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China’s Belt and Road Initiative is one of President Xi’s most ambitious foreign and economic initiatives. It reflects a combination of economic and strategic drivers, not all of which can be easily reconciled.
China’s Belt and Road Initiative [also known as One Belt, One Road (OBOR)] is one of President Xi’s most ambitious foreign and economic policies. It aims to strengthen Beijing’s economic leadership through a vast program of infrastructure building throughout China’s neighbouring regions. Many foreign policy analysts view this initiative largely through a geopolitical lens, seeing it as Beijing’s attempt to gain political leverage over its neighbours. There is no doubt that is part of Beijing’s strategic calculation. However, this Analysis argues that some of the key drivers behind OBOR are largely motivated by China’s pressing economic concerns.
One of the overriding objectives of OBOR is to address China’s deepening regional disparity as the country’s economy modernises. Beijing hopes its transnational infrastructure building program will spur growth in China’s underdeveloped hinterland and rustbelt. The initiative will have a heavy domestic focus. The Chinese Government also wants to use OBOR as a platform to address the country’s chronic excess capacity. It is more about migrating surplus factories than dumping excess products. One of the least understood aspects of OBOR is Beijing’s desire to use this initiative to export China’s technological and engineering standards. Chinese policymakers see it as crucial to upgrading the country’s industry.
At the end of 2013 Chinese President Xi Jinping announced one of China’s most ambitious foreign policy and economic initiatives. He called for the building of a Silk Road Economic Belt and a 21st Century Maritime Silk Road, collectively referred to as One Belt, One Road (OBOR) but which has also come to be known as the Belt and Road Initiative. Xi’s vision is an ambitious program of infrastructure building to connect China’s less-developed border regions with neighbouring countries. OBOR is arguably one of the largest development plans in modern history.
On land, Beijing aims to connect the country’s underdeveloped hinterland to Europe through Central Asia. This route has been dubbed the Silk Road Economic Belt. The second leg of Xi’s plan is to build a 21st Century Maritime Silk Road connecting the fast-growing Southeast Asian region to China’s southern provinces through ports and railways.
All levels of the Chinese Government, from the national economic planning agency to provincial universities, are scrambling to get involved in OBOR. Nearly every province in China has developed its own OBOR plan to complement the national blueprint. Major state-owned policy and commercial banks have announced generous funding plans to fulfil President Xi’s ambitious vision.
Xi has launched OBOR at a time when Chinese foreign policy has become more assertive.1)Christopher K Johnson, “President Xi Jinping’s ‘Belt and Road’ Initiative: A Practical Assessment of the Chinese Communist Party’s Roadmap for China’s Global Resurgence”, CSIS Report, 28 March 2016, https://www.csis.org/analysis/president-xi-jinping’s-belt-and-road-initiative. This has meant that OBOR is often interpreted as a geopolitical plan rather than a purely economic one. While there is a great deal of truth to this interpretation, this Analysis argues that focusing on the geopolitical dimensions of OBOR obscures its principally geoeconomic drivers, in particular its connection to changes in China’s domestic industrial policy.
OBOR: GEOSTRATEGY OR GEOECONOMICS?
Before the 18th Party Congress in 2013, there were heated debates among Chinese policymakers and scholars about the strategic direction of the country’s foreign policy,2)Zhai Kun,一带一路：大国之翼：一带一路引领中国：国家顶层战略设计于行动布局[“One Belt and One Road: The Wings of a Great Nation”, in One Belt and One Road Leads China: Strategic National Design and Implementation Guideline], Caixin Media Editorial Department ed (Beijing: China Wenshi Publishing House, 2015). especially in its neighbourhood.3)‘Neighbourhood’ refers to a disparate group of states located east of the Ural Mountains and west of the Bering Straits, south of the Caucasus Mountains and east of the Bosphorus Strait and the Suez Canal, and includes 63 countries from Asia, Russia, and Oceania, according to Xue Li, a senior researcher at the Chinese Academy of Social Sciences:“一带一路背景下的中国周边外交方略[China’s Neighbourhood Foreign Policy against the Backdrop of One Belt and One Road]”, Financial Times (Chinese edition), 11 January 2016, http://www.ftchinese.com/story/001065641. In October 2013 Beijing convened an important work conference on what it termed ‘peripheral diplomacy’. It was reportedly the first major foreign policy meeting since 2006 and the first-ever meeting on policy towards neighbouring countries since the founding of the People’s Republic. It was attended by all of the most important players in the Chinese foreign policy making process, including the entire Standing Committee of the politburo.4)For a full discussion of China’s Peripheral Diplomacy Work Conference, see Michael D Swaine, “Chinese Views and Commentary on Peripheral Diplomacy”, China Leadership Monitor 44 (Summer 2014), http://www.hoover.org/research/chinese-views-and-commentary-periphery-diplomacy.
At the Peripheral Diplomacy Work Conference, Xi said that China’s neighbours had “extremely significant strategic value”. He also said that he wanted to improve relations between China and its neighbours, strengthening economic ties and deepening security cooperation.5)“习近平在周边外交工作座谈会上发表重要讲话[Xi Jinping’s Important Speech at the Peripheral Diplomacy Work Conference]”, Xinhua News Agency, 25 October 2013, http://news.xinhuanet.com/politics/2013-10/25/c_117878897.htm.
“Maintaining stability in China’s neighbourhood is the key objective of peripheral diplomacy. We must encourage and participate in the process of regional economic integration, speed up the process of building up infrastructure and connectivity. We must build the Silk Road Economic Belt and 21st Century Maritime Silk Road, creating a new regional economic order.”6)Ibid.
Xi clearly sees China’s considerable economic resources as a key tool in his efforts to maintain regional stability and assert China’s leadership in the country’s neighbourhood. Analysts regard the work conference as a significant turning point in the evolution of China’s foreign policy. Douglas Paal of the Carnegie Endowment for International Peace argues that the conference saw the Chinese leadership effectively bury former leader Deng Xiaoping’s famous dictum, “hide your strength and bide your time”. According to Paal, in its place, the new Chinese leadership have advanced a more proactive diplomacy in surrounding regions.7)Douglas Paal, “Contradictions in China’s Foreign Policy”, Carnegie Endowment for International Peace, 13 December 2013, http://carnegieendowment.org/2013/12/13/contradictions-in-china-s-foreign-policy-pub-53913 – comments.
This new more activist foreign policy has reinforced the impression that OBOR is primarily driven by broad geostrategic aims. Certainly some elements of OBOR are consistent with such a characterisation. The China–Pakistan Economic Corridor is a prime example. It is widely regarded as one of the flagship projects of OBOR and is enthusiastically supported by both Beijing and Islamabad. The proposed corridor is expected to connect Kashgar in Xinjiang in China’s far west with the Port of Gwadar in the province of Baluchistan. Given the port’s proximity to the Persian Gulf, it could be used as a transhipment point for China’s energy supplies obviating the need to go through the Strait of Malacca in Southeast Asia.8)Dipankar Banerjee, “China’s One Belt and One Road Initiative — An Indian Perspective”, ISEAS Perspective, Issue 2016, No 14, 31 March 2016, https://www.iseas.edu.sg/images/pdf/ISEAS_Perspective_2016_14.pdf.
Economic Corridor Rail Projects
Havelian-Kashi New Railway:
1059 km long
(US$2 billion)9)see https://www.dbs.com/aics/pdfController.page?pdfpath=/content/article/pdf/AIO/072017/170724_insights_one_belt_one_road_moving_faster_than_expected.pdf
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Apart from serving as a commercial port, Gwadar is also deep enough to accommodate submarines and aircraft carriers. Indeed, the military logic behind the development of the port is becoming increasingly prominent as the People’s Liberation Army Navy embarks on far-flung activities from anti-piracy missions in the Arabian Sea to the evacuation of Chinese workers in Libya.10)Andrew Small, The China–Pakistan Axis: Asia’s New Geopolitics (London: Hurst & Company, 2015), 103–105.
At a broader strategic level, influential Chinese policymakers and analysts have also argued that OBOR could be used as a strategic tool to counter the Obama administration’s pivot to Asia. In 2015 Justin Yifu Lin, an influential policy adviser and a former chief economist at the World Bank, argued President Xi had launched OBOR to counterbalance US policies such as the pivot and the Trans-Pacific Partnership (TPP). He argued China should use its economic resources including its large foreign reserves and experience in building infrastructure to strengthen its position in the region.11)Justin YiFu Lin,一带一路， 让中国市场经济体系更完善， 读懂一带一路，国家智库顶级学者前瞻中国新丝路[“One Belt and One Road, Enables China to Perfect its Market Economy”, in Leading Scholars from National Think Tanks and Their Insights on China’s New Silk Road] (Beijing: CITIC Press, 2015), 5. One Counsellor at the State Council of the Chinese Government, Tang Min, noted that China and many emerging economies had been locked out of the US-led TPP and these countries needed a ‘third pole’, namely OBOR.12)Tang Min,一带一路战略彰显大国心态，读懂一带一路，国家智库顶级学者前瞻中国新丝路[“One Belt and One Road Shows China’s Great Power Attitude”, in Leading Scholars from National Think Tanks and Their Insights on China’s New Silk Road] (Beijing: CITIC Press, 2015).
The election of Donald Trump as President of the United States in 2016 and his rejection of the TPP in January 2017 will help the Chinese leadership to sell OBOR more effectively. As Singaporean Prime Minister Lee Hsien Loong warned in a visit to Washington in August 2016, the US rejection of the TPP will damage its reputation among regional allies.13)Dave Boyer, “At White House, Leader of Singapore Urges Congress to Approve Free-trade Deal”, The Washington Times, 2 August 2016, http://www.washingtontimes.com/news/2016/aug/2/singapore-pm-urges-congress-ok-free-trade-deal/.
