Any One’s Investment in Infrastructures in Belt and Road Benefits China


There is a common misunderstanding that China’s Belt and Road initiative (BRI) aims at enhancing its geopolitical influence so that Bloomberg’s article “China Faces New Competition as Japan, India Eye Sri Lanka Port” regard India and Japan’s investment in Sri Landa Port as a new competition faced by China.

As I have repeatedly pointed out that BRI aims at provide connections for China’s trade, help other nations’ development by building necessary infrastructures and transferring China’s labor-intensive industries there, and thus expand China’s market there.

China’s investment in building Sri Lanka’s Hambantota Port is a part of its efforts to establish its 21st maritime Silk Road linking China with the Middle East, Europe and Africa through the Indian Ocean. Therefore, the most important parts of that Silk Road are the connection through the China-Pakistan Economic Corridor to Pakistan’s Port of Gwadar and the connection through the China-Myanmar Economic Corridor to Myanmar’s Port of Kyaukpyu. For the latter connection the existing port facilities in Sri Lanka are far from enough for China’s huge shipping volume from the Port of Kyaukpyu. That is why China incurs so great costs to build Hambantota Port into a shipping hub for its maritime Silk Road through the Indian Ocean.

India and Japan’s investment in the Port of Colombo will provide additional port facilities for China’s maritime Silk Road. Their project will help China’s establishment of its maritime Silk Road. China will certainly be happy with that.

China knows well that it lacks financial resources to build BRI infrastructures alone so that it has times and again invited other nations to join it. What India and Japan plan to do in Sri Lanka means cooperation with China’s BRI instead of competition.

Comment by Chan Kai Yee on Bloomberg’s report, full text of which can be viewed at https://www.bloomberg.com/news/articles/2019-05-21/japan-india-in-deal-at-belt-and-road-colombo-port-nikkei.

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Conflicts of Interests between Russia and China due to BRI


Silk Road Economic Belt in Central Asia
As mentioned above Central Asian countries were previously parts of the Soviet Union under Russia dominance. Now, Russia wants to establish the Eurasia Union to keep them as its satellite states or at least in Russia’s sphere of influence. China has convinced Russia that in building infrastructures in Central Asia it pursues only economic benefit with no geopolitical intention. However China’s Belt and Road initiative (BRI) is regarded by the West, especially the US, as a scheme for geopolitical influence. If so, the Belt and Road initiative in Central Asia may very likely result in replacing Russia’ influence with China’s. It is, therefore, very difficult for China to convince Russia that the projects being parts of China’s Belt and Road initiative are but economic with no political effect. In fact, it is impossible to separate economics from politics.

Due to the conflict of interests, no significant progress has been made in finding a way to accommodate Belt and Road with Russia’s Eurasia Union though China and Russia have had an agreement on that.

US Quad Pushes Russia Further into China’s Embrace
Fortunately, the US comes to their assistance. Trump has replaced Obama’s pivot to Asia with Indo-Pacific quad of the US, India, Japan and Australia with the obvious intention to contain China. US Secretary of State made that very clear in his speech at the Centre for Strategic and International Studies on October 18.

India as a key part of quad has long been Russia’s friend and major market of weapon export. To win over India and make it the major player in controlling the Indian Ocean to threaten China’s trade lifelines through the ocean, the US has promised India that it will help India develop aircraft carriers with better US technology and supply India with US carrier-based fighter jets.

However, before US restoration of quad, Russia is India’s major weapon supplier and has been helping India develop its aircraft carriers. It has developed and made 45 Mig-29K worth $2.2 billion specially for India’s new aircraft carrier. Russia will suffer serious losses if India refuses to buy the Mig-29Ks. Obviously, India’s participation in US quad will cause Russia to lose its major weapon market to the US.

Moreover, China’s major BRI project in India’s enemy Pakistan upsets India while BRI is not accepted by Vietnam too due to China’s disputes with Vietnam over the South China Sea. China is not able to spread its BRI in those two countries of Russian influence. After all Central Asia is not an important area in Asia and China’s BRI there has not caused much reduction in Russia’s influence there, but the rail and Arctic links between China and Europe will bring Russia much greater benefits. Therefore, BRI in Asia is not a problem for Russia.

BRI in Europe May Affect Russia’s Interests there
China, however, is extending BRI to Central and Eastern Europe, where there are previous members and satellite states of former Soviet Union. As mentioned above, Russia has long been a European country so that those former members and satellites states are much more important to Russia. It is especially so as EU has been trying hard to win over them as EU members or areas of influence.

