Module 1: What is Global China?

China’s impact and role in the Global South is diverse and fragmented, but not a black box

(Illustration: Herlinde Demaerel / Dialogue Earth)

July 10, 2025July 10, 2025

Over the past two decades, China’s presence has become ever more felt across the Global South. Whether through imports of raw materials, the ubiquity of Chinese-made products, or the emergence of Chinese investors and infrastructure companies, China has rapidly become a major actor in the Global South.

But why exactly? Through which companies and financiers? Regulated by whom? And shaped by what political and economic dynamics?

When we try to answer these questions, it quickly becomes clear that “Global China” – the manifestation of China overseas – is often oversimplified and poorly understood. In this module, we will address some of the knowledge gaps on Global China. In doing so, we will attempt to build a more nuanced understanding of the multiple actors that make up this important phenomenon.

China’s place in the Global South

The Global South has emerged as a collective term for a diverse group of countries, both wealthy and impoverished, sharing common interests in redefining global power dynamics. It captures a wide spectrum of nations, including those in the Northern Hemisphere that identify as part of this group.

China is increasingly seeking to position itself as a leader of the Global South, in competition with India. In 2021, during the United Nations General Assembly, China’s leader Xi Jinping emphasised this alignment: “China has always been a member of the Global South and will always belong to the developing world.” He highlighted the significance of cooperation among developing nations and reaffirmed China’s support for their interests and development. (The Decoding China Dictionary)

As with all the modules in these learning materials, the purpose is not to provide specific answers. These would quickly find themselves redundant as Global China evolves, or would be irrelevant to your particular context. Rather, it aims to provide useful lenses and a foundation of knowledge through which to understand Global China in greater depth and complexity.

Why are Chinese companies investing overseas?

Let’s start by unpacking some of the motives of Chinese companies investing overseas. Why have they increasingly done so over the past two decades, in countries across the Global South, particularly in infrastructure and resource extraction?

● Profit: For many Chinese companies, the major motivation is simply to turn a profit. This can be the case for both state-owned and private companies.

● Domestic overcapacity: In the wake of the 2008 global financial crisis, China launched a massive economic stimulus package to protect its economy. The package also helped stave off global economic depression and created a boom in demand for commodities, such as copper used for wiring and plumbing, many supplied from Global South countries. The result was a long period of construction in China and strong demand for goods such as steel, concrete and power. This helped buoy China’s economy. But it also created severe overcapacity in a number of industrial sectors. In other words, China’s producers could make far more than domestic demand could absorb. One of the solutions for companies in these sectors was to seek projects in new markets overseas.

Today, we see somewhat similar dynamics in “green” economic sectors such as renewable-energy products, batteries and electric vehicles, which are all seeking new markets overseas. (Though some have cautioned that “overcapacity” may be the wrong term for products that are so essential to the global energy transition.)

● Demand for resources: The Chinese economy, heavily dependent on industry and manufacturing, has a high demand for raw materials. This is the case for both old and new industrial and manufacturing sectors. In addition, with its large and increasingly wealthy population, China’s demand for consumer commodities, such as agricultural products, is also large.

● Geopolitics and economic statecraft: Access to certain natural resources – such as oil and, increasingly, the “critical minerals” needed to produce batteries and other high-tech products – is a key geopolitical driver and a source of international rivalry. It is, however, very hard to tell how coordinated Chinese companies’ investments in these sectors are. While these motives may be an incentive for some projects, they are probably overstated as reasons for many Chinese companies’ investments overseas.

What is the Belt and Road Initiative?

The most well-known framing of China’s overseas investments is the Belt and Road Initiative (BRI). First announced by Xi Jinping in Kazakhstan in 2013 as “an economic belt along the Silk Road”, the initiative is now enshrined in the Chinese Communist Party’s constitution – meaning it will not disappear any time soon. But it can be a confusing term.

Firstly, the trend of Chinese companies investing overseas, particularly in the Global South, predates 2013. A previous Chinese government policy had encouraged this trend under the phrase “Going Out”. And before that, companies from the more developed east of China were encouraged to invest in the less developed markets of western China. Some say that domestic policy laid an early blueprint for what would become the BRI.

Secondly, the BRI is often described in terms of geographic linkages: roads and sea routes across the world, with images of the ancient Silk Road often invoked. But it can be misleading to think so literally about the initiative. Transport projects have been a major focus of Chinese companies investing overseas, but it is unlikely that all these disparate projects will link together.

Lastly, the BRI is far less coordinated than is often implied in media discourse and, indeed, in its very name. Research has shown that the many actors who participate in and shape the BRI – from companies to state ministries to partner country governments – often have conflicting and competing interests.

