FOCAC exposed tension between Chinese overseas involvement and domestic public opinion
The Forum on China-Africa Cooperation (FOCAC) was a highlight of the past month and once again put China’s overseas involvement under domestic spotlight. Held in Beijing from Sep 3-5, the extravagant event brought high-level representatives from 53 African countries to two days of dialogue, deal making and celebration of China-Africa friendship. In his opening speech, President Xi Jinping announced a $60 billion package to finance development in Africa and spelled out the “5 NOs” and “4 CANNOTs” principles (五不四不能) that would lay the foundation for China-Africa relationship in the coming years. The principles mainly served as a re-affirmation of China’s long-standing non-interference, “no-strings attached” aid policy and a warning to third-party forces trying to undermine the relationship.
In many senses the forum delivered what was intended of it. Politically, it confirmed China’s commitment to the continent as a benevolent partner. Economically, it produced a long list of major infrastructure and investment deals between African stakeholders and their Chinese counterparts. And it even paid environmental dividends for the host city by bringing a week of sapphire blue sky (dubbed “FOCAC blue” by the city’s residents) which ended as soon as the forum was over.
But the high-profile forum also exposed a chronic tension between China’s overseas engagements and its domestic public opinion, a pitfall that policy makers usually strive to circumvent. As soon as China’s $60 billion pledge to Africa was made public, the Chinese Internet was buzzing with murmurs and whispers of disbelief and sarcasm. Under Weibo posts that featured President Xi Jinping’s speech announcing the renewed pledge, where comments were often censored or outright blocked, netizens reacted with emojis of dismay and disapproval.
Under Weibo posts that featured President Xi Jinping’s speech announcing the renewed pledge, netizens reacted with emojis of dismay and disapproval.
“The controversy around aid to Africa is not so much about whether such investments deliver good returns. It’s a way to express domestic frustrations. The Chinese public can be generous if their own lives are comfortable,” said one commentator on Weibo.
FOCAC happened at a tricky time when the Chinese public was anxious over a series of domestic measures on taxation and social insurance that would affect the pockets of millions of Chinese enterprises and individuals. Among those policies rolled out briefly before FOCAC, shifting the collection of pension fund deposits to the tax authority, widely perceived as more stringent in its efforts, was interpreted by the media as the government’s attempt to fill an enlarging national pension hole which would result in a net reduction of many people’s monthly take-home salary. China’s high social benefit charges have been a burden on enterprises hiring large number of employees. For years, corporates try to dodge their share of pension payments by lowering the reported salaries of their employees, while worker are more than happy to pocket more take-home salary that they can dispense on their own terms.
The government’s revenue-grabbing move touched off widespread complaints from the society, and the high-profile $60 billion pledge to Africa (equivalent to almost 400 billion in RMB) understandably received a fair amount of trolling. To some extent this represents the worst nightmare of Chinese policy makers: Chinese financing overseas is pitched directly vis a vis its domestic fiscal policies. For a long time, the Chinese government has been low-key (to the extent of being secretive) when it comes to releasing its foreign aid figures, largely because of concern over domestic criticism. Senior aid workers have openly complained about the public’s hostility towards Chinese aid overseas. The Chinese Political Compass, an online survey that maps Chinese ideological spectrum online, lists the foreign aid question in its questionnaire as one of the 50 issues dividing and polarizing the Chinese Internet.
Experts believe that the Chinese public is misguided. Wang Yiwei, a scholar at Remin University in Beijing and an expert on the BRI, claimed in a Weibo post that majority of China’s pledged financing would require return on investment. It’s not free lunch. And based on China’s track record, returns on Chinese investments in Africa are “unparalleled” by its investments elsewhere. “Chinese are not stupid. They won’t rush to a place if it doesn’t mean economic opportunities for themselves,” Wang proclaimed, “those who spread rumors about Chinese involvement in Africa are trying to create tension between the public and the leadership.”
Wang was mainly referring to the previous round of Chinese pledge made at the 2015 Johannesburg FOCAC, which also amounted to $60 billion. Within that package, only $5 billion was grant money that did not require repayment. The rest was either concessional loans (loans with below-market interest rates), or injection into equity funds that are largely market-based and generally seek (modest) profits. The new $60 billion package announced on Sep 3 is made of $15 billion of grants and no-interest/concessional loans, $20 billion regular loans, $10 billion private investments and another $15 billion dollar injection into special funds.
Information from Africa seems to bear out the claim that China talks more serious business in Africa than people generally perceive. Bright Simons, president of the Ghana-based MPedigree Network, wrote that while China appeared generous with pledges, it was strict with actually unlocking them into real financing. Of the 2015 pledge, only 2/3 (45 billion) had actually come through, most of which “in the form of sovereign-backed, natural resource securitized loans.” Zimbabwe was particularly bad at translating Chinese pledges into actual financing, redeeming just 2.5 billion of Chinese funds from over 33 billion promised over the past two decades. Angola did much better in this regard largely due to its oil reserves that allowed a reliable means to service its loan payments to China.
Weibo commentators who consider themselves endowed with a long term view urge policy makers to disregard public sentiments and stay on course of its African strategy: “You should stick with things that are fundamentally right.”
On the other hand, the Global Times‘s editor in chief Hu Xijin reminds readers that they should equip themselves with a “great power mentality:” “China will not be able to maintain its global stature today if it does not fulfill its obligations as a great power,” he wrote, “the idea that foreign assistance is immoral as long as you still have poverty inside the country represents agrarian era thinking and cannot guide our grand practices today.”
Like it or not, the architects of China’s grand schemes along the Belt and Road would probably have to tango with domestic public opinion for a while.
A Russian environmentalist’s account of the Chinese effort to engage BRI country NGOs for environmental restoration
Among the five pillars of China’s Belt and Road Initiative (BRI), “promoting people to people connection” is probably the least well understood, not just because of the intangible nature of such cooperation in general (compared with huge “connectivity” projects such as railroads and ports that are concrete in its literal sense), but also because traditionally China is often seen as lacking the kind of soft power needed to genuinely engage with the “hearts and minds” of the public in other countries.
Recently, Eugene Simonov, a Russian environmentalist and a friend of this blog, had the rare opportunity to participate in the “Belt and Road International Forum on Public Cooperation for Ecological Remediation” held from September 11-14 in Wuwei, Gansu, a drought-stricken province of Western China bordering the Gobi Desert.
Founding of the “BRI NGO Partnership for Ecological Management” (actual objectives and program are yet to be defined), Photo supplied by Eugene Simonov
The event was jointly organized by the China Green Foundation (CGF), China NGO Network for International Exchanges, and the International Forestry Cooperation Center of the National Forestry and Grassland Administration (FGA), a mixture of governmental and semi-governmental bodies charged with the task to advance “people to people connection” through environmental collaboration.
Compared with more traditional forms of accepting international students and training developing country bureaucrats, the “Green BRI” initiative, if played well, could kill two birds at once: finding an area of “people to people” cooperation that can tap into a rich pool of existing exchanges between Chinese environmental NGOs and their foreign counterparts, while reinforcing China’s “green leadership” image internationally.
As Eugene’s account shows, however, the reality is far from ideal. In many aspects the event appeared well-intentioned, but too orchestrated and somewhat awkward. Genuine engagement with BRI region civil society on environmental sustainability apparently requires Chinese actors to change their modus operanti. And the rare occasion also gives BRI country NGOs a chance to learn how to approach the Green BRI initiative.
“So I had to represent Putin.”
Panda Paw Dragon Claw(PPDC): So how did you end up at this extravagant Green BRI event in Gansu?
Eugene Simonov (ES): Foreign participants like me were invited for various reasons not necessarily related to the key theme of the event or our NGOs’ experience with the BRI. It is worth noting that two thirds of the Forum participants were Chinese FGA officials and experts, as well as functionaries of local party committees. About 15 foreign NGOs from various countries were invited, mostly with the help of the United Nations Convention for Combating Desertification (UNCCD) secretariat, as well as up to a dozen representatives from Chinese branches of international environmental groups (WWF, IFAW, NRDC, etc). Local grassroots NGOs from China’s desertification-stricken areas were neither seen or heard at the Forum.
The largest NGO delegation was the Saudi Desert Plant Cooperation Society headed by His Highness Prince Muteb. Photo supplied by Eugene Simonov
In my case, I was recommended to CGF by an Indian colleague, to whom I was accidentally recommended by Rivers without Boundaries (RwB) Mongolia when asked to find a “representative of Russia”. So I had to represent Putin, sitting at table no.1 with key cadres at banquets, rub shoulders with His Highness Prince Muteb from Saudi Desert Plant Society, and to the extent possible, behave myself.
PPDC: The Chinese government isn’t really known for its engagement with civil society groups. What’s your impression of attending a government organized NGO gathering in China?
ES: Having uneven support from governments and local communities in BRI regions and being criticized by foreign press for lack of consultation in project planning, China is eager to demonstrate its willingness to build cooperation with NGOs in BRI countries.
In particular case of this Forum, the Chinese authorities did not seek recommendation or approval from the respective governments of BRI countries to interact with foreign NGOs, which goes beyond the “government-centric mentality” expected from them. So I see it as a progressive approach and a sign of openness.
On the other hand, little effort is made so far to engage NGOs in joint planning and/or at least to get feedback from them on proposed cooperation plans. They were largely there to “demonstrate support for Green BRI” and at best seen as implementers of already proposed projects. When NGOs expressed doubts they were reminded that it’s their own decision whether to continue such cooperation. This is very similar to mode of official bilateral negotiations with China on many “joint projects”.
“Exporting green solutions like exporting industrial capacity”
PPDC: The “Green BRI” initiative, first announced in May 2017, always feels a bit vague and empty. Does the event give you any concrete idea as to what China is trying to achieve?
ES: The event shows how China’s newly established Forestry and Grassland Administration (FGA) would likely advance the initiative.
