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Countries that abandoned Beijing after the initial “One Belt, One Road” (OBOR) summit in 2017 have re-congregated under the Chinese flag in mutual support of its second summit event.
This includes new member Switzerland, as well as Malaysia and Myanmar, which previously complained to the United States and the International Monetary Fund (IMF) that investing in China caused them to fall into a “debt trap.”
Countries Submit Their Allegiance
Compared with the first summit in May 2017, the second summit has several points of attraction.
First, countries have adjusted their expectations of the Chinese Communist Party (CCP). Although there is a general expectation for large amounts of CCP funding, the estimates are far more realistic than the 2017 target.
During the first summit in 2017, China’s foreign exchange reserves were falling sharply, and on May 4, Zhou Xiaochuan, governor of the People’s Bank of China, published an article in a Chinese financial magazine.
The Main Points Were: Investment and financial cooperation for OBOR isn’t unilateral financial support, but requires all parties to jointly build a common-interest community to share the expenditures, risks, and benefits. At the same time, emphasis must be placed on market-based financing and active use of the Chinese yuan to generate more in local savings and international capital.
To put it bluntly, China said that future investment should make the Chinese yuan the main source of capital and OBOR partners should make joint investments. That was disappointing to countries that came with hopes of seeking the support of the U.S. dollar. That sparked a 2017 international incident: OBOR countries called for an end to the Chinese project, claimed to the IMF that China had increased their debts, demanded that the IMF provide assistance, and finally, convinced the United States to support a narrative that OBOR created a “debt trap” for participating countries.
With these experiences, the expectations of participating countries for the second summit weren’t as high as the first, with many countries just testing the waters. The attitude of Italy is typical: as long as China has money, it’s fine.
The second summit also included a number of important new members. Two European countries, Italy and Switzerland, attended. Italy is the first G-7 member country to participate in the OBOR program, and the symbolism is self-evident.
Switzerland’s participation is even more important. An article published by the BBC a day before the summit has a clear understanding of this. First, Switzerland has the most prestigious financial services industry in the world; secondly, Switzerland is home to numerous international organizations. For China, Switzerland’s unique “neutral” political status is of paramount importance to OBOR. While Germany is dissatisfied with that, its problem with Italy isn’t so much in its participation. Rather, Germany insists on maintaining a position as a European leader, controlling the EU’s collective bargaining power.
Third, the Chinese government has been very tactical in placing its focus on economic cooperation, and has promised to be in line with international regulations. These statements have given participating countries very good reasons to cooperate.
China launched the “One Belt, One Road” initiative in 2013. According to Refinitiv, the total value of the project is $3.7 trillion, spanning dozens of countries in Asia, Europe, Africa, Oceania, and South America. At the first OBOR summit, China had a sense of expansion, propagating the Chinese model, and espousing that China will become the new leader of globalization. That raised alarm in some countries.
During the trade war, the United States raised various criticisms questioning China’s “red expansion,” which also caused some OBOR countries to waver.
During the second summit, Beijing softened its tone and shifted its focus to resolving the doubts in various countries. For example, it proposed to conduct a joint study with the World Bank on environmental and social standards of OBOR. “Building a framework for debt sustainability analysis to prevent debt risk” was its explanation for concerns regarding OBOR’s transparency and ideology export.
The draft communiqué also clearly stated that the 37 global leaders attending the April 25-27 summit would reach an agreement on project financing issues, comply with global debt targets, and promote sustainable development.
Since October 2018, Malaysia and several other countries accused China of leading them into a “debt trap,” a criticism the United States shares. On Oct. 3, 2018, the U.S. Senate approved the Investments Leading to Development Act of 2018 (BUILD) by a vote of 93-6. Under the measure, the original Overseas Private Investment Corporation (OPIC) and other development aid agencies will be integrated to form a new U.S. International Development Finance Corp.
The new agency, which is to receive $60 billion in funding, is responsible for providing assistance loans to developing countries for infrastructure projects, such as energy, ports, and water supply.
However, when it comes to using state resources, democratic countries are a lot more restricted and far less efficient than authoritarian states such China (efficiency that’s due to a disregard for people’s livelihoods).
