China’s overseas energy financing has fallen to a decades-long low after its promotion of Belt and Road projects in developing countries was blocked, with most of the money going to energy projects in Africa, which analysts believe may become the focus of Chinese energy investment in the future.
Comprehensive international media reports, data from Boston University’s Global Energy Finance Database show that more than half of China’s $4.6 billion in overseas energy loans in 2020 were invested in projects in Africa. Experts say the trend of Chinese investment in African energy projects will continue.
The continent faces a huge energy investment gap, while investing in energy projects in Africa meets Beijing‘s strategic needs.
In addition, China has accumulated significant excess capacity in nuclear, hydropower, solar and wind power generation, and Chinese policy banks are encouraging Chinese companies in these sectors to participate in large energy projects in Africa by providing loan financing and insurance for investments in Africa.
As the world’s largest consumer of energy and the top importer of Crude Oil, China’s increased investment in Africa also aims to enhance energy security and diversify its sources of supply.
China’s Belt and Road projects often have poor governance standards, inviting a series of scandals and complaints from debtor countries, which has led to little success in Beijing’s goal of using economic resources to expand its political influence.
Last year, Zambia became the first African country to default on its debt under the new crown Epidemic, while Pakistan, the main recipient of loans for Belt and Road projects, accused Chinese companies of inflating the cost of power projects by billions of dollars.
According to a recent report by the Overseas Development Institute, a think tank, Beijing has realized its lending approach is unsustainable.
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