Author Topic: The dark side of the One Belt, One Road  (Read 3680 times)

adroth

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The dark side of the One Belt, One Road
« on: May 01, 2017, 12:56:49 AM »
In this thread, let's talk about the flip-side of the One Belt, One Road initiative

See also: China’s One Belt, One Road: Will it reshape global trade?

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Thread index

India skips China's Silk Road summit, warns of 'unsustainable' debt

Debtor Projects


Djibouti



Djibouti Opens Chinese-Backed Free Trade Zone

Ethiopia



China & Ethiopia's Addis Ababa-Djibouti Railway

Kenya



China and Kenya's Nairobi-Mombasa railway line

Laos



Laos merely a bystander as China pushes Belt and Road ambitions
Pakistan



China-Pakistan Free Trade Agreement (CPFTA)
$56 billion China-Pakistan Economic Corridor (CPEC)
In Pakistan's currency crisis, China is the problem and the solution

Maldives



The Maldives Crisis and the China-India Chess Match

Sri Lanka

   
   


China's Xi offers fresh $295 million grant to Sri Lanka
Sri Lanka accepts a US$1 billion, eight-year loan from China Development Bank
China and Sri Lanka's Hambantota port
China and Sri Lanka's Mattala International Airport


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China's One Belt, One Road project doesn't guarantee market access: Steel exec

    China's massive investment in OBOR doesn't guarantee market access to countries
    Chinese companies could instead move manufacturing overseas

http://www.cnbc.com/2017/04/28/chinas-one-belt-one-road-project-doesnt-guarantee-market-access-steel-exec.html

China's investment in its ambitious One Belt, One Road project will spur infrastructure building, but it does not mean automatic market access along the route, a steel industry executive said Thursday.

"Even if you are an investor…along the One Belt and Road routing, actual investment will not necessarily guarantee you will have access to markets," said Gerry Craggs, managing director for Asia of U.K. steel trader Stemcor.

He cited the example of how U.K. steel manufacturers were able to bring about a dumping case against Chinese steel even though the East Asia giant was a substantial investor into the U.K., which is also a participant in the Chinese initiative.

Launched in 2013, the initiative backed by president Xi Jinping aims to revive the ancient Silk Road and strengthen Chinese ties with more than 60 countries across Asia, Europe and East Africa through infrastructure, trade and investment.

The attraction to China is opening up vast areas of Central Asia that still retain trade links established centuries ago to routes in South Asia, Persia, Arabia and Africa, but now often lack the modern infrastructure needed to attract large-scale investment and trade.

Craggs said Chinese steel companies could over time reach a saturation point in China and will start to embark on manufacturing activities overseas.

"The way you can succeed is not necessarily through direct trade, but it would be though indirect trade by investing in the manufacturing of steel in countries along those routes," added Craggs, who is also the chairman of the Singapore branch of the International Steel Trade Association.

This will in particular help small-to-medium production units in countries along the route, said Craggs who was speaking at the Singapore Iron Ore Forum on Thursday.

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—CNBC's Aza Wee Sile contributed to this article.
Huileng TanReporter
« Last Edit: July 26, 2018, 05:48:54 AM by adroth »

adroth

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Re: The dark side of the One Belt, One Road
« Reply #1 on: May 18, 2017, 12:10:34 AM »
EU asks China to meet its globalization promises with greater market access
Reuters

Posted at May 09 2017 06:34 PM

http://news.abs-cbn.com/business/05/09/17/eu-asks-china-to-meet-its-globalization-promises-with-greater-market-access

BEIJING - Europe hopes China will deliver its pro-globalization pledges by increasing foreign access to its own markets, the European Union's ambassador to China said on Tuesday ahead of a summit to discuss Beijing's signature new Silk Road development plan.

Chinese President Xi Jinping's speech at the World Economic Forum in Davos in January painted a picture of China as a wide open economy in contrast to a rising wave of global protectionism.

However, the Chinese government has faced increasingly fervent criticism from foreign business groups and governments alike, who say China has done little to remove discriminatory policies and market barriers that favour Chinese companies.

