News on Sunday

New Silk Road : stronger Chinese Economic and Diplomatic Influence

Chinese Economic

China is reshaping a New Geopolitical and Economic World Order and it is all set to become an economic superpower. In 2013, President Xi Jinping launched the Belt and Road Initiative (BRI), which is a combination of a 21st Century Maritime Silk Road and a Silk Road Economic Belt. Five years later, the BRI is rooted in some 88 countries and international organizations, including Mauritius, involving two-thirds of the world’s population (4.5 billion inhabitants).

China is conquering the world at an accelerated speed not by using military operations but by means of Economic Diplomacy.  In 2013, when President Xi Jinping announced the Belt and Road Initiative (BRI) (also known as One Belt, One Road or OBOR), few political leaders and experts in International Trade could predict its success in the short term. Only five years later, China is reaping the fruits of this initiative. China is actively present in some 80 countries after signing some 100 cooperation agreements under the BRI.

Great breakthroughs

From 2013 to 2018, trade of goods between China and countries involved in the BRI surpassed $5 trillion (Rs 175 trillion), according to the State Council Information Office of China. The total investment in economic and trade cooperative zones in these countries reached $28.9 billion (Rs 1 trillion), and generated 244,000 local jobs. China's direct investment in these countries grew by 7.2 percent in average annually, with newly signed foreign contract of some $500 billion (Rs 17,5 trillion). Chinese enterprises established in 82 economic and trade cooperative zones of these countries have attracted 3,995 companies to the zones. China has improved its diplomatic relations with 30 countries.

China has established ship routes with more than 600 major ports in over 200 countries around the world. Shipping services have widely stretched out to all coastal countries along the B&R routes. Railway interconnection between China and the B&R countries has also performed well. In 2017, export volume saw the highest growth rate when railway serves as the transportation mode, registering a year-on-year increase of 34.5 percent. In the civil aviation sector, China has signed air transport agreements with eight countries along the B&R routes and bilateral inter-governmental air transport agreements with 62 B&R countries, realizing direct flight to 45 countries with about 5,100 flights every week. In 2017, the two-way tourism between China and the countries along the B&R routes witnessed 60 million tourists.

Moreover, the number of Chinese students studying abroad exceeded 600,000 for the first time in 2017, a number rising continuously. China has established 17 national cultural centres, 173 Confucius Institutes and 184 Confucius classrooms in B&R countries, taking up about a quarter of the total Confucius Institutes and classrooms worldwide.

According to a report recently released by the accounting giant Ernst & Young, Chinese-funded banking institutions have participated in nearly 2,700 Belt and Road projects in the past three years, with a total credit line of around 400 billion U.S. dollars and loans of over 200 billion U.S. dollars.

Cooperation agreements

The cooperation agreements under the BRI are focused on the following goals:

  • Improving intergovernmental communication to better align high-level government policies like economic development strategies and plans for regional cooperation.
  • Strengthening the coordination of infrastructure plans to better connect hard infrastructure networks like transportation systems and power grids.
  • Encouraging the development of soft infrastructure such as the signing of trade deals, aligning of regulatory standards, and improving financial integration.
  • Bolstering people-to-people connections by cultivating student, expert, and cultural exchanges and tourism.

The Belt and Road Initiative aims to connect Asia, Europe and Africa along five routes. The Silk Road Economic Belt focuses on: (1) linking China to Europe through Central Asia and Russia; (2) connecting China with the Middle East through Central Asia; and (3) bringing together China and Southeast Asia, South Asia and the Indian Ocean. The 21st Century Maritime Silk Road focuses on using Chinese coastal ports to: (4) link China with Europe through the South China Sea and Indian Ocean; and (5) connect China with the South Pacific Ocean through the South China Sea.


