BRI Politics and Trade
China grants zero-tariff status to 10 least-developed countries (LDCs)
On November 9, China announced that it will extend its zero-tariff treatment to 10 LDCs: Afghanistan, Benin, Burkina Faso, Guinea-Bissau, Lesotho, Malawi, Sao Tome and Principe, Tanzania, Uganda and Zambia. The policy came into effect on December 1 and will be applicable to 98 percent of taxable items, including agricultural goods and production materials. The policy aims to accelerate these countries’ growth, and is likely to be extended to other LDCs that have diplomatic relations with China, putting Beijing in an advantageous position as it competes with its rivals for influence in the global south.
China strengthens bilateral partnerships with Indonesia and Thailand
On November 16, the Chinese and Indonesian governments signed 5 bilateral agreements in the fields of economy, maritime, and trade following the G20 Summit in Bali. Following the APEC summit, China and Thailand also signed 5 agreements aimed at: strengthening security, trade and sustainability; cooperating on the Belt and Road Initiative; and signing an MoU on establishing a working group on investment and economic cooperation. These agreements build on China’s growing ties with Southeast Asia, which will likely continue to emerge as a field of strategic competition between China and others as discussed in the above entry on competition in ASEAN.
Kenya goes public with its Chinese contracts
On November 5, the Kenyan government released three documents from a loan contract signed in 2014 with China’s ExIm bank for Kenya’s Standard Gauge Railway (SGR). Kenya’s new Transport and Infrastructure minister released the contracts to remove public uncertainties that the previous Kenyan leadership had staked the valuable Mombasa Port as collateral for the initial USD 3.6 billion railway project loans. One clause states that any significant disagreements about the SGR would be resolved in China over Kenya, however it is unclear if this implies Chinese authorities would have the last word in such disagreements. The records also indicate that the Kenyan government was required by law to maintain the confidentiality of the agreement’s specifics. The incident serves as a reminder of the shortcomings of transparency on the BRI, an area in which Europe’s Global Gateway could present itself as a credible alternative partner.
Transport and Logistics
Chinese capabilities are displayed at Qatar World Cup
Qatar imported 1,500 Chinese-made Yutong buses, including 888 electric buses to use at the FIFA World Cup. The success has led the company to announce its plan to build a factory in the Gulf state, helping Qatar achieve the country’s ‘National Vision 2030’ of becoming 100% electric. While a Chinese firm won the bid for electric buses, the government also signed an MoU with the European ABB in September 2021 to install charging stations – perhaps a sign of how middle-powers can play off competitors to build out different parts of their system. Additionally, the Lussel Stadium building project was awarded to CRCC International back in 2016. The Chinese company served as the general contractor for the design and building of the World Cup stadium, breaking the pattern of European and American contractors historically winning such bids.
Alibaba’s Cainiao goes global in Pakistan and Brazil
Alibaba’s Cainiao Logistics continues to develop foreign e-commerce operations. In partnership with Pakistani e-commerce Daraz Group, the Chinese company completed an automated express distribution center in mid-October. The distribution center is said to be one of the most technologically advanced logistics facilities in South Asia. Additionally, the company recently named Sao Paulo as its LatAm headquarters about the same time as launching Brazil’s first parcel distribution center, adding to its regional network of sorting centers in Mexico and Chile. The Hangzhou-based company plans to build more sorting centers in Brazil, and to set up 1,000 smart drop-off lockers in 10 major cities by 2025. Even as China’s digital champions are being hit at home as well as in the US and Europe, they are also expanding their global footprint and seizing market share in emerging economies.
Manufacturing and Construction
Germany compromises over Hamburg COSCO deal
Following criticism over an initial deal between Hamburg port terminal and China’s shipping company COSCO, the German chancellory approved the deal after reducing COSCO’s stake from 35 percent to 24.9 percent. The Ministry of Economics announced that the compromise would fall under the threshold to have voting rights on terminal management. The Chinese shipping company is also prohibited from having contractual veto rights in future strategic business decisions, though at the time of printing, COSCO had not yet accepted or denied the compromise. The investment is the first in a European port since the new EU investment screening mechanism was put in place.
Chinese EV companies continue their Hungary expansion
On October 5, Shanghai Kuaibu New Energy Technology (KBVIP) signed its first photovoltaic (PV), battery storage and electric vehicle (EV) charging pilot project agreement with Hungary’s Intretech. The timing of the project comes soon after CATL, the parent company of KBVIP, announced that it was building a battery factory near Debrecen. The Hungarian city is increasingly becoming an EV manufacturing hub, with BMW having also announced a further 2 billion Euro investment in their factory opening in 2025. While a new EV hub will boost Hungary’s industry, Some fear China’s EV expansion makes the country and Europe too dependent on Chinese battery-makers, and that European automakers are lagging behind their Chinese competitors that are increasing their footprint in the common market.
