Posts Tagged ‘BRI’

Finally, a short post for the Financial Times Beyond BRICS blog, trying to challenge some of the narrative that we see around the Belt and Road pushback that has become the dominant feature of the public conversation. It is happening, but being mischaracterised at the moment. To also separately catch up on media, spoke to NBC about the US-China clash and to Reuters about the recent attack on the Chinese consulate in Karachi by the Baluchistan Liberation Army (which was picked up a few places including in 普通话 for VOA Cantonese).

China’s Belt and Road hits problems but is still popular

US should not oppose the projects but offer alternative solutions
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Chinese construction project in Sri Lanka: countries that criticise the Belt and Road Initiative overlook the real need in developing nations for foreign investment © Bloomberg

There is a narrative of pushback against the Belt and Road Initiative, China’s programme to finance and build infrastructure in about 88 countries around the world. Coming against the backdrop of US-China confrontation, this evidence of pushback is being read as a collective response to Chinese leader Xi Jinping’s overarching foreign policy concept.

But this misses the detail of several deals in which the context is more one of renegotiation than cancellation. The fundamental logic of many of the BRI in developing countries neighbouring China remains intact. Such is the need for investment in these countries that Chinese proposals for new bridges, highways, railways, power stations and other crucial infrastructure remain alluring.

It is five years since Mr Xi’s pair of speeches in Astana and Jakarta launched the BRI. Since then, much of what China does outside China has become associated with the BRI. At one stage, this was true of much within China as well, where almost every region and institution sought to associate themselves to the leader’s big initiative.

Five years later, it can come as no surprise therefore that some of the projects that were brought under the broader BRI umbrella have encountered issues. One consultancy, the Washington-based RWR Advisory Group, has estimated this number to be around 14 per cent. This number does not seem too high when one considers the surge in project announcements that followed Mr Xi’s speeches in 2013.

It is also useful to dig into the detail of the projects that are being repeatedly highlighted as problematic. Three prominent cases are in Pakistan, Malaysia and Myanmar. But rather than revealing consistent flaws in the BRI’s design, each of these cases derive in part from a push by local governments to renegotiate some BRI projects.

With both Pakistan and Malaysia, an election appears to have precipitated the change. The election of Mahathir Mohamad as prime minister in Malaysia led to dramatic changes within the country, including a general re-accounting of some of the deals that had been signed under the former government with China.

The most prominent were a series of pipelines and the East Coast Rail Line. After a visit to Beijing, Mr Mahathir seemed to cancel them all, but subsequently, it has emerged that while the pipelines were put on hold until the country was able to deal with the “internal fiscal problems” he had inherited, the ECRL has instead entered a period of re-negotiation as both sides seek to keep the project moving.

Mr Mahathir’s public rhetoric has expressed concern about China, but he has also repeatedly stressed the importance of Chinese investment into Malaysia.

The case is similar with Pakistan, where the election of Imran Khan as prime minister led to a change in public rhetoric in Islamabad. Specifically, it has helped crystallise a series of complaints about the China-Pakistan Economic Corridor that had been rattling around the Pakistan government.

This was given a boost through public statements by Mike Pompeo, the US secretary of state, and a bipartisan letter from the US recommending confronting China over the BRI in general and CPEC in particular.

Yet, the reality is that this has not resulted in massive changes to CPEC. Pakistan’s balance of payments crisis has prompted a push by the new government to seek new loans or debt rescheduling between Saudi Arabia and China. Following his inaugural visit to Beijing, Mr Khan agreed to a joint statement in which the two countries “dismissed the growing negative propaganda against CPEC”.

They also announced the creation of a new working group “on social-economic development to assist with livelihood projects in Pakistan”.

In fact, the active pushback on CPEC projects took place before Mr Khan’s election, with the decision to reject a proposal to build the Diamer-Bhasha Dam taking place when Nawaz Sharif was still in power. This was widely touted as evidence that Pakistan was not simply going to take every infrastructure project that China wanted to do in the country.

