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1、 China Belt and Road Initiative(BRI)Investment Report 2023 H1 Dr.Christoph NEDOPIL Green Finance&Development Center,FISF Fudan University Shanghai,July 2023 Page 2 This brief is produced by the Green Finance&Development Center(GFDC)of the Fanhai International School of Finance at Fudan University,Sh
2、anghai,P.R.China.The brief aims to provide a vehicle for publishing preliminary results on topics related to the Belt and Road Initiative(BRI)to encourage discussion and debate.The findings,interpretations,and conclusions expressed in this paper are entirely those of the author(s)and should not be a
3、ttributed in any manner to FISF or Fudan University,to its affiliated organizations,or to members of its Board of Executive Directors.Citation and the use of material presented in this brief should take into account this provisional character.For information regarding GFDC Briefs,please contact the
4、Director Dr.Christoph Nedopil.Please quote as:Nedopil,Christoph(July 2023):“China Belt and Road Initiative(BRI)Investment Report 2023 H1 the first ten years”,Green Finance&Development Center,FISF Fudan University,Shanghai;doi:10.13140/RG.2.2.13892.19841 Cover picture:Windwrts Energie GmbH,Fotograf:M
5、ark Mhlhaus/attenzione Contact:For inquiries,please contact the Green Finance&Development Center infogreenfdc.org 2023 Green Finance&Development Center,FISF All rights reserved Page 3 China Belt and Road Initiative(BRI)Investment Report 2023 H1 Key findings 10 years after the announcement of the Bel
6、t and Road Initiative(BRI),cumulative BRI engagement breached the USD 1 trillion mark(USD1.016 trillion),with about USD596 in construction contracts,and USD420 in non-financial investments;Chinas energy related engagement in the first half of 2023 were the greenest in any 6-month period since the BR
7、Is inception in 2013;BRI finance and investments is picking up in the first half of 2023 with about 103 deals worth USD43.3 billion compared to about USD35 billion in the first half of 2022;Investments as a share of BRI engagement reached record levels at 61%-the first time that it constitutes more
8、than 50%of total BRI engagement;A growth area of strategic importance is metals and mining through Chinese investment for ownership.Engagement in the sector has grown by 131%compared to the first half of 2022.The minerals and metals are particularly relevant to the green transition(e.g.,lithium)and
9、batteries for electric vehicles.Major growth countries of Chinese engagement were Bolivia,Namibia,Eritrea,and Tanzania making Sub-Saharan Africa the fastest growing area of BRI engagement.26 countries saw a 100%drop in BRI engagement,including Turkey,Poland and Kenya;Russia continued to see no publi
10、c engagement from China;BRI investments in the first half of 2023 were for the second time after 2022 dominated by private sector enterprises,including Huayao Cobalt and CATL,while construction contracts were dominated by state-owned enterprises(SOEs);In global comparison,global FDI into emerging ec
11、onomies developed similar to Chinas BRI engagement with a mixed bag of growth and decline;For the rest of 2023,further rebound of Chinese BRI engagement is possible with a strong focus on BRI country partnerships in renewable energy and related technologies;Potential future engagements can be expect
12、ed in six project types:manufacturing in new technologies(e.g.,batteries),renewable energy,trade-enabling infrastructure(including pipelines,roads),ICT(e.g.,data centers),resource-backed deals(e.g.,mining,oil,gas),high visibility or strategic projects(e.g.,railway).Page 4 Content Chinas finance and
13、investments in the Belt and Road initiative(BRI).5 Regional and country analysis of Chinese BRI engagement.7 Sector trends of BRI engagement.9 Energy-related engagement in the BRI at their lowest level.11 Transport engagement in the Belt and Road Initiative.14 Major players in BRI investments.15 Chi
14、nas BRI investments in a global comparison.16 Outlook for 2023 foreign direct investments.17 Outlook for Belt and Road Initiative(BRI)Finance and Investments.18 Appendix:About the Belt and Road Initiative(BRI).22 Countries of the Belt and Road Initiative.23 About the author.24 About the Green Financ
15、e&Development Center.25 List of figures Figure 1:Chinas BRI construction engagement(top)and investments(bottom)2013-2023 H1,cumulative(right).6 Figure 2:Share of construction and investment engagement in the BRI.6 Figure 3:Deal size of Chinese engagement in the BRI:left,for construction projects;rig
16、ht investments(Source:Green Finance&Development Center,FISF Fudan University,based on AEI data).7 Figure 4:Chinese engagement in different BRI regions.8 Figure 5:Trends of Chinese BRI engagement across different countries 2022(top)and comparison of 2021 and 2022(bottom).9 Figure 6:BRI investments in
