Bosnia and Herzegovina faced the most unbearable suffering during the violent disintegration of Yugoslavia in the 1990s. It emerged from this traumatic period as one of the most complex political entities ever devised constitutionally, with its long-term sustainability under increasing question. Yet, the country soldiered on, slowly rebuilding and gaining an uncertain foothold in international politics and economics. Western support has been decisive despite the unlikelihood of deep institutional integration for the foreseeable future. A wave of political and economic interest from countries such as Turkey, Russia, and the Gulf states was perceived by many politicians as a helpful interim option. China’s entry into the region and country over the last decade occurred in a largely welcoming context. The opaque, elite-dominated social ‘pillar’ structure of Bosnian society fit well with Beijing’s preferred approach to the region, which involves engaging directly with elites and high-positioned office holders. This gave Bosnia and Herzegovina opportunities for engagement and provided a shield against potential public discontent. Interestingly, the complex, multi-entity, multi-layer constitutional structure offered complementary lines of engagement, both to the Bosnian-Croat Federation and Republika Srpska entities. The lack of an immediate imperative to comply with EU law due to the continued stalling of political progress seems to have presented yet another opportunity for Chinese expansion.
Given this history it is unsurprising that the mid-2010s saw extensive growth of China’s presence in the energy sector. The Stanari Thermal Power Plant project was completed in 2016 following a loan from the China Development Bank, which also supported the smaller Ulog hydropower project. Most public attention has been directed at the Tuzla Block 7 Thermal Power Plant, initiated in 2014 and currently under construction. The endeavour is worth upwards of $800 million and is funded by loans from China Exim Bank. Chinese engagement has also expanded into road infrastructure construction with the Sarajevo-Prijedor highway section. Chinese telecoms firm Huawei made a concerted effort to secure the contract to upgrade the network of the main state telecoms operator to 5G. A greater number of local firms participate in trade fairs in an effort to crack the Chinese market. Two Confucius Institutes operate in the country, in Sarajevo and Banja Luka, with the latter functioning as a wider cooperation hub in culture, education, and research. Bilateral academic cooperation is also intensifying, as various BRI-related events across the country testify. Sarajevo is also one of the capitals where an activist Chinese ambassador is gradually venturing to establish contacts with non-state actors such as non-governmental organizations in various fields and working to build up higher public visibility. Beijing is supporting a media outlet with regional ambitions.
Bosnia remains the most problematic country in the Western Balkans as more and more political actors call into question the Dayton Agreement and the viability of the country’s constitutional construction. There is a rising sense of Bosnia and Herzegovina being at a dead end in terms of the Western approaches and policies towards it. Ethnic divisions show signs of deepening as society-wide frustrations increase despair about the long-term future of the country. The current political and constitutional crisis between Republika Srpska and the central state is yet another reminder that dramatic disruption and instability remain an ever-present threat in the Western Balkans. EU and NATO accession continue to be a distant prospect, ever less able to spur political and economic change. In this sense, the geopolitical impasse will go on generating opportunities for non-Western actors to expand their influence, with the political and business elites of Bosnia’s different constitutional entities also being more than ready to engage and take advantage. China’s activities in Bosnia are an important reminder that the country might not be risk-averse, choosing to engage quite actively in a complex political environment. Additionally, Beijing could even be using Bosnia to improve its capacity to engage across political elites, differing institutional frameworks, and a difficult internal context. Its complementary society-focused approach provides yet more evidence that a multi-layer setting is a useful learning ground, offering opportunities as much as challenges.
Economy and business
Investment
One way that China has invested in Bosnia and Herzegovina in recent years is through its Belt and Road Initiative (BRI), which funds infrastructure projects and seeks to boost cultural, economic, and political ties with over 60 countries across Europe, Africa, and Asia.
In March 2019, Bosnian lawmakers approved a $1.04 billion loan from a development lender from Beijing for the expansion of the Tuzla Block 7 Power Plant in Tuzla, one of Bosnia and Herzegovina’s largest cities. This is among the largest investments in the country in the post-war period starting in 1995. However, considering its environmental impacts and the broader global shift under way towards decarbonisation, it is questionable whether this plan will be executed. Construction of the plant was initially meant to begin in July 2020 but was postponed due to the pandemic. General Electric, the contractor charged with construction, withdrew from the project, and it also announced in September 2020 that as a company it would cease to build coal-based power plants as it refocuses on renewable energy. Siemens has also withdrawn from the project, following GE’s example.
The Chinese then looked for an alternative at Siemens, but the company turned them down. However, the Chinese wanted the project to go ahead so they offered to continue with the construction themselves and for the equipment to be manufactured and delivered by Shanghai Boiler Works and Shanghai Electric Group instead of the American General Electric or Siemens. A recent statement claimed that every effort is being made to keep the power plant agreement in force. Based on available information it looks like the project is still ongoing, despite growing concerns about its effects on the environment in terms of carbon dioxide emissions.
