Panda Paw Dragon Claw

The puzzle of China’s missing solar and wind finance along the Belt and Road (Part 2)

Despite strong domestic performance, the Chinese renewable energy sector’s lack of financial support overseas is multifaceted.

By Ma Tianjie

In Part 1 of this blog series, we looked at why China’s two major policy banks, China Development Bank and China Exim Bank, whose overseas energy sector lending totaled 251.3 billion between 2000-18, lend only grudgingly to Chinese renewable companies going overseas. The difficulty for Chinese renewable energy projects along the Belt and Road to raise funds is not limited to the arena of policy bank financing, however. A March report from Chinese NGO Greenovation Hub and the Center for Finance and Development at Tsinghua University paints a broader picture of the obstacles to renewable energy financing along the Belt and Road, with key and often poorly understood players including commercial banks, multilateral banks and insurers. The study gives us another perspective on the puzzle of the Belt and Road’s missing renewable energy finance and suggests some financing mechanisms which could break through some of the obstacles.

One of the report’s main conclusions is that there are a number of financial factors that make the overseas expansion of Chinese renewable energy firms less competitive vis a vis their international peers. Factors such as interest rates offered by Chinese banks and higher financial costs become disadvantages for Chinese solar and wind firms when bidding in a cost-sensitive developing country market. It is understandable why some Chinese renewable industry players express grievance over such issues and question the wisdom of host country markets in adopting more competitive price mechanisms.

The main focus of this blog, however, is the financing constraints that disadvantage Chinese renewable projects vis a vis traditional fossil fuel projects, particularly coal power. For the global transition towards a low-carbon energy structure, this second competition is more critical.

Conflicting preferences between project developer and project financier

Based on interviews with a dozen industry insiders, including finance directors from large Chinese energy companies, the report authors came up with the diagram below illustrating the typical financial arrangement for a renewable energy project overseas, financed by a Chinese bank and with Sinosure overseas investment insurance.

REfinance — A typical “limited recourse” financing model for Chinese renewable energy projects overseas, by Greenovation Hub/Tsinghua report authors, recreated by Panda Paw Dragon Claw

A key concept that is embedded in this diagram is that of “neibao waidai” (内保外贷), a practice of using assets inside China as collateral for loans supporting projects overseas. According to the industry insiders interviewed, this is still the most common way for Chinese companies to find financing for renewable energy projects overseas. In other words, even though Chinese companies are developing projects all over the world, from developed markets such as Canada and West Europe to Belt and Road countries such as Indonesia and Ethiopia, they continue to rely on their home market assets and Chinese banks for financing. It is relatively rare for a Chinese developer of renewable energy to tap into the financing pool of host country banks, international banks or multilateral banks, or to go beyond debt financing and make use of capital market, bond market or institutional investors.

The heavy reliance on neibao waidai indicates Chinese companies’ lack of access to alternative funding sources. It is also a sign of risk aversion from Chinese banks. In essence, it’s a form of recourse loan that favors the lender in providing extra assets (other than the project in question) to go after in case the borrower does not fulfil their obligations. For the borrower, the recourse loan will reflect on its corporate balance sheet as potential liability, reducing the amount of assets that it can underwrite other loans.

Naturally, borrowers would want to go for non-recourse loans to keep such liabilities off corporate balance sheets. In the case of overseas energy projects, this means using only project assets, including its future revenues, to secure financing, with the investor’s other assets off-limit. Usually this would mean higher charges as the lender takes on more risks, but Chinese renewable energy developers nonetheless prefer this option. These differing preferences create barriers to finance as risk-averse lenders would prefer to provide asset-backed recourse loans, while developers are keen to secure non-recourse loans.

The ups and downs of China’s domestic renewables policy

Interviews with industry insiders in China also show the overstretched condition of Chinese renewable energy firms that are already “highly leveraged” and can barely allocate more assets to underwrite new loans. One factor that is particularly burdening them is the severely delayed payment of renewable energy subsidies in China, which has proved a huge drag on their cash flow. China set up feed-in tariff for wind and solar in 2011, a favorable policy framework that propelled spectacular growth of renewable energy installation. A renewable energy development fund was set up with money coming from a renewable energy surcharge on industrial and commercial electricity users. The fund is used to pay for the difference between the subsidized solar and wind tariff and the benchmark coal power price.

But with exponential growth of installations aiming to take advantage of the subsidy, the fund’s pool has been unable to keep pace with the number of eligible entities drawing from it. Rationing was installed and payments became slow, leaving many renewables companies surviving on very tight revenue streams.

A large portion of China’s renewable energy sector (solar in particular) is private-owned and does not control large assets compared to their rival state-owned energy companies. This pushes private solar and wind firms to pursue more project financing (non-recourse) that does not eat into their corporate balance sheets.

Systemic biases

While “liberating” for some Chinese renewable companies, breaking away from the neibao waidai model is easier said than done. For a financier of renewable energy, to offer project financing requires a confident grasp of local market conditions and risks that many Chinese banks simply do not have. Moreover, Chinese renewable energy projects along the Belt and Road are generally disconnected from multilateral and international banks’ financing, which tend to be more attuned to host country markets.

REbankability — Solar project bankability from the perspective of a major Chinese solar developer, recreated by Panda Paw Dragon Claw

Beyond passing the “project bankability” test, Chinese renewable projects on the Belt and Road also need to overcome biases in the system that is built for supporting large fossil fuel projects overseas. A large part of the bias originates from the state financial institution’s perception of risks. For example, the neibao waidai model has a built-in element requiring overseas energy project developers to purchase Sinosure insurance, which provides an extra level of protection for Chinese banks. According to the report authors, this is very much a residual model of overseas fossil fuel financing where large amounts of funding is usually at stake with long project development cycles. Renewable energy projects, in contrast, are nimbler, with much smaller per project investment and shorter development time. Chinese renewable developers cannot, however, be exempted from insurance requirements that invariably increase their development costs. The report authors also highlighted the fact that at Sinosure, there are quotas for mid-long term export credit insurance, a product that is required of developers whose overseas projects involve export buyer’s credit or export seller’s credit. A large portion of that quota is reserved for overseas coal power projects, however. When renewable energy projects do need to tap into that quota, they often find themselves facing the left-over share from coal.

Another bias is that Chinese state financial institutions consider risk at overall country level, rather than sector level or project level. This results in renewable projects in “high risk” countries that are otherwise healthy from a project point of view incapable of securing financing from Chinese banks. In addition, Chinese financial institutions, many of them with fresh memories of cash flow troubles experienced by the domestic renewable energy sector in recent years due to energy curtailment and unpaid subsidies, tend to project these worries onto their assessment of overseas renewable projects, even though market conditions such as pricing and subsidy mechanisms are different from those in China. In short, these biases lead Chinese public banks to take an over-cautious approach to solar and wind projects according to the authors.

Lastly, the report also sheds light on different sets of incentives for Chinese banks when it comes to funding domestic and overseas projects. Inside China, the People’s Bank of China (PBoC, China’s central bank) has included key green financing indicators in its Macro Prudential Assessment (MPA) of commercial banks. First introduced by the PBoC in 2015, after a stock market meltdown almost triggered a financial crisis, the MPA is a powerful rein on Chinese financial institutions. Although a bank’s financial health and risk control are the focus of the assessment (with emphasis on indicators such as capital, leverage and liquidity), green performances were included in the MPA starting from 2018, with quantitative indicators such as the percentage of outstanding green loans in a bank’s overall lending. The domestic renewable energy sector has long been a beneficiary of green finance. Unfortunately, the greenness of a bank’s overseas lending is not part of the MPA, stripping Chinese financing institutions of a key incentive to take Belt and Road renewable energy projects more seriously.

A road through the obstacles – blended financing

In light of these constraints in debt financing from both policy and commercial banks for Chinese renewable energy projects overseas, the report authors advocate for the mobilization of capital markets, institutional investors and utilization of blended financing to overcome the obstacles facing such projects. The report lists two types of arrangements commonly understood as blended financing:

Blending of development financing and commercial financing
Blending of corporate financing and project financing at different stages of a project’s life-cycle

Under the first type of blended financing, a development finance institution, usually a multilateral development bank, leads a consortium of commercial lenders to provide what is known as A/B loans to a borrower. The multilateral bank, serving as the Lender of Record for the loan, provides the A portion of the loan while other lenders chip in with the B portion. The blended financing model benefits renewable energy projects for its lower financing costs, as multilateral banks, with their Prefered Creditor Status, are better positioned in risk mitigation. This allows for non-recourse project financing with no sovereign guarantee and a long tenor. Critically, in the case of Chinese borrowers, such arrangements also waive the need to secure Sinosure insurance, further lowering costs. Jinko Solar’s San Juan project in Argentina is one of the few Chinese-invested renewable projects financed through an A/B loan led by the Inter-American Development Bank with participation from Bank of China.

The second type of blended financing takes into account the temporal differences in risks throughout a project’s life cycle and addresses them using different financial arrangements. What is commonly seen in Chinese overseas renewables projects is a combination of short-term corporate financing (raised by the EPC contractor) at the construction phase of a project and project financing after the project goes into operation. This allows projects to speedily go online and reduces the risks in the construction of projects for later financiers who would feel more comfortable taking on project financing of the solar or wind farm.

Authors also pointed to the fact that it is still a relatively recent phenomenon for Chinese companies to take up the role of developer in overseas energy projects. Up to now, they have more commonly been seen under the EPC contractor hat. It takes time for them to develop and cultivate relationships with host country financial institutions and multilateral development banks. Educating domestic market financiers also takes patience.

As Ma Jun, chair of China’s Green Finance Commission and former Chief Economist for the People’s Bank of China, put it at a March 27 webinar, Chinese financial institutions should honor the Party leadership’s Green BRI vision “through their portfolios” by financing less coal projects and more renewable projects.

Understanding the financing challenges of renewable projects along the Belt and Road is the first step towards unlocking and mobilizing the massive financial resources needed to steer the BRI along the green path the Chinese leadership propounds, and to secure a form of development for BRI countries that does not lock them into carbon intensive energy systems. Given the scale of energy sector growth expected in these countries in the medium to long term, many of whom are in stages of rapid development, unlocking renewable energy financing would also significantly help to steer the world away from catastrophic climate change.

How will China handle multiple debt repayment crises?

Domestic commentators provide insight into Chinese thinking on the thorny issue

By Ma Tianjie

As Covid-19 continues to ravage through the world, the global economy has been brought to its knees. The dominos fell one by one in a globalized and interlocked web of consumers, traders, suppliers, producers and financiers. “The spiral form of endless capital accumulation is collapsing inward from one part of the world to every other,” writes Marxist scholar David Harvey.

Nothing highlights this domino effect better than the tsunami of debt repayment difficulties currently experienced by developing countries in Africa, South Asia and Latin America. As global demand for commodities such as oil and minerals collapses, the revenue streams of resource exporter countries, many of which are concentrated in the Global South, have dried up. In the case of Nigeria for example, the country’s Finance Minister Mrs. Zainab Ahmed told reporters in late May that, with the country 31% off its Q1 oil revenue target, “COVID-19 [and] the collapse of oil price…has already started showing on the federation’s revenues and on the foreign exchange earnings.” The effect of dwindling revenues bears heavily on the balance sheets of these governments, who often rely on foreign borrowing, with debts often denominated in a foreign currency, to fund important domestic development plans. On top of that, countries like Nigeria had already witnessed their external debt blown to new highs in the past few years. Now they face a growing repayment crisis that threatens their creditworthiness for years to come.

China looms large in conversation about the debt tsunami. According to one calculation by the China Africa Research Initiative (CARI) at Johns Hopkins University, between 2000-2018, China extended USD 152 billion of loans to 49 African countries, a large portion of which went to oil rich countries such as Angola. Since Covid-19 hit the African continent, calls on China to ease debt service have been mounting. On 15 April, G20 countries agreed to a suspension of debt payments for the lowest-income countries that make such requests. China backed the agreement and announced later that it would freeze debt repayment for 77 developing countries.

The repayment standstill began on 1 May and will last until the end of this year. The move allows low-income countries to spend precious government funds, otherwise reserved for debt repayment, on fighting the pandemic. But experts have pointed out that the suspension merely kicks the can further down the road. Moreover, the G20 initiative risks being undermined if private creditors simply step in to seek repayment from freed up funds.

RefDebt — References to Chinese debt relief in international media from Mar 2 to May 18, as tracked by Pan Yufeng and Zhang Yan at Peking University’s School of International Studies.

All eyes on China

Senegalese President Macky Sall welcomed the G20 debt moratorium but said it was only the first step and more must be done. Calls on China to outright forgive African debt have been collecting force.

