April 20, 2018

Fun on Friday: Zucked!


Fun on Friday: Zucked!

APRIL 13, 2018  BY SCHIFFGOLD   0   1

Facebook CEO Mark Zuckerberg experienced the big-boy version of getting called into the principal’s office this week. He spent about 10 hours testifying before Congress after news came out that a data firm accessed Facebook user information.

The iconic image from the hearing was Zuckerberg perched on a booster cushion. He looked like Dennis the Menace sitting in front of an entire room full of Mr. and Mrs. Wilson clones.

On a side-note, it was funny seeing Zuck in a suit. I wonder where he rented that? I have this image in my head of a hoodie hanging on a coat rack outside the Senate chamber.

Anyway, Congress roasted Zuckerberg and dropped some hints that they might just regulate Facebook if he’s not careful. I find it a bit ironic that the “deliberative body” that oversees and “authorizes” the most invasive, systematic and far-reaching surveillance state in the world spent 10 hours grilling the CEO of a social media site about privacy.

It also kind of amuses me because these people don’t understand the internet.

It reminds me a little of my late grandfather. He was 92 when he died, but he was extremely spry up until the end of his life. My grandfather was a retired Army colonel who enlisted just before World War II and served through the Vietnam War. I share this information just to give you an idea of his personality. He was old-school Army all the way. Before he passed away, we met for lunch about every other week. Now, my grandfather was curious about the world, but it had clearly passed him by. He used to show up to Wendy’s with a Post-It note tucked in his shirt pocket. During lunch, he would whip it out and regale me with questions he’d come up with over the last few days. “What is a tweet?” “What is Bitcoin?” “How do you save pictures on your phone?” “Why in the hell is the clock on my DVD player blinking.”

You get the idea.

The all-time best Gramps question was, “What is twerking?”

Picture for just a moment me explaining twerking to my at-the-time 91-year-old grandfather. God rest his soul.

At any rate, Gramps didn’t understand a lot about the modern world. But here’s the thing – he didn’t pretend to. That’s the difference between my grandfather and these dopes in Congress. He recognized the limits of his knowledge. The political class doesn’t possess that kind of self-awareness. Not only do these clowns fail to understand most of what goes on in the real world – they think they have the competence and divine right to control it.

This exchange between Zuckerberg and Sen. John Kennedy (courtesy of CNN) reveals the level of ignorance most of the Senate displayed.

Kennedy: “Are you willing to go back and work on giving me a greater right to erase my data?”

Zuckerberg: “Senator, you can already delete any of the data that’s there or delete all of your data.”

Kennedy: “Are you willing to expand my right to prohibit you from sharing my data?”

Zuckerberg: “Senator, again, I believe that you already have that control….”

Kennedy: “Are you willing to give me the right to take my data on Facebook and move it to another social media platform?”

Zuckerberg: “Senator, you can already do that….”

Some senators even made crap up. Sen. Deb Fischer asked “how many data categories” Facebook stores. Zuckerberg basically replied, “What in the f— is a data category you raving moron?” Of course, he didn’t put it that way. It’s hard to be belligerent when you’re sitting on a booster cushion. But I’m pretty confident that’s a reasonably accurate representation of what he was thinking.

Here’s the takeaway, these people have absolutely no clue how Facebook works, but by-golly they know how to regulate it! And millions of Americans think this is a great idea!

This is pretty much modus operandi for Congress. Politicians don’t generally know much about anything – other than how to get votes. And yet the vast majority of your fellow citizens trust these people to make them safer, richer and happier.

And then they wonder why they are not safer, richer nor happier.

Historian Kevin Gutzman summed things up beautifully in a Facebook post that was published at the Tenth Amendment Center.

The Senate committee members’ grilling of Zuckerberg put on full display what seems intuitive: that there is no way a legislative body can have adequate knowledge to manage every element of a society of 325,000,000 people (let alone the entire world).

These people are comparably ignorant of any particular issue or “policy area” that comes to mind: management of federal lands, the economy for agricultural products, the effect of illegal immigration on rural Texas towns, the Constitution’s implications concerning private firearms ownership, funding of urban schools, welfare’s effects on family formation, the consequences of easy access to capital for college funding…

So yes. Let’s put these people in charge of everything!

Or how about this. Let’s not.

Turkish President Fires Another Shot in an Escalating War Against the Dollar

Turkish President Fires Another Shot in an Escalating War Against the Dollar

Source: schiffgold.com 


Turkey went on a gold-buying spree in 2017and that trend continued in the first two months of 2018.  Turkish President Recep Tayyip Erdoğan likes gold and it’s pretty clear the president has been pushing Turkey’s central bank to buy gold and reduce foreign currency reserves in an effort to move away from dependence on the dollar and euro.

On April 16, Erdoğan got a little more overt in his apparent quest to dethrone the dollar, suggesting international loans should be made in gold instead of greenbacks in order to prevent exchange rate pressure on economies.

I made a suggestion at a G20 meeting. I asked, ‘Why do we make all loans in dollars? Let’s use another currency.’ I suggest that the loans should be made based on gold.”

According to a Turkish newspaper, Erdoğan confirmed making the suggestion at the G20 meeting during a speech at the opening ceremony of the Global Entrepreneurship Congress in Istanbul. Turkey’s president inferred that global dependence on the dollar was a “tool of oppression.”

With the dollar, the world is always under exchange rate pressure. We should save states and nations from this exchange rate pressure. Gold has never been a tool of oppression throughout history.”

Turkey is experiencing that exchange rate pressure firsthand. The Turkish lira hit a record low of 4.1920 against the dollar on April 11. According to the Hurriyet Daily, the lira lost 7% of its value last month, making it the second-worst performing currency in the world behind the Russian ruble.

Erdoğan has been trying to boost Turkish currency for months, and gold has played an important role in his strategy. Last year, the president urged Turks to use gold instead of dollars to help stem a drop in the lira. London-based Metals Focus Ltd. consultant Cagdas Kucukemiroglu said at the time that the president is also likely pushing the country’s central bank to buy gold.

The president has always been pro-gold and is against the dollar, and that’s informing the central bank’s decision as well.”

Turkey isn’t the only country working to dethrone the dollar. China recently launched yuan-based oil contract to directly compete with the petrodollar. Last June, China took the first step toward establishing a “petroyuan” when it launched a direct trade relationship with Russia, allowing oil purchases to be made strictly in the Chinese currency. Yuan-based oil contracts began trading in Shanghai in March. As  a Bloomberg report put it, “China’s hoping the yuan could challenge the dominance of the greenback in international trade.”

There have been reports that China may back some yuan-based oil contracts with gold. Last fall, the Chinese announced the launch of a gold-backed, yuan-denominated oil futures contract.  These contracts would be priced in yuan, but convertible to gold. As Alasdair Macleod, head of research at Goldmoney, told the Asian Review, including an option to have the contract paid in physical gold would ease some of the wariness oil exporters have about the yuan.

Dollar-dominance has given the US a great deal of leverage over other countries. Moves by Turkey, Russia, China and other countries with rocky relationships with the US to diminish their dependence on the dollar and even undermine its position as the global reserve currency makes sense. It also makes sense that gold would make up part of their plans. As we’ve reported in the past, Gold plays a key role in both China and Russia’s plans for economic independence. Gold cannot be easily controlled and manipulated like fiat currencies.

Erdoğan’s comments about using gold as the basis for international loans seem to be another shot in the escalating war against the dollar.

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Is PTM an ‘engineered protest’?

by Mir Mohammad Ali Talpuron 20 Apr 20181 Comment

A statement from the Chief of the Army Staff Gen Qamar Javed Bajwa said on April 12 that “engineered protests” would not be allowed to reverse the gains of counterterrorism operations and cautioned the nation against forgetting the sacrifices of “real heroes”. He, without naming the Pashtun Tahaffuz Movement (PTM), blamed it as something which was not indigenous but was being supported and guided by the usual suspects they have been accusing of guiding and supporting the Baloch (and the Bengalis in the past) for protesting against the injustices and the state terror being perpetrated against them.


The Baloch have been always labelled as agents of India and Afghanistan, though the injustices that they protest against are perpetrated by those who label them such. Oddly, often times these crimes of disappearances and mutilated bodies of Baloch people have been imputed against India and others.


