Showing posts with label South China Sea. Show all posts
Showing posts with label South China Sea. Show all posts
Wednesday, September 16, 2020
China's One Belt, One Road: Pakistan's Cautionary Tale
Back in 2015, the China-Pakistan Economic Corridor (CPEC) section of China's One Belt, One Road (OBOR) Initiative was expected to bring economic development and jobs to Pakistan and also provide substantial benefits to China. The new deep water port at Gwadar, Pakistan, on the Arabian Sea would enable China to transport oil from the Middle East up through Pakistan to western China rather than across the Indian Ocean and through the congested Malacca Straight between Indonesia and Malaysia to the South China Sea.
By encircling India, the CPEC offered a way to balance or neutralize democratic India's influence in the region, but the CPEC also involved China in India's Kashmir border dispute with Pakistan high in the Himalaya Mountains. Shots fired on the border in Septemebr, 2020, violated an Indo-Chinese agreement.
Pakistan found the terms of the CPEC less than transparent and a debt burden Beijing was unwilling to renegotiate. The Chinese support Pakistan expected for its border dispute with India failed to materialize. In fact, in September, 2017, China and India signed an anti-terrorist declaration that criticized Pakistan for shielding terrorist groups. The US even floats the notion that China might be an ally willing to help persuade Pakistan to pressure its Taliban friends to help stabilize neighboring Afghanistan.
The bottom line is: Pakistan's deteriorating economy, made worse by the coronavirus, finds 18 million employees out of work. China, which expects repayment for the CPEC, has no need for Pakistan's textile exports. CPEC construction jobs failed to satisfy Pakistan's need for the education, technical training and scientific research necessary for modern employment, such as monitoring and correcting Pakistan's poor air quality.
Finally, the CPEC involves atheistic China with a Muslim country, when China is trying to eliminate the Uighur Muslim culture in Kashgar, home of the Id Kah Mosque, and to control up to one million Uighurs in so-called re-education camps. At the same time, Pakistan's Hindu minority, already discriminated against in better economic times, is converting to Islam just to receive assistance from the government and charities.
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Friday, August 14, 2020
Has China Overplayed Its Hand?
Xi Jinping, Chairman of China's Communist Party, envisions a "China Dream", not to cool or feed the planet, but to regain China's place, center stage in world history. Kublai Khan's civilization, superior to Europe's in the 13th century, waited for Marco Polo to discover Chinese people paid for their goods with paper money and healed their wounds with a kind of vasoline. Unwilling to wait for China to be discovered in the 21st century, Chairman Xi chooses to dream of world domination by following Deng Xiaoping's 1978 advice, "It is a glorious thing to be rich."
To be a rich country in the 21st century requires the technological superiority the world associates with Silicon Valley. When Chairman Xi learned, in April, 2018, a US ban on microchip exports could cause the bankruptcy of a Chinese firm, ZTE, he saw how the patent a US company held on a specific semiconductor chip established the international standard for an item essential in every device connected to a cell phone network. From that point on, his "Made in China 2025" program aimed for self reliance and acquiring standard essential patents (SEPs). Using a SEP without being licensed subjects a user to the charge of infringement. According to a German patent data source, Huawei now holds 2000 5G SEPs. Normally, a firm has to license its monopoly rights to anyone on FRAND (fair, reasonable and non-discriminatory) terms. The US wants to withhold licensing its SEPs to competitors because of national security concerns. To be fair, Huawei would have to be allowed to do the same.
The chip situation is very complicated, because Washington has not been able to resist lobbying from US firms that want to continue selling chips to Huawei, a short term gain, since China is determined to end reliance on US supplies. Nonetheless, as of September 26, 2020, the US Commerce Department requires US suppliers to obtain hard-to-come-by licenses to export what China's Semiconductor Manufacturing International Corporation (SMIC), considered a supplier to the Chinese military, needs to upgrade and maintain its manufacturing and hardware equipment.
Not easy to replicate or fund are the processes of: 1) designing the delicate silicon microchips created for different purposes, such as operating driverless cars, and 2) constructing the automated, super-cooled and shock resistant facilities where chips are manuractured. Ironically, Taiwan, which Beijing claims under its "one country, two systems" policy framework, currently is among the countries with facilities capable of fabricating microchips. Yet, Beijing is at odds with the democratic government Taiwan re-elected in January, 2020. Chairman Xi's detrmination to maintain stability through surveillance-guaranteed control and conformity undermines a relationship that provides Taiwan's top tier brainpower and technology.
What steps is China taking to reduce external dependency, even from Taiwan, on foreign sources of semiconductor chips?
- Enhanced domestic training of top quality skilled workers
- Using experienced Chinese hackers to scoop up foreign researh and development progress in a wide variety of high tech
industrial, medical, engineering, solar, gaming and military fields
- China Talent Plan, a spy-like program for recruiting foreign individuals with access to intellectual technology property who are willing to work with Chinese partners
- Huawei, a Chinese company with total annual earnings of over $100 billion annually from 170 countries, sells smartphones and cellular and internat gear that give Beijing potential access to big data from around the world.
Some US professors targeted by the China Talent Plan have seemed oblivious to the way China uses them, but the FBI has been concerned for more than a decade. Yanqing Ye, for example, would see herself on an FBI wanted poster after she entered Boston University's Department of Physics, Chemistry and Biomedical Engineering without declaring, on her visa application, her status as a Lieutenant in China's military, her membership in the Chinese Communist Party and her association with China's National University of Defense Technology (NUDT). The FBI found a Princeton professor working on unmanned drones and autonomous submarines with a scientist from NUDT.
