In this report, the authors examine Chinese foreign investments and financing in critical resources and energy infrastructure using a case-study approach involving investments and financing in coal power plants in Indonesia, Pakistan, and South Africa; electricity transmission and distribution infrastructure associated with the global energy interconnection initiative in Brazil, Chile, Argentina, Peru, and Mexico; and seabed mining globally.

China's Role in the Global Development of Critical Resources

Case Studies in Coal Power, Electricity Transmission, and Seabed Mining

Tom LaTourrette, Todd C. Helmus, Irina A. Chindea

ResearchPublished Nov 7, 2022

Cover: China's Role in the Global Development of Critical Resources
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China's extensive and expanding foreign investment and financing activities over the past two decades have garnered substantial attention and raised several concerns. Such concerns are diverse and include (1) paying insufficient attention to internal politics, global relations, environmental regulations and controls, and human rights, worker safety, and health records of host nations; (2) engaging in unfair contracting practices; (3) using overseas investments and financing to attain access and influence in strategic locations; and (4) using disinformation to influence markets.

For this report, the authors examined Chinese foreign investments and financing in critical resources and energy infrastructure for evidence of these types of behaviors. They used a case-study approach in which they examined investments and financing in coal power plants in Indonesia, Pakistan, and South Africa; electricity transmission and distribution infrastructure associated with the global energy interconnection initiative in Brazil, Chile, Argentina, Peru, and Mexico; and seabed mining globally.

The objective of the research was to characterize Chinese foreign investments and financing in critical resources and energy infrastructure, emphasizing the extent to which Chinese investors engaged in any of these concerning behaviors, and to develop recommendations to build capacity among host nations to diversify their sources of investment and financing in order to minimize the potential negative impacts of an overreliance on Chinese investments and financing. The research did not turn up many clear examples of such behaviors, but the authors identified several other topics of concern that have important implications for host nations.

Key Findings

Overall, China appears to have continued to reduce its support for overseas coal-fired power plants

  • In addition to China's cessation of financing new coal projects in 2020 and the high rate of project cancelations from 2017 to 2021, over 16,000 MW of planned coal power were shelved, canceled, or decommissioned in the months following President Xi Jinping's September 2021 announcement that China would not build new coal power projects abroad.
  • China's National Development and Reform Commission guidelines released in spring 2022 provided further evidence that China intends to cease support for new overseas coal power, improve and upgrade existing plants, and shift to a greater reliance on renewable energy.

Relatively few concerns emerged overall in relation to Chinese ownership or control over power transmission and distribution companies in Brazil, Chile, Peru, and Argentina

  • The concerns that are present are mostly related to the way projects are financed and the perception that Chinese state-owned enterprises have a competitive advantage that private competitors from other countries do not have in terms of access to finance under nonmarket conditions.

China's rapid development of advanced deep- and distant-sea and seabed mining exploration capabilities has raised concerns about its strategic military and commercial intentions

  • China's integration of research activities with military pursuits makes it difficult to ascribe seabed mining activities to purely research, commercial, or military purposes.
  • China has demonstrated a willingness to encroach on other seabed mining contract holders' areas.
  • China is endeavoring to maintain its global dominance of minerals processing capabilities.

Recommendations

  • The international community should promote renewable energy sources for industrial parks, seek greater clarity from China on plans for coal plants with financing and permits, and help host countries (such as Indonesia and Pakistan) transition from a dependence on coal.
  • Countries that are integrating green energy into their power grids need to consider developing legislation that governs the underlying integration process, including regulations of the power supply and demand across international borders and over long-distance power transmission lines, how to respond to potential blackouts, and how to approach unstable power supply and demand when violent conflict breaks out.
  • Overreliance on investors from one single country increases the economic vulnerability of the host country and, over time, might increase the country's vulnerability to foreign political pressures. Diversifying foreign investors fosters a healthy competition environment, allowing host countries to attract higher quality investments in the long run as foreign investors gain confidence that the country follows and respects free market practices.
  • It will be important for host and sponsoring nations and seabed mining authorities to monitor Chinese seabed mining technology development and exploration activity. Host and sponsoring nations and authorities can also require contractors to announce seabed mining exploration cruises in advance and can require operators to attest that all activity conducted in pursuit of seabed mining is entirely research or commercial in nature.
  • Host and sponsoring nations and home nations of mining operators should create incentives to develop their domestic minerals processing capabilities.

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RAND Style Manual

LaTourrette, Tom, Todd C. Helmus, and Irina A. Chindea, China's Role in the Global Development of Critical Resources: Case Studies in Coal Power, Electricity Transmission, and Seabed Mining, RAND Corporation, RR-A2096-1, 2022. As of April 30, 2025: https://www.rand.org/pubs/research_reports/RRA2096-1.html

Chicago Manual of Style

LaTourrette, Tom, Todd C. Helmus, and Irina A. Chindea, China's Role in the Global Development of Critical Resources: Case Studies in Coal Power, Electricity Transmission, and Seabed Mining. Santa Monica, CA: RAND Corporation, 2022. https://www.rand.org/pubs/research_reports/RRA2096-1.html.
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This research was sponsored by the U.S. Department of State's Global Engagement Center and conducted within the International Security and Defense Policy Center of the RAND National Security Research Division (NSRD).

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