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BRI Update June 18

BRI Update

2019.06.21

  • Shanghai Cooperation Organisation members Support Belt and Road Initiative. The two-day 19th summit of the Shanghai Cooperation Organization (SCO) in Bishtek, Kyrgyzstan concluded on June 14 with the issuance of a joint declaration, and the signing of 14 agreements, including many bilateral cooperation agreements among the heads of state attending. There was particular emphasis on combating international terrorism and upholding the principles of multilateralism. However, the SCO is increasingly incorporating economic cooperation as a key element of the security and stability of this Eurasian part of the world. Concerning the Belt and Road Initiative and its close coordination with the Eurasian Economic Union (of which Russia, Kazakhstan and Kyrgyzstan are members), the Bishkek Declaration stated: "The Republic of Kazakhstan, the Kyrgyz Republic, the Islamic Republic of Pakistan, the Russian Federation, the Republic of Tajikistan and the Republic of Uzbekistan reaffirm their support for China’s Belt and Road Initiative and praise the results of the Second Belt and Road Forum for International Cooperation (Beijing, 26 April 2019). They note the ongoing work to implement this initiative together, including the efforts to align the Eurasian Economic Union projects with those under the Belt and Road initiative."

It is noteworthy, though, that India is not mentioned in this paragraph of the declaration as India is not yet a member of the BRI or a supporter of its expansion.

Further emphasizing the importance of economic cooperation, the declaration states: "The Member States agree that since its foundation, the SCO has built up a considerable potential for trade, economic, and investment relations that contributes to the improvement of economic cooperation at the Organisation. The Member States believe that expanding and deepening cooperation of the SCO nations in finance, investment, transport, energy, agriculture and other areas meet the interest of sustainable economic growth in the region as a whole."

The purpose of this according to the declaration is "to gradually ensure the free movement of goods, capital, services and technologies, as provided for by the SCO Charter."

Just prior to the Bishkek summit, Chinese President Xi  Jinping held a state visit in Kyrgyzstan, during which many cooperative agreements were signed. At the summit itself, he met with Indian Prime Minister Narendra Modi, and with Pakistan's Prime Minister Imran Khan. Putin also met with Modi and Khan. Modi later tweeted that he had an "extremely fruitful" meeting with Xi, and that the two nations should continue to work together to improve economic and cultural ties.

The SCO summit was characterized by many bilateral and trilateral meetings among attending leaders, to discuss greater economic, security and trade cooperation. Among the many topics he touched on in his speech to the plenary session, Russian President Vladimir Putin announced a renewed emphasis on "deepening the mutually beneficial economic ties among the SCO member states," with projects in trade, industry, energy, infrastructure, science and technology. Putin stressed the SCO's efforts to "combine the integration processes being developed in Eurasia," pointing to the "promising potential in integrating the Eurasian Economic Union with China's Belt and Road project with a future aim of building a larger Eurasian partnership..." This meshed nicely with Xi Jinping's call on SCO countries to "implement the agreements reached at the Second Belt and Road Forum for International Cooperation, and further synergize the BRI and the development strategies of other members, as well as such regional cooperation initiatives as the
Eurasian Economic Union."

 

  • China’s Belt and Road Initiative (BRI) has been creating opportunities for German enterprises, said Hans von Helldorff, chairman the Federal Association of German Silk Road Initiative (BVDSI), an organization of the high-productivity small and medium-size enterprises, known as Germany’s “Mittelstand.” Von Helldorff told Xinhua in an interview on June 17: “The future markets and the new markets, for example, are in Asia, Africa as well as Eastern and Southern Europe. They are not so well-connected. China has been providing the connections, thus it will generate great opportunities,” and the new markets are needed by the Mittelstand firms.