Although Huawei has global sales, its biggest customer is China, where a 2017 law requires any citizen or organization, including Huawei, to comply with all government requests. Therefore, the US attempts to prevent countries from making Huawei purchases, especially the countries in the "Five Eyes" spying pact that shares intelligence among Australia, New Zealand, Canada, the UK and US. When Britain concluded a review of an April 24, 2019 decision to build its 5G (fifth generation) network with a limited amount of Huawei equipment, the decision was overturned on July 14, 2020. In October, 2020, Sweden also decided not to use Huawei products in its 5G network.
Following the UK's decision, Britain suggested forming a 10-country alliance of democracies to develop 5G technology and to eliminate dependence on Huawei and other Chinese technology companies. With 6G technology already on drawing boards, an alliance of G7 countries (Britain, Canada, the US, France, Germany, Italy, Japan) and Australia, South Korea and India represents an important source of brainpower and financing to develop future networks. Such a NATO-like coalition also could more than match China's future investments in computing power to handle big data, the semiconductor industry, drones, robotics, autonomous weapons and other advanced technology.
By attempting to gain world domination, China has stirred up widening opposition to its transgressions, such as internment of one million Uighur Muslims in so-called re-education camps, disregard of Hong Kong's 50-year guarantee of rights under China's takeover agreement with Britian and an expanding claim to the South China Sea. What some are calling a tech Cold War is more.
Chinese Communism and the democratic ideals of human rights, the rule of law and representative government are waging a battle for history's center stage.
Wednesday, February 6, 2019
Unmask Inscrutable Chinese Intentions
China has an uncanny ability to describe what the United States wants to hear while pursuing the future Beijing is determined to create.
At a 2014 Asia-Pacific Economic Cooperation summit, Chinese President Xi Jinping told President Obama the Pacific Ocean was "broad enough to accommodate the development of both China and the United States." A year later, China declared it had no intention of militarizing its artificial islands in the South China Sea. Today, China has radar installations, reinforced concrete bunkers, and missiles on three of its artificial islands and claims "indisputable sovereignty" in their adjacent waters.
In 2017, the Taiwan-based Chinese company, Foxconn, arrived in Wisconsin offering to create 13,000 new jobs in a State, where then Republican Gov. Scott Walker had failed to deliver on a campaign promise to create 250,000. In return for the increase in employment and plant investment that Foxconn agreed to bring to Wisconsin, the State offered the company generous tax credits said to be anywhere from $3 billion to $4.5 billion.
During the past two years, Foxconni 's Technology Group changed its original plan to manufacture TV liquid crystal display panel screens in Wisconsin. While holding to its contractual obligation to employ 13,000, Foxconn now claims three-quarters of the jobs in Wisconsin's 6G "technology hub" will be in research, development, and design, rather than in blue collar manufacturing jobs.
In Manhattan, Mayor Bill de Blasio said any attempt to change the terms of the agreement that brought Amazon's second headquarters to the city would nullify the contract. How can Foxconn alter plans for its operation in Wisconsin without any consequences?
Whether there are 9,750 employees with skills to handle the 6G tasks Foxconn now expects to perform in Wisconsin is doubtful. In 2018, Foxconn did not qualify to receive any tax incentives, because the company only created 178 of the 260 positions it agreed to fulfill in that period. Were these 178 positions filled by Wisconsinites? Since an audit in December, 2018 found the Wisconsin Economic Development Corporation has a policy of awarding tax credits for employees who do not work in Wisconsin, it seems possible Foxconn even could receive tax credits for 6G jobs performed by Foxconn employees in China.
I do not pretend to know how a 6G (sixth generation) network works, but I doubt Gov. Tony Evers and the GOP legislature that approved the Foxconn contract do either. I do know 6G networks are designed to facilitate the IoT
(Internet of Things). If home appliances and office electronics with display panels instantly transmit everything they see, an advanced ultra-high frequency 6G network is needed to instantly transmit an enormous amount of data. And memory chips are essential to this technology.
By locating in the United States, Foxconn can purchase memory chips from U.S. companies, such as Qualcomm, and avoid the export ban that nearly put ZTE out of business in China, when Congress initially prohibited the exports it needed. (See the earlier post, "China's Domestic Economic Belt.")
Chinese scientists suggest how lovely it would be to use 6G technology to share a holiday dinner with friends and relatives thousands of miles away. Benign 6G applications in driverless cars, aviation, and medicine do seem beneficial. But you only need to imagine paying China for devices that allow Beijing to look into every home and business in the United States to recognize problems and the need for government regulation.
U.S. officials already indicate they consider the practices and equipment of China's telecom firms a national security threat. Huawei, which builds networks in 170 countries, is charged in the U.S. with flaunting sanctions forbidding exports of memory chips to Iran, stealing intellectual property, and improper banking disclosures. After Canada arrested Huawei's chief financial officer, Meng Wanzhou, Washington asked for her extradition to the United States. To date, no evidence reveals Huawei's smartphones or networks have been used for spying, but the fear that they, or their 6G successors, could be used for that purpose persists. As long as Huawei offers good service at a lower price than competitors, U.S., European, and other companies will not shy away from buying their products. In China, President Xi is determined to eliminate dependence on, and influence related to, chips supplied by U.S. companies.
