Posts

EU’s Global Gateway
In competition with China, the European Union (EU) has pledged to give €300 billion to countries around the world in order to help them rebuild their infrastructure. The EU’s Global Gateway is a ‘global investment plan’ that will offer options to countries that are currently dependent upon China’s Belt and Road Initiative and also provide different opportunities through the United States’ and G7’s Build Back Better World initiative. These three different strategies and initiatives will all work in cooperation but also compete with each other to increase infrastructure in underdeveloped countries around the world and bring jobs and opportunities to raise people out of poverty.

The announcement comes after the meeting of the G7 in June 2021, where the members had agreed to launch an infrastructure partnership to meet global infrastructure development needs and will build off of the success of the 2018 EU-Asia Connectivity Strategy. The EU announced on December 1, 2021, that it will direct €300 billion equal to $340 billion to public and private infrastructure investments over the next 6 years through 2027.

Global Gateway Projects

With the announcement of the Global Gateway Strategy, the EU has also laid out how it will divide the money into different sectors such as digital, transport, energy and health. In a press release from the European Commission, it is written that the Global Gateway will “boost smart, clean and secure links in digital, energy and transport and strengthen health, education and research systems across the world.” Europe is also hoping that the Global Gateway will help improve its strategic interests and most importantly boost its supply chains which Europe noticed the instability throughout the COVID-19 pandemic. The plan will focus on providing physical infrastructure such as “fibre optic cables, clean transport corridors and clean power transmission lines.”

EU’s Global Gateway Strategy vs. China’s Belt and Road Initiative

Although the official announcement of the Global Gateway did not mention China or its economic development plan called the Belt and Road Initiative, this new deal comes into direct competition with China’s economic development plan which critics question for forcing already underdeveloped countries into unsustainable levels of debt. Further, the EU’s version will provide financing for countries “under fair and favorable terms in order to limit the risk of debt distress.”

How China’s Belt and Road Initiative Works

China’s Belt and Road Initiative focuses mainly on offering assistance to foreign countries in the form of loans and thus the loans are the only way the countries can improve their infrastructure. Compared to the EU’s $340 billion plan, China plans to spend up to $1 trillion for its plan, which began in 2013. The projects approved with funds from the Global Gateway must support high standards to keep workers safe and properly paid for their work. The money for the plan will come from the European Fund for Sustainable Development Plus. This can provide €40 billion guaranteed while giving grants up to €18 billion through external programs.

How the Global Gateway Works

The Global Gateway is bringing together the EU and its member states with financial and development institutions such as the European Investment Bank (EIB) and European Bank for Reconstruction and Development (EBRD) while also mobilizing the private sector to create an even larger impact. In addition to financial contributions for projects, the EU will also offer technical aid to their partners to enhance their ability for credible projects. The Global Gateway will provide a much-needed option to countries that have limited choices for foreign economic development aid. In the case of Sri Lanka, it had taken part in China’s Belt and Road Initiative to build the Hambantota Port. However, when Sri Lanka turned out to be unable to repay its loan, China forced the nation to “hand over a majority stake and  99-year lease on the port to a Chinese firm.”

Conclusion

The EU’s Global Gateway is a necessary achievement for the advancement of progress for countries and their citizens around the world. This is a true achievement of the G7 and will go a long way in supplying sufficient projects and infrastructure to lift people out of poverty around the world. With the support of the European Union and its focus on lifting people out of poverty and competition building foreign countries, the Global Gateway should be able to aid in the reduction of poverty around the world.

– Julian Smith
Photo: Flickr

COVID-19 Vaccinations in Africa
COVID-19 vaccinations in Africa account for only 2% of vaccinations the world administers. Meanwhile, other countries are close to vaccinating the majority of their populations. This is a glaring example of the dangerous vaccine inequity burdening developing countries. The United Nations Security Council recently called for accelerated availability of COVID-19 vaccinations in Africa. A statement that all 15 members endorsed emphasized the need for “equitable access” to quality, affordable COVID-19 tests, treatments and vaccines. With wealthy nations buying a disproportionately large amount of the world’s vaccine supply, it is imperative that developing African countries receive the proper aid and resources to implement proper vaccination programs across the continent. That is where China comes in.

