Posts Tagged ‘Belt and Road Initiative’

Finally catching up on some very old posting. Here is a piece on China for the Telegraph, was intended after the 19th Party Congress. I will catch up on other posting later.

Can China avoid an armed confrontation with the West?

Chinese soliders

China is moving towards shedding Deng Xiaoping’s famous maxim about hiding its strength and biding its time. President Xi Jinping’s bold statements during his 19th Party Congress speech last week spoke of a China rising to fill its role on the global stage.

The difficult question for the West is: how will this newfound confidence be expressed in China’s posture on the world stage? And how the rest of the world will have to interact with it?

China’s rise as a military and security power is not a new story. From a third-rate military force in the 1980s, the People’s Liberation Army has transformed itself.

Xi Jinping’s administration has stepped this up through an intensive process of reform that is giving it doctrines and approaches that are competitive with some of the world’s most effective militaries.

China is also expanding its military footprint. We can see this from the establishment of new forward bases, like in Djibouti on the Horn of Africa, or through port visits, such as the appearance of Chinese submarines in Sri Lanka.

On land, Chinese peacekeepers are being deployed with increasingly dangerous mandates, something reflected in losses on the ground in parts of Africa.

In military sales, China has leapt up the rankings to become the world’s third largest weapons vendor at around $9.1 billion, according to estimates by SIPRI.

But is this surprising? China will soon be one of the world’s largest economies, with investments and interests all around the globe. It makes sense for it to develop a hard power capability to protect its interests and people as they go out under the auspices of Xi Jinping’s keynote “Belt and Road Initiative”, which aims to build a series of land and sea trade routes across Asia.

The dilemma for China is whether this role is one which will complement or compete with the activities of the West – and the United States in particular. The American political scientist Graham Allison believes all rising powers face something called the Thucydides Trap, in which their rapid improvement brings them into inevitable confrontation with an established power which fears replacement.

In reality China’s foreign policy is complex, containing three strands with varying degrees of aggression:

1. China often cooperates with the West

In Afghanistan it has worked closely with the US and Germany on joint training missions, providing training for Afghan security forces, and facilitating negotiations between the Taliban and the Afghan government in Kabul. This clearly matches with western interests.

2. China sometimes passively opposes the West

In Syria the US and most of Europe has taken against the Assad regime, against Isil and alongside the Kurdish forces. By contrast, Beijing has thrown its weight firmly behind Assad, and is supporting the fight against Isil only with the proviso that it is ultimately the regime (supported by Russia and Iran) that will bring stability and security back to the country.

The running theme through all of these situations is that China is protecting its own interests. This is quite natural, but an accidental war would be in nobody’s interest. So far, tensions like these re mostly restricted to border countries where China feels it is not being expansionary but merely protecting its homeland.

A bigger dilemma will present itself when China decides to undertake a more aggressive action in some foreign field where it has no direct border dispute but isprotecting its interests or nationals. In this context, what will be the Western response – to support or condemn?

It is not clear we are anywhere near this situation yet, but clearly Beijing has started down a path of preparing itself for such an eventuality. The question at that stage will be whether the West agrees and supports China’s activity, or whether Beijing is seen as an aggressor that requires confrontation.

There is no clean answer to this question. And nor is it clear whether and when it will be faced. But there is no doubt that China is rising as a global power and has a growing military and security footprint to accompany its mighty economic machine. How the world manages this will be one of the defining questions of the next decades.

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More late posting, this time on China’s posture with regard to international terrorism for the South China Morning Post. Am also catching up on some media appearances over the past couple of months. Spoke to the LA Times, AFP, and Washington Post about the Finsbury Park attack. To the  New York TimesNewsweek, Financial Times, Guardian, and Ireland Herald about the London Bridge attack. To the New York Times about ISIS long distance direction. On the broader question of the current threat picture and UK history with The TimesObserverBloomberg, the Australian, and Newsweek. And finally, on the difficulties countering online terror and European sharing with the Washington Post and US News Report. More on this final topic to come in an interesting new format soon. And absolutely finally, on the other side of the coin, about the Belt and Road causing frictions between China and Russia for RFE/RL. As ever a lot more on this to come soon as well (including a very substantial couple of new pieces).

