Paw Tracker newsletter (Week of Jan 3)

As 2021 opens, the world still hasn’t woken up from the nightmare of COVID-19 and its deadly consequences. This hasn’t stopped China from executing an ambitious diplomatic effort early in the year, with its top diplomats touring key countries in the first week of 2021. In the process, we get to take a peek at China’s priorities for the BRI in the coming months, with the BRI Forum, FOCAC and the UN biodiversity talks high on the agenda. The pandemic is rapidly changing the face of China’s global diplomacy: vaccine collaborations will be a top issue in its exchanges with African and ASEAN countries in 2021, and we are set to see President Xi more “on the cloud”.

Hope you like the new format of this newsletter! 

Talk of the Town

Wang Yi on China’s international priorities for 2021 and “cloud diplomacy” 

In 2020, China has agreed to debt extension with 12 African countries and has waived no-interest loans due by the end of 2020 for 15 African countries, Foreign Minister Wang Yi revealed in a wide-ranging end-of-year interview with a group of Chinese state media on China’s foreign policy outlooks for the new year. He claimed China had agreed to the most debt extension and cancellation among the G20 group.

Africa fairs big in Wang Yi’s talk. The 2021 Forum on China-Africa Cooperation (FOCAC) Summit - to be held in Senegal - will focus on vaccine collaboration, economic recovery and development transition, Wang told reporters. By Jan 4, the Minister had already landed in Africa for a 5-day visit to Nigeria, DR Congo, Botswana, Tanzania and the Seychelles. The visit follows a 30-year tradition of Chinese Foreign Ministers picking Africa as the destination of their first international visit in the new year. It is usual this year due to the ongoing pandemic. 

In his interview with state media Wang Yi also emphasized the role of Belt and Road in the (post) COVID era. He described the BRI as “a warm current in the global economy’s winter” over the last year. In 2021, the initiative will likely be geared towards public health, digital economy and green development to “build new economic momentums for host countries”. Wang specifically highlighted key areas of collaborating with ASEAN countries in 2021. Economic recovery is high on the agenda of China-ASEAN relationship in the new year, with the “speedy activation of RCEP” and the opening up of “fast lanes” for personnel exchanges two priorities. Wang Yi continues his international travel this week with visits to ASEAN countries Myanmar, Indonesia, Brunei and the Philippines..

The Minister also touched on relations with the US and EU, emphasizing that China is not going to “become the United States” while the US should become “a better version of itself”, and that China-EU are not “institutional rivals”. 

Interestingly, he brought up the role of so-called “cloud diplomacy” over the past year, where President Xi Jinping appeared in over 22 international forums virtually in 2020, advancing China’s international agenda and building its image “on the cloud”. 2020 has changed not only the face of BRI but also the very mediums of Chinese diplomacy.

This week's highlight projects

Lao PDR: Nam Ou cascade hydropower project close to finished

At the end of 2020, 3 dams that constitute Phase II of the Nam Ou cascade hydropower project entered into operation, meaning that 6 out of the 7 planned dams under the PowerChina developed project are now operational.
 

Important context: The Nam Ou hydropower cascade is the first case in which a Chinese hydropower developer attained the right to develop an entire river basin overseas. 
 

More project details: The project is divided into two phases. Phase I, consisting of the Nam Ou 2, 5, 6 dams, was operational in 2016. The recently completed dams are Phase II dams, the Nam Ou 1, 3 and 4. A map of the full cascade can be found here.

Even more details: The cascade has been developed under a Build-Operate-Transfer (BOT) arrangement, where PowerChina gets to operate the dams for 25 years before handing them back to the Laos State Electricity Corporation. 

Why it gets our attention: The construction of the dams has been controversial for the loss of biodiversity and sources of food in the river basin. Resettlement is also an ongoing, difficult process. On Dec 31 2020, Lao media reported that officials in Phongsaly province were still trying to “get back on track the lives of people of three villages who have been affected by the construction of the Nam Ou 7 hydropower plant.” An assessment of the dams’ impact by International Rivers can be found here.
 

Russia & Mongolia: Railway links expected to boost China’s coal imports 
 

According to Chinese media reports, the Tongjiang-Nizhneleninskoye rail bridge between northeast China and eastern Russia is “essentially complete”. 

More project details: A boon for trade between the two countries, the railway will in particular be a major carrier of Russian coal, iron ore and timber into the Chinese market. In addition, over 250km of the southern Mongolia rail link, which will connect the Tavan Tolgoi coal mine has been completed. The Tavan Tolgoi mine is one of the largest coking coal mines in the world and analysts expect the rail line will carry up to 30 million tons of Mongolian coal exports to China per year.

Why it gets our attention: Imports of Russian and Mongolian coal are expected to fill much of the gap created by China’s curbing of Australian coal, particularly coking coal which is in high demand from China’s massive steel sector.

Other project & corporate updates

CCCC: Chairman outlines company’s 2021 priorities for CPEC

In an end of year interview with the China Economic Herald, Wang Tongzhou, the Chairman and CEO of China Communications Construction Company (CCCC) outlined the company’s priority under the China-Pakistan Economic Corridor (CPEC) in 2021.

Wang mentioned that CCCC is currently trying to achieve financial closure for the Rashakai Special Economic Zone, located in Pakistan’s northwestern province of Khyber Pakhtunkhwa (KP) on the Afghanistan border. It is also pushing through the residential and coastal development projects in Karachi. Another priority in 2021 is the upgrade of Pakistan’s artery railway system.

Why it gets our attention: CCCC is a unique BRI corporate player that spearheads China’s industrial capacity export through the building of new cities, economic zones and industrial parks overseas. It is involved in more than 20 such projects, including the high-profile Colombo Port City and New Yangon City. These projects allow Chinese companies to go abroad in clusters that maintain the integrity of supply chains. 

Worth your time

Western media outlets say the Belt and Road Initiative is on the decline. China’s Ministry of Commerce say Belt and Road investment deals are on the rise. So what’s the truth of the matter? A briefing released last week by the Rhodium Group dug into the various datasets on BRI investments to illustrate recent and likely future trends. China’s Belt and Road: Down but not Out can be read HERE.