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Paw Tracker newsletter (Week of Jan 31)

 

The world’s attention has been on Myanmar this past week. As people watched the fast-paced and highly volatile situation, numerous analyses of possible realignment of interests in the region, with far-reaching consequences, have already emerged. Initial reactions from Chinese sources give a sense of relative calmness and confidence - of Chinese interests being well protected in the country. Time will tell how well founded that confidence is: would a perceived closeness with the military become a liability for the BRI in post-coup Myanmar? 
 

The political upheaval also raises a key question about China's knowledge infrastructure on BRI countries. How developed are Chinese research institutes and think tanks in understanding political risks in neighboring countries? The unfolding situation in Myanmar may be a test of this capacity.

We will take a break for Chinese New Year next week. Wish all our readers a healthy and productive year of the ox! 牛年吉祥!

The Paw Tracker newsletter, developed by Panda Paw Dragon Claw, provides up-to-date and granular project-level information on the Belt and Road Initiative. Drawing from Chinese sources of information that are often disjointed and difficult to access, the newsletter also aims to become a convening space for watchers of the BRI to share and cross-check information about projects and their impacts on the ground. 

Talk of the Town


Last Monday, the detainment by the Burmese military of Aung San Suu Kyi, together with other NLD leaders, forced the world to confront the possibility of Myanmar returning to a military dictatorship.

China looms large in all the discussions about the situation in its southwestern neighbor. It is Myanmar’s largest trade partner and its second largest source of investment in 2020 (including investment from Hong Kong SAR) after Singapore. 

The coup happened at a sensitive time when China is doubling down on getting the China-Myanmar Economic Corridor off the ground. Just days before it happened, Foreign Minister Wang Yi visited Aung San Suu Kyi and Burmese leaders to discuss a 5-year economic cooperation plan and accelerating projects such as the Kyaukpyu Deep Water Port and Yangon New City. On Jan 27, Hubei province held a virtual meeting with Myanmar’s Investment and Corporate Management Bureau to discuss investment opportunities in industrial zones, the digital economy, agriculture and renewable energy.

As soon as the coup was made public, Chinese media was asking questions about the prospects of key Chinese investments, including grid connection, solar and wind projects and hydro dams. The NLD government’s perceived “silence” on the future of the Myitsone Dam during the election campaign was also highlighted in Chinese media reports. 

In response to media inquiries, a few Chinese listed companies made statements about their operations in Myanmar. NORINCO International, a subsidiary of the state-owned conglomerate NORINCO, told reporters that it was at the final stage of implementing the USD 700 million engineering contract for the controversial Letpadaung Copper Mine and was unaffected by the coup. The copper mine is run by Wanbao, another NORINCO subsidiary. Jiangsu Guotai International Group, which has investments in textile manufacturing in Myanmar, said it’s trying to find out more about the local situation. 

Smaller Chinese businesses are feeling the more immediate impact. A trader in Ruili, the town in Yunnan province bordering Myanmar, told International Finance News, a Chinese newspaper, that she was unable to get in touch with her buyers on the other side of the border, and that many of her fellow traders in Ruili were hesitant about sending shipments to Myanmar at the moment.

On the other hand, analysts in China are relatively calm about the possible impact of the coup on Chinese investments in Myanmar. Tian Guangqiang, an associate researcher at the Chinese Academy of Social Sciences, opined that the Myanmar military, concerned with economic growth, would “actively protect and advance Chinese investments” in the country. This is in line with what observers in Japan are seeing: “If the West reinstates its sanctions on Myanmar, it will affect Japanese investments in the country and leave China to fill in the gap, ” Nikkei Chinese reported on Feb 1, “This will become an opportunity for China to expand its economic presence in Southeast Asia. ”

This week's highlight projects


Uzbekistan - Construction begins on Central Asia’s largest gas power plant

On 24 January a ceremony was held to mark the start of construction of the 1500MW combined cycle gas plant in Uzbekistan’s eastern Syrdarya Region. China Gezhouba will construct the plant and investment comes from Saudi Arabian company ACWA Power, who have secured a USD 200 million loan from the European Bank for Reconstruction and Development (EBRD).

The Syrdarya gas plant is touted in Chinese media as using the highest, most efficient technology with “zero waste water discharge”. In their assessment of the project, financiers at EBRD note that the new project will replace nearby outdated thermal power units, leading to a net 1,539,000 tonnes in CO2 savings. The EBRD assessment also noted the “economic competitiveness of Solar PV.”

Last week Central Asian neighbor Kazakhstan also announced plans to expand gas fired power capacity with plans to build four new gas power plants totaling 1300MW by 2025.

Why it gets our attention: Much of Central Asia is in dire need of power sector upgrades. Soviet era energy infrastructure is outdated and stretched, and has been at the root of power shortages. The Asian Development Bank estimates that the region requires USD 33 billion in annual energy infrastructure investment up to 2030 in order to modernize and meet growing demand.

EBRD financing comes with far greater transparency than financing from Chinese development banks would. The EBRD’s project assessment report, which addresses concerns such as environmental risks, impacts on local communities and transboundary pollution with Tajikistan, is worth a read.

Nigeria - USD 3 billion methanol plant gets green light 

The Nigerian National Petroleum corporation has finalized plans to build a USD 3 billion gas-to-methanol plant. The plant is expected to be completed by 2024 and will produce up to 10,000 tonnes of methanol per day. The project has a range of corporate and financial backers, including China Export-Import Bank and the African Development Bank.

Why it gets our attention: Oil and gas is the foundation of Africa’s largest economy, but poor management for decades has meant that the vast majority of the products are directly exported in their crude form, leaving Nigeria with heavy bills to import refined petroleum products. The country is now on a mission to add value to its domestic oil and gas resources.

One more take: The project shows just how entangled global oil and gas interests are. The project will receive financing from, among others, China Export-Import Bank, use gas supplied by Shell, and sell the methanol product to BP under a USD 6 billion purchasing agreement signed in 2017.

Other project & corporate updates


Cambodia -  Controversial coal ash plant in Cambodia closed, fined and ordered to relocate


Environmental authorities in Cambodia recently ordered a coal ash processing plant in Steung Hav, Sihanoukville Province, to stop operation after Feb 15, according to the Cambodia China Times. The environmental ministry cited negative health impacts on local communities as reason to take the action. The decision was announced on Jan 29 by provincial officials at a meeting with representatives of multiple coal-fired power plants in the region.


Why it gets our attention: The coal ash processing plant has long been the target of local protests for its environmental and health impacts. It serves three coal-fired power plants in the nearby area, one of which was built with a second-hand Chinese unit from Hunan province. It is an important case of how a secondary environmental impact is created through China’s industrial upgrade and its spillover effect on neighboring regions.

If you have further details of any of the above mentioned projects that you would like to share with the community, please reach out to us through pandapawdragonclaw@gmail.com

Worth your time


Though not directly related to Belt and Road, the mega scandal hitting PM Sheikh Hasina and the political elite of Bangladesh, a key BRI country, is worth familiarizing yourself with. An investigative report by Al Jazeera published last week reveals the murky past and present of Sheikh Hasina’s chief of army staff, Aziz Ahmed and his family. Him and his four brothers (one of whom was murdered in a revenge killing in 1999) have been involved in assassination, identity fraud and the purchase of public surveillance equipment from the Israeli army, despite Bangladesh’s position of not recognizing the state of Israel. Though officially wanted by Bangladeshi police, the brothers were reunited last year at a high level wedding in Dhaka, where they rubbed shoulders with, among others, the President of Bangladesh, Al Jazeera revealed. The Al Jazeera documentary is one hour long and well worth your time.

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