China’s investment in the countries along its Belt and Road Initiative (BRI) last year rose to the highest since 2019, with much of that increase due to a new battery plant for electric vehicles.
Investment in the 147 nations in the BRI rose 63 percent to US$32.5 billion from a year earlier, a report from Fudan University said.
Driving the rise was China’s Contemporary Amperex Technology Co (CATL, 寧德時代) and Mercedes-Benz Group AG plans to invest more than US$7 billion in a battery plant in Hungary, the biggest single project in any BRI country since it started in 2013.
After the tech sector, the energy sector was the largest recipient of Chinese investment, with US$9 billion going into projects, mostly for oil, gas and green energy.
Chinese companies also signed more than US$15 billion in construction deals for the energy sector and another US$12 billion for transport infrastructure such as ports, roads and railways, the report from Christoph Nedopil at Fudan’s Green Finance and Development Center said.
Total construction deals fell 27 percent to US$35.3 billion, the lowest level since the start of the initiative spearheaded by Chinese President Xi Jinping (習近平).
Hungary was the largest recipient of Chinese investment among BRI nations, followed by Saudi Arabia and Singapore. Russia, Angola, Sri Lanka, Nepal and Peru saw no new investment or construction deals, while engagement in Pakistan dropped 34 percent, and that in sub-Saharan Africa also plunged by double digits, the report showed.
Chinese lending to a number of countries has fallen during the COVID-19 pandemic, as an increasing number of borrowers in Africa and elsewhere have either defaulted on their debts or requested debt restructuring. Pakistan was in talks this week with the IMF for a resumption of a US$6.5 billion bailout and Sri Lanka is moving closer to a restructuring deal.
Lending by China’s top two development banks slowed in 2020 and 2021, a separate study said.
The value of construction contracts should roughly track the value of overseas projects that are funded with Chinese loans, while the investment figure tracks overseas projects where Chinese companies have an equity stake, the report said.
As there is a possible overlap between the two and because 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 BRI projects.
Total engagement last year was US$67.8 billion, the report said, slightly lower than the US$68.7 billion in 2021.
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