among them. However, the global financial crisis also produced incentives for Belgrade to actively engage with Beijing. Serbian policymakers were impressed that the Chinese economy persevered despite the shock of the crisis. Serbia saw China as a potential source of financial aid for its hard-hit economy, as well as a potential geopolitical partner at a time when Serbia was diversifying its relationships in an uncertain world. Even further, the notion that the world is moving towards multipolarity, thanks primarily to the rise of China and the idea that Serbia should keep its options open, is shared by the entire Serbian political class irrespective of the partisan and ideological distinctions. The incumbent Serbian president, Aleksandar Vučić—who, unlike the center-left former President Boris Tadić, is taking Serbia in an illiberal direction—shares this same understanding.

Belgrade has since acted on these perceptions. In 2009, Serbia and China issued a joint statement on a strategic partnership and signed an agreement on economic and technological cooperation in infrastructure development. As a result, China agreed to provide a credit line for constructing a bridge across the Danube River connecting two Belgrade municipalities (Zemun and Borča), thus beginning the first major Chinese project in Serbia. The Chinese state-owned enterprise China Road and Bridge Corporation (CRBC) was in charge of the project, while the Export-Import Bank of China, or Exim Bank, provided the financing. With this agreement, the political foundation for future partnership was set.

WHILE SERBIA was enthusiastic about its new strategic partnership with China, this was not reciprocated by Beijing—at least not at first. President Tadić famously called China “the fourth pillar of Serbian foreign policy” alongside the EU, the United States, and Russia. To avoid endangering its partnership with Beijing, Belgrade tried boycotting the Nobel Peace Prize ceremony in 2010—honoring the late Chinese human rights activist, Liu Xiaobo—only to abandon this boycott due to EU pressure.

However, Beijing did not demonstrate the same level of interest. China did not want to be engaged in provincial disputes in the Balkans, such as the Kosovo issue, as none of these disputes directly affect China’s own national interests. When Serbia asked for an advisory opinion from the International Court of Justice on the legality of Kosovo’s declaration of independence in 2010, China backed the Serbian initiative but did not delegate its judge in this proceeding. By late 2012, most Serbian diplomats perceived China as a country with whom Serbia had friendly bilateral relations but not a major player in the region’s geopolitics.

The situation started to change in 2012. In that year, China inaugurated the “16+1 initiative,” a platform aimed to facilitate cooperation between China and countries of Central and Eastern Europe, with Serbia among them. Then, in 2013, Chinese president Xi Jinping announced the Belt and Road Initiative (BRI)—a macro-project dedicated to constructing a global network of infrastructural connectivity, aimed primarily to tie China economically and politically with the span of Eurasia. Through the BRI, China would also promote itself internationally, boosting its political influence and soft power capital even in distant countries like Serbia. As a result, the Balkans, and Serbia in particular, being the geographically central country in the region, found themselves on the Chinese radar, as Beijing perceived the region as a bridgehead between Europe and the rest of Eurasia. Moreover, Serbia is an EU membership candidate, which further raised Chinese interest. Serbia, from China’s perspective, could become the conduit through which the EU’s markets could be penetrated.

In 2014, Chinese prime minister Li Keqiang visited Belgrade to attend the 16+1 Summit. He also attended the opening of the aforementioned bridge across the Danube, the Pupin Bridge, named after Serbian scientist Mihajlo Pupin. Furthermore, during the summit, Prime Minister Li promised Central and Eastern Europe that China would create a region-focused targeted investment fund capitalized with $3 billion and $10 billion in credit lines.

It was in 2016, however, that the partnership truly began to take off, with Xi’s visit to Serbia.

IN THE beginning, Chinese interactions with Serbia mostly revolved around economic statecraft and Chinese infrastructural lending performed under the BRI umbrella. But as the EU’s enlargement efforts ground to a halt, its funds became inaccessible for Serbia, making Chinese financing even more attractive. This has resulted in China acquiring significant interests within key sectors of Serbia’s economy, enabling Beijing to use the country as a springboard to access EU markets.