Fill the gap created by US

LehmanBrown International Accountants pointed out in a document that the Belt and Road Initiative could be a good investment for private investors due to President Trump’s move to back out of the Trans-Pacific Partnership (TPP). The action means the Belt and Road Initiative is likely to gain more popularity and momentum, as it is aimed at providing a vast network for international trade similar to the TPP. As the US are starting to become more introverted, there is a gap being left on the world’s economic stage, which will likely be filled by China. This view is supported by Louis Kuijs, head of Asia Economics at Oxford Economics in Hong Kong. By investing in the initiative’s developing countries, investors are investing in creating more buying power and establishing efficient routes to fully utilise these new markets. The Chinese government are encouraging a mixture of foreign investment and domestic investment in Belt and Road projects.

President Xi gives new impetus to Belt and Road Initiative

In August 2018, President Xi Jinping announced that the next priority of jointly advancing the initiative is to realize its high-quality development. Xi asked for efforts to push for progress in Belt and Road projects, especially those delivering real benefits to local people, and keep expanding the market while maintaining the balance of trade. He advocated a policy system on financial support for the BRI and encouraged non-governmental funds to invest in infrastructure and resource development projects in Belt and Road countries. In 2014, China announced contributing 40 billion U.S. dollars to set up a Silk Road Fund to support the Belt and Road projects. A year later, the China-initiated new multilateral financial institution Asian Infrastructure Investment Bank was established. Xi stressed that investment activities should be regulated and businesses should operate in accordance with laws and regulations, pay attention to environmental protection, and fulfil their social responsibilities. Xi pointed out that jointly pursuing the BRI was not only aimed at economic cooperation but also an important pathway to improve global development patterns and global governance and promote the healthy development of economic globalization.

China and Mauritius sign a Free Trade Agreement

xi et pravind
Chinese President Xi Jinping with Mauritian Prime Minister Pravind Jugnauth.

In September, China and Mauritius signed four bilateral cooperation agreements, including one that concludes the negotiation on a free trade agreement, witnessed by Chinese Premier Li Keqiang and Mauritian Prime Minister Pravind Jugnauth, in Beijing.

Bilateral ties have seen smooth development, Li said. China appreciates Mauritius’s firm support for the one-China principle, he said. China and Mauritius have reached an agreement on negotiation of a free trade agreement, and is willing to work with Mauritius to safeguard multilateralism and free trade, he said. China is ready to boost cooperation with Mauritius in tackling climate change, with special attention to small island nations’ reasonable concerns, Li said.

Pravind Jugnauth said Mauritius is committed to enhancing bilateral relations and Africa-China relations. He extended gratitude to China’s help in his country’s infrastructure construction and financing, which have promoted the economic and social transformation of Mauritius. He also said Chinese enterprises are welcome to invest in Mauritius, which will provide a platform for business exchanges between China and Africa.

The three-day third round of negotiations on the Mauritius-China Free Trade Agreement (FTA) was held in August at the Hilton Hotel in Flic en Flac.  The first round of negotiations on the Mauritius-China Free Trade Agreement kicked off in April 2018 while the second round was held in June. In his opening statement, the Minister of Foreign Affairs, Regional Integration and International Trade, Seetanah Lutchmeenaraidoo, pointed out that the substance of the FTA should be that of a framework agreement which shows the way forward and conveys that both countries mean business.  For his part, the Head of the Chinese delegation, Mr Hu Yingzhi, said that FTA is of great significance in ensuring the promotion of Africa’s economic, trade and investment cooperation with China, he stated.

Xi Jinping stopover in Mauritius

In July this year, during its stopover in Mauritius, Chinese President Xi Jinping said that China is willing to always be a good friend and a good partner of Mauritius and promote the bilateral friendly cooperative ties to continuously reach new heights.

