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Belt and Road Updates, July 18

Belt and Road Updates

July 18, 2019

  • China Leading Global Transportation Investment in Africa: A new report  has identified China as the largest non-continental investor in rail and transportation projects in Africa, and shone a light on the potentials of the New Paradigm economy. China now has 21.3% of an investment market now estimated at $430.3 billion. The figures were compiled by Project Insight (a firm which creates business management software), whose authors tracked 448 “large-scale transportation projects” involving road, rail and bridges, across the continent. The authors highlight that both the IMF and Africa Development Bank project—even with existing infrastructure density—forecast continued growth for the region, and state that this growth rate will only increase when these projects are realized.

The executive summary of the 31-page report takes particular note of the Chinese influence throughout the continent. “China has made numerous investments across Africa,” they write “becoming a major financier of key transport projects in the region. At least five African countries have had their railway systems funded by China: Kenya, Ethiopia, Angola, Djibouti and Nigeria.

“Based on the pipeline of projects tracked by the publisher, Chinese contractors are involved in road and railway projects that account for 21.3% of the overall project pipeline value,” followed by France, Turkey and the U.K. (with 3.4%). The leading investors are China Railway Construction Corporation Ltd. with $47.3 billion invested; followed by Power Construction Corporation of China (PowerChina) ($12.18 billion); and China Communications Construction Corporation ($9.4 billion).

Looking at the entire continent, the report states: “When completed in their entirety, the tracked projects will total over 110,000 km in length (54,110 km for roads, 55,345 km for railway and 599 km for bridges) of which 75,297 km will be newly constructed, 29,197 km will be upgraded and 5,561 km will have an element of both construction and upgrade, crisscrossing the African continent.”

 

  • How China's Belt and Road Helping Improve Lives in Africa: Addressing the Lunch Meeting of the Eighth World Peace Forum on July 10, Chinese Vice Foreign Minister Le Yucheng said that China has advanced high-quality Belt and Road cooperation to enhance economic growth, higher living standards and infrastructure connectivity of countries and regions involved. It is changing the lives of many local people, he said, the Ministry of Foreign Affairs website reported.
    Citing China's role in Africa, Le said in a village called Chimkombero in northern Malawi, for nearly a century, the villagers had to walk with buckets on their heads for about one kilometer to a hand-dug shallow well to get drinking water. Then came Chinese workers who drilled a new borehole for them. The moment fresh water came gushing out of the borehole, the villagers were so excited that they said, "We no longer had to walk such a long distance on bare feet to get water." The 600 boreholes China has helped to drill in Malawi are now providing clean drinking water to 150,000 people in six local districts, the website noted.
    Last September, in an exclusive interview with the Financial Times, Le said: "Africa has for many years received certain assistance from Western countries. But why couldn't it achieve faster development? One important reason is the underdevelopment of infrastructure. I have been to Africa and I know that many African countries, although in the same continent, are not connected by direct flights, railways or even roads. You have to fly to Paris or Zurich in order to get to another African country. How can the economy grow with such underdeveloped infrastructure," China Daily reported.

 

  • Renmin University Prof: Belt and Road Has Broken Out From Its `Geographical Concept'--Including in Europe: "The Belt and Road is walking on a wider road. It has broken beyond the geographical concept where it originated," Zhou Rong, a senior research fellow at the Chongyang Institute for Financial Studies at the Renmin University of China, told the {Global Times} on July 10. "When BRI just started, some European countries didn't see many benefits of it.
    But now they are seeing what the program can bring them. For example, the active operation of the China-Europe Railway Express has caught many European countries, which have been relying more on sea transport, by surprise," Zhou said.
    A BRI China-Italy business investment matchmaking conference was held in Milan, Italy on July 5, where business representatives from both countries discussed the search for appropriate business investment opportunities under the BRI program, reported Xinhua. Italy was the first major European economy to join the BRI, signing a memorandum of understanding with China during Xi Jinping's state visit in March.
    A report recently released by the Paris Île-de-France Chamber of Commerce and Industry, also pointed out that China will "play its role as the main center of the world economy" as it organizes trade around the New Silk Road. It stated that the BRI is a project with a strong economic dimension that provides important  opportunities, illustrated by the corporate cooperation.  According to the report, China's New Silk Road initiative has contributed to the development of cooperation between French and Chinese companies, including both large enterprises and also small and medium-sized enterprises, in industries such as maritime, rail and air transport. The report also stated that China's major transport infrastructure projects under the Belt and Road contribute to the growth in market demand and raise global standards in the sector.

