Australia could partner with China on Belt and Road Initiative projects


By Anthony Galloway

June 17, 2020 — 5.40pm

Trade Minister Simon Birmingham has left the door open to Australia partnering with China on infrastructure projects in other countries under an agreement it signed with Beijing covering the controversial Belt and Road Initiative.

Senator Birmingham declared Australia would not be “trading away any of our values” in its dealings with China, saying both countries needed to respect each other’s sovereignty and get back to a trade relationship of “mutual advantage”.

Trade Minister Simon Birmingham said Australia won’t compromise its values in its relationship with China.
Credit: Alex Ellinghausen

In a speech at the National Press Club in Canberra, Mr Birmingham also announced Australia would on Wednesday begin formal negotiations for a free trade agreement with Britain which he said would open up new doors for Australian farmers, businesses and investors.

As tensions between Australia and China have escalated during the coronavirus pandemic, the Morrison government has been critical of Victorian Premier Daniel Andrews for pressing ahead with the state’s BRI agreement with the Chinese government. The deal paves the way for projects to be built in Victoria under the BRI banner and for Victorian firms to partner with Chinese companies in other countries.

Asked whether the federal government was now embarrassed about a 2017 agreement the Commonwealth signed with Beijing, Mr Birmingham said he was “not as pessimistic” about the deal.

Mr Birmingham’s predecessor, Steven Ciobo, inked the memorandum of understanding in September 2017, which covered building infrastructure such as roads, bridges and dams in third party countries.

The Commonwealth’s agreement with China differs from the Victorian government’s deal in that it only covers the BRI program in third party countries.

“Australia welcomes the opportunity to cooperate on infrastructure investments in other countries, in third countries, where it is in the interests of that third country, where it is valuable infrastructure investment, where it respects the sovereignty of that third country and where it is financially suitable and appropriate for that third country,” Mr Birmingham said.

“In terms of the difference between a national government signing an agreement and a state or territory government signing an agreement – well I think that goes to the fundamental premise of the fact the Australian government sets Australian foreign policy in our engagement with other nations, and it shouldn’t be outsourced or run by separate … state or territory governments.”

The BRI, Chinese President Xi Jinping’s signature policy to bankroll infrastructure around the world, has been criticised by national security experts as a form of “debt-trap diplomacy” to bind developing nations.

Australia and China’s diplomatic relationship has hit a new low after Australia played a lead role in pushing for an independent review into the handling of COVID-19 and China imposed trade strikes on $1 billion of beef and barley.

Senator Birmingham said Australia “will not compromise our sovereignty, our values or our principles”.

“It isn’t a question of idealism,” he said.

“The truth is that we believe in our exporters and the quality of their offerings, the reliability and integrity of our supply and our competitiveness on price.”

Australian Strategic Policy Institute defence program director Michael Shoebridge said he didn’t believe the Morrison government would help the Chinese state implement its economic and strategic vision under the BRI.

“Minister Birmingham seems to be going through the motions here. He’s reciting the terms under which the government signed an MOU about doing BRI work in third countries,” he said.

“The terms that the government has set for supporting Australian contributions to BRI projects in other countries are almost designed to be unable to be met by China – unless it gives up on what it wants from the BRI.”

Commenting on the launch of negotiations for a free trade agreement, Prime Minister Scott Morrison said Australia and Britain had “a wonderful opportunity to supercharge our economic relationship”.

“It will mean more jobs, more growth, more prosperity in both our countries. And more opportunities for Australian and UK citizens to live and work in each other’s countries, ultimately,” he said.

“It will also demonstrate the determination of both our nations to open, not close, our markets in the post-COVID era. I can assure everyone that my good friend Boris Johnson and I will not settle for anything less than an ambitious and high quality deal that benefits both our nations.”

Source: Sydney Morning Herald “Australia could partner with China on Belt and Road Initiative projects”

Note: This is Sydney Morning Herald’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


US backs down from Pompeo’s Belt and Road remarks


By Benjamin Preiss

May 24, 2020 — 9.40pm

The US embassy in Australia has gone into damage control over controversial comments by Secretary of State Mike Pompeo that America would “simply disconnect” if Victoria’s decision to join China’s Belt and Road plan impacted telecommunications.

On Sunday morning Prime Minister Scott Morrison said the state government should never have signed the memorandum of understanding with China.

US Secretary of State Mike Pompeo said all Belt and Road projects needed to be carefully scrutinised. Credit: AP

Earlier, Premier Daniel Andrews said he agreed with the comments of his Treasurer, Tim Pallas, who was critical of federal government rhetoric that could be interpreted as vilification by China.

There were also calls from members of the Victorian Liberals for Opposition Leader Michael O’Brien to commit to scrapping the agreement between Victoria and China if the party won government.

Hours after Mr Pompeo appeared in an interview warning against Victoria’s involvement in China’s backing of foreign infrastructure projects, the US government sought to clarify the remarks and insisted it had confidence in Australia’s ability to protect the security of its telecommunications.