The Forum was a follow-up to the UNCCD conference held in China last year. At that conference, China made a pledge to combat desertification and “to carry out cooperation on ecological restoration” along the Belt and Road.
On the first day of the event the organizers arranged a day-long field trip to desertification control project sites of Gansu Province. We toured experimental bases of various companies designing desert-combatting technology, state-owned orchards and vineyards in oases, and poplar plantations. From the bus we only glimpsed the edge of the beautifully natural Tengger Desert, the advance of which all these fortifications are being designed to slow down.
This poplar is one of the keystone species of riparian forests at vast floodplains of Central Asian and Middle-Eastern rivers from Tarim and Indus to Amu-Darya and Euphrates. FGA believes the poplars provide important economic value to people (erosion control, fodder, tourism, wood, firewood, medicine, etc). Under the plan, a cooperative partnership will be established with local NGOs to encourage more exchanges of experience in different countries with Euphrates Poplar as a symbolic keystone species. Most activities so far are planned, however, in Xinjiang and across Northwestern China.
Slide quotes: “Populus euphratica (Hu Yang) is a symbol of the tenacity of the Chinese nation…” Premier Wen Jiabao, 2009, Photo supplied by Eugene Simonov
PPDC: So it sounds like a massive tree-planting effort along the Belt and Road?
ES: It’s slightly more than that. During the forum, the GCF also announced the launch of an international ecological restoration fund, drawn from donations from companies worldwide to promote a green economy in countries involved in the BRI. First pilot project for poplar planting abroad is planned in mountains of Pakistan along the China Pakistan Economic Corridor (CPEC), but I found no Pakistani representative at the Forum or among the listed editors of the very detailed bilingual report “Restoration of Populus Euphratica” handed out to participants.
Dozens of Chinese companies, including the very famous ELION Group which has been celebrated for its anti-desertification efforts in Kubuqi Desert, were featured heavily at the event. The whole thing makes me feel that the logic for doing such “Green BRI” projects is quite similar to the logic behind “industrial capacity sharing” along the Belt and Road, i.e. exporting Chinese industrial capacities such as power plants and steel mills to other countries. China has some mature desertification-control technology, buttressed by domestic success stories and may be shared and exported with some involvement of China companies. Whether or not the marketed approach fits local needs, ecological conditions and social demands is to be studied AFTER overall project direction has been identified.
Like high-speed railways and other “exported capacity”, success of such projects directly depends on how they match local conditions. Strategic planning and public consultations are straightforward means to increase likelihood of success. So far those tools are rarely used in early planning of BRI projects and “capacity sharing” programs.
PPDC: Were there reservations expressed at the event about this approach?
ES: First of all, I must clarify that I do not disagree with necessity to plant trees. And I see great necessity to restore natural multi-species riparian forests in Central Asia. But similar to many other scientists, I tend to view with great suspicion tree-planting projects in deserts and steppes which naturally do not support woody vegetation, unless it is done due to extreme economic need and in environmentally sustainable manner. Water availability and equitable access to its use is the key factor on which adaptation strategy in a given place depends on. For example, the key to restoration of riparian forests is in preserving adequate flooding by respective rivers and controlling grazing and other activities that suppress tree growth. Artificial planting is only a supplementary measure, especially in places where seeds from trees are not available naturally.
From all foreigners who came to the forum, only Meskele Lera Lencha, the officer of the Hailemariam and Roman Foundation from Ethiopia called China to support large-scale tree-planting endeavors overseas. Other foreign participants had stressed different priorities such as local community empowerment and diversification of local economies.
Even tree-planting champions like the very articulate John H. Kwon from Korean Future Forest, which plants forests in China’s easternmost deserts, explained that planting efforts alone cannot catch up with the speed of land degradation, and preventative policies and measures are essential to win the battle.
PPDC: Did you weigh in on the debate?
ES: At the event I attempted to describe long-term cooperation in China-Mongolia-Russia Dauria International Protected Area, where government agencies, scientists and NGOs complement each other. I emphasized priority of protection measures and strategic science-based environmental assessment of any development and climate adaptation project. Interesting enough, my pitch was immediately echoed by the Head of the FGA Grassland Management, who stated that the main task of desertification control is to prevent conversion of the desert margins into arable land during wetter phases of climate cycle.
Other than delivering our speeches and remarks from the podium (by the way, completely uncensored, which is another good sign of the Forum’s openness) we had not any other slot where we could actually discuss issues and plans.
“Very straightforward recommendations should be repeated again and again.”
PPDC: As an NGO participant, how do you envision this project to unfold hereafter?
ES: Except for the “Euphrates Poplar Project” there is no publicly available overall plan for advancing the cooperation outlined at the event, at least in the realm of FGA activities. Likely what will happen is “development aid” type of cooperation where partners are sought to implement predetermined projects and resources are distributed to consortiums of Chinese actors and foreign NGOs.
Developing countries have large number of NGOs for which distributing foreign aid for predetermined projects is the main mode of operation. So the approach is theoretically doable, but hardly the most effective or innovative. And most NGOs invited to this Forum are not likely partners for such an endeavor, as they are generally mature enough to formulate and execute their own programs best fit for specific local conditions. We are yet to see whether partners from China are willing to engage in a dialogue with local stakeholders and redesign predetermined projects. If you want another forest plantation, it is logical to go to local Forestry Departments in BRI countries instead of NGOs.
At the end of the Forum, International NGOs were given bottles with shiny green liquid to poor it over a large poster revealing the name of the new-born “Belt and Road Euphrates Poplar Forest Ecological Restoration Plan and International Cooperation Fund on Ecological Management”. Photo supplied by Eugene Simonov
PPDC: What would be the more effective ways then?
ES: Hopefully FGA, which has key responsibilities in nature conservation and ecosystem management, will be able to start other lines of cooperation with foreign NGOs, for example to prevent destruction and degradation of valuable and vulnerable wildlife habitats, which happens because of many reasons, but increasingly due to poor planning and management of BRI projects. However, no sign of that was seen at the Forum. It was dedicated fully to “remediation” after damage is done.
It is especially urgent along the Silk Road Economic Belt (SREB) where arid conditions make huge portions of natural and semi-natural landscapes very vulnerable that need preventative measures. In early Green BRI policy documents and associated research project outcomes, it is openly said that identification of valuable and vulnerable areas and preventing their degradation is an urgent task.
Strategic environmental assessments (SEA) are among most needed and accessible tools, since they are written into in legislation of China and most BRI countries.
PPDC: Do you find this experience overall worthwhile?
ES: Sure, meeting so many natural resource management actors from national to very local level was very useful experience. It is necessary to participate in such official fora to keep channels of communication open. Although not very effective, such channels are much better than absence thereof. And at those occasions, very straightforward recommendations should be repeated again and again publicly on strategic planning, good governance, meaningful performance indicators and open information, even though you may not get meaningful response immediately.
When it comes to specific pilot projects in their countries foreign NGOs may link Chinese actors with interested and knowledgeable local stakeholders, or at least help local communities to prepare for projects coming their way. This Forum could have achieved more if it was multi-stakeholder. A mix of academians, NGOs, indigenous leaders and forestry officials from various BRI regions would provide better matching opportunities and ensure greater acceptance for future joint projects.
Eugene Simonov is a Russian environmentalist who co-founded the Rivers without Boundaries International Coalition(RwB-www.transrivers.org). He has cooperated with a network of stakeholders interested in river conservation along the Russia-China-Mongolia borders, where dam building and water transfers on a monumental scale threatens the fragile wetland ecosystems in the birthplace of Genghis Khan.
A digest of Chinese media coverage of the BRI in the past month
Chinese media outlets produce reporting series for BRI’s five year anniversary. Source: Caijing
On September 7th, 2013, President Xi Jinping proposed the “21st Century Maritime Silk Road” while visiting Indonesia. The proposal was a key component of what later became the Belt and Road Initiative (BRI). And to mark the 5th anniversary, Chinese state media have ramped up their BRI coverage with multiple reporting series looking back at the past 5 years.
Across China’s mainstream media, most reports touted the success of the BRI, as expected, and highlighted key projects, with the People’s Daily offering a comprehensive list in an article titled “China’s Contribution”. Projects cited include the the Gwadar Port in Pakistan, the Kuala Lumpur subway system in Malaysia, and China-Europe freight rail and industrial parks in Belarus and Cambodia.
Despite the largely celebratory coverage, there were still hints of tempered defensiveness in tone and language. For example, in a commentary published in the ideologically conservative Red Flag Digest, the authors insisted that “BRI is an economic cooperation initiative” that should not be overly conflated, and that its two core components were “connectivity of infrastructure and cooperation on (building) industrial capacity”. The authors also responded to comparisons of the BRI to the Marshall Plan, saying that the “BRI is not China’s Marshall Plan” and “it does not seek to expand China’s ‘sphere of influence’, nor does it aim to export the ‘China model’,”
This is notable, and suggests a dialing down of a more assertive message from a year earlier, when state media and key supporters for the BRI advocated the spread of “Chinese wisdom”,”Chinese experience” and “Chinese solutions” to other developing countries. Recently, the escalating animosity with the United States over trade and industrial policy has led some to question the wisdom of touting the Chinese wisdom so loudly.
In less-official media outlets facing fewer restrictions, commentators have been less constrained in their analysis of the BRI. The Financial Times’ Chinese site (paywalled) has recently become a hub of reflective BRI pieces that try to re-calibrate outside perceptions of the grand initiative. In one interview, Singapore-based Chinese politics pundit Zheng Yongnian believes that external world has fundamentally mistaken the BRI as President Xi’s project to achieve “China’s Rejuvenation”. He offers a more tempered rationale for the BRI project, arguing that “the surplus industrial capacity and capital, a consequence of slowing economic growth domestically, is the main driver of (BRI)” and because “most of (China’s) exported capacity and capital is state-owned, the outside world (has) “mistaken” it for some kind of broader governmental strategy. He also suggests that the BRI is a phenomenon more related to China’s developmental stage than to the will power of its top leader. In his view, Chinese capital and capacity have reached a point where they must search for a “way out” and that trend already started during President Jiang Zemin’s tenure and has only truly accelerated recently. Thus, he believes that the style and personality of the current leader is only a secondary driving factor behind the BRI.. “If this administration did not start the BRI, the next administration certainly would have,” he said.
