Newsletter September 2021
Contents: Blog posts: Xi Jinping: “No new coal power abroad” (Guest post by Tom Baxter) / Newsletter August 2021 News: Myanmar: Moving closer to the military regime Readings: Debt debate: Digging into a ‘Black Hole’.
Xi Jinping: “No new coal power abroad”
Advocates have been doing everything they can for years to stop the construction of new coal power plants. Xi Jinping’s announcement could bring an end to China’s position as the world’s largest and last major public financial backer and builder of coal fired power plants overseas. A guest post by Tom Baxter, Panda Paw Dragon Claw. More
Newsletter August 2021
Contents: Blog post: Risks of labour unrest News: „Greening“ Belt & Road / Beijings human rights offensive Readings: Overseas investments and human rights / Public perceptions of BRI and sustainability. More
Moving closer to the military regime in Myanmar
China will transfer over US$6 million to Myanmar’s government to fund projects in agriculture, culture, Tourism and disaster prevention within the Mekong-Lancang Cooperation framework. Unlike Western countries that have condemned the junta that overthrew the elected government on February 1 and ousted and detained elected leader Aung San Suu Kyi, for cutting short democracy and the killing and imprisonment of its opponents, China has taken a softer line and said its priorities are stability and not interfering in its neighbour.
A stronger message that regardless of the military regime, Beijing still pursues its interests in Myanmar is the opening of a transport link by ship, road and rail between Singapore, the port of Yangon and the central Chinese metropolis of Chengdu. This is part of the China-Myanmar Economic Corridor (CMEC) and will eventually shorten the existing freight routes via China’s southwestern provinces of Guangxi and Guangdong by 20 days. It could also be used for the transport of goods from and to Europe and the Middle East. More important than the economic significance of the logistically complex route, whose reliability is also called into question by the escalating domestic political conflict, however, is probably the symbolic gesture that Beijing is sticking to its cooperation with the military government and strengthening the transport routes from its Western provinces to the Indian Ocean through Myanmar.
Source: South China Morning Post, September 5, 2021
Debt debate: Digging into a ‘Black hole’
China’s development financing, which has received an additional boost through BRI, has been the subject of fierce attacks for years: it would lead countries into a “debt trap”, make them politically vulnerable to blackmail and serve primarily China’s own economic and political goals – attributions that by the way also apply to Western development programmes and funds, even if their legitimating phrases are now more elegant and euphemistic after decades of criticism by civil society organisations and academic discourse. The central question is to what extent excessive indebtedness is caused in the recipient countries.
A current stage for PR is the tug-of-war over debt relief for the poorest countries, which have been hit severly by Corona: a multilateral moratorium within the framework of a G20 initiative, in which Beijing has participated for the first time, is more of a farce than real relief, because it only provides a postponement and, above all, cuts out the more important commercial loans from private lenders.
Beijing’s open flank for attack is the secrecy surrounding the scope and conditions of Chinese development funding. However, according to an earlier AidData–study, which evaluates around 100 contracts with 24 countries, “we cannot conclude that they violate international standards.“ Indeed, Western borrowing is not characterized by excessive openness either, imposes at times harsh economic and political conditions, and of course also benefits primarily companies from donor countries (see ‘My borrowers, your borrowers’).
In another recent report, AidData, a database funded by a number of Western funding institutions and foundations, has now renewed criticism of China’s approach. It announces new insight into BRI funding and Chinese development finance worldwide, based on more than 13.000 projects worth $843 billion across 165 countries over an 18-years periode: According to the study:
- China outspends the US and other larger powers with $85 billion a year on a 2-to1 basis or more, using mostly semi-concessional and non-concessional loans rather than aid. The terms would be “less generous” than loans from OECD-DAC and multilateral creditors. with an average loan from China has a 4.2 percent interest rate, a grace period of less than two years, and a maturity length of less than 10 years.
- By channeling more funds to state owned companies or private sector institutions instead to governments, most of these debts would not appear on government balance sheets, which makes it easier for governments to retain their creditworthiness. This also includes the subtle accusation that other lenders are thus kept in the dark about the true extent of debt levels and risks.
- Stronger repayment safeguards indicates, that risks and risk awareness by Chinese banks and institutions have increased. Collateralization – using an asset to secure a loan and to mitigate risks – has become the most common way, especially when the stakes are high: According to the report, 40 of 50 largest loans from Chinese state-owned creditors to overseas borrowers are collateralized.
- Finally: A third of the BRI infrastructure project portfolio has encountered major implementation problems, such as corruption scandals, labour violations, environmental hazards and public protests. They are taking substantially longer to implement than comparable projects outside of BRI, there are more project suspensions and cancellations. This would have a negative impact on repayment capacities because of lack of income from the projects like f.e. from new railway lines.
As a consequence, the report concludes that Chinese debt burdens are substantially larger than previously understood: 42 countries now have levels of public debt exposure to China in excess of 10 percent of GDP. Additionally the report estimates that the average government is underreporting its actual and potential repayment obligations to China by an amount that is equivalent to 5.8 percent of its GDP.
