All you need to know about China's Belt and Road Initiative

China aims to make the Belt and Road initiative sustainable and prevent debt risks, its finance minister said on Thursday, seeking to allay criticism that the infrastructure plan to boost trade and investment creates a heavy burden for some nations.

The policy championed by Chinese President Xi Jinping has become mired in controversy, with some partner nations bemoaning the high cost of projects, though China has repeatedly said it is not seeking to trap anyone with debt.

Western governments have tended to view it as a means to spread Chinese influence abroad, saddling poor countries with unsustainable debt.

Finance minister Liu Kun, speaking at a forum to kick off a three-day Belt and Road summit in Beijing, said China will establish an analysis framework on debt sustainability for Belt and Road projects to "prevent and resolve debt risks".

Chinese financial institutions, countries involved in Belt and Road and international agencies are encouraged to use this framework to enhance debt management, Liu said.

While most of the Belt and Road projects are continuing as planned, some have been caught up by changes in government in countries such as Malaysia and the Maldives.

Those that have been shelved for financial reasons include a power plant in Pakistan and an airport in Sierra Leone, and Beijing has in recent months had to rebuff critics by saying that not one country has been burdened with so-called "debt traps".

Yi Gang, China's central bank governor, said at the same event that local currencies will be used for investments related to the Belt and Road plan to curb exchange rate risks.

China will follow market principles and rely on commercial funds for Belt and Road financing, Yi said, adding that China will improve transparency for those projects.

"We should strengthen debt and risk management. We should objectively and fully understand debt problems of developing countries," he added.

"Investment decisions should...effectively control risks and fully consider a country's overall debt capacity and ensure debt is sustainable."

In a nod to debt concerns, a draft communique seen by Reuters said that 37 world leaders attending the summit will agree to project financing that respects global debt goals and promotes green growth.

Visiting leaders will be headlined by Russia's Vladimir Putin, as well as Prime Minister Imran Khan of Pakistan, a close China ally and among the biggest recipients of Belt and Road investment, and Prime Minister Giuseppe Conte of Italy, which recently became the first G7 country to sign on to the initiative.

The United States, which has not joined the Belt and Road, is expected to send only a lower-level delegation, and nobody from Washington. 
&nbsp;

China aims to make the Belt and Road initiative sustainable and prevent debt risks, its finance minister said on Thursday, seeking to allay criticism that the infrastructure plan to boost trade and investment creates a heavy burden for some nations.

China aims to make the Belt and Road initiative sustainable and prevent debt risks, its finance minister said on Thursday, seeking to allay criticism that the infrastructure plan to boost trade and investment creates a heavy burden for some nations. The policy championed by Chinese President Xi Jinping has become mired in controversy, with some partner nations bemoaning the high cost of projects, though China has repeatedly said it is not seeking to trap anyone with debt. Western governments have tended to view it as a means to spread Chinese influence abroad, saddling poor countries with unsustainable debt. Finance minister Liu Kun, speaking at a forum to kick off a three-day Belt and Road summit in Beijing, said China will establish an analysis framework on debt sustainability for Belt and Road projects to "prevent and resolve debt risks". Chinese financial institutions, countries involved in Belt and Road and international agencies are encouraged to use this framework to enhance debt management, Liu said. While most of the Belt and Road projects are continuing as planned, some have been caught up by changes in government in countries such as Malaysia and the Maldives. Those that have been shelved for financial reasons include a power plant in Pakistan and an airport in Sierra Leone, and Beijing has in recent months had to rebuff critics by saying that not one country has been burdened with so-called "debt traps". Yi Gang, China's central bank governor, said at the same event that local currencies will be used for investments related to the Belt and Road plan to curb exchange rate risks. China will follow market principles and rely on commercial funds for Belt and Road financing, Yi said, adding that China will improve transparency for those projects. "We should strengthen debt and risk management. We should objectively and fully understand debt problems of developing countries," he added. "Investment decisions should...effectively control risks and fully consider a country's overall debt capacity and ensure debt is sustainable." In a nod to debt concerns, a draft communique seen by Reuters said that 37 world leaders attending the summit will agree to project financing that respects global debt goals and promotes green growth. Visiting leaders will be headlined by Russia's Vladimir Putin, as well as Prime Minister Imran Khan of Pakistan, a close China ally and among the biggest recipients of Belt and Road investment, and Prime Minister Giuseppe Conte of Italy, which recently became the first G7 country to sign on to the initiative. The United States, which has not joined the Belt and Road, is expected to send only a lower-level delegation, and nobody from Washington.

China seeks to allay Belt and Road debt concerns

Chinese President Xi Jinping sent a letter to congratulate the inauguration of the Belt and Road Studies Network (BRSN) on Wednesday.

Xi said the development of history, the prosperity of civilizations, and progress of humanity are closely connected with the guidance of advanced ideas.

Noting that the Belt and Road Initiative (BRI) originates in China, but belongs to the world, Xi said the initiative has become an open and inclusive platform for international cooperation and popular global public goods, thanks to the concerted efforts of all parties.

Xi said think tanks are an important force in the joint pursuit of the BRI, adding that exchanges and cooperation among think tanks help deepen mutual trust, build consensus, and advance the joint pursuit of the BRI towards higher levels.

Xi stressed that the establishment of the BRSN provides an important platform for think tanks of all countries to enhance exchanges of ideas and offer consulting services to policy-making.

Xi expressed the hope for the BRSN to deepen academic exchanges and produce more high-quality research results to contribute to making solid progress in the joint development of the BRI and building a community with a shared future for humanity.

The BRSN, co-initiated by Xinhua Institute and 15 other think tanks, is an open mechanism of academic exchanges and cooperation, which is established to serve international think tanks, international and regional organizations and researchers of various countries, and promote the studies and academic exchanges on the BRI, according to a statement issued at the inauguration meeting on Wednesday.

Its 16 initiators formed an initiators council, and Cai Mingzhao, president of Xinhua News Agency and chairman of Xinhua Institute, serves as the chairperson of the council. Xinhua Institute, the leading initiator, also hosts the secretariat of the council.

The BRSN plans to hold an academic exchange event each year, organize seminars and field trips to Belt and Road projects, and raise money to set up a non-profit Belt and Road international research fund.

The inauguration of the BRSN will surely promote think tank studies on the Belt and Road to a higher level, and contribute more wisdom and strength to the Belt and Road construction, said the statement.

The official website, www.brsn.net, was launched at the meeting.

The BRSN will also launch its App, as well as create a BRSN journal and a BRI-related basic database.

More than 200 experts and scholars from 59 countries and two international organizations attended the inaugural meeting.

Chinese President Xi Jinping sent a letter to congratulate the inauguration of the Belt and Road Studies Network (BRSN) on Wednesday. Xi said the development of history, the prosperity of civilizations, and progress of humanity are closely connected with the guidance of advanced ideas.

Chinese President Xi Jinping sent a letter to congratulate the inauguration of the Belt and Road Studies Network (BRSN) on Wednesday. Xi said the development of history, the prosperity of civilizations, and progress of humanity are closely connected with the guidance of advanced ideas. Noting that the Belt and Road Initiative (BRI) originates in China, but belongs to the world, Xi said the initiative has become an open and inclusive platform for international cooperation and popular global public goods, thanks to the concerted efforts of all parties. Xi said think tanks are an important force in the joint pursuit of the BRI, adding that exchanges and cooperation among think tanks help deepen mutual trust, build consensus, and advance the joint pursuit of the BRI towards higher levels. Xi stressed that the establishment of the BRSN provides an important platform for think tanks of all countries to enhance exchanges of ideas and offer consulting services to policy-making. Xi expressed the hope for the BRSN to deepen academic exchanges and produce more high-quality research results to contribute to making solid progress in the joint development of the BRI and building a community with a shared future for humanity. The BRSN, co-initiated by Xinhua Institute and 15 other think tanks, is an open mechanism of academic exchanges and cooperation, which is established to serve international think tanks, international and regional organizations and researchers of various countries, and promote the studies and academic exchanges on the BRI, according to a statement issued at the inauguration meeting on Wednesday. Its 16 initiators formed an initiators council, and Cai Mingzhao, president of Xinhua News Agency and chairman of Xinhua Institute, serves as the chairperson of the council. Xinhua Institute, the leading initiator, also hosts the secretariat of the council. The BRSN plans to hold an academic exchange event each year, organize seminars and field trips to Belt and Road projects, and raise money to set up a non-profit Belt and Road international research fund. The inauguration of the BRSN will surely promote think tank studies on the Belt and Road to a higher level, and contribute more wisdom and strength to the Belt and Road construction, said the statement. The official website, www.brsn.net, was launched at the meeting. The BRSN will also launch its App, as well as create a BRSN journal and a BRI-related basic database. More than 200 experts and scholars from 59 countries and two international organizations attended the inaugural meeting.

Xi Jinping sends congratulations on inauguration of Belt and Road Studies Network

Pakistan <a href="https://www.wionews.com/south-asia/pakistans-pm-imran-khan-to-visit-china-next-week-sign-new-pacts-211179">Prime Minister Imran Khan</a> is all set to embark for his second visit to China from Thursday.

The visit comes in the wake of the second edition of the <a href="https://www.wionews.com/world/no-plans-to-send-officials-for-chinas-belt-and-road-forum-us-213201">Belt and Road forum</a> and will have leaders from 37 countries.

Imran Khan will pay a four-day visit to Beijing and will&nbsp;be accompanied by a high-level ministerial delegation.

This will be Khan’s second visit to China since coming to power in August 2018.

China has pledged about $60 billion in infrastructure loans for Pakistan, touted as a success story of its Belt and Road Initiative, which aims to build road and maritime trading routes across the globe.

Through the project, China aims to expand its influence worldwide with the help of a chain of infrastructure projects funded by Chinese investments.&nbsp;

India and Bhutan will be among a handful of countries to skip Xi Jinping's mega event.

India opposes the Belt and Road Initiative because its offshoot, the 60-billion-dollar China Pakistan Economic Corridor, passes through Pakistan-Occupied Kashmir, which is an integral part of the Jammu and Kashmir.

Besides delivering the keynote address to the forum, Imran Khan will also meet with the Chinese leadership.

He is also scheduled to hold talks with other heads of state or government on the margins of the forum.

Sources privy to the development say that China is likely to give an exemption to three-hundred-and-13 products of import from Pakistan.

Islamabad aims to sign a free trade agreement with China.

Pakistan’s crippling economy has been a worry for the Imran Khan government since he has taken charge. Friendly countries, including China, came to Islamabad’s rescue in a bid to pull the country out of a Balance-of-payments crisis.

Pakistan Prime Minister Imran Khan is all set to embark for his second visit to China from Thursday. The visit comes in the wake of the second edition of the Belt and Road forum and will have leaders from 37 countries.

Pakistan Prime Minister Imran Khan is all set to embark for his second visit to China from Thursday. The visit comes in the wake of the second edition of the Belt and Road forum and will have leaders from 37 countries. Imran Khan will pay a four-day visit to Beijing and will be accompanied by a high-level ministerial delegation. This will be Khan’s second visit to China since coming to power in August 2018. China has pledged about $60 billion in infrastructure loans for Pakistan, touted as a success story of its Belt and Road Initiative, which aims to build road and maritime trading routes across the globe. Through the project, China aims to expand its influence worldwide with the help of a chain of infrastructure projects funded by Chinese investments. India and Bhutan will be among a handful of countries to skip Xi Jinping's mega event. India opposes the Belt and Road Initiative because its offshoot, the 60-billion-dollar China Pakistan Economic Corridor, passes through Pakistan-Occupied Kashmir, which is an integral part of the Jammu and Kashmir. Besides delivering the keynote address to the forum, Imran Khan will also meet with the Chinese leadership. He is also scheduled to hold talks with other heads of state or government on the margins of the forum. Sources privy to the development say that China is likely to give an exemption to three-hundred-and-13 products of import from Pakistan. Islamabad aims to sign a free trade agreement with China. Pakistan’s crippling economy has been a worry for the Imran Khan government since he has taken charge. Friendly countries, including China, came to Islamabad’s rescue in a bid to pull the country out of a Balance-of-payments crisis.

Pakistan PM Imran Khan to visit China, will attend Belt and Road forum

The Indian politico-diplomatic policy contour, in relation to two major events slated for end April in the Chinese calendar, is indicative of a carefully nuanced posture that Delhi is adopting towards Beijing, even as the world’s largest democracy is in the middle of a major national election.

The Modi led NDA government is in caretaker mode and a new Prime Minister will assume office after May 23 but some import-laden Indian policies that are unfolding this week warrant scrutiny.

On April 23 (Tuesday), two Indian naval ships – the INS Kolkata, a guided-missile destroyer and INS Shakti the fleet tanker will be part of the International Fleet Review (IFR) that China is conducting off Qingdao as part of the 70th-anniversary celebrations of the PLA Navy. Chinese President Xi Jinping will review the 50 naval ships assembled from 13 nations (excluding the host) on Tuesday. Major foreign navies represented at the PLA(N) IFR &nbsp;include Russia, Japan and India and some ASEAN nations. It may be recalled that India had conducted an IFR in February 2016 that saw 100 ships from 50 navies anchored off Visakhapatnam and the assemblage included two PLA(N) frigates.

International fleet reviews are a demonstration of a nation’s politico-diplomatic and military credibility as also acceptability and China is engaged in a similar pursuit against the backdrop of regional anxiety and unease over the kind of military assertiveness that Beijing has demonstrated in recent years in relation to its territorial claims in the East Asia-western Pacific continuum.

But in contrast to this friendly overture apropos the Qingdao IFR, Delhi has decided that India will not be part of the second OBOR (one belt-one road) summit being held in Beijing later in the week (April 26). This summit meeting has been billed as the biggest diplomatic event for China in 2019 and is acknowledged as a hugely ambitious personal project of President Xi Jinping that has complex strategic implications linked to the ‘rise of China’.

Delhi had stayed away from the inaugural summit in 2017 due to the manner in which India’s sovereignty claims over POK (Pakistan occupied Kashmir) were ignored among other concerns. Yet given the manner in which the post-Doklam tension was sought to be assuaged at the informal Xi-Modi summit Wuhan, it was expected that India would review its non-participation at the second OBOR (aka Belt and Road Initiative) &nbsp;summit. &nbsp;&nbsp;

However, in what was seen as a major disappointment for Beijing, earlier in March, the Indian ambassador to China Vikram Misri explained the rationale for the Indian refusal to be part of the 2019 summit. Misri noted: &nbsp;"Above all, connectivity initiatives must be pursued in a manner that respects the sovereignty, equality and territorial integrity of nations".

He further added: "No country can participate in an initiative that ignores its core concerns on sovereignty and territorial integrity. To be honest, we have made no secret of our views and our position on the BRI is clear and consistent and one that we have conveyed to the authorities concerned.”&nbsp; 
 
It is understood that most of the global community would be present at the second BRI &nbsp;summit, including nations with whom China currently has an uneasy or tense relationship including the USA and Japan and India’s determined ‘absence’ would be visible.

The inference that could be made is that by adopting two very different policy &nbsp;options in relation to the PLA (Navy) IFR on April 23 and the BRI summit on April 26, Delhi &nbsp;is signalling both malleability and resolve in what may be described as an ‘issue-based’ and carefully calibrated approach in its overall China policy.

In yet another development, the Indian Ministry of External Affairs (MEA) has set up a new division designated the Indo-Pacific and it is understood that this division will integrate policies pertaining to the Indian Ocean Rim Association (IORA) and deliberations related to the Quad. The latter refers to maritime/naval consultations between the USA, Japan, India and Australia.

The Indo-Pacific is both a geographic entity that links the two oceans – the Indian and the Pacific; and a nascent strategic construct mooted by the USA in some detail in October 2017. The Indian formulation in relation to the Indo-Pacific was outlined by PM Modi at the Shangri-La dialogue in mid-2018 which dwelt on the centrality of ASEAN in this maritime framework. China has its own reservations about this yoking of the two oceans and the strategic sub-text advanced by the USA and the Indian decision to formally create a new division dedicated to the Indo-Pacific will not go unnoticed.

Managing the bilateral with China will be a major challenge for the next Indian government and the policy contours of end April, as manifest in the IFR and the BRI summit, will remain important punctuation in this uneasy relationship between the two Asian giants.

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)&nbsp; 
&nbsp;

The Indian politico-diplomatic policy contour, in relation to two major events slated for end April in the Chinese calendar, is indicative of a carefully nuanced posture that Delhi is adopting towards Beijing, even as the world’s largest democracy is in the middle of a major national election.