China’s Efforts

China has thus far set the precedent in the global response towards increasing COVID-19 vaccinations in Africa, pledging to provide vaccines to over 40 African countries. China has described its actions as purely altruistic. To back this up, China has either been donating or selling the vaccines at favorable prices. Foreign Ministry official Wu Peng told reporters that “We believe that it is, of course, necessary to ensure that the Chinese people get vaccinated as soon as possible, but for other countries in need, we also try our best to provide vaccine help.” So far, the Chinese efforts to counter vaccine inequity have been quite successful. China has already committed half a billion doses of vaccines to African countries. By engaging in “vaccine diplomacy,” China has been able to expand its influence in Africa through tactful, yet charitable actions.

However, Wu makes the important distinction that “Aid alone cannot solve Africa’s vaccine issues. We must support local manufacturing of vaccines in Africa, even though this is difficult due to (low) levels of industrialization.” While difficult, initiating the local manufacturing of vaccines will have monumentally positive effects in curbing the disease. Starting in June 2021, Egypt will be able to start locally producing China’s Sinovac vaccine. Sinovac has not only provided Egypt with advanced technical guidance in producing the vaccine, but also the rights to manufacture and pack the vaccine domestically. China hopes to replicate this in other African countries.

US-China Rivalry

Boasting claims of being able to produce at least 2.6 billion doses by the end of 2021, China will likely continue to lead the way in vaccinating a large portion of the world’s population. In light of China’s generous distribution of COVID-19 vaccines, many have criticized the U.S. for hoarding vaccines. In response to this, President Joe Biden has now pledged to donate an additional 20 million vaccine doses. Certainly, the continued proliferation of aid from wealthy nations will help to increase the rate of COVID-19 vaccinations in Africa. Developed nations cannot hoard vaccines or vaccine technology and expect the pandemic to end. The pandemic will not end until the current state of vaccine inequity disappears.

– Conor Green
Photo: Flickr

6 members of The African Continental Free Trade Area have a panel discussionThe New Year has brought a host of new possibilities, and in particular, for Africa. The African Continental Free Trade Area (AfCFTA) agreement went into effect on January 1, 2021. The expectations are high for the continent.

AfCFTA is the largest free trade conglomerate in the world; 55 countries signed on to AfCFTA, consisting of 1.3 billion people and a gross domestic product of $3.4 trillion. Moreover, expectations have determined that 30 million Africans will be able to improve their income, leaving poverty behind. The move could remake Africa as a new power for trade, both internally and externally. However, the agreement is contingent on some key workings to reach the full potential of AfCFTA’s reach.

China and AfCFTA

The contingencies are large and focus on infrastructure, policy and eliminating tariff and non-tariff obstacles to improve and enhance continental trade. Some of these contingencies require funding beyond continental borders.

China, the burgeoning world power, is making its presence known in Africa, folding the continent into its monolithic project, The Belt and Road Initiative (BRI). The initiative would give incentives for Chinese investors to support infrastructure, trade and industrialization in Africa.

The BRI pivots on the ancient “Silk Road,” which were the trade routes that flowed in and out of China to the West and beyond. The Han Dynasty established the road in the year 220 B.C.E. It was over 4,000 miles long, connecting the Middle East to Central Asia and eventually, Europe.

The updated Silk Road Economic Belt and the Maritime Silk Road combine to make the BRI. The initiative invests in railways, highways, energy pipelines and benefits from streamlined border crossings. Folding in over a billion African workers and consumers is tantamount to its success. Through the initiative, China and AfCFTA have a great interest in working with each other.

Infrastructure

Africa is receiving funding for infrastructure already. In fact, China is the top investor in the African infrastructure of any foreign country. This is a much-needed economic boost for the continent.

The United Nations Economic Commission for Africa’s chief for energy and infrastructure, Dr. Robert Lising, placed a price estimate on what would allow AfCFTA work. He pointed to estimates the African Development Bank put forth amounting to $130-$170 billion per year.

