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How Chinese Financing is Fueling Megaprojects Around the World

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How Chinese Financing is Fueling Megaprojects Around the World

How Chinese Financing is Fueling the World’s Megaprojects

On a mountaintop a few miles north of the bustling streets of Harare, Zimbabwe, a curving, modern complex is beginning to take shape. This building, once completed, will be the home of the African country’s parliament, and the centerpiece of a new section of the capital city.

Aside from the striking design, there’s another unique twist to this development — the entire $140 million project is a gift from Beijing. At first glance, gifting a country a new parliament building may seem extravagant, but the project is a tiny portion of China’s $270 billion in “diplomacy spending” since 2000.

AidData, a research lab at the W&M Global Research Institute, has compiled a massive database of Chinese-backed projects spanning from 2000–2017. In aggregate, it creates a comprehensive look at China’s efforts to grow its influence in countries around the world, particularly in Africa and South Asia.

Beijing has ramped up the volume and sophistication of its public diplomacy overtures, […] but infrastructure as a part of its financial diplomacy dwarfs Beijing’s other public diplomacy tools.

– Samantha Custer, Director of Policy Analysis, AidData

Below, we’ll look at three diplomacy spending hotspots around the world, and learn about key Chinese-funded megaprojects, from power plants to railway systems.

1. Pakistan

In 2015, Chinese President Xi Jingping visited Islamabad to inaugurate the China-Pakistan Economic Corridor (CPEC), kicking off a $46 billion investment that has transformed Pakistan’s transportation system and power grid. CPEC is designed to cement the strategic relationship between the two countries, and is a portion of China’s massive One Belt, One Road (OBOR) initiative.

CPEC investment China to Pakistan

One of the largest projects financed by China was the Karachi Nuclear Power K2/K3 project. This massive power generation project is primarily bankrolled by China’s state-owned Exim Bank which has kicked in over $6.6 billion over three phases of payments.

Billions of dollars in Chinese capital has also funded everything from highway construction to renewable energy projects across Pakistan. Pakistan’s youth unemployment rate sits as high as 40%, so jobs created by new infrastructure investments are a welcome prospect. In 2014, Pakistan had the highest public approval rating of China in the world, with nearly 80% respondents holding a favorable view of China.

2. Ethiopia

Ethiopia has seen a number of changes within its borders thanks to Chinese financing. This is particularly evident in its capital, Addis Ababa, where a slew of transportation projects — from new ring roads to Sub-Saharan Africa’s first metro system — transformed the city.

china ethiopia investment

One of the most striking symbols of Chinese influence in Addis Ababa is the futuristic African Union (AU) headquarters. The $200 million complex was gifted to the city by Beijing in 2012.

Though Ethiopia is a clear example of Chinese investment transforming a country’s infrastructure, a number of other African nations have experienced a similar influx of money from Beijing. This financing pipeline has increased dramatically in recent years.

chinese loans to africa

3. Sri Lanka

In the wake of political turmoil, Sri Lanka is increasingly looking to China for loans. From 2000 to 2017, over $12 billion in loans and grants have poured into the deeply-indebted country.

Perhaps the most contentious symbol of the relationship between the two countries is a port on the south coast of the island nation, at a strategic point along one of the world’s busiest shipping lanes. The Hambantota Port project — which was completed in 2011 — followed a now familiar path. Eschewing an open bidding process, Beijing’s government financed the project and hired a state-owned firm to construct the port, primarily using Chinese workers.

By 2017, Sri Lanka’s government was burdened by debt the previous administration had taken on. After months of negotiations, the port was handed over with the land around it leased to China for 99 years. This handover was a strategic victory for China, which now has a shipping foothold within close proximity of its regional rival, India.

John Adams said infamously that a way to subjugate a country is through either the sword or debt. China has chosen the latter.

