COVID-19 restrictions, other concerns affected China's BRI projects in 2020: Report
Feb 06, 2021
Beijing [China], February 7 : About 15 Chinese Belt and Road Initiative (BRI) projects worth over USD 2.4 billion ran into trouble last year, according to a London-based think tank report.
The Overseas Development Institute (ODI) said in a report titled 'China navigates its Covid-19 recovery - outward investment appetite and implications for developing countries' that the overall figure could be higher of all the setbacks to delays caused by the COVID-19 pandemic, South China Morning Post (SCMP) reported.
According to the report, China Export & Credit Insurance Corporation (Sinosure) was "greatly frustrated" by Zimbabwe's failure to pay a USD 10 million commitment fee for the Kunzvi Dam electricity project, contracted to Sinohydro. The report said the Zimbabwean government was understood to already owe a substantial debt to Sinosure.
Furthermore, the study tracked BRI projects between January and November last year and found several projects affected by delays due to COVID-19 as Myanmar and Nigeria closed their borders early on to contain the virus and Costa Rica likely as a result of mobility restrictions due to high numbers of infections.
SCMP further cited the report saying that other projects had failed to raise the necessary funding or backing.
"Political risks associated with large scale infrastructure projects are as much a risk for Chinese investors as others," said ODI director for global risks and resilience Rebecca Nadin, one of the report's authors, who also mentioned that some high-profile projects in Tanzania and Nigeria had stalled or been cancelled for more traditional reasons of political risk, such as corruption and unrest.
The study also found projects which were blocked on national security grounds or for geopolitical considerations in countries experiencing tense relations with China
One project was cancelled due to community protests in Kyrgyzstan, where perceptions of China and Chinese investments have tended to be negative, SCMP reported citing the study.
In Australia, the Foreign Investment Review Board blocked an investment by an Australian subsidiary of Baotou Iron and Steel Group, reportedly to 'safeguard the national interest'.
Yue Cao, senior research officer, global risks and resilience for ODI, said that the COVID-19 pandemic would have increased costs for projects which had achieved financial close or started implementation due to mobility restrictions and delays.
Megaprojects were at their lowest level since the inception of the BRI plan in 2020, the study found.