    Von Helldorff said that thanks to the interconnectivity, businesses have already been on the rise in German cities such as Hamburg and Duisburg, Europe’s largest inland port. Many SME companies in Germany have gotten contracts with sea-going and logistics enterprises from China and other countries for local registration, legal, accounting and tax services, von Helldorff stated. “The infrastructure projects along the Belt and Road countries also need a lot of know-how, port-related, road-related, train-related, etc. We have to open our eyes and participate in them,” he stressed, explaining the strength German businesses can contribute as an “innovation and investment engine.”

    Countering prevailing doubts and concerns about the New Silk Road, allegations that the initiative would be politically motivated and harm local industries, von Helldorff shrugged them off as simply clichés and unfounded. “The BVDSI sees China as a fast-growing economy that follows a plan. We need to sit down, make eye-to-eye contact and have negotiations. Only cooperation in the sense of fair competition will be for the benefit of humanity,” von Helldorff said.

    The BVDSI, founded in March 2019, is a business association serving as a platform for the interests of Mittelstand enterprises. The BVDSI is looking to organize a forum later this year in Germany on the New Silk Road, and for partners to establish project-related contacts.

 

  • Germany's Wilhelmshaven To Join the Maritime Silk Road, Plan To Build Major Chinese Logistics Center. An MOU has been signed between Li Xiangyang, General Manager China Logistics; Tong Laiming, Vice President China Chengtong Group; and Andreas Bullwinkel, JadeWeserPort-Marketing GmbH, on a project for building a Chinese logistics center at this northwestern German port, which is the only natural deep-water seaport that can also handle the largest categories of container vessels. The MOU was signed on the sidelines of Transport Logistics 2019 fair in Munich. According to German media reports, The plan is for the establishment of a big logistics area of 20 hectares, with the perspective of taking a leading role as a maritime freight hub plus redistribution via the German and European rail grid in the context of the Belt and Road Initiative, Bullwinkel explained. China Logistics, based in Beijing and operating 58 logistic centers in China and internationally, is a subsidiary of the China Chengtong Group and handles freight by road, rail and sea. Dr. Berend Lindner, Deputy Economics Minister of Lower Saxony, where Wilhelmshaven is located, welcomed the MOU, saying the fact “that one of the biggest logistics companies globally is investing in Lower Saxony emphasizes the productive capacity of Germany’s only deep-water container port.”

 

  • German states and cities continue expanding ties with China's Belt and Road. The mayor of Düsseldorf travels to Chongqing, according to reports in German media! 

 

  • Hangzhou-Rome Direct Air Route Marks the 50th Anniversary of China-Italy Diplomatic Ties

A new direct air route was launched today linking the eastern Chinese city of Hangzhou and Rome, Italy, as part of a celebration to mark the 50th anniversary of diplomatic ties between China and Italy. The round-trip air service will be offered by Air China three times a week, on Wednesday, Friday and Sunday, flying an Airbus A330-200 aircraft.

“China and Rome were connected by the ancient Silk Road over 2,000 years ago, and the launch of the new air service under the Belt and Road Initiative is part of an important celebration of the 50th anniversary of the establishment of diplomatic relations between China and Italy,” said Ding Hong, general manager of Air China in Zhejiang province, whose capital is Hangzhou. This is Air China’s first direct air service to Rome from eastern China and the fourth direct passenger route that Hangzhou’s Xiaoshan International Airport has opened to Europe.

Bilateral exchanges between the two countries have been on the rise in recent years, and last year total bilateral trade surpassed 50 billion yuan (about $7.2 billion). The number of tourists from Zhejiang to Italy also has risen rapidly in recent years, with passengers from Hangzhou and Wenzhou alone registering an annual increase of 14%, according to Air China. (EIRNS)

 

  • South African daily cover Belt and Road's contribution to prosperity in Africa. A feature today in the South African Independent Online Business Report publication reviews the benefits of the Belt and Road Initiative for Africa, saying that the African Union backs the BRI, and many of its member nations, such as Liberia, Morocco, and Tunisia have benefitted from development projects, as have Ethiopia, whose Addis Ababa Light Rail has cut travel time to and from the city, and Abuja, Nigeria, where China has also built the first light-rail system in Western Africa. Chinese construction companies have also assisted Angola in rebuilding its Benguela Railway which had been destroyed in civil war. The country can now transport goods from Angola’s west coast port of Lobito to the border of Democratic Republic of Congo.