Interestingly, on 19 December, 2016, in the session of the Senate Standing Committee on Interior and Narcotics Control, the Senate panel’s chairman, Rehman Malik (former Interior Minister), said he knew that the uniforms of law enforcement agencies were being used by RAW operatives, who abduct and kidnap people in Balochistan in order to bring a bad name to the forces and destabilize Pakistan. “It is no more a secret that RAW is actively working in Balochistan to incite sectarian and ethnic violence to replicate an East Pakistan-like situation,” he claimed.


So what can one say about the efficiency of their intelligence agencies or their blatant lies when they put the blame of all their evil work on others and proclaim their innocence.


But this is not the only instance that this preposterous excuse has been used to cover up their crimes. In May 2012, during a hearing by the Supreme Court on the issue of missing persons in Balochistan, a CCTV video of Frontier Corps personnel abducting a Baloch youth was shown to then Inspector General Frontier Corps, Major General Obaidullah Khan, who was dismissed for corruption in April 2016. Despite this irrefutable evidence the then IGFC denied the charge, saying that there existed the possibility that FC uniforms were being misused by unknown people.


They lie unashamedly to put the blame on RAW and others and expect people will believe them. They have maligned the Baloch so long and so often that many believe their version of events, and now they have started this maligning campaign against the PTM and hope that people will overlook the injustices that the PTM is protesting against and start accusing them of being an ‘engineered movement’.


Mama Abdul Qadeer Baloch and Farzana Majeed, with half a dozen Baloch women, 10-year-old Ali Haider, nine-year-old Beauragh Baloch, son of Mir Jalil Rekei, and four young men of the Voice of Baloch Missing Persons Long March, walked braving cold and rain from Quetta to Karachi and then from Karachi to Islamabad in 106 days. They faced threats and hardships of not knowing where they would be spending the night, were accused of being agents of RAW and being funded by it. I had the honour of being with them for 26 days during this historic March.


Mama Qadeer refused to accept any donation from even the most ardent supporters and those who wanted to show support and goodwill. He didn’t want it to be tainted by allegations that it was an exercise in making money. But this did not stop the state and its supporters to allege that this was an ‘engineered protest’.


On March 1, 2014, the day the march ended in Islamabad, Air Vice Marshal Shehzad Chaudhry, quite blatantly lied on Capital TV program when he said that Mama Abdul Qadeer, the leader of the VBMP Long March, has a Thuraya satellite phone and that he wouldn’t be surprised if there were there three or four Land Cruisers with them. To put the record straight, Mama had a cheap Nokia phone and the only vehicle accompanying the marchers was an ambulance provided by the Edhi Foundation.


The TV One channel ran a ticker that Rs 2 million were being given to the marchers daily and that food for them came from five-star hotels. The fact was that the marchers ate whatever food was available from wayside hotels and quite a few times, in Sindh as well as Punjab, the owners refused to accept money for the food or tea taken.


The core group of marchers numbering 16 was housed for the night by different individuals who were friends of supporters and provided whatever dinner and breakfast they could manage. These individuals had to face harassment of the intelligence agencies for playing host to the marchers. Aslam Verraich, an artist and political activist, played host to them at his residence in Wazirabad for six nights. Mama Qadeer and other marchers stayed with me and my friends for six nights in Sindh.


The supposedly informed analysts and some TV channels lied unashamedly to malign the march and its participants because this march had taken the battle to the establishment’s heartland. The PTM has moved the Pashtun protest from the hinterlands of FATA to the establishment’s heartland and that is what is causing concern in all quarters of the establishment.


The maligning campaign against the PTM has just begun; we weren’t surprised when they maligned us because we knew that this is what they had done when Bengalis wanted their rights and protested against the establishment and elite of West Pakistan, which denied them their rights. Here, either you accept the injustices quietly without a murmur or be ready to face a vicious maligning campaign. The more potent your protest is, the more vicious and vociferous will their propaganda be, so the PTM will face even more viciousness and suppression now that the Army Chief has spoken against them.


This tirade should be considered as accolade for it means that the PTM is denting the narrative that has long been fed to people - that it is the Pashtun who are to blame while the Army and State are innocent. The PTM has challenged and changed the narrative and that is why it is being challenged and will be challenged even more viciously by the State in coming days and they should be prepared to face whatever is thrown at them, for without braving the odds, victories are hard to achieve.


A word of advice from this old man to Manzoor Pashteen and all the supporters of the PTM, who mostly seem to be young like Manzoor Pashteen himself: this will be a long struggle, so do not expect quick unhindered victory or daily victories for, as they say, the party has just begun. You should always keep in mind what Friedrich Nietzsche said is the defining quality of great men: “It is not the strength but the duration of great sentiments that makes great men”.  To put this in a practical perspective, take the example of South Africa and its Apartheid and its opponents. There must have been many who intensely hated Apartheid and there must have been many who struggled hard, but lost heart after a few years, a decade. However, it was Madiba Nelson Mandela who refused to give up despite 27 years of incarceration and it is he who eventually defeated the Apartheid.


You, my dear friends, will have to be steadfast, consistent and persistent if you want to win. The Baloch have been struggling since March 27, 1948 and will continue their struggle. Victories which change fates of Nations come at a much higher price than the price exacted by other struggles.


My respected father very often used to quote a couplet which saw me through a lot of difficult and desperate times in my life. Maybe it would be of some utility to those of PTM who struggle for their rights.


Insaan nahin woh jo darr jaaye, iss daur kay khooni manzar say

Jis haal main jeena mushkil ho, uss haal main jeena lazim hai


Mir Mohammad Ali Talpur ranks among the few who raise the issue of “missing people” or victims of enforced disappearances in Balochistan


Clingendale Silk Road Headlines

Source: Louis Vest/flickr

 According to the German newspaper Handelsblatt, the embassies in Beijing of EU member states have compiled a joint report that criticizes the Belt and Road Initiative (BRI) [EU ambassadors band together against Silk Road]. Of the 28 EU countries, Hungary was the only one whose ambassador to China has not signed the report. Handelsblatt quotes the report as stating that BRI “runs counter to the EU agenda for liberalizing trade and pushes the balance of power in favor of subsidized Chinese companies.” It is unclear what the status of the joint report is and for what purpose it has been written, as it is not publicly available. The fact that nearly all EU ambassadors are said to support the report is remarkable, since most countries in the eastern half of the European Union have signed a memorandum of understanding with China on BRI cooperation - a symbolic sign of support for the Chinese initiative. Interestingly, several Western European leaders who visited China in recent months - including Macron of France, May of the UK and Rutte of the Netherlands - have refused to sign similar MoU’s in spite of invitations from the Chinese government to do so [Netherlands keen on Chinese investment but wants belt and road to benefit foreign companies].

Meanwhile, the European Commission is preparing an EU strategy on ‘Europe-Asia connectivity’ which is likely to be perceived by many as a European answer to BRI. This new connectivity strategy will be aimed at contributing to greater economic integration across Europe and Asia, and cooperating with Asian countries to do so, while defining and promoting relevant EU interests and values. As such it appears to be an effort to counterbalance Chinese influence - in particular what the EU regards as the undermining of liberal economic norms - in the Europe-Asia economic sphere. After the European Commission’s proposal of September 2017 for an EU-wide investment screening framework, which is said to have been triggered primarily by Chinese investments in the EU, the connectivity strategy may turn out to be a further sign of growing worries in the EU about the rise of Chinese economic power. To which degree this is the case remains to be seen as the strategy will not be publicly available until later this year.

Frans-Paul van der Putten

This week's Silk Road Headlines

EU ambassadors band together against Silk Road [Handelsblatt]

Is China waging “Debt Trap Diplomacy” Against Its Neighbors? [China US Focus]

Poland Designated as Home to New BRI East European Logistics Hub [HKTDC]

Can a small German city reinvent itself as a gateway between Europe and Asia?[Belt and Road Blog]

Attracting foreign funding to build the BRI would be a capital idea [East Asia Forum]

Netherlands keen on Chinese investment but wants belt and road to benefit foreign companies [SCMP]

China and the EU in the Horn of Africa: competition and cooperation?[Clingendael]

Iran Planning Super-Highway to Connect with Mediterranean [Silk Road Briefing]

HSBC names veteran banker head of Asia belt and road initiative [Reuters]

Leadership in a Multipolar World: Can the United States Influence Cooperation between China and Russia? [NBR] 

To increase awareness of and facilitate the debate on China's Belt and Road Initiative, the Clingendael Institute publishes Silk Road Headlines, a weekly update on relevant news articles from open sources

China tries to enlist European allies in Trump's trade war


China tries to enlist European allies in Trump's trade war

Macron and Xi in China during a state visit by the French president. Photo: Mark Schiefelbein, Pool/Getty Images

While Beijing is courting the European Union for support in a trade war, European officials are sounding the alarm on China's ambitions in their countries.

