Prime Minister May visits China
China and the UK are working together to promote a "Golden Age" of bilateral ties, as Prime Minister Theresa May’s met President Xi Jinping in Beijing. The nations showed similarities in many concepts and opinions in international issues as the leaders discussed business endeavors, security regarding the North Korean threat, and environmental preservation. During Prime Minister May's three day trip to China, the two countries also signed new deals in areas including finance and trade.
President Xi expressed support for strengthened relationships in areas like security, trade, and technology. He also advocated for greater ties through the Belt and Road Initiative, which he stated will allow the two countries to carry out greater cooperation, while Prime Minister May wanted to expand business, as the UK is in the process of removing itself from the European Union. During Prime Minister May's state visit, the China Development Bank announced it will be allocating 1.6 billion USD for the British banking and financial services company Standard Chartered to fund new projects. Standard Chartered will be using the money to fund corporate finance projects and trade finance transactions. Although Prime Minister May declined to officially endorse the plan, the CEO of Standard Chartered, Bill Winters, is optimistic about the deal. It seems then that China is more than willing to aid the UK, in exchange to better facilitate development projects within the Belt and Road Initiative. Read more here, here, and here.
China takes the spotlight in Davos
Despite the high anticipation of Trump's appearance at the World Economic Forum in Davos, the focus of the forum was on China's OBOR. The CEO of Germany's Siemen even expressed that regardless of what people like, the OBOR will eventually become the “new World Trade Organization.”
Critics have pointed out that the OBOR may be aggravating the debt burden that beneficiary countries can experience, and that OBOR projects can potentially damage the environment. President Temer of Brazil challenged such criticisms by stating that he does not worry about China's expansion in South America, even after China increased its investments in Brazil and provided new loans to Venezuela and Ecuador. Pakistan Prime Minister, Abbasi, also expressed that China's investments will not sway the sovereignty of Pakistan, nor will it bring about the financial debt and environmental concerns critics pointed out.
Many leaders at the Davos annual meeting called for stronger cooperation with China. Further, a Chinese official made a high criticism on trade protectionism at the Davos annual meeting, which led many to believe he was echoing the concerns many nations have over the new aggressive trade policy the Trump administration will adopt.
Polar Silk Road
Although China does not border the arctic circle, Beijing has started laying claims on parts of the region, citing need for resources and new sea routes. The Chinese white paper, "China's Arctic Policy," is seen as an extension of the OBOR to the Arctic Circle. China has become a big investor in the Arctic states, spending 89 million USD on infrastructure and energy projects, and financial cooperation, while China also became an observer state of the Arctic Council in 2013. The commercial value of the Northwest Passage is increasing alongside rising temperatures. A “Polar Silk Road” sea route through the Arctic circle would make China independent from traditional trade routes, and shorten the route to Europe by 4000 kilometers. Read more here.
Asian Infrastructure Investment Bank
President of AIIB, Jin Liqun, pointed out that there are four reasons why Hong Kong plays an important role in the infrastructure projects of One Belt One Road Initiative.
First, Hong Kong is a capital market, a financial center, and an asset management center in Asia. The AIIB can use Hong Kong’s capital markets to issue bonds. Second, Hong Kong has a long history in managing infrastructure such as rail transit and airport seaports, thus it is qualified to be an important information, law, and management service deliver in Asia. Third, Hong Kong is one of the few places has great reputation for arbitration in the world. Therefore, it has always been one of the preferred places for arbitration. Fourth, Hong Kong has a reputable talent center.
In 2017, Jin met with Chief Executive of the Hong Kong Special Administrative Region (HKSAR), Carrie Lam. He showed the willingness of AIIB to strengthen cooperation with the government of HKSAR, HK financial institutions, and relevant agencies. Jin highlighted that Hong Kong has the resources and capability to become a main driver behind leveraging international capital to finance the countries along the Belt and Road Initiative. Hong Kong has the potential to provide services to the global economy and promote basic investment and financing services align with the goal of One Belt One Road. Read more here.
Sri Lanka benefits from venture with China
Sri Lanka is reaping the rewards of a successful joint venture with China, the Hambantota Port in southern Sri Lanka. After entering operation last year, the Port is said to be functioning extremely well and business in the region is picking up at a greater rate than anticipated. Sri Lanka has been one of China's strongest partners and has been the home for several of China's development projects under the Belt and Road Initiative. The government of Sri Lanka hopes that Hambantota Port will rejuvenate the nation's economy and play an important role in shipping and trade in the region.
The Asian Development Bank
The ADB will act as a transaction advisor for Philippine National Oil Company (PNOC) in the country's first liquefied natural gas (LNG) hub project, located in Batangas. The project seeks to provide a sustainable gas supply in response to dwindling gas reserves in the Malampaya gas field in Palawan. ADB will assist and advise in the completion of related infrastructure for the hub.
