China’s investments in infrastructure projects under its Belt and Road Initiative (BRI) have declined while Beijing’s short and medium-term assistance to partner countries, some of which are dealing with rising debt levels, is increasing, according to recent research highlighting a shift in China’s approach to overseas lending.
In the first half of 2022, China’s engagement through financial investments and contracts in 147 countries amounted to $28.4 billion, up by 47% from the previous year, said a report from the Green Finance and Development Centre (GFDC) at Shanghai’s Fudan University. Of this, $11.8 billion was through investments and $16.5 billion through project contracts.
This marked a decline from $48.5 billion in the same period in 2019. Since the launch of the BRI in 2013, the report estimated China’s total engagement at $932 billion, with $561 billion in construction contracts and the rest in other investments.
The report noted three clear trends in the BRI: a growing role for Chinese State-owned Enterprises; the average size for project deals falling, from $558 million in 2021 to $325 million last year; and an increasingly uneven spread of engagement.
Several countries “saw no Chinese engagement” in the first half of the year, including Russia, Sri Lanka and Egypt, while the figure in Pakistan was down by 56%.
At the same time, China’s short and medium-term lending to several BRI partners has rapidly risen, according to research from the AidData research lab reported by Bloomberg this month.
Loans to Pakistan
In the past five years, China “made nearly $26 billion in short and medium-term loans to Pakistan and Sri Lanka” alone, marking a shift in its overseas engagement “from funding infrastructure toward providing emergency relief.”
On Thursday, China’s Foreign Ministry said, commenting on the GFDC report noting falling engagement in Pakistan, that the China Pakistan Economic Corridor “is an important pilot program under the BRI” that had “brought tangible benefits for socio-economic development of people’s lives.”
“China will continue to work with Pakistan to ensure that the cooperation outcomes are better delivered to the Pakistani people,” spokesperson Wang Wenbin said.
Mr. Wang added that as of this year, China had signed BRI documents with 149 countries with an investment volume “of over 1 trillion Yuan” ($147 billion), flagging the China-Laos railway, bridge in Serbia, and Gwadar port as landmark projects that had been “well implemented”.
