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RWR Advisory: Belt and Road at a Glance


 

Top Developments

Australian Foreign Ministry Refuses to Disclose BRI MoU
On July 30, Australia’s Department of Foreign Affairs and Trade (DFAT) declined to disclose the text of an MoU on Belt and Road infrastructure cooperation it signed last September. Trade Minister Steven Ciobo cited lack of consent from China, explaining that, “disclosure without the express consent of the Chinese government would also damage the government’s relationship with China...as well as with other governments and international organisations with whom Australia has concluded MOUs.” New Zealandreleased a similar MoU signed with China last year.Malaysia Special Envoy Visits Beijing
On July 18, Chairman of Malaysia’s Council of Eminent Persons Daim Zainuddin arrived in Beijing with a delegation of Malaysian officials and a letter from Prime Minister Mahathir Mohamad asking to renegotiate existing Chinese loans and contracts. While Mahathir acknowledged Malaysia’s disadvantages in negotiations with Beijing in an interview with CNN, Beijing’s desire to secure the progression of the Belt and Road Initiative in Southeast Asia, particularly Malaysia, could facilitate some kind of compromise on stalled projects on terms favorable to Kuala Lumpur. Further scandal  that may emerge from the new government’s investigation into existing Chinese contracts, however, is a potential wild card in this environment. Mahathir is expected to visit Beijing in August.China, UAE Deepen Ties
On July 20, Xi Jinping arrived in the United Arab Emirates for a state visit that saw a rapid pace of agreements designed to grow relations significantly. It was the first visit by a Chinese leader to the UAE in 29 years, showing Xi’s interest in a strategically located country that is becoming increasingly active and influential in regional politics. Of the agreements reached, the most important was a deal between Abu Dhabi National Oil Company (ADNOC) and China National Petroleum Company (CNPC) to invest in oil and gas exploration and refinery projects, and establish a technology hub linked to CNPC’s Al Yasat offshore concession.BRI Continues African Expansion
On July 21, Senegal signed an agreement to join the Belt and Road Initiative during Xi Jinping’s state visit, making it the first West African country to officially become a member. Xi also made a visit to the Rwandan capital of Kigali, where he signed a series of MoUs and agreements with his counterpart,Rwandan President Paul Kagame. The MoUs included a commitment to cooperate under the framework of the Belt and Road Initiative. The highlight of Xi’s visit was the BRICs Summit in South Africa. On the sidelines of the summit, state-owned utility company Eskom received a $2.5 billion loan from China Development Bank to fund its capacity expansion program. Specifically, Eskom plans to use the loan to complete the 4,800MW Kusile power station in Mpumalanga province and the 4,800MW Medupi power station in Limpopo province.Growth in Latin America Continues
On July 27, Guyana and China signed an MoU on Guyana joining the Belt and Road Initiative. The Guyanese government reportedly hopes to financeinfrastructure development, including the Linden-Lethem highway and proposed Demerara Harbour Bridge. Guyana is one of the poorest countries in Latin America, but is a target for the international oil industry after ExxonMobil drilled eight successful discovery wells offshore in the last three years.ICBC, Germany’s Commerzbank Sign BRI MoU 
On July 18, the Industrial and Commercial Bank of China (ICBC) signed an MoU with Germany’s Commerzbank to fund projects along the Belt and Road Initiative, valued at up to $5 billion. The agreement mirrors similar moves made by Deutsche Bank and Standard Chartered to contribute capital to the development of projects related to BRI. Commerzbank declined to comment on the specific details of the agreement.Beijing Continues Lending to Sri Lanka
On July 21, China granted Sri Lanka $295 million to be used for “any project.” Sri Lankan President Maithripala Sirisena plans to propose using the grant to build houses in administrative districts across. The provision of a general-purpose grant would suggest that China is seeking to address the fallout from its lending to former President Mahinda Rajapaksa, but if the funding is structured as a loan, it would deepen headaches regarding the repayment of existing Chinese financing. Xu Jianwei, Chinese Military Attache to Sri Lanka, also announced that Beijing would donate a frigate to the Sri Lankan Navy.Mozambique, China Agree to Fight Illegal Timber Exports
On July 26, Mozambique signed an MoU with China for joint efforts to combat unreported timber exports and illegal deforestation, as Chinese demand for hardwood rises. The two countries committed to exchanging import and export data to curb fraudulent declarations and tax revenue losses. Rough wood is Mozambique’s biggest export to China, comprising 60 percent of total exports. The country’s burgeoning energy sector (and offshore discoveries) may be a factor in China’s efforts to buttress its reputation in the country as a good actor.China, Serbia Launch Economy Association as a BRI Platform
On July 24, the China-Serbia Economy Association (CSEA) was founded in Belgrade as a platform for Belt and Road Initiative exchange and development. Members include China Road and Bridge Corporation, Huawei Technologies, China Machinery Engineering Corporation, and Shandong Hi-Speed Group. The former president of Serbia, Tomislav Nikolic, was named CSEA’s honorary president. Nikolic is also head of the National Council for Coordination with Russia and China, which was established in June 2017.

