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China Renews Its ‘Belt and Road’ Push for Global Sway
Deals by Chinese companies to build ports, telecom networks and other infrastructure in poor countries have picked up, alarming some in the West.
A construction project in Sri Lanka.
By Keith Bradsher
BEIJING — China’s big-money push to build ports, rail lines and telecommunications networks around the world — and increase Beijing’s political sway in the process — seemed to be running out of gas just a year ago.
Now the program, called the Belt and Road Initiative, has come roaring back. Western officials and companies, for their part, are renewing their warnings that China’s gains in business and political clout could come at their expense.
Chinese companies signed Belt and Road contracts worth nearly $128 billion in the first 11 months of last year, according to China’s Commerce Ministry, a 41 percent increase over the same period in 2018. The contracts are mostly for construction and equipment by big Chinese companies using Chinese skilled labor and loans from Chinese banks, although the projects often create jobs for local laborers as well.
The latest contracts include a subway system for Belgrade, Serbia; an elevated rail line in Bogotá, Colombia; and a telecommunications data center near Nairobi, Kenya.
The return of Belt and Road is likely to raise tensions with the United States, which worries that China is building a globe-spanning bloc of nations that will mostly buy Chinese goods and tilt toward China’s authoritarian political model. The initiative figures into many of the disputes between the two countries over national security and technology.
The rush of new Belt and Road contracts follows a public pullback by Chinese officials in 2018 after projects in Malaysia, Sri Lanka, Pakistan and elsewhere were criticized by some in the West as bloated and costly. China argues that since then, it has fine-tuned practices to trim waste.
“We will continue to follow a high-standard, people-centered and sustainable approach to promote high-quality Belt and Road cooperation with partner countries,” Xi Jinping, China’s top leader, said during a visit to Brazil in November.
Chinese officials have long presented Belt and Road as a chance to give emerging markets the same kind of world-class infrastructure that has helped make China a global economic powerhouse. Under Belt and Road, state-owned Chinese banks typically lend practically all of the money for a construction project to be carried out by Chinese companies. The borrowing countries are then required to repay the money, often with oil or other natural resources.
Chinese leaders began to acknowledge the criticism. Vice Premier Liu He of China publicly raised concerns in early 2018 about heavy lending by Chinese banks, not just for the Belt and Road Initiative.
In the months that followed, Chinese financial regulators clamped down hard on domestic and overseas lending alike. New Belt and Road contracts plummeted, Chinese data showed. China’s financial regulators told the country’s banks to look twice at further lending to poor countries. Top leaders practically stopped mentioning the program.
But the credit crunch produced a much broader slowing in the Chinese economy in 2018 than expected. Financial regulators reversed course. That has produced a revival of lending for domestic infrastructure projects and for Belt and Road projects alike. Contracts started to be signed in earnest again in the final weeks of 2018, and momentum built through last year.
In recent days, two groups representing Western governments, companies and banks have raised questions about the resurgence of the Belt and Road Initiative.
A report released on Thursday morning by the European Chamber of Commerce in China concluded that Chinese-built telecommunications networks and ports are set up in ways that make it hard for European shipping companies, computer software providers and other businesses to compete.
A survey by the chamber of its members also found that they had been almost completely excluded from bidding on Belt and Road Initiative contracts, which went mostly to Chinese state-owned enterprises.
“It was rather sobering to see that for businesses, it is quite insignificant what we get out of this,” said Joerg Wuttke, the chamber’s president.
Alongside telecommunications, the biggest security concern in the West about the Belt and Road Initiative has involved China’s construction or expansion of extensive ports. These ports now ring the Indian Ocean and extend up the west coast of Africa and into the Mediterranean.
The European Chamber report said that European shipping companies, which have ranked among the world’s largest since the Middle Ages, increasingly find themselves at a competitive disadvantage. The new ports are designed and managed by Chinese state-owned enterprises that are under the same Chinese government agency as Chinese shipbuilders and Chinese shipping companies.
China has contended that economic growth has long suffered in many emerging markets from high transportation costs, and that the construction of new ports can reduce these costs.