Other infrastructure projects that are approved but awaiting financing include a highway between Banja Luka and Novi Grad, whereby two phases of the projects have been approved with two streams of financing. In the first phase, a state-run division of Shandong Gasou Group based in Jinan, China covers costs exceeding $1 billion. In the second phase, the Export-Import Bank of China will provide a €300 million loan. Prior to the emergence of Chinese investment in the Prijedor-Banja Luka highway, there appear to have been no major Chinese-backed infrastructure projects in Bosnia and Herzegovina. However, one of the most significant joint projects is the Stanari Thermal Power Plant, which is owned by a privately owned company from Republika Srpska and a consortium of companies from China. The 300-megawatt facility is worth €530 million. The Stanari Thermal Power Plant emerged from China CEEC (Cooperation between China and Central and Eastern European Countries) and was the first successfully implemented project from the 2018 Sofia Summit. (Sources: 1, 2)
While it stands testament to the corporate responsibility of GE and Siemens to pull out of the coal plant, a newer project aims to provide an environmentally friendly way of generating energy through a €130 million Chinese investment into the construction of a wind farm for Bosnia and Herzegovina. Representatives of the Livno Canton authorities – one of the ten cantons in the Federation of BiH – announced that the Chinese will build a wind farm in Ivovik, after meeting with representatives of the investment companies China National Technical Import & Export Corporation and Powerchina Resources LTD.
The Chinese government has been significantly involved in infrastructure projects that include, but are not limited to, the reconstruction of the main Sarajevo tram service and the construction of a railway in Herzegovina. This involvement is evident from a November 2021 article where the leader of Republika Srpska stated that the construction of a railway is to begin once Chinese firm Shandong gives the go-ahead. The company signed a construction concession agreement with the Republika Srpska government in 2018, when they partnered on the project.
In September 2020, a meeting was held between the water management firm, Vode Srpske, and representatives from two Chinese companies from the construction and IT sectors to discuss potential investments.
Trade
Chinese imports into Bosnia and Herzegovina peaked in 2019 at more than €1.5 billion. According to data provided by the Agency for Statistics of Bosnia and Herzegovina, between 2016 and 2017, Bosnian exports to China grew from 2.6 million to 3.8 million Bosnian convertible marks, falling in 2018 to nearly 3.7 million and dropping below 3 million in exports in 2019 and 2020. The table below showcases the trade volume between BiH and China from 2008 to 2020 based on the data provided by the Agency for Statistics of Bosnia and Herzegovina.
Loans from Chinese Banks and Entities
Aside from the $1.04 billion loan noted above, there are no other known official loans between Bosnia and Herzegovina and China. Instead, there is a variety of different investments in projects or concessions, including the afore-mentioned Stanari Power Plant investment, where mines and land, for example, are pledged as collateral for Stanari investment repayments.
A study by the European Investment Bank found that over 20% of construction loans from China given to central and eastern Europe (amounting to €12 billion) support projects in Bosnia and Herzegovina. These include investments by Huawei to build Bosnia’s 4G network and dairy sector investments. With the earlier selection of Huawei as a 4G supplier, BH Telecom was the target of well-intentioned criticism from diplomatic friends of Bosnia and Herzegovina due to security questions about Huawei.
Main Local Companies and Businesspeople with Economic Ties to China
According to Bosnia and Herzegovina’s Ministry of Foreign Trade and Economic Relations, more than 750 companies owned by citizens of the People’s Republic of China were registered in Bosnia by 2011, accounting for 5.5% of the total number of registered foreign direct investment agreements in the country. On the other hand, there are numerous Chinese investors that hold small, wholesale and retail trade enterprises. The total value of Chinese investments is marginal and represents 0.03% of total foreign investment in Bosnia and Herzegovina.
Cooperation between China and Employers’ and Branch Associations
No data available.
Trade Fairs
In 2018, the Minister of Foreign Trade and Economic Relations of Bosnia and Herzegovina, Mirko Šarović, opened a trade fair focusing on equipment and investments in agriculture. This was organised as part of the “16 + 1” platform countries within the 21st International Fair of Economy in Mostar, which was held in partnership with the People's Republic of China. The fair is attended by respectable European and Chinese companies that produce agricultural equipment, including the largest Chinese company, YTO Group Corporation, which is present with its products in more than 100 countries. Hu Yang, special envoy of the People's Republic of China for cooperation with 16 + 1 countries, said that this platform has already shown its capabilities, but that much more can be done in the coming period and that events like trade fairs represent the right step in that direction.
Politics
There is a possibility that non-extensive cooperation is a result of a complex political situation in BiH, but it is important to note that Chinese companies – as displayed throughout the research – are a bit more active in Republika Srpska. It is interesting to mention that Milorad Dodik expressed support for China in terms of maintaining peace and stability in Hong Kong.
China’s “16+1” format is a multilateral approach, but China acts mainly bilaterally within it. Currently, Bosnia and Herzegovina does not have reliable or recent data available on Chinese foreign direct investment but it has welcomed Chinese companies in as part of some of the projects described earlier. There have been false starts too. After the Bosnia and Herzegovina government signed a cooperation agreement in 2018 with Huawei, no such collaboration then resulted.