He stated that “This is a huge amount of money so China’s involvement is definitely welcome… In addition, we all know that there is available capital and equipment linked to China’s involvement in Africa’s infrastructural development.” He also pointed out that China’s competitive involvement would lower prices, benefitting Africa. Additionally, he mentioned that while Western involvement is welcome as well, Western forces often come with conditions, whereas China does not.

He said that “If you want to reap the full benefits of the AfCFTA, you need regional infrastructure development… If you want to close the gap in infrastructure development in Africa, you need to bring in all the partners including China through the BRI.” He reminded others that Chinese involvement in African infrastructure is not a new thing, happening for the last five decades. Citing the completion of Nairobi to Mombasa rail lines and the Addis Ababa to Djibouti line to support his claim.

A Partnership of Need

A round table discussion that the Center for China & Globalization organized and held in December 2019 further supports Dr. Lising’s thoughts. Isabel Domingos, ambassador from Sao Tome and Principe at the conference lays out a plan for mutual benefit. She stated that “China has needs and Africa also has needs; China has potentialities and Africa also has potentialities. We have the African Continental Free Trade Area that can be one place to promote both sides, and find a place to deepen the cooperation between China and Africa.”

While there remain anxieties over the confluence of Chinese involvement in AfCFTA, the consensus is clear; the involvement of foreign capital in AfCFTA is crucial. China stands to gain from its involvement and has the capital available that the African continent needs.

China and AfCFTA are a strong match. As Africa continues on its current trends of globalization, China can heed the call. The entire world will watch the results as a blueprint for international involvement.

– Christopher Millard
Photo: Flickr

United States International Development Fincance Corporation

Traditionally, international development has been considered a government responsibility. Developed countries loan large sums of money to developing countries. Debt accumulates, developing countries become reliant on loans and corrupt leaders benefit—not the people. State-controlled development has become infamous for its ineffectiveness and harmfulness over the years. The new U.S. International Development Finance Corporation (USIDFC) introduces a new model: stimulate development through private sector investment and avoid the red tape, corruption and wastefulness of country-to-country loans.

The New U.S. Development Model

In 2019, the BUILD Act created the U.S. International Development Finance Corporation to expand upon the development work of the U.S. Agency for International Development (USAID) and the Overseas Private Investment Corporation (OPIC). Its purpose is to include the private sector in the United States’ international development mission. It can provide loans and political risk insurance, insurance that protects investments from political instability to its corporate partners. Thanks to the services it provides, it can collect service fees from the corporations. This means USIDFC operates without a cost to U.S. taxpayers.

USIDFC combines government oversight with private sector funding to create a new U.S. international development model. Although still in its infancy, the U.S. International Development Finance Corporation has introduced some ambitious projects and adopted some from USAID and OPIC. The projects cover a wide variety of development issues such as healthcare, technology, poverty and female empowerment. Such issues often intertwine, as a solution for one can often impact another.

Alleviating Poverty in Chad and Mexico

For example, USIDFC’s work to bring electricity to Chad will help alleviate poverty. Currently, only 8.8% of Chad’s population has access to electricity. Such limited access impairs education, business growth and overall quality of life. Partnering with FinLux Ellen Sarl, a French corporation, USIDFC will provide a $10 million loan for the distribution of solar-powered appliances to Chad. The project will:

  1. Provide electricity to schools, businesses, and medical clinics
  2. Achieve UN Sustainable Development Goal number seven: Affordable and Clean Energy
  3. Achieve UN Sustainable Development Goal number eight: Decent Work and Economic Growth

Through a similar project in Tanzania by the Millennium Challenge Corporation, a farmer increased her daily earnings by 504% in two years. Such a drastic increase in wages shows the powerful effects of electricity-focused development projects on poverty.

Another example of the U.S. International Development Finance Cooperation’s work to alleviate poverty is occurring in Mexico. Mexico suffers from a poverty rate of nearly 50%. USIDFC is partnering with KapitalMujer to provide $5 million in microloans to women-owned businesses in southern and central Mexico. This project will give low-income women the necessary funds to start or continue their small businesses.

