Archive for ‘Economics’


Theresa May in talks with Chinese president Xi Jinping

Theresa May has met President Xi Jinping for talks on the second day of her visit to China.

At a joint press conference with Mr Xi, Mrs May said Britain and China were enjoying a “golden era” in their relationship.

And she wanted to “take further forward the global strategic partnership that we have established”.

The UK prime minister is in China at the head of a 50-strong business delegation.

With Mrs May’s discussions with Premier Li Keqiang on Wednesday largely given over to trade and Brexit, the talks with Mr Xi were due to focus on global issues, including North Korea’s nuclear ambitions.

After shaking hands for the cameras, Mrs May and Mr Xi were seated with their delegations on opposite sides of a large conference table at the Diaoyutai State Guesthouse in Beijing.

Mrs May hailed improved trading links between the two nations since Mr Xi’s state visit to Britain in 2015.

She added: “I’m very pleased with the people-to-people links we have been able to build on in education and in culture too.

“Also as you say we are both significant players on the world stage of outward looking countries.

“And as we both sit together as permanent members of the security council of the united nations, there are global challenges which we both face, as do others in the world.”

Image captionTheresa May outside the British Embassy in Beijing

Mrs May is understood to have raised environmental issues with Mr Xi – and she presented him with a box-set of the BBC’s Blue Planet II series, with a personal message from presenter Sir David Attenborough.

The show examined the effect of human behaviour on the environment and was referenced by Mrs May last month when she pledged to eradicate all avoidable plastic waste in the UK by 2042 as part of a 25-year green strategy.

Warm words

On the first day of her trip the prime minister announced a UK-China effort to strengthen international action against the illegal trade in ivory.

After meeting Mrs May in Beijing on Wednesday, Chinese Premier Li Keqiang said China would further open up its markets to the UK, including to agricultural products and financial services.

UK-China trade is currently worth a £59bn a year and Mrs May has said she expects deals worth a further £9bn to be signed during the course of her visit.

One of the UK companies travelling with the PM, health-tech firm Medopad, has said it signed more than £100m of commercial projects and partnerships with organisations including China Resources, GSK China, Peking University and Lenovo.

BBC political editor Laura Kuenssberg said the prime minister would want to build on the warm words from China when she meets Mr Xi, amid pressure on her from her own party and Brussels in recent days.

Fox urges Tories to focus on the ‘big picture’

By Laura Kuenssberg, political editor

International Trade Secretary Liam Fox is in China and wants his restive colleagues at home to focus on the big picture.

Listing the number of deals that have been done already this week during the prime minister’s visit he told me that building levels of trade with China is a real “success story”.

No 10 is confident that by the end of this marathon trip well over £9bn of new contracts will have been secured – such a high profile political investment edging deals over the line.

Dr Fox accepts it will take some to get trade deals done in the longer term. The UK will be limited not just before Brexit, but also during the transition period, in how much can get done.


Theresa May unveils education deal at start of China visit

Theresa May has announced new education links with China as she arrives for a three-day visit to boost trade and investment after Brexit.

The initiative includes the extension of a Maths teacher exchange programme and a campaign to promote English language learning in China.

The UK prime minister has claimed her visit “will intensify the golden era in UK-China relations”.

But she has stressed China must adhere to free and fair trade practices.

In an article for the Financial Times ahead of her arrival, she acknowledged that London and Beijing did not see “eye-to-eye” on a number of issues – and she promised to raise concerns from UK industry about the over-production of steel and the protection of intellectual property against piracy.

‘Two great nations’

Other issues likely to be discussed include North Korea and climate change. It is not clear whether they will include human rights in Hong Kong.

Mrs May, who will hold talks with Chinese President Xi Jinping, is travelling at the head of a 50-strong business delegation, including BP and Jaguar Land Rover, as well as small firms and universities including Manchester and Liverpool.

Her first stop, Wuhan, in central China, is home to the largest number of students of any city in the world.

The education deal includes:

  • Extension of a maths teacher exchange programme for a further two years to 2020, enabling around 200 English teachers to visit China
  • Joint training of pre-school staff in the UK and China
  • Better information-sharing on vocational education
  • The launch of an “English is GREAT” campaign to promote English language learning in China
  • Education deals worth more than £550m, which it is claimed will create 800 jobs in the UK

Mrs May said new agreements signed on her trip would “enable more children and more young people than ever to share their ideas about our two great nations”, helping to ensure that “our golden era of co-operation will endure for generations to come”.

During the three-day trip, Mrs May is expected to focus on extending existing commercial partnerships rather than scoping out new post-Brexit deals.

She said she expected China to play a “huge role” in the economic development of the world, adding: “I want that future to work for Britain, which is why, during my visit, I’ll be deepening co-operation with China on key global and economic issues that are critical to our businesses, to our people, and to what the UK stands for.”

She acknowledged that her agenda “will not be delivered in one visit: it must be our shared objective over the coming years”.