On Sunday Mr Pompeo was asked on Sky News about whether Victoria joining the Belt and Road Initiative raised concerns about Australia and if it exposed Victorians to any threats.

Mr Pompeo said all Australians should know that “every one of those Belt and Road projects needs to be looked at incredibly closely”.

US ambassador Arthur Culvahouse.
Credit: Dom Lorrimer

Mr Pompeo said the US would not take any risks regarding its telecommunications infrastructure or national security with regards to its “five eyes” security partners. Australia is one of those partners.

I don’t know the nature of those projects precisely but to the extent they have an adverse impact on our ability to protect telecommunications from our private citizens or security networks for our defence and intelligence communities we will simply disconnect,” he said.

But several hours later US ambassador to Australia Arthur Culvahouse, issued a statement saying Mr Pompeo had been asked to “address a hypothetical” and he was unfamiliar with Victoria’s Belt and Road discussions.

We are not aware that Victoria has engaged in any concrete projects under BRI, let alone projects impinging on telecommunications networks, which we understand are a federal matter,” Mr Culvahouse said.

A Victorian government spokeswoman said the Belt and Road Initiative was about creating opportunities for Victorian businesses and local jobs.

Telecommunications regulation is the responsibility of the Commonwealth government,” she said. “Victoria has not, and will not in the future, agree to telecommunications projects under the BRI.”

Mr Andrews restated his commitment to the employment benefits of a partnership with China, which he said was in “everybody’s interests”.

Mr Morrison, however, remained critical of the arrangement.

We didn’t support that decision at the time they made it,” he said. “And national interest issues on foreign affairs are determined by the federal government. I respect their jurisdiction when it comes to the issues they’re responsible for and it’s always been the usual practice for states to respect and recognise the role of the federal government in setting foreign policy.”

Victorian Liberal members have told The Age they want Opposition Leader Michael O’Brien to reject the deal. Despite being critical of the arrangement, Mr O’Brien refused to say whether the Victorian Coalition would ditch the deal if in power.

One senior Liberal said there was widespread opposition to Belt and Road within the party.

Everybody wants to scrap it,” the figure said.

Mr O’Brien said the opposition would scrutinise the deal from an economics, security, employment and sovereignty point of view.

But I can tell you everything is on the table because when it comes to protecting Victorian jobs and Victorian sovereignty I will be somebody who puts Victoria first.”

He called on the state government to explain how Victorians benefited from the Belt and Road Initiative.

It was supposed to be about increasing agricultural trade between Victoria and China,” he said. “Instead we’ve seen our barley farmers whacked with an 80 per cent tariff.”

Source: The Age “US backs down from Pompeo’s Belt and Road remarks”

Note: This is The Age’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.


Xi Hopeful on Belt and Road Projects in Myanmar During COVID-19


Myanmar President U Win Myint (right) and Chinese President Xi Jinping (left) pose for a photo after the bilateral meeting in January. / Myanmar President Office

By Nan Lwin 21 May 2020

YANGON—Chinese President Xi Jinping expressed hope that Myanmar will speed up cooperation with China to implement its ambitious infrastructure projects in the country during a recent call with Myanmar President U Win Myint.

In the phone conversation on Wednesday, Xi said that he is expecting the two sides will cooperate closely and speed up the implementation of projects under the Belt and Road Initiative (BRI) that were agreed to during his visit to Myanmar earlier this year.

During Xi’s visit to Myanmar, both sides agreed to speed up the China-Myanmar Economic Corridor (CMEC) backbone projects including the Kyaukphyu Special Economic Zone (SEZ) in western Rakhine State, New Yangon City in Myanmar’s commercial capital and Cross-Border Economic Cooperation Zones in Shan and Kachin states.

He branded all three projects as crucial pillars of the CMEC that are needed to deepen “result-oriented BRI cooperation” and move from “the conceptual stage to concrete planning and implementation” of building the CMEC.

In January, the two sides inked a concession agreement and shareholders’ agreement for Kyaukphyu SEZ, a letter of intent on the development of Yangon City and a memorandum of understanding (MoU) to accelerate negotiations around the Ruili-Muse Cross-Border Economic Cooperation Zone.

Among the backbone projects, the Kyaukphyu SEZ is crucial for China, as it is expected to boost development in China’s landlocked Yunnan Province and provide China with direct access to the Indian Ocean, allowing its oil imports to bypass the Strait of Malacca.

The two sides signed an agreement on CMEC in 2018 and the corridor is part of the BRI, Xi Jinping’s signature foreign policy project. Unveiled in 2013, the international plan is also known as the Silk Road Economic Belt and the 21st Century Maritime Silk Road. The project aims to build a network of roads, railroads and shipping lanes linking at least 70 countries from China to Europe, passing through Central Asia, the Middle East and Russia and fostering trade and investment.