There are several open questions regarding this report: A fundamental one is the reliability of the data in view of the frequently lamented lack of transparency by the Chinese institutions as well as by recipient governments. Still, Chinese development finance seems to remain a ‘black hole’, even if more and more data become available. Secondly: Analysing Chinese development finance vis a vis Western aid programmes and development funding is like comparing apples with pears: The large proportion of commercial lending by private banks and institutions from Western countries are not adequately taken into account, because they don’t figure fully in the Western definition of development financing. Similarly, Chinese policies of debt reduction differ substantially from Western procedures, nevertheless, they exist and seem to have advantages for the respective countries. By conveniently removing from view the contribution of Western countries to debt, the debate around the issue becomes a political weapon in the “System competition”.
But it also seems to be true: Indebtedness becomes a real issue for many countries and for public concern in those countries. Beijing will need to become more transparent and address the concerns of host countries in order to sustain support for the BRI – more openness, more cooperation and dialog, better implementation of social and environmental standards, less hiding behind the responsibility of the recipient countries for mismanagement or other problems. These learning processes could become even more urgent if the much heralded alternative, the US Build Back Better World initiative, B3W, should actually take off and provide substantial support on favourable terms to China’s and BRI’s current partner countries. Because then they would have a choice.
Banking on the Belt and Road: Insights from a new global dataset of 13,427 Chinese development project. By Ammar A. Malik et al. AidData, September 2021
Newsletter August 2021
Inhalt: Blog posts: Arbeitskämpfe als Risiko News: Mehr „grün“ für Belt & Road Readings: Pekings Menschenrechts-Offensive; Auslandsinvestitionen und Menschenrechte; Ablehnung von BRI gefährdet Nachhaltigkeit
„Wer baute das siebentorige Theben?“ lässt Bertold Brecht einen lesenden Arbeiter fragen, „in den Büchern stehen die Namen von Königen.“ Bei den Seidenstraßen werden immerhin chinesische Arbeiter erwähnt, allerdings zumeist mit dem Zusatz, sie würden Einheimischen die Arbeitsplätze streitig machen. Arbeitsbedingungen und Gewerkschaftsrechte spielen in der Debatte über chinesische Projekte und Unternehmen dagegen kaum eine Rolle. Doch hier gibt es Risiken, die das Projekt BRI gefährden können. Zum Post:
Ankündigungspolitik: Ein tiefer Griff in den grünen Farbtopf
Die “Richtlinien zur grünen Entwicklung von Auslandsinvestitionen und -kooperationen”, die die chinesische Regierung Anfang Juli 2021 vorlegte, verordnen staatlichen chinesischen Konzernen und Banken eine ökologische Ausrichtung. Investitionen in Industrien, Infrastruktur, Energiesektor und Wirtschaftszonen sollen durch die Einhaltung lokaler und gegebenenfalls internationaler Standards wie Environmental Impact Assessments (EIA) „grün“, die Öffentlichkeitsarbeit mit positiven Beispielen („Tell China’s Story Well“) und Kontern gegen kritische Berichte, zum Beispiel durch Umwelt- und Entwicklungsorganisationen, ausgebaut werden. Bislang handelt es sich bei diesem Versuch, ökologische und soziale Risiken für chinesische Investitionen abzufedern, und das Image von Regierung und Konzernen zu verbessern, um „soft law“, also um eher zahnlose Anweisungen. Daher bleibt abzuwarten, wie er umgesetzt wird oder ob er gar einen Beitrag zu nachhaltiger Entwicklung leistet. Und er ersetzt keinesfalls die kritische Beobachtung chinesischer Investitionen durch Umwelt- und Entwicklungsorganisationen.
Siehe dazu: What China’s new guidelines on ‚green development’ mean for the Belt and Road. China Dialogue, August 18, 2021.
Menschenrechte: Peking hält Angriff für die beste Verteidigung
Bei der 47. Sitzung des Menschenrechtsrats der Vereinten Nationen (UN Human Rights Council) im Sommer 2021 experimentierte Peking „with a full-throated denunciation of human rights violations in other countries“, schreibt Shannon Tiezzi in der Zeitschrift The Diplomat vom August 2021. China, das seit seiner Gründung 2006 Mitglied der UN-Organisation ist, wurde erst kürzlich heftig angegriffen für seinen schönfärberischen Bericht über die Menschenrechtssituation im eigenen Land.
Bislang bestand die Taktik der Regierung vor allem im defensiven Verweis auf „Doppelstandards“ und „Doppelzüngigkeit“ westlicher Länder und dem Konzept einer “human rights governance in a balanced way“, indem vor allem soziale Rechte betont wurden. Jetzt wurde zum Beispiel Australien, mit dem Peking in einem politisch motivierten Handelsstreit liegt, für „numerous human right violations“ offensiv angegangen: die Kritik an der Unterdrückung von und Diskriminierung gegen Aborigines und die Haftlager für Flüchtlinge sind noch leicht als Retourkutsche gegen die Verurteilung von Pekings Politik in Xinjiang zu erkennen. Verwiesen wurde aber auch auf die Hassverbrechen gegen Menschen asiatischer Herkunft. Die Verurteilung eines systemischen Rassismus und struktureller Diskriminierung durch „wichtige westliche Länder“, sowohl gegen Schwarze als auch gegen asiatische Bevölkerungsgruppen in Australien und anderswo scheint ein besonderer Schwerpunkt der Offensive zu sein.