Joining a multilateral call for debt relief is already a big step for the country and so far China has chosen to stick close to the G20 initiative while offering relatively small sweeteners beyond its scope. At the World Health Assembly on May 18, President Xi Jinping added another 2 billion USD of support for developing countries battling Covid-19, which, at some point, may be counted as a form of debt relief. On June 17, at the China-Africa special summit for fighting Covid-19, Xi further pledged to write-off all zero-interest loans owed to China by African countries that are due this year, and instructed Chinese financial institutions to conduct “friendly negotiations” with African countries on commercial-based sovereign credits.

This confirms assessments by observers that China’s participation in the G20 initiative only covers a very limited set of sovereign lending, while distressed loans disbursed by China’s two policy banks, China Development Bank (CDB) and China Eximbank, on relatively commercial terms are excluded from the debt standstill deal for concern with the health of the banks’ balance sheets. Zero-interest loans make up less than 5 percent of China’s lending to Africa between 2000-2018.

Analyses from researchers at the Brookings Institute, China Africa Research Initiative (CARI) and Rhodium Group converge on the point that China is unlikely to grant blanket debt cancelation to its debtors. As Brookings Institute’s Sun Yun puts it, “postponement of loan payments, debt restructuring, and debt/equity swap are more likely in China’s playbook.”

Beijing is expected to take on the matter on a bilateral, case-by-base basis, renegotiating loans depending on the prospect of each country and each project. In the past, such renegotiations resulted in deferrals, refinances and small write-offs for at least a quarter of Chinese loans to Africa, according to one account by Rhodium Group.

How concerned is China?

Starting from March, African debt issues began to feature in risk alerts compiled by Sinosure, China’s state-owned insurer of overseas ventures, which underwrites many of the loans extended by CDB and Eximbank. Its policy mainly covers political risks that may lead to non-payment or default and some commercial risks. In a March 19 country-specific alert about Angola, its analyst wrote that “by Jun 2019, Anglola’s outstanding foreign debt stood at 42 billion USD, 21.3 billion of which is owed to China.” The alert recommended that concerned parties should closely monitor Angola’s foreign reserve situation to “avoid liquidity risks and currency exchange risks.” In addition, they should keep an eye on the country’s crude oil reserve and oil price fluctuations to accurately assess its debt repayment pressure. Throughout April to May, the insurer published debt-related alerts on Zambia, Pakistan, Madagascar, Surinam, Ecuador and Gabon. All of those countries are suffering economic shocks from Covid-19 and the resultant global market downturn.

But despite being a hot topic internationally, debt relief gets very little air time on Chinese media and social media. The government has traditionally been cautious about openly discussing its foreign aid and lending programs, as the perceived “largesse” overseas contrasts sharply with talks of poverty alleviation domestically. But still, sporadic signs of anxiety emerge on the internet that offer a window into the Chinese mental frame about the thorny issue.

Even though the issue has largely been kept out of public view throughout the weeks when international calls on debt relief were most pointed, it still managed to draw the attention of some veteran online commentators on political and economic policy. In one of such Weibo threads, commentator Shenyeyizhimao, a former journalist, jokingly suggested that private Chinese companies such as Alibaba, JD and Vanke should take over and revitalize the economies of indebted countries, allowing them to generate enough cash for debt repayment. “Infrastructure alone does not generate economic activities,” he wrote, “if we do not at the same time export industry and urbanization, non-payment from recipient countries is inevitable.” Many Chinese Weibo users share that skepticism toward the wisdom of pouring money overseas, which is exactly why conversations about debt relief have to be carried out low-key inside China.

International opinion

Compared with domestic public opinion, which is relatively malleable under the state’s sophisticated control of cyberspace, international public opinion is much more worrying for China. On 7 June, a research team led by Pan Yufeng and Zhang Yan at Peking University’s School of International Studies published an interesting analysis of international narratives of Chinese debt, using data analytical tools provided by Tencent. The analysis acknowledged that debtor countries are making debt relief demands, and highlighted that “a few” of them were linking Belt and Road financing with “debt traps” (Nigeria’s congressional inquiry into Chinese loans was used as an example) and, in the more extreme cases, were legitimizing debt relief by blaming Covid-19 on China (Kenya’s former Vice President Musalia Mudavadi’s comment was used as an example). The authors warned that a coordinated push from African countries for debt cancelation is in the making: “a global consensus on debt relief is forming.”

Debtcountry — Pan Yufeng and Zhang Yan’s analysis of individual countries’ public opinion on Chinese debt relief shows people in countries such as Pakistan, Ethiopia, Uganda and Tanzania more sympathetic (orange spots) than Kenyan, Indian, American and British public (green spots)

The analysis also pointed out that Western countries, particularly the United States, are using the issue to drive a wedge between China and other developing countries. It particularly highlighted the fear of China coming to grab strategic assets as collateral for debt, noting that references to Sri Lanka’s Hambantota port in international media tripled from March to May. The Hambantota Port is often used by BRI opponents as an example of China’s malicious leveraging of a country’s financial plight to gain control of strategic assets such as ports and railways, a claim that has been disputed by scholars such as Debra Brautigam of CARI, who sees it as a regular debt-to-equity swap that allows host countries to tap capable private investors to vitalize problematic assets. The research team advised Chinese decision makers to actively disperse misunderstandings such as those surrounding Hambantota and explore debt relief solutions on a country-by-country basis, carefully considering the necessity, feasibility, scale and design of those relief measures.

“The biggest challenge yet to the BRI”

While the country’s top political elites are playing their cards close to the chest, those slightly further away from the center are beginning to air their worries and offer advice.

An article co-written by the chairman of CITIC Group’s board of supervisors, Zhu Xiaohuang and Zhang Anyuan, the Chief Economist of CSC Financial, a CITIC Group subsidiary, asserts that the debt repayment crisis is “the biggest challenge faced by BRI since its creation.” CITIC, a state-owned financial conglomerate, is itself deeply involved in overseas adventures. One of its most well known projects is the Kyauk Phyu Special Economic Zone (KPSEZ) Project in Myanmar.

The two authors were blunt about their concern with China’s massive debt exposure overseas, to the tune of 250 billion USD by their calculation. They estimate that the majority of these outstanding loans fall outside the G20 pledge and will be subject to further requests for relief. “For us not to respond to such pleas would be unreasonable,” the authors write, “but response will create a precedent for a flurry of renegotiation requests that we may not be able to handle.”

The authors proposed a 5-step approach to address the debt repayment crisis: extension, RMB denomination, write-down, debt-to-equity swap and write-off. The underlying principle is to preserve as many assets as possible. If cancellation becomes inevitable in the end, China should at least leverage it to get payback in other forms.

A key component of the advocated approach that is not being featured in most international discussions about possible Chinese response is the re-denomination of Chinese debt to RMB, as a precondition for writing-down any loan. “Covid-19 has essentially reinforced the dollar’s standing in the world economic system,” claimed Zhu and Zhang, “the dollar-denominated Chinese loans only strengthened the linkage between USD and local currencies along the Belt and Road.”

Dollar-denominated Chinese loans along the Belt and Road have been a sore point for Chinese observers of BRI. As early as 2017, Zhang Anyuan, one of the above authors, has warned about how the practice would eat into China’s seemingly abundant but fragile foreign reserves. By adding on to a host country’s dollar-denominated debt stock, BRI is essentially making those countries more dependent on dollar liquidity that is ultimately at the mercy of the Federal Reserve at the source. Zhu and Zhang noted that amid the Covid-19 crisis, the Fed has set up liquidity swap lines with a dozen of central banks in Europe, Asia and Latin America, playing the role of “the world’s central bank.”

The “internationalization of RMB” through the Belt and Road Initiative has always been an aspiration but limited by multiple constraints such as the lack of RMB reserves on the side of host countries, exchange rate risks and the uncompetitiveness of RMB-denominated loans. The authors argued that debt restructure could be an opportunity to advance that cause, offering loan write-downs in exchange for RMB denomination, therefore uncoupling some BRI debts with dollar supremacy.

It is hard to assess how practical this advice is in debt renegotiations. Zhu and Zhang themselves concede that now probably is not the best time for such a move, but insist that it’s worth trying. Shifting those debts to RMB-denomination also allows for easier debt-to-equity swaps at a later stage, the authors argued. Domestic RMB funds can be more easily tapped to take on some of the distressed assets as equity investment to preserve asset value as much as possible. And equity investment “guarantees a long-term presence of Chinese commercial interests in Belt and Road countries.” Though such swaps would, as noted above, be controversial and potentially very damaging to the BRI.

All of the prescriptions look good on paper. But as requests pile up on China to respond to relieve countries of debt burdens, it might not have the luxury to patiently go over its overseas lending stock on a loan by loan, country by country fashion, as Scott Morris, Center for Global Development told Euromoney. President Xi’s announcement last week looks like both an instruction to Chinese commercial lenders to start looking for debt restructuring solutions and a play to buy some time for creditors to work that out.

The tsunami is likely on its way however and how China will manage will be a key test of its international diplomacy skills, finance savviness and of the BRI in general. Offering realistic debt relief solutions while not falling into the narrative of “debt trap” and keeping a check on anti-foreign-aid sentiment domestically will be a difficult but necessary balancing act.

Losing Steam: China’s Overseas Development Finance in Global Energy

Overseas energy finance from China’s policy banks has been declining since 2017 due to a combination of demand and supply constraints. A rebound in 2020 is unlikely.

By Xinyue Ma, Kevin P. Gallagher

After a decade-long surge in Chinese development finance into the global energy sector, China’s policy bank lending continued to trickle in 2019. This could largely be due to a lack of demand capacity in host countries and less financing available on the China side.

Losing Steam

According to the annual update of the ‘China’s Global Energy Finance database’ at Boston University’s Global Development Policy Center, China’s overseas development finance from the China Development Bank (CDB) and the Export Import Bank of China (CHEXIM) in the energy sector dropped to a lowest level in a decade (Figure 1). This may seem surprising given that overseas finance was a centerpiece at the Second Belt and Road Forum in 2019, but there are number of demand and supply side factors that led to the dimming of such prospects for 2019.

BU-PPDC-1 — Figure 1 China’s Annual Energy Finance from Policy Banks 2000-2019，Source: China’s Global Energy Finance, 2020. Global Development Policy Center, Boston University.

As shown in Figure 1, according to information collected from public sources, in 2019, China’s policy banks issued a total of $5.3 billion to overseas energy projects, down 52 percent from the $11.08 billion in 2018. As of the end of 2019, we record a total of 272 loans given in the energy sector to other countries by these two banks since 2000, totaling approximately $241 billion and concentrated in oil, coal, hydropower, and gas.

The downturn could be due to a handful of key demand and supply side factors. Perhaps most importantly, emerging market and developing countries have hit their demand capacity. While these countries face an enormous need and financing gap for sustainable infrastructure, they have reached their limits in their ability to absorb new projects. In part this is due to the governance capacity to handle so many projects (Indonesia has 21 coal projects from China’s policy banks alone). More important however is the fact that, even before the COVID-19 crisis, many emerging market and developing countries had started to approach unsustainable levels of dollar denominated debt. According to the IMF, about half of all emerging market and developing countries were close to or already undergoing debt distress.

On the supply side China has heralded the BRI and outward finance in general, and has faced overcapacity on the mainland. So one might think there would be a surge in 2019. However, the level of dollars for outward finance has diminished in recent years. China has financed the BRI and overseas expansion through large current account surpluses, which are dwindling. Of course, 2019 was plagued by the US-China trade dispute, which slowed Chinese exports and investment into China. China’s current account balance was over 10 percent of GDP in 2007, but slid to 1 percent of GDP by 2019.

Faced with increasing risk and uncertainty, China has been tightening the reigns on the financing, including overseas financing, by strengthening its financial regulations, emphasizing prudent and sustainable lending. Since 2016, the China Banking (and Insurance) Regulatory Commission (CBIRC), People’s Bank of China, Ministry of Finance, etc. have issued a series of regulations which emphasize risks control and green finance practices. For policy banks in particular, capital adequacy regulations, monitoring and evaluation, and aligning the banks’ operations with their roles of policy and development banks are highlighted. The Guidelines for Establishing the Green Financial System published in 2017 and the Debt Sustainability Framework for Participating Countries of the Belt and Road Initiative issued in 2019 laid stress on environmental and financial sustainability of overseas financial activities. Over these years, CDB and CHEXIM leadership also frequently emphasized the caution they are practicing regarding debt sustainability, environmental impact, and risk management.

overseas-policy_46828134

However, it is hard to attribute China’s overseas lending decrease to external or internal political or regulatory drivers alone. Chinese policy banks are market-based financial institutions, and largely respond to market dynamics and tracks a similar decline in China’s outbound Foreign Direct Investment (FDI) in energy (Figure 2).

