China Government Belt & Road Initiative Loans, Q2 2020

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India does well from Chinese Institutional Funding

Chinese Government funding in Q2 2020 was dominated by Covid-19 Emergency Programme (CEP) Loans by the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB, also known as the BRICS bank), being two multilateral development banks. This marked a change of funding patterns away from Chinese policy bank loans focused on BRI projects.

Together, these two institutions were involved in some US$14 billion CEP loan commitments; US$12 billion by AIIB and US$2 billion by NDB. AIIB also saw US$1.9 billion committed loans for non Covid projects. Conversely, there were less than a handful of committed policy bank loans, totaling circa US$2 billion, consistent with the declining trend over the previous several quarters.

China is the leading shareholder in AIIB with a stake of 26.06%. India is the 2nd largest shareholder with 7.5%. As at May 2020, AIIB, which was launched by China, had 102 approved members. AIIB is separate from the BRI.

All five BRICS countries are equal 20% shareholders in NBD.

The Impact of Covid-19 
The AIIB was involved in 10 Covid related loans involving 8 different countries (2 CEP loans each to Indonesia and India) totaling circa US$12 billion. AIIB provided US$4.3 billion, representing 35.8% of total commitments, in these 10 facilities. However, the largest aggregate commitments were from the Asian Development Bank (ADB), which provided US$5.6 billion or 46.7%. Local financial institutions provided US$1.84 billion (15.4%), while the remainder was funded by the World Bank.

India was the largest recipient with US$3.75 billion (31.3%) followed by Indonesia with US$3.5 billion (29.1%). Pakistan, Mongolia, the Philippines, Georgia, Bangladesh and PRC were the other country recipients.

The NDB also approved two CEP loans, each for US$1 billion, one to South Africa and one to India (when combined with AIIB India saw a Q2 total of US$4.75 billion out of US$14 billion). The June loan to South Africa came days after NDB priced its inaugural US$1.5 billion 3-year Covid Response Bond in international capital markets, which saw strong participation from central banks and major institutions. Geographically, the final investor distribution was 56% Asia, 29% EMEA and 15% Americas.

ADB’s largest shareholders are Japan and the USA with 15.6% each; China has 6.4%, India 6.3% and Australia 5.8%.

Project Financing AIIB Commitments 
There were 4 non Covid AIIB loans in Q2 and one AIIB equity investment in an Asian infrastructure fund. The projects involving the four loans totaled US$1.72 billion; of which AIIB loans represented US$1.1 billion or 65% of the total. The World Bank contributed US$170 million while local financing sources approved US$452 million. Two of these loans were to Bangladesh projects and two to Uzbekistan projects. All four were multilateral. The one (US$100 +50 million) equity investment was into an Asian multi-country infrastructure fund based in Singapore.

Policy Bank Commitments 
Policy bank loan commitments continued their quarterly decline with less than 5 committed facilities in Q2, totaling circa US$2 billion. The largest, by CEXIM, was for US$1.785 billion, which represents 85% of the cost of the 150 km Hungarian portion of the 370 km Budapest–Belgrade railway (under discussion since 2014). The China Development Bank (CDB) also completed a US$150 million bilateral facility with Bank Muscat to be used to fund domestic Oman growth. In early May, the Sri Lanka Govt Cabinet approved an US$80 million CDB loan to develop a number of roads within the country. This paucity of new Chinese policy bank loan commitments continues as China rapidly moves to digitize prior BRI infrastructure projects.

We are grateful to China Investment Research, part of the Grisons Peak merchants bank for their assistance and data in this report. Please see: 

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Silk Road Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Asia, and assists foreign investors into the region. For strategic advisory and business intelligence issues please contact the firm at or visit