Why it matters: If the U.S. starts closing off its market to the Chinese, Beijing needs the EU to remain neutral and stay open to business with China, but the Europeans are increasingly frustrated with China's behavior and wary of its ever-growing influence.

Show less

The backdrop: This week, Beijing's top trade official, Fu Ziying, met with several European ambassadors as trade disputes with the U.S. escalate, per Reuters. Days later, German news outlet Handelsblatt reported that 27 of the 28 European Union ambassadors co-signed a report criticizing President Xi Jinping's trillion-dollar Belt and Road Initiative, an infrastructure plan that pulls in Europe.

Why China needs the EU

The EU is Beijing's biggest trading partner, per the European Commission, and they trade over $1 billion in goods and services a day.The EU is also the biggest investor in China. At the end of 2015, the value of European investments in China was about $207 billion, compared to about $84 billion from the U.S. at that time.Behind the numbers: A hefty portion of Europe's direct investment comes from factories which manufacture high-end appliances in China that come with a European label, Yukon Huang, an expert on China's economy at the Carnegie Endowment for Peace, tells Axios.

The bottom line: The trade and investment relationship between China and the EU is strong enough that China can survive loss of access to the U.S. market if the EU remains open for business, Huang says.

Europe's concerns

China's Belt and Road Initiative includes ports in European waters and railroads that cut through EU nations, and while some countries welcome the infrastructure — paid for and built by the Chinese — others fear it'll give China broad influence in the more politically unstable Central and Eastern European nations.

The EU ambassadors' report says the Initiative "runs counter to the EU agenda for liberalizing trade and pushes the balance of power in favor of subsidized Chinese companies," according to Handelsblatt.The only ambassador who didn't sign its contents was Máté Pesti of Hungary, a nation which relies heavily on Chinese investment. Hungarian Prime Minister Viktor Orbán said in January, ""Central Europe has serious handicaps to overcome in terms of infrastructure ... If the European Union cannot provide financial support, we will turn to China."Western European nations are concerned about weaker countries getting close to Beijing. On a state visit to China in January, French President Emmanuel Macron sounded the alarm:

"For China, the new Silk Roads are also a tool to promote new international standards, rules and norms that are different from those currently used by France and other European countries ... By definition, these roads can only be shared. If they are roads, they cannot be one-way."

— Emmanuel Macron

What to watch:

There's an EU–China summit coming in July where these issues are sure to be on the table.European companies have a lot to lose in a U.S.–China trade war, and European leaders have been reluctant to take sides in the dispute. But the EU could soon become Trump's next target, the Wall Street Journal's Simon Nixon writes.Germany, in particular, has been on President Trump's radar in the past. The U.S. had a $68 billion trade deficit with Germany in 2016, it's second-largest deficit behind that with China

April 19, 2018

The Belt and Road Initiative: Visegrad Four’s Chinese dilemma


The Belt and Road Initiative: Visegrad Four’s Chinese dilemma

By Adéla DenkováEdit ZgutKarolina ZbytniewskaLukáš Hendrych and Marián KoreňEURACTIV.czEURACTIV.plEURACTIV.sk and Political Capital

 Mar 22, 2018 (updated:  Mar 28, 2018)

A Chinese dragon dancer performs to celebrate the arrival of the first direct freight train from China to the UK in Barking, London, on 18 January 2017. [EPA/FACUNDO ARRIZABALAGA]

Languages: Deutsch


China has used the international economic crisis to elbow its way towards a dominant position on the global market. Its New Silk Road is seen as an attempt to create a massive, multi-national zone of economic and political influence, including in Central Europe. EURACTIV Poland/Czech Republic/Slovakia and Political Capital report.

In that context, it is logical that the Central European region should be an important part of Beijing’s Go Global outlook, as it is seen as a “side door” to the richer Western European markets. But Beijing’s flagship initiative has so far failed to attract significant attention in the Visegrad countries, though analysts believe its appeal may grow.

In 2012, China launched the so-called 16+1 framework – a platform for China-CEE cooperation – as a final landmark decision of the outgoing PRC premier Wen Jiabao. It comprises 16 Eastern European countries including all four Visegrad states (Czech Republic, Hungary, Poland and Slovakia) and 11 EU member states altogether.

Since the current president Xi Jinping announced in 2013 the flagship Belt and Road Initiative (BRI, also known as the New Silk Road), 16+1 has focused mainly on infrastructure to match this cooperation with Beijing’s general global strategy.

But the Visegrad group is also trying to work out the well-known “Chinese dilemma”: Is the opening up to the Chinese presence in the region a unique economic opportunity or a threat?

An umbrella for Chinese activities

The underlying goal of the BRI, with 16+1 as one of its elements, has been to “re-orient the entire economy of Afro-Eurasia toward China as its centre. But the hard economic statistics show that there’s not much in BRI for V4 to get excited about,” according to Salvatore Babones, a professor at the University of Sydney. China is still poorer than all four Visegrad countries, and its modest spending on BRI is diluted among dozens of partners hungry for investment.

Ivana Karásková, a research fellow at Association for International Affairs (AMO), a Prague-based think tank, said the initiative’s main aim is to export Chinese overproduction overseas.

“The New Silk Road is just an umbrella for Chinese activities in Europe, Asia and Africa and does not have any concrete features,” Karásková told EURACTIV adding that it is hard for regional stakeholders to imagine anything particular under the BRI. AMO has launched a website, Chinfluence, dedicated to analysing the Chinese impact in the region.

Despite the quick and significant rise in Chinese foreign direct investments (FDIs) in the Visegrad countries, their volume also remains minor and focuses on mergers and acquisitions, lacking significant infrastructure projects.

In terms of infrastructure investment in the 11 EU members of the 16+1, “cooperation on infrastructure remains close to zero, despite intensive political contacts with China,” due to the incompatibility of the Chinese offer with the EU law (assuming state aid and the lack of open tenders), as Jakub Jakóbowski and Marcin Kaczmarski from the Centre for Eastern Studies (OSW) explained.

The only exception is the flagship Belgrade-Budapest 336-kilometre rail line investment which ended with the EC’s probe into the Hungarian part of the project and with a final change of cooperation conditions on Budapest’s side.

China's new Silk Road risks unravelling in Hungary

China’s planned railway link between Greece and Central Europe has hit difficulties after the project was accused of flouting EU rules on public procurement in Hungary. EURACTIV’s partner Italia Oggi reports.

Opportunity to diversify export markets

However, the Visegrad governments consider the BRI a major opportunity to strengthen trade flows from both sides. Currently, the relatively small V4 economies run a drastic deficit with China.

“If we are looking for ways to diversify our trade portfolio and reduce our dependency on the European market, this may be one of the solutions, although not the only one,” Czech MEP Jan Zahradil (ECR) toldEURACTIV.

When the first trial train with containers from Dalian – the largest port in eastern China – arrived in Bratislava last year, the Slovak Government’s deputy for the Silk Road project, Dana Meager, described it as “one of the most important pillars of further development of the national economy”.

All V4 governments want to deepen mutual cooperation and attract more foreign direct investment to widen the array of financing and investment opportunities provided by the EU.

If the new EU multiannual financial framework reduces funding possibilities for V4 countries, be it as a result of Brexit and/or reshuffling of financial priorities, “then China’s offer could automatically become more attractive,” warned Jakub Jakóbowski and Marcin Kaczmarski from the Centre for Eastern Studies (OSW).

But Chinese foreign direct investment in V4 countries is not really growing and has, in fact, decreased in some of them.

“The old model of globalisation is over”

Czech MEP Jiří Pospíšil (EPP) thinks that the whole project is more of an instrument of Chinese propaganda and a reinforcement of Chinese influence.

“If one party is to benefit from the cooperation, it is China and Chinese companies,” he adds.

For example, when joining the BRI in 2015, Hungarian prime minister Viktor Orbán indicated that he is completely unmoved by the reigning political system in China. “The old model of globalisation is over, ‘the East has caught up to the West’, and a large part of the world has had enough of being schooled on, for instance, human rights and the market economy by developed nations,” he stressed.