BU-PPDC-2 — Figure 2 China’s Outbound FDI in the Energy Sector，Source: FDI Markets, Dealogic, 2019.

According to Global Energy Monitor’s coal projects data and BNEF’s clean energy cross-border investment data, we find commercial bank investments in the power sector has slowed as well (Figure 3).

BU-PPDC-3 — Figure 3 Chinese Development Finance and Commercial Finance in Overseas Coal and Renewable Energy

Globally, this downward trend of Chinese overseas energy finance has been concurrent with stagnant global energy investment and decreasing energy investment in the emerging markets – the main target of Chinese development finance (Figure 4).

BU-PPDC-4 — Figure 4 Energy Investment in Selected Markets, 2015 and 2018，Source: IEA, 2019. World Energy investment.

Western-led multilateral development banks (MDBs) have followed a similar trend. Total energy loans from six MDBs had been much smaller than the amount provided by CDB and CHEXIM, and only surpassed CDB and CHEXIM in 2018 after two years of decline from the two Chinese banks (Figure 5). Given these global and domestic trends of financial supply and demand of the past few years, the slowing down of China’s overseas energy finance seems to be a systematic phenomenon.

BU-PPDC-5 — Figure 5 Development Bank Annual Lending in the Energy Sector，Source: Development Bank Annual Reports & Project Database. Note: EBRD has not published annual report or projects for 2019. The 2019 column does not include EBRD loans.

Future Outlook

An increase in Chinese global energy finance seems even more unlikely in 2020 but could form an important part of the global recovery effort if it is re-calibrated toward the needs of the post-COVID-19 world.

China has signed a G20 agreement to freeze bilateral loan repayments for low-income countries until the end of the year, even though diplomats said that the process of identifying which loans in which countries would be eligible has only just begun and that negotiations were being undertaken with China on a bilateral basis. The Ministry of Commerce and the CDB issued a joint notice announcing potential relief for Chinese firms and projects in the Belt and Road Initiative that have been impacted by the COVID-19 pandemic. The CDB will provide low-cost financing and foreign exchange special working capital loans, set up reasonable repayment grace period, open up “fast lanes” for credit granting, and provide diversified support in foreign currency financing services to “high-quality” BRI projects and enterprises impacted by the pandemic.

Nevertheless, the COVID-19 related economic crisis inflicted serious damage on emerging market and developing economies. Capital flight has been over $100 billion and exchange rates plummeted by up to 25 percent. This has increased dollar debt burdens and over 100 countries went to the IMF for finance given the collapse of global trade and remittances. The vast majority of external debt is due to private creditors and multilateral lenders, but China is a significant bilateral creditor to many countries. While Chinese finance has been relatively patient relative to the private sector finance that has fled the developing world over the last few months, China’s borrowers will be hard pressed to service their debt to China for the foreseeable future. This lack of debt service on existing loans, and the limited ability to negotiate deals due to social distancing and travel bans, prepares us with a foreseeable shortage in Chinese energy finance in 2020.

Along with multilateral institutions and other development financiers in the world, Chinese development finance will be much needed as the world begins to develop recovery programs from COVID-19, which has revealed the need for more resilient and sustainable infrastructures. Energy infrastructure is a major pillar of economic development, and therefore sustainable infrastructure should be a cornerstone of recovery efforts. Moreover, China needs to make sure that any of its debt relief efforts are aligned with sustainability and climate standards, and continue to shift its overseas development finance into cleaner and more resilient energy sources, so that this crisis does not accentuate the climate crisis.

Xinyue (Helen) Ma is the China Research and Project Leader at the Global Development Policy Center (GDP Center) at Boston University.

Dr. Kevin P. Gallagher is a professor of global development policy at Boston University’s Frederick S. Pardee School of Global Studies, where he directs the Global Development Policy Center.

Covid-19 and Chinese Soft Power in Africa: Q&A with Ambassador David H. Shinn

Former U.S. Ambassador to Ethiopia and Burkina Faso shares his view on how recent events may reshape China-Africa relationship

Amb. David H. Shinn is a former U.S. ambassador to Ethiopia (1996-99) and Burkina Faso (1987-1990). A keen observer of African affairs, he is also co-author of China and Africa: A Century of Engagement (University of Pennsylvania Press, 2012), an encyclopedic book about China’s relation with each country on the African continent. Currently, he is an adjunct professor of international affairs at George Washington University in Washington D.C.

Panda Paw Dragon Claw has the opportunity to interview Amb. Shinn, who also runs his own Africa-watching blog, through email to get his take on recent developments in China-Africa relationship that has garnered international attention. His observations from across the Pacific offers a third-party perspective on China’s standing in Africa and the forces that are reshaping this important cross-continental relationship.

Panda Paw Dragon Claw (PPDC): Observers have compared African response to President Trump’s 2018 “shithole” comment and to China’s recent maltreatment of African communities in Guangzhou and found a particular sense of betrayal in the latter. As a long time observer of China in Africa, do you think there is special “brotherhood” between China and African nations beyond economic and political ties?

Amb. David Shinn: There is some special attachment to China by many older African elites who were involved in their country’s struggle for independence or at least were alive at the time. But this has little resonance for younger Africans who were not alive during the independence struggle and are now primarily interested in finding employment. Younger Africans also obtain much of their information from social media, which does not face the same restrictions of government-controlled media in many countries. These social media are not easily accessible in China. As a result, Chinese officials initially did not fully appreciate the level of anger expressed by Africans.

The suggestion that there is a special “brotherhood” between China and African nations is, in my view, a stretch. African governments appreciate China’s financing, investment, development aid, military assistance, and political support, but I do not see this as constituting a special “brotherhood.” African governments are just being practical.

PPDC: How serious do you think the damage done by the Guangzhou incident is on China’s “soft power” in Africa? What areas of the relationship will it impact on?

Amb. David Shinn: I was surprised that several African leaders publicly criticized China for what happened in Guangzhou. This is highly unusual for African leaders and demonstrates the degree to which they were motivated by their own domestic audience, which is rare. African leaders, Nigeria’s House of Representatives excepted, subsequently went quiet on the issue, probably under pressure from Chinese embassies in Africa and perhaps even calls from Beijing. This did not surprise me. China is too important of an economic and political partner in most African countries and it does not take criticism lightly. At the level of African governments, I think the damage is short term and manageable.

The far more important question for China is Guangzhou’s impact on African publics and with people-to-people interaction. Guangzhou builds on a history of ill-advised Chinese advertisements and TV programs that played badly in Africa. Nor is there any guarantee Guangzhou is the last time something like this might happen. Consequently, at the level of the African public, I think serious damage has been done based on social media information and media coverage in the free press in some African countries.

This is, however, hard to measure until there are new scientific public opinion polls that ask about African perceptions of China and compare them with earlier polling data. The degree to which African students, even with a full scholarship, decide to study in China will be an indicator. The size of the African diaspora in China, whether it is rising or falling, is another gauge. On China’s side, the extent to which Chinese tourists feel comfortable choosing Africa as their destination post-coronavirus will shed some light on the China-Africa people-to-people relationship.

PPDC: China has a long history of providing medical assistance to Africa, which constitutes a major component of its “soft power.” The Covid-19 outbreak is supposed to be a moment when China demonstrates to Africa that it is a “friend in need.” How do you evaluate China’s overall Covid-19 response in relation to Africa this time?

Amb. David Shinn: I agree that China’s medical teams in Africa have been one of its most successful programs. The fact that they date back to 1963 in Algeria and today are found in nearly all African countries makes the case. In 2014, China also made a useful contribution to combatting Ebola in Sierra Leone, Liberia, and Guinea. Covid-19 is different than Ebola, however, in that the former originated in China and the latter in Africa. This puts a different face on Covid-19 and, in the minds of some Africans, there may be a tendency, fair or not, to blame China. With Ebola, China could assist without concern about any connection with China. With Covid-19, Chinese assistance is a reminder of the origin of the virus. Nevertheless, China’s assistance, especially that from Alibaba founder Jack Ma, seems to have been well received in Africa.

PPDC: How do you assess China’s handling of the Guangzhou incident so far from a diplomatic point of view? Do you think statements and gestures coming out of the Chinese foreign policy apparatus are adequate? What does the Chinese government’s response to it tell us about China’s ability to wield soft power on the continent?

Amb. David Shinn: Again, it is important to distinguish China’s handling of this incident as it has impacted African governments and as it has impacted African publics. In the early days of the crisis, I think China’s lack of transparency in explaining the situation resulted in a poor response at both the governmental and public level. Subsequent messaging improved and largely ended any additional damage at the governmental level. It appears that Chinese embassies in Africa went all out to control the damage. China’s information effort has not, however, convinced African publics that this matter is finished and that it could not happen again. China’s governmental response tells me that it still has a lot to learn as it tries to wield soft power in Africa. It might start by paying more attention to what is being said by Africans about China on social media.

PPDC: African leaders appear to be willing to move on from the incident and restore cross-continental relations to a level of normalcy. What do you think are the strategic considerations behind this?

Amb. David Shinn: I agree that China has generally restored the government-to-government relationship to normalcy. China has always emphasized the relationship with African governments. It is not surprising that is where it has devoted most of its effort.

From the African side, I suspect that reminders of continuing Chinese financing, investment, and political support were the primary strategic consideration. China’s financing and investment in Africa were declining, however, before Covid-19. As global economies, including China, face new stresses and challenges, it raises the question whether China will be able to meet African expectations over the next several years.

PPDC: What do you think are some of Africa’s priorities in relation to China post-Covid-19? To what extent will these priorities be affected/constrained by African public sentiments?

Amb. David Shinn: First on the list will be debt postponement or even cancellation. Ethiopia’s prime minister recently called for creditor nations and especially the Group of 20 to either postpone the debt of poorest countries until the Covid-19 health crisis is over or to cancel debt entirely. The next priority will be a request for assistance to rebuild African economies, which will almost certainly suffer significant damage. Covid-19 may provide opportunities for terrorist groups from northern Nigeria to the Sahel to the Horn of Africa to Mozambique to take advantage of preoccupied governments and deteriorating economies. This could lead to requests for additional assistance to combat these groups. Unfortunately, these requests will come at a time when the wealthier countries are experiencing significant damage to their own economies.

Traditionally, African publics have not played a major role in the decision-making of their governments except when they reach the point of large protest movements, especially those that take to the streets. When the situation reaches that point, there is either an overthrow of a government or severe repression of the protests by a government. Ideally, African governments would take more account of public opinion before it reaches that point.

PPDC: The US government and politicians have also responded to the Guangzhou incident by raising concerns about racism in China. The US-China rivalry in Africa is no secret these days, with Secretaries of State Tillerson and Pompeo’s warning of African nations about China reverberating in international media. In your opinion, will Covid-19 (the Guangzhou incident included) change anything in the US-China-Africa relationship? What are dynamics likely to be afterwards?

Amb. David Shinn: There is a saying dating back to 14^th century English author Geoffrey Chaucer that “people who live in glass houses should not throw stones.” Africans are perfectly capable of coming to their own conclusions about the implications of events in Guangzhou. They do not need any help from American officials. Most criticism of China for the situation in Guangzhou originated in Africa by Africans and not by the Western press or Western officials.

It is also not useful to deny the existence of racism in China or anywhere else. Racism of one kind or another is a global phenomenon. China is not immune. When official Chinese statements suggest otherwise, China just diminishes its credibility.

Covid-19 is impacting in a negative way the US-China relationship, but I doubt that it will change the US-China-Africa relationship. In a better world, there would be a joint effort by the United States and China to combat Covid-19 in Africa. While both countries are assisting Africa individually to counter the pandemic, the prospects for a cooperative approach in the current political environment are remote. This is unfortunate.

Bring back the “Bandung Spirit” in China-Africa relationship

Chinese scholar Liu Haifang argues that China should re-discover its early embrace of Africa to build a new foundation for China-Africa solidarity.

By Liu Haifang

The racial discrimination controversy in Guangzhou’s Covid-19 response measures is a shrieking noise in China-Africa relationship, making many anxious that it could derail years of pragmatic, mutually beneficial cross-continental collaboration.

I was alerted to the events in Guangzhou by my African students in Peking University. For me, they were the “whistle blowers” on this incident. They asked me, shouldn’t governments on both sides and concerned citizens do something about it? Realizing how serious the situation was, I immediately passed the message on to my government contacts, even though it was late at night, hoping that they would take it seriously. As the Guangzhou incident quickly occupied global headlines, I received a great number of letters and messages from friends on both the Chinese and African sides. They were invariably filled with worry, anxiety and a deep sense of loss over the damaged China-Africa friendship. I was clearly not the only one concerned.

