China in Africa: discovering the “China Model” through empirical evidence

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.

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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.

Zooming In, Zooming Out: the frames through which Western media see Belt and Road

An awareness of the narrative frames used by Western media to portray BRI can lead to better reporting

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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.”

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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

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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

 

How should the Chinese media approach Belt and Road reporting?

A conversation with Michael Anti, award-winning journalist, blogger and veteran media observer

Michael Anti

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.

China’s climate foreign aid after ministerial re-shuffle

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.

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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.

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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.

“Bullet proof” policies on the Belt and Road

by Sam Geall

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.

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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

Green Evolution: can China’s new multilateral banks make Belt and Road more sustainable?

by Calvin Quek and Lauren Huleatt

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.

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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

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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.

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Journey to the West: What China tells itself about the Belt and Road Initiative

Ever since President Xi Jinping unveiled the Belt and Road Initiative (BRI) in late 2013, the massive infrastructure and connectivity initiative has captured the world’s imagination. Supporters see it as a timely injection of fresh energy to global development long held back by the West-dominated Bretton Woods institutions. Detractors, meanwhile, warn about the plan’s risk of raising developing countries’ debt burden, its potential climate impacts and the military – or even “imperialist” – ambitions of a rising great power.

Just as the international media has busied itself with deciphering, interpreting and guessing the intention of the BRI grand plan, China’s domestic media is also trying to make sense of the initiative. Not surprisingly, however, its point of departure and framing is markedly different from its peers in other countries. Putting aside state media outlets such as Xinhua and People’s Daily, which clearly have a mandate to positively portray the BRI, a scan of domestic media on the topic shows that Chinese media are producing information, observation, reflection and commentary that connects public perception with policy making, much like they would with day-to-day domestic news reporting.

With the BRI involving some of China’s most prominent financial and business entities, many of these media outlets are finance and business-oriented – China’s Bloombergs and WSJs. A review of four years of Belt and Road coverage, from when the initiative was first announced to end of 2017, by China’s two elite business weeklies, Caixin Weekly (财新周刊) and Caijing Magazine(财经杂志), gives us a glimpse of how the initiative is being portrayed inside China. Both news organizations, well respected for their journalistic professionalism, have produced a substantial body of coverage on the topic over that period, including feature stories, standard news pieces, opinion pieces and editorials. More than 100 such published pieces focus exclusively on the subject, a not so small portion given their weekly nature. On-the-ground reporting, though still relatively rare, constitutes an integral part of this growing coverage, with the footprint of Chinese reporters reaching countries as far as Tanzania and Sri Lanka.

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Belt and Road stories on the covers of Caijing Magazine and Caixin Weekly

Contesting Ideas

Firstly, it is worth noting that the body of Caijing and Caixin media coverage shows clearly that Chinese discourse around Belt and Road is far from a coordinated monologue. Criticism (or rather “contesting ideas”) abounds, especially in the opinion pages. Scholars, officials and commentators use such media outlets as platforms to offer their views about how China should roll out the plan, sometimes challenging “mainstream thinking” on the issue.

When it comes to busting prevailing myth of the Belt and Road Initiative, such commentaries can be brutally direct. For example, Mei Xinyu (梅新育), a Ministry of Commerce (MOFCOM)-affiliated researcher, took aim at a popular perception of the China Pakistan Economic Corridor (CPEC), in particular the China-invested Gwadar Port. Many hailed it as a strategically brilliant maneuver to secure energy supply from the Middle East. Mei, however, directly critiqued the idea as prohibitively costly and, ultimately, a red herring, as Western “hostile forces” could anyway shut off oil supplies at source. Furthermore, Mei warned of the “excessive hyping of CPEC” by interest groups and suggested Chinese investment in Pakistan should hue more closely to commercial logic, rather than wild geopolitical strategy.

Broader critiques from a range of experts and think tankers have  questioned the wisdom of including the “Road” (the “Maritime Silk Road” that goes from the southern coast of China, through Southeast Asia and all the way to East Africa) in the Belt and Road Initiative, highlighting that it significantly increases the geopolitical complexity of the program (as compared to a much more focused Belt, connecting China’s landlocked western provinces with Central Asia and European markets). Others highlighted the risks associated with low returns from large infrastructure projects in developing countries and with the over-emphasizing of exporting overcapacity to other countries.

By publishing such critical voices, the two media outlets have maintained their status as the go-to platforms for critical observation and ideas. But in the larger context it is also more or less playing its accepted social role of “loyal admonishment”, an honest effort to correct and refine the course of a national undertaking, without totally rocking the boat. In other words, they are performing a valuable service to the greater national goal.

“Poster boys”

Despite its global publicity, the actual nature and content of the Belt and Road Initiative is still vague. Besides grandiose declarations of its general vision, no charters, institutions or elaborative policy papers exist that define the precise contour of the initiative, leaving it to mean everything and nothing to the outside world.

