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Belt and Road initiative POL1ISP GROUP 12 

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A study, albeit entirely funded by the US department of state, evaluated past Chinese deals with countries such as Ecuador and Argentina. It looked at factors such as transparency, environmental sustainability and financial sustainability, then compared them to the Port Vila Wharf project in Vanuatu, supported by Japan, Australia and the Asian Development Bank. The Ecuadorian Coca Codo Sinclair Hydroelectric Dam project is a project that has been mentioned a couple of times for the deal made requiring Ecuador to pay for the project by turning over 80% of the country's oil exports.

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Developing strong, pragmatic and principled national security and defense policies.

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This video, posted by the Chinese state-owned CGTN, a global news network, introduces the Belt and Road Initiative from China's perspective, promoting the benefits of the projects under the initiative. The response to the mostly US criticisms is to call the comments 'ridiculous' and that the 'accusatory voices are loud but not backed by evidence'. Interestingly, the video not only promotes the BRI, but also criticises the US for its belief in its values being right for the world. It is interesting to see this promotion of the Belt and Road Initiative from a state-owned source, compared to US criticisms in media operated by the US state.

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WHAT is the BELT and ROAD INITIATIVE (BRI)?

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WHAT is the BELT and ROAD INITIATIVE (BRI)?

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The Parliament of Australia defines the Belt and Road Initiative as a "Chinese economic and strategic agenda" which aims at connecting Eurasia, Africa and Oceania through an overland economic 'Belt' and a 21st century maritime silk 'Road'. The project was originally proposed by Chinese President Xi Jinping in 2013 and has been both widely criticised and praised by states, media and individuals alike. Supporters suggest that the BRI is paving a way for China to lead the world into a new era of infrastructure and economic gains, while some critics claim that the BRI is an exertion of power and dominance to assert China as the global hegemon.

The following video provides as an in-depth explanation of the Belt and Road Initiative.

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China's trillion dollar plan to dominate global trade

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WHO is Involved in the BELT and ROAD INITIATIVE? 

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WHO is Involved in the BELT and ROAD INITIATIVE? 

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China claims that the Belt and Road Initiative will include 65 states, 4.4 billion people worldwide and 40% of global GDP. Some estimates suggest the total number of involved states is closer to 100.

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Proposed Mapping of the Belt and Road Initiative

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Proposed Mapping of the Belt and Road Initiative

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US on Avoiding 'Debt-Trap Diplomacy' - Warning against BRI

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US on Avoiding 'Debt-Trap Diplomacy' - Warning against BRI

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In its long running criticism and condemnation of the Belt and Road Initiative, the US has promoted itself as the better alternative as a partner for development in the Indo-Pacific. The article below, managed by US Department of State website ShareAmerica explains how the US avoids what it calls 'debt-trap diplomacy' in its development projects and partnerships with other countries, stating 'The U.S. seeks long-term partners rather than debtors.' The article goes on to criticise who gets the jobs in foreign projects, as well as the transparency of projects.

It is clear the US is not only promoting its own foreign investment, but openly condemning Chinese projects as China's influence continues to rise.

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The world's prosperous nations spend hundreds of billions of dollars each year in "foreign aid." But foreign aid can mean many things.

Most U.S. assistance, for example, falls into these categories:
* Emergency response and other forms of humanitarian assistance.
* Global health, such as programs to prevent the spread of HIV/AIDS and other diseases.
* Peace and security.
* Good governance, by funding accountability measures, judicial reform and support for human rights.

Others believe that loans and business investment also are forms of aid. This can be true, but sometimes loans and investment come with strings. Loans must be paid back. Sometimes a country borrows to build infrastructure, and the donor nation's own workers get the best construction and other jobs. And aid that does not guard against corruption can hurt rather than help the recipient nation. That's why some kinds of foreign aid amount to debt-trap diplomacy.

Avoiding the debt trap

The U.S. seeks long-term partners rather than debtors.

Researchers at the College of William and Mary found that loan assistance does not improve economic growth. And, they noted, countries can have a hard time paying off the loans. Sri Lanka, for example, was forced to give up one of its ports in a 99-year lease to China when it struggled to pay for its loans.

"The price being paid to reduce the China debt could prove more costly than the debt burden Sri Lanka seeks to reduce," said N. Sathiya Moorthy of the Observer Research Foundation in an interview with the New York Times.

Aid recipients can find themselves greatly indebted to a single creditor: Over half of Kenya's sovereign debt, for example, is held by China.

Even when a program is not grant-based, the U.S. is working with countries to avoid the debt trap. India, for example, is trying a bold approach. A U.S.-backed initiative leverages private investor capital to improve health care for 600,000 new mothers and their babies in India. The project, which makes economic sense for the hospitals involved, is called the largest and most ambitious of its kind.

"This is our first health-impact bond. I'm quite sure it won't be our last," USAID Administrator Mark Green said at the World Economic Forum in Davos in 2018. "It is a step forward toward a more sustainable and increasingly country-led approach to maternal and child health."

Who gets the jobs?

Aid isn't really aid if it's used to hire donor-country workers. One example: Nearly three-quarters of the laborers who constructed Angola's Ombaka National Stadium were imported from China. In Cameroon, half the workers on a major port reconstruction hailed from China. Locals were not trained in engineering and other skills for high-value positions on the project. Even less-skilled positions such as truck drivers were filled by Chinese workers.

By contrast, consider how the U.S. structured the Power Africa program. Power Africa is a true partnership, working to add 60 million new home and business connections to Africa's power grid. U.S. and private firms provide the financing to build the new electricity projects, but local workers are hired to do the work.

Osike Kenneth of Uganda said working on a solar plant helped his family through a 2016 famine. "Because I was working in the solar project, I was able to feed my family," the 24-year-old said. Two Power Africa projects bringing reliable electricity to Senegal should create more than 68,000 jobs and grow the economy by $400 million, according to recent studies.

Administrator Green celebrated Power Africa's multidimensional partnerships in a March event, highlighting an electricity project in Ghana. General Electric and Endeavor Energy are building the plant, which will supply about a fifth of the country's power. U.S. government agencies are providing technical assistance and finance. The result? "Citizens being employed, communities being connected and Ghana charging ahead in its journey to self-reliance and prosperity," Green said.

Transparency

Without anticorruption measures, aid can create economic distortion, according to James Roberts of the Heritage Foundation. "It reinforces instead of fixing the problems that undermine sustainable development - including corruption."

That's why U.S. aid programs include safeguards that allow people anywhere to follow the money.

The U.S. government makes public all of its program data since 1946 through the Foreign Aid Explorer. This "dashboard" of U.S. assistance presents decades of accurate data in understandable terms. The U.S. government also provides detailed foreign-assistance transaction data from 2006 to the present at Foreignassistance.gov.

Geoffrey Chongo of Zambia said transparency was crucial in starting up a $30 million electricity project in a community of 100,000. Four years after obtaining assistance, the government hadn't started work. Community leaders spoke out. "They became passionate, to just find out where their money had gone. Government had to respond," Chongo said.

Transparency also lets countries coordinate efforts to make development assistance more effective.

Green said that each sector - the public sector and the private sector - playing by the rules and doing what it does best, is key to prosperity for all. "This is Africa's time, but only if all of us here work together."
This story was originally published on March 16, 2018.

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How U.S. aid avoids 'debt-trap diplomacy'

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The world's prosperous nations spend hundreds of billions of dollars each year in "foreign aid." But foreign aid can mean many things. Most U.S. assistance, for example, falls into these categories: * Emergency response and other forms of humanitarian assistance. * Global health, such as programs to prevent the spread of HIV­/AIDS and other diseases.

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Pompeo Warns of 'Predatory' Chinese Economics

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Pompeo Warns of 'Predatory' Chinese Economics

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The video below posted by CNBC discusses the Belt and Road Initiative following US Secretary of State Mike Pompeo calling Chinese investment through the Belt and Road Initiative ‘predatory’. Further, an issue commonly raised regarding the BRI is its transparency regarding financial sustainability and anti-corruption measures, something else Pompeo has commented on.

The US perspective on the Belt and Road Initiative and its criticism on the project is pretty well summed up in the video: ‘You borrow money from the Chinese, to pay the Chinese to build you stuff, and then you end up owing the Chinese’.

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Pompeo calls Chinese infrastructure program 'predatory'

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'Corrupt infrastructure deals in exchange for political influence' and 'bribe-fuelled debt-trap diplomacy', US Secretary of State Mike Pompeo criticised regarding China's Belt and Road Initiative in London in early May.

The Reuters article below talks about responses from Chinese officials regarding the United States' continued criticism on the Belt and Road Initiative following the latest Belt and Road Forum, such as Geng Shuang, a Foreign Ministry spokesperson, condemning the US for its 'irresponsible comments' regarding the Belt and Road Initiative.

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BEIJING (Reuters) - China is "fed up" with hearing complaints from the United States about its Belt and Road program to re-create the old Silk Road, the government said on Thursday, following stinging criticism from U.S. Secretary of State Mike Pompeo.

The initiative, a key thrust of President Xi Jinping's administration, has hit opposition in some countries over fears its opaque financing could lead to unsustainable debt and that it aims more to promote Chinese influence than development.

China sought to tackle those concerns at a summit in Beijing last month, promising to make the program sustainable and green and follow international standards, especially regarding debt.

The United States has been particularly critical, and Pompeo, speaking in London on Wednesday, slammed China for peddling "corrupt infrastructure deals in exchange for political influence" and using "bribe-fuelled debt-trap diplomacy".

In Beijing, Foreign Ministry spokesman Geng Shuang said various people in the United States had been making "irresponsible comments" on the program, especially before the summit when, he said, such criticism reached a crescendo.

"But what was the result? One hundred and fifty countries, 92 international organizations and more than 6,000 delegates from various countries attended the second Belt and Road Forum for International Cooperation, including 50 delegates from the United States," Geng told reporters.

"I think this is the international community taking actual actions to cast a vote of confidence and support in the Belt and Road initiative, and the best response to the words and actions of the United States."

In the past two days, some Americans have been "singing the same old tune", seeking to attack and smear the program, he added.

"They're not fed up with saying it; we're fed up with hearing it," he said.

"I want to remind them again, don't overestimate your ability to create rumors, and don't underestimate the judgment of others. If they want to, let them continue talking. We will continue getting on with things."

The spat has fueled already tense relations between Beijing and Washington, most notably over their trade war, which the two countries have been seeking to end.

Vice Premier Liu He will hold talks in Washington on Thursday and Friday aimed at salvaging a deal that appeared to be unraveling after U.S. officials accused China of backtracking on earlier commitments and President Donald Trump threatened to hike tariffs on Chinese goods on Friday.

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China says 'fed up' with hearing U.S. complaints on Belt and Road

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BEIJING (Reuters) - China is "fed up" with hearing complaints from the United States about its Belt and Road program to re-create the old Silk Road, the government said on Thursday, following stinging criticism from U.S. Secretary of State Mike Pompeo.

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The video below, posted on ShareAmerica and YouTube, briefly explains what the Belt and Road Initiative is from the United States' negative, critical perspective on the topic.

The video mentions once again the Ecuador Coca Codo Dam project and the 'debt-trap diplomacy' that put it there, before going into the alternative that the US is pushing, involving 'free and fair trade'.

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Italy's decision to join China's new Silk Road project last month has heightened Western nations' concerns over Chinese expansionism. Though the initiative is likely to disrupt the global power balance and undermine democratic governance, it presents a significant opportunity for investors to access untapped resources across the continent.
China's controversial Belt and Road Initiative is the cornerstone of its ambitious foreign policy strategy. The initiative seeks to replicate the historic Silk Road trading routes through financing a series of projects across Asia, Eastern Europe and Africa. Over sixty countries, accounting for two-thirds of the world's population, have indicated their interest or already signed up to projects.

A Perceived Threat to the West

As countries with unsustainable debt accept Chinese BRI investment loans, there is a significant risk of increasing tensions with Western powers. The EU commission's emphasis on 'China's growing economic power and political influence', reflects the threat perception.

Italy's decision to join the project has elevated the issue to a new level. As the first developed economy and G7 member to join, the move has lent the project symbolic legitimacy. A total of 29 deals amounting to $2.8bn were signed in Rome last month, covering energy, finance and agricultural sectors. For China, this endorsement serves as a significant political boost, particularly at a time when the EU is seeking to pursue a more unified strategy to address the challenges of China's growing influence.

China's investment model in developing countries is likely to tolerate corruption and a lack of transparency, which has a range of destabilising impacts. Moreover, the risk of the institutionalisation of BRI investments in developing countries has increased fears that it could increase the likelihood of the authoritarian model being adapted, whilst undermining the political and economic independence of developing countries in the long term. Therefore, the increased presence of China throughout the developing world poses an implicit threat to political liberalism. This is a challenge to investors and governments alike.

Meanwhile, US-China trade tensions continue to simmer. The US has attempted to dissuade allies from allowing Chinese firm Huawei to contribute to 5G networks, out of the fears the equipment will be used for espionage. These pleas have had mixed success.

US counter-measures

The US has established a new development agency, the International Development Finance Corporation (IDFC), to curb China's growing influence. The agency seeks to mobilise private capital for development and provides resources to emerging markets. The $60 million dollar agency is designed to 'provide countries with a robust alternative to state-directed investments by authoritarian governments'. This comes amidst fears China will challenge American hegemony and rising US-China trade tensions, as increasing fragile relations continue to strain under pressure.

The move to counter China's growing geopolitical dominance is a significant reversal in Trump's protectionist foreign policy, which has often criticised foreign aid. Increasing fears of the potential security risks Chinese technology firm Huawei poses has been marked by attempts to restrict foreign investment in the US. Significant Chinese investors are reportedly investing in American start-ups working on cutting-edge technologies with potential military applications, further fuelling fears of the risk of cyber-attacks, espionage and exposure of the intellectual property.

Washington responded to these risks with the implementation of tariffs on $250 billion Chinese exports.

The tariffs aim to make it difficult for China to 'gain access to American technology and trade secrets'. Furthermore, China's surging investment in Pakistan, known as the China-Pakistan Economic Corridor (CPEC) has further added to concerns over China's growing military ambitions in Asia. Chinese military expansion is a key political and security risk for the US, a challenge which threatens the US's international military position.

Debt-trap diplomacy: the globalisation trap?