At a 2014 Asia-Pacific Economic Cooperation summit, Chinese President Xi Jinping told President Obama the Pacific Ocean was "broad enough to accommodate the development of both China and the United States." A year later, China declared it had no intention of militarizing its artificial islands in the South China Sea. Today, China has radar installations, reinforced concrete bunkers, and missiles on three of its artificial islands and claims "indisputable sovereignty" in their adjacent waters.
In 2017, the Taiwan-based Chinese company, Foxconn, arrived in Wisconsin offering to create 13,000 new jobs in a State, where then Republican Gov. Scott Walker had failed to deliver on a campaign promise to create 250,000. In return for the increase in employment and plant investment that Foxconn agreed to bring to Wisconsin, the State offered the company generous tax credits said to be anywhere from $3 billion to $4.5 billion.
During the past two years, Foxconni 's Technology Group changed its original plan to manufacture TV liquid crystal display panel screens in Wisconsin. While holding to its contractual obligation to employ 13,000, Foxconn now claims three-quarters of the jobs in Wisconsin's 6G "technology hub" will be in research, development, and design, rather than in blue collar manufacturing jobs.
In Manhattan, Mayor Bill de Blasio said any attempt to change the terms of the agreement that brought Amazon's second headquarters to the city would nullify the contract. How can Foxconn alter plans for its operation in Wisconsin without any consequences?
Whether there are 9,750 employees with skills to handle the 6G tasks Foxconn now expects to perform in Wisconsin is doubtful. In 2018, Foxconn did not qualify to receive any tax incentives, because the company only created 178 of the 260 positions it agreed to fulfill in that period. Were these 178 positions filled by Wisconsinites? Since an audit in December, 2018 found the Wisconsin Economic Development Corporation has a policy of awarding tax credits for employees who do not work in Wisconsin, it seems possible Foxconn even could receive tax credits for 6G jobs performed by Foxconn employees in China.
I do not pretend to know how a 6G (sixth generation) network works, but I doubt Gov. Tony Evers and the GOP legislature that approved the Foxconn contract do either. I do know 6G networks are designed to facilitate the IoT
(Internet of Things). If home appliances and office electronics with display panels instantly transmit everything they see, an advanced ultra-high frequency 6G network is needed to instantly transmit an enormous amount of data. And memory chips are essential to this technology.
By locating in the United States, Foxconn can purchase memory chips from U.S. companies, such as Qualcomm, and avoid the export ban that nearly put ZTE out of business in China, when Congress initially prohibited the exports it needed. (See the earlier post, "China's Domestic Economic Belt.")
Chinese scientists suggest how lovely it would be to use 6G technology to share a holiday dinner with friends and relatives thousands of miles away. Benign 6G applications in driverless cars, aviation, and medicine do seem beneficial. But you only need to imagine paying China for devices that allow Beijing to look into every home and business in the United States to recognize problems and the need for government regulation.
U.S. officials already indicate they consider the practices and equipment of China's telecom firms a national security threat. Huawei, which builds networks in 170 countries, is charged in the U.S. with flaunting sanctions forbidding exports of memory chips to Iran, stealing intellectual property, and improper banking disclosures. After Canada arrested Huawei's chief financial officer, Meng Wanzhou, Washington asked for her extradition to the United States. To date, no evidence reveals Huawei's smartphones or networks have been used for spying, but the fear that they, or their 6G successors, could be used for that purpose persists. As long as Huawei offers good service at a lower price than competitors, U.S., European, and other companies will not shy away from buying their products. In China, President Xi is determined to eliminate dependence on, and influence related to, chips supplied by U.S. companies.
Wednesday, September 5, 2018
Vietnam and U.S. Demonstrate the Value of Short Memories
Chances are, looking back on your life, you remember having an enemy who later became your friend. Kids also go through those off and on enemy-friend relationships, as do countries. Turning Germany into a friend after World War II proved far better than trying to condemn the country forever following World War I.
In the U.S. we learned at Senator John McCain's funeral service on September 1, 2018 last Saturday, even though he was captured and tortured for over five years in Hanoi during the Vietnam War, the Vietnamese now recognize him as someone who helped bring about the reconciliation of the United States and Vietnam.
Haiphong harbor, once mined by the U.S. during the Vietnam War, now is valued as an import/export hub needed to handle U.S. trade pulling out of China. In February, 2019, President Trump and North Korea's Kim Jong-un chose Vietnam for their meeting to discuss demilitarization of the Korean peninsula and lifting the crippling economic sanctions that keep North Korea from enjoying the prosperity South Korea and Vietnam now enjoy.
Today, both the United States and Vietnam continue to contest China's claim to "indisputable sovereignty" over the Spratly Islands and their adjacent waters in the South China Sea. After declaring in 2015 no intention of militarizing its artificial islands there, China now has radar installations, reinforced concrete bunkers, and missiles on three Spratly Islands west of the Philippines, a compliant challenger dependent on Chinese investment. China also has landed bombers in the Parcel Islands disputed with Vietnam.
Vietnam, nonetheless, with its powerful military force, successfully prevented China from locating an oil exploration rig in its waters. At home, Vietnam has experienced anti-Chinese protests. Meanwhile, in its ongoing challenge to excessive maritime claims by all countries violating the international Law of the Sea Convention, a U.S. destroyer's Freedom of Navigation Operation sailed within 12 miles of one of China's seven artificial islands in May, 2018. Then, the US canceled an invitation to China to participate in annual naval drills off Hawaii and invited Vietnam instead.