Chinesische Auslandsinvestitionen und Menschenrechte
Zunehmend geraten chinesische Investitionen im Ausland in den kritischen Fokus von Menschenrechtsorganisationen, zivilgesellschaftlichen oder gewerkschaftlichen Gruppen – ähnlich wie ihre Counterparts aus westlichen kapitalistischen Ländern. Der Befund einer Studie der internationalen Menschenrechtsorganisation Business & Human Rights Resource Centre über ihre vielfältigen sozialen, ökologischen und menschenrechtlichen Fehltritte überrascht allerdings den kundigen Bobachter kaum: Die Studie ist knapp 700 Vorwürfen gegen chinesische Unternehmen im Ausland zwischen 2003 und 2020 nachgegangen – angesichts der großen Zahl von Unternehmen wohl nur ein Bruchteil von Verstößen gegen Land- und Arbeitsrechte, von Gesundheits- und Umweltgefährdungen, von der Vernichtung von Lebensgrundlagen. Wenig überraschend ist auch, dass solche Verstöße in Ländern mit schwachen politischen und rechtlichen Institutionen und im Bergbau und der Bauindustrie besonders hoch ist – wurde das doch vielfach ähnlich auch schon für westlich-kapitalistische Unternehmen gezeigt. Voreilig daher, wenn jetzt mit dem Finger auf die chinesische Konkurrenz gezeigt wird.
Die Bereitschaft zu Transparenz und Rechenschaftspflicht ist dagegen weitaus geringer als bei der westlichen Konkurrenz, bei der sie allerdings auch nicht gerade sonderlich ausgeprägt ist. Ebenso seien Richtlinien und Regeln zur Verbesserung verantwortlicher Unternehmensführung nicht wirksam genug. Offensichtlich gibt es hier noch viel Luft nach oben, bevor chinesische Unternehmen internationale Standards erreichen. Daher empfiehlt die Studie zum einen, das ‚regulatorische Umfeld’ weiter zu stärken, zum anderen die Partizipation aller betroffenen Gruppen auszuweiten.
Die bisherigen Erfahrungen sprechen allerdings dafür, dass solche Schritte staatlichen Stellen und Unternehmen gerade in den Bereichen, die für eine wirksame Verbesserung der konkreten Situation vor Ort notwendig wären wie Transparenz, Beratung und echte Beteiligung, eher schwer fallen werden. Mechanismen wie Free Prior Informed Consent durch betroffene Bevölkerungsgruppen, auch jetzt bereits vielfach ausgehöhlt und häufig zu reiner Farce verkommen, würden beispielsweise der Reputation chinesischer Unternehmen für eine schnelle Projektabwicklung entgegenstehen und einen wesentlichen Konkurrenzvorteil ausbremsen. Und der Eindruck, den der Bericht erweckt, mit einem Anschluss an internationale Standards sei alles gut, schönt natürlich auch die trotz aller Bemühungen nach wie vor global umfassend schlechte Sozial- und Ökobilanz der meisten Konzerne – aus Ost und West.
„Going out“ responsibly. The Human Rights Impact of China’s Global Investments. Business & Human Rights Resource Centre, August 2021.
Zweifel am ‘Win-win’-Narrativ
Wie die Studie „The Impact of the Belt and Road Initiative on Conflict States“, die im Newsletter Juli 2021 vorgestellt wurde, blickt diese Studie auf fragile Länder mit Konflikten wie Myanmar, Kirgistan und Uganda. Trotz einiger Erfolge und positiver Auswirkungen von Projekten zweifeln große Teile der Bevölkerung am ‚Win-win’-Narrativ, dass BRI allen gleichermaßen zugute kommt, sondern stattdessen vor allem politische und wirtschaftliche Eliten profitieren. Das könnte zu einer Verschärfung von politischen Spannungen und Instabilität in den Ländern beitragen – und damit negative Auswirkungen auf die Investoren haben und eine bereits verbreitete Ablehnung über chinesischen Einfluss weiter anheizen, wie beispielsweise in Myanmar. Damit, so die Studie, wäre die Nachhaltigkeit von BRI gefährdet.
Ähnlich wie bei der oben vorgestellten Studie „’Going out’ responsibly“ lautet auch hier eine der zentralen Empfehlung an Regierungsinstitutionen und Unternehmen, Transparenz und Rechenschaftspflicht sowie Dialog, Partizipation und Konflikt- und Geschlechter-Sensibilität zu stärken. Dadurch wären „sustainable and mututally beneficial, ‚win-win’ partnerships for each country and its population, as well as for the Chinese companies and other foreign businesses operating there“ zu erreichen. „Working in partnership with civil society would enable companies to manage potential risks better, ensure relations with host governments and local communities remain positive, and improve China’s and Chinese companies’ reputation, while protecting their ‚social licence to operate’.“
Bei beiden Studien liegt ihr Wert weniger in solchen Empfehlungen, die vor allem an die Eigeninteressen der Unternehmen appellieren, als vor allem darin, mehr Informationen über die Situation ‚on the ground’ zu erheben und zu systematisieren und daraus für zivilgesellschaftliche Gruppen, nationale und internationale soziale und politische Bewegungen prioritäre Strategien und Forderungen abzuleiten.
