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Historical Background

The Republic of Belarus established diplomatic relations with the People’s Republic of China in January 1992, barely a month after gaining independence from the Soviet Union. Yet, relations with China received more attention in the country’s foreign policy only from the mid 2000s, when tensions with Russia, the European Union, and the United States saw the Belarusian regime search for new cooperation opportunities and partners, especially in investment and trade.

Since 2005, following a mutual declaration of intention to cooperate more intensively, China has been referred to as a strategic partner by Belarusian President Alexander Lukashenko and his officials. A comprehensive strategic partnership was officially declared in 2013, before the launch of China’s Silk Road Economic Belt (SREB), the land component of the Belt and Road Initiative (BRI). This was followed by a 10-year treaty of friendship and cooperation signed in 2015 during a state visit by Chinese President Xi Jinping to Minsk. The same year, China–Belarus relations attracted wider international attention when Belarus demonstrated its new long-range multiple-launch rocket system developed in cooperation with China.

In the 2010s, Belarus and China expanded cooperation in different fields, from loan finance and education to cross-regional ties. Still, bilateral high-level political interaction prevailed, setting the tone for other spheres. The partnership with China—perpetually emphasised by Belarusian authorities—was updated with new labels over the years. In 2020, before the dramatic Belarusian presidential elections, bilateral relations were referred to by President Xi as an ‘iron brotherhood’. Yet, the ensuing political crisis and massive crackdown on civil society in Belarus led to EU and US sanctions against the regime, to which Alexander Lukashenko responded with threats to block rail freight traffic transiting between Germany and China.

These developments have certainly tarnished the image of the country as a stable and predictable partner for China. Nevertheless, in September 2022, Belarus and China declared their relationship was an ‘all-weather comprehensive strategic partnership’. This was, however, a less emphatic description than those announced earlier by Belarusian officials (‘iron brotherhood, exemplary all-round strategic cooperation and all-weather partnership’)—once again demonstrating the discrepancy between the desired and the real in a shifting international context.

BRI Status

Belarusian authorities demonstrated great enthusiasm for China’s SREB/BRI after its launch in 2013, embracing it as a chance to obtain strategic, material, and reputational benefits. The Chinese side, when outlining the advantages of advancing the initiative via Eastern Europe, took an interest in Belarus due to its location, relatively developed transport infrastructure, and the keenness of its long-lasting regime to maintain cordial relations with China. Moreover, since 2014, turbulence in neighbouring Ukraine made Belarus a relatively more attractive and stable partner. Additionally, as a member of the Eurasian Economic Union (EAEU) since 2015, Belarus could potentially have facilitated the development of the China–EAEU free-trade zone by implementing Chinese–Belarusian industrial projects and actively supporting integration between the EAEU and the BRI.

In 2015, during a visit by President Xi, both heads of state agreed to jointly promote the BRI and expand cooperation in a wide variety of relevant areas, from trade and investment to information technology and cultural exchanges. They also declared an intention to revive the idea of a China–Belarus industrial park—and that dated back to 2010–11 but had floundered due to administrative clumsiness and limited attractiveness to Chinese investors and companies—declaring it an important joint BRI undertaking. Thereafter, the joint industrial park’s ‘Great Stone’, not far from the Belarusian capital, came to be regarded by both sides as a model BRI project.

Other BRI-related items have been added to the bilateral agenda. During the first BRI forum in 2017, both countries’ governments agreed to cooperate on the development of infrastructure, international freight transport, and warehouse logistics. The growth in China–European Union rail freight services worked for the image of Belarus as a transit country along the BRI, as most China–European Union rail connections passed through its territory. Additionally, since 2018, China and Belarus have adopted a mutual visa-free policy.

The Belarusian regime’s support for China’s BRI has been steadfast over the years, running like a thread through presidential directives on the development of bilateral relations with China from 2015 to today. This has been demonstrated on multiple occasions by officials and state media. Belarusian authorities have tended to overemphasise their strategic cooperation with China and the country’s role in the BRI, indicating high expectations of support from China. As for the Chinese side, the partnership has been a functional foundation for cooperation in the spheres of its interests, ranging from trade and economic links with the EAEU via Belarus to medical aid cooperation during the Covid-19 pandemic as part of China’s Health Silk Road initiative.

Current Economic Relations

Trade: China is the second-largest source of imports for Belarus after Russia and, largely because of this, is its third-largest trading partner, after Russia and Ukraine. Since the mid 2000s, Belarus has had a strongly negative trade balance with China. In 2021, the value of imports from China reached 2.73 billion USD, while Belarusian exports to China amounted to 1.09 billion USD. Chinese imports consist mainly of industrial goods (equipment, machinery and accessories, and consumer goods), while Belarus exports potash fertilisers and wood (sawn timber, pulp), and, in recent years, has made a strenuous effort to export its agricultural products (mainly frozen beef, poultry, and condensed and dried milk) to China.

In 2022, due to its involvement in Russia’s invasion of Ukraine, Belarus was sanctioned politically and economically by the European Union, the United Kingdom, and the United States. Seeking export and import alternatives, the regime pinned its hopes on China, which took over Ukraine’s position as Belarus’s second-largest trading partner. From January to August 2022, Belarusian exports to China reportedly more than doubled, exceeding the total for the previous year. Yet, China’s exports to Belarus have been slowing, with a 1.4% decrease from January to August 2022 compared with a 29% annual increase in 2021 and a 17.5% annual increase in 2020.

Investment: Chinese investment in Belarus has not been very impressive, totalling 2.6 billion USD, with 1.1 billion USD of that in foreign direct investment (FDI), since 1992. Most of this investment came in the 2010s, with a marked increase between 2014 and 2018. In these four years, China rose to sixth or seventh position among the top-10 investors in Belarus, later dropping back to ninth and tenth place. The increase occurred after the launch of the BRI and the initial impetus given to the joint industrial park.

Data Source: National Statistical Committee of Belarus.

The extent to which conditions in Belarus are favourable for China’s investors matters a lot. For instance, Chinese experts and diplomats repeatedly call attention to the shortcomings of the Belarusian economy and hence the risks for Chinese investors and enterprises.

Over the past decade, Chinese net FDI inflows to Belarus fluctuated significantly, reaching a maximum in 2018–19 and decreasing after 2020.

Data Source: National Statistical Committee of Belarus.

Chinese investment has been directed mainly towards industry and construction, as well as transport and logistics infrastructure. More than 50 investment projects were under implementation in 2021, with most concentrated in the joint industrial park.

Aid: China’s aid to Belarus has been provided mainly in the form of non-refundable technical and economic assistance (more than 500 million USD in total by 2022). This began in 2007, but most came after the two countries reached an intergovernmental agreement in 2014 and President Xi’s visit to Belarus the following year. The assistance was granted to Chinese contractors to develop infrastructure at the joint industrial park (such as elements of the electrification system and a fixed riverbed) and construct public utilities (for example, social housing and a hospital building). In 2020, the construction of a large stadium and a swimming pool (estimated to be worth 235 million USD) financed by China commenced in Minsk.

Other Finance: Belarus’s external debt amounted to 18.4 billion USD in mid 2022. According to the most recent statistical data on the country’s public debt from the Belarusian Ministry of Finance, Belarus’s external debt to China as of 1 November 2021 represented 1.4% of the total amount borrowed that year. For the second consecutive year, China was Belarus’s fourth-largest creditor (with a 4% share). China had previously been among the top-three creditors, becoming the third largest in 2018 (22%) and rising to second position (39%) behind Russia in 2019. By the end of the 2010s, Belarus had received Chinese loans to implement more than 30 projects in transportation, energy, and industry.

An increase in Chinese lending to Belarus followed a 3-billion-USD concessional loan and 4 billion USD in commercial credit lines agreed to during Xi’s visit in 2015. Since 2005, Chinese loans tied to specific projects, or loans covering 85–100% of the contract with a minimum 35–60% mandatory participation of Chinese contractors and suppliers, have made China one of the top lenders to Belarus. In 2019, when the debt guaranteed by the state to China increased again (to a share of 39%, compared with 22% in 2018), Belarus managed to secure the first untied Chinese loan (3.5 billion RMB, or about 500 million USD), which was referred to in official reports on public debt as a remarkable achievement for Belarus. According to Belarusian state media, this loan was intended for government debt servicing (debt repayment and interest on outstanding loans) and to support bilateral trade. Chinese official media, on the other hand, reported that the loan would be used for investing in renminbi-denominated assets and trade support.

In 2020 and 2021, more than 5% of Belarus’s external debt was in Chinese renminbi. In September 2022, Belarus announced a switch to Chinese renminbi to pay out Chinese loans originally denominated in US dollars.

Key Controversies

Alongside the official narrative of a fruitful bilateral partnership, there have also been controversies related to the practical implementation of cooperation.

Transiting Freight Transportation: The transit of freight transportation between China and the European Union is one of the factors making Belarus attractive for China’s BRI. The volume of freight along the northern route of the China–Europe Railway Express was increasing in both directions before the 2020s. According to official statistics, in 2020–21, transport services dominated Belarusian exports of services to China. Yet, the threat to block this rail freight in the summer of 2021, as well as the weaponisation of the instability created by a migrant crisis on the Belarus–European Union border in late 2021, had the potential to create obstacles for Chinese partners, motivating them to launch alternative routes, such as a multimodal route from Xi’an bypassing Belarus via the ports of Saint Petersburg (Russia) and Mukran (Germany). This route was launched in January 2022 by China Railway to ‘avoid the unstable operation of the China–Europe train caused by congestion at some traditional stations’ in Eastern Europe.

After Russia’s invasion of Ukraine in February 2022, the decrease in rail freight transiting through Russia and Belarus (of at least 35% by October 2022, as reported by Russian Railways), especially eastwards, increased uncertainty about the scale of operations along the main rail route. Even though a September 2022 declaration by China and Belarus mentioned their intention to ensure the ‘safe and smooth running of China–Europe–China trains’, the changing international context of Russia’s war in Ukraine continues to generate uncertainty.

Joint Industrial Park: Since 2015, thejoint industrial park has been seen in Belarus and China as a model BRI project, but there have been controversies with its development, such as initial discrepancies in the expectations of the park’s functions and decreasing attractiveness to investors.

Belarusian authorities initially envisioned the park as a key project for the development of advanced and green technologies, biomedicine, and logistical services, with a view to promoting closer logistical links with Chinese partners within the ‘16+1’ initiative in Central and Eastern Europe. In response, Chinese experts and practitioners pointed to China’s experience in the gradual development of special economic zones from much less technologically advanced projects. In the view of Chinese experts, the park should evolve according to market demand, producing products that comply with China’s technical standards and focusing on the markets of the EAEU. Furthermore, EAEU regulations requiring a high level of production localisation for automotive industry products to circulate freely on the EAEU market undermined some of China’s expectations.

To make things worse, after the start of the political crisis and economic meltdown in Belarus, attempts to consolidate the budget included raising income tax for the park’s employees in 2021. All this reconfirmed to Chinese partners the risks of a changing legislative framework and the poor investment climate. Despite an order from Alexander Lukashenko later the same year to improve the legal regime of the park and enlarge its scope of activity, the damage to the park’s image could not be entirely undone.

Key Sources

Danilovich, Maryia. 2020. ‘Bridging Westward to Open the Gates of Europe: Implementation of the Belt and Road Initiative in Central Asia and Belarus.’ In How China’s Silk Road Initiative is Changing the Global Economic Landscape, edited by Marcus Taube and Yuan Li, 207–27. London: Routledge. Link.

Danilovich, Maryia. 2021. ‘Belarus–China Industrial Cooperation: A Blow Up of the Picture.’ Blog des Leibniz-Instituts für Länderkunde [Leibniz Institute for Regional Geography Blog], March. Link.

Jakóbowsky, Jakub and Kamil Kłysiński. 2021. ‘The Non-Strategic Partnership: Belarus–China Relations.’ OSW Studies, 81. Link.

Marin, Anaïs. 2017. ‘Minsk–Beijing: What Kind of Strategic Partnership?’ Notes de L’Ifri: Russie Nei Visions No. 102, June. Paris: French Institute of International Relations. Link.

Rinna, Anthony V. 2021. ‘The Beijing–Minsk Partnership and Belarus’s Role in China’s Economic Relations with the European Union.’ China Report 57: 1. Link.

Turarbekova, Roza and Maryia Danilovich. 2020. Belorussko–kitajskie otnosheniya: Ekspertnye ocenki [Belarus–China relations: Expert views]. Friedrich Ebert Stiftung Policy Paper, December. Bonn: Friedrich Ebert Foundation. Link.

Cover Photo: The House of Government at Independence square, Minsk. Credit (CC): Marco Fieber,



Austria and the People’s Republic of China (PRC) established diplomatic relations in 1971. Being a neutral, but Western-oriented country, Austria took this step earlier than many European countries—a fact Beijing continues to acknowledge. In the 1970s and 1980s, however, concrete cooperation took place in only a few areas, chief among them the railway sector, with Austrian companies providing knowhow for the construction of locomotives. Relations deepened in the mid-1990s, which was reflected in regular mutual state visits. Still, while Austrian heads of state travel frequently to China and Chinese President Hu Jintao (in office 2002–12) visited Vienna in 2011, President Xi Jinping (in office since 2013) has not yet visited Austria.

To promote its strategic interests such as multilateralism, respect for international law, and mutually fair competitive conditions in Europe and China, Austria largely relies on the leverage offered by the European Union (EU). Former conservative chancellor Sebastian Kurz (twice in office between 2019 and 2021; at the time of writing in January 2022, the chancellor is Karl Nehammer, also from the People’s Party) has argued that China is too powerful to be ignored and cooperation should be promoted in areas of mutual interest. Kurz also stressed the need for unity among EU member countries, supporting the European Union’s tougher stance on China—notably, the threefold characterisation of the PRC as a partner, an (economic) competitor, and a systemic rival outlined in the draft strategy paper ‘EU–China: A Strategic Outlook’ (2019). Austria also endorses the European Union’s Europe–Asia Connectivity Initiative and its Global Gateway Initiative as means to offer Asian partners alternatives to China’s Belt and Road Initiative (BRI) for infrastructure.

