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China Is Changing Serbia From the Inside

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China Power | Politics

China Is Changing Serbia From the Inside

The gradual weakening of legal requirements for Chinese investments in Serbia is of real concern.

China Is Changing Serbia From the Inside

People wave Chinese and Serbian flags during a concert at Belgrade’s Kalemegdan Fortress, Serbia, Saturday, Feb. 22, 2020.

Credit: AP Photo/Darko Vojinovic

Chinese businessman Wang Feng was an unexpected guest at the inauguration of Serbian President Aleksandar Vucic in 2017. On the afternoon of the event, Wang was given an exclusive timeslot with the incoming Serbian president, to discuss his plans for the future and have his portrait taken in front of the blue and yellow EU flag.

The same day, Wang met with staff in the Office of the President, the Serbian Development Office, and the Serbian Development Bureau to discuss the “prospects and opportunities for building on the Belt and Road Initiative,” concentrating mainly on obstacles like land, transport, tax policy, and work visas.

At that time, few Serbs recognized the Chinese businessman, nor the Shandong Linglong tire company that he represented. Today they are better known. The popular Serbian national football league has been renamed after the company, and is now the “Linglong Tire SuperLiga.” With this sponsorship, and substantial ongoing investment, the Chinese company aims to be one of the biggest tire suppliers for the European car industry.

This, and a number of other Chinese investments, are regarded as a godsend for Serbian leaders, stressed by high unemployment rates and an outdated, uncompetitive industry. Since Vucic took office, ties with China have strengthened, through sizable investments in coal power plants and heavy industries such as copper mining and smelting, and the reinvigoration of a decrepit steelworks.

The investments were accompanied by massive Chinese lending, high-level political meetings, and the procurement of Chinese arms. In 2019, Serbia even invited Chinese security forces to participate in joint exercises.

A recent European Parliament resolution shed light on Serbia’s love affair with China, and expressed concerns about Beijing’s increasing influence on Belgrade. Of particular concern was the lack of transparency in Chinese investments and loans, and the failure of investors and lenders to carry out environmental and social impact assessments.

The European Parliament called on Serbia to strengthen its legal compliance standards for Chinese business activities, and sent a warning to Belgrade that its behavior is jeopardizing the country’s European accession process.

The gradual weakening of legal requirements for Chinese investments in Serbia is of real concern. Our legal analysis, performed in collaboration with Serbian lawyers, shows that China’s influence had an overall negative impact on the legal system. Its business activities increased the number of loopholes in the law, which made exceptions for highly polluting large-scale infrastructure investments, predominantly from Chinese enterprises or financed by Chinese state loans.

Several new Serbian laws and procedures have made it easier to make investments under the radar. One of these is the 2019 law on public procurement, which has weakened the regulations governing competition, access to public information, and environmental protection.

Another is the February 2020 law on “special procedures.” This legislation makes it possible for the government to earmark infrastructure projects as urgent, and therefore ignore the procedural regulations for public procurement. Instead, they are subjected to special procedures, because they provide strategic partnerships in projects of particular importance to the Republic of Serbia.

The Serbian government often declares projects, particularly Chinese investments in polluting industries, to be of national interest so that it can apply laws flexibly. Further, the government authorities often deny requests for information that are made wholly or in part under the Law on Access to Information, thereby blocking citizens and civil society from holding the government accountable.

In September 2018, a year after Vucic’s inauguration, the president visited Beijing and signed a Memorandum of Understanding with Shandong Linglong for the construction of a tire factory. The Serbian government then declared this factory a project of national importance. Neither this decision nor its legal basis was explained or made public, and it is unclear whether the move allows the project to effectively circumvent Serbia’s legal framework.

Following the signing of the Memorandum of Understanding, the ownership of more than 96 hectares of land was transferred to Linglong International Europe, directly and without money changing hands. Because of the project’s special status, the investor was exempted from paying fees to redesignate agricultural land for construction.

The citizens in the area have requested information on the implications the Linglong factory could have for their health, the environment, and the safety of workers. To date, however, no information on these concerns has been made available.

Similar behaviors have been observed in several other investments involving Chinese actors in Serbia. This is bad news for Serbian citizens, who are suffering from polluted air, shrinking civic spaces, and increasing levels of corruption. It could also bode poorly for Serbia’s membership negotiations with the EU.