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India and China Rivalry Presents an Opportunity for Nepal

3/30/2018

6 Comments

 
Picture
Nara La, Nepal. Wikimedia Commons.

The recent 2017 elections in Nepal resulted with the coalition of the Communist Party of Nepal (Maoist Centre) and the Communist Party of Nepal (Unified Marxist Leninist) winning 80 of the 275 seats in the House of Representatives, giving them the majority rule. The party, under the leadership of Prime Minister Khadga Prasad Oli, has voiced support for greater collaboration with China.

The Communist party victory signals a shift in Nepal’s approach to relations between China and India. India has long held a strong presence in Nepal’s economy and politics. As part of their campaign promises, the party will push for closer collaboration with Beijing over New Delhi. The shift stems from the ideological support China has given the party, and desires to distance Nepal from India after recent conflicts.

In 2015, protests by Madhesi groups in the southern region of Nepal against the new Nepalese constitution lead to an Indian blockade. Subsequently, Beijing supplied resources, especially fuel, that were lost due to the blockade. This crisis elicited
anti-Indian sentiments and feelings of trust with China, especially with Oli, as this was during his first term as prime minister.


The new government recognizes the need for aid to bolster the economy and to support development projects. With the degradation of Nepal-India relations and the opportunities surrounding Chinese support, Kathmandu is balancing relations between the two countries to maximize economic growth and political stability with both neighbors.


Nepal’s rivers and mountainous geography present high potential for hydropower development. Due to a lack of funds, Nepal has relied on outside investments. Both India and China have contributed funding in the past. Most recently,
approved projects include a 750 MW plant in the West Seti River under the Chinese state-owned Three Gorges International Corp, and two 900 MW plants owned by two Indian companies - GMR Group and Satluj Jal Vidyut Nigam Limited - that would be primarily used to export power to India.


In relation to energy, almost all of Nepal’s petroleum is imported from India. This reliance, along with a large importation of electricity from India, has exponentially increased the country’s
trade deficit with India. Greater exploitation of hydropower is thought to expand Nepal’s own energy capacity, lessening dependence on Indian energy. Cooperation with Beijing gives Kathmandu an increased ability to accomplish this. The new government is actively taking this approach, which is seen with return of a formerly scrapped deal for the 2.5 billion USD Budhi Gandaki dam project with China’s Gezhouba Group.


As part of the Belt and Road initiative, Nepal has access to transportation infrastructure development from Beijing. Negotiations over this between China and Nepal came to a head in 2016 when Oli, who was still prime minister at the time, secured Nepalese transit rights through China. The agreement
opened the possibility to connecting Nepal to primary Chinese production centers, specifically through rail connections. Proposals for further road and rail routes continued to be made throughout 2017, even though Oli was not in power.


India has long been the main trading partner with the landlocked country, but it has been costly due to logistical incompetence, including rail congestion, inefficient customs clearance, and
limited coordination between related agencies. India and Nepal have been working to improve these conditions with the implementation of an Asian Development Bank-supported electronic cargo tracking system for better security between the major port of Kolkata and Nepalese customs points. However, Chinese possibilities seem much more enticing. The most promising project is the Qinghai-Tibet railway, which is planned to reach the Nepal border by 2020. There is interest in connecting the rail to Kathmandu, which would place Nepal’s trade capacity with a direct connection to Beijing.


Nepal is also expanding its sources for internet services by teaming with China. The country has long been dependent on Indian telecom companies for cyber connectivity, which made Nepali users vulnerable to network failures. In January, this ended when Nepal Telecom and China Telecom Global
launched internet services by laying optical fibers between Kerung in China and Rasuwagadi in Nepal. While India is still present, the Chinese involvement offers more flexibility in pricing and greater confidence in reliable connections.


Through all these ways, China is rapidly gaining influence in Nepal. New Delhi is expressing concern over the shift as another South Asian country leans further from India and closer towards China. The Maldives and Sri Lanka have received great political influence and investments from China, and
Nepal seems to be following in suit.