In response to this nebulousness, a considerable amount of Caixin and Caijing‘s reporting on the subject is organized around just a few high-profile, symbolic cases. In doing so, the news organizations help give form to the BRI, providing valuable “handles” for people to grasp onto when trying to understand the massive program. Going through the reports, a few “poster boys” stand out as major narrative shaping projects that the Chinese business media keep coming back to. These include China’s high speed rail projects across the globe, the deep sea ports of Hambantota and Gwadar in Sri Lanka and Pakistan, and investments in Myanmar, among others.

The cases depict a picture of the BRI as fundamentally about export (of technology and manufacturing capacity) and import (of resources), which will improve China’s security and positioning in the global market.

The high-speed rail stories run by the two media organizations over the past four years provide the most concrete and detailed account so far of a major, high-priority BRI effort. The “product” (China’s high-speed rail technology and the system attached to it) represents the epitome of “made-in-China 2.0.” No longer a low-cost labor-intensive mass product, it is a complex system of high-tech engineering-heavy industrial components that can compete with high-end manufacturing powerhouses such as Japan, Germany and France.

The stories also highlight one of China’s strategic goals in promoting BRI: moving China higher up on the global value chain. Instead of selling socks and T-shirts, China now exports standards (of railway systems) that would ensure advantage for a consortium of Chinese manufacturers, system designers, and maintenance technicians in overseas markets for years to come. And the goal is being pursued by a combined effort of high-level diplomacy (led by the Premier, Li Keqiang), financial backing (competitive loan packages from Chinese policy banks) and upstream-downstream coordination across the supply chain.

The pool of symbolic cases also contains tales of caution. A not insignificant portion of the Caijing and Caixin coverage is dedicated to failures, some of which are quite spectacular. Inside this “ledger of blunders” lie China’s botched effort to build Bahamas’ largest beach resort, its aborted attempt to open an iron mine in Gabon, and losses to the tune of 5.7 billion RMB in Brazil on agricultural investments. Such cases offer valuable lessons on potential risks along the Belt and Road, and shape domestic perceptions of the external environment, from political, legal and economic perspectives.

The quest narrative

Whether it’s loyal admonishment or lessons from symbolic cases, the stories on Caixin and Caijing share one common denominator: they picture BRI through the viewpoint of Chinese entities, companies, personnel or even products, and locate them in a journey that winds toward a predetermined destination.

The Caixin story of Mr. Chang Xuehui (常学辉) is emblematic of this storyline. The piece follows Chang’s career as a Chinese diplomat and corporate representative in Africa, which trails China’s involvement on the continent. He started his journey as a young medical aid worker to Djibouti in the early 1990s, later traded Chinese goods in Cameroon on behalf of an state-owned enterprise (SOE) from his home province and served as a commerce secretary at the Chinese Embassy in Gabon in the early 2000s to promote Chinese business. It was in Gabon that he became instrumental in securing a deal between the Central African country and China Machinery International, a Chinese SOE, to explore the controversial Belinga iron mine. The deal met with fierce resistance from the local community and environmentalists for its potential threat to the Invindo National Park and was later abandoned after Omar Bongo Jr. replaced his deceased father as President in 2009.

While the report highlights the environmental controversies around the project, it manages to present the controversies as setbacks in Chang’s quest for excellence as a broker of business between China and Africa. That quest ended tragically and violently in Mali, when Chang, then a senior manager representing China Civil Engineering Construction Corporation (CCECC), were killed in a terrorist attack at Radisson Blu Hotel in Bamako. He was negotiating a railway deal with his Malian counterparts.

The life story, at points poignant and touching, is a mirror to the bumpy roads of China’s “Going Out” efforts. There are problems, environmental or social, but these are obstacles to be overcome. A grander version of that storyline can be found in the above mentioned high-speed rail reports. Both Caijing and Caixin have dedicated multiple feature stories tracking every step of Chinese products’ stumbling tour around the globe: the setback in Thailand, the success in Indonesia, the shut door in Poland, the confusion and frustration in Mexico and the United States.

Just as the protagonists in the Chinese classic Journey to the West had to overcome 81 obstacles to finally reach the true teaching of Buddha in India, Chinese goods, services and businesses also need to prevail over myriad challenges before arriving at their own celebrated destination.

There is nothing intrinsically wrong with this approach to Belt and Road reporting. After all, those Chinese players, large SOEs, state banks, or multilateral institutions such as AIIB, are indeed at the center of most BRI developments. Following their point of view does provide a valuable angle as most of them are hardly accessible to media from outside China. It is still remarkable, however, that the two elite news organizations, bastions of journalistic professionalism in China, adopt it as their main viewpoint when they cast their gase outside of China. In the eyes of of the westward traveler, everything else retreats into the background, either as hurdles to go over or as tests of his character.

The absent civilian

This perspective is in stark contrast to how both Caijing and Caixin report on domestic issues. For years, such outlets have differentiated themselves from state media in their representation of the “civilian” perspective, amplifying voices of the powerless, the disadvantaged and the underrepresented. The plight of “ordinary people” often occupies the pages of those media, pressing authorities to respond.

