CHINA’S BELT AND ROAD INITIATIVE (BRI) has seen no new deals struck in Russia so far this year (see map above), according to a report by the Green Finance & Development Center at Fudan University in Shanghai.
This looks to this Bystander as a further example of Chinese companies’ circumspection about falling foul of Western sanctions imposed on Russia because of the war in Ukraine.
Russia and China signed deals under the BRI rubric worth about $2 billion in 2021, roughly the same level as the previous year. Pre-pandemic, the figure was more than three times as much in four of the six preceding years.
BRI investment is being redirected to the Middle East. The Center’s report says that Chinese firms signed $5.5 billion worth of mainly energy and construction deals in Saudi Arabia in the first half of the year — more than in any other country.
In general, new BRI investment has plateaued, settling at slightly lower levels. In the first half of 2022, at $28.4 billion, BRI finance and investment was 4% on the same period a year earlier, according to the Center.
Beijing is becoming more steely-eyed about projects’ investment returns and the external reputational risks of saddling host governments with unsustainable debt. Sri Lanka and Egypt were two other countries without new BRI deals in the first half of this year, but as the map below highlights, they were far from alone.
There is also greater Western pushback over the geopolitical intent behind the BRI, particularly in Europe.
The days are over when Chinese firms could slap the BRI label on any foreign direct investment. Beijing is now more focused on the strategic value of BRI deals as it seeks to secure access to resources it will need for its new tech and green industries and the energy it needs to fuel its economy.
The Centre identifies five strategic project types:
- strategic assets, including ports:
- trade-enabling infrastructure, including pipelines and roads;
- ICT, e.g., data centres;
- resource-backed deals such as in mining, oil and gas; and
- high visibility projects like high-speed railways.