BRI Status

In April 2018, the largest ever Austrian delegation of politicians and businesspeople visited China. It was led by President Alexander Van der Bellen and Chancellor Kurz. During the visit, a strategic partnership and several economic agreements were signed. Yet, the Austrian Government made clear it had no intention to sign a far-reaching memorandum of understanding (MoU) on the BRI like the one signed by the Italian Government in 2019. However, during the visit, Austria’s Minister of Transport, Innovation, and Technology signed an MoU with his Chinese counterpart regarding cooperation in science and infrastructure building, including collaboration on the planned railway connection from the Piraeus Port in Greece to Vienna, which is being promoted by China as part of the BRI. Based on an MoU signed in 2011, way before the launch of the BRI, this new document represents only a vague agreement at the ministerial level but is portrayed by Beijing as a sign of political support for the BRI. Chancellor Kurz attended the Second Belt and Road Forum in 2019, stressing the need for upholding the rule of law, transparency, and human rights, in bilateral talks with the Chinese leaders. In a position paper published in April 2021, the Federation of Austrian Industries, an influential chamber of commerce, similarly argued in favour of reciprocity between Europe and China in regard to investment laws and market access.

Even though it is not a member, Austria is strategically and directly affected by the 16(17)+1 Platform, which was established by China in 2012 and includes 11 EU members (Lithuania left in May 2021) and four (potential) candidate countries. Since 2013, cooperation has grown considerably in Central Eastern Europe and the Western Balkans—Austria’s ‘near abroad’. Austrian companies—notably, banks and insurance companies (for instance, Erste Bank, Raffeisen, and Bank Austria), as well as construction companies (such as Strabag), and retailers (including Billa and Bipa)—have strong economic interests in the 16(17)+1 region. Austria is in many of these nations the top investor or at least among the top three, and Austrian business leaders have been vocal in calling out untransparent public tendering in EU candidate countries—in particular, in relation to Chinese actors.

Current Economic Relations

Trade: China is Austria’s fifth-largest trade partner and, since 2020, the second-largest import partner, with a share of 7%, surpassed only by the dominant Germany (35%) and slightly ahead of Italy (6.3%). In 2020, imports from the PRC amounted to 10.1 billion EUR (up 300 million EUR from 2019), and exports were 3.9 billion EUR (down 500 million EUR from the previous year). Austria has traditionally had a trade deficit with the PRC. The main export products to China are machinery and vehicles, electrical and electronic equipment, optical and medical apparatus, and pharmaceuticals, while the key import goods are electrical and electronic equipment, machinery, apparel, textiles and footwear, furniture, optical and medical apparatus, toys, games, and sporting goods, and plastics.

Tourism contributes about 6% of Austria’s gross domestic product. In total, in 2019, Austria welcomed 32 million tourists, two-thirds of whom came from Germany. The number of Asian and, in particular, Chinese tourists has increased dramatically since 2009. In 2018, one million Chinese tourists visited Austria, well ahead of South Koreans (327,000), who ranked second among Asian visitors.

Investment: According to Austrian sources, as of the end of 2020, Austrian companies had invested a total of 4.6 billion EUR in the PRC and Hong Kong, while firms from China and Hong Kong had invested 2.8 billion EUR in Austria. These amounts are comparatively low; Germany, the leading investor in Austria, invested 49 billion EUR (as of 2020) and Russia about 21.3 billion EUR (as of 2020). So far only a few acquisitions involved sensitive targets, with FACC and Diamond Aircraft the most noteworthy. FACC is an aerospace and defence company (in which the state-owned Aviation Industry Corporation of China acquired a 91.25% share in 2009), and Diamond Aircraft builds planes and drones (and was acquired by Wanfeng Aviation Industry, a private company, in 2017). Other internationally well-known but strategically non-sensitive firms acquired by Chinese companies include Atomic (skiing) and Wolford (hosiery and lingerie).

Source: Chinese Ministry of Commerce.

Overall, around 100 Chinese companies have a presence in Austria, compared with 650 Austrian firms in China. Austrian business leaders are well aware of the economic opportunities the Chinese market offers, but also know the risks involved in becoming dependent on it and the potential requirement to transfer parts of their intellectual property or technology to Chinese partners to maintain their market access or local partnerships. Among the leading Austrian investors in China are AT&S, a reputable producer of high-end printed circuit boards with production sites in Shanghai and Chongqing, and Plasser & Theurer, a global champion in the railway industry. AT&S announced in June 2021 plans to build a new plant in Malaysia rather than in China to diversify its production base, investing 1.7 billion EUR to this end.

Two large Chinese banks—the Bank of China (since 2015) and the Industrial and Commercial Bank of China (since 2018)—established their headquarters for Central Eastern Europe in Vienna, targeting large European and Chinese companies as clients and aiming to contribute to the implementation of the BRI.

Key Controversies

Unlike in the neighbouring Czech Republic and Slovakia, in Austria, China is not a heated topic. A key reason is that bilateral political relations are currently frictionless. However, the lack of a critical public debate about the impact of China’s rise is surprising, as Beijing already plays a significant role in the 16(17)+1 region. Yet, this may change, as the coalition government of the conservative People’s Party and the Green Party promised in their coalition agreement to develop a China strategy (even though at the time of writing in January 2022, the strategy had not been presented). Such a strategy will be crucial to ensure a consistent policy towards the PRC, as different Austrian stakeholders have different economic and political interests in China. Depending on the content of the strategy and, in particular, how critically it addresses the human rights situation in China, controversies with the PRC could arise, as demonstrated by the harsh Chinese criticism of the new Swiss China strategy in March 2021.

In 2020, as part of its Covid-19 diplomacy, China donated 40,000 facemasks to the city of Vienna. Austria has not seen significant controversies regarding Chinese propaganda efforts within the country. The country’s two Confucius Institutes (in Vienna and Graz) keep a low profile and focus on Mandarin teaching and organising cultural events. Also, unlike certain other European countries like the Czech Republic, Poland, and Sweden, as of January 2022, the Austrian Government does not exclude any provider of 5G technology. Rather, it emphasises that telecommunication companies have the right to choose the most appropriate partners. The Chinese telecom companies Huawei and ZTE are already cooperating with leading Austrian telecom providers, and Drei, Austria’s third-largest firm, is owned by CK Hutchison Holdings Limited (Hong Kong).

Despite the growing economic exchanges, Austria does not face the risk of becoming economically dependent on China in the future. However, as many Austrian companies—notably, in the automotive sector—are suppliers for German firms, which in turn increasingly rely on the Chinese market, the quality of Germany’s relations with the PRC will have considerable spillover effects on Austrian business interests.

Key Sources

The Austrian Institute for European and Security Policy (AIES) closely monitors Austria’s relations with China and has also strong expertise on current events in Central Eastern Europe and the Western Balkans. The AIES is also a partner of the transnational think tank the Central European Institute of Asian Studies (CEIAS), with additional offices in the Slovakian capital, Bratislava, and Olomouc, in the Czech Republic. The Vienna Institute for International Economic Studies (WIIW) regularly publishes analyses of the economic relations of Austria and China with the 16(17)+1 region.

Books, Reports, and Scholarly Articles:

Breinbauer, Andreas. 2019. ‘The Chinese Belt and Road Initiative and Its Implications for Europe.’ In Emerging Market Multinationals and Europe: Challenges and Strategies, edited by Andreas Breinbauer, Louis Brennan, Johannes Jäger, Andreas Nachbagauer, and Andreas Nölke, 213–36. Cham, Switzerland: Springer.

Erlbacher, Lucas. 2021. ‘China’s Soft Power in Austria: Building on the Power of Nonchalance.’ In China’s Soft Power in Europe: Falling on Hard Times, edited by Ties Dams, Xiaoxue Martin, and Vera Kranenburg, 14–20. The Hague: Clingendael. Link.

Gerstl, Alfred. 2018. ‘China’s New Silk Roads: Categorizing and Grouping the World—Beijing’s 16+1+X European Formula.’ Vienna Journal of East Asian Studies 10: 31–58. Link.

Gerstl, Alfred. 2020. ‘Pompeo Goes to Vienna: No Consensus on China and Russia between the US and Austria.’ CEIAS Insights, 23 September. Bratislava: Central European Institute of Asian Studies Link.

Grübler, Julia and Robert Stehrer. 2021. ‘Economic (Policy) Implications of the Belt and Road Initiative for Central, East, and Southeast Europe.’ In China’s Belt and Road Initiative: Strategic and Economic Impacts on Central Asia, Southeast Asia, and Central Eastern Europe, edited by Alfred Gerstl and Ute Wallenböck, 212–28. London: Routledge. Zinkanell, Michael. 2020. ‘Disinformation during Covid-19 from a European Perspective.’ AIES Fokus 3. Link.

Cover Photo: Vienna, Austria. Credit (CC): Maria Eklind

Czech Republic

Historical Background

In the 1950s, communist Czechoslovakia was one of China’s closest allies and its second most important trading partner (on par with Eastern Germany), right behind the Soviet Union. This ‘golden era’ came to a sudden end in the early 1960s, when the Sino-Soviet split led the two communist powers to become estranged, a situation that would remain unchanged for most of the Cold War.

The relationship began to improve in the second half of the 1980s, when Mikhail Gorbachev was in power in the Soviet Union, yet the Velvet Revolution of 1989 in Czechoslovakia terminated this thawing abruptly. The change of regime in Czechoslovakia left the new democratic and anti-communist government with very different strategic priorities than developing relations with China. Václav Havel—the last president of Czechoslovakia and, after the country’s breakup in 1993, the first president of the Czech Republic—played a major role in setting the Czech approach towards China, with reverberations that last to this day. As an anti-communist dissident and revolutionary, he made a name for himself, and his country, as the proponent of a ‘moral’ foreign policy supporting human rights and democracy around the world. Advocacy for Tibet and Taiwan, and opposition to China’s communist government, have become some of the most visible symbols of this approach.Since 2013, President Miloš Zeman has been attempting to change this by adopting a friendly approach to China as one his flagship policies, supposedly to attract Chinese investment in the Czech Republic and support Czech exports to China. As a response, Zeman’s political opponents, and much of the civil society, have doubled-down on their opposition to China, paving the way for an unprecedented official visit to Taiwan by the Senate President in 2020 which led to threats of retaliation from the Chinese side.

BRI Status

The Czech Republic signed the Memorandum of Understanding (MoU) on the Belt and Road Initiative (BRI) in 2015, during a summit of China and 16 Central and Eastern European countries in Suzhou, China. Under President Zeman (in office since 2013) and the government led by Bohuslav Sobotka of the Social Democratic Party (in power from 2014 to 2017), the Czech Republic became one of the most active countries within Central and Eastern Europe within the 16+1 platform and the BRI.

This activism manifested in high-level exchanges and the signature of various deals. On the diplomatic front, President Zeman was the only Western head of state present in Beijing for the military parade celebrating the end of the Second World War in 2015, and one of the few who attended the two Belt and Road Forums in 2017 and 2019. In 2016, Chinese President Xi Jinping paid an official visit to Prague, in what became the highest point of the bilateral relations. At the conclusion of the visit, a list of deals was announced totalling up to 10 billion EUR over the course of three years.

Still, as of February 2021, no infrastructure or otherwise clear BRI-related project has been realised in the Czech Republic, most likely due to the fact that China’s infrastructure building is not consistent with the rules and approaches of the European Union, which require that public money is spent transparently and economically through an open tender—a requirement thatgoes against China’s preferred mode of state-to-state lending and subsequent hiring of a Chinese contractor. Besides, the Czech Republic has access to the EU structural funds, which makes Chinese loans ultimately not competitive in the EU context. The proposed project of a water canal connecting the Danube, Labe, and Odra rivers is emblematic of the ambiguousness of the Czech Republic’s participation in the BRI. Although the project has been touted by President Zeman for a long time and a preliminary agreement to cooperate on a feasibility study of the project was signed during President Xi’s 2016 visit to Prague, whether it will ever materialise and whether Chinese companies will participate in it remain highly doubtful.

Current Economic Relations

Trade: As most European countries, the Czech Republic has a significant trade deficit with China. In 2019, imports from China accounted for 11.7% of the total imports, making China the second largest source of imports in the Czech Republic after Germany (which accounted for 27%). On the other hand, only 1.3% of all Czech exports went to China, a number that still made it the country’s largest Asian export partner. Most imports were in machines and electronics, while most exports were in the automotive sector. In terms of tourism, in 2019 there were more than 600,000 Chinese tourists visiting the Czech Republic, making China the fourth largest source of foreign tourists after Germany, Slovakia, and Poland. This is a significant increase compared to only about 160,000 in 2013.

Source: UN Comtrade.

Investment: Different sources give vastly different numbers regarding Chinese investment in the country due to different methodologies. According to the Chinese Ministry of Commerce, Chinese foreign direct investment (FDI) stock in the Czech Republic in 2019 was worth 287.49 million USD. German think tank MERICS put the number at one billion EUR, close to the American Enterprise Institute’s estimate of 960 million USD. These discrepancies notwithstanding, it is obvious that China is not a major investor in the Czech Republic, accounting for less than 1% of the overall FDI stock in the country regardless of which methodology is employed.

Source: Chinese Ministry of Commerce.

The lack of reliable and comparable statistics makes it complicated to judge the share of Chinese FDI flow as compared to overall incoming FDI into the Czech Republic. To get a sense of what this proportion might look like, in 2018  the government agency Czech Investlisted four Chinese-invested projects for a total value of 174 million USD, which directly created 960 jobs. In the same year, the same agency listed a total of 82 investments projects valued at 1.7 billion USD and creating more than six thousand jobs.