‘Why China must do more to fight international terrorism’

China is increasingly becoming a target for militant groups, but by cooperating more with other countries Beijing can help combat the threat, writes Raffaello Pantucci

PUBLISHED : Sunday, 09 July, 2017, 2:03pm
UPDATED : Monday, 10 July, 2017, 2:49am

A darker side to China’s Belt and Road Initiative is starting to reveal itself.

As China’s profile rises and its investments and interests globally grow, China is finding itself in the terrorists’ cross hairs. This means Beijing needs a more considered counterterrorism policy with greater international cooperation.

Back in July 2015, the Islamist militant group al-Shabab launched an attack on the Jazeera Palace Hotel in Mogadishu, Somalia. Apparently revenge for an assault by Ethiopian soldiers that killed civilians, the attack also happened to hit the Chinese embassy in the building, killing a security guard.

Al-Shabab was reminded of the impact of its action in a message from the Turkestan Islamic Party, a Uygur jihadi group that China has blamed for a series of attacks in its western region of Xinjiang. It sent a message saying: “We the mujahideen in the Turkestan Islamic Party congratulate the Islamic Ummah for this blessed operation, we endorse it and we encourage the Shabab al-Mujahideen Movement in Somalia to carry out more such jihadi operations.”

But there was little evidence that the group had meant to target the Chinese embassy.

Just over a year later, another Chinese embassy was hit by a terrorist attack. This time a suicide car bomber crashed through the gates of the embassy compound in Bishkek, Kyrgyzstan, before detonating explosives in the vehicle. The damage was limited, although local employees were hurt. But the attack this time was far more targeted. Nobody claimed responsibility, but reports strongly suggest the attack was linked to an Islamist militant group operating in Syria. What was not in doubt was it clearly targeted China.

This shift comes after a period when China could relax as a second-order priority for international terrorist groups. While al-Qaeda and others would occasionally issue threats to China, it was not clear that they were dedicating material resources to target Beijing or its interests. The principal link China had to international jihadist networks was the militant Uygur community angry at Beijing’s domination of Xinjiang. Some were connected with international jihadi networks. Yet this group was largely seen as weak and not one that could command much more from the international jihadist community beyond rhetorical statements.

Turn to today, and as China reaches out to the world through President Xi Jinping’s belt and road plan, Beijing is becoming more of a terrorist target.

Many of these forces intersect in Pakistan, where large-scale infrastructure investment into the conflict-prone country is directly exposing Chinese interests and citizens to the dangers of armed groups. In part, this is a product of China’s support for the Pakistani state – the main target of many Pakistan-based groups. But it is also a result of China’s ongoing problems in Xinjiang and an angry Uygur minority who are finding more active support in the international jihadist milieu. Recent statements by Islamic State and other militant groups in Pakistan link strikes and anger against China to their treatment of Uygurs.

But what can China do about this? In the first instance, Beijing needs to find some way to resolve its problems in Xinjiang – letting the situation fester there is not going to improve China’s standing in the eyes of the international jihadist community. Looking abroad, Beijing still officially stands behind its sacred principle of non-interference but it is clearly starting to build a legislative framework to provide a mandate for its forces to go out into the world and protect its national interests. This can be seen in new counterterrorism and intelligence legislation. It is also apparent in the People’s Liberation Army’s growing assertiveness and international presence – be it more aggressive peacekeeping mandates, overseas bases, or growing direct military support for countries dealing with militant groups at home.

Yet there is more that can be done. China continues to be a hesitant player in international cooperation. This is in part the product of a lack of trust and different views on the root causes of terrorist problems, but there are a number of places around the world where China and the West share a common threat.

