Investment from China to Eurasia is on the decline
Chinese investment in the formerly Soviet states from 2016 through the first half of 2023 reached a staggering $80 billion, as per the Eurasian Development Bank's reports. Yet, Beijing's hunger for foreign investment seems to be on the downturn.
Kazakhstan alone scooped up 52% of China's investment in Eurasia during this period, raking in approximately $41.9 billion. Russia followed closely with $19.7 billion, making up about 24% of the foreign direct investment (FDI) by Chinese entities. Interestingly, a lion's share of these investments poured into the oil & gas sector, with China's state-controlled energy conglomerate CNPC serving as the major purveyor of funds.
Turkmenistan ranked third in China's 2016-2023 FDI table for Eurasia, amassing $9.4 billion. It's no shocker, given China's penchant for energy and pipelines. Notably, Russia topped the list as the largest single investor in the EDB, and the bank's figures omitted Estonia, Latvia, and Lithuania — now European Union members.
The EDB's survey, however, didn't include figures for the latter half of 2023, a period plagued by numerous roadblocks in China's domestic economy, including high unemployment, mounting municipal debt, and deflation. There's a boatload of anecdotal evidence suggesting that China's escalating fiscal issues, compounded by a lumbering government response to obstacles, has hampered Beijing's role as an FDI engine.
For instance, Uzbek PM Abdulla Aripov left China's western Xinjiang Region with empty hands after a trip intended to invigorate trade and investment. According to UZDaily, the visit failed to yield any new deals. Similarly, investment events in Tashkent and Guangzhou sparked buzz in the Uzbek press but appeared to fall flat when it came to attracting new business.
Kyrgyzstan's government head, Akylbek Japarov, joined Aripov and Chinese officials in Xinjiang for a rally in early March, the main topic of discussion being the revival of the much-hyped China-Kyrgyzstan-Uzbekistan railway project. The project has been stalled due to China's reluctance to pony up more funds. Regrettably, no progress on the project was reported following the new round of talks.
While specific data about the influence of China's domestic economic challenges in the second half of 2023 on its oil & gas sector investments in Eurasia is scant, several points are worth considering:
- Economic Challenges and Investment Trends: China's slowing economic growth and excess capacity problems have prompted companies to venture into new markets worldwide[3], which might impact investment decisions, even in the oil & gas sector, as companies seek to diversify their operations and lessen their dependence on domestic markets.
- Eurasian Investment Landscape: China remains a major player in Eurasia, mainly through the Belt and Road Initiative (BRI), leading to significant investments in Central Asia[5]. However, the particular impact of domestic economic challenges on oil & gas investments is not addressed in the search results.
- General Trends in Chinese FDI: Chinese FDI in the EU and the UK reached €10 billion in 2024, largely due to a surge in greenfield investments, particularly in EV-related projects[3]. This growth indicates continued interest in European markets but doesn't offer insights into the oil & gas sector in Eurasia.
To fully grasp the implications on the oil & gas sector, more targeted data or analysis focused on this industry would be advantageous.
The economic challenges experienced in China during the latter half of 2023 might have influenced the investment trends of Chinese companies in the oil & gas sector in Eurasia. Despite China's continuing involvement in the region through the Belt and Road Initiative, specific data on the impact of these domestic economic issues on oil & gas investments in Eurasia remains elusive. On the contrary, Chinese FDI in the EU and UK surged in 2024, primarily due to greenfield investments in electric vehicle-related projects, suggesting a persistent interest in foreign markets but clinical to the oil & gas sector in Eurasia.
