China’s deal with the Solomon Islands creates security concerns for Australia and New Zealand
The PRC finalized a security deal with the Solomon Islands in an unwelcome surprise for Pacific neighbors Australia and New Zealand. The deal is believed to offer the chance for Chinese warships to be based and refueled in the archipelago. China also wooed the Pacific nation of Kiribati, which switched diplomatic recognition from Taiwan to the PRC in 2019. Foreign minister Wang Yi visited in May on his eight nation Pacific tour in May. China’s longstanding dedication of political and economic resources to the region has started to pay off. Beijing has been able to expand its influence into the South Pacific partly due to the relative absence of the US and its Pacific allies. However, that may change. The US and New Zealand responded to the security deal with a joint statement about strengthening security cooperation in the region – a big step for Wellington – which was met with aggravation in Beijing.
DIGITAL, HEALTH, AND TECH
China’s Digital Silk Road advances in Bangladesh
China Railway International Group signed a contract for digital infrastructure with the Bangladesh government in April. Under the “Bangladesh National Digital Unicom” project, CRIG will construct 10,000 computer labs across the country, help to improve government statistics gathering techniques and technology, and build an information and communications literacy training center in the capital, Dhaka. It is the first major Digital Silk Road project in Bangladesh and typical of how China hopes to meet the Global South’s demand for digitalization. Chinese firms are all too happy to fulfill that demand, especially in the absence of meaningful competition from the West.
Huawei an increasingly central player in mobile payments in Africa
The popular Kenyan mobile payment service M-Pesa runs on Huawei Mobile, which each year processes billions of dollars in transactions. Moreover, Huawei Mobile Money is also powering similar mobile payment systems in other African countries, including Ghana, Angola, and Ethiopia.
The expansion in Chinese mobile payments , despite a reduction in Chinese investment in Africa, shows the demand-led resilience of China’s digital engagement in Africa.
China’s SOEs still backing overseas coal plants in Pakistan, Indonesia and Laos
China has shown its continued support for Pakistan through more BRI investment commitments, despite the recent chaotic change in government. PowerChina has obtained a contract to build a water supply project supporting the Thar coal plants, the biggest in Pakistan. Meanwhile, Energy China has won two new contracts in Indonesia and Laos in the coal power sector. While they cannot be classified as direct investments – technically restricted since President Xi’s UN pledge – the projects will support the construction and maintenance of coal plants through equipment and essential “engineering and technology services.”
Brazilian offshore oilfield tapped by Chinese SOE as part of larger international project
China National Offshore Oil Corp (CNOOC)'s ultra-deepwater pre-salt oilfield in Brazil was put into operation in May, the latest effort by the country's top offshore oil and gas producer to step up overseas oil and gas production. The oilfield is located in the Santos Basin and is part of an international cooperative project in which CNOOC currently holds a 9.65 percent working interest.
Myanmar dissolves business ties with Chinese solar power companies
The Myanmar government has cancelled 26 tenders for solar PV projects issued under the previous NLD government in September 2020. Chinese companies have dominated tenders for solar projects in Myanmar for several years, winning 28 of the 29 tenders offered between May and Sept 2020. Many of those companies have now been blacklisted for “breaching tender regulations.” They include three major private companies, Sungrow Power, Xi’an LONGi Solar and GCL System Integration, as well as three state owned power sector investors, Yunnan International Power Investment (a subsidiary of the State Power Investment Corporation (SPIC)), China Machinery Engineering Corporation (CMEC), and the Gezhouba Group Overseas Investment Company.
MANUFACTURING, CONSTRUCTION, AND RESOURCES
New iron mine in Cameroon set to help Beijing diversify supplies for its steel industry
China’s Sinosteel Corp signed a USD 690 million contract for an iron ore mine in southern Cameroon.
Sinosteel signed a 50-year contract with the central African government to exploit the Lobe deposit. The move may be understood via the current uncertainty surrounding global commodity markets, as Chinese companies seek alternatives to Australian ore.
Growing appetite for Lithium in China drives new joint venture in Zimbabwe
China's Sinomine Resource Group Co. and Shenzhen Chengxin Lithium Group Co. agreed to set up a joint venture in Zimbabwe for cooperation on lithium mining projects. The joint venture will be registered in Harare, Zimbabwe with starting capital of USD 5 million, and carry out exploration on lithium and platinum mines. Global demand for lithium products – such as electric vehicle batteries – continues to rise. Chinese firms have accrued a substantial market share of the world’s critical raw materials for such technologies.
Guinea taps China to build stadium for upcoming African Cup of Nations 2025 tournament
China Construction Fifth Engineering Division Corp signed a RMB 1.99 billion EPC contract to build a 40,000-seat football stadium in Guinea’s capital, Conakry, for the 2025 African Cup of Nations. The stadium complex will include six training facilities and a smaller 17,000-seater stadium will be restored. Construction is due to be completed within 24 months.
Hungary set to be part of China’s NEV supply chain investments in Europe
GEM Co., Ltd., a Chinese company focused on waste recycling recently signed a memorandum of cooperation (MoC) with the Hungarian consulate in Shanghai for production of high nickel precursors for new energy vehicles (NEVs) and recycling scrapped power batteries in Hungary.
TRADE AND FINANCE
New airport terminal in Ethiopia begins construction, despite ongoing civil war
PowerChina began construction of a new airport terminal in Bahir Dar, the capital city of the Amhara region in northern Ethiopia, on 17 May. Ethiopia’s civil war, which has already claimed around 500,000 lives, has not slowed Chinese investment there. PowerChina’s deal followed CAMC Engineering’s signing of a contract to operate a sugar factory in Amhara on 10 May.
TRANSPORT AND LOGISTICS
The ‘Eurasian Land-bridge’ sees traffic plummet due to Russian invasion of Ukraine
The Russian invasion of Ukraine has all but halted traffic on one of the signature BRI projects: the China-Europe Railway Express (CERP). Practically all traffic passing through Russia, Ukraine, and Belarus has been stopped or diverted, and the volume of goods transiting by rail has dropped to decades-low levels. Moreover, the situation is unlikely to be resolved anytime soon, leaving Chinese exporters wondering how to shift their exports to the already log-jammed freight sector.