That’s the title of the study.
A key point:
As expected given COVID-19, China’s construction and, especially, investment around the world plunged in the first half of 2020. The decline may be exaggerated by Chinese firms not wanting to report global activity, but Beijing’s happy numbers are not credible.
The data show decline in the People’s Republic of China’s (PRC) global activity predates the pandemic. Activity peaked in 2016–17. The peak was an unsustainable drain on China’s foreign currency reserves, and Beijing belatedly tightened controls on capital outflow.2 A second blow, starting in 2018, stemmed from growing foreign doubts about benefits of Chinese investment.3 This trend is evident in both CGIT and government numbers.
The CGIT stands for China Global Investment Tracker, an analytic tool used by the American Enterprise Institute and the Heritage Foundation.
A slice from the 12-page long pdf:
Beijing recognized in 2017 that it did not have the money to buy all it wanted. A foreign exchange squeeze has limited and will continue to limit China’s global investment and construction. Foreign currency holdings remain the highest in the world yet are also insecure. Reserves hit $4 trillion in spring 2014 but tested $3 trillion lows in early 2017 and have held steady near $3.1 trillion since (say official data). This is why tight controls on out-bound capital were imposed and remain in place. Foreign exchange is required because no one wants the RMB. Its share in global reserves is 2 percent, not far ahead of the Canadian dollar. A steady $3 trillion is more than enough to cover basic import needs, but not enough for constant acquisitions in developed economies and engineering projects in more than 140 developing economies. Over the past few years, Beijing’s choice about where to concentrate its reduced resources was preempted by first the US and then other rich countries. Most of the developed world has become more hostile to Chinese enterprises, a hostility the COVID-19 outbreak is almost certain to intensify.
Economic push back — and so richly deserved.
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