China’s $1.5 billion highway in Serbia signals deepening ties with Beijing despite EU concerns

Serbia has signed on 7 May a major new infrastructure deal with China, awarding a Chinese company a $1.5 billion (approximately €1.3 billion) contract to build the Vožd Karadjordje Expressway.

The project underscores the continuing surge in Chinese investment across the Balkans, even as the country pursues European Union membership. The agreement, signed with Shandong Hi-Speed Group, highlights Serbia’s pragmatic approach to development: welcoming capital and expertise wherever it is available while managing tensions with Brussels over transparency, environmental standards, and strategic alignment.

Construction of the expressway is scheduled to begin in July and is expected to take three years for the initial phase. The first segment will stretch approximately 83 kilometers from the Belosavci interchange through Rača to Markovac, eventually linking with Pan-European Corridor X. A second phase will extend the route to a total of 125 kilometers by 2035, better connecting Belgrade’s southern suburbs with the central Šumadija and Pomoravlje regions.

Serbian President Aleksandar Vučić described the project as evidence of the “iron friendship” between the two nations, praising Chinese partners for their efficiency, seriousness, and responsibility. He noted that Shandong Hi-Speed Group is already delivering other key roads, including routes toward Golubac and the Belgrade–Zrenjanin–Novi Sad corridor.

The magnitude of Chinese investments in Serbia

The new highway forms part of a broader infrastructure push that Serbian officials credit with supporting economic expansion. Vučić highlighted first-quarter growth estimates of around 3 to 3.1 percent and expressed optimism that Serbia could achieve roughly 3.5 percent growth in 2027, roughly double the projected rate for developed economies. He pointed to comparable performance in North Macedonia and Albania while noting weaker outlooks elsewhere in the region. According to the president, the project will contribute directly to GDP growth, higher wages, and improved pensions by strengthening connectivity in central and eastern Serbia.

Over the past 15 years, Chinese investments in Serbia have exceeded €10 billion in commitments, with actualized projects estimated around €5.5 billion. China ranks among the top five foreign investors in the country and accounts for the vast majority of Chinese foreign direct investment across the Western Balkans. Major initiatives include the Budapest-Belgrade railway, upgrades at the Bor copper mine and smelter by Zijin Mining, the Pupin Bridge, sections of the Belgrade ring road, and the Kostolac B Thermal Power Plant. Ongoing projects also encompass the Belgrade metro system, a significant road tunnel in the capital, and several bridges.

For a nation still recovering from the conflicts of the 1990s and seeking to modernise its transport network, such large-scale financing and rapid execution fill gaps that other partners have been slower to address. The Chinese side has committed not only to construction but also to pre-financing, easing immediate budgetary pressures on Belgrade. Ambassador Li Ming described the expressway as a vital component of Serbia’s “Serbia 2035” development vision and a symbol of the enduring China-Serbia relationship, expressing confidence that the work would meet high standards and stay on schedule.

Geopolitical traps and lingering concerns

Yet this deepening partnership occurs against a complex geopolitical backdrop. As an EU candidate country, Serbia faces expectations to align its policies and procurement standards with European norms. Brussels has repeatedly voiced concerns about the transparency of Chinese-led projects, potential debt sustainability issues, and adherence to environmental and competitive bidding requirements. Serbia owes roughly €2.7 billion to China’s Exim Bank, raising questions about long-term fiscal implications even as the immediate infrastructure gains are welcomed.

Critics point to limited public scrutiny of contract terms. Agreements are often handled through intergovernmental channels that reduce opportunities for independent due diligence or parliamentary debate. This opacity, combined with China’s willingness to finance projects without extensive political preconditions, has helped strengthen the position of the ruling Serbian Progressive Party by delivering visible results. At the same time, Serbia maintains close ties with Moscow, further complicating its EU accession path.

Despite these frictions, Vučić has continued to cultivate relations with Beijing, including multiple visits to China and hosting President Xi Jinping in Belgrade in 2024. Chinese investments have become a cornerstone of Serbia’s growth strategy, providing both capital and execution capacity in sectors where Western financing has sometimes moved more cautiously. Proponents argue that the “no-strings-attached” model has accelerated development without demanding immediate policy shifts on sensitive issues.

The European Union stands as Serbia’s largest donor and investor, having contributed over 7 billion euros in grants and investments only between 2000 and 2025. However, on 1 May EU commissioner for еnlargement Marta Kos announced that the European Commission had suspended all payments to Serbia under the Growth Plan – €1.5 billion, citing setbacks in judicial reform. She also expressed concerns over Belgrade’s geopolitical orientation.

“We have a clear rule: a country aspiring to join the EU must fully align with the Union’s foreign and defence policies. This means you cannot sit on two chairs. Serbia will eventually need to decide what is most important for its future development,” Kos stated.

For ordinary Serbians, the benefits of the highway project are measured in improved travel times, job opportunities during construction, and the promise of broader economic spillover. Whether these gains outweigh the risks of increased debt, reduced transparency, and potential delays on the EU track remains a subject of ongoing debate in the region and in Brussels. What is clear is that Chinese infrastructure financing has become deeply embedded in Serbia’s development story, with the highway marking the latest chapter in a partnership that shows no signs of slowing.

Sources: BGNES, Xinhua, Tanjug, B92, Centre for European Policy Analysis (CEPA)

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Caption: President of the Republic of Serbia Aleksandar Vučić attended on 7 May the ceremony of signing documents on design and execution of works for the construction of the state road I order “Vožd Karadjordje” – sector 2 and sector 3. (Government of Serbia)