At the other end of the media spectrum, outlets are taking a much more combative approach to the BRI’s image problem overseas. In an interesting piece titled “Who’s denigrating BRI from the United States?”, the nationalist Global Times did some digging inside the beltway and uncovered what it believed to be the source of negative coverage of BRI originated in the US. Beyond editors ideologically hostile to China and politicians with an agenda to thwart China, the newspaper also traced some of the bad-mouthing to an obscure, US Congress-funded organization called BBG that supervises the Voice of America and other outlets. The popular newspaper accused the BBG of orchestrating anti-BRI propaganda through its network, a “Cold War residue”. On the other hand, Global Times also found that “pragmatist Americans” don’t all object to the initiative. Enterprises and individuals are keen to participate. At the end, it cited Janet Eom of Johns Hopkins University as confirming, in her Washington Post article, that the BRI “looks more like a stimulus project than a blueprint for geopolitical control.”
On Aug 27, President Xi Jinping spoke at a Leadership Group meeting marking the 5th anniversary of the BRI. He emphasized that BRI was simply an answer to the changing demand of global governance: “(BRI) is an economic cooperation initiative, NOT geo-political or military alliance building; it is an open process, NOT a closed, exclusive “China Club”; it is a welcoming initiative, NOT a zero-sum game divided by ideological lines.” In this month of backpedalling, the three NOTs sound particularly accentuated.
African leaders, more than a “benevolent” China, should set the tone for Africa-China relations, argues Kofi Gunu
By Kofi Gunu
When I first became aware of China’s growing influence in Africa, I was only ten years old. Ghana was set to host the 2008 African Cup of Nations, the continent’s biggest soccer competition, and work was progressing steadily on a new multipurpose stadium in my hometown, Tamale—one of the tournament’s host cities. Our remote savannah town swirled with rumors about the Chinese construction firm undertaking the project and the files of Chinese foremen who marched chain gang-style to the construction site each morning. I recall my Catholic priest explaining once that the contractor, apparently frustrated with the negative work ethic of his Ghanaian laborers, had replaced all but a few of them with convict labor imported from China.
Later I would learn that this was nothing more than a myth, one of many urban legends concocted by locals trying to make sense of the strangers in our midst. But for a long time afterwards, the imposing Tamale Stadium stood in my young mind as a symbol of China in Ghana and Africa, at once shrouded in mystery and impossible to ignore.
The scale of China’s involvement in Africa is a point of surprising contention. Western politicians and media, alarmed at the significant diplomatic, economic, and military roles China has assumed on the continent, often exaggerate its efforts. Chinese experts, eager to assuage these fears, hasten to cite studies which show that Chinese investment and aid to Africa is safely smaller than the West’s.
However, nothing can obscure the truth that China is Africa’s biggest economic partner now and into the foreseeable future. China is currently Africa’s largest trading partner. Additionally, according to the Bilateral FDI database and McKinsey, China is poised to surpass the US as Africa’s largest source of foreign direct investment (FDI) stock within the next decade Chinese official development assistance (ODA) and other official flows (OOF) to Africa together added up to 6 billion USD in 2012, making China the third largest country donor to the continent. Besides, since 2012, loan issuance by Chinese institutions to African governments has tripled accounting for approximately one-third of all new sub-Saharan African government debt.
A recent groundbreaking report from Mckinsey & Company, that sought to evaluate Africa’s economic partnerships globally, showed China among the top four partners for Africa across five key dimensions: trade, investment stock, investment growth, aid, and infrastructure financing.
Source: Dance of the Lions and Dragons, McKinsey & Company, Jun 2017
To objectively analyze China’s footprint in Africa, we must first arrive where reality is. The reality is that China is indispensable to Africa’s development agenda.
This reality is one that many on the continent acknowledge but with mixed feelings. A recent large-scale public opinion survey showed that ordinary Africans appreciate the infrastructural development that closer ties with China has brought. Chinese-led projects and businesses also employ several million people across Africa. African policymakers, a growing number of them Chinese-educated, increasingly look to China, rightly or not, as a model for catalyzing growth and eradicating poverty.
These positive reviews notwithstanding, legitimate questions persist about the motives behind Chinese assistance. Resource-for-infrastructure deals, which may make perfect financial sense to Chinese bankers, set off loud alarm bells on a continent whose vast mineral wealth has been used to enrich everyone but its own people. Citizens decry a political elite that appears incapable of looking beyond narrow political considerations to safeguard Africa’s interests. With a few notable exceptions, African governments lack defined China strategies, master plans for translating increased investment in priority sectors into sustainable development or for ensuring technology and skills transfer. They are waiting for Chinese firms to take the initiative. This lack of confidence in our leaders, far more than a crisis of explanation as proposed in a blog entry by Shou Huisheng earlier this week, is the main reason Africans remain apprehensive about this budding partnership.
Take, for instance, tensions sparked by the influx of hundreds of thousands of Chinese migrants to Africa in recent years. In Ghana, these tensions are felt most acutely in the small-scale mining sector, where the arrival of Chinese prospectors with machinery and heavy equipment has transformed a hitherto unsophisticated industry into a major driver of ecological catastrophe. Galamsey, as the practice is commonly known, has caused irreversible damage to protected forests and polluted vital water bodies. Matters got to such a point that the government was forced to impose a blanket ban on small-scale mining last year and to arrest several Chinese operators, over the objections of the Chinese ambassador. But far from being placated, many Ghanaians continue to point fingers at the authorities for permitting Chinese nationals to flout the country’s laws in the first place. To quote a caller on a Ghanaian radio program: “The Chinese government will never allow us to go to their country and trash it. Why does our government allow it here?”
The fate of China-Africa relations depends on Africans like this caller who are willing to hold African governments accountable for protecting the continent’s interests as they engage with China. As African heads of state convene in Beijing next month for the Forum on China-Africa Cooperation (FOCAC), ordinary Africans are expecting them to show more agency in articulating a clear and well-prioritized China strategy. China’s presence in Africa will produce win-win dividends, not because benevolent China pre-ordains it, but because farsighted African leaders insist on it.
Kofi Gunu is from Ghana. He graduated from Tsinghua University’s Schwarzman College in 2018 with a master’s degree in global affairs and public policy. Prior to that, he held roles at the Council on Foreign Relations and the Global Green Growth Institute. He is currently completing a year of national service in Accra.
Empirical research depicts a picture of Chinese involvement in Africa different from common perception
By Shou Huisheng
Africa is a continent where many Chinese ideas about investment and foreign aid are being piloted. As a result, China’s experience there is valuable for its involvement in other developing countries, particularly those along the Belt and Road. Since the early 2000s, “China in Africa” has been a major focus of international attention. The focus of the discussion is on the “China model” as reflected by the patterns of Chinese investment and aid. This blog tries to summarize that discussion, and outline how the international community, in particular Western countries view Chinese involvement in Africa. It is hoped that a better understanding of the discussion will help China improve its practices in other developing countries.
Common Misconceptions
Relying on empirical studies and statistics, many Western scholars have objectively evaluated China’s contribution to African development. They recognize that China’s infrastructure investments and foreign aid in African countries have fundamentally changed their developmental path. Many also acknowledge the uniqueness of China’s “unconditionality” approach. They believe that the “no strings attached” method does indeed give agency back to African countries trapped by Western conditional aid in the decades following World War II.
But such views tend to dwell only in academic circles. In government and public opinion, negative perceptions of Chinese aid and investment prevail and persist. In this regard, Rex Tillerson’s comments are quite representative. Before the former US Secretary of State visited Africa in March this year, he made a speech criticizing Chinese involvement in Africa. “Chinese investment does have the potential to address Africa’s infrastructure gap, but its approach has led to mounting debt and few, if any, jobs in most countries,” he told his audience. “When coupled with the political and fiscal pressure, this endangers Africa’s natural resources and its long-term economic political stability.” Later that week, in Ethiopia, he reminded African countries to “carefully consider” the terms of Chinese investments and the “predatory” model behind them.
Former US Secretary of State Rex Tillerson expressed disapproval of Chinese involvement in Africa on Mar 6, 2018. Photo courtesy US Embassy in Senegal.
Some experts consider Tillerson’s views to be “singing the same tune” as Hillary Clinton, when she visited Africa in 2011 and 2012, even though things have changed much since then. But such views remain popular today. In sum, the “predatory model”, as understood through such a lens, means three things:
First, that China is promoting neo-colonialism in Africa. It supports proxy regimes, “divides and conquers” African countries, and bases investment and aid decisions on diplomatic and political considerations. Cheap Chinese loans make African countries dependent on China’s economic largess. Chinese investments mainly target primary resources and land, creating an unhealthy economic structure and unbalanced trade in recipient countries. Short-term prosperity may become a long-term trap.
Second, that Chinese investments actively seek corrupt and autocratic governments to work with. Unconditional Chinese aid in fact provides a free pass to these regimes. In other words, China’s autocratic government is actively looking for its own African proxies through aid and investment.
And last but not least, that the Chinese government and its corporations disregard local environmental, social and cultural concerns. They turn a blind eye to labor rights and the interest of minority social groups.
