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Paw Tracker newsletter (Week of Feb 7)


After an almost two year hiatus of in-person diplomacy, Chinese President Xi Jinping made maximal use of the Winter Olympics in Beijing to receive some of the closest allies of China’s global agenda. Besides the much watched joint statement that ushered in a new era of China-Russia strategic partnership, a series of other statements and agreements also helped map China’s priorities in key regions across the globe, from Africa to Central Asia to Latin America. This week we offer a breakdown of the intensive heads-of-state diplomacy last week and a closer look at one of the concrete project deals that came out of the meetings.

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


Xi Jinping last week met with 18 leaders of foreign countries over a three day period from 4 Feb, the opening day of the Beijing Winter Olympics, to 6 Feb. The foreign visitors to Beijing reflected strongly the contours of China’s Belt and Road and global south based network of alliances, with heads of state from Russia, all of the Central Asian states, the Middle East, Eastern Europe, southeast Asia, and Latin America in attendance. Of EU countries, only Poland and Luxembourg - a hub for Chinese finance in Europe - were present at the Olympic opening ceremony and the Great Hall of the People.

 

Perhaps most noticeable in the Xinhua news reports and official joint declarations which came out of the 18 bilateral meetings was messages of support for the Global Development Initiative (GDI) announced by President Xi Jinping at the UN General Assembly in September last year. Though its announcement at the time did not generate big waves of media interest, subsequent discussions in China’s foreign policy circles have indicated that the GDI is a new priority for China. The words of support from nine heads of state last week - present in the statements in almost identical wording - is further evidence that the new initiative occupies a central place in China’s diplomacy. Noticeably, none of the European countries, including non-EU members Serbia and Monaco, announced their support for the initiative. President Abdel Fattah Al-Sisi of Egypt, meanwhile, seemed a little more cautious in backing the initiative, offering to “begin implementing cooperation” on the GDI (“落实全球发展倡议开展合作”), rather than “support” (“支持”), as it was worded in most statements.


Unsurprisingly, energy was a major feature of a number of the bilateral meetings. Most prominently, China and Russia signed two major gas and oil-related deals, including a 30 year supply and purchase agreement for gas from Russia’s Far East Pipeline (signed by Gazprom and CNPC) and a supply and purchase agreement for crude oil to refineries in western China. According to Reuters, Gazprom will supply ​​10 billion cubic metres of gas per year under the Far East Pipeline deal. Gas cooperation was also a feature of heads of state meetings with the presidents of Uzbekistan and Turkmenistan. President Gurbanguly Berdimuhamedow of Turkmenistan called for the “acceleration of construction of the Central Asia-China Gas Pipeline Line D”, which originates in Turkmenistan’s Bagtyýarlyk gas fields.


Besides getting support for the GDI and securing energy collaborations, China also made progress in consolidating the BRI’s position in Latin America. Argentina’s signing of an MOU with China on BRI cooperation during President Alberto Fernandez’s visit to Beijing marks the addition of the largest Latin American economy so far to the BRI’s “friends list” (Brazil and Mexico are still taking a wait-and-see approach). In exchange, Argentina got to seal the deal for the Atucha III nuclear power plant right ahead of Fernandez’s visit and obtained Chinese support for its sovereignty claim on the Malvinas Islands.  


“Green cooperation” also cropped up in a number of bilateral meetings. Mongolia’s President called for “cooperation on ecological environment as well as prevention and control of desertification”, a shared challenge for the two countries. The China-Pakistan joint declaration, meanwhile, labelled the Gwadar Port and Free Zone - we think for the first time - a “low carbon and circular [economy] zone.”


A few other standout points from the mostly template-like Xinhua news reports and joint declarations include Kazakhstan President Tokayev’s expression of gratitude to China for support against “foreign interference”. Tokayev also welcomed Xi to visit Kazakhstan “as soon as possible.” The China-Pakistan joint declaration included a statement on the two sides’ willingness to “continue talks on extending the China-Pakistan Economic Corridor to Afghanistan.”


Over the course of just three days last week, Beijing witnessed a whirlwind of Belt and Road bilateral heads of state diplomacy. While the largely copy-and-paste like official media statements do much to obscure the details of each bilateral relationship, a close read through does reveal some key trends and differences among the relationships. Zooming out, the map of visiting heads of states does much to reveal the contours of Beijing’s current network of allies.

This week's highlight projects

Uganda: PetroChina Subsidiary Wins Oilfield Bid

On 8 February, a virtual signing ceremony was held simultaneously in Beijing, Tianjin, and Kampala, the capital of Uganda, to mark PetroChina subsidiary China Petroleum Engineering Construction Co.’s (CPECC) winning of an EPC contract to construct the Kingfisher Oilfield Project on Uganda’s Lake Albert. The project is expected to take 36 months and will produce 40,000 barrels per day upon completion. 

The bigger picture: A week before CPECC’s signing ceremony, French oil major Total and the China National Offshore Oil Corporation signed a Final Investment Decision on 1 Feb for the Lake Albert Development Project and East Africa Crude Oil Pipeline, a $10 billion megaproject expected to be completed in 2025. Sixteen years in the making – the oil reserves were first discovered in 2006 – the project has caused an uproar for the environmental damage and population displacement it is expected to cause, as well as the climate implications of injecting more oil supply into the global energy market. 

According to Chinese media reports, the Lake Albert oil field project has “officially begun construction”. Financing for the entirety of the project has yet to be secured, however, and is also a source of controversy, with 15 major banks having ruled out involvement. Speaking to Kenyan newspaper The East African last week, Chief Executive Officer of the Uganda National Oil Company, Proscovia Nabbanja, said that Chinese banks are now “the only realistic option” for financing.

Uganda's National Environment Management Authority gave the greenlight for the Kingfisher development in 2020 after an environmental review and a series of public hearings, but the project is unlikely to escape similar criticism. 

Other project & corporate updates


Argentina: CNNC sealed deal to build Atucha III nuclear power plant


An EPC contract was signed between Nucleoeléctrica Argentina SA and China National Nuclear Corporation (CNNC) on Feb 1 to construct the Atucha III nuclear power plant, just 3 days before Argentina’s president Alberto Fernandez attended the opening ceremony for the 2022 Winter Olympics in Beijing.


The project, with a total investment of USD 8 billion, will be using China’s Hualong One (HPR1000) reactor, a Generation III technology that is considered intrinsically safer than earlier generation reactors such as the one in Fukushima. After completion, the nuclear power plant in Buenos Aires province will supply Argentina with a nominal gross electrical power of 1200MWe. Construction is expected to begin at the end of this year.


Why it gets our attention: Promoting China’s own advanced technologies to the global market is a key strategic aim of the Belt and Road Initiative. Both high-speed railways and nuclear power (represented by Hualong One) are the key pillars of such a strategy. Atucha III could significantly add to the international reputation for the technology as it will be the only other HPR1000 power plant overseas besides the one in Karachi, Pakistan. Financing from Chinese banks likely played an important role in the decision to adopt HPR1000 by Argentina, a country facing precarious financial situations over the past years. 

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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