17、 different sectors.10 Figure 7:Chinese BRI engagement in different sectors through construction and investment(2013-2023 H1).10 Figure 8:Chinese BRI engagement in metals and mining.11 Figure 9:Chinese total energy engagement in the Belt and Road Initiative(BRI)2013-2022 12 Figure 10:Chinese energy e
18、ngagement through investment and construction in the BRI 2013-2023 H1 by subsector.13 Figure 11:Chinese energy engagement in the Belt and Road Initiative(BRI)by country in 2021.14 Figure 12:Chinese engagement in BRI transport infrastructure 2013-2023 H1.15 Figure 13:FDI in oil&gas extraction,and R&D
19、 projects in 2022(Data:fDi Markets).17 Figure 14:5-step framework for accelerating green BRI investments after COVID19.19 Page 5 Chinas finance and investments in the Belt and Road initiative(BRI)Cumulative BRI engagement in the 10 years since the announcement of the BRI in 2013 breached the USD1 tr
20、illion mark to reach USD1.014 trillion,about USD596 in construction contracts,and USD418 in non-financial investments.Preliminary data on Chinese engagement through financial investments and contractual cooperation for the first half of 2023 in the 148 countries of the Belt and Road Initiative1 show
21、 about 102 deals worth USD43.3 billion.This equals to about 60%of Chinas BRI engagement in all of 2022(USD72.6 billion).Of this engagement,about USD24.1 billion through investment and USD16.3 billion through construction contracts(partly financed by Chinese loans).Chinas overall engagement shows a s
22、teady development since 2020 from the onset of COVID-19(see Figure 1).About the data:In April 2023,the Ministry of Commerce(MOFCOM)released new BRI engagement statistics covering the period of January to March 2023.2 According to these data,Chinese enterprises invested about 5.76 billion in non-fina
23、ncial direct investments in countries“along the Belt and Road”in the first quarter of 2023(a year-on-year increase of 9.5%).For this report,the definition of BRI countries includes 148 countries that had signed a cooperation agreement with China to work under the framework of the Belt and Road Initi
24、ative by June 2023.We base our data on the China Global Investment Tracker3 and our own data research at the Green Finance&Development Center affiliated with FISF Fudan University,Shanghai.The data mostly includes deals with a size of over USD100 million and we count BRI engagements as those in coun
25、tries that had an MoU with China to cooperate under the BRI(thus,if the Syrian Republic signed a BRI MoU in 2022,we also count prior investments into Syria as BRI investments).As with most data,they tend to be imperfect and need regular updating.1 https:/greenfdc.org/countries-of-the-belt-and-road-i
26、nitiative-bri/2http:/ 3 http:/www.aei.org/china-global-investment-tracker/.Page 6 Figure 1:Chinas BRI construction engagement(top)and investments(bottom)2013-2023 H1,cumulative(right)Share of investments in Chinas BRI highest on record The share of Chinese engagement in the BRI through investments c
27、ompared to construction has seen its highest levels in the first half of 2023:investments reached about 59%of BRI engagement compared to 29%in 2021.2023 is the first time that more than 50%of the BRI engagement is through investments where Chinese investors take equity stakes with higher risks.This
28、compares to construction contracts that are typically financed through loans provided by Chinese financial institutions and/or contractors with the project often receiving guarantees through the host countrys government institutions(see Figure 2).Figure 2:Share of construction and investment engagem
29、ent in the BRI 2013-2023 H1 Deal sizes are getting smaller,potentially following“small or beautiful”ambitions The average deal size for investments has decreased from about USD617 million in 2022 to USD392 million in the first half of 2023.Compared to the peak in 2018,the investment deal size is 48%
30、smaller.Page 7 For construction projects,the deal size in the first half of 2023 was the lowest since the BRI was announced in 2013,with about USD327 million compared to USD338 million in 2022(see Figure 3).Compared to the peak in 2017,this is a 35%decrease.This tendency is likely in line with the a
31、mbition to have“small or beautiful projects”in the BRI propagated through official channels.Another reason is that China adjusted its risk management strategies to adjust for BRI country risks that are more pronounced and challenging in large scale projects with more social,environmental and governa
32、nce(ESG)requirements and issues.Figure 3:Deal size of Chinese engagement in the BRI 2013-2023 H1:left,for construction projects;right investments Regional and country analysis of Chinese BRI engagement Strong growth in most regions led by Sub-Saharan Africa and South America,after years of mixed dev
33、elopments Chinese BRI engagement was not evenly distributed among all regions.BRI countries in Sub-Saharan countries saw a 130%increase in Chinese investments and 69%increase in construction contracts.The region became dominant for construction engagement and the second most important target region