Vietnam also has challenged China's claims in the South China Sea by building two of its own artificial islands on the Nanhua Reef in the Spratly Island chain. According to China, the reef where Vietnam built is only above water at low tide, and typhoon "Jasmine" washed away much of the reclaimed land dredged up from the ocean floor. China also was proud to add Vietnam used a technique inferior to the way China sucks up sand for its taller islands.
Both low tech and high tech industries benefit from Vietnam's and the US's short memories. Check clothes labels, and you probably will see a number of items were made in Vietnam. At the same time, the oncology treatment IBM's Watson chose at Phu Tho General Hospital enabled a patient to move and eliminate the need for painkilling medication. Google Brain and technology experts also applaud Vietnamese Dr. Le Viet Quoc's effort to make deep learning a reality and to incorporate artificial intelligence (AI) into advertising research.
At "Age of AI and Vietnamese Enterprises," a Hanoi summit on July 25, 2018, more than 400 AI, economists, and financial experts and delegates from Vietnam's leading firms heard Harvard's James Furman urge private-government cooperation on AI research and applications. Vietnam's own Deputy Minister of Planning and Investment told the summit's older generation to eliminate obstacles preventing companies from making full use of younger employees with math skills and an interest in new technology.
Modeled on Silicon Valley, California, Vingroup JSC, a Vietnamese conglomerate worth about $3 billion, intends to consolidate its diversified businesses in VinTech City, where the focus will be technology development (including development of new generation materials), applications, manufacturing, and services. A sub-unit will house the Big Data Institution and Vin Hi-Tech Institution.Vietnam finds the key to using Big Data effectively is creating teams that include Big Data technology experts and those with a full understanding of the industry using the data. Working together, technology and industry partners are best able to incorporate unstructured data about customer activities, such as internet use and applications, with structured and semi-structured industry data in order to develop new digital products and services. Just like in the United States, Vietnam knows data found to have great long-term value for a company, needs to be protected from nearby and distant competitors, even if they are friends.
In the U.S. we learned at Senator John McCain's funeral service on September 1, 2018 last Saturday, even though he was captured and tortured for over five years in Hanoi during the Vietnam War, the Vietnamese now recognize him as someone who helped bring about the reconciliation of the United States and Vietnam.
Haiphong harbor, once mined by the U.S. during the Vietnam War, now is valued as an import/export hub needed to handle U.S. trade pulling out of China. In February, 2019, President Trump and North Korea's Kim Jong-un chose Vietnam for their meeting to discuss demilitarization of the Korean peninsula and lifting the crippling economic sanctions that keep North Korea from enjoying the prosperity South Korea and Vietnam now enjoy.
Today, both the United States and Vietnam continue to contest China's claim to "indisputable sovereignty" over the Spratly Islands and their adjacent waters in the South China Sea. After declaring in 2015 no intention of militarizing its artificial islands there, China now has radar installations, reinforced concrete bunkers, and missiles on three Spratly Islands west of the Philippines, a compliant challenger dependent on Chinese investment. China also has landed bombers in the Parcel Islands disputed with Vietnam.
Vietnam, nonetheless, with its powerful military force, successfully prevented China from locating an oil exploration rig in its waters. At home, Vietnam has experienced anti-Chinese protests. Meanwhile, in its ongoing challenge to excessive maritime claims by all countries violating the international Law of the Sea Convention, a U.S. destroyer's Freedom of Navigation Operation sailed within 12 miles of one of China's seven artificial islands in May, 2018. Then, the US canceled an invitation to China to participate in annual naval drills off Hawaii and invited Vietnam instead.
Vietnam also has challenged China's claims in the South China Sea by building two of its own artificial islands on the Nanhua Reef in the Spratly Island chain. According to China, the reef where Vietnam built is only above water at low tide, and typhoon "Jasmine" washed away much of the reclaimed land dredged up from the ocean floor. China also was proud to add Vietnam used a technique inferior to the way China sucks up sand for its taller islands.
Both low tech and high tech industries benefit from Vietnam's and the US's short memories. Check clothes labels, and you probably will see a number of items were made in Vietnam. At the same time, the oncology treatment IBM's Watson chose at Phu Tho General Hospital enabled a patient to move and eliminate the need for painkilling medication. Google Brain and technology experts also applaud Vietnamese Dr. Le Viet Quoc's effort to make deep learning a reality and to incorporate artificial intelligence (AI) into advertising research.
At "Age of AI and Vietnamese Enterprises," a Hanoi summit on July 25, 2018, more than 400 AI, economists, and financial experts and delegates from Vietnam's leading firms heard Harvard's James Furman urge private-government cooperation on AI research and applications. Vietnam's own Deputy Minister of Planning and Investment told the summit's older generation to eliminate obstacles preventing companies from making full use of younger employees with math skills and an interest in new technology.
Modeled on Silicon Valley, California, Vingroup JSC, a Vietnamese conglomerate worth about $3 billion, intends to consolidate its diversified businesses in VinTech City, where the focus will be technology development (including development of new generation materials), applications, manufacturing, and services. A sub-unit will house the Big Data Institution and Vin Hi-Tech Institution.Vietnam finds the key to using Big Data effectively is creating teams that include Big Data technology experts and those with a full understanding of the industry using the data. Working together, technology and industry partners are best able to incorporate unstructured data about customer activities, such as internet use and applications, with structured and semi-structured industry data in order to develop new digital products and services. Just like in the United States, Vietnam knows data found to have great long-term value for a company, needs to be protected from nearby and distant competitors, even if they are friends.