Therefore, U.S. investment is only part of a plan, but China has actually put in real money. Countries all over the world are now facing a common problem; domestic unemployment.
For example, while Italy’s employment rate is now at its lowest in seven years, its youth unemployment rate at the end of 2018 was as high as almost 31 percent. The youth unemployment rate in Greece in January 2019 also remained at nearly 40 percent. To each country’s respective leader, what’s important isn’t helping rid the world of tyrannical rule, but solving its own employment problems.
Amid opposition from the EU’s major powers, Italy chose to cooperate with China unilaterally, an attitude based on realistic considerations: “From the windowsill of one’s home, this (China’s construction in the Italian port of Vado Ligure) is certainly not beautiful scenery, but it can bring jobs. So it is a good thing.”
For Vado Ligure, a town with a population of 8,000, Chinese investment has brought about 400 jobs, which has pleased both the local government and its residents. The mayor told Deutsche Welle that a strong investment partner is able to bring new opportunities and new capital.
At the same time, under the control of a series of treaties, contracts, and regulations, there is no need to worry that Chinese capital will cause issues of debt or labor rights violations. “The Chinese are not a problem. They bring money, and are greatly welcomed,” the mayor said. It’s the same principle for Croatia, Nigeria, and other countries. Money is the most important link for China in maintaining relations with countries.
Two years ago, Sri Lanka, due to an inability to repay Chinese loans related to the construction of the port of Hambantota, leased the entire port to China for a period of 99 years.
This incident has been criticized as a classic case of the OBOR debt trap, and it appears that countries seem to have forgotten the market principle of debt repayment. Actually digging back, this kind of thinking has its roots.
Western media is left-leaning and has always placed a priority on value systems. The importance of the economy, and especially the role of the United States in the world economy has always been a little underemphasized. However, after Democrats won the majority in the House of Representatives in the 2018 midterm elections, socialist policies have become the preference of the Democratic Party, moving farther from the main topic of concern for U.S. voters.
Concerned, Western media often unconsciously cite a famous quote that Bill Clinton used to defeat incumbent President George H.W. Bush in the 1992 campaign: “It’s the economy, stupid!”
I thus wish to use this opportunity to remind left-wing politicians around the world that only by “playing economics” can they win voters. In fact, this truth applies not only to the politics of all countries in the world, but also the reason why countries are rushing into China’s OBOR debt trap. Because only by obtaining China’s money can they have the capital to play economics at home and attract voters.
Originally, economic development was a country’s personal matter. But after World War II, the state of the Cold War between the United States and the Soviet Union caused other countries to become accustomed to a “following” approach: in addition to ideological reasons, each country (especially countries without very strong ideologies) could choose a side and receive financial assistance of a major economy.
Many small- and medium-sized countries have no methods for developing their economies, but made use of U.S.–Soviet contention to play political “seesaw.” They would stand on whichever side gave more benefits. The United States, since World War II, has assumed the public good of maintaining international order, believing it to be the embodiment of their own “soft power.” Other countries also take it for granted that this is the United States’ responsibility, and don’t feel a need to give thanks.
On the other hand, China is very aware of the power of money, and has been using it to wrestle relations within the United Nations. It has fully demonstrated the important influence money has on developing countries in human rights affairs.
Remnant of Cold War Model
According to the official statistics of the Chinese Communist Party, as of March 2019, China has signed different cooperation agreements with 125 countries. These countries account for 36 percent of the world’s GDP and 60 percent of the world’s total population. Are such strenuous efforts really just for winning business opportunities?
Of course not.
During the second OBOR summit, China did a lot of explanatory work to quell doubts of the outside world. Countries have accepted China’s explanations, believing that Beijing’s use of comprehensive transportation and infrastructure to bring the continents of Europe and Asia closer is beneficial to deepening trade and human contact.
But these countries understand the geostrategic significance of OBOR: the purpose is to establish a system with China as the core, causing countries to, in the process of cooperation with China, establish a high dependence on Beijing. Through the implementation of OBOR, China would have the right to formulate rules and regulations, and reshape the global structure.