The Indian politico-diplomatic policy contour, in relation to two major events slated for end April in the Chinese calendar, is indicative of a carefully nuanced posture that Delhi is adopting towards Beijing, even as the world’s largest democracy is in the middle of a major national election. The Modi led NDA government is in caretaker mode and a new Prime Minister will assume office after May 23 but some import-laden Indian policies that are unfolding this week warrant scrutiny. On April 23 (Tuesday), two Indian naval ships – the INS Kolkata, a guided-missile destroyer and INS Shakti the fleet tanker will be part of the International Fleet Review (IFR) that China is conducting off Qingdao as part of the 70th-anniversary celebrations of the PLA Navy. Chinese President Xi Jinping will review the 50 naval ships assembled from 13 nations (excluding the host) on Tuesday. Major foreign navies represented at the PLA(N) IFR include Russia, Japan and India and some ASEAN nations. It may be recalled that India had conducted an IFR in February 2016 that saw 100 ships from 50 navies anchored off Visakhapatnam and the assemblage included two PLA(N) frigates. International fleet reviews are a demonstration of a nation’s politico-diplomatic and military credibility as also acceptability and China is engaged in a similar pursuit against the backdrop of regional anxiety and unease over the kind of military assertiveness that Beijing has demonstrated in recent years in relation to its territorial claims in the East Asia-western Pacific continuum. But in contrast to this friendly overture apropos the Qingdao IFR, Delhi has decided that India will not be part of the second OBOR (one belt-one road) summit being held in Beijing later in the week (April 26). This summit meeting has been billed as the biggest diplomatic event for China in 2019 and is acknowledged as a hugely ambitious personal project of President Xi Jinping that has complex strategic implications linked to the ‘rise of China’. Delhi had stayed away from the inaugural summit in 2017 due to the manner in which India’s sovereignty claims over POK (Pakistan occupied Kashmir) were ignored among other concerns. Yet given the manner in which the post-Doklam tension was sought to be assuaged at the informal Xi-Modi summit Wuhan, it was expected that India would review its non-participation at the second OBOR (aka Belt and Road Initiative) summit. However, in what was seen as a major disappointment for Beijing, earlier in March, the Indian ambassador to China Vikram Misri explained the rationale for the Indian refusal to be part of the 2019 summit. Misri noted: "Above all, connectivity initiatives must be pursued in a manner that respects the sovereignty, equality and territorial integrity of nations". He further added: "No country can participate in an initiative that ignores its core concerns on sovereignty and territorial integrity. To be honest, we have made no secret of our views and our position on the BRI is clear and consistent and one that we have conveyed to the authorities concerned.” It is understood that most of the global community would be present at the second BRI summit, including nations with whom China currently has an uneasy or tense relationship including the USA and Japan and India’s determined ‘absence’ would be visible. The inference that could be made is that by adopting two very different policy options in relation to the PLA (Navy) IFR on April 23 and the BRI summit on April 26, Delhi is signalling both malleability and resolve in what may be described as an ‘issue-based’ and carefully calibrated approach in its overall China policy. In yet another development, the Indian Ministry of External Affairs (MEA) has set up a new division designated the Indo-Pacific and it is understood that this division will integrate policies pertaining to the Indian Ocean Rim Association (IORA) and deliberations related to the Quad. The latter refers to maritime/naval consultations between the USA, Japan, India and Australia. The Indo-Pacific is both a geographic entity that links the two oceans – the Indian and the Pacific; and a nascent strategic construct mooted by the USA in some detail in October 2017. The Indian formulation in relation to the Indo-Pacific was outlined by PM Modi at the Shangri-La dialogue in mid-2018 which dwelt on the centrality of ASEAN in this maritime framework. China has its own reservations about this yoking of the two oceans and the strategic sub-text advanced by the USA and the Indian decision to formally create a new division dedicated to the Indo-Pacific will not go unnoticed. Managing the bilateral with China will be a major challenge for the next Indian government and the policy contours of end April, as manifest in the IFR and the BRI summit, will remain important punctuation in this uneasy relationship between the two Asian giants. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)

Managing bilateral relations with China will be a major challenge for the next Indian government

China is struggling to ease worries about President Xi Jinping's signature plan to build a new Silk Road as it readies for a major summit in late April, especially among Western nations wary about debt, transparency and Chinese influence.

While China gained a major victory by convincing Italy to become the first G7 nation to formally sign on to the plan last month during Xi's visit to Rome, others in the West have been less keen to jump on board, though many have kept an open mind.

The Belt and Road Initiative, as it is formally called, is aimed at building a vast network of infrastructure connecting China to Central Asia, Southeast Asia, Europe and beyond, much like the ancient Silk Road.

Following the first Belt and Road summit two years ago, in a luxuriously appointed convention centre in hills north of Beijing, the second one is scheduled for the same location in late April. China is billing it as the country's most important diplomatic event of the year.

The country's top diplomat, Yang Jiechi, said on Saturday that almost 40 foreign leaders would come, and also took a swipe at "prejudiced" critics of the programme who seek to besmirch it with concerns like "debt traps".

"The Belt and Road is open, inclusive and transparent. It does not play little geopolitical games," Yang, who runs the ruling Communist Party's foreign affairs committee, told the official People's Daily.

The United States, locked in a bitter trade war with China, has been a particular critic of the Belt and Road, calling it an "infrastructure vanity project" when Italy signed on.

Jonathan Cohen, acting permanent representative of the United States at the United Nations, last month slammed China's attempt to get Belt and Road language into a resolution on Afghanistan, saying it had "known problems with corruption, debt distress, environmental damage, and lack of transparency".

Wu Haitao, chargé d'affaires of China's Permanent Mission to the United Nations, said the rebuke was "contrary to the facts and fraught with prejudice".

In 2017, the United States sent White House National Security Council senior director for Asian affairs Matt Pottinger to the summit. This time, Washington said it will not dispatch high-level officials due to its concerns about the project.

Lower-level staffers, possibly from the US&nbsp;embassy in Beijing, might go to the summit to observe and take notes, sources familiar with the matter said, though a final decision has yet to be made.

China says it always welcomes "like-minded countries" to take part in the project.

It has not disclosed a full list of the leaders planning to attend the event. But some of Beijing's closest friends have confirmed they will go, including Russian President Vladimir Putin and Pakistan Prime Minister Imran Khan.

EU Wariness

The European Union, China's largest trading partner, has also been in a bind about how to respond.

Last week, Europe's top leaders told Xi they wanted a fairer trading relationship with China, signalling an openness to engage with the project if it meant more access to the Chinese market.

German Chancellor Angela Merkel, speaking at the EU summit in March, grumbled about Italian Prime Minister Giuseppe Conte's decision to join the project, although she said Germany will play in active role in the Belt and Road and called for reciprocity.

Conte is due to attend the summit. Rome says signing onto the Belt and Road will bring much-needed investment and boost trade and has pointed to the fact that a dozen EU countries have already signed memoranda of understanding (MOUs) with China, including Hungary, Poland, Greece and Portugal.

Safeguarding interests

The EU last year proposed its own infrastructure scheme, but it has denied it is trying to counter China's ambitions.

"For China it is a question of power projection. China is corrupting what should be a level playing field by offering loans that send country debts soaring and create a culture of economic dependency on Beijing," one EU official said.

German Economy Minister Peter Altmaier, a Merkel confidant, is attending the summit, along with French Foreign Minister Jean-Yves Le Drian, with Altmaier saying they wanted to "safeguard European interests in co-operation with China there".

Several EU officials said the European Commission was still looking at who to send as a replacement for Vice President Jyrki Katainen, who attended 2017's Belt and Road summit and has cited a calendar clash with the EU-Japan summit for not being able to go this time.

China has been on a push to show that the Belt and Road remains popular, despite cooling enthusiasm from governments including in Pakistan, Sri Lanka, Malaysia and the Maldives, where new administrations are wary of deals struck with China by their predecessors.

The Chinese government's top diplomat, State Councillor Wang Yi, who ranks below Yang, last month touted the success of the $57-billion China-Pakistan Economic Corridor, a major Belt and Road scheme.

Wang said after meeting Pakistan's foreign minister that less than 20 per cent of funding for the China-Pakistan Economic Corridor came from Chinese loans, with the rest made up of direct Chinese investment and free grants.

The corridor focuses on the interests of ordinary people, Wang said, citing as an example women truck drivers trained to work at a coal mine connected to the project, which he described as a "touching story".

Wang told reporters at March's annual meeting of parliament that the Belt and Road was about high quality, sustainable, green development.

"As President Xi has said, the Belt and Road initiative comes from China, but the achievements belong to the world," Wang said.

China is struggling to ease worries about President Xi Jinping's signature plan to build a new Silk Road as it readies for a major summit in late April, especially among Western nations wary about debt, transparency and Chinese influence.

China is struggling to ease worries about President Xi Jinping's signature plan to build a new Silk Road as it readies for a major summit in late April, especially among Western nations wary about debt, transparency and Chinese influence. While China gained a major victory by convincing Italy to become the first G7 nation to formally sign on to the plan last month during Xi's visit to Rome, others in the West have been less keen to jump on board, though many have kept an open mind. The Belt and Road Initiative, as it is formally called, is aimed at building a vast network of infrastructure connecting China to Central Asia, Southeast Asia, Europe and beyond, much like the ancient Silk Road. Following the first Belt and Road summit two years ago, in a luxuriously appointed convention centre in hills north of Beijing, the second one is scheduled for the same location in late April. China is billing it as the country's most important diplomatic event of the year. The country's top diplomat, Yang Jiechi, said on Saturday that almost 40 foreign leaders would come, and also took a swipe at "prejudiced" critics of the programme who seek to besmirch it with concerns like "debt traps". "The Belt and Road is open, inclusive and transparent. It does not play little geopolitical games," Yang, who runs the ruling Communist Party's foreign affairs committee, told the official People's Daily. The United States, locked in a bitter trade war with China, has been a particular critic of the Belt and Road, calling it an "infrastructure vanity project" when Italy signed on. Jonathan Cohen, acting permanent representative of the United States at the United Nations, last month slammed China's attempt to get Belt and Road language into a resolution on Afghanistan, saying it had "known problems with corruption, debt distress, environmental damage, and lack of transparency". Wu Haitao, chargé d'affaires of China's Permanent Mission to the United Nations, said the rebuke was "contrary to the facts and fraught with prejudice". In 2017, the United States sent White House National Security Council senior director for Asian affairs Matt Pottinger to the summit. This time, Washington said it will not dispatch high-level officials due to its concerns about the project. Lower-level staffers, possibly from the US embassy in Beijing, might go to the summit to observe and take notes, sources familiar with the matter said, though a final decision has yet to be made. China says it always welcomes "like-minded countries" to take part in the project. It has not disclosed a full list of the leaders planning to attend the event. But some of Beijing's closest friends have confirmed they will go, including Russian President Vladimir Putin and Pakistan Prime Minister Imran Khan. EU Wariness The European Union, China's largest trading partner, has also been in a bind about how to respond. Last week, Europe's top leaders told Xi they wanted a fairer trading relationship with China, signalling an openness to engage with the project if it meant more access to the Chinese market. German Chancellor Angela Merkel, speaking at the EU summit in March, grumbled about Italian Prime Minister Giuseppe Conte's decision to join the project, although she said Germany will play in active role in the Belt and Road and called for reciprocity. Conte is due to attend the summit. Rome says signing onto the Belt and Road will bring much-needed investment and boost trade and has pointed to the fact that a dozen EU countries have already signed memoranda of understanding (MOUs) with China, including Hungary, Poland, Greece and Portugal. Safeguarding interests The EU last year proposed its own infrastructure scheme, but it has denied it is trying to counter China's ambitions. "For China it is a question of power projection. China is corrupting what should be a level playing field by offering loans that send country debts soaring and create a culture of economic dependency on Beijing," one EU official said. German Economy Minister Peter Altmaier, a Merkel confidant, is attending the summit, along with French Foreign Minister Jean-Yves Le Drian, with Altmaier saying they wanted to "safeguard European interests in co-operation with China there". Several EU officials said the European Commission was still looking at who to send as a replacement for Vice President Jyrki Katainen, who attended 2017's Belt and Road summit and has cited a calendar clash with the EU-Japan summit for not being able to go this time. China has been on a push to show that the Belt and Road remains popular, despite cooling enthusiasm from governments including in Pakistan, Sri Lanka, Malaysia and the Maldives, where new administrations are wary of deals struck with China by their predecessors. The Chinese government's top diplomat, State Councillor Wang Yi, who ranks below Yang, last month touted the success of the $57-billion China-Pakistan Economic Corridor, a major Belt and Road scheme. Wang said after meeting Pakistan's foreign minister that less than 20 per cent of funding for the China-Pakistan Economic Corridor came from Chinese loans, with the rest made up of direct Chinese investment and free grants. The corridor focuses on the interests of ordinary people, Wang said, citing as an example women truck drivers trained to work at a coal mine connected to the project, which he described as a "touching story". Wang told reporters at March's annual meeting of parliament that the Belt and Road was about high quality, sustainable, green development. "As President Xi has said, the Belt and Road initiative comes from China, but the achievements belong to the world," Wang said.

China struggles to ease concerns over Silk Road project as summit looms

By Winnie King

Italy is projected to be the first G7 nation to officially endorse China’s Belt and Road Initiative (BRI). And that’s raising the ire of both the European Union and the United States.

Having re-entered a recession at the end of 2018, the eurozone’s third largest economy is welcoming China’s President Xi Jinping for a three-day state visit. While there, Italy is expected to sign a memorandum of understanding – making it the 124th nation to sign up for this geographically expansive infrastructure and investment strategy.

Proposed in 2013, China’s BRI is a transcontinental project that focuses on infrastructure investment and projects that promote regional cooperation, development and connectivity. It offers participants a means to secure their trade, energy and transport network. China presents it as a win-win relationship aimed at mutual growth. But there are suspicions regarding China’s motivations – it’s seen as a way for China to embed its global influence – and it could make participants dependent on China. Today the BRI is linked to two-thirds of the world’s population, and has to-date seen an investment of more than $1 trillion.

The Italian job

While the current Italian government has not been fully unified toward China, a severe economic downturn has made the world’s second-largest economy look more appealing to it. Alberto Bradanini, Italy’s former ambassador to China, has stressed that Europe’s own indecision and inability to tackle trade deficits with China (of which Italy contributed approximately €176m, or an eighth of the EU’s total trade deficit) is a key motivator behind this decision.

Italy wants to enhance its “Made in Italy” brand through increasing trade – especially in the form of exports – to China. The BRI is seen as a vehicle to achieve this. Italy offers goods (in particular luxury goods and foodstuffs) that are attractive to China’s growing middle class and increasingly affluent population.

China is also interested in investing in Italian firms. More significant, however, are Italy’s key infrastructure assets. This would enhance the transport and trading network of the BRI, giving it strategic access to Europe. Less than 2 per cent of Italy’s sea imports come from China so there are substantial prospects for growth in that area.

A deal between Genoa’s port authority and shipping firm China Communications Construction Company (CCCC) has already been approved by the Italian government. And the port city of Trieste hopes for something similar. This would offer China and the BRI a more direct route to move goods onto the European continent and an ideal hub for accessing new rail lines and transport networks to Germany, Austria, Slovenia and other regional economies. By giving China access to its ports, Italy is hoping for infrastructure investment from China’s Asian Infrastructure Investment Bank (AIIB) – something the Italian government is trying to link to its role in the BRI.

With the port city of Palermo due to be part of Xi’s itinerary, it is clear that China is focused on European shipping terminal options. Following Algeria’s joining of the BRI in mid-2018, Palermo could help establish a new North African trade corridor.

Disunity and discontent 
 
The international response to Italy’s decision has been, at best, mixed. Germany and France have led the charge, raising concerns of China’s poor reputation regarding transparency, unfair BRI practices of favouring Chinese firms, as well as Chinese protectionism restricting European firms from Chinese projects.

The EU is clearly particularly concerned about what Italy’s decision means for the bloc’s China Policy. It is important to note, however, that when it comes to the BRI, Europe’s unified China’s Policy fell as early as 2017. It was then that Premier Li Keqiang’s visited Hungary and the coalition of Central and Eastern European Countries (CEEC), also including Poland and the Czech Republic, signed up to the BRI. Greece, Portugal and Croatia then followed suit.

The US has also derided Italy’s decision to break the G7 position on the BRI. The Trump government has labelled the BRI as a vehicle for debt trap diplomacy and accused the BRI of being nothing but a vanity project.

The growing tensions between China and the US do not help matters. The two sides are locked in a trade war and US charges of espionage against Chinese tech firm Huawei encapsulate its fears over Chinese investment in strategic industries and acquisitions. But traditional alliances seem to have fallen to the wayside, as Telecom Italia has agreed to remain partnered with Huawei.

The full impact of Xi’s visit to Italy will become more clear come April 9 when Brussels is scheduled to host an EU-China summit. In the build-up,&nbsp;however, the EU’s increasingly China-sceptic leadership has published an official strategy document labelling China a “systemic rival”. Targeting the BRI specifically, it calls upon member states to work together to pressure the Chinese for more accountability and greater transparency in the area of infrastructure and investment projects. Furthermore, on March 18th the EU tabled a proposal calling upon all member states to ban Chinese firms from bidding on public procurement projects.

Italy’s status as a G7 country is a coup for the Chinese leadership and the legitimacy of the BRI. While the prospect of Italy’s participation underscores growing fault lines in the EU’s joint approach to China, China has also been effective at dividing and conquering EU member states by targeting them individually.

So Italy’s decision to join the BRI is significant. But four years ago we saw Italy, France and Germany join China’s AIIB, contrary to US wishes. Therefore, Italy is neither the first, nor will it be the last European economy that will “go rogue” and follow its own national interest with regard to China.

 
(Winnie King is Teaching Fellow East Asian and International Political Economy, University of Bristol)

(This article was originally published on The Conversation. Read the <a href="https://theconversation.com/italy-joins-chinas-belt-and-road-initiative-heres-how-it-exposes-cracks-in-europe-and-the-g7-114039">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)

 
&nbsp;

By Winnie King Italy is projected to be the first G7 nation to officially endorse China’s Belt and Road Initiative (BRI). And that’s raising the ire of both the European Union and the United States.

