China’s 2022 Belt & Road Investments Up 63% YoY On EV Tech and Energy

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China’s investment Belt and Road Initiative (BRI) countries rose last year to the highest level since 2019, with much of that increase due to a new battery plant for electric vehicles. Chinese investments into the 147 nations part of the BRI rose 63% to US$32.5 billion from 2021, according to a report from Fudan University Green Finance and Development Centre.

The GDFC is an independent, non-Government research, advisory, and capacity building platform for regulators, financial institutions, corporations and civil society engaged in green finance and development. The report was written by Christoph Nedopil.

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.

Total construction deals fell 27% to US$35.3 billion, the lowest level since the start of the initiative spearheaded by Chinese President Xi Jinping.

Hungary was the largest 2022 recipient of Chinese investment among BRI nations, followed by Saudi Arabia and Singapore. Russia, Angola, Sri Lanka, Nepal, and Peru saw no new direct investment or construction deals, while engagement in Pakistan (CPEC) dropped 34%, and in sub-Saharan Africa also being reduced.

Part of this is belt-tightening among debt issues related to project delays and cashflow return hangovers from Covid, other capital expenditure reductions are simply because projects have now been completed. For example, the Lahore metro system is now up and running, as is the Lagos metro.

Chinese lending to several countries also fell during the Covid pandemic, as an increasing number of borrowers in Africa and elsewhere have 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. Consequently, lending by China’s top two development banks slowed in 2020 and 2021.

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. We have previously reported on how Chinese SOEs are increasingly content to take smaller equity stakes then look to cash out later via IPO’s.

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