Countries also understand that the United States has long expressed dissatisfaction with that plan. The U.S. strategic community generally believes that the CCP’s continued promotion of OBOR construction mustn’t be ignored. It not only has the potential to change the Geo-economic and Geo-political balance of Eurasia, but also poses a real threat to the United States in fields such as technological standards, military security, and international development.
It even undermines the foundation of the global hegemony established by the United States since World War II. Therefore, the United States definitely won’t tolerate China’s strong challenges in this regard. The power struggle between the two superpowers will inevitably bring opportunities to many countries in the world seeking financial support.
As for the countries vying to jump into China’s “debt trap,” they are merely making a slight change to the new thinking of “depend on China for economic interests, depend on the United States for political security” formed by Asian countries post-Cold War, making a return to the Cold War-era seesaw model.
Situations such as that of mid-October 2018, when countries such as Malaysia cried out to the IMF and the United States, will inevitably reoccur, because complaining is also a way to sell the right to follow.
He Qinglian: is a prominent Chinese author and economist. Currently based in the United States, she authored “China’s Pitfalls,” which concerns corruption in China’s economic reform of the 1990s, and “The Fog of Censorship: Media Control in China,” which addresses the manipulation and restriction of the press. She regularly writes on contemporary Chinese social and economic issues. THE EPOCH TIMES QUALIFIER: Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.
Original Source: Date-stamped: 2019 MAY 5/24 | Author: He Qinglian | Article Title: The Debt Trap of One Belt, One Road: The Price of Following China | Article Link: theepochtimes.com
Tags: 4cminewswire, BRI, OBOR, China, CCP, Yuan, Debt Trap, Geo-economic, Geopolitical, Global Hegemony, Italy, Switzerland, Sri Lanka, United States, 4cminews, #4CM2019MAY24,
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Here’s what China’s plan to connect the world through infrastructure is like.
■ Map showing the projects subsumed under China’s Belt and Road Initiative as of December 2015. Reuters
□ The Belt and Road Initiative is one of China’s most ambitious projects.
□ It involves partnering with dozens of countries around the world through trade and infrastructure
…..projects, such as shipping lanes, railroads, and airports.
□ Supporters say it’s a way for China to invest in emerging markets and strengthen ties. Critics say
…..this is a way for China to use money to leverage political gains and increase its global power.
□ The US is now trying to create a viable alternative to the project by increasing investment in Asia.
….. Whether that will work, though, is not clear.
□ Learn more about the mega-project here.
China is undertaking what it considers the largest project of the century — linking itself with more than 100 countries across Asia, Africa, Europe, and Oceania through trade.
The main focuses of the Belt and Road Initiative (BRI) — also known as “One Belt, One Road” — are in infrastructure, transportation, and energy. The initiative was first announced in 2013, and is seen to be President Xi Jinping’s pet project.
Most BRI deals involve China lending vast amounts of money to other countries to build new railroads, shipping lanes, and other ventures in those countries. Investment from China alone in the project is estimated to be between $1 trillion and $8 trillion.
Proponents of the BRI say it’s a way for China to invest in emerging markets and strengthen its ties with them. However, the inner workings of the BRI are shrouded in secrecy, and some projects have already been abandoned due to host countries being unable to pay back their loans.
Critics also say that by creating these loans, China is engaging in debt-trap diplomacy — a strategy of extracting political concessions out of a country that owes it money.
The Belt and Road Initiative is a massive trade and infrastructure project that aims to link China to dozens of economies across Asia, Europe, Africa, and Oceania.
IT CONSISTS OF TWO PARTS: the “belt,” which recreates an old Silk Road land route, and the “road,” which is not actually a road, but a route through various oceans.
The Silk Road was an ancient land route across Europe and Asia that connected traders and travellers from regions like the China, Persia, and the Roman Empire.
Merchants used to transport silk and other commodities by camel or horse along those roads.
As of November 2019, 138 other countries are part of the project, according to China. They include New Zealand, Russia, Italy, and even Syria.
Source: Chinese government
Below Left: BRI partnerships typically come in the form of joint memoranda of understanding to support future projects. But these contracts are typically shrouded in secrecy, so it’s hard to understand how they work.
