The EU and the BRI
The European Union has long expressed some level of discontent with China's Belt and Road Initiative. In a recent joint report, 27 out of 28 of the EU ambassadors to China criticized the BRI. Europe remains an important component of the BRI, and China has made efforts to further integrate the EU into its overarching development framework. However, for Europeans, the BRI has its drawbacks; a prominent critique is that the BRI runs counter to the EU agenda for liberalizing trade and pushes the balance of power in favor of subsidized Chinese companies. Indeed, almost 90 percent of BRI projects are financed by Chinese companies, and foreign firms have long expressed frustration with a lack of reciprocity and a lack of access to Chinese markets. Although China has branded the BRI as “win-win cooperation,” the country's reluctance to welcome foreign investors and further liberalize its markets could prompt greater criticism from the EU and other governments.
China responded in a Press Conference claiming that these reports and clarification are not confirmed with facts. The spokesperson stated that China has repeatedly stressed that the BRI is a global public product that seeks mutual benefits and common development, and transparency of BRI is always highly insisted. Read more here.
Chinese tax evasion in Europe?
EU authorities are investigating instances of tax evasion and tax fraud by Chinese firms through new routes developing with the Belt and Road Initiative. At the core of the investigation is a suspected wide-scale tax fraud scheme by Chinese importers via the Greek port of Piraeus, a trade gateway between China and Europe. The European Anti-Fraud Office asserts that there is evidence that Chinese-owned firms have been fraudulently avoiding import duties and the value-added tax (VAT) on large shipments of goods through Piraeus. Italian and Greek investigators are also independently investigating cases of tax fraud on the part of Chinese firms in Mediterranean ports.
Belt and Road debt concerns
Based on news from Chinese government researchers, the Belt and Road Initiative is currently facing serious financial challenges. Li Ruogu, former chairman of the Exim Bank of China, stated that most countries along the BRI have no money to pay for projects they participated in. These countries are already heavily in debt and are needing to take on private loans. He continued by saying that the average liability ratio and debt ratio in these countries have already reached beyond 10-20 percent of the globally recognized risky percentages.
India still opposes BRI
India has consistently held an opposing view toward the Chinese led BRI, stating that BRI’s flagship project, the China-Pakistan Economic Corridor, “passes through the Pakistan-occupied Kashmir region which concerns India's sovereignty.” At a recent strategic dialogue meeting, India once again refused to participate in BRI, yet Beijing will continue its efforts to persuade India to join due to its important position in South Asia and its huge market potential.
The Asian Infrastructure Investment Bank
As the original sponsor of the Asian Infrastructure Investment Bank, China has played a leading role in decision making and preparation process, keeping about 30 percent of the Bank's shareholding and about 26 percent of the voting power. This author makes three points about China's leadership in AIIB. First, the author believes that China's dominance and leadership within the AIIB is formed objectively rather than deliberately. Second, China's high share of the AIIB and its high voting power is a phenomenon of phase, and it will adjust as more countries join in the future. However, China will not deliberately give up its leading role. Third, there is no need to avoid the fact that the good performance of the AIIB reflects China's rapid progress in multilateral diplomacy and that China had promoted a series of groundbreaking foreign policy practices.
ADB and AIIB cooperation
Takehiko Nakao, president of the Asian Development Bank (ADB) stated at a press conference his desire to increase “cooperation over competition” with the Asia Infrastructure Investment Bank (AIIB). In reference to the AIIB's relative inexperience, Nakao stated “it is also important to cooperate with the AIIB in order to draw them toward international standards.” In response to a question regarding the possibility of ADB assistance for North Korea, he stated “it would be the prerogative of the member states, but no such talks are currently in place.”
Asian Development Bank Updates
The ADB and Afghanistan signed three energy contracts to support the country's energy security and efficiency. The contracts, totaling 80 million USD, are part of a 415 million USD grant with numerous other cofinancers. Afghanistan relies heavily on energy imports from neighboring countries. The contracts and grant are aimed to expand the country's energy producing capacity by building new stations and expanding the current grid.
Healthcare in Laos
The ADB is providing a 30 million USD policy-based grant to the Lao People's Democratic Republic (Lao PDR) to expand healthcare coverage. The grant is the second part of the government's Health Sector Reform Strategy to achieve universal health care coverage by 2025. The project will support enhancing healthcare for the poor, especially women and children by improving health human resource management and the sector's financial management system.
The ADB is expanding projects into the Eurasia region by increasing investments in Georgia. ADB will work on improving the water supply, sanitation, and wastewater systems in Georgia’s ski resort in the Caucasus mountain range, Gudauri. Werner Liepach, a director at ADB, says that the bank intends to pursue a long term partnership with Georgia, and that urban and water development are of high priority to the bank. In addition, ADB will be invest in Georgian infrastructure to improve transit and tourist potential.
Seven Multilateral Development Banks (MDBs), including the ADB, launched a new platform to collaborate on economic migration and forced displacement. In response to a request by the G7, the MDBs involved are continuing to cooperate on the project. Four priority areas include refining a common framework for MDB engagement with the two issues, advancing cooperation on knowledge and data, ensuring strategic coordination of efforts with fellow MDBs, governments, and NGOs, and using better-targeted instruments and products.
China provides disaster relief to Pakistan
China has supported the United Nations Development Programme's (UNDP) project in Balochistan and the Federally Administered Tribal Areas (FATA) in Pakistan to provide disaster relief from past flooding. Chinese aid, provided under the framework of the South-South Cooperation Fund, offered food assistance to affected families. This is the first Chinese contribution to the World Food Programme (WFP) in Pakistan.
China looks to Mexico
China looks to invest in the Lázaro Cárdenas Port in Michoacan, Mexico after Chinese officials met with Mexican officials. The port is a good avenue to expand trade relations with Mexico because it already has nearly all infrastructure needed to be successful and lies in a location that is geographically advantageous for importing and exporting manufactured vehicular goods, minerals, and other bulk cargo.