There are conflicting assessments of the health of China’s Belt and Road Initiative and how it’s fared during the past 7-8 months amid the ongoing COVID-19 pandemic.
A new report from the London-based analytics and consulting firm GlobalData contends that project cancellations and renegotiations have led to a sharp downturn in revenue for Chinese contractors working on BRI projects around the world.
But there’s reason to be skeptical of GlobalData’s findings, because their analysts appear to include projects that were canceled for a variety of reasons unrelated to COVID-19 into their calculation. For example, they include the $2 billion coal-fired power plant on Kenya’s Lamu Island that would have been partially financed by Chinese banks but was shut down in 2019 by a Kenyan tribunal on environmental grounds — long before the COVID-19 outbreak.
They also include the $10 billion Bagamoyo port in Tanzania on their lis. While the project is definitely stalled as President John Magufuli seeks to renegotiate the deal, there’s been no public confirmation that the deal has been canceled as suggested by GlobalData.
Not surprisingly, the Chinese government uses different metrics to tell a much more upbeat story. Rather than focus on construction projects, media outlets like China Daily emphasize increased trade between China and Belt & Road countries as evidence of the BRI’s health. Even amid the economic downturn brought on by the pandemic, Chinese BRI trade increased by 1.5% in the first nine months of the year to just over $1 trillion, according to new data from the General Administration of Customs.
As is so often the case with anything related to the BRI, one can see exactly what they want in it.
Two Diverging Perspectives on the Vitality of China’s Belt & Road Initiative
GLOBAL DATA: According to China’s Ministry of Commerce, foreign engineering business contracted to $79.55 billion by 12.6% year on year in the first eight months of 2020. Of the total, 58% was accounted for projects in 61 countries along the Belt and Road. The number of new contracts signed by Chinese contractors in January-August 2020 in those 61 ‘along the Belt and Road’ countries had contracted by 24.4% on a year-on-year basis. (READ MORE)
CHINA DAILY: The growth of nonfinancial ODI in BRI economies was even more obvious in the first nine months of this year, surging almost 30 percent on a yearly basis to more than $13 billion, according to the Ministry of Commerce.
“It’s not a surprise at all that trade and investment activities between China and the BRI regions keep growing, and became a bright spot amid the global contraction in trade and investment activities this year, because the BRI propels trade and economic cooperation that lead to mutual benefits and development,” said Bai Ming, deputy director of international market research at the Chinese Academy of International Trade and Economic Cooperation. (READ MORE)