Below Right: China has invested between $1 trillion and $8 trillion in projects along the Belt and Road, mainly in infrastructure, transport, and energy.
Chinese President Xi Jinping votes at Great Hall of the People in Beijing, China.
Below Left: This 2017 photo shows a freight train directly running from Kouvola, Finland, to Xi’an, China. The trip takes 17 days, and is supposed to be faster than sea travel and cheaper than air.
Below Right: Here are workers building a natural gas pipeline linking China and Russia — one of the landmark BRI projects between the two countries.
Source: New China TV
Russian President Vladimir Putin — whom China’s President Xi calls his “best and bosom friend” — has propped up China’s Belt and Road Initiative in the past.
Below Left: China’s ambitions have even reached the Arctic, with plans to build a “Polar Silk Road” with infrastructure projects and shipping routes between the Arctic and Asia.
Below Right: Critics have warned that the building infrastructure projects under the BRI can cause environmental damage and displace people.
China first announced plans to build the Polar Silk Road in January 2018.
Smog in Beijing
China — which has led action on climate-change policies in recent years— has pledged to build environmentally sustainable BRI projects in the past, but has not given much detail on how it would do so, the Center for Strategic and International Studies said.
Activists and locals have spoken out about the potential environmental damage of various BRI projects.
In 2018, activists in Kenya managed to halt, via judicial order, the construction of a Chinese-financed coal plant because it would destroy the environment and human health.
Environmental groups in Indonesia have also warned that the building of a $1.6 billion dam on Sumatra island could wipe out a species of orangutan, the Financial Times reported.
A villager in Bom Or, Laos, told the Financial Times that Laotian and Chinese officials had visited more than 30 households asking them to make way for a building, without offering them financial compensation or other housing.
Below Left: Regardless, China is immensely proud of the BRI — it’s considered President Xi Jinping’s pet project. Experts say that you can just cite it to get government funding for projects.
Below Right: China is so keen to plug the project that state media outlets have made multiple music videos to promote it.
Chinese President Xi Jinping attends a meeting at the United Nations European headquarters in Geneva, Switzerland, January 18, 2017.
New China TV/YouTube | One video published by China Daily, ostensibly aimed at Gen-Z, shows children “from participating nations of The Belt and Road” singing these lyrics: “The world’s we’re dreaming of starts with you and me / The future’s coming now, the Belt and Road is how.” | Source: New China TV
“If you package something and say it’s Belt and Road-related, you have a much better chance of getting money from the Chinese government,” Stanley Rosen, a China expert and political-science professor at the University of Southern California told Business Insider earlier this year.
Similarly, Charles Parton, a former EU diplomat in China, told the Financial Times in 2017: “If you want to get projects or programmes approved, you say it’s OBOR [One Belt, One Road], so everything becomes OBOR.”
Below Left: In March 2019 China claimed one of its biggest victories for the BRI by signing a memorandum of understanding with Italy, the 8th-biggest economy in the world.
Below Right: The US isn’t a part of BRI, but recognizes and deems it a threat. In November 2019, President Donald Trump’s administration announced it will invest and trade more in Asia to counter China’s economic power in the region.
Xi and Italian Prime Minister Giuseppe Conte shake hands after signing trade agreements in Rome, Italy, on March 23, 2019.
Chinese and US delegations led by Xi and President Donald Trump at a working dinner after the G20 leaders summit in Buenos Aires, Argentina, in December 2018.
The two countries’ MOU, reportedly to support a joint infrastructure project, is non-binding — meaning there will be no legal ramifications for Italy or China if either withdraws from the agreement.
The exact details of what the memorandum aims to achieve are also unclear, further shrouding the BRI in secrecy.
The Trump administration in November launched the “Blue Dot Network,” a US-led public-private initiative to increase “financially sustainable infrastructure development” in Asia.
The organization wants to “promote market-driven, transparent, and financially sustainable infrastructure development in the Indo-Pacific region and around the world,” it said in a statement.
It appears to be directly targeting countries concerned about the BRI’s opacity.
Below Left: In 2016, China established the Asian Infrastructure Investment Bank, an regional development bank to fund infrastructure — like an Asian version of the IMF. The UK, Germany, and France all joined despite the Obama administration warning its allies not to.