34、for BRI investments(after East Asia).Middle Eastern countries continued to be a major recipient of Chinese engagement,receiving USD8.1 billion in total engagement,yet significantly less than the USD12.3 billion in the first 6 months of 2022.East Asian BRI countries,meanwhile,expanded cooperation wit
35、h China from USD8.84 billion to USD13.2 billion in the first 6 months of 2022 and 2023,respectively(see Figure 4).Interestingly,South American BRI countries saw no construction engagement in the first 6 months of 2023,but significant growth(+227%)in investments,receiving overall the highest level of
36、 Chinese engagement in the region since 2018.Page 8 Figure 4:Chinese engagement in different BRI regions 2013-2023 H1 Chinas financing and investment spread across 45 BRI countries in 2023,with 24 countries receiving investments and 29 with construction engagement.The country with the highest constr
37、uction volume in the first half of 2023 was Saudi Arabia,with about USD3.8 billion,followed by Tanzania(about USD2.8 billion)and UAE(USD1.2 billion).Regarding BRI investments,Indonesia was the single largest recipient with about USD5.6 billion in investments,followed by Peru(USD2.9 billion)and Saudi
38、 Arabia(about USD 1.6 billion).26 countries saw a 100%drop of BRI engagement compared to 2022,including Turkey,Poland,and Kenya.Chinas engagement in Pakistan for the China Pakistan Economic Corridor(CPEC)dropped by about 74%(see Figure 5).The countries with the largest growth of BRI engagement were
39、Bolivia(+820%),Namibia(+457%),Eritrea(+359%),Tanzania(+347%),and Cambodia(+230%).Page 9 Figure 5:Trends of Chinese BRI engagement across different countries 2023 H1(top)and comparison of 2022 and 2023 H1 investments(bottom left)and construction engagement(bottom right)Sector trends of BRI engagement
40、 The focus of Chinas overseas BRI engagement continued to be in infrastructure,particularly in energy(36%)and transport(28%),expanding these sectors significance from a combined value of 57%in 2022.In the first 6 months of 2023,particularly the agriculture(+271%)and real estate(+269%)grew compared t
41、o the first half of 2022(see Figure 6).Technology saw a significant drop,compared to the announcement of the USD7.6 billion investment by Chinas largest battery producer CATL battery plant in Hungary in 2022.4 https:/ https:/ https:/ noteworthy engagements include manufacturing facilities,such as tw
42、o automotive production capacity in Serbia through Minal Europe Green Material4 and Jiangsu Liango Precision5,as well as manufacturing of chemical materials(e.g.,chlorine and derivatives)in Saudi Arabia6.Only one manufacturing plant related to renewable energy technology could be found:the Goldwind
43、agreement for the implementation of a wind turbine industrial unit worth around USD36 million,which will generate about 1,100 direct and indirect jobs.7 saudi-china-ties-major-announcements-from-arab-china-business-conference-rtrw7np7 7 https:/www.evwind.es/2023/03/24/goldwind-will-install-a-factory
44、-of-wind-turbines-for-wind-power-in-brazil/90891 Page 10 Figure 6:BRI investments in different sectors 2013-2023 H1 When looking at Chinas engagement strategy in these sectors distinguished by construction and investment,it becomes clear that investment with equity shares and thus higher risk within
45、 the Chinese organizations becomes an increasingly important strategy in all strategic sectors(energy,transport,metals&mining)(see Figure 7).Figure 7:Chinese BRI engagement in different sectors through construction and investment(2013-2023 H1)An important growth area of strategic importance is China
46、s engagement in metals and mining.Engagement in the sector has grown by 131%compared to the first half of 2022.The minerals and metals are particularly relevant to the green transition(e.g.,lithium)and batteries for electric vehicles.Engagement has been strong in African and Latin American countries
47、.China already holds significant shares of global mining sources(e.g.,over 80%of global graphite Page 11 resources),and even more control in material processing(where across lithium,nickel,cobalt and graphite,China owns more than 50%of global capacity).8 Examples include significant expansion of lit
48、hium and copper mining(both mines and processing),for example within the last 6 months through Hainan Minings acquisition of Kodal Minerals part of a lithium mine in Mali9,a copper processing plant agreement in Saudi Arabia10,and a commissioning of a lithium processing plant in Zimbabwe11(see Figure
49、 8).Figure 8:Chinese BRI engagement in metals and mining 2013 2023 H1 Energy-related engagement in the BRI greenest and at their lowest level Chinas energy related engagement in the first half of 2023 were the greenest in any 6-month period since the BRIs inception in 2013:12 in the first 6 months o
50、f 2023,about 41%of energy engagement went into solar and wind,plus an additional 14%into hydropower.Chinese engagement related to the energy sector constitutes the largest share of Chinas BRI engagement.In the first half of 8 https:/ 9 https:/ 10 https:/ 2023,total engagement in the energy sector re
