Speeda Analysis 

Chart 2.1: Total Participation Amount of China's "Belt and Road" Projects by Sector (in millions of US dollars) from 2013 to the first half of 2023

Source: Data compiled by Uzabase based on AEI

As shown in Chart 2.1 (China's cumulative participation amount from 2013 to the first half of 2023), the energy industry, transportation industry, and metal industry are the three key investment areas, among which energy projects leads by a large margin. The cumulative scale of investment and construction projects in the energy sector in the past decade is approximately $366.8 billion. In the energy sector, oil and gas projects dominate, accounting for nearly 40% of the total scale. Due to China's resource characteristic, which is "more coal, less oil, less gas", such investment and construction projects are mainly aimed at helping China secure external oil and gas resource supply. For example, in 2021, China National Petroleum Corporation (CNPC) invested $7 billion to build three new natural gas wells in Turkmenistan, by a payment made through Turkmenistan exporting natural gas to China.

As shown in Chart 2.2 (the participation amount ratio of various fields over the years), although energy projects have the largest scale, the proportion of energy projects has decreased, falling from a peak of 49% in 2013 to 29% in the first half of 2023, while the proportion of transportation and metal projects has increased. Especially, the proportion of transportation projects reached 30% in the first half of 2023, which exceeded that of energy projects.

Chart 2.2: Proportion of China's "Belt and Road" Project Participation Amount by Sector

Source: Data compiled by Uzabase based on AEI

Chart 2.3: Total Participation Amount of China's "Belt and Road" Projects by Sector (in millions of US dollars) from 2013 to the first half of 2023

Source: Data compiled by Uzabase based on AEI

Chart 2.4: Proportion of China's "Belt and Road" Project Participation Amount by Sector

Source: Data compiled by Uzabase based on AEI

The transportation sector includes automobiles, aviation, railways, and shipping as subdivisions, with automobiles and railways holding an absolute share. The main function of these projects is to export China's excellent production capacity in these two industries abroad. The growth in metal project scale is closely related to China's green transformation of its industrial structure. With the vigorous development of new energy vehicles, the demand for lithium batteries sustained at a high level.

Therefore, China has increased its investment in overseas lithium mines. For example, in February 2023, Hainan Mining announced an investment of $118 million to acquire Bougouni lithium mine assets in Mali, an African country.

According to Chart 2.3 (investment regions), East Asia recorded the highest cumulative amount in the participation of China's the "Belt and Road" Initiative projects, which was over $250 billion invested and constructed from 2013 to the first half of 2023. Sub-Saharan Africa and West Asia followed closely, while investments in Europe and the Americas were relatively small. However, when tracking the movement in the proportion of project amounts in each region (Chart 2.4), it suggests that the proportion in South America is on the upward trend, reaching 14% of the total "Belt and Road" Initiative project scale in the first half of 2023, up from 12% in 2022.

Furthermore, when considering the average participation amount per project (Chart 2.5), South America had the highest average amount in the first half of 2023. This was mainly driven by several large investment activities, such as Southern Power Grid's acquisition of two subsidiaries of Enel Perú in Peru for $2.9 billion in April. This not only helped Enel Perú alleviate its debt problems but also allowed Southern Power Grid to further expand its overseas business. In addition, in June, Contemporary Amperex Technology Co. Limited (CATL) led an enterprise consortium to invest in direct lithium mining in Bolivia. The first-phase investment exceeded $1 billion. It is reported that Bolivia's salt lakes have the world's largest reserves of lithium resources, while they have not yet been developed and produced commercially. Therefore, this investment by CATL helps China seize the lead in lithium mining in South America.

Chart 2.5: Average Participation Amount per Project of China's "Belt and Road" Projects by Sector (in millions of US dollars)

Source: Data compiled by Uzabase based on AEI

Chart 2.11 Number of China's Overseas Debt Restructuring (items)

Source: Data compiled by Uzabase based on AEI

On October 10, 2023, a report titled "Productive Finance: China's Overseas Loans and the Economic Growth of Developing Countries" was released at a conference held in Beijing. The event was jointly organized by the Institute of World Economy and Politics of the Chinese Academy of Social Sciences and the National Global Strategy Think Tank. The report, based on empirical research using data from the World Bank, suggests that receiving sovereign loans from China can increase the per capita GDP growth rate of debtor countries by 0.6 to 1%.

Chinese overseas loans are one of the four main sources of funding for the “Belt and Road” Initiative projects (the other three are bond financing, equity financing, and other financing such as financial leasing). There is currently no official agency that collects and publishes the amount and investment direction of Chinese overseas loans. In third-party databases, the information is relatively plentiful in the Global Chinese Development Finance Dataset (GCDF database) constructed by the AidData Research Center at the College of William & Mary in the United States. This database tracks and statistics the loans provided by the Chinese government and state-owned financial institutions to low-income and middle-income countries. Currently, the V3.0 version of the database covers more than 20,000 loan information for the period from 2000 to 2021.

From this point of view, the “Belt and Road” Initiative bond is the most ideal financing channel besides direct bank loans. The “Belt and Road” Initiative bonds include two categories. The first category refers to government or corporate bonds issued by government institutions, financial institutions and enterprises of countries along the “Belt and Road” Initiative in Chinese trading institutions. If such bonds are denominated in RMB, they are called "Panda Bonds". The second category refers to the corporate bonds issued domestically or overseas by Chinese financial institutions and enterprises to raise funds for the “Belt and Road” Initiative project.

China has preliminarily established the bond related system of the “Belt and Road” Initiative. In December 2015, the China Securities Regulatory Commission officially launched the pilot program for panda bonds. In March 2018, Shanghai Stock Exchange and Shenzhen Stock Exchange issued the Notice on the Pilot of the “Belt and Road” Initiative Bond Business respectively. According to the white paper "Jointly Building the “Belt and Road”: A Major Practice of Building a Community with a Shared Future for Humanity" issued by the State Council in October 2023, as at June 2023, 99 Panda Bonds and 46 the “Belt and Road” Initiative Bonds have been issued, reaching a cumulative issuance scale of 152.54 billion yuan and 52.72 billion yuan respectively.

Chart 2.12 By region, the scale and proportion of green projects in China's the “Belt and Road” Initiative project participation quota

Source: Data compiled by Uzabase based on AEI