The estimated 1,700-kilometer-long CMEC will connect Kunming, the capital of Yunnan, to Myanmar’s major economic checkpoints—first to Mandalay in central Myanmar and then east to Yangon and west to the Kyaukphyu SEZ.

Xi said that as both countries implement COVID-19 prevention and control measures, the two sides should advance exchanges and cooperation and push for positive progress on CMEC projects.

Though Myanmar is facing the possibility of a sever COVID-19 outbreak, China is pushing hard to implement CMEC projects in the country. In early May, Chinese Ambassador to Myanmar Chen Hai and Myanmar’s Deputy Minister for Planning, Finance and Industry U Set Aung met for “in-depth discussions” on the implementation of CMEC projects. The two discussed how to move forward on the development of China’s ambitious projects in Myanmar based on the Myanmar government’s COVID-19 Economic Relief Plan (CERP).

Myanmar’s CERP seeks to mitigate the economic impact of the pandemic by implementing new measures and response plans. The measures include steps to expedite the solicitation of strategic infrastructure projects and to use fast-track procedures to approve and disclose large investments from reputable international firms that may be currently experiencing delays.

According to a statement from the Chinese Embassy, U Win Myint thanked China for providing support and assistance to the World Health Organization (WHO) and other countries, including Myanmar, in their battles against the pandemic.

U Win Myint said that Myanmar will continue to firmly uphold the One China policy and work with China closely to implement the outcomes of Xi’s most recent visit to Myanmar.

He said Myanmar is committed to deepening friendship and the comprehensive strategic cooperative partnership between Myanmar and China.

The Chinese government and Chinese companies have poured a massive amount of COVID-19-related medical supplies into Myanmar since late March. China also dispatched a team of experts to offer technical assistance and share China’s experiences fighting COVID-19 with Myanmar medical experts.

Both sides also discussed exchanging high-level visits in the post COVID-19 period to mark the 70th anniversary of China-Myanmar diplomatic relations.

Xi said that China will stand ready to work with Myanmar and other countries to continue to support the WHO as it plays a leading role in the global battle against the COVID-19 pandemic.

He also called for coordinated efforts along China’s border with Myanmar to safeguard peace, prevent and control the pandemic and resume work and economic productivity.

Since late March, China has strictly control border gates between Yunnan Province and Myanmar to prevent the further spread of COVID-19. Myanmar farmers and traders have been hurt badly following China’s restrictions and controls on the border.

The Myanmar government has received criticisms from traders and farmers over the significant decline in border trade and the Ministry of Foreign Affairs (MOFA) said the Myanmar Consulate in Kunming discussed the issue with Chinese officials on Wednesday. The Consulate reportedly raised the issue that Myanmar’s seafood and fruit industries have suffered losses due to the restrictions on the border. However, MOFA did not release the outcomes of the meeting.

Myanmar, China to Conduct Joint Boundary Inspection Next Year, Ministry Says

Source: The Irrawaddy “Xi Hopeful on Belt and Road Projects in Myanmar During COVID-19”

Note: This is The Irrawaddy’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.


Coronavirus Pakistan Business Opinion Culture Sport Magazines World Tech Prism Diamer-Bhasha dam ready for construction, PM Imran told Sanaullah KhanMay 11, 2020 Facebook Count Twitter Share 119 The premier was informed about the progress of all pending issues related to the project’s construction. — PM Khan’s Instagram/File Prime Minister Imran Khan was informed on Monday that all the prep work for the Diamer-Bhasha dam has been completed and the project was ready for construction. Taking to Twitter, Special Assistant to the Prime Minister on Information and Broadcasting retired Lt Gen Asim Saleem Bajwa called the announcement “historic news”. He said: “Announcing to start construction of Diamer-Bhasha dam today is historic news for all generations of Pakistan. A huge stimulus for our economy, [will] create 16,500 jobs, generate 4,500 MW hydel power and irrigate 1.2 m acres agri land, enhance Tarbela dam’s age by 35 years.” Article continues after ad Chairing today’s briefing on national water security strategy and the construction of dams to meet the country’s agricultural and energy requirements, the premier was informed about the progress of all pending issues related to the dam’s construction. The premier expressed satisfaction over the progress made so far and directed authorities concerned to begin construction work on the dam. “Ensuring water security is the government’s first priority,” he said, according to a statement issued by the Prime Minister’s Office. “In addition to ensuring the optimum utilisation of available water resources for agricultural needs, the construction of dams will help meet energy requirements at affordable rates.” The prime minister directed that local materials and expertise be used during construction to provide the people with ample job opportunities. According to the statement, during today’s meeting, PM Imran was informed that “all issues related to this critically important project, including settlement, detailed roadmap for mobilisation of financial resources etc. have been resolved and the project was ready for commencement of physical work”. The meeting was informed that Diamer-Bhasha dam had remained in limbo for decades due to various reasons. “The construction of the dam will create 16,500 jobs and utilise a large quantity of cement and steel which will boost our industry, in addition to its main purpose of water storage and producing 4,500 MW of cheap and affordable electricity,” the press release said. “The 6.4 million acre feet (MAF) water storage capacity of the dam will reduce the current water shortage in the country of 12 MAF to 6.1 MAF. It will add 35 years to the life of Tarbela dam by reducing sedimentation. An area of 1.23 million acres of land will be brought under agriculture [use] due to this dam,” it added. The meeting was also informed that Rs78.5 billion will be spent on the area around the dam for its social development as part of the project. “[The dam] will also be a major source of flood mitigation and save billions in damages caused by floods each year,” the statement added. The chairman of Water and Power Development Authority (Wapda) also briefed the meeting about the progress of the recently-commenced construction work that at Mohmand Dam. PM Imran was also informed about the Dasu hydropower project and the progress made so far. “The premier expressed satisfaction over the progress and directed to ensure expeditious commencement of the project,” the statement read. It added that the prime minister was also told that funds have been arranged for Naulong dam in Balochistan and that work on the project will commence next year. The premier stressed the need for starting the Sindh barrage project. “The project has huge benefits in addressing the agriculture needs of the province. It will stop soil erosion and also improve the drinking water situation for urban centres in Sindh,” he said. PM Imran also appreciated the efforts made by the water resources ministry and Wapda in pursuing the projects. He reiterated his emphasis on keeping a close eye on the quality of work and meeting timelines.