51、ached USD12.3 billion which is on par with the first half year of 2022.However,compared to e.g.,2019,when it reached about USD20 billion in the first six months,the engagement in energy is down by 40%.An important reason for this green performance in 2023 is a drop in gas-and 11 https:/ All energy s
52、ubsector calculations exclude energy engagement with unknown use,for example investments into local energy providers with diverse portfolio,or transmission lines.Page 12 oil related projects that dominated in 2022 and 2021,respectively(see Figure 9).Figure 9:Chinese total energy engagement in the Be
53、lt and Road Initiative(BRI)2013-2023 H1 Coal Following Chinas announcement in September 2021 to not to build new coal fired power plants,select new coal-fired power projects seem to progress.While we reported last year about the 1.5 GW of new coal-fired power plants announced in 2022 in Indonesia,th
54、e Pakistan government approved a 300 MW of coal fired power in Gwadar,Pakistan in January 202313 to be constructed by China.While Pakistan had announced in December 2020 to not build new coal-fired power plants,various sources report that China was interested in providing financial and technical sup
55、port for the project14-including the design that requires import of coal(rather than using possibly more affordable domestic coal in Pakistan).15 However,no 13 https:/.pk/print/1027065-300mw-coal-power-plant-okayed-for-gwadar 14 https:/ 15 https:/ financial closing has been announced,which is why th
56、is project is not included in the 2023 H1 dataset.Oil and gas Oil and gas engagement fell to USD3.8 billion(45%of Chinese overseas energy engagement),USD1.4 billion through investment,and USD2.4 billion in construction contracts.Rumors of an 8 GW gas power plant in Yakutia,Russian Far East,with Chin
57、as Power China from June 2023 have not yet been confirmed.16 Oil-related investments reached their lowest level in the history of the BRI as they dropped to zero after several higher profile projects in the previous years inside and outside the BRI(e.g.,Chinas CNOOC engaged in a USD1.9 billion 16 ht
58、tps:/ 13 production sharing deal with Petrobras to explore Brazils Buzlos field.17).At the same time,BRI partners invested in China to support oil development,such as Aramcos investment in a petrochemical complex in Panjin City,Liaoling Province.18 Green energy/hydropower Chinas total engagement in
59、green energy(solar and wind)and hydropower amounted to about USD4.8 billion in the first half of 2023.This compares to USD3.8 billion in the first half of 2022(see Figure 9).Looking at investment only,Chinese green energy and hydropower investment decreased to USD990 million in the first half of 202
60、3 from USD1.3 billion in the first half of 2022.Meanwhile,construction projects related to green energy(including hydropower)increased from 1.6 billion in the first half 2022 to USD2.6 billion in the first half of 2023.Figure 10:Chinese energy engagement through investment and construction in the BR
61、I 2013-2023 H1 by subsector Energy engagement in different countries Analyzing Chinese energy engagement in different BRI countries,we find that,similar to 2022,Saudi Arabia was the country that received the most energy engagement in the first half of 2023(USD1.5 billion),followed by Qatar(USD1.4 bi
62、llion).Both countries received 17 https:/ of their engagement in fossil fuels(see Figure 11).Overall,the most important partners for Chinas BRI energy engagement since the BRIs initiation in 2013 remains Pakistan,which has received close to USD30 billion through investment and construction contracts
63、(most of which in hydropower 18 https:/ Page 14 and coal).Pakistan is followed by Russia and Saudi Arabia.An interesting case for Chinas energy investment is Zimbabwe:after a cancelled coal-fired power plant in 2021,Zimbabwe saw strong engagement in green energy through an agreement on a 1GW floatin
64、g solar station19.Figure 11:Chinese energy engagement in the Belt and Road Initiative(BRI)by country in 2023 H1 Transport engagement in the Belt and Road Initiative Transport-related engagement is key to providing the means to trade between China and the BRI countries where trade is a core component
65、 of the BRI.Accordingly,China has invested in and constructed projects in road,rail,aviation,shipping,and logistics across the world(see Figure 12).Aviation:No aviation related contracts were announced in the first half of 2023.Rail:Total rail engagement was worth USD5.6 billion(all through construc
66、tion contracts).A particularly interesting case is the USD2.2-billion contract with a Chinese company to build the final section of a 19 https:/ 20 https:/ railway line aimed at linking the Tanzanias main port with its neighbours as part of a broader regional,2,561-kilometre line that aims to link t
