China’s Belt and Road spending in Russia and Sri Lanka drops to zero
China did not fund any new projects in Russia, Sri Lanka and Egypt under its Belt and Road Initiative in the first half of this year, with the drop contributing to the continued slowdown in spending on development. project.
According to a study by Green Finance & Development Center, a subsidiary of Fudan University in Shanghai.
The Belt and Road began to falter in 2017, after China tightened capital controls to stem the fall of its own currency and a growing number of overseas projects ran into trouble. The pandemic has exacerbated these problems, with countries in Asia and Africa particularly struggling to repay loans or default. This is reflected in the new data, which shows a 40% drop from the first half of 2019.
About $11.8 billion of China’s BRI commitment in the first half of the year went to investments and $16.5 billion to construction contracts partially financed by Chinese loans. This brought China’s total financial commitment since the initiative was launched in 2013 to $931 billion, according to the report.
Energy and transport continued to be the focus of the BRI in infrastructure, absorbing 73% of overall spending in the first six months of this year, up from 63% a year ago. Most of the funding went to the Middle East, which received a third of the total.
Saudi Arabia was the biggest recipient of investment, with about $5.5 billion in new funds, while Iraq received about $1.5 billion for construction. The Philippines and Serbia also secured major new construction projects.
Russia remained the second largest partner for energy spending between 2013 and 2022, although no new BRI funds were added from January to June. It was second behind Pakistan and followed by Iraq and Saudi Arabia.
No coal projects received funds in the first half, according to the study. This continues the trend in 2021, when no BIS money was spent on coal projects in the first half of the year.
President Xi Jinping announced in September last year that China planned to stop building new coal-fired power plants in other countries, a year after pledging to make China carbon neutral by 2060. This decision could put an end to one of the last sources of international funding. to burn the dirtiest fossil fuel, as more than 70% of all coal-fired power plants built today rely on Chinese funding.
Spending on technology jumped 300% and 209% in the healthcare sector in the first half of 2022, while investment in logistics, consumer products and agriculture fell.
China’s BRI program has come under fire from Western countries in recent years, with the United States and others accusing it of using “debt diplomacy” to make developing countries more dependent. Beijing has denied these accusations and the project has led to the development of needed infrastructure projects in some countries.
The United States resurrected an initiative at the Group of Seven summit last month that is touted as a direct alternative to the Chinese program. The “Global Infrastructure and Investment Partnership” aims to finance projects in middle- and low-income countries to the tune of $600 billion over the next five years, primarily through private sector investment with government funding.