Below Right: Though China typically stays out of other countries’ politics, the BRI has given it reasons to get involved in some of them. When Turkey invaded northeastern Syria — a BRI partner nation — in October, China told Turkey to stop (and was ignored).
US President Barack Obama was not pleased when US allies all joined the Asian Infrastructure Investment Bank despite his discouraging them from it. Source: Asian Infrastructure Investment Bank, Business Insider
Below Left: The project has also amplified feuds between other countries. India is suspicious of the BRI because of Beijing’s plans to build the China-Pakistan Economic Corridor (CPEC).
Below Right: China’s backing of Pakistan-based infrastructure projects has also appeared to encourage it to support Beijing in other political issues. Pakistani Prime Minister Imran Khan has routinely ignored criticism of China’s abuse against its Muslim minority.
Pakistan’s Gwadar port, which is part of the China-Pakistan Economic Corridor, in October 2017. Drazen Jorgic/Reuters
Imran Khan at his house in the Bani Gala hills, on the outskirts of Islamabad, Pakistan July 29, 2017. Caren Firouz/Reuters
Projects along the CPEC include a coal-fired power plant, schools, and solar energy facilities, according to China’s state-run Xinhua news agency.
Tensions between India and Pakistan, meanwhile, reached a height this year when India claimed the disputed region of Kashmir as its own federally-administered territory.
Khan has repeatedly claimed not to know anything about China’s oppression of the Uighurs, a mostly-Muslim ethnic minority in its west.
China-Pakistan: Critics told Business Insider earlier this year that through the BRI, China had bought Pakistan’s silence.
It’s an example of what critics call Chinese “debt-trap diplomacy” — the strategy of extracting political concessions from a country that owes money. Another example of this can be seen in BRI countries shunning Taiwan.
Below Left: Taiwan
Below Right: Cambodia
A woman in front of Taiwan’s flag.
Construction for an airport in Botum Sakor, Cambodia, developed by China’s Union Development Group, in May 2018.
TAIWAN: has been self-governing for decades, but Beijing continues to call it a Chinese territory. Tensions between the pair have ramped up in recent years because the island nation’s incumbent president is particularly critical of China.
A handful of countries, which are also BRI partners, have formally severed ties with Taiwan in recent months, leaving the island nation with just 15 allies left globally — all of whom are relatively impotent on the world stage.
Taiwan’s allies include the Pacific island nations of Nauru and Tuvalu, and Eswatini, a southern African nation of 1.4 million people
Many of those countries have also restored or improved ties to China after cutting off Taiwan.
PACIFIC: Not everyone agrees with that characterization, though. An Australian think tank found that China’s actions in the Pacific do not, at this point, show any sort of debt-trap diplomacy.
“The evidence suggests China has not been engaged in problematic debt practices in the Pacific as to justify accusations of debt trap diplomacy, at least not to date,” the Lowy Institute said in October 2019, according to The Guardian.
The think tank did warn, however, that the “sheer scale of Chinese lending and the lack of strong institutional mechanisms to protect the debt sustainability of borrowing” could still bring risks for the borrowing nations.
Below Left: One thing is clear: China has poured a lot of money and effort into the BRI, and is unlikely to stop. The US — the only world power strong enough to take on China — will have to step up if it wants to be taken as a serious alternative in Asia.
Below Right: This map shows a trillion-dollar reason why China is oppressing more than a million Muslims (The Uighurs, a mostly-Muslim ethnic minority in Xinjiang, western China, are living in one of the most heavily-policed and oppressive states in the world. This map helps explain why.)
Trump and Xi Jinping in Osaka, Japan, in June 2019.