Despite China’s increasing presence, India and Nepal are still historically, culturally, religiously, and politically deeply intertwined. India still has great influence over the country through trade, open borders, and
shared military arrangements. Nepal is not trying to fully move away from India towards China. Instead, Nepal acknowledges its growing needs, and the new government is making it possible to satisfy those needs from both Indian and Chinese sources.
​

Ethan Masucol

Ethan is a first-year student majoring in Plan II and International Relations & Global Studies with a minor in Chinese at the University of Texas at Austin.

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WEEKLY DIGEST: March 20- March 27, 2018

3/27/2018

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Picture
The India Gate, New Delhi, India. Flickr.

India and the Belt and Road 

India is currently the largest borrower of the AIIB, even though the country has yet to participate in China's Belt and Road Initiative. Over the last two years, the AIIB has granted a total of 4.3 billion USD in loans to India. India is concerned that China will use the BRI to expand its power over nations neighboring India, thus they have refused to support the initiative. Dhruva Jaishankar, a research fellow at Brookings India, said that India finds a clear distinction between the AIIB and the Belt and Road initiative. The AIIB is composed of a board of directors and voting rights, while the BRI is a Chinese vision. Some people believe India will eventually come to accept the BRI and the only thing China needs to do is to be patient.                

India is trying to avoid dependence on China, with the creation of "Made in India". There are several circumstances that make India's economic independence unrealistic, including the fact that India's trade deficit with China is growing every year. Although India has always regarded China as a competitor, India is actually the biggest beneficiary of AIIB. Read more here.


The Asian Infrastructure Investment Bank                            

Solar energy 

Acciona and Swicorp started construction on three photovoltaic energy plants in Egypt after financing was secured with the Asian Infrastructure Investment Bank and the International Finance Corporation, and the World Bank. The investments involved total around 180 million USD. The plants will be able to power a reported 150,000 homes and will be a key part of the Benban photovoltaic complex, which incorporates nearly 40 facilities and has a total production capacity of nearly 1800 MW. The solar potential could offset 297,000 metric tons of CO2 emission per year.    

Further, the AIIB, along with the European-Arab Bank and other financial institutions will provide funding for three solar parks with a combined capacity of 116 MWp. The park will be operated by an Italian company in partnership with Egyptian Electricity Transmission Company. Read more here.

Chile to join? 

Officials from the Chilean Government met with representative from the Asian Infrastructure Investment Bank to review income statistics. If the Chilean legislature approves finalizing entry into the entity, it would make Chile the first South American nation to join the AIIB. Chile seeks to increase foreign investment to boost its own economy.


Asian Development Bank updates

Supporting Small and Medium-Sized Enterprises 

ADB is allocating another 100 million USD to its Supply Chain Finance Program (SCFP), to support small and medium-sized enterprises (SMEs) in Asia and the Pacific. The SCFP is dedicated to assessing SME risk by focusing on history of performance, longevity, and nature of relationships within a supply chain to make up for the lack of confidence. By supporting SMEs, ADB hopes to bolster the sector's contribution to the region's economic growth and development.

Anti-Corruption and Counter-Terrorism Financing 

ADB's Office of Anticorruption and Integrity (OAI) reports that the ADB is increasing support for anti-money laundering and counter terrorism financing (AML/CFT) efforts in the Asia-Pacific. ADB's AML/CTF funding includes a 2 million USD technical assistance grant approved in December 2016. The report details training, commissions, and other services offered to countries in the region, such as the Philippines, Mongolia, Bhutan, and Papua New Guinea, under the grant.    

Pakistan 
                                
The ADB is loaning 260 million USD to Pakistan to improve the country's power transmission network. The funds will support the Second Power Transmission Enhancement Investment Program to better coverage, reliability, transparency, and quality of power transmission. The program will also provide more power to the national grid to enhance Pakistan's energy security and to establish a foundation for an energy trading platform. According to the Pakistani government, funds will be distributed to improve electricity networks in the Sindh and Balochistan provinces after the signing in Islamabad. Read more here.

Mongolia 

The ADB is loaning 130 million USD to Mongolia to address public health issues concerning poor air quality in the capital of Ulaanbaatar. The city has a heavy reliance on raw coal burning for heating purposes. The loan will support a framework for air pollution regulation in certain sectors, such as transportation and domestic heating. It will also guide future spending on air pollution reduction and human health protection, and will support a long-term plan for cleaner fuel and green development.