President Xi wasted no time in promoting China as the new global champion of free trade. Chinese diplomats have been busy hawking Beijing-backed regional trade deals such as the Regional Comprehensive Economic Partnership and OBOR.14)Carrie Grace, “US Leaving TPP: A Great News Day for China”, BBC News, 22 November 2016, http://www.bbc.com/news/world-asia-china-38060980. There are early indications that some US regional allies are already gravitating towards Beijing on issues of economic leadership. For example, Philippine President Rodrigo Duterte has warmly embraced Beijing despite the country’s troubled relationship with China over disputed South China Sea islands.15)Ben Blanchard, “Duterte Aligns Philippines with China, Says US Has Lost”, Reuters, 20 October 2016, http://www.reuters.com/article/us-china-philippines-idUSKCN12K0AS.
The problem with narrow geostrategic interpretations of OBOR is not that they are wrong but that they are incomplete. Many analysts tend to overstate geostrategic dimensions of the project, while underappreciating the economic agenda of OBOR.16)See Johnson, “President Xi Jinping’s ‘Belt and Road’ Initiative”, 20. The two goals are not, in fact, contradictory. China is using OBOR to assert its regional leadership through a vast program of economic integration. Its aim is to create a regional production chain, within which China would be a centre of advanced manufacturing and innovation, and the standard setter.
But it is also true that OBOR will help China to meet some of its most pressing economic challenges. Of these challenges, three in particular are important in understanding the key aims of OBOR: encouraging regional development in China through better integration with neighbouring economies; upgrading Chinese industry while exporting Chinese standards; and addressing the problem of excess capacity.
OBOR and regional development
The regional development aspect of OBOR is perhaps one of China’s most important economic policy objectives. The lead coordinating government agency for OBOR is the National Development and Reform Commission, the country’s premier economic planning agency. It is likely that Chinese domestic components of OBOR projects will be built before any overseas components for the simple reason that Beijing can enforce its plans much more effectively within its own jurisdiction. However, if the Chinese Government fails to connect its domestic projects with overseas components, OBOR will be little different from other domestic infrastructure programs, greatly diminishing its economic and strategic value.
In 2014 OBOR was officially incorporated into China’s national economic development strategy at the Central Economic Work Conference, the annual agenda-setting economic summit for policymakers. Beijing announced three regional development plans, one of which was OBOR.17)Chai Yifei,“三大战略肩负共同使命 [Three Strategies Shoulder the Common Destiny]”, The People’s Daily (overseas edition), 20 September 2016, http://paper.people.com.cn/rmrbhwb/html/2016-09/20/content_1713601.htm. These regional development plans are designed to address the chronic problem of uneven development in China.
Inequality between inland western regions and prosperous eastern seaboard states is a huge challenge for the ruling party. For example, the coastal mega-metropolis of Shanghai is five times wealthier than the inland province of Gansu, which is part of the old Silk Road.18)“Regional Development: Rich Province, Poor Province”, The Economist, 1 October 2016, http://www.economist.com/news/china/21707964-government-struggling-spread-wealth-more-evenly-rich-province-poor-province.
Beijing has tried to close the gap between these provinces. Since 1999 the Chinese Government has pursued the so-called ‘western development strategy’ to revitalise chronically underperforming provinces including the majority Muslim autonomous region of Xinjiang. However, these efforts have produced few tangible results. Despite Beijing’s preferential policies, large-scale fiscal injections and state-directed investments, the western provinces’ share of China’s total GDP increased only marginally from 17.1 per cent in 2000 to 18.7 per cent in 2010.19)David SG Goodman ed, Handbook of the Politics of China (Cheltenham: Edward Elgar Publishing, 2015), 198.
One acute side effect of heavy state subsidies in these western provinces has been a high concentration of state-owned enterprises and low penetration of private firms. For example, the western regions of Xinjiang, Tibet, Qinghai, and Gansu are the four lowest-ranked provinces on the China Economic Research Institute’s Free Market Index.20)The Free Market Index measures Chinese provinces’ degree of economic liberalisation. The Index is published by the China Economic Research Institute. Their average score is 2.67 (0 means no private enterprise and 10 means completely free); the national average is 6.56.21)Wang Xiaolu, Yu Wenjing and Fan Gang,“王小鲁 余静文 樊纲 中国市场化八年进程报告 财经[A Progress Report on Eight Years of China’s March Towards the Free Market Economy]”, Caijing Magazine, 11 April 2016, 20.
Beijing is keen to try different approaches to reinvigorate these underperforming provinces and OBOR has been touted as one of the key solutions. The economic rationale behind it is simple enough; instead of showering these provinces with more central government money, Chinese policymakers want to integrate them into regional economies.
Xinjiang offers an interesting case study. As already noted, one of the most important flagship projects of OBOR is the China–Pakistan Economic Corridor, which links Kashgar in Xinjiang with the Port of Gwadar. This project, which is estimated at $46 billion, is also the clearest example of where OBOR’s geostrategic rationale intersects with its economic drivers.
Xinjiang has a large Turkic-speaking Muslim population which has grown increasingly frustrated with Beijing’s rule. Since the 1990s, Xinjiang has also become the main source of terrorism within China. “Aspirations towards greater autonomy or outright independence have never been far from the surface of political life in the province”, notes Andrew Small, a leading expert on China–Pakistan relations.22)Small, The China–Pakistan Axis: Asia’s New Geopolitics, 69–70. The spread of radical Islamism in Xinjiang is adding further complexity to an already tense situation.
The ruling Communist party regards Xinjiang’s separatist movement as an existential threat to the party state. Beijing believes poverty and underdevelopment is at the heart of rising militancy in the restive province and that the best strategy to address the root cause is integrating Xinjiang with the neighbouring region.23)Alok Ranjan, “The China–Pakistan Economic Corridor: India’s Options”, Institute of Chinese Studies Occasional Paper No 10, May 2015, 12, http://www.icsin.org/uploads/2015/06/05/31e217cf46cab5bd9f15930569843895.pdf.
A former Chinese ambassador to Islamabad, Lu Shuling, argues the construction of the Port of Gwadar is economically vital for landlocked Xinjiang, which is 4000 to 5000 kilometres away from China’s coastal ports. Lu believes the port will significantly reduce the transport costs for the province. He further argues that the economic benefits of the corridor will help to solve Pakistan’s and Xinjiang’s political problems: “The best medicine to address the terrorism problem is through tackling the incubator of terrorism, namely poverty.”24)Lu Shulin,中巴经济走廊是一带一路的旗舰项目和示范项目 : 张小安 : 中国周边频频起火了吗[“China–Pakistan Economic Corridor Is the Flagship Project of OBOR”, in Is China’s Neighbourhood on Fire?, Zhang Xiaoan ed] (Beijing: Shijie Zhishi Publishing House, 2016). The head of the Chinese Central Bank in Xinjiang has made a similar argument, noting that better connectivity between the province and the Central Asian region will bring both “economic and national security dividends”.25)Guo Jianwei,新疆金融业支持‘丝绸之路经济带’战略发展的结构和路径, 读懂一带一路，国家智库顶级学者前瞻中国新丝路[“Xinjiang’s Financial Services Industry Supports Strategic Development of ‘Silk Road Economic Belt’”, in Leading Scholars from National Think Tanks and Their Insights on China’s New Silk Road] (Beijing: CITIC Press, 2015).
Chinese Provinces and OBOR Strategies
KEY OBOR PROJECTS:
Xinjiang Province, Fujian Province
OBOR – RELATED PLANS:
Tibet, Tibet, Gansu, Yunnan, Sichuan, Ningxia, Ningxia, Chongqing, Shaanxi, Beijing, Liaoning, Jilin, Heilongjiang, Hainan, Guangdong, Jiangxi, Anhui, Shandong, Shanghai, Zheijiang,
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Apart from developing the western region, OBOR is also expected to play an important role in revitalising economically underperforming provinces in the north-east as well as other poor regions in the south-west, bordering Southeast Asia. In fact, all Chinese provinces are keen to be involved in the national project. Many see it as a golden opportunity to obtain cheap funding and political support for their own infrastructure projects under the banner of OBOR.
Guan Youqing, the head of Minsheng Securities Research Institute and one of the China’s most respected equity analysts, says all provinces are competing fiercely against each other for OBOR-related projects. Every province wants to become a significant hub in the national strategy and he believes this will reignite infrastructure spending by local governments. Guan estimates all provinces have earmarked just over a trillion renminbi for OBOR-related infrastructure projects; 68 per cent of them will be related to railway, road and airports. Guan estimates this will add 0.2 to 0.3 percentage points to China’s GDP growth, although this estimate needs to be treated with a degree of caution.26)Guan Youqing,一带一路；第四次投资浪潮来临，读懂一带一路，国家智库顶级学者前瞻中国新丝路[“One Belt and One Road: The Fourth Wave of Investment”, in Leading Scholars from National Think Tanks and Their Insights on China’s New Silk Road] (Beijing: CITIC Press, 2015).
Upgrading Chinese industry while exporting Chinese standards
China has developed an impressive reputation as the ‘world’s factory’ over the last three decades. In recent years, however, its comparative advantages in manufacturing, such as low labour costs, have begun to disappear. For this reason, the Chinese leadership wants to capture the higher end of the global value chain.
To do this, China will need to upgrade its industry. Indeed, this has become one of China’s most important domestic economic goals. It is reflected in the so-called Made in China 2025 strategy,27)Arthur Kroeber, “The Never-ending Slowdown”, China Economic Quarterly 19, Nos 3 and 4 (November 2015), 4. drafted by the Ministry of Industry and Information Technology (MIIT). The strategy was inspired by Germany’s “Industry 4.0” plan. Its primary goals are to make the country’s manufacturing industry more innovation-driven, emphasise quality over quantity, and restructure China’s low-cost manufacturing industry.28)Scott Kennedy, “Made in China 2025”, Critical Questions, Center for Strategic and International Studies, 1 June 2015, https://www.csis.org/analysis/made-china-2025.