Key Controversies

Since President Zeman has adopted a friendlier approach towards China in 2013, a significant number of controversies surrounding the bilateral relations have erupted on the public scene. Due to space limitations, only a few representative examples will be discussed.

Although commitments of 10 billion EUR in Chinese business deals were announced in 2016 in concomitance with President Xi’s visit to Prague, so far the actual number has fallen far short of that. Most of the Chinese investment that has actually materialised has come from the CEFC China Company Limited, one of China’s largest private companies at the time of the announcement. Their investment in the Czech Republic included the acquisition of almost 10% of the shares of the J&T Financial Group (one of the leading Czech and Slovak financial groups), the Slavia Praha football club, the Lobkowicz brewery, a travel agency, as well as assorted real estate in Prague and shares in a local media group. However, in 2018, CEFC got into financial and political troubles. Its assets were temporarily taken over by its local creditor, and eventually by CITIC, a major Chinese state-owned investment company. The company’s chairman Ye Jianming was arrested in China on charges of bribery and, in March 2020, the company was declared bankrupt. The CEFC scandal eventually brought down a number of senior officials at China’s top policy bank, the China Development Bank. This included the then chairman, Hu Huaibang, who was sentenced to life in jail in 2021 for taking millions of dollars in bribes from CEFC.

As these events were still unfolding, in November 2018 the new city government of Prague led by Mayor Zdeněk Hřib announced that they would scrutinise previously agreed sister city links with Beijing and Shanghai as the new administration did not approve the inclusion of the ‘one China clause’ in the agreements concluded under the previous city leadership. Eventually, Mayor Hřib announced that Prague would cancel its ties with Beijing, but Beijing—and later Shanghai—moved faster and cancelled the ties first.

Another incident occurred in December 2018, after the Czech National Cyber Security Centre issued a warning against Huawei and ZTE products, claiming that the legal and political conditions that require these firms to cooperate with intelligence services in China in certain scenarios would present a threat to Czech national security. After subsequent exchanges, Czech Prime Minister Andrej Babiš (in power since the end of 2017) accused the Chinese Ambassador, Zhang Jianmin, of ‘lying’ regarding how he had characterised their communications over the security warning. Following other tensions between the Ambassador and the Czech authorities, there were even calls for the Chinese government to replace its ambassador but they did not go anywhere.Another controversy erupted after it was revealed in February 2020 that Chinese officials had made threats in relation to the trip of Czech Senate President Miloš Vystrčil to Taiwan. Before the trip, it was discovered that the Chinese Embassy had prepared a document listing possible retaliation measures. After the trip actually took place in August 2020, Chinese Minister of Foreign Affairs Wang Yi threatened retaliation in harsh terms. However, there is no evidence of any actual retaliation taking place, with the only issue publicly discussed after the visit being the postponement of the sales of Czech piano maker Petroff. A few weeks later, however, it was reported that the company was continuing with its normal business in China.

Key Sources

English-language Media:

Radio Prague International and Prague Monitor offer news coverage on the Czech Republic in English.Kafkadesk and Visegrad Insight provide good coverage on the Central European region.


Czech universities, research institutes, and think tanks are very active in China studies. There are three departments of Asian studies teaching Chinese language and Sinology—at Charles University in Prague, Palacky University in Olomouc, and Masaryk University in Brno. Although these departments take mostly a ‘classical’ approach focussing on the language, history, and culture, they have been also active in terms of contemporary Chinese politics and international affairs.

Palacky University Olomouc has a history of hosting large-scale EU-funded research projects, in the past ‘Chinet’, and since 2018 ‘Sinophone Borderlands–Interaction at the Edges’. Employing about 40 researchers studying interactions between China and foreign countries and peoples, it is currently the largest research centre with such a focus in the country.

Sinologists affiliated with the Charles University have established the project Sinopsis, which has made a name for itself for exposing instances of ‘Chinese influence’ in the Czech Republic and beyond.

Czech Academy of Sciences hosts an Oriental Institute. Besides its more classical research focus, it has recently engaged in a research project ‘Power and Strategies of Social and Political Order’. The Institute also keeps a separate centre in Taipei at the Academia Sinica.

There is also a department of Asian studies at the Metropolitan University Prague focusing on international affairs of the Asian regions. 

Prague’s University of Economics and Business has its own Centre of Asian Studies, one of the few centres in the country studying China’s and other Asian economies.

Among the think tanks, the Association for International Affairs Prague (AMO) has a number of researchers and projects. Most importantly, it hosts the project China Observers of Central and Eastern Europe (CHOICE), which serves as a regional network of China-watchers. AMO also hosts a research project titled MapInfluence (previously known as ChinfluenCE), studying Chinese influence in Central Europe. 

The Institute of International Relations Prague, a research institute affiliated with the Ministry of Foreign Affairs, includes a Centre for EU-Asia Relations. The Institute is also a member of European Think Tank Network on China, focusing on the study of contemporary China and the EU-China relations.

The Central European Institute of Asian Studies (CEIAS), originally a Slovak independent think tank, has been active also in the Czech Republic and since 2019 has been affiliated also with the Palacky University Olomouc.

Reports and Scholarly Articles:

  • Fürst, Rudolf and Gabriela Pleschová. 2010. ‘Czech and Slovak Relations with China: Contenders for China’s Favour.’ Europe-Asia Studies 62, no. 8: 1363–81. 
  • Bajerová, Alžběta and Richard Turcsanyi. 2019. ‘Between Defender of Values and Faithful Ally: Czech Approaches to China in the Prism of Role Theory Approach.’ Studia Orientalia Slovaca 2. Link
  • Garlick, Jeremy. 2019. ‘China’s Principal–Agent Problem in the Czech Republic: The Curious Case of CEFC.’ Asia Europe Journal 17, no. 4: 437–51.
  • Turcsányi, Richard Q., Renáta Sedláková, Matej Šimalčík, and Kristína Kironská. 2020. ‘Czech Public Opinion on China in the Age of COVID-19: A Divided Nation.’ Link
  • Zelenka, Jakub. ‘Česko-čínské objímání [Czech-Chinese Hugging].’ Deník N. Link

See also the relevant policy papers articles in Sinopsis, MapInfluence, and the European Think-Tank Network on China.

Cover Photo: Praga, by @anarey (CC).



Denmark recognised and established official diplomatic relations with the People’s Republic of China (PRC) in 1950—the second Nordic country to do so after Sweden. Despite being a member of the North Atlantic Treaty Organization (NATO) since 1949 and a member of the European Union (EU) since 1973, Denmark has retained its interest in developing economic relations with China due to its position as a small, export-oriented state. To date, Denmark is the Nordic country with the highest number of official government-level memorandums of understanding (MoUs) with China, and bilateral relations have been solidified through an increasing volume of high-level diplomatic visits, including by the Danish royal family.

Following the 1989 crackdown in China, the Danish Government adopted a critical, values-based activism and policy approach focusing on human rights that was pursued throughout the 1990s, resulting in strained bilateral relations. Around 2000, in line with other Western governments seeking to capitalise on China’s growing economy, this critical approach was shelved in favour of a more ‘discreet’ model in which human rights were to be discussed behind closed doors or through official channels, such as those provided by the European Union. Denmark’s bilateral relations with China were subsequently developed through economic diplomacy—a pragmatic approach that was cemented in 2008 when Denmark and China established a Comprehensive Strategic Partnership (CSP) focusing on sustainable development, climate, energy, environment, food safety, green maritime transport, and health.

Throughout the years, however, the intensifying great-power rivalry between the United States and China has led Denmark to strike an uneasy balance between its old allies and its new cooperation partner. Denmark takes cues from Washington when it comes to some Chinese investments—for example, in relation to China’s ‘Digital Silk Road’ and Huawei’s 5G networks, or infrastructure investments in Greenland and the Arctic, such as mining ventures and the Kalaallit Airports (for more details, see the Greenland country profile). In these cases, Denmark has sided with the United States, noting the importance of preserving alliances related to Danish security policy, and alternative investments to counter China’s influence have been secured through or provided by the Danish Government. Conversely, the Danish Government has been critical of US foreign policy under President Joe Biden, especially in relation to that country’s retreat from Afghanistan in 2021, but also its polarising policy on China.

The approach of the preceding Trump administration caused similar political friction in US–Danish relations. Nevertheless, since 2019, Denmark has adopted a more vocal approach to Chinese politics and investment. The country now follows the policy laid out by the European Union, considering China as a cooperation partner, an economic competitor, and a ‘systemic rival’. The Danish approach to China is increasingly debated in the Folketinget (the Parliament), and political parties from all sides of the spectrum are voicing concerns about China’s current trajectory, especially in relation to democracy, human rights, and the flexing of its muscles on the international stage, not least in the South China Sea. Views of China among politicians as well as the public have worsened, and there have been calls on the government to demand China uphold human rights and strengthen democracy, as well as to create a clear strategy concerning Sino-Danish relations.

BRI Status

Denmark became one of the founding members of the Asian Infrastructure Investment Bank (AIIB) in 2015. Membership was viewed as a means for Denmark to adhere to the Danish Strategy for Foreign and Security Policy, particularly in terms of promoting globalisation and connectivity, as well as advancing Danish trade interests. In conjunction with its membership of the AIIB, Denmark was quick to show interest in the Belt and Road Initiative (BRI), although at the time of writing in February 2022 no official BRI MoU had been signed. Therefore, in 2017, when former Prime Minister Lars Løkke Rasmussen (in office 2009–11 and 2015–19) visited China, President Xi Jinping expressed hope that Denmark and China would enhance their cooperation under the BRI framework. Subsequently, the CSP was bolstered with the launch of a Joint Work Program (JWP) between the two countries.

An agreement to renew the JWP was made in November 2021 when Danish Foreign Minister Jeppe Kofod met with his Chinese counterpart, Wang Yi. The new JWP entails an emphasis on addressing climate change and promoting bilateral cooperation in areas such as the green transition. However, while Danish companies such as COWI, Vestas, and Maersk have been present and active in BRI discussions, and have cooperated with Chinese state-owned enterprises (SOEs) in different ways—for instance, by consulting for certain overseas projects—it remains unclear whether Denmark plans to get more involved in BRI projects in the future. The initiative has been widely criticised by different Danish politicians and political parties—for example, in relation to issues of human rights and the environment. As the BRI has also received pushback from some of Denmark’s European allies and the United States, it could lead to discord with some of these allies if Denmark officially ‘joins’ the initiative.

Current Economic Relations

Trade: While Denmark has grown more sceptical of China’s global intentions and more critical of the country’s human rights issues, Danish authorities have kept a pragmatic attitude when it comes to commercial and trade interests with China. According to the United Nations’ Comtrade database on international trade, in 2019, China exported goods worth 6.97 billion USD to Denmark—mainly passenger and cargo ships, medicine, and textiles. Danish exports to China reached 5.28 billion USD—primarily consisting of growth hormones, pig meat and edible meat offal, and medical equipment. Bilateral trade in commodities between the two countries in 2020 was worth 12.04 billion USD—a 14.7% increase year-on-year. In 2022, China surpassed Norway to become Denmark’s fifth-largest export partner.

(Source: Statistics Denmark)

Investment: Most Chinese investments in Denmark are in the fields of renewable energy, health and welfare solutions, and advanced technologies such as robotics and information technology (IT). The Danish Government has largely framed China’s interest in Danish companies as beneficial, and the fact that China increasingly seeks out Danish knowhow has been viewed positively. Even so, shifts can be seen in the Danish approach to Chinese investment. Overall, Danish industry remains positive, arguing that China is unduly ‘demonised’ and the Danish state should not be unnecessarily worried about the country acquiring Danish knowhow and access to critical infrastructure. At the same time, China’s lack of interest in investing in Danish companies and projects is framed as worrisome by industry, with the argument that Denmark needs the economic boost such investment would bring. Sometimes, Chinese expertise may even be needed, such as in 2020, when China Railway Engineering Equipment Group (CREG) was contracted to deliver two tunnel-boring machines for the expansion of the Copenhagen Metro. However, criticism persists, and resistance is growing in some quarters. Critics argue that Denmark should not be an ‘investment buffet’ for Chinese companies seeking to take over key technologies, and that Denmark risks selling out its cultural values related to democracy and freedom of speech by accepting Chinese investment. Some Danish companies have found themselves in hot water over cooperation with controversial tech giants such as Hikvision, whose surveillance technology has been used by the Chinese state in the Xinjiang Uyghur Autonomous Region. As a result, in 2021, the Danish Business Authority introduced new regulations for screening foreign investments in sectors such as defence, IT, and critical infrastructure.

(Source: Chinese Ministry of Commerce)

Aid: The Sino-Danish aid landscape has been viewed positively during the Covid-19 pandemic, as Denmark offered monetary and material support to China, which then returned the favour. However, in February 2021, intense criticism was levied at Danish development assistance to China, which continues to identify as a developing country despite having the second-largest economy in the world. At the time, Denmark had active development projects in China amounting to roughly 170 million DKK (approximately 26 million USD), primarily related to renewable energy, water sanitation, and urban development. Climate and energy collaboration remains a focal point of Danish aid and, in the past decade, Denmark has used funds from the Danish International Development Agency to cooperate with some of the world’s primary emerging economies and emitters of carbon dioxide. In 2020, using a 250 million DKK (approximately 38 million USD), five-year grant, Denmark began its largest climate collaboration thus far, with China, Vietnam, Mexico, and South Africa.

Key Controversies

While Denmark officially supports the One-China Policy, many controversies in the Sino-Danish relationship have centred on Tibet, Xinjiang, Hong Kong, and Taiwan. One high-profile incident concerned the so-called Tibet flag case, which began in June 2012 when former Chinese President Hu Jintao visited Denmark and was driven to the centre of Copenhagen to attend high-level meetings. To voice concerns over the ongoing repression in Tibet, Danish demonstrators waved Tibetan flags along the route, but the Danish police forcibly removed the flags and the demonstrators on orders from the government—in direct contravention of Danish law on freedom of speech. The event sent shockwaves through the Danish parliamentary system and contributed to a public uproar about the importance of criticising China’s human rights issues. Subsequent events have underlined Denmark’s difficulty in addressing tough questions with China.