However, having witnessed these exchanges of goodwill, and more importantly, the actions of young volunteers in Guangzhou rising up in response to the situation, I am more convinced than ever of the exceptional connection between China and Africa. It manifests itself not just in the highly formal relationship between “sovereigns”, but also in the day-to-day experiences of ordinary people, who realize the potentials of their lives through the cross-continental exchanges that are no longer limited to the economic sphere. For many years, people have entrusted the China-Africa relationship with the ideal of achieving a truly equal and reciprocal international relationship. No one wants to see it distorted and destroyed.

Scholars have a responsibility to approach culture-centrism and racism from a critical, analytical point of view. Just as the coronavirus outbreak is fast becoming an opportunity for humankind to slow down and examine what is lost in our single-minded pursuit of globalization, so has the China-Africa relationship, after a period of smooth sailing development, reached a point where we can take a moment to reflect on how we view each other, our shared qualities and our differences. The Guangzhou incident highlights the huge gap of language, culture and values between China and Africa, a reality that everyone needs to face in pursuing a sustainable cross-continental relationship. Colleagues of mine who have participated in discussions at the Peking University Center for African Studies all agree that scholars and academic institutions have a key role to play in promoting mutual understanding and an exchange of hearts and minds.

In the 1990s, the University of Chicago Press published Africa and the Disciplines: the Contributions of Research in Africa to the Social Sciences and Humanities, a collection of papers edited by scholars Robert H. Bates, V. Y. Madimbe and Jean O’Barr. The papers illustrated the value of African studies to the modern university and argued that, rather than chasing university rankings and competitiveness, higher education institutions should focus on “refining students’ sensibilities”. Through the study and research of Africa, universities can become truly “internationalist” and vehicles for promoting global understanding and respectful behavior. As globalization reaches today’s stage of uncertainty, extreme nationalism/tribalism, selfishness and finger-pointing, this responsibility of higher education institutions is particularly relevant.

Africa University

Research on Africa in the People’s Republic of China began with seriousness after the 1955 Bandung Conference in Indonesia, the first large conference of newly independent Asian and African countries. Many scholars in the field recognize that China’s initial gaze on the African continent in the 1950s was different from that of the Western world. As Professor Zheng Jiaxin of Peking University, a renowned Chinese scholar of Africa once put it, “the People’s Republic shares the same outlook and destiny as its Third World peers and will always side with the Third World.” He paid particular attention to the agency of African people in his compilation of African history and advocated for placing people at the center of their history, a reversal of a century of imperial historical tradition that elevates “African colonial history” above “African History”. But have we, as Chinese African scholars, adhered to this people-centered principle?

In 2007, Professor Li Yangfan of Peking University’s School of International Studies, published an article titled “Asia-Africa-Latin America: the forgotten world”, which discussed his experience of being confronted by an African diplomat. “Why do you always invoke the United States in your talks? What about the Third World?” he asked Professor Li. Similarly, my Peking University colleague Professor Chen Pingyuan brought up his own experience of feeling “stung” by his Chinese students’ indifference to Africa in a 2016 article. When he excitedly described Africa’s first electrified railway, the Addis-Djibouti railway, in class, the reaction of the students was ignorance and a lack of interest. Professor Chen reminisced that when he was a college student back in the late 1970s, the world view of his whole generation was shaped by the idea that “the people of Asia, Africa and Latin America must be liberated.” He recognized that young people’s upbringing is always intertwined with the national and global power structures of his or her time.

Another moment of reckoning came when Chen read about Ugandan scholar and public intellectual Mahmood Mamdani’s 2016 speech in Shanghai. Higher education institutions played pivotal roles in the independence and rebuilding of many African countries, and yet due to Chinese academia’s increasing focus on global ranking and a “snobbish worldview”, these institutions were almost invisible in China.

Drawing from these two personal experiences, Professor Chen reflected that academic excellence is only one aspect of a university’s mission. Its contribution to a nation’s political, societal and economic development goes far beyond published papers and patents. He raised the expectation that modern China’s study of Africa should be strengthened. And he emphasized that he was not talking about elitist “African Studies” (capital letters), but to incorporate Africa into the curriculum of liberal education in China and make it part of society’s shared knowledge.

Our study of Africa must step outside the small echo chambers of think tanks and the restrictive focus on China-Africa economic collaboration. We must respond to the Chinese public’s need for knowledge about the outside world, and show them Africa from an objective and equal perspective. It is an Africa with texture, rich in its history, culture and traditions and brimming with a youthful perspective.

Revisiting Historical Perspectives

150 years before Lord Macartney’s famous refusal to kowtow to Emperor Qianlong, Dutch emissaries reached the land of the Bakongo people (located between today’s Angola and Congo Brazzaville) in 1642 and kneeled in front of their king, in an effort to compete with the Portuguese who had traded with this prosperous kingdom since the 15th century.

Dutch Bakongo — Image provided by Prof. Liu Haifang

Europe’s early encounter with Africa was filled with such stories of admiration and fascination. Tragically, as the emergence of the Atlantic slave trade and colonialism irreversibly sank the continent into the abyss of exploitation, its image also suffered from continued alienation. Its lack of written history, much of it kept orally, was seen as a sign of backwardness. Hegel labelled Africa a continent “that is not a historical part of the world”, as he believed history only began with text-based records. Many forms of “rigorous”, “measurable raciology” banished Africans to the lowest in the hierarchy of human existence. Blackness was no longer a physical concept but an ideological one associated with being uncivilized. As British-Ghanaian thinker Kwame Appiah lamented, the entire African belief system, value system and knowledge system were demolished and discarded.

A Song Dynasty (960-1279 CE) Chinese writer Zhao Rushi left an early record of Africa in his book The Record of Many Foreign Countries. When Yang Renbian (1903-1973), a pioneer of African Studies in China, compared Zhao’s accounts with French and English-language accounts (including those translated from Arabian sources) of the same period, he found that Zhao’s grasp of conditions on the African East Coast was way more advanced than the Europeans of his time. Later accounts by Wang Dayuan (14th century), Ma Huan (15th century) and Fei Xin (15th century) were simple but authentic products of seafaring experiences and first-hand records of visits to the continent. Only after the Qing Dynasty did China’s view of Africa show signs of distortion by its encounter with the Western world. The racist myth of Africans being “inferior” held by colonialists began to influence the Chinese mind. If we browse the literature of the Qing Dynasty, occasionally we can still find expressions of concern for the fate of Africa and Africans, but most were imported from publications by Western colonialists. Most Qing Dynasty writing about Africa was filled with Sinocentric biases. “They looked down upon the dark-skinned races, and claimed that Africans were black, ignorant and beasty beings, ”as scholar Peng Kunyuan put it.

It is regrettable that China, which had left colorful, first-hand accounts of Africa way earlier than the Europeans, reduced its conception of the continent to bigotry and discrimination through the Qing Dynasty’s unquestioning absorption of Western knowledge. Today’s China must return to the starting point of its embrace of Africa when it was a newly founded country on the international stage; It must pick up the “Bandung spirit” again in reaffirming the Afro-Asian identity that was established in 1955; It must also look at the continent with a refreshed pair of eyes, just like the curious Song and Yuan Dynasty seafarers. This is where the foundation of today’s Africa research in China should be laid upon.

This blog is translated from a Chinese version with permission from the author.

Liu Haifang (刘海方), PhD (History), Peking Uni., is an Associate Professor in School of International Studies, Peking University. She previously worked for the Institute of West Asian and African Studies (IWAAS), the Chinese Academy of Social Sciences (CASS), and a visiting scholar at the Institute of Social Studies in The Hague（2007-8）. She serves as Director of the Center for African Studies, Peking Uni., and the Vice President of the Chinese Society of African Historical Studies as well. Liu ‘s current research topics are Racial, ethnic issues, political development in contemporary Africa, China-Africa relations and African sustainable development studies, China’s foreign aid from global perspective; South Africa, Angola country studies, etc.

After Guangzhou, 3 things will shape China-Africa “brotherhood”

A quick take on the aftermath of the diplomatic crisis triggered by Guangzhou’s Covid-19 measures targeting African communities

By Ma Tianjie

If “people to people connection” was really one of the five pillars of the Belt and Road Initiative, it has been seriously damaged over the past week. The disturbing images and video clips of shelterless Africans roaming the streets of Guangzhou, as the result of evictions, rattled the cyberspace of the African continent and started a diplomatic crisis rare in the history of China-Africa relationship.

The incident was one of the unintended consequences of China’s response to the coronavirus outbreak, now in its 5th month since the first reported cases emerged in Wuhan, Hubei province in December 2019. As domestic spread of the virus is more or less brought under control and situations in other parts of the world became more serious in recent months, the frontline of the response effort began to shift: emphasis was put more on stemming the import of cases from overseas. Chinese and foreigners returning from international hotspots of outbreak were subject to quarantine and testing measures that had gradually evolved in China with sophistication and force. And Guangzhou’s African community, the largest in Asia, began to feel the heat, as landlords and hotels began evicting black tenants out of both panic and prejudice. The resultant scene created an ugly spectacle and a cross-continental outcry.

By the end of Apr 15, the issue had been declared “sorted out” by African leaders, who, days earlier had made open and unprecedented protests about the situation to Chinese diplomats and officials. There are signs that African governments are now ready to move on and return the relationship to normalcy after receiving assurance from the Chinese government of “equal treatment of foreigners” and “zero tolerance for discrimination”.

But as Nigerian journalist Solomon Elusoji wrote in a latest China-Africa Project analysis, “while the current controversy might only linger for a while and soon be forgotten in the long, winding cabinets of history, Beijing must realize these are the incidents that tarnish its positive relationship with African countries and create deep distrust of China and its intentions among the more than a billion people living on the continent.”

The impact of the incident, on the hearts and minds of the African public and on the long-term prospect of China’s presence on the continent, will likely be long-lasting regardless of the intention of political elites on both sides. Here is a quick take on how the situation is going to continue to playout in the near future, based on information available to us from public sources.

GuangzhouAfrican — A Weibo video showing Guangzhou residents distributing food and supplies to Africans who lost shelter in the city’s Covid-19 containment campaign

1. Tensions between Chinese authorities and African communities will likely continue

When Zhao Lijian, spokesperson of China’s Ministry of Foreign Affairs, spoke of “equal treatment” and “zero discrimination”, he was talking in code language that only those familiar with dynamics of the country’s Covid-19 response in the past months could fully comprehend

Racial discrimination against black people, manifested both online and offline, is not uncommon in China. Elusoji, a guest of the Chinese government in a 2018 tour in China, experienced it firsthand. But another side of the story, that is often lost in international conversations about the situation, is the issue of perceived “preferential treatment” of foreign citizens within China, which has intensified tensions amid the implementation of confining Covid-19 control measures across the country.

Before the Guangzhou situation flared up, Chinese internet has witnessed multiple controversies of foreign residents in China being “taken better care of” than Chinese citizens under the coronavirus control regime. In some situations, this translated directly into more lenient quarantine measures for foreign nationals than for Chinese citizens. This created huge resentment online and began to challenge the credibility of the government’s pandemic fighting measures for the citizenry. Exceptional cases of assault on nurse by a Nigerian Covid-19 patient and group infection of 5 Nigerian residents of Guangzhou only made things worse.

It was in this context that on Mar 9, Beijing city had to make an explicit statement about “bringing all foreign nationals under the same coronavirus prevention regime as Chinese citizens.” It is also the subtext of Zhao Lijian’s “equal treatment” reference. It can mean equal treatment with respect. It can also mean equal treatment of coercion (as Chinese citizens know well).

The Guangzhou incident is possibly a mixture of over-correction on “equal treatment” and terrible under-performance on cultural and racial sensitivity. There were complaints that African people were subject to an extra 14-day quarantine on top of the existing quarantine rules applied to everyone in Guangzhou. If controlling the pandemic is the final goal, then racial profiling, targeting people based on skin color rather than epidemiologically relevant factors such as travel and contact history, which China has proved effective at tracking via mobile apps and QR codes during the epidemic period, does not make sense.