Beijing expects OBOR to play an important role in facilitating the export of higher-end Chinese manufactured goods. Chinese policymakers believe emerging markets targeted under OBOR will be more willing to accept higher-end Chinese industrial goods than developed countries in North America and Europe.
China is not just trying to export higher-end goods through OBOR but to encourage the acceptance of Chinese standards. The Chinese Government’s focus on exporting its technological standards must be understood in terms of its broader ambition to become an innovation-based economy and a leader in research and development. According to a research report prepared on behalf of the US–China Economic and Security Review Commission, “Policy makers see development of technology standards as central to realizing these objectives”.29)Dan Breznitz and Michael Murphree, “The Rise of China in Technology Standards: New Norms in Old Institutions”, Research Report Prepared on Behalf of the US–China Economic and Security Review Commission, 16 January 2013, 4, https://www.uscc.gov/sites/default/files/Research/RiseofChinainTechnologyStandards.pdf.
There is a popular saying in China that “Third-tier companies make products, second-tier companies make technology and first-tier companies make standards”. There is a pervasive belief within China, particularly in policy circles and academia, that only companies that make standards can be considered world-class companies.30)Ibid.
Xu Jing, head of the MIIT-affiliated Smart Manufacturing Institute, says OBOR will play a key role in helping Chinese companies to become more internationally competitive.31)Wang Erde,“中国制造2025应于一带一路无缝对接[The Seamless Integration between Made in China 2025 and One Belt and One Road]”, 21st Century Business Herald, 20 May 2015, http://finance.sina.com/gb/experts/sinacn/20150520/17031264782.html. Under OBOR, Chinese companies and especially higher-end industrial goods manufacturers will be encouraged and expected to operate in more demanding markets and more stringent regulatory environments. The expansion of a China-centred production chain will also force Chinese manufacturers to move higher up in the value chain. These efforts will be supported by Chinese financiers, who often urge loan recipients to accept Chinese-made goods as a condition of extending credit.
The Chinese Government’s campaign to market its high-speed railway technology is perhaps the best example of how it intends to use OBOR to upgrade China’s industry. Many have dubbed Premier Li’s marketing effort in this area as ‘high-speed railway diplomacy’.
Beijing considers its high-speed railway technology to be one of the crown jewels of its advanced manufacturing industry. The Chinese Government has mobilised more than 10 000 scientists and engineers to incorporate imported foreign technology as well as to develop the country’s own high-speed rail technology.
The result of this effort is evident in the breathtaking development of China’s high-speed rail sector. Today the country is home to more than 50 per cent of the world’s total constructed high-speed railway. Premier Li Keqiang has personally marketed Chinese-made high-speed to Thailand, India, Indonesia, and Malaysia.32)Sha Lu,“李克强的 ‘高铁外交’ 成绩单[Li Keqiang’s ‘High-Speed Rail Diplomacy’ Scorecard]”, Xinhua News Agency, 26 November 2015, http://news.xinhuanet.com/finance/2015-11/26/c_128469565.htm. All of these countries are considered to be key strategic partners in OBOR.
CHINESE HIGH-SPEED RAIL PROJECTS
China / Laos / Thailand
Jakarta / Bandung / Surabaya
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The focus on high-speed rail also illustrates Beijing’s goal of gaining acceptance of Chinese standards. If countries across the region accept Chinese high-speed railway technology as their national standard, it could become the de-facto standard across a vast geographical area. This means Chinese manufacturers and suppliers would enjoy a strong, first-mover advantage over other competitors, especially Japanese producers of high-speed rail.
In a policy document released by the MIIT on the development of the transport industry, the high-speed rail sector is expected to play a leading role in encouraging high-end Chinese industrial exports. It estimates the market for transport equipment to be around $263 billion by 2018. Chinese planners believe significant demand will come from regions covered by OBOR such as Southeast Asia, South Asia, Central Asia, and West Asia.33)“中国制造2025解读之：推进先进轨道交通装备发展[Interpreting Made in China 2025: Promoting the Development of Advanced Transport Equipment]”, The Ministry of Industry and Information Technology, http://www.miit.gov.cn/n11293472/n11293877/n16553775/n16553822/16633922.html.
The Jakarta–Bandung High-Speed Railway project is a good example of how Beijing intends to use OBOR to promote the high-tech sector as well as Chinese technical and engineering standards. Beijing secured the right to build the 142 kilometre high-speed rail line connecting the Indonesian capital and Bandung in West Java after an intense bidding war with the Japanese.34)“China Wins Indonesia High-speed Rail Project as Japan Laments ‘Extremely Regrettable’ U-turn”, South China Morning Post, 29 September 2015, http://www.scmp.com/news/asia/southeast-asia/article/1862459/china-wins-indonesia-high-speed-rail-project-japan-laments. Beijing won the bid by offering to finance the project itself.35)Robin Harding and Tom Mitchell, “Rail Battle between China and Japan Rushes Ahead at High Speed”, Financial Times, 20 December 2015. In order to win over Indonesian President Joko Widodo, Xi Jinping even dispatched the Chairman of the National Development and Reform Commission, Xu Shaoshi, as a special envoy to Jakarta.
The most significant part of the deal for Beijing is the Indonesian Government’s decision to adopt Chinese high-speed railway technology. Xinhua, the Chinese Government official news agency, has reported that the project will adopt “Chinese standards, Chinese technology and Chinese equipment” and that a Chinese engineering company will be involved in every aspect of construction, from the initial survey to the management of the railway once the project is completed.36)Cao Zheng,“高铁出海获历史性突破 中国印尼合建雅加达至万隆高铁[High-speed Rail Export Scores Historical Breakthrough, China and Indonesia Will Jointly Build High Speed Rail between Jakarta and Bandung]”, 17 October 2015, Xinhua News Agency, http://news.xinhuanet.com/fortune/2015-10/17/c_128327911.htm. For Beijing, this deal might be a loss-making venture, but it is a major breakthrough in persuading a foreign country to accept Chinese standards and technology.
Apart from the high-speed rail sector, the Chinese Government is also using OBOR to push for Chinese standards in other sectors such as energy and telecommunications. Ru Quan Lu, Director of Strategic Development at Petro China, argues that China should use its extensive investment in oil and gas projects in Central Asian states to promote Chinese petroleum industry standards:
“Based on the experience of American and European energy majors, controlling standards means having an upper hand in negotiation, more bargaining chips and better profitability. To control standards is more important than anything else.”37)Lu Ruquan,“陆如泉，一带一路：油路上的中国[One Belt and One Road, China On the Oil Road]”, Caixin, 6 July 2015.
Telecommunications is another important sector in terms of gaining acceptance of Chinese standards. China boasts two world-class telecommunication equipment makers: Huawei and ZTE. The former derives 70 per cent of its sales revenue from outside of China and is particularly successful in Asia, Africa, and Latin America.
Huawei, ZTE, and China Mobile are closely involved in developing 5G technology, which includes setting and designing international technical standards. These companies are becoming active participants in many international telecommunication industry bodies and associations such as the International Telecommunications Union, the 3rd Generation Partnership Project, and the Institute of Electrical and Electronics Engineers. Beijing sees the telecommunications industry as central to its Made in China 2025 strategy.38)Xie Lirong,“移动通信标准翻身战[Turning the Table on Mobile Telecommunications Standards]”, Caijing Magazine, 7 September 2015, 59.
It is no coincidence, therefore, that the Chinese Government envisages building telecommunication networks as a key part of OBOR. Hu Huaibang, Chairman of the China Development Bank, one of the world’s largest banks, specifically named the telecommunications sector as one of the key industries that his bank wants to support as part of OBOR, noting: “This will have an enormously positive impact on upgrading China’s industrial structure.”39)Hu Huaibang,“胡怀邦：以开发性金融服务‘一带一路’战略, 中国银行业[Using Development Finance to Serve the OBOR Strategy]”, China Banking, 13 January 2016, http://www.cdb.com.cn/rdzt/gjyw_1/201601/t20160118_2187.html.
Dealing with excess capacity
During the global financial crisis, the Chinese Government delivered one of the largest stimulus packages in recent economic history. It saved China (and arguably a host of other countries, including Australia) from recession by sending commodity prices sky-high. Though the stimulus program was effective, one of its lasting side effects was the creation of massive excess capacity in many industrial sectors from steel to cement. In the steel industry, for example, China’s annual steel production surged from 512 million tonnes in 2008 to 803 million tonnes in 2015. To put that into perspective, the extra 300 million tonnes is larger than the combined production of the United States and the European Union.40)World Steel Association data, accessed 8 August 2016, https://www.worldsteel.org/dms/internetDocumentList/statistics-archive/production-archive/steel-archive/steel-monthly/Steel-monthly-2015/document/Steel%20monthly%202015.pdf.
Dealing with the country’s excess capacity has become one of the top economic priorities for the Chinese Government. Beijing has described this issue as the sword of Damocles hanging over its head. Excess capacity will squeeze corporate profits, increase debt levels, and make the country’s financial system more vulnerable.41)“李克强叩门 ‘新东盟’ 产能合作成重要看点[Li Keqiang Knocking on the Door of ASEAN Countries and Industrial Capacity Cooperation is the Key]”, Chinese Government Information Portal, http://www.gov.cn/zhengce/2015-11/19/content_5014521.htm.
Many state-owned firms in sectors with excess capacity borrowed heavily during the financial crisis. The slowing economy, sluggish international demands, and the supply glut have reduced their profits. Many are struggling to keep their heads above water. These bad loans have put the Chinese banking system under a great deal of stress.