Lin Qiqing contributed research from Shanghai.
https://www.nytimes.com/2020/01/15/business/china-belt-and-road.html
China Renews Its ‘Belt and Road’ Push for Global Sway
Deals by Chinese companies to build ports, telecom networks and other infrastructure in poor countries have picked up, alarming some in the West.
A construction project in Sri Lanka.
By Keith Bradsher
BEIJING — China’s big-money push to build ports, rail lines and telecommunications networks around the world — and increase Beijing’s political sway in the process — seemed to be running out of gas just a year ago.
Now the program, called the Belt and Road Initiative, has come roaring back. Western officials and companies, for their part, are renewing their warnings that China’s gains in business and political clout could come at their expense.
Chinese companies signed Belt and Road contracts worth nearly $128 billion in the first 11 months of last year, according to China’s Commerce Ministry, a 41 percent increase over the same period in 2018. The contracts are mostly for construction and equipment by big Chinese companies using Chinese skilled labor and loans from Chinese banks, although the projects often create jobs for local laborers as well.
The latest contracts include a subway system for Belgrade, Serbia; an elevated rail line in Bogotá, Colombia; and a telecommunications data center near Nairobi, Kenya.
The return of Belt and Road is likely to raise tensions with the United States, which worries that China is building a globe-spanning bloc of nations that will mostly buy Chinese goods and tilt toward China’s authoritarian political model. The initiative figures into many of the disputes between the two countries over national security and technology.
The rush of new Belt and Road contracts follows a public pullback by Chinese officials in 2018 after projects in Malaysia, Sri Lanka, Pakistan and elsewhere were criticized by some in the West as bloated and costly. China argues that since then, it has fine-tuned practices to trim waste.
“We will continue to follow a high-standard, people-centered and sustainable approach to promote high-quality Belt and Road cooperation with partner countries,” Xi Jinping, China’s top leader, said during a visit to Brazil in November.
Chinese officials have long presented Belt and Road as a chance to give emerging markets the same kind of world-class infrastructure that has helped make China a global economic powerhouse. Under Belt and Road, state-owned Chinese banks typically lend practically all of the money for a construction project to be carried out by Chinese companies. The borrowing countries are then required to repay the money, often with oil or other natural resources.
Chinese leaders began to acknowledge the criticism. Vice Premier Liu He of China publicly raised concerns in early 2018 about heavy lending by Chinese banks, not just for the Belt and Road Initiative.
In the months that followed, Chinese financial regulators clamped down hard on domestic and overseas lending alike. New Belt and Road contracts plummeted, Chinese data showed. China’s financial regulators told the country’s banks to look twice at further lending to poor countries. Top leaders practically stopped mentioning the program.
But the credit crunch produced a much broader slowing in the Chinese economy in 2018 than expected. Financial regulators reversed course. That has produced a revival of lending for domestic infrastructure projects and for Belt and Road projects alike. Contracts started to be signed in earnest again in the final weeks of 2018, and momentum built through last year.
In recent days, two groups representing Western governments, companies and banks have raised questions about the resurgence of the Belt and Road Initiative.
A report released on Thursday morning by the European Chamber of Commerce in China concluded that Chinese-built telecommunications networks and ports are set up in ways that make it hard for European shipping companies, computer software providers and other businesses to compete.
A survey by the chamber of its members also found that they had been almost completely excluded from bidding on Belt and Road Initiative contracts, which went mostly to Chinese state-owned enterprises.
“It was rather sobering to see that for businesses, it is quite insignificant what we get out of this,” said Joerg Wuttke, the chamber’s president.
Alongside telecommunications, the biggest security concern in the West about the Belt and Road Initiative has involved China’s construction or expansion of extensive ports. These ports now ring the Indian Ocean and extend up the west coast of Africa and into the Mediterranean.
The European Chamber report said that European shipping companies, which have ranked among the world’s largest since the Middle Ages, increasingly find themselves at a competitive disadvantage. The new ports are designed and managed by Chinese state-owned enterprises that are under the same Chinese government agency as Chinese shipbuilders and Chinese shipping companies.
China has contended that economic growth has long suffered in many emerging markets from high transportation costs, and that the construction of new ports can reduce these costs.
Lin Qiqing contributed research from Shanghai.
https://www.nytimes.com/2020/01/15/business/china-belt-and-road.html
