Wendy Leutert, An Wang Postdoctoral Fellow at Harvard’s Fairbank Center for Chinese Studies and Fellow at the Columbia-Harvard China and the World Program, examines the changing nature of Chinese state-owned enterprises as they continue to expand operations across the globe.
Chinese state-owned enterprises (SOEs) involved in infrastructure projects abroad are quietly evolving from contractors to become operators, investors, and owners. Since Xi Jinping launched the ambitious but still ambiguous Belt and Road Initiative (BRI) in 2013, more than 80 of the 97 companies owned by China’s central government have undertaken 3,100-plus projects worldwide. The BRI channels China’s excess industrial capacity toward the development of power plants, dams, ports, roadways, railways and other infrastructure overseas.
Yet SOEs today are no longer merely builders backed by Chinese finance. Instead, they are moving up the value chain to operate, own, and invest in the projects they construct, thereby assuming long-term commercial and strategic stakes in countries around the world.
Ever since China’s national champions began “going out” to participate in infrastructure projects overseas, they have served primarily as contractors responsible for engineering, procurement, and construction (EPC). Chinese policy banks — the Export-Import Bank of China (Exim Bank) and China Development Bank (CDB) — supported their business abroad by financing it with instruments including export buyers’ credits and concessional loans. This “EPC plus financing” approach has accelerated the rise of Chinese SOEs to become top international contactors. So what is different now?
Wendy Leutert is a 2018–2019 An Wang Postdoctoral Fellow at Harvard’s Fairbank Center for Chinese Studies and Fellow at the Columbia-Harvard China and the World Program, where she studies the historical evolution and global expansion of Chinese state-owned enterprises.