New Project Locations

Data from IntelTrak, July 17 - 31

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What They're Saying

SIPHAN PHAY
CAMBODIAN GOVERNMENT SPOKESMAN
Speaking to Nikkei Asian Review about Cambodian views on China

"The Chinese are giving money, and they want something — that's normal. We need the money, but we don't want the Chinese to split us apart in ASEAN. We don't want to use ASEAN against China or against the U.S."

RICHARD HEYDARIAN
FELLOW AT THE STRATBASE ALBERT DEL ROSARIO INSTITUTE (ADRi)
Interview with Bloomberg on China-Philippines relations

"Under Duterte, the Philippines has forward deployed its geopolitical concessions. We have been used by China."

JAINDI KISERO
FORMER ECONOMIC AFFAIRS EDITOR AT NATION MEDIA GROUP
Essay on Chinese contractor-negotiated loans in Kenya

"This is the arena where one of the most viciously fought political struggles is happening — the struggle for opportunity to broker projects negotiated through MoUs and commercial contracts with Chinese contractors...being a broker or political linkman for these MoU deals can be extremely lucrative."

MAHATHIR MOHAMAD
MALAYSIAN PRIME MINISTER
Speaking to regional reporters during briefing

"[China is] more powerful, and we cannot fight against them, so how do we benefit from their wealth and their power? That's what we are looking at now. We have to accept the reality of the situation."


 

PAUL KAGAME
RWANDAN PRESIDENT
Speaking to journalists at the end of Xi Jinping’s state visit

"China relates to Africa as an equal. This is a revolutionary posture in the world affairs, and it's more precious than money."

JONATHAN HILLMAN AND MATTHEW GOODMAN
CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES (CSIS)
Essay on China’s international dispute courts

"By making itself more central in the dispute settlement process, Beijing will have more influence to gain access to, and control of, strategic assets. When projects fail, it will be better positioned to protect its own interests and shift losses onto its partners."




 

By the Numbers

Data from RWR's IntelTrak tool

Data from RWR's IntelTrak tool

Regional Developments

East Asia and the Pacific

July 30: Citing the Chinese government's lack of consent, Australia’sDepartment of Foreign Affairs and Trade declined to disclose the text of an MoU on Belt and Road infrastructure cooperation it signed last September, in response to a Freedom of Information Act request filed by Fairfax Media. A similar request made by Senator Penny Wong, foreign affairs spokeswoman for the Labor Party, was also previously refused.

Southeast Asia

July 18: The Chairman of Malaysia’s Council of Eminent Persons Daim Zainuddin arrived in Beijing with a delegation of Malaysian officials and a letter from Prime Minister Mahathir Mohamad in a bid to renegotiate existing Chinese loans and contracts. Prime Minister Mahathir is expected to visit Beijing next month.July 23: Hebei Bishi Industry Group signed an agreement with Indonesianpartner PT Seafer Kawasan Industri to establish a $2.54 billion steel factory in Central Java Province’s Patebon subdistrict. The factory will have three alloy plants and a stainless steel mill with production capacity of 3 million tons, and supporting infrastructure including a seaport, road, and 270MW power plant. Hebei Bishi Industry Group plans to continue investing in Central Java.