Finally, there is the case of Kyaukpyu in Myanmar, a massive port project that is in some ways one of the precursors to the BRI, the Bangladesh-China-India-Myanmar BCIM Economic Corridor. Seeing how the international mood was shifting against Chinese investments, Naypyidaw appears to have taken advantage of the situation to renegotiate the port deal.

Part of a much bigger Chinese investment that includes Special Economic Zones and pipelines, the project is one that is clearly important to China. The re-negotiation ended up with the size of the project being cut back considerably (reportedly from $7.2bn to $1.3bn), with Chinese investor CITIC still the biggest single partner on the project holding a 70 per cent stake.

Reflecting the positive tenor of this negotiation, Myanmar officials in September signed an agreement in Beijing to create a China-Myanmar Economic Corridor. While this may appear to dilute the importance of a pre-existing Bangladesh-China-India-Myanmar corridor, it certainly does not suggest that Myanmar is vociferously turning against the BRI.

Doubtless, some of this re-negotiating is a product of each other. The press coverage to emerge from Hambantota in Sri Lanka and the reports that the country ultimately signed over a 99-year lease on the port to a Chinese firm, have all become something of a byword for BRI concerns. Leaders in capitals like Islamabad, Kuala Lumpur and Naypyidaw all saw an opportunity to push back on terms themselves.

It provided easy domestic wins, while also being something that they knew they were likely to win given China’s need for the BRI to be seen to be continuing to move forwards. For both the idea of scrapping BRI within their countries was never really on the table. The underlying logic and general trend of Chinese investment in these countries continues to hold.

What has accentuated the negative narrative in the public discourse has been Washington’s attempt to harness this pushback into its broader conflict with China. Donald Trump’s administration has led an increasingly aggressive bipartisan push against China in numerous different fields.

Yet fought on these terms, this is a losing battle for Washington. In many cases the countries in question are developing countries that need investment. As Chinese neighbours, there is a natural logic in them trying to tap the Chinese economic boom, and improving their regional connectivity.

A far more productive response can be found in Washington’s decision to super-charge the Overseas Private Investment Corporation, offering a funding boost for e-infrastructure investment in south-east Asia while encouraging other regional powers like Australia and Japan to focus their efforts on specific projects in developing countries currently considering BRI investment.

This is the sensible response to BRI, as it both understands the logic of the projects in these developing countries and offers a logical alternative that they can choose. This is a response that far more effectively captures the broader logic of re-negotiation that is visible across BRI countries.

Five years since the announcement of BRI, it has grown to become a synonym for China’s outward investment strategy and broader foreign policy. As is natural with any major effort like this in foreign policy by a big power, it is raising concerns in countries impacted along the way.

What is essential to understand is the logic of this pushback which is not part of a broader conspiracy, but rather a set of individual reactions that are taking place at the same time. Keeping this understanding in mind will enable the world to better respond to the BRI and China more generally, while also remembering that the broader vision is one that is appreciated in some parts of the world as much as it is feared in others.

The writer is director of international security studies at the Royal United Services Institute.

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A piece from late last week as part of a short dossier ahead of the Afghan election done for a new outlet of an excellent Italian think tank called Istituto per gli Studi di Politica Internazionale (ISPI). My contribution focused on China’s role in Afghanistan, a common theme which there should be more work on later in the year.

In addition, spoke to Norwegian paper Morgenbladet about Anjem Choudary’s release and the Sun about ISIS in Syria.

18 October 2018

lachinainafghanistan

Afghanistan remains an awkward fit within China’s Belt and Road Initiative concept. Look at most maps of Xi Jinping’s keynote foreign policy concept cutting a route across Eurasia, and they tend to go tidily around Afghanistan. But this masks China’s genuine stake in the country, the gradual shift that is visible in Beijing’s activity and finally, the potential importance of the country to China’s broader push across Eurasia.