Sharing assessments and specific intelligence linked to respective national interests is one cooperative way forwards, but these both need to be two-way streets. Historically, China has acted in a more passive manner in such engagements, taking information without giving much in return. More could also be done to think through the impact of support for government forces on the ground – in particular to make sure there is a greater level of common effort in this direction.

For example, coordinating support to the Philippines as it deal with its growing problem with militants. Currently, numerous powers – both Western and Asian – provide support for the Philippine government. Making sure this support is complementary and that both sides are highlighting the same problems to the Philippine government is key in establishing long-term stability in the country.

International terrorism is a common problem facing the world. While there are always going to be disagreements and difficulties in countering these threats, there are some things which can be done together.

China can no longer hide in the shade of terrorist groups’ desire to strike primarily at the West. As it expands its international footprint, it is going to be increasingly exposed and will need to build relations with friends around the world to manage this growing menace effectively.

Raffaello Pantucci is director of international security studies at the Royal United Services Institute in London

Back on my China in Eurasia theme, this time a piece timed to land at my institutional home RUSI to coincide with the big Belt and Road Forum taking place in Beijing. Lots more on this topic to come, and if you want more have a look at the China in Central Asia site.

Separately, spoke to the Times about returning foreign fighters to the UK from Syria, to Politico about Brexit and counter-terrorism, and the Mail on Sunday about Khalid Ali, the arrested Westminster terror plotter.

China: Understanding Beijing’s Belt and Road Initiative

A great deal of rhetoric is expended over China’s gigantic investment initiatives. Still, many of the economic projects are real, and Western governments will be well advised to understand their purpose.

The Middle Kingdom is asserting its centrality in global affairs by hosting the Silk Road summit this weekend. Aimed at showcasing President Xi Jinping’s ‘Belt and Road’ vision, the conference will bring together leaders, officials and experts from around the world.

Apart from the signing of some large deals and some affirmations about China’s eagerness towards free trade, the summit’s real importance is in the message it sends about China’s place in the world.

First announced in 2013 in a set of speeches in Astana and Jakarta, the One Belt, One Road (now renamed the Belt and Road Initiative) is at its root about putting a new name on a series of initiatives that built on existing Chinese investment and trade relationships.

The decision to first focus the initiative on Central Asia was a reflection of the fact that the region served as a conduit for China’s decades-long approach to investment around the world.

With a model of building infrastructure using Chinese firms deployed to deliver on loans provided by the country’s financial institutions to open up trade and markets, Beijing’s investments in Central Asia since the end of the Cold War provide a model for the globalised Belt and Road Initiative.

For countries along the routes, there is the difficulty of understanding and connecting with the Chinese investments in a manner that is useful to them, so that they are not simply roads passing through their territories.

For outside powers, such as the UK, there is the challenge of comprehending where they sit in the broader vision, as well as how they can connect with these projects along the routes.

To understand these issues better, there are three key aspects to remember. First, the concept is not a monolith. Each of the strands of the Belt and Road are different; at different stages of development, advanced to differing degrees and of variable importance.

In some cases, China is building on a long history of investment, while in others China is starting from a very low base of investment. It is important to distinguish between the rhetoric and the reality in each case.

Second, it is important to remember that this is not a giant aid project; China is making commercial investments in many cases. In some, the loans have been offered at reasonable rates and the implementing partner is contractually obliged to be Chinese. Looking at the Asian Infrastructure Investment Bank projects, they are in fact put out to open tender.

It is only in very few cases that the investment being offered acts as pure aid. China is still developing its aid profile, and this is key in understanding what China is doing under the Belt and Road.

The ultimate aim is to develop a series of trade and economic corridors using Chinese companies (thereby helping them go out into the world) to help China develop domestically. This is fundamentally a selfish vision aimed at advancing Chinese interests.

Third, it is important to think of the vision with a longer horizon that we are used to considering. At the moment, there is little economic logic to placing goods on trains from China to go to Europe: the route is far more expensive than going by sea and the highest value goods that need to get across land quicker need to travel by air.