The premier was informed about the progress of all pending issues related to the project's construction. — PM Khan's Instagram/File
The premier was informed about the progress of all pending issues related to the project’s construction. — PM Khan’s Instagram/File

Prime Minister Imran Khan was informed on Monday that all the prep work for the Diamer-Bhasha dam has been completed and the project was ready for construction.

Taking to Twitter, Special Assistant to the Prime Minister on Information and Broadcasting retired Lt Gen Asim Saleem Bajwa called the announcement “historic news”.

He said: “Announcing to start construction of Diamer-Bhasha dam today is historic news for all generations of Pakistan. A huge stimulus for our economy, [will] create 16,500 jobs, generate 4,500 MW hydel power and irrigate 1.2 m acres agri land, enhance Tarbela dam’s age by 35 years.”

The premier expressed satisfaction over the progress made so far and directed authorities concerned to begin construction work on the dam. “Ensuring water security is the government’s first priority,” he said, according to a statement issued by the Prime Minister’s Office.

“In addition to ensuring the optimum utilisation of available water resources for agricultural needs, the construction of dams will help meet energy requirements at affordable rates.”

The prime minister directed that local materials and expertise be used during construction to provide the people with ample job opportunities.

According to the statement, during today’s meeting, PM Imran was informed that “all issues related to this critically important project, including settlement, detailed roadmap for mobilisation of financial resources etc. have been resolved and the project was ready for commencement of physical work”.

The meeting was informed that Diamer-Bhasha dam had remained in limbo for decades due to various reasons.

“The construction of the dam will create 16,500 jobs and utilise a large quantity of cement and steel which will boost our industry, in addition to its main purpose of water storage and producing 4,500 MW of cheap and affordable electricity,” the press release said.

“The 6.4 million acre feet (MAF) water storage capacity of the dam will reduce the current water shortage in the country of 12 MAF to 6.1 MAF. It will add 35 years to the life of Tarbela dam by reducing sedimentation. An area of 1.23 million acres of land will be brought under agriculture [use] due to this dam,” it added.

The meeting was also informed that Rs78.5 billion will be spent on the area around the dam for its social development as part of the project. “[The dam] will also be a major source of flood mitigation and save billions in damages caused by floods each year,” the statement added.

The chairman of Water and Power Development Authority (Wapda) also briefed the meeting about the progress of the recently-commenced construction work that at Mohmand Dam.

PM Imran was also informed about the Dasu hydropower project and the progress made so far. “The premier expressed satisfaction over the progress and directed to ensure expeditious commencement of the project,” the statement read.

It added that the prime minister was also told that funds have been arranged for Naulong dam in Balochistan and that work on the project will commence next year.

The premier stressed the need for starting the Sindh barrage project. “The project has huge benefits in addressing the agriculture needs of the province. It will stop soil erosion and also improve the drinking water situation for urban centres in Sindh,” he said.

PM Imran also appreciated the efforts made by the water resources ministry and Wapda in pursuing the projects. He reiterated his emphasis on keeping a close eye on the quality of work and meeting timelines.

Source: DAWN “Diamer-Bhasha dam ready for construction, PM Imran told”

Note: This is DAWN’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.


For developing world, Belt and Road Initiative is best deal around


China’s infrastructure offer supports economic growth in Europe, Africa and Asia

Shan Saeed

May 06, 2020 14:00 JST

A bridge construction site of the Bar-Boljare highway, pictured in June 2018: for Montenegro any concerns were far outweighed by the potential economic benefit of the new road. © Reuters

Shan Saeed is chief economist at Kuala Lumpur-based IQI Global, the largest real estate agency network in Southeast Asia.