Hong Kong concerns

But she added: “I’m confident that, as China continues to open up, co-operation and engagement will ensure its growing role on the global stage delivers not just for China, but for the UK and the wider world.”

In a statement ahead of the visit, a Chinese Ministry of Foreign Affairs spokesman said Beijing saw Mrs May’s trip as “an opportunity to achieve new development of the China-UK global comprehensive strategic partnership”.

But asked whether the UK had achieved its aim of becoming China’s closest partner in the West, he replied: “Co-operation can always be bettered. As to whether China and Britain have become the closest partners, we may need to wait and see how Prime Minister May’s visit this time plays out.”

Pro-democracy protester in Hong KongImage copyrightEPA
Image captionCritics accuse China of abandoning its “one country, two systems” pledge on Hong Kong

In recent years, both countries have hailed a “golden era” in UK-Sino relations.

China has signalled its desire to invest in high-profile UK infrastructure projects, including the building of a new nuclear reactor at Hinkley Point – although its involvement has raised some national security concerns.

British trade with China has increased by 60% since 2010 and UK ministers are expected to use the trip to stress that the UK will remain an “excellent place to do business” after it leaves the EU next year.

The UK has said it will prioritise negotiating free trade agreements with major trading partners such as the United States, Australia and Canada after it leaves the EU in March 2019.

Earlier this year, the UK said it would not rule out becoming a member of the Trans Pacific Partnership free-trade zone, whose members include Japan, South Korea and Vietnam and which is considered by many as a counter-weight to Chinese influence in the region.

Chinese President Xi Jinping with his US counterpart Donald Trump in NovemberImage copyrightREUTERS
Image captionUS President Donald Trump and French counterpart Emmanuel Macron have both visited China recently

Lord Patten, the last British governor of Hong Kong, has urged Mrs May to use the visit to privately raise what he says has been the steady erosion of freedoms and rights in the former British colony in recent years.

Hong Kong is supposed to have distinct legal autonomy under the terms of its handover to China in 1997.

In a letter to the PM, Lord Patten and ex-Lib Dem leader Lord Ashdown said its residents needed assurances that the UK’s growing commercial relationship with China would not “come at the cost of our obligations to them”.


China’s ambitions in space are growing

America is keeping its distance

The base in a township of Wenchang city is the newest of China’s four space-launch facilities. It is also by far the easiest to visit—thanks in part to the enthusiasm of officials in Hainan, a haven for tourists and rich retirees. Wenchang’s local government has adopted a logo for the city reminiscent of Starfleet badges in “Star Trek”. It is building a space-themed tourist village near the launch site, with attractions that include a field of vegetables grown from seeds that have been carried in spaceships.

If the dream is to turn this palm-fringed corner of Hainan into a tourist trap comparable to Florida’s balmy space coast, there is still a lot to do. Several idle building sites suggest that some investors have gambled rashly. Signs have been taken down from a patch of scrub that was once earmarked for an amusement centre. On a recent weekday, pensioners wintering nearby were among the few visitors to the launch site. A local says that people often come out feeling like they have had a lesson in patriotism, but not much fun.

Perhaps this will change when Wenchang gets up to speed. The base is crucial to China’s extraterrestrial ambitions because it is the only site from which it can launch its latest and largest rocket, the Long March 5 (pictured). Narrow railway tunnels limit the size of the components that can be delivered to the three other bases. Rockets are anyway more efficient the closer they are launched to the equator, where the faster rotation of Earth provides extra lift. Of China’s launch centres, Wenchang is by far the nearest to that sweet spot.

The Long March 5 can carry about 25 tonnes into low orbit, roughly double the maximum load of China’s next most powerful rocket. This is only a bit less than the biggest rocket currently used by America’s space agency, NASA, can carry—but far less than the Falcon Heavy, a behemoth being developed by SpaceX, a private American firm (see article). The Long March 5’s maiden launch, in 2016, was a success. But the second one last summer failed a few minutes after lift-off. Wenchang’s two launch pads have stood empty ever since.

That failure, and another one last year involving another type of Long March rocket, slowed China’s space efforts. Officials had hoped to launch around 30 rockets of one type or another in 2017 but only managed 18 (there were 29 launches in America and another 20 of Russian ones—see chart). But they promise to bounce back in 2018, with 40-or-so lift-offs planned this year. These will probably include a third outing for the Long March 5—assuming its flaws can be fixed in time—and missions that will greatly expand the number of satellites serving BeiDou, China’s home-grown satellite navigation system.

The next two years could see big progress in China’s two highest-profile civil programmes in space: lunar exploration and building a space station. In 2013 China sent a rover to the moon’s surface, the first soft landing there since Russia and America discontinued such efforts in the 1970s. Towards the end of this year China hopes to put a robot on the far side of the moon, a region never yet explored from the lunar surface. That landing will help preparations for an attempt—tentatively planned for 2019—to collect rocks from the surface and return them to Earth.

