week 8 Flashcards
Belt and Road Initative
aka one belt one road
created by Xi Jinping in 2013 linking maritime and land trade routes
more than 146 countries in 2022, including 55 African countries
cost of the project is rising (1.3 trillion in 2020)
all levels of gov, major state-owned companies, and commercial banks are all involved
Original Silk Road
arose during the westward expansion of China’s Han Dynasty (206 BCE–220 CE), which forged trade networks throughout what are today the Central Asian countries of Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, as well as modern- day India and Pakistan to the south.
* Those routes extended more than four thousand miles to Europe.
A successful BRI would allow China to
more efficiently utilize excess savings and construction capacity, expand trade, consolidate economic and diplomatic relations with participating countries, and diversify China’s import of energy and other resources through economic corridors that circumvent routes that are controlled by the U.S. and its allies.
Silk Road Economic Belt
On land, Beijing aims to connect the country’s underdeveloped hinterland to Europe through Central Asia
Maritime Silk Road
The second leg of Xi’s plan is to build a 21st Century Maritime Silk Road connecting the fast-growing Southeast Asian region to China’s southern provinces through ports and railways
BRI objectives
Creating a vast network of railways, energy pipelines, highways, and streamlined border crossings, both westward —through the mountainous former Soviet republics —and southward, to Pakistan, India, and the rest of Southeast Asia.
* Such a network would expand the use of Chinese currency, the renminbi
* In addition to physical infrastructure, China plans to build 50 economic zones
5 Priorities of BRI
policy coordination, infrastructure connectivity, unimpeded trade, financial integration, and connecting people
China’s motivation behind BRI
motivated to boost global economic links to its
western regions, which historically have been neglected.
By so doing it is engaging different parts of China in development and globalization.
expanding military agenda and political influence leading to the possibility of reshaping the nature of global leadership.
Debt trap diplomacy
through BRI, china is critiqued for providing infrastructure funding to developing economies under opaque loan terms, only to strategically leverage the recipient country’s indebtedness to China for economic, military, or political favor
Cons of BRI
For some countries that take on large amounts of debt to fund infrastructure upgrades, BRI money is seen negatively.
BRI projects are built using low-interest loans as opposed to aid grants. Some BRI investments have involved hidden bidding processes and require the use of Chinese firms.
As a result, contractors have inflated costs, leading to canceled projects and political backlash.
Pros of BRI
stimulating development in previously non-developed places – African places – the railway lines, ports, better built
Sri Lanka’s Hambantota port
example of debt-trap diplomacy
exchange for a 99-year lease of the Sri Lankan
port in 2017
BRI & Africa
- 2015 – at FOCAC in South Africa – BRI scarcely
mentioned - 2016 - China declared Africa significant partner in BRI
- 2018 – BRI is the center! Almost everything is BRI at
FOCAC – Infrastructure is the keyword! - 2021 – at FOCAC – Infrastructure is not mentioned
Criticisms of China’s Exporting Authoritarianism
BRI has been criticized as an effort to export China’s authoritarian model, as a number of major loan recipients have poor records of democracy and civil liberties (e.g., Venezuela in Latin America, Cambodia and Laos in Asia, and Sudan and Zimbabwe in Africa).
* While the advanced economies have generally been critical of the initiative, Italy broke ranks with the rest of the G-7 and signed up for BRI in 2019 but signed off in 2023!
* The West could be more effectively engaged than
criticizing China e.g. IMF loans and forcing China to be
more transparent!
