Chinese firms are facing greater risks when they invest abroad because of rising tensions with the United States and growing security threats posed by Islamic State and al-Qaeda, a risk assessment report warns.
The report, released on Tuesday, said the challenges were particularly acute in Asian and African countries, which are at the centre of China’s global trade and infrastructure strategy, the “Belt and Road Initiative”.
It also said the US and its allies were expected to step up efforts to counter China’s growing influence in those countries. The report was published by Beijing-based Paitron Services and the China Overseas Development Association, a semi-official body under the National Development and Reform Commission.
“On the bilateral level, the US will continue to strengthen its trade protectionism, including through its economic ‘decoupling’ policy to circumvent competition from China and curb China’s development,” the report said.
“At the same time, it will step up its assault through the ‘technology cold war’ and introduce even more stringent investment review measures, export controls or extraterritorial jurisdiction tactics to contain China,” it continued.
“We must also be aware that even if there is a temporary truce in the current tense situation between China and the US in trade, the US will accelerate its Indo-Pacific strategy and New Africa strategy in the belt and road countries to curb China’s geopolitical influence in those countries.”
The report comes as Beijing and Washington are locked in disputes over trade, technology and security.
Washington has accused Beijing of using government-backed investments to promote its influence abroad, creating debt burdens for countries that they will struggle to repay. But Beijing has rejected the claim, saying its financing comes with no strings attached.
The report also warned that Chinese investments may face a heightened risk of terror attacks as global counter-terrorism efforts may be hampered due to increasing geopolitical competition among major nations.
Those risks could come from Islamic State fighters extending their influence around the world after defeats in Syria, as well as the resurgent al-Qaeda seeking to carry out attacks in South Asia, the Middle East and Africa.
China’s crackdown on Muslim minorities in the far western region of Xinjiang could also trigger “certain pushback by internal and external extremists to plot terror attacks targeting Chinese companies and Chinese citizens overseas”, the report warned.
Beijing has denied the existence of mass internment camps and forced political re-education in the region, but admitted that Xinjiang was facing severe threats from separatist and extremist forces.
After years of growth, Chinese overseas investment has lost momentum in the past two years, partly because of Beijing’s tightened control of capital outflows and closer scrutiny by Western governments of China’s controls on its critical assets and infrastructure.
Chinese investment in Southeast Asia, Africa and Latin America has also come under pressure amid environmental and social concerns and the “debt trap” it could create.
The report suggested Chinese companies should be more sensitive to political risks when they invest overseas, and improve relations with local communities to reduce their vulnerability.