But coronavirus also exposed the deep-rooted issue of managing foreign nationals in Guangzhou. For China’s brand of pandemic-fighting measures to work, which has now evolved into an ultra-sophisticated system of mandatory hotel quarantine, home quarantine, neighborhood watch, travel history tracking and massive testing, it has to have a confident grasp of the movement of people living in China. While Chinese citizens can be more easily brought under such a society-wide system of control through all kinds of surveillance and administrative measures, foreign nationals are more challenging to incorporate. Different visa types, people working on incorrect visas, multiple nationalities and the diplomatic issues that entails, as well as various language and cultural factors all make it more difficult to monitor and control this diverse group of residents.

As Yangcheng Wanbao, Guangzhou’s influential local newspaper, pointed out in an Apr 9 Weibo post, Guangzhou’s African community management was a “black hole” (without racial connotation) in the middle of the city. Authorities there genuinely have a hard time keeping track of the African population, which for many years has taken root in the southern China city known for its highly active international trade sector. At a “normal” time, such undocumented presence might not pose too much a problem other than occasional need for order keeping. But Covid-19 will likely force the hand of the authorities to fundamentally change the status quo and eliminate grey areas that have so far shaped the existence of the African community there.

Regardless of this contextualizing of the Guangzhou incident in the past and in light of the pressure of Chinese public sentiment and pandemic-fighting measures, new cases of profiling and arbitrary treatment may well emerge and further test the strength of so-called “China-Africa brotherhood.”

2. Chinese social media will be slightly tamed for racial contents

To further complicate things, throughout the Guangzhou incident, Chinese social media (Weibo and WeChat) became hotbeds for racist comments against the African community. The Chinese internet actively censors any information that is considered politically sensitive, but racially inflammatory comments, including the N-word, did not seem to qualify for that category. This is beginning to change.

On Apr 15, Weibo suspended and permanently shutdown 180 user accounts for “publishing information about foreign countries” and “promoting community discrimination.” As most of the accounts and contents in question are now deleted, it is impossible to find out what exactly triggered the crackdown. But given the timing, it is reasonable to assume that recent events have prompted Chinese authorities to take a hard look at racial discrimination on social media.

Even though Chinese internet users inhabit a cyberspace separated from the rest of the world by the Great Firewall, the Guangzhou incident shows that what’s being said inside the wall can still penetrate the double barriers of language and technology and cause outcry outside of China’s borders. Over the last few weeks, a great number of African social media users (many of whom speak and read Chinese after studying or working in China) screenshotted and translated Weibo utterances of racism on Weibo and posted them on Twitter, Facebook and YouTube.

In some cases, Chinese internet users jumped over the fence (using VPNs) to pick fights with netizens in other countries over what they considered cultural and political offenses, actively bringing insults to the cyberspace of other countries. From the information released by Weibo, at least one user was suspended for participating in the online quarrel with Thai users over perceived offenses. An episode (unrelated to the Guangzhou incident) that became a spectacle on Twitter and created new vocabulary in the Urban Dictionary.

Chinese social media’s agitating role in racial and foreign affairs has been made clear by incidents in Guangzhou and beyond. This will likely bring more regulatory (i.e. censoring) attention to such content in the near future. Whether this will actually contain its destructive force in the China-Africa relationship is yet to see. If the root cause of tension is unaddressed, social media is but one place where grievance, bigotry and outright hatred bubble up.

3. True people to people connection is taking place

As people stare into the bleak future of China-Africa connections at the civilian level, severely tarnished by the latest incident, one may find some hope in the grassroots efforts trying to build bridges and tend to the wounds.

As some Chinese web users indulged themselves with racial slurs, others alarmed concerned compatriots that “if we don’t do something about racism in China, everyone will pay for the downward spiral of hatred between Chinese and Africans.”

Motivated Chinese netizens pressured McDonald’s for an explanation and apology for a “no black” notice at one of its stores in Guangzhou. And a group of volunteers self-organized to provide support to Africans who have lost shelter in the city.

VolunteerGuangzhou — A notice circulating online recruiting volunteers to support Africans in Guangzhou

One impact of the coronavirus outbreak in China is a rekindled sense of civic duty among many of its citizens. The crisis that almost brought Wuhan to its knees in Jan and Feb mobilized people to donate and volunteer for their fellow countrymen. Now that sense of civic duty is being extended to Africans in Guangzhou.

Such efforts are not without costs. Paranoid Guangzhou residents reported the volunteers to the police, claiming that they were undermining pandemic control measures. It highlights the stubbornness of anti-black sentiments but also the preciousness of citizens standing up to such prejudice.

As the world continues its struggle against the coronavirus and experiences the cracks in the international order that are emerging and widening, the events in Guangzhou in the spring of 2020 will forever form part of the covid-19 experience for both China and Africa. Communities on both sides can choose to go along with the downward spiral or turn it into the beginning of a difficult yet necessary conversation. Doing the latter would take agency, wisdom, and time.

The puzzle of China’s missing solar and wind finance along the Belt and Road (Part 1)

New paper sheds light on reasons behind the lack of renewable energy lending from China’s policy banks

By Tom Baxter

From 2000-2018 China’s two policy banks, the China Development Bank (CDB) and China Export Import Bank (CHEXIM), loaned over USD 251.3 billion to overseas energy sector projects. Of that finance, traditional energy sources such as coal and hydro dominated, occupying 45.2% and 33.7% of the total finacinging respectively. Just 2.3% went to wind and solar projects.

Given that China is the world’s leading manufacturer of wind and solar power generation equipment, given that the domestic renewables sector is experiencing overcapacity, given that Belt and Road actors have been tasked from the highest levels with expanding a “green BRI”, and given the enormous energy needs and renewable potential in BRI countries, why has so little of China’s two policy banks’ overseas finance go toward wind and solar projects?

CBDEXIMRE — Source: “Chinese Development Finance for Solar and Wind Power Abroad”, Bo Kong & Kevin P. Gallagher, Feb 2020

A recent paper by Boston University Global Development Policy Center’s Kevin Gallagher and Bo Kong labeled this reality a “counterfactual puzzle” and dug into the reasons for it. Why China’s Belt and Road Initiative has not led to large scale deployment of renewables as has been seen domestically in China is a question on the lips of many on the climate community, from NGOs to government staffers. Panda Paw Dragon Claw seeks to provide some insights on that critical question by digesting a few recently published papers and reports on that topic for our readers.

Is there potential for a renewable-powered Belt and Road?

In theory, both the supply and demand side for a large scale roll out of renewable energy projects along the Belt and Road are well aligned.

On the supply side, China has been a global leader in wind and solar power investment, manufacturing and deployment for most of a decade. Moreover, with the domestic market plagued with overcapacity, there is also a push factor from the supply side propelling Chinese companies to explore new markets. By as early as 2012 China’s solar PV production capacity exceeded total global demand by 33%. In fact, the overcapacity problem was in part driven by the two policy banks’ huge amounts of financing for the sector. By 2017, CBD and CHEXIM financing was behind about 40% of total installed wind and solar power in China, the paper points out.

In addition, both CDB and CHEXIM have an explicit mandate to promote the international expansion of China’s renewable energy sector. As early as 2015, a “guiding opinion” document from the State Council urged companies to “actively participate in investment and construction” of wind and solar PV projects overseas. In the same year, Deputy Director General of the New Energy Department of China’s National Energy Administration (NEA), Liang Zhipeng, publicly urged CDB and CHEXIM to assist China’s renewable energy companies’ exports, investments and expansion overseas.

This is backed up by a political vision for a “green Belt and Road” endorsed multiple times by President Xi Jinping himself. It also more broadly dovetails with China’s ambition to be seen as a key partner or even leader in global climate governance.

On the demand side, Belt and Road countries are projected to see large growth in power demand over the coming decades and an enormous market for solar and wind investment awaits, estimated at almost USD 800 billion globally. A report from Tsinghua University, Vivid Economics and Climateworks Foundation last year projected that keeping economic growth pathways across Belt and Road countries in line with the Paris Agreement’s 2 degree target could require investment to the tune of nearly USD 12 trillion up to 2030.

Banks’ caution

In spite of the alignment of all these factors, the two banks’ appear to hold deep reservations about renewable energy projects. Via interviews with middle level staff at the banks, Gallagher and Bo are able to reveal some of these reservations.

“Not every government turns to us for financing. When they do, many of them are governments of Asian, African, and LAC countries. When they approach us for loans, they invariably prioritize financing for the development of their industrial economy,” a mid-level manager at CDB said, reflecting that the banks see themselves very much at the end of a decision making process, rather than steerers of energy project decisions.

The bankability of a project is another key concern for these policy bank insiders. With many of the country governments who seek loans for the power sector lacking the ability to subsidize and support renewable development, bankability of solar and wind projects becomes less tenable. The CDB mid-level manager noted that the bank ultimately accepts or rejects loans based on a series of indicators, including “profitability, future cash flows, and debt-paying ability, and technical indicators, such as grid connectivity and electricity transmission capacity.” Failure to meet thresholds on these indicators will decrease the likelihood of a project receiving finance.

Lastly, the banks are well aware of the difficulties experienced in China’s domestic solar and wind expansion, as well as the tumult in Europe after 2008, perhaps ingraining caution in their approach to renewables.

“Considering the amount of problems the renewable power expansion has experienced in China, it is natural these developing countries will have more problems in light of their stage of development,” said an interviewee at CHEXIM. “Because of these problems, renewable power for the moment will only remain at a demonstration stage in these countries.”

The projects

Between 2000 and 2018 CBD and CHEXIM financed a total of 11 wind and solar projects, in seven different countries. What do these experiences tell us about the nature of the banks’ renewables financing in practice?

The financing for the 11 projects total over USD 2 billion. 44% went to European countries Bulgaria, Romania and Italy, mostly in the form of M&As. 27% went to African countries, 17% to Latin America and 12% to South Asia. Finance to European countries dried up after 2013, however, after which the three other regions accounted for all solar and wind financing.

RE projects CBD-EXIM — Source: “Chinese Development Finance for Solar and Wind Power Abroad”, Bo Kong & Kevin P. Gallagher, Feb 2020

The seven countries which have received financing for wind and solar projects share a few similarities. Firstly, all are endowed with rich renewable power resources. Secondly, all have rolled out some sort of support for renewables development, aiding project bankability. For example, all seven countries have renewable installation targets and tax incentives. Only Kenya however implements a feed in tariff (FiT) system, wherein the government subsidizes a premium price for renewable power. Lastly, all seven of the countries have good relations with China and all except Argentina are official members of the Belt and Road Initiative.

The countries and their power sector investment environments also have some obvious differences, however. Gallagher and Bo divide them into two distinct categories. The first consists of the three European countries, who are primarily expanding renewables for environmental considerations, not least that the EU’s 2020 Energy Strategy obliges all countries to expand the percentage of renewables in their energy mix. The second category consists of Kenya, Ethiopia, Pakistan and Argentina. These four countries see renewables as part of the answer to power shortages, rapidly growing energy demand and energy security.

Finance for renewable projects in European countries

CDB financed all three of the solar projects in Europe. One notable aspect of these three projects is that the financing mechanism bore strong similarities to how Chinese PV companies would approach CDB for loans domestically. All four of the companies engaging in European projects, who all had existing strong relationships with CDB, sought to mortgage their project loans on fixed assets, such as the solar PV stations themselves, corporate bonds or future revenues. This is almost identical to how firms secure CDB loans in China, Gallagher and Bo note, with the major difference that in the European market there was no local government to act as guarantor, greatly increasing the riskiness of the project.

Indeed, the rollback of subsidies for renewables in all three of these European countries created major problems for the Chinese companies involved in solar PV projects there. This contributed to the bankruptcy of three of the companies, Europe Suntech, Chaori Solar and Hairun Solar, between 2013 and 2016.

“It is hard for us not to conclude that CDB may have gotten burned in all three cases,” conclude Gallagher and Bo. This early negative experience of overseas solar financing is likely to have contributed to the banks’ caution and reservation about loans for renewables projects.

Finance for renewable projects in the South

Financing for projects in Africa, South Asia (Pakistan) and Latin America (Argentina) have taken on a very different, and overall more reliable, mechanism. Most fundamentally, financing for projects sees significant government involvement, providing far greater security. In many cases, governments themselves are the borrowers.

Loans to these countries tend to take the form of preferential export seller’s credit (Argentina, Ethiopia) or concessional loan (Kenya), making up a total of 90% of all the loans to this group of countries from 2000 to 2018. At 2-3%, their interest rates are low, and repayment periods of 10 to 15 years come with significant flexibility. The authors cite the case of CHEXIM’s loan to the Cauchari Solar Park I, II, and III in Argentina, with an interest rate of 3% and a repayment period of 180 months, with a grace period of 60 months.

CHEXIM is by far the biggest lender to these “global south” countries, having issued more than USD 1.2 billion between 2013 and 2017, compared to USD 341 million to date from the CDB.

