China’s investment into Belt and Road countries rose last year to the highest since 2018, a new report says, with companies putting almost US$50 billion (RM235.8 billion) into overseas projects.
Total investment was almost 80% higher than in 2022 and helped take total engagement with the 150 countries that have signed up to the infrastructure initiative to more than US$1 trillion since 2013, according to a new report from Griffith University in Australia and Fudan University in Shanghai.
Investment into high-technology projects, including electric-vehicle manufacturing, expanded substantially. The battery sector saw about US$8 billion in engagement, the report said, driven by plans for a battery factory in South Korea and car plants in countries such as Thailand, Vietnam, Brazil and Hungary.
The report confirms recent data that showed China’s outbound investment last year rose to the highest since 2016, despite the domestic slowdown and concern in some nations about the nation’s influence and lending practices. The drop-off in BRI construction may reflect those worries, and a number of countries have restructured their debt in recent years, including money they borrowed to pay for Chinese-led infrastructure projects.
The average size of building projects announced last year was less than US$400 million, the second lowest figure since the BRI began in 2013, according to the report, which said that this was likely due to China’s shift to “small and beautiful” projects.
The report classifies projects as part of the BRI if they occur after 2013 in countries that have signed a memorandum to join the initiative, even if they signed on much later than 2013. For example, in the case of Argentina which joined in 2022, any Chinese investment after 2013 is included.
The value of construction contracts should roughly track the value of overseas projects that are funded with loans from Chinese banks, while the investment figure follows overseas projects where Chinese companies have an equity stake, according to the report.
Because there is a possible overlap between the two and some Chinese construction contracts will be for projects funded by other countries, the report tracks engagement in the BRI, not the total Chinese financing of projects in the initiative.
Chinese President Xi Jinping launched the BRI a decade ago to boost economic ties and the influence of the world’s second-largest economy. It has always been loosely defined, with the label often applied to any projects in nations with friendly ties to China.
Italy announced it was pulling out of the agreement late last year, with Foreign Minister Antonio Tajani saying it had “not produced the desired effects.”
China will pursue BRI engagement this year to at least the level of 2023, wrote report author Christoph Nedopil, an economics professor. This would come “with a strong focus on BRI country partnerships in renewable energy, mining and related technologies.”
“Part of this expectation is driven by challenges in China’s domestic economic development, where Chinese companies seek opportunities in other countries,” he said. – Bloomberg
