BRI for Security of China’s Trade with Middle East, Europe, Africa


SCMP’s article “China slimming down Belt and Road Initiative as new project value plunges in last 18 months, report shows” on October 10 points out the decline of the number and value of new projects of China’s Beld and Road initiative (BRI). The reasons for such decline, according to the article is the reduction of funds available for such projects and Chinese banks’ caution to lend and potential borrowers reluctance to borrow for fear of inability to repay the loans.

The analysis of the entire article is based on the theory that BRI aims at enhancing China’s geopolitical influence.

It fails to see BRI’s strategical importance for China.

As the US had fallen deep in Thucydides trap, China was facing the risk of US military attacks of cruise missiles from US attack submarines in the South China Sea so that China had to build artificial islands there to prevent such attacks.

At the same time, China was aware that its trade lifelines through the oceans might be cut off by powerful US navy. As most of its foreign trade was with the Middle East and Europe, China launched its Silk Road economic belt for land connections to those areas and 21st century maritime Silk Road for maritime connections.

BRI was launched in late 2013 while construction of the artificial islands in the South China Sea began in early 2014. The timing of those two of China’s major security projects proves that they came out from the same security strategy.

Trump’s trade war against China precisely proves Chinese leaders’ vision on China’s risks of US attacks.

BRI has established China’s land connection to Europe through Central Asia and Russia. It also facilitates China’s sourcing of oil and natural gas in Russia and Central Asia.

For China’s shipping safety, the most important BRI projects are the China-Pakistan economic corridor that provide land and sea connections between China’s northwest and the Middle East, Europe and Africa and the China-Myanmar economic corridor for China to bypass the Malacca Strait for land and sea connections between China’s southwest and the Middle East, Europe and Africa.

Perhaps due to West’s misunderstanding of China’s intention for BRI, Trump has created tension with Iran to enable China to have Iran as an ally in defending its shipping from Pakistan to Europe and Africa and India’s enhancing of tension with Pakistan to facilitate the development of China-Pakistan economic corridor.

West accusations of Myanmar’s way in dealing with Rohingya refugee crisis have pushed Myanmar into China’s arms to facilitate the development of China-Myanmar economic corridor for China to bypass the Malacca Strait.

The other BRI projects facilitate China moving its labor-intensive industries to areas with cheap labor, obtaining mineral resources for its economic development and expansion of market in developing countries. China has had quite a few such projects as a beginning. It certainly has to reduce the scale of investment due to the limit to its financial resources.

The article talks about BRI setting debt traps for countries involved. In fact, those countries will not fallen into debt traps as China has no way to force them to repay their debts when they are unable to repay. Instead, it will be China to fall into the debt traps and incur serious setbacks in its economic development. China’s caution in its BRI development precisely proves its leaders’ wisdom.

Comment by Chan Kai Yee on SCMP’s article, full text of which can be viewed at https://www.scmp.com/economy/global-economy/article/3032375/china-slimming-down-belt-and-road-initiative-new-project.


Four mega projects under China-Pakistan Economic Corridor launched


PM, Chinese VP unveil Rashakai Special Economic Zone project to promote industrialisation in KP Imran, Wang resolve to deepen all-weather strategic cooperative partnership

Four mega projects under CPEC launched

Maqbool Malik

May 27, 2019

ISLAMABAD – Prime Minister Imran Khan and Chinese Vice President Wang Qishan Sunday launched four mega development projects in the fields of energy, technology and education under China-Pakistan Economic Corridor (CPEC).

Both the dignitaries unveiled the plaques of the four projects at a ceremony held here during the visit of the Chinese vice president who is here on three-day visit.

The ceremony was also attended by Minister for Foreign Affairs Shah Mahmood Qureshi, Planning Minister Khusro Bakhtiar, Finance Adviser Abdul Hafeez Sheikh and members of the Chinese delegation.

Under the first project, a transmission line of 660KV would be laid between Matiari and Lahore to transmit power from coal-based plants located at Thar, Port Qasim and Hub. The project would have the capacity to supply 2000MW with 10 percent overloaded capability for two hours.

The two leaders unveiled the plaque for Rashakai Special Economic Zone (RSEZ) project to promote industrialization through optimally priced, world-class industrial infrastructure in Khyber Pakhtunkhwa province.

The RSEZ is situated centrally in the CPEC at the junction of Karakoram Corridor and ML-1 development corridor. It is set to become, and will be designed, to be the key trade and logistics hub connecting Kashgar, Kabul and Gwadar on the Belt and Road, and be a high-end host of international commercial, technological and manufacturing activities.

The two leaders inaugurated the Confucious Institute at the University of Punjab. The institute mainly provides Chinese education, cultural promotion and cultural exchanges and other projects and activities.