As well as a high level of government involvement, the financing deals with these countries are almost always conditional on the use of Chinese EPC in the project, emphasizing the export expansion incentives of the two policy banks.

The government-to-government loan making model in Argentina, Ethiopia, Kenya and Ethiopia has proven reliable and provided “unambiguous wins” for the two banks, Gallagher and Bo write. The problem with this mechanism, however, is that the heavy involvement of bilateral government deal making means that a rapid scale up of the mechanism is unlikely.

Cracking the puzzle

With the world off track on the global Sustainable Development Goals and Paris Agreement climate commitments, where support for the large scale deployment of solar and wind power will come from is a critical question for the world. China, as the world’s solar and wind power leader and a country hungry for overseas markets for its industrial output, must be a key partner in meeting those goals. Just as they did in the rapid expansion of wind and solar domestically, China’s two policy banks could play a critical role, especially in energy generation capacity hungry Belt and Road countries. To date, however, that finance has been largely missing.

Gallagher and Bo’s exploration of the puzzle helps to explain some of the reasons why overseas financing for renewables from the CBD and CHEXIM has been in such short supply. Though they believe we are unlikely to see a major change in these financing dynamics any time soon, based on their understanding of the puzzle they do offer advice for those seeking to promote and attract Chinese policy banks’ support for renewable energy projects on the Belt and Road:

“For countries that want to turn to China for help with their solar and/or wind power expansion,…they will have a better shot if their governments step up to the plate and play a more proactive role in engaging the two Chinese policy banks and working out an arrangement in their favor.”

Railpolitik: the strengths and pitfalls of Chinese-financed African Railways

Ethiopia is tapping into both Chinese and Turkish financing for its railway ambitions. The difference illuminates the pros and cons of China’s model of overseas infrastructure development.

By Chen Yunnan

Chinese railways are crisscrossing the world. Driven in part by domestic competition in a saturated infrastructure construction market, Chinese state-owned enterprises (SOEs) are increasingly seeking projects overseas, constructing new transboundary high-speed rail projects across Southeast Asia, and in Africa, new standard gauge railway (SGR) projects in Nigeria, Kenya, and Ethiopia. These projects have become a way to offshore China’s excess capacity in its industrial sectors, boosting Chinese manufacturing through a ‘supply chain export’ model where railways, locomotives and equipment are offered as a package to recipient governments in Africa and elsewhere, and conditional on the generous loan finance from China Eximbank that supports them.

These projects have constituted some of Africa’s largest lending from China. Up to 2016, 31% of China’s total lending in Africa has been in the transport sector: of this, over a third went to the railway sector. Many projects feed into existing domestic and regional corridor plans, but they have also become absorbed into China’s Belt and Road Initiative (BRI), particularly in the east African region. Railways also hold symbolic power in the China-Africa relationship. The first Chinese-built railway, the Tanzania-Zambia (Tazara) cross-border ‘friendship railway’, was built in the 1970s, at the height of the Cold War and China-Soviet tensions, when China was on a desperate search for international allies. It remains a potent symbol of contemporary solidarity and cooperation between China and its African partners.

But as this case study of Ethiopia’s engagement with China’s railway financing shows, the “China model” of supporting railway expansion in Africa comes with both strengths and constraints. Though “debt sustainability” concerns loom large in conversations about railway projects, the difficulties experienced in Ethiopia’s railway projects are more directly linked to its creditor-debtor and employer-contractor relationships formed under those deals. A parallel case of a Turkish-financed railway project, constructed sequentially after a major Chinese-line, highlights the pros and cons of the politically-oriented China model vis a vis a more transactional, commercially-motivated project.

Research for this case study in 2018 and 2019 involved several months of fieldwork investigations, including site visits to operational and under-construction railways, as well as around 40 interviews with representatives from the Ethiopian Railway Corporation (ERC), Chinese and Turkish contractors, and other managing agencies working on the project. Interviews were semi-structured, and conducted in English and Mandarin Chinese.

Ethiopia’s Railway Ambitions

Ethiopia has had perhaps one of the most ambitious railway development schemes in Africa, leveraging Chinese as well as other foreign finance for its railway network. In 2007, the Ethiopian Railway Corporation (ERC) was created to oversee the construction of a new planned network spanning 5,000km. This network was seen as part of a wider industrialization and export-oriented growth strategy to connect major planned industrial zones across the country—many of which have Chinese involvement—to the sea port in Djibouti, which was also financed and constructed by Chinese institutions. Crucially, this is the justification on which the railway is supposed to make economic sense.

Economic potential—in generating trade and connectivity, and in encouraging technology transfer through foreign investment—is one of the main allures of railway technology. In China’s own domestic experience, the development of its locomotives industry benefited directly from German and Japanese technology. Further back, the construction of many of China’s main arterial railways, and the creation of professional railway institutions owed much to colonial-era foreign concessional railways by British and American companies. However, this form of technology transfer is not automatic. The Tazara railway’s decline after the departure of Chinese engineers showed a failure of management and the insufficiency of knowledge transfer.

As well as a new urban light rail project in Addis Ababa, Ethiopia has so far constructed two new standard gauge railway lines. The first, from Addis Ababa, crosses the border towards Djibouti (marked in red below) ; the second, a branch from the city of Awash northward to Weldiya, eventually to connect the trunk line to the north city of Mekele in Amhara (marked in green below). All these projects, including the light rail, are notable for being the first electrified railway projects in sub-Saharan Africa.

Ethiopia railmap

A Tale of Two Financiers

The Ethiopia case is particularly illuminating because at the same time, the country is tapping into two very different pools of funding and construction expertise to realize its railway ambitions.

Ethiopia’s first route, from Addis Ababa to the port of Djibouti, is Chinese constructed, by a joint consortium of China Railway Engineering Corporation (CREC) and China Civil Engineering and Construction Corporation (CCECC), and financed by China Eximbank through a loan of US$2.5bn. The second line from Awash to Weldiya, is a Turkish/European project, built by Yapi Merkezi, and financed by a consortium of lenders including Turkish Eximbank, who lent US$300mn, and Credit Suisse at a tune of US$1.1bn. While both are similarly financed through commercial loans and an EPC (Engineering, Procurement and Construction) contract, the different financiers and contractors at play has entailed a significant divergence in how the ERC and other agencies have been able to leverage their contractor and financier relationships, with implications for project implementation and for the agency and choice of recipient host governments.

One major material difference between the two railways’ construction are the different standards and technologies used between the two sets of contractors. The Chinese Addis-Djibouti line, completed in 2018, uses Chinese Class 2 technical standards, and CTCS (Chinese standard) signaling systems that controls locomotive speeds above 120km/h. The Turkish-built Awash-Weldiya line, meanwhile, employs European technical standards, including social and environmental safeguards, and employs ERMTS (European standard) signaling systems. As of 2019, the project was over 95% complete. It will likely require several more years for electrification and testing before it will become operational however, as well as a further challenge of integrating the operation of the two railway lines.

The two railway projects also show a very different creditor-debtor relationship, influenced by the nature of how the financing for the projects arrived. This in turn impacts the relationship between the ERC and the project contractors, as well as the implementation of the projects. For instance, the Turkish contractors Yapi Merkezi won the Awash-Weldiya project through a traditional competitive bid, where crucially, their promise to broker finance from European creditors for the EPC contract was key in winning them the bid. Meanwhile, the Chinese railway project was premised on a strategic bilateral relationship: financing was pledged first via high-level discussions between Chinese and Ethiopian governments. Contractors were subsequently determined on the Chinese side, through a selection process of the major national railway contractors—while this process is competitive, it is limited to only Chinese firms and decided in Beijing, not in Addis Ababa. Though the Turkish project also enjoyed export credit financing, the project due to its blended finance nature was far more commercial and transactional in its relationship between host and contractor.

The implications of this for the ERC’s scope of agency is significant. Contrary to common perceptions, the major advantage of choosing Chinese finance has been the flexibility in the financial relationship. Ethiopia has long-faced challenges in its foreign exchange that has seen it struggle to service external debts. With its Chinese partners, the ERC has been delaying payments on loans and on the management fees to the contractors for the first year since the project started operating. In September 2018, Ethiopia renegotiated the tenor of loan to 30 years from the original 15-year agreement, signalling a major concession on the part of China. With its European lenders, however, Ethiopia has never missed a payment.

In this area, Ethiopia has seen increased scope for maneuver. It has prioritized its European private creditors where it has less leeway, due to higher reputational and financial costs in non-repayment. Conversely, the strategic and political relationship that Ethiopia holds with China as a regional partner means it has been able to exploit the flexibility of Chinese finance that the bilateral Ethiopia-China relationship offers. Put simply, the political elevation of the railway as a ‘Belt and Road’ project means it is politically unfeasible to allow it to fail, giving the Ethiopian government significant leverage and flexibility over loan repayments.

The Double Edge of Chinese Loans

Despite the corollary of this, the ERC faced a bigger struggle when facing its Chinese contractors in applying pressure and getting compliance compared to the Turkish, where they had a more transactional commercial relationship. In this sense, the tied nature of financing has been a constraint to the exercise of agency. Firstly, in the inability to choose the contractor, which was a condition of financing in both Chinese funded light rail and standard gauge railways. Secondly, in the appointment of Chinese construction company representatives as the employer’s representative,, a position which generally takes the project owner’s side (in this case the ERC) in holding contractors to account on the project implementation and construction. This was the case in the Addis-Djibouti railway, where ERC were compelled to select CIEEC as the employer’s representative. This had repercussions for the level of trust and accountability between the ERC and contractors, as the ERC perceived the employer’s representative and contractors to be in a form of ‘collusion’, and not adequately representing the ERC’s interests.

The political model of finance, despite its advantages in terms of loan repayment, has led to an ineffective employer-contractor relationship. One example of this can be seen in when the project owner (ERC) tried to push the contractor CREC to fulfil a commitment to procure and provide spare parts for maintenance work on the light rail. Pushing the contractor directly was ineffective. Contractors were slow to respond to demands and, with the ERC behind on payments to the contractors for railway operations and management fees, their leverage over the firms was limited. Instead, according to the ERC’s manager on the light rail, they had to pull on political levers, calling on the Chinese embassy and economic counsellor’s office, who then applied direct pressure to the firms to order and pay for parts, and to pay for a new maintenance workshop.

This poor relationship between host and contractor also has implications for the long-term sustainability of the project, particularly for skills and technology transfer. Interviewees at the ERC expressed a sense of missed opportunity in the construction phase of the Addis-Djibouti railway, in terms of the potential for learning and knowledge transfer on railway construction for local staff. There is also a distrust of the firms’ interests in technology transfer on the part of Ethiopian respondents, who see genuine capacity building as a conflict of interest with the incentives of the Chinese companies to hold onto their intellectual property and knowledge, ensuring their continued involvement in the railways’ management. ERC has since learned from this experience and built in an engineering skill transfer component in its Yapi Merkezi deal.

The very fact the two contractors—specialists in construction, not operation—remained in the first place to take over the operations and management signals a failure of capacity building during the early phase. Significantly, CREC and CCECC were both pressured to extend their operation and management role beyond the initial six years agreed in contracts..

Under pressure from China’s Ministry of Commerce (MOFCOM) and the ERC, the firms have later set up a capacity building center outside of Addis Ababa, conducting in-house training sessions themselves for staff in maintenance, engineering, and even driver training. Further funding via Chinese aid have supported student exchange for ERC workers at several Chinese universities with railway specializations, and in 2018, MOFCOM pledged funds for a new railway academy, which will specialize in railway vocational training.

In this, the flexibility of this coordinated Chinese model abroad compensated for the poor employer-contractor relationship. The Chinese contractors have continued to fulfil the operation and management parts of the contract, despite late loan payments on the part of the cash-strapped ERC. The comprehensive breadth of skill transfer initiatives involved from both state actors and contractors, in financing new colleges, student exchanges and training courses, are advantages that competitors like Turkish Yapi Merkezi, cannot fulfil, and do not have an interest in.

Furthermore, these state-led and firm-led training and technology transfer initiatives offers not only the transfer of technology, equipment and contractors, but also whole systems of management: the dissemination of China’s own railway technical and managerial standards, operating procedures and protocols, all of which will have a similar impact on the development of Ethiopia’s young railway bureaucracy—in the same way that China’s own railway borrowed from European and foreign partners. This can generate potential path-dependence effects that can ‘lock-in’ advantage for Chinese firms and technology in the future. This can already be seen in the case of the Turkish-built railway, where despite the use of European construction techniques, the design of the railway itself had to conform to Chinese locomotives, and the signaling system to be integrated with the Chinese system that carries the rest of the network.