EU ambassador to China Hans Dietmar Schweisgut said Europe was impressed by Xi's defense of globalization and open markets in Davos, calling them important messages.

"They are important also because they have raised expectations," Schweisgut told a press briefing. "We obviously also hope that China will implement domestically what it is preaching globally."

Schweisgut's comments come days before next week's "One Belt, One Road" forum, which will draw heads of state to Beijing to discuss Xi's plan to expand trade links between Asia, Africa and Europe through billions of dollars in infrastructure investment.

China has repeatedly rebuffed concerns that the plan is part of a grand strategy to expand its economic interests and seek global dominance, saying that while it's a Chinese-led scheme anyone can join to boost common prosperity.

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adroth

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Re: The dark side of the One Belt, One Road
« Reply #2 on: June 15, 2017, 01:44:51 PM »
Why Chinese Infrastructure Loans in Africa Represent a Brand-New Type of Neocolonialism
How will African countries repay massive debts to China?

By Xiaochen Su
June 09, 2017
     
http://thediplomat.com/2017/06/why-chinese-infrastructural-loans-in-africa-represent-a-brand-new-type-of-neocolonialism/
 
Amid much fanfare, the Nairobi-Mombasa railway line opened in Kenya on May 31, 18 months ahead of the schedule. It represents the second major railway undertaken by China on the African continent recently, after the launch of Addis Ababa-Djibouti Railway in January.  Chinese media outlets have spoken glowingly about these African infrastructural investments, often in the context of the One Belt, One Road Initiative that seeks to attain economic development through greater transport connectivity. African leaders seem to concur, as many are taking out massive concessional loans from China to fulfill ambitious projects, such as the East African Railway Master Plan, in the coming decades.

But there is strong doubt as to whether African countries have the financial capabilities to put such ambitious plans in action. In the case of the Addis Ababa-Djibouti Railway, for instance, its total building cost of roughly $4 billion is almost a quarter of Ethiopia’s 2016 government budget of $12.57 billion. Even at concessional rates, servicing and repaying the debt will be a significant burden for the government in the coming years and decades. It is unfathomable how that the government will be able to undertake other infrastructural projects even if the economy, and the government budget, grow at a steady clip, as it has done in recent years.

It begs the question, then, of how African governments will possibly repay the Chinese for all this infrastructure construction. Given the ballooning amount of debt from more and more loans taken on to finance infrastructural developments in the future, African states are likely to require more than just portions of their limited budgets to complete repayment. More likely than not, many states will have to resort to payments in kind.

The concept of “in-kind payments” smacks of colonialism in some ways. The historical precedent of European colonists comes to mind.  Europeans built infrastructure in Africa at the turn of the century, purportedly also for local economic development, but in essence the projects were used for natural resource extraction. The predecessor of both the Nairobi-Mombasa and Addis Ababa-Djibouti railways can be categorized as such. Both connect inland regions with mineral deposits with major ports on the Indian Ocean.

And there is no doubt that some of the same natural resources sought out by European colonists a century or more ago are also desired by the Chinese. While building infrastructure, the Chinese have also invested massively in local mines and processing facilities. At least part of the cargo to be shipped by the new railways and roads constructed with Chinese financing is expected to be natural resources to feed the Chinese industrial machine.

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If almost monopolistic control of Southeast Asian economies by the ethnic Chinese serves as any reference, dominance of the local economic infrastructure through control of banks, real estate, trade networks, and retail space is pivotal for ensuring wealth remains concentrated within Chinese families despite waves after waves of anti-Chinese regulations, protests, and violence. China’s leveraging of sovereign debt stemming from infrastructural investments may greatly accelerate this process and deepen the economic control to one less politically toxic than the Southeast Asian case.

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« Last Edit: June 15, 2017, 01:55:33 PM by adroth »

adroth

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Re: The dark side of the One Belt, One Road
« Reply #3 on: July 04, 2018, 05:34:46 PM »
China’s mammoth Belt and Road Initiative could increase debt risk for 8 countries

China's Belt and Road Initiative elevates debt risks in eight countries, including Pakistan, Laos, Maldives and Mongolia, a Center for Global Development study found.

