Just north of Montenegro’s sleepy capital of Podgorica, workers are boring two road tunnels into the mountains that give the country its name. The work is arduous — and contentious.

The highway, ultimately intended to link the Adriatic port of Bar to Serbia’s capital Belgrade, has been a symbol of Montenegro’s desire to build a state even before it declared independence in 2006. But its problematic construction has come to exemplify China’s divisive investment on the fringes of the EU and the pitfalls of funding large infrastructure projects with loans from Beijing.

The Montenegrin government’s borrowing from China to finance the road’s cost, estimated at €1.3bn, has sent the country’s debt soaring from 63 per cent of gross domestic product in 2012 to almost 80 per cent. If Montenegro were to default, the terms of its contract for the loans even give China the right to access Montenegrin land as collateral.