Railpolitik

The burst of Chinese lending overseas following the global financial crisis has been a boon for the development of Africa’s nascent railway sector, and a means to offshore China’s domestic capacity and promote its own railway technology. After this initial exuberance, however, the tide has been slowing down. Debt sustainability has become a keenly politicized issue in Ethiopia and elsewhere, particularly given the railway’s operational challenges. Low uptake, power supply issues, and regional ethnic grievances have complicated the operation of Africa’s first electric railway. This has become a risk to its economic profitability in the long-run—and thus the sustainability of the debt that financed it.

Notably, none of the China-financed railway projects have had independent financial feasibility studies conducted. They were driven instead by the interests of winning contracts for Chinese firms and technology manufacturers overseas, and to satisfy the infrastructure ambitions of Ethiopian political elites. However, the lingering question of the projects’ financial feasibility has induced greater risk aversion on the part of both Chinese and Ethiopian partners, seen in the skeptical comments from state insurer Sinosure, and also puts into question the future expansion of the railway network. A branch extension from the Turkish-built line from Weldiya to Mekele in the North, contracted to the China Communications Construction Corporation (CCCC), for example, has also stalled due to lack of financing. Further loans from China Eximbank will not be forthcoming until the Addis-Djibouti line can be proven to work.

As China’s Belt and Road Initiative continues to broaden in scope, the case of Ethiopia’s railways illustrates the strengths and pitfalls of China’s coordinated model of infrastructure finance. Compared to the European and Turkish project, the advantage of Chinese lending for Ethiopia’s railway infrastructure has been significant leniency and flexibility in the creditor-debtor relationship. This has enabled the ERC to expand its agency in the relationship and ability to manage and prioritise its multiple lending partners. However, there is a trade-off to this flexibility: it has not necessarily lead to a better project. In the case of the Addis-Djibouti railway, it has undermined the ability of host government agencies to oversee and control foreign contractors, which is crucial for new institutions like the ERC, as it seeks to build its own experience and capacity through working with foreign partners.

Chen Yunnan is a Senior Research Officer at the Overseas Development Institute (ODI) and PhD Candidate at Johns Hopkins School of Advanced International Studies. She was previously a Global China Initiative fellow at the Global Development Policy Centre, Boston University. At the SAIS China Africa Research Initiative (CARI), her research focused on the rise of China in global development, particularly infrastructure finance in Africa. She has worked at the Institute of Development Studies, Sussex, and China Dialogue, London. She holds an MA in political science from the University of British Columbia, and a BA in politics, philosophy and economics from the University of Oxford.

Looking at the Belt and Road through the lens of Marxist geography

The Belt and Road is driven by a capitalist logic recognizable to any large economy

By Tom Baxter

In November last year researchers from the Transnational Institute (TNI) wrote a framing paper on the Belt and Road Initiative (BRI) on behalf of the Asia Europe People’s Forum. The paper provided a quite different and refreshing perspective on the BRI, seeing it through the lens of political economy and, in particular, Marxist geographer David Harvey’s theory of the “spatial fix” for economies facing crises of overaccumulation. Steering clear of the noise of proponents’ and opponents’ political sloganeering around the Initiative, the researchers dug into the underlying economic drivers of the Belt and Road. Such an approach is potentially enabling for advocacy groups in that it helps to identify different actors and their motivations within the Initiative and provides new discussion points and perspectives for researchers and anyone else interested in the Belt and Road.

Panda Paw Dragon Claw interviewed the three authors of the framing paper, Stephanie Olinga-Shannon, Mads Barbesgaard and Pietje Vervest, on their critical perspectives on the Belt and Road Initiative.

PPDC: Looking at Belt and Road as a whole, many have seen the motivation for the initiative through the lens of geopolitics – China attempting to increase its influence around the world. In your briefing, however, you reject this view in favor of the macro-economic push factors, which you describe as a “capitalist crisis with Chinese characteristics”. Can you tell us more about this reading of the BRI?

TNI: Viewing the BRI through the lens of political economy, rather than geopolitics, a different picture emerges. Rather than a ‘grand strategy’, we see the BRI as a broad and loosely governed framework of activities seeking to address a crisis in Chinese capitalism. Under the capitalist mode of production, crises routinely emerge and – as argued by geographer David Harvey – an indicator of such crises is the “overaccumulation of capital”. This overaccumulation can be defined as: “some combination of surplus capital looking for productive investment, surplus commodities looking for buyers, and surplus labor power looking for productive employment”. This then requires some sort of fix. As Harvey argues, such fixes are discernible throughout the history of capitalist development. For example, Britain’s export of surplus capital and labor in the nineteenth century to the United States, Australia, Argentina and South Africa. Or more recently, the export of surplus capital from Japan in the 1960s, South Korea in the 1970s and Taiwan in the 1980s. Significant parts of the export from the latter three in fact went to China and helped build up productive capacity there. In the framing paper, we argue that the BRI needs to be seen in the context of such fixes that have also been taking place in China to solve moments of “overaccumulation”.

As we try to show, similar activities to those currently happening under the BRI, in fact began in the 1990s in a similar moment of overaccumulation, as Chinese companies began operating abroad, including state-owned enterprises (SOEs). Thus, in this view, the BRI, like ‘Going Out’ and ‘the Great Western Development Project’ before it, provides a broad framework to incorporate and encourage these activities that seek to provide a solution to overaccumulation.

Almost any activity, implemented by any actor in any place can be included under the BRI framework and branded as a ‘BRI project’. This campaign mobilisation approach to policy making is common in Chinese economic policy. It allows Chinese SOEs and provincial governments to promote their own projects in pursuit of profit and economic growth, while the central Chinese government maintains a semblance of leadership and control over the initiative. Where necessary, the central Chinese government plays a strong politically supportive role, through local embassies, or national ministries or agencies such as the National Energy Administration or the Ministry of Commerce. But at the same time, with such a broad framework, and a multitude of actors involved, the Chinese government has struggled to effectively govern BRI activities.

PPDC: In particular, you talk about BRI as a “spatial fix” to China’s economic woes. Can you explain more about this concept?

TNI: David Harvey explains that when capital, for different reasons, can no longer find profitable outlets, crises characterized by surpluses of money, commodities and industrial capacity emerge, leading to “mass unemployment of labor and an overaccumulation of capital”. Capital is understood here as a process rather than a thing, whereby money is invested into productive labor in order to earn more money. If this process stops, surpluses of capital sitting ‘idle’ – that is, not in process (including money, commodities and machines) – emerge side-by-side with surpluses of labor power (meaning workers, who are unemployed). Under capitalism, such barriers to the process of capital can lead to situations of social unrest. Under globalized capitalism, any and all governments must manage these crises, if they are to remain in power.

David Harvey cover

Such crises are often managed by what Harvey terms a ‘spatial fix’, that is, as Harvey writes in his book Seventeen Contradictions and the End of Capitalism, the “absorption of these surpluses through geographical expansion and spatial reorganisation”. The crux of spatial fixes is to provide new opportunities for productively combining capital and labour in pursuit of profit. Spatial fixes can take many forms, such as opening up new markets by breaking down trade and investment barriers or building large-scale infrastructure projects to absorb surpluses while facilitating expansion into new territories. While these spatial fixes have occurred throughout the history of capitalist development, they are necessarily unable to permanently resolve the crisis, they merely delay or relocate it. In the framing paper then, we try to conceptualise the BRI as encapsulating the latest in a series of spatial fixes happening since the 1990s.

PPDC: What do you see as the principal motivations for Chinese companies, in particular SOEs, to invest along the Belt and Road?

TNI: We see profit as the main motive for Chinese companies, including SOEs, to invest abroad. Since reforms to corporatize Chinese SOEs in the 1990s, they have been required to become self-funding and their success is evaluated by the State-owned Assets Supervision and Administration Commission (SASAC) primarily based on economic targets, including profit. Investments and projects abroad are one of the means through which these SOEs are pursuing profits. This pursuit can take many forms, e.g. from the construction of infrastructure, to hunting for cheaper manufacturing opportunities, to constantly reducing shipping costs in different ways.

We aren’t thinking in terms of ‘along the Belt and Road’, as this assumes one big physical project, but see these as a broad range of investments branded under the BRI framework. Investments have also been branded by their promoters as ‘BRI activities’ in countries that have not signed Memorandums of Understanding (MOUs) relating to the BRI.

Branding investments and projects under the BRI provides Chinese companies, especially SOEs, with financing opportunities, political support for projects both from the Chinese government and potentially from the government where the project is located, and the prestige of their project being part of a global initiative.

PPDC: Given that BRI is designed to release the pressure valve on China’s overcapacity industries, many of which are polluting heavy industries, to what extent do you think the Belt and Road can really be “greened”, an intention that was reiterated at last year’s Belt and Road Forum in April?

TNI: ‘Greening’ the BRI will be challenging given the scope of the BRI and its focus on mega infrastructure and mega production. As renewable energy capacity has increased in China, some Chinese companies have developed strong technology and experience in this field. However, the use of this capacity and technology has not necessarily been used in BRI-branded projects outside of China. Furthermore, activists and researchers are increasingly showing there is also a ‘dark side’ to renewables, for example Corporate Europe Observatory’s research on so-called ‘renewable gas’.

The type of energy projects implemented in participating countries also depends on what these governments want. Where there is a demand for coal power and large-scale hydropower, profit-seeking Chinese companies will be keen to fulfil these demands. At the same time, we have seen strong lobbying from Chinese energy companies to promote their projects. In Myanmar, for example, hydropower companies, with the support of the Chinese Embassy in Yangon and the National Energy Administration, have lobbied the national government for the expansion of large-scale hydropower in the country’s north.

We also need to think about what is meant by “green”. In China, large-scale hydropower is viewed as ‘green’ and has been key to the reduction of China’s energy emissions. Large-scale hydropower has, however, had devastating impacts on communities affected. It is important that ‘greening’ the BRI does not mean destroying the lives and livelihoods of those involved.

PPDC: In contrast to placing China’s domestic economic issues as the main drivers of the BRI, you describe the geopolitics of Belt and Road as “a consequence” of the Initiative. Can you tell us a bit more about this perspective?

TNI: We argue the primary drivers of BRI are political-economic. The types of profit and growth driven activities currently being branded under the BRI were implemented long before the BRI was announced. However, the BRI does encourage the building of political and public support for the initiative (BRI priority areas number one and five), and trade and investment on such a mammoth scale is apt to change the economies and relations of many places involved, at both the national and local level. The BRI has already impacted relations between China and participating countries, and between participating and non-participating countries. Japan and the United States, for example, have launched similar initiatives in response to the BRI, in an attempt to prevent their own influence from diminishing.

PPDC: If the geopolitical implications of BRI are a consequence rather than a motivating factor, why do you think the initiative has triggered so much scepticism from Western governments, in particular the US?

TNI: Regardless of the drivers of the BRI, many western governments are viewing the BRI through how it impacts their interests (including the interests of capital emanating from their respective countries). As the BRI is increasing competition and BRI-branded projects are changing the physical landscape and movement of goods, people, resources and energy, this is undoubtedly impacting those interests. However, just because the BRI is perceived to be driven by geopolitics, doesn’t mean that it is.

PPDC: You also explain that China and the BRI are, contrary to more commonly heard interpretations, not trying to overthrow the international order, but rather are proactively engaging with international organisations to create legitimacy for and smooth the path for the initiative. Can you tell us more about how China is doing this and the likely intentions and outcomes?

TNI: In recent years we have seen a significant increase in the Chinese government’s involvement in the UN and other international organisations, including funding, personnel and cooperation. At least 29 international organisations have signed MOUs relating to the BRI, and the Chinese government, for example, is promoting the BRI as a key means to achieving the UN Sustainable Development Goals. This builds legitimacy for the BRI and seeks to change the perception of the BRI from a threat, to the BRI as a global and cooperative initiative to promote development. The Chinese government, for example, has also been a key advocate for a UN Treaty on Transnational Corporations and Human Rights. Another key moment was President Xi’s 2016 speech to Davos, where he made it clear that the Chinese government was willing to be a champion of free trade, as President Trump espoused more protectionist trade policies. These commitments show that the Chinese government is seeking to play a key and increasingly prominent role in existing international organisations, rather than overthrow them.

A notable exception is the establishment of ‘BRI courts’ for commercial and investor-state dispute arbitration. Here, rather than work within the existing (and flawed) international arbitration system, the Chinese government is establishing their own courts under the People’s Supreme Court. This is likely to create a venue for arbitration that is more in favor of Chinese companies but follows the same model as similar venues in Singapore, Dubai and Hong Kong. The Chinese government is, therefore, not overthrowing the existing system, just tweaking it in favor of Chinese actors. We are, therefore, likely to see an international system that increasingly involves and favors Chinese actors, but not an overhaul of this system.

