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New data reveals that China’s investments in metals and mining projects overseas are set to reach a record high this year. These investments are driven by the country’s need to secure resources to maintain its position as the world’s leading producer of electric vehicles, batteries, solar panels, and wind turbines.
According to a report from the Green Finance & Development Center at Fudan University in Shanghai, Chinese investments and contracts in the mining and metals sector have already surpassed $10 billion in the first half of this year. This amount exceeds the total investments made in 2022 and is on track to surpass the previous record of $17 billion in 2018.
China’s investments in the sector encompass various resources such as nickel, lithium, copper, uranium, steel, and iron. These investments highlight the country’s efforts to secure access to resources across the clean technology supply chain in anticipation of increasing long-term demand due to climate change.
Furthermore, these investments reflect President Xi Jinping’s goal of achieving economic self-reliance and strengthening China’s position in the face of escalating geopolitical tensions with the US.
“Overall, China’s Belt and Road Initiative (BRI) engagement appears to be more strategic, focusing on bankable projects that contribute to China’s and the host countries’ industrial development,” said Christoph Nedopil, director of the center at Fudan University.
The Belt and Road Initiative, launched in 2013, was initially hailed as the “project of the century” and offered an alternative financing model for infrastructure projects to countries worldwide. However, concerns over China’s economic influence and issues related to debt and corruption have led some countries to reassess their involvement in the initiative.
Despite these challenges, the resources sector has remained a bright spot within the Belt and Road Initiative. China’s strategic drive to secure raw materials has accelerated alongside the development of its domestic processing industry, reducing its reliance on overseas refiners for metals like copper, aluminium, lithium, and cobalt.
The latest data from Fudan University shows that in the first half of 2023, investments as a share of BRI engagement reached a record 61%. This marks the first time that construction contracts accounted for less than half of the value of new BRI financing in a six-month period.
Although the size of BRI deals has decreased proportionally, Chinese private companies have increased their investment, filling the gap left by state-owned enterprises that were prominent in the initiative’s early years.
Nedopil also noted that changing risk evaluations by Chinese investors and banks have led to a focus on revenue-generating and resource-backed deals in new BRI financing. This shift has also benefited the metals and mining sector, diverting investment away from construction contracts and infrastructure.
Additional reporting by Harry Dempsey in London
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