The Belt and Road initiative introduced by China in 2013 has prompted more than 50 commercial agreements between China and its partners and has resulted in a sharp increase of Chinese FDI (foreign direct investment) in Central and South Asia.
The question that comes to mind is: what is China investing in? Between 2005 and 2018, China has invested USD 1,870 bn overseas, USD 680 bn of which were invested in energy and constructions (36%) according to the American Enterprise Institute (AEI).
Annual worldwide Chinese investments in the energy and constructions sector (USD bn)
The 2015 joint investment of the Chinese Power Construction Corporation and Al-Mirqab Capital (Qatar) in a 1,320 megawatts coal-fired plant in Pakistan worth USD 2.34 bn is not the first of its kind. In fact, it was established that between 2001 and 2016, Chinese financial institutions supported the construction of more than 50 coal-fired power plants and that some 80% of Chinese overseas energy investments are in fossil fuels. Despite its commitment to curb GHG emissions domestically, China has no policy governing the climate impact of its foreign investment. And these figures also say something about its approach to assessing fossil fuel risks and opportunities. The surge of Chinese giant green companies will likely increase the share of renewables in the long-run. In the meantime, Chinese legacy corporations continue to invest in fossil fuel and coal-fired plants that are planned to stay for a while.