Updates from the Belt and Road
UN interest in the BRI
José Graziano da Silva, Director-General of the United Nations Food and Agriculture Organization (UNFAO), commended the Belt and Road Initiative and highlighted opportunities for the United Nations to cooperate with China through the Chinese development framework. The UNFAO has developed a BRI umbrella program, identifying four key areas where the UNFAO and China can work together: food system development, digital-agriculture, controlling transboundary animal and plant diseases, and protecting biodiversity. The BRI provides a unique opportunity to further integrate the global agricultural economy, as farmers will be able to reduce input and transportation costs, reach further markets in a shorter time, and gain access to information, technical services and financial advice. These opportunities will allow for higher quality products and increased productivity in the agricultural sector.
Financial woes on the Belt and Road
China’s BRI is facing some serious financial challenges, as several participating countries are starting to run out of funding to pay for the projects. With average liability and debt ratios well above globally recognized warning lines, many of the participating countries were low on funds prior to joining the initiative. Previously funded by institutions such as the Asian Infrastructure Investment Bank, China Development Bank, and the Export-Import Bank of China, some are calling on international fundraising mechanisms to provide financial support from private investors. Private investors have previously been turned off by the projects due to the complex regulations that go along with international investing.
Chinese praise of the BRI
From 2013 to 2017, China accumulated 5 trillion USD in trade goods with countries along the Belt and Road Initiative. China's direct foreign investment now exceeds 70 billion USD. Along the BRI, Chinese corporations have created 210,000 jobs, promoted the establishment of 75 economic cooperation zones, and paid 2.2 billion USD to host nations. Similarly, China has diversified its foreign trade at an accelerated pace. China's total value of imports and exports along the BRI increased by 12.9 percent in the first quarter. The BRI continues to play an increasingly important role in China's foreign trade. Read more here.
Asian Development Bank News
Large loans to the Philippines
The ADB expects a sovereign loan to the Philippines to reach 920 million USD this year. Projects to be funded by the loan include private participation in infrastructure development, poverty relief and inclusive development, increasing Mindanao governmental capacity, and enhanced public transport and traffic alleviation. The ADB’s statement mentioned that special tax privileges for investors in the country's special economic zones and free ports would end.
Public-private partnerships in Pakistan
The ADB is loaning 375 million USD to Pakistan for irrigation projects and promoting public-private partnerships (PPPs) in the Punjab province. 275 million USD will go to the Jalalpur Irrigation Project, which will draw water from the Jhelum River to the Rasul Barrage to service 384,000 people. The remaining 100 million USD will encourage PPPs in Punjab by supporting the government to enhance the commercial viability of projects and attract private sector participation.
Investment in Blockchain Technologies
During the opening of Hangzhou Blockchain Industrial Park in China, the Chinese government announced the commencement of the Xiongan Blockchain Global Innovation Fund, with around 10 billion CNY. The Yuhang District government is providing 30 percent of the funds. The Industrial Park will provide academic and financial support for the development of blockchain technologies in Hangzhou. The blockchain center establishment follows cancelled plans to create an international blockchain investment development center in China, as revealed in a proposition leaked from the Chinese Investment Association. Read more here.
Blockchain industry experts say that the successful development and implementation of blockchain investment technology will rely upon instrumental regulatory framework. China's National Internet Finance Association (NIFA) will prioritize well-designed regulation with intentions of fostering healthy and stable economic growth. Read more here.
China in Latin America
Chinese investment in the Dominican Republic
Kingtom Aluminum SRL will be the first Chinese company established in the Dominican Republic. The company will create approximately 400 direct and 1000 indirect jobs, and will export aluminum extrusions to the U.S. and its territory, Puerto Rico. The company's establishment amounts to approximately 10.7 million USD of Chinese foreign direct investment in the Dominican Republic.
China's ambassador to Mexico visited the Port of Lázaro Cárdenas with officials from China's Industrial and Commercial Bank, Bank of China, China Development Bank, China National Offshore Oil Corp. in Mexico, China Harbor Engineering Company in Mexico, China Gezhouba Group Company Limited in Mexico, and others. Those that attended assessed the "logistical advantages opportunities" of investing in the Michoacan province in Mexico.
Chinese influence at the Summit for the Americas
U.S. President Donald Trump was absent during the Summit for the Americas, which was held in Lima, Peru. Attending Japanese observers expressed concern of Chinese influence expanding in the Americas. This article notes Chinese developmental assistance for a 450km Panamanian rail project as one facet of China’s expanding influence, and the fact that Chile joined the AIIB in 2017 as another indicator of Chinese influence expanding in the Americas. The observers also noted that Russia is strengthening its ties with Cuba and Venezuela.
News from around the world...
Australia limits foreign aid
According to recent research conducted by Australia’s International Development and the Pacific Ministry, up to 80 percent of Australians do not support further spending on foreign aid. The minister, Concetta Fierravanti-Wells, admitted that the findings reflect Australia's massive cuts of foreign aid. She also called on Britain to support infrastructure development in the Pacific, something interpreted as an attempt to counter increasing Chinese influence in the region through development aid.
China’s presence in Germany
Despite that Chinese foreign investments have been increasing for years, many western businesses and politicians have not recognized the extent of China’s influence. With a combination of Maoist control techniques and capitalist corporate governance, China’s BRI has been extremely successful – “the next WTO” according to Siemens CEO, Joe Kaeser. China is more active than ever in the European market. As a member of European financial institutions such as the European Investment Bank (EIB) and the European Development Bank (EBRD), Chinese companies have invested more money than ever before in German companies. This worries the Office for the Protection of the Constitution as they are concerned that there is an unequal outflow of information and technology to China.
Solar Energy in Nepal
Nepal’s government administrative headquarters, Singhadurbar, will be powered by solar energy provided by Chinese aid starting April 17. The project symbolizes the opportunities that Chinese aid provides Nepal to modernizes and diversify Nepal's energy sources.