While Balkans-China relations have deepened in a number of policy areas over the last decade, two particular forms of interaction have been most visible and talked about: a) cooperation on large-scale infrastructure projects undertaken by the Balkan governments, funded via Chinese loans, implemented by contracting Chinese state-owned enterprises (with the notable exception of the Pjelešac Bridge in Croatia, which is financed primarily by EU funds); and b) Chinese greenfield and brownfield investments in other infrastructure assets as well as manufacturing capacities in the region. The number of these types of so called 'Chinese projects' (the term is widely accepted, but not fully accurate, especially with regard to the infrastructure construction projects, as they are primarily domestic ones) in the region has been increasing over the past few years, which has contributed to the positioning of China as a stakeholder in the development of the region. Nevertheless, as the Balkans-China relations have been advancing, they have also been moving from the earlier stages of excessive optimism towards one that is increasingly dubbed as “down-to-earth pragmatism.”
The early experience of Balkans-China cooperation has shown that there are a lot of lessons to be learned by both sides, and provided reality checks for those hoping for a shortcut to win-win outcomes (and in some cases, has been a source of disappointment). While the joint projects undertaken by national governments in the region and China have contributed to stimulating region-wide economic growth, the insufficient financial prudence and due diligence, and the lack of resilience to informal practices have led to controversies, cost overruns and delays, at least in the cases of two significant joint projects in the region, which quickly became synonymous with the Balkans-China relations in general (the Montenegrin Bar-Boljare and the Macedonian Kičevo-Ohrid highways, the latter also being a subject of grand corruption investigation). The domestic context of governance deficiencies, the lack of experience of Chinese actors in following EU standards, and the inherent trickiness of the infrastructure construction business have all added to the challenges for the actors involved. Moreover, brewing global rivalries and the rise of the discourse on the threat of China in the West have added on to the negative publicity, and increased the frequency of critical statements on China's role in the Balkans issued by European and American diplomats. Therefore, the new stages of Balkans-China cooperation – while still greatly driven by the symbolic power of the New Silk Road narratives – include a significant component of added reflection and caution on both sides, not the least visible in the increased sensitivity to the broader political and regulatory context in which their relations unfold.
Additionally, while the need for development cooperation is far from saturated in the region, Balkan governments still have limited capacities and can undertake a few projects at a given time. They are also observing and evaluating the renewed interest in the provision of development support expressed by the EU, US, Japan and other global actors (not least as an attempt to compete with Global China), which gives them prospects for further diversification of their partnerships for development. China will remain a significant partner, but the field will be increasingly crowded. At the same time, Beijing is also trying to rethink its outward investment and loans: while it has already succeeded in projecting its vision globally, in the era of its gradual economic slowdown, China needs to make the Belt and Road more sustainable both for the partner countries as well as for itself, and to advance third-party cooperation with other external actors in the region. And on the practical side, despite their size and ambition, Chinese state-owned enterprises active in infrastructure development cooperation overseas have a cap on how many projects they can pursue at a given time.
All of this does not suggest that Balkans-China relations will stagnate or decrease in intensity, but that they are simply undergoing a qualitative change, which in some ways reflects an incremental learning process, but also responsiveness to the changing global context. Importantly, future policy decisions will be increasingly also determined by the assessments of the tangible outcomes of the cooperation. The Surčin-Obrenovac highway in Serbia and the Miladinovci-Štip highway in Macedonia have been completed in 2019. The Kičevo-Ohrid and Bar-Boljare ones are to be completed in 2021 and 2020 respectively. The completion of the highways, nevertheless, while a milestone in itself, also poses the question of how will the Balkan governments make use of them, and what role will China play in the process? Will there be any progress in the cooperation on projects in production capacities or logistics, aiming to take advantage of the improved regional connectivity? These questions are particularly relevant with regards to the (often doubted) financial sustainability of the infrastructure projects. The only way that the debt for their construction can be smoothly repaid is through generating higher economic growth. So far, the Chinese FDI in production capacities in the region are lagging behind the infrastructure investment made by the Balkan governments (through Chinese loans), as the expectations for Chinese capital far outweighs the level of actual FDI. On the other hand, even though small in number, some Chinese FDI are already changing the economic landscape of the region: for example, the Smederevo steel mill experienced a remarkable transformation from a failed giant in 2015, to Serbia's largest gross exporter in 2018, after being acquired by Hebei Steel in 2016. Nevertheless, we are yet to see whether there will be other similar cases in the period to follow.
In conclusion, the Balkans-China cooperation enters a new stage: the one of more down-to-earth rhetoric, that takes into account the lessons learned and the global shifts, and is guided by the assessment of the tangible and measurable outcomes achieved. The overall posture of the two sides will be more practical and cautious, while their discussions will be based less on the desires and potentials, and more reflective of the reality on the ground. Whether and how will they be able to overcome the challenges that have arisen in the past several years, remains to be seen.