25/04/2020
- But trade with partner countries might not be as badly affected as with countries elsewhere in the world, observers say
- China’s trade with belt and road countries rose by 3.2 per cent in the January-March period, but second-quarter results will depend on how well they manage to contain the pathogen, academic says
China’s investment in foreign infrastructure as part of its Belt and Road Initiative has been curtailed because of the coronavirus pandemic. Photo: Xinhua
The
coronavirus pandemic is set to cause a slump in Chinese investment in its signature
and a dip in trade with partner countries that could take a year to overcome, analysts say.
But the impact of the health crisis on China’s economic relations with nations involved in the ambitious infrastructure development programme might not be as great as on those that are not.
China’s total foreign trade in the first quarter of 2020 fell by 6.4 per cent year on year, according to official figures from Beijing.
Trade with the United States, Europe and Japan all dropped in the period, by 18.3, 10.4 and 8.1 per cent, respectively, the commerce ministry said.
By comparison, China’s trade with belt and road countries increased by 3.2 per cent in the first quarter, although the growth figure was lower than the 10.8 per cent reported for the whole of 2019.
China’s trade with 56 belt and road countries – located across Africa, Asia,
Europe and South America – accounts for about 30 per cent of its total annual volume, according to the commerce ministry.
Despite the first-quarter growth, Tong Jiadong, a professor of international trade at Nankai University in Tianjin, said he expected China’s trade with belt and road countries to fall by between 2 and 5 per cent this year.
His predictions are less gloomy than the 13 to 32 per cent contraction in global trade forecast for this year by the
World Trade Organisation.
“A drop in [China’s total] first-quarter trade was inevitable but it slowly started to recover as it resumed production, especially with Southeast Asian, Eastern European and Arab countries,” Tong said.
“The second quarter will really depend on how the epidemic is contained in belt and road countries.”
Nick Marro, Hong Kong-based head of global trade at the Economist Intelligence Unit, said he expected China’s total overseas direct investment to fall by about 30 per cent this year, which would be bad news for the belt and road plan.
“This will derive from a combination of growing domestic stress in China, enhanced regulatory scrutiny over Chinese investment in major international markets, and weakened global economic prospects that will naturally depress investment demand,” he said.
The development of the Chinese built and operated special economic zone in the Cambodian town of Sihanoukville is reported to have slowed, while infrastructure projects in Bangladesh, including the Payra coal-fired power plant, have been put on hold.
The development of the Chinese built and operated special economic zone in the Cambodian town of Sihanoukville is reported to have slowed. Photo: AFP
Marro said the reduction of capital and labour from China might complicate other projects for key belt and road partner, like Pakistan, which is home to infrastructure projects worth tens of billions of US dollars, and funded and built in large part by China.
“Pakistan looks concerning, particularly in terms of how we’ve assessed its sovereign and currency risk,” Marro said.
“Public debt is high compared to other emerging markets, while the coronavirus will push the budget deficit to expand to 10 per cent of GDP [gross domestic product] this year.”
Last week, Pakistan asked China for a 10-year extension to the repayment period on US$30 billion worth of loans used to fund the development of infrastructure projects, according to a report by local newspaper Dawn.
China’s overseas investment has been falling steadily from its peak in 2016, mostly as a result of Beijing’s curbs on capital outflows.
Last year, the direct investment by Chinese companies and organisations other than banks in belt and road countries fell 3.8 per cent from 2018 to US$15 billion, with most of the money going to South and Southeast Asian countries, including Singapore, Vietnam, Indonesia and Pakistan.
Tong said the pandemic had made Chinese investors nervous about putting their money in countries where disease control measures were becoming increasingly stringent, but added that the pause in activity would give all parties time to regroup.
“Investment in the second quarter will decline and allow time for the questions to be answered,” he said.
“Past experience along the belt and road has taught many lessons to both China and its partners, and forced them to think calmly about their own interests. The epidemic provides both parties with a good time for this.”
Dr Frans-Paul van der Putten, a senior research fellow at Clingendael Institute in the Netherlands, said China’s post-pandemic strategy for the
belt and road in Europe
might include a shift away from investing in high-profile infrastructure projects like ports and airports.
Investors might instead cooperate with transport and logistics providers rather than invest directly, he said.
“Even though in the coming years the amount of money China loans and invests abroad may be lower than in the peak years around 2015-16, I expect it to maintain the belt and road plan as its overall strategic framework for its foreign economic relations,” he said.
