Five takeaways from China’s BRI engagement in 2022

China’s engagement in the 147 countries with an MoU on cooperation under the Belt and Road Initiative (BRI) remained relatively stable in 2022, with about USD67.8 billion of investments and contract value, compared to USD68.7 billion in 2021. Engagement has, however, evolved in 2022 to a more complex landscape. Using data from the 2022 China BRI investment report by the Green Finance & Development Center at FISF Fudan University, this article highlights five key takeaways on BRI investments and construction contacts last year.

The analysis utilizes data from China’s Ministry of Commerce, the American Enterprise Institute’s (AEI) China Global Investment Tracker and our own database of BRI projects at the Green Finance & Development Center at FISF Fudan University. Throughout the analyses, we distinguish between Chinese engagement through investments and construction. Investments involve equity investment and therefore ownership in the project. Construction projects, meanwhile, are infrastructure projects built and sometimes debt financed through Chinese entities, for example via EPC and EPC+Finance contracts.

The 2022 BRI “ideograph of the year” is 通 (connection), Source: Xinhua

Green versus fossil engagement

China aspires to build a “green Belt and Road Initiative”, as signaled through policy documents, speeches from the highest level of government, state media reports and various other official communication channels. In the past few years, China has defined what it means by “green”, for example through the “Traffic Light System” for BRI projects and detailed guidance and opinions on how projects should incorporate international standards on environmental evaluation and management. China also officially announced an end to building new coal power plants overseas at the UN General Assembly in 2021.

Accordingly, Chinese companies and investors have been engaged in numerous “green” projects, particularly in green energies, such as solar and wind, across the globe. Compared to 2013, the share of “green” in China’s energy engagement in BRI countries rose from 5.6% to 26.1% in 2022. Investments occurred in countries as diverse as Bangladesh, Saudi Arabia, Chile, Sweden, and Mexico.

At the same time, however, China continued to engage in fossil fuel related projects. In 2022, fossil fuel related engagement constituted 60% of China’s energy portfolio, just slightly lower than average since 2013. These projects included gas pipelines, gas exploration and oil-related projects. In apparent contradiction to its commitment to exit coal power, Chinese companies were also engaged in 1.5GW of new coal-fired power plants – as well as in coal mining – in Indonesia. In February 2022, China Energy Engineering Corporation won the bid for a 4 x 380-megawatt thermal power plant on Obi Island, Indonesia, while Power Construction Corp. (PowerChina) engaged in a coal mining project in Central Kalimantan Province, Indonesia, with the purpose to sell 30 million tons of coal.

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Technology versus traditional infrastructure

Traditionally, China’s BRI engagement has focused on hard infrastructure, such as transport and energy-related projects. Since 2013, energy-related projects constituted about 40% and transport-related projects about 23% of China’s total BRI project value. Other traditional sectors included mining and metals and real estate, which were the next biggest sectors for Chinese engagement in the BRI.

In the big picture, 2022 is similar: energy and transport-related engagement continued to be the most important sectors, constituting 36% and 18%, respectively. However, unlike previous years, technology-related investments became much more prevalent, constituting their highest share of about 16% (equivalent to about USD10.7 billion) of China’s total engagement. This was driven by several key investments in battery-related projects, including a USD7.6 billion investment in a Gigafactory in Hungary by CATL. Battery producers also invested in other countries – including non-BRI countries, such as the US, and Germany – potentially demonstrating a shift of investments into higher value-added products in key markets to expand China’s leadership in specific technologies (such as new energy vehicles).

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Big versus small projects

Since the 2nd Belt and Road Forum in 2019 China has emphasized a focus on “small but beautiful” projects in BRI countries to overcome some of the challenges of larger projects, such as long development times and higher financial risk. Indeed, the data from 2022 suggest that the average value of construction projects has decreased to their lowest levels since the BRI’s inception in 2013. The average size was about USD321 million in 2022, compared to USD496 million in 2021 and over USD500 million in 2017.