China’s Belt and Road Initiative program is big — so big that it scares political leaders in Western countries while at the same time providing them with an easy target for criticism.

The BRI encompasses more than 130 countries. The World Bank estimates more than half a trillion dollars of BRI projects are planned, underway or already complete.

The intercontinental undertaking is of such scale and diversity that motivated critics have not found it difficult to pick out examples of corruption, self-dealing and overleveraging with which to tar the whole enterprise.

Yet much of the criticism of the BRI is misplaced. Many commentators tend to overlook the fact that the BRI often genuinely serves the needs of the developing countries where its projects take place.

As Richard Branson of the Virgin Group, which has infrastructure investment projects in India and other countries, said in 2017: “The Belt and Road Initiative is the only winning infrastructure strategy that can spur growth globally.”

Western governments and private companies have themselves not put enough money on the table for infrastructure projects in Asia and other developing regions. The Blue Dot Network recently launched by the U.S. is so small as to make China’s case for it; U.S. officials say the new program will catalyze private funding rather than deploy government money.

China’s program, on the other hand, is not only the world’s largest today, it is the largest in history. It is revolutionizing economic geography. Places that were backwaters — like the dusty town of Khorgos on the Chinese-Kazakh frontier or the Siberian outpost of Blagoveshchensk just inside Russia’s border with China — can become vital crossroads.

Developing countries that want to get infrastructure going quickly often have little alternative to the BRI. Djibouti wants $11 billion in investment to expand ports and other transport infrastructure. Serbia sought a new bridge across the Danube.

People attend a ceremony held to open the 1,507-meter long Mihajlo Pupin Bridge spanning the Danube River in Belgrade, Serbia in December 2014. © Anadolu Agency/Getty Images

Cambodia wanted industry and tens of thousands of jobs for its Sihanoukville Special Economic Zone. Officials in Thailand and Malaysia have been reluctant to embrace China’s terms for joint development of high-speed rail lines, but no other competitive offers have been put on the table.

It is not just that Western pocketbooks look puny compared with the enormous BRI money pot. It is also that the Western funds that are available often come with onerous strings attached that set limits on government spending and debt or require reforms intended to promote democratic decision-making and civil liberties.

China has been willing to invest in projects that Western funders reject, giving developing nations a chance to implement their highest priority investments.

Many BRI projects may be unbankable by Western standards. Even so, they can still be important to the countries involved and make sense to China.

Montenegro was looking for financing for a transnational highway to Serbia. Consultants hired by the EU’s European Investment Bank said the project would not attract enough traffic to be economically viable.

China’s financing threshold turned out to be much lower, perhaps because the project could help soak up excess industrial capacity and advance Beijing’s geopolitical goals. For Montenegro, however, any concern about those issues was far outweighed by the potential economic benefit of the new road.

Critics often lament that participation in the BRI leaves smaller countries dependent on China, which can then gain influence. But fears of such debt traps are overblown.

A study by U.S. research company Rhodium Group of 40 negotiations between China and debtor nations found that Beijing readily wrote off 40% of the value of problem loans. Debt trap concerns should also be dampened following President Xi Jinping’s declaration last April that Beijing will ensure the fiscal and commercial suitability of future BRI projects.

Moreover, China is learning from its mistakes. In its negotiations with Mahathir Mohamad, then Malaysia’s prime minister, Beijing showed a willingness to restructure its projects in his country to address his concerns about financial sustainability while keeping the developments moving forward.

While critics call China a bully, BRI countries might rather think of China as a generous friend. Most countries concerned welcome tighter ties to China.

Notwithstanding the impact of new coronavirus outbreaks, China has been growing much more quickly than Europe or North America and is transferring manufacturing jobs into other countries at a rapid pace. Its economic miracle is a model many want to emulate.

Xi has said that he wants the BRI to result in “win-win cooperation.” Despite the West’s resistance, many developing countries are more than willing to take him at his word.

If Western governments want to offer a serious alternative to the BRI, they will need to significantly scale up development aid budgets and consider loosening up governance and investment standards. They will have to tailor their offerings to appeal to developing countries rather than simply take their welcome for granted.

Source: Nikkei Asian Review “For developing world, Belt and Road Initiative is best deal around”

Note: This is Nikkei Asian Review’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.


Chinese Investment and the BRI in Sri Lanka


24 March 2020

China’s Belt and Road Initiative (BRI) is having profound impacts on recipient countries. This paper examines the benefits and costs of the BRI and its projects to Sri Lanka and the lessons that may improve future BRI projects in Sri Lanka and elsewhere.

Ganeshan Wignaraja

Executive Director, Lakshman Kadirgamar Institute of International Relations and Strategic Studies (LKI)

Dinusha Panditaratne

Non-Resident Fellow and former Executive Director, LKI

Pabasara Kannangara

Research Associate, LKI

Divya Hundlani

Independent Researcher

GettyImages-106945018.jpg

Summary

China’s expansive Belt and Road Initiative (BRI) has led to greater Chinese outbound investment in Asia, including in Sri Lanka. This investment has recently come under scrutiny, due to intensifying geopolitical rivalries in the Indian Ocean as well as Sri Lanka’s prime location and ports in the region.