Saturday, March 10, 2018
China's Plan for World Domination
What developing country could resist participating in China's One Belt One Road (OBOR) and Maritime Silk Road (MSR) initiatives to construct roads, railroads, bridges, and power plants that would enable a rural exodus to jobs in urban centers, employ the unemployed, stimulate manufacturing, and facilitate trade? What developed country could resist participating in the financial enterprise of investing in China's estimated $1 trillion to $8 trillion project?
That's the good news. Students are challenged to activate their critical thinking to anticipate, and even suggest solutions for, the problems that have and will develop along these routes.
Finance: Traditionally, the international financial institutions charged with funding major projects include the World Bank, dominated by the United States; the International Monetary Fund (IMF), whose president comes from Europe; and the Asian Development Bank headed by a president from Japan. Because the funding process of these institutions was considered too slow and the required plan preparation was too costly, a New Development Bank, Asian Infrastructure Investment Bank (AIIB), and Silk Road Fund were established to pick up the pace.
Since then, the Islamic Development Bank has agreed to jointly finance African projects with the AIIB, and Japanese, British, and US banks also are looking into ways to cooperate with China. Japan and the United States did not join the AIIB, because they suspected the bank would lack concern about labor, environmental sustainability, and requirements for democratic reform, since China considers all political systems equal and claims not to interfere with a recipient's sovereignty. As it has turned out, the AIIB is careful to abide by international norms, but the bank seems to retain its image by avoiding involvement with One Belt, One Road (OBOR) projects.
After World War II, the Marshall Plan helped rebuild a Europe that had existed. China's One Belt, One Road plan attempts to build something that never existed before what exits is ready to use it. As a result, Chinese development projects and financing bury recipients, such as Angola and Zambia, in debt. Half the countries in sub-Sahara Africa now have public debt greater than half their GDPs. There is growing concern about the raw materials, state power utilities, and other compensation China might require in case of loan defaults. Sri Lanka already was asked to share intelligence about traffic passing through its now bankrupt and Chinese-seized port. Zambia's default on a Chinese loan repayment resulted in immediate discussions that could lead to seizure of Zambia's electric company, ZESCO. The following eight countries have been singled out as in danger of assuming too great a Chinese debt burden: Laos, Kyrgyzstan, the Maldives, Montenegro, Djibouti, Tajikistan, Mongolia, and Pakistan.
Pakistan's new prime minister, Imran Khan, found out countries cannot escape hard financial realities. Fed up with "hand outs from the West," Pakistan hoped to avoid the scrutiny of loan requests submitted to the IMF. But even China, in the process of using Pakistan to gain access to the mineral riches in Afghanistan's mountains and to encircle India with its OBOR projects, balked at loaning funds to cover the $10 billion Pakistan needs for the next few month's fuel imports and foreign debt repayments. Saudi Arabia only offered to consider investing in the $60 billion China-Pakistan Economic Corridor (CPEC), the part of China's OBOR that includes a deep water port at Gwadar, Pakistan, and a major dam at Karot on the Pakistan-India-Chinese border. Now that the IMF is evaluating Pakistan's loan application, China also faces scrutiny of the secret terms of its CPEC contracts.
Reminiscent of the way Britain achieved control over the Suez Canal, China is creating influence and economic dependency in a wide swath of territory. With complex partnerships, including with the developing countries themselves, and enormous amounts of money at risk, diverse financial instruments handle equity participation, public-private partnerships, insurance, loan guarantees, debt instruments, first-loss equity, challenge funds, grants, and project preparation support. In cases of shared risk, allocating amounts to partners is challenging. Reducing risks also requires staff to monitor project progress and maximize the speed of fixing mistakes. At any time, China can call in loans for non-payment.
Political conflict: Beijing's Maritime Silk Road includes the deep water port China is building at Gwadar, Pakistan, to gain access to the Arabian Sea and avoid shipping oil farther east through the congested Malacca Straight. From Gwadar, China plans a route north and east toward the Karot hydroelectric power plant on the Jhelum River southeast of Islamabad and into China's Xinjiang Uighur Autonomous Region, China, which already uses facial recognition technology to track 2.5 million in its Xinjiang province, also would gain another way to control the restive Uighur Muslim minority that lives among the Chinese Han majority. Since China's President Xi Jinping came to power in 2012, he has pushed the idea that China's atheistic political system should be considered just as valid, especially for maintaining China's peace and security, as the governments of any other countries.
Try as hard as it might, however, the Chinese Communist Party has been unable to squelch Muslim Uighurs, but also Christians and Taoists in Chengdu's panda-breeding city and Buddhists in Tibet (as well as democracy activists in Hong Kong and Taiwan). More than a million Uighurs are said to be confined in re-education camps. Increased surveillance using facial recognition, AI, and computer monitoring systems tries to catch violations. Rather than be shut out of a major market, even Google was poised to develop a "Dragonfly" search engine that would meet China's censorship requirements by excluding keywords, such as Tiananmen, until its employees refused to compromise their ethics in order to work on the project.
A part of the Pakistan to China road also passes through Kashmir, the primarily Muslim site of a territorial dispute between the nuclear powers, Pakistan and Hindu India. For the first time in 30 years, the Kashmir flash point came under a major attack in February, 2019, when a suicide bomber from Pakistan killed 40 of India's security forces. To further complicate border tensions, Saudi Arabia's crown prince, Muhammad bin Salman, who is accused of directing the murder of journalist, Jamal Khashoggi, seemed to challenge China's influence in the area by visiting with a promise to invest in Pakistan and India.
