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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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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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Politics

Political Longshots That Caught America by Surprise

Nothing is certain in politics until the results are in. Here’s a roundup of the most surprising longshot victories in American history.

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Millions of Americans rely on polls and the media to gauge the direction of political elections. Politics are sometimes unpredictable though, and on occasion, election outcomes can defy conventional wisdom.

These surprises, known as political longshots, are scattered throughout American political history. As time winds down to the 59th U.S. presidential election in November, today’s visual article from PredictIt goes back in time to showcase moments when polls, media outlets, and the American public were left stunned.

The Truman Show

PredictIt

What Happened?

As elections approached in 1948, incumbent Harry Truman led a struggling Democratic party.
Not only had they lost control of both chambers of Congress two years prior, they also faced internal divide over Truman’s civil rights initiatives. To make matters worse, Truman’s approval rating in June 1948 sat at just 39%.

Pollsters and the media were unanimous in declaring Republican Thomas Dewey the next president, but this didn’t discourage Truman from running a tactical campaign which featured:

  1. Clear demographic focus: Truman campaigned heavily in rural communities where working-class citizens felt neglected.
  2. Populist messaging: Truman often attacked Republicans, pinning them with the blame for a range of issues.

Despite being overlooked by many, Truman went on to claim a decisive victory. This caused one of the most famous media blunders in U.S. history—with high confidence in the polls, editors at the Chicago Daily Tribune prematurely reported Dewey as the winner of the election.

We stopped polling a few weeks too soon. We had been lulled into thinking that nothing much changes in the last few weeks of the campaign.

—George Gallup Jr.

Pollsters took a hit to their credibility, but used the opportunity to refine their methods. They extended the deadlines of polls and, over time, began using a methodology known as random sampling. This replaced quota sampling, a methodology prone to bias because it questioned a predetermined number of people from certain ethnic and age groups.

Murkowski’s Comeback

PredictIt

What Happened?

After losing the Republican primary to Joe Miller, incumbent senator Lisa Murkowski decided to run in 2010 as a write-in candidate. A somewhat unique aspect of American politics, a write-in candidate is one whose name does not appear on the ballot, and instead needs to be written in by the voter directly.

Miller, the Republican nominee, was supported by the Tea Party movement and former Alaskan governor Sarah Palin. All momentum seemed to be in his favor, according to polls conducted roughly a month ahead of election day:

PollDate AdministeredJoe Miller (R)Lisa Murkowski (R)Scott McAdams (D)
Raasmussen ReportsSept. 19, 201042%27%25%
Moore ResearchSept. 23-27, 201043%18%28%
CNN, Time, Opinion ResearchSept. 24-28, 201038%36%22%

Source: Rasmussen Reports, Moore Research, CNN/Time/Opinion Research

Despite Miller’s lead in the polls, Murkowski’s write-in campaign was able to capitalize on the state’s significant number of independent voters. On election day, Murkowski collected 101,091 write-in votes—a comfortable margin above Miller’s 90,839 votes.

[I]n our state, we have got over 54 percent of the electorate that chooses not to align themselves with any party at all, not Republican, not Democratic, not green, not anything.

—Lisa Murkowski

Miller challenged 8,000 write-in votes on the basis of name misspellings, but his claims were rejected by the Alaska Superior Court—perfect spelling on write-in ballots is not required if the voter’s intent is clear.

The Trump Train

PredictIt

What Happened?

Donald Trump’s 2016 victory will likely top the list as one of the most shocking political events of our time. As election day approached, many of America’s mainstream media outlets pointed to a decisive Clinton victory.

OutletClintonTrump
L.A. Times
by electoral count
352186
Fox News
by electoral count
274215
New York Times
by chance of winning
85%15%
CNN
by chance of winning
91%9%

Source: The Wrap, CNN

While Trump’s rhetoric was largely opposed in urban regions (which often lean Democrat), the media failed to recognize that his message was resonating in America’s industrial Midwest. One potential explanation for this is that the region’s manufacturing jobs had been drying up, causing workers to feel abandoned by the existing political establishment.

This led to a number of Democrat-controlled states flipping Republican, and was a critical force for propelling Trump to the White House.

PredictIt

In PredictIt’s market, Will Trump Win the 2016 Presidential Election, traders also underestimated Trump’s chances of winning. Throughout the entire campaign phase, Trump’s “yes” shares failed to break past the 50 cents marker.

Source: Predictit

Share prices climbed 64% after FBI Director James Comey released his letter regarding the Clinton email investigation, but these gains were erased in the days leading up to elections. It wasn’t until November 8th, election day, that the prediction market swung by an incredible 345% in favor of Trump.

The Rise of AOC

PredictIt

What Happened?

The biggest surprise from the 2018 midterm primaries was Alexandria Ocasio-Cortez’s (AOC) victory over incumbent Joseph Crowley in New York’s 14th Congressional District. That’s because the two candidates were nearly complete opposites of one another:

MetricAlexandria Ocasio-CortezJoseph Crowley
Age2856
Past Political ExperienceOrganizer for Bernie Sanders' 2016 presidential campaignU.S. Representative from New York's 14th congressional district (1999-2019)
Fundraising$300,000$3,354,370

Source: abc news

AOC led a grassroots campaign appealing to the district’s ethnically diverse population, which many believed Crowley could not relate with. Her platform included:

PredictIt

Also lending to the surprise factor was AOC’s relatively sparse media coverage. Because her campaign was largely operated through social media platforms such as Twitter and Instagram, it flew under the radar of traditional political media coverage.

The traditional media pay attention to one metric—money—but there should be other considerations: number of volunteers, social-media engagement, small-dollar donations.

—Dave Weigel, Washington Post

AOC would go on to win New York’s 14th Congressional District in the 2018 midterm election, defeating Republican Anthony Pappas with 110,318 votes to 19,202, to become the youngest woman to ever serve in the U.S. Congress. More recently, she secured her re-election in the 2020 Democratic primaries. This time, however, it comes as less of a surprise.

What’s Next?

The very definition of a longshot means that they are difficult to quantify and predict.

However, one potential longshot in the making may be 21-time Grammy Award winner Kanye West, who announced his intention to run for president on July 4th. While he hasn’t taken any official steps towards running as an independent candidate, he has garnered the support of notable figures like Tesla CEO Elon Musk. West first declared his interest in the presidency during an acceptance speech at the 2015 MTV Video Music Awards.

Looking further down the road, Democratic presidential nominee Joe Biden has still not declared his running mate. Much is at stake for Democrats hoping to deny Trump a second term, and the VP nominee will likely play a significant role in how the party performs. Biden has a long list of candidates that, for the first time in history, predominantly features women of color.

Speculation is ramping up as the 2020 presidential elections approach. While it’s difficult to say when politics will surprise us again, more longshots are sure to be in store.

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