The real model in statistics
The negative perceptions are persistent, but they are not evidence-based. In contrast, some Western scholars have done long-term empirical studies of China’s presence in Africa. They have collected data on Chinese aid and investment, run fact-based analyses and come to conclusions different from popular perceptions. The AidData database developed at William & Mary College, and the China Africa Research Initiative led by Prof. Deborah Brautigam at Johns Hopkins University are two major sources of such analyses. Even though the data quality and methodology could be improved, these quantitative studies do complement the more anecdotal case studies and observations we often see.
Below are a few key observations from the empirical studies:
First of all, Western media has generally overstated the scale of Chinese investment and aid in Africa. People are made to believe that Chinese involvement in the continent is way larger than that of the West. A wide range of figures about the stunning scale of Chinese finances in Africa have been floating around, but many have been proven to be wrong. In addition, Western media often gives the impression that China’s Export Import Bank provides more loans to Africa than the World Bank does, despite the fact that the World Bank remains Africa’s largest development finance provider since 2010. These exaggerations do not just create anxiety in the West. They may also mislead African countries into believing that Chinese loans are easy to get.
The second observation from empirical data is related to resource grabbing. In fact, only 10% of Chinese loans to Africa goes into oil and minerals. And much of that is concentrated in just a few countries. The biggest loan in this area was offered to Sonangol, the state owned oil company of Angola. On the other hand, 56% of Chinese loans flow into transportation, electricity and telecom. In other words, China invests more in African infrastructure than natural resources.
The third notable fact is that roughly one third of Chinese loans require or allow African countries to repay in energy, minerals or agricultural products. China calls such arrangements “resource-backed loans”. These are often the target of “resource-grabbing” criticism in Western media. But in reality, even though the Chinese government and companies purchase large quantities of energy and mineral products, they seldom control the ownership of such resources. For instance, even if China imports 49% of Angolan oil, most of the country’s oil is controlled by American companies, with Chinese firms controlling less than 10%. The main purpose of having loans repaid in commodities is to hedge against financial risks, rather than controlling resources. This is a reasonable arrangement, given China’s own experience of attracting foreign investments with the same approach in the early years of its Reform and Opening. From as early as 1975, Deng Xiaoping encouraged commodity-backed investment deals with Japan, which allowed China to get access to much needed funding for development. China repaid much of those Japanese loans in commodities throughout the 1980s and 90s.
Data also shows that the destination countries of Chinese policy loans are no different from those of the World Bank, despite perceptions that they predominantly go to countries with rich resources and corrupt governments. Between 2000 and 2014, Ethiopia was the second largest recipient country of Chinese loans in the continent. The country isn’t particularly rich in natural resources, and China’s involvement there is mainly in building industrial parks, driven by the country’s large population and potential market size. Over the same period, Ethiopia was also the World Bank’s top borrower in Africa.
There also appears to be no strong correlation between an African country’s political ties with China and the likelihood of receiving Chinese aid and investments. Zimbabwe traditionally has a strong tie with China. However, it does not even make the top ten list of Chinese lending in Africa. Moreover, unlike ODA, China usually does not cancel a country’s loans. Chinese policy banks and commercial banks usually choose to extend a loan or lower the interest rate to deal with payment issues. Even Zimbabwe, widely seen in the West as China’s proxy regime in the region, complained about how difficult it was to get a cancellation of debts. Chinese bank officials have made it clear that they don’t waive debts against market principles.
Orange and Apple
And finally, the data tells us to differentiate numerous types of Chinese finances in Africa. In the West, people tend to group Chinese money all in one basket and consider it all directed by China’s diplomatic and political priorities. But Chinese ODA and commercial loans follow different logic. Statistics from AidData show a very weak correlation between Chinese ODA and a country’s natural resource endowment. It also has very little to do with political systems or governance capabilities. This is in line with the non-intervention principle that China upholds.
Western countries’ ODA tends to go into African countries with large populations. Chinese ODA is not, however, tied to population size. The one clear feature of Chinese aid is that it leans more towards low-income African countries. These characteristics indicate that Chinese foreign aid is more development-oriented than political or commercial-oriented.
Chinese commercial lending, however, is different. The same analysis from AidData shows that it has a much stronger propensity to go after natural resources, thanks to the Chinese market’s large appetite for African resources. They are also more likely to be associated with corrupt and autocratic regimes. Researchers at AidData offered two plausible explanations. First, some Chinese companies and government departments do regard corruption as a “lubricant” to commercial activities, and have brought certain problematic domestic practices to Africa. Another explanation is that Chinese commercial entities are less risk-averse than their Western counterparts, as commodity-backed arrangements and the likes effectively reduce risks in investing in such countries.
Both explanations have some validity. And the two factors could indeed work together. Considering that the economic growth of the continent in the past 20 years has been driven largely by energy and resource demands from China and other emerging markets, rather than the ODA or investments from Western countries, it is reasonable to state that Chinese commercial lending, with its distinct features, are better suited to the pragmatic needs of African countries. Being a “business partner” with corrupt governments is something ideologically repulsive to many Western actors. Convincing Western society that this could be overall beneficial to African development is a huge challenge for China. And for the moment, China should do its best to make its ODA and commercial investments more transparent in Africa.
To be clear, the main reason for the lack of statistics-based, quantitative research on Chinese aid and investment is the low transparency on the side of the Chinese government. Researchers have observed that existing statistics actually tell a quite positive story about China’s involvement in Africa and have suggested the Chinese government to be more upfront with collecting and releasing statistics. But apparently China still has lots to worry about when it comes to transparency (one of the biggest concerns is possibly domestic public opinion, strands of which see China’s involvement in Africa as “handing free gifts to other countries” while many regions of China are still relatively poor). Short-term improvement of the dataset is therefore unlikely. Nevertheless, the government should attach more importance to the matter and begin to invest more into setting a more quantitative and objective basis for assessing Chinese aid and investments overseas. The recent setting-up of China’s international aid agency (CIDCA) is a welcome move to facilitate the process.
Dr. Shou Huisheng is Senior Fellow at the Statecraft Institution, Research Fellow at the National Strategy Institute, Tsinghua University. Dr. Shou received his doctoral degree in political science from University of Illinois Urbana-Champaign. The blog is based on a recent speech he made recently.
An awareness of the narrative frames used by Western media to portray BRI can lead to better reporting
Chinese commentators are starting to take note of international negative coverage of the BRI since the beginning of 2018. (Screenshot from FTChinese.com)
In April this year the China-Africa scholar Deborah Brautigam published an article in the Washington Post which essentially fact checked and myth-busted Western media reporting on China’s role in Africa. It included the debunking of such commonly held assumptions as Chinese companies’ investments and projects not providing jobs or skills to local communities, Chinese banks’ loans as predatory and burdensome, and China as a land-grabbing power, a notion whose implications of colonialism by stealth Brautigam debunks as straight up fake news.
Panda Paw Dragon Claw‘s inaugural article took a look at how some of China’s more independent media outlets — Caixin and Caijing — are interpreting and writing about the Belt and Road Initiative (BRI) and China’s growing involvement abroad. Not surprisingly, that deep dive found certain firmly-rooted perspectives, biases and blind spots in the outlets’ reporting of China abroad, all of which are contributing to shaping the dominant narrative of China’s engagement overseas in the eyes of their audiences.
Western media outlets are no different. Approaching the topic with their own world views and their own needs to satisfy the desires of their readers (customers), Western media are also engaged in the construction of narratives around what Jonathan Hillman at the Center for Strategic and International Studies has called “the best known, least understood foreign policy effort” of the 21st century. And as Professor Brautigam pointed out, some of Western media’s blind spots and assumptions can lead to pure factual inaccuracy — anathema to any journalist worth their salt.
More often, however, these perspectives present the Belt and Road through a certain framing, which is neither correct nor incorrect, but does have significant bearing on how the often mysterious initiative is understood in the eyes of readers.
As the construction of something approaching a common, global understanding of Belt and Road is underway, it is worth reflecting, analysing and, where appropriate, critiquing these frames. While some framing of stories is inevitable in order to make sense of the enormous, nebulous and often opaque initiative, an awareness of these frames, their strengths and their blind spots can lead to better coverage and a more complex understanding of China’s overseas involvement. This in turn, we hope, could lead to increased and more effective engagement with the initiative from those who stand to gain or lose the most – local communities and their civil society partners.
So what are the major frames through which major Western media outlets are looking at the Belt and Road? Below are three major framings identified from a read through of BRI coverage from Reuters, the New York Times, The Guardian, Bloomberg and the Economist. This analysis is not exhaustive, but has attempted to be broad in its sources and aims to be a starting point for broader discussion.
Great Power Rivalry
In response to China’s increasing global clout, Western governments’ perspectives have included the hawkish and the more softly, softly approach. While one perspective sought to absorb China into the global order as a new “responsible global player”, another, knee-jerk, reaction has been to label China a neo-imperialist and expansionist power. Hillary Clinton has even used the phrase “neo-colonialism” in response to China’s increasing presence in Africa.
Media have not been immune from the influence of aspects of the latter of these perspectives. One of the major lenses through which Western media covers Belt and Road is that of geopolitical rivalry. BRI is commonly explained as in direct competition to the post-WWII order, and much coverage of BRI in Asia and Africa has directly pitted US influence against Chinese influence, a binary in which, like a weighing scale, more on one side necessarily equals less on the other.
This framing is evident, for example, in the New York Times’ warm up piece to the first Belt and Road Summit in Beijing in May 2017. The authors of the article attempt to define the Belt and Road — no easy task — and focus on its direct challenge to the West, one which, in their view, comes right from the top, President Xi Jinping himself. “Mr. Xi is aiming to use China’s wealth and industrial know-how to create a new kind of globalization that will dispense with the rules of the aging Western-dominated institutions,” the authors write. The article also directly compares BRI to the US’s post-WWII Marshall Plan, which served the dual functions of post-war reconstruction and the fundamental reshaping the global economic and political order in the US’s interest.