Thus far, India's military buildup, economic shortfalls in the region, and ethnic/religious conflict have prevented Beijing from surrounding India. The two countries, India and China, already needed to resolve a 2017 border dispute by establishing a hotline between them. With the launch of its Arihant submarine in November, 2018, India enhanced its military capability in the area by adding sea-based, short-range nuclear missiles capable of reaching China and Pakistan to its air- and land-based missile systems.
In the south, the Indian Ocean's strategic Maldive Islands ousted China's hand-picked president. Under former President Yameen, Chinese influence had started to replace the protection India provided after the Maldives and India achieved independence from Britain. Millions in low interest Chinese loans began funding construction of a bridge from the Maldive capital in Male to the main airport, as well as housing and a hospital that could support a naval base. Saudi Arabia also has showed interest in the Maldive atolls and constructed a major mosque there.
Beijing's effort to eliminate the need to import oil through the congested Malacca Straight also moves China closer to India in the southeast. China plans to construct a road-rail-pipeline corridor through Myanmar, from its Shan state in the east to a port on the Bay of Bengal in the Rakhine state on the Bangladesh border. The Chinese conglomerate constructing the port is financing 70% of the project, but Myanmar is hard-pressed to fund its 30%, much less the rest of the country-wide project. Myanmar's Buddhist government and military face warring factions: the Muslim Rohingyas; the Arakan Army of Buddhist Rakhine that opposes the Burman-dominated Buddhist government; and the Northern Alliance Brotherhood, a coalition of insurgents from Kachin and Shan states.
In Central Asia, China runs into conflict with Russia, especially in resource-rich Kazakhstan, sometimes called the buckle of the new Silk Road.
The South China Sea finds China challenged by the United States, Japan, the Philippines, Vietnam, Thailand, Malaysia, and Brunei. Of course, there is a chance that rising waters on the overheated planet may swamp the atolls, small islands, and reefs China has militarized there, as well as in the Maldives in the Indian Ocean.
Finally, any country's government can stall, kill, or seize a project on China's land and sea routes. History recalls how France and England struggled to build and finance the Suez Canal only to have Gamal Nasser seize it in the spirit of anti-colonial nationalism. Three months into his new position, after defeating Chinese-backed Najib Razak, Malaysia's new, 93-year-old prime minister, Dr. Mahathir Mohamad, termed Chinese loans Chinese "colonialism." He traveled to Beijing to cancel the previous government's $20 billion agreement to let China build a high speed railway and two oil pipelines. China may have a way to regain these contracts, however. Malaysia is eager to prosecute Jho Low, the Malaysian mastermind behind a plot that misappropriated funds raised by three bond offerings Goldman Sachs underwrote for a Malaysian wealth fund. China could offer to turn over Mr. Low in exchange for the resumption of the cancelled projects. To block a Chinese-financed upscale Malaysian housing project wealthy Chinese investors, but not most Malaysians, could afford, Dr. Mohamad said Malaysia would not grant visas for foreigners to live there. Anwar Ibrahim is expected to replace Mahathir Mohamad, when he resigns as prime minister.
Sierra Leone's new president, Julius Maada Bio, canceled the previous administration's contract for the Chinese-financed Mamamah International Airport. As the country's aviation ministry observed, construction of a new airport would be uneconomical when the existing one is underutilized.
China also experienced opposition, when Nepal referred a Chinese project to review by anti-corruption watchdogs. Feeling overextended, Pakistan shut down projects on the China-Pakistan Economic Corridor Beijing views as its access to the Arabian Sea. It seeks more lending from China instead of an IMF loan. Even at home, Chinese citizens are beginning to view potential defaults on loans, especially to Africa, as foreign aid better used to finance domestic needs.
Environment: Constructing roads, railroads, bridges, and power plants has a major impact on the environment. At the same time cutting trees to make way for roads, rails, and tunnels, and laying thousands of miles of concrete invite flooding by eliminating anchors for soil and ground to absorb rain, increased truck and car traffic and the added heat from burning fossil fuels to generate electricity from power plants will warm the planet and increase the need for trees to absorb greenhouse gases.
Railroad projects in Kenya and seaport construction at Walvis Bay, Namibia, led locals to demand protection for wild life. China remains a major market for the ivory and rhino horn poachers obtain by killing Africa's elephants and rhino.
Infrastructure projects also can be expected to encounter objections from non-governmental organizations (NGOs) with environmental, as well as religious, human rights, and other concerns.
Employment: With a population of 1.4 billion people, China is in a position to provide all the skilled and unskilled labor needed to design, engineer, construct, administer, staff, monitor, and maintain its OBOR and MSR projects. Should governments along these routes expect China to employ their countries' unemployed, China will see no need to pay desirable wages nor to establish exemplary working conditions. Experience in Africa shows China's railroad projects have generated protests over poor pay and treatment. African construction companies even have seen contracts to build government buildings go to Chinese firms instead of local ones. Also, African industries and shop owners that expected to benefit from Chinese-financed roads and rails have found themselves unable to compete with cheaper Chinese imports.
What cannot be ignored is how the hundreds of migrant workers employed on China's widespread infrastructure projects could pose a major threat of disease transmission, especially of AIDS. Despite the attempt of Chinese managers to confine workers to monitored compounds, employees likely will be determined to find ways to meet local women.