Russia has been striving to win back those countries. Its conflict with the West over Ukraine is a typical example. China’s BRI there may further complicate the situation, which the US may exploit to break the alliance between Russia and China.

That issue will be dealt with in my next post.

Article by Chan Kai Yee.


China says ties with India insulated from differences on Belt and Road Initiative


Atul Aneja Beijing, April 19, 2019 11:24 IST
Updated: April 19, 2019 17:22 IST

Chinese foreign minister and state councillor Wang Yi says both nations were limiting the threshold of their differences so that overall development of ties remained unhampered.

China on Friday said its ties with India had a “bright future” and they were preparing for a summit between their leaders as a follow-up to last year’s two-day across-the board Wuhan informal summit between President Xi Jinping and Prime Minister Narendra Modi.

At a press conference on a three-day Belt and Road Forum for International Cooperation that begins on May 25, Chinese foreign minister and state councillor Wang Yi was emphatic that ties between India and China were insulated from their differences on the Beijing-led Belt and Road Initiative (BRI).

Thirty-seven heads of state or heads of government, including leaders from Russia, Italy, Hungary, Austria, Switzerland, Malaysia and Singapore, as well as high level representatives from France, Germany, UK, Spain the European Union and Republic of Korea, will attend the mega event.

Mr. Wang said, “The two leaders [President Xi and Prime Minister Modi] had a very successful meeting in Wuhan. Particularly, they established mutual trust and they jointly planned for the future of improvement and the strengthening of the China-India relationship. After the Wuhan summit, we see progress in all areas of cooperation.”

Mr. Wang pointed out that India and China were limiting the threshold of their differences so that overall development of ties remained unhampered. “China and India are two major countries and neighbouring countries to each other. It is natural for us to have differences…I remember Prime Minister Modi has mentioned many times that [we] cannot escalate our differences into disputes,” he said.

“The Indian side wants to put our differences at a proper level in order not to interfere in the proper development of our relations. This is in fundamental interest of the people of two countries and China is happy to see [that],” he noted.

China, he said, understood India’s “concerns” about the China Pakistan Economic Corridor (CPEC), but counselled New Delhi not to view the project—a flagship of the BRI—as an infringement of its “sovereignty”.

Mr. Wang said, “One of our fundamental differences is how to look at the Belt and Road Initiative. The Indian side has their concerns. We understand that and that’s why we stated clearly on various occasions that the Belt and Road Initiative, including the CPEC, is only an economic initiative.” CPEC should be de-linked from a territorial dispute that was rooted in history.

India’s stance on CPEC

India has slammed CPEC, stating that it was an affront to its sovereignty as it passes through Pakistan occupied Kashmir (PoK).

Mr. Wang contended that the CPEC did not “target any third country” and had “nothing to do with sovereign and territorial dispute left over from history between the two countries.

He said, “Of course, India has its basic position on these disputes. Our cooperation will not undermine any party’s position on those issues. Those issues left over from the history must be separated from our efforts in this area. I think such cooperation will not undermine the basic position on sovereignty and territorial integrity and at the same time will provide you more opportunity of development and help India in modernisation endeavour. I believe this is a good option and good choice for India.”

The Chinese top diplomat rubbished accusations that BRI projects were “debt traps”. Instead, he said, the mega-connectivity project to revive the ancient Silk Road had generated benefits. The total trade volume between China and participating countries had surpassed 6 trillion dollars and investments had scaled 80 billion dollars, generating 300,000 jobs, he pointed out.

In a veiled reference to the United States, he said, “Some country when it cannot succeed, it doesn’t want other countries to succeed either. And this sour grape mentality is in no one’s benefit.”

An “advisory council”, comprising eminent international personalities, had been formed to impart “high quality” to projects under the BRI banner. “To my knowledge, the advisory council will submit a policy suggestion report to the second forum, which contains many good suggestions. We welcome more constructive voices to the Belt and Road,” Mr. Wang observed.

Source: The Hindu “China says ties with India insulated from differences on Belt and Road Initiative”

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


Russia-China Alliance, the Impossible Made Possible 3


Conflicts between China and Russia

China’s ‘Colonization’ of Eastern Russia
Russian’s Far East is an area with great development potential but Russian government has achieved little in developing the area in spite of its great efforts because Russian people do not want to move to that area.