Although a heavily disputed development model, microfinancing has proved beneficial in Bangladesh and China. Microloans will not drastically increase the standard of living; however, the loans will raise many families out of poverty. Ultimately, this project will give impoverished women access to funds that would otherwise be unavailable to them due to their high risk. This money will allow them to invest in their businesses and increase their income.

Different Development Models

The motivation behind the U.S. International Development Finance Corporation’s creation should not be overlooked. It is a response to China’s Belt and Road Initiative (BRI). However, China’s state-to-state development model and the United States’ new corporation-to corporation development model are fulfilling different needs. China is investing large amounts into infrastructure in over sixty countries. U.S. International Development Finance Corporation is targeting small and mid-sized companies to grow developing countries’ economies from the inside.

International politics aside, both programs are filling gaps in places where investment is lacking. Both countries are actively trying to increase economic growth in developing countries, which will decrease poverty rates. Whether the countries’ motives are altruistic or geostrategic, frankly, does not matter. The global poverty rate will be positively affected either way.

Lauren Clouser
Photo: Flickr

Poverty in China’s Xinjiang ProvinceXinjiang is a remote autonomous region in northwest China. While Xinjiang had periods of independence, the province became part of communist China in 1949. There are 40 different ethnic groups in Xinjiang, but the Uighurs, who are the traditional inhabitants of the area, and the Hans Chinese compose the ethnic majority of the region. While the economic disparity between the Hans and Uighurs gave rise to a certain amount of ethnic tension, the Chinese government’s recent treatment of the Uighurs in Xinjiang led to many human rights violations and poverty in Xinjiang.

Poverty in China’s Xinjiang Province

The historic racial tension between the Uighurs and Hans seems to be the root cause of poverty in Xinjiang. The Uighurs are a Turkic-speaking Sunni Muslim minority in China. In general, the Hans Chinese and the Uighurs disagree on who has the historic claim to Xinjiang. Since 1949, and centuries before, the Uighurs resisted the Chinese control over Xinjiang. After the collapse of the Soviet Union in 1991, there was a surge of support for the Uighur separatist groups within Xinjiang. The Chinese government feared that this Uighur support for separatism might lead to the region declaring itself as a separate state called the East Turkestan. Due to this fear, the Chinese government started to characterize the Muslim traditions, practices and activities of the Uighurs as a national security threat.

The Chinese government’s hostile stance against the Uighurs had a wide-reaching effect throughout Chinese society. After years of the Chinese government’s repression of Uighurs’ religious practices and culture, it has presented the Uighurs as terrorist sympathizers to the general Chinese public. This perception of the Uighurs is a further cause of poverty in Xinjiang. According to The Guardian’s reporter Gene A. Bunin, it is common for businesses to deny service to a Uighur person. Due to the Chinese government’s crackdown on the Uighurs, many Uighurs are losing their rights, livelihoods and potentially their lives. Bunin reported that Uighur restaurants in inner-China are the only ones on their street that Chinese flags and posters about the determined struggle against terrorism cover.

China’s Strike Hard Campaign

In 2014, the Chinese government launched the Strike Hard campaign, which aimed to quell these Uighur separatist sentiments. While the government presented this campaign as a campaign to eradicate terrorism within China, the Strike Hard campaign justified the establishment of political reeducation camps throughout Xinjiang. An estimated 800,000 to 2 million detainees are Uighurs and other Muslims. Reports suggest that Chinese authorities arrested these detainees for trivial reasons such as traveling to a Muslim country, attending services at mosques and sending texts containing Quranic verses. While official reports about the detention camps are scarce, some have made allegations against the Chinese government for torture, sexual abuse and mistreatment of the detainees.

