Archive for ‘GeoPolitics’

25/11/2014

India-Pakistan Sparring Opens Door for China in South Asia – Businessweek

For a senior Afghan diplomat sitting in India’s capital, it’s easy to explain how a region with a quarter of the world’s people can account for only five percent of global trade.

Narendra Modi and Xi Jinping

“India and Pakistan need to overcome their problems,” M. Ashraf Haidari, deputy chief of mission at Afghanistan’s embassy in New Delhi, said in an interview ahead of this week’s meeting of the South Asian Association for Regional Cooperation, or SAARC. “Summits happen, leaders come, there’s all this consensus and declarations announced. But unfortunately it doesn’t happen in reality.”

As leaders of eight SAARC countries meet in Nepal this week for the first time since 2011, Indian Prime Minister Narendra Modi has more reasons than ever to turn the bloc into a regional force to counter China’s growing influence in South Asia. Doing so will require him to overcome differences with Pakistani leader Nawaz Sharif.

So far, things aren’t looking good. Modi’s government scrapped talks with Pakistan in August, which was followed by the worst border fighting between the countries in a decade. At the same time, China has promised SAARC nations part of a $40 billion Silk Road fund to finance infrastructure investments.

“SAARC won’t be able to counter China’s influence,” said Nishan de Mel, executive director and head of research at Colombo-based Verite Research Pvt., a policy research group. “China tends to have an approach that isn’t too demanding and isn’t politically difficult for the partner country and where the partner country will tend to see benefits quite quickly. India’s approach tends to be more hard-nosed.”

via India-Pakistan Sparring Opens Door for China in South Asia – Businessweek.

25/11/2014

China’s Railroad Ventures Abroad Project Soft Power – Businessweek

Last week state-owned China Railway Construction Corp. (CRCC) signed a lucrative contract with Nigeria to build an 870-mile coastal railroad from Lagos to Calabar, two of the West African nation’s leading cities. The price tag: $12 billion. That makes it the largest single overseas engineering contract awarded to any Chinese company, according to state-run Xinhua newswire.

Chinese and Venezuelan construction workers build an elevated platform at China Railway Engineering Corporation's (CREC) Tinaco-Anaco railway project in Los Dos Caminos, Venezuela in 2012

Beijing hopes many more deals will follow. In recent months, Chinese leaders on overseas missions have often bragged of the country’s prowess in building railroads, including high-speed bullet trains.

In May, Li Keqiang made his first diplomatic trip as China’s premier to Africa, visiting Ethiopia, Nigeria, Angola, and Kenya. At the headquarters of the African Union in Addis Ababa, Ethiopia, he said he envisioned a bright future for the continent when African capitals would be connected by high-speed rail. And China, he added, according to Xinhua, could “help make this dream come true.”

In early November, a consortium of Chinese companies led by CRCC won a $3.7 billion contract to build a bullet train in Mexico; that contract was canceled a few days later due to suspected corruption on the Mexican side. But the aborted deal is still a sign of overseas demand for China’s rail technology.

Nor are rail deals limited to developing nations: In October, Boston’s transit authority signed a $567 million contract with China’s CNR Corp. to build 284 subway cars.

In addition to stimulating domestic manufacturing demand for steel and rail equipment exports, China’s leaders hope the flurry of railway deals will have soft power benefits as well. The Nigerian railroad will be “a mutually beneficial project,” as CRCC Chairman Meng Fengchao told Xinhua. He pledged to hire at least several thousand workers from Nigeria; in the past, Chinese companies have been criticized for bringing in Chinese workers to complete large engineering projects, thus denying work opportunities to local populations.

via China’s Railroad Ventures Abroad Project Soft Power – Businessweek.

22/11/2014

China commits $45.6 billion for economic corridor with Pakistan | Reuters

The Chinese government and banks will finance Chinese companies to build $45.6 billion worth of energy and infrastructure projects in Pakistan over the next six years, according to new details of the deal seen by Reuters on Friday. The Chinese companies will be able to operate the projects as profit-making entities, according to the deal signed by Prime Minister Nawaz Sharif during a visit to China earlier this month.