To summarise, the BRI has roots in earlier policies, is less coordinated than often implied and – as we will explore further below – is made up of often contesting interests.

What might be a better way to understand this messy initiative?

There is a political dynamic to Belt and Road projects, one that is an echo of many of China’s domestic policies. The central government sends a clear signal that overseas investment is a strategic priority. Local governments, state-owned enterprises and even private companies wish to demonstrate their operations align with that priority. As a result, some existing overseas projects have been labelled Belt and Road projects, and deals which would have happened anyway have been publicised as part of the BRI.

Additionally, the countries in which Chinese companies are investing have their own influence over the shape of those investments. This is often referred to as country “agency”. For example, if a country’s government insists on high environmental standards, the Chinese company is likely to enforce such standards. This is evident, for example, in Chinese companies’ investments in the heavily regulated EU market. Similarly, a country’s government has the ability to push for investment in specific sectors via various policy tools. For example, Indonesia banned the export of unprocessed nickel ore in 2014, effectively moving Chinese investment in its nickel sector from purely mining to include processing.

It is also partner country governments that provide the permissions and permits required to proceed with investment projects. That said, the real-world impact of this agency depends on many factors and the degree of leverage partner countries have over Chinese investors. In the examples mentioned above, the EU is one of China’s largest export markets, while Indonesia holds the world’s largest nickel reserves.

As a result, “Global China” manifests in many different ways, based on how these dynamics, along with the specific motivations of investing companies, interact.

Who is Global China?

As alluded to above, the Belt and Road involves many different actors. Let’s take the major groupings of actors one by one. All of them both participate in the BRI and, in their own ways, shape it.

Who invests?

Chinese companies investing along the Belt and Road include both state-owned and private companies. Some of the former are owned by the central government, others by provincial governments.

In the early years of the BRI, overseas investments tended to be dominated by various state-owned companies. Private ones have come more to the fore in recent years. In 2023, the largest investor in the BRI was Sinopec, a centrally governed state-owned company, followed by PT Shengwei New Energy Technology, a private company. State-owned companies continue to be the main actors in infrastructure construction, such as transport and energy projects, with Power China and China National Chemical Engineering the leading companies in 2023.

Different companies will have different incentives for investing overseas. Many state-owned construction companies are looking for new markets due to saturation of the domestic market. Their investments may be more “patient” than private companies, for whom return on investment – often with short-time horizons – is the fundamental motivation. These distinctions are important when we research, write about or engage with Chinese companies.

Who finances?

BRI projects can only come about with sources of financing. These, too, come from diverse places. In addition, as will become clear in this and the following section, China’s state financiers and state ministries operate in a far less coordinated manner than is commonly assumed.

China’s banks are divided into two categories, “policy banks” and “commercial banks”.

Policy banks are the state-owned lenders that offer official loans to Belt and Road partners, among other clients. In terms of overseas financing, there are two active policy banks, the China Development Bank (CDB) and the China Export-Import Bank (Exim). The CDB offers medium- and long-term loans at commercial rates. Being state-owned, its mandate is to prioritise national strategy over profits, with a goal of pursuing “modest profits”. Exim, which is much smaller than CDB, offers concessional loans and export buyer’s credits – loans earmarked for the purchase of Chinese goods and services. It is not designed to make profit. In the first decade of the Belt and Road, these two policy banks were central players in the build-out of infrastructure.

Unlike the development banks of most western countries, the CDB and Exim enjoy considerable autonomy in their operations. China’s Ministry of Finance is a shareholder in the CDB and on the board at Exim, but does not have official jurisdiction over them. Exim’s loans and export credits must be approved by the China International Development Cooperation Agency and the Ministry of Commerce, but not CDB’s. The two policy banks are charged with bilateral finance only – not with China’s contributions to multilateral financial institutions, such as the World Bank.

Commercial, profit-making banks are also prevalent in China’s overseas financing ecosystem. They include some of the biggest banks in the world, such as Bank of China, Industrial and Commercial Bank of China (ICBC), and China Commercial Bank. They offer mid- to long-term loans at commercial interest rates, though the specifics of loan deals vary and are rarely publicly available.

A recent study of Chinese project finance in Africa between 2000 and 2015 found that concessional loans have a median interest rate of around 2%, while commercial loans have a median interest rate of 3%.

A final important player in the Global China financial space is the state-owned project insurer Sinosure, which provides risk insurance to Chinese companies investing in projects overseas. Some argue this has enabled Chinese companies to expand in high-risk markets and sectors, such as large-scale infrastructure.

Who regulates?