In 2019, Denmark received two pandas from Chengdu as part of China’s ‘panda diplomacy’, but when the new panda enclosure at the Copenhagen Zoo was about to open, a map display had to be changed following demands from China because it depicted Taiwan as being independent from the Chinese mainland. In 2020, the citizens’ rights activist Ted Hui, a prominent member of the Hong Kong democracy movement, fled to Denmark with the help of several Danish politicians and the Kina-Kritisk Selskab (China-Critical Society)—an organisation that aims to fight China’s influence in Denmark and to provide criticism of issues related to China’s human rights, freedom of speech, and democracy. The politicians were able to convince the Chinese authorities to allow Hui to travel to Denmark to attend a series of fictional political meetings concerning the climate. However, officials from the Danish Government, including the Foreign Ministry, refused to meet with Hui due to concerns about a political backlash from authorities in Beijing, opting instead to discuss the situation in Hong Kong through official EU channels. In 2022, China’s repression of the ethnic Uyghur population in Xinjiang resulted in a diplomatic hiccup when the Danish Government decided to opt out of its official attendance at the Beijing Winter Olympics. While initial reports stated that Denmark had joined other Western countries in boycotting the games over human rights abuses, the Danish Government quickly backpedalled and framed the cancellation in terms of concerns about the Covid-19 pandemic.

Another controversy relates to Sino-Danish knowledge-based cooperation. Because of China’s increasing focus on science and innovation, the Danish Ministry of Higher Education and Science has labelled China a ‘strategically important country for cooperation’, and strengthened research cooperation is a top priority. Several bilateral MoUs on research and development have been signed and Danish universities, government ministries, and municipalities retain a focus on establishing cooperation agreements with Chinese partners, especially in the field of renewable energy. However, recently, it was discovered China had hired Danish researchers through the ‘Thousand Talents’ program, which the US Department of Justice suspects of stealing Western research. This has resulted in resignations of researchers and has brought intensified attention to allegations of Chinese espionage in Denmark, both in universities and in industry.

Key Sources

Institutions: The China studies environment in Denmark is vibrant and diverse, with a growing number of experts progressing knowledge of China and its politics. These experts are based at institutions, departments, and think tanks such as the University of Copenhagen and its think tank, Aarhus University, Copenhagen Business School, the Danish Institute for International Studies, the Nordic Institute of Asian Studies, and the Danish–Chinese Business Forum.

Reports and Articles:

Esteban, Mario, Miguel Otero-Iglesias, Una Aleksandra Bērziņa-Čerenkova, Alice Ekman, Lucrezia Poggetti, Björn Jerdén, John Seaman, Tim Summers, and Justyna Szczudlik, eds. 2020. Europe in the Face of US–China Rivalry. Madrid: European Think-tank Network on China. Link.

Forsby, Andreas Bøje. 2016. ‘Norden og Kina: Førsteviolinist i det nordiske ensemble? Danmarks forhold til Kina [The Nordics and China: First Violin in the Nordic Ensemble? Denmark’s Relations with China].’ Internasjonal Politikk [International Politics] 74(3): 1–9. Link.

Sørensen, Camilla and Jørgen Delman. 2016. ‘Dansk Kina-politik: fra spørgsmål om eksport og danske arbejdspladser til ny verdensorden [Danish China Policy: From Questions on Exports and Danish Workplaces to New World Order].’ Økonomi & Politik [Economy & Politics] 89(1): 2–8. Link.

van der Putten, Frans-Paul, John Seaman, Mikko Huotari, Alice Ekman, and Miguel Otero-Iglesias, eds. 2016. Europe and China’s New Silk Roads. ETNC Report December 2016. Madrid: European Think-tank Network on China. Link.

Yang, Jiang. 2020. ‘Danmarks politik i forhold til kinesiske investeringer: Pragmatisk balancegang mellem voksende trusselsperspektiver [Denmark’s Policy on Chinese Investments: Pragmatic Balancing Act between Growing Threat Perspectives].’ Internasjonal Politikk [International Politics] 78(1): 43–53. Link.

The author would like to thank Professor Emeritus in China Studies, Jørgen Delman (University of Copenhagen), for his helpful comments on this article.

Cover Photo: Axel Towers, Copenhagen. Credits: Maria Eklind (CC).


Historical Background

China and Greece established diplomatic relations on 5 June 1972. Greek Prime Minister Konstantinos Karamanlis visited Beijing in 1979 followed by an exchange of visits in 1986 between Prime Minister Andreas Papandreou and Premier Zhao Ziyang. However, in the first three decades of diplomatic relations official contacts remained rare, involving only infrequent visits and dialogue in the bilateral framework of the China–Greece Joint Inter-ministerial Committee and in the context of the Asia-Europe Meeting (ASEM) Process. 

The official visit to Greece of Chinese President Jiang Zemin in 2000 and that of Greek Prime Minister Kostas Simitis to China in 2003 were important milestones as they inaugurated a new period of comprehensive cooperation. Official Sino–Greek contacts intensified after 2003, driven by the Olympic Games of Athens (2004) and Beijing (2008), as Greece provided know-how to the Beijing Olympic Games Organising Committee. In 2006, the two countries upgraded their bilateral relations by establishing a Comprehensive Strategic Partnership, including a political dialogue and enhanced cooperation in trade, tourism, sport, education, and people-to-people diplomacy. The concession of the Piraeus Port Container Terminals II and III (hereinafter ‘the Concession’) to China Ocean Shipping Company Limited (COSCO) in 2009 and the privatisation of Piraeus Port Authority (PPA) in 2016 solidified bilateral relations in the economic realm. In addition, in 2011 Greek merchant vessels evacuated thousands of Chinese citizens and workers from Libya, an event that showcased Greece’s strategic value for Chinese operations in the Mediterranean.

BRI Status

Since the Belt and Road Initiative (BRI) was first announced in 2013, the port of Piraeus has been designated as one of the Initiative’s key projects in Europe. COSCO’s investment in Greece, a member of both the European Union and the Eurozone, envisaged Piraeus as a gateway and transit centre for Chinese imports to Europe. Following that, high-level official visits between the two sides have become frequent, with heads of state and government meeting on an annual basis. During these official visits, the two sides have signed a large number of agreements and memorandums of understanding, covering economic, cultural, scientific and educational cooperation, as well as trade and investment deals.Greece officially joined the BRI on 27 August 2018, when foreign ministers Nikos Kotzias and Wang Yi signed a memorandum of understanding to strengthen bilateral cooperation within the BRI framework. On 13 April 2019, Greece became a member of the Cooperation between China and Central and Eastern European Countries (also known as 17+1), and on 20 August 2019 it joined the Asian Infrastructure Investment Bank (AIIB) with a paid-in capital of 10 million USD and 0.1552% of total votes. In addition, since 2015 successive Greek governments have expressed interest in joining the New Development Bank led by Brazil, Russia, India, China, and South Africa (the so-called BRICS), but no formal application has been submitted to date.

Current Economic Relations

Economic relations between China and Greece remained unremarkable until COSCO’s gradual involvement in the port of Piraeus in 2009. Since then, Chinese investment in Greece’s largest port has been the cornerstone of the economic partnership and has generated interest from Chinese SOEs and private companies in other sectors of the Greek economy.

Trade: Bilateral trade is modest. In 2019, it totalled 5.2 billion USD, with Greek exports to China reaching 999.09 million USD and Chinese exports to Greece 4.1 billion USD. China and Greece are each other’s 13th and 46th largest trading partner respectively. The main categories of Greek exports to China are: a) fuels, oils, distillation products (468.64 million USD); b) minerals and cement (239.96 million USD); and c) machinery and parts (84.95 million USD).

Source: Chinese Ministry of Commerce.

Investment: According to the China Global Investment Tracker of the American Enterprise Institute, Chinese investments in Greece reached 10.5 billion USD in 2020. Two specific investments have attracted the most attention from the public and from the media: the Piraeus Port and the Greek Independent Power Transmission Operator. Despite often being presented as a key BRI project in Europe, COSCO’s involvement in Piraeus goes back to 2009, four years prior to the first mention of the BRI, when the Chinese company won an international tender for the concession of Container Terminals II and III. Greek shipowners, long-standing clients of Chinese shipyards and banks, spearheaded the investment by intensively lobbying the Greek government. The 2010 economic crisis paved the way for the port’s privatisation. Under the third bailout agreement with the European Commission, the International Monetary Fund, and the European Central Bank, Greece was obliged to implement a programme of rapid privatisations, which included the Piraeus Port Authority. In 2016, following an international tender, COSCO acquired a majority stake in PPA for 402.1 million USD. In the same year, another Chinese SOE, the State Grid Corporation of China, acquired a minority stake (24% of shares) in the Greek Independent Power Transmission Operator (IPTO) for 352.14 million USD. Although the Greek state retained a majority stake of 51%, State Grid has positioned itself strategically for IPTO’s future privatisation. Other notable private investments include acquisition of 16.4% of Folli Follie, a luxury brand, by Fosun and of 70% of Korres SA Natural products by Chinese Profex Inc and Morgan Stanley. In addition, up to February 2020, 5,869 Chinese citizens had obtained residence permits under the Greek ‘Golden Visa’ programme, which amounts to approximately 1.5 billion USD in investment.

Key Controversies

COSCO’s expanding presence in Piraeus since 2009 has resulted in disputes over labour conditions, environmental protection, public health, and the use of land. Dockworkers in Container Piers II and III have organised strikes and walkouts protesting about poor labour conditions, and in 2014 managed to set up a union despite strong opposition from the management. The Port is surrounded by the densely populated urban districts of the City of Piraeus, and so COSCO ‘inherited’ local grievances over air pollution and traffic—both of which have deteriorated since 2009. In addition, local communities have opposed COSCO’s various plans for the use of PPA land, such as the vacated fertiliser plant at Lipasmata and the fuel silos in Perama, and the expansion of the Port’s cruise terminal that will block access to the seafront and increase air pollution. These issues have resulted in local mobilisation, protest, and long litigation processes. Nevertheless, COSCO’s economic activities in the port have remained broadly uninterrupted and consistently profitable.

In 2020, opposition against COSCO’s plans for expansion of the port grew considerably with the addition of influential local businessmen and the city’s municipal government that barred tracks carrying building materials from passing through the city.  In addition, local business associations have accused COSCO of using its control of the Port to monopolise a broad range of traditional economic activities in Piraeus, including ship building and repair and logistics.

Piraeus Port, Greece. Credit: Christos Vassiliou (CC).

Key Sources

Local Media in English:

Reports and Scholarly Articles:

  • Huliaras, Asteris, Petropoulos, Sotiris. 2014. ‘Shipowners, Ports and Diplomats: The Political Economy of Greece’s Relations with China.’ Asia Europe Journal 12, no, 3: 215–30.
  • Neilson, Brett.  2019. ‘Precarious in Piraeus: On the Making of Labour Insecurity in a Port Concession.’ Globalizations 16, no. 4: 559–74.
  • Psaraftis, Harilaos, Pallis, Athanasios. 2012. ‘Concession of the Piraeus Container Terminal: Turbulent Times and the Quest for Competitiveness.’ Maritime Policy and Management 39, no. 1: 27–43.
  • Tonchev, Plamen, Davarinou, Polyxeni. 2017. ‘Chinese Investment in Greece and the Big Picture of Sino–Greek Relations’. Institute of International Economic Relations website. Link.
  • Tsimonis, Konstantinos, Igor Rogelja, Ioana Ciută, Anastasia Frantzeskaki, Elena Nikolovska, and Besjan Pesha. 2020. ‘A Synergy of Failures: Environmental Protection and Chinese Capital in Southeast Europe.’ Journal of Current Chinese Affairs 48, no. 2: 171–200.
  • Van der Putten, F. P., 2014. ’Chinese investment in the Port of Piraeus, Greece: The Relevance for the EU and the Netherlands.’ Clingendael Institute website. Link.

Cover Photo: Piraeus Port, by @jb912 on (CC)



As part of the Kingdom of Denmark, Greenland’s foreign relations are managed in cooperation with Denmark. With the adoption of the Self-Government Act of 2009, the Government of Greenland (GoG) took sole responsibility for Greenland’s natural resources and earned the right to act independently in international affairs on matters pertaining to these and other areas for which it took over responsibility. While several policy areas remain under Danish jurisdiction—such as justice, defence, and national security—Greenlandic influence reaches beyond what the formal division of labour suggests.

Bilateral relations between Greenland and China began to develop after the adoption of the Self-Government Act. The GoG has sought to attract Chinese investment in Greenland’s economy—in particular, its mining industry. Most of Greenland’s political elite regard a mining boom fuelled by Chinese investment as the most feasible path towards achieving a self-sustaining economy and a prerequisite for realising formal independence from Denmark, which is the stated long-term aspiration of most Greenlandic political parties, individuals, and interest groups (today, an annual block grant from Denmark of 3.9 billion DKK, or roughly 585 million USD, accounts for about one-fifth of GDP and half of government revenue). In November 2011, Greenland’s Minister for Industry and Natural Resources, Ove Karl Berthelsen, visited the China Mining Conference and Expo, an annual international mining conference in Tianjin, where he met with China’s then Vice-Minister for Land and Resources Wang Min as well as several Chinese companies. Berthelsen also visited Beijing, where he was received by China’s then vice-premier and now Premier, Li Keqiang. In April 2012, China’s then Minister for Land and Resources Xu Shaoshi visited Nuuk, which was followed by a visit in the summer of 2013 by a large Chinese investor delegation to Greenland. Greenlandic leaders have since made several trips to China to promote Greenland to potential Chinese investors, including to the China Mining Conference and Expo.