At the time, officials provided few details of the projects or the financing for the deal, dubbed the China-Pak Economic Corridor (CPEC).

The deal further cements ties between Pakistan and China at a time when Pakistan is nervous about waning U.S. support as troops pull out of Afghanistan.

Pakistan and China, both nuclear-armed nations, consider each other close friends. Their ties are underpinned by common wariness of India and a desire to hedge against U.S. influence in South Asia.

via China commits $45.6 billion for economic corridor with Pakistan | Reuters.

19/11/2014

Summitry: The Chinese order | The Economist

FOR the past week China’s state media have conveyed an almost imperial choreography playing out in the Great Hall of the People, in Zhongnanhai, the Chinese leaders’ compound next to the Forbidden City in Beijing, and at Yanqi Lake just outside the capital. Every day, on television and in newspapers, President Xi Jinping (above, right) is portrayed receiving lines of grateful world leaders. And every day he is seen arranging prosperity, ordering peace or, in an agreement with Barack Obama, America’s president, (above, left) on carbon emissions, even saving the planet. It escaped no visitor that not since Mao Zedong has a Chinese leader conducted foreign affairs with such eye-catching aplomb. Yet this was not only Mr Xi’s moment, but also China’s—a diplomatic coming-out party of sorts.

On several fronts, a country known for a somewhat reactive diplomacy has made the running. China was host this week to the Asia-Pacific Economic Co-operation—APEC, a regional trade gathering that rarely makes waves. Yet in quick succession China declared free-trade agreements with South Korea and Australia, two sizeable Asian economies, all but signed. It announced a breakthrough with America by promising at last to eliminate tariffs on information-technology products. And to the delight of Asian leaders and of Vladimir Putin, president of Russia (reviled in the West but made welcome in Beijing), Mr Xi announced $40 billion in investments to cement a new commercial “Silk Road” that will run overland through Central Asia and Russia eventually to Europe and by sea through South-East Asia to the Middle East and Africa.

Most strikingly, on November 11th Mr Xi urged APEC’s 21 members to move towards a Free Trade Area of the Asia-Pacific (FTAAP). The commitment to “study” the idea over the next two years is in effect to launch it, and for all that an eventual FTAAP is unlikely to be notable for its high standards, the announcement was intended to stand in contrast to the predicament of the 12-nation Trans-Pacific Partnership, sponsored by America, which remains bogged down in negotiations between America and Japan despite earlier hopes of a breakthrough announcement at APEC.

On security matters, Mr Xi appeared to be making the running, too. There had been a “meeting of minds”, according to Benigno Aquino, president of the Philippines, over disputed reefs in the South China Sea. Most striking, though, was an agreement for China to resume high-level contacts with Japan. China has rationed these, and in 2012 began actively challenging Japan’s control of the Senkaku islands (known as the Diaoyu islands to China) in the East China Sea; ties had been frozen entirely since Japan’s prime minister, Shinzo Abe, visited Tokyo’s Yasukuni shrine last December. The shrine, honouring Japan’s war dead, has militarist overtones.

Yet on November 7th China and Japan announced a four-point agreement to reduce tensions (see article). The signal agreement was later sealed when Mr Xi met Mr Abe for the first time as president. Admittedly, the withering handshake and puckery expression he offered Mr Abe lent the impression of a dog owner obliged to pick up another pooch’s turd.

That breakthrough was downplayed in state media, perhaps because Chinese ultranationalists might perceive in it a climbdown from China’s hard line over the islands, and towards Japan in general. But given much more prominence was the summit between the Chinese and American presidents, their second full one after that at Sunnylands in California in 2013. Again, there were welcome breakthroughs in co-operation. One was the agreement on information technology, which should now clear the way for a World Trade Organisation pact on IT products. Another was that both sides agreed to find common confidence-building and other measures to help avoid misunderstandings or accidental military confrontations on or above the East China Sea and South China Sea, where the United States shadows China’s increasingly assertive military presence.

