Posts Tagged ‘One Belt One Road’

China: Could the world’s new superpower be on the verge of collapse? — China must step up

June 21, 2017

By Paul Wilson   news.com.au

COULD China be witnessing the beginnings of its own end?

The vast majority of commentators say chances are slim. Most are as dismissive of China-sceptics as Nikita Krushchev was of USSR doom-mongers in the late fifties. Yet within three decades of “We will bury you!” Krushchev was proved wrong. History was not on his side and the only grave being dug was for the Soviet Union itself.

But, surely, this is the beginning of the great “Chinese Century”? The People’s Republic is completely different to the USSR? It’s all about economics now? Well, yes and no …

Historical map of China. Picture: Thinkstock

Historical map of China. Picture: Thinkstock Source:News Limited

A ‘NATION STATE’?

Pull out a map of the Orient. Not a Chinese Communist Party standard issue, but one from history. Whether you go back a hundred years or a thousand, the image that greets you is strikingly similar: a far, far smaller “China”, centred on the old Han Chinese heartlands. Much of what lies within “Chinese” borders today was not so long ago a mosaic of very separate, non-Chinese states, only absorbed by force.

Travel around China, and as you leave the booming cities of the east, the picture becomes clear. Fewer people look “Chinese”, speak Chinese (either Mandarin or Cantonese), or act “Chinese” (mosques instead of Mao, chortens instead of chopsticks). It is not so much “ethnic minorities” living in “autonomous zones”, more non-Chinese majorities whose homelands have been swiped from beneath their feet. The contrast with Beijing and Shanghai is stark, despite millions of Han Chinese families being forcibly relocated to live in these regions, or bribed with government jobs.

If it was inevitable Soviet Republics like Kazakhstan and Uzbekistan would one day seek self-determination, is it so hard to believe Tibetans and Uighurs won’t do the same? Or that Inner Mongolians wish reunification with their “Outer” cousins?

Prime Minister Malcolm Turnbull inspects the troops with Premier Li Keqiang outside Beijing’s Great Hall of the People on his first official visit to China. Picture: Stephen Cooper

Prime Minister Malcolm Turnbull inspects the troops with Premier Li Keqiang outside Beijing’s Great Hall of the People on his first official visit to China. Picture: Stephen CooperSource:News Corp Australia

THE WAR IS OVER?

China may not face the threat of a cold war, yet it is still embroiled in major conflict. Trump, Putin, even Kim Jong-un could be roll-called as potential adversaries, but foreign opponents are the least of Party Leaders’ worries. The reality is they are already at war on three home fronts:

Xinjiang

This is the Mandarin name for the enormous province that makes up northwest China. However, a significant minority of the region’s (primarily Muslim) inhabitants use “East Turkestan” or “Uighurstan”. The area’s history is of mixed fortune but for much of the past it was made up of rich independent kingdoms like Khotan or Kashgar. As recently as 1949, East Turkestan existed as an independent republic. Today, the largest ethnic group is the Uighurs, and many are in conflict with Beijing. Suicide bombings, embassy attacks and plane hijackings are regularly carried out by groups demanding their own nation state. A 2014 attack at the Kunming Railway station killed 31 and injured 141.

Tibet

The Tibetan struggle may be the most peaceful “war” on the planet, but this does allow the Dalai Lama to retain broad international sympathy. Historically, Tibet also included much of the modern Chinese provinces of Qinghai and Sichuan, and ethnically and culturally Tibetans have always been completely at odds with their Chinese neighbours. This whole region is still primarily “Tibetan”, despite 150,000 Tibetans living in exile. Recent protests have turned violent, sometimes deadly.

Taiwan

Technically, China is not at war with this nation but that is only because Taiwan has never formally declared nationhood. If Taipei does, Beijing has vowed it will launch an immediate military attack. As recently as March 2017, Taiwan’s Defence Minister talked of “warfare” against mainland China. With hostilities in the South China Sea steadily increasing, and Washington using Taiwan as a bargaining chip in its negotiations with Beijing, developments in Taipei could yet be a major catalyst for change.

Workers install the ‘Golden Bridge of Silk Road’ outside a summit showcasing President Xi Jinping's signature foreign-policy plan ‘One Belt, One Road’. Picture: AP

Workers install the ‘Golden Bridge of Silk Road’ outside a summit showcasing President Xi Jinping’s signature foreign-policy plan ‘One Belt, One Road’. Picture: APSource:AP

ECONOMICS OR POLITICS?

If economics as much as politics proves instrumental in the unravelling of modern China, Hong Kong holds the key. Beijing has made every effort to integrate the former colony into the mainland economy, but fundamental obstacles remain. Uncompromising protests frequently denounce Beijing for reneging on promises, with many “islanders” demanding full democratic rights and an end to the one-party system.

Dissent is spreading across southern China and many protesters, like their Hong Kong counterparts, are Cantonese — or Hokkien-speaking Han. Those south of the Yangzte River may share ethnic and cultural ties with their Mandarin-speaking cousins in the north, but they have long considered themselves different. Traditionally this might have only been a preference for rice over noodles, but increasingly debate is about more than what food’s on the table.