By Winnie King Italy is projected to be the first G7 nation to officially endorse China’s Belt and Road Initiative (BRI). And that’s raising the ire of both the European Union and the United States. Having re-entered a recession at the end of 2018, the eurozone’s third largest economy is welcoming China’s President Xi Jinping for a three-day state visit. While there, Italy is expected to sign a memorandum of understanding – making it the 124th nation to sign up for this geographically expansive infrastructure and investment strategy. Proposed in 2013, China’s BRI is a transcontinental project that focuses on infrastructure investment and projects that promote regional cooperation, development and connectivity. It offers participants a means to secure their trade, energy and transport network. China presents it as a win-win relationship aimed at mutual growth. But there are suspicions regarding China’s motivations – it’s seen as a way for China to embed its global influence – and it could make participants dependent on China. Today the BRI is linked to two-thirds of the world’s population, and has to-date seen an investment of more than $1 trillion. The Italian job While the current Italian government has not been fully unified toward China, a severe economic downturn has made the world’s second-largest economy look more appealing to it. Alberto Bradanini, Italy’s former ambassador to China, has stressed that Europe’s own indecision and inability to tackle trade deficits with China (of which Italy contributed approximately €176m, or an eighth of the EU’s total trade deficit) is a key motivator behind this decision. Italy wants to enhance its “Made in Italy” brand through increasing trade – especially in the form of exports – to China. The BRI is seen as a vehicle to achieve this. Italy offers goods (in particular luxury goods and foodstuffs) that are attractive to China’s growing middle class and increasingly affluent population. China is also interested in investing in Italian firms. More significant, however, are Italy’s key infrastructure assets. This would enhance the transport and trading network of the BRI, giving it strategic access to Europe. Less than 2 per cent of Italy’s sea imports come from China so there are substantial prospects for growth in that area. A deal between Genoa’s port authority and shipping firm China Communications Construction Company (CCCC) has already been approved by the Italian government. And the port city of Trieste hopes for something similar. This would offer China and the BRI a more direct route to move goods onto the European continent and an ideal hub for accessing new rail lines and transport networks to Germany, Austria, Slovenia and other regional economies. By giving China access to its ports, Italy is hoping for infrastructure investment from China’s Asian Infrastructure Investment Bank (AIIB) – something the Italian government is trying to link to its role in the BRI. With the port city of Palermo due to be part of Xi’s itinerary, it is clear that China is focused on European shipping terminal options. Following Algeria’s joining of the BRI in mid-2018, Palermo could help establish a new North African trade corridor. Disunity and discontent The international response to Italy’s decision has been, at best, mixed. Germany and France have led the charge, raising concerns of China’s poor reputation regarding transparency, unfair BRI practices of favouring Chinese firms, as well as Chinese protectionism restricting European firms from Chinese projects. The EU is clearly particularly concerned about what Italy’s decision means for the bloc’s China Policy. It is important to note, however, that when it comes to the BRI, Europe’s unified China’s Policy fell as early as 2017. It was then that Premier Li Keqiang’s visited Hungary and the coalition of Central and Eastern European Countries (CEEC), also including Poland and the Czech Republic, signed up to the BRI. Greece, Portugal and Croatia then followed suit. The US has also derided Italy’s decision to break the G7 position on the BRI. The Trump government has labelled the BRI as a vehicle for debt trap diplomacy and accused the BRI of being nothing but a vanity project. The growing tensions between China and the US do not help matters. The two sides are locked in a trade war and US charges of espionage against Chinese tech firm Huawei encapsulate its fears over Chinese investment in strategic industries and acquisitions. But traditional alliances seem to have fallen to the wayside, as Telecom Italia has agreed to remain partnered with Huawei. The full impact of Xi’s visit to Italy will become more clear come April 9 when Brussels is scheduled to host an EU-China summit. In the build-up, however, the EU’s increasingly China-sceptic leadership has published an official strategy document labelling China a “systemic rival”. Targeting the BRI specifically, it calls upon member states to work together to pressure the Chinese for more accountability and greater transparency in the area of infrastructure and investment projects. Furthermore, on March 18th the EU tabled a proposal calling upon all member states to ban Chinese firms from bidding on public procurement projects. Italy’s status as a G7 country is a coup for the Chinese leadership and the legitimacy of the BRI. While the prospect of Italy’s participation underscores growing fault lines in the EU’s joint approach to China, China has also been effective at dividing and conquering EU member states by targeting them individually. So Italy’s decision to join the BRI is significant. But four years ago we saw Italy, France and Germany join China’s AIIB, contrary to US wishes. Therefore, Italy is neither the first, nor will it be the last European economy that will “go rogue” and follow its own national interest with regard to China. (Winnie King is Teaching Fellow East Asian and International Political Economy, University of Bristol) (This article was originally published on The Conversation. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL.)

Italy joins China’s Belt and Road Initiative – here’s how it exposes cracks in Europe and the G7

The United States on Saturday urged Italy not to "lend legitimacy" to China's "infrastructure vanity project" while referring to the One Belt One Road (OBOR) initiative.

"Italy is a major global economy and great investment destination. No need for the Italian government to lend legitimacy to China’s infrastructure vanity project," Garrett Marquis, a spokesman for the United States National Security Council tweeted.

The statement comes in the wake of Italy's Prime Minister Giuseppe Conte mulling over signing an accord with Chinese President Xi Jinping.

Xi is slated to visit Italy from March 22 to 24, reports Sputnik. Conte had outlined that Italy and China would seek a framework deal during the Chinese premier's impending visit.

The United States has previously warned Italy against supporting the project as well, with Marquis outlining that China's initiative was unlikely to "bring any sustained economic benefits to the Italian people".

He added that it "may end up harming Italy’s global reputation in the long run."&nbsp;

The United States on Saturday urged Italy not to "lend legitimacy" to China's "infrastructure vanity project" while referring to the One Belt One Road (OBOR) initiative.

The United States on Saturday urged Italy not to "lend legitimacy" to China's "infrastructure vanity project" while referring to the One Belt One Road (OBOR) initiative. "Italy is a major global economy and great investment destination. No need for the Italian government to lend legitimacy to China’s infrastructure vanity project," Garrett Marquis, a spokesman for the United States National Security Council tweeted. The statement comes in the wake of Italy's Prime Minister Giuseppe Conte mulling over signing an accord with Chinese President Xi Jinping. Xi is slated to visit Italy from March 22 to 24, reports Sputnik. Conte had outlined that Italy and China would seek a framework deal during the Chinese premier's impending visit. The United States has previously warned Italy against supporting the project as well, with Marquis outlining that China's initiative was unlikely to "bring any sustained economic benefits to the Italian people". He added that it "may end up harming Italy’s global reputation in the long run."

US urges Italy against China's OBOR initiative

A Chinese state-owned company marked on Wednesday the completion of an ambitious land reclamation adjacent to Sri Lanka's capital Colombo, part of Beijing's "Belt and Road" infrastructure initiative that has alarmed India and the West.

"Colombo Port City is an important project of the One Belt, One Road initiative in Sri Lanka, which is one of the key countries along the maritime silk route," China's ambassador Cheng Xueyuan said at a ceremony.

"No matter how the international situation changes, China always facilitates great importance to Sino-Sri Lanka relations and actively implements the consensus of the leaders of the two countries," he added.

The $1.4 billion Colombo Port City was agreed between China and Sri Lanka's former president Mahinda Rajapakse, one of several projects to raise fears that the strategically important location was falling into Beijing's orbit.

On another, the $1.4-billion Hambantota deep-sea port also built by the Chinese, China in December 2017 was given a 99-year lease after Colombo said it was unable to keep up with servicing loans made by Beijing to pay for it.

The nearby Hambantota airport also funded by China and built in Rajapaske's constituency in the middle of two wildlife sanctuaries has turned into a white elephant, with no scheduled flights.

Two-thirds of the new 269 hectares (664 acres) reclamation project which is envisaged as the site of a new financial district and has worried environmentalists, goes to China on a 99-year lease.

Patali Champika, the minister in charge of the project, said however that the reclaimed area would not be a threat to Sri Lanka's sovereignty or undermine the security of regional power India.

The port of Colombo is a key hub for Indian import-export cargo and the new real estate is situated at the entrance.

China has also emerged a key political and financial backer of Sri Lanka, dislodging Japan which used to be the biggest funder of infrastructure such as ports in the island nation.

Finance ministry officials said the Bank of China had offered Colombo a $1.0 billion loan to shore up its foreign reserves amid an exodus of foreign capital from Sri Lanka's bond and equity markets.

The Chinese funding becomes crucial at a time when three international credit rating agencies downgraded Sri Lanka after a political crisis in late 2018.

A Chinese state-owned company marked on Wednesday the completion of an ambitious land reclamation adjacent to Sri Lanka's capital Colombo, part of Beijing's "Belt and Road" infrastructure initiative that has alarmed India and the West.

A Chinese state-owned company marked on Wednesday the completion of an ambitious land reclamation adjacent to Sri Lanka's capital Colombo, part of Beijing's "Belt and Road" infrastructure initiative that has alarmed India and the West. "Colombo Port City is an important project of the One Belt, One Road initiative in Sri Lanka, which is one of the key countries along the maritime silk route," China's ambassador Cheng Xueyuan said at a ceremony. "No matter how the international situation changes, China always facilitates great importance to Sino-Sri Lanka relations and actively implements the consensus of the leaders of the two countries," he added. The $1.4 billion Colombo Port City was agreed between China and Sri Lanka's former president Mahinda Rajapakse, one of several projects to raise fears that the strategically important location was falling into Beijing's orbit. On another, the $1.4-billion Hambantota deep-sea port also built by the Chinese, China in December 2017 was given a 99-year lease after Colombo said it was unable to keep up with servicing loans made by Beijing to pay for it. The nearby Hambantota airport also funded by China and built in Rajapaske's constituency in the middle of two wildlife sanctuaries has turned into a white elephant, with no scheduled flights. Two-thirds of the new 269 hectares (664 acres) reclamation project which is envisaged as the site of a new financial district and has worried environmentalists, goes to China on a 99-year lease. Patali Champika, the minister in charge of the project, said however that the reclaimed area would not be a threat to Sri Lanka's sovereignty or undermine the security of regional power India. The port of Colombo is a key hub for Indian import-export cargo and the new real estate is situated at the entrance. China has also emerged a key political and financial backer of Sri Lanka, dislodging Japan which used to be the biggest funder of infrastructure such as ports in the island nation. Finance ministry officials said the Bank of China had offered Colombo a $1.0 billion loan to shore up its foreign reserves amid an exodus of foreign capital from Sri Lanka's bond and equity markets. The Chinese funding becomes crucial at a time when three international credit rating agencies downgraded Sri Lanka after a political crisis in late 2018.

China firm completes $1.4 billion Sri Lanka land reclamation

The Pakistan government has <a href="http://www.wionews.com/south-asia/pakistan-assured-full-security-to-our-nationals-cpec-following-terror-attack-on-consulate-china-179755">decided to shelve a major coal-based</a> power plant project under the $60 billion China-Pakistan Economic Corridor(CPEC), citing sufficient generation capacity already lined up for the next few years.

The CPEC, which connects <a href="http://www.wionews.com/south-asia/spotlight-on-cpec-projects-imf-bailout-as-imran-khan-all-set-to-embark-on-maiden-china-visit-174930">Gwadar Port in Balochistan</a> with China's Xinjiang province, is the flagship project of Chinese President Xi Jinping's ambitious Belt and Road Initiative (BRI).

The previous Pakistan Muslim League-Nawaz (PML-N) government had pushed for the construction of the 1,320 MW Rahim Yar Khan power project by China.

The Pakistan Tehreek-i-Insaf (PTI) government of Prime Minister Imran Khan officially conveyed to Beijing that it was no more interested in the project in view of sufficient generation capacity already lined up for the next few years, the Dawn reported.

It has requested the Chinese friends to formally delete the project from the CPEC list, the report said.

During the 8th Joint Coordination Committee (JCC) meeting held last month, a Pakistani delegation led by Minister for Planning and Development Makhdoom Khusro Bakhtyar "proposed to remove the Rahim Yar Khan imported fuel power plant (1,320MW) from the CPEC list, in order to provide structure optimisation space for the subsequent power market of Pakistan," said an official, quoting minutes of the December 20 JCC meeting.

The Chinese side suggested that a joint study on optimisation of energy mix be carried out at the earliest.

The project was originally pushed as imported coal-based plant by Quaid-i-Azam Thermal Company of the Punjab government led by PML-N president Shahbaz Sharif who used to attend meetings of the Cabinet Committee on Energy led by his brother and then prime minister Nawaz Sharif.

A leading business tycoon had proposed the project and was expected to be one of the key sponsors.

The project was removed from the CPEC priority list when then bureaucracy highlighted that surplus generation capacity had already been contracted and more contracts would lead the country to 'capacity trap'.

The government had already notified a ban on capacity addition on imported fuel as early as June 2016 and the Rahim Yar Khan and Muzaffargarh coal-based plants were removed from the CPEC priority list, the report said.

Among other reasons, this led to unceremonious removal of the then power secretary and head of the National Transmission Company.

The Punjab government had pushed for revival of the plant which was included again in the priority list in subsequent CPEC negotiations, according to a federal secretary. 
It was not needed at all and would have been a burden on the already deteriorating financial condition of the power sector, he said, adding that Diamer-Bhasha dam was also included in the CPEC list when the coal-based projects were removed, but the dam project could also not move forward under the CPEC for unrelated reasons.

The official said the PTI government had already made up its mind to remove almost 400 "politically motivated" projects from the development portfolio as part of a comprehensive mid-year review of the Public Sector Development Programme later this month.&nbsp;

The Pakistan government has decided to shelve a major coal-based power plant project under the $60 billion China-Pakistan Economic Corridor(CPEC), citing sufficient generation capacity already lined up for the next few years.

The Pakistan government has decided to shelve a major coal-based power plant project under the $60 billion China-Pakistan Economic Corridor(CPEC), citing sufficient generation capacity already lined up for the next few years. The CPEC, which connects Gwadar Port in Balochistan with China's Xinjiang province, is the flagship project of Chinese President Xi Jinping's ambitious Belt and Road Initiative (BRI). The previous Pakistan Muslim League-Nawaz (PML-N) government had pushed for the construction of the 1,320 MW Rahim Yar Khan power project by China. The Pakistan Tehreek-i-Insaf (PTI) government of Prime Minister Imran Khan officially conveyed to Beijing that it was no more interested in the project in view of sufficient generation capacity already lined up for the next few years, the Dawn reported. It has requested the Chinese friends to formally delete the project from the CPEC list, the report said. During the 8th Joint Coordination Committee (JCC) meeting held last month, a Pakistani delegation led by Minister for Planning and Development Makhdoom Khusro Bakhtyar "proposed to remove the Rahim Yar Khan imported fuel power plant (1,320MW) from the CPEC list, in order to provide structure optimisation space for the subsequent power market of Pakistan," said an official, quoting minutes of the December 20 JCC meeting. The Chinese side suggested that a joint study on optimisation of energy mix be carried out at the earliest. The project was originally pushed as imported coal-based plant by Quaid-i-Azam Thermal Company of the Punjab government led by PML-N president Shahbaz Sharif who used to attend meetings of the Cabinet Committee on Energy led by his brother and then prime minister Nawaz Sharif. A leading business tycoon had proposed the project and was expected to be one of the key sponsors. The project was removed from the CPEC priority list when then bureaucracy highlighted that surplus generation capacity had already been contracted and more contracts would lead the country to 'capacity trap'. The government had already notified a ban on capacity addition on imported fuel as early as June 2016 and the Rahim Yar Khan and Muzaffargarh coal-based plants were removed from the CPEC priority list, the report said. Among other reasons, this led to unceremonious removal of the then power secretary and head of the National Transmission Company. The Punjab government had pushed for revival of the plant which was included again in the priority list in subsequent CPEC negotiations, according to a federal secretary. It was not needed at all and would have been a burden on the already deteriorating financial condition of the power sector, he said, adding that Diamer-Bhasha dam was also included in the CPEC list when the coal-based projects were removed, but the dam project could also not move forward under the CPEC for unrelated reasons. The official said the PTI government had already made up its mind to remove almost 400 "politically motivated" projects from the development portfolio as part of a comprehensive mid-year review of the Public Sector Development Programme later this month.

Pakistan to pull out of major CPEC power plant project: Report

China's multi-billion dollar 'One Belt and Road' (OBOR) initiative has 'funded' corruption in Malaysia, an investigation carried out by The Wall Street Journal (WSJ) has revealed.

The documents, accessed by the WSJ, reveal Beijing's designs of causing corruption in Malaysia.

SupChina, 'an independent digital media company,' in an article titled 'How China's Belt And Road Reportedly Funded Corruption In Malaysia' called the WSJ report a 'bombshell story.'

Quoting the investigative piece, SupChina said the minutes of the meeting of Najib Razak-led Malaysian government, which was in power from April 2009 to May 2018, as well as the interviews with "people in position to know the events, among them a former official of Mr&nbsp;Najib's government" revealed China's overseas influence.

"Chinese officials told visiting Malaysians that China would use its influence to try to get the US and other countries to drop their probes of allegations that allies of then-Prime Minister Najib Razak and others plundered the fund known as 1MDB," writes SupChina's Associate Editor Lucas Niewenhuis.

Infrastructure projects, funded by China, were planned in Malaysia at "above market profitability" with excess funds created to "settle the 1MDB debts."

The East Coast Rail Link, a major part of China's initiative, was originally estimated to cost $7.25 billion. But turned into a $16 billion project, though it was suspended by Malaysia's new Prime Minister Mahathir Mohamad.

Referring to the WSJ piece, Niewenhuis says that there are many 'juicy details' in the report, like China's State-owned Assets Supervision and Administration Commission Xiao Yaqing, in June 2016, said that Chinese President Xi Jinping had "personally approved the infrastructure initiatives." However, attributing the information to online news portal Malaysiakini, SupChina says both Najib and the Chinese embassy in Kuala Lumpur, have denied these allegations.

The FT also reports that Malaysia's Finance Minister Lim Guan Eng said that he would like to have a copy of those minutes that the WSJ report mentions, adding that he would "pursue" anything that is "in black and white" regarding the alleged improper deals.

According to Singapore's state broadcaster Channel NewsAsia, Lim said, "We know that the price (of projects with China) is inflated, but whether there was such a deal, I have to check."

China's multi-billion dollar 'One Belt and Road' (OBOR) initiative has 'funded' corruption in Malaysia, an investigation carried out by The Wall Street Journal (WSJ) has revealed.