Public perceptions of the Belt and Road Initiative. Guiding ‚win-wins’ for people, business and policy makers. By Robert Swaine, Bernardo Mariani and Ilya Jones. Saferworld, August 2021.
Newsletter July 2021
Contents: Blog posts: Options for Beijing in Afghanistan; From free rider to train driver?; Guest post by Ying Wang on Chinese NGOs ‚Going global’ Blog roll: The People’s Map of Global China; Workers Struggles along the New Silk Roads (in German) News: Who Funds Overseas Coal Plants? Readings: The Impact of the Belt and Road Initiative on Conflict States.
July 2021: From free rider to train driver?
The pull-out of their armed forces by the U.S. and other NATO allies, the escalation of violence, and the spectre of indirect or direct rule by the Taliban have triggered a flurry of diplomatic activity by neighbouring countries, both near and far. These include regional heavyweights such as India, Pakistan and Iran, Russia and China. Fuelling just as much speculation is how the new, as yet uncertain, situation might unfold. After all, the withdrawal will make the country an epicentre for regional power struggles. More
Update 26. July 2021:
Beijing’s Afghanistan nightmare may be unfolding faster than expected: In mid-July, nine Chinese workers and engineers died in a bus accident on their way to the construction site of the Daru dam. The circumstances suggest a targeted attack, but so far no one has claimed responsibility. Analysts point to the TTP, the ‘Pakistan Taliban’, which in turn is said to be closely linked to the Taliban in Afghanistan. Beijing immediately sent a commission of enquiry with the deputy director-general of the Foreign Ministry’s Department of External Security Affairs. Meanwhile, speculation is mounting that Beijing is pushing for more of its own security forces to be deployed in Pakistan.
Sources: The Diplomat, July 19, 2021; South China Morning Post, July 21, 2021
Update 29. Jul 2021:
At a recent meeting in the city of Tianjin with a delegation led by the Taliban’s chief negotiator and co-founder Mullah Abdul Ghani Baradar, Foreign Minister Wang Yi has pledged support for the Taliban’s role in Afghanistan’s reconstruction, while demanding that it cuts ties with the East Turkestan Islamic Movement – blamed by Beijing for attacks in its Xinjiang region.
Source: South China Morning Post, 18 July 2022:
July 2021: Going Global: The International Endeavours of Chinese NGOs
By Ying Wang, The People’s Map of Global China
The international exposure of Chinese NGOs is not a recent phenomenon. Starting in the late 1970s, China reopened its doors to INGOs and other international organisations, which have since supported the development of a large number of Chinese NGOs. What is new today is that we are starting to see Chinese NGOs branching out of China and acting as donors and partners to organisations in developing countries. However, several key challenges remain. More
Posted on Blog roll:
The People’s Map of Global China
“The People’s Map of Global China is an attempt to trace Global China in material, spatial, economic, political, and human terms reflecting the experiences of the people most affected by its emergence. It tracks China’s complex and rapidly changing international activities by engaging an equally global civil society. Using an interactive, open access, and online ‘map’ format, we collaborate with nongovernmental organisations, journalists, trade unions, academics, and the public at large to provide updated and updatable information on various dimensions of Global China in their localities. The Map consists of profiles of countries and projects, sortable by project parameters, Chinese companies and banks involved, and their social, political, and environmental impacts. This bottom-up, collaborative initiative seeks to provide a platform for the articulation of local voices often marginalised by political and business elites. It is our hope that the information collected by this networked global civil society will be a useful resource for policymaking, research, and international advocacy.” The People’s Map
The People’s Map of Global China: https://thepeoplesmap.net/about-us/
Kämpfe entlang der Neuen Seidenstraßen VI
Während es zahllose Veröffentlichungen und Informationen über die Neuen Seidenstraßen im Besonderen und China insgesamt gibt, fehlen Berichte über die Situation von Arbeiterinnen und Arbeitern, über Arbeitsrechte, über gewerkschaftliche Organisierung und Proteste weitgehend. Das Forum Arbeitswelten trägt dazu bei, diese Lücke zu füllen, unter anderem mit einer regelmäßigen Berichterstattung über soziale Konflikte im Zusammenhang mit chinesischen Projekten in den BRI-Ländern.
Forum Arbeitswelten, Kämpfe entlang der Neuen Seidenstraßen: https://www.forumarbeitswelten.de/blog/kampfe-seidenstrasse-6/
Who Funds Overseas Coal Plants?