– Brahma Chellaney

Playing the Long Game

Africa’s economic rise will likely be a major contributor to global growth in coming years. Already, six of the 10 fastest growing economies in the world are located in Africa. China is also the top trading partner on the continent, with the United States sitting in third place.

OBOR spending has also earned China plenty of influence in the rest of Asia as well. If the ambitious megaproject continues along its current trajectory, China will be the central player in a more prosperous, interconnected Asia.

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Energy

Mapped: The World’s Nuclear Reactor Landscape

Which countries are turning to nuclear energy, and which are turning away? Mapping and breaking down the world’s nuclear reactor landscape.

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The World’s Changing Nuclear Reactor Landscape

View a more detailed version of the above map by clicking here

Following the 2011 Fukushima nuclear disaster in Japan, the most severe nuclear accident since Chernobyl, many nations reiterated their intent to wean off the energy source.

However, this sentiment is anything but universal—in many other regions of the world, nuclear power is still ramping up, and it’s expected to be a key energy source for decades to come.

Using data from the Power Reactor Information System, maintained by the International Atomic Energy Agency, the map above gives a comprehensive look at where nuclear reactors are subsiding, and where future capacity will reside.

Increasing Global Nuclear Use

Despite a dip in total capacity and active reactors last year, nuclear power still generated around 10% of the world’s electricity in 2019.

Global Nuclear Reactors and Electrical Capacity

Part of the increased capacity came as Japan restarted some plants and European countries looked to replace aging reactors. But most of the growth is driven by new reactors coming online in Asia and the Middle East.

China is soon to have more than 50 nuclear reactors, while India is set to become a top-ten producer once construction on new reactors is complete.

Asia's Growing Nuclear Footprint

Decreasing Use in Western Europe and North America

The slight downtrend from 450 operating reactors in 2018 to 443 in 2019 was the result of continued shutdowns in Europe and North America. Home to the majority of the world’s reactors, the two continents also have the oldest reactors, with many being retired.

At the same time, European countries are leading the charge in reducing dependency on the energy source. Germany has pledged to close all nuclear plants by 2022, and Italy has already become the first country to completely shut down their plants.

Despite leading in shutdowns, Europe still emerges as the most nuclear-reliant region for a majority of electricity production and consumption.

world-nuclear-landscape-supplemental-3

In addition, some countries are starting to reassess nuclear energy as a means of fighting climate change. Reactors don’t produce greenhouse gases during operation, and are more efficient (and safer) than wind and solar per unit of electricity.

Facing steep emission reduction requirements, a variety of countries are looking to expand nuclear capacity or to begin planning for their first reactors.

A New Generation of Nuclear Reactors?

For those parties interested in the benefits of nuclear power, past accidents have also led towards a push for innovation in the field. That includes studies of miniature nuclear reactors that are easier to manage, as well as full-size reactors with robust redundancy measures that won’t physically melt down.

Additionally, some reactors are being designed with the intention of utilizing accumulated nuclear waste—a byproduct of nuclear energy and weapon production that often had to be stored indefinitely—as a fuel source.

With some regions aiming to reduce reliance on nuclear power, and others starting to embrace it, the landscape is certain to change.

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Politics

How Much Do Countries Spend on Healthcare Compared to the Military?

Every year, governments spend trillions on healthcare and defense. But how much is spent per person, and how does this compare by country?

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Healthcare vs. Military Spending, by Country

Keeping citizens both healthy and secure are key priorities for many national governments around the world—but ultimately, decisions must be made on how tax dollars are spent to accomplish these objectives, and funding must fall into one bucket or another.

This infographic from PixlParade examines how much 46 different countries put towards healthcare and military spending in 2018, per capita.

Head to Head: Healthcare versus Military

Data for government and compulsory healthcare spending comes from the Organization for Economic Co-operation and Development (OECD). Note that these figures do not include spending through private insurance or out-of-pocket expenses.

Meanwhile, the data for military spending comes from the Stockholm International Peace Research Institute (SIPRI).