Looking at topographical maps will give students an idea of the challenges of constructing routes through mountains, forests, and deserts and over rivers. (The earlier post, "All Aboard for China's African Railroads," describes problems of terrain, as well as financial and other problems, that can arise with projects in developing countries.) All in all, watching the progress along China's One Belt One Road and Maritime Silk Road will give students an interesting learning experience for years to come.
That's the good news. Students are challenged to activate their critical thinking to anticipate, and even suggest solutions for, the problems that have and will develop along these routes.
Finance: Traditionally, the international financial institutions charged with funding major projects include the World Bank, dominated by the United States; the International Monetary Fund (IMF), whose president comes from Europe; and the Asian Development Bank headed by a president from Japan. Because the funding process of these institutions was considered too slow and the required plan preparation was too costly, a New Development Bank, Asian Infrastructure Investment Bank (AIIB), and Silk Road Fund were established to pick up the pace.
Since then, the Islamic Development Bank has agreed to jointly finance African projects with the AIIB, and Japanese, British, and US banks also are looking into ways to cooperate with China. Japan and the United States did not join the AIIB, because they suspected the bank would lack concern about labor, environmental sustainability, and requirements for democratic reform, since China considers all political systems equal and claims not to interfere with a recipient's sovereignty. As it has turned out, the AIIB is careful to abide by international norms, but the bank seems to retain its image by avoiding involvement with One Belt, One Road (OBOR) projects.
After World War II, the Marshall Plan helped rebuild a Europe that had existed. China's One Belt, One Road plan attempts to build something that never existed before what exits is ready to use it. As a result, Chinese development projects and financing bury recipients, such as Angola and Zambia, in debt. Half the countries in sub-Sahara Africa now have public debt greater than half their GDPs. There is growing concern about the raw materials, state power utilities, and other compensation China might require in case of loan defaults. Sri Lanka already was asked to share intelligence about traffic passing through its now bankrupt and Chinese-seized port. Zambia's default on a Chinese loan repayment resulted in immediate discussions that could lead to seizure of Zambia's electric company, ZESCO. The following eight countries have been singled out as in danger of assuming too great a Chinese debt burden: Laos, Kyrgyzstan, the Maldives, Montenegro, Djibouti, Tajikistan, Mongolia, and Pakistan.
Pakistan's new prime minister, Imran Khan, found out countries cannot escape hard financial realities. Fed up with "hand outs from the West," Pakistan hoped to avoid the scrutiny of loan requests submitted to the IMF. But even China, in the process of using Pakistan to gain access to the mineral riches in Afghanistan's mountains and to encircle India with its OBOR projects, balked at loaning funds to cover the $10 billion Pakistan needs for the next few month's fuel imports and foreign debt repayments. Saudi Arabia only offered to consider investing in the $60 billion China-Pakistan Economic Corridor (CPEC), the part of China's OBOR that includes a deep water port at Gwadar, Pakistan, and a major dam at Karot on the Pakistan-India-Chinese border. Now that the IMF is evaluating Pakistan's loan application, China also faces scrutiny of the secret terms of its CPEC contracts.
Reminiscent of the way Britain achieved control over the Suez Canal, China is creating influence and economic dependency in a wide swath of territory. With complex partnerships, including with the developing countries themselves, and enormous amounts of money at risk, diverse financial instruments handle equity participation, public-private partnerships, insurance, loan guarantees, debt instruments, first-loss equity, challenge funds, grants, and project preparation support. In cases of shared risk, allocating amounts to partners is challenging. Reducing risks also requires staff to monitor project progress and maximize the speed of fixing mistakes. At any time, China can call in loans for non-payment.
Political conflict: Beijing's Maritime Silk Road includes the deep water port China is building at Gwadar, Pakistan, to gain access to the Arabian Sea and avoid shipping oil farther east through the congested Malacca Straight. From Gwadar, China plans a route north and east toward the Karot hydroelectric power plant on the Jhelum River southeast of Islamabad and into China's Xinjiang Uighur Autonomous Region, China, which already uses facial recognition technology to track 2.5 million in its Xinjiang province, also would gain another way to control the restive Uighur Muslim minority that lives among the Chinese Han majority. Since China's President Xi Jinping came to power in 2012, he has pushed the idea that China's atheistic political system should be considered just as valid, especially for maintaining China's peace and security, as the governments of any other countries.
Try as hard as it might, however, the Chinese Communist Party has been unable to squelch Muslim Uighurs, but also Christians and Taoists in Chengdu's panda-breeding city and Buddhists in Tibet (as well as democracy activists in Hong Kong and Taiwan). More than a million Uighurs are said to be confined in re-education camps. Increased surveillance using facial recognition, AI, and computer monitoring systems tries to catch violations. Rather than be shut out of a major market, even Google was poised to develop a "Dragonfly" search engine that would meet China's censorship requirements by excluding keywords, such as Tiananmen, until its employees refused to compromise their ethics in order to work on the project.
A part of the Pakistan to China road also passes through Kashmir, the primarily Muslim site of a territorial dispute between the nuclear powers, Pakistan and Hindu India. For the first time in 30 years, the Kashmir flash point came under a major attack in February, 2019, when a suicide bomber from Pakistan killed 40 of India's security forces. To further complicate border tensions, Saudi Arabia's crown prince, Muhammad bin Salman, who is accused of directing the murder of journalist, Jamal Khashoggi, seemed to challenge China's influence in the area by visiting with a promise to invest in Pakistan and India.