Starting with national security, China has increasingly sought to harden its security presence in Afghanistan. But this has been focused for the most part on Chinese national interests, rather than providing broader security support to the country. Beijing has provided funding, equipment and training for Afghan forces in Badakhshan, in Gilgit-Baltistan in Pakistan, and helped build border bases for Tajik forces on their side of the border in Badakhshan. At a strategic level, China has fostered the creation of the Quadrilateral Coordination and Cooperation Mechanism(QCCM) which brings together the Chiefs of Army Staff for China, Afghanistan, Tajikistan and Pakistan. The focus of the grouping the border region around the Wakhan Corridor which all three of them share.

The key to understand this is that China is not seeking to displace the United States or NATO as a key security provider for Afghanistan’s armed forces. The country is focusing on bolstering its links and the capability of the various armed forces that touch upon its border with AfghanistanThis posture focused on Chinese national security concerns can be seen in China’s previous security engagements with Afghanistan which have for the most part focused on building relations with local groups to ensure that China’s security equities – either its nationals and investments or its concerns about Uighur militants using the territory to plan attacks in China – are covered. 

Having said this, there is an equally noticeable gradual increase in China’s activity in Afghanistan. From largely seeing the country as a graveyard of Empires from which it prefers to keep a discrete distance, China has increasingly stepped forwards to play a role in the country. Chinese firms have won some large extractive projects – in the north CNPC won an oil concession in Amu Darya, while MCC and Jiangxi Copper famously won the Mes Aynak Copper mine in Logar. Construction firms like Xinjiang Beixin, CBRC and Gezhouba have all worked on major infrastructure projects in the country. And at the smaller end of the scale, Chinese traders have sought to exploit the gemstones in Afghanistan, while Afghan shuttle traders are a feature of the thriving community of developing world merchants in Yiwu.

And Beijing has actively sought tomend the previous omission of Afghanistan from the broader Belt and Road, hosting conferences in Kabul and Beijing on the topic. At the same time, China has used a multiplicity of regional groupings to bring different regional configurations together on Afghanistan. Large multilaterals like the Shanghai Cooperation Organization, the Conference on Interaction and Confidence-Building Measures in Asia (CICA), and the Heart of Asia (or Istanbul) Process have all seen Chinese leadership try to push different parts of them towards playing a role in Afghanistan. At a mini-lateral level, Beijing has brought together the Afghan and Pakistani Foreign Ministers, and engaged, separately, with the US, India, UK and Germany on Afghanistan.

All of this is a step change from earlier years when Beijing largely kept on the sidelines of any discussion around Afghanistan. To some degree this was part of a general reticence by Beijing to become too involved in any major international entanglements, but it was also a product of China’s habit of abrogating its Afghanistan policy to Islamabad. While Beijing continues to be responsive to Pakistan’s concerns in Afghanistan, it has increasingly struck out its own path. The key turning point can likely be seen in 2014 when Beijing realized that American-led NATO efforts in Afghanistan had a shelf life and were not likely to result in a tidy resolution in Kabul. And while Islamabad could provide some support to advance Beijing’s goals, it did not have total control. The United States instead, was not a continental power. It could eventually up and leave – as a physical neighbour, Beijing was a hostage of geography.

At the same time, the main running narrative from Beijing was one of Belt and Road. There was a gradual build up to this through Xi Jinping’s early years – with a major foreign policy work conference on peripheral diplomacy, a refocusing on Xinjiang and China’s border regions, some major foreign travel to South Asia by leadership figures (including in May 2013 the signing of the MoU that laid the foundation for the China Pakistan Economic Corridor), and finally in September and October 2013 the respective announcements of the Silk Road Economic Belt (in Astana, Kazakhstan) and the 21stCentury Maritime Silk Road (in Jakarta, Indonesia). In 2014, China decided to create a position of Special Envoy for Afghan Affairs, appointing seasoned diplomat and Afghanistan watcher Sun Yuxi to the role.