Chinese people, however, are fond of finding opportunities there. First, they remember well the history that Russia pressured China’s weak and incompetent Qing Dynasty to cede 2 million square kilometers of land to Russia more than a century ago. Quite a few Chinese hold that China shall fight Russia to recover the ceded land. However, they do not know exactly where the 2 million square kilometers is. They do not care but just go into Russia to find a place they can settle down and regard the place as a part of the 2 million square kilometers.

The border between China and Russia is very long and a vast area of Russia along the border is sparsely populated. Russia shall have lots of border guards to intercept illegal immigrants. However, Russia lacks funds to keep so many border troops there nor are Russian troops willing to station in the barren cold area.

Since there are few people in the vast Russian area to the north of Northeast China, people in Northeast China believe entering that vast area to try their luck is a better choice. They have moved into the area illegally in large number. They have brought much needed funds and diligent labor to Russia’s vast Far East and made the area to some extent prosperous. Local Russian people are happy. They enjoy the better life brought by the illegal immigration.

Moreover, there are more girls than boys in Russia resulting in difficulties for girls to find husbands. There are, however, more boys than girls in China. Chinese boys are welcome to marry Russian girls there. As a result, there are not only lots of Chinese immigrants but even lots of Chinese families with Russian wives. Russian government is seriously worried: China is turning Russia’s Far East into Chinese colony.

That is pure bloodless colonization of Russian territories. How can Russia not treat China as invader, aggressor and colonist?

Conflicts between China and Russia in Central Asia
Central Asia is another area of conflicts between China and Russia. Russia has the dream for the recovery of its glorious past. Not exactly the glorious past of the Soviet Union as one of the two superpowers in the world, but at least as a world power as Russia always was before the establishment of the Soviet Union. Central Asian countries were members of the Soviet Union as they were parts of the old Russia before the Soviet Union. The Soviet Union has collapsed, but Russia still has great influence in Central Asia. It has the ambition to take Central Asian countries back or at least retain them as its sphere of influence. That is why Russia has established the Eurasian Union. However, most Central Asian countries want the Eurasian Union to be an economic rather than political union.

China has been making lots of investment to build infrastructures in Central Asian countries in order to have connection to Europe and the Middle East through them and obtain oil and gas from them. The infrastructures, in addition, facilitate transfer of some Chinese industries to exploit the cheap labor there. China’s win-win cooperation with them may draw those Central Asian countries away from Russia to Chinese side.

India, Vietnam May Also Be Area of Conflicts
India and Vietnam have long been Russia’s sphere of influence, but China is now providing them with loans and investment and may thus draw them to China’s side. There are border disputes with India and maritime territorial disputes with Vietnam that may give rise to tension but China has been trying hard to resolve the disputes peacefully.

China’s military modernization provides a lucrative weapon market for Russia. Russia has made lots of profits from weapon sales to China, but there are serious problems: China learns Russian technology through reverse engineering. It uses Russian technology to produce clones of Russian weapons not only for itself but also for export in competition with Russia in international weapon market.

If Chinese economy grows at its current slowed but still fast rate, it will have much more funds for weapon development. Russia is afraid that China may soon surpass it in weapon technology and become Russia’s fierce rival in international weapon market.

The above conflicts of interests are impossible to reconcile. How can China and Russia become allies in disregard of such serious conflict of interests?

Article by Chan Kai Yee


China’s Succeses in Belt and Road, a Heavy Blow to the US


From left: Jean-Claude Juncker, Xi Jinping, Emmanuel Macron and Angela Merkel in Paris. Photograph: Antoine Gyori/Corbis/Getty Images

Xi Jinping and Giuseppe Conte in Rome on March 23.
Photographer: Alessia Pierdomenico/Bloomberg

China’s Belt and Road initiative (BRI) aims first of all at establishment of secure connections to its export markets in Asia, Europe and Africa.

The rail connections to Europe through Russia and Central Asia have not only been established but also in regular operation but the railway freight is expensive and slow due to the need to change carriages with different gauges.

A shipping route through the Arctic to Europe along Russian coast will be a secure shortcut but the Arctic has not melted enough. However, US refusal to reduce carbon dioxide emission may help. I wonder why the US is always helping China with or without its measures to contain China.

The rail link through China-Pakistan Economic Corridor to the port of Gwadar for shipping to the Middle East, Europe and Africa will be a faster and cheaper alternative without gauge problem. The railways will be newly built with capacity devoted to such connections while the rail connections through Russia and Central Asia have limited capacity due to the use of existing old railways that have already been busy. The shipping from Gwadar is safe due to protection of Pakistani and Iranian military, for which China and Russia will provide advanced weapons and training if necessary.