There is a misconception that the majority of new funding for overseas coal plants comes from public financing institutions in China. While it is correct, that China is the largest public financier of overseas coal plants, with banks like the Exim Bank of China and the China Development Bank accounting for 50 percent of global public finance commitments in overseas coals fired power plants that reached financial closure between 2013 and 2018. But a new policy brief by the Boston University Global Development Policy Center by Xinyue Ma and Kevin P. Gallagher estimates, that 87 per cent of total financing – public and private – for overseas coal plants comes from entities outside China. Similarily, acccording to a report by nonprofit organisations (Urgewald, Reclaim Finance, Rainforest Action Network, 350.org Japan and 25 further NGO partners) published in February 2021, Japanese and Western institutional investors and commercial banks are major financiers of international coal power abroad.
See also: Niccolò Manych, Jan Christoph Steckel and Michael Jakob, Finance-based accounting of coal emissions. Environmental Research Letters, 24 March 2021
Another interesting development is being reported Reuters ( June 16, 2021). According to this, more China-invested overseas coal-fired power capacity was cancelled than commissioned since 2017. The Centre for Research on Energy and Clean Air (CREA) said that the amount of capacity shelved or cancelled since 2017 was 4.5 times higher than the amount that went into construction over the period, highlighting the obstacles facing the industry as countries work to reduce carbon emissions. The wave of cancellations also reflects rising concerns about the sector’s long-term economic competitiveness. Although 80 gigawatts of China-backed capacity is still in the pipeline, many of the projects could face further setbacks as public opposition rises and financing becomes more difficult, CREA added.
Pascal Abb, et al, Road to Peace or Bone of Contention?
„Chinese-built infrastructure has a transformative impact on local conflict dynamics in many ways – through the provision of developmental benefits and economic opportunities, the manifestation of state power in everyday lives, the abduction of BRI projects by local political interests, or securitization measures. Some of these effects are positive, and have opened up new development perspectives to countries that would have otherwise found it difficult to attract outside investments. Others are negative, and have created new grievances and tensions, especially where the benefits and costs of BRI projects are unevenly distributed between groups with a history of conflict with each other. As projects continue to materialize in conflict environments, Chinese enterprises are grappling with how to navigate them. There is a pervasive lack of trust in national authorities tasked with implementing the BRI, sometimes paired with suspicions over Chinese influence. This report is based on an investigation of four especially conflict-prone BRI member countries: Pakistan, Myanmar, Kyrgyzstan and Uganda.“
Road to Peace or Bone of Contention? The Impact of the Belt and Road Initiative on Conflict States. By Pascal Abb, Robert Swaine, and Ilya Jones. PRIF Report 1/2021
Newsletter June 2021
Inhalt: Blog posts: ‘Build Back Better World’ (B3W), die beim G7-Gipfel angekündigte US-Kopie der BRI Blog roll: Global Voices News: EU rettet Montenegro aus “Schuldenfalle”; Aufruf zum Boykott von Myanmars Jade-Industrie Readings: Chinesische Investitionen in Europa in 2020; Chinas technologischer Einfluss in Südostasien durch die Digitale Seidenstraße; Ökologischer Autoritarismus: Besprechung des Buches ‘China Goes Green’ von Yifei Li und Judith Shapiro.
B3W: New Highway to Heaven. June 2021
The label for the multilateral copy of China’s New Silk Roads, recently announced at the G7 summit by U.S. President Biden, is gruesome: Build Back Better World, or B3W. But it is certainly not more gruesome than the official designations One Belt, One Road (OBOR) or Belt and Road Initiative (BRI) for the original. Most media outlets gleefully-affirmatively embraced the “positive vision”, the White House wants to open up for the countries of the Global South, as yet another sign that the “major democracies” are back on the world stage as a collective actor. As a “values-driven, high-standard, and transparent infrastructure partnership” it is to compete with China’s infrastructure activities, which are regarded as being indecent and harmful for the targeted countries. So far, however, B3W is merely an anaemic PR product – and it will probably remain that way for a long time. More
Deutsch: B3W: Seidenstraßen Made in USA. Juni 2021.
Global Voices: China’s Belt & Road Initiative: Deal or Steal? (Posted on Blogroll)
„As China expands and advances its interests as a global power, we explore its influence in other countries. While the Belt and Road Initiative plays out across all continents, local societies and communities hold differing perceptions of its benefits and potential harms, despite China’s extensive public relations and propaganda effort to promote its aims. Our investigation looks at the intersection of Chinese technology transfer, soft power, communications technology buildout, and public information. Working with local researchers and writers in a dozen countries, we explore the ways China advances narratives that bolster its drive for global power, and how local perspectives either support or counter China’s ambitions. Over the next few months, we’ll be adding stories and details about the project to this page.“ Global Voices Civic Media Observatory
European bailout for Montenegro
At the last minute, the EU seems ready to bail out Montenegro (see blog post: My borrowers, your borrowers): The indebted Balkan state, additionally burdened with the impact of Corona, had difficulties to start repayment for a Chinese € 809 million loan for an ambitious and controversial highway project due in July 2021. After an initial brusque rejection by the EU, much begging on the part of the Montenegrin government and the message from Beijing, expressing its willingness to discuss extending the grace period until the end of 2022, now several European financial institutions are ready to facilitate an alternative debt financing solution, changing a US$-based 2 per cent interest loan to China into a €-based 1 per cent loan with a six-year grace period and repayment of 20 years. Obviously, the bargaining position for countries like Montenegro improves with the competition between China and Europe. Yet, it is another question whether non-European countries, let’s say in Africa, may benefit equally.