 

  • China and Bangladesh to expand BRI cooperation: During the visit on July 5th by Bangladeshi Prime Minister Sheikh Hasina to Beijing, the two sides agreed on a series of bilateral cooperation documents on investment in infrastructure, water resources, culture and tourism. In his meeting with Sheikh Hasina, China’s Prime Minister Li Keqiang said that China stood ready to better synergize the Belt and Road Initiative with Bangladesh's development strategy. Hasina said Bangladesh-China ties are at a high level and that her country was willing to actively participate in the joint construction of the Belt and Road, according to Global Times. Coinciding with the visit, China Daily published a thorough article on the trade and investments level between China and Bangladesh.

 

  • The Asian Infrastructure Investment Bank (AIIB) member states reach 100: The China-initiated AIIB announced this week that the with the approval of three new African nations, the number of member states will reach 100. The membership of Benin, Djibouti and Rwanda were approved during the AIIB’s annual meeting in Luxembourg, according to a press release issued by the AIIB on July 13. The press release, AIIB President Jin Liqun said: “AIIB members collectively account for 78 percent of the world’s population and 63 percent of global GDP. With the backing of all of our members, we are building a lean, clean, and green institution that can help to support their sustainable development“.

It added that “new estimates by the African Development Bank suggest that Africa’s infrastructure needs amount to USD130–170 billion a year, with a financing gap in the range USD68–108 billion. AIIB and the African Development Bank signed a Memorandum of Understanding in April 2018 to enhance collaboration in developing programs, co-financing, and other forms of financial assistance, knowledge and staff exchanges.”

The three prospective non-regional members will officially join AIIB once they complete the required domestic processes and deposit the first capital installment with the Bank.

 

  • Russia approves 2000 km highway from Kazakhstan-China border to Belarus: Russian Prime Minister Dmitry Medvedev has approved the construction of a new, toll road, the Meridian highway, across Russia, designed to significantly shorten cargo routes between China and Central Europe. The highway will stretch over 2,000 km from the Belarus border to the border with Kazakhstan, and it is expected to become part of the fastest trucking route between China and Europe. The motorway falls under China’s transcontinental trade and infrastructure project, the Belt and Road Initiative, which Russia supports, RT reported. The project is expected to cost around $9.5 billion. The massive infrastructure project has won the support of the Russian government, RT cites Vedomosti business daily as reporting.

While the construction will fully rely on investors’ funds, the government has pledged to assist with attracting new investment for the project, including from China. However, investors want the government to ensure their minimal revenue of around $550 million, covering political risks such as the closure of state borders, RT wrote. Given the large capacity of the highway, and that tolls will be charged for trucks and cars, the project is expected to break even in 12 years.

 

  • China To Build Morocco's New Tech City in Northern Tangiers: Morocco has kicked off construction of a high-tech city in Northern Tangier, known as Tanger Tech Mohammed VI. According to a July 9 report by Construction Review Online poral. This follows the April signing of a Memorandum of Understanding by China Communications Construction Co (CCCC) and its subsidiary, China Road and Bridge Corp (CRBC), and the Morocco-based BMCE Bank.
    The city will be built in three phases, Ilyas El Omari, head of the northern Tangier-Tetouan-Alhoceima region, told Reuters July 1. He declined to give a date for the completion of the first phase, which he said would cover up to 700 hectares (1,730 acres) out of 2,000 hectares (4,940 acres) in total. Work has already begun to connect the city to road, rail, and electricity infrastructure, he said, adding that the tech city would benefit from its Tanger Med port. Tanger Med launched terminals on July 5, increasing its container-handling capacity to 9 million, the
    largest in the Mediterranean Sea, Reuters reported.

 

  • China's CREC to Build Helsinki-Tallinn Tunnel: Peter Vesterbacka, who heads the group, FinEstBay Area Development, said this week, "we are signing a letter of intent with the Chinese company, CREC, the world's largest construction company to build the challenging undersea tunnel between the Finnish capital Helsinki and the Estonian capital Tallinn." Vesterbacka said the Chinese construction giant specialized in railway projects and had built over 18,000km of railway tunnels in China. The 100km-long tunnel already has Chinese financing in principle, Global Construction Review (GCR)reported today.
    Helsinki and Tallinn are separated by the Gulf of Finland. The tunnel, when completed, will link two close, but separated, parts of the European Union physically by removing the need of sea or air transport, or to travel through  Russia. The Helsinki-Tallinn connection is part of the EU's TEN-T network's North Sea-Baltic corridor. A standard gauge railroad track will run through the tunnel. In terms of freight, the tunnel is projected to increase cargo transport between the cities from 3.7 million tons in 2017 to eight million tons. And the prospect of replacing weather-dependent two-hour ferry journeys with a 20-minute high-speed rail transfer is certainly one that will generate long-term value for the entire region.

 

 

Hussein Askary

Hussein Askary

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