Chinese-funded projects have also led to the construction of the Isimba and Karuma hydroelectric power stations in Uganda, two new sources of electricity which will ultimately aid the country’s development. In Rwanda, road construction projects have brought young citizens into construction through their employment, which has ultimately improved theirwelfare and provided labor skills. In the spirit of BRI’s trade ambitions, Egypt now looks to make the idea of the roadway from Cape Town to Cairo a reality. Since becoming 2019-2020 chairperson of the African Union, Egypt’s President Abdel Fattah el-Sisi plans to construct a superhighway through multiple African nations eventually ending in Cape Town, to open countries to trading in the Cape’s ports, and in Cairo, Egypt’s gateway to the European Union.

 

  • Despite Global Slowdown, China Trade Is Growing—Especially with Belt and Road Countries. The Chinese government announced the official foreign trade statistics for the first four months of 2019, which indicate continuing overall growth of 4.1%, compared to same period of 2018. Exports rose 6.1%, imports grew by 1.8%. The official announcement pointed out that this happened despite the slowdown in global economic growth and international trade, where the World Bank has reduced its global forecast to a 2.6% annual growth rate. The highest growth areas for China are trade with EU countries (11.7%), ASEAN (9.4%), and Belt and Road nations in general (9%). BRI trade accounted for 28.8% of China’s total trade volume. Read more detailed report here.

 

  • President Xi Invites Brazil To Join in Exploring Far Side of the Moon. Brazilian Vice President Hamilton Mourão told Valor Econômico for June 7 that President Xi Jinping invited Brazil to participate in China’s program to explore the far side of the Moon, when the two met in Beijing in May. Mourão’s exchange with Valor is brief, but fascinating.

Brazil and China have had for 31 years a program to jointly design, manufacture, launch and use remote sensing satellites (CBERS). Five satellites have been produced, and the sixth is being completed now. During his visit, Mourão visited the Chinese Academy of Space Technology where the CBERS program operates. So Valor asked the Vice President if there were anything new on Brazil’s space program with China. Mourão replied:

“We have a satellite that is being built. The Brazilian part is being completed and as of November it will be in China to be launched.

“They have an exploration program for the hidden side of the Moon and they are offering people to participate in this practically for free. He [Xi] made a generic offer.... But I think it’s great. I put that in the report” for President Bolsonaro about his trip to China.

Mourão stated that if Brazil would join the Belt and Road Initiative, it will do that in accordance to Brazilian interests, not Chinese interest, and in accordance with Brazilian legislation concerning bidding to build infrastructure. He emphasized that Brazil is in great need for infrastructure building. This issue might be taken up in October when President Bolsenaro visits China.

The interview also dealt with the issue of Huawei and 5G, and the fact the U.S. President Donald Trump had called President Bolsenaro and warned him against Huawei. When asked by Valero "So, is there no idea at the moment to ban Huawei?" He answered: "No, no. Not here. In our government it does not. The president did not say that to me in a moment. We are a country that needs, we are a very little digitally integrated country. You leave here from Brasilia, walk 50km on the road and you cannot talk on the phone anymore. We have a telecommunication milestone that is from the 1990s." Mourão  further added that "You look at 5G. The four companies that own the technology are two Chinese and two Finnish. Where's the American?" Full interview in Portugese.