China talks of launching the main module of a permanent space station as soon as 2019, and expanding it with two bolt-ons early in the following decade. It is going it alone with this programme. America passed a law in 2011 that forbids NASA from sharing knowledge or resources with its Chinese equivalent. This ensured that China remained locked out of the International Space Station; America was never keen on letting it in because of the military uses of China’s space programme. China has instead experimented with two temporary orbiters of its own, the newest of which it crewed for a month in 2016 (the older one has reached the end of its mission and looks likely to tumble to the Earth sometime in the next few months).

Eventually, China would like to send its taikonauts to the moon. There is no target date for achieving this, but in 2016 an official speculated that a Chinese citizen might step on the lunar surface within 15 to 20 years. The country has Mars in its sights, too. It plans to land a rover there in 2020 or shortly thereafter. It wants to retrieve rocks from Mars sometime in the 2030s.

China still lags far behind America in its space accomplishments, but it does not appear bent on a cold-war-style race. It spends far less on its civil space programme than the $19.7bn that NASA was allocated last year. China is doggedly pursuing its goals, however. Joan Johnson-Freese of the US Naval War College compares China to Aesop’s tortoise.

One of the Communist Party’s aims is to boost national pride at home. In 2016 Mr Xi declared that April 24th would be celebrated annually as “space day”: it is the anniversary of China’s first satellite launch in 1970. Even if outshining America remains a distant goal, China is mindful of the progress being made by India, another big developing country that dreams of the stars. India is planning its first soft-landing on the moon in March, more than four years after China’s.

Europe is keen to collaborate. Chinese and European scientists launched their first joint satellite in 2003. They are now co-operating in a study of solar wind. Astronauts from the European Space Agency (ESA) recently trained with Chinese counterparts in survival skills. Karl Bergquist, an ESA official, says a few European astronauts are learning Chinese to prepare for possible joint missions.

But America’s worries are growing about the military aspects of China’s space programme. Marco Aliberti of the European Space Policy Institute in Vienna says this has been particularly evident since 2013, when China showed it could launch projectiles into the lofty orbits traced by America’s most sensitive satellites, suggesting it was developing an ability to knock them out. Many American scientists favour a more relaxed approach. But in an era of “America First”, the chances are slim of NASA being allowed to befriend China.

All this rankles among Chinese officials. They note that tense relations between America and Russia have not prevented those two countries’ space agencies from working together (since retiring the space shuttle, America has been dependent on Russian rockets to get astronauts into space). As many people in China see it, America’s behaviour is further confirmation of a long-held belief that America wants to create impediments to China’s rise. Jiao Weixin, a space expert at Peking University, says America is locked in “cold-war thinking”. If American authorities do not wish to work with China, he says, there are others who will.

This article appeared in the China section of the print edition under the headline “Hainan aims high”

China’s growth in 2017

China’s economy grew by 6.9% in 2017 according to official data – the first time in seven years the pace of growth has picked up.

The figure beats Beijing’s official annual expansion target of about 6.5%.

China is a key driver of the global economy and so the better-than-expected data is likely to cheer investors around the world.

But many China watchers believe the GDP numbers are much weaker than the official figures suggest.

This month alone, the governments of Inner Mongolia and of the large industrial city of Tianjin have admitted their economic numbers for 2016 were overstated.

Taking the figures at face value, the 2017 growth rate is China’s highest in two years. And it represents the first time the economy has expanded faster than the previous year since 2010.

However as Beijing ramps up efforts to reduce risky debt and to increase air quality, analysts said this may impact 2018 growth.

The numbers released on Thursday also showed that in the last three months of 2017, the economy grew at an annual rate of 6.8% – slightly higher than analysts had been expecting.


Robin Brant, BBC China Correspondent, Shanghai

Two things stand out.

First, it looks like stronger exports – as the world economy picked up – and the final sputter of (another) government infrastructure investment spurt helped make 2017 better than expected.

But that’s the model China is trying – gently – to get away from.

Second, is it true?

China’s figures can be so stable, so in line with government targets, that it’s hard to really believe them.

In the run up to these figures being published there’s also been an unusual spate of honesty from several provincial governments, who’ve admitted faking their GDP or fiscal figures. All of which fed into the national picture.

China’s debt has risen significantly in recent years, with worrying numbers around local government loans, corporate and household debt and non-performing bank loans.

The International Monetary Fund (IMF) said recently that the country’s debt had ballooned and was now equivalent to 234% of the total output. It said Beijing needed to concentrate less on growth and instead help improve banks’ finances, among other efforts.

Beijing meanwhile says it has been taking steps to contain risky debt despite the impact that might have on economic growth – efforts the IMF said it recognised.

The government has promised to continue tackling local government debt, among other efforts, and on Thursday vowed to help state-owned enterprises “leverage and cut debt … and to repay their bonds on time this year”.

China's economic growth

Blue skies v economic growth

China’s strict anti-pollution measures, which were introduced across 28 cities last year, are also expected to hurt economic growth in the short term.

The measures have included shutting down or cutting back production at factories in heavy industry like cement and steel.

Households have also been asked to switch to natural gas and electricity from coal, in an effort to curb pollution.

