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Chinese Investment in the Balkans

0 Comments 🕔14.Dec 2015

This article is part of our feature Re-imagining the Silk Road.

Romania’s Cernavoda Nuclear Power Plant, which has an agreement with a Chinese company. Photo credit: CameliaTWU.


by Wade Jacoby

In September 2013, Chinese leaders announced their ambitions to recreate both land-based and maritime versions of the old ‘Silk Road’ connecting East Asia with Europe. A related high-profile tussle in 2015 over the Asian Infrastructure Investment Bank highlighted one important financial channel for building and connecting the myriad planned projects related to the Silk Road. When it comes to China’s longtime use of the ‘Silk Road’ meme, separating hype from reality is a constant challenge (Stenzel).

Against this new background then, how much interest have Chinese investors shown in the Balkan region? What are the geographic and sectoral patterns evident so far? Since most Balkan states are former communist countries—Greece is the exception here—it makes sense to first look at broader patterns in the post-communist region. Chinese investment in Central and Eastern Europe (CEE) remains modest, but it is clearly growing at a very fast rate from an initially low level. Between 2005 and 2013, CEE states collected nearly $4.5 billion in Chinese FDI in 107 greenfield projects accounting for just over 25,000 new jobs.[1] The impact on any given state remains modest; only in Hungary is aggregate Chinese investment above 1% of GDP. Chinese investment to date has also been skewed towards weaker economies—especially the three CEE EU member states (Hungary, Romania, and Latvia) that also had International Monetary Fund (IMF) programs in the wake of the 2008 global financial crisis. Each of these countries has received a higher amount of Chinese FDI than would be predicted simply by looking at its FDI compared to the rest of the world (Hanemann). Meanwhile, CEE’s largest economy (Poland) and its richest (Czech Republic) each have some FDI, but no more than what we would expect based on stocks from the rest of the world. Moreover, Chinese greenfield activity substantially outnumbers mergers and acquisitions (M&A) in the CEE region. This trend runs directly counter to findings for the EU-15, where M&A predominates (Zhang and van den Bulcke). Finally, four CEE states – including relatively sizable and wealthy economies like Slovakia, intermediate cases like Slovenia and Estonia, as well as poor economies like Lithuania – have no Chinese FDI at all.

Several existing explanations for Chinese investment behavior do not hold much explanatory power across the CEE region, at least not at this stage (Jacoby). There is no evidence that the few remaining national legal barriers to FDI are decisive factors. Chinese investment also does not appear to be affected much by variation in labor (Burgoon and Raess) or business regulations. Although it is clear that Chinese investors do not shy away from difficult (and corrupt) business environments, neither do CEE national corruption scores show a positive correlation with Chinese FDI choices (Jacoby).  Finally, at most, communist-era developments have a very indirect effect through migration policies that brought many Chinese immigrants to some CEE countries—most notably, Hungary. By contrast, pre-existing commercial ties between communist-era CEE regimes and China have played a very small role according to the evidence uncovered so far.

How well does the less-studied Balkan case accord with these generalizations? Here, too, the situation reveals substantial diversity. Relying on data from the Financial Times (FDI intelligence), we can track 70 Chinese FDI projects in the Balkans region between January 2003 and January 2015 (Crossborder Investment Monitor 2015).[2]  As indicated in the following table compiled by the Crossborder Investment Monitor, the bulk of Chinese investment in the Balkans has gone to three EU member states—Romania, Bulgaria, and Greece. After that, there is a sharp drop, with only six additional projects in the entire region occurring over more than a decade—two each in Serbia and Bosnia and one each in Macedonia and Croatia.


FDI trends by destination countryJacoby chart 1Source: fDi Intelligence from The Financial Times Ltd


Total employment from these Balkan projects (column 3) is just under 24,000, with an average project size (column 4) of 340 jobs. Aggregate size of the projects (column 5) was €5.8 billion with an average project size (column 6) of €83 million. Even these averages, however, disguise important fluctuations that can be seen in disaggregated data. Average job size was actually highest at the very outset (in 2003) with nearly 25% of the job creation for the entire period, and average capital investment peaked in 2006. But these early years saw fewer projects overall (an average of fewer than four per year from 2003-2010). From 2011-2014, by contrast, annual projects averaged 11 with a high of 16 in 2013. Thus, the trend is clearly towards more projects in the region, consistent with the earlier pattern noted for CEE.