Development Partnership View
Development and implementation of infrastructure and industry
Increasing African infrastructure boosts China’s exports, uses China’s excessive labor force, and transfers industries to Africa
Competitive View
China is using Africa to compete with European countries and the US
Beneficial View
China’s relationship with African countries has had multiple socio-economic benefits, such as increased jobs
China is a leader in investment, FDI, loans, and aid in Africa
Colonial View
Through BRI and Chinese loans, African countries have transitioned from European colonies to being apart of imperial China
Economic Trap View
China has used loans to economically trap African countries
China then politically influences these countries
Resource Driven View
China is using Africa for easier access to minerals and raw materials as well as cheap labor
undermine’s Africas growth and industralization
Reasons why Kenya is a center point for BRI in Africa
large coastal and regional economy
geographical position (Mombasa port & borders South Sudan (which China needs to export oil from))
historical 15th-century links
Kenya has few trade, security, political, and economic links with China
Standard Gauge Railway
flagship project for Kenya’s Vision 2030 development agenda & aligns with the Railways Master Plan of East Africa to revive & expand the railways of Tanzania, Uganda, and Kenya
from Mombasa (the largest East African port) to Kenya’s capital Nairobi (phase 1) and eventually to Naivasha (phase 2)
Phase 1 cost $3.8 billion (5% of Kenya’s GDP)
Built by the China Road and Bridge Corporation according to Chinese railway standards
The largest infrastructure project in Kenya for cargo and passenger transportation
The loan matured in August 2023, with a 10-year grace period & a 40-year repayment plan
SGR’s Environmental Impacts
More modern and efficient railways should carbon emissions & traffic (congestion)
– reducing overall pollution
– replaced trucks, reducing gas emissions
10 elephants died during construction and lions were driven out from Nairobi National Park during bridge construction
– Increased in elephant poaching and ivory smuggling linked to an increase in Chinese workers
– Loss of habitat and wildlife displacement which harms wildlife tourism (a key part of the Kenyan economy)
Takes 4 hours and $7 (vs 10-15 hours and $12-$17) to get from Mombasa to Nairobi
SGR Political Impacts
Expected to reinforce cooperation of East African Community States
Increase importance of Kenya to China by providing transportation for Chinese goods
During SGR, China became Kenya’s leading source of imports in 2014
Strengthens the Northern Corridor Transit Agreement signed by Kenya, Uganda, Rwanda, Burundi, and the DRC
SGR Employment Impacts
Provided 60 new jobs for every kilometer constructed (roughly 45000 jobs)
trained 45,000 Kenyans (but this may not have happened)
– Most Kenyans were semi-skilled or unskilled after completion of Phase 1
Formal employment grew by 11.4%
influx of Chinese workers
58 Chinese to 30 Kenyan locomotive drivers
SGR Sectoral Growth Impacts
Significant Growth in the building and construction center (13.6% in 2015)
Growth was maintained by the continued implementation of the first phase and the development of the road network
Growth is evident from the increased cement construction
– increased from 5.88 million tons in 2014 to 6.3 million tons in 2016
SGR Impacts on Trade
In 2017, China was the leading source of Kenya’s imports at $3.36 billion against Kenya’s exports worth $100 million
– China’s low production costs and value chains have helped it become the top source of imports for Kenya
The import of manufactured goods has increased significantly, especially transport and machinery equipment
However, Kenya has not been able to take advantage of the commodity boom from China’s growth due to its scare natural resources & thus, low level of exports to China
SGR Concerns about Debt
Kenya’s overall public debt increased from 44% of GDP in 2013 to 57.1% by the end of 2017
Most of the debt is made of concessional loans due in 2017, 2019, and 2024
Was 57% of GDP in 2017 and is projected to swell further if SGR is extended
Both government officials and the public worry that the debt is unsustainable
worried Kenya will lose its assets to China
The debt could negatively affect economic growth and present risks to government, social, and development programs
Kenya has started borrowing from other countries to pay back the debts
SGR Public Goods Concerns
SGR is not financially self-sustaining
Needs to transport 20-25 million tons to pay for itself but is only projected to transport 9 million
Paid for with a high-interest loan
made a loss $100 million in 2016-2018 (first year of operation)
SGR Tendering Concerns
Main contractor (CRBC) was sourced through government-to-government tendering
No competitive tendering and lack of transparency
Court system canceled the CRBC contract needed to be cancelled but this was ignored
SGR Human Rights Concerns
CRBC’s parent company was accused of wage discrimination in both phases of SGR
CRBC brought 5k Chinese workers & promised 30k Kenyan jobs but these never materialized
Naivasha residents were forced to give up their land for low compensation
To resolve issues with SGR
issues need to be addressed
– The debt is not sustainable
– Labor issues: staff recruitment, skills transfer, racism, favoritism, cultural differences
Kenya needs to improve its negotiation practices
– Government officials need to be empowered with the skills to get what’s best for Kenya
– Chinese officials need to remember that BRI’s success will cement China’s position
SGR is financed through commercial and concessional loans from the China EXIM bank
– the loans should be refinanced through AIIB instead
Government-to-government procurement should not be the only option
The Media as Soft Power
In 2018, Xinhua established an Africa regional bureau in Nairobi.
* There are several engagements between Chinese and Africa media. These include collaborations on projections and China
providing equipment.
* The Forum on China-Africa Media Cooperation is a new addition to China’s portfolio of soft power engagements. In 2018 brought together 400 African and Chinese professional to discuss the state of the media in their countries
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