However this policy left millions without proper heating, and so was temporarily abandoned in December.

Chinese officials have said Beijing’s air quality improved sharply in the winter of 2017 and heralded their efforts as a “new reality” for the country.


Chengdu runs 1,000 cargo trains to Europe in 2017 – Xinhua |

A cargo train loaded with 41 containers of electronic products departed from Chengdu, capital of southwest China’s Sichuan Province, for the Netherlands on Wednesday.It brings the total number of cargo trains from Chengdu to Europe to 1,000 this year, and 1,700 since the city launched the service in 2013.The city has rail routes to 14 European countries.”Rail freight is one of the fields where the Sino-European cooperation has made very important progress and will continue to do so in the future,” said Filippo Nicosia, Italy Consul General in Chongqing.In 2018, at least 1,000 cargo trains are expected to run from Chengdu to Europe.Demand for rail cargo between China and Europe, an alternative to slower and riskier sea freight and much costlier air cargo, has exploded in recent years.About 35 Chinese cities run cargo trains to Europe.

Source: Chengdu runs 1,000 cargo trains to Europe in 2017 – Xinhua |


Despite its reputation, Chinese aid is quite effective

CHINA is one of the world’s largest providers of foreign aid. But it has a reputation as a rogue donor: stories abound of shoddy projects, low environmental standards and mistreatment of workers.

A hospital built by the Chinese in Luanda, the capital of Angola, developed alarming cracks and had to be rebuilt. Aid is widely thought to have been diverted for arms purchases by Robert Mugabe’s regime in Zimbabwe. The list goes grimly on.

Stories do not abound, however, about who gets China’s aid and what it goes on. The government says that it spends about $5bn a year on assistance to other countries. But it has no aid ministry comparable to, say, Britain’s Department for International Development. Most details of the aid programme are kept secret, perhaps because the largesse is unpopular domestically. Many Chinese think that their country is too poor to give handouts and the money ought to be spent at home. When the health ministry tried to investigate whether Chinese projects in Africa made people healthier, the rest of the government flatly refused to co-operate.

The most detailed study so far of Chinese aid, published this week by AidData, a research group at the College of William and Mary in Virginia, shines a light on the murky data. The report looks at 4,400 projects which China has either committed to, is building or has finished, between 2000 and 2014. It finds that the country gave or lent about $350bn over that period—not much less than the total of American aid, which was $424bn in those years. But almost all of America’s aid is in the form of grants, compared with a fifth of China’s. The rest is concessional lending at below-market interest rates, mostly to Chinese companies working abroad—the kind of aid that used to be common in the West but went out of fashion in the 1990s because it overburdened recipients with debt. The grant component of China’s aid was $75bn, still a lot (about the same as Britain’s), but not a tidal wave of money.

Previous AidData studies of Chinese aid have been controversial. In 2013 the researchers reckoned that aid to Africa alone (which accounts for half of China’s total foreign aid) was $75bn between 2000 and 2011. Deborah Brautigam of Johns Hopkins University in Maryland said their calculation was “way off”. She criticised what she described as its excessive reliance on unreliable news reports. AidData’s new estimate appears to be better grounded. It is based more on official announcements from Chinese commercial offices abroad and from the finance and planning ministries of recipient countries.

The authors use their new numbers to look at whether Chinese aid works—an equally controversial subject. In a study published along with the data set, researchers including Bradley Parks of the College of William and Mary find that the grant kind does. They reckon a doubling of Chinese grant aid is associated with a 0.4-point increase in the rate of GDP growth of the recipients after two years. That is more than can be said for China’s no-strings-attached concessional lending, which, according to AidData, has no effect on the receiving country’s GDP. It appears to be tantamount to an export subsidy to Chinese firms, with a side order of backhanders for local elites.

On a happier note, the study looks at whether Chinese aid damages Western assistance. The researchers do this by calculating whether aid effectiveness declines in countries that receive Western aid and then get an influx of Chinese cash. It finds no decline, implying Chinese aid does not harm efforts by other donors.

Three conclusions can be drawn from AidData’s findings. First, Chinese aid could do more good in poor countries if more of it came in the form of grants, rather than cheap loans. Next, Western aid agencies should not be so wary of co-operating with the Chinese. Co-ordination is important in aid-giving because otherwise you might find, say, three aid agencies each building a hospital in the same city. Because China is regarded as a rogue, it is not roped into the co-ordination efforts among Western donors. That should change. Lastly, the paucity of information about China’s aid (despite AidData’s efforts) is caused by the opacity of China’s government. Perhaps it might consider being more open about a programme that appears, for all its flaws, to be moderately effective.

Source: Despite its reputation, Chinese aid is quite effective


Following the Money: Uncovering a Chinese state secret – BBC News

China has a long list of state secrets – how many people it puts to death every year, and even the birthdays of its top leaders. But now, overseas researchers have uncovered another Chinese state secret: how much money Beijing gives in aid to other countries.

