How Big Is China’s BRI-Related Overseas FDI & Where Is It Going?
Alexander Hammer (汉力山)
Director of Economic Analysis Unit, International Trade Administration
by Alexander B. Hammer and Trevor Litwin
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China’s Belt and Road Initiative (BRI) is considered by some to be the largest infrastructure project in history, far surpassing the inflation-adjusted size of the U.S. Marshall Plan and other well-known infrastructure projects. Official details of the size and scope of the BRI remain broadly undefined, however, and estimates by researchers have varied widely from some $272 billion to $8 trillion. A closer inspection of these studies reveals that they have measured different aspects of the BRI, ranging from China’s overseas foreign direct investment (OFDI), to exports, to infrastructure development projects, loans, grants, and others. Even when estimates have focused on comparable concepts, such as OFDI, they have tended to use official statistics which reflect declared, not realized, investment flows. The studies also considered different definitions of BRI member countries, and have been hampered by round-tripping problems (which returns OFDI to the donor country) and distortions from temporary offshoring to tax havens. To advance the understanding of the size and composition of China’s BRI, we focus on one of the largest forms of outlays, OFDI, and aggregate transaction data to circumvent such data limitations. We also standardize the BRI’s span to include all countries with signed BRI-related Memoranda of Understanding with China.
We find that China’s incremental OFDI spending to BRI countries amounted to $235 billion since the initiatives’ implementation. We also find that most OFDI has been directed to Asia in the transport and energy sectors, and that the largest country-sector investments have been in Pakistan and Russia’s energy sectors, and Nigeria’s transportation sector.
Senior Director, Investments | Corient
4 年Thoughtful and timely article as China is now the world’s largest creditor to developing countries, with a significant portion of its lending to these countries driven by the Belt and Road Initiative. Thanks for sharing!
Research Fellow @ IIAS | Silk Road Virtual Museum
4 年That was enjoyable...short, sweet and to the point. I miss the base-line data (pre-2014) so as to get a total, and I wonder if you could share the disaggrerated regional data
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4 年Alexander Hammer (汉力山) Very insightful. You might also be interested to see a detailed analysis on India China trade relations as well. https://globalcir.org/research-areas/revealing-the-dragon-sino-india-trade-relation/