Why the Belt and Road Is Back in a Big Way
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Hello and welcome to another edition of the China Global South podcast, a proud member of the Sinica podcast network. I’m Eric Olander. Today, we’re going to get an update on the state of the Belt and Road Initiative.
Now, for the past several years, we’ve been hearing that the BRI is spent. The Chinese have run out of money and Global South countries that were the destination for so much of that investment simply can’t afford to take on more debt. And even the Chinese themselves have tried to change the narrative to make way for what was supposed to be a new, more austere era. Remember all of that talk about small yet beautiful? In Chinese, it’s called Xiao Er Mei (小而美). That was the line that they told everyone about smaller, more affordable, less risky BRI projects around the world.
Well, the data tells a very different story. BRI engagements last year actually reached an all-time high of more than $200 billion. Construction projects increased by 81% and investments surged by 61% compared to 2024. Energy engagements, especially in the fossil fuel sector, were very, very hot in 2025. And while the U.S. may have soured on Africa, Chinese investors haven’t. The continent was the top destination for BRI engagements anywhere in the world last year.
All of this comes from a new report published by the Green Belt and Road Center at Fudan University in Shanghai and Griffith University in Australia. Our old friend, Christophe Nedepil, is the man in charge of the project and joins us today from his office at Griffith University.
Good morning, Christophe, and welcome back to the show.
“Good morning to you, Eric. Great to be here and good to see you.”
It’s wonderful to see you and to get these surprising numbers because, again, we had heard that the BRI was all but done. Even the Chinese themselves were trying to brace us for a much more austere era. Your data says otherwise. What do you explain for this big surge of construction and investment by Chinese stakeholders?
“Yeah, I think that was a very big surprise already. When we were tracking the data, this level of commitment that we’ve seen in 2025, it’s something that we hadn’t expected and obviously hadn’t seen before.”
We’re at levels of BRI engagement and engagement, again, there’s construction contracts and investments—construction contracts where Chinese construction companies, like particularly state-owned enterprises, take the lead in implementing a large project. And investments are much more where the Chinese are investing their own money through equity investments, so they take ownership.
Now, these levels are more than double from the COVID years. So it is quite impressive. And you mentioned the energy engagement over $90 billion, and that over $90 billion is more than we’ve seen. Just kind of only the energy engagement is higher than we’ve seen during the COVID years. So this level of engagement is really something that is quite surprising to us.
I think there are a couple of explanations, of course. In the COVID years, 2020, 2021, and 2022, there was this whole idea of Xiao Armei, like small, yet beautiful, which was, I think, very logical. There was a lot of global risks. It was difficult to make deals. It was difficult to travel. And so the projects overall, the project volume decreased.
And now, really, this uptake in a still very volatile world, but with massive deals, scales more than $10 billion for single engagements.
So I think the largest one, also outside the BRI, is $37 billion by TikTok in Brazil. But we’re also tracking outside BRI. So we’re not just tracking BRI. We’re reporting on BRI, but in all the massive engagements:
- Nigeria: $20 billion for gas industrial park
- Kazakhstan: $10+ billion for mining and metals related engagement
And this $10+ billion engagement, we’ve not seen before. This is a new level of BRI engagement that I think is quite interesting to observe, and we’ll see whether that continues over the years to come.
So a lot of us were surprised, not only because of the size of the numbers but also the timing of it. Coming in 2025, when Donald Trump comes back into power, the international system goes into disarray, is there any connection that you can see in the data between the events that have been happening, say, within the new Trump era—that is the disruptions? Do they see an opportunity to move as the United States is pulling back from the world? Or are these just more coincidental in terms of the timing?
“I think there’s both. These projects take a while, particularly large-scale projects, take a while to negotiate.” This is not something that the Chinese are able to do with their partner countries in months. This is usually maybe a year in the making. So not everything that we have seen in 2025 was agreed to in 2025.
Now, what we know, of course, that over the last years, and this is not just the Trump era, this is also Obama era. And there was supply chain diversification, supply chain de-risking, with manufacturing plants being constructed in countries outside of China in order to reduce the tariff burdens from exporting directly from China, so rather exporting from other countries.