Skeptics have also raised concerns that China is consolidating geopolitical power through predatory practices. Throughout exploitation of its debts, China has convinced the Sri Lankan government to agree to a 99 year lease to operate its strategic Hambantota port. In Greece, Chinese firms bought 51% of the port authority in Piraeus port near Athens in 2016, following the economic crisis.

The likelihood of a Chinese monopoly on untapped resources is a concern. Countries like Azerbaijan are known for their oil and natural gas reserves. China's singular presence would be problematic for both foreign investors and global powers alike.

Meanwhile, for local economies, foreign loans and accumulating debt increases the risk of an economic 'drain', without guarantee of sustainable reinvestment into the local economy.

The BRI initiative will be felt on a global stage over the next decade. The use of loans to finance projects and the accumulation of unsustainable debt in developing countries remains a significant long term risk, as debts could be used to leverage economic, political and military power. At a micro level, emerging economies face the potential risk of a loss of sovereignty over key assets in the long term, as high-interest debt increases the risk of dependency on China. Indonesia, Thailand and the Philippines have raised concerns about their growing dependency on Chinese investments in infrastructure.

For investors, the BRI initiative presents a significant opportunity to access untapped resources in developing regions. Chinese investment is focussed on infrastructure projects, which should aid in enabling foreign investment opportunities. However, the opportunity is bittersweet. The fruits of untapped resources in emerging markets are likely to be barred and undermined by a lack of transparency and total Chinese monopoly.

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China's new Silk Road or debt-trap diplomacy? | Global Risk Insights

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Italy's decision to join China's new Silk Road project last month has heightened Western nations' concerns over Chinese expansionism. Though the initiative is likely to disrupt the global power balance and undermine democratic governance, it presents a significant opportunity for investors to access untapped resources across the continent.

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Hambantota port leased to china 99 years

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Hambantota port leased to china 99 years

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The fate of Hambantota port, which the Sri Lankan government leased to a Chinese firm for 99 years, has been hotly debated since the launch of the Belt and Road Initiative (BRI).

Western experts and media have used the port as proof that China is using the BRI as a tool for creating a debt trap and gaining ownership of vital infrastructure.

The proposed Hambantota port was expected to relieve pressure on the Colombo port and to provide services to ships that detour to secure services such as refueling, maintenance, logistics and buying provisions and medical supplies.

India was the first country Sri Lanka turned to for financial help to build Hambantota port. However, the request was rejected as India deemed the project commercially unviable.

When costs for the first phase were being discussed in 2006-07, Sri Lanka did try to seek a preferential loan from China, but China was unable to provide as funds were already dedicated to other projects at that time.

Sri Lankan officials instead negotiated a commercial rate based on the London InterBank Offered Rate (LIBOR), which was around 5.5 percent and rising. After many negotiations, Export-Import Bank of China eventually agreed to fund 85 percent of Hambantota port's first phase construction with a 15-year commercial loan of $306 million at an interest rate of 6.3 percent, including a management fee of 0.3 percent.

Financing for phase two of the port of Hambantota was negotiated after the 2008 financial crisis, and the interest rate was much lower. The rate was around 2 percent when LIBOR was under 1 percent. The risk premium accorded to Sri Lanka was quite high at the time because of the ongoing civil conflict.

At no time did China put pressure on Sri Lanka to accept any specific terms or conditions, nor did they entice additional borrowing by offering low rates.

Sri Lanka Ports Authority (SLPA) operated the Hambantota port from 2012 to the end of 2014, a period that saw little traffic. Likewise, bunkering business failed to take off due to SLPA not having a strategic international partner.

Hambantota port was unable to generate sufficient revenue to meet its loan obligations due to inadequate governance, lack of commercial and industrial activities, and its inability to attract passing vessels to dock at the port. By the end of 2016, it suffered a total loss of $304 million.

There was a change of government in Sri Lanka in January 2015. The new administration suspended port operations, including bunkering. However, the four-year payment moratorium is coming to an end.

Amid mounting pressure to meet the IMF's bailout terms and loan repayment obligations, the Sri Lankan government struck a public-private partnership (PPP) deal with China in July 2017. The PPP is not a debt-equity swap but fresh investment by China Merchants Port Holdings Co.

At at no time did China intend to take the Hambantota port. It was the Sri Lankan government that requested China bail out the Hambantota port after it incurred heavy losses.

Under the concession agreement, Sri Lanka did not confer any special status to the operators, either in terms of extraterritorial rights or fiscal regime. Sri Lankan Police, Customs, Navy and Emigration officials manage all vessels, personnel and cargo in and out of the port.

China neither enticed nor compelled Sri Lanka to borrow money. Currently, Sri Lanka's total sovereign debt stands at about $65 billion. China only accounts for $8.5 billion of the total foreign debt, of which Hambantota port is a mere $1.12 billion.

The Hambantota port's failure is mainly because Sri Lanka is an emerging country lacking management skill and an international cooperation network. Once these issues are overcome, Hambantota port is expected to have a very bright future.

When its neighbor and multilateral development banks turned their backs, China provided the funding and built Hambantota port with good intentions. The process reflected the BRI spirit.

A New York Times article alleged that China lured Sri Lanka into a debt trap under the BRI. However, we now know that the port project began in 2007, while the BRI was launched in 2013, and lending was not tied to any strategy.

The BRI is an initiative proposed by China, but it benefits others, too. It aims to strengthen economic cooperation, promotes the free flow of production factors, and optimizes resource distribution. At the same time, the BRI has become a target of criticism from vested interests and those with ill intent. The story of Hambantota was twisted, and China got the blame.
Source: Global Times

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China's debt trap? The true story of Hambantota port

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The fate of Hambantota port, which the Sri Lankan government leased to a Chinese firm for 99 years, has been hotly debated since the launch of the Belt and Road Initiative (BRI). Western experts and media have used the port as proof that China is using the BRI as a tool for creating a debt trap and gaining ownership of vital infrastructure.

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- Asian Infrastructure Investment Bank is a multilateral financial institution created by China
- Financial Support for BRI and projects eg energy, transportation, infrastructure etc in Asia and beyond.
- New Zealand part of AIIB since 2015
New Zealand has invested monetary funds towards the development of projects, which has been used as financial support for the BRI by China.

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The Belt and Road Initiative refers to the Silk Road Economic Belt and 21st Century Maritime Silk Road, a significant development strategy launched by the Chinese government with the intention of promoting economic co-operation among countries along the proposed Belt and Road routes. The Initiative has been designed to enhance the orderly free-flow of economic factors and the efficient allocation of resources. It is also intended to further market integration and create a regional economic co-operation framework of benefit to all.

The National Development and Reform Commission (NDRC) issued its Vision and Actions on Jointly Building the Silk Road Economic Belt and 21st Century Maritime Silk Road on 28 March 2015. This outlined the framework, key areas of co-operation and co-operation mechanisms with regard to the Belt and Road Initiative.
Conceptual Framework
The Belt and Road Initiative aims to connect Asia, Europe and Africa along five routes. The Silk Road Economic Belt focusses on: (1) linking China to Europe through Central Asia and Russia; (2) connecting China with the Middle East through Central Asia; and (3) bringing together China and Southeast Asia, South Asia and the Indian Ocean. The 21st Century Maritime Silk Road, meanwhile, focusses on using Chinese coastal ports to: (4) link China with Europe through the South China Sea and Indian Ocean; and (5) connect China with the South Pacific Ocean through the South China Sea.

Focussing on the above five routes, the Belt and Road will take advantage of international transport routes as well as core cities and key ports to further strengthen collaboration and build six international economic co-operation corridors. These have been identified as the New Eurasia Land Bridge, China-Mongolia-Russia, China-Central Asia-West Asia, China-Indochina Peninsula, China-Pakistan, and Bangladesh-China-India-Myanmar.

(1) The New Eurasia Land Bridge Economic Corridor

The New Eurasia Land Bridge, also known as the Second Eurasia Land Bridge, is an international railway line running from Lianyungang in China's Jiangsu province through Alashankou in Xinjiang to Rotterdam in Holland. The China section of the line comprises the Lanzhou-Lianyungang Railway and the Lanzhou-Xinjiang Railway and stretches through eastern, central and western China. After exiting Chinese territory, the new land bridge passes through Kazakhstan, Russia, Belarus and Poland, reaching a number of coastal ports in Europe. Capitalising on the New Eurasia Land Bridge, China has opened an international freight rail route linking Chongqing to Duisburg (Germany); a direct freight train running between Wuhan and Mělník and Pardubice (Czech Republic); a freight rail route from Chengdu to Lodz (Poland); and a freight rail route from Zhengzhou to Hamburg (Germany). All these new rail routes offer rail-to-rail freight transport, as well as the convenience of "one declaration, one inspection, one cargo release" for any cargo transported.

(2) The China-Mongolia-Russia Economic Corridor

Linked by land, China, Mongolia and Russia have long established various economic ties and co-operation by way of frontier trade and cross-border co-operation. In September 2014, when the three country's heads of state met for the first time at the Shanghai Co-operation Organisation (SCO) Dushanbe Summit, agreement was reached on forging tripartite co-operation on the basis of China-Russia, China-Mongolia and Russia-Mongolia bilateral ties. At the same meeting, the principles, directions and key areas of trilateral co-operation were defined. The three heads of state also agreed to bring together the building of China's Silk Road Economic Belt, the renovation of Russia's Eurasia Land Bridge and the proposed development of Mongolia's Steppe Road. This commitment will strengthen rail and highway connectivity and construction, advance customs clearance and transport facilitation, promote cross-national co-operation in transportation, and help establish the China-Russia-Mongolia Economic Corridor. In July 2015, the three leaders held a second meeting in the Russian city of Ufa. This second summit saw the official adoption of the Mid-term Roadmap for Development of Trilateral Co-operation between China, Russia and Mongolia.

(3) China-Central Asia-West Asia Economic Corridor

The China-Central Asia-West Asia Economic Corridor runs from Xinjiang in China and exits the country via Alashankou to join the railway networks of Central Asia and West Asia before reaching the Mediterranean coast and the Arabian Peninsula. The corridor mainly covers five countries in Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan) as well as Iran and Turkey in West Asia.

At the third China-Central Asia Co-operation Forum, held in Shandong in June 2015, a commitment to "jointly building the Silk Road Economic Belt" was incorporated into a joint declaration signed by China and the five Central Asian countries. Prior to that, China had signed bilateral agreements on the building of the Silk Road Economic Belt with Tajikistan, Kazakhstan and Kyrgyzstan. China had also concluded a co-operation document with Uzbekistan on the building of the Silk Road Economic Belt. This was aimed at further deepening and expanding mutually beneficial co-operation in such areas as trade, investment, finance, transport and communication. The national development strategies of the five Central Asian countries - including Kazakhstan's "Road to Brightness", Tajikistan's "Energy, Transport and Food" (a three-pronged strategy aimed at revitalising the country), and Turkmenistan's "Strong and Happy Era" - all share common ground with the establishment of the Silk Road Economic Belt.

(4) China-Indochina Peninsula Economic Corridor

During the Fifth Leaders Meeting on Greater Mekong Sub-regional Economic Co-operation, held in Bangkok in December 2014, Chinese Premier Li Keqiang put forward three suggestions with regard to deepening the relations between China and the five countries in the Indochina Peninsula. The suggestions included: (1) to jointly planning and building an extensive transportation network, as well as number of industrial co-operation projects; (2) creating a new mode of co-operation for fundraising; and (3) promoting sustainable and co-ordinated socio-economic development. Currently, the countries along the Greater Mekong River are engaged in building nine cross-national highways, connecting east and west and linking north to south. A number of these construction projects have already been completed. Guangxi, for example, has already finished work on an expressway leading to the Friendship Gate and the port of Dongxing at the China-Vietnam border. The province has also opened an international rail line, running from Nanning to Hanoi, as well as introducing air routes to several major Southeast Asian cities.

(5) China-Pakistan Economic Corridor

The concept of the China-Pakistan Economic Corridor was first raised by Premier Li Keqiang during his visit to Pakistan in May 2013. At the time, the objective was to build an economic corridor running from Kashgar, Xinjiang, in the north, to Pakistan's Gwadar Port in the south. At present, the two governments have mapped out a provisional long-term plan for building highways, railways, oil and natural gas pipelines and optic fibre networks stretching from Kashgar to Gwadar Port. According to a joint declaration issued by China and Pakistan in Islamabad in April 2015, the two countries will proactively advance key co-operation projects, including Phase II of the upgrade and renovation of the Karakoram Highway (the Thakot-Havelian section), an expressway at the east bay of Gwadar Port, a new international airport, an expressway from Karachi to Lahore (the Multan-Sukkur section), the Lahore rail transport orange line, the Haier-Ruba economic zone, and the China-Pakistan cross-national optic fibre network.

(6) Bangladesh-China-India-Myanmar Economic Corridor

In a series of meetings during Premier Li Keqiang's visit to India in May 2013, China and India jointly proposed the building of the Bangladesh-China-India-Myanmar Economic Corridor. In December 2013, the Bangladesh-China-India-Myanmar Economic Corridor Joint Working Group convened its first meeting in Kunming. Official representatives from the four countries conducted in-depth discussions with regard to the development prospects, priority areas of co-operation and co-operation mechanisms for the economic corridor. They also reached extensive consensus on co-operation in such areas as transportation infrastructure, investment and commercial circulation, and people-to-people connectivity. The four parties signed meeting minutes and agreed the Bangladesh-China-India-Myanmar Economic Corridor joint study programme, establishing a mechanism for promoting co-operation among the four governments.
Key Areas of Co-operation
The five major goals of the Belt and Road Initiative are: policy co-ordination, facilities connectivity, unimpeded trade, financial integration, and people-to-people bonds.

In terms of specifics, policy co-ordination means that countries along the belt and road will, via consultation on an equal footing, jointly formulate development plans and measures for advancing cross-national or regional co-operation; resolve problems arising from co-operation through consultation; and jointly provide policy support to practical co-operation and large-scale project implementation.

Facilities connectivity refers to prioritising areas of construction as part of the Belt and Road strategy. Efforts will be made to give priority to removing barriers in the missing sections and bottleneck areas of core international transportation passages, advancing the construction of port infrastructure facilities, and clearing land-water intermodal transport passages. The connectivity of infrastructure facilities, including railways, highways, air routes, telecommunications, oil and natural gas pipelines and ports, will also be promoted. This will form part of a move to establish an infrastructure network connecting various Asian sub-regions with other parts of Asia, Europe and Africa.