The Chinese Government has announced a number of policy measures to address the issue of excess capacity. This has included laying off 1.8 million workers from the steel and coal mining industries.42)Peter Cai, “Curbs on Coal and Steel will Test Beijing’s Resolve”, The Australian, 19 January 2016, http://www.theaustralian.com.au/business/business-spectator/curbs-on-coal-and-steel-will-test-beijings-resolve/news-story/43dfa1b17bd88556d1b8746e0c7d2658. The authorities are also trying to shut down polluting steel mills and blast furnaces.
OBOR is another way for Chinese policymakers to address the excess capacity problem, although not in the way that some observers believe. When Xi Jinping announced OBOR, a number of observers labelled it as an effort by China to export excess industrial products to neighbouring countries. The Financial Times reported in 2015 that the grand vision for a new Silk Road began its life modestly in the bowels of China’s commerce ministry as an export initiative.43)Charles Clover and Lucy Hornsby, “China’s Great Game: Road to a New Empire”, Financial Times, 13 October 2015.
In terms of addressing the excess capacity problem, OBOR is less about boosting exports of products such as steel and more about moving the excess production capacity out of China. OBOR projects are currently too small to absorb China’s vast glut of steel and other products. Instead, Beijing wants to use OBOR to migrate whole production facilities. Chinese premier Li Keqiang made the point clear in his address to leaders of ASEAN countries in 2014 at Nay Pyi Taw, Myanmar:
“We have a lot of surplus equipment for making steel, cement and pleat glass for the Chinese market. This equipment is of good quality. We want companies to move this excess production capacity through direct foreign investment to ASEAN countries who need to build their infrastructure. These goods should be produced locally where they are needed.”44)Li Keqiang’s Official Speech at the 17th ASEAN–China (10+1) Leaders’ Meeting, Nay Pyi Taw, Myanmar, 13 November 2014, http://www.fmprc.gov.cn/web/ziliao_674904/zt_674979/dnzt_674981/qtzt/ydyl_675049/zyxw_675051/t1210820.shtml.
Hu Huaibang, Chairman of the China Development Bank and the most influential financier of OBOR projects, says one of the most important objectives of OBOR is to help China undergo economic structural reform and upgrade its industries, moving away from the cheap mass manufacturing model:
“On the one hand, we should gradually migrate our low-end manufacturing to other countries and take pressure off industries that suffer from an excess capacity problem. At the same time, we should support competitive industries such as construction engineering, high-speed rail, electricity generation, machinery building and telecommunications moving abroad.”45)Hu Huaibang,“以开发性金融服务‘一带一路’战略[Using Development Finance to Service the One Belt and One Road Strategy]”, first published in China Banking Industry Magazine, 13 January 2016, http://www.cdb.com.cn/rdzt/gjyw_1/201601/t20160118_2187.html.
Moving factories with excess capacity to OBOR countries helps China reduce the supply glut at home while helping less developed countries to build up their industrial bases. In essence, domestic economic liabilities become foreign economic and diplomatic assets. Jin Qi, the Chairman of the Silk Road Fund, a sovereign wealth fund set up in 2014 specifically to provide seed capital for OBOR projects, made this clear during one of her rare public speeches on OBOR.46)Jin Qi’s speech in Hong Kong on 18 May 2016 at Belt and Road Summit, http://www.silkroadfund.com.cn/cnweb/19930/19938/32726/index.html.
Jin said China currently sits in the middle of the global production chain and it can help countries at an early stage of development to industrialise: “China possesses high-quality industrial production capacity, equipment, technology, ample supply of funds and 30 years of development experience.” She also noted that Chinese capital can “help facilitate international production cooperation, and reorganise global production chain. For China, it means helping the country to export high-quality production capacity, equipment, technical know-how and developmental experience.”47)Ibid.
Part of this thinking is informed by China’s own experience of industrialisation in the 1980s and 1990s. One senior provincial economic planning official said China imported second-hand production lines from Germany, Taiwan, and Japan in the 1980s; essentially unwanted surplus industrial capacity.48)Interview with a senior economic official from Hubei province, August 2016. Beijing thinks China’s experience could be replicated in neighbouring, less-developed countries.
One clear example of this is the plan to migrate part of Hebei province’s massive surplus steel production facilities. The province, China’s largest producer of steel, wants to relocate 20 million tonnes of production capacity abroad by 2023. The plan calls for companies to move their excess steel (but also cement and pleat glass production) facilities to Southeast Asia, Africa, and West Asia. For example, Delong Steel from Xintai is building a steel mill in Thailand that is capable of producing 600 000 tonnes of hot rolled coil a year in partnership with a local Thai operator, Permsin Steel Works.49)“我省力推钢铁水泥玻璃过剩产能向境外转移, 河北省人民政府[Hebei Province Promotes the Migration of Excess Capacities from Steel, Cement and Pleat Glass Sectors]”, Policy Directive from Hebei Provincial Government, http://www.hebei.gov.cn/hebei/11937442/10761139/12224328/index.html.
Some Chinese researchers and officials are sceptical of how successful this aspect of OBOR is likely to be. It is questionable whether OBOR countries can actually absorb China’s vast surplus production line. More importantly, will it be politically palatable for other countries to simply accept China’s unwanted industrial capacity?
Analysis from Anbang Research has noted that many OBOR countries are not enthusiastic about accepting China’s excess capacity. In fact, some countries are hostile to the idea because in several industrial sectors, they are competing directly with China.
“In the foreseeable future, Belt and Road countries are unlikely to experience the same rapid pace of urbanisation China had enjoyed in the last decade. The current problem of excess capacity is of a global nature; the Belt and Road Initiative is unlikely to solve it.”50)Liu Xiao, Wang Xu and Wang ShuQin,一带一路的愿景与行动，读懂一带一路，国家智库顶级学者前瞻中国新丝路[“One Belt and One Road: The Vision and Implementation”, in Leading Scholars from National Think Tanks and Their Insights on China’s New Silk Road] (Beijing: CITIC Press, 2015), 169.
One of China’s most senior policy advisers, Zheng Xin Li, a former deputy head of the Policy Research Office of the Chinese Communist Party Central Committee, has expressed his concerns about the massive migration of Chinese manufacturing to Southeast Asia and South Asia.
“There are still 240 million farmers (in China) who need to find manufacturing jobs. If most of the country’s labour-intensive industry moves abroad, all these surplus farm labours will be stuck in the countryside.”51)Zheng Xinli,“在海外投資的方向与战术[The Directions and Tactics in Investing Overseas]”, in一带一路 金融大战略[One Belt and One Road and the Grand Financial Strategy], Chen Yuan and Qian Yingyi eds (Beijing: CITIC Press, 2016), 76.
IMPLEMENTATION CHALLENGES: LACK OF BANKABLE PROJECTS AND MORAL HAZARD
Chinese leader Xi Jinping launched OBOR at the end of 2013. Three coordinating government agencies (the National Development and Reform Commission, the Ministry of Foreign Affairs, and Ministry of Commerce) issued the first official blueprint on OBOR, the ‘Vision and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road’, just two years later in March 2015. However, there has been slow progress in terms of the implementation of projects outside of China.
At a recent OBOR work conference chaired by Vice-Premier Zhang Gaoli, a member of the Politburo Standing Committee who is overseeing the initiative, Xi urged for some signature projects to be implemented quickly, showing tangible benefits and early success. He wanted the focus to be on infrastructure projects that improve connectivity, deal with excess capacity, and trade zones. “We need to get some model projects done and show some early signs of success and let these countries feel the positive benefits of our initiative”, he told a large gathering of senior party officials and business people.52)“习近平在推进 ‘一带一路’ 建设工作座谈会上发表重要讲话 张高丽主持, 新华社[Xi Jinping’s Speech at the One Belt and One Road Work Conference, Chaired by Zhang Gaoli]”, Xinhua News Agency, 17 August 2016, http://www.gov.cn/guowuyuan/2016-08/17/content_5100177.htm. Xi is not happy with the lack of progress, not least because OBOR is part of his political legacy. But the initiative faces multiple, formidable challenges.
First, there is a significant lack of political trust between China and a number of important OBOR countries. Perhaps the best example of this is India. The country’s Foreign Secretary Subrahmanyam Jaishankar has said OBOR is a unilateral initiative and that India would not commit to buy-in without significant consultation.53)Tanvi Madan, “What India Thinks about China’s One Belt, One Road Initiative (But Does Not Explicitly Say)”, Order from Chaos (blog), Brookings Institution, 14 March 2016, https://www.brookings.edu/blog/order-from-chaos/2016/03/14/what-india-thinks-about-chinas-one-belt-one-road-initiative-but-doesnt-explicitly-say/. Sameer Patil, a former assistant director at the Indian National Security Council and a researcher at foreign policy think tank Gateway House, says the China–Pakistan Economic Corridor project is a major obstacle to Indian involvement in the initiative.54)Interview with Sameer Patil, Mumbai, India, August 2016.
A second problem is that nearly two-thirds of OBOR countries have a sovereign credit rating below investable grade. Some key OBOR countries such as Pakistan are unstable, which poses significant security risks to Chinese companies as well as personnel working there.55)Kamran Haider and Ismail Dilawar, “Militants Strike Pakistan, Hitting China’s Economic Corridor”, Bloomberg, 26 October 2016, https://www.bloomberg.com/news/articles/2016-10-25/militants-return-to-pakistan-hitting-china-s-economic-corridor. The Pakistani military has, for example, promised to raise a special military unit of 12 000 soldiers to protect China–Pakistan Economic Corridor projects.
