Small Economy, Large Partner: Strategic and Competitive Implications of Serbia’s FTA with China
Small Economy, Large Partner: Strategic and Competitive Implications of Serbia’s FTA with China

Summary/Abstract: The Free Trade Agreement (FTA) between the Republic of Serbia and the People’s Republic of China represents one of the most significant changes in Serbia’s trade policy in the last decade. The objective of the paper is to analyse the implications of the Serbia–China FTA for the volume and structure of trade, the competitiveness of the Serbian economy, and Serbia’s strategic positioning in the context of China–European Union (EU) relations. The analysis is based on current data on trade flows and a descriptive-analytical approach, with theoretical grounding in the literature on regional trade agreements, China’s free trade agreements, and small open economies. The results indicate asymmetric initial effects of the Agreement, dominantly concentrated on the import side, while the export effects are conditioned by the structural and institutional capacities of Serbia. The structure of trade remains highly concentrated, with Serbia’s exports dominantly based on primary industrial products, while imports from China consist of products of higher stages of processing and technologically intensive goods. It is concluded that liberalisation by itself is not enough to improve competitiveness, and that active industrial and export policies are necessary in order to achieve long-term development effects

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