analysis 04 Jul 16

Business Deals with China Alarm Serbia’s Environmentalists

China’s investments in Serbia’s steel and coal industry have worrying environmental implications - and may conflict with its EU obligations.

Milivoje Panovic
BIRN
Beograd
 
 Serbian PM Vucic with the Chinese President Xi Jinping and his Serbian counterpart Nikolic during the visit to Zelezara. Photo: Beta.

Serbia’s government has declared the recent visit of Chinese President Xi Jinping to Belgrade a major success - but experts warn that some of the business deals signed on this occasion could have negative consequences for the Serbian environment and for its EU negotiations.

During the three-day visit of the Chinese delegation to Serbia, the two countries signed 22 agreements designed to improve business relations and boost Serbia’s weak economy.

Besides new business deals, Serbia and China are already involved in several joint projects.

In April, Serbia sold its ageing, indebted steel mill in Smederevo to China’s Hebei Iron and Steel Group for 46 million euros.
In 2014, the two countries signed a loan agreement by which China lent Serbia 608.26 million US dollars to construct a new section of the coal-based thermal power plant, Kostolac B3.

Serbia ratified the loan in 2015, which is being used to increase the power of the plant by 350 Megawatts and expand the work of the Drmno coal mine, increasing its production from nine to 12 million tons of coal per year, which the power plant will use.

The boost to the steel and coal industry in Serbia comes at a time when China itself is lowering steel and coal production, reflecting China’s growing environmental concerns and its plans to restructure its own economy.

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