Will China collapse? Ask this guy.

Will China collapse? Ask this guy.Source:AP

PAPERING OVER THE CRACKS

The world’s new “superpower” hopes investment in the provinces will convince locals that life under CPC rule is preferable to any breakup. In particular, President Xi Jinping is staking billions on his “One Belt, One Road” policy, aimed at creating a “New Silk Road” to bring trade and prosperity. Nevertheless, the economy is increasingly volatile. Could a 9/11-type terrorist event cause it to implode? Under such circumstances, might the Han Chinese call for their Uighur, Tibetan and Mongol “compatriots” to be cut loose? This is a country famous for turning its back on the outside world.

Tellingly, the Kremlin also ordered mass migrations. Stalin sent thousands of native Russians to “modernise” his newly created Soviet Republics, yet following the breakup of the USSR the vast majority quickly returned. Successive leaders tried similar “economic solutions” but the likes of Perestroika and Glasnost proved too little too late.

Will China collapse tomorrow? Probably not. In the next 30 years? Ask Mikhail Gorbachev.

Paul Wilson has been travelling through Central Asia and China since the late 1990s. His book, The Silk Roads (Trailblazer), is in its third edition. He is a regular speaker at the UNWTO’s Silk Road Programme and Open Central Asia Literary Festival.

http://www.news.com.au/finance/economy/world-economy/could-the-worlds-new-superpower-be-on-the-verge-of-collapse/news-story/46a688923e23434cb8bb32e8fa576b74

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China’s “Belt and Road” plan would be the world’s largest infrastructure program.

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Hong Kong firms join forces to make deals under Silk Road plan

June 19, 2017

Companies will draw on their experience to initially establish infrastructure projects and industrial parks in Thailand and Vietnam

By Josh Ye
South China Morning Post

Monday, June 19, 2017, 8:48pm

Hong Kong companies will form a consortium to build infrastructure projects and industrial parks in Thailand and Vietnam under mainland China’s Silk Road project, the Trade Development Council says.

Council president Vincent Lo Hong-sui said over 40 business leaders from Hong Kong and Shanghai formed a delegation while visiting the two countries last month and met both prime ministers.

He added that this was one of many steps in further involving Hong Kong companies with the “One Belt, One Road” initiative.

Lo said the statutory body was now forming “a consortium of local companies” to help them enter these developing markets as a collective force.

“We are looking to build infrastructure projects and industrial parks in countries under the belt and road initiative.”

The initiative was launched by Beijing in 2013 to promote the building of railways, roads, power plants and other infrastructure projects in 60 countries from Asia to Europe on its old Silk Road to promote trade and economic growth.

The council has identified eight countries out of the 65 under the scheme as the initial destinations for Hong Kong investment – Vietnam, Thailand, Indonesia, Saudi Arabia, United Arab Emirates, Poland, Hungary and the Czech Republic.

Nicholas Kwan, research director at the council, said Hong Kong investors were seasoned in managing supply chain systems across countries.

 Vincent Lo says numerous multibillion-dollar deals will be closed this year. Photo: Sam Tsang

Lo said the development level of many of the belt and road countries reminded him of mainland China three decades ago.

“Hong Kong investors have garnered a lot of practical experience in developing mainland China,” he said. “This experience is unique and will definitely benefit other countries.”

He said the council aimed to close several deals this year and estimated some projects were worth more than US$10 billion.

Lo added that chief executive-elect Carrie Lam Cheng Yuet-ngor had told him the next administration would fully support the council in furthering deals with countries linked to the trade initiative.

The council also announced that it would host its second belt and road summit in September, which looked to introduce more concrete plans for local firms to enter relevant countries.

http://www.scmp.com/news/hong-kong/economy/article/2099050/hong-kong-firms-join-forces-make-deals-under-silk-road-plan

Chinese loans may put Bangladesh in debt trap

June 18, 2017

BY  DIPANJAN ROY CHAUDHURY

NEW DELHI: Lanka’s estimated national debt is $64.9 billion, of which $8 billion is owed to China.

China is arm-twisting Bangladesh to convert soft loans it offered -during President Xi Jinping’s visit to Dhaka last year -to commercial credit (incurring higher interest rates) with apparently no headway into projects for which the amount was earmarked.

Bangladesh, however, has resisted the move to change pattern of loans for the projects which are part of grandiose OBOR project connecting China with rest of Asia, Africa and Europe. Higher interest on Chinese loans could push Bangladesh into a debt trap like Sri Lanka.

It has been learnt that the Chinese proposal was made by Li Guangjun, economic and commercial counsellor at the Chinese Embassy in Dhaka, during a recent meeting of the Sino-Bangladesh Joint Economic Council. However, China later showed signs of softening its stance in the face of Opposition from Bangladesh, according to Dhaka-based persons familiar with the issue. Converting soft loans into commercial credit means Bangladesh will have to pay higher interest for the loan amount, Bangladesh officials told ET from Dhaka over phone.

