China's Tentacles - The Belt and Road Initiative

[Allon]

One of the risks not mentioned is the cost of containers on that railroad. Our company ships to Afghanistan and Syria but has to go circuitous routes to avoid the war. But in doing so, there are little "fees" a shipper must pay along the way, and that is multiple times. They are not small. And those little blue circles on that map are familiar to me as part of our supply chain. And Greg, western China, Kazakhstan and Krzystan are also among them, the latter being the worst. Other countries, small ones are just as bad.

 

The old term is baksheesh If the Chinese can avoid those fees, Kubliai Khan will roll over in his grave, wherever that is.

[Randy W]

in the Shanghaiist

 

First freight train linking China and the UK arrives back in Yiwu after 12,000 kilometer journey

 

http://shanghaiist.com/attachments/alexlinder/train_back.jpg

 

After leaving China back at the start of January this year and making it all the way to London in just 18 days, the first freight train linking China with the United Kingdom arrived back in the Chinese manufacturing hub of Yiwu on Saturday.

The journey from the UK capital took 19 days, traveling over 12,000 kilometers and passing through seven other countries on the way. The train was loaded with 32 containers, mostly filled with maternity products and soft drinks.

 

 

[Randy W]

The US weighs in at the Belt and Road Summit - in the SCMP

 

US warms up to ‘Belt and Road’ business potential

But success of the China-led initiative rests on transparency and private sector input, Washington warns

 

US envoys at the “Belt and Road Initiative” summit in Beijing said on Sunday that their country aimed to make the most of the grand plan’s business opportunities, walking back from US ­President Donald Trump’s antiglobalisation rhetoric and Washington’s earlier wariness.

Foreign policy analysts said the shift in the US’ position reflected fears in Washington of being left out in the cold as other countries climbed aboard the China-led project.

 

 

[Greg.D.]

NY Times reports, too, on the B&R summit. Both articles and other reporting reference the fact that, so far, all such projects exported as "aid" from China tend, actually, to be overflow basins for China's engineers, raw materials and technology; even most of the laborers on the projects are shipped in to the foreign countries. Also, the ironies that China wants to go around the world and do business but still maintain roadblocks to doing business in China:

Xi Jinping Positions China at Center of New Economic Order

Among the attendees were Britain’s chancellor of the Exchequer, Philip Hammond, and Matthew Pottinger, senior director for Asia at the National Security Council in Washington.

In remarks to the forum, Mr. Pottinger urged China to insist on transparency in government procurement as projects began. “Transparency will ensure that privately-owned companies can bid in a fair process, and that the cost of participating in tenders will be worth the investment,” he said.

American firms were eager to work on the projects, he said.

.........

The Indian government said in a statement on the eve of the forum that the initiative risked “unsustainable debt burden for countries,” a worry expressed by some Western economists who have studied the program. China is not giving aid, they say, but is asking countries to assume debt from Chinese banks to pay for the infrastructure.

Some officials from the United States and Western Europe contend that China is spending abroad and corralling others to join it while keeping important sectors of its huge market at home off limits to foreign investors.

“The opening up of China for foreign businesses is still timid,” said Joerg Wuttke, the former head of the European Chamber of Commerce in China.

[Randy W]

from Forbes, dated OCT 17, 2017

 

China's Challenges Abroad: Why The Belt & Road Initiative Will Succeed

 

 

Over the past five years, Chinese companies are now running no less than 77 sea terminals in dozens of countries, building high-speed rail corridors across Southeast Asia and potentially even Europe and Russia, funding the construction of highways in Pakistan, bridges in Bangladesh, power plants in too many countries to list here, erecting new cities and/or special economic zones in Sri Lanka, Oman, Myanmar, Malaysia and Abu Dhabi, dug a vast array of oil and gas pipelines stretching across Central Asia, Russia and Southeast Asia, and established a 35-line network of direct freight trains connecting the manufacturing centers of central and western China with cities in Europe.

In developing this infrastructure, China has shown that they can vastly outcompete other companies and governments to get contracts. Their strategy is simple: they overpay. But we have to remember that the economic principles of the BRI are not those that are at play for today, but those of 10, 20, 50 years from now. China is apparently investing in a future world where all roads run through Beijing, and only once that's set up will talks of profit and loss be applicable.