In order to facilitate unimpeded trade, steps will be taken to resolve investment and trade facilitation issues, reduce investment and trade barriers, lower trade and investment costs, as well as to promote regional economic integration. Efforts will also be made to broaden the scope of trade, propel trade development through investment, and strengthen co-operation in the industry chain with all related countries.

With regard to financial integration, action will be taken to enhance co-ordination in monetary policy, expand the scope of local currency settlement and currency exchange in trade and investment between countries along the route, deepen multilateral and bilateral financial co-operation, set up regional development financial institutions, strengthen co-operation in monitoring financial risks, and enhance the ability of managing financial risks through regional arrangements.

In terms of people-to-people bonds, efforts will be made to promote exchanges and dialogues between different cultures, strengthen friendly interactions between the people of various countries, and heighten mutual understanding and traditional friendships. This will all form the basis for the advancement of regional co-operation.
Co-operation Mechanisms
The Belt and Road Initiative upholds the principles of jointly developing the program through consultation with all interested parties. Existing bilateral and multilateral co-operation mechanisms will be utilised to promote the integration of the development strategies of the countries along the route. Steps will be taken to advance the signing of co-operation memorandums of understanding or co-operation plans for the establishment of a number of bilateral co-operation demonstration projects. Efforts will also be made to set up a sound bilateral joint work mechanism, and to devise an implementation plan and action roadmap for advancing the Belt and Road strategy.
The Silk Road Fund
The US$40 billion Silk Road Fund has been established to finance the Belt and Road Initiative. It will invest mainly in infrastructure and resources, as well as in industrial and financial co-operation. The Fund was set up as a limited liability company in December 2014 with its founding shareholders including China's State Administration of Foreign Exchange, the China Investment Corp, the Export-Import Bank of China and the China Development Bank. The Fund will comply with market rules and the international order of finance, and welcome participation from domestic and overseas investors, such as the China-Africa Development Fund and the Asian Infrastructure Investment Bank.

The first capital installation of the Fund amounts to US$10 billion. On 14 May 2017, President Xi Jinping delivered a keynote speech at the opening ceremony of the "Belt and Road Forum for International Co-operation", and announced that China would contribute an additional 100 billion yuan to the Silk Road Fund.
The Asian Infrastructure Investment Bank
The Asian Infrastructure Investment Bank (AIIB) is a new multilateral financial institution founded to bring countries together to address the huge infrastructure needs across Asia and beyond. AIIB offers sovereign and non-sovereign financing for sound and sustainable projects in energy and power, transportation and telecommunications, rural infrastructure and agriculture development, water supply and sanitation, environmental protection, and urban development and logistics.

As of December 2015, all of the 57 Prospective Founding Members of AIIB had signed the Articles of Agreement. The initial signatories were Australia, Austria, Azerbaijan, Bangladesh, Brazil, Brunei Darussalam, Cambodia, China, Denmark, Egypt, Finland, France, Georgia, Germany, Iceland, India, Indonesia, Iran, Israel, Italy, Jordan, Kazakhstan, Republic of Korea, Kyrgyz Republic, Kuwait, Lao PDR, Luxembourg, Malaysia, Maldives, Malta, Mongolia, Myanmar, Nepal, Netherlands, New Zealand, Norway, Oman, Pakistan, Philippines, Poland, Portugal, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Tajikistan, Thailand, Turkey, the United Arab Emirates, the United Kingdom, Uzbekistan, and Vietnam. As of 21 March 2018, AIIB had 86 approved members/prospective members in total (including Hong Kong).

The AIIB Articles of Agreement entered into force on 25 December 2015. On 16 January 2016, the Board of Governors held its inaugural meeting, declaring the Bank open for business and electing Mr. Jin Liqun as President for an initial five-year term.

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The Belt and Road Initiative refers to the Silk Road Economic Belt and 21st Century Maritime Silk Road, a significant development strategy launched by the Chinese government with the intention of promoting economic co-operation among countries along the proposed Belt and Road routes.

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- China's development of ports and hubs a key aspect of BRI
- New Zealand in a strategic position for direct access to markets in Europe through Indian Ocean
- New Zealand proposed to be the 'linking hub' between China and South America

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Geoff Wade, Foreign Affairs, Defence and Security

Key Issue
The 'One Belt, One Road' (OBOR) initiative is a Chinese economic and strategic agenda by which the two ends of Eurasia, as well as Africa and Oceania, are being more closely tied along two routes-one overland and one maritime. Supporters suggest that the initiative permits new infrastructure and economic aid to be provided to needy economies. Critics claim that it facilitates Chinese economic and strategic domination of the countries along these routes. OBOR provides a global context for China's growing economic links with Australia.

The 'One Belt, One Road' (OBOR) initiative is a foreign policy and economic strategy of the People's Republic of China. The term derives from the overland 'Silk Road Economic Belt' and the '21st-Century Maritime Silk Road', concepts introduced by PRC President Xi Jinping in 2013. These are the two major axes along which China proposes to economically link Europe to China through countries across Eurasia and the Indian Ocean. The OBOR initiative also links to Africa and Oceania. In March 2015, the PRC issued an action plan for realising this initiative. While the OBOR initiative is being coordinated by China's National Development and Reform Commission, it also heavily involves the ministries of Foreign Affairs and Commerce.

The initiative envisages the building of six major economic cooperation corridors and several key maritime pivot points across Eurasia:

On land, the plan is to build a new Eurasian land bridge and develop the economic corridors of: China-Mongolia-Russia; China-Central Asia-West Asia; the China-Indochina peninsula; China-Pakistan; and Bangladesh-China-India-Myanmar ... On the seas, the initiative will focus on jointly building smooth, secure and efficient transport routes connecting major sea ports along the belt and road.

Formally, OBOR emphasises five key areas of cooperation:

coordinating development policies

forging infrastructure and facilities networks

strengthening investment and trade relations

enhancing financial cooperation and

deepening social and cultural exchanges.

But it is infrastructure such as railways, roads, ports, energy systems and telecommunications networks which is receiving most attention.

The overland 'Belt' involves the creation of an economic and trade corridor extending from China's west through Central Asia, and finally to Europe. The first step is to further link Central Asian states to the Chinese economy, while the longer-distance initiatives include railway connections between China and Europe. The 'Belt' initiative calls for the integration of the Eurasian land mass into a cohesive economic area.

For the maritime 'Road', China's development of ports and hubs across the Indo-Pacific is a key aspect of the initiative. Purchase and construction of port facilities and associated economic zones in Australia, Malaysia, Indonesia, Bangladesh, Sri Lanka, Myanmar, Pakistan, Kenya, Tanzania, Oman and Djibouti are intended to provide China with maritime access and economic benefit across the Indian Ocean. These will connect to Piraeus, Greece's major port, which has been bought by Chinese shipping group COSCO and which will allow direct access to the markets of Europe.

Foremost among the key projects which have been promoted as focal parts of the OBOR initiative are the China-Pakistan Economic Corridor which provides China's western provinces with access to the Indian Ocean through the Pakistani port of Gwadar, and the Bangladesh China India Myanmar Corridor, which will give Yunnan Province access to the Bay of Bengal.

Funding for the initiative is a key issue. China's policy banks are providing massive funds for Chinese enterprises to operate along these axes, while further funding will be provided through the Asian Infrastructure Investment Bank (AIIB), funded by countries globally. The AIIB was created precisely to service projects under OBOR. The projects funded by the first loans issued by AIIB were in Indonesia, Bangladesh, Pakistan and Tajikistan, all countries which China is trying to include within its OBOR initiative.

Hong Kong is also being tapped. In his policy address in January 2016, the Chief Executive of the Hong Kong Special Administrative Region, CY Leung, underlined that Hong Kong would play an active financial role in OBOR and would facilitate educational exchanges between Hong Kong and 'OBOR countries'. A ' Hong Kong Belt and Road Summit' was also convened in May 2016 to allow Zhang Dejiang, Chairman of the Standing Committee of the National People's Congress, to outline 'Hong Kong's Four Unique Advantages' as a hub for OBOR projects. Then in July 2016, the Hong Kong Monetary Authority launched the Infrastructure Financing Facilitation Office, a new entity to facilitate fundraising for projects related to the OBOR initiative. The Hong Kong Trade Development Council has also arranged visits to Thailand for Chinese investors to promote OBOR investment.

Singapore is also essential to promoting offshore economic activities by Chinese entities. The China Construction Bank signed an MOU with International Enterprise Singapore in April 2016, providing S$30 billion in financial support to Singaporean and Chinese companies jointly investing in OBOR projects. A new centre in Singapore to provide project financing and related services to projects is also being planned.

While China claims that OBOR will 'include 65 countries, 4.4 billion people and about 40 percent of global GDP', the current realities are much more pedestrian. China has reportedly established 75 overseas economic and trade cooperation zones in 35 countries as part of the OBOR initiative. OBOR, however, remains inchoate and still strives for external endorsement and support.

China's other OBOR interests

It is clear that China has broader uses for the increased influence it hopes to enjoy through the OBOR initiative.

The expansion of China-controlled telecommunications networks is an important aspect of OBOR. CITIC Telecom CPC recently acquired Linx Telecommunications, which services Russia, Kazakhstan and the 'Stan' region, the Baltic Sea and Eastern Europe. This will provide China with telecommunications services across much of its targeted 'Belt' region. Visits by journalists from OBOR countries to China, and publishing arrangements with newspapers abroad are intended to promote China's views over a broader sphere.

Mining and energy projects are also central to this endeavour, with China widely purchasing mines as well as generation and transmission projects across OBOR states. Chinese companies now own almost a quarter of Kazakhstan's oil production, while over $15 billion of oil, gas and uranium deals have recently been signed with Uzbekistan.

And in this year's white paper on its satellite navigation and location service, China says that it plans to launch another 30 Beidou satellite navigation system satellites over the next five years, with the first 18 satellites being launched before 2018 to cover OBOR countries.

Reactions

Reactions to the OBOR proposal have varied globally. Ethnic Chinese business figures in Southeast Asia and their political representatives have generally been enthusiastic about the business possibilities. Malaysia has been active in accepting and promoting the idea, with a 162-member Malaysian delegation heading to Beijing in July 2015 to participate in an OBOR dialogue.

Pakistan and Sri Lanka have also been particularly welcoming of Chinese capital and infrastructure projects, as have the various Central Asian states. Vietnam, meanwhile, has expressed grave doubts about the initiative. With few exceptions, India has been stridently suspicious of the overall OBOR initiative and has repeatedly expressed its concerns about China's growing economic and strategic power being pursued through OBOR. Russia needs funding assistance for developing its resources and appears to see OBOR as an avenue for this.

Australia and OBOR

Within Australia, enterprises, banks and law firms are promoting the OBOR initiative as an economic opportunity for the country and, with Chinese endorsement, an Australia-China OBOR Initiative has been established to promote Chinese engagement in the Australian economy. China is also utilising the concept to promote its growing economic engagement with northern Australia. Another avenue for encouraging Australia's further engagement with OBOR is China's funding and support of various related local academic conferences and seminars.

Criticisms

Not all reactions to OBOR have been enthusiastic. Former World Trade Organization chief, Supachai Panitchpakdi, has stated that the OBOR initiative and, specifically, its projects along the Mekong River, all serve China's own interests.

Broader concerns relate to the longer-term aims of China, with the possibility that the OBOR agenda is aimed at creating a Eurasia-wide, China-led bloc to counter the US. At the June 2016 Shangri-la Dialogue in Singapore, Professor Xiang Lanxin, director of the Centre of One Belt and One Road Studies at the China National Institute for SCO International Exchange and Judicial Cooperation, spoke of OBOR as being an avenue to a 'post-Westphalian world'. As such, some see this initiative as a profound challenge to the current global political and economic status quo.

Conclusion

China's wielding of this economic statecraft strategy derives from several collocations. On the political front, since late 2012, President Xi has been promoting the ' Chinese dream' (中国梦), involving the 'great revival of the Chinese nation'. Such revival requires a restored global position and identity for China. Earlier iterations of OBOR involved the catch-phrases 'common development' and 'win-win cooperation' to characterise the relations between China's development and that of its neighbours. China also promoted a ' China-ASEAN community of shared destiny' (中国-东盟命运共同体). But these smaller initiatives have burgeoned into the Eurasia-wide OBOR, bringing into play the PRC's massive capital reserves-both state and private-achieved through 40 years of rapid economic growth, and offering an outlet for the vast excess production capacities which exist today in China.

Regardless of the credence which one assigns to the various interpretations of the OBOR initiative, progress thus far makes it clear that as Australia becomes increasingly tied economically with China, there is a need to maintain a close watch on the progress of the OBOR initiative globally. It also suggests that Australia needs to adopt a more economically and strategically prudent attitude in determining how the Australia-China economic relationship is to further develop.

Further reading

The Economist Intelligence Unit (EIU), Prospects and challenges on China's 'one belt, one road': a risk assessment report, EIU, London, 2015.

WT Wilson, ' China's huge 'One Belt, One Road' initiative is sweeping Central Asia', The National Enquirer, 27 July 2016.

RD Blackwill and JM Harris, War by other means: geoeconomics and statecraft, Belknap/Harvard University Press, Cambridge (Mass.), 2016.
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Geoff Wade, Foreign Affairs, Defence and Security Key Issue The 'One Belt, One Road' (OBOR) initiative is a Chinese economic and strategic agenda by which the two ends of Eurasia, as well as Africa and Oceania, are being more closely tied along two routes-one overland and one maritime.

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Wu Xi is the Chinese ambassador to NZ, and encourages cooperation between China and New Zealand on the BRI.

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COMMENT:

Nearly 5,000 guests from more than 150 countries and more than 90 international organisations are attending the Second Belt and Road Forum for International Cooperation in Beijing.

This year's theme is "Belt and Road Cooperation, Shaping a Brighter Shared Future".

The Forum will serve as a great opportunity for people in New Zealand and around the world to have a better understanding of what the Belt and Road Initiative is all about and how New Zealand can benefit from the BRI cooperation.

What is Belt and Road Initiative?

Belt and Road Initiative (BRI) is an international economic cooperation initiative proposed by President Xi Jinping in 2013, in order to enhance both China's development and its cooperation with global partners.

The BRI aims to enhance connectivity in policy, infrastructure, trade, finance and people-to-people ties, to provide new impetus to world economic growth. It is guided by the principle of consultation and cooperation for shared benefits.

The world today is experiencing profound changes unseen in a century. Protectionism and unilateralism are rising, so are uncertainties and destabilising factors. BRI shows China's commitment to further deepening reform and opening-up and sharing development opportunities and outcomes with more countries in the world.