The Chinese president said that the two countries should maintain the momentum of high-level exchanges, strengthen exchanges between government departments, legislative bodies and at sub-national level, and continue to understand and support each other on issues involving respective core interests and major concern. He insisted that the two sides should explore the potential for practical cooperation, improve the standard of bilateral trade and investment liberalization and facilitation, negotiate about and sign a bilateral free trade agreement at an early date, leverage the unique geographical advantage of Mauritius in participating in the Belt and Road Initiative, strengthen communication and aligning, and deepen cooperation in a wide range of areas. The two countries should also enhance people-to-people exchanges and mutual understanding, he said. China stands ready to strengthen South-South cooperation on climate change with Mauritius, increase coordination in international affairs and safeguard the common interests of developing countries, he said.


Contribution by All, Benefits for All

china

This was the theme of the 2018 Media Cooperation Forum on Belt and Road, held in Boao Town in South China’s Hainan Province, at the end of October. Ji Bingxuan, vice chairman of the National People’s Congress Standing Committee, said China’s Belt and Road Initiative focuses on the bigger picture, complies with the trend of the times, and conforms to the common aspirations of all countries. He hoped that media outlets from across the world could work together to spread the ideas behind the initiative including peace, development, opening-up, innovation, and civilization. Jiang Jianguo, deputy head of the Publicity Department of the Communist Party of China Central Committee, said that media is expected to play an important role in recording, participating and promoting the initiative, and they are encouraged to strengthen cooperation and report stories in countries along the Belt and Road. The Forum is hosted by the People’s Daily, the Hainan Provincial Committee of the Communist Party of China, and the provincial government.


Chinese ‘debt traps’

US accused China of creating ‘debt traps’. US Defense Secretary James Mattis pointed that China is encouraging smaller countries to pile on massive debt: “I just got back from Singapore, met with ASEAN, two weeks ago, where we are welcome, where many nations, in private, will tell us why they need us engaged out there because they’re concerned about what China is doing and the piling of massive debt....” On his way to Vietnam for a visit, he said that China was engaging in “predatory economic behaviour” to encourage smaller countries to pile on “massive debt” that “fiscal analysis would say they are going to have difficulty, at best, repaying.” The Chinese Foreign Ministry has reacted by denouncing “US irresponsible and disappointing lies.” “Despite a huge number of facts and data, the US was continuing to tell lies and make irresponsible comments to satisfy its own political needs, which was disappointing,” said, spokesperson Lu Kang. “China understands that many less developed countries face bottlenecks in development, as China itself went through that stage before. That was why China is providing win-win assistance without attaching any political conditions,” he said. “The US should see Chinese cooperation with the developing countries in the correct way and make more concrete efforts to help them develop, rather than sow dissension,” Lu concluded.


Scholarship for Myanmar students

The Education Bureau of China's Hong Kong Special Administrative Region (HKSAR) government has launched a Belt and Road Scholarship for students from Myanmar. Its objective is to attract outstanding students from Myanmar to pursue undergraduate studies in Hong Kong from the 2019/2020 academic year. Under the scholarship scheme, up to 10 scholarships will be offered annually to students from Myanmar who are enrolled in first-year undergraduate programs of publicly funded institutions in Hong Kong.


Tech-based disaster resilience

The United Nations Development Programme (UNDP) has launched a project in Beijing to enhance disaster preparation and response for countries along the Belt and Road. The project will use satellite remote sensing, geographic information systems, and Beidou navigation technology to provide better access to risk information, early warning systems and post-disaster damage assessments, according to the UNDP. Agi Veres, country director of UNDP China, said disaster resilience was a central part of sustainable development, adding that the UNDP was committed to continue supporting China and all other Belt and Road countries in their development aspirations.


Help with refugee work

China’s Belt and Road Initiative could ‘definitely’ help with global refugee work, said United Nations Refugee Agency UNHCR chief Filippo Grandi. “Much of what China does through the Belt and Road Initiative converges with what we are doing in refugee-hosting countries, linking humanitarian and development aid to better address long-term problems and seek solutions to refugee crisis,” said Grandi, the United Nations High Commissioner for Refugees. According to UNHCR, 68.5 million people were forcibly displaced worldwide in 2017. Among them, 52 percent were children under 18-years-old.