Governance of the Belt and Road Initiative is also a complex and fragmented picture. Multiple Chinese ministries are involved, each with their own responsibilities and motivations, not all of which are aligned. Some of the major ministries engaged with oversight of and regulations concerning Chinese companies’ overseas investments include:

● National Development and Reform Commission (NDRC)
Sometimes referred to as a “supra-ministry”, the NDRC coordinates macroeconomic policymaking across government. Primarily focused at home, it also plays a significant role in supervising investments overseas. The NDRC is reportedly tasked with approving Chinese overseas investments in natural resources that exceed USD 300 million. Secondly, its Department of Foreign Capital and Overseas Investment is in charge of “overall planning and coordination of the work in relation to ‘going global’”. In recent years, it has had some engagement with attempts to “green” the BRI, which we will examine in more detail in the next module.

● Ministry of Commerce (Mofcom)
Tasked with approving and regulating Chinese companies’ major investments overseas, Mofcom’s Department of Foreign Economic Cooperation must approve any projects involving state-owned enterprises, investments by any firms into natural resources, and any projects involving Chinese investment over USD 100 million. However, some studies indicate that Mofcom’s priority is in building and maintaining trust with state-owned enterprises, and it lacks capacity and expertise to effectively supervise overseas investments by Chinese companies. In addition, all Chinese importers and exporters must register with the ministry.

● Ministry of Ecology and Environment (MEE)
Primarily tasked with leading domestic environmental protection, since the first Belt and Road Forum in 2017, the MEE has been increasingly proactive in steering discussions around the “greening” of the initiative. The Foreign Environmental Cooperation Center is a sub-department of the MEE that is in charge of multiple schemes focused on this issue. It has generally been open to engaging with international organisations, including NGOs and foreign researchers, often finding itself aligned with or receptive to their positions. While it is outspoken at times, the MEE does not hold much power within China’s bureaucratic hierarchy. In 2021 and 2022, it released a series of guidelines on green development and the BRI, two of which were jointly released with the more influential Mofcom and NDRC. We will explore these important documents more in the next module.

● Ministry of Foreign Affairs (MFA)
While the MFA is by far China’s most internationally prominent and vocal ministry, it in fact holds relatively little influence over the shape and nature of overseas investments. It has no formal disciplinary powers over Chinese companies or financiers investing overseas, and relatively little engagement with ministries that have an environmental remit. It does, however, play a huge role in setting the tone of political and policy discussion within China and in China’s foreign relations. In regards to China’s relations with Global South countries, this is often shaped by the so-called “Spirit of Bandung” and the idea of Global South solidarity against an imperial west – foundational to Chinese foreign policy. It also sometimes act as a firefighter in instances of scandal or diplomatic crisis caused by Chinese investments overseas.

Case study: The Lamu coal power plant

The Lamu coal power plant was a proposed 1,050-megawatt project on the Kenyan coast. It involved a consortium of Kenyan and Chinese companies, most prominently the state-owned enterprise China Huadian, and, for a time, the American firm General Electric. The Chinese state-backed commercial bank ICBC was supporting the project via a USD 1.2 billion loan to the consortium.

This project was extremely controversial. A broad swathe of the local population were against it, for reasons including pollution, job losses and its proximity to Lamu Old Town, a Unesco world heritage site. In 2016, local NGOs and the local community took the project to court and in 2019 the Kenyan court ruled the project’s Environmental and Social Impact Assessment was insufficient.

Interestingly, in response to the court’s ruling, a number of the campaigners who had initiated the court case were invited to a meeting in the Chinese embassy in Nairobi. The ambassador at the time, Wu Peng, stated that Chinese companies will always abide by the legal ruling of the country they are operating in.

The case of the Lamu coal power plant shows how:

● Multiple stakeholders are involved in any one project. In this case, Chinese state-owned companies, local (Kenyan) and western companies, Chinese commercial banks, as well as local communities and civil society.

● Chinese companies are likely to be responsive to the enforcement of local laws.

● The Chinese embassy (part of the MFA) may step in to control damage, even if that means it stands against the business interests of Chinese companies.

● Chinese companies are on a learning curve when it comes to engagement with local communities and considering environmental risk.

Summary

In this module, we have learned how Global China is complex and diverse, with multiple motivations and actors shaping how the initiative unfolds. It has introduced some of the major actors from government, finance and the corporate world.

China can sometimes appear as a “black box”. But it is important to open up that box and understand the interests and dynamics at play in overseas investments. Doing so can help us comprehend Chinese actors on their own terms and in a more realistic manner. In the next module, we’ll dig deeper into China’s own environmental story, and how that is shaping the evolution of Global China to this day.

Questions

● How does knowledge of the different actors and their interests shape your understanding of Global China and/or specific infrastructure projects with Chinese investment?

● Based on this knowledge, how might you re-focus your research questions and/or approaches to policymaking in regards to Global China?