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Chinese investments in Central & Eastern Europe linked to corruption, lower environmental & governance standards, report says

New Study Says China Using Investments To Buy Political Influence In Central, Eastern Europe, 9 September 2021

A new report has found a correlation between the influx of Chinese capital into a country and a negative impact on its environment and the quality of governance.

The study -- published by the Bulgarian-based Center for the Study of Democracy on September 9 -- says Beijing’s growing economic footprint in Central and Eastern Europe over the last decade has coincided with a drop in legal and governance standards and raises concerns about the environment and rising debt levels in the region.

The report is the first wide-ranging study of China’s expanding presence in Central and Eastern Europe, which has seen Beijing become the region’s largest trading partner...

According to the report’s findings, Bosnia-Herzegovina, Hungary, Montenegro, and Serbia have experienced the most noticeable drops in those categories in connection to increased Chinese investment, with Beijing-backed companies receiving tax exemptions, the ability to bypass local labor laws, and other forms of preferential treatment...

But many Chinese projects across the region have been pushed into the spotlight recently amid controversy over nontransparent contracts and accusations of corruption during the tender process...

The report also finds that China’s economic rise has led to a growing share of coal-fired power used to generate electricity in Central and Eastern Europe, as well as cost-cutting and lowered environmental standards for projects across the region...

In addition to debt concerns, Montenegro’s controversial highway has also been in the crosshairs of activists over environmental damage that construction has brought to the UNESCO-protected Tara River.

Similarly, environmental damage caused by a Chinese-owned copper mine near the Serbian city of Bor has led to complaints of and protests over pollution, forcing the company to temporarily halt its operations...

“China isn’t trying to stop countries from joining the EU,” said [report author Martin] Vladimirov, “but the laws and policies that are being adopted to facilitate Chinese investment indirectly undermine the accession process for many countries.”