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91. Examining World Bank Lending to China: Graduation or Modulation?

Author:
Scott Morris and Gailyn Portelance
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
Under the World Bank’s 2018 capital agreement, borrowing countries are expected to gradually reduce their portfolios once a base income threshold—the Graduation Discussion Income (GDI)—is reached. However, the agreement also affirms the case for ongoing lending to these countries. One justification is tied to external value beyond the borrowing country’s borders (global public goods, or GPGs). Another is tied to building capacity within the borrowing country, which can mean a focus on sub-regions where poverty remains high and capacity weak. In this paper, we examine World Bank graduation policies and lending through the lens of China, which maintains a large portfolio of World Bank projects. China currently exceeds the GDI thresholds for IBRD borrowing at the national level, while income inequality within the country leaves many noncoastal provinces below the GDI per capita threshold. Aggregate and provincial-level analysis of World Bank lending in China shows that less than half of China’s portfolio comprises activities clearly linked to GPGs, while a slight majority of projects are based in provinces with per capita income below the GDI threshold. A substantial number of World Bank projects in China focus on climate change mitigation and transportation infrastructure construction, while a smaller number relate to capacity building. Overall, we find evidence that China’s borrowing is broadly consistent with the 2018 principles of institutional capacity strengthening and GPG-related engagement, although significant areas of bank engagement do not appear to fall within the parameters of these principles.
Topic:
Poverty, Infrastructure, World Bank, and Inequality
Political Geography:
China and Asia

92. The Kunming-Vientiane Railway: The Economic, Procurement, Labor, and Safeguards Dimensions of a Chinese Belt and Road Project

Author:
Scott Morris
Publication Date:
05-2019
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
The Kunming-Vientiane (K-V) railway, part of the Kunming-Singapore multi-country rail network (or “Pan-Asia Railway”), is an anchor investment of the Chinese government’s Belt and Road initiative (BRI). This case study will assess the rail project along four dimensions: economic implications; procurement arrangements; labor; and environmental and social safeguards. In each of these areas, evidence from the railway project suggests that Chinese policy and practice could be better aligned with the practices of other sources of multilateral and bilateral development finance. Where the project’s standards are broadly aligned, at least in principle, there is nonetheless reason to believe that China’s approach carries heightened risks given the overall scale of financing. These risks hold for China’s global program of official finance, which has made the country the largest source of official credit in the world. In this regard, BRI policymakers should consider a more rigorous set of “best practices” that align Chinese official finance with leading multilateral standards, even if these practices don’t currently characterize many other bilateral lenders. Such an approach would be consistent with the multilateral vision for BRI espoused by Chinese officials and reflected in the framework of the annual Belt and Road Forum for International Cooperation. This study considers what a stronger set of standards would look like in the context of the four areas of focus.
Topic:
Infrastructure, Belt and Road Initiative (BRI), Transportation, and Railways
Political Geography:
China and Asia

93. Grading China's Belt and Road

Author:
Daniel Kliman, Rush Doshi, Kristine Lee, and Zack Cooper
Publication Date:
04-2019
Content Type:
Special Report
Institution:
Center for a New American Security (CNAS)
Abstract:
Since its launch in 2013, what China calls “One Belt, One Road” has emerged as the corner-stone of Beijing’s economic statecraft. Under the umbrella of the Belt and Road, Beijing seeks to promote a more connected world brought together by a web of Chinese-funded physical and digital infrastructure. The infrastructure needs in Asia and beyond are significant, but the Belt and Road is more than just an economic initiative; it is a central tool for advancing China’s geo-political ambitions. Through the economic activities bundled under the Belt and Road, Beijing is pursuing a vision of the 21st century defined by great power spheres of influence, state-directed economic interactions, and creeping authoritarianism. As Beijing prepares to host the second Belt and Road Forum in late April 2019, countries that once welcomed Chinese investment have become increasingly vocal about the downsides. This report is intended to serve as a resource for governments, corporations, journalists, and civil society groups now re-evaluating the costs and benefits of Belt and Road projects. Building on previous research by the Center for a New American Security and other institutions,2 this report provides a high-level overview of the primary challenges associated with China’s Belt and Road. It explores these challenges in the context of 10 cases that have received little high-profile attention and identifies future concerns generated by the Belt and Road’s growing digital focus. Lastly, the report puts forward a checklist for evaluating future infrastructure projects involving China.
Topic:
Development, Economics, Infrastructure, Authoritarianism, Geopolitics, and Belt and Road Initiative (BRI)
Political Geography:
China and Asia

