China has not financed any new infrastructure projects in Russia for months as Beijing focuses on averting the country’s financial crisis.
Financing and investment through China’s Belt and Road Initiative (BRI) fell to $28.4bn (£23.6bn) in the first half of 2022, compared to the same period last year, according to a study by Green Finance and Development. Duran is less than $29.4 billion. Center at Fudan University in Shanghai.
No money went to new projects in Russia, Sri Lanka or Egypt, all of which were earlier beneficiaries of Chinese spending. The lack of engagement with Russia suggests that Chinese businesses may fear falling victim to secondary sanctions introduced against Moscow over an attack on Ukraine, and despite the pair’s insistence that their friendship shortly before the outbreak of war had “no limit”.
The BRI was formally adopted in 2013 as part of Beijing’s efforts to expand its influence in Asia, Africa, South America and parts of Eastern Europe.
Under this scheme, China invested nearly a trillion dollars in investment and infrastructure projects in developing regions, creating jobs for its businesses in the process and often in strategically important countries. To gain a foothold.
But spending has been falling since 2017, with China introducing tighter capital controls and controversy over several projects that had run into trouble.
Investment in coal plants has stalled, eliminating one of the last major sources of funding for burning the heavily polluting fuel. More than half of the coal-fired power plant projects have been funded under the scheme, the researchers said.
The pandemic has accelerated the slowdown, leaving many countries struggling to repay their BRI loans or defaulting, including Sri Lanka, where soaring inflation has brought down the government. Total expenses have decreased by 40% since the first half of 2019.
Beijing put in about $11.8 billion in investment and $16.5 billion in construction contracts as part of the scheme.
Energy and transportation were the biggest focus, accounting for 73 percent of total spending between January and June. Saudi Arabia received $5.5 billion in new funds, while Iraq received about $1.5 billion.
Overall, Russia has been the second largest recipient of energy expenditure since the launch of the BRI.
The war in Ukraine, the lockdown in China and ongoing global uncertainty over Covid-19 are likely to further slow foreign investment through the BRI this year, the researchers said.