China's Tentacles - The Belt and Road Initiative

[Randy W]

Why China should watch out for impact of US infrastructure plans

• Build Back Better World plan focuses on intangible ‘values driven’ aspects to counter Beijing on rules-setting and Belt and Road Initiative, Chinese scholar notes
• Washington’s US$1 trillion building push at home another area to keep an eye on, Chen Weixin says

from the SCMP 

US President Joe Biden signs the infrastructure bill into law on November 15, 2021. Photo: AFP
 

Quote

 

The assessment from Chen, deputy director of the Institute of American Studies at the China Institutes of Contemporary International Relations (CICIR), came as he studied the US infrastructure agenda signed into law by Biden last November.

The plan will disburse billions of dollars to state and local governments over five years for much-needed upgrades to ageing roads, bridges, rails and airports, as well as improve public facilities such as water systems, high-speed broadband and power plants. Biden has said the drive would help the US regain its competitive edge over China.

Overseas, Biden has teamed up with G7 leaders to create the “Build Back Better World” (B3W) plan, aiming to offer hundreds of billions of dollars in loans to developing countries as a counter to China’s Belt and Road Initiative – a multi-trillion-dollar global infrastructure and investment programme launched in 2013 that has drawn criticism for its alleged debt trap risks and lack of transparency.

 

 

[Randy W]

China Reins In Its Belt and Road Program, $1 Trillion Later
After loans have gone sour and projects have stalled, Beijing is revamping its troubled initiative

from the WSJ

A construction site in Sihanoukville, Cambodia, part of China’s Belt and Road initiative, in 2019. BRENT LEWIN/BLOOMBERG NEWS

Quote

 

After nearly a decade of pressing Chinese banks to be generous with loans, Chinese policy makers are discussing a more conservative program, dubbed Belt and Road 2.0 in internal discussions, that would more rigorously evaluate new projects for financing, the people involved said. They have also become open to accepting some losses on loans and renegotiating debt, something they had been previously unwilling to do. 

Chinese President Xi Jinping once called the initiative “a project of the century,” but the overhaul exposes limits to his vision to reshape the global order. At a November meeting with senior officials, Mr. Xi noted that the international environment for Belt and Road was becoming “increasingly complex,” and stressed the need to strengthen risk controls and expand cooperation, according to state-media reports of the meeting. 

Nearly 60% of China’s overseas loans are now held by countries considered to be in financial distress, compared with 5% in 2010, according to economists Sebastian Horn, Carmen Reinhart and Christoph Trebesch, who have written about international debt.

The process could force Chinese banks to accept losses, something they’ve long opposed. For years, Beijing preferred to extend the maturity of troubled loans, a practice known in the finance industry as “extend and pretend.” That strategy risks prolonging countries’ debt woes rather than fixing them.

Beijing has also dialed down its rhetoric in state media. While it used to tout the economic benefits of Chinese lending for recipient countries, it now emphasizes managing risks and improving international cooperation, said Weifeng Zhong, a senior research fellow who tracks Chinese government propaganda at the free-market think tank Mercatus Center at George Mason University. “China is attempting a course correction,” Mr. Zhong said.

 

 

[Randy W]

China-Laos railway ‘caused even more hardship’

Laos is looking to a US$6 billion railway connected to China to pull its people out of poverty. But amid progress, thousands have been displaced.

from the SCMP on Facebook
https://www.facebook.com/scmp/videos/822593262379923/

[Randy W]

China bought land in the Czech Republic to build a spa resort and housing development –– part of an effort to make Beijing see the country as a "gateway to Europe." The delayed project is now a symbol of the pitfalls of China's overseas business model.

from the NY Times on Facebook 
https://www.facebook.com/nytimes/posts/pfbid0m1zmF225scTuMuJxZecXWdVDTk18y2A8QQE68DzRA8tpf45MaYx5uScyBCVN8hC3l

How China’s ‘Gateway to Europe’ Began to Narrow
The Czech Republic, which once courted Beijing in the hope of attracting investment, has soured on China, as have many other countries in Central and Eastern Europe, partly over the war in Ukraine.E

Quote

 

ight years ago, the Czech president, on a visit to Beijing, offered his country as “China’s gateway to Europe.” But the entry ramp for an expected flood of Chinese investment has narrowed to a patch of muddy land on the edge of a tiny Czech village.

The land was purchased in 2018 by a Chinese real estate company with ambitious plans for a sprawling spa resort and housing development. Getting construction started, however, has been so slow that local farmers now use the Chinese-owned property to grow corn.

 . . .

“Clearly, Chinese investors have not delivered what they promised,” he said.

Philippe Le Corre, a researcher at the Asia Society Policy Institute, said that democratic churn and generational change in countries that China previously looked to as friendly had disrupted once reliable support in Europe’s formerly communist eastern fringe.

“China, in my view, has lost Eastern Europe,” Mr. Le Corre said, adding that the Ukraine war had accelerated a decoupling of interests between Beijing and many Eastern and Central European countries

“The longer the war in Ukraine goes on the more they are losing friends,” he noted

 

 

[Randy W]

10 years of China’s Belt and Road

In September 2013, Chinese President Xi Jinping unveiled an ambitious plan for economic integration on a global scale. A decade since the launch of what’s known as the Belt and Road Initiative, around 152 countries have signed trade and infrastructure deals with China. Beijing says the initiative will benefit the entire world and lift millions out of poverty. But critics, including the US and major European countries, say the programme has been a debt-trap for developing countries and merely serves to expand Beijing’s influence abroad. Amid growing geopolitical tensions, Italy, the only major Western nation to sign up with the initiative, is considering pulling out of the deal.