94. Addressing China's Rising Influence in Africa

Author:
Michael Tiboris
Publication Date:
05-2019
Content Type:
Special Report
Institution:
Chicago Council on Global Affairs
Abstract:
Addressing China's Rising Influence in Africa MAY 21, 2019 By: Michael Tiboris, Nonresident Fellow, Global Water Key facts and figures China is now the largest trading partner for the African continent, and China’s Export-Import Bank aims to invest more than $1 trillion in the continent by 2025. In addition, China has now surpassed the United States government in total agriculture R&D funding. China has increased its presence in African development—a trend that will persist because its model is extremely attractive to both China and many African nations. China’s growing contributions to African development should not automatically be feared, but their increased presence should create a recalibration in US approaches to development. Current US National Security Advisor and former Ambassador John Bolton in his announcement of the administration’s Prosper Africa initiative cast China’s presence in Africa as a strategic challenge for the United States. The market opportunities on the African continent are enormous. Consumer expenditure is expected to reach $2.1 trillion by 2025 and $2.5 trillion by 2030. The World Bank estimates that the African food market alone could be worth $1 trillion by 2030, more than tripling the current $300 million market. China’s ability to directly finance and construct infrastructure projects with fewer conditions is unique and has raised worries in some quarters about the expropriation of natural resources, environmental hazards, labor displacement, unstable debt burdens, and land grabs. In addition, China’s investment strategy leaves notable gaps that the United States, leaning on its expertise, can fill. The most direct and sustainable mechanism for moving people out of poverty is investment in agriculture—in particular, smallholder agriculture. US leadership on global water, food, and nutrition security is essential to catalyze the innovations and development necessary to achieve US foreign policy and development goals on the continent. To maintain its global leadership in this strategically important continent, the United States should consider prioritizing technical assistance for water sustainability and thereby support sanitation and agricultural growth. The United States must also continue to find ways to deepen its relationships with African partners to demonstrate US commitment to building resilience and self-reliance in these communities for the long term. Simultaneously, the United States and its allies should work through international institutions to encourage China to adopt policies that achieve shared global objectives in economic development, security, human welfare, and sustainability.
Topic:
Infrastructure, Banks, Trade, and Strategic Competition
Political Geography:
Africa, China, Asia, North America, and United States of America

95. The Talsinki Tunnel: Channelling Chinese Interests into the Baltic Sea

Author:
Frank Jüris
Publication Date:
12-2019
Content Type:
Special Report
Institution:
International Centre for Defence and Security - ICDS
Abstract:
China’s assertive foreign policy is best known for the Belt and Road Initiative (BRI). In Northern Europe, China is interested in developing the Polar Silk Road which, using the Northeast Passage route, could significantly cut down the transit time between Asia and Europe and provide alternative route to the target European market. The Tallinn–Helsinki connection should be seen as part of this route, which helps explain why the Chinese investor TouchStone Capital and state-owned construction companies have shown interest in building an undersea rail tunnel between Helsinki and Tallinn (the “Talsinki tunnel”). This paper analyses Chinese strategic interests through the BRI initiative in general and the Polar Silk Road in particular. With the focus on the motives of the host countries it tries to find out, how well they resonate with Chinese interests in the region. This analysis looks at the preparations made for the implementation of the project and describes the Chinese state actors involved in it. The final, largest section analyses the security risks involved in the implementation of the tunnel project and highlights the potential security risks that need to be taken into consideration by the host countries.
Topic:
Security, Foreign Policy, Infrastructure, Belt and Road Initiative (BRI), and Resilience
Political Geography:
China and Asia

96. The Use of Aid to Counter China's "Djibouti Strategy" in the South Pacific

Author:
John Lee
Publication Date:
03-2019
Content Type:
Special Report
Institution:
Hudson Institute
Abstract:
China has gradually militarized its facilities in the horn of Africa (Djibouti) under the pretense of anti-piracy operations and development aid since 2017, which has forced the U.S., France, and Japan to accept a permanent Chinese military presence in the same 14,400 square-mile African territory, where China is now holding live-fire exercises. Dubbed the “Djibouti strategy,” Beijing is now executing this tactic across the South Pacific, one of the most aid-dependent regions of the world. China, one of the highest contributors to Official Development Assistant (ODA) in the South Pacific, uses that tool at first under the guise of aid while actually employing it to shape the islands’ infrastructure to its own strategic military advantage. China is currently building infrastructure capable of dual economic and military use in Fiji, the Cook Islands, Samoa, Tonga, Vanuatu, and other Pacific islands. These projects support China’s aim to break through the First and Second Island Chains, a series of pro-U.S. countries that limit Chinese naval access to the Philippine Sea and Pacific Ocean. Meanwhile, U.S. ODA is deployed inefficiently and inconsistently through 19 separate agencies. The design, delivery, and administration of U.S. development assistance must be reformed. ODA is a national security issue, not just a humanitarian one. The U.S. defense community needs to embrace the strategic potential of ODA and its capacity to strengthen democracies and counter malign influence abroad.
Topic:
International Relations, Foreign Aid, Infrastructure, Alliance, and Soft Power
Political Geography:
Africa, China, Asia, Djibouti, Cook Islands, Samoa, Tonga, Vanuatu, United States of America, Fiji, and South Pacific