There are claims that by accepting Chinese outbound investment, Sri Lanka risks being stuck in a ‘debt trap’ and the displacement of its local workers by both legal and illegal Chinese labour. There are also concerns that Chinese investment has led to environmental damage and increased security risks for Sri Lanka and the neighbourhood. Furthermore, there is criticism that institutional weaknesses in Sri Lanka, including a lack of policy planning and transparency, are resulting in nonperforming infrastructure projects funded by Chinese investment.

The pattern of Chinese investment in Sri Lanka reveals a nuanced picture of benefits and costs. Similarly, it shows that a matrix of Sri Lankan, Chinese and multilateral policies are required to maximize the benefits and minimize any risks of Chinese investment. Sri Lanka is not in a Chinese debt trap. Its debt to China amounts to about 6 per cent of its GDP. However, Sri Lanka’s generally high debt levels show the country needs to improve its debt management systems. This step would also reduce any risk of a Chinese debt trap in the future.

Specific projects have contributed positively to Sri Lanka’s economy. Some have brought greater benefits than others, such as the Colombo International Container Terminal (CICT), which has allowed the Colombo port to grow at a rapid pace. However, imports from China for projects in Sri Lanka have widened the trade deficit between the two countries. In addition, there have been only limited economic spillovers for Sri Lanka, including knowledge transfer in the local labour force.

The number of Chinese workers in Sri Lanka is rising but remains a very small percentage of the total labour force. While illegal migration is a concern, there are significantly fewer illegal residents from China than from neighbouring countries. Sri Lanka has relatively strong rules on outward migration but can better regulate inward migration based on labour market demands and economic priorities.

The environmental implications of Chinese investment projects in Sri Lanka are mixed. While earlier projects were more harmful, recent projects such as the CICT and Port City in Colombo have adapted to stricter environmental standards. To ensure consistently high environmental standards, Sri Lanka should strengthen its domestic regulations and seek more investments from green-friendly partners.

Concerns that China will use ports and other projects for military purposes are, in part, driven by geopolitical anxieties. In response, Sri Lanka has strengthened its naval presence at the Hambantota port. Continual oversight by technical experts is required to guard against security-related concerns and ensure public trust in the projects. Such trust will also grow by improving transparency and by pursuing a long-term, national infrastructure development plan.

Source: chathamhouse.org “Chinese Investment and the BRI in Sri Lanka”

Note: This is chathamhouse.org’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.


China Moving Export-oriented Enterprises to Silk Road Belt


In its article “Industries may relocate to Pakistan due to covid-19” on March 12 Pakistan media Tribune quotes State Bank of Pakistan (SBP) Deputy Governor Dr Murtaza Syed as saying that after recovery from coronavirus, the world is likely to reconsider the global supply chains to avoid concentration of industries in one country, China, which will create opportunities of relocation of some industries to Pakistan.

Syed hopes that industries will move from China to Pakistan. That is precisely what China wants in its Belt and Road initiative. China is now switching from export- and investment-geared economic growth to innovation-, creationg- and consumption-led economic growth but it is hard to transform all its export-oriented enterprises into innovation- and creation-geared ones so that it has to move those it cannot transform to Silk Road economic belt including Pakistan.

Moreover, US trade war offensive is forcing China to move enterprises geared for export to the US out of China to avoid tariff hikes.

Pakistan, Myanmar, Bangladesh, Laos, Cambodia, Vietnam, etc. are all destinations for such removal as they are all in Silk Road economic belt. Syed is wise to see and wants to grab the opportunity.

Comment by Chan Kai Yee on Trubune’s article, full text of which can be viewed at https://tribune.com.pk/story/2174277/2-industries-may-relocate-pakistan-due-virus/.


CPEC: The ball is in Pakistan’s court


Afshan SubohiUpdated February 10, 2020

China asserts that it is not wavering from its commitment to assist Pakistan in the second, people-centric phase of the China-Pakistan Economic Corridor (CPEC). — AP/File

China asserts that it is not wavering from its commitment to assist Pakistan in the second, people-centric phase of the China-Pakistan Economic Corridor (CPEC).

Despite being embroiled in multiple problems — the virus epidemic, growth moderation and trade spat with the United States — the Asian dragon is all set to commit $1 billion in the current calendar year to kick-start the next phase of CPEC.

In an exclusive interaction with Dawn, China’s Consul General in Karachi Li Bijian was open and clear about the mutual relationship and its future. He dismissed the perception that China is disillusioned by the Pakistani leadership and has adopted a wait-and-see strategy before committing support for CPEC’s second phase.

