Serbia is expanding its economic integration with China while the European Union remains its largest export market, biggest investor and formal destination for future membership. Belgrade is pursuing this dual track through a free trade agreement, industrial investments and expanding manufacturing cooperation. The shift has intensified debate over how Serbia aligns its access to European markets with deeper links to China.
The discussion gained momentum after the entry into force of the Serbia-China Free Trade Agreement. The agreement provides preferential access for thousands of products and positions Serbia uniquely among European countries. Chinese manufacturers operating in Serbia can access both the Serbian market and preferential access to European markets via the country’s existing Stabilisation and Association Agreement with the EU.
Preferential access and investment expansion across manufacturing sectors
Chinese companies cite factors that are increasingly difficult to replicate elsewhere in Europe, including relatively low production costs, state investment incentives and geographic proximity to EU consumers. Preferential trade arrangements are also part of the investment rationale. As a result, Chinese investment has expanded across sectors such as steel, mining, automotive components, battery supply chains, tires and industrial manufacturing.
Since 2015, Chinese investments in Serbia have been estimated at approximately €7 billion. That figure places China among the fastest-growing foreign investors in the country. The scale of activity has been accompanied by new production links aimed at serving regional supply chains.
Assembly operations and automotive supply chain developments
Critics argue that products assembled in Serbia may enter European supply chains with lower trade barriers than goods shipped directly from China. They describe a “gateway” effect in which Chinese firms establish final assembly operations in Serbia while importing much of the higher-value content from China. Some Serbian economists characterize the model as predominantly assembly-based manufacturing rather than deep industrial localization.
The automotive sector shows the clearest concentration of these developments. Chinese suppliers connected to electric vehicle and component manufacturing have expanded operations across Serbia, building on earlier investments including the Linglong tire plant. The expansion also includes a growing network of automotive component manufacturers operating in Serbia.
The restructuring of Europe’s automotive industry, together with growing trade tensions between Brussels and Beijing, may further encourage Chinese companies to seek production platforms closer to European customers. The shift is occurring alongside changes in how firms position their manufacturing footprint relative to end markets.
EU remains dominant partner as new industrial-policy tools roll out
Despite the growth of China-linked projects, the EU remains Serbia’s most important economic partner. EU member states account for most Serbian exports, imports and foreign direct investment. Recent data show Serbia exported approximately €18.9 billion worth of goods to the EU while importing nearly €22 billion.
The EU accounts for around 56% of total foreign direct investment inflows into Serbia. That concentration shapes how Belgrade weighs regulatory alignment and market access across both relationships. Brussels has raised concerns about regulatory alignment, competition policy and state aid practices, alongside the risk that Chinese firms could use Serbia as a platform to reach European markets under different standards.
The issue is becoming more prominent as the EU introduces new industrial-policy instruments designed to strengthen resilience and reduce strategic dependencies. These include CBAM rules, foreign subsidy investigations, battery regulations, critical raw materials policies and supply-chain due diligence requirements. Companies operating in Serbia increasingly need to meet both Chinese commercial expectations and European regulatory requirements.
Copper processing and battery-material supply chains under competing strategies
In mining and processing, Chinese firms have become major investors in copper production, smelting and battery-material supply chains. At the same time, the EU seeks secure supplies of critical minerals for its energy transition. This places Serbia between two industrial strategies: China’s outward manufacturing expansion and Europe’s push for strategic autonomy.
The broader question is whether Serbia can continue balancing both relationships as competition between Brussels and Beijing intensifies. The country’s economic model has benefited from acting as a bridge between East and West by attracting capital from multiple sources while maintaining access to European markets.
For investors, the most likely outcome described is not a choice between Europe and China but a more selective integration with both sides. European capital is expected to remain dominant in banking, infrastructure financing and export markets, while Chinese investment continues expanding in manufacturing, mining, industrial processing and strategic supply chains. The challenge for Belgrade is ensuring that parallel relationships reinforce rather than undermine each other.
As Europe raises new regulatory barriers and China seeks alternative routes into global markets, Serbia’s role as an industrial and logistical bridge between the two economic blocs may become more valuable—and more scrutinized—in Southeast Europe.