 

. . .

 

There is no overarching structure, no membership protocols, no moralistic browbeatings, no predefined set of standards that BRI participants need to uphold in unison, and deals that are made do not need to be watered down to the lowest common denominator of an established group. Each country or bloc negotiates on their own terms, and deals can be structured in accordance with its particular parameters. When things go awry, China can renegotiate with the conflicting party directly rather than having a situation that puts an entire multilateral network at risk.

 

. . .

 

Simply put: the BRI is built to actually work.

 

[Randy W]

The Global Times vs. Time

 

Time magazine

 

China Is Loaning Billions of Dollars to African Countries. Here's Why the U.S. Should Be Worried

 

 

The 2018 Beijing Summit of the Forum on China-Africa Cooperation (FOCAC) is scheduled to be held on September 3-4 in Beijing.

 

 

The upcoming Forum on China-Africa Cooperation is sure to include an eye-popping announcement of billions of dollars more in Chinese financing to build infrastructure across the continent. But these massive loans can come with steep and opaque conditions.

 

It’s tempting for Americans to think this is not our problem. But as African countries sink deeper and deeper into Beijing’s carefully laid debt trap, the United States could pay a steep cost in reduced cooperation on counterterrorism and job creation.

 

Chinese debt has become the methamphetamines of infrastructure finance: highly addictive, readily available, and with long-term negative effects that far outweigh any temporary high. This is particularly true in sub-Saharan Africa, where China has become the largest provider of bilateral loans. Forty percent of sub-Saharan African countries are already at high risk of debt distress; by having so much debt concentrated in the hands of a single lender, they are dangerously beholden to their supplier.

 

Why does this matter? Because in Africa and elsewhere, governments have secured massive loans from Beijing using strategic assets—such as oil, minerals, and land rights— as collateral. If borrower nations find themselves unable to repay the loan, China can claim the strategic asset. Sri Lanka recently learned this the hard way and handed over control of the port of Hambantota, giving China a strategic foothold along a busy trade waterway.

 

 

 

The Global Times response -

 

B&R accusations groundless, but problems need to be addressed: analysts

 

 

Between 2015 and June 2018, Chinese companies have undertaken 21,284 contracts for projects in more than 60 countries and regions worth a total of $410.78 billion as part of the B&R, according to data from the Ministry of Commerce. Data for before 2015 is not available.

 

While the projects have greatly helped these countries to address their outdated infrastructure and lack of funding, they have also been billed by some as a "debt trap" set up by China to gain influence in these countries.

 

Liu Ying, a research fellow with the Chongyang Institute for Financial Studies at Renmin University of China, said that this argument is baseless and is propelled mainly by some Western countries, particularly the US, that are wary of the fast progress of the B&R.

 

"The debt issue is basically non-existent. Look at Africa; they do not have debt issues that are as serious as some have suggested. Yes, they do have debts, but so do many countries around the world," Liu told the Global Times on Monday.

[Randy W]

Belt and Road revisited, from Bloomberg - this is probably a more realistic assessment

 

Needed for China’s Belt and Road: a Roadmap

Right now, like most Communist Party campaigns, it’s sprawling and uncoordinated.

 

 

 

What many outsiders have missed is that the Belt and Road is a vision, not a plan. . . .

This modus operandi is typical in China, where the central government often issues broad directives and expects lower-ranking officials to figure out how to fulfill them. The hallmark of such communist-style mass campaigns is that everyone pitches in with frenzied enthusiasm and little coordination. Vast resources and human capital are mobilized toward one goal. Banks, businesses and officials across the country participate en masse, rather than dividing up responsibilities, as local governments rush to meet what they see as their superiors’ wishes (or, at least, to sneak through their pet projects).

 

. . .

 

What’s more, this particular campaign is a high-level, national effort on which Xi has staked his personal legacy. It’s therefore mobilized not only all segments of the party-state bureaucracy and media, but also Chinese society, including private companies, universities, think tanks and consultancies.

