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Explosion of Chinese investment on the Silk Road

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Exceed $32 billion in 2022, focus on high tech

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The spending that led to the big increase was primarily China's CATL and Mercedes-Benz Group's joint plan to invest $7 billion in a battery production facility

BLOOMBERG, FINANCIAL TIMES

Despite what has been said in recent years about the over-indebtedness of those developing countries that have received development loans from China under the new Silk Road, Beijing's investments in the ambitious his plan are increasing spectacularly. The emphasis is mainly on high technology, batteries for electromobility and energy.

According to a related report by Shanghai Fudan University, China's investment in all 147 countries of the new Silk Road reached $32.5 billion last year, up 63% year-on-year and recording the highest level since 2019.

The spending that led to the big increase was primarily the joint plan by China's Contemporary Amperex Technology, known as CATL, and the Mercedes-Benz Group to invest $7 billion in a production facility of batteries for electric vehicles.

This is the largest of the plans foreseen by the new Silk Road since 2013, when it was inaugurated. Apart from the technology sector, China's biggest investments have been in the energy sector, financing a $9 billion series of projects mainly in the oil, gas and green energy sectors. Chinese companies also signed deals totaling more than $15 billion for projects in the energy sector, as well as $12 billion in infrastructure projects, ports, highways and rail links.

Overall, however, the funds that Beijing has committed to loans and investments in the multifaceted Silk Road project show a slight decrease in 2022 compared to 2021, as Beijing's lending to some countries, mostly in Africa, has decreased. who have either gone bankrupt or requested debt restructuring. Among them Pakistan, which these days is negotiating with the IMF a support package of 6.5 billion dollars, but also Sri Lanka, which is also approaching an agreement on the restructuring of its debt. So the total amount committed by China in 2022 to the Silk Road projects was $67.8 billion, slightly less than the $689.7 billion in 2021.

Among the Silk Road countries, Hungary was the one that received the largest investments with Saudi Arabia second and Singapore third. In contrast, there were no investments for construction projects in Russia, Angola, Sri Lanka, Nepal and Peru. As far as Pakistan is concerned in particular, the funds that China has committed as a whole within the framework of this project have decreased by 34%, while its investments in sub-Saharan African countries have also decreased by a double percentage.

China's investment surge does not negate the fact that there have been and remain many problems in its colossal and international investment plan across continents. A plan that Chinese President Xi Jinping called the “plan of the century” in 2017.

According to relevant research, China's two development banks have cut their lending in both 2020 and 2021. Details of the research group Rhodium Group report that the amount of loans granted by Chinese financial institutions in the context of the Silk Road and renegotiated in the last two years has reached at least 52 billion dollars. This is an amount more than three times the corresponding amount of the immediately preceding two years which amounted to 16 billion dollars.

Source: www.kathimerini.com.cy

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