Yet while the appointment was a clear signal of focus by Beijing, it was made in a manner which seemed to suggest it was adjacent to the broader Belt and Road Initiative. At the time, the concept was still working itself out, so in some ways this was not surprising, but the net result was to create a sense of BRI not necessarily being something which encompassed Afghanistan.

The appointment of Ambassador Sun, however, did demonstrate a level of seriousness by Beijing in terms of trying to understand how to engage with Afghanistan at a more sophisticated level than just engaging with Kabul. The difficulty with a country like Afghanistan for a power like China which is still developing its civil service cadre, is to find individuals who are able to understand countries from the inside and figure out which levers deliver results. In a tribal country like Afghanistan, this problem is multiplied, with local power brokers as significant to guarantee success of projects as the central government. As an Ambassador who had served in the country for some time, Ambassador Sun had a good understanding of these dynamics and good relations across the board on the ground. He was also instrumental in getting Beijing’s efforts are helping try to broker negotiations between the Taliban, Islamabad and Kabul together – playing an important role in the creation of the Quadrilateral Coordination Group (QCG) bringing together China, USA, Afghanistan and Pakistan.

This was not unfortunately always the case with Chinese investments in the country. When CNPC embarked on its project in the Amu Darya region, they did it with a company which was not linked to the local power brokers, causing issues when their engineers deployed into the region to deliver the actual project. 

Over time, Beijing has learned these lessons, and is increasingly seeking opportunities to engage with Afghanistan in new formats and play a slightly more forward role. It has ensured that it has developed a range of relationships within the country amongst all the different factions, but at the same time ensured that it has prioritized strengthening its specific border with Afghanistan to make sure China is protected from overspill of security problems. Currently the focus is largely on bolstering capacity in neighbouring weaker countries (in Central Asia, or parts of Pakistan), while also continuing to show a willingness to talk about playing a positive role in Afghanistan. Beijing’s broader caution, however, remains and the country continues to refuse to take a clear leadership role with Kabul. A posture which is likely to continue until China sees with greater clarity what exact role the United States sees for itself in the longer run.

 

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the Italian Institute for International Political Studies (ISPI)

And another piece, this time a more recent one for the South China Morning Post exploring reactions to the Belt and Road once again.

Unbuckling China’s belt and road plan will not be easy for Western powers

While the major powers are offering alternatives to infrastructure funding, developing countries are trying to play a stronger hand in negotiating with the Chinese

PUBLISHED : Sunday, 07 October, 2018, 7:32pm
UPDATED : Sunday, 07 October, 2018, 7:32pm

Another op-ed for the South China Morning Post, on a not dissimilar topic to the last two, focusing on the Belt and Road Initiative and its consequences on the ground. It has gotten a bit of attention on Twitter, and the point is to try to challenge the rather empty policy responses we hear about BRI for the most part.

Beyond this op-edding in the SCMP, have also been delinquent in updating media commentary. Since this was last done, I spoke to the Telegraph about a Pakistani Taliban video, the Independent about the fact that Abu Bakr al Baghdadi’s son was killed fighting in Syria, to the Telegraph again about the worrying set of arrests in Germany that included someone who had managed to make Ricin, to Huffington Post about the fact that al Shabaab issued an edict about banning plastic bags, and to the Independent again about ISIS telling its followers to beware of fake social media accounts. Beyond this, The Conversation posted a podcast which included a longer conversation I had had with them about lone actor terrorism as part of the preparation for making this comic strip about the phenomenon.

Why developing countries can’t resist joining China’s massive infrastructure plan

Raffaello Pantucci writes that Beijing’s offer of investment and a connection to a regional ‘balancing force’ is tough to pass up for poor nations with few options

PUBLISHED : Saturday, 07 July, 2018, 10:02pm
UPDATED : Saturday, 07 July, 2018, 10:05pm

And more catch-up posting, this a short piece ahead of British Prime Minister Theresa May’s visit to China for my institutional home RUSI.