But the biggest surprise was the agreement on greenhouse gases. China and America are the two biggest polluters, together accounting for 44% of global carbon emissions. Without their commitment to cut emissions, any global target is meaningless. On November 12th Mr Obama announced a “historic” agreement in which America will cut emissions by 26-28% by 2025, compared with 2005 levels, while China promises its emissions will peak around 2030. It gives a big boost to getting a global deal on carbon emissions at a crucial gathering in Paris next year. For China, a huge guzzler of coal, setting a date for emissions to peak is a first, even though it is five years later than the Americans would have liked. To bring down emissions after 2030, it aims for a big growth in nuclear power and for a fifth of its electricity to come from non-fossil fuels.

via Summitry: The Chinese order | The Economist.

19/11/2014

Putin Loses His Grip on Central Asia as China Moves In – Businessweek

As President Vladimir Putin strains to keep Ukraine within Russia’s grasp, he may be losing his grip on another part of his would-be empire: the former Soviet republics of Central Asia, which are increasingly turning toward China for investment and trade.

Russia's President Vladimir Putin and Tajik President Emomali Rakhmon meet on the sidelines of an informal summit of the regional security group in 2013

In the latest sign of its growing economic ties with the region, China is planning a $16.3 billion fund to finance railways, roads, and pipelines across Central Asia, reviving the centuries-old Silk Road trade route between China and Europe. President Xi Jinping first proposed the idea last year during a visit to Kazakhstan, the region’s wealthiest country.

Beijing has plenty of reasons to spend big in Central Asia. Improved infrastructure would help link China to European markets and give China increased access to the region’s rich natural resources. Kazakhstan is a major oil producer, while neighboring Kyrgyzstan has large mineral deposits and Turkmenistan produces natural gas.

At the same time, the planned construction would give an economic boost to adjoining areas of western China where Beijing is trying to quell a separatist insurgency, says Sarah Lain, a researcher at the Royal United Services Institute in London. As it has in Africa, China is likely to bring Chinese workers into Central Asia to do much of the construction.

During much of the 19th century, the Russian and British empires vied for control of Central Asia, a rivalry dubbed the “Great Game.” But the predominantly Muslim region, which also includes the countries of Tajikistan, Turkmenistan, and Uzbekistan, was annexed by the Soviet Union after the Bolshevik revolution and has remained close to Moscow in the post-Soviet era.

Putin has sought to maintain those ties—for example, by inviting Kazakhstan and Kyrgyzstan to join a customs union with Moscow. But with the Russian economy in a deep slump, he can’t match the big money that China is offering. Indeed, Russia’s economic malaise is clobbering some Central Asian economies, spurring them to seek help from China.

via Putin Loses His Grip on Central Asia as China Moves In – Businessweek.

30/10/2014

United States praises China’s growing role in Afghanistan | Reuters

The United States welcomed China’s growing role in trying to ensure Afghanistan’s stability on Thursday, saying a Beijing conference of foreign ministers on Afghan reconstruction this week shows its commitment to the region as Western troops pull out.

Chinese President Xi Jinping (R) and Afghan President Ashraf Ghani Ahmadzai attend a signing ceremony at the Great Hall of the People in Beijing October 28, 2014. REUTERS/Lintao Zhang/Pool

The comments, made by a senior State Department official, are rare U.S. praise for Beijing, which this week hosts Afghan President Ashraf Ghani on his first visit abroad since assuming office in September.

Washington and Beijing, which have typically contentious relations on geopolitical issues from Iran to the South China Sea, have both said they see Afghanistan as a point where their security interests converge.

On Tuesday, China pledged to give Afghanistan $327 million in aid through 2017, more than the $250 million contribution it has so far offered since the fall of the hardline Islamist Taliban regime in 2001.

