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| After the agreement on the liberalization of visas between Albania and China |
From the Ammonium Nitrate Factory in Fier to the Metallurgical Complex in Elbasan... over 400 industrial projects were built in Albania with credits and investments from China during the communist regime. Two countries on two different continents... geographically distant and with different cultures, but at one point in history, they united in ideology. Today, Chinese investments can be counted on one hand, and their value is no more than symbolic.
“Rather than an unfriendly approach, I would say that the proposals made, at least for certain investments, have not been very effective in being welcomed as other investments might be,” expert Adrian Civici told A2 CNN.
Data from the Bank of Albania show that except for 2022, new investments made by Chinese companies in Albania have not reached even 1 million euros per year. This year has started somewhat more optimistically with around 590,000 euros invested by Chinese businesses.
“In strategic sectors, it should not be hidden that China has made proposals as a state, not as private entities, and we have been cautious about the geopolitical impact. So the Albanian government has not hidden the geopolitical risk in relationships when they are not based on market principles, but on later objectives,” said former Finance Minister Arben Malaj.
According to data from the National Business Registry, there are 178 businesses with at least one Chinese citizen partner with active status operating in Albania. Most of them are engaged in wholesale and retail trade, vehicle repair, and processing industries.
Data from the Albanian Investment Development Agency (AIDA) show that primarily in the automotive industry, but also in road and rail infrastructure, several Chinese companies have expressed interest but have been unsuccessful in investing in Albania in recent years.
“During the period 2013 – 2024, AIDA has handled several expressions of interest from Chinese investors, but they have not materialized into concrete investments, due to the decision-making of the interested parties. Within the framework of law no. 55/2015 ‘On strategic investments in the Republic of Albania,’ as amended, AIDA has not processed any application from Chinese investors for obtaining the status of ‘Strategic Investor/Investment.’"
“Albania is a small market, and naturally, large foreign investments, except in specific cases like energy or gas or other elements, are unlikely to be on that scale solely for Albania. More and more, foreign investments are aiming for a more regional character, making them more attractive to come to Albania,” says Civici.
“The Chinese tried to come to Albania to invest in the agriculture sector. They wanted to collect olive oil and export it to China. Again, they saw that, in reality, Albanian production was relatively very low compared to their demands,” says Klodian Muço.
Today, China ranks behind Egypt and Israel in terms of foreign investments in Albania. In total, from the state with unparalleled friendship between politics and people, about 5 million euros have been invested. “This also has an important political component because the nature of economic relations always reflects political relations. If you look at major Chinese foreign investments in Serbia or other countries, they naturally have geopolitical or political significance behind them,” says Civici.
“For years now, we have been in a situation where globalization has ended, and we now have two blocs: the United States, the West on one side, where we are part of, and the Eastern countries on the other side, with China as the main state followed by Russia. We can say that just as during the communist period Albania did not welcome investments from Western countries, today it does not welcome investments from Eastern countries,” says Mateo Spaho, a lecturer and economy expert.
However, these perceptions, whether argued or not, are not accepted by the Government of Albania and the Ministry for Europe and Foreign Affairs. In response to a request for information, they replied: “Albania offers a very friendly legal framework regarding foreign investments. The Law on Foreign Investments is based on the principles of equality, non-discrimination, and investor protection. Law no. 7764 dated 02.11.1993 'On Foreign Investments' is designed to create a favorable climate for investments. The law provides guarantees for all foreigners (natural or legal persons) willing to invest in Albania.
“Do you see any obstacle for private Chinese investors to invest in Albania? I don’t. The issue raised diplomatically by China is that they complain about intergovernmental projects,” says Arben Malaj.
The Albanian Investment Development Agency (AIDA) provides similar arguments. “Foreign investments in the Republic of Albania do not require prior authorization. They are allowed and treated under conditions no less favorable than those granted to domestic investments under similar conditions, except for land ownership, which is regulated by a special law. In all cases and at all times, investments are treated equally and impartially, enjoying full protection and security.”
“I have read the books of two Israeli economists who reveal the key to their success. And the advice given is this: You build the legal and physical infrastructure... the edges and activities where profit might be found are identified by business, not the government,” says Malaj.