The BRI represents a major breakthrough in both theory and practice on international cooperation, and it carries far-reaching significance.

Since its inception, the BRI has received strong endorsement and warm support of the international community. So far, a total of 126 countries and 29 international organizations have signed BRI cooperation documents with China, including New Zealand.

Meanwhile, the BRI vision has been included in documents of major international institutions including the United Nations, the G20, etc.

Looking back on the development of the BRI, it has opened a new area for international cooperation and boosted confidence in it.

It has created new impetus and opportunities for global growth and provides a new platform and new opportunities for fostering closer ties between countries.

With joint efforts from all parties, the BRI will help move economic globalisation toward greater openness, inclusiveness, balance and win-win outcomes.

How does BRI promote international cooperation?

President Xi has emphasised on various occasions that while the BRI is launched by China, its benefits should be shared by the world. Cooperation under the BRI has seen major progress and proved more fruitful than planned since its inception.

First,there is growing complementarity between the BRI and development plans and policies of various parties.

At the global level, the BRI is well aligned with the UN 2030 Agenda for Sustainable Development. At the regional level, the BRI connects regional or state development plans and cooperation initiatives.

Second, the BRI has boosted global connectivity. The joint endeavor to promote the BRI has deepened international cooperation on physical connectivity within the basic framework of "six economic corridors, six connectivity networks, and multiple countries and ports in different parts of the world". It has also strengthened cooperation on institutional connectivity including policies, rules and standards.

David Parker, Minister for Trade and Export Growth of New Zealand. Photo / File

Third, the international platform for Belt and Road cooperation has been steadily strengthened. The BRF is the highest-level platform for Belt and Road cooperation where all parties concerned meet to build consensus and adopt plans for future cooperation. A BRF Advisory Council consisting of leading international figures has been set up to provide advice on the growth of the Forum.

Fourth, the BRI has delivered fruitful outcomes in boosting economic growth and improving people's lives in participating countries. There are so many stories of success.

All of the above fully demonstrate that the BRI has provided good opportunities for all parties involved to jointly address global

challenges, promote global growth, and achieve common prosperity through greater connectivity. But this is only the beginning, and there is a lot more can be accomplished by pursuing this cooperation initiative. China will continue to work with all other parties to create greater opportunities and deliver even more fruitful outcomes.

How New Zealand could benefit from BRI?

Since the establishment of diplomatic relations between China and New Zealand, enormous achievements have been made in bilateral cooperation in various fields.

We have seen continued strengthening of trade, investment and people-to-people links. We have enjoyed an impressive list of 'firsts' in China's relations with developed countries.

All of the above lays a solid foundation for practical cooperation between China and New Zealand on BRI.

New Zealand has long supported the BRI and participated in the Asian Infrastructure Investment Bank. China and New Zealand signed BRI Memorandum of Agreement in 2017 during Premier Li Keqiang's official visit to New Zealand.

During Prime Minister Jacinda Ardern's successful visit to China in early April, the two sides have reached broad consensus to promote China-New Zealand comprehensive strategic partnership, which includes deepening the cooperation in the BRI.

China and New Zealand are highly complementary in economy. China stands ready to synergise the BRI with development strategies of New Zealand, broaden minds, tap into the potential and promote the development of bilateral economic and trade cooperation, so as to make the pie of cooperation bigger.

As the report by New Zealand China Council has pointed out, BRI is a historic opportunity for countries like New Zealand, which are highly dependent on free trade and overseas markets.

Based on New Zealand's advantages and from the perspective of New Zealand, the report proposes to actively participate in BRI cooperation in four priority areas of trade facilitation, linking hub for Asia-South America, innovation and creativity. All of these provides greater potential and inspirations on how New Zealand could benefit from BRI.

What kind of cooperation New Zealand and China could have under the BRI?

On policy coordination, both China and New Zealand firmly supports multilateralism and free trade. We should enhance cooperation in this regard by jointly striving for an open world economy and uphold multilateralism and mutilateral trading regime.

On infrastructure connectivity, in light of New Zealand and China Council's suggestions, the two sides could explore the possibility of making New Zealand the hub for air and sea transportation between China and South America.

On unimpeded trade, China and New Zealand have agreed to speed up negotiations on the upgrade of bilateral Free Trade Agreement. The upgraded FTA will unleash more cooperation

dividends for the business community. China would also like to work with New Zealand and other parties to push forward negotiations on the Regional Comprehensive Economic Partnership.

On financial cooperation, a Memorandum of Arrangement on Bilateral Financial Dialogue was signed during Prime Minister Ardern's recent visit to China. This will serve as a platform for the financial cooperation between our two countries. We could explore more financing models to enhance bilateral practical cooperation.

On people-to-people exchanges, we should further enhance exchanges and cooperation in areas of education, culture and tourism. We should take joint efforts and make the 2019 Year of Tourism a great success.

The BRI is an open, inclusive and transparent platform for joint economic development. All parties involved are equal participants, contributors and beneficiaries. There is no uniform model for how each party should carry out cooperation under it.

Each participant can find its own conjunction point between its development strategy and the BRI.

China would like to strengthen communication and coordination of economic policy and development strategy with New Zealand, to carry out more pragmatic cooperation under BRI, bringing more benefits to the two countries and two peoples.

- Wu Xi is Chinese Ambassador to New Zealand.

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How New Zealand could benefit from Belt and Road Initiative

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COMMENT: Nearly 5,000 guests from more than 150 countries and more than 90 international organisations are attending the Second Belt and Road Forum for International Cooperation in Beijing. This year's theme is "Belt and Road Cooperation, Shaping a Brighter Shared Future".

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- Kerepehi is a North Island town in NZ, where a local cheese factory got shut down, which was seen as the 'heart of the town'.
- BRI allowed for chinese investment to the factory, which opened up again as an 'ice cream' factory, highly demanded by the Chinese market.
- Creation of 50 full time jobs, employing locals and using local ingredients in production.

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Lorrayne is a Maori woman in the North Island town of Kerepehi who witnessed the prosperity and decline of the town.

After the closure of the Kerepehi cheese factory, the economic pillar of the town, Lorrayne's neighbors lost their jobs. Many families, including Lori's family, are unsustainable. People applied for government subsidies, or left their homes to make a living, so the population has flowed out for many years. Lori and her friends felt hopeless and desperate. However, with the arrival of a food company from China, Lorrayne saw hope.

Lorrayne said, "When I first came here three years ago, we had no machines. So watching everything get put together has been amazing. In my life. I'm from here, from Kerepehi. The factory bring big changes to the local, I think. When they (old factories) were closed, a lot of families moved away. So now we've got a lot coming back home and working here, and it's good."

The arrival of the Chinese investment has brought a new life to this century-old cheese factory, and 50 full-time jobs have sowed seeds for the new dreams of 50 families.

Baxi is a brand of Beijing Capital Agricultural Group's Allied Faxi Food Company, and the ice cream series products are sold well in Beijing, Shanghai and many other Chinese cities. Arthur Yan, general manager of Ailei New Zealand, said that the first factory of Baxi was located in Beijing and the second factory was located in Shanghai. The New Zealand plant, built in the deserted cheese factory, is its third factory, which uses locally sourced milk and hire local employees.

"Quality ice cream comes from high-quality ingredients," Yan said, "New Zealand was chosen because the air and water is among the purest on earth and the dairy industry is world-leading. The factory is equipped with the best quality milk, cream and fruit resources in New Zealand. The 50 employees of the factory are all locally."

On September 26, 2016, New Zealand's Baxi factory was put into production. Some people saw the busy production plant on the assembly line, and they could not help but shed tears. Their childhood memories were connected with the century-old factory, and the rebirth of the old factory also means a new economic pillar for the town.

After extensive experimental testing and continuous formulation improvement, the New Zealand Baxi factory has produced three kinds of classic ice creams of vanilla, double raspberry and chocolate, under the brand of G'nature. In May 2018, at the "22nd International Ice Cream Contest" held in New Zealand, G'nature's double-berry flavor and super chocolate-flavored ice cream won the Gold and Silver Awards seperately.

In the international ice cream market, the ice cream is also a blockbuster, letting the world have a taste of a high quality ice cream from a Chinese firm and made in New Zealand, Yan said.

A year after, G'nature ice cream was launched in China's Shangchao and catering outlets, China's first G'nature flagship store opened on Nanjing Road in Shanghai's CBD. New Zealand's consumers can buy G'nature ice cream at local supermarkets.

Because the products are sought after by the market, the company achieved profitability in the second year of production. In the previous fiscal year, its net income exceeded 20 million New Zealand dollars (13.4 million U.S. dollars), and it is expected to exceed 30 million New Zealand dollars (20.1 U.S. dollars) this fiscal year.

"This is a big business," said John Tregidga, Mayor of the Hauraki District, to which Kerepehi belongs, "this is a labor-intensive industry."

"What the Chinese company is doing is not only helping of employment for our people, but also giving confidence to our community. So what we had in New Zealand, which is no different from Australia and some other countries, is that we have a lot of young people going into the big cities to get jobs," said John Tregidga.

"I've been working hard on getting companies to settle in, to attract young people to stay here and have their families and be a part of the culture and the community, and it's now being successful. We are seeing unemployment go down. We are increasing the GDP above the national average," Tregidga said louldly and proudly.

About 50 kms west away from Kerepehi, lays Yashili New Zealand Dairy Co, a leading producer of infant milk formula for the domestic market in China.

Linda, who worked here for Yashili for the last three and a half years, is a purchasing officer in Yashili.

"Before coming to work here, I worked in Auckland City, and it used to take me an hour and a half in the morning to go to work and an hour and a half every night to get home from work. Now I work locally. It takes me only five minutes to get to work and five minutes to get home. When they first started to develop down here, I can see the plant from my house and I leaned on my kitchen bench when they first started to count the ground, and I said to my husband: 'If they need a purchasing officer, the job is mine.'"

"When they advertised the job and I applied and I got the job. My daughter goes study in a local school and they have a very extensive robotics program. Yashili has donated money in that robotic program," said Linda.

The projects of Allied Faxi and Yashili in New Zealand are two microcosms of Sino-New Zealand dairy cooperation. Under the Belt and Road Initiative, New Zealand dairy products have become a major part of the dairy products exported to China. China's increasing dairy demand is having a strong pulling effect on New Zealand's dairy production.

New Zealand's exports of all goods and services to China were worth 16.6 billion NZ dollars (11.4 billion U.S. dollars) for the year ending in September 2018, 2.6 billion NZ dollars more than Australia and almost double the sales to the United States, Stats NZ said. Of all the goods exported to China, dairy products accounted for the largest proportion.

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Belt and Road Initiative revitalizes New Zealand's small town

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Lorrayne is a Maori woman in the North Island town of Kerepehi who witnessed the prosperity and decline of the town. After the closure of the Kerepehi cheese factory, the economic pillar of the town, Lorrayne's neighbors lost their jobs. Many families, including Lori's family, are unsustainable.

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- In 2018, New Zealand security intelligence services of NZ stated that the country is 'a target of espionage and foreign interference activity'.
- This expresses concerns of vulnerability towards Beijing via BRI.
- China can use BRI as an excuse to gain information about New Zealand and alter any political or economic decisions the government may make.
- Greenhouse gas emissions increased due to growth in diary product exports to China.
- 60% of monitored rivers unsafe to swim due to contribution of diary farming to river pollution

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Posted March 14, 2019 06:06:30

As China flexes its muscles throughout the Pacific, New Zealand is now finding itself in a troublesome position as the nation awaits a major report into foreign interference expected to come out soon.

Until now, the United States and Australia have fretted over the possibility of China exerting influence through debt and construction in the region, but much less attention seems to have been paid to New Zealand amid increasing reports of espionage by Beijing.

But there are signs of divisions emerging within New Zealand's coalition government over how to respond to claims of undue influence from its largest trading partner.

This week Deputy Prime Minister and Foreign Affairs Minister Winston Peters told the media that laws dealing with foreign interference similar to those already enacted in Australia are being considered.

But at a media conference on Monday, Prime Minister Jacinda Ardern appeared unaware of any new legislation, and said she would await the findings of an ongoing parliamentary committee into foreign interference before any changes were made to existing laws.

Mr Peters, the leader of the New Zealand First party which Ms Ardern's Labour party needsto work with to remain in government, has previously spoken out strongly on Chinese interference.

The disconnect between the two is the latest sign of the strain the country is facing as it struggles to deal with potential Chinese influence.

According to New Zealand foreign policy expert Dr Reuben Steff from the University of Waikato, the situation comes down to how to appeal to both China and its citizens amid fears of appearing to side too heavily with Washington or Beijing.

Things came to a head late last year when New Zealand reportedly banned Huawei from its 5G network, which Ms Ardern has since denied, but Beijing quickly responded by publishing a state media article alleging it had been "stabbed in the back".

Meanwhile, a major tourism event was cancelled, an Air New Zealand flight had to turn around, there was a drop in Chinese student enrolments, while a free trade deal renegotiation appears to have stalled.

China trying to 'guide, buy or coerce' New Zealand

Concerns about foreign interference in New Zealand burst into the open late in 2017 when academic Professor Anne-Marie Brady published the paper Magical Weapons, which forensically detailed the scale of China's alleged interference in New Zealand.

"The People's Republic of China's (PRC) attempts to guide, buy, or coerce political influence abroad are widespread," she wrote.

"China's foreign influence activities are part of a global strategy with almost identical, longstanding approaches."

After the study was published, Professor Brady reported that her home was broken into, her car was tampered with, and that she received threatening letters and phone calls.

Then, just last week, Professor Brady was controversially barred from speaking before the parliamentary committee inquiry into foreign interference chaired by Labour politician Raymond Huo, whom she identified in her paper as having extensive links to the Chinese Communist Party, which he denies.

A day later, the government-dominated committee then backed down and agreed to consider allowing her to testify, which observers have pegged to a fear from the government of handling the situation undemocratically.

While New Zealand's politicians tread cautiously around China, the country's security agencies have increasingly expressed concern at the scale of foreign interference in the country.

"We know New Zealand is a target of espionage and foreign interference activity," stated the New Zealand Security Intelligence Service in its 2018 annual report.

"Foreign actors attempt to gain access to sensitive government ... influence decision makers, control migrant communities, and acquire intellectual property."