Bangladesh signed $25 billion deals with China for nearly two and a half dozen projects during President Xi Jinping’s visit to Dhaka in October last year. Chinese officials have claimed that Beijing had not promised that all the projects signed between the two sides during the president’s visit would be implemented on the G2G (government to government) basis. The Chinese officials believe that Bangladesh could jointly fund the projects. But Bangladesh government officials argue, when the agreements are signed at the level of leaders, especially in the presence of two heads of government, the loans are treated as soft loans.

Compared to the Chinese approach India’s support of $ 7.5 billion Line of Credit for slew of development projects are offered at a concessional rates. Interest rates of India’s Line of Credit to the neighbouring countries are as low as one per cent or even less in some cases. China told Bangladesh that it a detailed list outlining how much of the $25 billion for 34 projects would be treated as soft loans, how much as commercial credit and how much to be contributed by the Bangladesh government.

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China is still the economic hope of the world

June 17, 2017

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Xinhua | Updated: 2017-06-16 11:02

John Brumby, currently serving as the chairman of the Australia China Business Council, spoke to Xinhua on the sidelines of a national forum in Canberra on Thursday that with the G20 on the horizon, the current global economic situation is “sluggish”.

“Europe has picked up, the latest quarterly growth figures for Europe were quite good. So, Europe could be looking at two percent growth or thereabouts. The United States has low unemployment, and growth is still a question mark,” Brumby said.

The former premier made it clear that in terms of the global economic growth of not only the G20, but all the nations, China is leading the way and currently accounts for the “best part of 40 percent of all new global growth”.

“So, although China’s growth rate is 6.5 to 6.7 percent, as the second largest economy in the world, the biggest in purchasing power parity terms, that growth adds 40 percent to world economic growth,” Brumby said.

“Which means China is still the economic hope of the world.”

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As a seasoned expert on the global economic stage, Brumby said that the G20 will continue to play a major role in moving forward in terms of the global governance mechanism, and suggested that unity is the key to future prosperity.

“It’s crucial and the key thing with countries right around the world, is if you can get them all kicking in the right direction at the right time, if you can get China, Europe, and the United States all ticking along, it’s happy days,” Brumby said.

The role of China’s economy at the global level is crucial, according to Brumby who said that he has always remained “optimistic” about the state of economic affairs in China despite the views of certain analysts.

“I’ve seen over 20 years a lot of people talk down the Chinese economy, the growth is going to stop, they can’t keep going, there will be a credit squeeze and so on,” Brumby said.

“But, the drivers of their growth, the driving force of the middle class, the shift to services, the shift to consumption, the continued urbanisation, all of these things are automatically driving a very strong growth figure,” he said.

It is this overwhelming economic performance that Brumby believes will lead to a return to the top of the global economic standings for China, placing the nation on the course for an ever larger role in economic governance worldwide.

“It is going to become more and more important. As I have said, China in purchasing power parity terms is now the biggest economy in the world, so this is a shift in the world order,” Brumby said.

“As Henry Kissinger would say, we are going back to where the world has been for most of its modern history, when China was the biggest economy.”

This will not come without challenges, and Brumby believes that China has to continue to develop even further upon its already positive strides with the Belt and Road Initiative and the Asian Infrastructure Investment Bank (AIIB).

“China will have to feel its way a little. We have seen new initiatives obviously, the Belt and Road, the AIIB, these are all instruments to drive and encourage free and global trade, and free and global investment. So they are very positive,” Brumby said.

“So I think, if you look at President Xi’s speech at Davos, it was very positive about openness, about open trade, about open investment, and so this is what the world economy needs,”

“China has got an important role to play, and so does Australia,” he added.

Brumby remained adamant that these initiatives and partnerships that China is developing around the world will, in his opinion, lead to a future that is markedly more positive not only economically, but on a variety of other levels.

“From my point of view, the Belt and Road leads to more economic infrastructure, and more linkages between nations particularly in the Asia Pacific and more traded goods and services. So, it is unarguable this will lead to greater economic growth,” Brumby said.

“The greater economic growth will lead to more jobs, more opportunities, better education outcomes, better healthcare for families, and more people lifted out of poverty,”

The Regional Comprehensive Economic Partnership, or RCEP, will continue to evolve, but Brumby pointed to the AIIB as another way in which the future will be shaped through growth opportunities for China and beyond.

“AIIB also will mean more funding and more infrastructure, and that in turn can drive productivity improvements and more trade,” he said.

“I’m a big believer in more openness and more trade, and all of those things, the Belt and Road, AIIB, and others, are heading in that direction.”

Thai Junta to Invoke Executive Order to Kick-Start $5 Billion Rail Project With China — Angering Rights Groups, Environmentalists, Activists Worried About Government Debt

June 13, 2017

BANGKOK — Thailand’s prime minister will invoke an executive order to allow construction to start on a $5.5 billion railway project with China, which forms part of Beijing’s regional infrastructure drive but has been beset by delays.

The high-speed link, in theory a centrepiece of Chinese-Thai cooperation, has been held up by years of negotiation over everything from cost and loan terms to land development rights.