67、he Indian Ocean port of Dar es Salaam to Mwanza on Lake Victoria,with eventual spurs to Burundi,Democratic Republic of Congo(DRC),Rwanda and Uganda.20 Other noteworthy projects include an agreement on the tram project in Colombia21.Road-transport:China continues to engage in road construction projec
68、ts across many countries.Examples include a toll road in Cambodia worth about USD1.622 billion.21 https:/ 22 https:/ 15 Ports:Some shipping and port-related projects investments were announced in the first half of 2023,such as an agreement with Saudi Arabia to support Aramcos corporations shipping p
69、rojects.Figure 12:Chinese engagement in BRI transport infrastructure 2013-2023 H1 Major players in BRI investments Among the major players for BRI investments in the first half of 2023 were contrary to most years before not exclusively Chinese SOEs,but private enterprises(see Table 1).For investment
70、 projects,Zhejiang Huazou Cobalt led ahead of battery producer CATL.The Chinese companies most prominently featured in construction projects in the BRI in 2022 was China Railway Construction,followed by Power Construction Corporation(PowerChina),and China National Petroleum Corp(CNPC).This developme
71、nt is in line with last years trends.Page 16 Table 1:Major Players in BRI investments in 2023 H1(parent companies)Chinas BRI investments in a global comparison After foreign direct investment(FDI)rebound to pre-pandemic levels in 202123 and saw further growth in the first quarter of 2022,a multitude
72、 of crises on the global stage(e.g.,debt pressure,invasion of Ukraine)led to a slower growth of FDI in the following quarters resulting in a 12%decline of global FDI in 2022.24 According to UNCTAD,project finance and mergers and acquisitions(M&A)“were most affected by deteriorating financing conditi
73、ons,rising interest rates,and growing uncertainty in financial markets”.International project finance values shrunk by 30%in 2022.Yet,effects of lower FDI were most prevalent in developed countries,while ASEAN economies saw a 21%increase in greenfield project announcements.Similarly,Brazil saw an in
74、crease of 30%of greenfield announcements.Another winner was India,which attracted as many 23 https:/unctad.org/publication/world-investment-report-2023 24 https:/unctad.org/system/files/official-document/diaeiainf2023d1_en.pdf R&D projects as the US,UK,and China combined.It also outpaced China to be
75、come the largest destination and source of Greenfield FDI in Asia and the Pacific in 2022.India received USD60 billion in inward greenfield FDI and invested USD35 billion in other countries.25 Regarding greenfield project numbers,developing countries saw an increase by 26%,particularly countries in
76、Africa,while international project finance deals were down by 6%.Similarly,the value of cross-border M&A sales were down by 6%in developing countries,particularly in Central Asia,South-East Asia and South Asia(see Figure 13).A particular focus of global FDI in 2022 was in semiconductors(e.g.,a USD28
77、 billion investment by Taiwan Semiconductor Manufacturing(TMSC)in the United States)and in renewable energy(e.g.,a USD13 billion investment 25 https:/www.unescap.org/kp/2022/foreign-direct-investment-trends-and-outlook-asia-and-pacific-20222023 Page 17 by Indias ACME Group in Egypt).Europe was the m
78、ain source and destination of FDI for wind energy projects,with USD55 billion pledged by Western European wind developers,of which USD23 billion went to places like North America,Latin America,Africa,and Asia Pacific.Another focus of FDI,however,was in oil&gas extraction,which by August 2022 had rea
79、ched USD42.15 billion the same as the cumulative FDI between 2018 and 2021.Figure 13:FDI in oil&gas extraction 2008-2022(left),and R&D projects in(right)2014-2022(Data:fDi Markets)Outlook for 2023 foreign direct investments According to OECD,cross-border M&A and FDI in 2023 is facing a“gloomy outloo
80、k”,also in emerging markets and developing economies26.Reasons for challenges include high inflation and interest rates(depressing financing opportunities in projects and M&A),as well as geopolitical tensions and soaring protectionism.However,some optimism has returned with inflation levels sinking
81、and overall economic activity showing stronger resilience than expected.27 Countries that are expected to perform well and attract FDI include those with relevant natural resources to finance the green transition(e.g.,lithium),as well as those with relevant markets or technical 26 https:/www.oecd.or
82、g/daf/inv/investment-policy/FDI-in-Figures-April-2023.pdf.27 https:/ capacity to warrant a supply chain localization(e.g.,for semiconductor manufacturing).African countries would perform very differently among each other,depending on their governance,debt levels,and opportunities(e.g.,as a market or
83、 as a source for commodities).Developing Asian countries are expected to grow by 4.9%in 202328,possibly also due to shifts from investments into China into neighboring economies,particularly from those companies that depend on Western markets.With much needed green energy transition and political wi