Not very long ago, China was a foreign aid recipient. Now, it rivals the United States as one of the world’s largest donors, through traditional development aid or through financial loans.

For the first time, a large group of researchers outside China have compiled a major database detailing virtually all of China’s financial money flow to recipient countries. Citing more than 5,000 projects found across 140 countries, it reveals that China and the US rival each other in terms of how much they offer to other countries.

However, “they spend those budgets in radically different ways. And the different compositions of those portfolios have far-reaching consequences”, explains Brad Parks, the project’s chief researcher.

He heads the AidData research lab at the College of William & Mary in Virginia, which teamed up with other researchers at Harvard University and the University of Heidelberg in Germany to complete the research.

How did they uncover the secret?

Pictured in 2015, Chinese workers build railway infrastructure to link Djibouti with Addis Ababa, in neighbouring Ethiopia

The AidData team had to develop its own methodology to answer the questions that weren’t provided by the Chinese government. They tracked money flows from China to recipient countries using news reports, official embassy documents and aid and debt information from China’s counterparts.

Piece by painstaking piece, the information came together to draw a relatively complete picture of where Chinese aid is going and what impact it’s having.

“We think the methodology has revealed the known knowable universe,” Brad Parks says. “If the Chinese government really wants to conceal something, we won’t necessarily pick it up.” But if there are sizeable money transfers going from China to a recipient country, “word is going to get out”, he adds.

How does China hand out money?

One major finding from the study: China and the US, the world’s biggest donor, have handed out similar amounts of money in the years covered in the database, but the countries distribute that money in radically different ways.

The vast majority (93%) of US financial aid fits under the traditional definition of aid that’s agreed upon by all Western industrialised countries. That aid is given with the main goal of developing the economic development and welfare of recipient countries. At least a quarter of that money represents a direct grant, not a loan that needs to be repaid.

In contrast, only a small portion (21%) of the money that China gives to other countries can be considered as traditional aid. And the rest of that money? The “lion’s share” of that money is given in commercial loans that have to be repaid to Beijing with interest.

“China wants to get attractive economic returns on its capital,” Brad Parks explains.

And what does that money achieve?

The team’s other major finding: when China gives out traditional aid, the recipient countries reap impressive economic rewards. For a long period, there were suspicions that Chinese aid projects were only set up to benefit China; infrastructure projects built by imported Chinese workers, for instance, that did little to improve the lives of people on the ground. However, this research shows that China is just as capable of managing development aid projects as Western donors.

Chinese aid: How they spend it$362bn

total Chinese foreign aid and loans

21% of China’s aid spending is on grants – the rest is loans

$399bn is the total for US foreign aid and loans in the same period

93% of the US total is traditional aid, focused on economic development and welfare

Source: AidData, 2000-2014

Which countries are getting China’s money?

Since 2000, African countries have captured a large slice of the aid and loans given by China.

However, China’s wealth is distributed to points across the globe, from hospitals in Senegal to ports in Pakistan and Sri Lanka. In 2014, the most recent year covered by AidData, Russia topped the recipient list, followed by Pakistan and Nigeria.

In contrast, the US list in 2014 was topped by Iraq and Afghanistan, followed by Pakistan.


Chinese cash has funded the development of Pakistan’s Gwadar port

Politics plays a big part in how both China and the US decide to spend their money. Earlier studies by the researchers behind AidData show that both Beijing and Washington tend to offer money to countries which support them at the United Nations.

But for China, economics play a key role: the AidData researchers found Beijing is often focused on promoting Chinese exports or market rate loans where China wants to get the loan repaid with interest.

The North Korea factor

China is often cited as the main source of aid propping up the fragile North Korean economy. But the AidData researchers tracked down just 17 Chinese projects in North Korea over the 14-year period, totalling a measly $210m.

Brad Parks calls North Korea “an informational black hole”, admitting that it’s the only recipient country that truly evaded the researchers. To a large extent, the vast amounts of money and other kinds of aid that China is believed to give North Korea fall outside the global financial system.

North Korean leader Kim Jong-Un with his sister Kim Yo-JongImage copyrightAFP PHOTO/KCNA VIA KNS
Image captionResearchers have struggled to track the Chinese aid flowing into secretive North Korea

Why is China’s money so attractive?

In the 1960s to the 1990s, Western countries offered high-interest market-rate loans to developing countries. However, that strategy misfired when recipient countries could not begin to repay the interest on the debts they had acquired. Outrage ensued and the Western aid model was overhauled.

“There was a shared principle that we should not be offering market-rate loans to developing countries,” Brad Parks says. “And now, here comes China, enter stage left. They’re not part of that coalition. They haven’t been socialised to that principle and they’re very willing and able to provide loans near or at market rate.

“Increasingly, countries that don’t want to go the IMF for a bailout when they’re in trouble, they will go to China instead.”

Will China continue to loan out money?

So far, the data shows that the countries that receive China’s market-rate loans are not suffering economically, but they aren’t experiencing economic growth either. Researchers fear that could change in 10 or 15 years, when countries build up debts because they can’t repay the money they will owe to Beijing. At that point, China might have to rethink things.

