Eye on China is a weekly bulletin offering news and analysis related to the Middle Kingdom. This week we focus on the second Belt and Road Forum; the Chinese Navy’s new destroyer; the Party’s criteria for assessing cadre; the Huawei leak that’s shaken the British government and much more…
I. BRI Forum
This week Beijing is hosting perhaps the most significant political event of the year from a Chinese diplomacy point of view. In attendance, as per a Bloomberg assessment, are 37 heads of state or government. Over the past six years, Chinese official reports inform, 173 cooperation documents on BRI have been signed with 125 countries and 29 international organizations. Chinese enterprises invested over $90 billion in BRI countries between 2013 and 2018. Total trade between China and BRI countries has surpassed $6 trillion, with annual growth of 4% on average and making up 27.4 percent of China’s overall trade in the period. Here’s a snapshot at some of the key happenings at the forum, although a fuller picture will only be available once the forum ends and a communique is issued on Saturday. Also, we’re likely to see some deals with regard to CPEC and the China-Pakistan FTA. But that’s likely to happen over the next few hours and days.
- What is BRI: There’s been a lot of speculation and some hope going into the forum that Beijing is finally going to provide clarity and transparency with regard to BRI projects. We might still some sort of infrastructure project list, but broader clarity seems impossible, given that BRI appears to have become a euphemism for any and all Chinese foreign policy initiatives. Read through this paper put out by the Office of the Leading Group for Promoting the Belt and Road Initiative this week. If this is to be believed, BRI has an incredible number of objectives attached to it, such as peace-building, green development, innovation, people-to-people connectivity and even addressing government corruption.
- Debt’s the Talk: Finance minister Liu Kun spoke about debt risks at the start of the BRI Forum this week. He said that China will establish an analysis framework on debt sustainability for BRI projects to “prevent and resolve debt risks.” This is reportedly a 15-page document that draws from established international standards. PBOC governor Yi Gang, meanwhile, added that China will follow market principles and rely on commercial funds for Belt and Road financing. He further stated that local currencies will be used for investments related to the Belt and Road plan to curb exchange rate risks. In the meantime, state media has been pushing back against the notion that BRI promotes debt traps (another example here).
- Xi’s Speech: Xi Jinping delivered the keynote speech at the forum on Friday. It was a shorter speech than the one delivered in 2017 and there were no financial commitments this time around. SCMP has a good breakdown of the speech, from commitments with regard to rule-of-law, exchange rate stability, reform and opening up, cutting of tariffs and easing non-tariff barriers, protection of IPR and cracking down on forced technology transfers, green development, etc. Also worth following is the Bloomberg live blog on the forum. It pretty much summarizes all the key actions.
- Bilaterals and Deals: A large number of key bilateral meetings are scheduled over the three days of BRI Forum. The news from these will trickle through over the next few days. But here are some of the important reports. Ethiopia has managed to get a debt restructuring deal along with bagging a $1.8 billion investment deal to build electric power transmission and distribution lines. After having successfully renegotiated the ECRL deal earlier this month, Malaysia’s Mahathir Mohamad pledged friendship during his visit in Beijing. The sides also signed a bunch of MoUs, with one of them relating to Chinese purchases of palm oil. Mahathir, interestingly, also visited Huawei’s offices in Beijing. Progress is also likely in building the thus-far stalled China, Thailand and Laos high-speed rail network. A large Myanmar government delegation is also in attendance in Beijing. Aung San Suu Kyi met with Xi at the sidelines of the forum this week. Reports inform that out of the 40 projects under the China-Myanmar Economic Corridor initiative, Myanmar will prioritise nine of them in power, roads, bridges, communications, construction, agriculture, research, and technology. Bangladesh’s foreign minister Mohammed Shahriar Alam, meanwhile, sounded rather cautious about accepting more Chinese loans. Already, in 2016, the two countries signed 27 agreements for investments and loans, amounting to a reported $24 billion. One last interesting bit to note is this story about how Chinese built projects in different countries are featuring on currency notes of those countries.
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