The ceremony also marked the launching of Huawei Technical Support Center to be established in Pakistan as part of Chinese tech giant’s commitment to make massive investment in Pakistan.

The two leaders also witnessed the signing of MoUs/agreements between Pakistan and China and inauguration of several projects to enhance bilateral cooperation in diverse areas. The MoUs/agreements signed on the occasion include Framework Agreement on Agricultural Cooperation; Memorandum on the Requirements of FMD Free Zone; Letter of Exchange for Disaster Relief Goods; China-Pakistan Economic Agreement; Agreement between CMEC, Government of Balochistan and Lasbela University on Modern Agriculture Comprehensive Development in Lasbela.

Both the leaders yesterday resolved to further deepen their ‘all-weather strategic cooperative partnership’.

Islamabad and Beijing expressed this commitment at delegation-level talks held here between Prime Minister Imran Khan and Chinese Vice President Wang Qishan. The Chinese vice president arrived in Pakistan on three-day visit on invitation of the prime minister.

Reaffirming ‘all-weather strategic cooperative partnership’ between Pakistan and China, the two leaders exchanged views on the entire gamut of bilateral relations and expressed the resolve to further strengthen bilateral relations in all spheres – including political, economic and trade and people-to-people exchanges.

Recalling his visit to China last month to attend the 2nd Belt and Road Forum (BRF), the prime minister expressed satisfaction at results of the visit and highlighted significance of high-level exchanges in cementing abiding friendship between the two countries.

The prime minister appreciated President Xi’s Belt and Road Initiative and underscored its significance for greater regional connectivity and sustainable growth.

Reiterating Pakistan’s unwavering commitment to China-Pakistan Economic Corridor (CPEC), the prime minister highlighted the extension of CPEC into new areas of agriculture, industrial development and socio-economic uplift.

He also stressed the importance of further deepening bilateral economic and commercial interaction, industrial collaboration, and China’s investment in Pakistan’s special economic zones (SEZs).

Reciprocating the sentiments of the prime minister, the vice president thanked him for the warm welcome and hospitality.

He reiterated China’s strong support for agenda of socio-economic uplift and people-centred development.

He also expressed satisfaction at the increasing momentum of bilateral engagement between the two countries.

Among other things, the vice president underlined importance of frequent leadership-level exchanges, CPEC projects in diverse sectors, expansion of bilateral trade in a balanced manner, promotion of investments, and increase in cultural and people-to-people exchanges with a special focus on youth and the media.

The two sides also exchanged views on the regional situation, including recent developments in South Asia.

The vice president lauded Pakistan’s constructive approach and new initiatives for forging peaceful and cooperative relations in the neighbourhood.

Vice President Wang also expressed China’s appreciation for Pakistan’s sustained and successful efforts in the fight against terrorism and reaffirmed China’s steadfast support in this regard.

Earlier upon arrival on three day visit on Sunday, the Vice President of China Wang Qishan was accorded red carpet welcome at Nur Khan Airbase.

Foreign Minister Shah Mahmood Qureshi and Planning Minister Khusro Bakhtiar received the Chinese vice president.

Source: The Nation “Four mega projects under CPEC launched”

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


Indian Air Strike in Pakistan Helps China’s Belt and Road There


Reuters says in its report “India launches air strike in Pakistan; Islamabad denies militant camp hit” on February 26 that India said that its air force conducted air strike in Pakistan and killed 140 militants but Pakistan denied any damages or casualty inflicted by Indian air raid.

Though Pakistan has shot down 2 Indian warplanes and captured one Indian pilot, Pakistan is weaker than India and has suffered a lot in three previous wars with India.

According to Chinese media, weapons supplied by China have played their role to enable Pakistan to resist Indian attack.

Pakistan and China are iron brothers. If India really starts a war with Pakistan, China will certainly help Pakistan. Indian attack has made China popular in Pakistan and helped reduce the opposition of some people affected by the construction of China’s Belt and Road projects in Pakistan.

When the projects are completed, those people will be benefited by the projects and their opposition will be turned into support.

There were 220 million people in Pakistan and most of them are quite poor. The infrastructures built under China’s Belt and Road initiative will facilitate China to move its labor-intensified industries to Pakistan and provide employment for those poor people.

That will in turn make Pakistan prosperous and provide market for Chinese goods. It seems that both China and Pakistan shall be grateful to India for the air strike that according to Pakistan has caused no damages or casualty.

War between India and Pakistan is certainly not desirable. However, as both countries have acted with restraint, there will be no war between them, but the tension and hostility will remain to facilitate China’s Belt and Road.

Comment by Chan Kai Yee on Reuters’ report, full text of which can be viewed at https://www.reuters.com/article/us-india-kashmir-pakistan/india-launches-air-strike-in-pakistan-islamabad-denies-militant-camp-hit-idUSKCN1QF07B.