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Japanese opinions

Earlier this month, Japanese political columnist Taro Yayama criticized the AIIB's Maldives and Hambantota port (Sri Lanka) projects. He compared the Chinese-led development bank's efforts to British colonialism in the 19th century as well as to the operations of organized crime syndicates. Later in the article, Yayama claimed that Chinese efforts such as Belt and Road, and military expansion could threaten an economic recession.

Although Japan has traditionally been wary of growing Chinese economic influence, the country has recently expressed a greater interest in participating with China through the Belt and Road Initiative. Despite prevailing tensions between the countries, Japan plans on hosting Chinese Premier Li Keqiang to discuss bilateral relations and Japan's role in Asian development. In particular, Japanese firms have been exploring possibilities in the energy, environment and industrial sectors, but have also expressed concern about the current lack of framework or transparency in the Belt and Road Initiative. In the future, the Japanese government will be weighing its options of whether or not to pursue closer economic ties to Beijing, and assess the potential risks and rewards of such cooperation. Read more here.


Chinese collaboration around the world

Cameroon bilateral relations

Chinese President Xi Jinping and Cameroonian President Paul Biya met together in Beijing to discuss advancing bilateral ties between China and Cameroon. The African country has long been close to China, and has sought assistance from Beijing as it continues its process of industrialization of development. President Xi urged President Biya to integrate Cameroon into the Belt and Road Initiative in order to promote Chinese investment in sectors like agriculture, energy, transportation, housing and new technology. During this meeting, China and Cameroon also agreed to several bilateral agreements on economic and technological cooperation, human resources development, infrastructure construction, and industrial cooperation.                                

Laos Cement

The Lao Cement Public Company, a joint venture between China Yunnan International Economic and Technical Cooperation Co., Ltd. and Lao Agro-industrial Development Co., Ltd. became the first cement company to be listed in Laos. The company will promote industrial integration to better serve Belt and Road construction, and infrastructure construction in Laos. The listing of the company also opened up a new financing model for the Belt and Road.

Panama joint investments 

Panama president Juan Carlos Varela met with Zhou Xiaochuan, Governor of the People's Bank of China. The two discussed increasing joint investment strategies. They also highlighted the Bank of China's nearly 30-year involvement and the establishment of a headquarters for the Industrial and Commercial Bank of China in Panama to promote rhetoric of Chinese confidence of the Panamanian financial system. This comes as recent agreements set forth an agenda of multiple co-operational opportunities between the Republic of Panama and China Development Bank and Export-Import Bank. 

Export-Import Bank pledges funds to China 

The Export-Import Bank of China has agreed to pledge upwards of 100 Billion USD in an effort to drive new growth in China.  The bank plans to strategically invest in growing industries such as the tech and automotive industries, and are intended to drive major projects and build platforms for new innovation.

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WEEKLY DIGEST: March 13- March 20, 2018

3/20/2018

1 Comment

 
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Salt Lake Mine, Djibouti. Max Pixel.

Driving nations into debt

Countries linked to the Belt and Road Initiative increasingly question Chinese interests in projects supported by the Initiative. They fear that the AIIB is a political and geopolitical tool of the Chinese government.  These doubts are reinforced by a recent report from the Center for Global Development showing that the BRI will not only provide infrastructure development to other nations, but will fulfill China’s important economic, foreign policy, and security goals.

The U.S.-based think-tank finds that several countries helped by the BRI incur high risk of bankruptcy due to the BRI financing. Among the 68 countries analyzed, 23 countries tend be very vulnerable to indebtedness. The situations in eight countries (Tajikistan, Laos, Maldives, Djibouti, Kyrgyzstan, Pakistan, Mongolia, and Montenegro) are extremely worrisome. India's Economic Times pointed out that four of these eight nations are neighboring nations of India and increasing debt will lead to increasing political costs in India. The Central News Agency claims that China's strategy is very simple and straightforward; when a small country is unable to pay its debts, China will claim ownership/use of the project and land.    

The Center for Global Development recommends that international financial institutions, such as the World Bank, oblige China to respect international norms for loans. Read more here and here.