Moreover, Beijing certainly values political gestures, such as when Hungary, together with Greece and Croatia, blocked a joint resolution on the South China Sea in 2016, as well as the fact that Hungary stopped the EU from signing a declaration standing up for lawyers and human rights activists being tortured in China.

Strengthening cooperation between China and European countries may also be a problem for the EU “because many EU members prevent the adoption of common position towards China, e. g. in the area of human rights, investments screening or a market economy status,” said Karásková.

But analysts also stressed that several other high-level politicians – with Czech president Zeman as the most striking example – as well as officials and the media help the Chinese government expand its power in Europe.

However, most analysts are convinced that political destabilisation in V4 countries is not in the Chinese interest and thus poses no threat to the unity of the European Union.

“I firmly believe that the main aim of China’s influencing efforts is Western Europe and not Central and Eastern Europe,” said Tamás Matura, an expert on China and a professor at Corvinus University in Budapest.

“There is no doubt that the 16+1 initiative will increase Chinese influence in CEE, but it also creates a win-win situation and brings new opportunities to develop the region,” the former Hungarian Prime Minister Péter Medgyessy told Political Capital

What India and China can do to build bridges


New Delhi cannot restrict itself to anyone camp and should try to harness opportunities, as and when they arise.


 |   Long-form |   19-04-2018



The 5th India-China Strategic and Economic Dialogue, was held in Beijing at an interesting time. In the past few months, both India and China, despite their deep divergences on strategic and economic issues, and the strains caused as a consequence of the Doklam standoff in 2017, are trying to put relations back on track by increasing the level of engagement at the governmental level.

Significantly, this dialogue, the first after the Doklam standoff -which led to the freezing of dialogue between the two countries in 2017 - was held days after the Boao Forum, where Chinese President and leader for life, Xi Jinping, made an interesting address articulating his vision on a myriad of important, but complex issues, such as globalisation, and geopolitics, especially the Belt and Road Initiative (BRI).

The Strategic and Economic Dialogue

At the dialogue, India was represented by Rajiv Kumar, vice chairman Niti (National Institution for Transforming India) Aayog, while China was represented by He Lifeng, chairman of China's National Development and Reform Commission (NDRC).

Apart from bilateral issues - trade, investment, infrastructural cooperation and economic connectivity - the trade dispute between US and China, and possible impact, including opportunities, for India-China relations, also figured in the discussions.

Economic issues

On the trade dispute between Beijing and Washington DC, India was unequivocal, that it would remain neutral in the dispute. India did suggest to China, that it should consider importing soya and sugar from India. China's imports of agricultural commodities, from the US, are to the tune of $20 billion.

Possible Chinese investments in India

For long, both sides have also been discussing the possibility of China setting up special clusters in India. During the dialogue, this issue was discussed again, with the Indian delegation stating that there is great scope for China to set up special clusters in areas such as textiles, food processing, electronic components and pharmaceuticals. It may be pertinent to point out that a memorandum of understanding (MoU) was first signed in June 2014 between Indian state governments of Maharashtra, Gujarat, Haryana and Chinese agencies) for the setting up of industrial parks. So far, not much has been achieved.

In the area of infrastructure, cooperation was sought to be explored in the area of railways (specifically for increasing the speed of the Chennai-Bangalore railway corridor, and upgradation of Agra-Jhansi railway stations). India also invited China to invest in the Housing for all program by 2022.

Connectivity and Belt and Road Initiative

On issues like BRI, differences between both sides persisted, with China stating that Bangladesh China India and Myanmar (BCIM) Corridor was one of the important corridors of the BRI. New Delhi disagreed, and stated that the BCIM project began way before the idea of BRI was conceived.

India also stated that at this point of time, India was more focused on projects such as the Asean trilateral highway project (India-Myanmar-Thailand), which would boost its "Act East Policy".

Even on India's concerns with regard to CPEC (China Pakistan Economic Corridor), there was no real progress with China not paying enough attention to India's concerns, that CPEC passes through disputed territory and it is a major sovereignty issue. After the Chinese president's speech at the Boao Forum, some in India had believed that China may be more sensitive to addressing India's concerns on BRI. Commenting on the BRI, President Xi said:

"China has no geopolitical calculations, seeks no exclusionary blocs and imposes no business deals on others."

Interestingly, China did take note of India's Act East Policy and infrastructural projects being upgraded in India's North Eastern Region.

The issue of "soft power" also came up during the discussions with India suggesting that in addition to the current working groups, and additional one be set up on culture. Of late, Indian movies have been doing very well in China, with the latest success being Hindi Medium, whose box-office collection was nearing Rs 200 crore as of April 14. Earlier movies like Secret Superstar (Rs 450 crore) and Bajrangi Bhaijaan (Rs 300 crore) had won Chinese heart. Indian film star Aamir Khan, also one of the producers of both Dangal and Secret Superstar has a large number of fans on Sina Weibo, a Chinese microblogging website, and has also expressed interest in working with Chinese actors.

Even strained ties between both countries have not been an obstacle to the success of Hindi movies in China. In fact, the success of Bollywood movies in China receives extensive coverage in Chinese media.

Challenges for both sides

Amid US president's insular economic policies, and intransigence on issues pertaining to climate change, there is space for India and China to cooperate.

For any meaningful progress, however, a few steps need to be taken:

China needs to genuinely address Indian concerns on BRI. Indian ambassador to China, Gautam Bambawale, in an interview to South China Morning Post, while commenting on India's apprehensions had said:

"If a project meets those norms, we will be happy to take part in it. One of the norms is the project should not violate the sovereignty and territorial integrity of a country. Unfortunately, there is this thing called CPEC, which is called a flagship project of BRI, which violates India's sovereignty and territory integrity. Therefore, we oppose it,"

At the same time, New Delhi should also have a more pragmatic vision towards BRI. While New Delhi should not give up its stance on the "sovereignty issue", synergies should not be ruled out, New Delhi should be open to the BCIM corridor, which seeks to connect Kunming in China to Kolkata in India.

While New Delhi is working jointly with Japan in projects like the Africa Asia Growth Corridor and even countries in the Indo-Pacific have spoken in terms of strengthening connectivity projects, New Delhi should look at all options. If Japan and China are willing to work jointly on connectivity projects, (during a meeting between foreign ministers of both countries in Tokyo, this issue was discussed) both, there is no reason why New Delhi should be totally closed to the BRI. Considering the fact, that China is planning to extend CPEC till Afghanistan, New Delhi cannot afford to be excessively rigid to participating in the project.

Second, in areas like investments, infrastructure and agriculture, it is important to get Indian state governments and Chinese provinces onboard by rotation.

The Fourth Strategic Dialogue in October 2016, where India was represented by then vice chairman of Niti Aayog, Arvind Panagariya and China, by Xu Shaoshi, chairman of National Development and Reform Commission, People's Republic of China witnessed the participation of India's Coastal Provinces and presentations by them on possible investment opportunities. It was also decided that greater cooperation between both sides in manufacturing is needed. The minutes of the Dialogue are as follows:

"... representatives of different states, viz., Gujarat, Telangana, Karnataka, Andhra Pradesh and CEO, Delhi Mumbai Industrial Corridor Development Corporation Ltd. made presentations in the Working Group… The State Government representatives gave presentations on the opportunities in the above sector in the coastal regions of India… Mr Li Xuedong (Deputy Director General NDRC) stressed that the Statement of principles on Manufacturing and Industrial Capacity between NDRC, China and NITI Aayog, India to be signed on October 7 by two Chairmen of the 4th India China SED, would mark the good beginning of manufacturing and industrial capacity cooperation between the two sides. With active participation of Chinese local governments and Indian states….

Since in recent years, a number of states and provinces which were not pro-active in the relationship have begun to play a role in the bilateral relationship. Off late for instance, China has shown an interest in Eastern India (especially West Bengal) due to interest in the BCIM project.The Chinese side can also include provinces, like Jiangsu, which have done well in agriculture, and states like Punjab have sought to build linkages with them. While the India-China Forum of State Provincial Leaders has not been able to enhance the participation of states and provinces in the bilateral relationship to the degree possible and feasible, the Strategic and Economic Dialogue should seek to make Indian states and Chinese Provinces important stakeholders.

