China’s Belt and Road Initiative Hits Roadblock in H1 2022
- July 25, 2022
- Posted by: Quatro Strategies
- Category: Infrastructure
China’s finance and investment spending in its Belt and Road Initiative slightly went down in the first half of 2022 from a year earlier, as it scrapped funding in new coal projects and investments in Russia, Egypt and Sri Lanka fell to zero. Saudi Arabia was the biggest recipient of Chinese investments during the period with around $5.5 billion. Total financing and investment was $28.4 billion, down from $29.6 billion a year earlier. The total cumulative spending on Belt and Road since 2013 has reached $932 billion.
The initiative was launched in 2013 by Chinese President Xi. He has been aiming to finance infrastructure construction to build a community of shared interests throughout Asia, Africa and Latin America.
However, the ambitious plan has come under criticism for the debt burden it places on countries and other issues including environmental damage. Some countries have renegotiated their investment projects with China, highlighting the debt risks.
China has not invested in any new coal projects over the period after Xi’s pledge at the United Nations General Assembly last September to put an end to overseas coal financing.
Still, a Chinese developer won a bid to build a thermal power plant in Indonesia in February, and there are still 11.2 gigawatts of capacity that have already secured financing though are yet to begin construction.
Despite no new investments in coal, China has continued to provide support to other fossil fuel projects, with oil and gas amounting to around 80% of China’s overseas energy investments and 66% of its construction contracts.
Engagements in gas projects stood at $6.7 billion in the first half, compared with $9.5 billion over the whole of last year.
Renewables and hydropower financing fell 22% from a year earlier. Investment rose to $1.4 billion from $400 million, but green energy-related construction spending fell to $1.6 billion, less than half the level a year earlier.
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