Paw Tracker newsletter (Week of Nov 15)

Chinese companies continue to win contracts to build major infrastructure projects overseas. In Southeast Asia, we are seeing more and more news about renewable energy developments, with Myanmar’s solar tender and Vietnam’s expansion of wind power both attracting huge Chinese interest. The region is so buzzing with business right now that some Chinese EPC contractors are setting up service centers in southwest China to make themselves more available to clients in the region. On the other side of the world, however, the consequence of years of debt-funded infrastructure building is starting to show. Zambia’s latest debt default re-ignited the debate over debt sustainability and transparency this week.

This week's highlight projects

Brazil: Chinese consortium won bid to build longest cable sea bridge

A consortium of China Railway 20th Bureau Group (CR20G) and China Communications Construction Company (CCCC) has been granted the contract to build a 12.4km long cable-stayed sea bridge in Bahia, Brazil. The bridge will be the longest of its kind in South America and the largest bridge project that Chinese companies have financed through a Public Private Partnership (PPP) model in the continent, according to CRCC’s official website. Connecting the city of Salvador, state capital of Bahia, with Itaparica Island, the sea bridge is expected to benefit 45 cities and their 4.4 million citizens.

China Railway Construction Corporation (CRCC), of which CR20G is a subsidiary, is rapidly expanding its presence in Latin America’s transportation sector. The state of Bahia on Brazil’s Atlantic coast has been a focus of its interest for its strategic position as the starting point of the envisioned FIOL railway project, Brazil’s West-East Integration Railway. The project has been under development since 2017.
 

Laos: Power China’s Nanou River cascade hydropower dam passes environmental and social assessments
 

Power China this week publicised that their enormous cascade of seven hydropower dams on the Nanou River, a tributary of the Mekong, passed Lao government environmental and social assessments with flying colours. The assessment hearing was attended by government bodies on the national, provincial and county levels, and representatives from companies affected by the project. A recent third party environmental assessment carried out on behalf of the Ministry of Environment also showed that the Nanou project is in line with national environmental standards, according to the Power China release.
 

Hydropower projects in southeast Asia have faced much opposition from local communities for environmental and social impacts. In their press release Power China stated that the Nanou project has “received the broad approval of the [Laos] government and all sectors.”
 

Vietnam: Gezhouba to build country’s largest wind power project

A 350MW offshore wind project will be constructed in Cà Mau, southern Vietnam, by China’s Gezhouba Group, now a subsidiary of China Energy Engineering Corporation (CEEC). As part of Vietnam’s ambitious goal to boost renewable energy’s share in the country’s energy mix to 20% in the next ten years, the Cà Mau project will help reduce carbon emissions by 880,000 ton a year while generating 1.1 billion kwh of electricity, according to Chinese media.

The deal is Gezhouba’s largest offshore wind energy project by far in Southeast Asia. The engineering conglomerate has so far accumulated a renewable energy portfolio of 3GW in its construction pipeline, indicating its readiness to embrace “the global energy transition”, the company’s press release stated.

Other project & corporate updates

SPIC: SDEPCI sets up regional service center to support Southeast Asia market

Shangdong Electric Power Engineering Consulting Institute (SDEPCI),  a subsidiary of State Power Investment Corporation (SPIC), one of China’s largest power generators and investors, has set up a regional service center in Kunming, Southwest China, to support key clients in South and Southeast Asia and respond more efficiently to their needs. As an EPC contractor, SDEPCI has developed over 3,000MW of installed power capacity in the region, including Bangladesh, Myanmar, Laos, Sri Lanka, Indonesia, the Philippines and Malaysia.

Talk of the Town

Zambia recently became the first African country to default on a portion of its foreign debt this year as it chose not to pay a coupon on its outstanding dollar bonds. The development followed weeks of bickering among the Zambian government and its bondholders, with China looming large in the conversation. The country holds 25% of Zambia’s 12 billion dollar external debt by one estimation. 
 

One major point of contention was transparency over Zambia’s China debt stock. Bondholders were concerned that cash freed up from any debt relief deal would end up paying Chinese creditors. China is a participant in the G20’s Debt Service Suspension Initiative (DSSI) to freeze debt repayment for least developed countries this year, but excluded China Development Bank from the initiative on the ground that the CDB’s loans are commercial in nature. CDB had just agreed to a debt payment reschedule with Zambia days before the crucial Nov 13 bondholder deadline, which the country used as a leverage.
 

Song Wei, an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, claims that the standoff highlights the “bleak prospects for international coordination [on foreign aid].” Worded much more strongly than his English language opinion piece in Global Times, Song blamed Western creditors for seeding Africa’s debt crisis in the 1980s and 90s, and proclaimed their current demand “ridiculous”. 
 

He did emphasise, however, the need to increase Chinese foreign aid transparency in general, citing the embarrassing fact that databases compiled by Bloomberg, William and Mary College, Johns Hopkins University’s CARI program are regarded as “authoritative” sources of Chinese foreign aid figures. “The chronic absence of official aid data from China led to over- and misinterpretations by the outside world,” he wrote, arguing for the urgent need to set up China’s own database of foreign aid.