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China’s “Belt and Road” Investment Shifts Focus

China’s overseas investments related to the “Belt and Road” initiative are undergoing a shift, with a decrease in large-scale infrastructure projects and an increase in soft investments in areas such as biotech and digital technology. According to data from fDiMarkets, a service that tracks foreign direct investment, China’s greenfield investments in local entities, factories, and sales channels are growing in the digital and biotech sectors. Investments in IT, communication, and electronic components have grown sixfold to $17.6 billion, while biotech investments have surged to $1.8 billion, a 29-fold increase since the start of the then  Belt and Road initiative in 2013.

Etana Biotechnologies, an Indonesian start-up, has acquired the technology for the development of messenger RNA (mRNA) vaccines from Suzhou Aibo Biotechnology in China. The vaccine plant is to be completed in 2022 with a target of 100 million doses.

The development of digital and biotech sectors represents a shift in China’s overseas investment strategy away from large-scale infrastructure and fossil fuel projects. In the past decade, China has reduced its investment in coal and fossil fuels by 99 percent and has set a goal of decarbonizing by 2060. Meanwhile, China’s investment in metals such as aluminum has also peaked and since 2018, it has declined . The soft investments in digital and biotech sectors are seen as more cost-effective than hard infrastructure investments, and the smaller investment amounts could help to reduce debt risks for emerging market countries.

Source: Nikkei, May 8, 2023