84、llingness and 28 https:/ Page 18 direction,also FDI in renewable energies should further accelerate.29 Outlook for Belt and Road Initiative(BRI)Finance and InvestmentsChinese finance and investments into the Belt and Road Initiative countries in the first half of 2023 have remained steady and partly
85、 increased.For the rest of 2023,with Chinas COVID-related lockdowns fully lifted,a broader recovery of BRI investments and construction contracts seems possible.On the one hand,there is clear need for investments to boost growth in the post-COVID19 world supported by global financial institutions,in
86、cluding developing finance institutions(such as the World Bank,Asian Development Bank,AIIB),from which Chinese contractors can benefit.On the other hand,with travel restrictions lifted,Chinese developers are able to travel freely to negotiate,plan,and implement new projects.We do not expect Chinese
87、BRI engagement to reach levels as in 2018-2019.This is also a recognition of the Chinese Ministry of Commerce(MOFCOM),which put a break on fast overseas expansion in its 14th Five-Year Plan(FYP)30 for 2021 to 2025:it plans for China to invest USD550 billion(that includes non-BRI countries),down 25%2
88、9 https:/www.investmentmonitor.ai/features/fdi-forecasts-and-trends-to-watch-in-2023/30 http:/ USD740 billion in the 2016-2020 period.Also,Chinese contracting volume is planned to decrease from USD800 billion in the previous FYP to USD700 billion in this FYP.However,with relatively low levels of BRI
89、 engagement in 2021 and 2022,more acceleration should be possible.In line with our previous predictions,this should mean that deal number is increasing.As we have been seeing in 2021 and early 2022,many smaller projects have been financed even in more difficult economic circumstances and often provi
90、de both the means to boost sustainable economic development,provide employment and are better able to protect the environment.At the same time,we see two types of large projects to continue:strategic engagements(such as in strategic transport infrastructure in the region),and resource-backed deals(s
91、uch as in mining,oil,gas).To move the BRI investments forward,we expand our recommendations from the previous reports:0842898.pdf?mc_cid=25492edd68&mc_eid=7d8719095d Page 19 Figure 14:5-step framework for accelerating green BRI investments after COVID19 1.Focus on projects that are financially susta
92、inable and cut losses in non-profitable projects Investors in BRI projects within China and outside China should focus on smaller projects that are easier to finance and faster to implement.Particularly in infrastructure and energy investments,scalable solar and wind investments seem viable,as long
93、as local conditions provide the relevant grids to handle renewable energy supply.With decreasing energy cost for renewable energy,we also see an opportunity to invest in early phase-out of existing older coal projects,which would be both economically and environmentally relevant.2.Support partner-co
94、untries and partner businesses in dealing with(sovereign)debt-repayment of already invested BRI projects,e.g.,through debt-for-nature swaps and nature performance bonds.Debt is a major concern for future growth in many BRI countries.As we found in our in-depth analysis of debt in BRI countries,China
95、 has a unique opportunity to support BRI countries in dealing with their debt both bilaterally and multilaterally.Dealing with the debt issue is crucial for providing BRI countries with the necessary fiscal space for future investments.While debt-for-resource or debt-for-equity swaps might seem bene
96、ficial for China in the short-term to reduce the debt burden in the BRI countries,these swaps tend to undermine future domestic growth opportunities for BRI countries.Rather,Chinese relevant stakeholders together with international partners through multilateral frameworks should support green recove
97、ry by swapping part of the debt for nature and providing necessary frameworks to increase transparency and accountability of the use of funds.Furthermore,sustainable debt instruments could be applied to raise Page 20 more funds,e.g.,through nature performance bonds.31 3.Increase international cooper
98、ation for BRI projects to allow existing and useful projects to go ahead also in difficult times.Tripartite cooperation with international financial and implementation partners can support BRI projects through better access to financial resources,risk sharing and knowledge sharing.Particularly non-S
99、OEs that often have a higher burden of accessing investments from Chinese large financial institutions could benefit through broader access to finance,as witnessed for example in the Zhanatas wind farm in Kazakhstan,co-financed by EBRD,AIIB,GCF and ICBC,while it was build and is operated by China In
100、ternational power Holding32.Also,Chinese financial institutions could benefit to de-risk project finance by broaden their international cooperation.A report“China Third-Party Market Cooperation for Infrastructure Finance Financing Mechanism Handbook”had been released in September 2021 to accelerate