Consider the case of steel. In April 2016, a Chinese conglomerate called Hesteel Group acquired a local major steel manufacturer in Smederevo, renamed HBIS Serbia after acquisition, indicating it would invest $300 million over the next few years to modernize the company’s existing plants and increase production. Ironically, HBIS had originally been owned by U.S. Steel, which invested the capital and resources that made the steel mill into one of Serbia’s largest exporters from 2003 to 2012. Taking advantage of dropping steel prices at the time, China acquired the steel mill and, by the end of 2018, the company once again became Serbia’s biggest gross exporter. (The company, however, is currently in trouble due to the introduction of EU steel import quotas.)

Other notable instances of Chinese financing abound. In 2018, Zijin Mining took control over debt-burdened Serbia Zijin Bor Copper (better known as RTB Bor), the only copper mining complex in Serbia. With both RTB Bor and HBIS’ Smederevo steel mill, China has taken hold of two of Serbia’s major industrial infrastructure assets. In September of that same year, during a World Economic Forum event in Beijing, Vučić and Xi agreed on a plan to welcome a Chinese firm, Shandong Linglong, to Serbia, with a plan to build a tire factory in Zrenjanin—an investment estimated at $1 billion.

China has also been active in Serbia’s energy sector. The modernization of the Kostolac coal power plant was completed by China Machinery Engineering Corporation with China’s Exim Bank providing the financing.

Then there is infrastructure. The CRBC is currently involved in the construction of the E-763 highway, which will increase connectivity between Belgrade and western Serbia, while also providing quicker travel from Serbia to Montenegro. Meanwhile, the construction of the Belgrade-Budapest railway remains the most famous Chinese project in Serbia, and is often touted as a signature BRI project. Though the ultimate fate of this project remains unknown due to many delays on the Hungarian side, thereby showcasing some of the failures of the BRI, engaging in these sorts of projects allows Chinese state-owned enterprises to acquire references to compete in EU-based tenders.

Given the enormous quantitative and qualitative disparity between the two economies, a question mark remains on how functional this economic partnership can really be. Serbian exports to China by mid-2021 have increased fifteen times in the past five years, amounting to $377 million. However, China accounted for less than 2 percent of Serbian export revenues while accounting for 43 percent of the entire Serbian national deficit. The problem for Serbia is not just the deficit, but the fact that the cost of logistics and transport to the Chinese market is expensive for the state and its exporters. While more than 70 percent of Serbian exports to China was copper, the copper in question originates from the RTB Bor, owned by Chinese Zijin Mining.

TECHNOLOGICAL PARTNERSHIP is another striking domain of cooperation between Beijing and Belgrade. In 2019, Serbia signed an agreement with Chinese e-commerce company Alibaba to promote Serbia as a tourist destination through its online travel agency platform, Fliggy. Similar arrangements exist with WeChat and Weibo. Another Chinese firm, NetDragon, helped the Serbian Ministry of Education establish an artificial intelligence training center so that remote learning platforms can be developed to compensate for the closure of schools during the COVID-19 pandemic. The CRBC is also involved in constructing an industrial park intended to contain facilities for innovation and development.

But of all of China’s companies and state entities, it is the tech giant Huawei that is at the heart of this partnership. 

The Balkans and wider Eastern Europe became the regional markets where China and Huawei tried to compensate for the fall in revenues caused by the tech war unleashed under the Trump administration. There is, however, a strategic logic for China to include Serbia in its Digital Silk Road: it presents an interesting opportunity to shape global tech standards. Serbia, thanks to its geography, is a hub for regional internet traffic. It is a neighbor to four EU member states—twice that of any other country in the Western Balkans. Among these neighbors is Croatia, an EU and NATO member and, more importantly, home to two out of three submarine cables allowing internet traffic to the Balkans. Serbia is also the only country from the Western Balkans that is part of the 5G Public Private Partnership—a joint initiative of the European Commission and various private European companies promoting next-generation communication solutions across the continent. Between January 2019 and January 2020, more regional internet queries were transmitted through Belgrade than through any other city in the wider European region except for Frankfurt, through which some regional traffic is routed.