'Dancing with a dragon is risky business for Kiwi hobbits'

The results of the parliamentary committee inquiry into foreign interference will be watched closely in New Zealand, as well as the currently divided coalitions government's response to its recommendations.

Some parallel measures have already taken place - like Australia, New Zealand has also begun attempts at a Pacific realignment with million-dollar aid boosts throughout the South Pacific.

However unlike Australia, New Zealand has trodden more carefully when it comes to passing foreign interference laws, largely because in addition to being a far smaller player in international affairs, it has a different set of geopolitical priorities than Australia, according to Dr Steff.

"Australia and New Zealand face the same problem - increasing trade with China but a close security relationship with the US," he said.

"For Australia, ensuring they remain in the orbit of the US is viewed as critical to your long-term security; for New Zealand, geopolitical threats are often an after-thought and don't enter into foreign policy considerations to the same extent as they do in Australia."

Meanwhile, proponents of China in New Zealand have been actively engaged in damage control since the relationship started to erode after the Huawei debacle last year.

"Interests and organisations in New Zealand that support deepening New Zealand-Chinese ties are currently playing defence and it's not clear what China gets out of this," Dr Steff said.

For example, in a speech last month, Stephen Jacobi - the executive of one pro-China organisation, the New Zealand China Council - openly acknowledged the shifting landscape.

"As our relationship continues to grow and deepen, it is perhaps inevitable that there will be some heightened public debate about the extent of that relationship and its impact here in New Zealand," he said.

"Dancing with a dragon must, after all, be considered risky business, even for us Kiwi hobbits, and even at the best of times."

Topics: government-and-politics, world-politics, foreign-affairs, foreign-aid, defence-and-national-security, security-intelligence, trade, new-zealand, china, asia

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Why New Zealand is approaching China differently to Australia and the United States

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Posted March 14, 2019 06:06:30 As China flexes its muscles throughout the Pacific, New Zealand is now finding itself in a troublesome position as the nation awaits a major report into foreign interference expected to come out soon.

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This academic article was written in 2017, two year prior to Italy signing on to the BRI. It accurately predicts Italy's action and reasoning for joining.

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Is the BRI (Belt And Road Initiative) colonialism?  

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Is the BRI (Belt And Road Initiative) colonialism?  

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Despite China's attempts to create what it views as an economic/ trading route key critics accuse China of economic colonialism.

Creating deals where developing states give access to raw resources in exchange for Chinese funded and built projects.

Furthermore loans given out by the Chinese state which are so called "unconditional" when compared to IMF or World Bank loans.

Will these states which have traditionally seen economically turbulent times be able to pay back the loans and what happens if they do not.

The inability to fix the Chinese built infrastructure which are built using solely Chinese tooling.

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Italian Prime Minister Giuseppe Conte's View

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Italian Prime Minister Giuseppe Conte's View

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Conte views that joining the BRI as an integral way for Italy to rebuild its economy.

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Italian Premier Giuseppe Conte pledged to make Italy the first Group of Seven nation to join China's ambitious Belt and Road initiative.

Despite objections from the United States and concerns within his governing coalition, Conte told parliament

Speaking to parliament, Conte said the move would not call into question Italy's position in the transatlantic alliance or with European partners.

Italy is expected to sign a memorandum of understanding for the infrastructure-building venture during a visit by Chinese President Xi Jinping this week.

Italy's signature would be considered a major legitimation of the project that envisions overland and maritime routes connecting China with Europe.

A White House official has warned Italy against joining, calling it a Chinese "vanity project".

European governments declined to sign a joint declaration on the "Belt and Road" at a forum last year in Beijing. They argued it lacked standards on financing and transparency.

Conte said the details have been finalised during months of consultations at all levels of government, stating that the memorandum is not legally binding and would give Italy access to an enormous market.

"We want to first and foremost rebalance our trade, which is not favourable to us now. Our exports to China are far lower than other European countries," Conte said.

China's foreign ministry said Wednesday that Xi will visit Sicily in addition to Rome, with plans to meet with Italian President Sergio Mattarella as well as Conte. It also defended the Belt and Road initiative against naysayers in Italy.

"During the process of developing the Belt and Road initiative cooperation, it is inevitable that we may encounter some misunderstandings and even doubts," said Chinese Vice Foreign Minister Wang Chao.

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Italy to join China's Belt and Road plan

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Italian Premier Giuseppe Conte pledged to make Italy the first Group of Seven nation to join China's ambitious Belt and Road initiative. Despite objections from the United States and concerns within his governing coalition, Conte told parliament Speaking to parliament, Conte said the move would not call into question Italy's position in the transatlantic alliance or with European partners.

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China's Belt and Road Initiative (BRI) is a multifaceted economic, diplomatic and geopolitical undertaking that has morphed through various iterations, from the "New Silk Road" to " One Belt One Road ".

The BRI imagines a US$1.3 trillion Chinese-led investment program creating a web of infrastructure, including roads, railways, telecommunications, energy pipelines, and ports. This would serve to enhance economic interconnectivity and facilitate development across Eurasia, East Africa and more than 60 partner countries.

First proposed in September 2013, it is the signature foreign policy initiative of Chinese President Xi Jinping. It is a project of unprecedented geographical and financial scope.

BRI has two primary components: the overland Silk Road Economic Belt (SREB), and the sea-based 21st-century Maritime Silk Road (MSR). Together, they form the "belt" and "road".

SREB's overland infrastructure network encompasses the New Eurasia Land Bridge and five economic corridors: China-Mongolia-Russia; China-Central Asia-West Asia; China-Pakistan; the China-Indochina peninsula; and Bangladesh-China-India-Myanmar. The SREB's connective sinews will be high-speed rail and hydrocarbon pipeline networks.

The MSR is focused on developing key seaports that connect to land-based transportation routes.

Reuters

China has been at pains to emphasise the co-operative nature of the initiative and its objective of "win-win outcomes". In his address to the Belt and Road Forum for International Co-operation in Beijing, Xi framed the BRI in terms of "peace and co-operation", "openness and inclusiveness", "mutual learning", and "mutual benefit".

Yet behind the rhetoric of harmony and mutuality lies a substantive strategy for growing an emerging China-led operating system for the international economy. This could potentially succeed the US-led Washington Consensus and Bretton Woods system.

What China gets from the BRI

BRI projects are likely to increase China's economic and political leverage as a creditor.

China has established the multilateral Asian Infrastructure Investment Bank (AIIB) and the $40 billion Silk Road Fund. These are financial vehicles for BRI infrastructure projects, yet the vast bulk of funding to date has come from China's big state-owned investment banks.

The prospect of access to Chinese financial largesse to fund much-needed infrastructure investments has attracted attention from many prospective partner nations. Many of these appreciate the minimal political conditionalities that come with Chinese finance, in comparison to finance on offer from the International Monetary Fund, the World Bank, and the Asian Development Bank.

The BRI has been viewed as a way for China to productively use its enormous, $3 trillion capital reserves, internationalise the renminbi, and deal with structural issues as its economy navigates the so-called "new normal" of lower growth.

Perhaps foremost among these is the issue of industrial over-capacity. Having maxed out investment-driven growth through a frenzy of domestic infrastructure building following the 2008 global financial crisis, the BRI represents an international stimulus package that will utilise China's idle industrial capacity and safeguard jobs in key industries such as steel and cement.
This is a significant political dividend for the Chinese government. The Chinese Communist Party's legitimacy rests on maintaining economic growth and improving people's standard of living.

In relation to energy security, the BRI will assist China in diversifying its energy sources through greater access to Russian and Iranian oil and gas. This will be achieved by linking with pipeline networks from Russia and Central Asia.

By investing in pipelines from Gwadar, on the coast of Pakistan, to Xinjiang, and from coastal Myanmar to Yunnan, China also can diversify its transportation routes for maritime energy supplies. This reduces its vulnerability to energy supply disruption at maritime choke-points in the Strait of Malacca and the South China Sea.

The establishment of port facilities in the Indian Ocean will also be advantageous to the emerging blue-water capability of the People's Liberation Army Navy. This would assist in keeping vulnerable critical sea lines of communication open for maritime energy supplies from the Middle East.

Collectively, these measures could reduce the ability of the US Navy to blockade China's energy supply routes in any future conflict scenario.

Geopolitical implications of the BRI

After more than a decade of conjecture about China's increasing international assertiveness, the Chinese government has now clearly signalled its intention to assume a more prominent global leadership role through the BRI.

China is aiming to spur a new round of economic globalisation, but in a changed international order that it has a pivotal role in shaping.

The Asian Infrastructure Investment Bank, the BRICS New Development Bank, and the Regional Comprehensive Economic Partnership are the " software of integration " - the financial pillars of trade and investment in this vision.

The BRI is the development vehicle - the " hardware of trade and investment " and the final pillar on which China's claim to global leadership rests.

Somewhat paradoxically, given the investment focus on hydrocarbon pipelines, the BRI also represents the vehicle through which China is likely to shape the contours of the emerging international post-carbon economy. The Paris Agreement in the UN Framework Convention on Climate Change is a keystone document in this respect.

A combination of the climate emergency and market behaviours are making fossil fuel energy production increasingly uneconomic. This has spurred an accelerating transition away from fossil fuels and toward renewable energy generation.

China is a world leader in green and alternative energy technologies. Through the BIR it is well-placed to be the dominant player in facilitating the transition and roll-out of renewable energy infrastructure across Eurasia. This is especially so since the Trump administration has ceded American influence in international climate politics through its repudiation of proactive climate policies.

Leadership on international climate action is one area in which China can develop significant soft power cache, particularly with developing countries of the global south.

China's BRI announcement is also reflective of the relative decline of the US as the world's pre-eminent power. A declaration of intent as bold as that made in Beijing over the weekend at the Belt and Road Forum for International Co-operation would have been inconceivable prior to the 2016 US election.

The Trump administration's clumsy foreign policy manoeuvrings have damaged US prestige, weakened the integrity of a liberal international order already under duress, and opened a window for China to stake its claim.

The BRI also signals a deepening of the Sino-Russian strategic partnership. This is based on a complementary supplier-consumer energy relationship and a mutual antagonism to the US.

However, not all regional countries see the BRI as a boon. The Indian government has expressed reservations over the BRI's China-Pakistan Economic Corridor and China's Indian Ocean ambitions.

The BRI now ups the ante for regional middle powers like Australia that have deftly attempted to hedge between the US and China. Australia's foreign policymakers must weigh up the case for engaging with the BRI and having a seat at the table as China's vision takes shape.

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The Belt and Road Initiative: China's vision for globalisation, Beijing-style

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China's Belt and Road Initiative (BRI) is a multifaceted economic, diplomatic and geopolitical undertaking that has morphed through various iterations, from the "New Silk Road" to " One Belt One Road ". The BRI imagines a US$1.3 trillion Chinese-led investment program creating a web of infrastructure, including roads, railways, telecommunications, energy pipelines, and ports.

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Australian Parliament Stance on the BRI - NZ

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Australian Parliament Stance on the BRI - NZ

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Geoff Wade, Foreign Affairs, Defence and Security

Key Issue
The 'One Belt, One Road' (OBOR) initiative is a Chinese economic and strategic agenda by which the two ends of Eurasia, as well as Africa and Oceania, are being more closely tied along two routes-one overland and one maritime. Supporters suggest that the initiative permits new infrastructure and economic aid to be provided to needy economies. Critics claim that it facilitates Chinese economic and strategic domination of the countries along these routes. OBOR provides a global context for China's growing economic links with Australia.

The 'One Belt, One Road' (OBOR) initiative is a foreign policy and economic strategy of the People's Republic of China. The term derives from the overland 'Silk Road Economic Belt' and the '21st-Century Maritime Silk Road', concepts introduced by PRC President Xi Jinping in 2013. These are the two major axes along which China proposes to economically link Europe to China through countries across Eurasia and the Indian Ocean. The OBOR initiative also links to Africa and Oceania. In March 2015, the PRC issued an action plan for realising this initiative. While the OBOR initiative is being coordinated by China's National Development and Reform Commission, it also heavily involves the ministries of Foreign Affairs and Commerce.

The initiative envisages the building of six major economic cooperation corridors and several key maritime pivot points across Eurasia:

On land, the plan is to build a new Eurasian land bridge and develop the economic corridors of: China-Mongolia-Russia; China-Central Asia-West Asia; the China-Indochina peninsula; China-Pakistan; and Bangladesh-China-India-Myanmar ... On the seas, the initiative will focus on jointly building smooth, secure and efficient transport routes connecting major sea ports along the belt and road.

Formally, OBOR emphasises five key areas of cooperation:

coordinating development policies

forging infrastructure and facilities networks

strengthening investment and trade relations

enhancing financial cooperation and

deepening social and cultural exchanges.

But it is infrastructure such as railways, roads, ports, energy systems and telecommunications networks which is receiving most attention.

The overland 'Belt' involves the creation of an economic and trade corridor extending from China's west through Central Asia, and finally to Europe. The first step is to further link Central Asian states to the Chinese economy, while the longer-distance initiatives include railway connections between China and Europe. The 'Belt' initiative calls for the integration of the Eurasian land mass into a cohesive economic area.

For the maritime 'Road', China's development of ports and hubs across the Indo-Pacific is a key aspect of the initiative. Purchase and construction of port facilities and associated economic zones in Australia, Malaysia, Indonesia, Bangladesh, Sri Lanka, Myanmar, Pakistan, Kenya, Tanzania, Oman and Djibouti are intended to provide China with maritime access and economic benefit across the Indian Ocean. These will connect to Piraeus, Greece's major port, which has been bought by Chinese shipping group COSCO and which will allow direct access to the markets of Europe.

Foremost among the key projects which have been promoted as focal parts of the OBOR initiative are the China-Pakistan Economic Corridor which provides China's western provinces with access to the Indian Ocean through the Pakistani port of Gwadar, and the Bangladesh China India Myanmar Corridor, which will give Yunnan Province access to the Bay of Bengal.

Funding for the initiative is a key issue. China's policy banks are providing massive funds for Chinese enterprises to operate along these axes, while further funding will be provided through the Asian Infrastructure Investment Bank (AIIB), funded by countries globally. The AIIB was created precisely to service projects under OBOR. The projects funded by the first loans issued by AIIB were in Indonesia, Bangladesh, Pakistan and Tajikistan, all countries which China is trying to include within its OBOR initiative.