“They may very well 10 years from now, or 15 years from now, encounter the same problems that Western donors and creditors encountered when loans are not getting repaid,” Brad Parks explains. “If and when that point of reckoning occurs, then perhaps Beijing will revisit how it structures these loans.”

Already, researchers have uncovered signs that China’s starting to shift its approach to lending, researcher Xiaojun Li from the University of British Columbia says. Increasingly, Beijing is lending through multilateral institutions like the Asian Infrastructure Investment Bank, China’s answer to the World Bank.

Why does it matter if China becomes a big global lender?

There is evidence that China’s no-strings loans have had an effect on the entire global lending system, forcing traditional donors to stop placing so many requirements on receiving countries. Using AidData’s database, economist Diego Hernandez revealed that China’s role as a major lender has boosted competition between traditional donors.

“When an African country is also assisted by China,” he writes, “the World Bank provides fewer conditions attached to its loans”. For every 1% increase in Chinese aid, Hernandez found the World Bank lessened its typical demands for things like market liberalisation or economic transparency by 15%.


Critics have long charged that “rogue aid” from China allows some countries to avoid democratic reforms because they can simply turn to China for aid, dodging the scrutiny of traditional Western donors.

Cambodia is a recent example; independent newspapers and western NGOs have been shuttered, as Cambodian leaders’ strengthening ties with China embolden them to turn away from Washington’s demands to hold fair elections.

Xiaojun Li studied how Chinese aid has changed countries in Africa, arguing that democratic reforms have slowed as the developing countries concluded they could bypass the political demands of Western donors by turning to Chinese aid.

“Traditional donors have criticised China’s approach to aid,” he says, but “many African countries embrace the assistance from Beijing, or at least are glad to have more options”.

Source: Following the Money: Uncovering a Chinese state secret – BBC News


Bangladesh soldiers build Chinese relief tents to house displaced Rohingyas people – Xinhua |

COX’S BAZAR, Bangladesh, Oct. 4 (Xinhua) — Bangladesh soldiers have started to build Chinese relief tents to accommodate the Rohingyas people crossing into the country from Myanmar.

Hundreds of tents have already been built at a new refugee camp in the southeastern Cox’s Bazar district, some 292 km away from capital Dhaka.

Chinese relief tents will be able to accommodate tens of thousands of people.

Military personnel are seen on Tuesday to build Chinese tents or extend support to Rohingyas who got allocation of the Chinese relief tents.

China last week sent relief materials for Rohingyas.

A second Chinese cargo plane carrying relief supplies for Rohingya refugees arrived in Bangladesh’s southeastern Chittagong region on Thursday after the first one which arrived last Wednesday. The relief materials included about 2,000 tents and 3,000 blankets.

A Cox’s Bazar district administration official who preferred to be unnamed said Prime Minister Sheikh Hasina is expected to visit the Rohingya camps again and distributes personally the Chinese relief blankets which will be crucial for the refugees during the winter months from November to May in the country.

Over half a million Rohingyas have so far fled to Bangladesh since the fresh wave of violence erupted in Myanmar.Extremist terrorists launched fresh attacks on police outposts in Myanmar’s Rakhine state on Aug. 25, displacing residents from a number of areas in Maungtaw district to border areas with Bangladesh.

Source: Bangladesh soldiers build Chinese relief tents to house displaced Rohingyas people – Xinhua |


China to shut down North Korean companies – BBC News

China has told North Korean companies operating in its territory to close down as it implements United Nations sanctions against the reclusive state.

The companies will be shut by early January. Joint Chinese and North Korean ventures will also be forced to close.China, Pyongyang’s only major ally, has already banned textile trade and limited oil exports.

The move is part of an international response to North Korea’s sixth and most powerful nuclear test.

The UN Security Council, of which China is a member, voted unanimously for fresh sanctions on 11 September.China’s commerce ministry said it had set a deadline of 120 days from the passing of the resolution for any North Korean companies within its borders to close.

North Korea is politically and economically isolated, and the vast majority of its trade is with China.

Beijing has traditionally been protective of its neighbour, but has sharply criticised its nuclear tests and escalating rhetoric.

Was your T-shirt made in North Korea?

Earlier this year, it clamped down on its purchase of coal from Pyongyang and on seafood and iron trade across the border.

Coupled with the textile trade ban, North Korea has lost several of its scant sources of foreign currency income.

Beijing has been under public pressure to take action from US President Donald Trump, who has both applauded and denounced Chinese policy at different times.

N Korea: Trump exploiting student’s death

North Korea crisis in 300 wordsMr Trump has also been involved in a direct war of words with North Korean leader Kim Jong-un, labelling him a “rocket man” on “a suicide mission”. The US president warned that he would have no choice but to “totally destroy” North Korea if forced to defend the US or its allies.

Mr Kim, in turn, has called Mr Trump “deranged” and a “dotard”, and said the US president’s comments have convinced him he is right to seek a nuclear deterrent, and has even accused Mr Trump of declaring war.

