Serbia-China bilateral trade relations: major challenges and opportunities

Abstract

Considering the growing presence of China in Serbia and deepening the overall bilateral relations, the main objective of the paper is to analyze the major trends and changes in the bilateral merchandise trade between both countries. The paper also focuses on exploring the main challenges as well as determinants for enhancement of trade relationships in the upcoming period. The total trade between Serbia and China has been steadily growing over the last decade. The value of total trade in 2019 compared to 2010 is increased by twice, the value of imported and exported goods grew twice and almost 45 times, respectively. Despite the rapid growth, the Trade Intensity Index shows that trade between Serbia and China is under-represented, implying there is a space for improvement. Some obstacles hinder trade relations between Serbia and China. One of the main challenges stems from the fact that China shares its influence in Serbia using investments rather than trade. On the other side, Serbia does not have enough capacity to meet Chines market demand, which is among other things is a result of the domination of low value-added products in the total Serbian exports. In order to overcome the obstacles, Serbia should focus on its comparative advantage as well as attracting the Chinese investment in the strategically important sectors. Furthermore, it is essential for Serbia to develop a strategic approach to trade policy towards China, which implies better promoting of export growth, relevant support of Serbian exporters as well as more active engagement around trade matters during official negotiations with China.