A Thai government spokesman said on Tuesday that Prime Minister Prayuth Chan-ocha, who heads the junta that has ruled Thailand since a May 2014 coup, will invoke Article 44, a security order that gives him the power to push through policy. Prayuth will discuss the matter at a cabinet meeting next week.

Image result for Prayuth Chan-ocha, photos

Prayuth Chan-ocha

The measure, dubbed the “dictators law”, has been heavily criticized by rights groups. Government spokesman Sansern Kaewkamnerd said invoking Article 44 would clear hurdles such as building on protected land.

“This is why Article 44 is needed,” he told reporters.

The $5.5 billion first phase of the railway will be a 250 km (155 miles) line between Bangkok and the northeastern province of Nakorn Ratchasima.

Transport Minister Arkhom Termpittayapaisith said last month that construction would begin in August or September.

Thailand will largely fund the project and China will provide technical assistance under terms agreed so far.

Almost every facet of this deal has changed in the last several years, including the route map, sharing of costs and financing and other factors.

Including later phases, the project intends to build a 873-km rail line linking Thailand’s border with Laos to eastern ports and industrial zones.

China wants to connect its cities to trade centres in Southeast Asia, including Thailand’s eastern industrial zones, as part of its ‘One Belt, One Road’ project, while Thailand needs to revamp its aging rail network and boost trade.

Thailand and China have enjoyed warmer relations following the 2014 coup which saw several Western nations downgrade ties with Thailand in response.

The rail project, however, has hit various delays over details including construction funding and technical assistance.

(Reporting by Amy Sawitta Lefevre, Kitiphong Thaicharoen and Satawasin Staporncharnchai; Writing by Amy Sawitta Lefevre; Editing by Susan Fenton)

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China should invest more of the money in rail project, Arkhom says

http://www.bangkokpost.com/learning/work/882096/china-should-invest-more-in-rail-project-arkhom-says

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Construction of Thailand-China railway project to start in 2017: official

Source: Xinhua| 2017-05-17 10:53:07|Editor: Hou Qiang
 Image result for Thailand-China railway project, photos, map

BANGKOK, May 17 (Xinhua) — The construction of Thailand-China railway project from Bangkok to Nakhon Ratchasima, which will be further extended to Nong Khai on the Thai-Lao border in the future, will start in 2017 for sure, Chatchai Thipsunaree, Permanent Secretary of Thailand’s Ministry of Transport, said on Tuesday.

“We (Thailand and China) are almost done with the contract, 90 percent I will say, the construction will start in this year for sure,” Chatchai told Xinhua after a press conference of the Transport Ministry.

Thai Transport Minister Arkhom Termpittayapaisith also mentioned the railway project at the press conference, saying it is a project of great importance to the kingdom, as it will connect Thailand with neighboring countries.

The current project, 252 km high speed railway from Bangkok to Nakhon Ratchasima, will be extended another 355 km to Nong Khai on the Thai-Lao border, connecting with China-Lao railway from Vientiane to Kunming in China’s southern Yunnan Province, according to Arkhom.

The railway is also to be extended to the south, to Kuala Lumpur and finally Singapore, Arkhom said.

The Thai government also plans to build a public-private partnership high-speed rail from Bangkok to Rayong to connect with the Thailand-China railway project.

Several Thai experts told Xinhua earlier that they want the railway plan to be implemented in a faster way.

Aksornsri Phanishsarn, director of Thai-Chinese Strategic Research Centre, National Research Council, told Xinhua that she hopes that China can help to push the Thailand-China railway project for it to become a “successful case” of cooperation between countries.

Swai Visavanant, senior researcher at Chulalongkorn University’s China Study Center, urged the Thai government to quickly move toward the implementation of the railway project, otherwise, Thailand may lose a good chance in its development.

According to Arkhom, China and Thailand still need to agree on three things, such as materials for the construction, consulting fee and whether it is necessary for Chinese engineers to get Thai engineering certifications before they come to work in the kingdom.

KEY WORDS: Railway

Pakistan scrambles to protect China’s ‘Silk Road’ pioneers — Could China’s Belt and Road Fail?

June 11, 2017

Reuters

By Drazen Jorgic and Jibran Ahmad | ISLAMABAD/PESHAWAR, PAKISTAN

Chastened by the Islamic State’s claim to have killed two kidnapped Chinese teachers, Pakistan is beefing up security around Chinese citizens streaming into the country on the back of Beijing’s “Belt and Road” infrastructure splurge.

China has often urged Pakistan to improve security after pledging around $57 billion to build power plants, railways, and roads that will cross the Himalayas to connect western China with Pakistan’s Arabian Sea port of Gwadar.

Pakistani officials have outlined to Reuters extensive security plans that include thousands-strong police protection forces, tighter monitoring of Chinese nationals, and in the province of Baluchistan – where the two teachers were kidnapped on May 24 – a review of security arrangements.

The protection forces will buttress a 15,000-strong army division set up specifically to safeguard projects in the China-Pakistan Economic Corridor (CPEC) initiative, which has been credited with rejuvenating Pakistan’s $300 billion economy.

