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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

Which Generation Has the Most Influence Over U.S. Politics?

Visual Capitalist’s inaugural Generational Power Index (GPI) examines the political power held by each generation and their influence on society.

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Measuring Influence in U.S. Politics, by Generation

Generations are a widely recognized and discussed concept, and it’s assumed people all understand what they refer to. But the true extent of each generation’s clout has remained undetermined—until now.

In our inaugural Generational Power Index (GPI) 2021, we examine the power and influence each generation currently holds on American society, and its potential to evolve in the future.

Political power by generation was one of three key categories we used to quantify the current landscape. Before we dive into the results, here’s how the Political Power category was calculated.

Measuring Generational Power

To begin with, here’s how we categorized each generation:

GenerationAge range (years)Birth year range
The Silent Generation76 and over1928-1945
Baby Boomers57-751946-1964
Gen X41-561965-1980
Millennials25-401981-1996
Gen Z9-241997-2012
Gen Alpha8 and below2013-present

Using these age groups as a framework, we then calculated the Political Power category using these distinct equally-weighted variables:

political power category breakdown

With this methodology in mind, here’s how the Political Power category shakes out, using insights from the GPI.

Share of Political Power by Generation

Baby Boomers dominated with over 47% of the total political power by generation. This cohort has particular strength in the judicial system and in Congress.

GenerationPolitical Power Share
Baby Boomers47.4%
Gen X29.0%
Millennials10.0%
Silent12.1%
Gen Z1.6%

Baby Boomers, along with the Silent Generation also control 80% of political spending. Meanwhile, Gen X accounts for nearly half (46%) of local government positions.

Both voters and politicians play key roles in shaping American society. Thus, two variables worth looking closer at are the evolving electoral base and the composition of Congress.

The Changing Face of the U.S. Voter

Younger generations have very different perceptions on everything from cannabis to climate change. This is starting to be reflected in legislation.

2016 was a watershed moment for politicians vying for the vote—it was the last election in which Baby Boomers made up over a third of U.S. voters. Collectively, Boomers’ voting power will decline from here on out.

GPI Political Power By Generation Supplemental Evolving Electorate

Within the next two decades, the combined voting power of Millennials and Gen Z will skyrocket from 32% in 2020 up to 55% by 2036.

Meanwhile, a decade from now, the oldest members of Gen Alpha (those born in 2013 and later) will enter the playing field and become eligible to vote in 2031.

The View from the Top

Having examined generational power in the electorate, we now turn our attention to the people on the other side of the democratic equation—the politicians.

In most cases, it takes many decades of experience and reputation building to reach the highest offices in the land. That’s why the median age of Congress (61.2) is much higher than the median age of the U.S. population at large (38.1).

At this point in time, Baby Boomers are in the sweet spot, and it shows in the numbers. Boomers represent 298 of 532 Congressional seats (56% of all seats), and Gen X’s growing contingent of members represents 31%.

GPI Political Power By Generation Supplemental Composition of Congress

On one end of the spectrum, the Silent Generation still occupies 7% of seats, which roughly reflects the group’s share of the U.S. population. California’s Democratic Senator Dianne Feinstein and Republican Don Young are both 87 years old, the latter having represented Alaska for 25 terms.

On the other end of the spectrum, Millennials currently claim 32 seats, just 6% of the total. As of 2021, this entire cohort now meets the minimum age requirement (25) to serve in the House of Representatives. The youngest member of Congress is Republican Madison Cawthorn, a representative for North Carolina at just 25 years old. Meanwhile, Senator Jon Ossoff is the youngest Senator in the country, serving Georgia at 36 years old.

GPI Political Power By Generation Supplemental Population vs. congress

This difference in political power by generation is stark considering that both Boomers and Millennials both make up similar proportions of the U.S. population at large. In that sense, Millennials are greatly underrepresented in Congress compared to Boomers.

Gen Z Waiting Patiently in the Wings

Gen Z’s current age range is a natural reason why they don’t yet have a foothold in government. But by 2022, the oldest members of Gen Z will turn 25, meeting the minimum age requirement to get elected into the House of Representatives.

With the oldest members of this generation soon turning 25, how long will it be before a representative from Gen Z occupies a seat in the Capitol Building?

Download the Generational Power Report (.pdf)

The Generational Power Index

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Politics

Visualizing Biden’s $1.52 Trillion Budget Proposal for 2022

A breakdown of President Biden’s budget proposal for 2022. Climate change initiatives, cybersecurity, and additional social programs are key areas of focus.

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Visualizing Biden’s Budget Proposal for 2022

On April 9th, President Joe Biden released his first budget proposal plan for the 2022 fiscal year.

The $1.52 trillion discretionary budget proposes boosts in funding that would help combat climate change, support disease control, and subsidize social programs.

This graphic outlines some key takeaways from Biden’s budget proposal plan and highlights how funds could be allocated in the next fiscal year.

U.S. Federal Budget 101

Before diving into the proposal’s key takeaways, it’s worth taking a step back to cover the basics around the U.S. federal budget process, for those who aren’t familiar.

Each year, the president of the U.S. is required to present a federal budget proposal to Congress. It’s usually submitted each February, but this year’s proposal has been delayed due to alleged issues with the previous administration during the handover of office.

Biden’s publicized budget only includes discretionary spending for now—a full budget that includes mandatory spending is expected to be released in the next few months.

Key Takeaways From Biden’s Budget Proposal

Overall, Biden’s proposed budget would increase funds for a majority of cabinet departments. This is a drastic pivot from last year’s proposal, which was focused on budget cuts.

Here’s a look at some of the biggest departmental changes, and their proposed spending for 2022:

Department2022 Proposed Spending (Billions)% Change from 2021
Education$29.841%
Commerce$11.428%
Health and Human Services$131.724%
Environmental Protection Agency$11.221%
Interior$17.416%
Agriculture$27.816%
Housing and Urban Development$68.715%
Transportation$25.614%
Labor$14.214%
State and International Aid$63.512%
Treasury$14.911%
Energy$46.110%
Small Business Administration$0.99%
Veteran Affairs$113.18%
Justice$17.45%
Defense$715.02%

One of the biggest boosts in spending is for education. The proposed $29.8 billion would be a 41% increase from 2021. The extra funds would support students in high-poverty schools, as well as children with disabilities.

Health and human services is also a top priority in Biden’s budget, perhaps unsurprisingly given the global pandemic. But the boost in funds extends beyond disease control. Biden’s budget allocates $1.6 billion towards mental health grants and $10.7 billion to help stop the opioid crisis.

There are increases across all major budget categories, but defense will see the smallest increase from 2021 spending, at 2%. It’s worth noting that defense is also the biggest budget category by far, and with a total of $715 billion allocated, the budget lists deterring threats from China and Russia as a major goal.

Which Bills Will Make it Through?

It’s important to reiterate that this plan is just a proposal. Each bill needs to get passed through Congress before it becomes official.

Considering the slim majority held by Democrats, it’s unlikely that Biden’s budget will make it through Congress without any changes. Over the next few months, it’ll be interesting to see what makes it through the wringer.

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