PPDC: Looking at BRI as a “spatial fix” underpinned by economic considerations, what are the most hopeful pathways for better environmental and social governance of the Initiative?

TNI: Viewing the BRI as a broad and loosely governed framework of many activities, rather than a pre-planned grand strategy, is politically enabling for activists on the ground, in that individual BRI activities (though large) are thereby not so different from other projects that they may have successfully challenged. Rather than being reduced to mere pawns in a larger geopolitical powerplay between governments, people can be mobilized and organized to engage in and/or challenge these activities as they see fit. While still very difficult, it is easier to halt or alter individual activities than an entire grand strategy hence opening up pathways for better environmental and social governance of BRI-branded projects.

Some activists and NGOs have had success halting BRI projects taking a ‘follow the money’ approach. Financiers of BRI branded projects, in some cases, have been willing to review their financing if the project is shown to be unprofitable or harmful. For example, in March 2019, the Bank of China agreed to review their financing of the Batang Toru hydropower dam in Indonesia following concerns raised by campaigners. The bank has not yet announced the results of their review and the financing for the project remains in doubt. However, activists opposing the dam continue to be threatened and in October 2019 activist Golfrid Siregar died in suspicious circumstances.

Another successful approach has been through litigation in national courts. For example, in Kenya, the deCOALonize campaign won a court case to stop the construction of a BRI-branded coal-fired power plant in Lamu. Their case was based on environmental grounds and the companies’ lack of consultation with affected communities.

Lastly, the Chinese government is sensitive to criticism and does not want to be perceived as an imperial actor. As discussed above, the self-branding nature of BRI activities means that the brand is difficult to control. This presents risks for the Chinese government, who cannot control, and may not even be aware of harmful BRI-branded projects abroad. This sensitivity can also provide an opening for activists and NGOs.

PPDC: Anything else you want to add?

TNI: Chinese investments are often racialized in a way that investments from other countries are not. That is, investments are referred to as ‘Chinese’ or by ‘China’, while investments from other countries are mostly viewed as from a specific company. For example, an international investment by Shell is rarely seen as ‘Dutch’ investment but investment by Shell the company. It is also often assumed that the activities of Chinese SOEs are under the tight control of the central Chinese government, when in reality these enterprises are loosely governed by central or provincial government agencies with limited capacity. As profit-seeking companies, they are, in fact, not innately different from other international companies. It is important that we refer to individual Chinese actors, such as companies and provincial governments, by their names so as not to racialize investments and contribute to anti-Chinese sentiment.

Stephanie Olinga-Shannon researches the Belt and Road Initiative at TNI, with a particular focus on Myanmar.

Mads Barbesgaard works on agrarian and environmental justice and land and ocean politics at TNI and teaches at the Department of Human Geography at Lund University @Madsbarbesgaard.

Pietje Vervest is an economic anthropologist coordinating TNI’s economic justice program.

Belt and Road actors brace for coronavirus shock

The epidemic is already disrupting some BRI operations but SOEs are getting prepared for more long lasting impacts

By Ma Tianjie and Tom Baxter

Up to the point of writing, the entire country of China has been at war with a disastrous outbreak of a novel coronavirus (2019-nCov) for three weeks, with no end in sight. The epidemic has infected more than 35000 people and killed more than 900. The virus has already claimed more lives than SARS, and the numbers are still growing rapidly.

The immense disruption to all aspects of life in China is clear for anyone to see. Wuhan, the epicenter of the outbreak and a city of 11 million, is in total lockdown, as its hospitals are overwhelmed by patients seeking medical attention. The rest of the country is half-paralyzed by travel restrictions and neighborhood seal-offs that keep most of its citizens confined at home. Schools are holding classes online and businesses are struggling to keep themselves afloat.

China’s overseas operations, from power plants to railway constructions, are also not immune to what’s going on at home. According to a tally kept by the Chinese National Immigration Agency (NIA), 128 countries have installed border control measures against Chinese citizens or people who have visited China. These measures range from Indonesia and Singapore’s strict ban on entry or transit of non-nationals or non-residents who have been in China within the last 14 days to the milder measures of the UK, where direct flights from Wuhan are to be checked. The disruption to the international movement of both people and goods is already sending shuddering shockwaves to China’s expansive presence across the globe.

2002041157560512970 — A quarantine space at a Power China overseas camp. Image: Power China

Scrambling SOEs

The outbreak derailed what would otherwise look like a brilliant start to 2020 for the Belt and Road Initiative. From January 17-18, President Xi Jinping made a state visit to Myanmar. His handshake with State Counsellor Daw Ang Sang Suu Kyi delivered a basket of key outcomes for the BRI that some media claimed would “remake the country”. Among them, the signing of the Letter of Intent for Yangon New City and the handover of Feasibility Study Reports of Mandalay-Tigyaing-Muse Expressway & Kyaukpyu-Naypyitaw Highway Projects are important progress for China Communications Construction (CCCC), one of the largest state owned enterprises (SOE) operating on the Belt and Road, specializing in building ports and roads.

Two days after the celebratory meeting between the leaders, on Jan 20, the coronavirus situation in Wuhan escalated into a national emergency, when top Chinese experts alarmed the country of human-to-human transmission and infected medical workers. And a national response was required. By Jan 29, CCCC was in a war posture to combat the outbreak, with units across the company’s massive organizational chart all mobilized to “win the war against the epidemic”. The company’s public records were not without worries. At a Feb 5 meeting, top executives instructed that the company should “minimize the impact of the outbreak” and come up with concrete counter measures to protect overseas projects with national strategic importance.

CCCC is not the only SOE scrambling to respond to the sudden deterioration of the situation. Power China, a major contractor for constructing power plants globally, provides a snapshot of the virus’s impact. The company immediately implemented traffic controls at its overseas bases, freezing holiday plans of all staff members on site while running health checks on anyone who had travelled to China two weeks before. Quarantine spaces were created and safety supplies such as facial masks were distributed at the bases. Moreover, the company also mobilized its overseas teams to source safety gears in their respective countries and ship them back home. In some cases, such as Bangladesh, the company worked closely with the Chinese embassy and the local authorities to collect and report the whereabouts of staff members and follow quarantine procedures. In other cases, such as Cambodia, the company went further to help communities living near its base camp to implement basic prevention measures such as sterilizing public spaces.

2002071642144905220 — Power China staff helping Cambodia neighborhood to disinfect door handles Image: Power China

Contract worries

The SOEs’ concerns go beyond just inconvenience at their overseas bases. The severe chokehold on the movement of personnel, goods and supplies is already threatening to delay project progress and trigger non-compliance clauses in project contracts.

In more than one case, SOEs referred to such risk in their instructions to staff. Power China reminded its legal departments to study local laws and contract terms to “get prepared for ensuing compensation claims.” CEEC, another big energy infrastructure contractor, asked its Philippines project company to start initial communications about potential compensation claims.

On 7 February, a Beijing law firm published an article outlining a few scenarios where the coronavirus outbreak may transform into legal risks to Chinese overseas projects. One obvious risk is the inability to send a large number of Chinese laborers overseas in the short term. The lawyer advised that Chinese companies should consider switching Chinese sub-contractors to local suppliers of services such as construction in order to avoid delaying project progress.

Some projects are already experiencing such difficulty. Bangladeshi media has reported that thousands of Chinese workers and engineers are now stuck at home after going back for Chinese New Year holiday, unable to return to work on a few priority projects such as the Padma Bridge and Payra Thermal Power Plant. The Bangladeshi government has already announced that this will lead to delays on a number of priority infrastructure projects, including postponement of the commissioning of the Payra coal power plant, which was supposed to begin commercial operations in early February. Similar situations have also been reported at Indonesian coal plants and nickel smelters with Chinese SOE involvement.

Another risk, according to the law firm, is “quarantine at anchorage” rules imposed by destination countries that may affect maritime routes. Such rules would not allow crew members to disembark before obtaining a quarantine officer’s permission. Malaysia is one of the countries that has implemented such measures. The risks of delayed or failed delivery of goods and equipment, and the ensuing costs at ports are something Chinese companies have to grapple with now.

A tricky aspect is that even “force majeure” clauses, already invoked in three contracts by CNOOC, according to a recent Reuters report, might not shield Chinese companies from legal liabilities unless such events as an epidemic outbreak have already been specified in contracts.

“Friend in need”

Commercial considerations aside, the outbreak appears to have become a litmus test of countries’ friendship with China, potentially redrawing the diplomatic friend/foe map across the globe.

In a telling episode, the BBC reported that China’s Ambassador Liu Xiaoming complained to Stanley Johnson, father of the UK’s Prime Minister, about his son not sending a personal message of condolence to President Xi.

With the government facing massive public discontent over its handling of the Wuhan situation at home, it is actively seeking international recognition and endorsement of its response to the epidemic to buttress its legitimacy. The effort has developed into an all-out diplomatic campaign that is two-pronged: 1) proactively seek messages of support from various levels of a foreign government; 2) scalding or threatening those who Beijing considers as “over reacting”.

The World Health Organization is an apparent target of such effort, with its Director General, Dr. Tedros Adhanom Ghebreyesus, placing lavish praises on China’s efforts to contain the epidemic. China’s ambassadors across the globe are also, like Liu Xiaoming, working hard to secure more such messages of support. Ambassador to the Philippines, Huang Xilian, sent back a message from Davao City Mayor of being confident that China will prevail over the disease under the leadership of the Chinese government. Li Jiming, Ambassador to Bangladesh, passed back praises from Bangladeshi ministers, commending China’s “responsible and transparent stance over the issue.” Probably the most impressive of all, is the message delivered in person, by Cambodia’s Prime Minister Hun Sen, who paid a visit to President Xi in Beijing and to the epicenter, Wuhan, on Feb 6.

Some countries, in contrast, are at the receiving end of China’s ire. Ministry of Foreign Affairs spokesperson Hua Chunying’s lambasting the US for implementing travel bans got a lot of media coverage last week. Lesser noticed was the stern words of China’s Ambassador to Indonesia, Xiao Qian, to the Indonesian government on certain trade restrictions the country has introduced. Speaking of Indonesia’s potential import ban on Chinese food and beverage, the Ambassador warned publicly:

“This kind of overreaction will harm the two countries’ normal trade relations and possibly give rise to serious consequences that neither side would wish to see for the two countries’ relations and future cooperation.”

Indonesia has since backpedaled from the position, claiming that the proposed ban only applies to live animals. But given China’s past practice of using economic leverage to punish “unfriendly” behavior from another country, the scuffle’s impact on the future of China-Indonesia relations, particularly Belt and Road projects in Indonesia, is worth watching.

In its hour of greatest need, just how well did China’s Belt and Road allies show up? And how will they be judged on their performance?

So far there is still no clear sign that the epidemic is going to be under control very soon. Dr. Zhong Nanshan, China’s top expert advising the State Council on the coronavirus, told reporters on Feb 11 that a turning point “might be expected in late Feb” but “no one can be certain.” Facing mounting pressure to reignite the frozen economy, the central government is cautiously loosening some confinement measures in non-epicenter regions. But this creates new uncertainty over whether it could slow or negate some of the earlier gains of containing the disease. A black swan event of epic proportions, the coronavirus outbreak is affecting almost every corner of Chinese politics and economics in the first six weeks of 2020. In what shape will BRI come out of this situation depends on how prolonged China’s war against the epidemic will be and how countries realign themselves in this war.

Panda Paw Dragon Claw

The puzzle of China’s missing solar and wind finance along the Belt and Road (Part 2)

Like this:

How will China handle multiple debt repayment crises?

Like this:

Losing Steam: China’s Overseas Development Finance in Global Energy

Like this:

Covid-19 and Chinese Soft Power in Africa: Q&A with Ambassador David H. Shinn

Like this:

Bring back the “Bandung Spirit” in China-Africa relationship

Like this:

After Guangzhou, 3 things will shape China-Africa “brotherhood”

Like this:

The puzzle of China’s missing solar and wind finance along the Belt and Road (Part 1)

Like this:

Railpolitik: the strengths and pitfalls of Chinese-financed African Railways

Like this:

Looking at the Belt and Road through the lens of Marxist geography

Like this:

Belt and Road actors brace for coronavirus shock

Like this:

share:

Like this:

share:

Like this:

share:

Like this:

share:

Like this:

share:

Like this:

share:

Like this:

share:

Like this:

share:

Like this:

share:

Like this:

share:

Like this: