China's Belt and Road pivots from coal plants to data centers
Concern about costs puts more focus on biotech and digital projects
TOKYO -- China's Belt and Road Initiative has been shifting away from signature big infrastructure projects in favor of less capital-intensive fields like IT and biotechnology, investment data shows.
Nikkei tallied new "greenfield" investment -- which involves building operations from the ground up -- by China from the Financial Times's fDi Markets foreign direct investment monitor. Investment in information technology, communications and electronic components totaled $17.6 billion in 2022, six times the amount in 2013, when the Belt and Road Initiative launched.
That has meant more projects like Senegal's new government data center, which sits under military guard a half-hour drive east of Dakar, the capital. Completed in 2021, the facility was a joint project with China, with servers supplied by Huawei Technologies.
The center has brought data back to Senegal that had been kept on foreign servers run by Western companies, reducing costs while also reclaiming digital sovereignty, said Cheikh Bakhoum, general manager of Senegal Numerique, the state agency that manages the facility.
Senegal has also installed an undersea cable and urban surveillance cameras with Chinese funds. Data from the cameras is analyzed using specialized software, Bakhoum said.
"China started exporting domestically developed digital infrastructure in the late 2000s," said Dai Mochinaga, an associate professor at Japan's Shibaura Institute of Technology.
"The trend ramped up around 2013, as Huawei expanded its overseas investment," he said.
Biotechnology has been another big growth area for Chinese investment, swelling 29-fold between 2013 and 2022 to $1.8 billion.
COVID-19 vaccine development is a prime example. China exported around 2 billion vaccine doses worldwide by the end of 2022, reaching out to emerging countries while Europe, home to major vaccine makers, focused on meeting local demand.
China's Abogen Biosciences has licensed technology for messenger RNA vaccine development to Indonesian startup Etana Biotechnologies, which completed a vaccine production facility last year, aiming to turn out 100 million doses.
Technology licensing is a fast track to catching up with the world, and China responded the quickest, said Andreas Donny Prakasa, head of corporate relationships at Etana.
The shift in Chinese investment into fields like IT and biotechnology has been accompanied by a decline in spending on big infrastructure projects.
Investment in fossil fuel development has plunged to a hundredth of where it was a decade ago amid a push to cut greenhouse gas emissions. Chinese President Xi Jinping pledged in 2021 to build no new coal-fired power plants abroad.
Spending on metals-related projects, such as aluminum production, has also been on the decline since peaking in 2018.
This is partly because investments in "soft" fields like IT are less costly. An average of $760 million is invested per fossil-fuel project, and $160 million in mining. Biotech, on the other hand, takes just $60 million per project, and IT services $20 million.
This can mean less risk for the receiving country. China has been accused of miring emerging economies in debt traps, loading them down with excessive debt and taking over rights to infrastructure such as ports when they cannot repay it.
Concern about having less money to work with is playing a role in the shift to more capital-efficient fields. Capital outflows from China exceeded inflows for the first time in about two years in the last quarter of 2022, as exports declined and foreign investment in the bond market slumped.