Chinese megaproject stopped investing in Russia

Chinese funding and investment in Russia under the One Belt, One Road mega-trade project has fallen to zero for the first time in nearly a decade. This is evidenced by the report of the Green Finance & Development Center at Shanghai Fudan University, writes the Financial Times, citing the report and the director of the institute, Christoph Nedopil Wang.

The director assured that relations between Beijing and Moscow are of a strategic nature, and Wang called the reduction in investment in projects under the global trade initiative "temporary." The reduction of investments to zero occurred for the first time since 2013, in 2021, as part of the One Belt, One Road megaproject, China invested about $2 billion in Russia.

The Chinese authorities have repeatedly criticized Western sanctions against Russia, insisting that this method of pressure on Russia does not work. However, Chinese companies themselves do not seek to help Russia and violate the sanctions regimes, fearing secondary sanctions for working with Moscow. It is these concerns that Wang partly explains the collapse in investment in Russian projects under the trade initiative.

The main beneficiary of the situation was Saudi Arabia, in which Chinese companies have significantly increased their investments. The volume of investments in joint projects under the initiative reached a record $5.5 billion. Last year, Iraq was the leader of Chinese investments in the framework of the megaproject - $10.5 billion of investments. At the same time, total investments in the trade initiative are declining: in 2021, Chinese companies invested $29.6 billion against the expected $28.4 billion in 2022.

One Belt, One Road is a large-scale trade megaproject that was personally lobbied by Chinese leader Xi Jinping. The initiative is aimed at expanding existing and creating new trade routes that would connect China with the rest of the world. The aim of the project is to cover a total of 4.4 billion markets in Central Asia, Europe and Africa. The total investment in the project since the start of the initiative is estimated at $932 billion.

Since the Russian invasion of Ukraine, relations between China and Russia have been on an ambiguous plane. Publicly, China refuses to support Russia's actions in Ukraine, but it also opposes sanctions pressure. However, China does not provide any economic support to Russia, fearing sanctions pressure already on its companies. In the same industries where sanctions hardly threaten Chinese companies, they are trying to extract the maximum benefit for themselves.

American Daily Newspaper

Learn More →