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The EU should have woken up long ago to China’s growing influence in the Western Balkans

Publishing date
03 February 2025
Map of Balkans
Alicia Garcia-Herrero

For years, the European Union has procrastinated over accession for the Western Balkan countries. Their accession process still has no clear end in sight. This has created a situation that China has been quietly taking advantage of, though with mixed results. China uses the region as an economic gateway to Europe, but has also undertaken expensive and ineffective infrastructure projects, including the Bar-Boljare Highway in Montenegro. Only 41 of the planned 163 kilometres have been built, with the Montenegrin government taking out a loan of almost $1 billion to fund construction. In any case, China’s growing influence is not just a matter of trade and investment; it is an economic security challenge that Europe cannot afford to ignore.

The sluggish EU enlargement process has left Western Balkan nations in a state of limbo. Accession has been delayed by unfulfilled promises and limited progress in compliance with accession requirements. China has moved in, providing economic assistance, infrastructural investment and some financial backing, though this backing is by no means comparable to the EU’s financing, including through the EU’s pre-accession assistance instrument.

Western Balkan countries thus see Beijing as an additional source of funding rather than a substitute for the EU and, as such, welcome its engagement. Beijing, on the other hand, regards the Western Balkans as an important link in its Belt and Road Initiative. Major infrastructure projects, such as the Bar-Boljare Highway, and Chinese-built railway connections between Greece and Hungary, are viewed as key arteries for trade. But beyond logistical considerations, China is also eyeing the region’s raw materials, seeking to secure control over industries including copper, steel and potentially lithium, a critical component for the global energy transition.

While China provides financial assistance to the Western Balkans, the countries actually owe most of their debt to the EU, making it difficult to discuss a potential debt trap with China. However, the case of Montenegro is worth considering. When it struggled to repay its $1 billion loan from China’s Exim-Bank in 2021 for the Bar-Boljare Highway, it was US and EU banks that provided loans to Montenegro. While this case was resolved without Beijing seizing assets in Montenegro, such a situation could arise again in the future. Many of the contracts Western Balkan countries have signed with China include legal provisions ensuring arbitration in Chinese courts and clauses that could allow contract termination for vague political reasons. While China has yet to weaponise these clauses, the potential leverage remains. If any Western Balkan country crosses a political red line, Beijing could easily coerce countries that have built economic dependence on China.

China’s strategy in Europe does not rely solely on the Western Balkans. EU member Hungary is potentially much more important. In fact, one might wonder why China needs the Western Balkans if it already has Hungary as a Trojan horse. The answer lies in contingency planning. Political winds can shift quickly, even in Hungary, and China cannot rely solely on Hungary’s continued loyalty in order to achieve its European goals. By embedding itself in the Western Balkans, Beijing can ensure that it has multiple access points into the continent.

The EU has been slow to react, but there is now an increasing awareness in Brussels that economic security extends beyond the EU’s immediate borders. To counter China’s growing role, the EU must take decisive action to speed up accession talks with the Western Balkans. The accession processes for Ukraine and Moldova, which were quickly granted candidate status in 2022, in comparison with the Western Balkans countries, shows the EU’s ability to demonstrate urgency in the accession process. At the same time, though, the Western Balkan countries must show greater willingness to cooperate in protecting their own security and that of the EU by implementing stricter investment screening rules. Western Balkan nations currently lack mechanisms to filter foreign direct investment, leaving them open to unchecked investments, including from China.

Western Balkan governments should also introduce rules to enforce fair competition so that European firms can compete with Chinese firms, which can often outbid European firms thanks to financial support from the Chinese government. Finally, the EU needs to enforce stricter sanctions on countries undermining the EU from within, so that Western Balkan countries do not follow Hungary’s example.

China’s economic entrenchment in the Western Balkans is not just a regional issue – it is a European one. If these nations become EU members whilst maintaining deep Chinese ties, Beijing will have long-term influence over internal European policy decisions. Conversely, if they remain outside the EU, they will continue to serve as an unchecked extension of Chinese economic power on the EU’s periphery.

The EU’s failure to act decisively will not only be a missed opportunity; it will be a strategic blunder with lasting consequences. For too long, Brussels has treated the Western Balkans as a secondary priority. But as China’s influence expands, it is clear that inaction is no longer an option. The EU must reclaim its role as the primary economic and political partner of the region, or risk losing it altogether.

ZhōngHuá Mundus is a newsletter by Bruegel, bringing you monthly analysis of China in the world, as seen from Europe.

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This is an output of China Horizons, Bruegel's contribution in the project Dealing with a resurgent China (DWARC). This project has received funding from the European Union’s HORIZON Research and Innovation Actions under grant agreement No. 101061700.

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About the authors

  • Alicia García-Herrero

    Alicia García Herrero is a Senior fellow at Bruegel.

    She is the Chief Economist for Asia Pacific at French investment bank Natixis, based in Hong Kong and is an independent Board Member of AGEAS insurance group. Alicia also serves as a non-resident Senior fellow at the East Asian Institute (EAI) of the National University Singapore (NUS). Alicia is also Adjunct Professor at the Hong Kong University of Science and Technology (HKUST). Finally, Alicia is a Member of the Council of the Focused Ultrasound Foundation (FUF), a Member of the Board of the Center for Asia-Pacific Resilience and Innovation (CAPRI), a member of the Council of Advisors on Economic Affairs to the Spanish Government, a member of the Advisory Board of the Berlin-based Mercator Institute for China Studies (MERICS) and an advisor to the Hong Kong Monetary Authority’s research arm (HKIMR).

    In previous years, Alicia held the following positions: Chief Economist for Emerging Markets at Banco Bilbao Vizcaya Argentaria (BBVA), Member of the Asian Research Program at the Bank of International Settlements (BIS), Head of the International Economy Division of the Bank of Spain, Member of the Counsel to the Executive Board of the European Central Bank, Head of Emerging Economies at the Research Department at Banco Santander, and Economist at the International Monetary Fund. As regards her academic career, Alicia has served as visiting Professor at John Hopkins University (SAIS program), China Europe International Business School (CEIBS) and Carlos III University. 

    Alicia holds a PhD in Economics from George Washington University and has published extensively in refereed journals and books (see her publications in ResearchGate, Google Scholar, SSRN or REPEC). Alicia is very active in international media (such as BBC, Bloomberg, CNBC  and CNN) as well as social media (LinkedIn and Twitter). As a recognition of her thought leadership, Alicia was included in the TOP Voices in Economy and Finance by LinkedIn in 2017 and #6 Top Social Media leader by Refinitiv in 2020.

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