“We are already alert, but this incident has made us extra vigilant over Chinese security,” said Amin Yousafzai, deputy inspector general of police for the southern province of Sindh, which is home to about 50 million people.

Sindh is raising a protection unit of about 2,600 police officers to help safeguard 4,000 Chinese working on CPEC projects, and another 1,000 working in other businesses.

Khyber Pakhtunkhwa province, which signed billions of dollars in contracts with Chinese companies, is also conducting a census of Chinese nationals and raising a force of about 4,200 officers to protect foreigners.

Baluchistan would “review the whole security arrangement” and Chinese nationals who come in a private capacity should inform the authorities about their activities, said Anwaar-ul-Haq Kakar, spokesman for the provincial government.

The number of militant attacks in Pakistan has fallen sharply in recent years, but violent Islamist groups still pose a threat, and in Baluchistan separatists opposed to CPEC also carry out attacks.

The Islamic State killings were a rare attack on Chinese nationals in Pakistan, but the incident has unnerved Islamabad and the growing Chinese community.

Miftah Ismail, a state minister involved in CPEC planning, said Pakistan had devoted huge resources to improving security and Chinese investors should not be put off by a one-off attack.

“The country’s security situation has improved,” Ismail said.

The scale of the task facing security agencies is increasing by the day as more Chinese entrepreneurs arrive to set up businesses. Most stay in big cities, but some venture into riskier areas.

The challenge for authorities will increase in 2018, when the corridor is due to become operational and trucks ferrying goods to and from China cross more than 1,000 km (620 miles) of road in remote Baluchistan areas currently off-limits to foreigners.

PROTECTION FORCE

The two Chinese-language teachers were kidnapped by gunmen pretending to be police, but little else is known about how the they ended up in Baluchistan’s provincial capital, Quetta.

Baluchistan’s government afterwards evacuated 11 other Chinese nationals based in the city. “There are no more Chinese living in Quetta”, said Ahsan Mehboob, Baluchistan’s inspector general of police. It was not clear why the 11 were there.

The new Sindh and Khyber Pakhtunkhwa forces resemble the Special Protection Unit (SPU) recently established by Punjab, Pakistan’s biggest province, which has attracted most Chinese investment.

Khyber Pakhtunkhwa province was already working on plans to set up the force, but after the Quetta kidnappings the process was “accelerated”, according to one regional official. Sindh was also planning to set up a force before the Quetta attack, and was now expanding it, another official said.

Punjab’s SPU, dedicated to protecting Chinese nationals and other foreigners, has more than 6,000 officers and is set to grow to 10,000.

Raja Jahangir, Punjab secretary for information, said SPU chiefs hold daily meetings with intelligence agencies and police chiefs to ensure Chinese nationals stay safe, while a database has been set up to track foreigners from their arrival, to their hotels, and their departure.

Jahangir said security has been stepped up since the Quetta attacks.

“Almost all personnel are on alert and they are on their toes,” he said.

(Additional reporting by Syed Raza Hassan in Karachi and Gul Yousafzai in Quetta; Writing by Drazen Jorgic; Editing by Alex Richardson)

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Kenya: Is China’s Railroad A “Debt Trap”? — Kenya is expected to repay — Will All “Belt and Road” Participants Find Themselves Saddled with Debt Owed to China?

June 10, 2017

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Kenya’s Madaraka Express railway — Built by China for Mombasa to Nairobi traffic

Kenya on Wednesday launched a new railway line call he Madaraka (Freedom) Express, linking Kenya’s Port of Mombasa on the India Ocean to the capital city Nairobi. The word “Madaraka” commemorates the day that Kenya became independent in 1963.

The new 380-mile Standard Gauge Railway (SGR) line is expected to be good for business. Cargo charges from the Port of Mombasa to Nairobi will cost about $500 per container and take 8 hours transit time. This is a significant saving over transit by road, which costs $900, and requires 24 hours. The train can carry 1,260 passengers.

The new railway replaces “The Lunatic Express,” a rail link built in the late 1800s by British money and colonists. The Lunatic Express was increasingly shaky, with old tracks and locomotives that were increasingly difficult to service.

The new SGR was built with Chinese money and Chinese workers. China’s state-owned Export-Import Bank loaned Kenya $3.6 billion for the project, which Kenya is expected to repay out of revenues. However, some analysts are raising concerns that the SGR will be a “white elephant,” leaving Kenya with enormous unpayable debts, as has already happened in Sri Lanka.

Even worse, the cost to build the Kenya railroad has been extremely expensive even by regional standards. The cost of the railway was roughly twice as great as another China-built railway, the Djibouti-Ethiopia train, suggesting the possibility of corruption.

Perhaps Djibouti and Ethiopia were able to drive a harder bargain with the Chinese, because China is also building a naval and air base on the strategic Red Sea port in Djibouti, and the railway connects that port to Ethiopia’s capital city, Addis Ababa. The site of the Chinese base is about 6 miles from an existing US base in Djibouti. China has defended the base construction, citing evacuations of Chinese nationals from nearby Yemen and Libya during recent conflicts.