“China’s view of engaging in Afghanistan over the course of these past few years has really changed significantly, and in our view, in a very positive direction,” the official told reporters during a telephone briefing.

On Friday, foreign ministers from Asian and Central Asian countries will gather in Beijing for a fourth round “Istanbul Process” conference on Afghanistan, which China hopes will help boost development and security there. White House counsellor John Podesta will attend the meeting.

“It’s a real demonstration of China’s commitment to Afghanistan, to its role in the region and one that we greatly welcome,” the official said.

via United States praises China’s growing role in Afghanistan | Reuters.

28/10/2014

Putin Turns to China as Russia’s Economy Is Weakened by Sanctions – Businessweek

Defying the U.S. and Europe is forcing Russian President Vladimir Putin to aid his biggest rival to the east. To avert a recession, Russia is turning to China for investment, granting it once restricted access to raw materials and advanced weapons, say two people involved in planning Kremlin policy who asked not to be identified discussing internal matters. Russia’s growing dependence on China, with which it spent decades battling for control over global communism, may end up strengthening its neighbor’s position in the Pacific. With the ruble near a record low and foreign investment disappearing, luring Chinese cash also may deepen Russia’s reliance on natural resources and derail efforts to diversify the economy.

“Now that Putin has turned away from the West and toward the East, China is drawing maximum profit from Russian necessity,” says Masha Lipman, an independent political analyst in Moscow who co-authored a study on Putin with former U.S. Ambassador Michael McFaul. China is wasting no time filling the void created by the closing of U.S. and European debt markets to Russia’s largest borrowers. A delegation led by Premier Li Keqiang signed a package of deals on Oct. 13 in Moscow. Among them were an agreement to swap $25 billion in Chinese yuan for Russian rubles over three years, a treaty to protect companies operating in Russia and China from having their profits taxed twice, and cooperation on satellite-navigation systems and high-speed rail. To promote trade, Export-Import Bank of China agreed to provide credit lines to state-owned VTB Group and Vnesheconombank, Russia’s development bank, as well as a trade finance deal with Russian Agricultural Bank.

Russia’s economy is more vulnerable than it’s been since the collapse of the Soviet Union in 1991. Unlike then, Russians are united in support of their leader, and with $455 billion in foreign currency and gold reserves, the country isn’t broke, according to Lipman. “The economy was much worse then, but Russia was in a much better position geopolitically because it had the support of the U.S. and Europe,” she says. Putin spokesman Dmitry Peskov didn’t respond to requests for comment.

via Putin Turns to China as Russia’s Economy Is Weakened by Sanctions – Businessweek.

17/09/2014

Is China Ready to Step Up and Invest in India? – India Real Time – WSJ

While Chinese companies have been great at peddling their products in India, they have been surprisingly reluctant to invest here. China has invested less in India than even Poland, Malaysia or Canada have.

President Xi Jinping’s three-day visit to India starting Wednesday is likely to include some massive pledges to try to remedy this imbalance.

When Prime Minister Narendra Modi visited Japan recently, Japan pledged to invest $35 billion in India. President Xi is expected to try to eclipse Japan’s promises, possibly pledging $100 billion in investment according to some local reports. His meetings with Mr. Modi are predicted to lay the groundwork for a wave of Chinese money to build industrial parks and bullet trains.

Annual trade between India and China has galloped to $66 billion from $3 billion 14 years ago, something that underscores the rise of Beijing as the global manufacturing hub and India’s growing appetite for everything from phones to machinery from China.

While the trade relationship between the two countries has bloomed, foreign direct investment from China has not. According to Indian government statistics, the country has received a total of around $400 million from China in investment in the last 14 years. Even if you add the $1.2 billion of direct investment India received from Hong Kong, China is still well behind the $22 billion in foreign direct investment from the United Kingdom, $17 billion from Japan, $13 billion from the Netherlands and $1.9 billion from Spain.