BI Graphics: A map showing some Belt and Road Initiative land routes that run through China’s Xinjiang. businessinsider.com.au
Original Source: Date-stamped: 2019 NOV 12 | Time-stamped: 2:42 AM | Author: Alexandra Ma | Article Title: The US is Scrambling To Invest More in Asia To Counter China's 'Belt And Road' Mega-Project. | Article Link: businessinsider.com
Hashtags: #4cminewswire, #BRI, #OBOR, #Europe, #Asia, #China, #XiJinping, #Xian, #Persia, #RomanEmpire, #Kouvola, #Finland, #Russia, #VladimirPutin, #PolarSilkRoad, #StanleyRosen, #CharlesParton, #Italy, #GiuseppeConte, #UnitedStates, #DonaldTrump, #BlueDotNetwork, #IMF, #Turkey, #ChinaPakistanEconomicCorridor, #CPEC, #Imran #Khan, #India, #Kashmir, #Uighurs, #Taiwan, #BotumSakor, #Cambodia, #4cminews, #4CMiTV, #4CM2019NOV12,
Tags: 4cminewswire, BRI, OBOR, Europe, Asia, China, Xi Jinping, Xi’an, Persia, Roman Empire, Kouvola, Finland, Russia, Vladimir Putin, Polar Silk Road, Stanley Rosen, Charles Parton, Italy, Giuseppe Conte, United States, Donald Trump, Blue Dot Network, IMF, Turkey, China-Pakistan Economic Corridor, CPEC, Imran Khan, India, Kashmir, Uighurs, Taiwan, Botum Sakor, Cambodia, 4cminews, 4CMiTV, #4CM2019NOV12,
#4cminewswire, #4cminews, #4CM2017MAR22, #BRI, #BeltRoadInitiative
SPANS EUROPE to CHINA through countries across EURASIA, INDIAN OCEAN, AFRICA and OCEANIA
The ‘One Belt, One Road’ (OBOR) initiative is a Chinese economic and strategic agenda by which the two ends of Eurasia, as well as Africa and Oceania, are being more closely tied along two routes–one overland and one maritime. Supporters suggest that the initiative permits new infrastructure and economic aid to be provided to needy economies.
Critics claim that it facilitates Chinese economic and strategic domination of the countries along these routes. OBOR provides a global context for China’s growing economic links with Australia.
The ‘One Belt, One Road’ (OBOR) initiative is a foreign policy and economic strategy of the People’s Republic of China. The term derives from the overland ‘Silk Road Economic Belt’ and the ‘21st-Century Maritime Silk Road’, concepts introduced by PRC President Xi Jinping in 2013.
These are the two major axes along which China proposes to economically link Europe to China through countries across Eurasia and the Indian Ocean. The OBOR initiative also links to Africa and Oceania. In March 2015, the PRC issued an action plan for realising this initiative. While the OBOR initiative is being coordinated by China’s National Development and Reform Commission, it also heavily involves the ministries of Foreign Affairs and Commerce.
The initiative envisages the building of six major economic cooperation corridors and several key maritime pivot points across Eurasia:
Formally, OBOR emphasises five key areas of cooperation:
But it is infrastructure such as railways, roads, ports, energy systems and telecommunications networks which is receiving most attention.
The Overland ‘Belt’ involves the creation of an economic and trade corridor extending from China’s west through Central Asia, and finally to Europe. The first step is to further link Central Asian states to the Chinese economy, while the longer-distance initiatives include railway connections between China and Europe. The ‘Belt’ initiative calls for the integration of the Eurasian landmass into a cohesive economic area.
For The Maritime ‘Road’, China’s development of ports and hubs across the Indo-Pacific is a key aspect of the initiative. Purchase and construction of port facilities and associated economic zones in Australia, Malaysia, Indonesia, Bangladesh, Sri Lanka, Myanmar, Pakistan, Kenya, Tanzania, Oman and Djibouti are intended to provide China with maritime access and economic benefit across the Indian Ocean. These will connect to Piraeus, Greece’s major port, which has been bought by Chinese shipping group COSCO and which will allow direct access to the markets of Europe.
Foremost among the key projects which have been promoted as focal parts of the OBOR initiative are the China-Pakistan Economic Corridor which provides China’s western provinces with access to the Indian Ocean through the Pakistani port of Gwadar, and the Bangladesh China India Myanmar Corridor, which will give Yunnan Province access to the Bay of Bengal.