ADB is loaning 250 million USD to India for rural road projects in five states. The loan's first tranche is part of the 500 million USD Second Rural Connectivity Investment Program for India that was passed by the ADB in December of last year. The projects will focus on flood resistance, access for women, and better security and efficiency in rural travel.
Environment ministers from the Mekong Subregion approved the ADB’s new Core Environment Program (CEP) Strategic Framework and Action Plan 2018-2022. This will be the third phase of the program, which was started in 2006, that includes over 540 million USD for environmental investments and cooperation over a 5-year period. The plan includes funding for green projects, a new project preparation facility, a green technology platform, and additional areas including biodiversity and conservation.
ADB and China Everbright International Limited (CEIL) agreed to a 100 million USD loan agreement to develop municipal waste-to-energy plants in Vietnam. The project aims to mitigate health risks from waste disposal and greenhouse gas emissions by disposing waste in the delta through incineration, while also providing an energy source.
China in Latin America and the Caribbean
Xi Jinping formally invited members of Community of Latin American and Caribbean States (CELAC) to join the One Belt, One Road initiative and proposed free trade among 33 countries at the CELAC most recent forum. After Trump pulled the United States out of the Trans-Pacific Trade Agreement, China looks to vastly expand relations with Latin America and the Caribbean. Since November 2017, trade expanded 18 percent between the partners. Along with increased trade, the China Development Bank has expanded operations with two regional offices and nine team in different countries in CELAC. So far, China has 62 billion USD invested in more than 200 projects in Latin America and the Caribbean. Read more here.
In a meeting with Argentinian President Mauricio Macri, Chinese Finance Minister Xiao Jie expressed interest in Chinese business' support to develop the Black Water Tunnel Project. The project would unite Argentina and Chile, costing 1.5 billion USD. It is assumed that the Asian Infrastructure Investment Bank would invest in the project because Chinese involvement in the region has significantly increased in recent times. Read more here.
The Ecuadorian Government presented the Manabí refinery project to 30 foreign companies. The project refine Ecuadorian oil and will rely upon new infrastructure to export the product. Executives from the China Development Bank and other large firms attended the presentation. Read more here.
Chinese investment in Southeast Asia
Each year, China’s influence in Southeast Asia grows. Through investment and infrastructure projects, China makes these smaller nations dependent on it, while gaining support for the Chinese political agenda. Chinese Prime Minister Li Keqiang reported that Thailand, Myanmar, laos, Vietnam and Cambodia have borrowed 900 million EUR from China. In exchange, China receives access to natural resources such as oil, gas and wood. China has also been financing a Pan-Asian railroad connection though the region, which will eventually connect Kunming, China with Vientiane, the capital of Laos as well as Bangkok, Kuala Lumpur and Singapore. Read more here.
The Philippine government recently approved the Subic-Clarke railway project, which will connect two large industrial centers on the island of Luzon. Eventually, the railway will be merged with other railway networks connecting Luzon's main seaports. The project is estimated to cost about 970 million USD, with China providing 948 million USD in loans to fund the project. Read more here.
A large number of Chinese enterprises such as Bank of China, Huawei and China Automotive have established local operations in Malaysia, and up to 90 percent of their employees are local workers. The presence of these large Chinese companies in Malaysia is welcomed, but the Chinese ambassador to Malaysia pushes for more attention on small and medium-sized enterprises (SMEs) in China's OBOR strategy because they are an important cornerstone in both the Chinese and Malaysian economies; SMEs account for over 98.5 percent of enterprises in Malaysia, and more than 15,000 new SMEs are established in China each day. Read more here.
Conditional loans in East Africa
European and Chinese investors plan to fund large railroad network in East Africa to connect Uganda, Kenya and Tanzania. the Chinese Export-Import Bank lent Kenya 90 percent of the 3.8 million USD, in exchange for the government-owned China Road and Bridge Corporation (CRBC) to receive the building contract. The Ugandan government also borrowed 3 million USD from the Chinese Exim Bank, on the conditions that China Harbour Engineering (CHEC) would receive the building contract. However, shortages on funds and complications on what energy source the lines would run on have slowed the building processes.
China increases its influence in Europe
With millions of dollars in investments, China is expanding its economic power – even in Europe. There is increased fear that China may undermine the power of the EU. Main supporters of Chinese influence in the EU include countries such as Greece and Hungary, because they rely on investment from China or show a certain proximity to Beijing's economic and political model. In March 2017, Hungary refused to sign a joint letter in which the EU wanted to denounce the torture of detained Chinese lawyers. In June 2017, Greece blocked a joint EU statement to the UN Human Rights Council.