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RWR Advisory: Belt and Road at a Glance


Top Developments

China Continues to Grow Zimbabwe Ties
The Xi administration has made a concerted effort to foster relations withZimbabwe since Emmerson Mnangagwa came to power. This has continued over the past two weeks. On April 27, Export-Import Bank of China extended a $144 million line of credit to Zimbabwe’s capital city of Harare for improvements to outdated water infrastructure. The financing arrangement was followed by a memorandum of udnerstanding (MoU) with Huajian Group for the construction of a multi-million dollar industrial park in Bulawayo, the second-largest city in Zimbabwe. The plan aims for the industrial park to employ 10,000 people. Chinese-sponsored industrial zones have been leveraged to boost political relations elsewhere in Africa, such as China Nonferrous Metals Company’s backing of the Zambia-China Cooperation Zone.Beijing’s Grip Over Sri Lanka Continues to Tighten 
In Sri Lanka, where China Merchant Port Holdings (CMPH) has already translated the country’s debt to China into a 99-year lease on the strategically important Hambantota Port, the Board of Investments approved on May 5 the construction of a $500 million LNG plant. The plant will be located by the port, where CMPH is seeking yet more land to develop an accompanying industrial zone.Chinese Companies Win Iraq Oil Development Rights
On April 26, Geo-Jade Petroleum and United Energy Group were awarded rights to develop oil and gas fields in the Huwaiza and Naft Khana Blocks in what observers have described as a flawed auction process that was rushed for political reasons, scheduled so results would come in advance of parliamentary elections. There was only one bid from a major international oil company – Italy’s Eni. Another reason for low participation in the bid, floated by Director-General of Iraq’s Petroleum Contracts and Licensing Directorate Abdul Mahdy al-Ameedi, was the risk profile of blocks that sitting former battlefields, were hard to access, and, in one case, lacking sufficient data.Chinese Bridge-Building Contracts, Anti-U.S. Sentiment from Manila
According to an announcement on April 30, two major Chinese contractors will build bridges in the Philippines, linking the cities of Manila, Makati, and Mandaluyong. With a collective value of approximately $101 million, China Communications Construction Company has been chosen as the highway consultant, while China Road and Bridge Corporation will implement the projects. The bridge deal is just the latest economic component of strengthening bilateral relations between Manila and Beijing under President Duterte, which has been accompanied by virulent anti-U.S. sentiment. On May 7, he criticized Washington’ performance as an ally, contrasting it, he said, with Beijing’s positive engagement: “China said, ‘We will protect you. We will not allow the Philippines to be destroyed. We are just here and you can call for our help anytime."China to Build $2 Billion Power Plant in Bangladesh
On May 7, reports emerged that Bangladesh Power Development Board (BPDB) and China Huadian Group agreed to form a joint venture that will build a large coal plant with a power generation capacity of 1,320MW. According to a senior BPBD official, the plant will be built on Moheshkhali Island in Cox’s Bazar District, 260 miles from the capital of Dhaka. The plant has an estimated cost of $2 billion and is intended to help Bangladesh meet its goal of providing electricity to all its citizens by 2021.China-CEE 16+1 Conferences Takes Place
The China-Central and Eastern Europe 16+1 grouping hosted two conferences in recent weeks. On April 24, the 2nd Silk Road Tourism Conference was held in Dubrovnik, Croatia with participants from China, Croatia, Montenegro,Macedonia, and Bulgaria. Attendees signed a strategic cooperation agreement on promoting economic and trade ties between China and Central and Eastern Europe. Potential projects proposed include a Silk Road Cultural Industry Fund and Silk Road Alliance of Transnational Financial Leasing. Meanwhile, the 2nd China-CEEC Spokespersons’ Dialogue took place in Budapest, Hungary on April 27. These events come as a number of reports suggest some disappointment across the grouping, with the failure of the 16+1 construct to bring significant opportunity to their economies.Belarus Sees Spike in Chinese Attention, Investment
While some European countries are expressing dissatisfaction in their relations with China, Belarus is seeing a sudden burst of engagement. On April 26, a delegation from China’s Ministry of Transport met with Belarus’s Ministry of Transport and Communications to discuss developing international road transport. A preliminary intergovernmental agreement was drafted, which will be submitted for joint approval. Landlocked Belarus is seeking to reduce container cargo transportation costs and become a major railway and vehicle transit point for the Belt and Road. Furthermore, on April 29, a Chinese media delegation representing China Radio International, Xinhua News, CCTV, China Daily, and various regional media outlets arrived in Belarus for a press tour promoting Belarusian goods and tourism services.Germany Approves Chinese Takeover of Aerospace Supplier
On April 26, Germany approved the takeover of German aerospace supplier COTESA by newly-created Chinese materials industry fund, Changzhou QFAT Composite Material. The fund’s anchor investor is  Beijing-based Advanced Technology and Materials (AT&M), a company with ties to Iran’s missile industry. COTESA is a supplier for Boeing and Airbus, and manufactures key components for U.S. Army’s CH-47F Chinook heavy-lift helicopter. This is the first Chinese takeover approved since July 2017, when Germany tightened regulations on non-EU acquisitions of companies in strategic sectors (including aerospace and defense). The approval calls into question what risk considerations were taken into account.AVIC to Build Mozambique Airport 
Prominent state-owned PLA contractor Aviation Industry Corporation of China (AVIC) will plan and oversee the construction of a new airport in Xai-Xai, Mozambique in a contract worth $7.8 million. AVIC presented the contract as a “great breakthrough” in the implementation of the Belt and Road and construction of an Aviation Silk Road, “demonstrating AVIC’s prowess in airport planning.” The overall project is expected to cost $75 million. China originally pledged to grant $15 million to the project in October 2017, but upgraded its commitment to $45.3 million in December 2017. Mozambican authorities initially launched a tender for the airport in January 2016.Cameroon Opens Chinese-Built Table Tennis Center
Before the emergence of the Belt and Road Initiative, constructing stadiums in the developing world was an important part of Chinese soft power. Recent warmth in bilateral relations between Cameroon and China – a mining ban aside – show a reversion to this strategy. On April 25, a Chinese-built table tennis center was inaugurated in the capital of Yaounde. China also built a multipurpose stadium in Yaounde in 2009.