Third, while China needs to address India's concerns and cannot afford to be dismissive of India's apprehensions, New Delhi needs to move beyond a 'security' mindset. Building a constructive economic relationship will be very tough without a degree of flexibility from both ends. If both sides are not genuinely flexible, the bilateral relationship will not move beyond platitudes and MoUs. China also needs to deliver on its commitments of investment in India. President Xi during his visit in 2014 had said that India would invest $20 billion over a five-year period, official estimates show that till last year, Chinese investments were a little over $1.5 billion.

Fourth, basic issues such as a more realistic - if not relaxed - visa regime, increased connectivity, and more direct flights between both countries are essential for progress in all spheres.

In conclusion, the current geopolitical and economic scenario is interesting, albeit challenging and complex, and India cannot restrict itself to anyone camp, it should try to harness opportunities, as and when they arise.

It is also important for both sides to distinguish between short-term goals, and a long-term vision, which needs to be more holistic

Survival of the European maritime technology sector depends on a firm stance from the EU


Survival of the European maritime technology sector depends on a firm stance from the EU

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"The European Commission needs to adopt a strong industrial and manufacturing policy based on reciprocity, otherwise our European maritime technology industry won't survive competition from Asian shipyards," warned Marian Krzaklewski, rapporteur of the EESC opinion on the LeaderSHIP strategy, adopted at its plenary session on 19 April. 

The EESC urges the Commission to step up the LeaderSHIP 2020 strategy's roll-out and put forward key recommendations for the sector's new LeaderSHIP 2030 strategy.

"Europe needs a specific approach for the shipbuilding and marine equipment manufacturing industry. Like China, the US, Japan and South Korea, European decision-makers must treat it as a strategic sector in Europe's economy", underlined co-rapporteur Patrizio Pesci.

In the EESC's view, such an approach must include

In terms of trade:

Efforts to conclude a comprehensive OECD agreement – including China – which would set out rules on subsidies, potentially also pricing discipline;Reciprocity between Europe and third countries as a guiding principle in both bilateral and multilateral trade negotiations, and issues linked to market access. "Protectionist measures need to be countered with the same means," says the EESC;In terms of financing:

Since the shipbuilding industry requires large amounts of capital, but access to financing is becoming increasingly difficult, the Commission should consider introducing a specific financial instrument that would enhance investment in this capital risk-intensive sector.In terms of development (research/skills):
Environmental protection, safety and security, as well as digitalisation, automation, cybersecurity or the internet of things pose major challenges for the European MT sector but also offer interesting opportunities, provided sufficient capacity for researchdevelopment and innovation is available. The Commission therefore needs to promote and - also financially - support investments in the European MT sector in the area of RDI.Furthermore, there is a strong need to rectify skills shortages. Therefore the Commission should provide substantial support to the social partners in the shipbuilding sector enabling them to continue their work at the European Skills Council for the Maritime Technology Sector.In terms of strategy:
The Commission should ensure that the maritime defence industry forms one of the pillars of the follow-up to the LeaderSHIP strategy.

The European maritime technology (MT) sector is a key industrial sector for Europe and – despite the many difficulties the sector has been confronted with, especially since the economic crisis – it is in relatively good shape. However, 2016 had not been a good year on the order book globally and even worse may still come, as a result of both protectionist policies from East Asian competitors and financial support for their own industry.

In its recent official documents ("Made in China 2025"), China has announced its ambition to become the world's leading producer of high-end ships, including cruise ships and high-tech marine equipment – currently a branch where European shipbuilders and maritime equipment manufacturers are market leaders. This will put even more pressure on one of Europe's key industrial sectors.


The European maritime technology industry sector includes all businesses involved in the design, construction, maintenance and repair of vessels and other maritime structures. There are around 300 European shipyards which have an annual turnover of approximately EUR 31 billion and employ 200 000 people.

Some 22 000 large, small and medium-sized companies produce and supply marine equipment, generating an annual turnover of approximately EUR 60 billion. They directly employ over 350 000 people. Their share of the global market is about 50%.

The European maritime technology sector invests 9% of its profits from sales in research, development and innovation – the highest rate of investment in RDI to be found in Europe.



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Related bodies:

Consultative Commission on Industrial Change (CCMI)

Related events: 

534th Plenary session, 18-19 April 2018

Five ways China's past has shaped its present


Five ways China's past has shaped its present

By Prof Rana MitterUniversity of Oxford

2 hours ago

Image copyrightGETTY IMAGES

To understand today's headlines about China's approach to issues such as trade, foreign policy or internet censorship, turn to its past.

The country is perhaps more aware of its own history than any other major society on earth. That remembering is certainly partial - events like Mao's Cultural Revolution are still very difficult to discuss within China itself. But it is striking how many echoes of the past can be found in its present.


China remembers a time when it was forced to trade against its will. Today it regards Western efforts to open its markets as a reminder of that unhappy period.

The US and China are currently in a dispute over whether China is selling into the US while closing its own markets to American goods. Yet the balance of trade hasn't always been in China's favour.

Are we on the brink of a US-China trade war?President Xi Jinping warns against a "Cold War mentality"Donald Trump's double threat to global free trade

In Beijing, there are long memories of a period, nearly a century and a half ago, when China had little control over its own trade.


Britain attacked China in a series of Opium Wars, starting in 1839. In the decades that followed, Britain founded an institution called the Imperial Maritime Customs Service to fix tariffs on goods imported into China.

It was part of the Chinese government, but it was a very British institution, run not by a mandarin from Beijing, but a man from Portadown.

Image copyrightGETTY IMAGESImage captionSir Robert Hart was the inspector-general of China's Imperial Maritime Custom Service from 1863 to 1911

Sir Robert Hart ended up becoming inspector-general of the Customs of China, which became a fiefdom for Brits for a century afterwards. Hart was honest and helped to generate a great deal of income for China.

But the memories of that time still rankle.

It was very different in the Ming dynasty, in the early 15th Century, when Admiral Zheng took seven great fleets to South East Asia, Ceylon and even the coast of East Africa to trade and show off China's might.

Image copyrightALAMYImage captionZheng He's exploits are recorded all over South East Asia, such as on the wall of this shrine in Penang, Malaysia

Zheng He's voyages were partly about making an impression. Few other empires could boast the massive fleets that it sent out across the oceans, and it was also an opportunity for strange and wonderful items be brought back to Beijing - such as China's first giraffe.

However, trade was also important, particularly in other parts of Asia. And Zhen could, and did, fight when he wanted to, defeating at least one ruler of Ceylon. Yet his voyages were a rare example of a state-driven maritime project. Most of China's overseas trade for the next few centuries would be unofficial.

Trouble with the neighbours

China has always been concerned to keep states on its borders pacified. That's part of the reason it deals so warily with an unpredictable North Korea today.

This is not the first time that China has had problems with those on its borders.

In fact, history reveals it has had worse neighbours than North Korean leader Kim Jong-un, who recently made a surprise visit to Beijing, his first known foreign trip since taking office in 2011.

Image copyrightGETTY IMAGESImage captionThe Chinese and North Korean governments confirmed Kim Jong-un's visit once he'd leftNorth Korea talks: China cautiously 'cheering on' KoreasKim in Beijing: Why Xi's still the one he needs to seeKim Jong-un visit: What else crosses the China-North Korea border?

During the Song dynasty in 1127, a woman named Li Qingzhao fled her home in the city of Kaifeng. We know her story because she was one of China's finest poets, and her works are still widely read. She went on the run because her state was under attack.

A people from the north, the Jurchen, had burst into China after a long period of uneasy alliance with the ruling Song dynasty's emperor. The elite of China's civilisation had to spread themselves across the country as cities burned.

Li Qingzhao saw her beloved art collection scattered between various cities. Her dynasty's fate was an object lesson that appeasing the neighbours may work for only so long.

For some time, the Jin dynasty ruled Northern China, and the Song founded a new realm in the south. But in the end, both fell to a new conqueror, the Mongols.

Image copyrightGETTY IMAGESImage captionFounded by Genghis Khan in the 13th Century, the Mongol empire would become the largest contiguous empire in history

The shifting lines on the map show that the definition of China has changed over time. Chinese culture is associated with certain ideas such as language, history and ethical systems like Confucianism.

However, other peoples, including Manchus and Mongols from the north, have taken China's throne at various points, ruling the country using the same ideas and principles upon which their ethnic Chinese counterparts relied.