The US is certainly unhappy with that as with such connections powerful US navy will be unable to cut China’s western trade lifelines.

Now, due to the trade war launched by the US against China, BRI’s top goal has switched to the transfer of China’s labor-intensive industries to BRI’s Silk Road economic belt to avoid US tariff hikes on the products of Chinese labor-intensive industries as well as reduction their labor costs.

US trade deficit with China will be greatly reduced but its trade deficit with Silk Road economic belt will increase by the same amount. China’s such strategy will deal a heavy blow at the US to thoroughly defeat the US in the trade war.

China’s market in the belt will expand and so will its geopolitical influence there though geopolitical influence is but BRI’s byproduct not its aim. For the US, however, such byproduct upsets it most as it hinders US world hegemony.

With secure trade lifeline, transfer of industries, exploitation of labor and other resources, expansion of China’s market and geopolitical influence, etc. BRI facilitates China’s further rise to surpass the US and reduces US world hegemony. No wonder the US and the Western media under US influence have been so upset by BRI and have been trying so hard to spread lies about BRI being debt trap, etc. to obstruct BRI. However, lies are but lies. With or without Chinese investment, Pakistan, Bangladesh, Myanmar, Sri Lanka, Thailand, etc. are building railways, roads, pipelines and ports to set up trade connections and build infrastructures and industry zones for China’s trade and labor-intensive industries.

The connections and labor and other resources also attract other countries. According to Reuters’ report (at https://www.reuters.com/article/us-saudi-pakistan-economy/saudi-arabia-to-set-up-10-billion-oil-refinery-in-pakistan-idUSKCN1P60OU on March 13), Saudi Arabia plans to build a $10 billion refinery in Gwadar due to its connections to Saudi’s markets in South Asia and China.

Other countries will also exploit the connections built by BRI. India is a firm opponent against BRI but its wealthy business family owned and Singapore-registered Silver Park International is taking part in building a $3.85 billion refinery in Hambantota, the port built under BRI (see Channel News Asia’s report “Sri Lanka opens work on US$3.85 billion refinery near strategic port” on March 24 at https://www.channelnewsasia.com/news/asia/sri-lanka-opens-work-on-us-3-85-billion-refinery-near-strategic-11374242).

Seeing the successes of BRI, Europe certainly is no willing to lag behind in exploiting the connections built and markets expanded under BRI. Moreover, the infrastructures built under BRI will enable Europe to build factories of cars and other products in Silk Road economic belt to avoid US tariff hikes. Italy has signed a memorandum of understanding to participate in BRI, Germany and EU have shown their interest in BRI after Merkel and Juncker’s summit with Macron and visiting Chinese President Xi Jinping.

Like AIIB, the US will again fail in its efforts to have Europe join it in containing China.

Article by Chan Kai Yee.


China-Myanmar Economic Corridor May Extend to Bangladesh, India


As mentioned in my post “China Building Bangladesh Railway for BRI’s BCIM Economic Corridor” on March 5, despite India’s opposition to Belt and Road initiative (BRI) and US demonization of BRI as debt trap, Bangladesh borrowed nearly $3 billion to build a railway linking Dhaka with Khulna. It will be a part of the Bangladesh-India-China-Myanmar Economic Corridor (BCIM) in Bangladesh and India as the railway extends railway link to India through the existing railway connection between Khulna and India’s Kolkata.

What about the BCIM in Myanmar and China?

China signed a memorandum of understanding with Myanmar on the project of a railway between Ruili, China and Pyaukpyu, Myanmar but Myanmar later scrapped the project under Western influence, especially the lies about BRI.

However, Myanmar still agreed to China’s investment and construction of oil and gas pipelines between Ruili and Pyaukpyu as Myanmar can use the pipelines for transport of oil and gas it needs.

The pipelines were completed in 2013 and have been in operation since. Myanmar has been using and able to use a maximum of 2 million tons and 2 billion cubic meters of the pipelines’ annual oil and gas capacities of 22 million ton oil and 12 billion cubic meter gas.

That is quite a great incentive for a poor country like Myanmar.

Moreover, China’s nickel and copper mining and production projects with investments respectively of $820 million and $1.07 billion have brought more than 100 million and tens of millions US dollar income to Myanmar respectively. All of them are not BRI projects as they started construction well before 2013 when BRI was initiated but they prove the benefit of Chinese investment. .