And there, of course, then came Liberation Day in April 2025, and with the massive increase of tariffs around the world to the U.S. And again, some of the Chinese companies have actually reacted quite quickly and also, for example, scrapped investment decisions for manufacturing from Vietnam and brought them to Morocco or other countries that have lower tariffs. So there’s still a lot of movement around in terms of the investment decisions, and that is also driven, of course, by geopolitics.
Let’s go back to energy. You mentioned that that was one of the major investment surges of last year. In fact, it was the highest of any period since the BRI’s inception at $94 billion, more than double what it was the previous year back in 2024. Give us the profile of these energy investments, because we had heard that the surge in Chinese investment overseas was in solar panels and new energy. But it seems to get these numbers at $94 billion, you’re going to have some of the older energy modes in there as well. Tell us a little bit about what happened in the energy sector.
Yeah, so I think kind of one of the quotes that have been picked up, it’s like
“2025 was the dirtiest and the greenest year in terms of energy engagement.”
And that’s true in absolute terms. So the overall engagement, as you said, increased quite a bit. It is particularly driven by oil and gas related engagement. These, for example, in Nigeria, the gas energy industrial park, there are a number of other fossil fuel engagements across the region.
So fossil fuel engagement actually has taken by far the majority, I think 75% of the total engagement is related to fossil fuel. And that’s a very high emitting energy engagement. And this is, so I remember in 2020, we celebrated that green energy or renewable energy has broken the 50% mark of the total energy engagement. And we’ve been backsliding since then in terms of the share. So that’s a worrying trend in some ways, particularly if we want to talk about a green Belt and Road Initiative and China’s green engagement.
Now, at the same time, the green energy engagement also increased to record levels. So that’s why we can also say it’s been the greenest year. And so that’s particularly in solar construction, but also in solar and wind construction, as well as in battery storage. As a broader kind of engagement portfolio that the Chinese have compared to previous years.
What’s important to note here, and I think we’ve also discussed this previously, Eric, is that we’re not looking at exports. So China’s green energy-related exports, solar panels and wind, whatever Pakistan, for example, imports 19 gigawatt of rooftop solar, this is not captured in the data. But because this is just pure export, we’re not capturing export. We’re capturing construction engagement and investment. And again, in the export space, China’s green-related exports, of course, are also increasing. And there’s great other reports out there that look at that.
Do you get a sense that in the fossil fuel sector the Chinese are building infrastructure and connectivity for exports from other countries to China? Or is this building coal, gas and oil infrastructure for these countries to use themselves or a mix of both? How does that break down?
So we don’t know exactly what it is used for each single project. What we see is that a lot of the fossil fuel engagement is indeed through construction contracts. So where Chinese construction companies just have a very strong expertise in
- building processing facilities,
- building extraction,
- building storage facilities,
- building pipelines,
where Chinese companies potentially, either through a government-to-government contract or even through open bidding, have offered the most competitive price and therefore get chosen to lead this implementation.
And it might come with some Chinese financing, but it also might just come with local financing. What’s interesting for the Chinese construction companies is that a lot of these projects are very well-financed because you have the fossil fuel that in the end generates revenue. So you can be pretty sure that you’re going to get paid back for the construction that you do. And that’s different, for example, probably we’re going to talk about it in road infrastructure, which is public infrastructure, where there’s not such a strong revenue model. And therefore, the risks for the Chinese construction companies are much higher.
Again, fossil fuel, very clear. You’re going to sell the fossil fuel. You’re going to make money. And then you can pay back the Chinese construction companies. And so it’s a very lucrative business also for the Chinese.
That seems to be one of the trends that you’ve been following over several years now: the types of infrastructure that the Chinese are financing and building that used to be railroads, roads, things that we would call public goods, are less prominent today as opposed to telecommunications networks, fossil fuels — things that the moment you turn on, revenue starts coming in.
So that debt sustainability issue becomes paramount in what the Chinese are funding because, obviously, a lot of the countries where they’re doing these activities are having debt issues. So they’re looking for projects that are revenue generating right from the start. Is that a fair assessment?
I think that’s a very fair assessment.
So in 2019, the Chinese published the debt sustainability guidelines. That means for companies to evaluate whether they’re going to give a loan or work with a country to build an infrastructure project and look at the country’s profile, whether they are able to pay back the debt and whether they’re actually exacerbating the debt issues of that country.