Source: Merics EU-China Weekly Review, 23 June, 2021.
China urged to boycott Myanmar’s jade industry
Since the ouster of the democratically elected government in early February 2021, there have been – mostly lukewarm – attempts to build political and economic pressure on the military coup leaders. There have been some sanctions on military personnel by Western governments, some foreign companies withdrew from joint ventures with the military economic complex MEHL. Too, China as one of their most important business partners would have many options to cut them off from their commercial sinecures. (see blog post: Myanmar: Beijing in a fix). The US-American campaign group Global Witness calls for an international boycott of the jade industry to dry up financial flows to the military which is heavily involved in the business. Global Witness estimates that up to 90 per cent of Myanmar’s jade ist smuggled out of the country, almost all of it into China, where it is processed into jewellery and other saleable items. So China could play a key role in such a boycott.
Source: SCMP, June 29, 2021.
Chinese Foreign Direct Investment in Europe: 2020 update
In 2020, Chinese direct investment in the European Union and the United Kingdom was significantly lower than in previous years. Expectations that the Covid 19 pandemic would trigger a surge in Chinese purchases have not materialised. Last year, the volume of completed Chinese M&A projects fell by 45 per cent compared to 2019, from €11.7 billion to €6.5 billion. New investments, so-called greenfield investments, on the other hand, reached their highest level since 2016, with a volume of 1.3 billion. Europe remains an attractive investment location, but the on-going disruptions caused by the pandemic, high hurdles for capital outflows from China and major regulatory obstacles in Europe continue to contribute to Chinese investments being at a lower level. Tense and deteriorating EU-China relations may create additional headwinds for Chinese investors in the future.
Source: Mercator Institute for China Studies, Berlin. Papers on China, June 16, 2021.
The Digital Silk Road in Southeast Asia
China has expanded its influence over Southeast Asia’s technological development through its Digital Silk Road (DSR) initiative, a newer part of the Belt and Road Initiative (BRI). A paper by Dai Mochinaga, a senior researcher at the Keio Research Institute in Japan,shows that China utilizes the DSR in Southeast Asia for several reasons. First, the DSR helps implement Beijing’s cyberspace principles and norms in other countries. Second, it promotes Chinese investment in certain industries in Southeast Asia, and helps convince other countries to use technology standards common to Chinese firms. Finally, Beijing exerts its influence over Southeast Asia, via the DSR, to help promote its models for data privacy and security on the internet. Despite efforts via the DSR and other avenues to exert influence over Southeast Asian cyberspace, China has not been fully successful in its aims in the region, in part due to local resistance, and in part because Japan, the United States and other actors have responded to Beijing’s efforts with their own proposals for cyberspace, conceived as part of the Free and Open Indo-Pacific strategy.
Source: Dai Mochinaga, The Digital Silk Road and China’s Technology Influence in Southeast Asia, Asia Unbound, June 2021.
China goes green
Could China be a green role model? The number of voices holding China up as a showcase for solving ecological crises, first and foremost the climate crisis, is growing. The reasons for this are the rapid expansion of wind and solar energy (with the downside of mega dams and nuclear power plants), the implementation of a comprehensive environmental management through institutions, laws and campaigns (albeit with sometimes drastic interventions into everyday life), and the astonishing change into a beacon of hope at the climate summit in Paris in 2015. Moreover, with the concept of ecological civilisation, Xi Jinping’s government has formulated nothing less than the claim to be a provider of ideas and a pioneer for dealing with the ‘common global threats’, even for a new era. At the same time, Beijing’s “coercive environmentalism” is water on the mills of all those who believe that state authoritarianism is better suited than democratic conditions to get to grips with the problems.
In order to „deconstruct and challenge the assertion, that China has gone green“, the two authors, Yifei Li, Assistant Professor of Environmental Studies at NYU Shanghai and Judith Shapiro, Chair of the Global Environmental Politics Program at American University in Washington D.C., analyse firstly the environmental governance within China, „which was changed dramatically“, secondly the international implications as the country rises to become a world superpower and seeks to export a development model that is both green and state-led, and thirdly China’s role in global trade, biodiversity and Climate as a key actor in trying to find solutions.
An illustrative example for China’s state-led environmentalism is the Belt and Road Initiative (chapter 3), which is now also increasingly being presented as “green”. The familiar win-win-framing of this economic and political infrastructure and investment programme is complemented by a „green developmentalism“, the projection of ecologically friendly soft-power like training programmes in environmental management und policies, and the use of big data in governance. The authors identify digital development at the heart of what China sees as low-carbon, clean, green growth for the underdeveloped countries along the BRI. The quasi official acknowledgement of BRI by UN-Organisations like UN Environment and linking BRI and the UN’s Sustainable Development Goals lends China a powerful imprimatur of international legitimacy.