These neighbours did not always stay put. But sometimes they embraced and exercised Chinese values just as effectively as the people from whom they took them.

Information flow

Today China's internet censors politically sensitive material, and those who utter political truths deemed problematic by the authorities may be arrested or worse.

The difficulty of speaking truth to power has long been an issue. China's historians have often felt they had to write what the state wanted rather than what they thought was important.

Carrie Gracie: The thoughts of Chairman XiChina congress: How authorities censor your thoughtsSocial media and censorship in China: how is it different to the West?

But Sima Qian - often dubbed China's "grand historian" - chose a different path.

Image copyrightALAMYImage captionDespite his disgrace, Sima Qian's works have been extremely influential

The author of one of the most important works chronicling China's past, in the 1st Century BC, he dared to defend a general who had lost a battle. In doing so he was held to have snubbed the emperor, and was sentenced to castration.

Yet he left behind a legacy which has shaped the writing of history in China to this day.

Find out more:

Professor Rana Mitter presents Chinese Characters on BBC Radio 4, a series of 20 essays exploring Chinese history through the life stories of key personalitiesYou can listen to the programmes on the BBC Radio 4 website, or download the Chinese Characters podcast

His Records of the Grand Historian (Shiji) mixed different types of sources, critiqued figures from the historical past, and also used the techniques of oral history to find out directly from participants what had actually happened.

All of this was a very new way of doing history, but it set a precedent for later writers: if you were willing to risk your safety, you could write history "warts and all", rather than censoring yourself.

Freedom of religion

Modern China is much more tolerant of religious practice than in the days of Chairman Mao's Cultural Revolution - within limits - but past experience makes it cautious about faith-driven movements which could potentially spiral out of control and pose a challenge to the government.

Records show that openness to religion has long been part of Chinese history.

Image copyrightALAMYImage captionDuring her 7th Century reign, Empress Wu Zetian embraced and promoted Buddhism

At the height of the Tang dynasty in the 7th Century, the Empress Wu Zetian embraced Buddhism as a way of pushing back against what she must have regarded as the stifling norms of China's Confucian traditions.

In the Ming dynasty, the Jesuit Matteo Ricci arrived at court and was treated as a respected interlocutor, although there was perhaps more interest in his knowledge of Western science than his slightly wan attempts to convert his listeners.

But faith has always been a dangerous business.

Chinese police detain 'female Jesus cult' membersWhy many Christians in China have turned to underground churchesReligion ban for China Communist Party ex-officialsChina and the Church: The 'outlaw' do-it-yourself bishop

In the late 19th Century, China was convulsed by a rebellion started by Hong Xiuquan, a man who claimed to be Jesus's younger brother.

The Taiping rebellion promised to bring a kingdom of heavenly peace to China but actually led to one of the bloodiest civil wars in history, killing as many as 20 million people, according to some accounts.

Government troops initially failed to tame the rebels, and had to allow local soldiers to reform themselves before they eventually put down the Taiping with great cruelty in 1864.

Image copyrightALAMYImage captionThe Taiping rebellion was eventually defeated with the help of British and French forces

Christianity would be at the centre of another uprising some decades later. In 1900, peasant rebels calling themselves Boxers would appear in north China, calling for death to Christian missionaries and converts, the latter being characterised as traitors to China.

At first, the Imperial Court backed them, which lead to the death of many Chinese Christians, before the uprising was eventually put down.

Through much of the following century, and to the present day, the Chinese state has veered between tolerance of religion, and the fear that it may upend the state.


Today China seeks to become a world hub for new technology. A century ago it went through an earlier industrial revolution - and women were central to both.

China is a world leader when it comes to artificial intelligence (AI), voice recognition, and big data.

Will China beat the world to nuclear fusion and clean energy?Should the West suspect Chinese tech?China's AI ambitions

A large number of the smartphones around the world are built with Chinese-made chips. Many of the factories which manufacture them are staffed by young women who often endure horrific conditions of work, but who are also finding a place in the industrial market economy for the first time.

They have inherited the experience of the young women who came 100 years ago to the factories that sprang up in Shanghai and the Yangtze delta.

Image copyrightGETTY IMAGES

They were not making computer chips, but silk and cotton threads.

Work was hard and likely to cause lung disease or physical injury, and conditions in the workers' dormitories were spartan.

Yet the women also recalled the pleasure of having their own wages, however, small, and the ability to visit a fair or theatre on a rare holiday.

Some made the journey to look - probably not buy - at the shiny new department stores in central Shanghai, one of the ultimate symbols of modernity.

Today, on Nanjing Road in that city, you can still see China's new working and middle class enjoying a wide range of consumer goods as part of China's contemporary tech-driven economy.

The view from future historians?

We are living through another significantly transformative era for China. Future historians will note that a country that was poor and inward-looking in 1978 became - within a quarter of a century - the second biggest economy in the world.

They will also note that China was the most important country to push back against what had seemed like an inevitable tide of democratisation.

Perhaps other factors such as the one-child policy (now ended) and the use of AI surveillance may catch future writers' attention. Or maybe it will be something else to do with the environment, space exploration or economic growth, which is not yet even obvious to us.

One thing is almost certain - a century from now, China will still be a place of fascination for those who live there and those who live with it, and its rich history will continue to inform its present and future direction.

About this piece

This analysis piece was commissioned by the BBC from an expert working for an outside organisation.

Prof Rana Mitter is professor of the History and Politics of Modern China at the University of Oxford, and is director of the University China Centre.

April 18, 2018

A route to economic growth – The Belt and Road Initiative 2018 survey


A route to economic growth – The Belt and Road Initiative 2018 survey

To mark the fifth anniversary of the Belt and Road Initiative (BRI), the IFF – in collaboration with Central Banking – conducted its inaugural Belt and Road Survey of central banks from more than 25 countries and regions. The survey examines BRI achievements, issues and experiences from the perspective of BRI countries. Most respondents expect the BRI to bolster their growth, but more effective co-ordination is required to fully unleash its potential. By Zhang Jizhong and Christopher Jeffery, with research by Emma Glass

Silk Route between China and India, Sikkim

Zhang Jizhong and Christopher Jeffery18 Apr 2018

China’s Belt and Road Initiative (BRI) has the potential to be the largest development project in modern history. In terms of its scope and scale, there can be little doubt. 

China’s signature BRI has already signed up 71 jurisdictions, representing a combined population of around 3.5 billion, and trillions of dollars of investment have already been made in projects such as the Port of Piraeus in Greece, the Suez Canal in Egypt, a new high-speed railway in Thailand, the China–Belarus Industrial Park, the Yamal LNG project in Russia, upgrading the Serbian railway system in Belgrade and the development of Gwadar – a brand-new container port – in Pakistan and 1,800 miles of superhighway and high-speed railway to connect China’s landlocked western provinces.

The BRI is not targeted as official development aid. It is a development strategy proposed by China focusing on connectivity and co-operation. Funding is expected to yield monetary returns and there will be economic consequences if projects fail to deliver on their expected returns. The sheer scale of the initiative also raises some challenges. Some are operational challenges – how capable are countries in terms of engaging into the BRI? What are the available sources of funding? What risks do they raise? Other issues are related to geopolitics. Could the China-led effort aimed at boosting economic development – in part by learning from China’s own lessons from its economic development, as well as benefiting from its capital – spark tensions with the European Union, the US, Russia, Japan and India? 


The IFF China Report 2018The IFF China Report 2018Asian Infrastructure Investment Bank – Raising expectationsBRI and the participation of private capital

The International Finance Forum asked Central Banking Publications to survey central banks of countries participating in the BRI to gain their insight into the current state of the initiative and the challenges and opportunities it faces in the years ahead. Central banks were polled as they are key advisers to most governments on economic and financial matters, have technical competency – even in developing countries – and are often charged with financial stability in addition to being stewards of monetary policy. About one-quarter of BRI central banks have also arranged currency swap agreements with the People’s Bank of China. 

This article reports the findings of the survey, which was carried out in January and February 2018. The work has only been possible with the support and co-operation of the central bankers who agreed to take part. They did so on the condition that neither their names nor those of their central banks would be mentioned in this report. 