A third problem is caution on the part of over-leveraged and risk-averse Chinese financers. After Xi announced OBOR, Chinese state-owned financial institutions followed with a raft of policies that echoed the president’s grand vision. China Development Bank, which is expected to play a key role in financing OBOR, says it is tracking more than 900 projects in 60 countries worth more than US$890 billion.56)“国开行建立900余 ‘一带一路’ 项目库 涉资金近万亿美元[China Development Bank Builds One Belt One Road Project Bank and the Total Amount is Approaching One Trillion USD]”, Caijing, 28 May 2015, http://m.caijing.com.cn/api/show?contentid=3893051. Bank of China, which has the largest overseas networks, pledged to lend US$20 billion in 2015 and no less than US$100 billion between 2016 and 2018.57)Huo Yu, Wang Ling and Wu Hong Yu Ran,“一带一路会是海外的4万亿吗[Will One Belt and One Road Become the Overseas Version of the Wasted Four Trillion Stimulus]”, Caixin Weekly, 15 June 2015. Industrial and Commercial Bank of China (ICBC) has been looking at 130 commercially feasible OBOR-related projects worth about US$159 billion. It has financed five projects in Pakistan and has established a branch in Lahore.58)Ibid.
Yet, despite these public pledges of support, many Chinese bankers and especially those from listed commercial banks such as ICBC are concerned about the feasibility of OBOR projects. They are worried about the many risks associated with overseas loans, including political instability and the economic viability of many projects. As Andrew Collier, Managing Director of Orient Capital Research, has noted: “It is pretty clear that everyone is struggling to find decent projects. They know it’s going to be a waste and don’t want to get involved, but they have to do something.”59)Email interview with Andrew Collier, Managing Director of Orient Capital Research, October 2016. Collier gave an example of one Beijing bank that he said had stopped lending to rail projects in risky places such as Baluchistan in Pakistan.
A chief investment officer from one of China’s largest state-owned financial institutions also told the author about his own reservations: “I prefer to invest in places like Canada and Australia, where I can get safe and decent returns. However, where I have been ordered to invest in OBOR countries, I will only allocate the minimum amount.”60)Interview with a senior Chinese financier, Beijing, June 2016.
The reservations of Chinese financiers and business people about OBOR also need to be seen in the context of the worsening debt problem within China’s financial system, especially the number of non-performing loans on banks’ balance sheets. This rapid pile-up of debts took place after the country’s massive stimulus package of 2008. China’s leading business magazine, Caixin, has suggested that OBOR could produce a repeat of 2008.61)Huo Yu, Wang Ling and Wu Hong Yu Ran, “[Will One Belt and One Road Become the Overseas Version of the Wasted Four Trillion Stimulus]”. Influential economic policymakers in China are also concerned that the political impetus behind OBOR could drive China into investing in white elephant projects abroad. They are worried that some countries will take advantage of OBOR and sign up to Chinese projects with no intention of repaying the loans.62)Ibid.
Yiping Huang, an influential economist who sits on the Chinese central bank’s monetary policy committee and a former investment banker, has argued that China needs to proceed cautiously on OBOR projects:
“The most effective way to promote the initiative is by getting one or two projects done. If they turn out to be effective, it will be easier to take the next step. If early projects are disastrous, the future path will be hard.”63)Huang Yiping,一带一路战略下的对外投资新格局，读懂一带一路，国家智库顶级学者前瞻中国新丝路[“New Overseas Investment Landscape against the Backdrop of One Belt and One Road Strategy”, in Leading Scholars from National Think Tanks and Their Insights on China’s New Silk Road] (Beijing: CITIC Press, 2015), 138, 285.
Huang has also noted the efforts to develop the country’s western region largely failed because the state ignored the fundamental economic issue of ensuring a return on assets.64)Ibid.
There are indications that Chinese financiers are demanding tougher terms to ensure OBOR projects are financially viable over the longer term. Negotiations with the Thai Government over the building of a high-profile rail project were hamstrung by disagreements over interest rates, among other things.65)“Thailand Rebuffs Railway Deal with China”, The Straits Times, 5 May 2016, http://www.straitstimes.com/asia/se-asia/thailand-rebuffs-railway-deal-with-china. Chinese financiers demanded a 2.5 per cent return on their concessional loan while the Thai Government wanted 2 per cent, the same rate Beijing offered to Jakarta. When Chinese bankers insisted on 2.5 per cent Bangkok said it would finance the project itself. Xue Li, a senior researcher at the Chinese Academy of Social Sciences and a member of a semi-official OBOR expert panel, says China is likely to lose money on the Indonesian high-speed rail deal, which Beijing is treating as a one-off special case and does not want the generous funding terms to become the norm.
OBOR is President Xi’s most ambitious foreign and economic policy initiative. Much of the recent discussion has concerned the geopolitical aspects of the initiative. There is little doubt that the overarching objective of the initiative is helping China to achieve geopolitical goals by economically binding China’s neighbouring countries more closely to Beijing. But there are many more concrete and economic objectives behind OBOR that should not be obscured by a focus on strategy.
The most achievable of OBOR’s goals will be its contribution to upgrading China’s manufacturing capabilities. Given Beijing’s ability to finance projects and its leverage over recipients of these loans, Chinese-made high-end industrial goods such as high-speed rail, power generation equipment, and telecommunications equipment are likely to be used widely in OBOR countries. More questionable, however, is whether China’s neighbours will be willing to absorb its excess industrial capacity. The lack of political trust between China and some OBOR countries, as well as instability and security threats in others, are considerable obstacles.
Chinese bankers will likely play a key role in determining the success of OBOR. Though they have expressed their public support for President Xi’s grand vision, some have urged caution both publicly and in private. Their appetite to fund projects and ability to handle the complex investment environment beyond China’s border will shape the speed and the scale of OBOR. There is a general recognition that this initiative will be a decade-long undertaking and many are treading carefully.
ABOUT THE AUTHOR
Peter Cai is a Nonresident Fellow at the Lowy Institute for International Policy. Previously he was a journalist with The Australian, Business Spectator, The Age and Sydney Morning Herald, covering business and economic news. Prior to becoming a journalist, Peter was at the Australian Treasury where he worked in the Foreign Investment Review Board Secretariat, focusing largely on state-owned enterprises and sovereign wealth fund investment policy. Peter has a master’s degree from Oxford University and holds undergraduate degrees from The University of Adelaide.
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Original Source: Date-stamped: 2017 March 22 | Author: Peter Cai | Article Title: Understanding China’S Belt And Road Initiative | Article Link: lowyinstitute.org
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|48.||↑||Interview with a senior economic official from Hubei province, August 2016.|
|49.||↑||“我省力推钢铁水泥玻璃过剩产能向境外转移, 河北省人民政府[Hebei Province Promotes the Migration of Excess Capacities from Steel, Cement and Pleat Glass Sectors]”, Policy Directive from Hebei Provincial Government, http://www.hebei.gov.cn/hebei/11937442/10761139/12224328/index.html.|
|50.||↑||Liu Xiao, Wang Xu and Wang ShuQin,一带一路的愿景与行动，读懂一带一路，国家智库顶级学者前瞻中国新丝路[“One Belt and One Road: The Vision and Implementation”, in Leading Scholars from National Think Tanks and Their Insights on China’s New Silk Road] (Beijing: CITIC Press, 2015), 169.|
|51.||↑||Zheng Xinli,“在海外投資的方向与战术[The Directions and Tactics in Investing Overseas]”, in一带一路 金融大战略[One Belt and One Road and the Grand Financial Strategy], Chen Yuan and Qian Yingyi eds (Beijing: CITIC Press, 2016), 76.|
|52.||↑||“习近平在推进 ‘一带一路’ 建设工作座谈会上发表重要讲话 张高丽主持, 新华社[Xi Jinping’s Speech at the One Belt and One Road Work Conference, Chaired by Zhang Gaoli]”, Xinhua News Agency, 17 August 2016, http://www.gov.cn/guowuyuan/2016-08/17/content_5100177.htm.|
|53.||↑||Tanvi Madan, “What India Thinks about China’s One Belt, One Road Initiative (But Does Not Explicitly Say)”, Order from Chaos (blog), Brookings Institution, 14 March 2016, https://www.brookings.edu/blog/order-from-chaos/2016/03/14/what-india-thinks-about-chinas-one-belt-one-road-initiative-but-doesnt-explicitly-say/.|
|54.||↑||Interview with Sameer Patil, Mumbai, India, August 2016.|
|55.||↑||Kamran Haider and Ismail Dilawar, “Militants Strike Pakistan, Hitting China’s Economic Corridor”, Bloomberg, 26 October 2016, https://www.bloomberg.com/news/articles/2016-10-25/militants-return-to-pakistan-hitting-china-s-economic-corridor.|
|56.||↑||“国开行建立900余 ‘一带一路’ 项目库 涉资金近万亿美元[China Development Bank Builds One Belt One Road Project Bank and the Total Amount is Approaching One Trillion USD]”, Caijing, 28 May 2015, http://m.caijing.com.cn/api/show?contentid=3893051.|
|57.||↑||Huo Yu, Wang Ling and Wu Hong Yu Ran,“一带一路会是海外的4万亿吗[Will One Belt and One Road Become the Overseas Version of the Wasted Four Trillion Stimulus]”, Caixin Weekly, 15 June 2015.|
|59.||↑||Email interview with Andrew Collier, Managing Director of Orient Capital Research, October 2016.|
|60.||↑||Interview with a senior Chinese financier, Beijing, June 2016.|
|61.||↑||Huo Yu, Wang Ling and Wu Hong Yu Ran, “[Will One Belt and One Road Become the Overseas Version of the Wasted Four Trillion Stimulus]”.|
|63.||↑||Huang Yiping,一带一路战略下的对外投资新格局，读懂一带一路，国家智库顶级学者前瞻中国新丝路[“New Overseas Investment Landscape against the Backdrop of One Belt and One Road Strategy”, in Leading Scholars from National Think Tanks and Their Insights on China’s New Silk Road] (Beijing: CITIC Press, 2015), 138, 285.|
|65.||↑||“Thailand Rebuffs Railway Deal with China”, The Straits Times, 5 May 2016, http://www.straitstimes.com/asia/se-asia/thailand-rebuffs-railway-deal-with-china.|
Victoria plans to sign agreements for investment under China’s Belt and Road Initiative within weeks, as Beijing ramps up trade tensions with Australia
Home Affairs Minister Peter Dutton asked the state government to justify taking part in a ‘propaganda exercise’ for Beijing
An Australian state is continuing with its plans to participate in China’s signature infrastructure drive regardless of opposition from Canberra, amid growing divisions between state and federal leaders over how to handle relations with Beijing.