China's multi-billion dollar 'One Belt and Road' (OBOR) initiative has 'funded' corruption in Malaysia, an investigation carried out by The Wall Street Journal (WSJ) has revealed. The documents, accessed by the WSJ, reveal Beijing's designs of causing corruption in Malaysia. SupChina, 'an independent digital media company,' in an article titled 'How China's Belt And Road Reportedly Funded Corruption In Malaysia' called the WSJ report a 'bombshell story.' Quoting the investigative piece, SupChina said the minutes of the meeting of Najib Razak-led Malaysian government, which was in power from April 2009 to May 2018, as well as the interviews with "people in position to know the events, among them a former official of Mr Najib's government" revealed China's overseas influence. "Chinese officials told visiting Malaysians that China would use its influence to try to get the US and other countries to drop their probes of allegations that allies of then-Prime Minister Najib Razak and others plundered the fund known as 1MDB," writes SupChina's Associate Editor Lucas Niewenhuis. Infrastructure projects, funded by China, were planned in Malaysia at "above market profitability" with excess funds created to "settle the 1MDB debts." The East Coast Rail Link, a major part of China's initiative, was originally estimated to cost $7.25 billion. But turned into a $16 billion project, though it was suspended by Malaysia's new Prime Minister Mahathir Mohamad. Referring to the WSJ piece, Niewenhuis says that there are many 'juicy details' in the report, like China's State-owned Assets Supervision and Administration Commission Xiao Yaqing, in June 2016, said that Chinese President Xi Jinping had "personally approved the infrastructure initiatives." However, attributing the information to online news portal Malaysiakini, SupChina says both Najib and the Chinese embassy in Kuala Lumpur, have denied these allegations. The FT also reports that Malaysia's Finance Minister Lim Guan Eng said that he would like to have a copy of those minutes that the WSJ report mentions, adding that he would "pursue" anything that is "in black and white" regarding the alleged improper deals. According to Singapore's state broadcaster Channel NewsAsia, Lim said, "We know that the price (of projects with China) is inflated, but whether there was such a deal, I have to check."

China's Belt and Road led to corruption in Malaysia: Report

China factor &nbsp; &nbsp;&nbsp;

With the advent of US-China trade war and reset of China-India relations with their informal summit at Wuhan, at the relations between the two countries seem to be getting better than the previous years when bitterness between both countries over Doklam crisis had touched a new height.&nbsp;

At this point, China needs good relations with India to ensure the latter does not get into the US club and peace and tranquillity prevails on the borders.

Meanwhile, there is going to be no change in India’s stance on the border issue or BRI/CPEC. However, some agreements on delimitation leading to the demarcation of LAC, to prevent a repeat of Doklam like incident is doable, if the political will exists on both sides.

China is expected to control its adventurism during the ongoing trade war. We can thus expect a relatively quiet period on Chinese borders, with some positive steps for better border management.

Pakistan factor

In 2019, I do not visualise any dramatic change in Pakistan’s behaviour. The terror industry and proxy war will continue, notwithstanding the perceived economic difficulties the country is facing. Whenever Pakistan is on the verge of sinking, some country will it out to foster its own interest through it.

Their terror industry is mainly sustained by parallel economy involving drug trafficking and assistance from ISI, with material and operational support from Pakistan Army. &nbsp;As the security situation unfolds in AfPak Region, I will not be surprised if Taliban would be in driving seat of power in Afghanistan (much against Indian interest), and the US may have no option but to silently end their pursuit against them.

Pakistan is well used to international isolation, hence, UN-declared terrorists will continue to move freely and plan terror operations against India in 2019. &nbsp;&nbsp;

Sino-Pak nexus&nbsp;

The progress on CPEC will continue despite India's opposition, although BRI will face many roadblocks in 2019 as well. According to experts, CPEC will force Pakistan to enter into a patron-client relationship, wherein strategic choices of Pakistan will be hostage to China. This brings out a long-term threat to India in terms of "two-front war" which India has to prepare for.

What should India do

Over the last few decades, financial allocations and attention towards military have been marred by bureaucratic denials. Chanakya, Clausewitz, and Sun Tzu have said, and rightly so, that no nation will be&nbsp;secure unless it has a powerful military which can deter a potential adversary.&nbsp;

The military is trained and equipped to launch operations across the IB/LC/LAC. We should realise that defence capabilities take a long time to build up, more-so, if India does not have a strong manufacturing base. The defence budget allocation made in 2018 should be increased in 2019. 
 
(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

China factor With the advent of US-China trade war and reset of China-India relations with their informal summit at Wuhan, at the relations between the two countries seem to be getting better than the previous years when bitterness between both countries over Doklam crisis had touched a new height.

China factor With the advent of US-China trade war and reset of China-India relations with their informal summit at Wuhan, at the relations between the two countries seem to be getting better than the previous years when bitterness between both countries over Doklam crisis had touched a new height. At this point, China needs good relations with India to ensure the latter does not get into the US club and peace and tranquillity prevails on the borders. Meanwhile, there is going to be no change in India’s stance on the border issue or BRI/CPEC. However, some agreements on delimitation leading to the demarcation of LAC, to prevent a repeat of Doklam like incident is doable, if the political will exists on both sides. China is expected to control its adventurism during the ongoing trade war. We can thus expect a relatively quiet period on Chinese borders, with some positive steps for better border management. Pakistan factor In 2019, I do not visualise any dramatic change in Pakistan’s behaviour. The terror industry and proxy war will continue, notwithstanding the perceived economic difficulties the country is facing. Whenever Pakistan is on the verge of sinking, some country will it out to foster its own interest through it. Their terror industry is mainly sustained by parallel economy involving drug trafficking and assistance from ISI, with material and operational support from Pakistan Army. As the security situation unfolds in AfPak Region, I will not be surprised if Taliban would be in driving seat of power in Afghanistan (much against Indian interest), and the US may have no option but to silently end their pursuit against them. Pakistan is well used to international isolation, hence, UN-declared terrorists will continue to move freely and plan terror operations against India in 2019. Sino-Pak nexus The progress on CPEC will continue despite India's opposition, although BRI will face many roadblocks in 2019 as well. According to experts, CPEC will force Pakistan to enter into a patron-client relationship, wherein strategic choices of Pakistan will be hostage to China. This brings out a long-term threat to India in terms of "two-front war" which India has to prepare for. What should India do Over the last few decades, financial allocations and attention towards military have been marred by bureaucratic denials. Chanakya, Clausewitz, and Sun Tzu have said, and rightly so, that no nation will be secure unless it has a powerful military which can deter a potential adversary. The military is trained and equipped to launch operations across the IB/LC/LAC. We should realise that defence capabilities take a long time to build up, more-so, if India does not have a strong manufacturing base. The defence budget allocation made in 2018 should be increased in 2019. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

What are India’s security challenges in 2019

Last week, we saw Pakistan reaching out to every conceivable friend for bailout assistance. The government was also unable to control radical elements that overpowered its decisions and judiciary in Asia Bibi&nbsp;case.

Pakistan's foreign reserves have plunged 42 per cent since the start of the year and now stand at about $8 billion. As per the State Bank of Pakistan report, the total debt of Pakistan in 2018 stands at 78.4 per cent of its GDP.&nbsp;

What Imran Khan has got from Saudi Arabia is meagre $3 billion support for a year and a further loan worth up to $3 billion in deferred payments for oil imports. He must have gone to China mentally prepared to mortgage anything to get a similar bailout package. Meanwhile, China said more talks are needed to finalise economic aid to Pakistan.

Chinese concerns over bailing out Pakistan&nbsp;

China knows that despite its help Pakistan will have to go to IMF for another bailout. &nbsp;China may not be comfortable with the kind of transparency being demanded by them including the details of debt to China. It may also not be keen to be pulled into the middle-east cauldron, the rivalry between Saudi Arabia and Iran or Shia-Sunni divide.&nbsp;

China itself is struggling with the Trade War and poor returns on investment in BRI. Since the launch of the CPEC in 2015, power generation and infrastructure projects in Pakistan worth $28 billion have either been completed or proceeded to advanced stages of construction.&nbsp;

China will seek the assurance of Imran Khan about the smooth development of the project, because he has slashed $12 billion reducing CPEC to be worth $50 billion projects from planned $62 billion, and ordered an audit of the same.&nbsp;

Despite Imran’s anxiety and optics of wiping out corruption, Chinese will like to wait for any big ticket announcement till they are sure about the security of their project, 30,000 workers, security personals, and future of his association with Pakistani Army, ISI, and militant groups. &nbsp;

It can also be argued that to avoid IMF scrutiny China may be little more liberal with debt aid package to keep Pakistan afloat minus IMF loan, if possible. There can also be some quid pro quo in keeping the US out of this strategic space, some land grab (With earlier precedence of ceding Saksham Valley to China) or mortgaging some other sovereign rights. &nbsp; &nbsp;&nbsp;

Internal chaos due to Islamic radicalisation&nbsp;

The way the Supreme Court decision to acquit Christian woman Asia Bibi in a blasphemy case triggered mass protests by radicalised elements. Militant groups like Tehreek-i-Labbaik Pakistan (TLP) and others including Hafiz Saeed outfits, outrightly challenging the government machinery, Supreme Court and Law and Order machinery, despite a warning personally by Imran Khan, indicates mass radicalisation.

Radical elements forced the government to an extent that it is likely to put her on Exit Control List (ECL). The militant groups like Jamaat-ud-Dawa (JuD) and Falah-E Insaniat (FIF) have been taken off from the list of banned outfits.&nbsp;

The Financial Action Task Force (FATF) that visited Pakistan last month, has also expressed dissatisfaction over any worthwhile control over terror funding. The support of Pakistan Army and ISI in developing terror support infrastructure to pursue a proxy war against India and Afghanistan is unlikely to be weakened due to their flawed narrative of ‘India Threat Theory’ to legitimize holding strings of power in their hand.

The fact that there has been an&nbsp;increase in defence expenditure and Pakistan aspires to be the fourth largest nuclear power in the world, clearly indicates that its military will not allow the government to muddle with its plans.

The Asia Bibi case gives an impression that Pakistan is in the dangerous path of Islamic radicalisation, which can lead itself into a semi-caliphate if radicalisation&nbsp;in Pakistani Army increases, but there is a catch.&nbsp;

An unstable Pakistan is not in global interest, nor in the interest of China as well as India, because it will take no time in getting converted into the largest jihadist caliphate.

It is the biggest harbour of terrorists in the world and does not seem to be inclined to any change in the status quo. It has been kept financially afloat in past by the United States, because of the reasons mentioned above and its strategic location, which was crucial to them at that point of time. Now for similar reasons and getting warm water access to its western region, China may have every reason to keep it financially afloat. &nbsp;

Pakistan’s other friends may also help directly or indirectly to pursue their own specific agendas. It may not be an exaggeration to say that it may lead Pakistan to be a future Chinese colony. For the time being China and other interested parties will not let Pakistan sink.&nbsp; 
 
 
(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Last week, we saw Pakistan reaching out to every conceivable friend for bailout assistance. The government was also unable to control radical elements that overpowered its decisions and judiciary in Asia Bibi case.

Last week, we saw Pakistan reaching out to every conceivable friend for bailout assistance. The government was also unable to control radical elements that overpowered its decisions and judiciary in Asia Bibi case. Pakistan's foreign reserves have plunged 42 per cent since the start of the year and now stand at about $8 billion. As per the State Bank of Pakistan report, the total debt of Pakistan in 2018 stands at 78.4 per cent of its GDP. What Imran Khan has got from Saudi Arabia is meagre $3 billion support for a year and a further loan worth up to $3 billion in deferred payments for oil imports. He must have gone to China mentally prepared to mortgage anything to get a similar bailout package. Meanwhile, China said more talks are needed to finalise economic aid to Pakistan. Chinese concerns over bailing out Pakistan China knows that despite its help Pakistan will have to go to IMF for another bailout. China may not be comfortable with the kind of transparency being demanded by them including the details of debt to China. It may also not be keen to be pulled into the middle-east cauldron, the rivalry between Saudi Arabia and Iran or Shia-Sunni divide. China itself is struggling with the Trade War and poor returns on investment in BRI. Since the launch of the CPEC in 2015, power generation and infrastructure projects in Pakistan worth $28 billion have either been completed or proceeded to advanced stages of construction. China will seek the assurance of Imran Khan about the smooth development of the project, because he has slashed $12 billion reducing CPEC to be worth $50 billion projects from planned $62 billion, and ordered an audit of the same. Despite Imran’s anxiety and optics of wiping out corruption, Chinese will like to wait for any big ticket announcement till they are sure about the security of their project, 30,000 workers, security personals, and future of his association with Pakistani Army, ISI, and militant groups. It can also be argued that to avoid IMF scrutiny China may be little more liberal with debt aid package to keep Pakistan afloat minus IMF loan, if possible. There can also be some quid pro quo in keeping the US out of this strategic space, some land grab (With earlier precedence of ceding Saksham Valley to China) or mortgaging some other sovereign rights. Internal chaos due to Islamic radicalisation The way the Supreme Court decision to acquit Christian woman Asia Bibi in a blasphemy case triggered mass protests by radicalised elements. Militant groups like Tehreek-i-Labbaik Pakistan (TLP) and others including Hafiz Saeed outfits, outrightly challenging the government machinery, Supreme Court and Law and Order machinery, despite a warning personally by Imran Khan, indicates mass radicalisation. Radical elements forced the government to an extent that it is likely to put her on Exit Control List (ECL). The militant groups like Jamaat-ud-Dawa (JuD) and Falah-E Insaniat (FIF) have been taken off from the list of banned outfits. The Financial Action Task Force (FATF) that visited Pakistan last month, has also expressed dissatisfaction over any worthwhile control over terror funding. The support of Pakistan Army and ISI in developing terror support infrastructure to pursue a proxy war against India and Afghanistan is unlikely to be weakened due to their flawed narrative of ‘India Threat Theory’ to legitimize holding strings of power in their hand. The fact that there has been an increase in defence expenditure and Pakistan aspires to be the fourth largest nuclear power in the world, clearly indicates that its military will not allow the government to muddle with its plans. The Asia Bibi case gives an impression that Pakistan is in the dangerous path of Islamic radicalisation, which can lead itself into a semi-caliphate if radicalisation in Pakistani Army increases, but there is a catch. An unstable Pakistan is not in global interest, nor in the interest of China as well as India, because it will take no time in getting converted into the largest jihadist caliphate. It is the biggest harbour of terrorists in the world and does not seem to be inclined to any change in the status quo. It has been kept financially afloat in past by the United States, because of the reasons mentioned above and its strategic location, which was crucial to them at that point of time. Now for similar reasons and getting warm water access to its western region, China may have every reason to keep it financially afloat. Pakistan’s other friends may also help directly or indirectly to pursue their own specific agendas. It may not be an exaggeration to say that it may lead Pakistan to be a future Chinese colony. For the time being China and other interested parties will not let Pakistan sink. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Where is debt-ridden Pakistan heading?

Before actually formally approaching the International Monetary Fund(IMF) for a bailout, the global governance institute has warned Pakistan against “excessive loans” from China. It is almost a surety that Pakistan will approach the Fund for its variegated economic and financial issues. But, a not too subtle warning has already been issued to the country which has over a period of time drifted to China’s orbit. (This has been couched in a technocratic gloss and verbiage). 
 
The reasons are not too difficult to figure out: the institutions of global governance like the IMF are not merely technocratic institutions designed to maximize peoples welfare or merely to “look after” the global economy; they are institutions where the ingress of ideology( free market capitalism or &nbsp;market fundamentalism) and politics is all too prevalent. 
 
The quota system of the IMF and the voting rights thereof are loaded towards developed and industrialised (or even post-industrial) nations, especially the United States (which has had no qualms in maintaining the status quo from which it benefits). Complemented with the geopolitical heft and clout of the country, &nbsp;the United States’ influence at and in the IMF gives it enormous leverage. 
 
In terms of the ideological flavour of the IMF, it is loaded towards free-market capitalism and the gravamen of its approach towards countries in financial and economic distress is to goad these countries towards this variety of capitalism. The IMF has a “one size fit all” prescription for distressed countries toward this end (Obiter Dictum, Thomas Friedman, the famous and influential columnist of the New York Times, in his best selling book, “ The World is Flat”, essentially in the nature of an irrationally exuberant ode to free-market capitalism inspired globalisation called this “the Golden Straitjacket”).

But, countries that form the international system are neither uniform nor homogenous in terms of their development, economic growth and patterns thereof for a whole host of reasons. So, a “straitjacketed” prescription for all countries or economies is not only impractical but suggests an ideological agenda. This agenda is translated into action through “conditionalities” and “structural reforms” foisted upon economies in distress by the IMF. And, given the voting power discrepancies, there are other political agendas involved as well. The case of Indonesia after the Asian financial crisis in 1997 comes to mind here as an egregious example. More contemporarily, the IMF’s involvement and its role in Greece constitutes another example.

All this is not to demean and denigrate the IMF. This global governance institution is a much-needed one. But the political power embedded in it, its nature and the institutions’ ideological predilections(discredited in and after the 2008 global financial crisis) need urgent reform.

&nbsp;Now, in terms of the instance of Pakistan , whose financing gaps have become enormous over the years, the country has been moving away from the United States and drifting into the Chinese orbit, being a substantive partner in China’s One Belt One Road Initiative’s, (OBOR) corollary, the China Pakistan Economic Corridor(CPEC). If both the OBOR and the CPEC actually fructify, then there will be a recalibration of economic and global power globally which, in turn, will have geopolitical implications and consequences. This might even constitute a challenge to the United States domination of the global economic and financial system, creating another powerful pole in the process. The IMF, in this instance, appears to be used to make a point to Pakistan. There then is politics involved here.