97. Engaging with India’s Electrification Agenda

Author:
Stephen Naimoli and Kartikeya Singh
Publication Date:
07-2019
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies (CSIS)
Abstract:
In 2019, India completed its program to provide electricity connections to every village and every home in the country. However, even though millions more are now connected, problems remain, including unreliable supply of power and a lack of workforce capacity for utilities to serve an expanded customer base. While India’s central government sets national policy, India’s powerful states have jurisdiction over the power sector and are responsible for implementation of central government programs and policies. For foreign stakeholders interested in supporting India’s electrification agenda, this presents an opportunity for them to engage with states to help meet their energy access priorities. To identify key areas for international engagement, CSIS conducted a survey of government, civil society groups, and energy access practitioners in the Indian states of Assam, Chhattisgarh, Madhya Pradesh, Odisha, and Rajasthan on their energy access priorities. Opportunities for collaboration include metering and bill collection, operations and maintenance, quality and reliability of supply, and off-grid technologies, including solar-powered pumps and other appliances.
Topic:
Energy Policy, Infrastructure, Electricity, and Renewable Energy
Political Geography:
India and Asia

98. Engaging with India’s Electrification Agenda: Powering Chhattisgarh

Author:
Stephen Naimoli and Kartikeya Singh
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies (CSIS)
Abstract:
Chhattisgarh is a mineral-rich state with abundant coal and iron ore resources and whose coal production gives it an energy surplus, but it is also one of India’s poorest states, with a poverty rate of 40 percent and low human development indicators. Long plagued by left-wing violence, with which it still struggles, Chhattisgarh’s government is trying to diversify the state’s economy by making it an attractive destination for non-extractive industries. Dense forests which house scattered communities coupled with the conflicts have made setting up infrastructure to support household electrification through a centralized grid a challenge for the state government. Absent such infrastructure, the state has been a ripe market for decentralized renewable electrification efforts. Chhattisgarh has increased the amount of its population with electricity access from 84.5 percent in 2015 to 99.67 percent in 2019. An important measure of the health of the state’s electric power sector is aggregate technical and commercial losses (AT&C), which measure line losses from transmission and distribution equipment, power theft, billing and collection inefficiencies, and customers’ inability to pay. Chhattisgarh’s AT&C losses in 2015 were 20.5 percent. Under the state’s 24x7 Power for All plan formed with the central government, Chhattisgarh’s utility Chhattisgarh State Power Distribution Corporation Limited (CSPDCL) would target AT&C losses of 16 percent in 2019. Unfortunately, losses have grown—as of August 2019, they are at 23.28 percent. Under the central government’s Ujwal Discom Assurance Yojana (UDAY) scheme, which aims to improve the financial health of the country’s utilities, Chhattisgarh has a target of 652,146 smart meters for customers with monthly consumption between 200-500 kilowatt-hours (kWh) by December 2019. As of August 2019, the state has not deployed any smart meters for these customers. The state also had a target to deploy 488,307 smart meters for customers with monthly consumption of over 500 kWh by December 2017 but has not deployed any smart meters for those customers either.
Topic:
Energy Policy, Infrastructure, Electricity, and Safe Energy
Political Geography:
India and Asia

99. The United Kingdom's Belt and Road Initiative strategy after Brexit

Author:
Benjamin Barton
Publication Date:
06-2019
Content Type:
Policy Brief
Institution:
Asia Research Institute, University of Nottingham
Abstract:
As China’s President Xi Jinping’s signature foreign policy programme, the Belt and Road Initiative (BRI) has become one of the world’s most active infrastructure development drivers. The BRI is helping to meet the increasing demand for infrastructure development in emerging markets across the world. This policy is unlikely to change due to the importance that the Chinese government attributes to the BRI, with it now being formally enshrined into the Chinese Communist Party (CCP) constitution. For the UK, the BRI stakes are high; it matters both domestically and internationally. It is impacting the wellbeing of countries that are of strategic importance to the UK. It also contributes to the emerging geopolitical rivalry on infrastructure financing. The government should explore bilateral and multilateral venues to seek to cooperate with China on the BRI by developing a UK BRI strategy post-Brexit.
Topic:
Development, Bilateral Relations, Infrastructure, Geopolitics, Brexit, Multilateralism, Belt and Road Initiative (BRI), and Economic Cooperation
Political Geography:
Britain, China, United Kingdom, and Asia

100. Strategic Implications of the China-Pakistan Economic Corridor

Author:
James Schwemlein
Publication Date:
12-2019
Content Type:
Special Report
Institution:
United States Institute of Peace
Abstract:
Great power politics is resurgent in South Asia today. China’s growing military ambition in the region is matched in financial terms by its Belt and Road Initiative, the largest and most advanced component of which is the China-Pakistan Economic Corridor. What remains unclear is how the United States should navigate the new dynamic. This report, which is based on research and consultations with experts worldwide, addresses the question of how the India-Pakistan rivalry will play into the emerging great power competition.
Topic:
Economics, Power Politics, Infrastructure, and Belt and Road Initiative (BRI)
Political Geography:
Pakistan, China, South Asia, Asia, North America, and United States of America