Since 2019, this debt sustainability framework exists, and so that was before COVID. Then we saw during COVID that a lot of the global South countries were subject to a lot of sovereign debt issues. That impacts Chinese construction companies quite severely because, in the end, it’s the construction companies, if they took out loans for building, let’s say, a coal-fired power plant or a road project, and whatever country — Pakistan, for example — does not pay back the loan or does not pay back the loan in time, who’s going to be paying the loan?
And in the end, it is actually often the construction companies that have to shoulder some of the banks necessarily, but it’s the construction companies that have to shoulder the risk.
So there’s a very clear risk management necessity to understand:
- Am I going to make my money?
- Am I going to earn my money back?
- Or is it too risky and I’m going to stay away from it?
I was surprised that Africa turned out to be the top destination last year for BRI engagement, $61.2 billion, an increase of 283%, largely by this big project in Nigeria that you referenced, $24.6 billion.
Just to be clear, is that project in Nigeria:
- an MOU?
- a committed project with contract signed, money transferred, already building it?
- or is that something more aspirational?
Because sometimes it’s not clear.
It is so true, Eric. So we are trying our best in our data to distinguish project-level commitments. I think every database is running into the same issues. We don’t track money. We track announcements of projects by two independent sources where possible, or a stock market announcement. So we try to be as rigorous with our methodology as possible.
There are different levels of commitments that we track. This one is, I think, more than an MOU. It’s agreed. We have the location. We have the amount. We have both sides’ agreement.
In the end, I believe this project will change and will evolve. It’s not kind of… The design phase is definitely not finished from what we can see. So there’s a lot more work that needs to come to make this project actually real. But the commitment is quite explicit from both sides and confirmed. And so that’s why we were willing to include it in the database.
Yeah, the report also said that part of the reason for this surge in Chinese engagement in Africa was because of potentially, again, just a theory, because of the lower U.S. tariffs that African countries received traditionally through the African Growth and Opportunity Act (AGOA), which is now in the process of being renewed through Congress.
By the way, something very interesting on the renewal of the African Growth and Opportunity Act.
- AGOA is making its way through Congress, but it’s only going to set the tariffs back to the Liberation Day tariffs, not to zero tariffs. Very important distinction there.
- So really, AGOA will not be a tariff-free entry into the United States. It will be Liberation Day tariffs — so on April 2nd, whatever Donald Trump announced for those various tariffs.
- So it’s not going to have the tariff advantage that a lot of regions had, or at least that Africa had, that other regions suffered.
But you said that there might be some connection between lower U.S. tariffs and the surge of Chinese BRI engagement. Tell us a little bit more about that. If a Chinese company wants to export to the U.S. and is in the process of making an investment decision, the logic is, of course, that the Chinese company will look at countries that have a tax regime that is favorable or a tariff regime that is favorable to them to be competitive against other competitors. It might be sitting in a country with a high tariff regime. So these investment decisions are just normal. I don’t think that any country or any company would not make those.
What’s interesting with the Chinese, and I think there’s an upside and a downside to that, is that China’s speed, making quick decisions, being able to build factories very quickly, and to churn out the products very quickly, is an opportunity, I think, also for host countries, for BRI countries, to attract specific types of investment.
The downside is that, and the downside is that, once the regime changes, and maybe there’s some issues, and maybe another opportunity for the same Chinese company, there’s also a risk that the facility will be abandoned very quickly.
Now, early on in the BRI, back in the 2013-2014 era, it was a lot of Chinese state-owned enterprises backed by Chinese policy bank loans that were going out and doing these big deals, these huge projects. We saw that run-up of lending that peaked in 2016, and that’s gone down. And the Chinese private sector back then played a secondary role.
Over the past couple of years, as we’ve talked to you, one of the things that we’ve noticed is that
- the private sector is playing an increasingly prominent role, and
- the state sector is actually pulling back.
Are you seeing that in the data for 2025 as well?
Yeah, so definitely for the investment side, it’s mostly private companies that are leading the fray, and it’s interestingly also a lot of these new tech companies that are both in kind of the IT tech, like TikTok and Alibaba, as well as in the green tech space, like Jinko Solar and other green tech companies that are leading the way.