At the same time, however, 2022 also saw the single largest Chinese investment in a BRI country ever – CATL’s USD7.6 billion investment into the Hungarian Gigafactory mentioned above. Similarly, Chinese companies including China Merchants
Capital participated with USD4.6 billion in Saudi Arabia’s gas pipeline in 2022 and through its Silk Road Fund invested USD2.9 billion in Indonesia’s Investment Authority, a state fund. This led to a 60% increase of the average deal size of investment projects in the BRI from less than USD20 million in 2021 to over USD32 million in 2022.

While this evolution may not indicate a new trend, the diversity of investment projects – from natural resources related deals (gas) to actual technology deals – is new.

Investment versus construction

As stated at the beginning of this analysis, China’s engagement in the BRI can broadly be distinguished between investments and construction contracts. Investments typically entail ownership by Chinese entities, through equity injections or greenfield investments, for example. Construction contracts usually involve Chinese companies that develop a specific project. The project can be financed with Chinese loans, but the ultimate ownership of the project usually lies with a different company. Thus, the risk of the project also lies with another company (or the local government) rather than with the Chinese developer.

Traditionally, China’s BRI engagement has been dominated by construction contracts, with investment playing a minor role. This compares to China’s engagement in non-BRI countries where over 90% of Chinese engagement was through investments.

In 2022, however, the share of investments in BRI engagement was higher than ever before, reaching almost 50%, compared to 29% in 2021. Investment volume reached USD 32.5 billion in 2022, representing a steady increase since 2020.   The increasing share of investments is visible across all regions, except in East Asia that saw a relative increase in construction contracts in 2022.

This might signal two things: first, Chinese investors are more willing to take financial risks in BRI countries and accordingly reap higher benefits. At the same time, it might also be that the issue of sovereign debt in many of the BRI countries reduces these countries’ ability to credibly provide sovereign guarantees needed to finance particularly large public infrastructure projects.

Private versus State-owned enterprises (SOE)

For many years, China’s BRI engagement was dominated by state-owned enterprises such as PowerChina, China Energy Engineering, Minmetals, and Sinopec.  With the exception of a few outstanding companies such as Alibaba, privately or publicly owned Chinese companies’ engagement in the BRI was comparatively small.

In 2022, however, due to the large investment by CATL, a publicly owned company was leading the flock of Chinese BRI investors. Alibaba, Nine Dragons China (a paper manufacturing company), and Tsingshan Holding (metals and mining) were also among the top 10 investors in BRI in 2022. Construction engagement, meanwhile, was still dominated exclusively by SOEs.

This could indicate a stronger capacity of leading Chinese non-government companies to take on more risk in overseas markets, which would include financial, technical and managerial capacity.


A freight train set off from Urumqi to Almaty on Feb 6. With the lifting of Covid-related restrictions, cross-border trade along the BRI is expected to rebound in 2023. Image: Xinhua

For 2023, with China’s COVID-related lockdowns fully lifted, an acceleration of BRI investments and construction contracts seems possible. Chinese developers can again travel to negotiate, plan and implement new projects. There is also a clear need for investments to boost growth in the post-COVID19 world supported by global financial institutions, including developing finance institutions (such as the World Bank, Asian Development Bank, AIIB), from which Chinese contractors can benefit.

We do not expect Chinese BRI engagement to reach levels as in 2018-2019, however. 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) for 2021 to 2025: it plans for China to invest USD550 billion (that includes non-BRI countries), down 25% from USD740 billion in the 2016-2020 period.

This does not necessarily mean that the deal number is decreasing. As we have been seeing in 2021 and early 2022, many smaller projects have been financed even in more difficult economic circumstances.

Two types of large projects will continue to attract Chinese engagement: strategic engagements (such as in strategic transport infrastructure in the region), and resource-backed deals (such as in mining, oil, gas).

To move the BRI to indeed becoming more green, however, still needs more Chinese government guidance, better risk frameworks that include climate and biodiversity of Chinese investors, and clearer demand for green projects from BRI countries.

Dr. Christoph NEDOPIL WANG is the Founding Director of the Green Finance & Development Center and an Associate Professor at the Fanhai International School of Finance (FISF) at Fudan University in Shanghai, China.

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