The Belt and Road Initiative

European concern 

Europe disagrees with China's Vice Foreign Minister Wang Yi claim that all nations are equal in power and dominance in the Belt and Road Initiative. According to many European nations, China adopted the BRI to create a new international order, and many countries are against endorsing this initiative. In February at the Munich Security Conference, former German Minister of Foreign Affairs Sigmar Gabriel stated that Western nations should begin developing countermeasures to the BRI. Gabriel pointed out that China is currently the only country with a global geopolitical strategy, and its ideals are vastly different from Western values of democracy, freedom, and human rights.

Transparency concerns

The ambitious BRI is meant to connect Asia with Africa and Europe through Chinese financing and building a series of ports, railways, highways, pipelines, power plants and mines. FAZ's South Asian business correspondent Christoph Hein criticizes Chinese investment institutions, especially the Chinese Development Bank and the Export-Import Bank, for not being transparent about their lending practices. Up to eight countries in the region will be hit hard by debt from these development projects, especially Sri Lanka, Pakistan and Djibouti, according to the reporter.

US business growth 

The growth of China's Belt and Road Initiative has attracted investors from around the world, including from the United States. At least 15 companies based in the United States have cited the Belt and Road Initiative as a potential opportunity for facilitating greater business growth. Specifically, companies like Honeywell have expressed interest in utilizing regional development programs to invest in emerging markets across Asia.

Increased real estate investments 

Investment in large infrastructure projects has led to a boom in property markets across South and Southeast Asian countries. Specifically, investment in real estate through the Belt and Road Initiative in Southeast Asia and South Asia reached 2.5 billion USD in 2017, and the total real estate investment value reached 39.5 billion USD in 2017, which represents a sevenfold increase from 2012 and an 8 percent rise year-on-year. These investment trends have re-enforced optimism that the Belt and Road Initiative will stimulate growth in wealth and enhance existing investment possibilities.

Growing trade 

According to Chinese Minister of Commerce Zhong Shan, trade volume between China and countries along the Belt and Road amounted to 1.1 trillion USD in 2017, up 14.8 percent year-on-year. Zhong also praised China's more diversified investment portfolio, and steady progress on major projects such as railways, expressways and ports, manufacturing operations, and energy programs. In the future, China hopes to promote e-commerce through big data, and embark on multilateral trade and investment liberalization policies.                

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Asian Development Bank updates

Cambodia to Tajikistan

The ADB acquired 190 million USD from the Green Climate Fund (GCF) for climate funding in Cambodia, Mongolia, and Tajikistan. Cambodia is receiving 30 million USD in grants and 10 million USD in loan for agribusiness, while Mongolia is receiving 50 million USD in grant and 95 million USD in loan for urban eco-districts. Meanwhile, Tajikistan is getting a 5 million USD grant and loan to bolster the State Agency for Hydrometeorology, the national weather forecasting entity.

Solar energy 

The ADB and the International Solar Alliance (ISA) signed a cooperation agreement to support solar power development in Asia and the Pacific. Both groups will collaborate in developing solar projects in the region and sharing research. ADB's current energy policy has 3 billion USD committed per year by 2020 for clean energy.

Pakistan 

ADB is loaning 140 million USD to Pakistan to improve roads in the northwestern region of Khyber Pakhtunkhwa for the KP Provincial Roads Improvement Project. 214 km of roads will be improved with higher safety and climate resilience. The project, supported with an additional 24 million USD from the Government of Pakistan, is planned to be completed by 2022.

Thailand 

ADB is loaning 35 million USD to Gulf Chana Green Company Limited (Chana Green) for a biomass power project in southern Thailand. To meet increasing power demands, the project will have Chana Green  use ADB's financing to construct a 25 MW biomass power project that will convert waste from rubber trees into renewable energy. Chana Green is wholly owned by Gulf Energy Development (GED), a leading private sector power generation company in Thailand.


​Chinese investments in Europe, Latin America, and Africa

Interconnected Spain

Spain holds interest in China’s interconnected strategies. Spain joined the AIIB in 2015, subscribing nearly 1.8 billion USD to the Bank and promoting their interests in infrastructure and engineering firms. China incorporated Spain in the Belt and Road Initiative when Madrid was chosen as the destination for a railway system "pilot test". After claimed success, the two nations wish to increase shipments via the railway line and improve conditions of the railway system that originates in China.