South Asia

July 21: China granted Sri Lanka $295 million to be used for “any project.” Sri Lankan President Maithripala Sirisena plans to propose using the grant to build houses in administrative districts across the country.July 25: Sinohydro Corporation was awarded construction contracts worth $149 million by Tanahu Hydropower Limited, a subsidiary of Nepal Electricity Authority, to execute the hydromechanical and electromechanical works for the 140MW Tanahu hydropower project located on the Seti river in Nepal.July 26: Huawei Technologies began testing 5G technology in Bangladesh, in partnership with the Bangladeshi Ministry of Posts, Telecommunications and Information Technology and Malaysian-Indian-Japanese joint venture, Robi. The project is designed to help realize the government’s Digital Bangladesh Vision 2021 policy.July 29: The Sichuan Silk Road Economic Belt Investment and Corporation Chamber of Commerce signed an MoU with the Bangladesh Economic Zones Authority on developing an industrial park, called the Sino-Bangla Communication Zone, in the Mirsarai Economic Zone. The proposed park will be located near the Dhaka-Chittagong Highway and the Chattogram Port, and is expected to have an initial investment of $1.59 billion.

Middle East and North Africa

July 19: Dubai-based port operator DP World signed an agreement with the Zhejiang China Commodities City Group to develop a “Traders Market” at the Jebel Ali Port and Free Zone, where traders from various sectors will be able to showcase and sell goods. DP World has an existing customs clearance cooperation agreement with the Zhejiang Seaport Investment & Operation Group, and plans to build a warehouse in Yiwu, China for exports to Dubai. Chinese manufacturers are looking to leverage a presence in the UAE to access markets in the Middle East and South Asia.July 19 - 21: The UAE signed a series of MoUs and agreements with China during Xi Jinping's state visit:

The UAE’s Ministry of Foreign Affairs and International Cooperation and China’s Ministry of Foreign Affairs signed an MoU on the construction of embassies and cultural centers;

The UAE’s Ministry of Energy and Industry and China’s National Energy Commission signed an MoU on advancing energy cooperation;

The UAE’s Ministry of Economy and China’s Ministry of Commerce signed MoUs on enhancing bilateral e-commerce and cooperation on the upcoming International Import Expo in Shanghai;

The UAE’s Ministry of Climate Change and Environment and China’s Ministry of Agriculture and Rural Affairs signed MoUs on strengthening cooperation in modern agriculture and establishing a wholesale market in the UAE for agricultural, livestock, and fishery products;

The UAE Minister of State Ahmad Al Jaber and China’s National Development and Reform Commission (NDRC) signed MoUs on joint development effortsunder the Belt and Road Initiative, including integration of technology and capital;

The Abu Dhabi National Oil Company (ADNOC) and China National Petroleum Company (CNPC) signed a strategic cooperation agreement to invest in oil and gas exploration and refinery projects, and establish a technology hub linked to CNPC’s Al Yasat offshore concession;

The UAE and Chinese governments signed an international customs cooperation and mutual administrative assistance agreement;

The Abu Dhabi Global Market (ADGM) international financial center and the China-UAE Industrial Capacity Cooperation Demonstration Zone (established by the Jiangsu Provincial Overseas Cooperation and Investment Company) in the Khalifa Industrial Zone signed a framework agreement to strengthenbilateral economic ties and industrial innovation; and

The Dubai Electricity and Water Authority (DEWA) and China’s Silk Road Fund signed a partnership and investment agreement for the fund to acquire a 24% stake in the 700MW Concentrated Solar Power (CSP) project of the Mohammed bin Rashid Al Maktoum Solar Park.