The New York Times also assert that, with infrastructure projects the key component of the geopolitical strategy, even unprofitable and risky projects are, at the end of the day, worth investing in as, for Beijing, politically strategic gains trump concerns over profitability. The case of the US$ 6 billion trans-south east Asia railway project beginning its construction in Laos is cited as an example. According to the New York Times’ interpretation, despite major concerns in regards to Laos’s ability to afford their share of the price tag and a feasibility study that estimated the rail line will remain loss-making for at least 11 years, Beijing is nonetheless willing to push ahead with the project as Laos is a central part of China’s plan “to chip away at American influence in south east Asia.”
The Economist pits BRI against the Marshall Plan, March 2018. (Screenshot from The Economist)
The Economist adopted a similar BRI versus post-WWII global order framing in the March 2018 article titled ‘Will China’s Belt and Road Initiative outdo the Marshall Plan’. While similar geopolitical concerns have been raised by numerous media in regards to China’s port investments in Sri Lanka and Pakistan, whose purported solely civilian usage has met with scepticism.
While there is nothing explicitly wrong about viewing BRI through this geopolitical rivalry lens, it can be limiting. It often underplays or disregards the role of ‘recipient’ countries and tends to overlook the multiplicity of roles from China’s side, wrapping the actions and incentives of ministries, banks, state owned enterprises and other players under the broad banner of “China”, or even going one step further and portraying it all under the name of Xi Jinping. This can lead to a broad brush approach to the multiplicity of incentives and intentions, which often lurk deeply shrouded in opaqueness.
One major exception to this is the New York Times’ recent investigation into the handing over of Sri Lanka’s Hambantota port to China on a 99 year lease. The article broadly takes the geopolitical framing as its reference, but digs deep into the multiple players and stakeholders involved to show a far more complex face of a BRI project than is commonly seen in the media.
The geopolitical frame can also elevate politics above other driving factors of BRI, such as Chinese companies’ rush to find new markets as they face overcapacity at home and the threat of a domestic economy slowly but surely transitioning away from the heavy industries of the 8+% growth era of previous decades.
Most likely almost all BRI projects see an overlapping of all these elements – macro-level geopolitical moves, local level political agency, the push force of China’s economic transition, and more. How to account for and tell a story which can encompass all these elements is a question journalists and researchers may want to ask. No one frame is necessarily more correct than the other, but one frame more often that not leads to the telling of only one part of the story’s whole.
International Development… with Chinese characteristics
Whereas the above lens generates much suspicion, when Western media look at the development impacts of China’s investments, a more ambivalent tone is to be found. There are two main reasons for this. One is that, once key projects take off, they often do have radical and tangible impacts in those recipient countries. Secondly, if part of what China is doing with Belt and Road is spreading its theory and practice of development to other parts of the world, given China’s impressive track record on development, this can hardly be dismissed outright.
As James Milward, a historian at Georgetown University, wrote in a New York Times opinion piece in May this year, “China’s economic progress over the past century has been phenomenal, lifting hundreds of millions of Chinese out of poverty. So when the Chinese government offers to share its experience in development … it should be taken seriously.” And few could dispute this.
Milward goes on to cite concerns in the current trend of this sharing of development experience – the debt burden on Sri Lanka which culminated in Sri Lanka’s leasing of the deep water Hambantota port to China for 99 years, for example. But other scholars take a very different view. Professor Brautigam, mentioned at the start of this article, for one, takes a more optimistic, or at least open, view of the benefits Chinese investment can leave behind in recipient countries. In her Washington Post opinion piece, for example, she writes: “Chinese loans are powering Africa, and Chinese firms are creating jobs… China may boost Africa’s economic transformation, or they may get it wrong — just as American development efforts often go awry.” The benefits should not be overlooked, and the jury should remain out.
When focusing on the development frame, news reports have also noted the benefits Chinese investment has and can bring. Bloomberg, for example, put together a list of the projects that will have the most direct positive economic impacts, including the Gwadar port in Pakistan, the Kyaukpyu to Kunming oil pipeline, running from Myanmar to China’s most south westerly province, Pakistan’s Thar coal mines, and the very same south east Asia rail link the New York Times called out as representative of the geopolitical gaming of Belt and Road.
While many (including myself) would not necessarily view the above list and its strong fossil fuel representation so positively,the point Bloomberg makes about the projects’ large and tangible impact, especially on economic indicators such as GDP, cannot be denied.
Big picture and local voices
Protest against Lamu coal power plant, Kenya, November 2015. Photo: Maarufu Mohamed/Standard via Sourcewatch
While many outlets have published articles attempting to encompass and report the entire Belt and Road – grand, macro picture sweeps such as the Guardian‘s ‘The $900 billion question‘ and Bloomberg‘s ‘China’s Silk Road’, for example – Western media’s reporting strength on the BRI has often been in local level case studies. These stories aim to act as miniatures of the larger Belt and Road story. Taking a leaf from the journalism 101 book, they tend to focus on points of conflict and disagreement, and in doing so are key mediums for amplifying the often underheard voices and concerns of local communities.
Reuters‘ 2017 in depth report on local opposition to the Petrochina-operated crude oil pipeline in Myanmar is a case in point. It leads into the story from the perspective of one of hundreds of local fishermen who have been ordered to cease all fishing activities and goes on to focus on the lack of consultation with local communities.
“Chinese companies said they would develop our village and improve our livelihoods, but it turned out we are suffering every day,” said Nyein Aye, the local fisherman interviewed by Reuters.
From another continent, the New York Times‘ report on the controversial Lamu coal plant on Kenya’s coast performs a similar function of amplifying and contextualising a variety of local voices, including the ambivalence of one young man: “If it comes with a job I’m ready to take it”. Local opinions can come in all shapes and forms, and international media is one powerful channel through which those different opinions can be expressed to the world.
These articles’ focus on human stories and the conflicts and tensions between big business interest and local communities in some senses help to fill a gap too often seen in China’s domestic coverage — that of on-the-ground coverage from grass roots perspectives, as noted in this blog’s opening article.
Disconnect
Perhaps what is most striking from all the above, however, is the apparent lack of connection and dialogue between Western media perspectives and Chinese. Bloomberg and Caixin’s reporting on the same project in Sri Lanka is a case in point. In their article, Bloomberg elevate local voices, opening the piece with an anecdote about a local farmer and his family drying rice on a newly built road, financed with Chinese money. Caixin on the other hand, puts its spotlight on local engineers and contractors who are benefiting from more business opportunities, treating local fishing community voices as footnotes and, as this blog previously pointed out, “like fire hoops for Chinese actors to jump through.”
It’s as if the two operate in separate bubbles, when in fact they could and should be in dialogue, both complementing and critiquing each other’s coverage.
This article’s overview and critique of some of the key narrative framings Western media are using in their coverage of the Belt and Road Initiative is intended to trigger awareness of and reflection on these framings. Some may see more framings out there, or see the above as overly simplified. My hope, however, is that through an awareness of the presence of these narrative framings readers, journalists and researchers will take note and see the gaps and blind spots that may exist in current reporting on BRI, with the ultimate purpose to improve, diversify and strengthen media coverage of what is surely one of the most important and rapidly unfolding stories across the world right now.
Tom Baxter works in communications and on the environmental impacts of Belt and Road projects at Greenpeace East Asia. You can find him on Twitter via @TomBaxter17
A conversation with Michael Anti, award-winning journalist, blogger and veteran media observer
Many Chinese netizens, including myself, recognize the pen name “Michael Anti” (real name Zhao Jing) as an internet legend. His blogs, back in the early 2000s, were must-reads of an emerging body of online writing that was distinctive in style and latitude from what people usually saw on media outlets back then. As a journalist, columnist and blogger, Anti represents the outward-looking, critical voice that introduces liberal ideals into the Chinese cyberspace. In 2005 he famously celebrated China’s Super Girl show (an American Idol style singing talent show) as a massive experiment of democracy, where tens of millions of Chinese viewers voted for their favorite singers through mobile phone SMS. His critique of the global and Chinese media/cyber landscape has established his reputation as one of the sharpest journalistic minds in China. He was the winner of the 2011 M100 Sanssouci Media Award, worked as a war correspondent for 21st Century Business Herald and a researcher for the New York Times Beijing bureau, and became a Harvard Niemann fellow in 2008.
Today, Anti is the editor-in-chief of Caixin Globus, a new media project incubated by Caixin Media, China’s leading business news provider, in 2016 that specializes in reporting news events and developments overseas. When I met Anti in his office two weeks ago, we started by talking about how poorly international news performs in Chinese media. “It’s almost always ranked at the bottom of viewership at news portals,” Anti told me. His answer to that challenge is to make Caixin Globus a “reader-centric” platform of international news. Unlike the standard model of setting up bureaus and dispatching correspondents, a costly arrangement that is out of reach for most non-state Chinese media, Globus has cultivated an impressive network of over 200 overseas contributors, many of them Chinese students of journalism or political science living in countries across the world. With this network, Globus has managed to deliver timely, often on-the-spot coverage of the Kim-Trump Summit, protests in Iran, and the general election in Germany, among other international topics. Anti’s vision is to give readers more say in Globus’s editorial decisions through a built-in mechanism that allows readers to flag what they are interested in. In his words, he would “give up the elitist position of deciding what readers should read” and deliver world news that is actually needed by its Chinese readership.
Globus has recently launched a new initiative to track the overseas ventures of Chinese enterprises. The rolling out of China’s Belt and Road Initiative (BRI) is also firmly on the radar of Anti’s global network. Our conversation naturally surrounds China’s overseas involvements and how the Chinese media should approach such developments far away from home.
“Our readers’ interest will ultimately fill the entire world map.”
Panda Paw Dragon Claw (P): What is the status of Belt and Road reporting in the Chinese media?
Anti(A): I think most of the media outlets, when they are faced with the Belt and Road topics, are in a state of hesitation. They don’t know who actually reads such stories. From an ordinary reader’s point of view, why would she or he want to read about BRI?
