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7 December 2018

Mark as favorite Be wary of spending on the Belt and Road


From January 2014 to June 2018, construction activity ($256 billion) outpaced investment ($148 billion) in 75 Belt and Road countries. Activity across both construction and investment focused on energy first, then transport.

From the end of June to mid-October, the Belt and Road mushroomed to 117 countries, but construction and investment trends were unchanged.

The share of private investment in the Belt and Road fell by 12 percent in the first half of 2018 versus the first half of 2017. Private companies that were interested in participating have reconsidered.

This puts more pressure on the Chinese state. China’s foreign exchange reserves are no longer growing and are further threatened by a possible contraction in exports to the US. Beijing is more wary of spending to finance Belt and Road projects.


Introduction

The Chinese government offered the Belt and Road Initiative to improve transport connectivity along the Silk Road of the ancient Tang dynasty. The initiative has also become a branding exercise for not-for-profit construction and investment that the People’s Republic of China (PRC) was already engaged in.

The number of countries in the Belt and Road (BRI) continues to expand, from 75 at end of June 2018 to 117 by mid-October. The latest additions are mostly developing countries in Sub-Saharan Africa and Latin America. However, construction and investment trends remain unchanged. All BRI members, new and old, were hosting Chinese companies before the BRI was launched. Construction still outpaces investment as the main activity in these countries, and state-owned enterprises (SOEs) are still the dominant actors. Read the full report.

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