China does not have a diplomatic mission in Greenland, and Greenland is diplomatically represented in China through the Embassy of Denmark. In November 2021, the GoG established a representative office in Beijing with the goal of promoting trade and fostering economic and cultural relations with China and other East Asian countries.

BRI Status

While Chinese officials have been careful about expressing any views on Greenland’s strategic importance to China, some Chinese academics have argued that Greenland could play a key role in the emerging ‘Polar Silk Road’, with some even claiming the country could provide a ‘foothold’ for China to access the Arctic. However, Greenland has not joined the Belt and Road Initiative (BRI) and is unlikely to do so under the current political circumstances. Since Greenland is not a sovereign state but a constituent country of the Danish Realm, China is more likely to invite Denmark to join the BRI than to invite Greenland separately (for more details on this, see the country profile for Denmark). And any unilateral move by Greenland towards signing a BRI agreement with China would likely be challenged by Copenhagen for violating its security concerns.

Considering Denmark’s close military cooperation with the United States in Greenland (which includes the United States operating the Thule Air Base in the north of the country) and given US efforts to push back against the BRI in the Arctic and elsewhere, it is unlikely Greenland (or Denmark) would join the BRI. The United States has long regarded Greenland as part of its sphere of influence and is currently stepping up its engagement in the country with the explicit aim of countering what it considers to be encroaching Chinese influence. In 2020, the United States reopened its consulate in Greenland, which had been closed since 1953. It has also extended two economic aid packages to Greenland and sought to cooperate with the GoG on rare earths minerals governance and exploration. While it remains to be seen how Chinese investors respond to these actions, signs point to China taking a more cautious approach in Greenland and the Arctic more broadly and perhaps even withdrawing plans for investment in the country.

Current Economic Relations

Trade: Due to Greenland’s tiny population (around 56,000), trade between China and Greenland is miniscule from the Chinese perspective, but significant for Greenland. In 2019, Greenland exported goods worth 270 million USD to China, about 98% of which was frozen fish, making China Greenland’s second-largest export destination after Denmark. By comparison, Chinese exports to Greenland reached 663,000 USD in 2019, making it one of China’s smallest export markets. The main Chinese exports to Greenland were stuffed animals, office machine parts, and light fixtures.

Investment: Chinese foreign direct investment (FDI) in Greenland has been very limited. One of the notable deals, Chengdu-based rare-earth miner Shenghe Resource’s investment in the planned Kuannersuit (Kvanefjeld) rare-earth mine in south Greenland, was in fact FDI in Australia, not Greenland. In 2016, Shenghe acquired 12.5% of the shares of Greenland Minerals and Energy Limited (GME), the Australian licence-holder for the project. The engagement of China Nonferrous Metal Industry’s Foreign Engineering and Construction (NFC) in the Citronen Fjord project—an advanced zinc and lead exploration project in northern Greenland owned by the Australian Ironbark Proprietary Limited exploration group—does not seem to have moved past the signing of a non-binding memorandum of understanding (MoU) between Ironbark and NFC in 2014. According to the MoU, NFC would provide a turnkey fixed-price engineering, procurement, and construction solution for developing the project. However, while NFC was involved in the 2017 feasibility study, it seems to have lost interest in the project and Ironbark has since moved on to other investors. In terms of Chinese FDI, this seemingly only leaves General Nice’s acquisition of the Isua iron ore project in 2015—a proposed large-scale iron ore mine 150 kilometres northeast of Nuuk (for more details, see below).

Key Controversies

Despite the fact very few investments have materialised, Chinese economic engagement in Greenland has been mired in controversy. One controversy concerned the Isua iron ore project. In 2012, media reports revealed that due to the shortage of qualified labour in Greenland, then licence-holder London Mining Greenland A/S (a subsidiary of London Mining Greenland) planned to import as many as 3,000 foreign workers for the construction, most of whom would be Chinese. For the project to be economically viable, the workers would need to be paid below the minimum wage. Apart from concerns about the social impact of such a large influx of foreign workers to Nuuk, which is home to only about 17,500 inhabitants, it triggered intense debates in Greenland and Denmark about immigration regulations and labour rights. As a result of these debates, the Large-Scale Projects Act was passed in Greenland in 2012, which aimed to facilitate immigration and made it legal to pay workers on ‘large-scale projects’ (defined as projects with capital costs exceeding 5 billion DKK, or 760 million USD) below the minimum wage. In 2015, the Hong Kong–based General Nice bought the remains of London Mining Greenland after the latter went bankrupt in the wake of the iron ore price collapse of 2014. General Nice thus acquired the Isua project. However, in November 2021, London Mining Greenland A/S (now a subsidiary of General Nice) was stripped of the licence by the GoG because of a lack of activity at the mining site and missed payments.

Another controversy, which also involved General Nice, concerned the abandoned Danish Grønnedal naval base in southwestern Greenland. The property had been put up for sale but when General Nice expressed an interest in purchasing it, the Danish Government swiftly decided to take it off the market and reinvest in it, allegedly to avoid upsetting the relationship with its close ally the United States.

In 2018, the state-owned China Communications Construction Company (CCCC) was shortlisted to assist with the extension of airport runways in Greenland. In what was widely perceived as an effort to keep China out, the Danish Government stepped in and financed half of the estimated cost, which triggered a political crisis in Greenland when the populist pro-independence Partii Naleraq quit the governing coalition in protest against receiving Danish assistance. CCCC later withdrew from the bidding process, citing problems with securing visas for its employees, which it claimed made it impossible to compete with the other bidders on equal terms.

Political controversy has also followed the Kuannersuit project—mainly for environmental reasons, particularly because uranium will be an inevitable by-product. The issue of how to handle the uranium has been a source of political tension between Denmark and Greenland, and the question of whether uranium mining should be allowed is one of the most divisive political issues in Greenland today. GME finally received approval for the project’s environmental impact assessment in September 2020, but in February 2021, Greenland’s governing coalition collapsed following disagreement over the project and its environmental risks. In the snap general election that followed in April 2021, the opposition Inuit Ataqatigiit party, which campaigned against the Kuannersuit project, won in a landslide. The new government has since halted the project. In November 2021, the GoG restored and strengthened the ban on uranium mining, which had been lifted in 2013 to allow the Kuannersuit project to proceed. 

Chinese involvement in the project has been another source of controversy. Rare-earth minerals are considered a critical and strategic resource in the United States, Europe, China, Japan, and many other countries for their importance for producing advanced communication and green energy technologies, but also modern military weapons. In the past two decades, China has achieved a quasi-monopolistic position in their entire supply chain, from the mining of minerals to processing and producing the advanced materials that are in demand by the high-tech industry. The involvement of Shenghe—a Chinese publicly listed company whose largest shareholder is a subdivision of China Geological Survey—has been viewed by some analysts as a Chinese effort to stay in control of global supply chains. China has in recent years been perceived as making veiled threats of weaponising its control over rare-earth minerals, as it has been accused of doing in the past. The United States has ramped up efforts to establish supply chains independent of China—a task that will take many years.

Key Sources

Research Articles and Reports

Andersson, Patrik, Jesper Zeuthen, and Per Kalvig. 2018. ‘Chinese Mining in Greenland: Arctic Access or Access to Minerals.’ In Arctic Yearbook: Special Section on China and the Arctic, edited by Lassi Heininen and Heather Exner-Pirot, 102–17. Akureyri, Iceland: Northern Research Forum.

Kalvig, Per and Hans Lucht. 2021. Greenland’s Minerals to Consolidate China’s Rare Earth Dominance? No Green Future without China. DIIS Policy Brief, 25 February. Copenhagen: Danish Institute for International Studies. Link.

Martin, Miguel. 2018. ‘China in Greenland: Mines, Science, and Nods to Independence.’ China Brief 18(4): 14–16.

Têtu, Pierre-Louis and Frédéric Lasserre. 2017. ‘Chinese Investment in Greenland’s Mining Industry: Toward a New Framework for Foreign Direct Investment.’ The Extractive Industries and Society 4: 661–71.

Ulrik Pram Gad, Naja Dyrendom Graugaard, Anders Holgersen, Marc Jacobsen, Nina Lave, and Nikoline Schriver. 2018. ‘Imagining China on Greenland’s Way to Independence.’ In Arctic Yearbook: Special Section on China and the Arctic, edited by Lassi Heininen and Heather Exner-Pirot, 6–28. Akureyri, Iceland: Northern Research Forum.

NewspapersSermitsiaq (in Danish and Greenlandic): link.

Cover Photo: Greenland sunset. Credit: Markus Trienke (CC).


Historical Background

The Hungarian People’s Republic and the People’s Republic of China (PRC) were both established in 1949, on 20 August and 1 October, respectively. With both countries in the communist camp, Hungary formally recognised the PRC as China’s legitimate government as early as 4 October 1949.

In the 1950s, bilateral relations began to develop through a significant number of high-level visits, which led to deepening economic, political, and cultural ties. Although the relationship was within the Soviet sphere of interest, Hungarian foreign policy differed somewhat from that of Moscow. While the Soviet Union maintained colder relations with China as they disagreed on ideological issues such as how to evaluate the legacy of Stalin and the direction of the International Communist Movement, Budapest continued to cooperate closely with Beijing. Whether the Chinese Government supported or opposed the Soviet invasion of Hungary in 1956 remains controversial to this day. By the end of the 1950s, however, the Sino-Soviet split had greatly limited how far Central and Eastern European (CEE) countries within the Soviet orbit could go in improving their relations with China, and deep ideological differences began to emerge between Budapest and Beijing. As a result, in the 1960s, especially during the Chinese Cultural Revolution, the relationship cooled. Still, Hungary tried to maintain a connection with Beijing, motivated mainly by the pursuit of trade benefits.

As the Chinese Communist Party embarked on its policies of Reform and Opening Up in the late 1970s, the two countries were brought closer together again. The Chinese leadership was genuinely interested in the Hungarian economic reforms of 1968—an experiment that created the so-called New Economic Mechanism, which flexibly combined the existing large-scale socialist sector with small-scale private activities—so a series of expert delegations from China visited Hungary to study the experience. In the 1980s, state and interparty relations were normalised and high-level delegations began travelling back and forth once again.

After the democratic transition of 1989 in Hungary, the level of contact between the two countries declined again, primarily because of the reorientation of Hungarian foreign policy, with more attention given to Euro-Atlantic interests. For more than a decade, bilateral exchanges were minimal, but relations remained free of tensions, if not cordial.

A new, fruitful period began at the turn of the millennium, after then Hungarian Prime Minister Péter Medgyessy (in power from 2002 to 2004) visited Beijing in 2003. The new rapprochement was initiated by Hungary, as the government in Budapest recognised that China was becoming an increasingly important player in the global economy and international politics. In the meantime, European Union (EU) membership made Hungary more attractive to China as well.

The Hungarian Government made several confidence-building gestures to strengthen its relationship with China, including the creation of a new special envoy position for the development of bilateral relations with the PRC. The first results of the new policy were the arrival of a branch of the Bank of China in Hungary (in 2003), the creation of the Bilingual Chinese–Hungarian Primary School in Budapest (2004), and the initiation of direct commercial flights between Budapest and Beijing (2004). Cultural contacts deepened as well: the first Confucius Institute was established in Budapest in 2006, and four more were opened in various Hungarian cities (Szeged, Miskolc, Pécs, and Debrecen) in the following years.

Although the first government of Viktor Orbán (1998–2002) neglected relations with China, the second, third, and fourth (2010–present) dedicated particular attention to boosting relations with Beijing. Prime Minister Orbán has repeatedly emphasised the importance of looking East. In his words, although Hungary’s ‘ship is sailing in Western waters, the wind blows from the East’.

In fact, the Hungarian Government regularly promotes bilateral relations with the PRC and supports it on many sensitive issues. In 2016, Hungary (and Greece) prevented the European Union (EU) from backing a court ruling against China’s expansive territorial claims in the South China Sea. At the end of 2019, in the middle of the controversy around Huawei’s alleged corporate espionage, as other Western governments were banning the company from involvement in their network infrastructure, the Hungarian Government announced that Huawei would build a 5G network in Hungary. Also, after the COVID-19 outbreak in 2020, Hungary was one of the most vocal countries in Europe in praising Chinese support in supplying medical equipment (testing kits and medical masks) to Europe, as well as the first EU country to approve the Chinese Sinopharm vaccine to speed up its vaccination efforts. In May 2021, Hungary blocked an EU statement accusing Beijing of cracking down on democracy in Hong Kong.

BRI Status

Hungary was the first European country to sign a memorandum of understanding with China on promoting the Silk Road Economic Belt and Maritime Silk Road, during Chinese Foreign Minister Wang Yi’s visit to Budapest in June 2015. Prime Minister Orbán said many times that he was convinced Hungary could be an important pillar of the Belt and Road Initiative (BRI) and that that the country was ‘proud of being part of the renewal of international relations that is embodied in the One Belt, One Road initiative’. In 2018, Hungary’s ambassador to the European Union was alone in not signing a report criticising China’s BRI for benefiting Chinese companies and Chinese interests.

Infrastructure projects—financed by Chinese loans and now branded as BRI projects—have been under negotiation for a while, but the Budapest–Belgrade railway seems to be the only one that will be implemented soon. The Hungarian Government was very keen on the railway project and when the construction agreement was signed in 2014, Prime Minister Orbán called it the most important moment in the cooperation between the European Union and China. However, the project’s construction is supported by a loan of 1.855 billion USD, the details of which remain murky and the benefits of which for the Hungarian side have been questioned by experts. So far, it seems Chinese engineers will be responsible for carrying out planning, land surveying, and preparatory work, with Chinese contractors and subcontractors involved in the construction work. The CRE Consortium, which is responsible for the design and construction of the railway, comprises three companies: two were founded for this purpose in Hungary by two Chinese state-owned enterprises—both subsidiaries of the China Railway Group Limited (CREC)—while the other is the holding company Opus Global, which is controlled by an associate of Prime Minister Orbán.