 

[Randy W]

How China's Belt and Road Initiative is changing after a decade of big projects and big debts

from the AP via National Post

Quote

 

A total of 152 countries have signed a BRI agreement with China, though Italy, the only western European country to do so, is expected to drop out when it comes time to renew in March of next year.

“Italy suffered a net loss,” said Alessia Amighini, an analyst at the Italian think tank ISPI, as the trade deficit with China more than doubled since Italy joined in 2019.

China became a major financer of development projects under BRI, on par with the World Bank. The Chinese government says that more than 3,000 projects totaling nearly $1 trillion have been launched in BRI countries.

 . . .

China filled a gap left as other lenders shifted to areas such as health and education and away from infrastructure after coming under criticism for the impact major building projects can have on the environment and local communities, said Kevin Gallagher, the director of the Boston University Global Development Policy Center.

Chinese-financed projects have faced similar criticism, from displacing populations to adding tons of climate-changing greenhouse gases to the atmosphere.

 . . .

Many economists say that China did not make the bad loans intentionally. Now, having learned the hard way through defaults, China development banks are pulling back. Chinese development loans have already plummeted in recent years as the banks have become more cautious about lending and many recipient countries are less able to borrow, given their already high levels of debt.

 . . .

Future BRI projects are likely not only to be smaller and greener but also rely more on investment by Chinese companies than on development loans to governments.

 

 

[Randy W]

Is China’s Belt and Road Initiative running out of steam?

• A decade after the initiative started, the amount being invested in projects in Africa has dipped to its lowest level
• While observers say the strategy will continue, it seems ‘small and beautiful’ is its new catch-cry with developers

from the SCMP

Quote

 

Before the China Exim Bank grew cautious over the commercial viability of the project, it had advanced US$5 billion to build a 590km railway line. But China declined to fund the section to Malaba, at the Uganda border, also over commercial viability concerns.

 . . .

The Kenyan SGR is representative both of the types of developments under the Belt and Road Initiative – which has seen China pour billions into mega projects such as ports, highways, hydroelectric dams and railways – as well as of the contraction trend in Chinese lending for large projects.

In Ethiopia, China funded and built the US$4.5 billion Addis Ababa-Djibouti railway line, while in Djibouti, China poured money into its maritime sector, including the country’s ports and free-trade zones, and built its first overseas military base near the strategic Bab el-Mandeb Strait between the Gulf of Aden and the Red Sea.

 . . .

Funding for belt and road projects has also been thrown into doubt as China’s economy is still facing headwinds. Beijing unveiled a package of policies this summer to stem further downward risks after economic growth rose only 0.8 per cent sequentially in the second quarter. There have been signs that the economy has stabilised, but its long-term reliance has become a global concern.

But China has denied the “debt trap” allegations. Instead, it has pointed the finger at multilateral financial institutions and commercial creditors which account for more than 80 per cent of the sovereign debt of developing countries.

“They are the biggest source of debt burden on developing countries,” China’s foreign ministry said early this year.

As a response to China’s Belt and Road Initiative, the US and other G7 members last year launched the US$600 billion Partnership for Global Infrastructure and Investment (PGII) to “develop a values-driven, high-impact and transparent infrastructure” in low- and middle-income countries.

 

 

[Randy W]

Taliban to join Belt and Road scheme
‘We have everything they need,’ says Afghan minister on visit to Beijing

from the Bangkok Post

The Taliban’s acting commerce minister, Haji Nooruddin Azizi, speaks during an interview with Reuters at the Embassy of Afghanistan in Beijing on Thursday. (Photo: Reuters)

Quote

 

The Taliban administration wants to formally the Belt and Road infrastructure initiative and will send a technical team to China for talks, Afghanistan’s acting commerce minister said on Thursday.

Beijing has sought to develop its ties with the Taliban-run government since it took over in 2021, even though no other foreign government has recognised the administration.

Last month, China became the first country to appoint an ambassador to Kabul, with other nations retaining previous ambassadors or appointed heads of mission in a charge d’affaires capacity that does not involve formally presenting credentials to the government.

“We requested China to allow us to be a part of the China-Pakistan Economic Corridor and Belt and Road Initiative … (and) are discussing technical issues today,” acting Commerce Minister Haji Nooruddin Azizi told Reuters a day after the Belt and Road Forum ended in Beijing.

 . . .

Afghanistan could offer China a wealth of coveted mineral resources. Several Chinese companies already operate there, including the Metallurgical Corp of China Ltd (MCC) which has held talks with the Taliban administration, as well as the previous Western-backed government, over plans for a potentially huge copper mine.

“China, which invests all over the world, should also invest in Afghanistan. We have everything they need, such as lithium, copper and iron,” Azizi said. “Afghanistan is now, more than ever, ready for investment.”

 

 

 

Edited October 20, 2023 by Randy W (see edit history)