At the moment most BRI stories are about corporate pioneers, the enterprises that first step out of the Chinese market and go global. They are either about initial successes or failures, and the lessons generated out of those. The problem is that the Chinese media have neither the resources nor the local presence to find really good story leads. So they end up doing what I call “policy reporting”. Such coverage of general policy developments does not pique the curiosity of most readers, who only browse them for casual reading.
P: So how can such reporting improve?
A: In a sense it is premature to expect the media to go big in this area. Readers’ interest in the topic has to be cultivated gradually. Without growing reader interest, investing heavily into BRI reporting is futile. At Caixin we have recently erected a paywall. If a story does not earn us subscription, it will be considered a loss for the publication. As you know, BRI reporting is expensive. Even if we can reduce costs by commissioning from in-country contributors, it will still cost much higher than reporting from Beijing.
Many of our peer news organization do deem BRI as of strategic importance to cover. The question is how. At Globus we want to empower readers to tell us what to cover. Even though many of them are currently not asking questions about BRI per se, they are starting to take a personal interest in other countries’ visa or immigration policies. And the US-China trade war is now high on their reading list. Sometimes their curiosity brings our attention to totally unpredictable places. So I believe that, with time, our readers’ interest will ultimately fill the entire world map.
It then begs the question of how we spend resources to address that growing appetite. The conventional, elitist mode of “editors pick, readers read” is becoming more and more strained with the ever enlarging geography that news organizations need to cover. The BRI involves more than 60 countries! It’s too scattered. It’s unlike domestic reporting, where editors more or less know what main frames they should use for a given news event. In BRI reporting, some level of reader participation and guidance are definitely helpful. The result coming out of this interactive process will be a real reflection of the BRI that matters, not some imagined concept conjured up by editors.
“The Fourth Estate doesn’t apply here.”
P: Where do you get this idea of need-based reporting?
A: It actually comes from the earliest economic and business reporting, pioneered by the Economist almost 150 years ago, when news reporting was considered an informational service. Nowadays, Chinese media elites understand the role of media often through the lens of New York Times vs. Sullivan, or the Pentagon papers, where news media acts as the “Fourth Estate” (or fourth power) in a society, as a check to other formal powers. But if we go back to the media’s original role as an information service, we may find its value in rebuilding the consensual basis of public discourses, something that is lost in an increasingly polarized and tribal world. In the US, partisan polarization has hit unimaginable levels. China is not there yet but you can still sense that people too readily fall into camps in any given public debate. At such a moment, my concern is to construct the foundation of informed conversation. No matter which side you are on as a Chinese, can we have a shared point of departure as globalized citizens of a responsible world power? This is the kind of consensus-building I would like to invest all my time in right now.
P: Is there any place for the Fourth-Estate-style muckraking in BRI reporting?
A: I doubt it. To play the muckraking role, media would need to be able to influence public opinion on a given matter, thereby exerting pressure on policy making. But we are at such early stages right now that even basic knowledge still needs to be disseminated. It’s impossible to jump directly into a role that can move and shake policy.
P: But the need for Chinese media to play that role is already there, if you look at environmental and social controversies around China-backed projects globally.
A: This can be addressed without resorting to adversarial, critical reporting. We can put them under the framework of an informational service, by explaining local concerns and expectations as accepted norms. We can tell our readers, if you do not respect such norms, your projects or investments may fail. This way you achieve what may otherwise need adversarial reporting through more matter-of-fact analyses. We can take the environmental debates of a host country, summarize the mainstream thinking behind them, and present it as the prevailing norms that Chinese actors should bear in mind when they enter the country. I think the Chinese actors reading our reports will agree with this approach. Because at the end of the day, they seek the acceptance of local communities. There is no point arguing back from where they stand in China.
“China has arrived at the gate of being a globalized country. But its media isn’t ready yet.”
P: What kind of BRI stories should such a press tell?
C: So many stories can be told of China’s “going out”. First of all, readers care about why China is venturing out. It’s about motivation. Secondly, they are massively interested in learning how other countries view China. For Belt and Road reporting, understanding a recipient country’s “imagination” of China is crucial. If this element is not embedded into the reporting, I would consider it a failure as it assumes other countries see China exactly the same way as it sees itself. Understanding that each country is different is the prerequisite for producing really grounded BRI reporting. And in this aspect, Chinese media has not done a great job.
P: Can you elaborate?
A: Only a truly globalized nation will need globalized journalism. It first appeared as the British Empire set its foot around the world. The Economist is a typical early product of that phase of globalization: an encyclopedia of global political knowledge. Without the demand for such knowledge, a country’s media ’cannot be truly globalized. The Economist basically taught its readers how to approach local culture and norms. Only by respecting that can you do business with the local people.
I think China has arrived at the gate of being a globalized country. And it’s not even by choice. To focus predominantly on US-China bilateral relationship is no longer viable given today’s political environment. It forces China to turn to Europe, to get closer with South East Asia, and to promote BRI. There should be a globalized Chinese press in this era.
P: But it seems that the capabilities of the Chinese media do not match the new globalized nature of China’s diplomatic and economic relations?
A: Of course not! Fundamentally China’s media elites themselves lack globalized genes. There is a talent issue here. How many of China’s newspaper editors have practiced journalism in other countries? How many Chinese news organizations have international bureaus or local correspondents? The lack of international experience leads to lackluster international news reporting.
The bright side is that this is starting to change. The United States has actually helped us train many international journalistic talents through its J-schools. And at Globus we now have this expanding network of PhD students overseas who have lived in host countries for many years and are able to analyze situations on the ground. Ultimately, we will need correspondents based in those countries to fill the gap.
P: Beyond having experienced professionals, how can Chinese media deliver stories that accurately portray how other countries view Chinese involvements?
A: This falls under the question of reporting paradigms. In BRI reporting we probably need to go beyond the fact-centric approach of American journalism which is restraint in commentary and invites readers to reach their own conclusion by presenting just ascertainable facts. Considering that our readers often lack the very basic knowledge-base to interpret developments in a host country, I would encourage my reporters to be more adventurous with their methods. Sometimes you will need to be a bit more educational in your reporting to be effective, like what Lin Da does (note: Lin Da is the pen name of a Chinese writer couple living in the US famous for their educational prose collections introducing the history and politics of the US, Spain and other foreign countries to a Chinese readership). BRI reporting doesn’t have to stick with a standard news reporting paradigm. A reporter can be as enlightening and illuminating as possible, as long as he or she maintains objectivity.
How well can China run its climate foreign aid program outside the UN framework
by Wang Binbin
Editor’s note: Among the numerous types of foreign aid that China gives to other countries, climate aid is one that is still relatively new. First started in 2007, as a way to diffuse increasing international pressure on China for its ballooning carbon emissions, the program has, over the past decade, expanded both in terms of its coverage (from small island states most affected by climate change to a wide range of developing countries across the globe) and its size (from about 10 million USD a year to 300 million based on one UNDP estimation). Just like the AIIB, China’s south-south climate assistance program represents another attempt at reshaping an important aspect of global governance with “Chinese wisdom”. For instance, Chinese climate aid runs outside the United Nations Framework Convention on Climate Change (UNFCCC) regime, which differentiates obligations of developed and developing countries. Under that system, developed countries put money into the Green Climate Fund (GCF) to help developing countries combat climate change. China’s long-standing sensitivity around being recognized as a developing country, combined with its urge to show leadership on a key global issue, has prompted it to come up with its own version of climate aid that is not without institutional challenges. Wang Binbin’s new blog is an update of the latest development under this program, after the recent creation of a “China AID”, in the fashion of USAID and UK’s DFID.
Xie Zhenhua, China’s special envoy on climate change, demonstrates cookstoves in Myanmar (Source: Global Environmental Institute)
One of the most closely-watched changes to come out of China’s recent ministerial shake-up was the creation in mid-April of the China International Development Cooperation Agency (CIDCA), equivalent to the United States Agency for International Development (USAID) or the United Kingdom’s Department for International Development (DFID) – agencies responsible for administering foreign aid and development assistance.
Although this sub-ministerial body does not have an official website yet, it got off to a quick start, announcing on May 16 that China would send emergency humanitarian aid to Kenya in response to severe flooding.
Despite its still undefined make-up and responsibilities, observers are already speculating about how the creation of CIDCA will affect China’s overseas aid, the Belt and Road Initiative, and wider South-South cooperation, including China’s climate change foreign aid to other developing countries.
Climate aid with “Chinese characteristics”
China’s South-South climate cooperation has focused on providing aid to less developed nations commensurate with its position as the world’s largest developing country. The country’s overseas aid has had a climate change component for more than a decade and this has expanded over the years.
In 2012 the National Development and Reform Commission (NDRC) announced that funding would be doubled for climate change aid to about US$72 million a year. Subsequently, a project to donate materials to help countries respond to climate change got underway, headed by the NDRC’s Department of Climate Change and funded by the Ministry of Finance. Notably, this included the donation of a meteorological satellite to Ethiopia.
In September 2015, before the Paris climate conference, China stepped up its commitment when Xi Jinping announced a 20 billion yuan (US$3.1 billion) South-South Climate Cooperation Fund. Two months later, in Paris, the government clarified its scope: from 2016 China would fund 10 low-carbon demonstration projects, 100 climate change adaptation and mitigation projects, and 1,000 training places in developing nations (the “10-100-1000” plan).
More recently, the 19th Communist Party of China National Congress work report stressed that China would cooperate internationally on climate change to contribute to and lead in the construction of an international “ecological civilization”.
When it comes to international climate governance, China views developed nations as having a responsibility to developing countries, owing to their historical emissions of greenhouse gases. In contrast, China is assisting developing nations out of a sense of climate justice rather than obligation. This has shaped China’s climate aid program, which is “voluntary” and “supplementary”, and stands separate from that of developed nations, which are channeling climate finance contributions through the Green Climate Fund (GCF), a United Nations mechanism to help developing nations counter climate change.