Hong Kong is also being tapped. In his policy address in January 2016, the Chief Executive of the Hong Kong Special Administrative Region, CY Leung, underlined that Hong Kong would play an active financial role in OBOR and would facilitate educational exchanges between Hong Kong and 'OBOR countries'. A ' Hong Kong Belt and Road Summit' was also convened in May 2016 to allow Zhang Dejiang, Chairman of the Standing Committee of the National People's Congress, to outline 'Hong Kong's Four Unique Advantages' as a hub for OBOR projects. Then in July 2016, the Hong Kong Monetary Authority launched the Infrastructure Financing Facilitation Office, a new entity to facilitate fundraising for projects related to the OBOR initiative. The Hong Kong Trade Development Council has also arranged visits to Thailand for Chinese investors to promote OBOR investment.

Singapore is also essential to promoting offshore economic activities by Chinese entities. The China Construction Bank signed an MOU with International Enterprise Singapore in April 2016, providing S$30 billion in financial support to Singaporean and Chinese companies jointly investing in OBOR projects. A new centre in Singapore to provide project financing and related services to projects is also being planned.

While China claims that OBOR will 'include 65 countries, 4.4 billion people and about 40 percent of global GDP', the current realities are much more pedestrian. China has reportedly established 75 overseas economic and trade cooperation zones in 35 countries as part of the OBOR initiative. OBOR, however, remains inchoate and still strives for external endorsement and support.

China's other OBOR interests

It is clear that China has broader uses for the increased influence it hopes to enjoy through the OBOR initiative.

The expansion of China-controlled telecommunications networks is an important aspect of OBOR. CITIC Telecom CPC recently acquired Linx Telecommunications, which services Russia, Kazakhstan and the 'Stan' region, the Baltic Sea and Eastern Europe. This will provide China with telecommunications services across much of its targeted 'Belt' region. Visits by journalists from OBOR countries to China, and publishing arrangements with newspapers abroad are intended to promote China's views over a broader sphere.

Mining and energy projects are also central to this endeavour, with China widely purchasing mines as well as generation and transmission projects across OBOR states. Chinese companies now own almost a quarter of Kazakhstan's oil production, while over $15 billion of oil, gas and uranium deals have recently been signed with Uzbekistan.

And in this year's white paper on its satellite navigation and location service, China says that it plans to launch another 30 Beidou satellite navigation system satellites over the next five years, with the first 18 satellites being launched before 2018 to cover OBOR countries.

Reactions

Reactions to the OBOR proposal have varied globally. Ethnic Chinese business figures in Southeast Asia and their political representatives have generally been enthusiastic about the business possibilities. Malaysia has been active in accepting and promoting the idea, with a 162-member Malaysian delegation heading to Beijing in July 2015 to participate in an OBOR dialogue.

Pakistan and Sri Lanka have also been particularly welcoming of Chinese capital and infrastructure projects, as have the various Central Asian states. Vietnam, meanwhile, has expressed grave doubts about the initiative. With few exceptions, India has been stridently suspicious of the overall OBOR initiative and has repeatedly expressed its concerns about China's growing economic and strategic power being pursued through OBOR. Russia needs funding assistance for developing its resources and appears to see OBOR as an avenue for this.

Australia and OBOR

Within Australia, enterprises, banks and law firms are promoting the OBOR initiative as an economic opportunity for the country and, with Chinese endorsement, an Australia-China OBOR Initiative has been established to promote Chinese engagement in the Australian economy. China is also utilising the concept to promote its growing economic engagement with northern Australia. Another avenue for encouraging Australia's further engagement with OBOR is China's funding and support of various related local academic conferences and seminars.

Criticisms

Not all reactions to OBOR have been enthusiastic. Former World Trade Organization chief, Supachai Panitchpakdi, has stated that the OBOR initiative and, specifically, its projects along the Mekong River, all serve China's own interests.

Broader concerns relate to the longer-term aims of China, with the possibility that the OBOR agenda is aimed at creating a Eurasia-wide, China-led bloc to counter the US. At the June 2016 Shangri-la Dialogue in Singapore, Professor Xiang Lanxin, director of the Centre of One Belt and One Road Studies at the China National Institute for SCO International Exchange and Judicial Cooperation, spoke of OBOR as being an avenue to a 'post-Westphalian world'. As such, some see this initiative as a profound challenge to the current global political and economic status quo.

Conclusion

China's wielding of this economic statecraft strategy derives from several collocations. On the political front, since late 2012, President Xi has been promoting the ' Chinese dream' (中国梦), involving the 'great revival of the Chinese nation'. Such revival requires a restored global position and identity for China. Earlier iterations of OBOR involved the catch-phrases 'common development' and 'win-win cooperation' to characterise the relations between China's development and that of its neighbours. China also promoted a ' China-ASEAN community of shared destiny' (中国-东盟命运共同体). But these smaller initiatives have burgeoned into the Eurasia-wide OBOR, bringing into play the PRC's massive capital reserves-both state and private-achieved through 40 years of rapid economic growth, and offering an outlet for the vast excess production capacities which exist today in China.

Regardless of the credence which one assigns to the various interpretations of the OBOR initiative, progress thus far makes it clear that as Australia becomes increasingly tied economically with China, there is a need to maintain a close watch on the progress of the OBOR initiative globally. It also suggests that Australia needs to adopt a more economically and strategically prudent attitude in determining how the Australia-China economic relationship is to further develop.

Further reading

The Economist Intelligence Unit (EIU), Prospects and challenges on China's 'one belt, one road': a risk assessment report, EIU, London, 2015.

WT Wilson, ' China's huge 'One Belt, One Road' initiative is sweeping Central Asia', The National Enquirer, 27 July 2016.

RD Blackwill and JM Harris, War by other means: geoeconomics and statecraft, Belknap/Harvard University Press, Cambridge (Mass.), 2016.
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Geoff Wade, Foreign Affairs, Defence and Security Key Issue The 'One Belt, One Road' (OBOR) initiative is a Chinese economic and strategic agenda by which the two ends of Eurasia, as well as Africa and Oceania, are being more closely tied along two routes-one overland and one maritime.

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This week, leaders from around the world are descending on Beijing for China's second Belt and Road Forum, a conference to showcase China's signature diplomatic initiative. But these leaders should be clear-eyed that China's efforts to use its Belt and Road Initiative (BRI) to broaden its geopolitical and economic clout risk saddling developing countries with unsustainable debt while increasing their dependency on China.

The fact that poorer countries struggle with debt is nothing new, but after years of successful efforts to reduce their debt burden-including through the largest debt forgiveness program in history, started under U.S. President Bill Clinton and advanced by the George W. Bush Administration and the international community-they are once again going into the red. Unlike before, developing countries' strategic assets, such as their resources, mineral deposits, port access rights, and the like, are now targeted by creditors as collateral in many of these predatory deals.

In many vulnerable countries, much of the burdensome debt is owed to a single source: China. According to a study by the International Monetary Fund (IMF), from 2013 to 2016, China's contribution to the public debt of heavily indebted poor countries nearly doubled from 6.2 percent to 11.6 percent. China's lending is expanding even more through BRI. Noting a lack of economic feasibility of some BRI projects, many observers suspect that the initiative is partly motivated by China's desire to stimulate its own economy, obtain strategic assets, and convert its economic access into political and strategic influence in recipient nations.

In such a scenario, the economic benefits of China's debt-driven projects to recipient nations' populations are an afterthought. And the lack of transparency in China's lending obscures its risks to recipient countries, many of which are already vulnerable to or are suffering from financial or fiscal distress. But concealing risks does not eliminate their consequences, and when cash-strapped developing countries fail to pay back the loans for multibillion-dollar projects, it can result in a loss of strategic assets, major hurdles to economic development, and a loss of sovereignty.

For example, unable to repay China for a loan used to build a new port in the city of Hambantota, in 2017 Sri Lanka signed over to China a 99-year lease for its use, potentially as a strategic base for China's navy. In Djibouti, public debt has risen to roughly 80 percent of the country's GDP (and China owns the lion's share), placing the country at high risk of debt distress. That China's first and only overseas military base is located in Djibouti is a consequence, not a coincidence. Elsewhere in Africa, Burundi, Chad, Mozambique, and Zambia are all either in debt distress or at high risk of it, a situation China's predatory lending practices are exacerbating.

By contrast, traditional donor nations belonging to the Paris Club, a group of sovereign creditors including the United States and 21 others, have pledged themselves to support a different relationship with poorer nations. Paris Club members have committed to sustainable repayment solutions for debtor nations and to provide appropriate debt relief if a debtor undertakes reforms to stabilize and restore its macroeconomic and financial situation.

China does not support such globally recognized sustainable and transparent lending practices; where the Paris Club would offer transparency and financial sustainability, China would trade debt for a country's strategic assets. It stands outside of international efforts-principally driven through the IMF and World Bank-to promote transparency, which improves policymaking, prevents debt crises, and discourages corruption.

Under the Trump administration, the U.S. Agency for International Development (USAID), which I lead, centers development initiatives on helping countries on what it calls their "journey to self-reliance." As reflected in the administration's Africa Strategy, USAID wants to help partner countries adopt reforms and address the challenges necessary for them to achieve first self-reliance and then, hopefully, prosperity.

President Donald Trump's National Security Strategy emphasizes that private sector development in emerging economies is the best alternative to state-driven approaches. As a result, Congress has passed the president's proposal to increase the United States' ability to provide transparent, sustainable finance through a new U.S. International Development Finance Corp., and USAID has undertaken a major cultural and operational transformation to expand our engagement with the private sector to achieve long-lasting and sustainable results.

Given evidence that China's lending imposes unsustainable burdens on vulnerable countries globally, it is past time for world leaders to insist that all projects adhere to internationally accepted best practices for transparency and financial sustainability and that lenders adopt modern labor, governance, and environmental standards for their development projects.

This week, China is showcasing its signature global initiative. But anyone who wants a brighter, more self-reliant future for developing countries should join together to demand that China help break the chains of debt it is wrapping around the developing world.

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This week, leaders from around the world are descending on Beijing for China's second Belt and Road Forum, a conference to showcase China's signature diplomatic initiative. But these leaders should be clear-eyed that China's efforts to use its Belt and Road Initiative (BRI) to broaden its geopolitical and economic clout risk saddling developing countries with unsustainable debt while increasing their dependency on China.

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Although China's top-ranking diplomat Yang Jiechi has repeatedly assured the world that his country's supreme foreign policy project, the Belt and Road Initiative (BRI), "does not play little geopolitical games", many governments believe this is exactly what it does. The second BRI Summit held last month did nothing to allay the concerns of Western governments about Beijing's rising influence and its role as a creditor.

But Europe and the US are far from the only ones to worry about the impact of BRI, and indeed, have less cause for it in any case. Thanks to their powerful economies, Beijing cannot throw them around as easily as smaller economies in Africa but also in Southeast Asia and Latin America, where China is relentlessly expanding its power.

Xi Jinping has tirelessly stressed how the Belt and Road seeks to create a "community of common destiny" and has reiterated its focus on "the fundamental issue of development, release the growth potential of various countries and ... deliver benefits to all." In reality, the BRI has already turned into a Chinese neo-colonialist project.

The reason behind it is China's economic logic. To continually fuel economic growth, Chinese companies in sectors such as aluminium, steel and cement have created massive production over-capacities. However, with the country's economy settling into a more modest growth rate compared to the furious boom years, these companies are hard pressed to keep their production lines running. The way out? Investing into big extractive and infrastructure projects abroad.
As a consequence, China has pushed to exploit foreign raw materials, especially minerals, fossil fuels, agricultural commodities for its perpetually hungry industries on virtually every content. But considering its wealth in resources required by Chinese industries, Africa has emerged as a main target of investments and influence. It is no coincident that China is present in 39 countries through the BRI, and has emerged as the continent's biggest trade partner.

China has laid its eyes on Guinea's bauxite reserves, one of the world's largest (Photo: Waldo Swiegers via Getty)

While China's tens of billions of investments and loans are greedily gobbled up by cash-starved African states, they are not as bereft of strings as is often claimed. In fact, the BRI is trapping numerous countries in unsustainable levels of debt. At the same time, bilateral trade, though often increasing after the conclusion of a deal, remains one-sided, where China extracts resources for exports but imports cheap finished goods of questionable quality that undermine local manufacturers. With a country's destiny thus chained to Beijing's wits, accusations of Chinese "neo-colonialism" are rising - not surprising given Beijing's scramble for Africa.

While China's tens of billions of investments and loans are greedily gobbled up by cash-starved African states, they are not as bereft of strings as is often claimed.

For example, China has laid its eyes on Guinea's bauxite reserves, one of the world's largest, to keep its aluminium industry running. Promising a loan double the size of its GDP, mining projects in Guinea's Boké prefecture under the auspices of Chalco and TBEA Co Ltd, as well as in Télémilé district with CDM Henan China, are well underway. In 2018, SMB-Winning Consortium, made up of Wining Shipping, logistics firm UMS and aluminium producer China Weiqiao, promised US $3 billion into infrastructure and smelter projects in Boké. That same year, another Chinese aluminium firm, Zibo Rundi, was awarded a 25-year mining concession containing 1 billion tonnes of bauxite.

These deals are cementing Guinea's position as the main bauxite exporter for China. Last year, Guinea exported 38.2 million tonnes of the aluminium precursor to Chinese smelters. The problem is that deals concluded between Beijing and African governments are hardly the "win-win" outcome Beijing promises.

In Guinea, the population is benefitting little from the bauxite boom. In May last year, workers at a Boké mine went on strike for two weeks in protest over the arrest of a union leader. A volatile region due to the wealth discrepancy between the mining companies operating there and the poor local population, riots broke out in 2017 over health and environmental issues, brutally suppressed by government forces. More recently, in April, workers at the CDM-China-owned mine in Telimélé district went on strike demanding better working conditions.

In Zambia, similar conditions for the local population prevail. Having invested there for its rich copper mines, China has moved men and machinery to the country, replacing Zambian with Chinese workers and causing a spike in unemployment in the country's mining heartland in the process. Safety regulations for locals are routinely flouted as miners are required to work for two years until they are given basic protective gear. The situation has escalated since 2015, and Zambian observers assert that the "influx of the Chinese ... will threaten the sovereignty and security of the country."
These examples show that China's foreign policy exhibits a pattern of exploitation and one-sidedness akin to the former colonialism of Western powers. But it is doubtful that China will change its ways any time soon and adapt its policies to the benefit of local populations rather than simply benefitting from them. After all, China considers itself a bringer of development - in stark contrast to the conditionality of Western development aid.