Key findings

Just under half of central banks described the BRI as a ‘once-in-a-generation’ initiative. Half of respondents said the BRI ranks above national development bank programmes in terms of importance; 21% ranked it above International Monetary Fund (IMF)/World Bank efforts; and 14% above regional development bank projects. Nearly three-quarters of those surveyed said the BRI has not yet resulted in greater investment from China than already expected.However, 92% of respondents expect the BRI to bolster domestic growth during the next five years, with 67% saying it will be greater than 0 and up to 1.5 percentage points, and 25% saying greater than 1.5 and up to 5.5 percentage points.Most funding is expected for major and mega infrastructure projects rather than smaller projects.Funding is expected to come from Chinese development banks, China-led and other multilateral institutions – financial centres scored poorly, with London (33%) ranking highest.Domestic currency (32%) and the euro (29%) are the most favourable funding currencies; respondents ranked renminbi and US dollar funding at the same preferred level (19%).Sixty-three per cent of respondents said they “actively support” or “support” expanding the capital of the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) with reserve currencies; 60% favoured domestic currency expansion – central banks unanimously rejected the use of reserves and sovereign wealth fund (SWF) capital for BRI projects.There was overwhelming support for sound ethical standards and transparency in BRIprojects.Thirty-five per cent of respondents said the BRI is evolving from an initiative to a regional/international co-operation mechanism; 35% called for the BRI to be more specific with standards; 29% called for it to be more transparent and relevant institutional mechanisms to be improved – European central banks believe the BRI will contribute to green finance, while most other central banks view it as “not relevant”.Legal framework, financing and the government sector were stated as being the largest obstacles to development.Policy and political risks are viewed as the two greatest barriers to the BRI.The BRI is expected to create the greatest friction with the EU (42%) and the US(33%). There was little concern about increased strain in relations with Russia, Japan or India.The BRI poses the biggest risks for domestic funding capabilities (36%), followed by monetary policy (27%) and financial stability (18%).Most central banks are not actively advising on the BRI to their governments or official development bodies – but the majority that are advising their governments on this initiative also have direct dealings with China.Engagement in the BRI is still patchy – most central banks said their countries have yet to draw up BRI plans.

Profile of respondents

Central Banking received responses from 26 central banks in countries participating in the Belt and Road Initiative. Over half of respondents were European, while Asian respondents made up just under one-quarter of the replies. Central banks from the Middle East and Oceania also featured. Transition economies played a significant role in this survey, contributing 46% of responses. Emerging markets and developing economies made up 19% of the total, while 15% of central banks were from industrial economies.

Percentages in some tables and graphs may not total 100 due to rounding.

Survey responses

1. Does your central bank actively advise your government and/or state development bodies on the BRI?

Nine respondents did not reply.

The majority of central banks’ respondents in BRI-participating countries surveyed said they are not playing an active role in advising the government or state development bodies about China’s signature development initiative. Given that much of the work of central banks is related to monetary policy, financial stability, currency and payments, and market infrastructure developments, it is perhaps not surprising that central banks are not yet playing a major role. Nonetheless, as many are financial and economic advisers to governments, it is noteworthy that so few view themselves as “active” in the area, five years after the unveiling of the BRI. This is by no means the case for all. One European central bank noted that it “acts in close co-operation with its government in connection with the BRI” while a major Asian central bank added: “We regularly provide outlooks to our government on this issue.” 

Others are engaged because of their involvement with multilateral bodies – particularly the World Bank, the European Bank for Reconstruction and Development (EBRD), the Asian Development Bank (ADB) and the China-led AIIB. At this stage, central bank governors are far less likely to be substituted for finance ministers on the AIIB board than on the boards of the Bretton Woods multilateral institutions and established regional development banks.

Some central banks are actively involved in tackling financial issues associated with the BRI. One respondent from a central and eastern European (CEE) central bank said: “The bank has been internally consulted on the main strategic guidelines of the BRI, especially the ones dealing with financial issues and financial system development.”

1a. If yes, does your central bank also engage with China on the BRI? 

It is noteworthy that more than 70% of central banks that viewed themselves as actively advising their governments and/or state development bodies were also engaging directly with China on the BRI.

One major central Asian central bank said that it “takes part in discussions concerning interbanking co-operation”. A Southeast Asian central bank explained that it “always supports [its] government’s co-operation with China under the framework of the BRI”, and other efforts. A European central bank added that “several initiatives have already been launched in the framework of the BRI” and it is expected “to further develop its relations with countries participating in the BRI”, while another pointed to the importance of its currency swap agreement with the People’s Bank of China to facilitate “commercial trade between the two countries”, although this is not “formally part of the BRI”.

2. How important is the BRI to your country? 

10 respondents did not reply.

Just under half of central banks viewed the BRIas a once-in-a-
generation opportunity, with another 20% ranking it as one of the most important in the past decade. This supports assertions that the BRIrepresents a major opportunity to advance transport, logistics and other infrastructure in developing countries, as well as to increase the velocity of trade and services for all countries involved.

“We support the BRI as it is expected to facilitate the flow of trade between our country and Asian countries, particularly China,” said one Middle East-based central bank. “In addition, the initiative enables us to access new financing sources and boost investment in infrastructure projects.”

“The BRI can significantly improve connectivity within Southeast Asia and beyond. The infrastructure networks connecting Asia with Europe and Africa, along with the project’s routes, will induce closer and larger economic, social and cultural ties between China and its trading partners,” added a central bank from a middle-income Asian nation. 

One major central bank asserted that the BRIrepresents an “opportunity to increase bilateral investments”, while others felt the BRI could promote development within their nation in terms of technological and social advancement. “The results of the initiative should be mostly obvious in building technological capacities, development of skills and the creation of new jobs – especially for the youth and female population. It should result in a long-term growth model, based on trading, exchange and, primarily, the activities of small and medium-sized enterprises,” said the central bank of a former Soviet Bloc nation.

One CEE central bank believes the BRI “could potentially be very important, if implemented and utilised actively”. 

3. How does your central bank categorise the importance of the BRI at a national level?

15 respondents did not reply.

Half of central bank respondents ranked the BRIas “more significant than national development bank programmes for new initiatives”, although just 14% said they viewed the BRI as “more significant than domestic government programmes for new initiatives”.

Perhaps surprisingly, 35% of respondents ranked the BRI as more significant at a national level than IMF/World Bank (21%) and regional development body (14%) programmes. “The BRIis able to promote win-win co-operation among the participating countries. The technological and financial involvement of the East can be decisive for the further development of Europe,” responded one CEE central bank.

Many central banks said they found it hard to rank the BRI against existing multilateral and domestic development efforts, in some cases because these efforts are viewed as complementary. “The BRI and the programmes offered by the organisations mentioned… are different both in objectives and practices and cannot be compared directly,” said one mid-sized Asian central bank.

A European central bank added: “It is very difficult to point out to what extent the BRI is more or less important … but it is certainly very much connected to all other international and domestic relations. We have a very specific position, and our economy is very much dependent on foreign direct investments. In that context it has to be highlighted that relations with the IMF… are very important, as well as the World Bank programmes. On the other hand, the involvement of the EBRD and other such institutions in the financial market is of the utmost importance for the further development of the economic conditions in our country. In our view, the BRI is accompanying these other factors.” 

Some central banks believed the scope of the question needed to refer, in a broader sense, to more than just public money. 

4. Has the BRI resulted in greater investment in your country compared with what was already expected from China?

11 respondents did not reply.

Nearly three-quarters of respondents stated that the BRI has not resulted in more Chinese investment in their country than was already expected. Most central banks asserted that Chinese investment that has taken place would have occurred irrespective of the BRI. There were some exceptions, however. 

One mid-sized central bank discussed the development of ports by public sector Chinese companies. Another central bank from central and eastern Europe foresaw investment in the future: “We expect far more projects in railways and road-building, housing, energy, mining and other sectors in the coming years, which would be a direct result of this initiative.”

“We already have a close trade and investment tie with China,” said one Asian central bank. “The BRI may further help secure the financial support needed from the China-led development banks to upgrade our infrastructure facilities and improve connectivity with other Asian countries.” 

One mid-sized central bank pointed to a major project that will target logistics and help develop high-value manufacturing, modern services and a knowledge-based society. “We aim to focus on linking innovative economies and supply chains across the region, which would be complemented by the BRI,” it said.

5. What is the expected boost to GDP from BRI-related projects over the next five years? 

Figures are rounded to the nearest percentage. 14 respondents did not reply.