Following the decision by President Trump to withdraw the United States from the Paris climate accord, China’s actions have been closely watched, as its pledge of 20 billion yuan to the South-South Climate Cooperation Fund was part of the Obama-Xi Joint Statement in 2015 that was made shortly before the Paris talks started. In that statement, the US made an equivalent pledge of US$3 billion to the Green Climate Fund. President Trump has said that the US will not honor the US$2 billion that remains to be paid to the GCF, while China appears committed to carry out its promised plan.
The shoe doesn’t fit
Providing direct material aid and training is relatively straightforward. However, other elements of the “10-100-1000” plan had to be implemented within a framework that was not fit for purpose. The mismatch prevented plans going ahead as scheduled.
The first issue was funding. The NDRC is responsible for macro-level planning and has no overseas remit. The Ministry of Finance’s rules require that the NDRC’s South-South climate cooperation spending and procurement take place inside China. The “10-100-1000” plan, therefore, had to be designed to fit that requirement, with the 100 mitigation and adaptation projects limited to material donations – and to those goods that could be purchased in China. This affected both the quality and pace of project delivery.
Similarly, the 10 low-carbon demonstration projects were originally intended to happen in industrial zones or residential neighborhoods in recipient countries, promoting general low-carbon development practices (in planning, management and infrastructure construction). But again, the requirement for procurement in China hindered progress.
Then there were personnel issues. As the only option was to buy goods at home, the NDRC’s Department of Climate Change needed to quickly develop new competences to ensure quality procurement: tendering processes, technical workflows, product standards, financial reporting, working across languages, negotiating, and assessing the needs of different nations. This was clearly too much to expect from a department previously responsible for climate change policy.
The final issue was communication. The domestic role of the NDRC means it has no direct links with other countries and so no way to directly communicate with recipient nations.
While the Ministry of Foreign Affairs traditionally handles overseas relationships, China’s expanding links with the rest of the world mean that the Ministry’s embassies abroad were already stretched. Although willing to help implement the plan, they lacked sufficient capacity to do so.
Faced with these constraints, those in charge had to come up with alternative approaches. For example, in August 2016 the NDRC’s Department of Climate Change toured south-east Asia, with the help of Oxfam, an international NGO, to assess the needs of developing countries. This helped to refine the “10-100-1000” plan and work around the department’s lack of international links.
The Department of Climate Change and the UN Development Program then held a “matchmaking” meeting to connect the needs of developing nations with types of support that China could provide.
In March 2017, China donated clean cooking stoves and domestic solar power systems to Myanmar, with project delivery entrusted to the Global Environment Institute, a Chinese NGO. These moves were all unprecedented.
Opportunities post-reshuffle
The reorganization of China’s cabinet ministries, announced at China’s Lianghui (Twin Sessions) in March of this year, brought seismic changes for climate and environmental governance, with responsibility for climate change reassigned from NDRC to the new Ministry for Ecology and Environment (MEE), which was formally established on April 16. Two days later, CIDCA was created, taking overseas aid responsibilities from the commerce, foreign affairs and finance ministries.
Future South-South climate cooperation is likely to take place within a joint MEE-CIDCA framework. This will help to resolve issues with funding, personnel and international links.
CIDCA is run by former NDRC vice minister Wang Xiaotao (pictured). On April 23, Zhou Liujun, former head of the Ministry of Commerce’s Department of Outward Investment and Economic Cooperation, and Deng Boqing, former ambassador to countries including Nigeria, were appointed as vice-directors. The structuring of the two new bodies should be completed by the end of June.
The fact that the top three officials for CIDCA have been drawn from China’s powerful macro-economic planning department, its commerce department, and its foreign affairs apparatus bode well for its ability to coordinate with these ministries.
We can expect that arrangements for the “10-100-1000” plan will be improved once governance structures are clearer. While the changes should not have much impact on the more straightforward training program, the 100 adaptation and mitigation projects will be able to deploy a more flexible approach to aid that is not restricted only to material donations procured domestically.
CIDCA will benefit from established overseas aid systems moved over from the Ministry of Commerce (including material aid, turn-key project delivery, technical cooperation and training). This will mean MEE can more easily make use of CIDCA capabilities when designing South-South climate cooperation projects. Researchers also predict that development attachés may be stationed in Chinese embassies to manage China’s overseas aid. This would solve the lack of international links.
Most eagerly anticipated are the 10 low-carbon demonstration projects. Although initial work on these projects was hampered, a lot of planning has been done and resources are in place.
The new framework will allow MEE and CIDCA to work together to better combine aid, investment and trade. And the model of government-set standards to guide private investment and create green investment is regarded by some experienced figures as the ideal model for those demonstration projects.
Three relationships
It is worth noting that China’s arrangements for South-South climate cooperation were not originally limited to the “10-100-1000” plan.
In 2014, China donated US$6 million to support the UN secretariat’s promotion of South-South climate cooperation. In April that year the funding was used as seed capital for a Southern Climate Partnership Incubator (SCPI) announced by Ban Ki-moon. The SCPI is designed to foster partnerships (both bilateral and multilateral) to allow less developed countries to engage in policy exchange, capacity building, and to have access to technologies and knowledge that facilitate climate action.
Combined with the “10-100-1000” plan, China’s use of UN platforms represents a combination of domestic and international approaches to climate change cooperation.
Pushing China’s South-South climate initiative at the UN level has several advantages: it is intrinsically more multilateral, it is not limited by China’s own rigid bureaucratic and financial restrictions, and it takes advantage of the UN’s global reach.
The ministerial shake-up makes efficient implementation of the “10-100-1000” plan possible. Meanwhile, China’s support for South-South climate cooperation under the UN system is growing and starting to attract civil society forces. For example, the Qiaonyu Foundation donated 100 million yuan (US$15.6 million) for South-South climate cooperation, with US$1.5 million going towards running the SCPI.
In January this year the foundation signed an agreement with the United Nations Office for South-South Cooperation launching the Qiao plan, which will use the UN to identify potential recipients of funding.
South-South climate cooperation can be expected to take place between the Chinese government and the UN, across Chinese government departments, and between the government and civil society.
If those three relationships promote and strengthen each other, resulting in projects that meet recipient nation needs while furthering mitigation, adaptation, poverty-relief and environmental protection, then South-South climate cooperation will be successful.
Wang Binbin is a research fellow at Peking University’s International Organizations Research Institute. Parts of this article, first published on chinadialogue, are taken from the her new book, From Zero to Hero: China’s Transition on Climate Communication and Governance, published April 2018 by the Social Sciences Academic Press.
Famed anthropologist Marilyn Strathern, after a long career writing about Papua New Guinea, later turned her attention to the practices of university life in the United Kingdom. In particular, Strathern realized that the “(unanalyzable) nonsense” of university mission statements she encountered day-to-day were similar to a number of objects, including magical shields, that she had written about in her Melanesian fieldwork. Drawing on the anthropological literature, she compared these bullet-point-strewn documents to civil war fighters in Mozambique, whose marks on their chests were said to be “vaccinations” against bullets. In her terms, they were “protective aversion tactics”.
The relevance of this occurred to me recently in an unusual context: reading an excellent new overview of Chinese financial institutions’ energy investments, Policies Governing China’s Overseas Development Finance: Implications for Climate Change, by Kelly Sims Gallagher and Qi Qi at Tufts University, in Boston – and it has continued to resonate for me, as I’ve travelled to meetings in recent months in Latin America, Europe and Southeast Asia about Chinese overseas impacts.
In short, the idea of the magical document seemed familiar in confronting the great raft of Chinese government and trade-body documents – “guiding opinions”, “guidelines”, “measures”, “provisions”, “notices” and “circulars” – that cover overseas investments, and occupy much of our time and discussions as analysts, activists or other actors trying to understand or influence the path of these financial flows. Specifically, the report brought home how effective this documentation has been in occupying or averting the gaze – when they have been largely ineffective in actually shaping investment.
Of these many categories of document, write Gallagher and Qi, only “guiding opinions” and “guidelines” include enforcement mechanisms for non-compliance. But they still do not have teeth. These mechanisms might include a deduction in the annual inspection score or “a record of ‘bad credit’”, perhaps even the potential loss of business qualification if the enterprise has “violated the relevant laws and regulations and caused serious consequences”, but there is no detail on how this might occur – and it has not. Instead, as Gallagher and Qi put it:
“So far, no companies have been publicly reported to be punished due to environmental problems related to overseas investments, and the bad credit list is not made transparently available, so it is hard to determine the extent of non-compliance without field research and independent verification.”
For all the work that has been done developing these documents, writing and discussing their likely effects and possible implementation, it seems oddly obscure, and seldom noted – other than in this excellent review – that there have been no penalties for non-compliance in these many attempts to “promote” (or “encourage”, or “guide” etc.) a greener Belt and Road. As the authors put it:
“the fragmented measures taken during this period are not sufficiently comprehensive to have effectively internalized the substantial environmental externalities to bring about real stimulus in green investment.”
As the authors note, this is a far cry from the comprehensive and enforceable industrial policy put forward domestically in China, which has spurred the extensive restructuring of investment away from polluting industries and towards innovation and cleaner technology. The result is that while China’s coal consumption appears to be in long-term decline, between 2001 and 2016, Chinese financial institutions supported the construction of more than fifty coal-fired power plants abroad that were either under construction or operational – the majority of them using carbon-intensive sub-critical technology. And this is despite the Chinese government’s commitment to “strengthen green and low-carbon policies and regulations with a view to strictly controlling public investment flowing into projects with high pollution and carbon emissions both domestically and internationally” in the 2015 U.S.-China Joint Statement on Climate Change.
