From Fish in Sweden to College in Vanuatu: Where and How Much China Is Investing

11.11.2022

China has earned the reputation of being the second economy in the world. The country has shown impressive economic growth over the past decades and is expanding its influence by investing trillions of dollars around the world

China’s economic reforms and Open Door Policy have made it the second economy in the world in terms of nominal GDP and the first in purchasing power parity, accounting for 18.45% of the world economy (as of 1 September 2022).

China has radically increased its foreign investment in recent years, bringing the total value of China’s foreign investment and construction projects to more than 2.23 trillion dollars since 2005, according to The Heritage Foundation and the American Enterprise Institute (AEI).

The biggest beneficiaries of Chinese investment over 17 years have been the United States, Australia, and the United Kingdom, as well as Brazil, Switzerland, Canada and Germany. The amount invested in the U.S. is 4.31 billion dollars, in Britain —— 3.47 billion dollars, and in Australia —— 20.91 billion dollars. However, if we consider investments in construction in 2005-2022, the leaders are those countries that are geographically closer to China: Pakistan (49.38 billion dollars), Saudi Arabia (36.79 billion dollars), UAE (29.09 billion dollars), Nigeria (28.46 billion dollars), Indonesia (27.89 billion dollars).

The AEI data show that China is most interested in energy, transport and metallurgy. However, in 2021 and early 2022, the greatest interest was shown in the areas of energy and transport, as well as in the consumer sector.

In addition, China is investing in the financial sector, education, water supply, health care and other spheres. Among China’s unusual investments are the renovation of Malapoa College in Vanuatu and the acquisition by Chinese Huitai Investment Group of Swedish Fiskexporten Varberg (engaged in the production, processing and sale of fresh fish and seafood). The most ambitious project of China’s foreign policy and economy is the One Belt, One Road (OBOR) initiative. Since 2013, China has signed over 200 cooperation agreements with more than 140 countries and 30 international organizations. The Chinese authorities plan to finish the OBOR by 2049, which is the centenary of the People’ s Republic of China. The volume of possible investments varies from 1 to 8 trillion dollars. Morgan Stanley predicted that China’s total spending on this project could reach 1.2-1.3 trillion dollars by 2027.

The Belt and Road initiative is also facing some challenges. A recent Green Finance & Development Center report claims that funding and investment remain low in the first half of 2022, at 28.4 billion dollars (compared to 29.6 billion dollars for the same period in 2021). The average amount of transactions for construction projects is also declining, from 558 million dollars in 2021 to 325 million dollars in the first half of 2022.

Russia, according to the AEI, has received more than 59.72 billion dollars of Chinese investment and construction contracts over 17 years, of which more than 34 billion dollars were investments. The trade turnover between the countries is 151 billion dollars, which is three times the turnover between the US and Russia.

According to analysts, the Chinese economy today is going through tough times. This is related to the collapse of the real estate market in China, the devaluation of the yuan and the strict measures taken by the Chinese authorities against COVID-19.

Source
Analytics on topic
Article
04.07.2022
What is the situation for China-Europe rail freight subsidies in 2022?

The success of China-Europe rail freight raises the question of its subsidy policy. In 2022, an adjustment seems more likely than an outright end to subsidies.

Article
09.15.2022
Trans-Kazakhstan Transit from China Grows

Cargo handling volume at the Dostyk TransTerminal has increased to 129,000 TEU

Source: Издательский дом Коммерсантъ