In launching the new railway, Kenya’s president Uhuru Kenyatta said:

A history that was first started 122 years ago when the British, who had colonized this nation, kicked off the train to nowhere… it was then dubbed the ‘Lunatic Express’…

Today 122 years later, despite again a lot of criticism, we now celebrate, not the Lunatic Express but the Madaraka Express, that will begin to reshape the story of Kenya for the next 100 years. I am proud to be associated with this day…

The drop in cost of freight and fares will make Kenya a more attractive investment destination. More investors will lead to more jobs and growth in our economy.

Another issue related to the railway is that it crosses Kenya’s Nairobi National Park. Built by British settlers in 1946, this is a wild animal park on the fringes of Nairobi, and is a leading tourist attraction, and is responsible for a significant amount of Nairobi’s income.

However, wild animals occasionally migrate out of the part into nearby homes and farms. With the SGR right through the middle of the park, these visits by wild animals have increased. Earlier this year, two lions escaped from the park and had to be shot, as they were threatening humans. This has raised an outcry from environmentalists, who are demanding a number of changes, including raising the railway above the park, so that animals can move freely. The Shanghaiist and Radio France Internationale and African Business Magazine (5-May) and UPI (18-April) and Huffington Post

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China accused of a policy of ‘debt trap diplomacy’ in infrastructure projects

There is no economic or financial case for the railway, according to a World Bank report. There’s a very realistic fear that the SGR will generate far less income than is necessary to repay the China’s $3.6 billion loan.

We have already seen exactly these problems in Sri Lanka. In 2009, China invested $1.2 billion in Sri Lanka’s Hambantota seaport. Sri Lanka had expected to repay the debt through profits earned by the port, but the slowdown in trade throughout the entire region in the last few years has meant that Sri Lanka has been unable to repay the debt, and now China has essentially taken over the port in lieu of repayment of the debt, resulting in violent protests by Sri Lanka’s Buddhist monks and anti-government protesters. China will own a significant piece of Sri Lankan real estate, and there will be a large Chinese community that will be in Sri Lanka forever.

Professor Samuel Nyandemo of the University of Nairobi’s School of Economics refers to China’s projects as “debt trap diplomacy”:

Extending loans for infrastructure projects is a good thing. But look at the projects being funded. Most of them are meant to open markets for Chinese goods in strategically-located countries and increase their access to natural resources.

If there is one thing China is truly good at, it is using its economic assets to advance its geostrategic interests, which has left countries snared in a debt trap that makes them vulnerable to Chinese influence.

In fact, however much revenue the new SGR railway generates, it will have a significant negative economic impact on Kenya. That’s because there is an existing Nairobi-Mombasa railway run by Rift Valley Railways (RVR). Amazingly, Kenyan authorities are now requiring that a minimum of 40% of the cargo traveling between Nairobi and Mombasa must be taken by the new SGR. This is presumably going to be a financial disaster for RVR, but it also means that Kenya will have little or no revenue gain from the new railway, since it will be taking much of its business from the old railway.

When Kenya’s president Uhuru Kenyatta recently visited the One Belt One Road (OBOR) forum in Beijing, he signed a contract borrowing another $3.5 billion from China for an extension to the SGR that was just launched. Critics say that thanks to the president, Kenyans will have to labor for China for years to come. Kenya Standard Media (28-May) and Times of India and African Business Magazine (23-May)

Related Articles

KEYS: Generational Dynamics, Kenya, Uhuru Kenyatta, Mombasa, Nairobi, China, Export-Import Bank, Madaraka Express, Standard Gauge Railway, SGR, Lunatic Express, Djibouti, Ethiopia, Red Sea, Addis Ababa, Nairobi National Park, Samuel Nyandemo, debt trap diplomacy, Sri Lanka, Hambantota seaport, Rift Valley Railways, RVR, One Belt One Road, OBOR
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U.S. says China likely to build more overseas bases, maybe in Pakistan

June 7, 2017

Reuters

Tue Jun 6, 2017 | 7:04pm EDT

By Phil Stewart | WASHINGTON
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A Pentagon report released on Tuesday singled out Pakistan as a possible location for a future Chinese military base, as it forecast that Beijing would likely build more bases overseas after establishing a facility in the African nation of Djibouti.

The prediction came in a 97-page annual report to Congress that saw advances throughout the Chinese military in 2016, funded by robust defense spending that the Pentagon estimated exceeded $180 billion.

That is higher than China’s official defense budget figure of 954.35 billion yuan ($140.4 billion). Chinese leaders, the U.S. report said, appeared committed to defense spending hikes for the “foreseeable future,” even as economic growth slows.

The report repeatedly cited China’s construction of its first overseas naval base in Djibouti, which is already home to a key U.S. military base and is strategically located at the southern entrance to the Red Sea on the route to the Suez Canal.

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“China most likely will seek to establish additional military bases in countries with which it has a longstanding friendly relationship and similar strategic interests, such as Pakistan,” the report said.

Djibouti’s position on the northwestern edge of the Indian Ocean has fueled worries in India that it would become another of China’s ‘string of pearls’ of military alliances and assets ringing India, including Bangladesh, Myanmar and Sri Lanka.