Source: SCMP
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07/03/2019
BEIJING (Reuters) – China’s ruling Communist Party is ramping up calls for political loyalty in a year of sensitive anniversaries, warning against “erroneous thoughts” as officials fall over themselves to pledge allegiance to President Xi Jinping and his philosophy.
This year is marked by some delicate milestones: 30 years since the bloody crackdown on pro-democracy demonstrators in and around Tiananmen Square; 60 years since the Dalai Lama fled from Tibet into exile; and finally, on Oct. 1, 70 years since the founding of Communist China.
Born of turmoil and revolution, the Communist Party came to power in 1949 on the back of decades of civil war in which millions died, and has always been on high alert for “luan”, or “chaos”, and valued stability above all else.
“This year is the 70th anniversary of the founding of new China,” Xi told legislators from Inner Mongolia on Tuesday, the opening day of the annual meeting of parliament. “Maintaining sustained, healthy economic development and social stability is a mission that is extremely arduous.”
Xi has tightened the party’s grip on almost every facet of government and life since assuming power in late 2012.
Last year parliament amended the country’s constitution to remove term limits and allow him to stay in office for the rest of his life, should he so wish, though it is unclear if that will happen and Xi has not mentioned it in public.
Later in the year the party will likely hold a plenum of its top leadership focused on what China calls “party building”, diplomats and sources with ties to China’s leadership say, a concept that refers to furthering party control and ensuring its instructions are followed to the letter.
In late January the party again stressed loyalty in new rules on “strengthening party political building”, telling members they should not fake loyalty or be “low-level red”, in a lengthy document carried by state media.
“Be on high alert to all kinds of erroneous thoughts, vague understandings, and bad phenomena in ideological areas,” it warned. “Keep your eyes open, see things early and move on them fast.”
LOYALTY FIRST
On March 1, Xi spoke at the Central Party School, which trains rising officials, mentioning the word “loyalty” at least seven times, according to official accounts in state media.
Xi noted that whether an official is loyal to the party is a key gauge of whether they have ideals and convictions. “Loyalty always comes first,” he said.
Duncan Innes-Ker, regional director for Asia at the Economist Intelligence Unit, said China was concerned about resistance at lower levels to following party orders, the slowing economy and also about demands for political reforms as people get steadily richer.
“The desire for control is not something particular to any time period,” he said. “It is a fundamental tenet of autocratic governments that they are constantly paranoid about being overthrown.”
Xi looms large over this year’s session of China’s largely rubber stamp parliament, known as the National People’s Congress, which has always been stacked with people chosen for their absolute fealty to the party.
Government ministers who spoke to reporters on the sidelines of parliament’s opening session on Tuesday peppered their comments with references to Xi – 16 times in all.
Customs minister Ni Yuefeng said that Xi himself “pays great attention to not allowing foreign garbage into the country”, a reference to China’s ban on solid waste imports, part of the country’s war on pollution.
“Ideology comes first this year,” said one Western diplomat who is attending the parliamentary sessions as an observer. “It’s all about the 70th anniversary.”
ROOTING OUT DISLOYALTY
The party has increasingly been making rooting out disloyalty and wavering from the party line a disciplinary offence to be enforced by its anti-corruption watchdog, whose role had ostensibly been to go after criminal acts such as bribery and lesser bureaucratic transgressions.
The graft buster said last month it would “uncover political deviation” in its political inspections this year of provincial governments and ministries.
Top graft buster Zhao Leji, in a January speech to the corruption watchdog, a full transcript of which the party released late February, used the word “loyalty” eight times.
“Set an example with your loyalty to the party,” Zhao said.
China has persistently denied its war on corruption is about political manoeuvring or Xi taking down his enemies. Xi told an audience in Seattle in 2015 that the anti-graft fight was no “House of Cards”-style power play, in a reference to the Netflix U.S. political drama.
The deeper fear for the party is some sort of unrest or a domestic or even international event fomenting a crisis that could end its rule.
Xi told officials in January they need to be on high alert for “black swan” events..
That same month the top law-enforcement official said China’s police must focus on withstanding “colour revolutions”, or popular uprisings, and treat the defence of China’s political system as central to their work.
The party has meanwhile shown no interest in political reform, and has been doubling down on the merits of the Communist Party, including this month rolling out English-language propaganda videos on state media-run Twitter accounts to laud “Chinese democracy”. Twitter remains blocked in China.
The official state news agency Xinhua said in an English-language commentary on Sunday that China was determined to stick to its political model and rejected Western-style democracy.
“The country began to learn about democracy a century ago, but soon found Western politics did not work here. Decades of turmoil and civil war followed,” it said.
Source: Reuters
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