However, the diplomatic response from the Ministry for Europe and Foreign Affairs, along with the arguments from the Albanian Investment Development Agency and experts, does not fully align with what Prime Minister Edi Rama stated at the Vilnius Summit just over a year ago.
“Both Russia and China are old marriages that we wouldn’t want to return to. For others, it’s different. Just imagine, since 1990 when we gained freedom, there hasn’t been an official high-level visit from Albania to Moscow or vice versa. With China, it’s different because we have friendly relations, but it’s not a country where we have had many Chinese investments, and we don’t exactly welcome Chinese investments warmly. I think I said it all; we don’t want to return to an old marriage,” said Rama.
Albania and China have friendly relations, and at least for now, this is an undeniable fact. Equally undeniable is the fact that the country remains cautious about using the economy as a tool for political pressure.
“In the global arena, the non-constructive and hostile actions and stances of authoritarian powers like China, Iran, and North Korea have been emphasized. These countries have chosen to align with Russia, supporting it politically and, in the cases of Iran and North Korea, even with military means. Economic security can also be threatened by the efforts of global actors to infiltrate economies for geo-economic objectives and to use the economy as a tool for political pressure.”
National Security Strategy 2023-2028
“Absolutely, the economy is used as an element and political pressure. The economy is politics and is used by every country, whether dictatorial or democratic. It is an influential element, absolutely,” says Mateo Spaho.
“Both as a tool of political pressure and as economic expansion and influence in many other areas,” says Adrian Civici.
“In the past, before the '90s and today, developed countries are increasingly exploiting this. They use what is considered ‘economic diplomacy.’ So, before the '90s, but also today, embassies are not just a diplomatic representation; they also serve to accommodate the businesses of those countries to carry out their activities,” says Klodian Muço.
“China has an expansionist policy aimed at placing various states under a regime of political domination through economic investments. What I mean by this is that China buys various countries, meaning it buys the political stance of different countries by investing in them,” says Pano Soko, an economic expert.
The European Union has identified China as a “partner for cooperation” on one hand, but also as an “economic competitor” on the other. Politically, Beijing is considered a “systemic rival.” “And you know very well that China is the initiator of the ‘BRICS’ group. Secondly, it offers loans without economic, political, or social conditions. Thirdly, the Chinese are not easy to negotiate with, and many of the countries that have taken loans from China have pledged national assets as collateral. Look at Montenegro; Europe had to intervene,” says Malaj.
"There have been cases and investments where not all countries have been happy with Chinese investments. We have the case of Montenegro, where there was a 40-kilometer highway investment that still today continues to be paid off. On one hand, it is unclear what benefits it has brought, and on the other hand, it is known that the cost is high and is borne by the state of Montenegro," says Spaho.
A completely different picture is presented regarding trade relations. China is one of Albania's main partners, with imports last year exceeding 933 million euros. This is the highest level ever recorded. (graph 3) Not at the same levels as imports, but also in terms of exports, Albania is in the process of strengthening its relations with China. Last year, Albanian companies sent goods and products worth over 100 million euros to the Asian state's markets. "Trade in goods is a straightforward transaction... I buy this and pay the money. Investments are what create dependency," says Pano Soko.
However, according to an article published in "Per Concordiam," an academic journal focused on security and defense issues in Europe, China might use trade agreements with Western Balkan countries to enable Chinese companies to bypass trade restrictions and export products directly to the EU market of 800 million inhabitants, thanks to the free trade agreements that the region's countries enjoy with the "union." "Trade relations with China are important. Let's not forget that today it is still the 'world's factory.' This means that China has such trade relations with almost all countries in the world," says Spaho.
Currently, Albania is the least connected country with China in the region, after Kosovo, despite having signed over 50 economic agreements with the state, once its closest ally. The country also became part of China's ambitious project, "One Belt, One Road," but has not received any loans, at least so far.
However, this does not mean that the situation cannot change. Even though Albania has taken the next step towards European Union integration by opening negotiations, the process may take years, if not decades. The European Parliament itself warns of what it calls "enlargement fatigue," meaning the weariness that comes from waiting many years to become part of the European Union without concrete results, which can tire the candidates and their citizens. In these moments of weakness, China will be ready to offer a simpler alternative, as in the case of the pandemic with the COVID-19 vaccines."