Net Zero Sparks 80 Percent Surge in Funding for Beijing’s Belt and Road Initiative

Cars recharge their batteries in San Francisco on March 9, 2022. Justin Sullivan/Getty Images

The global push towards net zero has proven to be a boon for Beijing’s Belt and Road Initiative (BRI), a global investment and lending program targeting major projects around the world.

The BRI has been subject to intense scrutiny in recent years, particularly about the lending practices (debt-trap diplomacy) from Beijing-linked entities to developing countries.

A new report from the Griffith Asia Institute and Fudan University, has found that Chinese companies (state-owned and private) poured US$50 billion into BRI last year—an 80 percent increase on the previous year.

The biggest boost in funding has come from the green transition, with “technology”-related investment accounting for $8 billion of the BRI, including electric vehicle and lithium battery manufacturing.

Technology investment grew a significant 1,046 percent between 2022 and 2023.

The report highlighted major investments from the Chinese EV brand, Zhejiang Hezhong, in car manufacturing in Thailand, or the major partnership between Zhejiang Huayou Cobalt (one of the world’s largest battery makers) and South Korean giant LG.

Wind turbine manufacturer Goldwind is also working on a new project in Brazil, costing $36 million, set to generate 1,100 jobs.

Beijing Leverages Green Energy Supply Chain

Linked to technology investment, the “metals and mining” sector also saw a major uptick in investment in the mining and processing of critical minerals like lithium, nickel, cobalt, and graphite.

The report recorded a 158 percent jump between 2022 and 2023, particularly in developing countries in Africa, South America, and parts of Asia.

Examples of such activity include the world’s largest battery manufacturer, CATL, buying a share in mining operations in Indonesia’s largest nickel producer, PT Aneka Tambang Tbk.

Meanwhile, Chinese company Jiangxi Ganfeng also invested in a Mali lithium mine, as well as projects in Zimbabwe, and Saudi Arabia.

In fact, the top five largest (non-construction) companies investing in the BRI overall were all involved in renewable energies. They include CATL (15.2 percent of total investment), Zijin Mining (10.8 percent), Southern Power Grid (9.3 percent), China Molybdenum (5.4 percent), and Minmetals (5.1 percent).

“Moving forward, further growth in Chinese BRI engagement is anticipated, with a strong emphasis on renewable energy, mining, and related technologies,” said Prof. Christoph Nedopil Wang, director of the Griffith Asia Institute.

Beijing is estimated to control about 50 percent of the world’s processing of key minerals like lithium, nickel, cobalt, and graphite. A situation that Western democratic governments have been keen to change, Australia and the United States have been investing in their own processing facilities.

The drive towards net zero in Western nations, and the need for the fast and widespread roll-out of solar panels, wind turbines, and battery storage, has underpinned significant demand for critical minerals and rare earth material needed for manufacturing these items.

Which Regions is BRI Making Headway?

Africa has been the largest recipient of BRI investment reaching $21.7 billion, overtaking the Middle East which recorded $15.8 billion in engagement. However, the latter region still saw a 31 percent increase in investment growth compared to 2022.

Saudia Arabia saw $5.6 billion in construction activity from the BRI in 2023, followed by Sri Lanka ($4.5 billion), Tanzania ($3.1 billion), and the United Arab Emirates ($2 billion).

Countries with the largest BRI growth were South Korea (577 percent jump), Bolivia (493 percent), Namibia (457 percent), Tanzania (415 percent), and Uzbekistan (375 percent).