Montenegro - China Relations
The People's Republic of China officially recognized Montenegro on June 14, 2006. Diplomatic relations between the two countries were established on July 7, 2006. The Ambassador of Montenegro, Ljiljana Toškovic, took office as the Ambassador Extraordinary and Plenipotentiary to the People's Republic of China on January 15, 2009, by handing over her credentials to the President of China, Hu Jintau.
The Ambassador of the People's Republic of China to Montenegro, Zhi Zhaolin, took office as Ambassador Extraordinary and Plenipotentiary on December 14, 2010, by handing over his credentials to the President of Montenegro, Filip Vujanovic. The first Chinese ambassador to Montenegro was Li Manchang, from January 10, 2007 to November 26, 2010. The Embassy of Montenegro in the People's Republic of China was opened on November 13, 2007. Consul General of the People's Republic of China in Montenegro Liu Wenxin performed this duty from 2003 to July 7, 2006, when the Consulate was transformed into the Embassy of the People's Republic of China in Montenegro. From July 7 to the end of 2006, Liu Wenxin was the charge d'affaires of the Chinese Embassy in Podgorica.
In July 2010, the Chinese corporation Poly Technologies donated a line for assembling heavy trucks (worth 3 million euros) to the Government of Montenegro. The line will be given to the municipality that offers the best conditions. Based on the Agreement from October 2009 between the Montenegrin shipping company AD Kotor and Poly Technologies, the ships "Kotor" and "21 May" were built and taken over on the basis of a loan of 50 million dollars, and the delivery of two more ships is expected in 2014.
Regular sessions of the Economic and Trade Joint Committee of Montenegro and China contribute to good economic relations. China has repeatedly donated computer equipment to Montenegro worth a total of over 1.5m euros. The total trade between the two countries in 2012 amounted to 134,406,987 euros, of which imports were 130,605,327 euros and exports 3,801,660 euros. Direct investment from China in 2012 amounted to 440,000 euros.
In 2013, the two countries maintained a sound momentum of development of their business ties as well as party-to-party, people-to-people and cultural exchanges. The building of the second group of the ocean-going cargo ships purchased by Montenegro from China made smooth progress. Chinese enterprises actively discussed with the Montenegrin side major cooperation projects on construction of highways, power plants and other infrastructures. The Social Democratic Party of Montenegro sent a delegation to the Fourth China-Europe High-level Political Parties Forum held in Suzhou. The China Disabled People's Performing Art Troupe staged a performance in Montenegro. In 2014, Montenegro signed a loan deal with the Export-Import Bank of China, under which the latter provided $944 million in loans to Montenegro, with a 20-year repayment period and a six-year grace period. The terms of the loan were determined not by the Chinese bank itself but in agreement with Montenegro's government. The highway project has often been cited as an example of the “debt-trap diplomacy” China is accused of deploying as part of its Belt and Road Initiative.
The 180-kilometer Bar-Boljare motorway, which will link the Adriatic Sea and Montenegro's border with Serbia, is Montenegro's first highway, and it will be a major link of the country to the EU's transportation system. The first 41-kilometer section of the highway was built by the Chinese Communications Construction Co (CCCC) and its subsidiary China Road and Bridge Corp (CRBC) at a price of 809 million euros ($1.067 billion). The construction of the motorway would significantly reduce travel time, since people will travel 30-40 minutes from Podgorica to Kolašin instead of an hour and a half as they do now. Also, high-quality and secure roads can bolster road safety even though this issue has been quite complex in terms of factors that affect the level of safety.
Construction of 44km Smokovac-Matesevo stretch was launched in April 2015 and would be completed by mid-2020. Tunnels and bridges represent about 60 percent of this section, and this section was the most difficult part of the whole project. "For this reason, it would mean much more than just a highway, as we will make secure one of the most dangerous parts of the road through the Moraca River gorge, and enhance economic progress along the road," said then Montenegrin transport minister Ivan Brajovic in 2013, before construction of the project.
A 2018 study by the Washington-based think tank the Center for Global Development noted : "Montenegro’s debt problem is enormous. The World Bank estimates that public debt (including guarantees) as a share of GDP will climb to 83 percent in 2018 in the absence of fiscal adjustment. The source of the problem is one very large infrastructure project, a motorway linking the port of Bar with Serbia that would integrate the Montenegrin transport network with those of other Balkan countries. The Montenegro authorities concluded an agreement with China Exim Bank in 2014 for the latter to finance 85 percent of the estimated $1 billion cost for the first phase of the project. The estimated cost has since risen to $1.1 billion, or over 25 percent of GDP. The loan for the first phase of the project will reportedly be extended with an interest rate of 2 percent, five-year grace period, and 20-year repayment period. The road is being built in three phases, and the IMF believes the second and third parts of the highway should only go forward with highly concessional funds because non-concessional terms would likely result in debt default."
The anti-corruption NGO MANS has many times voiced concerns about the project, claiming it has given room for corruption and lacks transparency. Also, MANS several times warned that CRBC was not building the motorway stretch with proper materials. The latest concern was that the construction of the stretch has seriously polluted the Tara river. MANS claimed it was devastated and in June 2019 filed a claim against the tourism minister Pavle Radulovic and transport minister Osman Nurkovic due to alleged environmental devastation associated to the Smokovac-Matesevo construction.
The key first priority stretch of the Bar-Boljare motorway from Smokovac to Matesevo did not connect any major urban centres to one another, often causing it to be dubbed ‘the highway from nowhere to nowhere’. As a result, the Western Balkans Investment Framework has approved funds to assist Montenegro with developing phase two of the project.
Montenegro asked the EU for help to repay a loan to China’s Exim Bank, taken out for the construction of the first priority stretch of the Bar-Boljare motorway, Deputy Prime Minister Dritan Abazovic told MPs on 26 March 2021. On 12 April 2021 the EU reportedly rejected Montenegro's request for help to repay a loan for a highway project in the Balkan country, which was applying for an EU membership. The European Commission even voiced "concerns" over some Chinese investments. And some media outlets suggested that repaying the loan would increase the country's public debt to 80 percent to GDP. The debt ratio reflects many factors, and many countries' debt ratios are far higher than 80 percent, such as France, which has a debt ratio of more than 100 percent.
The loan was agreed under the previous government led by Milo Djukanovic, who ruled the country for more than three decades as either president or prime minister for most of that time. Montenegro’s finance minister Milojko Spaijic made it clear that the new administration, which took over in December 2020, wanted closer ties with Brussels than Beijing. The project raised concerns about the impact of Chinese investment, but a spokesman for the EU said it does not pay off partners’ loans from third parties.
China-donated COVID-19 vaccines arrived at Podgorica, Montenegro on 03 March 2021. Chinese Ambassador to Montenegro Liu Jin and Montenegrin Health Minister Jelena Borovinic Bojovic welcomed the vaccines and attended the handover ceremony. Liu said that this batch of vaccines embodied the good wishes from the Chinese people and is a vivid reflection of the traditional friendship between the two countries. Montenegro is one of the first European countries to receive China’s vaccine donation, said Liu. China is willing to work with Montenegro to strengthen coordination and cooperation and address common challenges, Liu added.
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