Victoria’s bid to sign a road map for investment under China’s Belt and Road Initiative within weeks comes as state and national government figures clash over Canberra’s handling of escalating trade tensions with Beijing.
Beijing earlier this month restricted beef imports and slapped an 80 per cent tariff on Australian barley, in moves widely seen as retaliation for Australia’s push for an independent international inquiry into the coronavirus pandemic.
Home Affairs Minister Peter Dutton on Thursday called on the Victorian government, led by the opposition centre-left Labor Party, to justify taking part in a “propaganda exercise” for Beijing.
“This is gravely concerning, and Victoria needs to explain why it is really the only state in the country that has entered into this relationship,” Dutton said.
The remarks came after Victorian Treasurer Tim Pallas accused the federal government, led by the centre-right Liberal Party, of “vilifying” China, suggesting its push for an inquiry had led Beijing to retaliate against Australian exporters.
Pallas’ comments drew condemnation from government MPs for “parroting” Beijing, as well as resistance from even some federal members of his own Labor Party.
Although the trade measures are widely seen as punishment for the inquiry, Canberra has refrained from directly linking the two issues and insisted they be resolved separately.
Beijing has denied any link, insisting the measures were introduced in response to quarantine and inspection violations and unfair trade practices.
On Wednesday, Victorian government and opposition MPs clashed over the infrastructure initiative after state Transport Infrastructure Minister Jacinta Allan refused to answer questions on whether A$24 billion (US$15 billion) in new spending to deal with the pandemic would include funds borrowed from China.
Peter Jennings, executive director of the Australian Strategic Policy Institute, said the Victorian government was “undermining a bipartisan position” on the belt and road strategy and stepping beyond its authority into the realm of foreign affairs.
“The focus of state politicians tends only to be on investment and trade and they have little conception of the downside risks of engagement with the People’s Republic of China,” Jennings said.
“Very few state officials have security clearances or the need to access information from our intelligence agencies and the national security establishment. The result is state and territory governments tend to be incredibly naive when it comes to dealing with the PRC.”
Victorian Premier Daniel Andrews, who has made six trips to China as state leader, signed up to join Beijing’s US$1.4 trillion infrastructure drive in October 2018, hailing it as an “Australian first” that would lead to “more trade and more Victorian jobs and an even stronger relationship with China”. Both sides agreed to work out specific investment details by the middle of this year.
Victoria, home to Australia’s second biggest city Melbourne, sold A$10 billion (US$6.5 billion) worth of exports to China in 2018, more than to any other country, and received more than a quarter of Chinese investment into the country.
Prime Minister Scott Morrison rebuked the premier at the time for not properly consulting the federal government, which under the constitution is tasked with managing foreign affairs.
Beijing’s initiative, which envisages the creation of a new “Silk Road” linking China to Europe, Asia and Africa, has been viewed with suspicion in Canberra amid concerns about its strategic ambitions for the region and allegations of Chinese meddling in domestic politics.
Nick Bisley, a professor of international relations at La Trobe University in Melbourne, said state leaders lacked a “national security perspective” on China and were likely to see even greater need to court new investment due to the trade dispute at the national level.
“These tensions are certainly making states feel as if the government’s focus on the strategic risk of China is putting economic welfare in some states under threat, and as such they are likely to try to do what they can to improve economic ties,” said Bisley. “Given how dire the economic consequences of COVID are likely to be, there will be added incentive to do so.”
Pradeep Taneja, a lecturer in Chinese politics and international relations at the University of Melbourne, said the Victorian premier saw ties with China from the “parochial point of view” of investment opportunities in part because the state was on a major infrastructure drive, including an expansion of Melbourne’s rail network.
But Taneja said there would be limits to Chinese involvement in projects in the state as the federal government retained a veto over large international investment.
“Premier Andrews knows that – that he’s unlikely to get any major investment from China,” Taneja said, explaining that the state leader hoped to send the message that Victoria was open to trade. “It’s not just about investment, it’s also about the trade relationship.”
The Victorian government was contacted for comment.
VIDEO: (In 2013, Chinese President Xi Jinping unveiled an ambitious plan for economic integration on a global scale. What became known as the Belt and Road Initiative has seen at least 68 countries and international organisations sign trade and infrastructure deals with China. Beijing says the initiative will benefit the whole world and lift millions out of poverty. But critics, including the US and several major European countries, fear China’s real motive is to gain more power and influence on the world stage.)
Original Source: Date-stamped: 2020 MAY 21 | Time-stamped: 6:01 pm | Author: John Power | Article Title: Australia’s state of Victoria pushing ahead with belt and road plans, despite Canberra’s objections | Article Link: scmp.com
Hashtags: #4cminewswire, #PeterDutton, #TimPallas, #DanielAndrews, #ScottMorrison, #China, #Beijing, #XiJinping, #4cminews, #4CMiTV, #4CM2020MAY21,
Tags: 4cminewswire, Peter Dutton, Tim Pallas, Daniel Andrews, Scott Morrison, China, Beijing, Xi Jinping, 4cminews, 4CMiTV, #4CM2020MAY21,
Whenever Premier Daniel Andrews is attacked over his cosy relationship with China, he says the deal is in the interest of the state’s economy.(Twitter: Lisa Tucker)
Victorian Premier Daniel Andrews has signed a new deal with the Chinese Government to deepen the state’s engagement with the controversial Belt and Road initiative.
The deal has angered some in the Morrison Government who are worried about Chinese influence in Australia, but the Premier, who is a frequent visitor to China, says the deal is designed to boost the Victorian economy and jobs.
SO, WHAT IS THIS NEW DEAL?
It’s technically a non-legally binding agreement for Victoria to be involved in the Belt and Road project; the Silk Road for the 21st century that includes new ports, highways and railways across the globe.
It is essentially a commitment by Victoria to work together with Beijing on future projects for the benefit of both parties.
Mr Andrews will co-chair a group that will meet half yearly.
A big part is for Victorian infrastructure experts to get access to the hundreds of billions of dollars of projects slated for the Belt and Road.
But it also encourages Chinese infrastructure firms to establish a presence in VICTORIA AND TO BID FOR MAJOR PROJECTS.
($16 billion North-East Link) BE SURE THE MONEY AND THE WORK IS DONE BY CHINA AND CHINESE WORK FORCES NOTHING BUT CRUMBS FLOW BACK TO AUSTRALIANS OR AUSTRALIA
Two Chinese firms are part of bids for the $16 billion North-East Link.
Some critics have accused Mr Andrews of hypocrisy after he introduced laws ensuring local procurement for all government projects.
WHAT WILL VICTORIA GET OUT OF IT?
Foreign policy doesn’t usually fall under the jurisdiction of state governments, but essentially it will mean a bigger market to sell wine, beef and lamb, as well as an opportunity for Victorian institutions to teach future Chinese doctors.
International education is already the state’s biggest export.
Voicing public support for a major Chinese foreign policy initiative is likely to ease the way for Chinese companies to get approval from Beijing to make investments in Victoria, and for Victorian-based companies to sell to China.
For example, the partial granting in April of a licence for Bellamy’s infant formula to sell Chinese-labelled product after years of delay came just days before a visit by Mr Andrews to Beijing for a Belt and Road forum.
But was that a coincidence? Whenever Mr Andrews is attacked over his cosy relationship with China, he says the deal is in the interest of the state’s economy.
WHAT’S IN IT FOR CHINA?
For Beijing, it’s all about politics.
China’s cashed-up state-owned and private companies don’t need much encouragement to look for investment opportunities abroad — political leaders from across the globe come to Beijing on a near-daily basis asking for Chinese funding.
Having already been stung by a few unviable infrastructure projects in Sri Lanka and Pakistan, Chinese companies would likely weigh up the merits of Victorian deals rather than splash cash recklessly.
The real value for China is diplomatic.
Belt and Road is designed to help maintain economic growth in China through Chinese companies using Chinese materials and sometimes Chinese labour to build infrastructure in other countries, usually developing nations.
But it is also designed to grow China’s clout abroad by making countries economically dependent on Beijing, and has been written into the Communist Party’s constitution as a sign of its importance.
This political imperative partly explains the Federal Government’s refusal to formally sign Australia up.
So China’s Government is thrilled it can bypass Canberra by doing deals directly with a state government — and hopes more deals with other states could pressure the Federal Government to change its policy in future.
It would be unthinkable for a Chinese province to break ranks with Beijing on a major foreign policy issue like Victoria is doing, which also helps to explain the frustration of the Morrison Government having its diplomacy undermined.
WHY IS IT CONTROVERSIAL?
Home Affairs Minister Peter Dutton has led criticism of the Victorian deal with China, questioning why the Premier believes the decision is in the national interest.
“It’s a decision that’s been made by Mr Andrews, so he can justify the decision. I haven’t heard the rationale or the reasoning behind what seemed to be a pretty rushed decision,” Mr Dutton said.
Jane Golley from the ANU’s Australian Centre on China in the World said the Premier was making a pragmatic decision based mainly on the economic benefits for Victoria.