Serbia 

Zijin Mining Group, a Chinese company, recently expressed interest in purchasing RTB Bor, a Serbian copper mining and smelting company. Serbia intends to sell the mining complex to erase the debt problems it raises, after facing losses since the Balkan wars. As a precondition, potential buyers would first need to contribute between 300 and 330 million USD. Serbia is a part of the BRI, which is likely a motivating factor in the expressed possible purchase.

Brazilian investments 

The Chinese Communications Construction Company (CCCC), along with the Brazilian companies WPR and Lyon Capital, announced the construction of the Sao Luis port. CCCC will supply 51 percent of the 245 million USD investment needed to complete construction. The port aims to support regional growth, creating 4,000 jobs and facilitating movement of 10 million tons per year.

Uganda

Uganda President Yoweri Museveni inaugurated an industrial park financed by China. This park aims to create more than 15,000 jobs. Museveni also praised Chinese support in the country, up until late 2017, Uganda received 219 millions USD of Chinese direct foreign investments.


Chinese Blockchain

A confirmed leak revealed that the Chinese Investment Association plans to create a "International Blockchain Investment Development Center" to organize industry standards and alliance and introduce Blockchain investment funds. The center would link international funding to a Chinese state-run Blockchain system, likely contributing to governmental spending.
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Balancing Chinese influence in Malaysia

3/7/2018

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Malacca, Malaysia. Pixabay.

China must maintain strong relations with nations along the Silk Road Economic Belt and the 21st-Century Maritime Silk Road as it pursues the Belt and Road Initiative (BRI). The Maritime Silk Road extends through the South China Sea, thus China is expanding its influence into already disputed maritime territories. Though China has improving relations with the Philippines and Indonesia, Malaysia has been a primary economic partner as China increases its presence in the South China Sea.

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In 1974, Malaysia was the first Southeast Asian state to establish diplomatic relations with China, and since then, the two states have maintained strong political and cultural relations. Malaysia has maintained a pragmatic approach to China in regards to the South China Sea conflict. Malaysia and China have deep cultural ties and about 21 percent of Malaysians are ethnic Chinese. With friendly political and cultural relations, China and Malaysia have fostered a strong economic relationship.

China is Malaysia’s largest trading partner, with 96.3 billion USD in bilateral trade in 2017. Malaysia is a main source for palm oil and durian for exports to China. This "durian diplomacy" has flourished as Chinese markets have an increasing demand for the pungent fruit. Over the past decade, Malaysia’s economy has experienced significant growth in part because of the Chinese investments and trading driving the Belt and Road Initiative.

Malaysia’s growth fueled by Chinese investments is expected to continue as Malaysia remains an active participant and beneficiary of the Belt and Road Initiative. The Malaysian Prime Minister, Najib Razak has approved several Chinese infrastructure megaprojects, including a 13.1 billion USD rail project. The East Coast Rail Link will connect Malaysia’s east and west coasts to shipping ports on the peninsula, increasing connectivity between the Maritime Silk Road and the Economic Silk Belt.
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Three state owned Chinese companies have also been contracted to construct a deep-sea port and maritime industrial park off of the west coast of Malaysia in the Strait of Malacca, further highlighting Malaysia’s central role in developing the Maritime Silk Road and China’s increasing influence in the region.

Though the newly founded Asian Infrastructure Investment Bank has yet to approve any projects located in Malaysia, China will likely use this multilateral development bank as an avenue to increase maritime infrastructure capacity on the Southeast Asian nation. In February, AIIB President Jin Liqun spoke in at the World Capital Market Symposium in Malaysia. He highlighted that the AIIB will work closely with Malaysia, a founding member of the bank, to support infrastructure development in ASEAN countries.  

Malaysia is known for its sensible foreign relations, and historically, the state has been able to maintain its Chinese relations while still welcoming the U.S. in the region for security regions.  More recently, analysts have claimed that Najib is getting too close to China and that Malaysia has remained dangerously quiet on China’s increasing military presence in the region. There are concerns that Najib is being bought out by China through investment and trade deals.

