China's foreign aid agenda is based on mutually beneficial cooperation with developing countries and is mostly realized through loan schemes with high-interest rates. Besides the economic impact on their respective recipient countries, there is a significant body of research that shows the relationship between democracy backsliding and Chinese aid allocation, which raises concerns about its influence in the years to come. Even though major recipients of Chinese aid in Europe have experienced a democratic backsliding effect in the previous decade, there is a surprising lack of research that focuses on this region. What is the effect of Chinese development cooperation in Europe on the democratic institutions in recipient countries? The preliminary analysis focused on the Serbian case showed that rule of law and high political corruption were most significantly correlated with the Chinese aid flows. Building on this, Ivana Rudinac will aim to explore the causal mechanisms between these two variables, using both quantitative and qualitative methods.