The AIIB and Islamic Development Bank team up
The largest Muslim development organization, the Islamic Development Bank is looking to partner with the AIIB to address the infrastructure gap in Africa and other developing countries. Since its establishment, the AIIB has been constantly expanding its international relationships with other development banks.
ADB and AIIB continue cooperation
Last week, the AIIB's Director Commissioner, Zhang Wencai, expressed interest in continued cooperation with the ADB, noting past collaborations in Pakistan, India, Bangladesh, and Georgia. Meanwhile, Chinese experts pointed out that while the overall economic development in the Asia-Pacific region has been accelerating in recent years, there is still a disparity in regional development.
The Asian Development Bank
The ADB is granting an additional 1 million USD in emergency funds to Tonga in the wake of Cyclone Gita. The recent cyclone affected around 80 percent of the country's population, destroyed and damaged around 2,000 homes, and damaged the electricity network in Nuku'alofa. The grant will add on to the initial 6 million USD ADB provided to Tonga after the cyclone.
The ADB is loaning 360 million USD to buy rolling stock and support reform in Bangladesh Railway. The loans will be focused on investment and modernization needs of Bangladesh Railway. The project includes freight and passenger capacity increases, reduced diesel consumption, construction of maintenance facilities, driver training, and a new IT system. A technical assistance grant of 500,000 USD will be used for training and energy efficiency plans.
The ADB signed a 235 million USD loan agreement with B.Grimm Power Public Company Limited, one of the largest power producers in Thailand, for renewable energy development in ASEAN member countries. The loan will fund B.Grimm Power's part in the ASEAN Distributed Power Project which will support development of solar, wind, biomass, waste-to-energy, gas-fired power, and energy storage. Member countries benefiting include Cambodia, Indonesia, Lao People's Democratic Republic, Myanmar, the Philippines, and Vietnam.
China’s soft power
China will open a bookstore that focuses on Chinese culture development in Buenos Aires.The store will be a part of the "Bookuu Nuevo Continente" network, a multi-city program. The Zhejiang Publishing United Group will partner with the National University of Mar Del Plata. In addition, China International Press will establish a space for Chinese traditional texts translated to Spanish. These moves intend to spread the narrative of Chinese culture and are interpreted China implementing soft power alongside China's global commercial endeavors.
The World Trade Organization's most recent report estimated that world trade would continue to grow at a high rate of 3.2 percent in 2018, a figure similar to 3.6 percent in 2017. Exports from Latin America grew 13.1 percent in 2017, which correlates with Asian countries purchasing increasing by 5.8 percent. The report highlights that trends could continue to be positive with China’s economic agenda coupled with the One Belt One Road initiative.
The Ministry of Energy and Mines' and the World Bank's joint release of The Hydroelectric Atlas informed the public that, as of 2011, southern Peru has 300 megawatts of hydroelectric power. In response, the Technical Operation Committee of the Interconnected Electrical System pointed out that only 1/66th of all hydroelectric potential is utilized. Though new hydroelectric projects are on the table, the San Gabán III project is the only one progressing. The installation will have a capacity of 205.8 megawatts after the China Development Bank granted 438 million USD of investment to China's Three Gorges Corporation and Energías de Portugal.
China’s European Relations
The Belt and Road Initiative, while mainly focused on economic and infrastructure development, has produced several positive externalities for China. In creating economic ties with nations across the world, China has acquired greater access to foreign markets and their resources. This has created favorable conditions for China to import goods and services in order to meet growing domestic demand. With annual consumption rates exceeding 7.9 million tons, China is the third largest importer of beef, and through the Belt and Road Initiative China has accessed new beef markets like Belarus. With a well developed animal husbandry industry and a reputation for quality beef, Belarus exports over 130 thousand tons of beef every year, and following a July 2017 deal will export beef to the China for the first time.
China is Germany's most important trading partner for the second year running, with imports and exports combined totalling 186.6 billion EUR last year. As early as 2016, China passed up the U.S. and became Germany's largest trading partner. Following China is the Netherlands with 177.3 billion EUR from the U.S. with 172.6 billion EUR.
Concerns and Alternatives to the Belt and Road
The Belt and Road Initiative has gained international support in part because of China's promise of shared benefit for all countries involved. However, China has pursued an asymmetric policy of foreign direct investment (FDI), which makes it difficult for foreign firms to gain access to Chinese markets. The imbalance between FDI inflows and outflows could jeopardize external support for the Belt and Road Initiative, potentially creating a competitive atmosphere that could undermine the spirit of collective benefit.
For example, the Trump administration has proposed a system of reciprocity, which would impose the same regulations on Chinese investors in the U.S. as American investors face in China. The European Union has also raised concerns about investment imbalances in European markets. The success of the Belt and Road Initiative is contingent on China being able to access foreign export markets, and growing backlash on investment flows could incentivize China to further liberalize its own economy and make FDI more symmetrical in the future. Read more here.
Many countries including Germany and France are skeptical about the One Belt One Road initiatives, claiming it hinders Western values and prejudices democratic freedom. Several countries hold a more ambiguous attitude, saying that they do not oppose the OBOR but are starting a new program that is an alternative to OBOR. Read more here.
The U.S., Japan, India, and Australia look for an alternative
China is pushing ahead with a huge infrastructure project, the New Silk Road with billions of dollars of investments. Several Western and Asian countries fear Beijing's new influence. Therefore, countries like the U.S., Australia and Japan are seeking alternative programs to counter China's growing influence. Read more here.
Australian Minister of Foreign Affairs Julie Bishop stated that the U.S., Japan, India, and Australia are currently researching to create a joint Asian infrastructure project. Australian Prime Minister Malcolm Trunbull intends to discuss this plan with U.S. President Trump during their meeting. Turnbull emphasized that this project is referred to as an alternative of the OBOR and not a competitor. Read more here.