101、tri-partite project finance.33 In addition,with European Union(EU)launching its“Global Gateway”and the US pushing its“Build Back Better World”(B3W)initiative,competition for the BRI is increasing.However,if cooperation for project finance and development in emerging markets is the goal,Chinese inves
102、tors and developers can accelerate their cooperation with both public and private financial institutions from various 31 https:/www.f4b- 32 https:/ economies,particularly if they manage to share standards.4.Increase use of common environmental and social standards in project evaluation(e.g.,environm
103、ental impact assessment EIA)and for environmental and social risk management(ESMS)In July 2021,the Ministry of Commerce(MOFCOM),together with the Ministry of Ecology and Environment,issued the Guidelines for Greening Overseas Investment and Cooperation”34 and in January 2022,the Guidelines for Ecolo
104、gical Environmental Protection of Foreign Investment Cooperation and Construction Projects”35.Within these Guideline,Chinese developers are encouraged to adhere to international or Chinese environmental standards,particularly in countries whose domestic environmental standards and governance does no
105、t meet international standards.This is a formalization of a number of previous Guidances,including the“Green Development Guidance for BRI Projects Baseline Study”and the“Application Guide for Enterprises and Financial Institutions”backed by various relevant Chinese ministries published by the BRI Gr
106、een Development Coalition(BRIGC)in December 2020 and October 2021 respectively.These guidances calls for Chinese overseas investors to apply independent environmental impact assessments(EIA)and strict environmental and social risk 33 https:/greenfdc.org/china-third-party-market-cooperation-for-infra
107、structure-projects-financing-mechanism-handbook/34 http:/ 35 http:/ Page 21 management(ESMS)to ensure projects and investments are minimizing environmental harm and maximizing environmental benefits.Also,the Green Investment Principles(GIP)integrate sustainability into corporate governance,requiring
108、 boards to understand environmental,social and governance risks,as well as disclosing environmental information.By applying international standards,Chinese financial institutions can more easily raise capital on the global capital markets,accelerate co-financing with international partners and take
109、responsibility to fulfill the goal of building a“Green Belt and Road”.5.Develop socially and environmentally conscious phase-out strategies for non-performing investments Several investments in the Belt and Road Initiative have had to be stopped,mothballed or cancelled due to financial(e.g.,difficul
110、ties in financing or servicing debt)and operational reasons(e.g.due to travel restrictions or problems in supply chains).According to our study,over 50%of announced coal fired power plants have been mothballed.In order to avoid reputational,social and environmental risks arising from stopped,mothbal
111、led or cancelled projects,plans should be developed and implemented by financial institutions including insurance companies,developers,local governments and relevant Chinese authorities that compensate any losses to workers and companies up to a specific extent,and that ensure that nature around mot
112、hballed and particularly stopped projects can be remediated.This also helps avoid having skeleton constructions serve as a reminder of unfinished projects.Page 22 Appendix:About the Belt and Road Initiative(BRI)The Belt and Road Initiative(BRI)Chinas main international cooperation and economic strat
113、egy.The BRI is also known as the“One Belt One Road”(OBOR),the“Silk Road Economic Belt and the 21st-century Maritime Silk Road”or just the“New Silk Road”.Its Chinese name is 一带一路(yi dai yi lu).It was announced by Chinese President Xi Jinping in Kazakhstan in October 2013.The construction of the Belt
114、and Road Initiative is anchored in the Chinese constitution.Goals of the Belt and Road Initiative and how to make it green The BRI has officially“five goals”:policy coordination,facilities connectivity,unimpeded trade,financial integration,and people-to-people bonds.Over the past years,the emphasis
115、on developing a“green”and“high-quality”Belt and Road Initiative have accelerated.The Ministry of Environmental Protection(now Ministry of Ecology and Environment)had published the Guidance on Promoting Green Belt and Road already in 2017.The document stresses the relevance of the“ecological civiliza
116、tion”,“green development concepts”,“principles of resource efficiency and environmental friendliness”within the five goals of the Belt and Road Initiative.During the 2019 Belt and Road Forum,green and sustainable development of the Belt and Road Initiative took center stage,together with debt sustai
