Tagged: AIIB

China’s development lenders embrace multilateral co-operation

By Raffaello Pantucci

aiib-inaugural-mtg

First published in the Financial Times Beyond BRICS, November 1, 2016

There has been much speculation on the role of the Silk Road Fund (SRF) and Asian Infrastructure Investment Bank (AIIB) in China’s outward investment push.

They are both instruments created by Beijing to provide economic firepower and bring international credibility to the ‘Belt and Road’ vision that has become President Xi Jinping’s keynote foreign policy concept. But in reality they have both undertaken a series of investments that, while substantial and linked to ‘Belt and Road’ countries, pale in size next to China’s overall outward investments.

While the AIIB has quite clearly been subsumed into the ‘Belt and Road’ project, the SRF has so far largely focused on commercial projects which are focused on profit rather than national strategy.
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The Economics of the Silk Road Economic Belt

By Sarah Lain and Raffaello Pantucci

First published by RUSI on November 27, 2015

On 20 October 2015, RUSI held a day-long workshop in Almaty, Kazakhstan, in collaboration with KIMEP University and the Friedrich Ebert Stiftung (FES). The focus of the workshop was the economics behind the Chinese Silk Road Economic Belt (SREB) and its impact in Central Asia. The key areas of discussion examined the potential benefits that the SREB could bring to participating countries, the integration of the SREB with other economic projects and the various funding mechanisms through which the SREB will be financed. The workshop brought together participants from Almaty, Astana, London, Beijing, Shanghai, New Delhi and Russia, including representatives from academia, the private sector and think tanks.

The first session discussed the real benefits of the SREB to both China and participating countries along the road. There is a risk that the SREB will simply turn Eurasia into a set of transport routes emanating from China, aimed at increasing the volume of Chinese goods going to Europe. Other than transit fees, China has not made it explicitly clear as to what other value participating in the SREB can add to economic development. Special economic and free-trade zones are one opportunity, such as that of Khorgos on the border of Kazakhstan and China, or those planned for Pakistan. However, the extent to which these are benefitting Central Asia is still unclear, and those for Pakistan are still under discussion. Kazakhstan’s side of this free-trade zone is noticeably less developed than that of China’s, highlighting that not all of these projects are implemented to meet maximum potential.

Furthermore, China’s emphasis on connectivity as a key goal of the SREB runs the risk of over-emphasising railway development as an end goal, since not all goods are cost-effective to transport by rail. High-value goods are the ideal product: one participant from Kazakhstan noted that Kazakhstan Temir Zholy, the national railway operator, had begun transporting Apple products from China, cutting down delivery time from sixty days (by sea) to eighteen days (by rail). For the SREB project to be successful, therefore, both Xinjiang, the northwestern Chinese province, and the countries along the Silk Road route need to increase their high-tech manufacturing capacity to produce these high-value goods for transport, neither of which are currently visible.
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The geopolitical roadblocks

By Raffaello Pantucci and Qingzhen Chen

First published in China Analysis, June 10 2015

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Sources:

Zhang Yunling, “Analysis says One Belt One Road Faces Five Challenges,” Xiaotang Caizhi, 23 March 2015.

Tang Yiru, “Where does the money come from for the One Belt One Road? Geopolitical risks cannot be ignored,” Guoji Jinrong Bao, 9 February 2015.

Hu Zhiyong, “How to understand the political risks of ‘One Belt One Road’”, Aisixiang, 2 March 2015.

Jia Qingguo, “A number of issues that the OBOR urgently needs to clarify and prove,” Aisixiang, 24 March 2015.

Ge Jianxiong, “The History of One Belt One Road is misunderstood,” Financial Times (Chinese version), 10 March 2015.

Pang Zhongying, “One of the resistances to the One Belt One Road is from India,” Aisixiang, 4 March 2015.

Chinese authorities – and authors – describe China’s “One Belt, One Road” (一带一路, yidai yilu, hereafter OBOR) strategy as one of the most important foreign policy initiatives in the twenty-first century, and Chinese authors agree. Across the country (and, increasingly, across the world), Chinese universities and research institutions are conducting projects to explore how the vision might be implemented. Meanwhile, China’s leadership is offering economic incentives to help make the vision a reality, either through bilateral connections or through the new constellation of multilateral international financial institutions that China is developing. However, the Chinese comments also reflect that the strategy will have to overcome many challenges. Is Chinese business ready to go global? Are the countries along the routes ready to embrace the initiative? How much does China know about the countries involved and about how they will be changed by Chinese investment? And is China properly prepared to implement this strategy?
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The geopolitical roadblocks

By Raffaello Pantucci and Qingzhen Chen

First published in China Analysis, June 10 2015

china_analysis_belt_cover

Sources:

Zhang Yunling, “Analysis says One Belt One Road Faces Five Challenges,” Xiaotang Caizhi, 23 March 2015.

Tang Yiru, “Where does the money come from for the One Belt One Road? Geopolitical risks cannot be ignored,” Guoji Jinrong Bao, 9 February 2015.

Hu Zhiyong, “How to understand the political risks of ‘One Belt One Road’”, Aisixiang, 2 March 2015.

Jia Qingguo, “A number of issues that the OBOR urgently needs to clarify and prove,” Aisixiang, 24 March 2015.

Ge Jianxiong, “The History of One Belt One Road is misunderstood,” Financial Times (Chinese version), 10 March 2015.

Pang Zhongying, “One of the resistances to the One Belt One Road is from India,” Aisixiang, 4 March 2015.

Chinese authorities – and authors – describe China’s “One Belt, One Road” (一带一路, yidai yilu, hereafter OBOR) strategy as one of the most important foreign policy initiatives in the twenty-first century, and Chinese authors agree. Across the country (and, increasingly, across the world), Chinese universities and research institutions are conducting projects to explore how the vision might be implemented. Meanwhile, China’s leadership is offering economic incentives to help make the vision a reality, either through bilateral connections or through the new constellation of multilateral international financial institutions that China is developing. However, the Chinese comments also reflect that the strategy will have to overcome many challenges. Is Chinese business ready to go global? Are the countries along the routes ready to embrace the initiative? How much does China know about the countries involved and about how they will be changed by Chinese investment? And is China properly prepared to implement this strategy?
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Looking West: China and Central Asia

By Raffaello Pantucci

Delivered to the US-China Economic and Security Review Commission, March 18, 2015

Seal_of_the_United_States-China_Economic_and_Security_Review_Commission

Background

In September 2013 during a visit to Astana President Xi Jinping spoke of establishing a ‘Silk Road Economic Belt’ (SREB) that would ‘open the strategic regional thoroughfare from the Pacific Ocean to the Baltic Sea, and gradually move toward the set-up of a network of transportation that connects Eastern, Western and Southern Asia.’ Made during the President’s inaugural visit to Central Asia, the speech was both an articulation of a policy in a region that had been underway for around a decade, as well as the first declaration of a foreign policy vision that has increasingly shaped China’s own projection of its approach to foreign affairs. Founded in Central Asia, the SREB and the development of trade and infrastructure corridors emanating from China that it has come to symbolize, is slowly becoming Beijing’s dominant and most vocalised foreign policy strategy and is possibly set to be the defining public narrative for Chinese foreign policy under Xi Jinping.

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