Huawei is acting accordingly. In 2019, Huawei announced plans to form a digital transformation hub in the Western Balkans, headquartered in Belgrade, as part of a smart city development strategy. The next year, the hub was officially opened, with Serbian prime minister Ana Brnabić attending. In addition, in 2019 Huawei launched the One Thousand Dreams project to train 1,000 young talents from Central and Eastern Europe, including Serbia, in information and communications technology. Huawei has also partnered with the Serbian government to pursue a “smart city” strategy in the largest urban centers of Belgrade, Novi Sad, and Niš. Furthermore, Huawei will provide the Serbian Ministry of the Interior with eLTE—an advanced wireless broadband system—for its projects in Belgrade.

IN MORE martial affairs, a security partnership has also blossomed between the two countries. It entails three elements: Chinese presence in Serbian surveillance infrastructure, joint police patrols in Serbian cities, and growing military cooperation. 

Serbia’s partnership with Huawei is not just grounded in technological cooperation between the two governments but also in their national security cooperation. In 2015, Chinese authorities identified and tracked a Serbian national hiding in China after a fatal hit and run accident in Belgrade, leading to the man’s extradition. Serbian police were understandably impressed with the technological capabilities of their Chinese counterparts. The Serbian Ministry of the Interior was vindicated in its choice of Huawei as a partner for their Safe City project, for which an agreement was signed back in 2011. Within this project, Huawei installed 1,000 surveillance cameras in 800 locations across Belgrade, equipped with advanced facial and license plate recognition software. The location of most of these cameras remains confidential and undisclosed. Huawei is also secretive about the arrangement: when the introduction of surveillance cameras was announced, Huawei removed the description of the “Safe City” project from its website. In 2018, the Serbian Ministry of Finance signed another agreement, allowing Huawei to provide traffic surveillance systems. 

The presence of this type of technology exposes Serbia to the risk of authorities being encouraged to spy on their population, along with the potential that there is now a technological backdoor for China to penetrate local infrastructure and extract intelligence data. Regarding the former, there are strong suspicions that, during the early stages of the COVID-19 pandemic, Huawei’s cameras were used to monitor whether the Serbs who returned from virus hotspots, like Italy, obeyed quarantine measures. The latter risk was observed in 2018 in the headquarters of the African Union (AU) in Addis Ababa, Ethiopia, where Huawei used its equipment to transfer data from the AU’s offices to China. There is also the risk there might exist a “kill switch,” which would allow Beijing to shut down the local infrastructure from afar.

Other Chinese tech companies can also help export products to create a proxy-Chinese surveillance state. Dahua Technologies and Hikvision are two Chinese video surveillance companies, blacklisted by the United States for human rights abuses, that have a presence in Serbia. In 2019, one could find Dahau’s products at Belgrade airport. During the COVID-19 pandemic, Dahua engaged in an aggressive marketing campaign in Serbia, promoting its products as a solution to the problems created by the pandemic in a way that exaggerated the realistic capabilities of their products. In June 2020, 900 Hikvision internet-connected surveillance cameras were detected across Serbia.

In the more physical realm, Serbia and China also established joint Sino-Serbian police patrols in 2019. This arrangement was primarily because Serbian cities, before the COVID-19 pandemic, experienced a major growth in the number of Chinese tourists, thanks to the 2016 abolition of visas between the two countries. Though this agreement should not be overstated as a hallmark of diplomacy, as both Serbia and China have similar arrangements with other countries, it does speak to the growing security ties between the two governments. Furthermore, the joint police patrols will also allow China to have police authorities in cities where Chinese capital is concentrated, like Novi Sad and Smederevo.

Military cooperation is the most striking element of the developing security partnership. According to information disclosed by the Serbian Ministry of Defence in 2019, between 2008 and 2018 China was the second-largest donor to the Serbian army, with $5.2 million in donations, only second to the United States’ $9.8 million. Via this partnership, Serbia uses China to modernize its defense and meet its national security requirements while maintaining a balance between Western and non-Western powers. China, for its part, can cite these efforts as it tries to promote itself as a rising military superpower, capable of forming military partnerships even with distant countries. Additionally, it uses Serbia to penetrate the European defense market with its weapons systems. So far though, Chinese entry to this market has been impeded by the arms embargo imposed on China by the EU since 1989, following the violent suppression of the Tiananmen protests.