CountryHealth spending (Per capita, 2018 US$)Military spending (Per capita, 2018 US$)
U.S.$9,008.77$2,086.50
Norway$5,361.00$1,323.90
Germany$5,262.83$559.50
Switzerland$4,687.26$546.00
Sweden$4,623.68$574.90
Netherlands$4,461.30$651.50
Denmark$4,441.07$792.50
Luxembourg$4,385.66$650.80
France$4,310.55$791.00
Austria$4,137.25$381.00
Belgium$3,868.82$421.60
Japan$3,787.74$366.50
Canada$3,719.86$613.10
Ireland$3,629.43$229.80
UK$3,336.55$743.10
Finland$3,331.65$680.30
Australia$3,311.33$1,078.00
NZ$3,188.39$532.30
Czhechia$2,632.67$254.10
Italy$2,574.96$458.70
Malta$2,448.73$152.20
Spain$2,414.69$381.70
Slovenia$2,227.77$254.80
Portugal$1,906.23$431.00
South Korea$1,848.76$841.70
Israel$1,828.40$2,357.50
Estonia$1,744.57$458.60
Lithuania$1,599.15$377.10
Croatia$1,553.67$232.50
Poland$1,511.18$317.50
Hungary$1,493.01$184.60
Romania$1,344.34$223.50
Greece$1,331.19$547.10
Chile$1,282.59$296.10
Latvia$1,111.67$375.20
Cyprus$1,103.03$374.30
Bulgaria$1,042.85$136.30
Turkey$946.83$238.60
Russia$873.00$421.20
Colombia$864.16$204.10
Mexico$582.05$46.30
Brazil$388.98$134.50
South Africa$267.85$63.50
China$249.83$177.60
Indonesia$55.62$28.20
India$18.80$49.00
Source: OECDSource: SIPRI

Note: There are minor discrepancies in comparing table data to original sources due to recent estimate updates. Figures for Brazil, South Africa, China, Indonesia, and India come from the World Bank (2017).

The Top 10 Healthcare Spenders

The U.S. leads the world in government healthcare spending at $9,008 per capita – over 1.5 times that of Norway, the next-highest country examined.

CountryPer capita health spending% of GDP% of health spending
U.S.$9,008.7714.3%84.7%
Norway$5,361.008.6%85.3%
Germany$5,262.839.7%84.6%
Switzerland$4,687.267.6%64.4%
Sweden$4,623.689.3%85.1%
Netherlands$4,461.308.2%82.1%
Denmark$4,441.078.5%83.9%
Luxembourg$4,385.664.4%84.1%
France$4,310.559.4%83.6%
Austria$4,137.257.7%74.7%

While per-capita government spending on healthcare in the U.S. is the highest in the world, this has not necessarily brought about better outcomes (such as longer life expectancy) compared to other developed nations.

It’s also worth mentioning that the above figures do not cover all healthcare costs incurred by citizens, as they do not account for private insurance spending or out-of-pocket expenses. According to OECD data, these additional costs tend to be the highest in places like Switzerland and the United States.

The Top 10 Military Spenders

Israel has the highest rate of military spending per capita, and has the distinction of being the only country on this list to invest more in defense than in healthcare.

CountryPer capita military spending% of GDPTotal expenditure, US$M
Israel$2,357.505.3%$19,759M
U.S.$2,086.50 3.3%$682,491M
Norway$1,323.90 1.6%$7,067M
Australia$1,078.00 1.9%$26,840M
South Korea$841.70 2.5%$43,070M
Denmark$792.50 1.3%$4,559M
France$791.00 1.3%$51,410M
UK$743.101.8%$49,892M
Finland$680.30 1.4%$3,757M
Netherlands$651.501.2%$11,115M

Although the United States comes in second place here as well, in absolute terms, the U.S. puts more money into military expenditures than many other countries combined, at almost $700 billion per year.

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