Data from IntelTrak, April 24 - May 8

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What They're Saying

NELSON CHAMISA, PRESIDENTIAL CANDIDATE
ZIMBABWE'S MDC ALLIANCE
Addressing workers at a May Day event in Dzivarasekwa

"We will kick out the Chinese companies. We want genuine deals that benefit the people...I have seen the deals that [President Mnangagwa] has entered into with China and others, they are busy asset-stripping the resources of the country. I have said beginning September when I assume office, I will call the Chinese and tell them the deals they signed are unacceptable and they should return to their country."

IBRAHIMA DIONG, FORMER DIRECTOR-GENERAL
SENEGAL'S MINISTRY OF INTERNATIONAL COOPERATION
Interview with CNBC on China-funded development

"China knows what it wants from Africa. But, most African countries don’t have a strategy vis-a-vis China. Most of the African countries should have at least a China desk — or a China ministry."

CHAN THONG WEI, MALAYSIAN ENTREPRENEUR
Speaking on local entrepreneurs subcontracted by Chinese companies to develop the Malaysia-China Kuantan Industrial Park (MCKIP)

"All their steel is from China. Scaffolds and building materials are from China. Workers come from China. Some local hardware vendors get to supply small items like screws – and even that is hard. We quote any price and they’ll say it’s too high."

NAJIB RAZAK, MALAYSIAN PRIME MINISTER
Addressing Chinese-Malaysian supporters in Sabah

"Why should we turn a very very strong relationship to something which will be very, very negative for us? If you sour the relationship with the Chinese government and China, the implication is very, very, very serious."

EAR SOPHAL, CAMBODIAN-AMERICAN ECONOMIST
Interview with Voice of America (VOA) Cambodia

"It’s a win-win-win-win for China. Excess Chinese capital is invested in Cambodia. No tender or tendered to Chinese (likely state) firms only. These overwhelmingly employ Chinese male construction workers, which is win number three. If things go wrong, there can be a debt/equity swap."


By the Numbers

Data from RWR's IntelTrak tool

Data from RWR's IntelTrak tool

Domestic Developments

Public Engagement

April 26: Renmin University of China signed a cooperation agreement with HNA Group to establish the HNA Education Fund, which will support the new Belt and Road School at RUC’s Suzhou branch campus. The Belt and Road School will offer Master of Laws degrees to students from Belt and Road countries through Renmin University’s School of International Studies and Chongyang Institute for Financial Studies. Students will be able to choose from concentrations in Chinese politics, economy, law, and culture. RUC already offers a “Belt and Road scholarship” available to graduate students from countries on the official Belt and Road country list.May 8: Xi’an International Medical Center began planning the Belt and Road International Medical Center project, with involvement from the Chinese Academy of Sciences, Provincial Health Planning Commission, Xidian University of Electronic Science and Technology, Xi’an International Medical Investment, and the Municipal Party Committee. The $2 billion medical center will integrate medical services and scientific research with specialized hospital facilities and a five-story medical technology building on site. Xi’an International Medical Center has awarded the construction contract to China Construction Third Engineering Bureau.