In November 2019, Serbian special forces and Chinese police conducted a joint anti-terrorism exercise in Serbia. While China sent a police unit and not a military unit, the exercise speaks of the growing security stronghold China tries to accumulate in order to guard its citizens and interests overseas. Serbian acquisition of Chinese drones is just one case in point. In September 2018, during President Vučić’s visit to Beijing, representatives of the Serbian Ministry of Defence negotiated this acquisition with their Chinese colleagues. On that occasion, Serbia ordered nine Chengdu Pterodactyl-1 drones, also known as Wing Loong. The arrangement also includes technology transfers that would allow Serbia to complete its indigenous drone project, Pegaz (Pegasus).

In light of that fact, Serbia gave up on Wing Loong drones and instead went for the CH-92A drones, manufactured by the state-owned China Aerospace Science and Technology Corporation, as they were more compatible with the development of the Serbian drone program. Six CH-92A drones were delivered to Serbia in June 2020, and by October these drones were being used in military exercises attended by Vučić.

By buying Chinese weapons systems, Serbia is upgrading its outdated military hardware and adjusting it to the changing technological landscape of global defense. Thanks to the acquisition of CH-92A drones, Serbia will manufacture its own drones and reconstitute the 353rd Intelligence Surveillance squadron, defunct since 2006, thereby becoming the largest drone operator in the Balkans. This transformation will increase Serbian ability to police its airspace, which has been at the forefront of national strategic thinking since the experience of NATO’s intervention in 1999. By acquiring weaponry from China, Serbia’s leadership believes it has increased its bargaining power with the West. Meanwhile, Serbia continues to rely on China for the modernization of its defense and air-space capacities. In August 2020, Serbia decided to purchase the Chinese anti-aircraft FK-3 missile system, instead of the Russian S-300 system.

AT THE outbreak of COVID-19, ties between the two countries were at their apex. The cooperation between China and Serbia in combating the pandemic showed that China would step in to fill any opening left by the EU. In that way, China became Serbia’s primary non-Western partner, outmatching even Russia, while cooperation with Beijing has become a tool of domestic promotion for the Serbian leadership.

When the COVID-19 outbreak hit Europe, the EU’s initial response was a shortsighted export ban on protective medical equipment. At the press conference announcing a state of emergency, Vučić denounced the EU’s decision and opted to embrace China and Xi, saying: “I believe in my friend and my brother, Xi Jinping, and I believe in Chinese help. The only country that can help us is China.” On March 21, 2020, Vučić personally greeted a jet carrying Chinese medical aid at the Belgrade airport, where he kissed the Chinese flag as a sign of gratitude. In addition, landmarks across the city of Belgrade were lit up in the colors of the Chinese flag. The EU, possibly realizing its mistake, later jumped in with aid worth €93 million. China though had better timing and a better public relations campaign. As a result, in 2020 75 percent of Serbian citizens believe China provided the most assistance to Serbia during the pandemic, while in 2021, 33 percent of Serbs believed that China is the biggest aid donor to the country. It should be noted though that China’s campaign of boosting its global image through the provision of medical supplies, known as mask diplomacy, did not yield satisfactory results across the rest of Southeastern Europe.

Russian medical aid arriving in Belgrade was not greeted by the Serbian leadership with the same enthusiasm, indicating that Belgrade has replaced Moscow with Beijing as its primary non-Western partner. This transformation can be attributed to China’s endowment with capabilities that Russia simply does not have. It could also be down to the latent distrust which still exists between Russia and Serbia. Namely, while Serbia relies on Russia in the Kosovo dispute, it fears that Russia could sell it out in a hypothetical bargain with the United States. In that regard, Serbia was willing to break its practice of diplomatic neutrality by backing China on the issues of Hong Kong and Xinjiang, something it was not ready to do in the case of Russia.