As recently as November 2017, Caixin was sending its journalists to the slums of Beijing to witness how the city’s eviction campaign to clean up sub-standard residential buildings were affecting downtrodden migrant workers. It also dispatched teams of reporters to cover the impact of the coal-to-gas policy on poor villagers around Beijing, who, for the sake of air quality, were told to shift from coal burning to natural gas for winter heating, only to be hit by an unexpected gas shortage.

But the “civilian” perspective seems to disappear as soon as these media step outside China’s borders. There, they almost automatically don the hat of the Chinese state and look around with its perspective. Granted, on-the-ground reporting in BRI covered countries is still relatively rare, which makes it hard for reporters to get in touch with non-elite stakeholders in a remote country. Distance is a natural barrier for collecting local opinions about China-backed projects, which are often built in hard-to-access regions of countries suffering from chronic political instability and economic deprivation. When Caijing journalist Hao Zhou (郝洲) went on a reporting trip in Pakistan to assess the progress of the CPEC, he wrote that he needed to be chauffeured by a team of armed military guards everywhere he went, even to go just across the street, at Gwadar port.

When reporters did bring local community issues into their lens, they sometimes treated their views like fire hoops for Chinese actors to jump through. In a Caixin report about Sri Lanka’s Colombo port city project, a landmark piece of the BRI, the reporter allocated a section for the concerns from local environmental groups and fishermen about the potential damage from sand dredging in the harbor. For every specific complaint that the locals raised, be it the impact on coral reefs, or interference with fish migration routes, the report managed to get a response from the Chinese engineering company that claimed them addressed, one by one.

As Caijing‘s international affairs editor Yuan Xue (袁雪) noted in one of her reports about Chinese involvement in Tanzania, there is already awareness among Chinese players overseas that the lack of interaction with civil society and local communities would become a limiting factor to how far China could go with its development agenda along the Belt and Road.  If that is really the case, then for the Chinese media, telling “civilian-centered” Belt and Road stories to their Chinese audience, as they do with domestic stories, could be a good starting point to create the initial society-to-society bonding that would be the building block for sustainable and inclusive development supported by China overseas.

At Caijing, there are already attempts to put civil society at the center of reports. Sun Aiming(孙爱民)’s report on the growing pains of Myanmar’s booming NGO sector is a good example of how such storytelling delivers insights about the lens through which local civil society sees Chinese projects. It is more stories like this that would be a real service to the nation.

 

This blog aims to promote civilian-centered storytelling by providing a platform for documenting, reflecting and critiquing Chinese “storytelling” about its footprint overseas, and by engaging active Chinese storytellers such as journalists, editors, NGO workers, think tank researchers, etc. in a dialogue with their international peers.

Why “Panda Paw Dragon Claw”?

China’s increasing visibility and influence on the global stage have induced a mixed response.

Many in the field of studying Chinese involvement overseas have invoked the image of the dragon. Professor Deborah Brautigam, an authoritative scholar on China’s aid programs in Africa, named her groundbreaking book about that subject “the Dragon’s Gift”. Professor Kevin Gallagher, a Boston University expert on China-Latin America economic relations, titled one chapter in his book “the Dragon’s footprint”.

Fully aware that the dragon metaphor might be clichéd and stereotypical, we believe that it nevertheless captures the menacing posture that many associate with China. Its ambitious global program to boost infrastructure building, to finance development projects and to expand the reach of its industries overseas at times seem like the muscular claw of the dragon trying to snatch its preys, be it energy or mineral resources.

But we should not forget China’s other global image, which is more cuddly and warm, as represented by the giant panda. Like the affection those chubby animals invoke in zoos across of the globe, many Chinese projects and initiatives overseas are actually welcomed and embraced. These include its longstanding medical aid program to Africa since 1960s, and more recently, its South to South climate aid.

The overused and value-neutral concept of “footprint” is inadequate in its imagery force to truly reflect the complexity of China’s involvement beyond its own borders. Here we take the liberty of juxtaposing the two polarized images, panda paw and dragon claw, and leave it to our readers to decide which one they see. We hope the site can work like a hologram.

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“We hope the site can work like a hologram.“

We are also acutely aware of the fact that stories about China’s overseas adventures are often told from the standpoints of elites, in and outside the country. While documenting and analyzing the decisions and activities of politicians, financial institutions and business leaders are important, telling the story from the “civilian perspective”(民间视角) is also crucial to complete that story. To us, the words from a Sri Lankan fisherman are no less relevant than those of a European finance minister.

This blog is started by those who aspire to tell a better story about China’s involvement beyond its borders. We are journalists, campaigners, analysts, scholars and practitioners with years of experience navigating Chinese politics, bureaucracy, finance and their ramifications overseas. We hope that it will serve as a convening place for the community of China “storytellers” to share, discuss and debate about China’s impact globally, with a particular focus on developments in the energy and environmental fields.