Another business and investment conference between Bosnia and Herzegovina and China, apart from the Unlimited Forum mentioned further on, was held at the end of November 2018. It was attended by 17 Chinese companies from various industries, namely: the textile industry, production of energy equipment, production of medical equipment, production of mobile homes, production of plastics, production of aluminium alloy parts, production of machinery and auto parts, production of mobile homes, the chemical industry, production of stainless-steel products, production of wine equipment, and international freight forwarders. The conference was attended by representatives of the Ministry of Foreign Trade and Economic Relations of Bosnia and Herzegovina, VTK, and Chinese competent institutions of the City of Ningbo and the Chinese Embassy in Bosnia and Herzegovina, competent institutions of the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska, FBiH Foreign Investors Council, the FBiH Chamber of Commerce, and other similar institutions.
Civil society
In 2018, the Unlimited Forum – the largest regional forum of innovation and entrepreneurship – was held in Sarajevo, organised in partnership with China, with the ambassador of China addressing the audience directly at the opening event. The event hosted representatives of approximately 100 Chinese companies, and two of the most prominent keynotes including representatives of Chinese companies Viber and Alibaba.
Media
An examination of regional content produced by Chinese official media demonstrates a strong emphasis on portraying China’s economic investments in a favourable light. The “New Silk Road”, according to One Xinhua, is a “win-win” opportunity that will bring “jobs, jobs, jobs.” The Kina Danas (China Today) website covered the fifth anniversary of the BRI, the 16+1 forum, and related investments. More recently, it published an article about Ambassador Chen Bo’s goodbye visit to Dodik, during which only the Republika Srpska flag was displayed and not the Bosnia and Herzegovina national flag. Local leaders across the region have used Chinese state media to communicate with Chinese authorities and the Chinese public, urging Beijing to preserve and expand economic engagement. Even the high representative, Valentin Inzko, commended a Republika Srpska power station and mining proposal in a 2016 interview with Xinhua, describing it as the type of foreign investment Bosnia needed to tackle excessive unemployment.
There are no available data on media outlets that have Chinese ownership or content agreements with Chinese counterparts. However, it is noticeable through researching for the purposes of this report that relations differ between entities. In the Republika Srpska, media is more positive about China. That said, even in BiH news, reporting on China is not absent in regional or state level media. As investment projects are rather significant in Bosnia and Herzegovina, it can be concluded that it is in the best interest of the media at the level of Bosnia and Herzegovina to inform citizens on this matter as well as to reach high number of clicks, as such topics are considered interesting.
Academic research
There is cooperation between the Faculty of Philosophy at the University of Sarajevo and the Confucius Institute in Sarajevo. Collaboration includes lectures and providing Mandarin language classes.
In 2018, the Chinese government organised a university fair aimed at introducing numerous Chinese universities – specifically those in Beijing – to the students of Bosnia and Herzegovina and providing a path of academic cooperation between the two.
Additionally, the Chinese embassy provides one annual scholarship for a student from Bosnia and Herzegovina for foreign studies in China. Additionally, they provide five separate scholarship programmes for local students applying for Bachelors and Masters studies in China directly. These scholarships include the China/UNESCO-the Great Wall Fellowship Programme; the Chinese Government Special Scholarship Programme-University Postgraduate Programme; the Chinese Government Special Scholarship Programme-Degree Orientated Program in Provinces and Autonomous Regions; and the Chinese Government Special Scholarship Programme-Cooperative Programme with Provinces and Autonomous Regions.
The University for International Studies in Jilin, China, has signed an agreement with the University of East Sarajevo, Republika Srpska, to provide dual degrees to all attending students.
Culture
Language classes are not only provided by the Confucius Institute in Sarajevo, but also by BRAVO Sarajevo, a non-profit and non-governmental organisation. This covers tuition up to level A1 in Mandarin, indicating that an interest for this language is also present informally and available to learn through the NGO sector.
The cultural, societal, and academic impact is most prominent in the expanding opportunities for local young people to learn Mandarin or be exposed to Chinese culture through numerous, albeit short, events, as well as to study in China via numerous scholarship programmes offered by the embassy. There is a strong positive sentiment towards China in Republika Srpska in terms of politics, but the cultural and societal relations have also been on an upward slope due to business investment efforts. The long-term effects one may anticipate from this strengthened relationship are additional trust at the level of Bosnian society, which is already significant, with the rise in popularity of Xiaomi and Huawei brands. This will likely further positively impact on local receptiveness to imported Chinese goods, which have for a long time held a reputation of being affordable, low-end goods.
People-to-people interaction
Tourism
The data indicate a rapid rise in the arrival of Chinese tourists to Bosnia and Herzegovina in the period since 2011, which grew from 2,244 visitors recorded in that year to a remarkable 103,000 tourists prior to the covid-19 pandemic.
The trend of the nights spent in Bosnia and Herzegovina is proportional to the number of visitors visiting Bosnia and Herzegovina in the period 2012-2020, where the highest number of nights spent in Bosnia and Herzegovina was also recorded in 2019, amounting to 122,282 total nights.