Current Economic Relations

Trade: From the early 2000s onward, coinciding with the accession of CEE countries to the European Union, bilateral trade between Hungary and China increased relatively fast, starting from a very low base. When China created the 16+1 initiative in 2012, trade volumes increased throughout the region, including in Hungary, although this growth was not balanced: while imports from China increased substantially, the growth of exports to China remained rather modest, and even decreased slightly after 2014 and 2017. Consequently, trade deficits increased rapidly, with the level of Chinese imports currently around four times that of exports. The main products imported from China are the same as those of most other European countries—that is, machinery and electronics. Hungary exports to China vehicles, machinery, and electronics, mainly generated by multinational companies located in Hungary and not by local Hungarian companies. Although China’s hunger for high-quality agricultural products is growing globally, the share of agriculture in Hungary’s exports is not significant, and in 2020 it remained below 3%.

Investment: When it comes to foreign direct investment (FDI), according to statistics from the Hungarian National Bank, in 2018 Hungary hosted Chinese FDI stock valued at around 2.2 billion USD. According to more recent data from 2021, the stock now exceeds 3.4 billion USD. Either way, Hungary is a major recipient of Chinese companies’ investment in the CEE region. Still, although it has grown significantly over the past decade, China’s economic impact on Hungary remains relatively small: Chinese investment is still dwarfed, for example, by investment from Germany, which accounts for more than 20% of total inward FDI stock. Overall, Chinese FDI stocks are around 2.5% of total inward FDI in Hungary, compared with the more than 70% of (Western) European investors. Among non-European investors, companies from the United States, Japan, South Korea, and even India have invested more in Hungary than those from China. The main Chinese investors targeting Hungary are primarily interested in telecommunications, electronics, the chemical industry, and transportation. Initially, Chinese investment flowed mostly into manufacturing (assembly), but over time, services have attracted more investment. In addition to Wanhua Chemical Group, a partially state-owned company and the largest Chinese investor in Hungary, major companies active in Hungary include Huawei (telecom), ZTE Corporation (telecom), Lenovo (computers and electronics), and BYD (automobiles). These last firms are technically privately owned or controlled, although some (such as ZTE and Huawei) have also received substantial support from the Chinese state.

Finance: In addition to trade volume and FDI, financial cooperation between China and Hungary is also worth noting. This field of cooperation is in its infancy, but it is rapidly growing. The Bank of China (BoC) has established a regional and CEE headquarters in Budapest, while the Industrial Commercial Bank of China (ICBC) is looking into the possibility of doing the same. In 2017, Hungary was the first sovereign issuer to successfully sell Chinese yuan-denominated bonds (dim sum and Panda bonds) both on the onshore market and in Hong Kong. Hungary also joined the China-initiated Asian Infrastructure Investment Bank (AIIB) in 2017.

When it comes to Chinese loans, Hungary took a significant loan from the Export–Import Bank of China (Eximbank) to cover 85% of the total cost of the Budapest–Belgrade railway, which hovers around 2 billion EUR, making it the single most expensive rail investment ever in Hungary. In addition, the Hungarian Government recently announced its plans to build a Budapest campus of the Chinese Fudan University with Chinese contractors, financed by a 1.25 billion EUR loan from China.

Key Controversies in Bilateral Relations

One of the most significant and most controversial characteristics of the relationship between China and Hungary is the strong political commitment from the Hungarian side. Examples include police measures taken against pro-Tibetan and anti-China protesters during Wen Jiabao’s visit to Budapest in 2011; Radio Klasszik, which had been partly bought by China Radio International, being forced to change its programming during the same visit; and Prime Minister Orbán laying a wreath at the Monument to the People’s Heroes in Tiananmen Square during his 2017 visit to Beijing.

As detailed above, the minor benefits deriving from China’s economic engagements in Hungary (that is, an export market and a modest amount of FDI) are not currently proportionate to the enthusiasm of the Hungarian Government for further building relations with China. Other countries in the region, such as Poland and the Czech Republic, have already become disappointed or even suspicious about engaging with China, but Hungary continues to insist on the importance of the relationship.

Prime Minister Orbán wants strong partners outside the European Union, which he believes is in decline. He explained this at a conference in 2017, saying that ‘Brussels became addicted to a utopia … that is called a supranational Europe’ while in fact there still are independent nations in Europe, with their own politics, intentions, and will. He added that to be successful, Europe needs new types of cooperation, which includes treating China with respect. Hungary, in his view, is a frontrunner in this regard, since the country is ‘of Eastern origin into whom Christianity has been grafted, that allows a special angle, so as we understand everything that is happening in China’.

This belief could be seen, for instance, in the Hungarian Government’s decision at the end of 2019 to allow Huawei to build its 5G network, despite rising national security concerns across Europe. The recent loan-based projects (Budapest–Belgrade railway, Fudan campus) have also been widely criticised as expensive, with critics doubting whether the country even needs these projects.

Key Sources

English-Language Media Outlets:

Scholarly Publications and In-Depth Reports:

Karásková, Ivana, Alicja Bachulska, Ágnes Szunomár, and Stefan Vladisavljev’ (eds). 2020. Empty Shell No More: China’s Growing Footprint in Central and Eastern Europe. Policy Paper. Prague: Association for International Affairs. Link.

Matura, Tamás. 2018. ‘Hungary and China Relations.’ In China’s Relations with Central and Eastern Europe, edited by Weiqing Song. Abingdon, UK: Routledge, 137–53.

Matura, Tamás. 2018. ‘The Belt and Road Initiative Depicted in Hungary and Slovakia.’ Journal of Contemporary East Asia Studies 7(2): 174–89.

Matura, Tamás. 2021. ‘Chinese Investment in Central and Eastern Europe: A Reality Check.’ Central and Eastern European Center for Asian Studies website. Link.

Rogers, Samuel. 2019. ‘China, Hungary, and the Belgrade–Budapest Railway Upgrade: New Politically-Induced Dimensions of FDI and the Trajectory of Hungarian Economic Development.’ Journal of East–West Business 25(1): 84–106.

Szunomár, Ágnes. 2020. ‘Home and Host Country Determinants of Chinese Multinational Enterprises’ Investments into East Central Europe.’ In Emerging-Market Multinational Enterprises in East Central Europe, edited by Ágnes Szunomar. Cham, Switzerland: Palgrave Macmillan, 51–86.

Szunomár, Ágnes and Tamás Peragovics. 2019. ‘Hungary: An Assessment of Chinese–Hungarian Economic Relations.’ In Comparative Analysis of the Approach Towards China: V4 + and One Belt One Road, edited by Zack Kramer. Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences, Prague Security Studies Institute, Institute of Asian Studies (IAS), Belgrade Fund for Political Excellence (BFPE), and Centre for International Relations (CIR). Link.

Cover Photo: Budapest. Credit (CC): ChHsia.


Historical Background

The Italian government established diplomatic relations with the People’s Republic of China (PRC) in 1970. One year later, Italy also voted in favour of admitting the PRC to the United Nations. Despite this official recognition, the commercial relationship between the two countries did not immediately improve, and the political relationship continued to experience ups and downs, determined both by internal, European, as well as global developments. Nevertheless, Italy was one of the first countries to ease the tensions with China after the Tiananmen crackdown of 1989. The late 1990s and early 2000s saw moments of rapprochement and moments of distancing, but overall, Italian governments have maintained a rather positive view and approach towards China.

However, as China opened up its economy and became a global manufacturing hub, Italy as a country whose industrial base heavily relies on manufacturing, and most importantly on the textile sector, began feeling the pinch of intense competition. Despite Italy supporting China’s entry into the World Trade Organisation (WTO) in 2001, later on, at the European Union (EU) level, the country strongly opposed the designation of China as a market economy and was among the proponents, together with France and Germany, of a proposal to adopt stricter measures to manage company takeovers in the EU, a measure that indirectly targeted Chinese enterprises. In 2019, two years after Italy, France, and Germany sent the above-mentioned proposal to the European Commission, the EU adopted a framework for investment that allows member states and the European Commission to share information and opinions regarding inbound foreign direct investments. Italy, which in the meantime has undergone a transition from a government led by a mainstream centre-left party to a populist coalition, abstained at the final vote. That very month, March 2019, Italy signed a Memorandum of Understanding (MoU) with China in the framework of the Belt and Road Initiative (BRI), thus becoming the first G7 country to officially endorse and become part of the Initiative.

Despite another change of government in September 2019 (when a coalition between a populist party and centre-left mainstream parties came to power), Italy’s positive approach towards China has not changed. On the contrary, the supposedly new closeness between the two countries was used by the Minister of Foreign Affairs of that time, Luigi Di Maio, to explain the prompt and generous arrival of aid and medical supplies from China at the beginning of the outbreak of the COVID-19 pandemic in Italy. Furthermore, 2020 was meant to be the year in which the two countries would have celebrated the 50th anniversary of their diplomatic relations as well as the year of Italy-China tourism (now postponed to 2022). Despite the impossibility of celebrating these two occasions, throughout a difficult year such as 2020, Italian and Chinese counterparts continued to sign and finalise agreements that went beyond those initially agreed upon in March 2019 during the signing of the MoU. In December 2020, Luigi Di Maio and his Chinese counterpart Wang Yi reaffirmed both sides’ commitment to the BRI MoU.

BRI Status

On 22 March 2019, Italy joined the BRI on the occasion of a state visit by President Xi Jinping. 29 agreements were signed, 10 institutional and 19 commercial. Among the most significant agreements arguably are those between:

–       The Port Authority of the Eastern Adriatic Sea and China Communications Construction Company (CCCC): The planned collaboration foresaw the involvement of the state-owned CCCC in the construction of an intermodal rail station near Trieste, but no progress has been made since 2019. Furthermore, two elements suggest that further developments in this project are very unlikely: a) the station of Servola (where the intermodal rail station was to be built) does not have enough space for such a development; and b) the arrival of the German Hamburger Hafen und Logistik AG (Hhla) as majority shareholder in the construction of the new intermodal port terminal suggests that Trieste has been looking elsewhere for investments. For more details, see the Port of Trieste Rail Intermodal Platform profile.

–   The Western Liguria Sea Port Authority and CCCC: The two parties agreed to collaborate on the construction of a new breakwater dam near Genoa, but the planned cooperation did not materialise. CCCC participated in a public bid for the construction of the project but did not win it.

–   The Italian Trade and Investment Agency and Group Co. Ltd.: This collaboration officially began in July 2019. The objective is to increase the purchase of Italian products, including from less known brands, by to ultimately distribute and sell in China.

–   The Italian Ministry of Culture and China’s Ministry of Culture and Tourism: According to this agreement, Italy would return 796 archaeological pieces belonging to China’s cultural heritage. The restitution took place in the same month of the signing of the MoU, March 2019.

–   China Seismic-Electromagnetic Satellite 02 (CSES-02): According to this agreement, the China National Space Administration (CNSA) and the Italian Space Agency (ISA) will build a satellite that will ‘monitor electromagnetic field and waves, plasma and particle perturbations of the atmosphere, ionosphere and magnetosphere induced by natural sources and anthropocentric emitters and to study their correlations with the occurrence of seismic events’. The CSES-01 was launched in orbit in 2018 and the agreement signed in 2019 was for its replacement to go in orbit in March 2022. As of February 2021, the satellite’s construction is at an advanced stage.

–   The Italian news agency Ansa and Xinhua: Ansa now publishes translated news from Xinhua, labelling them as Xinhua news. Since the signing of the agreement, Ansa’s China coverage has expanded significantly, with the majority of the content coming from Xinhua.

–   National broadcaster RAI and China Media Group: The agreement envisioned broad terms for collaboration between the two. However, for the moment, there have not been significant developments.

At the end of 2020, the two countries’ Ministers of Foreign Affairs Di Maio and Wang Yi reaffirmed their reciprocal commitment to the agreements, the MoU, and the BRI. This included a direct mention of the partnership on CSES-02, but not of a controversial proposal to have the Italian industry build habitational modules for the Chinese space station Tiangong-3. This collaboration has been under discussion since 2018 but was not included in the batch of MoUs signed on the occasion of Xi Jinping’s 2019 visit. The initiative was then abandoned by the Italian counterpart soon after March 2019.

Current Economic Relations 

Bilateral Trade: In 2019, Italian exports to China amounted to more than 15 billion USD, while imports from China were worth more than 38 billion USD. Imports have been increasing, while exports have been decreasing. In terms of sectors, computers and electronics are at the top of the products imported from China, followed by machinery and appliances. The manufacturing sector remains the core of Italy’s exports to China, with machinery and appliances being the top products, followed by pharmaceutical products and clothing. Although not among these top sectors, the automotive, food, and wine industries remain important for Italy’s export to China.

Investment: Italian investment in China has been growing. In 2019, the number of Chinese enterprises controlled by an Italian enterprise had registered an 8.4% increase compared to the previous year. Chinese investment in Italy has been steadily growing since the 2010s, mostly in manufacturing, followed at a distance by services. Within the manufacturing sector, machinery and appliances attract the most investment, followed by plastic and rubber products (the latter in connection to the automotive sector). In terms of territorial distribution, most Chinese investments are in the north of the country, especially in Lombardy and, in particular, in the city of Milan.

Source: Chinese Ministry of Commerce.

Key Controversies

There have been multiple layers of controversy related to Italy’s decision to sign the BRI MoU. The most general of these layers regards the very decision to sign the agreement. The decision of the Italian government to sign the MoU raised concerns within the European Union and in the United States. Italy being the first G7 country to sign such an agreement was viewed by Brussels and Washington as a great political and diplomatic concession to China and a sign of China’s growing influence in Europe.

