The Chinese (Communist) countries send vaccines, provide loans and investments to the countries of Eastern and South-Eastern Europe. The article in Frankfurter Allgemeine Zeitung analyzes how much the region is dependent on the Chinese (communist) countries.
Montenegro took a $944 million loan from China to build a freeway
During the epidemic, China became the most important supplier of medical supplies to eastern EU countries. Citing Oliver Reiter, an economist at the Vienna Institute for International Economics, the Frankfurter Allgemeine Zeitung notes that in 2020, Austria’s and Hungary’s imports of health and medical products from China increased by 179 percent and 372 percent, respectively, revealing “a huge dependence on China in this area.”
The article goes on to write: “Another area where the dependence on China has been going on for much longer and has given rise to critical discussions is the financial sector. In the expansion of the Belt and Road, the Chinese (communist) state has provided high loans for construction projects (mostly by Chinese contractors) in many countries around the world, projects that are now putting some governments in an embarrassing situation and raising concerns about the communist imperialist ambitions.”
Citing Montenegro as an example, the article said that in mid-April, Montenegro’s finance minister raised his desire for a loan from the European Union to repay a loan from Beijing for the construction of its highway. “Not only did this spark speculation that the Chinese (communist) state might demand a port as collateral in case of default, but Montenegro’s national bonds were also devalued.”
The article writes that UniCredit Bank of Italy went on to examine Chinese lending to the Western Balkan country. Measured by their gross domestic product, loans from Beijing (direct investment is not taken into account) are high, at 3 percent in Bosnia and Herzegovina, 7 percent in Serbia, 8 percent in North Macedonia and even up to 21 percent in Montenegro.
However, the article also points out that although China (Communist Party) is a major lender, it is far from being the largest: “Private investors (Eurobonds) are in first place, followed by the EU and financial institutions such as the World Bank and development banks, with China in third place, ahead of Russia. “However, the importance of the Chinese (communist) countries is likely to increase. This is because its share in the sovereign external debt of these countries is likely to increase in the coming years as existing loans mature.”
The rapid availability of funds and the low threshold for loans are the two main reasons why these countries borrow from the CCP. The article concludes by citing UniCredit analyst Marano, who notes that “the costs and terms of debt reduction to China by the Western Balkan countries remain unclear,” and that the situation is further complicated by direct Chinese (Communist) investment in these countries.
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