The example of Pakistan and other countries in the past must concentrate the minds of developing and emerging economies which are at a structural disadvantage in many respects vis a vis the developed world. Given the inherent volatility of the world financial system, especially in its more globalised avatar and given that economic fluctuations are part and parcel of the capitalist growth process, emerging and developing economies face vulnerabilities that can perhaps best be mitigated by institutions like the IMF. The institution then is both needed and desirable. But, at the risk of sounding tautological, it needs reform at both conceptual and structural levels.

The world that we inhabit contemporarily is not the same world it was in the seventies. Profound structural transformations have occurred that have both upended and rejigged past paradigms and shibboleths. The developing world, as a group, albeit a differentiated one, no more bears the depredations of post colonialism but has emerged as an entity which can hold its own, in many domains. It cannot and must not be relegated to the margins in institutions of global governance. 
 
Developing countries need an agency and robust representations in institutions of import. One good starting point for this would be a comprehensive and robust reform of the IMF. If and when this happens, it could be a prelude to a more equitable world order. Till then, global governance will reflect and bear the imprimatur of power with developing countries, especially those in distress, suffering in the crucible of and at the altar of power politics.

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Before actually formally approaching the International Monetary Fund(IMF) for a bailout, the global governance institute has warned Pakistan against “excessive loans” from China.

Before actually formally approaching the International Monetary Fund(IMF) for a bailout, the global governance institute has warned Pakistan against “excessive loans” from China. It is almost a surety that Pakistan will approach the Fund for its variegated economic and financial issues. But, a not too subtle warning has already been issued to the country which has over a period of time drifted to China’s orbit. (This has been couched in a technocratic gloss and verbiage). The reasons are not too difficult to figure out: the institutions of global governance like the IMF are not merely technocratic institutions designed to maximize peoples welfare or merely to “look after” the global economy; they are institutions where the ingress of ideology( free market capitalism or market fundamentalism) and politics is all too prevalent. The quota system of the IMF and the voting rights thereof are loaded towards developed and industrialised (or even post-industrial) nations, especially the United States (which has had no qualms in maintaining the status quo from which it benefits). Complemented with the geopolitical heft and clout of the country, the United States’ influence at and in the IMF gives it enormous leverage. In terms of the ideological flavour of the IMF, it is loaded towards free-market capitalism and the gravamen of its approach towards countries in financial and economic distress is to goad these countries towards this variety of capitalism. The IMF has a “one size fit all” prescription for distressed countries toward this end (Obiter Dictum, Thomas Friedman, the famous and influential columnist of the New York Times, in his best selling book, “ The World is Flat”, essentially in the nature of an irrationally exuberant ode to free-market capitalism inspired globalisation called this “the Golden Straitjacket”). But, countries that form the international system are neither uniform nor homogenous in terms of their development, economic growth and patterns thereof for a whole host of reasons. So, a “straitjacketed” prescription for all countries or economies is not only impractical but suggests an ideological agenda. This agenda is translated into action through “conditionalities” and “structural reforms” foisted upon economies in distress by the IMF. And, given the voting power discrepancies, there are other political agendas involved as well. The case of Indonesia after the Asian financial crisis in 1997 comes to mind here as an egregious example. More contemporarily, the IMF’s involvement and its role in Greece constitutes another example. All this is not to demean and denigrate the IMF. This global governance institution is a much-needed one. But the political power embedded in it, its nature and the institutions’ ideological predilections(discredited in and after the 2008 global financial crisis) need urgent reform. Now, in terms of the instance of Pakistan , whose financing gaps have become enormous over the years, the country has been moving away from the United States and drifting into the Chinese orbit, being a substantive partner in China’s One Belt One Road Initiative’s, (OBOR) corollary, the China Pakistan Economic Corridor(CPEC). If both the OBOR and the CPEC actually fructify, then there will be a recalibration of economic and global power globally which, in turn, will have geopolitical implications and consequences. This might even constitute a challenge to the United States domination of the global economic and financial system, creating another powerful pole in the process. The IMF, in this instance, appears to be used to make a point to Pakistan. There then is politics involved here. The example of Pakistan and other countries in the past must concentrate the minds of developing and emerging economies which are at a structural disadvantage in many respects vis a vis the developed world. Given the inherent volatility of the world financial system, especially in its more globalised avatar and given that economic fluctuations are part and parcel of the capitalist growth process, emerging and developing economies face vulnerabilities that can perhaps best be mitigated by institutions like the IMF. The institution then is both needed and desirable. But, at the risk of sounding tautological, it needs reform at both conceptual and structural levels. The world that we inhabit contemporarily is not the same world it was in the seventies. Profound structural transformations have occurred that have both upended and rejigged past paradigms and shibboleths. The developing world, as a group, albeit a differentiated one, no more bears the depredations of post colonialism but has emerged as an entity which can hold its own, in many domains. It cannot and must not be relegated to the margins in institutions of global governance. Developing countries need an agency and robust representations in institutions of import. One good starting point for this would be a comprehensive and robust reform of the IMF. If and when this happens, it could be a prelude to a more equitable world order. Till then, global governance will reflect and bear the imprimatur of power with developing countries, especially those in distress, suffering in the crucible of and at the altar of power politics. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

The reform of the IMF is imperative for an equitable world order

Interpol, the France-based global police agency, is supposed to find missing or wanted people. Last week, to its embarrassment, it said it couldn’t locate its own president, Meng Hongwei, who was on a visit to China. Beijing finally revealed on October 7 that Meng had been detained on arrival. A former Chinese vice-minister, he is being investigated on charges of corruption and has resigned from Interpol.

The incident raises questions about the legitimacy of China’s rise as the world’s pre-eminent superpower, seizing that mantle from the United States. Three other developments could stall China’s rise. First, the trade war with the US which is going badly for Beijing. US Defence Secretary James Mattis’ official visit to China has been called off though Secretary of State Mike Pompeo visited Beijing earlier this week to calm tempers. Washington has meanwhile imposed a second round of tariffs on Chinese exports valued at $200 billion. Since China buys only about a third of what it sells to the US, it has little economic leverage to fight back. The escalating trade war could shave a full percentage point off China’s GDP growth rate in 2018-19.

The second headwind facing China are growing concerns over the viability of its ambitious $500-billion Belt and Road Initiative (BRI). Dubbed China’s ‘new Silk Route’, the BRI is President Xi Jinping’s brainchild. He has invested so much political capital in the BRI that any setback to it could spark domestic opposition to his tenure as president for life.

When Sri Lanka couldn’t repay high-interest Chinese debt for building infrastructure at the Hambantota port, China simply took it over on a 99-year lease. Malaysia was next. Prime Minister Mohamad Mahathir on a visit to China defied protocol to publicly cancel or rework a slew of Chinese infrastructure projects in Malaysia worth $23 billion.

Pakistan soon followed. Over the past week, ministers in the Imran Khan government have complained about the high-cost debt of projects under the $60 billion China Pakistan Economic Corridor (CPEC), which is a key component of the BRI. Islamabad directed its ire at China’s investment of $8.2 billion to upgrade a railway line from Karachi to Peshawar. Railways Minister Sheikh Rasheed Ahmad said the cost of the project is being cut to $6.2 billion and will later be reduced further to $4.2 billion — half its original value.

For a while, Pakistan’s new government toyed with the idea of inviting cash-rich Saudi Arabia as the third partner in CPEC. Annoyed, Beijing shot the proposal down. It wants the BRI and its cogs like the CPEC to be Chinese-funded, Chinese-owned and Chinese-run. The Pakistani government backed down and said Saudi Arabia would only be involved as a contractor for specific ancillary projects within the CPEC.

With Pakistan’s economy in a shambles, Islamabad is in a bind. It needs China’s funds but has realised that it is rapidly sinking into a debt trap. Other Asian countries are waking up to the threat as well. Myanmar has slashed the cost of its proposed China-funded Kyaukpyu port from $7.3 billion to $1.3 billion. Bangladesh too is downsizing — or cancelling — BRI projects.

In Europe, where Xi Jinping went on a charm offensive, Hungary and other EU countries are developing cold feet over the BRI’s inflated infrastructure costs and high-interest debt. In Africa too, where China is investing heavily, countries like Tanzania are cancelling or resizing BRI projects.

The third factor stalling China’s rise lies closer to home. With the Chinese economy cooling and GDP growth slowing, local infrastructure projects are running ahead of demand. As The Economist recently pointed out, “The infrastructure boom (in China) has lost steam this year. After expanding at a double digit pace for much of the past three decades, investment in it has slowed sharply. Since May, spending on projects ranging from railways to power plants has fallen compared with a year earlier, the longest weak patch on record.”

All this doesn’t mean the BRI is doomed. It will continue to be China’s most ambitious geo-economic initiative, linking the country to the world with a series of interlocking infrastructure projects. But this modern version of China’s historic Silk Route will shrink in size and scope as the complex geopolitical trade battles with the US play out.

India has long opposed the BRI because its CPEC component violates Indian sovereignty in Pakistan-occupied Kashmir (PoK). India watched closely as Washington snubbed Beijing recently by selling arms to Taiwan worth over $330 million. A near-clash last week between a US destroyer and a Chinese warship just beyond the 12 nautical mile exclusion zone off the Spratly islands claimed by Beijing underscores Washington’s determination to not cede ground to China as hegemon of the South China Sea.

Beijing, meanwhile, continues to veto the designation by the United Nations of Jaish-e-Mohammad chief Masood Azhar as a global terrorist. It continues to block India’s membership of the Nuclear Suppliers Group (NSG). Both reveal Beijing’s mala fide intent. But with the global tide turning against it across multiple fronts, China has been pushed on to the back foot. Will that help change its behaviour? Unlikely.

The detention of Interpol’s ex-president Meng Hongwei shows that Beijing continues to behave as a law unto itself.

(This article was originally published on DNA. Read the <a href="https://www.dnaindia.com/analysis/column-silk-route-hits-roadblocks-2673949">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

&nbsp;

Interpol, the France-based global police agency, is supposed to find missing or wanted people. Last week, to its embarrassment, it said it couldn’t locate its own president, Meng Hongwei, who was on a visit to China.

Interpol, the France-based global police agency, is supposed to find missing or wanted people. Last week, to its embarrassment, it said it couldn’t locate its own president, Meng Hongwei, who was on a visit to China. Beijing finally revealed on October 7 that Meng had been detained on arrival. A former Chinese vice-minister, he is being investigated on charges of corruption and has resigned from Interpol. The incident raises questions about the legitimacy of China’s rise as the world’s pre-eminent superpower, seizing that mantle from the United States. Three other developments could stall China’s rise. First, the trade war with the US which is going badly for Beijing. US Defence Secretary James Mattis’ official visit to China has been called off though Secretary of State Mike Pompeo visited Beijing earlier this week to calm tempers. Washington has meanwhile imposed a second round of tariffs on Chinese exports valued at $200 billion. Since China buys only about a third of what it sells to the US, it has little economic leverage to fight back. The escalating trade war could shave a full percentage point off China’s GDP growth rate in 2018-19. The second headwind facing China are growing concerns over the viability of its ambitious $500-billion Belt and Road Initiative (BRI). Dubbed China’s ‘new Silk Route’, the BRI is President Xi Jinping’s brainchild. He has invested so much political capital in the BRI that any setback to it could spark domestic opposition to his tenure as president for life. When Sri Lanka couldn’t repay high-interest Chinese debt for building infrastructure at the Hambantota port, China simply took it over on a 99-year lease. Malaysia was next. Prime Minister Mohamad Mahathir on a visit to China defied protocol to publicly cancel or rework a slew of Chinese infrastructure projects in Malaysia worth $23 billion. Pakistan soon followed. Over the past week, ministers in the Imran Khan government have complained about the high-cost debt of projects under the $60 billion China Pakistan Economic Corridor (CPEC), which is a key component of the BRI. Islamabad directed its ire at China’s investment of $8.2 billion to upgrade a railway line from Karachi to Peshawar. Railways Minister Sheikh Rasheed Ahmad said the cost of the project is being cut to $6.2 billion and will later be reduced further to $4.2 billion — half its original value. For a while, Pakistan’s new government toyed with the idea of inviting cash-rich Saudi Arabia as the third partner in CPEC. Annoyed, Beijing shot the proposal down. It wants the BRI and its cogs like the CPEC to be Chinese-funded, Chinese-owned and Chinese-run. The Pakistani government backed down and said Saudi Arabia would only be involved as a contractor for specific ancillary projects within the CPEC. With Pakistan’s economy in a shambles, Islamabad is in a bind. It needs China’s funds but has realised that it is rapidly sinking into a debt trap. Other Asian countries are waking up to the threat as well. Myanmar has slashed the cost of its proposed China-funded Kyaukpyu port from $7.3 billion to $1.3 billion. Bangladesh too is downsizing — or cancelling — BRI projects. In Europe, where Xi Jinping went on a charm offensive, Hungary and other EU countries are developing cold feet over the BRI’s inflated infrastructure costs and high-interest debt. In Africa too, where China is investing heavily, countries like Tanzania are cancelling or resizing BRI projects. The third factor stalling China’s rise lies closer to home. With the Chinese economy cooling and GDP growth slowing, local infrastructure projects are running ahead of demand. As The Economist recently pointed out, “The infrastructure boom (in China) has lost steam this year. After expanding at a double digit pace for much of the past three decades, investment in it has slowed sharply. Since May, spending on projects ranging from railways to power plants has fallen compared with a year earlier, the longest weak patch on record.” All this doesn’t mean the BRI is doomed. It will continue to be China’s most ambitious geo-economic initiative, linking the country to the world with a series of interlocking infrastructure projects. But this modern version of China’s historic Silk Route will shrink in size and scope as the complex geopolitical trade battles with the US play out. India has long opposed the BRI because its CPEC component violates Indian sovereignty in Pakistan-occupied Kashmir (PoK). India watched closely as Washington snubbed Beijing recently by selling arms to Taiwan worth over $330 million. A near-clash last week between a US destroyer and a Chinese warship just beyond the 12 nautical mile exclusion zone off the Spratly islands claimed by Beijing underscores Washington’s determination to not cede ground to China as hegemon of the South China Sea. Beijing, meanwhile, continues to veto the designation by the United Nations of Jaish-e-Mohammad chief Masood Azhar as a global terrorist. It continues to block India’s membership of the Nuclear Suppliers Group (NSG). Both reveal Beijing’s mala fide intent. But with the global tide turning against it across multiple fronts, China has been pushed on to the back foot. Will that help change its behaviour? Unlikely. The detention of Interpol’s ex-president Meng Hongwei shows that Beijing continues to behave as a law unto itself. (This article was originally published on DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

China on back foot as Silk Route hits roadblocks

Pakistan, following in the footsteps of Malaysia and Myanmar, is the latest country to balk at the China and infrastructure focus of Beijing’s Belt and Road-related investments.

Preparing for his first visit to China as Pakistan’s prime minister, Imran Khan is insisting that the focus of the China Pakistan Economic Corridor (CPEC), a $60 billion plus crown jewel of the Belt and Road, shift from infrastructure to agriculture, job creation and foreign investment.

“Earlier, the CPEC was only aimed at construction of motorways and highways, but now the prime &nbsp;minister decided that it will be used to support the agriculture sector, create more jobs and attract other foreign countries like Saudi Arabia to invest in the country,” said information minister Fawad Chaudhry.

Khan’s determination to ensure that more benefits accrue to Pakistan from Chinese investment comes at a time that various Asian and African countries worry that Belt and Road-related investments in infrastructure risk trapping them in debt and forcing them to surrender control of critical national infrastructure, and in some cases media assets.

Preceding Khan’s move, protests against the forced resettlement of eight Nepali villages persuaded CWE Investment Corporation, a subsidiary of China Three Gorges, to consider pulling out of a 750MW hydropower project.

Malaysia has suspended or cancelled $26 billion in Chinese-funded projects while Myanmar is negotiating a significant scaling back of a Chinese-funded port project on the Bay of Bengal from one that would cost $ 7.3 billion to a more modest development that would cost $1.3 billion in a bid to avoid shouldering an unsustainable debt.

Fears of a debt trap started late last year when unsustainable debt forced Sri Lanka to hand China an 80 per cent stake in Hambantota port.

Khan’s move takes on added significance given that Pakistan appears to have decided to ask the International Monetary Fund (IMF) to help it avert a financial crisis with a loan of up to $12 billion and discussions with Saudi Arabia that could produce up to $10 billion in investments that would be separate but associated with CPEC.

Pakistani finance minister Asad Umar is expected later this week to initiate discussions with the IMF during the fund’s annual meeting in Bali. The decision was taken after Saudi Arabia refused to delay Pakistani payments for oil imports, opting instead to build a refinery and strategic oil reserve in the CPEC port of Gwadar.

Pakistani officials see investment by Saudi Arabia as one possible way of facilitating a Pakistani request to the IMF for help. They hope that even an informal association with CPEC of Saudi Arabia, one of the United States’ closest allies in the greater Middle East, may alleviate Washington’s concern that IMF money could be used to repay Chinese debt.

Yet, even that is unlikely to prevent the IMF, backed by the United States, from demanding that the veil of secrecy be lifted that shrouds the commercial and financial terms of many CPEC-related, Chinese-funded projects, as a pre-condition for assistance from the fund.

Apparently concerned about Pakistan’s intentions, China’s deputy chief of mission in Islamabad, Lijian Zhao, insisted in an interview as well as a series of tweets that China welcomed Saudi investment and “always supported&amp; stood behind @ Pakistan, helping #develop it’s #infrastructure&amp; raise #living standards while creating #job.”

Lijian’s comments followed a statement last month by Chinese foreign minister Wang Ji after talks with Khan in Islamabad that appeared to indicate that China, while acknowledging Pakistani demands, would not address them immediately. Wang suggested that CPEC would only “gradually shift to industrial cooperation."

Indications suggest further that China may be looking to Pakistan’s military to shave off the rough ends of the government’s determination to effectively renegotiate CPEC.

