A report published by the Green Finance & Development Centre at the Fanhai International School of Finance (FISF) at Fudan University has found that Iraq received roughly $10.5bn in construction contracts from China’s Belt and Road Initiative (BRI) in 2021.

According to the report, this makes Iraq the biggest beneficiary among BRI countries, followed by Serbia at $6.8bn and Indonesia at $2.4bn worth of contracts. 

While Asian countries still receive the largest share of Chinese BRI investments, the report notes a “strong shift” towards African and Middle Eastern countries in 2021. Investments increased in this region from 8% in 2020, to roughly 38% of its total engagement. In particular, there was a 360% surge in investments into Arab and Middle Eastern countries.

Iraq is one of the main recipients of the BRI’s oil and gas-related investments and projects. Total oil engagements stood at $6.4bn in 2021, the report estimates, while gas-related investments jumped from $1.8bn in 2020 to to $4.5bn last year. Other recipients of fossil fuel investments included Tanzania, Kuwait, Russia and Thailand.

Iraq moved up to become the third-most important partner in the BRI for energy engagement between 2013 and 2021, after Pakistan and Russia. China and Iraq are working together to build the $5bn Al Khairat oil power plant and to develop the Mansuriya gas field.

Last year, China-based Power Construction Corporation of China announced plans to deploy two gigawatts of solar power capacity in Iraq. In the first phase, it will build 750 megawatts of photovoltaic parks in the country. It is expected to cost approximately $3.7bn.

The report highlights that with some of these projects, “implementation remains to be seen”, particularly in the solar project where the price for the solar power project “seems unusually high if no energy storage facility is included”.

However, the report maintains that better opportunities lie in the green transition rather than fossil fuel investments. “We continue to see better opportunities in investing in smaller projects that are faster to implement, e.g. in solar and wind, and an opportunity to scale back large and often loss-making projects, e.g. in coal,” it reads

Elsewhere, it expects an acceleration in green projects in the BRI for 2022 and for Chinese investments to focus on transport in Asia, resources and other strategic assets, such as in ports.

Iraq joined the BRI in 2019 under former prime minister Adel Abdul-Mahdi, who described his visit to China as heralding a “quantum leap” in Sino-Iraqi relations.

The report uses data from China Global Investment Tracker and its own data research. It defines BRI countries as those 142 countries that have signed a cooperation agreement with China to work under the framework of the Belt and Road Initiative as of the end of 2021.

This article first appeared in the February/March 2022 print edition of fDi Intelligence.