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China has not financed new infrastructure projects in Russia for months, as Beijing is preoccupied with preventing a financial crisis in the country.
Financing and investment through projects under China’s Belt and Road Initiative (BRI) fell to $28.4 billion in the first six months of 2022, about $1 billion less than the $29.4 billion spent in the same period last year. last year, according to a report from Shanghai’s Fudan University.
During this period, there were no new allocations for projects in Russia, Sri Lanka or Egypt, countries that were previously the main beneficiaries of Chinese investment.
The lack of activity in Russia suggests that Chinese companies may fear falling victim to secondary sanctions imposed on Moscow over its invasion of Ukraine, despite Russia and China insisting in the run-up to the war that their friendship “knows no borders” “.
The BRI is a blueprint for a number of infrastructure projects that China officially approved in 2013 in an effort to expand Chinese influence in Asia, Africa, South America and parts of Eastern Europe.
As part of this, China has so far invested almost a trillion dollars in various projects in developing countries, thus creating jobs for its companies there and often securing a foothold in strategically important countries.
But after 2017, Chinese investment is on the decline, as a result of increasingly strict capital controls in China itself, as well as controversies surrounding some projects that ran into difficulties. China’s investment in coal-fired power plants has stalled, eliminating one of the last major sources of financing for the fuel.
The authors of the report say that more than half of the projects to build coal-fired power plants as part of the BRI plan have now been suspended, reports the British Telegraph.
The slowdown of Chinese investments has become more pronounced also as a result of the pandemic, which has caused many countries to have problems with repaying loan installments to Chinese banks that have been paid for BRI projects. One of them is Sri Lanka, where the government fell due to the explosive growth of inflation. Total Chinese spending on the BRI decreased by 40% compared to the first half of 2019.
In the past 6 months, Beijing invested almost $11.8 billion in investments and $16.5 billion in construction contracts as part of BRI projects. Energy and transport are the sectors that received the most money, about 73% of everything contracted from January to June 2022.
Saudi Arabia received about $5.5 billion in new funding, while Iraq received about $1.5 billion. Since the start of the program in 2013, Russia has been the second largest recipient of investments in the energy sector.
The authors of the report say that Chinese investment abroad through the BRI program will most likely continue to slow in the second half of this year, mainly due to the war in Ukraine, strict lockdown regulations in China and global uncertainty surrounding Covid 19. .
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