These are private companies that are interested in:
- being closer to their customers
- diversifying their supply chains
- de-risking their supply chains
- going abroad
And that’s also now the capacity, management capacity, and technological leadership to be actually a really, really attractive partner in host countries to set up factories.
And that’s not just in BRI countries, that’s also in a lot of developed countries, and those are trying to attract battery manufacturers from China, because this is state-of-the-art technology, very different from the early phases of the BRI, where such technological leadership just did not exist.
From that perspective, I’m always very, very impressed, and I think the rapid emergence of these technological leaders in China over the past couple of years has very much flipped kind of our logic, what type of investment we want to attract.
It was at the beginning, of course, the Chinese wanted to attract Western technology, and now it is often the case that everybody wants to, particularly in the green space, attract the Chinese technological leaders to set up shop.
In the construction engagement, it’s still a lot of state-owned enterprises that are very engaged abroad. So, these are real leaders in driving these construction engagements.
What’s, I think, also clear is that state-owned enterprises have a different mandate, particularly of spending their own money. Now, construction engagement really brings them in money. That’s just revenue. You’re a service provider.
For investment, you have to, of course, use your own money, and Chinese state-owned enterprises might have a mandate to also invest domestically to create jobs. And it also, kind of, their financing modalities are quite different. Their approval processes are quite different from private companies. And so, their ability to invest abroad has also changed over the last year.
So, that’s, I think, why we’re also seeing less state-owned enterprise investments compared to the previous years.
As we look forward to 2026, which obviously is now underway, some of the trends that we should watch out for are probably:
- more fossil fuel engagement
- more activity by the Chinese private sector
And mining is something we didn’t talk about, but that was one of the areas that was also showing a lot of activity.
Do you expect Africa to continue to be a main focus, or will the Chinese look elsewhere to spread out some of those investments?
Man, that’s always the golden question, looking into the future. Obviously, we don’t know. I always start with that.
The trends that we’ve seen over the last years, I think, can continue. So, I think we’ll see even more tech-related engagement.
And we’ve seen this tech-related engagement, not just in developed countries, but really in emerging economies. I believe that this will continue. There are a lot of opportunities for the Chinese to set up shop. There is a lot more capacity for the Chinese in the management skills to do so, to manage all the local staff. So, I think this is really a learning. And therefore, I think this trend will continue.
In terms of the mining, there’s a very clear engagement across the world to kind of own more mines, to kind of also use this accelerated need for a lot of the transition minerals to utilize on this trend. And it’s not just the Chinese. It’s also, of course, the Australians and other countries that are trying to get their mines and their processing in order.
In terms of regional engagement, there will be a lot of kind of up and down. So, I always believe that kind of one year does not give a trend. And so, this year, of course, we saw a lot of Africa engagement. In the previous year, we often saw a lot of Southeast Asia engagement.
I think the only one that has been very constant over the last years is actually the Middle East, where there has been just a very strong engagement across a number of different sectors. It includes:
- Energy
- Manufacturing
- Real estate
So, I think this Middle East engagement has been very strong. Also, in countries that are often not seeing a lot of Western engagement, it includes Iraq, Afghanistan, where the Chinese had some good engagement.
Again, Africa, Southeast Asia, I think this is always kind of up and down. I’m not able to see a very clear trend where it will go over the next year.
Okay. The report is the China Belt and Road Initiative (BRI) Investment Report 2025. It is by far the most authoritative report on the trends related to the BRI, where the money is going, what they’re doing with it, and who is actually engaged.
It was prepared by Christoph Nedepil, who is the director of the Griffith Asia Institute at Griffith University in Australia, and the acting director of the Green Finance and Development Center that’s part of the School of Finance at Fudan University in Shanghai.
Thank you so much, Christoph, for letting us know about everything that’s going on. We’re looking forward to talking to you later in the year to get an update on how things are going in the first half.
You do these reports every, I think, two or three times a year, correct?
“Every six months.”
“Every six months.”
So we’ll talk to you over the summer to get an update on how the first half of 2026 is going.
Thank you so much for joining us.
“What a pleasure to be here again, Eric.”
“Always a pleasure to see you.”
Thank you, Christoph, and thank you, everybody, for joining us today.
We’ll be back again next week with another edition of the China Global South Podcast on behalf of everyone around the world at the China Global South Project.
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