China’s overseas development loans at lowest level in recent years as it shifts to ‘small is beautiful’ projects, study finds

Lending from China Development Bank and China EximBank has been on downward trend for several years after a long boom, researchers say

It is emblematic of the recent Chinese approach to economic engagement that prioritises smaller and more targeted projects, according to author

Reading Time:4 minutes

Construction workers at the Sonangol refinery in Luanda, Angola. China’s two policy banks have not made any new general-purpose commitments to Sonangol and other firms in the extraction and pipelines sector since 2017, according to the study. Photo: AFP

Published: 6:00pm, 26 Jan 2023Updated: 6:32pm, 26 Jan 2023

China’s two policy banks extended 28 new loans worth US$10.5 billion in 2020 and 2021, a new study shows – the lowest in recent years as Beijing makes a strategic shift to what it calls “small is beautiful” projects.

The lending from China Development Bank (CDB) and the Export-Import Bank of China (China EximBank) represents a continued decline in Chinese overseas development finance since it peaked in 2016, according to data compiled by the Boston University Global Development Policy Centre.

Its study found that overseas development finance from CDB and China EximBank has been on a downward trend for several years after a long financing boom for projects under the multibillion-dollar Belt and Road Initiative.

Researchers say CDB and China EximBank extended 28 new loans worth US$10.5 billion in 2020 and 2021 – the lowest level in recent years. Photo: LightRocket via Getty Images

Some 1,099 Chinese overseas development finance commitments – totalling US$498 billion – were made to 100 countries between 2008 and 2021, according to China’s Overseas Development Finance Database, which is managed by the Boston University centre.

Rebecca Ray, a senior academic researcher at the centre and the author of the study, said China’s overseas development finance had fallen in total value but also in terms of the average loan commitment size.

“This trend is emblematic of the ‘small is beautiful’ approach to Chinese economic engagement in recent years, which prioritises smaller and more targeted projects,” Ray said, adding that it “emphasises projects with smaller geographic footprints and lower risks to sensitive ecosystems and Indigenous communities”.

Addressing the third belt and road symposium in November 2021, President Xi Jinping said high-quality “small and beautiful” projects, which are sustainable and improve people’s livelihoods, should be a priority in overseas cooperation. China’s central bank has since issued new regulations capping external lending by the country’s banks.

Select Voice

Choose your listening speed

Get through articles 2x faster

1.25x

250 WPM

Slow

Average

Fast

00:0000:00

1.25x