News from the Belt and Road
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.
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.
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
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.
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.
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.