Seeing that China will move its labor-intensive industries to Bangladesh due to Bengali participation in BRI, Myanmar wants to follow suit as it clearly knows that the industries will bring jobs and economic growth and benefit Myanmar.

On September 9, 2018 it signed with China a memorandum of understanding for the establishment of China-Myanmar Economic Corridor. The corridor will be T-shaped including an economic corridor from Ruili, China to Pyaukpyu, Myanmar through Mandalay and an economic corridor from Mandalay to Yangon, former capital of Myanmar.

Like Bangladesh, Myanmar wants China to move its labor-intensive industries to the industrial zones in Mandalay and Myitkyina in China-Myanmar Economic Corridor.

There is already railway connection for the corridor from Mandalay to Yongon but for China a railway in the corridor between China’s Ruili City and Myanmar’s Kyaukpyu is more important as it provides China with a shortcut to the port of Kyaukpyu to bypass Malacca Strait. The railway project previously scrapped by Myanmar becomes an important one for Myanmar due to the establishment of the corridor as export of the corridor’s products to South Asia, Middle East, Europe and Africa shall better go through that railway to the port of Pyaukpyu while export to China, through that railway into China. Those will be much shorter and faster route than through the railway to Yangon. Moreover, the export of the products to Japan and America will better bypass Malacca Strait by the railway to a port at Chinese coast.

China and Myanmar have already signed an agreement on a joint venture to build a deep water port in Pyaukpyu. China will have 70% while Myanmar, 30% of the joint venture. As a result, Pyaukpyu-Ruili Railway becomes indispensable for the port of Pyaukpyu.

China has the vision to see that the benefit the railway to Myanmar will finally make Myanmar accept the railway so that in spite that the railway project had been scrapped by Myanmar, it has been making great efforts to build Dali-Ruili Railway to connect Ruili at border with Myanmar with China’s railway network.

Dali-Ruili Railway is a 330-km single-line electric railway with designed speed of 140 km/hour and capacity of 12 pairs of passenger trains daily and 12 million tons of cargo p.a.

Construction of its Dali-Baoshan section began in 2008 and has been completed now while that of the Baoshan-Ruili section did not fully begin until late 2015 and is expected to be completed by 2022.

The section, though only 196 km long is very difficult to build as 69% of it are bridges and tunnels due to complicated geographical conditions.

China is to invest 25.7 billion yuan in the railway, quite a large sum for such a short railway as the railway is essential for bypassing Malacca Strait and as China is confident that Myanmar will finally accept the railway indispensable for Myanmar’s economic development.

Now, the railway link between Ruili and Pyaukpyu will become a reality since the port of Pyaukpyu is under construction.

As the economic relations between Bangladesh and China grow, China-Myanmar Economic Corridor will certainly extend to Bangladesh to become BICM Economic Corridor and the railway will become an important part of it.

Article by Chan Kai Yee


No Quad to Contain China


US President Trump has withdrawn from the Trans-Pacific Partnership (TPP) that aims to contain China economically. Instead, he is enthusiastic in establishing satisfactory personal ties with Chinese President Xi Jinping in order that his country may better access to China’s huge market. As a result, there has been no military pivot to Asia to contain China either since Trump came to office.

In order to keep on containing China so as to please the large number of US elite hostile to the rise of China, Trump’s previous secretary of state Rex Tillerson wanted to replace Obama’s pivot to Asia with the Quad of the US, Australia, India and Japan to contain China.

However, according to Asia Times’ article “The Quad’ is fading into obscurity”, Australia does not want to hurt its trade relations with China while India has persisted in its non-alliance doctrine, only the US and Japan remain in the Quad to counter China now.

In fact Japan has been seeking improvement of ties with China as shown in its enthusiasm in Abe’s visit to Beijing and Xi’s visit to Tokyo soon. There is no Quad to contain China at all now.

The writer of the article worries what will be done if China takes Taiwan by force for reunification of China.

Will the US fight for Taiwan alone without the assistance from its Quad allies?

In a war between China and the US, China will surely has Russia’s support but who will support the US? The US will be really isolated in the war but no one is to blame. The US pursues isolationism and gets isolation.

Comment by Chan Kai Yee on Asia Times article, full text of which can be viewed at https://www.asiatimes.com/2019/03/article/the-quad-is-fading-into-obscurity/.