This is a figment of some naïve elements’ imagination. Nothing can be far from the truth. I can confirm that China has helped Pakistan close physical infrastructure gaps in the first phase and wishes to see benefits of this massive investment flowing to Pakistani youth, farmers, labour and disadvantaged segments in the second phase,” he asserted.

He declined to comment on a possible US role in peddling doubts about CPEC and its cost.

We can’t order private investment. We know well it will not be persuasion but the profit expectation and risk coverage that will mobilise them,’ CG Li

The second phase of CPEC is focused on public and private collaboration in industrial, agriculture and social sectors (poverty alleviation, training and research to transform industrial/agriculture sectors to improve productivity and competitiveness). The specifics of commitments for the identified projects have yet to be finalised, but about $1bn is expected to land in the country over the next 11 months.

In the first phase, the thrust was on bridging the physical infrastructure deficit (electricity, logistics and the port). Big-ticket projects close to $21bn in energy, transport infrastructure and Gwadar Port are either complete or about to finish shortly.

Expanding on his argument, the consul general stated: “The relationship between the two countries is not transactional. We are long-term partners who share the common dream for a just and inclusive order that affords decent living standards for all citizens. China chose Pakistan to be the first stop for its One Belt, One Road vision.”

If there was some confusion in the party that assumed power after the 2018 general elections, it has been cleared. We know the current leadership in Pakistan understands and acknowledges CPEC’s value for the country and its future,” he added, putting to rest the perception of deliberate reluctance on either side.

He also mentioned the revised China-Pakistan Free Trade Agreement (FTA) that has added 301 items to the list of articles enjoying duty-free access to the gigantic Chinese market. “It can translate into $6bn worth of additional export from Pakistan to China if the potential of the facility is properly leveraged,” Mr Li elaborated.

To a question regarding little interest among private Chinese companies in relocating their operations in Pakistan, the consul general was not apologetic. He attributed it to a lack of suitable business environment that had de-motivated even local investors.

We can’t order private investment. Yes, we are encouraging companies. We know well that it will not be persuasion but the profit expectation and risk coverage that will mobilise them. We are engaging with the relevant quarters in Pakistan to work out an incentives package for Chinese investors in special economic zones (SEZs).”

About $1bn is expected to land in Pakistan over the next 11 months as part of the second phase of CPEC

Elaborating on multiple factors that influence the decision of Chinese companies about the destination of their overseas investment, he mentioned the low quality of workforce in Pakistan. “Finding workers with required skills was identified as a big challenge by prospective Chinese investors. We intend to initiate more skill training programmes for workers in Pakistan to ensure the availability of employable youth for Chinese companies setting up shop here. Currently, we are setting up one such facility at Gwadar.”

Commenting on the current slump in Chinese funding, the consul general mentioned multiple challenges that his home country is facing. “Taking care of I.4bn- strong population is not a mean challenge in itself, especially when the GDP growth rate has moderated to 6.1 per cent from over 8pc annual average. The global slowdown and trade frictions with the United States are there. The fear of a virus epidemic in a country of high population density has soaked up the government attention. In this environment, China can’t afford to be too generous. Like others, we also need to justify to our people the resources diverted to other countries.”

He said the next Joint Coordination Committee meeting is still on the agenda. “The tradition of top-level exchange of visits will be maintained this year. Such frequent bilateral visits will further promote and strengthen the existing relations and cooperation.”

Experts involved in CPEC-related affairs agree that sometimes China raises issues, but it would be wrong to interpret those as second thoughts on Pakistan. “The problem is on Pakistan’s side. The PTI leadership took long to absorb the value of Chinese support to the economy that is on a slippery slope. All members of the leading team might still not be fully convinced by the official line to make CPEC fly. This, however, has proven to be insufficient.

The Khan government is still struggling to put in place a workable mechanism acceptable to all federating units for implementing the second phase of CPEC,” a well-connected source in Islamabad commented.

Several attempts to reach retired Lt Gen Asim Saleem Bajwa, chairman of the China-Pakistan Economic Corridor Authority (CPECA), for his input did not succeed.

Zafar Hasan, federal secretary for planning, was upbeat about the future of CPEC. He confirmed that the incentives package for local and Chinese investors in SEZs was in the works in collaboration with Chinese counterparts.

He defended the newly established autonomous authority that he said would be sufficiently empowered and made financially independent to coordinate and streamline dealings with all relevant departments and ministries and lower tiers of the government in CPEC-related projects across Pakistan.

As for the past and present inflow of funds from China, Mr Hasan said working out the exact quantum was a little difficult and involved monetising goods and services associated with CPEC projects. He did not confirm or dismiss the projection of $1bn worth of support in 2020 mentioned by the Chinese consul general.

The intent might be there but the pace of progress is woefully slow. It is almost criminal. The government must immediately remove irritants delaying the arrival of Chinese investment that might ease economic stress through job creation or the strengthening of social protection programmes,” commented a senior officer anonymously.