This view is based on China's self-perception as a victim of former Western imperialistic aggression itself. Consequently, Beijing is unable, as one analyst put it, "to view its actions as anything but benevolent and its tendency to ignore historical echoes."

And unlike in other regions where China is forcefully pushing ahead, African leaders are unwilling - or unable - to push back and effectively negotiate better terms for the deals. At the 2018 Forum on China-Africa Cooperation (FOCAC), African leaders drowned China in praise in a unmistakable sign of how indispensable the Middle Kingdom has become to them, in contrast to the United Nations, United States and European Union.

With the writing thick on the wall, it is clear that the West has neglected Africa as its former sphere of influence and has lost ground to Beijing. But for African countries hoping to escape Western conditionality by embracing China, a rude awakening is coming, no matter how hard China's top diplomats are denying it: far from being the better choice, colonialism is back - but this time with Chinese characteristics.

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Belt and Road: colonialism with Chinese characteristics

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Although China's top-ranking diplomat Yang Jiechi has repeatedly assured the world that his country's supreme foreign policy project, the Belt and Road Initiative (BRI), "does not play little geopolitical games", many governments believe this is exactly what it does.

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Geoeconomics of China-Pakistan (CPEC) & Belt and Road Initiative

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Geoeconomics of China-Pakistan (CPEC) & Belt and Road Initiative

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Geoeconomics of China-Pakistan Economic Corridor

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Terror, Security and the China-Pakistan Economic Corridor

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Terror, Security and the China-Pakistan Economic Corridor

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China and Pakistan inaugurated relations with one another in 1951 and since then, the elements necessary for a sustainable all-weather partnership have firmly taken root. Pakistan and China's relations have always been based on neighbourly respect, economic exchange, technological cooperation, common security goals and enlightened cultural exchange.

Today, the partnership has entered a new era due to mutual participation in the Belt and Road initiative (BRI). Pakistan is home to the China-Pakistan Economic Corridor (CPEC), a project that over the medium and long term will revitalise and then transform the foundations of the Pakistani economy. CPEC also provides China with an efficient, secure and ultra-modern infrastructure for vital east-west trading routes. CPEC can consequently be thought of as a central artery in the global Pacific to Mediterranean trading routes that converge at the ever growing CPEC port of Gwadar on the Arabian Sea.

After a decades long battle against terror, today's Pakistan looks to create new inroads of prosperity through interconnectivity to multiple trading partners, including its valued Chinese partner. CPEC will not only make this possible but in the process will revitalise domestic industry, spur domestic innovation, create thousands of jobs, incentivise growing trade with multiple partners and lay the foundations for a major future tourist sector in Gwadar and beyond.

In order to best achieve this, securing CPEC is as important as successfully constructing all CPEC related infrastructure. Here too, Pakistan stands shoulder-to-shoulder with its Chinese partner. Pakistan's military spokesman Major General Asif Ghafoor who serves as the director of the Inter-Services Public Relations (ISPR) recently held an on-camera dialogue with Chinese officials and journalists about Pakistan's commitment to security and peace in and around CPEC projects.

Major General Ghafoor explained that Pakistan's struggle with terrorism that began shortly after the turn of the 21 st century has been largely won by the Pakistani authorities, thus creating a safe working and living environment for Pakistanis, foreign investors and foreign workers. Ghafoor further stated that while small elements of lawlessness exist, the Army and intelligence agencies have a firm grip on neutralising the remnants of banditry and violence as this is recognised by the military in Pakistan as a key element of assuring the country's long term success on a sustainable basis.

Specifically, Ghafoor revealed that the Pakistani Army has raised a division sized force whose sole role is to safeguard CPEC related projects as well as the Chinese workers and investors who are in Pakistan to help expand CPEC. He then stated that the Pakistani Army plans to raise a second division sized force to bolster security even further.

Ghafoor acknowledged that Chinese investment into Pakistan has played a vital role in fighting terrorism. The bourgeoning economic opportunities that have arisen because of CPEC and related investment initiatives have helped to defeat one of the key elements of extremism - the exploitation of the young by forces of wickedness. Thanks to CPEC, instead of being lured into extremism at the hands of regional provocateurs, Pakistanis in Gwadar's province of Balochistan in particular are looking with optimism to CPEC while many have already found life changing employment opportunities as a result of China's investment.

One of the key takeaways from Ghafoor's statements is that Gwadar is like a young child that can grow to be a productive adult so long as it is nourished by Chinese investment, innovation and economic experience on the one hand and protected, strengthened and shielded from material threats by Pakistan's Army and intelligence on the other.

This cooperative endeavour holds the potential not only to expand upon existing win-win developments but more importantly, it can permanently transform the economic and developmental fortunes of Pakistan which over the coming years looks to become one of the major trading centres in the world because of CPEC and the growth that CPEC is already helping to foster.

Pakistan's authorities have played a vital role in protecting the people and ushering in a new era where the state's resources are now well placed to help expand an economy that contracted during the worst periods of the struggle against terrorism.

It is deeply important that as Ghafoor's statements make clear, Pakistan's Army understands the vital importance of CPEC. CPEC represents Pakistan's road towards a better economic future while it simultaneously represents the evolution of the all-weather friendship that has seen Chinese and Pakistani friendship consistently persevere irrespective of other global trends.

Adam Garrie is Director at Eurasia future and co-host of The History Boys with George Galloway.

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Major General Asif Ghafoor: Army Will Protect CPEC - Eurasia Future

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China and Pakistan inaugurated relations with one another in 1951 and since then, the elements necessary for a sustainable all-weather partnership have firmly taken root. Pakistan and China's relations have always been based on neighbourly respect, economic exchange, technological cooperation, common security goals and enlightened cultural exchange. Today, the partnership ...

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- https://eng.yidaiyilu.gov.cn/info/iList.jsp?cat_id=10060

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Undoubtedly, Gwadar - the port city in Balochistan on the Arabian Sea - is the backbone of the China-Pakistan Economic Corridor (CPEC), which is why it has been in the center of media attention ever since the announcement of the multi-billion dollar project. In this regard, Pakistan's prosperity is also linked to the development of the Gwadar port project. On some occasions, Pakistani officials have gone as far as to assert that Gwadar has the potential of changing the fate of the whole region.

But on May 12, Baloch militants carried out an assault in the heart of CPEC.

Three armed militants reportedly stormed the luxury Pearl Continental hotel in Gwadar. The attackers were killed, but only after killing five people inside the hotel and a soldier.

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CPEC is part of China's massive Belt and Road Initiative. It seeks to link China's western and less-developed Xinjiang region with Gwadar in Pakistan's Balochistan province. This plan will give China valuable access to the Arabian Sea.

From the beginning, China has been concerned about the threats to CPEC in Pakistan in general and in Balochistan in particular. The southern Pakistani province is home to a long-running insurgency by various Baloch ethnic militias aiming for independence. To address China's concerns, Pakistan has taken action against militant groups, including banned religious outfits. Over the years, the Pakistani authorities have been able to restore peace in many areas that were previously volatile. There have also been reports of Baloch nationalist militants surrendering before the authorities.

But those gains have proven to be short-lived. The May 12 attack in Gwadar was not a one-off; in November 2018 Baloch militants attacked the Chinese consulate in Karachi. Once again, these groups are gaining momentum and are carrying out attacks to show their presence. Clearly, the militants have only been driven underground, not exterminated once and for all.

The brazen nature of May's attack was notable. Ever since CPEC was unveiled, security has been beefed up in Gwadar. The whole town of Gwadar city now resembles a military cantonment. Foreign journalists visiting Gwadar have not been allowed to enter the port city without "No-Objection Certificates" (NOCs). Locals who visit other areas of Pakistan are regularly asked to show their national identity cards to step back inside their own hometown. Despite these intense security measures, militants were able to attack a luxury hotel in the heart of Gwadar.

The Gwadar incident suggests that Pakistan has not been able to fully address Chinese concerns. Instead, these concerns are further compounding by the day. Pakistani Prime Minister Imran Khan has not been able to satisfy Chinese authorities over CPEC; it doesn't help that under Khan's government, there has been talk of renegotiating certain CPEC projects with China. Although those reports were later officially denied, the Chinese were taken aback at the new demands.

China wants CPEC to be successful at any cost. That is why the Chinese have been trying to reach out to some Baloch separatist leaders on their own. Yet those efforts have not borne fruit. On the contrary, things have become even uglier since China's reported negotiations with Baloch separatists.

Baloch nationalists have shown their hostility toward CPEC from the very beginning. Baloch separatists have posted videos on social media vowing to carry out attacks against CPEC projects. According to them, these development projects are a threat to Baloch identity. In recent months, Baloch separatists have increased attacks in and out of the province. Last month, on April 18, around a dozen armed men killed 14 bus passengers in Ormara, Balochistan, including 11 members of Pakistan's navy, coast guard, and air force. And as mentioned earlier, last year in November, the the Balochistan Liberation Army (BLA) carried out an assault on Chinese consulate in Karachi, in which two policemen and two civilians were killed.

Besides Baloch nationalists, ordinary Balochs are also apprehensive about the future of Gwadar port project. Many Balochs are concerned that they are going to be outnumbered by a wave of outside migration to the province, as more non-Balochs come hoping to reap the benefits of CPEC. As a whole, Baloch fear that they will lose their identity if they are outnumbered in their own province following the development of Gwadar and completion of CPEC projects in Balochistan. Meanwhile, shockingly, there is a dearth of clean drinking water, electricity, and other facilities for the locals of Gwadar, the epicenter of CPEC.

The government of Pakistan has failed to address these apprehensions. Instead, these fears are only increasing. For instance Gwadar's local fishermen are being displaced, gradually but noticeably, from their main site of fishing in the name of development. If the government involved locals in the overall development of the Gwadar port project, the Balochs themselves would stand like a wall against any untoward incidents. But instead of getting local buy-in, the authorities are doubling down on militarizing Gwadar. This security-centric approach cannot prevent all attacks, as May 12 proved.

The recent attack on the only five-star hotel in Gwadar - with the explicit goal of targeting foreigners - has raised some serious questions about the security of CPEC. Already, foreign investors, including Chinese, have security concerns about investing in the province. Under these circumstances, the state of Pakistan needs to provide a secure environment to investors, so that they will not shy away from investing in Balochistan in general and in Gwadar in particular. But before doing that, the state must involve the local Balochs in the overall development of the Gwadar and CPEC projects. If not, the situation in Balochistan will continue to deteriorate, which does not augur well for the future of the port town.

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Undoubtedly, Gwadar - the port city in Balochistan on the Arabian Sea - is the backbone of the China-Pakistan Economic Corridor (CPEC), which is why it has been in the center of media attention ever since the announcement of the multi-billion dollar project.

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Italy Signs to the Belt and Road Initiative

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Italy Signs to the Belt and Road Initiative

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China's increased economic and political footprint in Europe has finally caught the attention of policymakers on the continent. In a new European Union (EU) approach, for the first time, Beijing is mentioned as a "systemic rival" of Europe. According the recent document of the EU Commission " EU-China: A strategic outlook," China is moving from a "strategic partner" (as depicted for more than 15 years in EU parlance) to a "negotiating partner." Ideally, the EU needs to find a balance of interests with China as an "economic competitor" in the pursuit of technological leadership, and as a "systemic rival" promoting alternative models of governance.

One of the main challenges in Sino-European relations is being played out by China's far reaching initiative, the Belt and Road Initiative (BRI) or One Belt One Road (OBOR), the brainchild of Chinese President Xi Jinping. The BRI, elevated to the constitutional rank by the Chinese Communist Party as a part of Xi Jinping's "China's Dream," is an open competition for global leadership, and a way to reshape the international system, putting China at its center.

The EU Council met on March 22 to discuss a common EU strategy toward China, which would serve as a basis for the EU-China Summit to be held on April 9. Ironically, the next day the Italian government signed a Memorandum of Understanding (MOU) with Beijing to officially become a member of the BRI.

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While at the start, the BRI was seen as a real opportunity for European economic recovery after the Eurozone crises, is has recently prompted new concerns. Following a "wait and see approach" on the EU side, there is a wider understanding that while the BRI promises global development, at the same time it carries daunting challenges, primarily running counter to the EU agenda favoring trade liberalization. In direct response to the BRI, the EU Commission published its Strategy on Connecting Europe and Euro-Asia, based on Western economic and institutional norms and principles, a document that completely ignores the BRI.
Chinese Strategic Partnerships With the Main Entry Points in Europe
While the EU was formulating its strategy, China was carefully targeting countries in South and Central Europe. Before Italy, 13 other EU member states had signed bilateral agreements with Beijing, officially becoming members of the BRI. It all started in 2012 with the "16+1" platform that gathered 11 EU member states and five candidate countries - all in Central and Eastern Europe - for meetings with China. Since then, two other EU countries, Greece (August 2018) and Portugal (January 2019) also signed on as members of the BRI.

Ultimately, Beijing, underlining its long-term strategy, has slowly penetrated the "softer" Central and Southern periphery of the EU with the aim to access the "core economies" of Europe, while simultaneously taking strategic control of the main shipping ports as points of entry for Chinese products.

In the framework of the China's 21st Century Maritime Silk Road, an integral part of the BRI, Italy represents one of the most important strategic players for China in Europe. The Chinese flagship project is the "Five Ports" initiative involving the Italian ports of Venice, Trieste, and Ravenna, plus Capodistria (Slovenia) and Fiume (Croatia), linked together by the North Adriatic Port Association (NAPA).

While Italy is not the first EU member to become a member of the BRI, it is the largest EU economy, and the only G-7 member.

The MOU between China and Italy is a very ambitious (while not legally binding) document, aiming at a strategic partnership covering a broad range of areas such as trade, investment, finance, transportation, logistics, infrastructure, connectivity, sustainable development, mobility and cooperation, also involving third countries. Notably, the area of telecommunications was left out of the agreement.

The Italian government hopes that membership in the BRI will open new opportunities in trade and investment, considering the country's sluggish economic growth over the last two decades. Since 2001, the average GDP growth rate has been 0.25 percent compared to the 1.7 percent EU average, which has a negative effect on local markets and the purchasing power of average Italians.

With a government debt of 130 percent of the gross domestic product, Italy is hoping to finance some of its infrastructure projects with Chinese money. Since 2000, Italy has attracted a stock of $16 billion in Chinese investment.