July 20: ADGM signed an agreement with the China Jiangsu International Economic and Technical Cooperation Group to establish the first Chinese state-owned financial services firm to operate in Abu Dhabi’s financial hub: Industrial Capacity Cooperation Financial Group Limited. The firm will extend lending facilities to Chinese companies in the China-UAE Industrial Capacity Cooperation Demonstration Zone to support Belt and Road development and RMB internationalization.July 20: Etihad Aviation Group, one of the UAE’s two national airlines, signed an MoU with the Jiangsu Provincial Overseas Cooperation and Investment Company to develop logistics and procurement services for companies operating in the China-UAE Industrial Capacity Cooperation Demonstration Zone. The companies will designate Etihad Airways as their preferred airline and receive preferred cargo and air transportation rates.July 21: The UAE's Dubai International Financial Center signed an MoU with financial services provider China Everbright Group on Belt and Road collaboration across the Middle East and South Asia.July 25: A delegation from Shandong Publishing Group visited the Mohammed bin Rashid Al Maktoum Knowledge Foundation in the UAE, where the two sides signed an MoU on strengthening cultural exchange through writing programs and two-way translations. The foundation’s Dubai Digital Library will increase its collection of Chinese books and publications.July 26: Morocco’s Secretary of State for Sea Fisheries Mbarka Bouaida met with a delegation from Qingdao in Shandong Province to discuss potential Chinese investment in Morocco’s seafood processing industry and marine sciences collaboration through Morocco’s National Institute for Fisheries Research. The two sides also discussed opportunities in solar energy, technology, and other areas of scientific research.July 26: China's CITIC Dicastal signed an agreement with Morocco’s Ministry of Economy and Finance and Ministry of Industry, Trade, Investment, and the Digital Economy to invest $407.5 million in the construction of auto wheel production plants in Kenitra and Tangier. The plants will have a combined annual production capacity of 6 million wheels, intended primarily for export.July 30: The China-Arab International Cooperation Committee and Dubai Expo 2020 signed an MoU on promoting Chinese investment in District 2020, the mixed-use legacy development in the UAE that will succeed the Expo. District 2020 will feature residential communities, office space, academic institutions, cultural attractions, and an exhibition center on site.

Sub-Saharan Africa

July 19: China’s State Council Information Office and Senegal’s National School of Administration signed an MoU on building a “China Pavilion” at the school, located in the capital of Dakar, to promote understanding of Chinese culture, history, politics, and development.July 22: Senegal signed an agreement to join the Belt and Road Initiative during Xi Jinping’s state visit, making it the first West African country to officially become a member. Senegal will serve an important role in the Initiative’s Maritime Silk Road component.July 23: China’s Shandong Ruyi Group signed an MoU with Nigeria’s federal government and the Abia state government to invest $2.5 billion in the Enyimba Economic City industrialization project. The value includes $12.5 million earmarked for investment in Geometric Power Limited, which will generate and provide power supply to Abia state.July 23: Rwanda signed a series of MoUs and agreements with China during Xi Jinping’s state visit, including:

Rwanda's Ministry of Trade and Industry signed an MoU with China on e-commerce cooperation to promote digital trading;

Rwanda's Ministry of Finance and Economic Planning signed Export-Import Bank of China for a $76 million concessional loan to upgrade the 66-km Huye-Kibeho-Munini road and a $50 million concessional loan to build the 13.8-km Bugesera International Airport access road; and

other agreements include an MoU on cooperation under the Belt and Road Initiative framework; an agreement to establish mutual diplomatic and service passport visa exemption; an agreement for China to provide Rwanda with a grant to expand the Masaka hospital; an agreement for China to provide Rwanda with a grant to conduct a geological survey and mineral resources assessment; and agreements on civil air transport cooperation and law enforcement cooperation.

July 24: South Africa signed a series of MoUs and agreements with China ahead of the 10th BRICS Summit held in Johannesburg, including:

State-owned utility company Eskom received a $2.5 billion loan from China Development Bank to fund its capacity expansion program. Specifically, Eskom plans to use the loan to complete the 4,800MW Kusile power station in Mpumalanga province and the 4,800MW Medupi power station in Limpopo province.

State-owned logistics company Transnet received a $300 million loan from the Industrial and Commercial Bank of China (ICBC) to help with liquidity.

China’s UnionPay International signed an MoU with South Africa’s Standard Bank on cross-border payment access. Chinese UnionPay card users will be able to access Standard Bank ATMs and POS terminals across Africa, and South African Standard Bank card users will be able to access similar services in China. UnionPay also plans to launch its mobile and online payment services in South Africa.

Unnamed Chinese companies signed MoUs on developing a $10 billion metallurgical complex in South Africa’s Musina-Makhado SEZ, with plans to start construction work next year. The complex will include a stainless steel plant, a ferrochrome plant, and a silicomanganese plant.