But the impression of a successful and sustainable ecological policy is misleading; striking progress in some areas is contrasted by countless failures and empty spaces. The opportunities for a green development, underlined, for instance, by the expansion of clean technologies, stand in a fundamental contradiction to „essentially capitalist China’s needs for domestic and global procurement of natural resources like minerals, fossil fuels, and grain, and the international transfer of environmental externalities“ (191). Chinese policy makers seem patently insensitive to the environmental and ecological impacts of infrastructure development and commerce, caused for instance by the export of coal-fired power plants or dam-building on the Mekong river. The construction of a Digital Silk Road (DSR) offers at the same time opportunities for censorship and surveillance.
As a result, environmental policies become a vehicle for the consolidation and centralization of state power, to strengthen the authority and reach of the state as the sole legitimate steward of the environment. „The Chinese state uses the appearance of going green to consolidate its power over territory and over the individual“ (188). Because the authors see authoritarianism as the end and environmentalism as the means, they conclude that Beijing’s strategy should be called „environmental authoritarianism“.
Yet there is some hope as well: Because of the state’s hyperbolic framings and unfulfilled pledges have become its largest political liability, there are structural opportunities for non-state social forces to hold the Chinese state to account (198). Chinese Belt and Road investors could be motivated to do a better job by cooperation between local civil society organisations in BRI countries and activists within China, who learn about some of the negative impacts of their country’s activities overseas.
The final chapter then reflects on the implications of the findings and whether the planet needs a „green autocracy“. While the authors agree, that radically new forms of governance are required, they dismiss the Chinese techno-political role model as inappropriate to provide the sustainable solutions which are necessary. Ultimately, it appears that reopening and reviving consultative mechanisms are „key to the authoritarian state’s political effectiveness and legitimacy“ (205). Thus, this Sino-American analysis enriches not only the understanding of how China is going green. It also contributes to the debates in other countries about ways out of the crises: How much technological ‚fixes’, how much top-down governance, and how much democratic steering?
Yifei Li, Judith Shapiro, China Goes Green. Coercive Environmentalism for a Troubled Planet. 2020, Polity Press, Cambridge, UK
Newsletter May 2021
Contents: Blog Posts: Indo-Pacific: Europe’s geopolitical ghost ride; Deutschland im Indo-Pazifik: Die Logik der Eskalation; My borrowers, your borrowers; Meine Schuldner, Deine Schuldner Readings: Anto Steng, Chinas neuer Imperialismus; Jonathan Hillman, The Emperor’s New Road; Shawn Shieh, et al, Understanding and mitigating social risks.
Indo-Pacific: Europe’s geopolitical ghost ride. April 2021
It may sound like a matter of routine: In the summer of this year, the German frigate Bayern is about to set sail and spend several months cruising in the Indian Ocean and the Western Pacific. The Defence Ministry merely wants to see this as a „signal“: Where Germany’s „values and interests are at stake“, its flag is to be shown. However, behind this there is a fundamental restructuring of security policy, in other words, a paradigm shift. Europe seeks to „learn the language of power,“ as former Defence Minister Ursula von der Leyen called for in the summer of 2019. And it is a provocation that was immediately answered by Beijing: The pro-government Global Times writes sardonically, „if they can come to the South China Sea, we can also go to the Mediterranean“.
Auf Deutsch: Deutschland im Indopazifik: Die Logik der Eskalation.
My borrowers, your borrowers. May 2021
The label of “debt diplomacy” is a popular refrain in the intensifying debate about China’s economic and political expansion. The narrative is simplistic: Lending by state-owned banks, it is said, is not transparent, would encourage corruption, and would primarily serve Chinese corporations. It would lead inevitably to a debt trap, to a policy of coercion and even to “debt bondage,” according to the German business weekly Wirtschaftswoche at the beginning of May. The beam in one’s own eye is overlooked. This gives the impression that Beijing’s policy is far more ruthless than the practice of international financial institutions like the IMF, governments of Western industrialized countries or large commercial banks.
Auf Deutsch: Meine Schuldner, deine Schuldner.
Anton Stengl, Chinas neuer Imperialismus
Is contemporary China communist, socialist, or indeed capitalist? And if so, how much so? For Anton Stengl, who intends “to analyse and criticize China without working with clichés, longstanding prejudices and the usual propaganda”, it is clear: China has undergone a fundamental systemic change since the Mao era and is today a capitalist market economy, even an imperialist superpower. He regards the Belt and Road Initiative, which reminds him of Western colonialism, as proof for this. For him, the global promotion of private business expansion by the state and the party is an essential foundation of China’s economic superiority. But the undeniable economic, social and technological successes are achieved at the expense of workers and peasants, who have been exploited, even “forgotten”, in favour of a consumption-obsessed “middle class” society. Naturally, Western capital feels increasingly under threat by the new competition from the Far East. But despite all its successes, the Chinese growth system is also at risk of a structural crisis that would drag the capitalist world economic order into the abyss as well.