Analysts highlight that infrastructure investment is beneficial for Malaysia, whether it comes from China or other foreign entities, but in order to continue growing its economy, Malaysia should turn to Japan, Europe and the U.S. for bilateral trade relations and increased foreign investments, thus avoiding complete dependence on China. 

By diversifying its economic relations, Malaysia can hope to remain resilient to economic downturns and policy shifts in China. As China increases its economic and political influence with the Belt and Road Initiative into Southeast Asia and beyond, Malaysia will have to find the optimal balance in order to reap from increasing economic opportunities without being completely absorbed into China’s economic orbit. 

Elizabeth Teare

Elizabeth is a fourth-year student studying International Relations and Rhetoric at the University of Texas at Austin.

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WEEKLY DIGEST: February 27- March 6, 2018

3/6/2018

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Hong Kong skyline, Flickr.

News from the Belt and Road

Hong Kong 

During a presentation of the city's budget plan, Financial Secretary of Hong Kong, Paul Chan Mo-po said that the OBOR and the development of the Guangdong-Hong Kong-Macao Bay Area can expanded uncharted areas of Hong Kong's economy and open up new markets. By helping mainland China develop the OBOR, Hong Kong has gained new space for development in business, financial, and professional services industries.

Japan 

At a conference in Washington D.C., Kentaro Sonoura, a key strategic advisor to Shinzo Abe, said that Japan is only participating in China's OBOR under a promise with the Indo-Pacific Strategy, with conditions that the OBOR is beneficial to Japan. It is expected that the OBOR considers what is jointly beneficial for Japan, the U.S., India, and Australia. Sonoura also mentioned that as long as China adheres to values of open-trade, is transparent in their economic growth, and is beneficial to the globe, the U.S. and Japan will be open to cooperating with China in the Indo-Pacific Strategy.

Vietnam 

A new power infrastructure project is under discussion between Zhejiang Huayun Power International Engineering Co., Ltd and Vietnam Electric Power Co., Ltd. Both sides reached a consent on cooperation and the benefits it will bring to Vietnamese economy under the Two Corridors, One Ring and One Belt One Road initiatives.

Digital Belt and Road in Thailand 

The National Research Council of Thailand (NRCT) and the Chinese Academy of Sciences (CAS) announced the establishment of the Digital Belt and Road International Center in Bangkok. The proposed investment has earned praise from both Thailand and China, which seek to promote closer ties under the Belt and Road Initiative. Sirirurg Songsivilai of NRCT stated that the new center will allow China and Thailand to work together on issues such as sustainable development and environmental research. Guo Huadong of CAS stated that investments in new research and monitoring tools, such as satellites and Big Earth data, will allow China to better implement Belt and Road projects.


Asian Infrastructure Investment Bank

The AIIB approved a loan of 1.5 billion US dollars to India for its infrastructure projects. The funds will be used to invest in renewable energy, road, and urban development projects. More allocation of funds will be anticipated. The AIIB hopes to encourage India’s transition to renewable energy but does not oppose coal-related projects.    


China to allow bond issuance to fund Belt and Road projects 

China has decided to allow domestic and foreign companies to issue bonds through the Shanghai and Shenzhen stock exchanges in order to help fund projects under the Belt and Road Initiative. The driving goal is to build Asian trade and infrastructure networks with Europe and Africa.  Historically, these projects were funded through Chinese policy banks, like the China Development Bank and the Asia Infrastructure Investment Bank, but Chinese officials believe that issuing bonds will lead to increased funding.


Asset Backed Security for the OBOR 

The Shanghai Stock Exchange approved China's first Belt and Road asset backed security (ABS) in a show of support for the country's Belt and Road Initiative. The new ABS means that a broader variety of bonds can be used to finance Belt and Road projects. The approval categorizes ABS bonds into three types: government bonds issued by government institutions, corporate bonds issued by financial institutions in Belt and Road countries, and corporate bonds issued by domestic financial institutions. The China Securities Regulatory Commission plans on integrating the Belt and Road ABS within the Shanghai and Shenzhen stock exchanges, which are China's two major sources of equity exchanges.