 

  • Belt and Road Provides Opportunity for China To Build 30 Nuclear Reactors over the Next Decade. Wang Shoujun, a standing committee member of the Chinese People’s Political Consultative Conference (CPPCC), said y that China needs to take full advantage of the opportunities provided by the Belt and Road Initiative and give more financial and policy support to its nuclear sector. “ ‘Going out’ with nuclear power has already become a state strategy, and nuclear exports will help optimize our export trade and free up domestic high-end manufacturing capacity,” he was quoted as saying in a report on the CPPCC’s official website, reported Reuters. He said China needs to improve research and development, localize the production of key nuclear components, and grow both the domestic and foreign nuclear markets to give full play to the country’s “comprehensive advantages” in costs and technology. Wang, the former chairman of the state-owned China National Nuclear Corp. (CNNC), said Belt and Road nuclear projects could earn Chinese firms as much as 1 trillion yuan ($145.52 billion) by 2030, Reuters cited a report from BJX.com.cn, a Chinese power industry portal.

On April 18, 2017, People’s Daily Online quoted then-CNNC Chairman Wang, as remarking that, “About 72 countries have been or are planning to develop nuclear power, among which 41 are along the Belt and Road, and most of them are still in the earliest stages of nuclear power development. We estimate that if their nuclear energy were raised to reach development levels comparable to those of the U.S. or Japan, it would spawn a market worth 4 trillion yuan.” (EIRNS)

 

  • Russia’s Rosatom and China Help Nigeria To Go Nuclear. In an interview with the Nigerian daily The Nation on June 3 at the X1 Atomic Energy Conference in Sochi, Rosatom’s Central and Southern Africa CEO Dmitry Shornikov said, “Discussions between Nigerian and the Russian government on the issue [of building nuclear power in Nigeria] have reached an advanced stage and hopefully would lead to success in the long run,” he said. “This is evident by the agreement which the country signed two years ago in relation to this issue. We believe that the federal government’s gesture would culminate in signing more agreements in the immediate future,” said Shornikov. He said the agreements would lead to siting nuclear energy plants and production of electricity in Nigeria. Responding to a question about Nigeria’s preparedness to utilize nuclear energy, he underlined that “a whole lot of things must be on the ground before any country can actualize or practicalize the use of nuclear energy. First, is a well-articulated policy, which spells out the reasons behind the issue of generating nuclear power, the megawatts which the country intends to generate, the distribution and transmission capacity and others as contained in infrastructure provisions of that country in particular,” Shornikov told The Nation’s Akinola Ajibade.

Shornikov also described how Russia is also working with nuclear newcomer Rwanda, South Africa which has the only nuclear reactor on the continent, and Egypt, in developing nuclear energy for the continent.

Nuclear power is part of a strategy to industrialize Nigeria that President Muhammadu Buhari had started to implement four years ago and will continue in his second term. He is doing this also with help of China and with Chinese methods. Abuja’s aim is to shift from an oil export-based economy to an agro-industrial economy, with investments in infrastructure and manufacturing. Buhari’s Presidency has also been able to reverse the balance against the Boko Haram terrorists, and, although the fight has not yet been won, it is helping to win international support for the Transaqua project to replenish Lake Chad.(EIRNS)

 

  • China's AIIB expanding loan opportunities
In a move which is sure to affect Africa, the Asian Infrastructure Investment Bank has been ramping up its global loan portfolio, now even taking on projects which it had previously declined. Since the beginning of the year the bank has expanded lending by 25%, approving 8 new projects according to their website. In May, they had their first bond sale, raising $2.5Bn.  FInd more here:
  • Zimbabwe's President encourages Chinese construction giant to adopt Zimbabwe as home. During a visit to the future (now under construction) Zimbabwe Parliament building-- which the Shanghai Construction Group is currently building for free-- President Mnangagwa invited them to take up permanent residence in the country, according to The Herald of Zimbabwe.

 

  • Kenya partners with Chinese firm to extend water availability in Nairobi suburbs. The Zhongmei Engineering Group is nearing completion of two reservoirs and connecting pipe to two sections of the city for this $35Mn project. More details in Afrika21.

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