Pakistan’s army chief General Qamar Javed Bajwa visited Beijing in August days after commerce minister Abdul Razak Dawood suggested that the government may suspend CPEC projects for a year.

Making his comments shortly after Wang’s departure from Islamabad, Dawood also asserted that the previous government had negotiated terms that were favourable to China rather than Pakistan.

China this week, in a move likely designed as much to strengthen Pakistani counter-terrorism capabilities as a gesture towards the country’s politically influential armed forces, made Pakistan the second country after Saudi Arabia to receive killer drones and the associated technology.

The US has refused to sell its more advanced killer drones to either Saudi Arabia or Pakistan.

The Khan government’s desire to refocus CPEC tackles key issues raised by critics of the project that potentially could impact China’s plan to pacify its troubled north-western province of Xinjiang through a combination of economic development and brutal repression and re-education of its Turkic Muslim population.

The initial plan for CPEC appeared to position Pakistan as a raw materials supplier for China, an export market for Chinese products and labour, and an experimental ground for the export of the surveillance state China is rolling out in Xinjiang.

The plan envisioned Chinese state-owned companies leasing thousands of hectares of agricultural land to set up “demonstration projects” in areas ranging from seed varieties to irrigation technology. Chinese agricultural companies would be offered “free capital and loans” from various Chinese ministries as well as the China Development Bank.

The plan envisaged the Xinjiang Production and Construction Corps introducing mechanization as well as new technologies in Pakistani livestock breeding, development of hybrid varieties, and precision irrigation. Pakistan effectively would become a raw materials supplier rather than an added-value producer, a prerequisite for a sustainable textiles industry.

The plan saw the Pakistani textile sector as a supplier of materials such as yarn and coarse cloth to textile manufacturers in Xinjiang. “China can make the most of the Pakistani market in cheap raw materials to develop the textiles &amp; garments industry and help soak up surplus labour forces in (Xinjiang’s) Kashgar,” the plan said. Chinese companies would be offered preferential treatment with regard to “land, tax, logistics and services” as well as “enterprise income tax, tariff reduction and exemption and sales tax rate” incentives.

For Khan to ensure that Pakistani agriculture benefits, the very concept of Chinese investment in Pakistani agriculture would have to renegotiated.

Similarly, Khan has yet to express an opinion on the plan’s incorporation of a full system of monitoring and surveillance that would be built in Pakistani cities to ensure law and order. The system would involve deployment of explosive detectors and scanners to “cover major roads, case-prone areas and crowded places…in urban areas to conduct real-time monitoring and 24-hour video recording.”

The surveillance aspect of the plan that identifies Pakistani politics, such as competing parties, religion, tribes, terrorists, and Western intervention” as well as security as the greatest risk to CPEC could, if unaddressed, transform Pakistani society in ways that go far beyond economic and infrastructure development.

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Pakistan, following in the footsteps of Malaysia and Myanmar, is the latest country to balk at the China and infrastructure focus of Beijing’s Belt and Road-related investments.

Pakistan, following in the footsteps of Malaysia and Myanmar, is the latest country to balk at the China and infrastructure focus of Beijing’s Belt and Road-related investments. Preparing for his first visit to China as Pakistan’s prime minister, Imran Khan is insisting that the focus of the China Pakistan Economic Corridor (CPEC), a $60 billion plus crown jewel of the Belt and Road, shift from infrastructure to agriculture, job creation and foreign investment. “Earlier, the CPEC was only aimed at construction of motorways and highways, but now the prime minister decided that it will be used to support the agriculture sector, create more jobs and attract other foreign countries like Saudi Arabia to invest in the country,” said information minister Fawad Chaudhry. Khan’s determination to ensure that more benefits accrue to Pakistan from Chinese investment comes at a time that various Asian and African countries worry that Belt and Road-related investments in infrastructure risk trapping them in debt and forcing them to surrender control of critical national infrastructure, and in some cases media assets. Preceding Khan’s move, protests against the forced resettlement of eight Nepali villages persuaded CWE Investment Corporation, a subsidiary of China Three Gorges, to consider pulling out of a 750MW hydropower project. Malaysia has suspended or cancelled $26 billion in Chinese-funded projects while Myanmar is negotiating a significant scaling back of a Chinese-funded port project on the Bay of Bengal from one that would cost $ 7.3 billion to a more modest development that would cost $1.3 billion in a bid to avoid shouldering an unsustainable debt. Fears of a debt trap started late last year when unsustainable debt forced Sri Lanka to hand China an 80 per cent stake in Hambantota port. Khan’s move takes on added significance given that Pakistan appears to have decided to ask the International Monetary Fund (IMF) to help it avert a financial crisis with a loan of up to $12 billion and discussions with Saudi Arabia that could produce up to $10 billion in investments that would be separate but associated with CPEC. Pakistani finance minister Asad Umar is expected later this week to initiate discussions with the IMF during the fund’s annual meeting in Bali. The decision was taken after Saudi Arabia refused to delay Pakistani payments for oil imports, opting instead to build a refinery and strategic oil reserve in the CPEC port of Gwadar. Pakistani officials see investment by Saudi Arabia as one possible way of facilitating a Pakistani request to the IMF for help. They hope that even an informal association with CPEC of Saudi Arabia, one of the United States’ closest allies in the greater Middle East, may alleviate Washington’s concern that IMF money could be used to repay Chinese debt. Yet, even that is unlikely to prevent the IMF, backed by the United States, from demanding that the veil of secrecy be lifted that shrouds the commercial and financial terms of many CPEC-related, Chinese-funded projects, as a pre-condition for assistance from the fund. Apparently concerned about Pakistan’s intentions, China’s deputy chief of mission in Islamabad, Lijian Zhao, insisted in an interview as well as a series of tweets that China welcomed Saudi investment and “always supported& stood behind @ Pakistan, helping #develop it’s #infrastructure& raise #living standards while creating #job.” Lijian’s comments followed a statement last month by Chinese foreign minister Wang Ji after talks with Khan in Islamabad that appeared to indicate that China, while acknowledging Pakistani demands, would not address them immediately. Wang suggested that CPEC would only “gradually shift to industrial cooperation." Indications suggest further that China may be looking to Pakistan’s military to shave off the rough ends of the government’s determination to effectively renegotiate CPEC. Pakistan’s army chief General Qamar Javed Bajwa visited Beijing in August days after commerce minister Abdul Razak Dawood suggested that the government may suspend CPEC projects for a year. Making his comments shortly after Wang’s departure from Islamabad, Dawood also asserted that the previous government had negotiated terms that were favourable to China rather than Pakistan. China this week, in a move likely designed as much to strengthen Pakistani counter-terrorism capabilities as a gesture towards the country’s politically influential armed forces, made Pakistan the second country after Saudi Arabia to receive killer drones and the associated technology. The US has refused to sell its more advanced killer drones to either Saudi Arabia or Pakistan. The Khan government’s desire to refocus CPEC tackles key issues raised by critics of the project that potentially could impact China’s plan to pacify its troubled north-western province of Xinjiang through a combination of economic development and brutal repression and re-education of its Turkic Muslim population. The initial plan for CPEC appeared to position Pakistan as a raw materials supplier for China, an export market for Chinese products and labour, and an experimental ground for the export of the surveillance state China is rolling out in Xinjiang. The plan envisioned Chinese state-owned companies leasing thousands of hectares of agricultural land to set up “demonstration projects” in areas ranging from seed varieties to irrigation technology. Chinese agricultural companies would be offered “free capital and loans” from various Chinese ministries as well as the China Development Bank. The plan envisaged the Xinjiang Production and Construction Corps introducing mechanization as well as new technologies in Pakistani livestock breeding, development of hybrid varieties, and precision irrigation. Pakistan effectively would become a raw materials supplier rather than an added-value producer, a prerequisite for a sustainable textiles industry. The plan saw the Pakistani textile sector as a supplier of materials such as yarn and coarse cloth to textile manufacturers in Xinjiang. “China can make the most of the Pakistani market in cheap raw materials to develop the textiles & garments industry and help soak up surplus labour forces in (Xinjiang’s) Kashgar,” the plan said. Chinese companies would be offered preferential treatment with regard to “land, tax, logistics and services” as well as “enterprise income tax, tariff reduction and exemption and sales tax rate” incentives. For Khan to ensure that Pakistani agriculture benefits, the very concept of Chinese investment in Pakistani agriculture would have to renegotiated. Similarly, Khan has yet to express an opinion on the plan’s incorporation of a full system of monitoring and surveillance that would be built in Pakistani cities to ensure law and order. The system would involve deployment of explosive detectors and scanners to “cover major roads, case-prone areas and crowded places…in urban areas to conduct real-time monitoring and 24-hour video recording.” The surveillance aspect of the plan that identifies Pakistani politics, such as competing parties, religion, tribes, terrorists, and Western intervention” as well as security as the greatest risk to CPEC could, if unaddressed, transform Pakistani society in ways that go far beyond economic and infrastructure development. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Remodelling the Belt and Road: Pakistan picks up the torch

While China’s Belt and Road Initiative (BRI) has been in the news for a while, Japan is slowly funding the building of supplementary trade corridors in the Mekong region, projecting itself as not only interested in building infrastructure but also trade facilitation through the human capacity building in the region. With a growth rate exceeding 5 per cent and a combined population of over 240 million, the Mekong region, which was devastated by the Vietnam War in the 1960s and 1970s, has now emerged as a new growth centre of Asia. With the exception of Thailand, the population of the region — that also includes Myanmar, Laos, Cambodia and Vietnam — is young, with more than 20 per cent of its residents below 15 years of age. In 2015, the combined total GDP in the region amounted to $673 billion, and the middle classes are growing right across the region. 
 
Japan’s renewed interest in the region is fuelled by Prime Minister Shinzo Abe’s enthusiasm for the US-inspired ‘Free and Open Indo-Pacific Strategy’, which also ropes in India and Australia. China views this as a strategy to contain Beijing’s economic rise and increasing political clout in the region. Under Japan’s new initiative that has targeted mainly Cambodia, Myanmar and Vietnam, it is not only funding building of highways, railways and bridges, but also trade facilitation through the training of human capital for better flows of people and goods. A major criticism of the BRI has been the emphasis on the building of infrastructure and the lack of attention to building human resources in the countries concerned.&nbsp;

This has led to suspicions that China is building these trade routes for its own benefit and not to promote two-way trade. The ASEAN, whose membership includes all the Mekong countries plus five others, is worried that the increasing rivalry between Asia’s two major powers may sideline the ASEAN-centrality strategy of the regional grouping with respect to development issues. 
 
During the ASEAN Foreign Minister’s meeting in Singapore in August 2018, it was emphasized that the ‘Indo-Pacific’ strategy should respect ‘Asean-centrality’ in building the regional economic architecture. At the same meeting, Chinese Foreign Minister Wang Yi said that China would welcome the Japanese initiative for security and economic cooperation in the region, but warned that it needs more funding than what Japan is offering. The Japanese government has pledged $ 110 billion towards ‘high-quality’ infrastructure projects in Asia.

The Chinese government, over the last few years, has pledged some $4 trillion for numerous infrastructure projects in developing countries, that has the potential to make Asia the centre of the global economy. When China announced its grand Silk Route revival initiative (later renamed BRI) a few years ago, Japan expressed scepticism. But in May 2017, Abe sent a special envoy to the BRI forum in Beijing. And at the Hamburg G20 summit in July 2017, Chinese President Xi Jinping and Abe met and discussed Japan’s interest in collaborating with China in implementing the BRI. While perceived disputes in the South China Sea have global attention, there is a greater conflict brewing along the Mekong river, where China has formed its own Lancang-Mekong Cooperation (LMC) organisation.

At the 2016 MLC Summit, China pledged $10 billion in preferential loans and another $10 billion in credit for the five countries to develop the region. It has triggered some 132 development projects in the region, but that includes building dams along the river that has upset Vietnam which is downstream. “It is impossible to discuss the LMC without putting it into the context of the BRI. The Mekong sub-region represents a key area for the BRI,” argues Nguyen Khac Giang, lead political researcher at the Vietnam National University in Hanoi. 
 
He points out that the so-called “signature projects” of the LMC, such as the Kunming-Bangkok road, China-Laos railway and Long Jiang Industrial Park (in Vietnam) are in the BRI framework; and most of the finance for LMC projects will come from China, either through the LMC special fund or the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund.” The link with China’s ‘initiative of the 21st Century’ indicates that the LMC is part of a bigger bid by Beijing to seek a leadership role in the region, notes Giang. In the 1970s, Japan was credited with having helped the development of South East Asia with strategic investments in setting up industrial parks, where Japanese companies set up manufacturing plants to make use of the region’s cheap labour.

China began its investment in South East Asia much later and started committing funds for infrastructure development after 2000. China’s initiatives for connectivity gained momentum in 2013 when President Xi Jinping proposed the BRI.

“In the colonial past, the Mekong region was divided between two rival powers: Great Britain and France,” notes Furuoka. “With recent developments, the Mekong countries may want to work out an astute and ingenious diplomatic policy to counteract potentially contradicting interests in the region. Otherwise, they could once again find themselves becoming a ‘playground’ for rival powers in Asia,” he warns. 
 
(This article was originally published on DNA. Read the <a href="https://www.dnaindia.com/analysis/column-sino-japan-rivalry-intensifies-in-asia-s-growth-region-2672774">original article</a>)

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

&nbsp;

While China’s Belt and Road Initiative (BRI) has been in the news for a while, Japan is slowly funding the building of supplementary trade corridors in the Mekong region, projecting itself as not only interested in building infrastructure but also trade facilitation through the human capacity building in the region.

While China’s Belt and Road Initiative (BRI) has been in the news for a while, Japan is slowly funding the building of supplementary trade corridors in the Mekong region, projecting itself as not only interested in building infrastructure but also trade facilitation through the human capacity building in the region. With a growth rate exceeding 5 per cent and a combined population of over 240 million, the Mekong region, which was devastated by the Vietnam War in the 1960s and 1970s, has now emerged as a new growth centre of Asia. With the exception of Thailand, the population of the region — that also includes Myanmar, Laos, Cambodia and Vietnam — is young, with more than 20 per cent of its residents below 15 years of age. In 2015, the combined total GDP in the region amounted to $673 billion, and the middle classes are growing right across the region. Japan’s renewed interest in the region is fuelled by Prime Minister Shinzo Abe’s enthusiasm for the US-inspired ‘Free and Open Indo-Pacific Strategy’, which also ropes in India and Australia. China views this as a strategy to contain Beijing’s economic rise and increasing political clout in the region. Under Japan’s new initiative that has targeted mainly Cambodia, Myanmar and Vietnam, it is not only funding building of highways, railways and bridges, but also trade facilitation through the training of human capital for better flows of people and goods. A major criticism of the BRI has been the emphasis on the building of infrastructure and the lack of attention to building human resources in the countries concerned. This has led to suspicions that China is building these trade routes for its own benefit and not to promote two-way trade. The ASEAN, whose membership includes all the Mekong countries plus five others, is worried that the increasing rivalry between Asia’s two major powers may sideline the ASEAN-centrality strategy of the regional grouping with respect to development issues. During the ASEAN Foreign Minister’s meeting in Singapore in August 2018, it was emphasized that the ‘Indo-Pacific’ strategy should respect ‘Asean-centrality’ in building the regional economic architecture. At the same meeting, Chinese Foreign Minister Wang Yi said that China would welcome the Japanese initiative for security and economic cooperation in the region, but warned that it needs more funding than what Japan is offering. The Japanese government has pledged $ 110 billion towards ‘high-quality’ infrastructure projects in Asia. The Chinese government, over the last few years, has pledged some $4 trillion for numerous infrastructure projects in developing countries, that has the potential to make Asia the centre of the global economy. When China announced its grand Silk Route revival initiative (later renamed BRI) a few years ago, Japan expressed scepticism. But in May 2017, Abe sent a special envoy to the BRI forum in Beijing. And at the Hamburg G20 summit in July 2017, Chinese President Xi Jinping and Abe met and discussed Japan’s interest in collaborating with China in implementing the BRI. While perceived disputes in the South China Sea have global attention, there is a greater conflict brewing along the Mekong river, where China has formed its own Lancang-Mekong Cooperation (LMC) organisation. At the 2016 MLC Summit, China pledged $10 billion in preferential loans and another $10 billion in credit for the five countries to develop the region. It has triggered some 132 development projects in the region, but that includes building dams along the river that has upset Vietnam which is downstream. “It is impossible to discuss the LMC without putting it into the context of the BRI. The Mekong sub-region represents a key area for the BRI,” argues Nguyen Khac Giang, lead political researcher at the Vietnam National University in Hanoi. He points out that the so-called “signature projects” of the LMC, such as the Kunming-Bangkok road, China-Laos railway and Long Jiang Industrial Park (in Vietnam) are in the BRI framework; and most of the finance for LMC projects will come from China, either through the LMC special fund or the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund.” The link with China’s ‘initiative of the 21st Century’ indicates that the LMC is part of a bigger bid by Beijing to seek a leadership role in the region, notes Giang. In the 1970s, Japan was credited with having helped the development of South East Asia with strategic investments in setting up industrial parks, where Japanese companies set up manufacturing plants to make use of the region’s cheap labour. China began its investment in South East Asia much later and started committing funds for infrastructure development after 2000. China’s initiatives for connectivity gained momentum in 2013 when President Xi Jinping proposed the BRI. “In the colonial past, the Mekong region was divided between two rival powers: Great Britain and France,” notes Furuoka. “With recent developments, the Mekong countries may want to work out an astute and ingenious diplomatic policy to counteract potentially contradicting interests in the region. Otherwise, they could once again find themselves becoming a ‘playground’ for rival powers in Asia,” he warns. (This article was originally published on DNA. Read the original article) (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Sino-Japan rivalry intensifies in Asia’s growth region

Pakistan today cut the size of China's "Silk Road" by $2 billion due to rising debt constraints, Railways Minister Sheikh Rasheed said.