Multilateral Institutions

May 2: Asian Infrastructure Investment Bank (AIIB) announced that the applications of Papua New Guinea and Kenya to join the bank had beenapproved by the Board of Governors. The two countries will remain prospective members until they complete certain requirements, including depositing the first capital installment with AIIB.

Regional Developments

East Asia and the Pacific

April 26: Alibaba Australia launched a pilot of its new supply chain initiative, the Food Trust Framework, in Auckland, New Zealand. The initiative will use blockchain technology and QR codes to authenticate and record products sold on Alibaba’s Tmall e-commerce marketplace. Alibaba has partnered with Australian health group Blackmores, Australian Post, New Zealand’s dairy co-operative Fonterra, and New Zealand Post on the pilot.May 7: Beixin Building Materials, a subsidiary of China National Building Materials Group, signed an MoU with Australia YMCI Pty Ltd, Country Garden Australia, and Jinshi Real Estate Development Group on establishing strategic partnerships and cooperating in Australia’s prefabricated construction industry.

Southeast Asia

April 25: Cambodia's government inaugurated the state-owned University of Kracheh in the city of Kratie, which will offer courses in agro-industry, fisheries, foreign languages, and information technology. The university wasconstructed using a $10 million grant from the Chinese government, and $2 million from the Kratie Foundation for Higher Education.April 27: Two subsidiaries of China Communications Construction Company (CCCC), CCCC Highway Consultants and China Road and Bridge Corporation (CRBC) won a $101 million contract from the Philippines to build the Binondo-Intramuros bridge in Manila and the Estrella-Pantaleon bridge connecting Makati and Mandaluyong. CCCC Highway Consultants will be responsible for project design and supervision, while CRBC will carry out construction.April 29: Philippine president Rodrigo Duterte announced that the country’s temporary deployment ban on Filipino workers to Kuwait had become permanent amid a diplomatic row over the abusive treatment of Filipino domestic helpers in the Gulf state. Duterte said that he planned to use about $96 million in Chinese education grants to instead fund the repatriation of all workers seeking to return to the Philippines. Duterte also suggested that returning workers turn to China for overseas employment as teachers.April 30: China Communications Construction Company (CCCC) signed a framework agreement with Myanmar’s New Yangon Development Company, which is backed by the Yangon provincial government. The two sides will work together to conduct studies on the development and operation of Yangon’s New City project. The first phase of the project would include theconstruction of five village townships, two bridges, industrial estate, power plants, transmission facilities, and wastewater treatment plants.May 8: The second phase of China’s Mekong River Brightness Journey launchedat the Toun Fa Chinese School in Phnom Penh and will target Cambodianstudents in Phnom Penh and Sihanoukville. Brightness Journey is a Chinese initiative under the Lancang Mekong Cooperation mechanism supported by the Overseas Chinese Love Project, tasked to provide eye screening and treatment in Cambodia, Laos, and Myanmar.

South Asia

April 26: China State Construction Engineering Corporation launchedconstruction of a $105 million mixed development project in Colombo, funded by Sri Lanka’s Odel Properties One. The environmentally-friendly complex, known as Odel Mega Mall, will house villa-style apartments, sports facilities, retail storefronts, and open public spaces.April 27: China Harbour Engineering Corporation signed an agreement withSri Lankan property developer Blue Mountain to build Achilleion, a new luxury complex in Colombo. The private residential complex will feature a sky bridge, 24-hour medical center, and access to a rooftop helipad.April 28: Alibaba Group’s Ant Financial signed a strategic partnership agreement to acquire 10% of bKash, a mobile financial service established byBangladesh Bank, with the possibility of acquiring an additional 10%. The two companies plan to co-develop a local mobile payment platform with money transfer functionalities, similar to Ant Financial’s Alipay.April 28: China Development Bank issued a $1 billion foreign commercial loan to Pakistan’s Ministry of Finance to bolster the country’s foreign exchange reserves. Pakistan recently also contracted a $1 billion foreign commercial loan from Industrial and Commercial Bank of China (ICBC), disbursed in two separate tranches.April 29: A Nepali government delegation led by the Ministry of Physical Infrastructure and Transport arrived in China to discuss the proposed cross-border railway. The railway would extend to Nepal’s capital city of Kathmandu through Kerung.May 5: Sri Lanka’s Board of Investment approved the construction of a $500 million liquefied natural gas (LNG) plant by China Machinery Engineering Corporation near Hambantota Port. The port is controlled by China Merchants Port Holdings, and there are plans to acquire land nearby for the development of an industrial zone.May 8: Nepal’s government announced a call for global tenders to develop the 1,200MW Budhi Gandaki hydropower project. The project had originally been awarded to China Gezhouba Group without tendering under Nepal’s preceding administration before the current administration cancelled the deal and replaced China Gezhouba with the Nepal Electricity Authority.May 8: Alibaba Group acquired Pakistani e-commerce company Daraz Group from Rocket Internet for an undisclosed amount. Following the sale, Daraz will continue to operate online marketplaces in Pakistan, Bangladesh,MyanmarSri Lanka, and Nepal under its original brand name. Daraz willintegrate Alibaba’s mobile payment and logistics platforms to drive regional growth, as Alibaba looks to invest in local warehouses and transportation to establish its Pakistani supply chain.