She warned simple rhetoric against the deal from Canberra politicians was a bigger concern because it sent a signal to Beijing that Australia was closed for business.
Associate Professor Golley said engagement was the most pressing national issue but how to deal with it needed to rise “beyond partisan squabbling”.
“It is not a black and white proposition,” she said.
Victorian Opposition Leader Michael O’Brien said he was concerned the agreement was one-sided, in China’s favour.
He pointed to the part of the agreement which said the aim was to “increase participation of Chinese infrastructure companies in Victoria” compared to “promoting the cooperation of Victorian firms in China”.
Mr O’Brien said he was concerned the agreement would give Chinese companies a head start on Victorian jobs.
“I am all for trade, economic partnerships and attracting investment to Victoria but I am also for a level playing field,” he said.
But what about China’s human rights record?
ABC’s Four Corner’s program exposed how China was creating the world’s largest prison, with millions of citizens being held in detention.
But the Premier insists China is an important trading partner and Victorian jobs will benefit.
The Premier has also encouraged other state governments and the Federal Government to follow suit.
“We’d always hope that the Federal Government would have a similar approach to us to work closely with China for the benefit of Victorian workers …” he said.
“I think most Australians would say that was good … we need a strong partnership … and we would hope that every state and territory, and indeed the Commonwealth, would have a strong partnership and friendship with China.”
Original Source: Date-stamped: 2019 OCT 25 | Author: Richard Willingham & Bill Birtles | Article Title: Victoria Deepens Engagement With Beijing'S Controversial Belt And Road Initiative | Article Link: abc.net.au
Hashtags: #4cminewswire, #BRI, #XiJinping, #China, #DanielAndrews, #Uighurs, #Kazakhs, #Kyrgyzs, #4cminews, #4CM2019OCT25
Tags: 4cminewswire, BRI, Xi Jinping, China, Daniel Andrews, Uighurs, Kazakhs, Kyrgyzs, 4cminews, #4CM2019OCT25
KHORGOS1)Khorgas, officially known as Korgas, also known as Chorgos, Gorgos, Horgos and Khorgos, formerly Gongchen, is a Chinese city straddling the border with Kazakhstan. It is located in the Ili Kazakh Autonomous Prefecture of the Xinjiang Uyghur Autonomous Region. SEE URL: https://en.wikipedia.org/wiki/Khorgas, Kazakhstan—To better understand the future of China’s role in Central Asia, and the world, you need to come here, the middle of nowhere.
Straddling the Kazakh-Chinese border, a collection of cranes, railways, and buildings rises out of a barren stretch of desert surrounded by towering mountains to form the backbone of the Khorgos Gateway, one of the most ambitious projects in China’s Belt and Road Initiative, or BRI, Beijing’s sprawling infrastructure project.
Beijing hopes the “dry port” here—where Chinese freight will be reloaded onto Kazakh trains to make the 5,000-plus-mile journey to Europe—will expand land-based trade across Eurasia. Beyond the logistics hub, the Kazakh project also consists of a special economic zone to attract investors to build factories and warehouses, and a free-trade border zone that aims to increase commerce with China. On the Kazakh side of the border, a purpose-built village, Nurkent, houses the area’s workers, with ambitious plans to grow it in the coming decades to complement its sister city in China, also called Khorgos, which already features shopping malls, hotels, and a population of more than 100,000.
Only in operation since 2015, the facilities are still taking shape in Kazakhstan, whose government is trying to maximize its geographic location to benefit from China’s flagship foreign-policy effort. Yet along the way, Khorgos has become emblematic of the immense promise and problems associated with the Belt and Road Initiative.
Since BRI was launched, in 2013, China has sunk hundreds of billions of dollars into ports, railways, and energy projects across Asia, Africa, and Europe. The goal is to not only expand infrastructure, including in many developing countries, but also win over local populations and governments by funnelling investment, jobs, and economic growth in their direction.
The path forward has been bumpy, though.
Questions regarding the commercial value of certain projects and concerns over the initiative being a backdoor for more sinister geopolitical ambitions have undercut Beijing’s official rhetoric of “win-win” cooperation and illustrated the uncertainty surrounding its plans.
As Beijing marks the 70th anniversary of the founding of the People’s Republic of China, questions over the implementation of BRI are among several facing the country regarding the limits of its power—from protests in Hong Kong to the escalating trade war with the United States.
“There is a reason that lots of these gaps in global infrastructure that China is trying to fill exist in the first place,” Andrew Cainey, a China expert and an associate fellow at Chatham House, a London-based think tank, told me. “It’s because they are not so commercially appealing.”
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This tension—between the expectations surrounding BRI and the challenges of fulfilling them—is on display here in Khorgos. The project has posted impressive overall growth numbers, and Kazakh officials are keen to talk up plans to develop the area. The dry port processed 44 percent more cargo, as measured by so-called 20-foot-equivalent units, in 2018 compared with the previous year, according to data provided by the authorities here. Kazakh officials were also keen to point to the area’s potential for growth.
A 2017 study commissioned by the International Union of Railways estimated that trade volume between China and Europe via rail would increase sharply over the next decade, with Kazakhstan becoming the key crossroads.
Similarly, officials mentioned new investments from Chinese companies to build facilities and factories in the special economic zone on the Kazakh side as a sign of the area’s growth.
“Khorgos is about turning Kazakhstan into Central Asia’s transit hub,” Nurlan Toganbayev, the director of the commercial department at the KHORGOS GATEWAY, told me. “We know this is no easy task, but we’re growing, and we take great pride in that.”
Yet even these touted successes point to future problems for the project.
The land route has also been criticized for waste and fraud.
Many of the cargo containers returning by rail from Europe to China through Kazakhstan are empty, officials admit, due to a trade imbalance, but the problem may run even deeper.
The Chinese government provides significant subsidies to encourage use of the rail links, and a recent report by the Chinese Business Journal found that many exporters transported empty containers from China to Europe just to receive those subsidies.
China Railway, the government operator of the rail line, admitted to the state-run Global Times that the problem existed, but said that it has been eradicated. Not only does the episode illustrate the commercial limits of large-scale shipping by train, but it calls into question the viability of the Khorgos project.
These concerns may be part of a broader pattern.
At the second annual Belt and Road Forum, in April, the Chinese leader Xi Jinping signalled that his government would move to tighten oversight of the opaque network of infrastructure projects that makes up BRI and discussed taking on more high-quality and sustainable deals, saying that Beijing had “zero tolerance” for corruption.
This came on the heels of several instances that have sullied the initiative’s brand. The $62 billion CHINA-PAKISTAN ECONOMIC CORRIDOR has been scaled back amid Pakistan’s increasing debt problems, while a major port deal in Myanmar was slimmed down from roughly $7 billion to $1.3 billion.
A port in Sri Lanka garnered global headlines after the government couldn’t repay its loans and granted a state-owned Chinese company a 99-year lease on the port as a form of debt relief.
Elsewhere, projects have been tarnished by corruption:
The new Malaysian government renegotiated a major rail project at a significantly reduced cost and cancelled $3 billion worth of plans to build new pipelines following a graft scandal. The Maldives is seeking debt forgiveness following corruption allegations connected to Belt and Road projects green-lit by its previous government.
These scandals come as a slowing Chinese economy could lead to a more cautious approach to investment in the future. According to Cainey, from Chatham House, Beijing is still fine-tuning BRI and trying to learn from a spree of large-scale projects in countries with poor governance and weak rule of law.
“The Chinese have taken the same approach they took at home, where they have lots of experience managing the risks of large infrastructure projects,” he told me, “but as they are now seeing, things work differently overseas.”
China has become the largest investor in Central Asia, and its patronage has been embraced by local governments, especially in Kazakhstan, where Xi announced BRI in 2013. But China’s expansion also stirred fears among everyday citizens of vassalage2)a position of subordination or submission (as to a political power). to Beijing.
Concerns over China’s intentions are not new, but they have increased as its economic footprint has deepened. These worries have grown in recent years, as China has built a sprawling surveillance state and internment-camp system to target its Muslim population: mostly Uighurs, but also ethnic Kazakhs, Kyrgyzs, and other groups in its western Xinjiang region, which shares a 1,100-mile border with Kazakhstan.
It’s unclear how many people are in some sort of detention, but the U.S. State Department estimates that 800,000 to 2 million people have been detained since 2017.
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In Zharkent, a Kazakh city of about 33,000 people that sits 22 miles from the Khorgos Gateway, this reality is on display.
The city was the site of the high-profile trial of Sayragul Sauytbay, an ethnic Kazakh Chinese national who worked in the camps and then fled to Kazakhstan because she feared internment herself. Sauytbay became a local celebrity for her firsthand testimony about China’s camps when she was tried for crossing the border illegally through the Khorgos free-trade zone. (She was granted asylum in Sweden in June.)
The internment camps also overlapped with the broader Khorgos project in December 2017, when Askar Azatbek, a former Xinjiang official who became a Kazakh citizen, was allegedly taken from the Kazakh side of the free-trade zone to China, where he has since been detained.
“China is trying to win hearts and minds,” Philippe Le Corre, a nonresident senior fellow at the Carnegie Endowment for International Peace who studies China’s global rise in Europe and Eurasia, told me, “but it’s an almost impossible task when you look at what’s happening to the Muslims of China.”
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Markets and bazaars in Zharkent are full of Chinese goods, and rumors of Chinese encroachment are prolific in trading stalls and tea houses. But criticizing China publicly is still a sensitive topic in authoritarian Kazakhstan, and during a recent visit, many people were wary of speaking on the record.