Funding for the initiative is a key issue. China’s policy banks are providing massive funds for Chinese enterprises to operate along these axes, while further funding will be provided through the Asian Infrastructure Investment Bank (AIIB), funded by countries globally. The AIIB was created precisely to service projects under OBOR. The projects funded by the first loans issued by AIIB were in Indonesia, Bangladesh, Pakistan and Tajikistan, all countries which China is trying to include within its OBOR initiative.
HONG KONG is also being tapped. In his policy address in January 2016, the Chief Executive of the Hong Kong Special Administrative Region, CY Leung, underlined that Hong Kong would play an active financial role in OBOR and would facilitate educational exchanges between Hong Kong and ‘OBOR countries’. A ‘Hong Kong Belt and Road Summit’ was also convened in May 2016 to allow Zhang Dejiang, Chairman of the Standing Committee of the National People’s Congress, to outline ‘Hong Kong’s Four Unique Advantages’ as a hub for OBOR projects. Then in July 2016, the Hong Kong Monetary Authority launched the Infrastructure Financing Facilitation Office, a new entity to facilitate fundraising for projects related to the OBOR initiative. The Hong Kong Trade Development Council has also arranged visits to Thailand for Chinese investors to promote OBOR investment.
SINGAPORE is also essential to promoting offshore economic activities by Chinese entities. The China Construction Bank signed an MOU with International Enterprise Singapore in April 2016, providing S$30 billion in financial support to Singaporean and Chinese companies jointly investing in OBOR projects. A new centre in Singapore to provide project financing and related services to projects is also being planned.
While China claims that OBOR will ‘include 65 countries, 4.4 billion people and about 40 percent of global GDP’, the current realities are much more pedestrian. China has reportedly established 75 overseas economic and trade cooperation zones in 35 countries as part of the OBOR initiative. OBOR, however, remains inchoate and still strives for external endorsement and support.
China’s other OBOR interests
It is clear that China has broader uses for the increased influence it hopes to enjoy through the OBOR initiative.
The Bank of China has clearly noted that OBOR is intended to make the Renminbi the main trading and investment currency in the countries involved. The expansion of Chinese banks into new OBOR markets to serve the globalisation of the Chinese economy is also being promoted. OBOR is further intended to facilitate online retailing and the collection and use of big data across OBOR countries. China has also been stressing the role of Overseas Chinese in promoting OBOR projects.
CHINA-CONTROLLED TELECOMMUNICATIONS NETWORKS
The expansion of China-controlled telecommunications networks is an important aspect of OBOR. CITIC Telecom CPC recently acquired Linx Telecommunications, which services Russia, Kazakhstan and the ‘Stan’ region, the Baltic Sea and Eastern Europe. This will provide China with telecommunications services across much of its targeted ‘Belt’ region. Visits by journalists from OBOR countries to China, and publishing arrangements with newspapers abroad are intended to promote China’s views over a broader sphere.
MINING & ENERGY
Mining and energy projects are also central to this endeavour, with China widely purchasing mines as well as generation and transmission projects across OBOR states. Chinese companies now own almost a quarter of Kazakhstan’s oil production, while over $15 billion of oil, gas and uranium deals have recently been signed with Uzbekistan.
And in this year’s white paper on its satellite navigation and location service, China says that it plans to launch another 30 Beidou satellite navigation system satellites over the next five years, with the first 18 satellites being launched before 2018 to cover OBOR countries.
Reactions to the OBOR proposal have varied globally. Ethnic Chinese business figures in Southeast Asia and their political representatives have generally been enthusiastic about the business possibilities. Malaysia has been active in accepting and promoting the idea, with a 162-member Malaysian delegation heading to Beijing in July 2015 to participate in an OBOR dialogue.
Pakistan and Sri Lanka have also been particularly welcoming of Chinese capital and infrastructure projects, as have the various Central Asian states. Vietnam, meanwhile, has expressed grave doubts about the initiative. With few exceptions, India has been stridently suspicious of the overall OBOR initiative and has repeatedly expressed its concerns about China’s growing economic and strategic power being pursued through OBOR. Russia needs funding assistance for developing its resources and appears to see OBOR as an avenue for this.