The Asian Development Bank

Bangladesh

ADB President Takehiko Nakao and Prime Minister Sheikh Hasina of Bangladesh met, along with other senior officials, to discuss the country's 45-year partnership with ADB. Nakao commented on Bangladesh's impressive economic and social development in the last decade, and reiterated ADB's offer to help address the recent Myanmar refugee crisis. The current ADB strategy has 8 billion USD in assistance to Bangladesh from 2016-2020 funding projects in education and urban utilities services. The group also discussed the plan to develop an economic corridor in the southwest for economic diversification and continued growth.

Armenia 

The ADB is loaning 32 million USD to Spayka Limited Liability Company (Spayka), a leading Armenian food producer and exporter, to help increase greenhouse operations and exports. The funds will support development of 30 hectares of climate-controlled greenhouses for tomato and bell pepper exports, mainly to the Russian Federation and United Arab Emirates. The project follows Armenia's goals for increased agricultural productivity despite climate change risks.

Fiji 

The ADB is loaning 44 million USD to Fiji for 58 kilometers of roads between Baucau and Viqueque, along with improved connectivity in Timor-Leste. ADB is also cooperating with the Japan International Cooperation Agency (JICA) to upgrade the highway between Dili and Baucau. All these projects will enhance road resilience to climate change, while increasing road efficiency and safety. ADB is also developing road maintenance and road safety action plans.


Tension with Australia

Australia's Department of Foreign Affairs and Trade (DFAT) insists Australia’s relationships in the Pacific region have not been affected despite a government minister's critique on Chinese aid to the region. In January, International Development and Pacific Minister, Concetta Fierravanti-Wells accused China of building "useless buildings" and "roads to nowhere" to buy influence in the Pacific. Despite initial protests from Pacific leaders and China, DFAT says there have been no formal diplomatic responses to the comments. Some officials have interpreted the situation to be a healthy refocus on the developmental needs of the Pacific. DFAT has claimed Australia provides 1.1 billion USD to the Pacific through aid.


The European Union Perspective

Key figures in the German economy want a bigger piece of the pie in China's trillion-dollar new Silk Road project between Asia and Europe. The head of the DIHK, Germany's national chamber of commerce, Volker Treier says it's better for the German economy if it gets involved early, seeing as 90 percent of global growth will take place outside of Europe in the next 10 years. The head of Germany Trade & Invest (GTAI) company, Jürgen Friedrich, agrees there are considerable opportunities for the German economy in the New Silk Road imitative. They are particularly large where the Asian Infrastructure Investment Bank participates, in which the Federal Republic holds shares.

Foreign investment restrictions

Following the wave of Chinese investments in Europe, the European Union no longer wants a “ naive free trade.” Six months ago, the European Commission proposed a list of measures to better control foreign investments. Recently, French representatives expressed a will to go further with binding measures to better control foreign investments. They want to expand protection to the sectors aeronautics, media, and health sectors. Even if these binding measures are not adopted, they highlight a shift in the EU’s posture toward foreign investments.

Fears of Chinese political influence 

Despite the fact that China's New Silk Road project has already started to take shape in Southeastern Europe, the EU has not yet formed a clear strategy on how to handle Beijing’s increasing  political influence. The economic advisor to the European Commission, Jens Bastian, fears the EU could lose some of its influence with member states to China if it doesn't come up with a clear strategy towards the New Silk Road Initiative soon. It could also become more difficult for the EU to maintain a uniform position in key policy areas towards China with the support of all its member states, particularly in areas such as human rights policy and recognizing international judicial decisions.


More news on the IBD and AIIB partnership

On February 21, 2018, the Islamic Bank of Development announced a partnership with the AIIB. This agreement should facilitate cooperation financing investments in Africa. With a capital of 150 million USD and 57 member countries, many of which are AIIB members, the IBD is an  “ideal partner” according to its president, Bandar Hajjar. Since its beginning in 2016, the AIIB already granted 4.32 billion USD loans to 24 projects in Asia, Middle East and Africa. Egypt was the first operation in Africa, where the AIIB financed 210 million USD solar projects. Ethiopia, Madagascar, South Africa and Sudan have also joined the AIIB. These countries seem the first step in the strategy of Jin Liqun, president of the AIIB, to reinforce its position on the continent. 
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