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Paw Tracker newsletter (Week of Jun 19)

 

There is lots to unpack from last week’s BRICS Summit, where China, as this year’s host country, presented a vision for global economic recovery and political cooperation against a backdrop of Russia’s war in Ukraine and the widening geopolitical schism. 

In this week’s newsletter we focus on China’s much-touted but poorly understood Global Development Initiative (GDI) that got major air time during the BRICS week. For the first time since its announcement at the UN in Sept 2021, the initiative’s contours are slightly clearer for the outside world to grasp.

The Paw Tracker newsletter, developed by Panda Paw Dragon Claw, provides up-to-date and granular project-level information on the Belt and Road Initiative. Drawing from Chinese sources of information that are often disjointed and difficult to access, the newsletter also aims to become a convening space for watchers of the BRI to share and cross-check information about projects and their impacts on the ground. 

Talk of the Town


Ever since its announcement by President Xi Jinping at the UN General Assembly in Sept 2021, China’s Global Development Initiative (GDI) has left the impression of being a politically prioritized but nebulous project. It appears to cover every key aspect of the global developmental agenda and yet offers very few clues as to how China plans to address them through the GDI.

Last week, Beijing lifted the curtain a little higher for the outside world to see what exactly is in the GDI box. At the High-level Dialogue on Global Development held as part of this year’s BRICS Summit, Xi made renewed commitments to strengthen the GDI. Earlier in the same week, the Center for International Knowledge on Development (CIKD) presented the first iteration of the Global Development Report, which contains a whole chapter on the “Philosophy, Principles, Pathways and Progress” of the GDI. CIKD was established in 2015 following Xi’s speech at the UN Development Summit and is affiliated with the State Council.

Based on Xi’s new announcements and the CIKD report, the GDI acts like a “booster shot” to the UN SDG process from China, rather than a standalone initiative of its own.

“The GDI seeks synergy with existing mechanisms,” the report declares, “[it] is intended neither to replace existing the international development agenda nor to dilute the 2030 Agenda or cherry-pick the SDGs. It is intended to renew focus on development issues, to re-commit to the SDGs, to revitalize global partnership, and to reactivate international development cooperation.”

Such a philosophy is probably best reflected in the GDI’s financing arrangements. Rather than creating a centrally administered fund or budget for the initiative itself, China seems to be taking the approach of injecting money into a multitude of development financing vehicles. At the High-level Dialogue, Xi announced that China will add another USD 1 billion to its South-South Cooperation Fund and upgrade it to a “Global Development and South-South Cooperation Fund.” The Fund, with the original size of 2 billion USD, was set up in 2015 at the UN Development Summit and was already given an extra 1 billion upon the inauguration of GDI last year. Xi’s pledge last week makes it a 4 billion USD pool of development assistance.

The report outlines that since 2021, China has also launched Phase III of the FAO-China South South Cooperation Trust Fund with a total amount of USD 50 million. Moreover, It has contributed to the replenishments of the International Development Association (IDA), the Asian Development Fund (ADF), and the Global Environment Facility (GEF). The China-initiated UN Peace and Development Trust Fund, a Sub-Fund of the 2030 Agenda for Sustainable Development, also approved new projects in green transition, digital technology, and capacity building. 

While the GDI is very much built around the UN SDGs (the BRI is also increasingly so in its public framing) and “does not cherry pick”, the initiative does have its own strategic priorities. In the short term, it is geared towards “pressing development challenges such as poverty reduction, food security, and COVID-19 response and vaccines” in order to “create a favorable environment for post-COVID recovery.” After the pandemic, medium and long-term developmental challenges will also enter its focus, including sustainable financing, climate change, new industrialization and digital infrastructure.

Xi’s speech indicates that the GDI may become a bit more institutionalized than before, with a Global Development Promotion Center in the making. But it appears to be only a hub of knowledge sharing and networking, a bit like an upgraded CIKD. CIDCA, China’s international development agency, will likely play a key role as the administrator of the South-South Cooperation Fund. But more multilateral platforms also need to be set up from scratch. A “Friends of the GDI” group was established early this year that has already attracted over 50 countries, the report says. A few issue-specific centers in China, such as the International Poverty Reduction Center and the China-Pacific Island Countries Climate Action Cooperation Center will likely handle project implementation under different policy areas. 

The GDI is taking shape at a critical moment in global geopolitics and economic relations. “The pandemic is negating years of developmental gains,” while “some countries are politicizing and marginalizing the developmental agenda by building up walls and slapping crippling sanctions on others,” Xi warned. In this context, will China’s booster of the UN SDGs be able to make an impact?

This week's highlight project

Colombia: Solar PV deal signed amid political change

Energy China recently signed an EPC contract for an 85MW solar PV plant in the Cordoba Department of northern Colombia. The company is already involved in a 12.75MW solar project in neighboring Sucre Department, including complementary infrastructure such as power cables. According to a report on Goalfore, the country is seeing a rapidly expanding market for renewable energy due to its natural endowments and ongoing energy sector upgrade and transition. As of 2020, fossil fuels made up 75% of energy generation, however, and coal was the fastest growing source of energy as recently.

Why it gets our attention: The election of Gustavo Petro last week has spooked many investors, in large part due to his proposals on tax reforms and increased government spending. Petro has also stated that he will not approve any new gas or oil exploration projects, exports of which recently made up nearly 30% of Colombia’s exports by value. According to an article by Lv Yang of the China Institute of Contemporary International Relations, many of the proposed reforms are an attempt to avoid “dependency development” and falling into the resource curse, development issues which China has historically identified with too.

Recent years have seen the growth of Chinese investment in the country, particularly via Public Private Partnerships. Whether the change of policy direction and expected reforms in Colombia will spook Chinese investors too remains to be seen.

Other project & corporate updates


Bolivia: Power China enters gold mining business


Power China, the infrastructure engineering conglomerate with a business scope way beyond the power sector, has just opened up new opportunities in the mining sector in Latin America. On Jun 21, the company signed the deal for the excavation and transportation of 14 million cubic meters of mineral ores and non-minerals at the Amayapampa mine in Bolivia’s Potosí department, about 400 km southeast of La Paz. The contract term is 54 months, according to BRProject.


Power China’s Latin American mining footprint: According to BRProject, this is the fourth Latin American country where Power China has obtained a mining contract, following Argentina, Guyana and Colombia. The company has high ambitions in establishing a foothold in the continent’s major mining markets, with the intention to further open up Brazil, Panama and Peru as its next targets.
If you have further details of any of the above mentioned projects that you would like to share with the community, please reach out to us through pandapawdragonclaw@gmail.com
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