Saudi Arabia to Be Major Participant of China’s Belt and Road


SCMP’s report “Saudi Arabia to build US$10 billion oil refinery at China-funded Gwadar Port in Pakistan” tells us how popular China’s Belt and Road initiative is in Asia.

China’s major Belt and Road project the China-Pakistan Economic Corridor has attracted not only Iran but also Saudi Arabia the richest country in Middle East.

As the US no longer depends on Saudi oil and even become Saudi’s competitor in exporting oil, China has become Saudi’s major oil importer so that an oil refinery at China-funded Gwadar Port in Pakistan will greatly facilitate Saudi oil export to China through Western China. Moreover, India’s fast economic growth is making it grow into another major importer of Saudi oil through Gwadar.

Politically, as the US is pursuing isolationism, Saudi can no longer rely on US protection. As a result, Saudi is anxious to improve relations with China and Russia. No wonder, it will become a major participant in China’s Belt and Road.

Comment by Chan Kai Yee on SCMP’s report, full text of which can be viewed at https://www.scmp.com/news/china/diplomacy/article/2181866/saudi-arabia-build-us10-billion-oil-refinery-china-funded.


Pakistan PM Khan, in search of loans, to visit China next week


October 25, 2018

ISLAMABAD (Reuters) – New Pakistani Prime Minister Imran Khan will visit China next week and meet President Xi Jinping, Pakistan’s foreign ministry said on Thursday, on a trip seen as vital to Islamabad’s efforts to obtain fresh loans to prop up the economy.

Khan, accompanied by Foreign Minister Shah Mahmood Qureshi, will lead a delegation from Nov. 2-5 which will sign several agreements on “diverse fields”, the foreign ministry said in a statement. Khan is also set to meet Chinese Premier Li Keqiang.

This week Pakistan received a $6 billion rescue package from Saudi Arabia, but officials say it is not enough and the country still plans to seek a bailout from the International Monetary Fund (IMF) to avert a balance of payments crisis.

On Wednesday, Khan said Pakistan was also in discussions with two “friendly nations” for more loans, with analysts saying one of those countries was China.

Though China is now Pakistan’s closest ally, Khan’s newly elected government has sought to re-think the two countries’ signature project, the $60 billion China-Pakistan Economic Corridor (CPEC), which Beijing touts as the flagship infrastructure program in its vast Belt and Road Initiative.

Pakistan has sought to amend CPEC to put greater emphasis on projects that focus on social development, rather than purely on infrastructure.

“Prime minister’s visit is expected to provide further impetus to enhancing the existing strategic ties between Pakistan and China and break new grounds for broadening the bilateral partnership,” the foreign ministry said in a statement.

After visiting Beijing, Khan is set to be a key note speaker at the First China International Import Expo in Shanghai, the ministry added.

Reporting by Drazen Jorgic; Editing by Nick Macfie

Source: Reuters “Pakistan PM Khan, in search of loans, to visit China next week”

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


Chinese government’s top diplomat says Beijing not saddling Pakistan with debt


Saad Sayeed September 8, 2018

State Councillor and Foreign Minister Wang Yi was in Pakistan for a three-day visit in the first high-level meetings between the neighbors since new Prime Minister Imran Khan took office.

Beijing has pledged $57 billion in loans for Pakistan as part of its vast Belt and Road initiative, deepening ties at a time when Islamabad’s relations with Washington are fraying over how to deal with Islamist militants waging war in Afghanistan.

Whether China was overburdening Pakistan with debt has become a sore point for both nations, who both say the loans are sustainable, after U.S. Secretary of State Mike Pompeo in July warned any potential International Monetary Fund bailout for Pakistan’s troubled economy should not provide funds to pay off Chinese lenders.

Wang said the Pakistani portion of the Belt and Road initiative, known as the China-Pakistan Economic Corridor (CPEC), has helped increase economic growth by 1-2 percent and has contributed 70,000 jobs.

“CPEC has not inflicted a debt burden on Pakistan, rather when these projects get completed and enter into operation, they will unleash huge economic benefits…and these will create considerable returns to the Pakistani economy,” Wang said during a news conference in the capital Islamabad.

Standing next to Pakistani Foreign Minister Shah Mehmood Qureshi, Wang said 47 percent of Pakistan’s debt comes from the IMF and the Asian Development Bank.

Wang said 22 operational CPEC projects, of which nine have been completed, have triggered investment worth $19 billion so far. He also rejected concerns about transparency of CPEC by saying those worries were “false” as all the projects had undergone necessary approvals.

Qureshi said CPEC remains the “top priority” of the new government, adding that the two governments would focus on projects with socio-economic development.