The Xinjiang Economy

While Xinjiang’s economy largely depends on agriculture, there is a recent push to develop the region’s mineral resource harvesting and heavy industries. The recent growth in China’s energy needs further increased the importance of the region to the Chinese government. Some estimations state that Xinjiang has 38 percent of coal reserves, 30 percent of crude oil output and 30 percent of natural gas output in China. During China’s economic boom in the 1990s, the Chinese government invested heavily in Xinjiang’s industrial and energy projects. This, however, meant the mass migration of the Hans Chinese into Xinjiang. The Chinese government stated that this mass migration of the Hans to Xinjiang happens in the name of national unity and inter-ethnic mingling. However, many Uighurs protested that the Hans Chinese were taking their jobs, making it difficult for the Uighurs to support themselves.

In 2018, the Chinese government launched a three-year plan to eradicate poverty in Xinjiang. While people do not know the exact amount of money the Chinese government will spend on its poverty relief program, the $960 million the Chinese government spent in 2017 gives hope to many people in Xinjiang. In addition, many think that the forced detention of the Uighurs, which caused poverty in Xinjiang, is the result of the Chinese government’s desire to secure Xinjiang in its Belt and Road Initiative. Since Xinjiang will play a big part in the project, many think that the Chinese government is trying to eradicate any possibility of separatist activity in Xinjiang.

Poverty in Xinjiang presents a bleak picture. More specifically, poverty in Xinjiang is the story of the Uighurs. The picture of Uighurs forcefully detained against their will is reminiscent of the Orwellian dystopia that many are familiar with. While the Chinese government’s heavy investment in Xinjiang might have improved the economic conditions in the region, many are still doubtful that this improved economy is benefiting the already marginalized Uighurs. The international community still looks to China, hoping that China will improve its human rights abuses in Xinjiang.

YongJin Yi
Photo: Flickr

China's Belt and Road Initiative
Chinese authorities have dubbed the One Belt One Road Initiative as the Project of the Century. Spanning 78 countries with a total investment representing 70 percent of the world’s population, 55 percent of its GDP and 75 percent of its energy reserves, China’s Belt and Road Initiative (BRI) is the world’s largest-scale development project. The One Belt One Road is conceptually based on the historic Silk Road, a network of trade routes established during China’s Han Dynasty from the second century B.C. until the 14th century A.D. stretching from China to the Mediterranean.

Broken down into two parts, BRI is composed of a land-based Silk Road Economic Belt, which will connect China with Central Asia, Eastern Europe and Western Europe, and the 21st Century Maritime Silk Road, a sea-based route that will give China’s southern coast access to the Mediterranean, South-East Asia, Central Asia and Africa. The One Belt includes six economic corridors by land and the maritime One Road has two directions, one reaching the Indian Ocean from China’s coastal ports and extending to Europe and the other from coastal China to the South Pacific.

This modern Silk Road is a massive undertaking of unprecedented scope that will take the next 20 years to build. China is investing over $1 trillion to implement the infrastructure projects, funded through low-cost loans to the cooperating countries, including highways, railways, ports, bridges, pipelines, energy grids and power plants. Here are some of the most significant routes and projects in 10 countries affected by China’s Belt and Road Initiative.