Anton Stengl, Chinas neuer Imperialismus. Ein ehemals sozialistisches Land rettet das kapitalistische Weltsystem. Promedia 2021
Jonathan E. Hillman, The Emperor’s New Road
Jonathan Hillman too sees China on its way to empire building with the New Silk Roads. And he also considers China’s trajectory of success to be susceptible to crisis, albeit not because of the “tendency of the inevitably declining rate of profit,” as Stengl argues, but because “Xi may be overreaching”. In a combination of travel reports, some of which, however, date back three or four years, and analysis, he elaborates on this threat by looking at the situation in 16 countries, from Eastern Europe to Russia and Central Asia, Pakistan and Sri Lanka to Southeast Asia, with a side step to East Africa. Like Stengl, he believes China is retracing in the footsteps of colonial powers, especially because he identifies stronger military ambitions than Stangl.
But Beijing has a harder time than Western colonial powers: It has to be welcomed in by its hosts and meet their high aspirations. Too, it is constrained by international norms, which did not apply when Western corporations and governments advanced their notions of “development optimism” in the post-World War II decades. In his travels, he has found many uncompleted construction sites, such as the Khorgos Gateway container terminal with attached economic zone on the Chinese border with Kazakhstan, or along the CPEC, which connects the western Chinese province of Xinjiang with the Pakistani port of Gwadar. The stories provide an impressive array of failures, corruption cases, ‘white elephants’, severe environmental damage, and distrust of the Chinese intentions among government and ordinary people alike. Often recipient countries have their own priorities, which do not necessarily coincide with Xi’s version of the BRI, nor with notions of an equitable, sustainable and ecological development.
Hillman thus illustrates the extent to which China’s BRI is dependent on consent and domestic political conditions in the recipient countries. As a consequence, renegotiations became necessary, project costs had to be reduced, and debts forgiven. In response to a diverse range of opposition, the Chinese PR machinery and soft diplomacy had to be stepped up, and in some cases security precautions had to be taken by private security services. In addition, Hillman emphasizes the crucial problem that both state-owned corporations and private-sector companies have not marched lockstep to Beijing’s tune. They often have more influence on the ground than Chinese officials. Coupled with rising costs and shrinking revenues at home, this had already led to adjustments to the concept at the Second Belt and Road Forum in April 2019, and its rebranding as “open, green and clean cooperation.” The Corona pandemic exposed these multiple weaknesses further.
Nevertheless, for the West and for the EU in particular, BRI is dangerous, Hillman points out, if it fails to successfully implement counter-initiatives for the countries of the Global South, such as stepped-up development and infrastructure programs, thereby offering alternatives to Chinese investment and domestic growth perspectives.
Jonathan E. Hillman, The Emperor’s New Road. China and the Project of the Century. Yale University Press, 2020
Shawn Shieh, et al, Understanding and mitigating social risks to sustainable development in China’s BRI
This study, commissioned by the think tank Overseas Development Institute (ODI), concentrates on the impacts of BRI projects, on benefits, opportunities and risks, in two countries – Nepal and Zambia. Here some clippings from the Executive Summary:
„Chinese companies behave much like they do in China and, to a significant degree, like other foreign companies behave in BRI countries where governance is weaker. The social risks to sustainable development observed in these countries were largely an outgrowth of these companies as profit-maximisers, prioritising profit and market share over social and environmental risks.“
„The most important social risks to sustainable development identified in the fieldwork for this study were:
1) risks to rule of law and strong governance stemming from lack of transparency and information disclosure in financing and project agreements;
2) risks to health, the environment, gender equality and livelihoods stemming from lack of community consultation and grievance mechanisms;
3) risks to industry and innovation stemming from lack of local linkages and excessive importation of manufactured goods and labour;
4) risks to decent work stemming from low wages and substandard working conditions; and
5) risks stemming from language and cultural differences and insensitivities.“
„Host governments in Zambia and Nepal have good policies and laws on paper; the problem is that they lack the capacity and will to coordinate implementation and enforcement of those policies and laws.“
„There is a tremendous diversity of Chinese businesses in BRI countries. The Chinese government is unable to coordinate, let alone provide guidance and assistance to these companies. Chinese state-owned enterprises (SOEs) are significantly more aware of Chinese government policies and guidelines than their privately-owned counterparts (POEs), and SOE internal policies include more robust health, safety and environmental guidelines as a result. Yet the sheer scale and scope of these business activities mean that the Chinese government and lenders and investors need to do more to manage these risks, hold companies to higher Environmental, Social and Corporate Governance (ESG) standards and strengthen their capacity to engage with communities and civil society groups in the host country.“
„Chinese companies need to bear some of the responsibility for managing and mitigating these risks, but they are unlikely to do so without external pressure and support. Local and Chinese civil society organisations and trade unions will play an important role in monitoring the behaviour of lenders, investors and contractors, holding them accountable to higher ESG standards and engaging companies to improve their Corporate Social Responsibility (CSR) and community engagement strategies and practices.“
Shawn Shieh, Lowell Chow, Zhong Huang and Jinfei Yue, Understanding and mitigating social risks to sustainable development in China’s BRI. ODI, April 2021 (pdf)