Not surprisingly, the vast bulk (88%) of the investment so far has been new investment as opposed to expansion (Crossborder Investment Monitor 4). A total of 43 Chinese companies were responsible for these 70 projects. Most Chinese companies invested in the Balkans have just a single project, but ten Chinese companies had two or more projects in the Balkans, led by ZTE (seven projects) and Huawei Technologies (four projects) during the period (Crossborder Investment Monitor 5). Just two sectors account for nearly half of the total projects, with 20 in communications and ten in renewable or alternative energy projects out of the total of 70. The car sector, which has had some high-profile projects like Great Wall Industry’s Bulgarian investment, totals just eight projects (divided evenly between ‘original equipment manufacturers’ (OEMs) and suppliers). The largest average employment figures came from the commercial real estate sector (e.g., construction), which generated nearly a fourth of the overall job growth due to Chinese investment in the Balkans. Automotive OEMs are second in average job growth—about 800 per project (Crossborder Investment Monitor 7).

In terms of business activity, Chinese investment in the Balkans is, not surprisingly, focused on manufacturing, which accounts for about 40% of projects (26/70) and over 50% of employment (nearly 14,000 of the roughly 24,000 created so far) (Crossborder Investment Monitor 8). Sales, marketing, and support activities account for another eleven projects, but only a paltry 250 jobs in aggregate, while electricity networks account for ten projects and a more robust 1,000 jobs over the period. No other business activity accounts for more than five projects. Chinese construction projects in the Balkans have been rare—only four were reported during the period—but they account for nearly 6,000 total jobs created.

Balkan investment projects are varied in their Chinese city of origin as well. The city of Shenzehn dominates the figures with just over a third of projects, followed by Beijing firms with another ten. This accounts for almost half (34/70) of all projects. After that, the other half are scattered across nearly twenty Chinese cities (Crossborder Investment Monitor 9). In terms of inbound location, the leading host city was Bucharest, Romania, with nine projects. Two Greek cities—Athens and Piraeus—were next with four each, as was Brasov, a Romanian regional center about 100 miles north of Bucharest (Crossborder Investment Monitor 11). No other Balkan location hosts more than two Chinese projects. In other words, 45 of the 70 Balkan projects are the only Chinese FDI money in town.

Looking at selected cases in more detail, the most active investor by number of projects, the Shenzehn telecommunications company ZTE, has several 10-20 million projects in telecom service centers in Romania, an R&D facility in Greece, and a production facility in Greece. By contrast, Macedonia, one of the FDI backwaters so far, is slated to receive one of the region’s largest investments, a cotton mill that is projected to employ about 4,500 workers when completed. Interestingly, this investment comes out of Weibo’s Turkish operations.[3]

In 2012, the Chinese government has announced a $10 billion fund for promoting investment in the broader CEE region. In late 2014, it announced a similar $3 billion fund for the Balkans region (Poznatov). When seen in conjunction with China’s 2013 announcements of its aim to rebuild a ‘Silk Road,’ the importance of China’s Balkan investments clearly seems to be on the rise. Already, we are seeing China build new distribution networks outward from the main Greek port of Piraeus, including the construction of a new Belgrade to Budapest railway. And while this brief report has emphasized greenfield investment over M&A, China has become a bigger player in privatizations in the region (e.g., Serbia). Whether the newly announced programs—and here we should include the Asian Infrastructure Investment Bank—will deflect the trajectories noted above still remains to be seen.


Wade Jacoby is professor of political science and Director of the Center for the Study of Europe at Brigham Young University in Provo, Utah.


This article is part of our feature Re-imagining the Silk Road.

Works Cited

Burgoon, Brian and Damian Raess. 2014: Chinese Investment and European Labor. Asia Europe Journal 12(1): 179-197.

Crossborder Investment Monitor. 2015. “Trends Report: China in the Balkans: January 2003 to January 2015.”

Hanemna, Thilo. 2014. Chinese Investment in the EU and the US: A Comparative View.” Asia Europe Journal 12(1): 127-142.

Jacoby, Wade. 2014. “Different Cases, Different Faces: Chinese Investment in Central and Eastern Europe.” Asia Europe Journal 12(1): 199-214.

Meunier, Sophie, Burgoon, Brian, and Wade Jacoby. 2014. “The Politics of Hosting Chinese Direct Investment in Europe: An Introduction.” Asia Europe Journal 12(1): 109-126.

Poznatov, Maja. 2014. “China Boosts Investment in Central and Eastern Europe.”, 20 December 2014.

Stanzel, Angela. 2015. “China’s Silk Road to Nowhere?” European Council on Foreign Relations. May 13, 2015 accessed at


[1] Typically, FDI is divided into two categories: ‘Merger and acquisition’ (M&A) involves foreign purchase of existing firms. ‘Greenfield’ FDI—the focus here—flows into new plants or offices.

[2] I am not aware of a more comprehensive data source than this. All subsequent data comes from this report. Page numbers are reported in parentheses.

[3] See

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