Consequently, the much-vaunted trains which are travelling across the Eurasian landmass bringing goods between Europe and China are for the most part going full one way and empty back.

Furthermore, they are being subsidised by Beijing or the regional governments from where they depart. They do not currently make economic sense.

But it is possible that this is looking at them on too short a timeline. Seen from Beijing, the idea is to lay these tracks and develop these routes so that once China’s western regions become more developed and productive, they can take advantage of these routes.

Over time, what seems a short-term loss may turn into a longer-term artery of international trade. The point is that it is possible that the horizon with which the Belt and Road is currently considered is too limited.

In fact, it is something with a much longer timeline and is fundamentally, seen from Beijing, about re-establishing China as the centre of a global network of trade and economic routes that will help re-wire international trade.

These three elements are essential to bear in mind when outside powers are seeking to connect with the vision. It is important to understand each corridor in detail, to focus on the commercial opportunities that the corridors will create and to think with a longer horizon that most governments usually consider.

Once this learning has been absorbed and considered, it will be easier to understand how to connect with China’s vision – something that is as relevant to countries such as the UK at one end of the route as those that are along the routes.

For the Chinese investments are happening, notwithstanding the hyperbole that will be on display this weekend; money is being spent, and ground is being broken.

Banner image: The first goods train service from China to the UK arrives at DB Cargo’s rail freight terminal in Barking, East London. Courtesy of PA Images

New piece for the Financial Times excellent Beyond BRICS blog, this time providing an evaluation of the links between the Asian Infrastructure Investment Bank (AIIB), the Silk Road Fund and Xi Jinping’s ‘Belt and Road Initiative.’ A lot more on this general topic on my parallel China in Central Asia site. This aside, spoke to the Telegraph about the recent terror attack in Quetta, Pakistan.

China’s Development Lenders Embrace Multilateral Co-operation

aiib-inaugural-mtg

There has been much speculation on the role of the Silk Road Fund (SRF) and Asian Infrastructure Investment Bank (AIIB) in China’s outward investment push.They are both instruments created by Beijing to provide economic firepower and bring international credibility to the ‘Belt and Road’ vision that has become President Xi Jinping’s keynote foreign policy concept. But in reality they have both undertaken a series of investments that, while substantial and linked to ‘Belt and Road’ countries, pale in size next to China’s overall outward investments.

While the AIIB has quite clearly been subsumed into the ‘Belt and Road’ project, the SRF has so far largely focused on commercial projects which are focused on profit rather than national strategy.

AIIB has so far made two sets of project announcements. The first were announced on June 24, 2016 and included a $165m loan for a power distribution project in Bangladesh, a $216.5m loan co-financed with the World Bank for a national slum upgrade in Indonesia, a $100m loan co-financed with the Asian Development Bank (ADB) and UK’s Department for International Development (DFID) to finance the Shorkot-Khanewal section of the M-4 motorway in Pakistan and a $27.5m loan for the Dushanbe-Uzbekistan Border Road Improvement Project in Tajikistan, co-financed with the European Bank for Reconstruction and Development (EBRD).

A second set were announced in September, including a $300m loan for Tarbela 5 hydropower project in Pakistan, co-financed by the World Bank and a $20m loan to finance a 225 MW power plant in Myanmar, a project which is set to possibly receive a further $58m from the International Finance Corporation (IFC) and $42.2m from the Asia Development Bank (ADB).

Of these projects, the only one that is uniquely funded by the AIIB is the power grid project in Bangladesh. All of the others are co-financed, or more accurately, the AIIB has bought into existing projects. Another significant detail is that with the exception of the Indonesian project, all of the projects are ones that can be captured under the broader ‘Belt and Road’ vision – which has three principal strands pushing out across Eurasia: China-Pakistan Economic Corridor (CPEC), Silk Road Economic Belt (SREB), and Bangladesh-China-India-Myanmar Economic Corridor (BCIM).