<a href="http://www.wionews.com/south-asia/cpec-projects-risk-widening-social-divides-in-pakistan-report-149556">Also Read:&nbsp;CPEC projects risk widening social divides in Pakistan, says Report</a>

"Pakistan is a poor country that cannot afford huge burden of the loans," Rasheed said, adding,"therefore, we have reduced the loan from China under CPEC for rail projects from $8.2 billion to $6.2 billion."&nbsp;

The project was hit over cost leading the Pakistan government to rethink the 1,872 km road infrastructure deal.

China has been a big investor in Pakistan with investments of over $60 billion in China-Pakistan Economic Corridor (CPEC). However, recent reports have suggested the deal has led to large-scale debts for the Pakistan government, already reeling under huge current account deficit.

Rasheed said the government remains "committed" to the Karachi-Peshawar Main Line-1 (ML-1) project but asserted that he wishes to further reduce the cost to $4.2 billion from $6.2 billion.

"CPEC is like the backbone for Pakistan, but our eyes and ears are open," Rasheed said.

Pakistan's Army chief General Baig who had recently visited China had assured government officials in China on over the viability of the CPEC.

But US Senators last month had flagged concern over risk of debt distress due to rising current account deficit and external debt obligations stemming from the CPEC project. The Centre for Global Development has estimated that of the 68 countries currently hosting BRI-funded projects, 23 countries are at risk of debt distress.

Last year, the Sri Lankan government, after being unable to repay over $1 billion of Chinese debt for construction of the Hambantota Port, granted a Chinese state company, a 99-year lease on the facility.

"In China's String of Pearls strategy for the Indo-Pacific, Gwadar and Hambantota are important footholds that if converted into naval bases will enable the PLA Navy to maintain a permanent presence in the Indian Ocean," the US Senators had said.&nbsp; 
&nbsp;

Pakistan today cut the size of China's "Silk Road" by $2 billion due to rising debt constraints, Railways Minister Sheikh Rasheed said. Also Read: CPEC projects risk widening social divides in Pakistan, says Report "Pakistan is a poor country that cannot afford huge burden of the loans," Rasheed said, adding,"therefore, we have reduced the loan from China under CPEC for rail projects from $8.

Pakistan today cut the size of China's "Silk Road" by $2 billion due to rising debt constraints, Railways Minister Sheikh Rasheed said. Also Read: CPEC projects risk widening social divides in Pakistan, says Report "Pakistan is a poor country that cannot afford huge burden of the loans," Rasheed said, adding,"therefore, we have reduced the loan from China under CPEC for rail projects from $8.2 billion to $6.2 billion." The project was hit over cost leading the Pakistan government to rethink the 1,872 km road infrastructure deal. China has been a big investor in Pakistan with investments of over $60 billion in China-Pakistan Economic Corridor (CPEC). However, recent reports have suggested the deal has led to large-scale debts for the Pakistan government, already reeling under huge current account deficit. Rasheed said the government remains "committed" to the Karachi-Peshawar Main Line-1 (ML-1) project but asserted that he wishes to further reduce the cost to $4.2 billion from $6.2 billion. "CPEC is like the backbone for Pakistan, but our eyes and ears are open," Rasheed said. Pakistan's Army chief General Baig who had recently visited China had assured government officials in China on over the viability of the CPEC. But US Senators last month had flagged concern over risk of debt distress due to rising current account deficit and external debt obligations stemming from the CPEC project. The Centre for Global Development has estimated that of the 68 countries currently hosting BRI-funded projects, 23 countries are at risk of debt distress. Last year, the Sri Lankan government, after being unable to repay over $1 billion of Chinese debt for construction of the Hambantota Port, granted a Chinese state company, a 99-year lease on the facility. "In China's String of Pearls strategy for the Indo-Pacific, Gwadar and Hambantota are important footholds that if converted into naval bases will enable the PLA Navy to maintain a permanent presence in the Indian Ocean," the US Senators had said.

$2 billion cut from China's 'silk road' in Karachi-Peshawar road project due to debts: Pakistan

If any one part of the world has forced China to throw its long-standing foreign and defense policy principles out the window and increasingly adopt attitudes associated with a global power, it is the greater Middle East, a region that stretches from the Atlantic coast of Africa to north-western China, a swath of land populated by the Arab, Turkic and Persian worlds.&nbsp;

It was a series of incidents in 2011 during the popular Arab revolts that drove home the fact that China would not be able to protect with its existing foreign and defence policy kit its mushrooming Diaspora and exponentially expanding foreign investments that within a matter of a few years would be grouped as the infrastructure and connectivity-driven Belt and Road initiative linking the Eurasian landmass to the People’s Republic.&nbsp;

Policy principles of non-interference in the domestic affairs of others, an economically-driven win-win approach as a sort of magic wand for problem solution, and no foreign military interventions or bases needed reinterpretation if not being dumped on the dustbin of history.&nbsp;

The incidents included China’s approach to the revolt in Libya as it was happening when it deviated from its policy of non-interference by establishing parallel relations with the opposition National Council. The outreach to Libyan leader Col Moammar Qadhafi’s opponents did not save it from being identified with the ancien regime once the opposition gained power. On the contrary, the Council made clear that China would be low on the totem pole because of its past support for the Qadhafi regime.&nbsp;

The price for supporting autocratic rule in the greater Middle East meant that overseas Chinese nationals and assets became potential targets. To ensure the safety and security of its nationals in Libya, China was forced to evacuate 35,000 people, its most major foreign rescue operation. The evacuation was the first of similar operations in Syria, Iraq and Yemen.&nbsp;

The evacuations didn’t stop militants in Egypt’s Sinai from kidnapping 25 Chinese nationals and radicals in South Sudan from taking several Chinese hostages. The kidnappings sparked significant criticism on Chinese social media of the government’s seeming inability to protects its nationals and investments.&nbsp;

With Uyghurs from China’s strategic north-western province of Xinjiang joining militant jihadists in Syria and two Uyghur knife attacks in Xinjiang itself in the cities of Hotam and Kashgar, the limits of China’s traditional foreign and defense policy meshed with its increasingly repressive domestic approach towards the ethnic Turkic people.&nbsp;

Finally, the greater Middle East’s expectations were driven home in a brutal encounter between Arab businessmen and ethnic Chinese scholars and former officials in which the Arabs took the Chinese to task for wanting to benefit from Middle Eastern resources and trade relations without taking on political and geopolitical responsibilities they associated with a rising superpower.&nbsp;

Add to all of this that in subsequent years it was becoming increasingly difficult for China to remain on the sidelines of the Middle East’s multiple conflicts and rivalries. This was particularly true with President Donald Trump’s coming to office. The greater Middle East’s problems escalated with Mr Trump’s abandonment of any pretence of impartiality in the Israeli-Palestinian conflict; his heating up of the rivalry between Saudi Arabia and Iran by withdrawing from the 2015 international agreement curbing Iran’s nuclear program; and his toying with attempting to change the regime in Tehran that encouraged Saudi Arabia to step up Saudi support for Pakistani militants in the province of Baluchistan; the likely return of Uyghur jihadists in Syria to Central and South Asia that has prompted the establishment of Chinese military outposts in Tajikistan and Afghanistan and consideration of direct military intervention in a possible Syrian-Russian assault on Idlib, the last rebel-held stronghold in Syria; and finally the potential fallout of China’s brutal crackdown in Xinjiang.&nbsp;

Already, the events in 2011 and since coupled with the mushrooming of Belt and Road-related investments has led to the creation of the country’s first foreign military base in Djibouti and the likely establishment of similar facilities in its string of pearls, the network of ports in the Indian Ocean and beyond.

China’s potential policy dilemmas in the greater Middle East were enhanced by the fact that it doesn’t really have a Middle East policy that goes beyond its shaky, traditional foreign and defence policy principles and economics. That was evident when China in January 2016 on the eve of President Xi Jinping’s visit to the Middle East, the first by a Chinese head of state in seven years, issued its first Middle East-related policy white paper that fundamentally contained no new thinking and amounted to a reiteration of a win-win-based approach to the region.

Moreover, with China dependent on the US security umbrella in the Gulf, Beijing sees itself as competitively cooperating with the United States in the Middle East. That is true despite the US-Chinese trade war; differences over the Iranian nuclear agreement which the United States has abandoned and China wants to salvage; and Mr. Trump’s partisan Middle East policy.

China shares with the United States in general and even more so with the Trump administration a fundamental policy principle: stability rather than equitable political reform. China’s principle of non-interference is little more than another label for the US equivalent of long-standing support of autocracy in the Middle East in a bid to maintain stability.

In some ways China is learning the lesson, despite recent developments in Xinjiang, that US President George W. Bush and Susan Rice, his national security advisor and subsequent secretary of state, learnt on 9/11. Within a matter of weeks after the Al Qaeda attacks on New York and Washington, Bush and Rice suggested that the United States was co-responsible for the attacks because of its support for autocracy that had fuelled anti-American and anti-Western sentiment. It was why Bush launched his ill-conceived democracy initiative.

China, as a result of its political, economic and commercial approach towards the Belt and Road, is starting to have a similar experience. Chinese overseas outposts and assets have become targets, particularly in Pakistan but also in Central Asia.

The kidnappings in 2011 in the Sinai and South Sudan were the beginning. Uyghurs joined groups like the Islamic State and Al Qaeda not because they were pan-Islamist jihadists but because they wanted to get experience they could later apply in militant struggle against the Chinese.

Beyond profiling themselves in fighting in Syria, Uyghurs have trained with Malhama Tactical, a jihadist for profit Blackwater, the private military company created by Erik Prince.

Anti-Chinese sentiment in countries like Kazakhstan and Tajikistan is on the rise.

Iranians are grateful for Chinese support not only in the current battle over the nuclear accord but also in the previous round of international and US sanctions. They feel however that last time round they were taken for a ride in terms of high Chinese interest rates for project finance, the quality of goods delivered, and a perceived Chinese laxity in adhering to deadlines.

Resentment of the fallout of the Belt and Road investment taps into the broader threat involved in supporting stability by backing autocratic regimes That is nowhere truer than in the greater Middle East, a region that is in a period of volatile, often bloody and brutal transition. It’s a transition that started with the 2011 Arab revolts and has been pro-longed by a powerful Saudi-United Arab Emirates-led counterrevolution. Transitions take anywhere from a quarter to half a century. In other words, the Middle East is just at the beginning.

China, like the United States, did for decades, ignores the rumblings just below the surface even if the global trend is toward more authoritarian, more autocratic rule. 9/11 was the result of the United States and the West failing to put their ear to the ground and to take note of those rumblings.

Of course, current rumblings may never explode. But the lesson of the people’s power movement in the Philippines in 1986, the video in late 2010 of a fruit and vegetable vendor in Tunisia who set himself alight that sparked the Arab revolts, months of street and online protests in Morocco in the last year, the mass protests in Jordan earlier this year against a draft tax bill that have now restarted because of the legislation’s resurrection, and the current protests in the Iraqi city of Basra potentially are the writing on the wall. &nbsp;All it takes is a black swan.

Said Financial Times columnist Jamil Anderlini:” China is at risk of inadvertently embarking on its own colonial adventure in Pakistan— the biggest recipient of BRI investment and once the East India Company’s old stamping ground… Pakistan is now virtually a client state of China. Many within the country worry openly that its reliance on Beijing is already turning it into a colony of its huge neighbour. The risks that the relationship could turn problematic are greatly increased by Beijing’s ignorance of how China is perceived abroad and its reluctance to study history through a non-ideological lens... It is easy to envisage a scenario in which militant attacks on Chinese projects overwhelm the Pakistani military and China decides to openly deploy the People’s Liberation Army to protect its people and assets. That is how ‘win-win’ investment projects can quickly become the foundations of empire.”

The Chinese crackdown in Xinjiang could just be a black swan on multiple fronts given the fact that its fallout is felt far beyond China’s borders. For starters, the wall of Western and Muslim silence is cracking with potentially serious consequences for China as well as the Islamic world.

What is happening in Xinjiang is fundamentally different from past incidents including protests against a novel by Salman Rushdie and Ayatollah Khomeini’s fatwa ordering his killing; the 2006 Muslim boycott of Danish products because of controversial Danish cartoons depicting the Prophet Mohammed, and the more recent protests sparked by the burning of a Qur’an by a Florida evangelist. The Chinese campaign in Xinjiang challenges the fundamentals of the Islamic faith itself.

The earlier incidents were sparked by protests, primarily among South Asians in either Birmingham or Pakistan. This month has seen the first of Xinjiang-related anti-Chinese protests in Bangladesh and India. The first critical article on Xinjiang in the Pakistani press was published this week.

Malaysia is the first Muslim country to speak out with condemnations by a senior figure in Malaysian prime minister Mahathir Mohamad’s political party as well as the country’s likely next head of government, Anwar Ibrahim.

Consideration in Washington of Xinjiang-related sanctions by the Trump administration, coupled with United Nations reporting on the crackdown and a German and Swedish ban on deportations of Uyghurs, puts the issue on the map and increases pressure on Muslim nations, particularly those like Saudi Arabia, Iran, Turkey and Pakistan that claim to speak on behalf of Islam.

This together with the fact that Chinese support for autocratic or authoritarian rule creates a potential opportunity to export its model of the surveillance state, the most extreme example of which is on display in Xinjiang, constitutes risks and involves potential black swans. To be sure, Pakistan can hardly be described as a liberal society, but it is also not exactly an authoritarian state, yet Pakistan is China’s first export target. And others closer to home could follow.

If all of this is more than enough to digest, factor in the geopolitics of Eurasia, certainly as they relate to the greater Middle East. The Chinese-backed Russian-Iranian-Turkish alliance is brittle at best, witness differences over the possible battle for Idlib and the post-war presence of Iran in Syria.

Saudi Arabia, the United Arab Emirates and Iran, and to a lesser degree Israel are players in what is a 21st-century Great Game. That is particularly true in the Caucasus and Central Asia as well as Pakistan and as it relates to port diplomacy in Pakistan’s Gwadar and the Indian-backed Iranian port of Chabahar.

Add to this the fact that if Saudi Arabia is the world’s swing oil producer, Iran is Eurasia’s swing gas producer with the potential to co-shape the supercontinent’s future energy architecture.

And finally, there are multiple ways that China risks being sucked into the Saudi-Iranian rivalry not least if the United States and Saudi Arabia decide to take plans off the drawing board and initiate a campaign to destabilize Iran by stirring unrest among its Baloch, Kurdish, Iranian Arab and Azeri minorities.

The long and short of this is that the Great Game in Eurasia remains largely undecided and that change in China’s foreign and defense policy is already a fact. The question is how all of this will affect China and how potential obstacles on the Belt and Road will play out.

(Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

If any one part of the world has forced China to throw its long-standing foreign and defense policy principles out the window and increasingly adopt attitudes associated with a global power, it is the greater Middle East, a region that stretches from the Atlantic coast of Africa to north-western China, a swath of land populated by the Arab, Turkic and Persian worlds.