Western reactions have been mixed. Business people are generally positive, while strategists have been less sanguine. In Europe, China has talked up OBOR’s possible integration with the EU’s €315 billion investment plan (the Juncker plan). China is simultaneously pushing for an EU-China FTA that would make it easier for PRC companies to invest in European markets. Central and Eastern Europe are a major focus for OBOR programs, with the Czech Republic, Serbia and Poland receiving major financial inputs.
Australia and OBOR (Pre Covid-19)
Within Australia, enterprises, banks and law firms are promoting the OBOR initiative as an economic opportunity for the country and, with Chinese endorsement, an Australia-China OBOR Initiative has been established to promote Chinese engagement in the Australian economy. China is also utilising the concept to promote its growing economic engagement with northern Australia. Another avenue for encouraging Australia’s further engagement with OBOR is China’s funding and support of various related local academic conferences and seminars.
Not all reactions to OBOR have been enthusiastic. Former World Trade Organization chief, Supachai Panitchpakdi, has stated that the OBOR initiative and, specifically, its projects along the Mekong River, all serve China’s own interests.
On the economic front, China has been criticised for using its massive financial assets to dominate smaller economies through long-term control of infrastructure, natural resources and associated land assets, and through offering less than desirable credit terms for infrastructure loans.
Further, the ‘production capacity cooperation’ which China lauds as an integral aspect of OBOR, often involves the simple transfer of Chinese-owned production capacity to countries where production is cheaper and markets are closer.
Such processes can also result in China exerting some control over local markets, labour and export policies. (2020 MAY 25 4CM comment: A serious understatement with time the recipient has all its manufacturing and Industry destroyed and shifted to china based companies)
Despite the claimed economic nature of the OBOR agenda, critics see the initiative as being simultaneously a strategic program.
EXPANSIONISM OF CHINA
China clearly portrays OBOR as both being premised on and further validating China’s claims to the islands of the South China Sea, while on the other side of the Indian Ocean, Djibouti is providing China with both a trade port as well as its first overseas military base.
NATIONAL SECURITY RISK
It has been repeatedly noted in China that OBOR is also intended as a regional security mechanism, and the future role of the People’s Liberation Army in protecting China’s OBOR facilities abroad has been widely discussed. The two ‘economic corridors’ now being developed provide China with direct access to the Indian Ocean.
GLOBAL DOMINATION AND BALANCE OF POWER SHIFTS
Broader concerns relate to the longer-term aims of China, with the possibility that the OBOR agenda is aimed at creating a Eurasia-wide, China-led bloc to counter the US. At the June 2016 Shangri-la Dialogue in Singapore, Professor Xiang Lanxin, director of the Centre of One Belt and One Road Studies at the China National Institute for SCO International Exchange and Judicial Cooperation, spoke of OBOR as being an avenue to a ‘post-Westphalian world’. As such, some see this initiative as a profound challenge to the current global political and economic status quo.
China’s wielding of this economic statecraft strategy derives from several collocations.
On the political front, since late 2012, President Xi has been promoting the ‘Chinese dream’ (中国梦), involving the ‘great revival of the Chinese nation’. Such revival requires a restored global position and identity for China. Earlier iterations of OBOR involved the catch-phrases ‘common development’ and ‘win-win cooperation’ to characterise the relations between China’s development and that of its neighbours.
China also promoted a ‘China-ASEAN community of shared destiny’ (中国-东盟命运共同体). But these smaller initiatives have burgeoned into the Eurasia-wide OBOR, bringing into play the PRC’s massive capital reserves—both state and private—achieved through 40 years of rapid economic growth, and offering an outlet for the vast excess production capacities which exist today in China.
DANCING WITH THE DRAGON WILL RESULT IN FIRST DEGREE BURNS
Regardless of the credence which one assigns to the various interpretations of the OBOR initiative, progress thus far makes it clear that as Australia becomes increasingly tied economically with China, there is a need to maintain a close watch on the progress of the OBOR initiative globally.
It also suggests that Australia needs to adopt a more economically and strategically prudent attitude in determining how the Australia-China economic relationship is to further develop.
Original Source: Date-stamped: 2017 MAR 24 | Author: China's Road by Geoff Wade | Article Title: China’s ‘One Belt, One Road’ initiative Article Link: aph.gov.au