New Delhi: Ten years after the announcement of the Belt and Road Initiative (BRI), cumulative BRI engagement breached the $1 trillion mark ($1.016 trillion), with about $596 in construction contracts, and $420 in non-financial investments, said a report by Christoph Nedopil Wang, Founding Director of the Green Finance & Development Center and an Associate Professor at the Fanhai International School of Finance (FISF) at Fudan University in Shanghai, China.
BRI finance and investments has picked up in the first half of 2023 with about 103 deals worth $43.3 billion compared to about $35 billion in the first half of 2022.
Investments as a share of BRI engagement reached record levels at 61 per cent – the first time that it constitutes more than 50 per cent of total BRI engagement.
A growth area of strategic importance is metals and mining through Chinese investment for ownership. Engagement in the sector has grown by 131 per cent compared to the first half of 2022. The minerals and metals are particularly relevant to the green transition (e.g., lithium) and batteries for electric vehicles.
The major growth countries of Chinese engagement were Bolivia, Namibia, Eritrea and Tanzania – making the sub-Saharan Africa the fastest growing area of BRI engagement, the report said.
Twenty-six countries saw a 100 per cent drop in BRI engagement, including Turkey, Poland and Kenya; Russia continued to see no public engagement from China.
The share of Chinese engagement in the BRI through investments compared to construction has seen its highest levels in the first half of 2023: Investments reached about 59 per cent of BRI engagement compared to 29 per cent in 2021.
2023 is the first time that more than 50 per cent of the BRI engagement is through investments where Chinese investors take equity stakes with higher risks. This compares to construction contracts that are typically financed through loans provided by Chinese financial institutions and/or contractors with the project often receiving guarantees through the host country’s government institutions, the report said.
Chinese BRI engagement was not evenly distributed among all regions. BRI countries in sub-Saharan countries saw a 130 per cent increase in Chinese investments and 69 per cent increase in construction contracts.
The region became dominant for construction engagement and the second most important target region for BRI investments (after East Asia), the report said.
Middle Eastern countries continued to be a major recipient of Chinese engagement, receiving $8.1 billion in total engagement, yet significantly less than the $12.3 billion in the first six months of 2022.
East Asian BRI countries, meanwhile, expanded cooperation with China from $8.84 billion to $13.2 billion in the first six months of 2022 and 2023, respectively. Interestingly, South American BRI countries saw no construction engagement in the first six months of 2023, but significant growth (+227 per cent) in investments, receiving overall the highest level of Chinese engagement in the region since 2018.
The country with the highest construction volume in the first half of 2023 was Saudi Arabia, with about $3.8 billion, followed by Tanzania (about $2.8 billion) and the UAE ($1.2 billion), the report said.
Regarding BRI investments, Indonesia was the single largest recipient with about $5.6 billion in investments, followed by Peru ($2.9 billion) and Saudi Arabia (about $1.6 billion).
Twenty-six countries saw a 100 per cent drop of BRI engagement compared to 2022, including Turkey, Poland, and Kenya. China’s engagement in Pakistan for the China Pakistan Economic Corridor (CPEC) dropped by about 74 per cent. The countries with the largest growth of BRI engagement were Bolivia (+820 per cent), Namibia (+457 per cent), Eritrea (+359 per cent), Tanzania (+347 per cent), and Cambodia (+230 per cent), the report said.
An important growth area of strategic importance is China’s engagement in metals and mining.
Engagement in the sector has grown by 131 per cent compared to the first half of 2022. The minerals and metals are particularly relevant to the green transition (e.g., lithium) and batteries for electric vehicles.
Engagement has been strong in African and Latin American countries. China already holds significant shares of global mining sources (e.g., over 80 per cent of global graphite resources), and even more control in material processing (where across lithium, nickel, cobalt and graphite, China owns more than 50 per cent of global capacity).
Examples include significant expansion of lithium and copper mining (both mines and processing), for example, within the last six months through Hainan Mining’s acquisition of Kodal Minerals part of a lithium mine in Mali, a copper processing plant agreement in Saudi Arabia, and a commissioning of a lithium processing plant in Zimbabwe, the report said.
A coup in Niger and its violent aftermath has Western powers, including the US scrambling to keep an anti-terrorism presence in the region, and the turmoil is also affecting China’s relationship with the West African nation. As one of the largest investors in Niger, China has put billions into its oil sector, for one, Axios reported.
But across the continent in Tanzania, China’s role looks different. There, the Chinese Communist Party’s first overseas training institute is teaching its up-and-coming African leaders Beijing’s approach to governing. It’s part of China’s plan to create an authoritarian-friendly political bloc in Africa, Axios reported.
–IANS
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