Of the $829m the bank has invested so far, $400m has been invested into projects which fit under CPEC, $27.5m into SREB, and $185m into projects which could fit under the BCIM.

In other words, almost 75 per cent of the AIIB’s first projects have been steered towards existing Chinese economic visions. And in many ways, the Indonesian project could also be captured under this banner, given the fact that Indonesia fits into the under-developed 21st Century Maritime Silk Road concept as well (and was the country in October 2016 that Xi announced the concept in the first place).

There is very little distance between the AIIB and Beijing’s ‘Belt and Road.’ And in fact, the parts of the ‘Belt and Road’ it is feeding are those parts which are going to ultimately have a resonance on China’s most under-developed regions that are the ultimate focus of the ‘Belt and Road.’ It is therefore hard, on the basis of its first projects, not to consider the bank as a tool of the ‘Belt and Road’ rather than a new independent financial institution advancing general regional development goals.

The Silk Road Fund is a more obvious tool than the AIIB. With a total capital of $40bn, the first $10bn was made up with money from the Chinese State Administration of Foreign Exchange (SAFE), which accounted for 65 per cent of the initial funds, Export-Import Bank (accounting for 15 per cent), China Development Bank (accounting for 5 per cent) and the China Investment Corporation (accounting for 15 per cent).

Established specifically to ‘promote common development and prosperity of China and the other countries and regions involved in the Belt and Road Initiative,’ the Fund is a commercial entity that is focused on projects that will generate returns.

Having laid out this logic, the Fund’s first investments have followed these principles, starting with an investment of $1.65bn in April 2015 to build the Karot hydropower project in North East Pakistan.

In September 2015 it announced it would purchase 9.9 per cent of the Russian Yamal liquefied gas field for $1.2bn, and more recently it was revealed it had explored putting almost $2bn into buying Glencore’s Vasilkovskoye gold mine in Kazakhstan.

It ultimately lost that deal to another pair of Chinese buyers. Outside these obvious ‘Belt and Road’ deals, the Fund has also invested in ChemChina to purchase Italian tire maker Pirelli, invested $100m into the China International Capital Corp (CICC) a state investment bank that prior to its initial public offering (IPO) in November 2015 was seen as taking losses internationally, and finally pledging some $300m to the IPO of China Energy Engineering Corp (CEEC) an international power plant construction firm.

To understand the ‘Belt and Road’ logic of the CEEC-Silk Road Fund investment, it is instructive to look at Mr Xi’s visit to Serbia in June 2016, seven months after the IPO announcement. Mr Xi was present at the signing of an MOU between the CEEC, the Silk Road Fund, China Environmental Energy Investment Ltd and the Serbian Ministry of Energy and Mining. The MoU laid the foundations for CEEC to undertake further energy projects in Serbia, joining already advanced CEEC projects in Lithuania and Bosnia-Herzegovina.

Taken as a whole, the Silk Road Fund is a heavier investor in ‘Belt and Road’ projects than AIIB. While the AIIB’s announced deals add up to $829m, the SRF’s amount to at least $3.25bn (not including the Pirelli deal, the exact numbers of which are not immediately available). In addition, the Fund has been reported as considering an investment of between €5-10bn into the European Fund for Strategic Investments, or the so-called Juncker Plan.

But all of this pales next to China’s overall outward investment numbers. The Ministry of Commerce announced outward investment last year at $145.67bn and EY, a consultancy, has predicted that this year’s total will surpass $170bn.

Taken against this background, the SRF and AIIB are clearly minnows. But they are minnows which have focused on national interest, something that highlights the degree to which the broader ‘Belt and Road’ is aimed at advancing national interest rather than being a benevolent vision for Eurasia.

It also illustrates to outsiders that to properly understand how to connect with the ‘Belt and Road’, there is a need to understand China’s broader international ambitions under the vision.

Raffaello Pantucci is director of international security studies at RUSI, a think tank based in London.