If any one part of the world has forced China to throw its long-standing foreign and defense policy principles out the window and increasingly adopt attitudes associated with a global power, it is the greater Middle East, a region that stretches from the Atlantic coast of Africa to north-western China, a swath of land populated by the Arab, Turkic and Persian worlds. It was a series of incidents in 2011 during the popular Arab revolts that drove home the fact that China would not be able to protect with its existing foreign and defence policy kit its mushrooming Diaspora and exponentially expanding foreign investments that within a matter of a few years would be grouped as the infrastructure and connectivity-driven Belt and Road initiative linking the Eurasian landmass to the People’s Republic. Policy principles of non-interference in the domestic affairs of others, an economically-driven win-win approach as a sort of magic wand for problem solution, and no foreign military interventions or bases needed reinterpretation if not being dumped on the dustbin of history. The incidents included China’s approach to the revolt in Libya as it was happening when it deviated from its policy of non-interference by establishing parallel relations with the opposition National Council. The outreach to Libyan leader Col Moammar Qadhafi’s opponents did not save it from being identified with the ancien regime once the opposition gained power. On the contrary, the Council made clear that China would be low on the totem pole because of its past support for the Qadhafi regime. The price for supporting autocratic rule in the greater Middle East meant that overseas Chinese nationals and assets became potential targets. To ensure the safety and security of its nationals in Libya, China was forced to evacuate 35,000 people, its most major foreign rescue operation. The evacuation was the first of similar operations in Syria, Iraq and Yemen. The evacuations didn’t stop militants in Egypt’s Sinai from kidnapping 25 Chinese nationals and radicals in South Sudan from taking several Chinese hostages. The kidnappings sparked significant criticism on Chinese social media of the government’s seeming inability to protects its nationals and investments. With Uyghurs from China’s strategic north-western province of Xinjiang joining militant jihadists in Syria and two Uyghur knife attacks in Xinjiang itself in the cities of Hotam and Kashgar, the limits of China’s traditional foreign and defense policy meshed with its increasingly repressive domestic approach towards the ethnic Turkic people. Finally, the greater Middle East’s expectations were driven home in a brutal encounter between Arab businessmen and ethnic Chinese scholars and former officials in which the Arabs took the Chinese to task for wanting to benefit from Middle Eastern resources and trade relations without taking on political and geopolitical responsibilities they associated with a rising superpower. Add to all of this that in subsequent years it was becoming increasingly difficult for China to remain on the sidelines of the Middle East’s multiple conflicts and rivalries. This was particularly true with President Donald Trump’s coming to office. The greater Middle East’s problems escalated with Mr Trump’s abandonment of any pretence of impartiality in the Israeli-Palestinian conflict; his heating up of the rivalry between Saudi Arabia and Iran by withdrawing from the 2015 international agreement curbing Iran’s nuclear program; and his toying with attempting to change the regime in Tehran that encouraged Saudi Arabia to step up Saudi support for Pakistani militants in the province of Baluchistan; the likely return of Uyghur jihadists in Syria to Central and South Asia that has prompted the establishment of Chinese military outposts in Tajikistan and Afghanistan and consideration of direct military intervention in a possible Syrian-Russian assault on Idlib, the last rebel-held stronghold in Syria; and finally the potential fallout of China’s brutal crackdown in Xinjiang. Already, the events in 2011 and since coupled with the mushrooming of Belt and Road-related investments has led to the creation of the country’s first foreign military base in Djibouti and the likely establishment of similar facilities in its string of pearls, the network of ports in the Indian Ocean and beyond. China’s potential policy dilemmas in the greater Middle East were enhanced by the fact that it doesn’t really have a Middle East policy that goes beyond its shaky, traditional foreign and defence policy principles and economics. That was evident when China in January 2016 on the eve of President Xi Jinping’s visit to the Middle East, the first by a Chinese head of state in seven years, issued its first Middle East-related policy white paper that fundamentally contained no new thinking and amounted to a reiteration of a win-win-based approach to the region. Moreover, with China dependent on the US security umbrella in the Gulf, Beijing sees itself as competitively cooperating with the United States in the Middle East. That is true despite the US-Chinese trade war; differences over the Iranian nuclear agreement which the United States has abandoned and China wants to salvage; and Mr. Trump’s partisan Middle East policy. China shares with the United States in general and even more so with the Trump administration a fundamental policy principle: stability rather than equitable political reform. China’s principle of non-interference is little more than another label for the US equivalent of long-standing support of autocracy in the Middle East in a bid to maintain stability. In some ways China is learning the lesson, despite recent developments in Xinjiang, that US President George W. Bush and Susan Rice, his national security advisor and subsequent secretary of state, learnt on 9/11. Within a matter of weeks after the Al Qaeda attacks on New York and Washington, Bush and Rice suggested that the United States was co-responsible for the attacks because of its support for autocracy that had fuelled anti-American and anti-Western sentiment. It was why Bush launched his ill-conceived democracy initiative. China, as a result of its political, economic and commercial approach towards the Belt and Road, is starting to have a similar experience. Chinese overseas outposts and assets have become targets, particularly in Pakistan but also in Central Asia. The kidnappings in 2011 in the Sinai and South Sudan were the beginning. Uyghurs joined groups like the Islamic State and Al Qaeda not because they were pan-Islamist jihadists but because they wanted to get experience they could later apply in militant struggle against the Chinese. Beyond profiling themselves in fighting in Syria, Uyghurs have trained with Malhama Tactical, a jihadist for profit Blackwater, the private military company created by Erik Prince. Anti-Chinese sentiment in countries like Kazakhstan and Tajikistan is on the rise. Iranians are grateful for Chinese support not only in the current battle over the nuclear accord but also in the previous round of international and US sanctions. They feel however that last time round they were taken for a ride in terms of high Chinese interest rates for project finance, the quality of goods delivered, and a perceived Chinese laxity in adhering to deadlines. Resentment of the fallout of the Belt and Road investment taps into the broader threat involved in supporting stability by backing autocratic regimes That is nowhere truer than in the greater Middle East, a region that is in a period of volatile, often bloody and brutal transition. It’s a transition that started with the 2011 Arab revolts and has been pro-longed by a powerful Saudi-United Arab Emirates-led counterrevolution. Transitions take anywhere from a quarter to half a century. In other words, the Middle East is just at the beginning. China, like the United States, did for decades, ignores the rumblings just below the surface even if the global trend is toward more authoritarian, more autocratic rule. 9/11 was the result of the United States and the West failing to put their ear to the ground and to take note of those rumblings. Of course, current rumblings may never explode. But the lesson of the people’s power movement in the Philippines in 1986, the video in late 2010 of a fruit and vegetable vendor in Tunisia who set himself alight that sparked the Arab revolts, months of street and online protests in Morocco in the last year, the mass protests in Jordan earlier this year against a draft tax bill that have now restarted because of the legislation’s resurrection, and the current protests in the Iraqi city of Basra potentially are the writing on the wall. All it takes is a black swan. Said Financial Times columnist Jamil Anderlini:” China is at risk of inadvertently embarking on its own colonial adventure in Pakistan— the biggest recipient of BRI investment and once the East India Company’s old stamping ground… Pakistan is now virtually a client state of China. Many within the country worry openly that its reliance on Beijing is already turning it into a colony of its huge neighbour. The risks that the relationship could turn problematic are greatly increased by Beijing’s ignorance of how China is perceived abroad and its reluctance to study history through a non-ideological lens... It is easy to envisage a scenario in which militant attacks on Chinese projects overwhelm the Pakistani military and China decides to openly deploy the People’s Liberation Army to protect its people and assets. That is how ‘win-win’ investment projects can quickly become the foundations of empire.” The Chinese crackdown in Xinjiang could just be a black swan on multiple fronts given the fact that its fallout is felt far beyond China’s borders. For starters, the wall of Western and Muslim silence is cracking with potentially serious consequences for China as well as the Islamic world. What is happening in Xinjiang is fundamentally different from past incidents including protests against a novel by Salman Rushdie and Ayatollah Khomeini’s fatwa ordering his killing; the 2006 Muslim boycott of Danish products because of controversial Danish cartoons depicting the Prophet Mohammed, and the more recent protests sparked by the burning of a Qur’an by a Florida evangelist. The Chinese campaign in Xinjiang challenges the fundamentals of the Islamic faith itself. The earlier incidents were sparked by protests, primarily among South Asians in either Birmingham or Pakistan. This month has seen the first of Xinjiang-related anti-Chinese protests in Bangladesh and India. The first critical article on Xinjiang in the Pakistani press was published this week. Malaysia is the first Muslim country to speak out with condemnations by a senior figure in Malaysian prime minister Mahathir Mohamad’s political party as well as the country’s likely next head of government, Anwar Ibrahim. Consideration in Washington of Xinjiang-related sanctions by the Trump administration, coupled with United Nations reporting on the crackdown and a German and Swedish ban on deportations of Uyghurs, puts the issue on the map and increases pressure on Muslim nations, particularly those like Saudi Arabia, Iran, Turkey and Pakistan that claim to speak on behalf of Islam. This together with the fact that Chinese support for autocratic or authoritarian rule creates a potential opportunity to export its model of the surveillance state, the most extreme example of which is on display in Xinjiang, constitutes risks and involves potential black swans. To be sure, Pakistan can hardly be described as a liberal society, but it is also not exactly an authoritarian state, yet Pakistan is China’s first export target. And others closer to home could follow. If all of this is more than enough to digest, factor in the geopolitics of Eurasia, certainly as they relate to the greater Middle East. The Chinese-backed Russian-Iranian-Turkish alliance is brittle at best, witness differences over the possible battle for Idlib and the post-war presence of Iran in Syria. Saudi Arabia, the United Arab Emirates and Iran, and to a lesser degree Israel are players in what is a 21st-century Great Game. That is particularly true in the Caucasus and Central Asia as well as Pakistan and as it relates to port diplomacy in Pakistan’s Gwadar and the Indian-backed Iranian port of Chabahar. Add to this the fact that if Saudi Arabia is the world’s swing oil producer, Iran is Eurasia’s swing gas producer with the potential to co-shape the supercontinent’s future energy architecture. And finally, there are multiple ways that China risks being sucked into the Saudi-Iranian rivalry not least if the United States and Saudi Arabia decide to take plans off the drawing board and initiate a campaign to destabilize Iran by stirring unrest among its Baloch, Kurdish, Iranian Arab and Azeri minorities. The long and short of this is that the Great Game in Eurasia remains largely undecided and that change in China’s foreign and defense policy is already a fact. The question is how all of this will affect China and how potential obstacles on the Belt and Road will play out. (Disclaimer: The opinions expressed above are the personal views of the author and do not reflect the views of ZMCL)

Opinion: China's policy dilemmas in the Middle East

Chinese President Xi Jinping pledged $124 billion on Sunday for his new Silk Road plan to forge a path of peace, inclusiveness and free trade, and called for the abandonment of old models based on rivalry and diplomatic power games.

Xi used a summit on the initiative, attended by leaders and top officials from around the world, to bolster China&#39;s global leadership ambitions as US&nbsp;President Donald Trump promotes &quot;America First&quot; and questions existing global free trade deals.

&quot;We should build an open platform of cooperation and uphold and grow an open world economy,&quot; Xi told the opening of the two-day gathering in Beijing.

China has touted what it formally calls the Belt and Road initiative as a new way to boost global development since Xi unveiled the plan in 2013, aiming to expand links between Asia, Africa, Europe and beyond underpinned by billions of dollars in infrastructure investment.

Xi said the world must create conditions that promote open development and encourage the building of systems of &quot;fair, reasonable and transparent global trade and investment rules&quot;.

Hours before the summit opened, North Korea launched another ballistic missile, further testing the patience of China, its chief ally. The United States had complained to China on Friday over the inclusion of a North Korean delegation at the event.

Massive funding boost

Xi pledged a major funding boost to the new Silk Road, including an extra 100 billion yuan ($14.50 billion) into the existing Silk Road Fund, 380 billion yuan in loans from two policy banks and 60 billion yuan in aid to developing countries and international bodies in countries along the new trade routes.

In addition, Xi said China would encourage financial institutions to expand their overseas yuan fund businesses to the tune of 300 billion yuan.

Xi did not give a time frame for the new loans, aid and funding pledged on Sunday.

Leaders from 29 countries attended the forum, as well as the heads of the United Nations, International Monetary Fund and World Bank.

Britain&#39;s finance minister told the summit his country was a &quot;natural partner&quot; in the new Silk Road, while the prime minister of Pakistan, Nawaz Sharif, a close Chinese ally, praised China&#39;s &quot;vision and ingenuity&quot;.

&quot;Such a broad sweep and scale of interlocking economic partnerships and investments is unprecedented in history,&quot; Sharif said.

White House adviser Matt Pottinger said the United States welcomed efforts by China to promote infrastructure connectivity as part of its Belt and Road initiative, and US&nbsp;companies could offer top value services.

India refused to send an official delegation to Beijing, reflecting displeasure with China for developing a $57 billion trade corridor through Pakistan that also crosses the disputed territory of Kashmir.

&quot;No country can accept a project that ignores its core concerns on sovereignty and territorial integrity,&quot; said Indian foreign ministry spokesman Gopal Baglay, adding that there were concerns about host countries taking on &quot;unsustainable debt.&quot;

China plans to import $2 trillion of products from countries participating in its Belt and Road initiative over the next five years, Commerce Minister Zhong Shan said.

Unease over summit

But some Western diplomats have expressed unease about both the summit and the plan as a whole, seeing it as an attempt to promote Chinese influence globally. They are also concerned about transparency and access for foreign firms to the scheme.

Australian Trade Minister Steven Ciobo said Canberra was receptive to exploring commercial opportunities China&#39;s new Silk Road presented, but any decisions would remain incumbent on national interest.

&quot;China is willing to share its development experience with all countries,&quot; Xi said. &quot;We will not interfere in other countries&#39; internal affairs. We will not export our system of society and development model, and even more will not impose our views on others.&quot;

&quot;In advancing the Belt and Road, we will not re-tread the old path of games between foes. Instead we will create a new model of cooperation and mutual benefit,&quot; Xi said.

North Korea, which considers China its sole major diplomatic ally and economic benefactor, raised eyebrows when it decided to send a delegation to the summit.

The North Korean delegation largely kept a low profile at the summit, and there was no evidence that its presence had affected participation despite US&nbsp;misgivings.

Financial Inclusiveness

Xi said the new Silk Road would be open to all, including Africa and the Americas, which are not situated on the traditional Silk Road.

&quot;No matter if they are from Asia and Europe, or Africa or the Americas, they are all cooperative partners in building the Belt and Road.&quot;

The idea of cooperation and inclusiveness extends to funding projects and investments along the new trade routes, which are being developed both on land and at sea.

&quot;We need joint effort among Belt and Road countries to boost financing cooperation,&quot; Zhou Xiaochuan, governor of China&#39;s central bank, said.

To sustain the projects, Belt and Road nations should allow companies to play a key role, as government resources are limited, Zhou said.

The active use of local currencies will also help to mobilise local savings, lower remittance and exchange costs, and safeguard financial stability, he said.

At the forum, finance ministries from 27 countries, including China, approved a set of principles that will guide project financing along the new Silk Road.

Germany, which was not among the countries that approved the financing guidelines, said its firms were willing to support the Belt and Road initiative, but more transparency was needed.

Some of China&#39;s close allies and partners were at the forum, including Russian President Vladimir Putin, Cambodian Prime Minister Hun Sen and Kazakh President Nursultan Nazarbayev.

There were also several European leaders attending, including the prime ministers of Spain, Italy, Greece and Hungary.

Chinese state-run media has spared no effort in its coverage of the summit, including broadcasting an awkwardly-named English-language music video &quot;The Belt and Road is How&quot; sung by children from countries on the new Silk Road.

(Reuters)

India has declined to be a part of the 'One Belt, One Road' initiative

Chinese President Xi Jinping pledged $124 billion on Sunday for his new Silk Road plan to forge a path of peace, inclusiveness and free trade, and called for the abandonment of old models based on rivalry and diplomatic power games. Xi used a summit on the initiative, attended by leaders and top officials from around the world, to bolster China's global leadership ambitions as US President Donald Trump promotes "America First" and questions existing global free trade deals. "We should build an open platform of cooperation and uphold and grow an open world economy," Xi told the opening of the two-day gathering in Beijing. China has touted what it formally calls the Belt and Road initiative as a new way to boost global development since Xi unveiled the plan in 2013, aiming to expand links between Asia, Africa, Europe and beyond underpinned by billions of dollars in infrastructure investment. Xi said the world must create conditions that promote open development and encourage the building of systems of "fair, reasonable and transparent global trade and investment rules". Hours before the summit opened, North Korea launched another ballistic missile, further testing the patience of China, its chief ally. The United States had complained to China on Friday over the inclusion of a North Korean delegation at the event. Massive funding boost Xi pledged a major funding boost to the new Silk Road, including an extra 100 billion yuan ($14.50 billion) into the existing Silk Road Fund, 380 billion yuan in loans from two policy banks and 60 billion yuan in aid to developing countries and international bodies in countries along the new trade routes. In addition, Xi said China would encourage financial institutions to expand their overseas yuan fund businesses to the tune of 300 billion yuan. Xi did not give a time frame for the new loans, aid and funding pledged on Sunday. Leaders from 29 countries attended the forum, as well as the heads of the United Nations, International Monetary Fund and World Bank. Britain's finance minister told the summit his country was a "natural partner" in the new Silk Road, while the prime minister of Pakistan, Nawaz Sharif, a close Chinese ally, praised China's "vision and ingenuity". "Such a broad sweep and scale of interlocking economic partnerships and investments is unprecedented in history," Sharif said. White House adviser Matt Pottinger said the United States welcomed efforts by China to promote infrastructure connectivity as part of its Belt and Road initiative, and US companies could offer top value services. India refused to send an official delegation to Beijing, reflecting displeasure with China for developing a $57 billion trade corridor through Pakistan that also crosses the disputed territory of Kashmir. "No country can accept a project that ignores its core concerns on sovereignty and territorial integrity," said Indian foreign ministry spokesman Gopal Baglay, adding that there were concerns about host countries taking on "unsustainable debt." China plans to import $2 trillion of products from countries participating in its Belt and Road initiative over the next five years, Commerce Minister Zhong Shan said. Unease over summit But some Western diplomats have expressed unease about both the summit and the plan as a whole, seeing it as an attempt to promote Chinese influence globally. They are also concerned about transparency and access for foreign firms to the scheme. Australian Trade Minister Steven Ciobo said Canberra was receptive to exploring commercial opportunities China's new Silk Road presented, but any decisions would remain incumbent on national interest. "China is willing to share its development experience with all countries," Xi said. "We will not interfere in other countries' internal affairs. We will not export our system of society and development model, and even more will not impose our views on others." "In advancing the Belt and Road, we will not re-tread the old path of games between foes. Instead we will create a new model of cooperation and mutual benefit," Xi said. North Korea, which considers China its sole major diplomatic ally and economic benefactor, raised eyebrows when it decided to send a delegation to the summit. The North Korean delegation largely kept a low profile at the summit, and there was no evidence that its presence had affected participation despite US misgivings. Financial Inclusiveness Xi said the new Silk Road would be open to all, including Africa and the Americas, which are not situated on the traditional Silk Road. "No matter if they are from Asia and Europe, or Africa or the Americas, they are all cooperative partners in building the Belt and Road." The idea of cooperation and inclusiveness extends to funding projects and investments along the new trade routes, which are being developed both on land and at sea. "We need joint effort among Belt and Road countries to boost financing cooperation," Zhou Xiaochuan, governor of China's central bank, said. To sustain the projects, Belt and Road nations should allow companies to play a key role, as government resources are limited, Zhou said. The active use of local currencies will also help to mobilise local savings, lower remittance and exchange costs, and safeguard financial stability, he said. At the forum, finance ministries from 27 countries, including China, approved a set of principles that will guide project financing along the new Silk Road. Germany, which was not among the countries that approved the financing guidelines, said its firms were willing to support the Belt and Road initiative, but more transparency was needed. Some of China's close allies and partners were at the forum, including Russian President Vladimir Putin, Cambodian Prime Minister Hun Sen and Kazakh President Nursultan Nazarbayev. There were also several European leaders attending, including the prime ministers of Spain, Italy, Greece and Hungary. Chinese state-run media has spared no effort in its coverage of the summit, including broadcasting an awkwardly-named English-language music video "The Belt and Road is How" sung by children from countries on the new Silk Road. (Reuters)

China pledges $124 billion for new Silk Road as champion of globalisation

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