At a news briefing on Thursday, China’s foreign ministry spokesman Lu Kang said: “We are opposed to any war on the Korean peninsula.”

“Sanctions and the promoting of talks are both the requirements of the UN Security Council. We should not overemphasise one aspect while ignoring the other.”

North Korea’s slowly growing economy

Pyongyang does not publish accounts or economic data, which leaves economists guessing over the country’s performance. But South Korea’s central bank bases its estimates on information from its National Intelligence Service.

It believes that last year, North Korea’s economy grew at its fastest pace in 17 years – with GDP up 3.9% despite international economic sanctions. Small shops and markets have been springing up in the capital over the past decade.

But that does not mean ordinary people are doing well. North Korea’s economy is geared towards supporting its large military – which analysts believe consumes up to 25% of the country’s GDP. Income inequality is rife, with some shops in Pyongyang stocked with all sorts of luxury goods, while other citizens have very little.

Even the latest sanctions have exceptions. China, for example, can still trade oil to its neighbour in limited supply.

Source: China to shut down North Korean companies – BBC News


China’s demographic divisions are getting deeper

IF DEMOGRAPHY is destiny, as Auguste Comte, a French philosopher, once said, then China has many destinies.

As a result of 30 years of the now-relaxed one-child policy, the country has an exceptionally low overall fertility rate: 1.2 according to the census of 2010. (The fertility rate is the number of children an average woman can expect to bear during her lifetime. If it is less than 2.1 a population will shrink in the long run, unless immigration makes up for the dearth of babies.) What is almost never recognised, however, is that this is not a uniform problem. Just as China has richer and poorer regions, so it has areas of higher and lower fertility—or, to be more precise, of low and lower fertility.

As a whole, China has too few young adults relative to the size of older generations, meaning it will not have enough workers to support its pensioners (or children) properly in the future. But some areas will hit demographic trouble earlier and harder than others, with serious implications for economic growth and regional stability. Wang Feng, of the University of California, Irvine, dubs the problem “the Balkanisation of Chinese demography”.

The place with the lowest fertility is Beijing, where the rate was 0.71 in 2010. The highest rate that year was in Guangxi, a province in the south bordering Vietnam, where the fertility rate was 1.79. Both rates are below the replacement level. But Guangxi’s fertility is two-and-a-half times higher than Beijing’s, which is a wider spread than the one separating the states with the highest and lowest fertility in Brazil, and only a little less than the equivalent gap in India.

Degrees of dwindling

The main reason is that, in practice, the one-child policy was never uniform. Ethnic minorities, such as Tibetans or Uighurs (the largest group in the western province of Xinjiang), were never subject to it. Minorities, who account for 8% of the population nationwide, were usually allowed two children in urban areas and three or four in rural ones. In addition, in most rural areas, everyone, including the majority Han group, was allowed two children.

As a result China has four categories of fertility, not one (see map):

  1. Areas of ultra-low fertility (rates of less than 1). These are three mega-cities, Beijing, Shanghai and Tianjin, and three provinces in the north-east, sometimes called Manchuria, where the one-child policy was applied most strictly. They have a total population of 170m
  2. Areas where fertility is between 1 and 1.29. These include provinces on China’s populous coastline, as well as the huge Sichuan basin in western China. They are overwhelmingly Han areas, so had few exceptions to the one-child policy. They were also the places where China’s growth and urbanisation took off quickest after 1980, so have relatively few rural dwellers. This is the largest category, with 600m people.
  3. Provinces with fertility rates between 1.3 and 1.49. Many, such as Henan, Hunan and Anhui, are just inland from the coast. They, too, are populous (460m in total) and mostly Han but have fewer city-dwellers: more than half of the populations of Hunan and Anhui is rural. This group also includes several provinces with lots of members of minorities, such as Ningxia, in the north-west, which is a third Muslim.
  4. Areas with rates above 1.5, which tend both to be more rural and to have big minority populations, such as Guangxi. These have a total population of 116m.

Since the one-child policy was in force so long, differences in fertility have become entrenched and their impact profound. To take one example, provinces with relatively low fertility tend to have an even bigger excess of boys over girls than is the norm. Nationally, the imbalance has ebbed somewhat since 2000, with the sex ratio at birth falling from 121 boys for every 100 girls in 2005 to 114 in 2015. But in the north-east there has been little or no improvement—a worry considering the high levels of crime associated with large numbers of unmarried men (called “bare branches” in China).

Fertility is not the only force pushing provincial demography in different directions. The migration of more than 245m workers from poor, rural areas to booming cities amplifies the difference in fertility in some places and counteracts it in others.

In the decade before 2010 the population of Chongqing, a large urban province in the west, fell by 2m (or 6%); in neighbouring Sichuan it fell by 3m. Births exceeded deaths in both places over the period, so the population should have grown. But this was offset by the outflow of migrants. Cai Yong of the University of North Carolina calculates that more than 10m people left Sichuan and nearby Hubei.

