Chinese investments in infrastructure worldwide

By Penelope Marbler and Lea Shan, Master’s Students ECC-Grenoble, Currently completing a double degree in Geo-Economics and Strategic Intelligence at IRIS Sup’.

China is the world’s second largest economy by nominal GDP ($11.3 trillion in 2016, according to the IMF 1) and is one of the fastest growing countries since the beginning of the 21st century, with an average growth of 10%. The country is impacted by the global economic slowdown, and its model has been gradually changing from an export-led model to a domestic consumer-led model. These facts can partly explain why the government is willing to invest abroad, notably in infrastructure, and has created specialized institutions to manage it in the recent years.

Indeed, the project “One Belt One Road” (OBOR) was announced by the Chinese President Xi Jin Ping in 2013. This project aims at building and linking mainland and maritime roads of three continents: Europe, Asia and Africa. OBOR is a gigantic project as it covers 2/3 of the global population and 3/4 of energy resources.

Chinese spending abroad for OBOR is expected to reach $100bn per year for the coming decade and funding mainly comes from Chinese banks, state-owned enterprises (SOEs) and Chinese local governments. This initiative was strengthened with the creation of the Asian Infrastructure Investment Bank (the AIIB) in 2015, currently composed of 57 country members.

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