July 24: Beijing Automotive Industry Company (BAIC) announced thecompletion of the first phase of its $800 million vehicle assembly plant in the Coega Special Economic Zone (SEZ) in South Africa. The plant will commence full-scale production of BAIC compact SUVs later this year.July 26: Mozambique signed an MoU with China in an effort to combat unreported timber exports and illegal deforestation as Chinese demand for hardwood rises. The two countries committed to exchanging import and export data to curb fraudulent declarations and tax revenue losses.July 26: Zambian President Edgar Lungu commissioned the first phase of the China National Building Materials (CNBM) Zambia Industrial Park in Lusaka’s Chongwe district. The first phase has a total investment of $200 million and includes cement, premix concrete, pan brick, and manufactured sand production lines. The total project value is estimated at $500 million.July 28: The opening ceremony for the CNBM Tanzania Distribution Center in Dar es Salaam was hosted by Botswana-based Global Max Media Group andThe Oriental Post (People’s Daily Overseas Edition Africa Weekly). The center will support CNBM logistics and job creation in Tanzania.July 29: Ghana's government approved a project financing agreement with Sinohydro Group, through which Sinohydro will invest $2 billion in critical infrastructure project construction in exchange for the rights to refined bauxite in Nyinahin, Ghana. The critical infrastructure projects selected by Ghana may include roads, bridges, hospitals, and rural electrification.

Russia and Eurasia

July 21: The Investment Promotion and Protection Agency of Kyrgyzstan (IPPA) hosted its fifth annual international investment forum, Issyk-Kul 2018. Several agreements and trade contracts were signed with representatives from Uzbekistan, Kazakhstan, Russia, China, and the UAE. These includecooperation agreements with the Sino-Kyrgyz Silk Road International Trade Company and China’s Kunsheng Gornoprom LLC.July 24: The Embassy of Turkmenistan in China and Beijing Sungxiong Foreign Service launched the Turkmen “Silk Road” visa service center in Beijing to provide advisory services, including mobile biometrics and insurance documentation, to Chinese companies and tourists.July 30: Kyrgyzstan’s capital of Bishkek hosted the fourth annual exhibition of Silk Road countries, where companies from Xinjiang showcased products, such as electronic devices and food items. The Kyrgyz Chamber of Commerce and Industry plans to hold another exhibition in August, featuring companies from both Uzbekistan and China.

Europe

July 18: The Industrial and Commercial Bank of China (ICBC) signed an MoU with Germany’s Commerzbank to fund projects along the Belt and Road Initiative, valued at up to $5 billion.July 20: Italian power engineering company Ansaldo Energia and China’s State Power Investment Corporation signed an MoU on technical cooperation to develop a heavy duty gas turbine. The companies may reach a cooperation agreement and establish an alliance in the future.July 24: The China-Serbia Economy Association (CSEA) was founded in Belgrade as a platform for Belt and Road Initiative exchange and development. Members include China Road and Bridge Corporation, Huawei Technologies, China Machinery Engineering Corporation, and Shandong Hi-Speed Group. The former president of Serbia, Tomislav Nikolic, was named CSEA’s honorary president.July 24: A delegation from China State Construction Engineering Corporation (CSCEC) met with Bosnia and Herzegovina’s Foreign Investment Promotion Agency (FIPA) to discuss investing in infrastructure projects. FIPA will coordinate future meetings between CSCEC and project stakeholders.July 25: China Railway 14th Bureau Group and China Railway International Group met with Moldova’s Ministry of Economy and Infrastructure to discussinvesting in infrastructure and energy projects.July 25: Belarus’ Borisov Pharmaceutical Company plans to partner with a Chinese pharmaceutical company to establish a factory and produce traditional Chinese medicines at the China-Belarusian Great Stone Industrial Park. The medicines will be sold domestically and abroad.July 27: China agreed to grant Belarus about $680 million in financing to buildan industrial-agricultural facility near Minsk to process wheat for animal feed products. The financing will comprise a $628 million 15-year loan from the Chinese government and a $50 million loan from a Chinese bank, in addition to $55 million from project shareholders including CITIC Group. CITIC has been invited by Belarus to participate in four other agricultural projects in the dairy, poultry, and beef industries.

Latin America and the Caribbean

July 27: Guyana and China signed an MoU on Guyana joining the Belt and Road Initiative. The Guyanese government hopes to finance infrastructure development, including the Linden-Lethem highway and proposed Demerara Harbour Bridge, through the initiative to attract potential investo

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