China’s spending on overseas energy projects has dropped to its lowest in more than a decade, as the nation focuses on domestic issues, and rethinks its strategy around indebtedness and the world’s energy mix.
The nation’s foreign energy financing dropped by 69 percent to US$3.2 billion last year, data from Boston University’s Global Development Policy Center showed. Only three nations received financing for new projects from China’s policy banks last year, compared with five the previous year.
The drop underscores how a slowing domestic economy and concerns related to debt levels in recipient nations are eroding China’s desire to wield influence through spending billions of dollars to finance megaprojects abroad, mostly through the Belt and Road Initiative announced by Chinese President Xi Jinping (習近平) in 2013.
The COVID-19 outbreak only adds to domestic headwinds that include credit stress among companies and the ill-effects of the prolonged trade dispute with the US.
“The Chinese are getting concerned about the debt levels countries have, and want to be more cautious about their lending,” Boston University professor Kevin Gallagher said. “I wouldn’t expect a bounce-back in 2020, given the circumstances related to the virus and the general downturn anyway.”
China has financed US$251 billion in energy projects since 2000 with about three-quarters of that in Belt and Road nations, according to the university’s research, which tracks data from the China’s two policy banks, the China Development Bank (國家開發銀行) and the Export-Import Bank of China (中國進出口銀行).
At the same time, China’s lending has drawn scrutiny over whether it is unduly wielding its political clout to force indebtedness on other nations.
The oil sector has received the biggest amount of loans, followed by coal and hydropower.
While Beijing’s financing of coal would hardly endear it to climate activists, it has filled a gap vacated by other lenders, concerned that a hardening line against the dirtiest fossil fuel could make coal mines and power plants go out of business before they are able to repay their debts.
China’s efforts have allowed energy-thirsty Pakistan to mine coal for the very first time, as well as financing projects from South Africa to Southeast Asia.
Still, Xi has publicly called for more clean energy as part of the program, as China has become one of the world’s leading manufacturers of solar and wind power components. Of the three Belt and Road projects that received financing last year, two were hydropower developments in Nigeria and Guinea, and the other a coal project in Turkey, Boston University said.
“We would hope to expect a real shift toward wind and solar and so forth in 2020, but I have to say as an economist there needs to be a supply shift and a demand shift,” Gallagher said. “So if the Chinese are willing to put more solar and wind on offer, of which they have plenty, countries on the demand side need to be asking for that. We haven’t seen too many.”
UNCERTAINTY: Innolux activated a stringent supply chain management mechanism, as it did during the COVID-19 pandemic, to ensure optimal inventory levels for customers Flat-panel display makers AUO Corp (友達) and Innolux Corp (群創) yesterday said that about 12 to 20 percent of their display business is at risk of potential US tariffs and that they would relocate production or shipment destinations to mitigate the levies’ effects. US tariffs would have a direct impact of US$200 million on AUO’s revenue, company chairman Paul Peng (彭雙浪) told reporters on the sidelines of the Touch Taiwan trade show in Taipei yesterday. That would make up about 12 percent of the company’s overall revenue. To cope with the tariff uncertainty, AUO plans to allocate its production to manufacturing facilities in
Taiwan will prioritize the development of silicon photonics by taking advantage of its strength in the semiconductor industry to build another shield to protect the local economy, National Development Council (NDC) Minister Paul Liu (劉鏡清) said yesterday. Speaking at a meeting of the legislature’s Economics Committee, Liu said Taiwan already has the artificial intelligence (AI) industry as a shield, after the semiconductor industry, to safeguard the country, and is looking at new unique fields to build more economic shields. While Taiwan will further strengthen its existing shields, over the longer term, the country is determined to focus on such potential segments as
TAKING STOCK: A Taiwanese cookware firm in Vietnam urged customers to assess inventory or place orders early so shipments can reach the US while tariffs are paused Taiwanese businesses in Vietnam are exploring alternatives after the White House imposed a 46 percent import duty on Vietnamese goods, following US President Donald Trump’s announcement of “reciprocal” tariffs on the US’ trading partners. Lo Shih-liang (羅世良), chairman of Brico Industry Co (裕茂工業), a Taiwanese company that manufactures cast iron cookware and stove components in Vietnam, said that more than 40 percent of his business was tied to the US market, describing the constant US policy shifts as an emotional roller coaster. “I work during the day and stay up all night watching the news. I’ve been following US news until 3am
COLLABORATION: Given Taiwan’s key position in global supply chains, the US firm is discussing strategies with local partners and clients to deal with global uncertainties Advanced Micro Devices Inc (AMD) yesterday said it is meeting with local ecosystem partners, including Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), to discuss strategies, including long-term manufacturing, to navigate uncertainties such as US tariffs, as Taiwan occupies an important position in global supply chains. AMD chief executive officer Lisa Su (蘇姿丰) told reporters that Taiwan is an important part of the chip designer’s ecosystem and she is discussing with partners and customers in Taiwan to forge strong collaborations on different areas during this critical period. AMD has just become the first artificial-intelligence (AI) server chip customer of TSMC to utilize its advanced
RSS