Chinese private investment in belt and road projects may be losing steam
- Investment share of Chinese private firms fell 12 per cent in first half from a year ago, US think tank finds
- American Enterprise Institute says decline in forex reserves has further complicated efforts to finance roads, railways and ports under the initiative
Chinese private firms are less enthusiastic about investing in the country’s vast trade and infrastructure strategy and Beijing is becoming more wary of throwing money at the project as it comes under pressure from the trade war and falling forex reserves, a US think tank says.
State-owned companies remain the dominant investors in “Belt and Road Initiative” projects – mostly in energy and transport – but the share of private firms is shrinking, according to a report released on Thursday by the Washington-based American Enterprise Institute.
The private company share stood at 28 per cent of overall investment in the projects by the end of June, the report said. It was down by 12 per cent in the first half from the same time a year ago.
The report by AEI research associate Cecilia Joy-Pérez and resident scholar Derek Scissors cited figures from the Chinese Global Investment Tracker by the institute and another conservative American public policy think tank, The Heritage Foundation.
It comes as Beijing is locked in an escalating tariff war with Washington that is fuelling fears of a further economic slowdown in the world’s second largest economy.
A decline in foreign exchange reserves – which Beijing has been using to pay for projects under the belt and road strategy – has further complicated its efforts to finance new roads, railways and ports as it tries to revive an ancient network of trade routes connecting China with the rest of Asia, Europe and Africa, according to the researchers.