China’s Belt and Road Initiative Projects in 10 Countries

  1. The Mombasa-Nairobi Railway: The maritime route to Africa connects China to Africa. Kenya is one of the largest recipients of the Belt and Road Initiative in Africa. The Mombasa-Nairobi Railway is the first new railway in Kenya in the past 100 years and among the first modern infrastructure projects in east Africa. The new railway has already increased Kenya’s GDP and boosted local and foreign tourists, who can now take the Nairobi-Mombasa Madarak Express train to cross Tsavo National Park in just four hours instead of 18. Chinese enterprises have also begun construction on a wind power project in Kapedo, Kenya.
  2. The China-Pakistan Corridor: The China-Pakistan Corridor connects south-western China through Pakistan to the Arabian Sea. In Pakistan, the Karot hydropower station on Ji lahm River was the first foreign investment of the BRI and its main project in Pakistan. China also began construction on the Karachi-Lahore Highway project with Pakistan’s National Highway Administration, the largest transportation infrastructure project in the China-Pakistan corridor.
  3. The Five Nations Railway: In Afghanistan, BRI plans include the Five Nations Railway, which would run from China to Iran through Afghanistan, as well as the north-south railway corridor connecting Kunduz to Torkham on Pakistan’s border.
  4. The Bangladesh-China-India-Myanmar Corridor: The Bangladesh-China-India-Myanmar Corridor connects Southern China to India via Bangladesh and Myanmar (BCIMEC). In Bangladesh, the CMEC has led to the construction of the Sheila GanJie Power Station Project, which will improve the local electricity shortage in Bangladesh. Bangladesh has a great need for ports to import energy or raw materials and export finished products. The last port to have been developed in Bangladesh was when it gained independence in 1971. The BRI will establish a new deep-sea port at Payra, which will include an oil refinery, a coal terminal to service a power plant and a container terminal.
  5. Myanmar Infrastructure Projects: In Myanmar, China plans to build a deep seaport, a trading estate and a special economic zone (SEZ) or an area designated for facilitating the industrial activity in Kyaukphyu, Rakhine State. Infrastructure projects will also be implemented in the remote western state, where it is much needed as the violence between Rohingya Muslims and Buddhists continues.
  6. The China-Mongolia-Russia Corridor: The China-Mongolia-Russia Corridor connects North China to Eastern Russia via Mongolia (CMREC). In Mongolia, two high-speed railways along this corridor, the Mongolian Vector running from Mongolia-Brest to Belarus and the Zhengzhou-Hamburg running from China to Germany via Mongolia, are bringing Mongolian markets to European firms. Development plans have begun for the building of an international UHV electric transmission super grid along CMREC routes. Another high profile BRI project in Mongolia is the Tavan Tolgoi Rail Project, which aims to link Tavan Tolgoi, the world’s most massive untapped coal mine, to the Chinese border by 2021.
  7. The China-Central Asia-West Asia Corridor: The China-Central Asia-West Asia Corridor connects Western China to Turkey via Central and West Asia. Turkey is a priority country for the BRI because of its quickly growing pipeline projects, especially the Lake Tuz Expansion, which will increase the capacity of an underground gas storage facility from 1.2 to 5.4 billion cubic meters. Lake Tuz (Tuz Gölü) is currently home to the world’s largest gas storage project under construction and it is expected to be completed in 2023.
  8. The Tehran-Mashhad: Iran is an essential part of the global framework of the BRI due to its tactical location. The BRI has implemented the Tehran-Mashhad, high-speed rail project, which unlike most of the single-tracked, slow and circuitous railways centered around Tehran, will be double-tracked and electrified. Iran plans to electrify all of its railroads, revolutionizing the country’s transportation, by 2025.
  9. China Indochina Peninsula Economic Corridor (CICPEC): Vietnam is in a position to reap the most opportunity from the BRI in the Indochina region. China built a 1,205-mile North-South Expressway from Hanoi to Can Tho, connecting eight major cities including Singapore, Kuala Lumpur, Bangkok, Phnom Penh, Ho Chi Minh City, Vientiane, Hanoi and Nanning. However, fears that the special economic zone laws would undermine Vietnamese sovereignty have caused unrest, leading to public demonstrations against SEZ law. Vietnam’s history of economic dependencies on China has made the Vietnamese citizens reluctant to cooperate with the BRI.
  10. The New Eurasian Land Bridge: The New Eurasian Land Bridge connects China to Europe and Western Russia (NELB). Kazakhstan will likely become a bustling financial hub of the Belt and Road Initiative as well as one of China’s main trading partners in the BRI. Khorgos has completed the Khorgos Gateway Dry Port, an important logistical town along the original Silk Road more than 1,000 years ago. The BRI has also completed a new land-border crossing with a four-lane road, connecting Khorgos with its Chinese counterpart Horgos.

Although there are many more countries that China’s Belt and Road Initiative will impact, these 10 countries highlight some of the key players and the most important development projects. So far, there have already been many notable successes, as well as failures and obstacles. The BRI has the potential to lift millions out of poverty.

Sarah Newgarden
Photo: Flickr