Egypt goes green with Chinese construction
China State Construction Engineering Corporation Egypt Branch (China Construction Egypt), has completed 20 buildings in Egypt’s New Administrative Capital, a large-scale project of a new capital city in Cairo that has been under construction since 2015. The project uses aluminum molds to replace traditional wooden ones, which has a high recycling rate and greatly reduces material consumption; uses different types of concrete, which saves construction energy consumption; and has installed an on-site water system to purify sewage and wastewater to reduce water wastage. China’s construction efforts overseas are increasingly incorporating greener technology, which not only increases their value as a partner in the eyes of developing countries, but also directly challenges an EU competitive strength.
China Harbor Engineering Company (CHEC) completes Nigeria’s Lekki Port Project
On October 31, CHEC handed over Nigeria’s first deep-sea port located in Lagos, the country’s economic hub. The tripartite project between China, France and Nigeria began in 2020 and is designed to handle 1.2 million standard containers annually, making it one of the largest ports in West Africa. Combined with the upcoming Lagos Free Zone, the project aims to tap into Nigeria's economic potential, increase revenue, and generate an estimated 200,000 jobs in the coming years. The project serves as a reminder that joint project development between China, European players, and recipient countries can still deliver.
Digital and Tech
Europe blocks Chinese takeover of chip firms
Two European semiconductor transactions have been blocked due to growing anxiety surrounding possible Chinese control. On November 9, Germany’s economic ministry barred Elmos Semiconductor, an automotive chipmaker, from selling a foundry in the city of Dortmund to Silex, a Swedish subsidiary of China’s Sai Microelectronics. On November 16, the British government ordered Chinese-owned technology company Nexperia to sell at least 86 percent of Britain's biggest microchip factory, Newport Wafer Fab, 16 months after it took it over in July last year. Both transactions have been blocked due to national security concerns at a time when the US seeks to reduce Chinese access to semiconductor technology and the EU tries to secure its own chip-making capacity.
China and Singapore lead submarine cable network in Southeast Asia
China Telecom Global and Singtel are co-leading a consortium of six carriers to build a USD 300 million undersea fiber-optic cable system that will connect Hong Kong, Singapore, Brunei, the Philippines, and China. The Asia Link Cable (ALC) system will span 6,000 kilometers and is expected to be completed by 2025. ALC will be built on an open cable system design that will reduce dependency on any one provider within the consortium. The cable network serves as a reminder of China’s growing role as a tech provider in third markets.
China’s ZTE boosts Thailand’s digital infrastructure
Thailand’s digital network operator, AIS, has partnered with China’s ZTE, a major worldwide provider of information and communication technology solutions. They launched a 5G innovation center to advance 5G technology, develop solutions for business sectors, and enhance Thailand’s competitive capabilities under Thailand 4.0. As Huawei and ZTE have hit headwinds in liberal market economies, it is increasingly turning to other economies to build market share, which could become a challenge when European competitors want to expand into those same markets in the future.
China ramps up its gas from Qatar
QatarEnergy signed a 27-year natural gas supply agreement with China’s Sinopec on November 21, making it the ‘longest’ agreement in the history of the LNG industry according to the Gulf state’s energy minister. The gas will come from the North Field East project which began in 2020, half of which is expected to go to Europe, and the other half to Asia. This comes at a time when EU countries have hesitated to sign longer-term deals as they plan to move away from fossil fuels in the short run, all the while reducing its dependency on Russian gas. Furthermore, this move is an important part of China’s efforts to diversify away from the US and Australia, which provide a large share of China’s gas through LNG deliveries.
Sino-French partnership brings PV power to Italy
On October 13, General Technology China Machinery Europe (Italy) Co., Ltd. and Ikarus Srl, a subsidiary company of the French GÉNÉRALE DU SOLAIRE (GDS) Group, signed the general contract for the 7 MW photovoltaic power plant project in Manduria, Italy. China Machinery Europe (Italy) is responsible for the design, procurement, construction, commissioning, trial operation, operation and maintenance of the power station. It is estimated that the annual power generation will reach 11.6 million kWh, saving 2,755 tons of standard coal and reducing the equivalent of 7,540 tons of carbon dioxide emissions.
Myanmar fires up its power plant
On October 10, China Power Construction Group completed a 135-MW gas-fired power plant located in the Kyaukphyu Special Economic Zone (SEZ). The USD 180 million project forms an important part of the China-Myanmar Economic Corridor (CMEC) scheme. It is one of the many energy projects lined-up between the two countries, including hydro power plants in Ye Ywa in Mandalay, Paung Laung in Naypyitaw and Tha Htay in Rakhine; natural gas-fired plants in Tha Hton in Mon State and Thaketa in Yangon; and a solar plant in Minbu in Magwe Region. Myanmar has grown increasingly reliant on China as LMEs and India have held back from cooperating with the local regime over human rights abuses.