Theresa May in China: The Essence of a Working Relationship

ximay

Raffaello Pantucci
Commentary30 January 2018
ChinaUK

Prime Minister Theresa May undertakes her long-awaited visit to Beijing tomorrow. It gives London an opportunity to define and shape its relationship with China, and move it beyond behind-the-scenes sniping and grandiose public rhetoric.

 

Prime Minister Theresa May travels to Beijing tomorrow hoping to shore up trade deals post-Brexit with the world’s second-largest economy amid reports of tensions surrounding the UK’s willingness to formally sign up to China’s flagship Belt and Road initiative (BRI).

Despite May’s reluctance to sign up to the BRI, the UK is already deeply intertwined with the multibillion dollar project.

The UK was the first G7 power to join the Chinese-instigated Asian Infrastructure and Investment Bank (AIIB), a platform aimed to support China’s outward infrastructure push; a report from 2015 by the China-Britain Business Council and Tsinghua University showed how UK companies were already doing projects worth around $27bn with Chinese firms in BRI locations. In addition, any British company worth its mettle with deep interests in China has had an established BRI strategy for some time.

And, as Chancellor of the Exchequer Philip Hammond stated at last year’s Belt and Road summit in Beijing, ‘As China drives forward the Belt and Road initiative from the East we in Britain are a natural partner in the West’.

In sum, the UK is already playing a role in the initiative, although questions persist about how the UK can connect with President Xi Jinping’s globe-spanning vision. There are four elements that should guide Britain in this debate.

First, build on existing connections. There is often a public misconception that the BRI is a large aid project. Indeed, the initiative amounts to a vision for improving connectivity across the Eurasian landmass, through underdeveloped countries that need infrastructure development, but it does this using Chinese funds and enterprises. Often projects are financed using linked loans provided to countries with stipulations of using Chinese contractors.

The entry point into this business chain for non-Chinese companies has, therefore to be an existing link with a Chinese firm or bank, rather than necessarily waiting for contracts to be pushed out into the open market.

Foreign companies that can develop such arrangements are  likely to be those already connected to Chinese firms or Banks and have a longstanding presence in Beijing, a deep history in the target market or those with specific technical know-how that is required in delivery of the ultimate project which the Chinese firm is lacking.

Second, British corporate actors should focus on foreign markets where the UK has an edge. Chinese banks and enterprises will often not have the necessary history or expertise in a target market and this provides an opportunity for British corporations or policymakers.

Certain niche opportunities include, for example, Pakistan, where the legal system is largely modelled on Britain, Kazakhstan whose major firms are listed on UK stock exchanges and, until recently, the UK was Kenya’s largest source of foreign direct investment (FDI). All three of these countries are identified as key BRI states, and all are where the UK has deep experience which can be leveraged, together with Chinese companies penetrating that market.

Third, British planners and commercial actors must remember that Chinese infrastructure investment in many countries will potentially create opportunities for a next wave of investments. The BRI is about building trade and economics corridors, often starting with much-needed infrastructure.

However, for this to provide benefits to locals, and generate a sustainable future, it will need to be developed into a broader economy. Something that will require many ancillary projects and construction.

Targeting this next wave of projects which build on the initial Chinese-dominated infrastructure wave is going to be key in ensuring the long-term viability of the BRI.

Government departments, such as the Department for International Development and the Department for International Trade, should, therefore, concentrate on this potential next wave, seeking both the trade opportunities, but also separately ensuring that poverty alleviation, environmental and sustainable development goals are advanced in relevant locations. In other words, BRI should be piggybacked by outside powers like the UK.

Beyond the BRI, the UK must establish a more coherent and considered security relationship with China. This includes considering the many key UK security relationships that may clash with Beijing’s view of the world. However, it needs to recognise that, as one of the world’s major economies, China will have an international security footprint.

Engaging with this footprint, cooperating where useful (in counterterrorism, in countries where we have shared interests such as Afghanistan, in military operations other than conflict like rescuing nationals or alleviating humanitarian disasters), while not shying away from criticising when relevant remain key ingredients.