For Gallagher and Qi, the answers lie in further tightening of the policies government overseas investment, in focusing on bank rules, forming industrial policy that favors China’s most innovative industries “going out”, and in encouraging recipient countries to adopt strong environmental rules at home. For me, the report may also caution against over-emphasis on the proliferation of Chinese government documents that thus far characterized the overseas investment debate, when other approaches – be it legal challenges, civil society and media collaboration, new models of activism – might warrant greater attention.
Sam Geall is Executive Editor of chinadialogue.net, and an Associate Fellow at the Chatham House Energy, Environment and Resources Department. He is also Associate Faculty at the Science Policy Research Unit (SPRU) at the University of Sussex, UK
In his articulation of the Belt & Road Initiative (BRI), President Xi outlined an international vision that connects economic, security, cultural, and development themes. However, across China’s policy-making machinery, Chinese bodies associated with supporting the initiative face formidable challenges in realizing this vision.
The foremost challenge is this: how to bridge Xi’s new international vision with domestic priorities. On the one hand, Xi’s vision calls for multilateralism, win-win partnerships, and sustainable development. On the other hand, China’s domestic priorities, most clearly articulated in its five-year plans and industrial policies, have seen a shift towards stronger central government control over all aspects of the economy, particularly of China’s state-owned enterprises.
Thus, the external optics of the BRI can be confusing. Despite the strong public display of domestic support for the BRI theme, there is as yet, no single coordinating authority body in China. China’s newly announced State Aid Agency does not appear to be immediately operational or influential, and incumbent Chinese institutions are likely jostling for influence, each pushing their own version of a program that they believe adheres to Xi’s goals.
This dissonance is particularly apparent in the field of development finance, where China’s new crop of financing institutions operate in a field that was previously the domain of more traditional and conservative players. Here, even though they are all associated with the BRI, the China-based Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB), operate in an observably different fashion from China’s largest policy banks, the China Development Bank (CDB) and the Export-Import Bank of China(EXIM Bank).
A bumpy, but hopeful start
Recent news that the AIIB is considering financing solar power in one of the riskiest countries on earth, Afghanistan, is the latest sign of how it is charting its own course and surprising skeptics along its path. Famously proclaiming to be “lean, clean, and green” at its inception, it continues to be small, with less than 150 staff, has set up a compliance team that reports to the board, not to management, and has so far avoided financing any mining, oil, or coal projects. Over in Shanghai, the NDB has similarly attempted to match sustainability rhetoric with real action. At its first annual meeting in 2016, it announced financing for five non-fossil fuel renewable energy projects in its member countries, and has committed 60% of its funding towards renewables – a target that few of its multilateral banking peers have aimed for.
However, both are far from perfect. The AIIB’s small size inhibits its capability, and its shareholders, particularly from borrowing countries, privately demur about the bank’s slow rate to lend commensurate with its invested capital. Since its establishment two years ago, the bank has only committed USD $4.4 billion, far below its stated objective of USD $10 – 15 billion per year for its first five years. This undershooting of expectations may either be a display of valuing quality over quantity, or be indicative of how “lean” may also mean prohibitive. Further, the bank has also faced criticism from civil society. Its energy policy trails some international peers in setting restrictions on coal power finance, and a few of its projects have raised some concerns among NGOs over environmental and social risks.
While the NDB has deployed more shareholder capital relative to paid-in capital, committing USD $3.4 billion in its first two years, this might have come at the expense of disclosure, due process, and policies, which so far lag that of the AIIB. In addition, despite the strong initial momentum, a combination of economic and political turbulence in several of the five-nation BRICS bloc may have dampened collective interest in the NDB project. It is also an ongoing question whether the bank can truly expand lending beyond its five-country mandate.
Crucially, even if the NDB and AIIB are representing a shift in China’s funding of sustainable development, they are minnows in both total China’s commitments to development finance, and as a share of projects identified with the financing into the BRI. As of year-end 2016, the AIIB and NDB together made up only 1.4% of the estimated USD $292 billion estimated outstanding loans or equity investment into BRI countries.
Yet despite their small size, the new multilateral development banks have become almost synonymous with the BRI, and have become both the poster children and the punching bags for everything that is perceived to be right or wrong with China’s growing assertiveness. Few seem to realize how small their piece of the pie actually is compared to more established domestic players. In response, both the AIIB and NDB have remained at arms-length on having an explicit connection to the BRI; The AIIB has said that it “maintains a qualified relationship to the Belt and Road Initiative (BRI)” and the NDB has said it “sees [BRI] as something that will clearly spur economic activity in the region”.
Nonetheless, their size and initial bumps notwithstanding, the trend being outlined by these two newly-created organizations does broadly tilt towards the spirit of multilateralism, win-win partnerships, and sustainable development that President Xi has espoused. Projects announced by both the AIIB and NDB have not, for the most part, been particularly unilaterally China-driven. Albeit NGO dissatisfaction with several issues, both banks have published environmental standards, and both have engaged the public and the media. Whether this showboating is hiding more nefarious intentions remains to be seen, but the general trajectory may suggest some tacit optimism may be warranted.
Table 1. Comparison of CDB, EXIM Bank, AIIB, NDB, IBRD and IFC
Dinosaurs in need of a new script
The same cannot be said for the other end of this spectrum in China’s development finance arsenal. Dominated by heavyweight incumbents, the China Development Bank (CDB) and the Export-Import Bank of China (EXIM Bank), both banks exhibit a public character very different from the AIIB and NDB, and suggest a BRI strategy less informed by multilateralism and sustainability. This matters, because the CDB and EXIM Bank accounted for 37.7% and 8.2%, respectively, of estimated outstanding loans or equity investment into BRI countries at year-end 2016. At the same time, this finance is flowing into hard infrastructure that has broad and lasting economic, financial, social, and environmental implications, both positive and negative.
For sustainability, while both the CDB and EXIM Bank have nomenclature for corporate social responsibility, they have almost zero published detailed standards for sustainability, information disclosure, and grievance handling. While China’s Green Credit Guidelines promulgated by the banking regulator applies to these policy banks, it only requires the “bare minimum” (e.g. ensure compliance with local laws and regulations). Moreover, the CDB and EXIM Bank are the largest funders of carbon-intensive infrastructure globally. According to the Natural Resources Defense Council, the two banks combined for the largest proportion (approximately 34%) of international public financing from G20 countries into the coal industry since 2013. Research by Boston University also shows that despite both banks being significant funders of the renewable energy sector in China, they strongly support fossil-fuel energy financing into BRI countries. In 2017, BRI countries received 55.9% of total energy financing from the two banks, and of that financing, 34.2% was made into the coal sector, with no investment at all into solar or wind since 2015.
On multilateralism, it is also unclear. The mandate to implement China’s ambitious industrial policies such as “international capacity cooperation”, which aims to promote Chinese “advanced industrial technologies” to international markets, falls squarely on the shoulders of the EXIM Bank. And with technologies such as high-efficiency ultra-supercritical coal power plants formally included in the high-profile “Made in China 2025” strategy as key advanced technologies that ensure China’s industrial competitiveness, it is hard to see how the policy bank would deviate from its set course.
A generation gap
Granted, the CDB and EXIM Bank were borne out of a context vastly different from today’s China. Unlike the AIIB and NDB, which were launched under President Xi’s watch, and are connected to his global vision, the CDB and EXIM Bank were both founded in 1994, when the country’s leadership was then staying true to Deng Xiaoping’s maxim for China to maintain a low foreign profile and to focus on domestic development. Both the CDB and EXIM Bank’s mandates flowed from this focus, with a majority of their funding flowing to domestic heavy industry that would support China’s development. For the CDB, it was central towards spurring domestic investments in infrastructure through local government financing vehicles (LGFV) which used land as collateral. For the EXIM Bank, it supported China’s “going abroad” strategy, providing financing for overseas deals, often at concessional rates that would favor Chinese companies and suppliers. It bears worth mentioning that these practices favoring domestic industry is characteristic behavior of other rising developing nations in the past, from the US in the 1900s, to Japan in the 1970s, through to the East Asian “tigers” of the 80s and 90s. China and its financing institutions are following a familiar pattern.
Nonetheless, the contrast in policy and practice between China’s newly created multilateral banks and its domestic policy banks is jarring. With a set of completely different mandates and priorities, China’s policy banks are more insular than their more internationally-oriented siblings and are more committed to domestic policy goals than they are to international environmental goals such as the Paris Climate Agreement. Thus, it remains to be seen which version of a BRI finance strategy will characterize overseas development finance flows.
Will the real BRI please stand up?
The larger picture that emerges is one of competing visions in China’s overseas finance space, to say nothing of other important BRI-associated organizations, such as the China-Pakistan Economic Corridor (CPEC), the Forum on China-Africa Cooperation (FOCAC), or the Sino-Russia and wider central Asia cooperation via the Shanghai Cooperation Organization (SCO). Perhaps this divide between China’s overseas finance players is indicative of an emerging trend that the BRI concept has become inflated, and increasingly means many different things to different organizations, with various implementing bodies, themes, and programs.
As a result, despite the fanfare and excitement that the launch of the AIIB and NDB elicited, and despite their efforts to espouse multilateralism and sustainability, China’s new batch of BRI-associated institutions have so far not been able to set the tone for the whole Belt and Road Initiative. This has frustrated many early proponents of the initiative, most notably European governments, who have visibly backed away from explicitly endorsing the projects over objections of China’s lack of trade reciprocity, and given further legitimacy to the concerns of the South Asian giant, India, which has refused to support the initiative. Given the ratcheting suspicions over China’s foreign policy, the time is now is for China’s top leadership to reassert President Xi’s commitment to sustainability and multilateralism through action. Pushing China’s policy banks to meaningfully engage the world would be a good start.
Calvin Quek is the head of Greenpeace East Asia’s sustainable finance program; Lauren Huleatt is a staff member of the same program.
