What China’s Belt and Road Initiative means for other coffee-producing countries

  • China’s Belt and Road Initiative was launched in 2013, with trillions of dollars spent connecting over 150 countries
  • China traded 230,000 metric tonnes of coffee and related products in 2022 – more than twice the amount in 2017
  • While the BRI brings trade and infrastructure opportunities to coffee-producing countries, there are wider geopolitical implications to consider

TRADE HAS a substantial impact on a country’s economic, social, and political development. In this light, for better or worse, China has an interest vested in many different countries through its Belt and Road Initiative.

Launched in 2013, the Belt and Road Initiative (BRI) is China’s global strategy for strengthening trade routes through extensive investments in infrastructure development, including ports, railways, airports, telecommunications, power plants, roads, and bridges, spanning over 150 countries.

The “belt” connects China to other Asian countries, Russia, and Europe via a trans-continental land passage. The “road” consists of maritime routes that link China’s coastal regions to Asia-Pacific, the Middle East, Eastern Africa, Latin America, and Europe.

China has invested trillions of dollars in the BRI which has already begun to generate significant economic growth. Reports suggest the value of goods traded between China and BRI-partner countries has almost doubled over the last decade, amounting to over $2 trillion.

As part of this, coffee trade between China and BRI partners has surged. In 2022, China traded 231,200 metric tonnes of coffee and related products worth 9.35 billion yuan ($1.3 billion) – more than double the amount from just five years earlier.

With China’s coffee market booming, this volume can only be expected to increase – and its relationship with BRI-partner producing-countries is likely to grow deeper.

Infrastructure and trade opportunities

For coffee-producing countries, the benefits of being involved with the BRI are clear. Improvements to infrastructure and trade routes have streamlined coffee exports to consuming countries across the Belt and Road. In addition, this allows producers to more easily capitalise on the immense growth of coffee consumption in China.

“China will be the world’s second-largest coffee market in five to ten years, and probably surpass the US as the world’s largest market not long after,” says Stuart Eunson, managing director of Arabica Coffee Roasters (Beijing) Co., Ltd. “The coffee trade that will take place on the Belt Road, and linked to BRI projects, will be big.”

In Ethiopia, Chinese firms have constructed 70% of the new roads and a light rail in Addis Ababa – contributing significantly to the country’s economic resilience through BRI investments.

There has also been increased trade between China and BRI-partner countries in Central America. Following El Salvador’s 2018 diplomatic agreement with China and the subsequent BRI agreement, there was a surge in the country’s coffee exports and growing interest among producers to engage more with the Chinese market.

“For a lot of the coffee-growing countries, especially if a significant portion of their GDP is agriculture-related or is coffee-related, the ability to increase exports via China’s infrastructure projects is a good thing,” Stuart says.

Furthermore, China’s investments under the BRI extend beyond trade infrastructure – making significant investments in agriculture across various partner countries. Over the past decade, China has purchased arable land in 33 countries and acquired nearly 300 foreign companies in the agriculture sector, with a total expenditure of around $91 billion.

This shows just how deep China’s investments go in certain partner countries.

Coffee-producing countries will be affected by China's BRI

China’s growing influence

Beyond the coffee industry, on a geopolitical stage, the BRI is an excellent basis for China to forge trade deals with emerging markets. We’ve already seen this benefit the coffee industries of producing countries such as El Salvador and Ethiopia.

But what if this were to scale? While historically tea has been the beverage of choice in China, coffee consumption in the country is growing at a wild rate. Were this to continue, Chinese coffee brands would become increasingly influential in the coffee industry – and potentially even dictate market movements.

We already saw some evidence of this with the proliferation of mobile ordering throughout the pandemic, as companies like Luckin Coffee drove major international coffee companies to improve their digital services.

It can also be seen in the rising number of coffee events in China that increasingly attract international audiences. As the BRI makes the country even more prominent, its influence in the global coffee industry is only likely to grow.

What would a reality like this mean for coffee producers? Well, among other things, if consumption in China continued to grow untapped, the BRI could end up influencing trading dynamics in certain countries – potentially even driving pricing changes based on local demand.

However, it’s difficult to draw any final conclusions at this point in time. Ultimately, the BRI is a huge initiative aimed at driving Chinese investment in other countries and international organisations. In the context of the coffee sector, this likely translates into increased global influence. What exactly that will look like in the future remains unseen.

Coffee Intelligence

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