China’s 2022 CPC Congress & Implications For The Belt & Road Initiative

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Overseas investment to continue with a more prudent lending policy while existing debt negotiations are on-going

By Chris Devonshire-Ellis

As part of the CPC’s newly announced next 5 years plan, China intends making significant inroads in developing outbound investment (the Belt and Road Initiative) and trade. The country has signed off significant energy and trade deals with Iran, Russia and Saudi Arabia this year. The Belt and Road Initiative, which both provides China with export opportunities for its SOEs, is also tied to trade as a more significant, longer-term play as the infrastructure is later exploited and used for imports and exports.

While the BRI is often maligned, in fact, China’s outward investment value in 2021 and the first quarter of 2022 saw a 12.3% year-on-year increase over previous levels, topping the global outward investment chart for the first time at US$153.71 billion, according to the Report on Chinese Enterprises Globalization 2021-2022 published by the Center for China & Globalization (CCG). This is important because the CCG is non-Governmental, independent, and was founded in 2008 by a committee of the Western Returned Scholars Association, an organization under the United Front Work Department. That BRI investment reach is little understood (but much-criticized) however will continue to provide infrastructure platforms for China to both import the products it needs, and export the products it can sell, for decades to come. The BRI remains an inherent part of China’s export policy. Yet it too, will evolve.

Now in its ninth year, the BRI will be re-calibrated. Beijing always knew that a percentage of its overseas loans would become problematic at some stage, and now this has occurred, adding to its loan portfolio will result in more prudence in Beijing’s lending. However, while the geopolitical tussle with the United States continues, Beijing will not want to be seen as an inconsiderate partner who walks away when the going gets tough. That renegotiation of problem debts will keep BRI projects going, while discourage debtors from shunning Chinese finance in favour of other underwriters who may then utilize that much-needed infrastructure for their own purposes.

The Shanghai Cooperation Organisation and BRICS

We can also expect China to continue to underscore its commitment to other regional, largely Eurasian initiatives, including at the top of the pile the Shanghai Cooperation Organisation (SCO), and BRICS initiatives, which also include significant trade elements. These are likely to be expanded. The SCO already includes eighteen members of varying status, with other countries – including Saudi Arabia – expressing interest. While the SCO has at its core a large security element directed at preserving the peace in Afghanistan, its territory encompasses much of the vital INSTC and Middle Corridor supply chains. China will be looking to further develop these relations.

The BRICS are also highly likely to be expanded, and already includes significant countries with huge influence in their own regional trade blocs. Brazil is the largest member of South America’s Mercosur, Russia the Eurasian Economic Union, China with RCEP, India with the SAARC South Asian bloc and South Africa with the African Union and AfCFTA trade agreement. Indonesia and many other nations including Egypt and Turkiye are all keen to join. This policy of developing China’s international trade ties with countries on the periphery of, or not included within the G20 will continue. Vibrant supply chains will emerge.


Other publications are publishing somewhat conflicting ideas of what transpired at the CPC Congress and discussing issues such as US sanctions on China’s semi-conductor industry, security concerns and the autocratic vs democratic debate – ignoring the fact that 2,296 delegates attended the CPC and gave their votes. Many of these headlines are negative. Many simply parrot US policy as carried by Washington analysts and political advisors without much real insight as to what is really going on with China and promoting American perspectives and interests – much of which are currently aimed at promoting negative opinions about China. While there is merit in considered opinions as concerns the political and ideological differences between the two, not enough time is spent in analyzing the trade impact of the current CPC Congress. That is peculiar when one considers China’s position as the world’s largest exporter.

The CPC however was clear in its objectives as concerns trade. It is continuing its policy of developing and encouraging wealth creation within its middle class and is aiming for more than a doubling of that between now and 2035. This brings huge opportunities for global manufacturers looking to export to China, as well as to service companies wishing to deal with Chinese consumers home, and abroad. There are also, within that, huge opportunities for global manufacturers looking to base themselves in China to garner more control of their production, the supply chains and distribution networks, and a larger chunk of the profitability.

In fact, looking back at China’s performance in what it said it would do and what it did, Beijing has shown itself as a reliable deliverer of trade messages. When Beijing previously stated it would continue to ‘open up its economy’, it followed that up with strategic adjustments that carry real weight. The 2022 ‘Negative List’ for example, that actually lists the industry sectors that foreign investment is welcomed to participate in, was the country’s most liberal ever. The good news for global exporters, export manufacturers, and international businesses with an eye on the China market, is that the CPC have just laid that out as a policy to be continued for the next twelve years.

The Belt and Road Initiative remains an integral part of this, and while some work needs to be put in to renegotiate and reorganize outstanding debts with errant borrowers such as Sri Lanka, the overall debt position of the total amount of China’s lending remains relatively small. We can expect these to be adequately renegotiated from the Chinese perspective although in cases such as Sri Lanka, where not just Chinese, but also significant volumes of Japanese and Indian money, together with private sector investments mean that negotiations must include not just China and Sri Lanka, but all creditor parties. That complicates negotiations – yet is hardly China’s fault.

Nonetheless we see the BRI continuing as before yet with more prudence in lending and negotiations continuing over distressed nations loans. However, this aside, the general picture will remain consistent.

Chris Devonshire-Ellis is the Chairman of Dezan Shira & Associates, and has a 30 year career in advising foreign investors in China. His firm has thirteen China offices and several hundred staff and also maintains a considerable presence throughout ASEAN, India, Russia and the Middle East. Contact: or visit

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