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Paw Tracker newsletter (Week of Mar 22)


“Third-country cooperation” appeared in China’s Five-Year Plan for the first time two weeks ago. As a mechanism that is supposed to address the “exclusiveness” of the BRI, what does it mean exactly? A roundtable at the China Development Forum 2021 last week provided some insights. 

Also in the past week, the ongoing armed conflict in Ethiopia got some airtime on Chinese social media and China Gezhouba Group’s annual CSR report reveals how it helped evacuate hundreds of Chinese nationals from the conflict area.

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

At the China Development Forum 2021 held from March 20-22, China’s policy heavyweights, including Vice Premier Han Zheng and NDRC Director He Lifeng, elaborated on China’s new development vision in front of international business leaders (through video connection mostly). BMW’s board chair Oliver Zipse was the co-chair of this year’s Forum.

One roundtable session was specifically about third-country cooperation mechanisms under the Belt and Road Initiative (BRI). One of the key challenges of (or rather criticism about) the BRI is its perceived exclusiveness. According to US think tank CSIS, at one point, 89% of companies involved in Chinese-funded projects overseas were Chinese. The reality makes it hard to present the BRI as anything other than a self-interest driven, tightly controlled initiative of economic and geopolitical expansion.

Men Honghua, dean of Tongji University’s School of International Relations and Politics, told participants of the roundtable that a “rethinking of the self-interest centered approach” is underway in China, and a new vision of “shared interest” and multilateralism has taken root. Third-country cooperation, with Chinese companies collaborating with developed country partners in a third country, is an important vehicle to realize that vision. 

More specifically, Fang Qiuchen, head of China International Contractors Association (CHINCA), highlighted the advantages of third-country cooperation: developed country companies are good at project design and engineering standards; developed country financial institutions have advanced financial systems and competitive financial costs, which make them desirable partners of joint financing with Chinese financial institutions aiming to enlarge the scale of syndicate loans, strengthen risk management and follow international financing standards. He mentioned that many Belt and Road countries apply developed country standards, which makes third country cooperation with European or American companies a good way of entering those markets. 

Prof. Li Xiaoyun of China Agriculture University added that third-country cooperation allows China’s relative competitiveness in labor cost and practical technologies to supplement the high tech and high standard of developed country companies. But he also pointed out that geopolitical complexities, differences in political and business culture and gaps in technical standards create challenges for such cooperation.

Martina Merz, CEO of German engineering giant ThyssenKrupp, spoke at the roundtable and used the company’s collaboration with Metallurgical Corporation of China in Saudi Arabia’s Yamama cement project as an example of a successful third-country cooperation. She complimented the Chinese company’s experienced workforce, cost control abilities, efficiency and financing capabilities.

This week's highlight projects

Indonesia: Coal-fired power plant units at Morowali Industrial Park granted to Shanghai Electric

Shanghai Electric has signed contracts for the three 380MW coal power plant units which will power Tsingshan Steel’s ambitious smelting operations at the Morowali Industrial Park in Sulawesi, Indonesia. The three units will be used to power production of ferronickel, ferrochrome and aluminium, all of which are used to make different steel products.

Some context: The Morowali Industrial Park is Indonesia’s first integrated steel production facility, replete with associated smelting capacity and a sea port. It reportedly already employs 43,000 people, 88% of whom are Indonesian.

More context: Tsingshan Steel has been operating in Indonesia since 2012, but interest in nickel smelting and related industrial operations in the country increased since Indonesia’s 2014 ban on unprocessed nickel exports. As Alvin Camba has written for PPDC, Indonesia’s use of trade and industrial policy is rapidly reshaping relations between Tsingshan Steel, the Indonesian government and domestic nickel miners, as well as creating an environmentally damaging “race to the bottom” among miners. 

One more thing: Tsingshan Steel was also in the news recently for its announcement that it will produce and supply at least 100,000 tonnes of nickel matte to battery producers. The announcement broke a deadlock in nickel markets and saw prices plummet 8.5% to their lowest since 2016. Much of that nickel matte may be produced in the Morowali Industrial Park.

Chile: China Rail Construction Corporation to build, maintain and operate section of Route 5 Highway

China Rail Construction Corporation have been awarded a PPP contract by the Chilean government to “construct, repair, maintain and operate” a 200km section of the Route 5 highway between Talca and Chillan. 

Why it gets our attention: The contract represents the first time a Chinese company has been included in a PPP contract for road construction in the country. The PPP includes constructing a new branch road, public transport stops, service roads, drainage channels and “greening” operations. It is expected to generate up to 350 new jobs per month.

Chile’s Route 5 is a critical transportation running the spine of the country up to the border with Peru and is part of the Pan-American Highway.

Other project & corporate updates

Gezhouba: Company helped evacuate Chinese nationals from Tigray, Ethiopia 

In its newly released 2020 Corporate Social Responsibility Report, China Gezhouba Group, a major engineering contractor, revealed that in Nov 2020, the company helped 600 Chinese nationals evacuate from Tigray, Ethiopia, where armed conflicts had erupted between the Tigray People’s Liberation Front and Ethiopian National Defense Forces. The conflict has since then killed thousands and displaced millions.

Why it gets our attention: The evacuation effort highlights the multifunctionality of Chinese SOEs overseas. As their businesses extend far and wide across the world, the SOEs sometimes become a form Chinese state presence in places where official entities cannot reach. The episode also provides a glimpse of the tense situation in Ethiopia, one of the most important destinations of Chinese investment in Africa. Last week, our newsletter also featured the news that the Chinese Embassy in Ethiopia reached a security deal with the Ethiopia Federal Police to protect key assets such as the Addis-Djibouti railway, reflecting general concerns with the security situation in the country.

It also shows Chinese companies facing similar security issues as their western peers in politically and economically unstable countries have faced for decades. Whether or not Chinese companies’ approach to security challenges will differ from western multinationals will be interesting to follow.

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

Worth your time

According to the latest Ministry of Commerce statistics released this week, China’s total direct overseas investments in January and February fell 1.4% compared to the same period last year. The total non-financial direct investments in “50 countries along the Belt and Road” grew by 4.3%, however, and represented nearly 20% of total overseas non-financial direct investments. ASEAN countries, along with Pakistan and the UAE were the top destinations for the BRI investments.

The value of the 620 new EPC contracts in “countries along the Belt and Road” signed in the first two months of 2021 fell 11.7% compared to 2020. 

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