The report did not address India’s potential reaction to a Chinese base in Pakistan.

But Pakistan, the U.S. report noted, was already the primary market in the Asian-Pacific region for Chinese arms exports. That region accounted for $9 billion of the more than $20 billion in Chinese arms exports from 2011 to 2015.

Last year, China signed an agreement with Pakistan for the sale of eight submarines.

QUANTUM SATELLITE, CYBER HACKS

The Pentagon report flagged Chinese military advances, including in space and at sea.

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Quantum Communications Satellite (Image Courtesy http://www.scmp.com)

It cited China’s 2016 launch of the first experimental quantum communications satellite, acknowledging that it represented a “notable advance in cryptography research.”

As in past years, the Pentagon renewed its concerns about cyber spying, saying U.S. government-owned computers were again targeted by China-based intrusions through 2016.

“These and past intrusions focused on accessing networks and extracting information,” the report said.

“China uses its cyber capabilities to support intelligence collection against U.S. diplomatic, economic, and defense industrial base sectors.”

In a section discussing China’s Navy, the report predicted that China’s first domestically designed and produced aircraft carrier would likely reach initial operating capability in 2020.

(Reporting by Phil Stewart; Editing by James Dalgleish)

Don’t Count on China as Next Climate Crusader — Plus China Looks to Capitalize on Clean Energy as U.S. Retreats

June 6, 2017

After the U.S. cajoled Beijing for years to go green, roles have reversed—up to a point

Chinese women wear air-pollution masks in a Beijing park. China has pledged to abide by the Paris accord on climate change as the U.S. prepares to exit.

Chinese women wear air-pollution masks in a Beijing park. China has pledged to abide by the Paris accord on climate change as the U.S. prepares to exit. PHOTO: ASSOCIATED PRESS

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June 6, 2017 5:30 a.m. ET

BEIJING—For years, a wide spectrum of groups in the U.S. lectured, cajoled and entreated China to go green.

Multinationals and nonprofits teamed up with Chinese environmental groups to promote eco-friendly causes; Coca-Cola restored forests in the upper Yangtze. U.S. labs offered scientific support. Academics collaborated on research. The former Treasury secretary, Hank Paulson, championed China’s disappearing wetlands, a haven for migratory birds.

The well-funded effort amplified voices within China demanding the government take action. It was, says Orville Schell, a longtime China watcher and environmentalist, “the most effective missionary work in the past couple hundred years.”

So it’s an irony of historic proportions how the roles have reversed: China, the world’s worst polluter by far, is now a convert on climate change while the White House under Donald Trump has turned apostate.

In pulling out of the 2015 Paris climate-change agreement, Mr. Trump has repudiated a signal accomplishment of the Obama presidency: persuading Beijing to become a partner in the effort to prevent the planet from heating up to the point of no return. Without China’s support, the Paris deal might have fallen apart.

Mr. Paulson issued a statement saying he was dismayed and disappointed. “We have left a void for others to fill,” he said.

Can China step in?

When it comes to the environment, China is still torn by conflicting priorities. It has installed more solar and wind capacity than any other nation—and plans to invest another $360 billion in renewable energy between now and 2020.

The economy is rebalancing away from heavy industry and manufacturing toward much cleaner services and consumption.

Coal consumption has declined for three straight years. On current trends, many scientists expect that China will reach peak carbon emissions well before its target date of 2030 under the Paris accord.

Yet Beijing remains committed to rapid growth. And coal is still king.

Just ask the residents of Beijing. Whenever economic policy makers set out to boost growth, spending flows to new real-estate and infrastructure projects, the steel mills around the capital fire up their coal furnaces—and commuters reach for their face masks.

This winter was particularly hard on the lungs. A spending splurge meant that Beijing’s average pollution levels last year were double the national standard set by the State Council.

America’s absence from the Paris accord weakens the global fight against climate change, while strengthening China’s position in clean technologies of the future. No doubt, the Chinese heavy-industry lobby—dominated by state enterprises and their growth-hungry local government sponsors—will put pressure on the government to relax green targets. But Beijing seems eager to seize the moral high ground. President Xi Jinping has vowed to “protect” the climate-change agreement.

Li Shuo, a climate and green-energy campaigner for Greenpeace East Asia, thinks that “China will just carry on” with its cleanup measures. In his judgment, it’s not a question of whether Chinese leaders will take the U.S. withdrawal as an excuse to backslide but “how far they will overachieve.”

By 2020, every Chinese coal-fired power station will be required to achieve an efficiency standard so high that not a single U.S. plant could meet it today, according to a report by the Center for American Progress, a liberal think tank.

Meanwhile, Mr. Trump has scrapped the Obama-era Clean Power Plan to curb power plant emissions.

The divergence on climate change represents a remarkable moment. For much of the past four decades China has pursued go-for-broke industrialization, heedless of the cost in human health. U.S. critics who lamented the damage to the planet often were told off for their imperialist attitudes. One commentator compared Western pressure on poor countries over climate change to the “guns, cannons and warships” of a previous era.

Then Beijing’s political calculus shifted. Urban residents rebelled at the smog, and when protests threatened social stability the government began to embrace a green agenda.