“They will be considering projects that have a livelihood connection to them, that means job creation. He has spoken about initiatives in health and education, vocational training, how do we want to make our people more productive if they want to export,” Qureshi said.

The two men did not mention whether China would give more loans to help Pakistan’s current account crisis. Pakistan is battling a worsening balance of payments crisis that may push it to seek a fresh bailout from the IMF, though officials have not ruled out other options such as a bailout from China.

Wang will also call on Prime Minister Khan and Chief of Army Staff General Qamar Javed Bajwa, the foreign office said.

Wang’s visit comes days after Pompeo’s trip to Pakistan last week along with the U.S. chairman of the joint chiefs of staff, the first high-level U.S. visit to the new government, with the secretary of state saying he was hopeful for “a reset of relations” between the two countries.

Reporting by Saad Sayeed; Writing by Drazen Jorgic; Editing by Clarence Fernandez and Jacqueline Wong

Source: Reuters “Chinese government’s top diplomat says Beijing not saddling Pakistan with debt”

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


Pakistan dismisses US concerns about IMF bailout and China


Drazen Jorgic August 1, 2018

ISLAMABAD (Reuters) – Pakistan on Wednesday dismissed U.S. concerns that any new International Monetary Fund bailout for the South Asian nation would be used to repay Chinese debt as “totally wrong”.

Pakistan’s economy has hit severe turbulence over the past year and most analysts expect the nuclear-armed nation to seek a bailout, either from the IMF or closest ally China, to avoid a currency crisis.

Beijing has pledged $57 billion in loans for Pakistan as part of China’s vast Belt and Road initiative, deepening economic and diplomatic ties between the neighbors at a time when relations between Islamabad and Washington are fraying over how to deal with Islamist militants waging war in Afghanistan.

U.S. Secretary of State Mike Pompeo on Monday warned that any potential IMF bailout for Pakistan’s incoming government should not provide funds to pay off Chinese lenders.

In response, Pakistan’s finance ministry sought to de-couple the link between any potential IMF bailout and Beijing’s loans for the China-Pakistan Economic Corridor (CPEC), which spans mostly energy and transport infrastructure.

“First and foremost it is totally wrong to link the IMF package with CPEC. It is affirmed that Pakistan Government is fully committed to undertake and complete CPEC projects in their totality,” the finance ministry said in a statement.

“Third parties cannot weaken our collective resolve to make CPEC a success story.”

CPEC is billed as Pakistan’s most important national project, while Beijing has touted CPEC as the “flagship” project in the vast Belt and Road initiative to build rail, road and maritime links across the globe.

Both countries are very sensitive of any criticism about CPEC.

The United States has been concerned that China is saddling smaller countries with debt as a way to gain influence and control around the globe.

Pakistan obtained a $6.7 billion IMF bailout in 2013 and near-identical balance of payments problems pose a major headache for the incoming government of Imran Khan, Pakistan’s former cricket hero who is seeking coalition partners to form a government.

“Make no mistake. We will be watching what the IMF does,” Pompeo said.

“There’s no rationale for IMF tax dollars, and associated with that American dollars that are part of the IMF funding, for those to go to bail out Chinese bondholders or China itself,” Pompeo added.

Asad Umar, widely tipped to become the new finance minister, told Reuters last month that Khan’s government would not rule out either Chinese or IMF support.

On Tuesday, Chinese Foreign Ministry spokesman Geng Shuang said the IMF had its own standards and operating rules when cooperating with countries.

“I believe they will handle it appropriately,” he told reporters, without elaborating.

 

30-YEAR LOANS

Miftah Ismail, Pakistan’s finance minister in the previous government until late May, said the Chinese debt repayments were nowhere near as big as Western nations imagine.

He told Reuters that ministry of finance calculations showed that for the next five years, Pakistan’s total annual debt repayments and profit expatriation by Chinese companies would be below $1 billion.

“All of those things combined will not go to $1 billion up until 2023,” he said.

Ismail added loans given by China to Pakistan had a 30-year length and a five-year grace period, meaning there were no repayments for the first five years.

The lending was a combination of zero-interest debt, concessionary and some market rate loans, Ismail said, adding that the “weighted average” interest rate for these loans was 2 percent

“These are not loans that will break our back,” he said.

Ismail said the problems hitting Pakistan’s economy were not linked to debt but rather to current account problems, which was not China’s fault.

Pakistan’s finance ministry said it was engaged in “technical discussions” with the IMF but the interim caretaker government did not have a mandate to decide on any IMF package, which will be down to the new administration.

Reporting by Drazen Jorgic; Editing by Nick Macfie

Source: Reuters “Pakistan dismisses U.S. concerns about IMF bailout and China”

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