The same pattern is also seen in the case of Chinese “vaccine diplomacy.” As the EU failed to provide COVID-19 vaccines to the Balkan countries in a timely manner, Serbia turned to China. In January 2021, one million doses of Chinese Sinopharm vaccines were delivered to Serbia. In March, an agreement for an additional two million doses was reached. At one point, Serbia was second in Europe, after the UK, for its vaccination rollout program. Again, the Russian vaccines were not greeted in the same welcoming manner as their Chinese counterparts.

Thanks to the Chinese vaccines, Serbia can now exercise its own version of vaccine diplomacy in the Balkans by donating to its neighbors for favorable terms—notably in regions like Africa, where it donates vaccines to ensure these countries do not recognize Kosovo. The plan to open a Sinopharm production facility in Serbia, with financing from China and the UAE, will make Serbia a regional supply hub for COVID-19 vaccines. Evidently, even when it comes to vaccine diplomacy, Serbia remains a springboard for Beijing’s wider goals.

For the Serbian leadership, the influx of Chinese capital has become relevant domestically, as it can promote itself to its domestic constituents as the facilitator of a favorable partnership with China. The arrival of Chinese capital frequently corresponds with local political cycles. At the same time though, secretive contracts with China enable local cronyism. Indeed, the agreements concerning the 2020 Chinese medical aid remain confidential, and so do the price of Chinese drones and Chinese vaccines. In addition, Chinese projects are followed by questionable environmental and labor standards. By late 2020, the incumbent elite’s pro-Chinese narrative resulted in 16 percent of Serbs believing that China is their greatest friend, second only to Russia with 40 percent. In 2021, 77 percent of citizens qualified Chinese influence in the country as positive.

HOW DURABLE is this partnership? As relations between China and the West deteriorate, the Sino-Serbian partnership will be under intense duress, as Serbia’s main partners remain in the West. Serbia’s foreign policy of hedging and balancing is a tactical and opportunist policy pursued only as long as there remains a systemic leeway.

The EU  is already showing uneasiness about China, with its strategic documents describing China as “a systemic rival.” Moreover, the EU is growing weary of Huawei’s presence in its vital infrastructure, and is working on eliminating it on security grounds. In May 2021, the European Parliament blocked the Comprehensive Agreement on Investment, a deal aimed to boost trade and investment between China and the EU, because of China’s human rights violations in Xinjiang. After the 16+1 initiative became the 17+1, with Greece joining in 2019, it reverted back to 16+1 earlier this year when Lithuania left the initiative. The project remains burdened with political dysfunction, growing dissatisfaction, and many members doubting its validity.

The determining factor of the relationship, however, will be the United States and its preponderance. Consider, for example, that in late 2019, Serbia temporarily gave up on purchasing weapons from Russia when faced with a threat of U.S. financial sanctions. There is no doubt that the United States will act in the same way regarding China, its only real great-power competitor. As Sino-American rivalry intensifies, it will inevitably reach Serbia.

In September 2020, the Trump administration mediated an agreement on economic normalization between Serbia and Kosovo, which stipulated that “both parties will prohibit the use of 5G equipment supplied by untrusted vendors,” a rather clear reference to Huawei. As a result, in late 2020, Serbia postponed the tender for the 5G spectrum. The U.S. embassy in Belgrade has already publicly shown concern for the Serbian plan to purchase a Chinese anti-aircraft FK-3 system. The Biden administration has demonstrated, much like its predecessor, that it is going to be tough on China. President Joe Biden has already banned U.S. companies from investing in fifty-nine Chinese tech and defense companies.

So far, Serbia has been kicking the can down the road, expecting that it can continue on its extant course of partnering with China, not minding the global game of great power politics. Now, as Europeans are becoming more aware of the China challenge and with Sino-American rivalry heating up, great power politics will knock on Serbia’s doors. Maintaining a balance between great powers without choosing sides will become even more challenging for Belgrade in the age of China’s rise. Serbia will soon be faced with some fateful choices.

Vuk Vuksanović is a senior researcher at the Belgrade Centre for Security Policy (BCSP) and an associate of LSE IDEAS, a foreign policy think tank of the London School of Economics and Political Science (LSE ). The piece is based on a strategic update he wrote as Mladena and Dianko Sotirov Visiting Fellow at lse IDEAS in 2021.

Image: Reuters.