That said, among Communist Party leaders the fear of environmental protests is matched by apprehension about the consequences of slower, more planet-friendly development. They have staked their credibility on China catching up to, and overtaking, America.

President Xi proclaims “supply-side reform,” by which he means shutting down overcapacity in heavily polluting state industries.

On the other hand, his monumentally ambitious Silk Road plan to build trading infrastructure from Asia to Europe via the Middle East and Africa will prolong the life of some of the heaviest emitters making steel, glass, aluminum and cement—and export the country’s carbon problem.

Much of the $62 billion that China has pledged to invest in Pakistan is for relatively inefficient coal-fired power plants.

China may be going green, but it’s not there yet. On the environment as in trade, another area where Mr. Trump seems determined to abandon America’s global leadership, don’t look to China to supply the crusading zeal.

Write to Andrew Browne at andrew.browne@wsj.com

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How the Qatar-Gulf row is blocking China’s new Silk Road

June 6, 2017

Rift between Qatar and its neighbours could disrupt key projects in Beijing’s sprawling trade initiative

By Julia Hollingsworth
South China Morning Post

Tuesday, June 6, 2017, 11:00am

A worsening rift between several Gulf Arab nations along China’s modern Silk Road trade route will make it harder for China to manage its ties in the region, according to analysts.

Bahrain, Egypt, Saudi Arabia, Yemen and the United Arab Emirates all cut diplomatic ties with Qatar on Monday, citing Doha’s alleged links to terrorism.

The nations also said they planned to cut air and sea traffic, while Saudi Arabia announced it would shut its land border with Qatar, cutting the gas-rich nation off from the rest of the Arabian peninsula.

Qatar denies that it funds extremist groups.

The nations are involved in Xi Jinping’s ambitious “Belt and Road Initiative”, which stretches across 65 countries and encompasses Asia, Africa and Europe.

The Arab peninsula is the top source of oil for China, the world’s biggest oil importer. Global prices rose in early trading on Monday.

Pang Zhongying, a senior fellow at the Ocean University of China in Qingdao, Shandong province, said the spat among the Middle East nations would make it more complicated to manage ties with the region.

“China has a huge economic interest in the Middle East,” he said. “With the belt and road and other initiatives it is using to expand geopolitical influence in the region, China may need to think about adjusting its “non-interference” diplomatic motto.”

Zhu Bin, an analyst at Southwest Securities, said: “These countries’ cutting of their diplomatic relationships with Qatar marks the beginning of a new round of chaos, even conflicts and war, in the Middle East.”

China’s trade with the Middle East

Saudi Arabia is China’s top trade partner in the region, and China is now Saudi Arabia’s largest oil customer.

In 2015, Saudi Arabian exports to China totalled US$5.61 billion and its imports were worth US$23.97 billion. Last year, total trade topped US$42 billion.

The figures for Qatar in 2015 were exports of US$5.24 billion and US$3.7 billion in imports.

But for most of the countries involved in the new rift, China is an important source of imports rather than a major export partner.

China’s major projects in the Middle East

The region is seen as a critical partner along the new Silk Road, partly due to its strategic position between Asia and Europe. The area is also significant for its energy resources, and Chinese firms are winning contracts in infrastructure projects across the Middle East.

In June 2015, ICBC became the first Chinese bank with a retail presence in Saudi Arabia when it opened a branch in Riyadh. A month earlier, China established a yuan clearing centre in Qatar – the first in the Middle East.

Earlier this year, China and Saudi Arabia signed a memorandum of understanding on investment cooperation valued at US$65 billion, including joint efforts in energy and finance. China has also signed a partnership with Saudi Arabia for the manufacture of CH-4 unmanned drones.

Last year, China’s Cosco Shipping Ports invested US$400 million in building a container terminal in Abu Dhabi, the capital of the United Arab Emirates.

How the Arabian peninsula nations see the belt and road scheme

The region has been receptive to the plan.

Last month, Saudi Energy Minister Khalid Al-Falih praised the initiative at Beijing’s new Silk Road summit, saying “the potential offered by this unique initiative is immense and promising”.

The United Arab Emirates was interested in reaping the benefits from the road, Dubai International Financial Centre’s governor Essa Kazim told The Financial Times last month.

Last year, Qatar became a key partner to promote the initiative, pledging to play an active role.

How China mediates conflict in the Middle East

China has traditionally stayed out of political issues in the Middle East, preferring not to pick sides to maintain good relations with all its trade partners.

But that may be changing as its links with the region strengthen. In April 2015, a Chinese frigate helped evacuate 225 foreign nationals from Yemen – the first time China’s military has helped other countries evacuate their people from a danger zone.

Last year, Beijing appointed its first special envoy for the Syrian crisis, seen as a move to get more involved in Middle Eastern diplomacy. In China’s first – and vague – Arab policy paper issued at the start of last year, it reiterated its commitment to peace and stability in the region.

http://www.scmp.com/news/china/diplomacy-defence/article/2096984/how-gulf-arab-row-blocking-chinas-new-silk-road