Published in Dawn, The Business and Finance Weekly, February 10th, 2020

Source: Dawn “CPEC: The ball is in Pakistan’s court”

Note: This is DAWN’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.


Pakistani PM Prioritizes Implementation of CPEC Projects


PM Khan chairs a meeting. Photo: APP

In its report “PM Imran reviews CPEC progress, directs ministries to fast-track projects” on January 29, Pakistan’s geo.tv says that Pakistani Prime Minister Imran Khan told officials at a high-level review meeting to ascertain progress on different CPEC projects that the China Pakistan Economic Corridor (CPEC) should be completed on a fast-track basis.

The report says, “Lauding the time-tested friendship with China, the premier said China had always supported Pakistan during difficult times and the CPEC was a manifestation of the partnership between the two countries” and “‘Chinese experiences in the social sector, especially for the eradication of poverty and promotion of agriculture, must be fully explored,’ the prime minister said, according to the media wing of the PM Office.”

CPEC and the China-Myanmar Economic Corridor are of vital strategic importance in China’s Belt and Road initiative (BRI) as they will provide vital trade routes to China’s west. The BRI railway connections to China’s west through Central Asia and Russia lack volume and are slow and too expensive to accommodate China’s huge volume of trade with Europe, the Middle East and Africa. BRI’s 21st century maritime Silk Road through Pakistan and Myanmar will provide shortcut to bypass the Malacca Strait. The route through CPEC is especially secure due to Iran’s friendship with Russia and China and enmity against the US. Iran may protect China’s trade route there.

Comment by Chan Kai Yee on geo.tv’s report, full text of which can be viewed at https://www.geo.tv/latest/269622-pm-imran-reviews-progress-on-cpec-directs-ministries-to-fast-track-projects.


China’s Xi Ensures Bypassing Malacca Strait


I have mentioned in my post “US Helpless as China Has Turned South China Sea into Its Lake” yesterday that with the deployment of J-20 for air supremacy and the construction of artificial islands, China has turned the South China Sea into its lake. The US is simply unable to win a war by direct attack at Chinese homeland.

However, powerful US military is still able to cut China’s trade lifelines though the oceans controlled by powerful US Navy. The trade lifelines through the Indian Ocean is especially vital for Chinese economy especially the imports of oil and gas from the Middle East and China’s shipping to EU, Middle East and Africa through Indian Ocean.

For security of China’s trade lifelines China has first to bypass the Malacca Strait, which can easily be blocked by US troops stationed in Singapore.

To do so, China has three alternatives, the best is to build a canal through Kra Isthmus (Kra Canal), which will shorten shipping route by 2,000 km for China, Japan and South Korea. However, as France, UK and USA all have to finally waive their ownership of Suez and Panama Canals, China certainly knows that it cannot own Kra Canal even if its construction is entirely funded by China. Build a canal all with its own funds to benefit not only itself but also Japan, South Korea, etc. is not a good idea. Moreover, Thai politics are not stable enough to ensure secure use of the canal.

Another alternative is a pan-Asian railway through Laos, Thailand and Malaysia to the west coast of Malaysia. China is building sections of the railway in Laos (China-Laos Railway) and Malaysia (East Coast Rail Link), but the construction of the section through Thailand has not been ensured. Moreover, there will certainly be political risks and diplomatic difficulties for a route through three foreign countries.

Therefore, the third and practically best alternative is the construction of a port at Kyaukpyu, Myanmar and a railway between Kyaukpyu and China’s Ruili.

This shortcut to bypass the Malacca Strait is much simpler as it goes through only one foreign country Myanmar, which is now politically stable and has close ties with China due to Western pressure on it over the Rohingya issue.

Reuters’ article “Myanmar, China ink deals to accelerate Belt and Road as Xi courts an isolated Suu Kyi” on January 18 says China and Myanmar signed 33 deals during Chinese President’s recent visit to Myanmar.

Among the deals are the projects of a deep sea-port in Kyaukpyu China has been building and a railway linking the port with China. Xi has thus ensured Southwest China’s trade route to bypass the Malacca Strait. That will be a major section of China’s 21sta century maritime Silk Road, the Road in China’s Belt and Road.

Reuters says that China is courting Myanmar, but from the video footage about Myanmar people’s enthusiasm in welcoming Xi, we see Myanmar is courting China for win-win cooperation with China to lift them out of poverty. China is courting Myanmar with its Chinese model of lifting people out of poverty and improving people’s living standard. That model has much greater impact than Rohingya issue. It is the major factor that enable the success of China’s BRI in Central Asia, Pakistan, Bangladesh, Sri Lanka, etc.

Another major section of the maritime Silk Road is the China-Pakistan Economic Corridor that links Northwest China with the Middle East and Africa.

Comment by Chan Kai Yee on Reuters’ article, full text of which can be viewed at https://www.reuters.com/article/us-myanmar-china/myanmar-china-ink-deals-to-accelerate-belt-and-road-as-xi-courts-an-isolated-suu-kyi-idUSKBN1ZH054