Other controversies were about specific parts of the agreement, mostly those that concerned space and ports. One of the controversies that followed Xi’s state visit to Italy, but was not part of the MoUs signed on that occasion, was a potential collaboration between Italian industry actors and China’s National Space Administration regarding the Tiangong-3 space station mentioned above. This collaboration was scrapped soon after signing due to security concerns raised from the United States.

The other controversies concerned the agreements with the two port authorities, that of the Western Liguria Sea (Genoa) and that of the Western Adriatic Sea (Trieste). After the experience of the Port of Piraeus in Greece—where COSCO’s acquisition of majority shares of the port led to disputes over labour conditions, environmental protection, public health, and the use of land—and awareness of the increasing involvement of Chinese enterprises in other European ports, concerns were raised, mostly by US officials, regarding CCCC’s involvement in infrastructure projects in both ports. The main worry was that China would eventually come to buy these ports and, thus, that Italy’s and Europe’s dependence on China would increase. However, in Italy, ports are publicly owned and cannot be sold.

Key Sources

English-language Media:

Agenzia Nazionale Stampa Associata (ANSA) the leading wire service in Italy, is also available in English.

Books, Reports, and Scholarly Articles:

  • Andornino, Giovanni B. 2020. ‘Tra status e agency: Cina e Italia a 50 anni dalla normalizzazione delle relazioni.’ Orizzonte Cina 11, no. 2. Link.     
  • Casarini, Nicola. 2019. ‘Rome-Beijing: Changing the Game.’ Istituto Affari Internazionali website, 18 March. Link.
  • Fondazione Italia Cina. 2020. ‘Cina 2020: Scenari e prospettive per le imprese.’ Fondazione Italia Cina website. Link.
  • Fondazione Italia Cina. 2020. ‘È tutta seta ciò che luccica?’ Special issue of the journal Mondo Cinese 165–66.
  • Gabusi, Giuseppe e Giorgio Prodi. 2020. ‘“Reality check”: Le relazioni bilaterali Italia-Cina in ambito economico dagli anni Settanta alle “nuove Vie della Seta’. Orizzonte Cina 11, no. 2. Link.
  • Ghiretti, Francesca. 2021 (Forthcoming). ‘The Maritime Silk Road: The Cases of Genoa and Trieste.’ IAI Papers, April.
  • Istituto Affari Internazionali. 2021. ‘When Italy Embraces the BRI.’ Istituto Affari Internazionali website. Link.
  • Marinelli, Maurizio and Giovanni Andornino (eds.). 2014. Italy’s Encounters with Modern China: Imperial Dreams, Strategic Ambitions. London: Palgrave Macmillan.
  • Pini, Mario Filippo. 2011. Italia e Cina, 60 anni tra passato e futuro. Roma: L’Asino d’Oro.
  • Pugliese, Giulio. 2020. ‘Italy and China: Much Ado about an MoU.’ East Asian Policy 12, no. 4: 73–89.
  • Silvestri, Francesco. 2020. ‘L’Italia e le società di telecomunicazioni cinesi tra congiuntura politica globale e incertezze interne.’ Orizzonte Cina 11, no. 2. Link.
  • Wang, Yi, Peter Hays Gries, and Tao Wang. 2020. ‘Italy’s Repatriation of Cultural Relics to Beijing: Chinese Nationalism and Its Impact on Europe-China Relations.’ Istituto Affari Internazionali website, 17 October. Link.

Cover Photo: Italy from space, by NASA Views Earth at Night (CC).



Lithuania declared its independence from the Soviet Union as early as March 1990, but the first country to officially recognise it as an independent state was Iceland in February 1991. As the Soviet Union was disintegrating in the final days of August 1991, the Icelandic Government, along with eight other European states, established formal diplomatic relations with Lithuania, paving the way for a rapid proliferation of relations with other countries. Lithuania’s diplomatic ties soon rapidly expanded worldwide, including with the People’s Republic of China (PRC), which established diplomatic relations on 14 September 1991—one of the first Asian countries to do so (North Korea would follow in 10 days and Japan one month later).

In the 2010s, China gained more attention in Lithuania as it seemed to offer opportunities for trade and economic cooperation. However, after Lithuanian president Dalia Grybauskaitė (in office from 2009 to 2019) met privately with the Dalai Lama in 2013, China temporarily put on hold all economic negotiations. Despite this political setback, Lithuania’s relations with China developed steadily throughout the decade. The first substantial achievement in bilateral relations occurred in 2015, when the managers of JSC Lithuanian Railways and the Chinese logistics company China Merchants Logistics Holding, a subsidiary of the state-owned China Merchants Group, signed an agreement to set up a joint company providing freight forwarding and logistics services in Lithuania. In 2016, Lithuania officially confirmed it was joining the Belt and Road Initiative (BRI).

In this way, Lithuania’s relations with China followed a pattern common to several other small European countries. Yet, recent years have marked a fundamental shift in their bilateral relations. After parliamentary elections in late 2020, a new coalition government led by the Homeland Union–Lithuanian Christian Democrats (TS–LKD) (previously in power from 2008 to 2012) was formed in Lithuania. Bilateral relations between Lithuania and China rapidly soured the following year. Some members of the ruling coalition parties are long-time supporters of closer informal relations with Taiwan, and this government significantly changed Lithuania’s China policy. Members of the ruling coalition explicitly indicated the government was turning away from authoritarian Beijing towards democratic Taipei in pursuit of values-based foreign policy. Relations between the two sides eventually escalated into a diplomatic row and Beijing downgraded bilateral relations.

First, in February 2021, the Lithuanian Government refused to send the highest-level representative—the president or prime minister—as requested by China to the meeting of the 17+1 platform, instead participating only at the ministerial level. In May, Lithuania officially confirmed it was withdrawing from the platform completely and called on other European Union countries to follow. In March, Lithuania had announced plans to open a trade representative office in Taiwan, and it was later confirmed that Taiwan was opening a representative office in the capital, Vilnius. In response, on 10 August, Beijing recalled its ambassador and requested Lithuania do the same.

On 18 November 2021, the Taiwanese Representative Office was opened in Vilnius. China officially denounced this as a violation of the One-China Principle and undermining China’s sovereignty and territorial integrity. In response, China unilaterally downgraded its diplomatic ties with Lithuania to the level of chargé d’affaires. Immediately after, the Chinese Embassy in Lithuania suspended issuance of visas ‘due to technical reasons’. The following month, Lithuanian Minister for Foreign Affairs Gabrielius Landsbergis announced Lithuania had recalled all its staff from Beijing for ‘consultations’ to work remotely for the time being, as Beijing demanded Lithuania change the status of its Beijing embassy into a lesser chargé d’affaires office, resulting in uncertainty over the legal status of Lithuanian diplomats in China.

In December, Lithuania became the target of economic measures from China. At first, Lithuania was removed from the Chinese customs declaration system. While customs clearance for Lithuanian imports were renewed within days, Lithuanian exporters complained that their goods were being blocked at Chinese ports. Reports surfaced of China pressuring multinationals to cut ties with Lithuania or face being shut out of the Chinese market. For instance, German car parts giant Continentalwas reportedly told to stop using components made in Lithuania. There had been similar accounts even before the opening of the Taiwanese Representative Office about Thermo Fisher Scientific, Lithuania’s flagship foreign investor, being warned by Beijing that its operations in mainland China would be at risk if the Lithuanian Government did not back down.

At the end of January 2022, the European Union referred China to the World Trade Organization (WTO) for discriminatory trade practices against Lithuania.

BRI Status

In 2016, Lithuania officially confirmed it was joining the BRI. The following year, Lithuania’s Ministry of Transport and Communication signed a memorandum of understanding (MoU) with China covering transport, logistics, infrastructure, technological innovation, and other areas. In April 2018, the same ministry signed an MoU with China’s state-owned postal operator that included developing the rail connection between China’s Chongqing and Vilnius for postal shipments. As a result, in April 2020, Europe’s first postal train from China arrived in Lithuania. It was scheduled to run once a week and deliver international parcels to be transferred to 36 European countries. In August 2021, as tensions in bilateral relations continued to escalate, China reportedly suspended railway services to Lithuania. According to media reports, as late as November 2021, China–Europe trains continued transiting through Lithuania without stopping, making the container drop-off in Vilnius complicated.

Current Economic Relations

Trade: Lithuania’s trade with China remains limited. In 2020, China was Lithuania’s thirteenth-largest trading partner, with a total trade volume of 1.5 billion EUR. China ranked 22 among Lithuania’s export destinations, with exports from Lithuania to mainland China amounting to 0.3 billion EUR. China was seventh among Lithuania’s import partners. Imports worth 1.2 billion EUR in 2020 comprised mostly electrical and electronic equipment and parts (19%), machinery (12%), textiles (9%), optical and photography technical equipment (6%), and vehicles other than railway and tramway (5%).

Investment: Among European countries, Lithuania has some of the lowest foreign direct investment (FDI) from China, which was ranked 40 among investors in the country in 2020, according to the Ministry for Foreign Affairs.

Key Controversies

Security Concerns over Chinese investment: In 2015, the Lithuanian Government warmly welcomed the possible investment by China Merchants Group (CMG) in Klaipėda port, Lithuania’s only seaport and a strategic hub for the North Atlantic Treaty Organization (NATO) in the Baltic states. Lithuania’s then prime minister Algirdas Butkevičius (in office from 2012 to 2016) welcomed CMG’s plans to establish a logistics park for Chinese manufacturers in Klaipėda, invest in the port, and become one of the controlling shareholders of the terminals and a potential partner for further infrastructure development. In 2018, Parliamentary Speaker Viktoras Pranckietis denied any link between Chinese investment in Lithuania and national security.

However, following growing concerns about Chinese investment in the European Union and the United States, by 2019, Lithuania had changed its position on the issue. In the summer of 2019, Lithuanian President Gitanas Nausėda (in office since 2019) rejected the possibility of Chinese investments in the port, citing concerns over national security. Later that year, the country’s Defence Minister, Raimundas Karoblis, stated that any Chinese investment in the port could pose strategic risks as the majority of US and overseas NATO forces arrive via Klaipėda.

In 2020, in their annual national security threat assessment, the Lithuanian security services identified China as a potential threatp. 34 for its attempts to gather technical intelligence on Lithuanian information systems and gain access to critical infrastructure. The Chinese Embassy in Vilnius expressed its strong disagreement with this assessment and urged ‘Lithuanian intelligence authorities to abandon its Cold War mentality and zero-sum game mindset’.

Security Concerns over 5G Network: In 2019, Lithuania’s security agencies recommended excluding companies like Huawei from sectors and infrastructure of special importance. In 2020, Sweden’s Telia Company, one of the major telecommunication service providers in Lithuania, announced it would replace all 4G telecoms equipment from Huawei in Lithuania and would not use it for 5G networks, due to the geopolitical situation.

Concerns around Attempted Influence: In 2020, Lithuanian media cited a high-ranking Lithuanian official speaking off the record that he had received numerous letters from China asking for an apology for statements directed against Beijing. Another cause of concern was an incident in August 2019 involving Shen Zhifei, China’s Ambassador to Lithuania, which was widely regarded as an example of China’s increasingly assertive efforts to use its diaspora to further Beijing’s interests. At that time, a rally in Vilnius supporting the protests in Hong Kong and Tibet was met by a smaller group of Chinese protesters. As verbal clashes and minor scuffles ensued, two Chinese protesters were fined by the police for creating a disturbance. Although the Embassy of the PRC denied it was involved in the counter-rally, a report by an investigation team from Lithuania’s national broadcaster revealed that members of the diplomatic staff did take part, including the Chinese Ambassador himself, the defence attaché, his deputy, and the second secretary of the embassy.

Economic Coercion against Lithuania: In late 2021, China imposed unofficial sanctions and exerted pressure through multinational corporations on Lithuanian businesses in response to the opening of the Taiwanese Representative Office in Lithuania in November of that year. In search for support, the Lithuanian Government appealed to the European Union, which later filed a case against China at the WTO.

Key Sources

Andrijauskas, Konstantinas. 2020. ‘The Dragon and The Knight: China’s Growing Presence in Lithuania.’ 16 February. Vilnius: Eastern Europe Studies Centre, Vilnius University. Link.

Andrijauskas, Konstantinas. 2020. ‘Sino-Lithuanian Relations in Lithuania in 2020: Shedding the Masks?’ 30 November. Vilnius: Eastern Europe Studies Centre, Vilnius University. Link.

Lithuania Radio and Television English website. Link.

Cover Photo: Sunset over Vilnius, Lithuania. Credit: @sinava (CC),


Historical Background

As a republic within the Socialist Federal Republic (SFR) of Yugoslavia, Montenegro had limited direct contact with the People’s Republic of China (PRC). Within the so-called socialist bloc, relations between the PRC and SFR Yugoslavia had their ups and downs, conditioned as they were by the ties each country had with the Soviet Union, as well as their differing views of the global socialist movement. Yugoslav liberal communist practices were often denounced in China, and the Balkan country frequently received negative coverage in the Chinese press, which portrayed it as a traitor to and ‘knife in the back’ of socialism.

In the post-Mao period, as China embarked on its path of Reform and Opening Up, bilateral relations between the PRC and SFR Yugoslavia were normalised. In 1978, the Chairman of the Chinese Communist Party Hua Guofeng became the first Chinese leader to visit the Balkans. In 1986, the Socialist Republic of Montenegro and China’s Guizhou Province established regional cooperation, with bilateral visits and agreements. At the time, Yugoslav communism was perceived positively by the Chinese leadership, which was then putting all its efforts into modernising China’s economy and discovering a new path to development.

Soon after regaining independence in May 2006, Montenegro established diplomatic relations with the PRC. In 2007, Montenegro opened an embassy in Beijing, while the Chinese consulate in Montenegro’s capital, Podgorica, was elevated to the level of an embassy. The two countries were moving towards relations that were friendly and polite but without much substance. Economic relations were dominated by trade, with a substantial trade deficit for Montenegro and no concrete measures or efforts to increase the country’s exports to China.