While Chinese banks might finance some of the needed infrastructural work in Italy, there are concerns that this might lead to a new and unsustainable financial situation, adding to the economic and political strings attached to Chinese economic funding under the BRI. In BRI countries, Beijing has been accused of leveraging its economic capacity to take control of strategically important infrastructure assets, while countries have become heavily indebted to China.

The hope that membership in the BRI will open new areas of cooperation for Italian companies might look optimistic in the short term, but naïve over the long term. One should consider that the EU as a whole has not achieved more market access in China after long years of insistence. On the contrary, it is probable that the strengthening of the transportation networks and future Chinese control over infrastructure and strategic investment will, in the long term, destroy Italy's local industries.

While the EU is trying to implement a new mechanism to screen Chinese investments in strategic areas across Europe, Italy, interestingly, abstained from a vote on just such a mechanism earlier this month. This is a significant change from the previous Italian government of the Democratic Party (PD) coalition led by Paolo Gentiloni, which in collaboration with the German and French governments had requested such a mechanism in a letter submitted to the European Commission in February 2017, highlighting growing concerns about Chinese investments in Europe.
How Europe Needs to React
Europe needs to defend its technological sovereignty, while investing in new industries that can compete with Chinese big state enterprises. One should not forget that Chinese spending in research and development has exceed that of the EU, with China spending 2 percent of its GDP, displaying the most rigorous R&D growth (accounting for nearly one-third of the global R&D spending over 2000-2015) and pledging to reach soon 3 percent of GDP.

In the new EU-China: A Strategic Outlook document, the focus is to achieve a more balanced relationship with China, based on fair competition and market access, with the goal of persuading China to commit to reforms (within the framework of the WTO) of industrial subsidies and policies.

The EU strategy is signaling an end to the unfettered access of Chinese companies in the EU market, while Beijing is failing to reciprocate by liberalizing its own market. While we still cannot speak about an alignment of interests or vision of the European countries towards China, the common strategy is a good step forward. But to effectively implement it, there should be a joint European response.

While Italy hopes that through deeper trade and investment ties with China it can boost its economy, its bargaining power can increase only if relations with Beijing will be pursued through the EU, as outlined in the EU's 2016 Strategy on China. As it stands, Italy risks remaining the weaker partner in bilateral relations with China, as today, the BRI is a platform that provides new market opportunities for Chinese firms and capital (most of which are state-owned enterprises) at the expense of host countries enterprises.

At the same time, Italy is among the most important economic and political players in Europe, and any EU response that excludes Italy would be incomplete and unsuccessful.
Dr. Valbona Zeneli is the Chair of the Strategic Initiatives Department at the George C. Marshall European Center for Security Studies. The views presented are those of the author and do not necessarily represent views and opinions of the Department of Defense or the George C. Marshall European Center for Security Studies.

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Italy Signs on to Belt and Road Initiative: EU-China Relations at Crossroads?

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China's increased economic and political footprint in Europe has finally caught the attention of policymakers on the continent. In a new European Union (EU) approach, for the first time, Beijing is mentioned as a "systemic rival" of Europe.

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- Italy is the first G7 country to join the BRI
- This fact begins to legitimises the BRI from a Western perspective, when it had previously been dismissed by the US
- In order for the former point to be effective, Italy needs to drastically upgrade their domestic railways in order to transport goods to and from Central Europe

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U.S & China's fight for dominance in Pakistan- Why? Impacts?
Key Points:

China's needs access into Pakistan through the BRI in order to have access to the Arabian Sea, Indian Ocean and ultimately to the Middle-East & Europe. (CPEC)

U.S has deep concerns about the project and how dominance in Pakistan could favour a Chinese government.

The International Monetary Fund (IMF) is going to aid Pakistan with funds with debit which the U.S stresses would ultimately be funnelled through to Chinese authority in the end.

Pakistan is in a difficult position right now, as if they take the IMF's money it could come with restrictions as the U.S is the top contributor to the fund, which in return would restrict their ability to work with China and the BRI.

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Why China and the U.S. Are Vying for Dominance in Pakistan

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This article attempts to analyse the recent Pakistan governments decision to divert once allocated funds from the China-Pakistan Economic Corridor (CPEC) which is a major component of the China's Belt and Road Inititaitve to other infrastructure developments that focus away from the BRI. The amount of funds transferred from the allocated CPEC amounts to 24 billion Pakistani rupees ($171.6 million), which the article below acknowledges is a small fraction of the total $62 billion allocated to the project. The key factor about this decision is that it could signify a strategic and national interest shift in terms of the CPEC. Some scholars in the article go to making the point that this could be sign that Pakistan is being now more cautious about the overall BRI but not at a stage where pulling out of the project is on the table. The CPEC is a crucial component of the BRI as it provides one of the main road infrastructure direct links directly into the Chinese mainland, to the further regions of the Middle East and Europe.

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ISLAMABAD -- The Pakistani government has diverted around 24 billion Pakistani rupees ($171.6 million) in funds meant for joint infrastructure development projects with China into other construction plans, as Islamabad distances itself from Beijing.

The funds were originally meant to go toward $62 billion worth of infrastructure projects to build the China-Pakistan Economic Corridor, a crucial leg of Chinese President Xi Jinping's ambitious Belt and Road Initiative. But since the change of government in August last year, both sides have not decided on a definite future course for CPEC.

While the amount of funds being diverted to other projects is only a fraction of the amount going into Belt and Road, the move highlights the tensions surrounding Chinese investment in the country.

Pakistan's Ministry of Planning and Development issued an order on Feb. 19 to divert the 24 billion rupees to projects to be identified by local legislators under the U.N.'s Sustainable Development Goals program.

The move was seen by some analysts as an effort by the ruling Pakistan Tehreek-e-Insaf party to please legislators by allowing them to make decisions on development projects. Other analysts said that the current government does not regard the CPEC as its top priority.

Opposition leader Molana Fazal ur Rehman seized on the change in direction to attack the government for unfairly shelving CPEC projects. "The government had committed theft by spending 24 billion rupees out of 27 billion rupee meant for the Belt and Road Initiative on other development projects," Molana Fazal ur Rehman was quoted as saying by local media, referring to a total of 27 billion rupees that had originally been earmarked to fund a portion of CPEC.

The Ministry of Planning and Development issued a statement on March 6 to clarify that the diverted monies were not part of CPEC core funds and were allocated for additional development projects. Several analysts pointed out that the fact the ministry did not deny the fund diversion was a sign of a change of heart in Islamabad.

PTI's suspicions about CPEC was clear from the outset. Razak Dawood, a cabinet member, had demanded that CPEC projects be put on ice for a year because he claimed they were of little benefit to Pakistanis.

Pakistan-China relations are complicated by Saudi Arabia's presence. The Saudi crown prince last month committed to investing $20 billion in Pakistan, thereby reducing Islamabad's economic dependence on China. Analysts said Pakistan was now in a position to make bold decisions that could irk China without fearing strong repercussions that could hit its economy.

"These new funding sources take a bit of leverage away from Beijing and make it easier for Islamabad to be more selective in how it approaches Chinese loans, as important as they remain for Pakistan," said Michael Kugelman, deputy director of the Asia Program at Wilson Center.

But Jonathan Fulton, political science professor at Zayed University in Abu Dhabi said that China and Saudi Arabia are not necessarily competing for influence in Pakistan as both countries share deep economic interests, including the Belt and Road Initiative.

China has not issued any statement about Islamabad's diversion of funds and some analysts believe this is because Beijing does not see the move as a major step to withdraw from CPEC.

Hasaan Khawar, a public policy analyst based in Islamabad, suggested that the government was forced to make such a move because of a fiscal crunch and not about moving away from CPEC: "[The] government is cutting corners to create as much fiscal space as possible."

Kugelman also said that the government has not indicated that it wants to abandon the CPEC. It only wanted to take a more cautious approach, he added.

Pakistan's foreign minister is now in Beijing for the Pakistan-China Foreign Ministers' Strategic Dialogue, during which CPEC will be an item on the agenda. Next month, the prime minister will again visit China to attend a second Belt and Road Forum for International Cooperation. Pakistan is expected to ask Beijing to amend terms in CPEC agreements to ensure that Pakistanis' interests are safeguarded.

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Pakistan distances itself from China's Belt and Road

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ISLAMABAD -- The Pakistani government has diverted around 24 billion Pakistani rupees ($171.6 million) in funds meant for joint infrastructure development projects with China into other construction plans, as Islamabad distances itself from Beijing.

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https://www.scmp.com/news/china/diplomacy/article/3010758/economic-corridors-viability-line-beijing-searches-answer

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This is one of the reasons why Italy wants to gain the economic benefits of the BRI

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Italy has officially fallen back into economic recession for the third time in a decade. The data published by the Italian National Institute of Statistics (ISTAT) showed that the third largest economy in the eurozone slid into recession in the last half of 2018, shrinking by 0.2% of its GDP in the final three months of the year. The third quarter of 2018 already displayed a decline of 0.1% and, according to a common definition, two quarters in a row of a declining economy are synonyms to recession.

Italy shrunk into recession for the first time since 2013, bringing bad news for the ruling coalition, formed by the rightwing League and the anti-establishment Five Star Movement (M5S) since the economy has been in decline from the moment the populist government took office. Moreover, the worrying performances of the Italian economy are likely to tense even more the confrontation between Rome and Brussels, and ultimately bring turbulence within the euro zone.

The data is particularly concerning also because it marks Italy's exception in an environment where the general trend is quite different. Even if the 2018's growth rate has been the slowest recorded since 2014, the economies of the other euro zone members are, despite all, expanding. Eurostat, the EU statistics agency, reported that last year the euro zone grew on average by 1.8%, a significantly lower result than 2017's 2.3%, but still an outcome that highlights the gap between a developing context and the Italian case.

Last year witnessed a general slowdown across the continent. Germany, Europe's largest economy, suffered an unpredictable drop in car sales and exports that led to economic contraction. The difficulties within the car industry came from changes in emissions standards and are likely to be overcome soon, given the strength of the sector and the stability of the German economy. On the other hand, the Italian economic struggle comes from structural problems that are much more deep-seated.

Even more in contrast to the Italian situation, some euro zone economies grew even more than expected. It is the case of France and Spain, which rose 0.3% and 0.7% quarter-on-quarter respectively. France did so while it was hit with waves of mass protests over the country's economy, while Spain experienced a surprisingly strong economic development, higher than most EU countries.

The renewed recession in Italy might trigger uncertainty and vulnerability within the euro zone. The weakness of the Italian economy puts back at center stage the huge public debt of the country, which is persistently a cause of economic and financial trouble for both Rome and Brussels. Even if the size of the Italian economy should prevent a debt crisis as deep as the one Greece experienced, the accumulated debt and the inability of governments to reduce it makes it impossible for the euro zone to conclusively put to rest the risk of a crisis which it might not survive.

The confrontation between the EU institutions and the Italian populist government and the debate over Rome's finances are going to be aroused once more. If recession, as expected, will continue in 2019, it will be extremely unlikely for the country to reach the growth goals set by the League and the M5S, and the consistent spending planned by the government will be unsustainable. The 2019 Budget Law almost brought about sanctions over Italy, when the coalition was accused by Brussels of not respecting the common agreements of the monetary union, through excessive spending which was in contrast with the promises of balancing the budget.

Now, with data showing recession, the economic measures that the government wanted to implement seem even more irresponsible. The statistics have shown that there is not enough money to realize some of the projects both parties endorsed while campaigning, like the citizens wage or the pension reform. This situation either creates a problem with voters or deepens the conflict with Brussels. The parties at the government might not have the money to carry on with some projects they promised to be elected, which could put at risk their approval ratings. If they spend it anyways not to lose votes, they will have to respond to the EU and face repercussions.

A ccording to Oxford Economics, the recession "leaves a black mark on its populist government's early track record", even though deputy prime minister Luigi Di Maio, head of M5F, said quite the opposite. Even though the data shows differently, Di Maio blamed the previous center-left governments for the recession, stating that they lied about bringing the country out of the crisis. Carlo Cottarelli, an Italian economist and former director of the International Monetary Fund (IMF) strongly disagreed, explaining that the coalition in power since June, the moment the country started sliding into recession, was to be found responsible.

The fact that the government reacted to the economic recession by simply putting the blame external factor, like a general global economic slowdown or the EU's prohibitions on spending money to stimulate the economy, is not much for a reassuring element. Prime minister Giuseppe Conte condemned the trade war between China and the United States for the decline, fueling the narrative that finds adversary elements abroad instead of looking at a realistic picture of the country's state of economy, industry, services and institutions.

The second half of 2018 has been a time of political unpredictability, economic instability and social anxiety. This scene is part of a receding economy, a red flag for the whole euro zone and ultimately for Italians. Economic difficulties might easily put populist parties in a different light, shaking voters' faith in their demagogic solutions, but they could just as well fuel the radical nature of these movements, legitimizing their every move.

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Italy Falls Back Into Recession As The World Fears Global Economic Slowdown

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Italy has fallen back into recession, for the third time in a decade, as its GDP shrank by 0.2% in the last quarter of 2018. The news brings back worries on the country's huge public debt and triggers tensions in the euro zone.

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On the 23rd of March 2019 Italy signed a non-binding agreement saying that they would become part of China's 'Belt and Road Initiative'

Why did Italy join?
- The European Union has not been able to display a strong united front either for or against the BRI. This has made countries like Italy be able to take whatever course of action they see fit.

- Italy has just gone into a recession and they have seen how China's investment in the Port of Piraeus in Athens has significantly boosted their economy. Italy wants to have a similar thing happen.
- In joining the BRI Italy aims to re-establish themselves as the main hub for imports into Europe and exports into China via the main ports in Venice and Trieste.

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On late April New Zealand sent a high level delegation of 17 representatives from businesses and the government for the first time to the Second Belt and Road forum for International Cooperation.

Why?
- In order to further enhance economic relationships between China and New Zealand, and for New Zealand to become more involved in the Belt and Road initiative.
- New Zealand's biggest exporter of diary products is to the Chinese Market, therefore participation in the BRI will boost economic situation in New Zealand.
-China is willing to work with New Zealand in development strategies of the BRI, where New Zealand is seen as an expert in the area.

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Belt and Road Forum for International Cooperation

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Belt and Road Forum for International Cooperation

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The Belt and Road Forum fro International Cooperation (BRF) was a major event for the Belt and Road Initiative and Chinese President Xi Jinping. The link below is a blog post on the BRF

https://rhycoo.home.blog/2019/05/27/belt-and-road-forum-for-international-cooperation/