The combination of migration and varying fertility means that provinces are ageing at different speeds. The median age nationally rose from 25 in 1990 to 35 in 2010; it had increased to 37 by 2016. But the three north-eastern provinces all aged by even more than average. In Liaoning the median age reached 39.2 in 2010, about the same as Russia. In contrast, the median age in Tibet, the youngest province, is 27.8, about the same as India.

Ageing matters because pension provision is partly a provincial responsibility in China. The value of the basic state pension is fixed nationally, but provinces set their own contribution rates, administer the money collected and distribute the pensions. How heavy a burden this is depends on a province’s demography. As a rule, the lower the fertility rate, the faster the rise in the dependency ratio (the number of pensioners relative to the number of working people). In relatively fecund Guizhou and Yunnan, the ratio is still falling. In Beijing and Shanghai, it rose by more than four percentage points between 2010 and 2015, more than the national average.

Giant cities such as Beijing, Shanghai and Tianjin have ultra-low fertility and fast-rising dependency ratios yet are still able to attract young workers because China’s highest-paying jobs are clustered there. As a result, their demographic profile is healthier than you would expect. The three cities, which have provincial-level status, are China’s fastest-growing provinces by population, increasing by around 3% a year in 2000-10, thanks largely to migration. Since the migrants are mostly young, the cities’ median ages rose much more slowly than the national average and their dependency ratios remain relatively low. And since the cities are also rich, they have hospitals, social services and schools to cope with their demographic problems.

Provinces with high fertility and outward migration are the opposite. Take Hainan, a tropical island in the far south. It has high fertility (by Chinese standards) and stable dependency. It ought to be doing well. Yet it is one of China’s poorest provinces (23rd out of 31) and is ageing fast, mainly because hundreds of thousands of workers from the freezing north-east are spending their retirement there. Its medical services are collapsing under the strain.

To see the convergence of all these trends, compare two regions, the north-east and Guangdong. The north-east is China’s rust belt, a place of depleted coal mines and decayed steel mills. It has had low fertility for decades, falling below replacement levels as long ago as 1982, much earlier than elsewhere (and before the one-child policy even began). It also implemented the policy especially strictly because it is dominated by state-owned industries which decreed that people who had a second child would lose their jobs. “Who would risk it?” asks a former steel worker. The area’s high wages used to attract migrants from elsewhere in China. But since 2000, when heavy industry ran into trouble, it has suffered a net outflow of over 2m people. Hotels near the Harbin Institute of Technology (in the region’s largest city) are packed around graduation day with recruiters from southern firms.

Last year a series of articles in China Business News, a state-run newspaper, revealed the extent of the region’s demographic problems. In China as a whole, it said, there were 2.9 people paying into provincial pension schemes for every person drawing a pension. In Liaoning, there was only 1.8; in Jilin, 1.5; and in Heilongjiang, just 1.3. The region’s share of China’s young workers (20 to 39 years of age) fell from 10% in 1982 to 8% in 2010. Zhou Tianyong of the Central Party School in Beijing says the region’s lack of young workers is his biggest worry. The national government has a grand policy to help the region called “the north-east revitalisation plan”, but as one of the articles noted, the region’s demographic crisis is never discussed.

Now compare that with Guangdong at the other end of the country, next to Hong Kong. On the face of it, China’s largest province, with a population of 108m, also faces severe problems. Its fertility rate was reported to be 1 in 2010, more than in the north-east but still alarmingly low. Yet its population rose more quickly in 2000-10 than any other province except the three huge cities. Its median age is five years below that in the north-east. It has 9.7 workers per pensioner, three times the national average, which has helped it to stash more money in its pension fund than any other province.

Whereas Beijing and Shanghai are attempting, misguidedly, to curb migration, Guangdong is trying to attract new arrivals. It has made it easier for their children to enroll in local schools (elsewhere the household-registration, or hukou, system, raises barriers to this). It also encourages everyone, including migrants, to join local social-insurance schemes. In mid-July, the province’s capital, Guangzhou, said it would allow the children of better-off migrants who rent property the same access to schools as local home-owners. This is significant since almost all migrants rent, not own, their houses.

Unlike in Guangzhou, the national authorities have been slow to recognise the problems of demographic decline. As a result, low fertility, ageing, labour shortages and dependency have all taken on a provincial aspect. The three great cities look relatively healthy, as do Guangdong and Zhejiang, a nearby province that shares some of its features. But provinces with low fertility, declining or ageing populations, and rising dependency are in deep trouble. These include the north-east, Sichuan and Chongqing in the west and several provinces in the third category in terms of fertility, such as Anhui.

The result is a big problem for the national government. Even now, it is having to bail out some provincial pension funds. But the threat is also philosophical. The Communist Party has long sought to narrow economic differences and erase local political distinctions because it is terrified of regional challenges. It thinks the only way to keep China together is to impose strong central control. If it is right, its failure to deal with demographic problems is setting back that cause.

Source: China’s demographic divisions are getting deeper

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