All eight countries would see their levels of debt owed to China rise "sometimes dramatically" due to the initiative.

The elevated risks were in part due to China's "problematic" record of dealing with debt relief in the past, the think tank said, adding that China needs to improve its debt practices soon.

Cheang Ming   | @cheangming
Published 2:48 AM ET Mon, 5 March 2018  Updated 2:59 AM ET Mon, 5 March 2018
CNBC.com

https://www.cnbc.com/2018/03/05/chinas-belt-and-road-initiative-raises-debt-risks-in-8-nations.html

China's ambitious Belt and Road infrastructure initiative elevates sovereign debt risks in eight countries involved in the massive cross-continent plan, a new study has found.

Of the 68 countries identified as potential borrowers in the Belt and Road Initiative (BRI) — a sprawling plan aimed at connecting China with much of Asia, Europe, the Middle East and Africa — 23 were found to be already at a "quite high" risk of debt distress, according to the Washington-based Center for Global Development (CGD), a think tank.

Among those names was Sri Lanka, which made the news in December when it handed over control of Hambantota port — a facility built using Chinese loans — to China Merchants Port Holdings, a state-owned port operator.

Eight could have problems servicing debt

The think tank determined that eight of those 23 countries would potentially face difficulties in servicing their debt because of future financing related to BRI projects. Those countries include Pakistan, Djibouti, the Maldives, Laos, Mongolia, Montenegro, Tajikistan and Kyrgyzstan.

Pakistan is a major part of the infrastructure scheme, playing home to the Gwadar Port, which is one of several notable developments in the region that make up the China-Pakistan Economic Corridor.

According to the think tank, these eight countries highlighted would see their levels of external debt owed to China and its bank rise "sometimes dramatically," thanks to the Belt and Road scheme, which plans to invest as much as $8 trillion in infrastructure projects across Asia, Europe and Africa.

Pakistan is by far the largest country at high risk, with China reportedly financing about 80 percent of its estimated US$62 billion in additional debt.

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adroth

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Re: The dark side of the One Belt, One Road
« Reply #4 on: November 25, 2018, 02:59:52 PM »
China can make its Belt and Road project more successful if it taps locals, experts say
China's Belt and Road Initiative has been clouded by criticisms amid complaints of excessive reliance on Chinese workers over locals.

It would help if Beijing were to increase its engagement with local stakeholders, a panel of experts at the Milken Asia Summit in Singapore said on Thursday.

Nyshka Chandran   | @nyshkac
Published 4:03 AM ET Fri, 14 Sept 2018

https://www.cnbc.com/2018/09/14/china-must-do-more-to-tap-locals-in-belt-and-road-initiative-panel.html

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To improve the image of the multi-billion dollar program, Beijing must do more to embrace local stakeholders, a panel of experts at the Milken Asia Summit in Singapore said on Thursday.

"A common lament of recipient nations is that despite all the investments from huge infrastructure projects, there's a lack of local employment opportunities," said Robin Hu, head of sustainability and stewardship at Singaporean sovereign wealth fund Temasek Holdings.

One of the biggest complaints around the initiative is an excessive reliance on Chinese employees for on-the-ground projects, which deprives participating countries of jobs. That's triggered anti-Beijing sentiments in places such as Laos and Turkmenistan. In instances where locals are employed, complaints about dire working conditions are rampant, with public demonstrations being held from Vietnam to Sri Lanka.

Beijing basically replicated its traditional state-owned enterprises (SOE) model in other developing nations, Hu said. These enterprises "tend to air drop the entire ecosystem, from their engineers to the construction workers to the chefs, into the countries to do the project," he said.

A McKinsey study in 2017 found that among 1,073 Chinese firms across eight African countries, only 44 percent of the managers on average were local.

"We may be missing the bigger point of the BRI, which is that it's simply an avenue for Chinese entrepreneurs to go forth and conquer," said Jonathan Woetzel, director of the McKinsey Global Institute, at Thursday's panel.

But Chinese SOEs are laden with debt liabilities which could impact their overseas operations.

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