117、nability.Accordingly,the Ministry of Ecology and Environment jointly initiated the BRI International Green Development Coalition(BRIGC)and international partners.With its 10 working groups,the BRIGC aims to support green development,in e.g.,green finance green transport green innovation green urbani
118、zation green standards In 2020,the MEE and several relevant ministries backed the Green Development Guidance for BRI Projects Baseline Study published by the Belt and Road Initiative International Green Development Coalition(BRIGC).The Guidance lays out 9 recommendations for greening the BRI and an
119、initial project taxonomy(“traffic light system”that distinguishes projects with high environmental risk(red projects)and projects with environmental benefits(“green projects”).In 2021,an implementation Guide for financial institutions and project developers was published.Also,in 2021,the Green Devel
120、opment Guidelines for Overseas Investment and Cooperation were published by MOFCOM and MEE,while the same ministries published the Guidelines for Ecological Environmental Protection of Foreign Investment Cooperation and Construction Projects in January 2022 to stress relevant environmental risk mana
121、gement practices.Find an overview of relevant policy documents for the Belt and Road Initiative here.Page 23 Countries of the Belt and Road Initiative According to official information,in June 2022,148 had signed cooperation agreements for the BRI.For countries and organizations to“join”the BRI,Chin
122、a and the respective country or organization sign a Memorandum of Understanding(MoU).For 7 countries listed in official Chinese media(),we could not confirm a signature of an MoU for bilateral cooperation under the Belt and Road Initiative framework.The following BRI map shows the list of countries
123、that have signed MoUs or are said to be members of the BRI.You can find a more detailed list of countries of the Belt and Road Initiative(BRI)here.Page 24 About the author Dr.Christoph NEDOPIL is Associate Professor of Practice in Economics and Director of the Green Finance&Development Center at the
124、 Fanhai International School of Finance(FISF),Fudan University.He is also a Senior Research Fellow at the Central University of Finance and Economics(CUFE)in Beijing,China,and a Visiting Faculty at Singapore Management University(SMU).Christoph regularly provides expertise to governments,financial i
125、nstitutions,enterprises,and civil society to accelerate the application of sustainable finance.He works with the China Council for International Cooperation on Environment and Development(CCICED),the Chinese Ministry of Commerce,as well as various private and multilateral finance institutions(e.g.,A
126、DB,IFC,UNESCAP)and international governments.He is the lead author of the UNDPs“(Re)orienting Sovereign Debt to Support Nature and the SDGs”,the Asian Development Banks handbook on“Green Finance for Asian State-Owned Companies”,the UNDPs“SDG Finance Taxonomy”,the“Green Development Guidance Baseline
127、Study”of the BRI Green Development Coalition under the Chinese Ministry of Ecology and Environment,and has authored four books,dozens of articles,and research reports.Christoph is serving as board director and supports various companies in scaling sustainability in businesses and finance.Christoph h
128、olds a Master of Engineering and a PhD in Economics from the Technical University Berlin,as well as a Master of Public Administration from Harvard Kennedy School.Page 25 About the Green Finance&Development Center The Green Finance&Development Center(GFDC)is a leading research center that provides ad
129、visory,research and capacity building for financial institutions and regulators for green and sustainable finance in China and internationally.The GFDC works at the intersection of finance,policy,and industry to accelerate the development and use of green and sustainable finance instruments to addre
130、ss the climate and biodiversity crisis,as well as contribute to better social development opportunities.The topics of our work at the Green Finance&Development Center respond to the needs and developments of the financial markets and related policies in China and internationally,while we also aim to
131、 provide evidence-based advisory and research for future policies and strategies to accelerate the greening of finance in policy and practice.To drive green finance development,GFDC works in four inter-related labs:1.Green BRI Lab 2.ESG Lab 3.Green Innovation Lab 4.Biodiversity Finance Lab The Green
132、 Finance&Development Center was founded in 2021 by Christoph Nedopil.It is associated with the Fanhai International School of Finance(FISF)at Fudan University in Shanghai,P.R.China.Page 26 Contact us for more detailed analysis on green and sustainable finance,the Belt and Road Initiative(BRI)and sustainable development.Green Finance&Development Center Fanhai International School of Finance(FISF)Fudan University 220 Handan Road,Yangpu District,Shanghai,P.R.China,200433 复旦大学泛海国际学院绿色金融与发展中心 200433 上海市杨浦区邯郸路 220 号 infogreenfdc.org II www.greenfdc.org