Alexander, a resident of Zharkent who gave only his first name, told me that he makes his living shuttling Chinese goods, and that there has been a change of attitude in recent years when locals interact with Chinese merchants and officials. “They look down on us now,” he said. Another man, Bolat, told me he feels that grand projects like Khorgos bring “no benefit to the local community.”
Still, despite limited goodwill for China and various difficulties with its marquee Belt and Road projects, developments like Khorgos hold too much symbolic political value for China and Kazakhstan to be allowed to fail. Beijing has fuelled its global infrastructure push with subsidies and investments, but as China enters a new phase shaped by tighter budgets and oversight, Khorgos and other BRI projects may need to adapt.
“There are lots of local people that would like for Khorgos to be a success story,” Le Corre said. “But given everything else going on at the moment, it’s becoming more difficult for China to sell this new Silk Road.”
Original Source: Date-stamped: 2019 OCT 01 | Author: by Reid Standish | Article Title: The Khorgos Gateway was once touted as one of the most ambitious projects in the Belt and Road Initiative, but it has come to represent the limits of Beijing’s global push. | Article Link: theatlantic.com
Hashtags: #4cminewswire, #BRI, #XiJinping, #China, #KhorgosGateway, #Malaysia, #Maldives, #SriLanka, #Kazakhstan, #Pakistan, #Uighurs, #Kazakhs, #Kyrgyzs, #4cminews, #4CM2019OCT01
Tags: 4cminewswire, BRI, Xi Jinping, China, Khorgos Gateway, Malaysia, Maldives, Sri Lanka, Kazakhstan, Pakistan, Uighurs, Kazakhs, Kyrgyzs, 4cminews, #4CM2019OCT01
References [ + ]
|1.||↑||Khorgas, officially known as Korgas, also known as Chorgos, Gorgos, Horgos and Khorgos, formerly Gongchen, is a Chinese city straddling the border with Kazakhstan. It is located in the Ili Kazakh Autonomous Prefecture of the Xinjiang Uyghur Autonomous Region. SEE URL: https://en.wikipedia.org/wiki/Khorgas|
|2.||↑||a position of subordination or submission (as to a political power).|
The Earth’s magnetic field, which protects life on our planet by blocking the majority of harmful solar radiation, is mysteriously weakening in specific locations.
Over the last two centuries, it has lost nearly 10% of its strength, leading some to speculate that a multi-century pole reversal has begun. What’s more, scientists have identified a large, localized region of weakness extending from Africa to South America, along with a second ‘center of minimum intensity’ southwest of Africa – both of which are allowing charged particles from the cosmos to penetrate lower altitudes of the atmosphere – throwing off satellites flying in low-Earth orbit, according to Sky.
According to scientists from the Swarm Data Innovation and Science Cluster (DISC) at the European Space Agency (ESA), measurements from their ‘swarm satellite constellation’ have shed tremendous light on the second anomaly.
In fact, the anomaly had puzzled ESA researchers as their Swarm satellites would sometimes ‘black out‘ when flying through the affected region. Three years ago, they observed a link between the blackouts and Ionospheric thunderstorms.
“The new, eastern minimum of the South Atlantic Anomaly has appeared over the last decade and in recent years is developing vigorously,” said Dr. Jurgen Matzka of the German Research Center for Geosciences. “We are very lucky to have the Swarm satellites in orbit to investigate the development of the South Atlantic Anomaly. The challenge now is to understand the processes in Earth’s core driving these changes.“
If this is the beginning of a pole reversal – which happens roughly every quarter-million years, it would result in multiple north and south magnetic poles all around the globe during the multi-century phenomenon.
“Such events have occurred many times throughout the planet’s history,” said ESA, adding “we are long overdue by the average rate at which these reversals take place (roughly every 250,000 years)”
Not to worry, in theory, as the space agency says that the South Atlantic dip which they’re still learning about was “well within what is considered normal levels of fluctuations.”
“However, one thing is certain: magnetic field observations from Swarm are providing exciting new insights into the scarcely understood processes of Earth’s interior.”
Original Source: Date-stamped: 2020 MAY 22 | Time-stamped: 22:05 | Author: Tyler Durden | Article Title: Earth's Magnetic Field Mysteriously Weakening In Specific Locations, Throwing Off Satellites And Spacecraft | Article Link: zerohedge.com
The Victorian government’s Belt and Road Initiative program is a zombie project that has its own inertia and is proceeding despite the world changing around it. It needs to be halted and comprehensively reassessed. The federal government institutions that understand foreign policy, national security and digital technology must be involved actively and comprehensively in that reassessment.
The core rationale for a state government being a party to this initiative of Beijing’s also needs to be rethought in light of the world we are now living in.
If it’s about cheap financing, the COVID-19 environment means money is as cheap for governments to borrow as it has ever been, so that reason doesn’t make much sense.
If it’s about giving Chinese firms work, there are plenty of Australian companies that are at least as qualified and available to undertake infrastructure projects.
If it’s about using Chinese digital technology in our infrastructure, that’s probably just a bad idea.
Premier Daniel Andrews has been personally pursuing Chinese involvement in Victoria’s multi-billion-dollar ‘Big Build’ since at least his May 2018 visit to China. In October of that year, he signed up to the Belt and Road Initiative in a memorandum of understanding with Beijing. He refused to make the agreement public, only doing so after intense pressure during the last Victorian election campaign.
Then in October last year, Andrews signed a ‘framework agreement’ with the People’s Republic of China on ‘Jointly Promoting the Silk Road Economic Belt and the 21st Century Maritime Silk Road’. The title is boilerplate Chinese government language for the BRI, Xi Jinping’s strategy for growing Chinese power and creating a Sino-centred world.
That document was made public, which is great, because it has some clear principles. It commits China and Victoria to adhere to ‘the concept of openness, green and clean governance’ as well as ‘highlighting the importance of procedure [which is] open, transparent and non-discriminatory’.
So, it’s surprising to find that as the Victorian government prepares to sign up Chinese entities—perhaps banks, perhaps state-owned or private construction companies, perhaps a combination of these—for actual projects in Victoria, no one can be told any of the details.
There are two bigger problems here, though. The Victorian government’s BRI activities are simply out of step with the new international and economic environment, including the now openly coercive directions that Beijing is taking with Canberra over trade and in government relations.
And the Victorian political leadership’s championing of the state’s tie-up with Beijing on infrastructure is a glaring wedge that Beijing is driving into Australia—at a time when national cohesion on dealing with the Chinese state is essential.
Almost as bad has been the language used by Victorian Treasurer Tim Pallas, who accused the federal government of ‘vilifying’ China—when what Prime Minister Scott Morrison and Foreign Minister Marise Payne had actually done and said was call for a credible, independent, international inquiry into the causes of a global pandemic. In very calm language. They have since gained the support of more than 120 nations.
Unfortunately, the treasurer’s words sounded like talking points from Beijing’s foreign ministry or an article in the Chinese Communist Party’s Global Times mouthpiece.
The result is that we appear headed for an outcome in Victoria where Chinese firms are involved in building chunks of national infrastructure, perhaps with tie-ups to Chinese state banks and other entities—who knows.
So what? Infrastructure isn’t just concrete and steel now. It’s laced with digital technology controlling its critical functions. The 2018 federal decision on 5G was all about the risks in digital technology from states like China that compel companies to cooperate for state security and intelligence purposes. Those issues are relevant here too.
What Victoria is proposing has foreign policy and national security implications that the Victorian government is simply unequipped to assess.
From the beginning, the BRI program with Victoria appears to have fallen into gaps between the federal and state governments. Right at the start, the Victorians said they had consulted at the federal level with the Department of Foreign Affairs and Trade, but Canberra seemed only partly aware of the proposal and expressed what sounded like lukewarm public support.
That was then. Who now thinks it’s the time to implement Xi’s strategic agenda and work to make Australia part of a more China-centred world? Who now thinks it’s the time to enter non-public arrangements with Chinese firms—state-owned or otherwise—to build Australian infrastructure? And who now thinks it’s the right time to show that the federal and state levels of government are on divergent paths in responding to an assertive and authoritarian Beijing?
Victoria’s tender process must not be used to hinder transparency with the proposed deal. This is not a standard arrangement between a government and the private sector. This is an Australian state dealing with an authoritarian superpower that is pursuing its key strategic agenda—and using its companies, banks and technologies to do so.
There’s more to the Victorian BRI deal than infrastructure. The agreements talk about cooperation on biotechnology and life sciences, research and high-end manufacturing—all areas that also have important national security applications and implications. Again, this must all be reassessed from a national perspective.
If the national cabinet has any purposes other than helping us all manage the COVID-19 pandemic, a fundamental one must be forging a cohesive and united national policy on China. This is needed to help us navigate the increasingly sharp strategic differences between Australia and the Chinese state, while keeping the areas in which we can continue to trade and cooperate to both our national advantages. To have any meaning, that national cohesion must extend to any deals contemplated by individual states and territories.
Unlike the excuses we heard after the disastrously managed 2015 Port of Darwin deal, which led to that piece of key infrastructure being leased to a Chinese company for 99 years, we have our eyes wide open about the issues involved this time. And we have time to stop and think. Let’s do so.
Original Source: Date-stamped: 2020 MAY 22 | Author: Michael Shoebridge | Article Title: Australia: Victoria’s Belt And Road Initiative Deal Undermines Cohesive National China Policy | Article Link: aspistrategist.org.au
Hashtags: #4cminewswire, #Australia, #ForeignPolicy, #NationalPerspective, #NationalSecurity, #DanielAndrews, #ScottMorrison, #China, #Beijing, #XiJinping, #4cminews, #4CMiTV, #4CM2020MAY22,
Tags: 4cminewswire, Australia, Foreign Policy, National Perspective, National Security, Daniel Andrews, Scott Morrison, China, Beijing, Xi Jinping, 4cminews, 4CMiTV, #4CM2020MAY22,
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