In the 2010s, Montenegro turned to the Export–Import Bank of China (China Eximbank) to finance some controversial projects. In 2010, the Montenegrin authorities set up the first credit arrangement with China: the Montenegrin state-owned shipping company Crnogorska Plovidba AD signed a loan agreement with China Eximbank to purchase two ships from a Chinese shipyard. In 2012, another partially state-owned Montenegrin shipping company, Barska Plovidba AD, utilised a similar arrangement to acquire two bulk vessels.

The two countries also began to cooperate on developing new infrastructure. This cooperation culminated in 2014 when Montenegro took a now notorious loan of 943.9 million USD—which, including the interest rate, was equivalent to 25% of the country’s annual gross domestic product (GDP) at that time—to build a 41-kilometre section of the planned Bar–Boljare Highway[IF1] . As the loan was issued in the form of export credits, it required the contractor to be a Chinese company—in this case, the state-owned China Road and Bridge Corporation (CRBC). Since then, even though bilateral relations have remained cordial and friendly, with limited economic cooperation and few strategic considerations from the Montenegrin side, this controversial loan arrangement has come to dominate public discussions of China’s engagements in Montenegro.

In August 2020, Montenegro experienced the first democratic regime change in its history, ending three decades of rule by the Democratic Party of Socialists (DPS), which had governed the country since 1990. The new government announced its willingness to disengage from ‘loans for infrastructure’ practices with China and to redefine its foreign policy priorities, openly seeking help from the European Union (EU) to refinance its credit arrangements with Chinese institutions. The European Commission (EC) initially rejected the proposal to refinance Montenegrin loans. However, Montenegro’s call for help provoked a wide debate across Europe, leading to some members of the European Parliament publicly asking EU institutions to help Montenegro. Eventually, the EC softened its stance and announced it would consider ways to assist Montenegro in its financial commitments to China—not to refinance the loans, but rather to help with financing the construction of the remaining sections of the highway.

On 7 July 2021, the Minister of Economic Development Jakov Milatovic revealed to Reuters that the negotiations with European and US banks regarding refinancing the highway loan are progressing well, and that a deal could be closed in a matter of weeks. He added that he is sure that the conditions of the loan will be much more favourable for Montenegro, with an interest rate around 1%.

Only one day later, the Minister of Finance and Social Welfare Milojko Spajic announced that his government, with help of the US and European institution, managed to perform a hedging of the highway loan, and thus reduced the interest rate from 2%to just 0.8%. This move was praised by the US Embassy in Montenegro, which in a tweet congratulated the Minister on his efforts to improve ‘Montenegro’s financial stability by partnering with the US banks.’

The events took place during a visit of the US Deputy Assistant Secretary Matthew Palmer, who used the occasion to suggest to his Montenegrin counterparts to be cautious when dealing with China. The comment provoked a reaction of the Chinese Embassy in Montenegro, who urged the United States to ‘[focus] on promoting US-Montenegro relation properly, rather than trying to damage China-Montenegro relations and slander China’s image in the name of doing good to Montenegro’.

BRI Status

In May 2017, during the Belt and Road Forum for International Cooperation in Beijing, the Montenegrin Government signed a memorandum of understanding (MoU) to join the Belt and Road Initiative (BRI), however, there have since been no major developments. Montenegro is also part of the 16+1 cooperation mechanism between China and 16 Central and Eastern European (CEE) countries—a platform launched in 2012 and renamed the 17+1 after Greece joined in 2019. Montenegro participated in all its summits and sent high-ranking representatives to its meetings. Within this initiative, Montenegro hosted the forum of the capital cities of China and the CEE countries in 2017; in 2018, it also organised and hosted in Podgorica a conference titled ‘Legacy of the Future’ at which participants adopted a document on environmental cooperation and established a cooperation mechanism. Although it was formed slightly before the BRI was launched, the 16(17)+1 mechanism has now been de facto subsumed under the BRI and serves to facilitate regional cooperation within the BRI.

Current Economic Relations

Trade: Chinese imports to Montenegro have grown continuously since Montenegro regained independence, increasing from approximately 56 million EUR worth of imports in 2006, to 221.9 million EUR in 2019, while exports went from only 62,000 EUR in 2007 to almost 20 million EUR in 2019. In 2019, China was Montenegro’s third-biggest trading partner in terms of imports after Serbia (500 million EUR) and Germany (244.2 million EUR), but did not even rank among Montenegro’s top-three export destinations.To put matters in context, Montenegro is not an exporting country (exported goods represented 3.2% of its GDP in 2019), and its economy consists mainly of services, dominated by the tourism sector. Its main exports to China are primary resources such as ore, slag, and ash (15 million EUR of its total exports of 17.5 million EUR are to China), while the rest mainly consist of wine and alcoholic beverages.

Investment: Since regaining independence in 2006, the Montenegrin economy has attracted significant inflows of foreign direct investment (FDI)—mostly in the form of intercompany loans, takeovers, mergers, and deals in the real estate sector. In 2007, total FDI stock in Montenegro reached 1 billion EUR—an amount that remained relatively stable in the following two years, before dropping significantly during the Global Financial Crisis. FDI inflows had an important role in covering a chronic deficit in Montenegrin current accounts.

The country’s major investors varied through the years with one constant being the Russian Federation, which has figured among the leading sources of FDI in Montenegro in the years since the country’s independence. EU countries are another significant source of FDI, especially Italy, Germany, Hungary, and the Netherlands. Over the years, there were also significant inflows from the United Arab Emirates, Azerbaijan, Switzerland, many island nations, in addition to regional countries like Serbia.

According to official data, Montenegro is not a priority destination for Chinese FDI. Between 2009 and 2019, total Chinese FDI in Montenegro was less than 10 million EUR. In that decade, China rarely appeared on the list of the largest investors in Montenegro, and never in the top ten. The situation changed markedly in 2020, when the Montenegrin Central Bank recorded 70 million EUR worth of inflows from China, bringing China among the top foreign investors for the first time. However, the bank chose not to disclose details of the investments.

While Chinese citizens did not previously figure among significant investors in Montenegrin real estate, this changed in 2019 when Montenegro introduced the Citizenship by Investment Program (CIP), which created the possibility of receiving a passport after investing a significant sum in real estate projects.

Source: Chinese Ministry of Commerce.

Aid: There is no official registry of foreign aid in Montenegro, which makes tracking and keeping an accurate database very difficult. The main sources of information are donors who keep track of their aid and media outlets. The European Union is by far the largest donor to Montenegro, providing more than 610 million EUR between 2007 and 2020. After the European Union, the main aid providers are individual EU member states.

The PRC has implemented various small projects in Montenegro, such as installing public lighting to municipalities, donating information communications technology equipment to military, educational, and medical institutions, and providing drone equipment for national parks. The health sector also features prominently in Chinese aid to the country. In 2017, China donated 12 specialised ambulance vehicles to Montenegrin health institutions. During the COVID-19 pandemic, China donated medical equipment, protection kits, and ventilators to Montenegro, not to mention 30,000 doses of one of the Chinese-developed vaccines, which was the most generous shipment of vaccines to Montenegro at the time.

Other finance: The most important aspect of bilateral relations between Montenegro and China is related to credit arrangements. The first such deal was stipulated in January 2010, when Crnogorska Plovidba AD, a company founded and majority-owned by the Government of Montenegro, took a loan of 47.4 million USD from China Eximbank to cover 85% of the value of two cargo ships to be built in China by Poly Group and Shanghai Shipyard. The loan arrangement had a 3% annual fixed interest rate, 15-year repayment period with a five-year grace period, and was backed by a state guarantee.

A similar agreement was signed in August 2012, when another majority state-owned shipping company, Barska Plovidba AD, signed a loan arrangement for 46.4 million USD, backed by state guarantees, for the purchase of another two ships. The loan duration was set at 20 years with a five-year grace period, and the interest rate was 2%.

In 2014 Montenegro signed another agreement with China Eximbank. This loan was worth 943.9 million USD, with a 2% annual interest rate, 20-year repayment period, and a six-year grace period. In this case, the aim was to finance 85% of the estimated cost of 1.1 billion USD for the 41-kilometre Smokovac–Uvač–Mateševo Highway, which would have connected the Port of Bar to the Serbian border and from there on to Belgrade.

Key Controversies in Bilateral Relations

Controversial loans: The two loans for the cargo ships in 2010 and 2012 were criticised by local shipping experts and the association of sea captains. There were also controversies regarding an ‘unsigned’ feasibility study and open opposition within one of the companies, Barska Plovidba AD, the CEO of which warned about negative aspects of the deal. In the case of Barska Plovidba AD, the issue was further complicated as 36% of the company was owned by private shareholders, who were not consulted about the deal. The government was accused of breaching the Law on Business Organisations when it failed to call for a shareholders’ meeting to decide about the loan.

As soon as the grace periods expired, the loans became problematic for both Montenegrin companies. It was revealed that the monthly instalments were higher than the actual revenue from renting out the ships. When a new government took office, it was discovered that the previous government had been unlawfully repaying the loans. The Agency for Protection of Competition—a body established through the EU integration process with a mandate that includes assessment of restrictive agreements between undertakings, investigation and establishment of potential abuses of dominant position, and assessment and control of mergers and acquisitions—ruled that the loan repayments represented unlawful state subsidies, and the smaller shareholders of Barska Plovidba AD announced they would go to court to protect their interests.

Debt trap allegations: In March 2021, Montenegro’s Deputy Prime Minister Dritan Abazovic asked the European Union to help repay the Chinese loans. During his visit to the European Parliament, he warned MEPs of the possible political implications of the Chinese loans related to the highway project. The move provoked discussion within the European Union and forced the Chinese Embassy in Montenegro to release a public statement defending China’s involvement in the highway project.

The Deputy Prime Minister’s statement brought international attention to Montenegro and its financial dealings with China. International media framed this story as a dramatic cry for help from a small country on the verge of falling into a debt trap with China. However, such a dramatic narrative seems exaggerated, given the Montenegrin authorities never officially said they were having problems meeting their loan obligations and the Minister of Finance even explicitly stated that Montenegro had no issues with servicing its credit obligations. The core of the Montenegrin problem lies in the fact that the loan was taken for a project that was considered unfeasible and has since been significantly delayed, meaning the country will have to start its repayments before receiving any revenue from the highway. Finally, its high indebtedness for such a small section of highway will limit its future capacity to build strategic infrastructure or to finish the remaining section of the Bar–Boljare Highway.

Problematic megaprojects: The Smokovac–Uvač–Mateševo Highway project has been controversial since its inception in the early years after Montenegro’s independence. As studies showed the project was economically unfeasible, Western financial institutions refused to finance it, and initial public calls for tenders for its construction fell through after the contractors failed to deliver completion guarantees. Only after Montenegro took its now notorious loan from China Eximbank in 2014 did the project begin to move forward. Because a condition of the loan was that the contractor had to be a Chinese company, the project was pushed through lex specialis to avoid public tenders. This led to an outcry about the lack of transparency and increasing costs. Contractual disputes related to complementary access roads, delays in licensing and permit procedures, and land-related controversies led to significant delays in the construction process, which at the time of writing is still under way. Environmental issues regarding damage to the River Tara, a UNESCO World Heritage Site, have also been reported, fuelling popular discontent with the project (for further details, see the relevant project profile).

International crime: In 2017, the famous Maltese journalist Daphne Caruana Galizia was assassinated in Malta, which created outrage in Europe. An investigation by Reuters and a consortium of journalists linked the murder in part to corrupt business dealings in Montenegro. Prior to her assassination, Caruna Galizia had reported on Chen Cheng, a Chinese executive at a global consulting firm who was negotiating an investment in a Maltese energy company by the Chinese state-owned Shanghai Electric Power Company. Chen and one of Malta’s richest businessmen, Yorgen Fenech, established companies in Panama, which, according to documents seen by Reuters, were used to make payments to politicians in Malta and siphon off profits for themselves from this and other deals. Fenech is now in jail awaiting trial for the journalist’s murder. The Reuters investigation also found that Fenech made 5 million USD from a wind farm deal in Montenegro also involving Shanghai Electric Power, which led to negative media coverage of Chinese engagements in the country.

Key Sources

News Outlets

  • Balkan Insight (regional news and insights)
  • CDM (a portal owned by a Greek businessman and close to the former government, with a version in English)
  • Dan (the most widely read print newspaper in Montenegro)
  • Monitor (independent weekly magazine)
  • Radio Free Europe
  • Vijesti (Montenegro’s most influential newspaper, and the most read online portal)



Deron, Laure, Thierry Pairault, and Paola Pasquali. 2021. ‘Montenegro, China, and the Media: A Highway to Disinformation?’ Briefing paper no. 7, China Africa Research Initiative. Link.

Gray, Emily. n.d. ‘The European Silk Road: Montenegro’s Decision to Build a New Highway.’ Stanford, CA: Freeman Spogli Institute for International Studies, Stanford University. Link.

Grgić, Mladen. 2019. ‘Chinese Infrastructural Investment in the Balkans: Political Implications of the Highway Project in Montenegro.’ Territory, Politics, Governance 7(1): 42–60.

Multimedia Materials

Deutsche Welle. 2019. ‘Montenegro: China’s Belt and Road to Nowhere in the Balkans.’ YouTube, 12 May. Link.

NVO Mans. 2021. ‘Road without End: Construction of the Bar–Boljare Highway.’ YouTube, 13 February. Link.

Reuters. 2018. ‘Chinese “Highway to Nowhere” Haunts Montenegro.’ Reuters, 17 July. Link.

VICE News. 2018. ‘China’s One Belt One Road Could Make or Break this Poor European Country.’ YouTube, 14 June. Link.

Updates & Corrections

16 January 2022: China Africa Research Initiative’s briefing paper added to key sources.

Cover Photo: Flag of Montenegro over Kotor Bay. Credit: (CC) Lassi Kurkijärvi.

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