 

. . .

 

The real danger is different: The Belt and Road has become a global investment campaign on steroids, where too many people are too eager to spend and build without sufficient care. The initiative may yet deliver growth opportunities for many developing countries. But, for it to encourage “common prosperity” instead of debt and bad publicity, China must exercise greater selectiveness, coordination and transparency. The Belt and Road isn’t a master plan: It needs one.

 

[Randy W]

from the SCMP

 

China invites Japan along belt and road as Shinzo Abe makes landmark trip to Beijing

• Japanese prime minister pledges to elevate bilateral relationship to a ‘new dimension’
• Beijing and Tokyo must work together as ‘problems that cannot be resolved by one country alone multiply’

 

With Donald Trump in the White House, China and Japan have made concerted efforts to mend ties in recent months. Trump’s “America first” drive has raised fears among Washington’s Asian allies, including Tokyo, that the superpower might not maintain its strong presence in the region.

Trump’s trade war has also pushed China to consolidate ties with its neighbour to head off US attempts to isolate Beijing.

But the rapprochement between the two countries has divided Japan, with some questioning if it is worth risking upsetting the United States, one of the island nation’s key allies.

 

 

[Randy W]

first of a 4 part series in the SCMP

 

Dominance or development? What’s at the end of China’s New Silk Road?

• Beijing’s global infrastructure drive will be in the spotlight this week when dozens of heads of state converge on the Chinese capital for the second Belt and Road Forum
• In the first of a four-part series, we look at what might be the real purpose of the massive programme

 

 

 

 

“A significant part of the Belt and Road Initiative is projecting the rejuvenation of China inherent in Xi’s ‘Chinese dream’,” Steve Tsang, director of the SOAS China Institute at the University of London’s School of Oriental and African Studies, said. “It is not about solving the world’s problems but about making Xi’s China appear great and successful.”

 

. . .

 

The official belt and road website demands English translations refer only to it as an “initiative”, forbidding use of “strategy”, “project”, “programme”, “agenda”, or other related terms to describe the scheme.

. . .

“China is the only country today that offers a blueprint for global development and also the tools for its execution. It is easy to criticise the plan and point out dangers and deficiencies but the question is who else is offering solutions? And who else is willing to put resources behind them?

“With a third of humanity still lacking access to basic infrastructure, including electricity, those who oppose infrastructure development on any ground are condemning the poorest people of the world to eternal poverty. This is immoral.”

The world was more likely to become multipolar than seeing the return of bipolarity, with China on par with the US as dominating powers, he said.

“One lesson from that old world is that great power alliances were solidified with royal marriages. Today it is transboundary infrastructure that solidifies relations. China understands that infrastructure is the connective tissue of its future sphere of influence. Pipelines, rail and motorways are the royal marriages of our time.”

Edited April 22, 2019 by Randy W (see edit history)

[Randy W]

So BRF I guess is the Belt & Road Forum . . . from the SCMP

 

China’s Belt and Road Forum ends with more support and US$64 billion in new deals, but is it job done for Beijing?

• Xi Jinping wraps up three-day event with signing of shared promise to make global trade and infrastructure plan more diversified, financially responsible
• But as nations eye up the potential economic benefits of the Belt and Road Initiative, analysts question if it can live up to the hype

 

 

Despite growing criticism of China’s “Belt and Road Initiative” from the United States and its allies, the message from Beijing on Saturday was clear: the multibillion-dollar trade and infrastructure development plan is alive and well and gaining support.

As the second Belt and Road Forum drew to a close, the leaders of 37 countries joined Chinese President Xi Jinping in signing a joint communique promising to work together as the global project enters its next phase.

At the inaugural forum in 2017, just 29 nations made such a pledge, with Portugal, Austria, the United Arab Emirates, Singapore and Thailand among the new signatories this time around.

Aside from the political support shown at the event, Xi announced at a press conference that more than US$64 billion worth of deals had been signed over the three days and that 283 “practical outcomes” had been achieved.