It’s not that China doesn’t invest abroad. According to data from United Nations Conference on Trade and Development, China was the third biggest source of foreign direct investment last year, having invested more than $100 billion in other countries. In the seven years to 2012, it invested more than $25 billion in the 10 members of the Association of Southeast Asian Nations alone.

Chinese investment has tended to focus on the resources sector to power its economy. Much of it has gone into getting control of oil, natural gas and coal in Africa, Australia, Indonesia and elsewhere. India has not attracted much of this investment as it is a net importer of resources and has a heavily regulated energy sector, said Rajiv Biswas, economist for IHS.

“China wants to increase investment in India and wants Chinese companies on the ground there,” Mr. Biswas said. “Most of it will be in manufacturing and infrastructure space.”

Chinese companies may also be looking to move some of their manufacturing to India as they struggle with rising wages at home, said Ajay Sahai, director general and chief executive at Federation of India Export Organization.

If India can’t find better ways to fix its trade imbalance with China, New Delhi may want to increase taxes on some imports such as auto-components and pharmaceuticals to encourage Chinese companies to set up factories in India, he said.

“This will not only raise Chinese investment in India but also help in fixing the trade imbalance,” said Mr. Sahai.

via Is China Ready to Step Up and Invest in India? – India Real Time – WSJ.

17/09/2014

5 Things to Look Out for During Xi Jinping’s Visit to India – WSJ

Manan Vatsyayana/Agence France-Presse/Getty Images

1 INFRASTRUCTURE

Prime Minister Narendra Modi is looking for foreign capital and expertise to build “smart cities”, high-speed trains and modern airports of the kind that China has built for itself in the past decade. The two leaders are expected to sign a deal to bring bullet trains to India and may also reach an agreement for the building of world-class railway stations and airports.

2 INDUSTRIAL PARKS

The two countries laid the groundwork for Chinese investment in industrial parks in India when Indian Vice-President Hamid Ansari visited Beijing in June. Indian officials say they expect to ink deals worth $5 billion for two parks – one in the western state of Gujarat, Mr. Modi’s home state, and the other in Maharashtra. The idea is to make it easier for Chinese companies to set up shop in India.

3 BORDER TROUBLES

Territorial disputes that have long dogged Sino-Indian ties aren’t the focus of this visit, but are sure to come up. Two reports this week – one about an alleged incursion by Chinese troops in Ladakh and another about protests by Chinese civilians and troops against the construction of an Indian canal along the disputed border – have highlighted the unresolved issues. Even after 17 rounds of talks, no solution has emerged – don’t expect one during this visit either.

4 COMPETITION WITH JAPAN

Indian newspapers have been filled with anticipation about whether China will outdo its Asian rival, Japan, in promising investments for India. Earlier this month, Japan pledged to pour $35 billion into India over five years; China is expected to go further. Expect reams of analysis of Mr. Xi’s rapport with Mr. Modi. When Japanese Premier Shinzo Abe met Mr. Modi, they bear hugged.

5 BREAKING OUT OF THE MOLD

Officials have raised hopes of a “directional change” and an “orbital jump” in Sino-Indian ties, which have long been bogged down by bureaucratic mistrust. Trade relations have flourished in the past decade, but are skewed in China’s favor– and investments have remained very low. Experts are hoping Mr. Modi – who worked with Chinese as chief minister of Gujarat – will adopt a pragmatic approach to push for Chinese money. If he succeeds, the visit may set the stage for an era of economic collaboration between the two Asian giants.

via 5 Things to Look Out for During Xi Jinping’s Visit to India – WSJ.

17/09/2014

Indian President flies out of Vietnam

President Pranab Mukherjee Wednesday wrapped up his four-day state visit to Vietnam and flew back to India.

During the President’s visit, India and Vietnam called for a peaceful, unfettered South China Sea, inked seven agreements including for direct Delhi-Hanoi flights and an extended line of credit for purchase of military equipment. Both countries also set a target of $15 billion bilateral trade by 2020

via President flies out of Vietnam.

Follow

Get every new post delivered to your Inbox.

Join 535 other followers