Middle East and North Africa

April 25: Dubai Mall announced that Chinese mainland visitors will be able to use Ant Financial Services’ Alipay digital payment system at all of its retail, dining, and entertainment attractions. Alipay launched in the UAE earlier this year through luxury retail group Al Tayer Insignia, which counts Harvey Nichols, Bloomingdales, and Coach among the global brands in its Dubai portfolio.April 26: Two Chinese companies were awarded rights to develop oil and gas fields in Iraq, following a rushed auction process. Geo-Jade Petroleum won exploration rights to the Naft Khana block in Diyala and Huwaiza block in southern Mayssan. United Energy Group (UEG) won exploration rights to the Sindbad block in Basra. The companies will sign initial contracts on May 10, pending government approval.April 28: The Jordan Atomic Energy Commission stated that it is in talks with China National Nuclear Corporation (CNNC) to build a 220MW high temperature gas-cooled reactor (HTR) in Jordan, possibly in Aqaba. The $1 billion project would most likely be funded by regional investors and Jordanian banks. CNNC is reportedly in the lead among UKU.S.Russian, andSouth Korean suppliers interested in the project because of its experience in HTR reactor construction.April 28: China and India agreed to implement joint development projects inAfghanistan, including a railway line between Afghanistan, Tajikistan,KyrgyzstanIran, and China.May 8: China signed a contract with the Dubai Expo 2020 Bureau (Ex20), confirming its participation at Expo 2020 in the UAE. Construction on the Chinese pavilion, which plans to showcase Belt and Road Initiative technologies, will begin in the coming months.

Sub-Saharan Africa

April 25: Cameroon’s table tennis center, built by Chinese contractors with funding from the Chinese government, was completed and inaugurated. The center is located in Cameroon’s capital of Yaounde, near the multifunctional stadium built by China in 2009.April 26: The Chinese government donated 135,500 bags of rice to Nigeria, meant for internally displaced persons (IDPs). The donation is valued at about $6 million.April 27: Export-Import Bank of China extended a $144 million line of credit toZimbabwe’s capital city of Harare for improvements to outdated water infrastructure. The first $72 million tranche was disbursed to refurbish the Morton Jaffrey water treatment plant.April 27: People’s Bank of China and the Central Bank of Nigeria signed a $2.5 billion currency swap agreement to improve local currency liquidity to Chinese and Nigerian businesses. The agreement will make it easier for Chinese manufacturers to purchase raw materials from Nigeria with Naira from Chinese banks, and for Nigerian manufacturers to purchase simple machinery from China with RMB from Nigerian banks. First Bank of Nigeria, Stanbic IBTC, Standard Chartered Bank, and Zenith Bank have been appointedthe settlement banks for businesses and importers from both countries.April 28: A delegation led by Huajian Group signed an MoU with Zimbabwe’sgovernment on developing the Bulawayo Special Economic Zone, which would focus on leather and clothing for domestic and export markets.April 28: Aviation Industry Corporation of China won an $8 million contract to design and manage the construction of Mozambique’s Xai-Xai airport project. The new airport will include flight and terminal areas, a 5-km airport approach road, and auxiliary facilities. Total project investment is estimated at $75 million. The Chinese government has previously pledged to finance $60 million of the project.April 28: A joint venture led by China National Electric Engineering Company, and which includes the U.S.’s General Motors Company, South Africa’s Transnet, and the Netherlands’ APM Terminals, signed an agreement withNigeria’s Ministry of Communications to repair and restore the East-West railway. The joint venture will also supply locomotives and carriages.May 4: Medical experts from the China Center for Disease Control and Prevention, the Chinese Military Medical Team, and the 19th Chinese Medical Team spoke on public health, disease control, and traditional Chinese medicine as part of the Public Benefit Academic Lecture Series hosted by the Confucius Institute at the University of Sierra Leone.