Drawing ‘red lines’ while continuing to engage remains the only practical way to manage such an emergent security power. The reality is that a global interconnected world is one that currently favours China and one that Beijing wants to maintain.

Finally, the UK needs to focus on continuing to push China to open its markets further. Among European economies, the UK is one of the most open and attractive to Chinese investors.

According to cumulative figures published by the Rhodium Group, the UK attracted some €23.6 billion in Chinese FDI between 2000–2016. Next closest was Germany at €18.8 billion.

Consequently, it is only proper that Britain should expect some reciprocation and should be willing to draw lines around investments that are made into the UK.

And this reciprocation has to be founded on improving the rule of law and accountability in China. And when this is not met, then clear lines need to be drawn in return about the degree to which China is allowed to invest in the UK.

It is also equally important for the UK to remember that Asia’s rise is not just a Chinese story. Beijing is the most prominent of several ascending Asian powers, and the UK needs to enhance its diplomatic and security engagement across the region.

This is something that the UK needs to do while at the same time continuing to enhance its engagement with Europe. As a power making an active choice to withdraw from one of the world’s most powerful economic and political blocs, the UK needs to engage in deft diplomacy around the world and demonstrate its continuing relevance as a major player on the world stage.

Prime Minister Theresa May meets Chinese President Xi Jinping at the State Guesthouse, on the second day of the 2016 G20 Summit in Hangzhou, China. Courtesy of PA Images

The views expressed in this Commentary are the author’s, and do not necessarily reflect those of RUSI or any other institution

Been a bit quiet of late, am focused on some larger writing projects which should be coming out over the next few months. We did, however, finally launch the Whitehall Paper authored with my colleague Sarah Lain which came out last year at an event at RUSI in London with Mark Field, MP, Minister for Asia at the Foreign and Commonwealth Office and James Kynge of the Financial Times. Given it is behind a paywall, I cannot just post the paper here, but it can be found online and if you get in touch with me, I can see what I can do to help. Many thanks to the MacArthur Foundation for their generous support of this work, and as ever, to find more work on this topic, check out China in Central Asia.

Separately, spoke to Eurasianet about China’s rail activity in Central Asia, WikiTribune about ISIS, the Times quoted my book in an article about Hafiz Saeed, and the Financial Times about the Belt and Road.

China’s Eurasian Pivot: The Silk Road Economic Belt

WHP_Chinas Eurasian Pivot
Raffaello Pantucci and Sarah Lain
Whitehall Papers31 May 2017
ChinaNew Silk RoadInternational Security StudiesPacific
The modern Silk Road is a key component of China’s political and economic strategy in Eurasia.

China’s growing influence across its western and southern borders is one of the great geopolitical trends of the past decade. With the development of its western domestic regions, Beijing has been drawn into building trade and economic corridors in nearby Central and South Asian countries. Yet these states are home to security risks which China is only now beginning to address.

China’s Eurasian Pivot analyses the country’s growing regional footprint from an economic, security and political perspective. It offers a comprehensive overview of China’s relations with Central and South Asia, showing that the policies now shaped by the concept of the Belt and Road Initiative are ones that China has been implementing in the region for some time.

The paper concludes that China is still developing its approach to the region, which is increasingly being driven by events and external relations. Beijing has stressed that its policies must be successful – both within the region itself and in terms of the impact back home. This highlights the degree to which Beijing feels that it must not fail, and why its approach to the region will continue to be a driving national priority for the next few decades.

Non-RUSI Members and Members with Standard Access

Read the Introduction for free

Buy the book through Taylor and Francis

A further piece for the South China Morning Post about what more China could do in Afghanistan. More on this topic over the year as well I think.

Beijing needs to move beyond rhetoric and take more concrete action to help and guide the violence-torn nation on its northern borders, writes Raffaello Pantucci

PUBLISHED : Tuesday, 02 January, 2018, 3:03pm
UPDATED : Tuesday, 02 January, 2018, 8:48pm