 

 

[Randy W]

from the SCMP

 

China’s belt and road cargo to Europe under scrutiny as operator admits to moving empty containers

• China Railway admitted the existence of the problem in an interview with the state-run ‘Global Times’ last week but insists it has improved recently
• Cities and provinces were looking to benefit from subsidies offered by both the local and national government as part of Xi Jinping’s plan to boost global trade

 

 

 

 

 

 

China Railway admitted the existence of the problem in an interview with the state-run Global Times last week, but insisted that it had largely been eradicated in 2018 after new rules were introduced limiting the number of empty containers allowed to just 10 per cent per train.

 

The company said that of all containers heading to Europe in 2018, only 6 per cent were empty, compared to 29 per cent for eastbound trains. In the first half of 2019, they said, the ratios had fallen to 2 per cent and 18 per cent, respectively.

Jonathan Hillman, a senior fellow at the Centre for Strategic and International Studies (CSIS), a Washington-based think tank, said the problem of empty containers “is consistent with the belt and road’s emphasis on short term political gains at the expense of longer-term economic fundamentals”.

“These routes are an effective advertising device for selling the belt and road’s overland dimensions – which despite the hype, will not challenge the dominance of maritime trade,” said Hillman, who closely monitors trade flows between China and Europe.

. . .

Last year, rail only carried 1.3 per cent of trade between China and the European Union by volume and 2.6 per cent by value despite being usually cheaper than air and faster than sea transport, according to European Commission.

Sea transport that offered more competitive prices dominated 90 per cent of overall trade by volume and 60 per cent by value, while air freight used for cargo requiring rapid delivery accounted for 2 per cent by volume and 27 per cent by value.

 

[eseum]

I finished a book called "The New Silk Roads: The Present and Future of the World" by by Peter Frankopan. It is a followup to his previously published "The Silk Roads." He talks a fair amount about the Belt and Road initiative. The numbers are phenomenal and it is a pretty good read.

[Randy W]

the debt trap - from the South China Morning Post

 

Sri Lanka wants its ‘debt trap’ Hambantota port back. But will China listen?

• Critics view the deal as a symbol of the problems associated with Chinese lending and the Belt and Road Initiative, but Beijing so far shows little sign of changing its mind
• Newly elected President Gotabya Rajapaksa promised on the campaign trail to revisit the agreement, but observers say he will need to offer China something else in return

[Greg.D.]

Worth reading that article. A primer on corruption.

[Randy W]

from the NY Times

 

Poor Countries Borrowed Billions from China. They Can’t Pay It Back.

 

Nations want Beijing to forgive or renegotiate loans as their economies suffer. Doing so would be costly. Saying no could hurt China’s global image.

 

Similar requests have come flooding in to Beijing from Kyrgyzstan, Sri Lanka and a number of African nations, asking to restructure, delay repayments or forgive tens of billions of dollars of loans coming due this year.

With each request, China’s drive to become the developing world’s biggest banker is backfiring. Over the last two decades it unleashed a global lending spree, showering countries with hundreds of billions of dollars, in an effort to expand its influence and become a political and economic superpower. Borrowers put up ports, mines and other crown jewels as collateral.

Now, as the world economy reels, countries are increasingly telling Beijing they can’t pay the money back.

China faces difficult choices. If it restructures or forgives these loans, that could strain its financial system and infuriate the Chinese people, who are suffering under their own slowdown. But if China demands repayment when many countries are already angry with Beijing over its handling of the pandemic, its quest for global clout could be at risk.

“China is politically on the back foot,” said Andrew Small, senior fellow at the German Marshall Fund. Should China foreclose on those loans, he added, “they would be taking over strategic assets in countries that now can’t afford to feed their people.”

China’s global reputation is on the line. Countries are openly questioning its role in the coronavirus outbreak, after Chinese officials in January initially downplayed the severity and contagiousness of the disease. Beijing is selling and donating masks and equipment to help its battered image. A misstep could deal its global ambitions a major setback.

At the same time, the financial stakes are huge. The Kiel Institute, a German research group, pegs China’s lending to the developing world at $520 billion or more, with the vast majority doled out in the last few years. That makes Beijing a bigger lender than the World Bank or the International Monetary Fund.