Chinese investment in Central Eastern Europe and the Western Balkan

Filipović, Sanja and Ignjatović, Jelena (2021) Chinese investment in Central Eastern Europe and the Western Balkan. Kultura polisa, 18 (45). pp. 73-86. ISSN 1820-4589

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Abstract

As part of the “Belt and Road Initiative”, China has established a platform for cooperation in the field of investment with 11 European Union countries in the region of Central and Eastern Europe and 5 countries in the Western Balkan (CEEWB-16). In addition to infrastructure projects, China has invested in this region in the form of foreign direct investments (FDI). The aim of this paper is to estimate the importance of Chinese investments for 16 countries in the CEEWB-16 region. Analyzing the placement of funds, it can be concluded that FDI are placed primarily in the countries of the region that are members of the EU, while investments in infrastructure projects are mainly directed to the countries of the Western Balkans, primarily in the transport sector. Infrastructure projects are financed by the governments of the countries borrowing from state-owned Chinese banks, and these loans have the character of public loans, but the conditions of borrowing also have commercial characteristics. In addition, the contractors of infrastructure projects are mainly Chinese companies, which largely employ their workers and import materials from China, so that the positive effect on the debtor’s country are smaller. However, as the countries of the Western Balkans have limited access to European funds and a great need to invest in infrastructure, they see these investment projects as a development opportunity.

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