Paw Tracker newsletter (Week of Nov 22)

Without an elaborate plan or institutional structure, the Belt and Road Initiative (BRI) is at once elusive (still nobody knows exactly what classifies as a BRI project) and adaptive (nothing is written in stone). This has resulted in disconnected policies and “guidance documents” scattered across multiple government agencies. Remarks from the leadership on different occasions have therefore become important moments to interpret the overall direction of the dynamic and evolving initiative. Such an occasion appeared last week, when a “sit and talk” event (座谈会) among China’s top leadership and heads of major companies tried to take the pulse of the BRI and deliberate on a way forward.

Talk of the Town

A high-level conference in Beijing last week tried to set the tone for the next phase of the BRI. The triennial conference (starting in 2015), attended by President Xi Jinping and BRI heavy weights including Vice Premier Han Zheng and the bosses of major SOEs and private companies, distilled the messages that people have been hearing since Covid-19 disrupted the global economy: BRI is changing its focus and priority.

The key take-away from Xi’s remarks at the conference was an understanding of the BRI at the end of 2021 as navigating five kinds of tensions: development and security; domestic and international; cooperation and struggle; existing and new; whole and specific. 

The tensions identified reflect certain dilemmas in the rollout of the BRI. On the one hand, further advancement of the initiative opens up new opportunities in previously inaccessible regions. On the other hand, it pushes Chinese actors into uncharted waters with high security risks (think Taliban-controlled Afghanistan or recent attacks in Balochistan, Pakistan). At the conference, Xi used the phrase “don't go to dangerous places, avoid disorderly places” (危地不往，乱地不去), possibly indicating a new level of risk aversion from the Chinese leadership. More concretely, an “all-weather” BRI project risk alert and service platform is to be set up, and higher level of coordination among China’s overseas interest protection apparatus, anti-terrorist efforts and security mechanisms are expected.

When it comes to the tension between existing projects and new projects, Xi’s speech suggests the underlying challenges in pivoting BRI towards a new direction in the post-pandemic world. Wan Zhe, a research fellow affiliated with Beijing Normal University’s Belt and Road Research Center, interpreted Xi’s words as indicating the challenge of how to properly handle the status of pre-Covid, pre-Climate pledge projects that are now considered undesirable, while exploring new projects that fit better with the new global economic and political reality. “As the global landscape is being reshaped by the pandemic and pressing climate change…China should resolve to phase-out a number of high security risk, high ecological risk and unsustainable projects,” he wrote. At the same time, new projects should be actively developed under the frameworks of public health, digital economy and green infrastructure. In Xi’s own remarks, he also highlighted that infrastructure projects in the future should “add value” to (or create a net increase in) global connectivity, another dimension of the “new” in this context.

Dealing with alliances (cooperation) and rivalries (struggle) has also become a theme of BRI, present in Xi’s address. Areas of cooperation include fighting the pandemic, climate change, ecological conservation and digital economy. The central government’s official website did not provide details as to what Xi meant by “struggle”, but according to Wan’s read, it is clear that the reference is informed by the US and its allies’ attempts to set up rival programs to the BRI. The struggle against initiatives such as Biden’s B3W will be a main concern for BRI over the coming years. And in Xi’s mind, this involves increasing “the sense of gain” (获得感) from the public of recipient countries through building more livelihood projects or projects that deliver public goods (民生工程). It also means doubling down on international communications of BRI to win over global public opinion. 

This week's highlight projects

Serbia: Progress continues on major Hungary-Serbia railroad line

On 22 November, a ceremony attended by Serbian President Vucic, Hungarian Foreign Minister Sialto, and the Chinese Ambassador to Serbia was held to celebrate breaking ground on the Novi Sad-Subotica section of the Hungary-Serbia railway project. Deputy Director of China’s National Reform and Development Commission (NDRC), Ning Jizhe, also attended via video and highlighted the railway as a “flagship project for cooperation between China and central and eastern Europe.” 

The line will run 350 kilometers connecting Budapest to Belgrade upon completion, which is expected in 2025. It is the first connection between Chinese railway standards and European Union UIC standards. Designed to facilitate the flow of goods from Greece’s Port of Piraeus, which is operated by COSCO, to the rest of Europe, Deputy Director Ning described the railway as part of a “European transport corridor.”

More context: Hungary and Serbia are two of China’s closest partners in Europe, and the story of the Chinese-built railroad connecting their capitals goes back more than eight years to November 2013, when the project was first announced. Marred by slow progress in its first five years, the project has since picked up significant steam. Just six days after the groundbreaking ceremony for the Novi Sad-Subotica section, ground was broken on the Belgrade-Old Pazova section of the railroad line.  

The project is considered a key component of China’s courting relations with eastern European countries, sometimes referred to as the “17+1” relationship. While that relationship is well over its honeymoon period and becoming increasingly fraught - most dramatically with the recent plunge into the freezer for China-Lithuania relations - China’s connections with the Balkan countries appear relatively stable.

Meanwhile: How the relationship between China and the new government in Germany develops could have ramifications across the China-EU relationship and was a source of speculation in Chinese media last week. The “traffic light” coalition’s manifesto mentioned China 12 times, compared to the last government manifesto’s five mentions, Global Times noted, and touched on all the areas Beijing considers sensitive and strictly “internal affairs”. The manifesto is widely interpreted as signaling a tougher attitude towards China from Europe’s largest economy.

Other project & corporate updates

Turkey: CMEC sign USD 1.8 billion high speed rail contract

China Machinery and Engineering Corporation (CMEC) recently signed a massive USD 1.8 billion EPC contract for a 196km high speed railroad project from Aksaray in central Turkey to Ulukisla in the west. The electrified passenger railroad will travel at speeds up to 250kph and link up areas of the country previously unconnected by rail.

Some background: Turkey has an ambitious program to expand high speed rail lines by 5,500km by 2023. The program has attracted European development finance and Chinese engineering companies for a number of lines. China Railway Construction Corporation and China National Machinery Import and Export Corporation constructed the high profile 561km Istanbul to Ankara high speed rail in collaboration with two Turkish engineering firms between 2005 and 2019.