Russia and Eurasia

April 24: A partnership between CITIC Bank Corporation and China National Tobacco Corporation subsidiary China Shuangwei Investment completed theacquisition of a majority share in Kazakhstan’s Altyn Bank. CITIC will hold 50.1% of the shares, and China Shuangwei Investment will hold 9.9%.May 7: Beijing Kaisheng, a subsidiary of China National Building Materials Group, signed a contract with Russian mine management company Vozrozhdenie to design and construct a cement production line in Perm, Russia.

Europe

April 24: The 2nd Silk Road Tourism Conference was held in Dubrovnik,Croatia with participants from China, Croatia, MontenegroMacedonia, andBulgaria. The conference was co-organized by the Chinese Southeast European Business Association and the Silk Road Chamber of International Commerce, which signed a strategic cooperation agreement on promoting economic and trade cooperation between China and Central and Eastern Europe. Potential projects proposed include a Silk Road Cultural Industry Fund and Silk Road Alliance of Transnational Financial Leasing.April 24: A delegation from the China Cultural Center in Latvia visited the University of Latvia’s Academic Library to discuss signing bilateral agreements between the National Library of China, Chinese Academy of Sciences, Beijing Foreign Studies University, and the Academic Library to strengthen political dialogue.April 25: Germany’s Federal Ministry for Economic Affairs and Energyapproved the takeover of German aerospace supplier COTESA GmbH by newly-created Chinese materials industry fund Changzhou QFAT Composite Material, following a months-long investigation due to the sensitive core technologies involved. Changzhou QFAT initially signed a contract in September 2017 to acquire a majority stake in COTESA for an unspecified amount (estimated at between €100-200 million). The fund’s anchor investor is Advanced Technology and Materials (AT&M), which aims to support COTESA’s expansion in China.April 26: A delegation from China’s Ministry of Transport met with Belarus’sMinistry of Transport and Communications to discuss developing international road transport. A preliminary intergovernmental agreement was drafted and will be submitted for approval. Landlocked Belarus is seekingto reduce container cargo transportation costs and become a major railway and vehicle transit point for the Belt and Road.April 27: The 2nd China-CEEC Spokespersons’ Dialogue took place in Budapest,Hungary. Government representatives from CEEC countries reaffirmed their commitment to China-CEEC 16+1 cooperation. Hungary’s Ministry of Foreign Affairs and Trade spoke at the event, calling to strengthen cooperation with China’s Belt and Road Initiative.April 29: A Chinese media delegation of representatives from China Radio International, Xinhua News, CCTV, China Daily, and various regional media outlets arrived in Belarus for a press tour promoting Belarusian goods and tourism services. The delegation visited Belarusian dairy company Savushkin Product and confectionery factory Kommunarka.April 30: China’s WuXi Biologics announced plans to invest $392 million tobuild a biologics facility in Dundalk, Ireland. The facility will have multiple single-use bioreactors for commercial biomanufacturing, and is expected to be the world’s largest single-use bioreactor facility.May 8: The Jinan-Belgium aerial cargo route officially opened, operatingbetween Jinan International Airport and Liège Airport in Belgium. The first flight carried household commodities, garments, and textiles from Shandong, Jiangsu, and Zhejiang.

North America

April 24: Chinese online travel service provider Ctrip.com International completed a strategic investment in U.S.-based aerospace company Boom Supersonic. The proceeds will be used to develop Boom’s Mach-2.2 airliner. The two companies plan to work together to bring supersonic flight to Chinese customers and build Boom’s relationships with Chinese airlines.April 26: Beijing-based Zhisland International, an international social network for Chinese and overseas business elites that claims Alibaba’s Jack Ma and Lenovo’s Liu Chuanzhi as members, has launched applications for membership in its Canadian chapter. Zhisland International intends for the new chapter to facilitate higher levels of Chinese investment in Canadian projects and initiatives. The chapter is chaired by former Canadian Minister of International Trade, Stockwell Day.

Latin American and the Caribbean

April 26: China transferred management of two photovoltaic (PV) parks, in Pinar del Rio and Yaguaramas, to Cuba’s Ministry of Energy and Mines. The parks have the combined capacity to generate 21MW, and were financed by China’s Ministry of Commerce as part of a bilateral cooperation agreement on renewable energy.

If you enjoy our Belt and Road coverage, consider checking out IntelTrak: RWR's visual analytic tool that tracks and maps the global activities of Chinese and Russian companies in real time

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