Thus far, India's military buildup, economic shortfalls in the region, and ethnic/religious conflict have prevented Beijing from surrounding India. The two countries, India and China, already needed to resolve a 2017 border dispute by establishing a hotline between them. With the launch of its Arihant submarine in November, 2018, India enhanced its military capability in the area by adding sea-based, short-range nuclear missiles capable of reaching China and Pakistan to its air- and land-based missile systems.
In the south, the Indian Ocean's strategic Maldive Islands ousted China's hand-picked president. Under former President Yameen, Chinese influence had started to replace the protection India provided after the Maldives and India achieved independence from Britain. Millions in low interest Chinese loans began funding construction of a bridge from the Maldive capital in Male to the main airport, as well as housing and a hospital that could support a naval base. Saudi Arabia also has showed interest in the Maldive atolls and constructed a major mosque there.
Beijing's effort to eliminate the need to import oil through the congested Malacca Straight also moves China closer to India in the southeast. China plans to construct a road-rail-pipeline corridor through Myanmar, from its Shan state in the east to a port on the Bay of Bengal in the Rakhine state on the Bangladesh border. The Chinese conglomerate constructing the port is financing 70% of the project, but Myanmar is hard-pressed to fund its 30%, much less the rest of the country-wide project. Myanmar's Buddhist government and military face warring factions: the Muslim Rohingyas; the Arakan Army of Buddhist Rakhine that opposes the Burman-dominated Buddhist government; and the Northern Alliance Brotherhood, a coalition of insurgents from Kachin and Shan states.
In Central Asia, China runs into conflict with Russia, especially in resource-rich Kazakhstan, sometimes called the buckle of the new Silk Road.
The South China Sea finds China challenged by the United States, Japan, the Philippines, Vietnam, Thailand, Malaysia, and Brunei. Of course, there is a chance that rising waters on the overheated planet may swamp the atolls, small islands, and reefs China has militarized there, as well as in the Maldives in the Indian Ocean.
Finally, any country's government can stall, kill, or seize a project on China's land and sea routes. History recalls how France and England struggled to build and finance the Suez Canal only to have Gamal Nasser seize it in the spirit of anti-colonial nationalism. Three months into his new position, after defeating Chinese-backed Najib Razak, Malaysia's new, 93-year-old prime minister, Dr. Mahathir Mohamad, termed Chinese loans Chinese "colonialism." He traveled to Beijing to cancel the previous government's $20 billion agreement to let China build a high speed railway and two oil pipelines. China may have a way to regain these contracts, however. Malaysia is eager to prosecute Jho Low, the Malaysian mastermind behind a plot that misappropriated funds raised by three bond offerings Goldman Sachs underwrote for a Malaysian wealth fund. China could offer to turn over Mr. Low in exchange for the resumption of the cancelled projects. To block a Chinese-financed upscale Malaysian housing project wealthy Chinese investors, but not most Malaysians, could afford, Dr. Mohamad said Malaysia would not grant visas for foreigners to live there. Anwar Ibrahim is expected to replace Mahathir Mohamad, when he resigns as prime minister.
Sierra Leone's new president, Julius Maada Bio, canceled the previous administration's contract for the Chinese-financed Mamamah International Airport. As the country's aviation ministry observed, construction of a new airport would be uneconomical when the existing one is underutilized.
China also experienced opposition, when Nepal referred a Chinese project to review by anti-corruption watchdogs. Feeling overextended, Pakistan shut down projects on the China-Pakistan Economic Corridor Beijing views as its access to the Arabian Sea. It seeks more lending from China instead of an IMF loan. Even at home, Chinese citizens are beginning to view potential defaults on loans, especially to Africa, as foreign aid better used to finance domestic needs.
Environment: Constructing roads, railroads, bridges, and power plants has a major impact on the environment. At the same time cutting trees to make way for roads, rails, and tunnels, and laying thousands of miles of concrete invite flooding by eliminating anchors for soil and ground to absorb rain, increased truck and car traffic and the added heat from burning fossil fuels to generate electricity from power plants will warm the planet and increase the need for trees to absorb greenhouse gases.
Railroad projects in Kenya and seaport construction at Walvis Bay, Namibia, led locals to demand protection for wild life. China remains a major market for the ivory and rhino horn poachers obtain by killing Africa's elephants and rhino.
Infrastructure projects also can be expected to encounter objections from non-governmental organizations (NGOs) with environmental, as well as religious, human rights, and other concerns.
Employment: With a population of 1.4 billion people, China is in a position to provide all the skilled and unskilled labor needed to design, engineer, construct, administer, staff, monitor, and maintain its OBOR and MSR projects. Should governments along these routes expect China to employ their countries' unemployed, China will see no need to pay desirable wages nor to establish exemplary working conditions. Experience in Africa shows China's railroad projects have generated protests over poor pay and treatment. African construction companies even have seen contracts to build government buildings go to Chinese firms instead of local ones. Also, African industries and shop owners that expected to benefit from Chinese-financed roads and rails have found themselves unable to compete with cheaper Chinese imports.
What cannot be ignored is how the hundreds of migrant workers employed on China's widespread infrastructure projects could pose a major threat of disease transmission, especially of AIDS. Despite the attempt of Chinese managers to confine workers to monitored compounds, employees likely will be determined to find ways to meet local women.
Looking at topographical maps will give students an idea of the challenges of constructing routes through mountains, forests, and deserts and over rivers. (The earlier post, "All Aboard for China's African Railroads," describes problems of terrain, as well as financial and other problems, that can arise with projects in developing countries.) All in all, watching the progress along China's One Belt One Road and Maritime Silk Road will give students an interesting learning experience for years to come.
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