China says it is keen to export its growth model to developing countries, and believes that enhanced connections of all forms will help to uplift economic growth for all parties engaged in the BRI. 

A total of 92% of central bank respondents expect the BRI to bolster their domestic growth during the next five years, with the majority saying this would be greater than 0 and up to 1.5 percentage points although 25% were more bullish, predicting a fillip to growth of more than 1.5 and up to 5.5 percentage points. Such growth levels would reflect favourably on the growth China itself has enjoyed during the past four decades. 

“Countries like ours have a chance to use the funds and agreements with the Chinese government and Chinese companies… to influence infrastructure development to be better connected to the region and world trading routes,” explained a CEE central bank. “In this way, better conditions would be formed for foreign direct investment and economic development. With this in mind, the government [agreed to give] full support to this new ‘Chinese economic philosophy’ and its guiding principles in financing the development of the countries along the ancient Silk Route. The BRI will certainly have a positive effect on our GDP in the next five years, but it is hard to calculate the extent of it.”

“The expected boost depends not only on engagement but also on the external opportunities,” added another CEE central bank. “The projects are in the initial phase and involve a number of institutions and decision-making bodies. For the time being, the impact on GDPcan be estimated in a wide range. However, the initiative is expected to further boost economic growth.” 

Other central banks found it hard to estimate the overall impact. A Southeast Asian central bank, for example, explained how its own new economic strategy would be the main contributor to future growth. “Our assumption is that the BRIwould induce investment as a supplement to [our own economic strategy], thus, its contribution to our GDP is expected to be quite slim,” it explained. “That said, direct contribution may be small but [the] indirect crowding-in effect could be large.”

A number of central banks chose not to make a prediction. “It is virtually impossible to answer, as there are no necessary and stable inputs,” said one European central bank. “It might not affect our economy,” added another, located in the Middle East. “Based on currently available information, publicly disclosed projects will affect the country only indirectly, thus they will have only a marginal impact in terms of GDP,” said another. 

6. In your country, which types of projects will receive the greatest funding support from the BRI? 

Votes were cast using a scale of 1–5, where 1 denotes the source of most funding and 5 the least. 15 respondents did not reply.

The Chinese authorities are keen to stress that BRI projects are not necessarily focused on major infrastructure developments, but rather the entire ecosystem, including small and
medium-sized enterprises and the financially excluded. This focus has yet to materialise in the thinking of  central banks in BRI countries. 

Major infrastructure (railways, roads, highways, factories and agricultural water conservancy works) and mega infrastructure (power stations, the power grid, high-speed rail networks, urban underground networks and rail transit) were the two types of investments viewed as most likely to secure the greatest funding from BRI, according to central banks surveyed. A total of 55% of central banks ranked major infrastructure projects as the most likely to secure BRI funding, with 36% ranking mega infrastructure as most likely. The percentages for second-ranked votes were 44% for major infrastructure, and 22% for mega infrastructure. 

“We anticipate we will be a connecting logistic hub for the whole Association of Southeast Asian Nations region,” said one Southeast Asian central bank. “Having said that, infrastructure and construction projects are at the forefront of receiving funding support from the BRI.”

These sentiments were echoed by a small European central bank. “Road and general infrastructure projects would probably constitute the main contributions. Some intra-regional and other types of supporting infrastructures could develop as well,” they added. 

Another European central bank said its response was based on “observed interest of Chinese investors in transport infrastructure and power plants projects”.

“Up to now there was no interest in the projects that fall into the remaining three categories of medium-sized development projects, small and medium-sized enterprises and financial excluded sectors, and could be qualified as part of the BRI. However, there are also other Chinese investments that we do not consider part of BRI,” the central bank said.

7. Where does your central bank expect most BRI funding for these projects to come from? 

Votes were cast using a scale of 1–6, where 1 denotes the source of most funding and 6 the least. 15 respondents did not reply.

The most significant source of funding
for BRI projects was expected to come from Chinese development and state-owned banks, said 40% of central banks in their first choices and 22% in their second. Chinese-backed multilateral institutions (20% of first choices and 22% of second choices) and, to a lesser extent, other multilateral institutions (10% of first choices and 20% of second choices) also scored highly. Meanwhile, private sector Chinese corporations (10% of first choices and 22% of second choices) are expected to play another important but smaller role. International commercial banks and financial markets are expected to play a minor role, despite Chinese efforts to utilise private capital. 

“It is expected that funding for BRI projects would come primarily from Chinese development and state-owned banks and, in some part, from private Chinese corporations and Chinese-backed multilateral institutions,” said one ‘16+1’ group central bank, summing up the views of many institutions. 

Some central banks said it is still too early to determine the source of funding for BRI projects. “Talks with Chinese investors on possible investments in major infrastructure projects are still at an early stage and that is why we cannot precisely rank the possible sources of funding,” said a CEE central bank. 

A small number of central banks alluded to involvement from European institutions. “Eurozone, EU-based markets and banks in general”, will be the primary source of funding, according to one central bank, while another suggested “adding the European Investment Bank to the list of multilateral institutions” – a list that includes the World Bank, the EBRD and the ADB. 

One major central bank explained how initial public offerings in Chinese financial markets are “regularly discussed” with the People’s Bank of China, but “the projects have not been implemented yet”. 

7a. If funding for BRI projects comes from financial markets, which financial markets?

Financial markets are not expected to play a major role in funding BRI projects for the time being, despite vast sums of pension and insurance money seeking higher returns than are currently available from many current market instruments. London was ranked as the top centre for market-based funding, followed by Hong Kong and mainland China. One European central bank explained: “Given prevailing current trends, the funding might probably be expected to come from Hong Kong-based markets.”

8. What currency should be used for financing BRI-related projects?  

Eight respondents did not reply. Respondents were invited to select more than one answer.

Unsurprisingly, many central banks would prefer BRI financing to take place in domestic currencies (32%), where there is no foreign exchange risk. But a large number of central banks also favour the use of the euro (29%). 

“Domestic currency would be preferable in order to minimise potential negative impacts on economic and financial stability,” said one central and eastern Europe-based central bank. “However, local financial markets remain rather shallow, and excessive reliance on them might crowd out domestic investment projects. A combination of both euro – given our increasing EU integration trends – and [domestic] currency might offer the best combination.”

A eurozone central bank added: “The euro serves as the one and only official currency, so from a financial stability point of view, it is preferable to eliminate forex risk, unless an effective/efficient hedge is made, and/or it can strongly be concluded that benefits of non-euro funding outweigh its costs.”

Encouraging for those that see a greater international role for the renminbi is that the same proportion (one-fifth) of respondents favoured use of renminbi for BRI projects as those that preferred the US dollar. 

“Our country is committed to strengthening financial and economic relations with China through renminbi-related agreements and initiatives,” said one mid-sized central bank. 

“The central bank is promoting regional currency usage,” added a mid-size Asian central bank. “Regarding the promotion of renminbi usage, we have designated one of the Chinese banks as a clearing bank to deal with renminbi transactions… In addition, we have swap arrangements between the central bank and the People’s Bank of China, which serves as backstop liquidity as it allows both central banks to access the local currency of the other party. This has bolstered confidence of the private sector as well as financial institutions on the availability of local currency for cross-border investment settlements.”

Another central bank that has a bilateral swap with the People’s Bank of China said the “best solution” would be for Chinese investments to be conducted by a “direct conversion from renminbi to our [domestic] currency” and “for all project activities” to be conducted in “domestic currency”. “However, BRI projects are very important for stimulating economic growth, even if they are conducted through funding in hard currencies such as the US dollar or euro.”

Another Asian central bank was impartial, stating the choice of currency should be determined “by the relevant decision-makers”. 

9. What is your central bank’s position on expanding the capital in the NDB and AIIBwith reserve currencies and/or your nation’s own currency?

17 respondents did not reply.

Many central banks that participated in the survey did not express a view about funding for the new China-led multilateral development institutions, the NDB – or the Brics (Brazil, Russia, India, China and South Africa) bank – and the AIIB. The NDB is currently seeking to expand membership beyond its five founders. 

“As we are not a member of any of the stated banks, we do not have a specific position on this issue,” said one mid-sized institution. One bigger central bank added: “The central bank’s involvement in the AIIB is somewhat limited as such matters fall within the responsibilities of the ministry of finance and involve the use of fiscal resources.” 

Nonetheless, a total of 63% central banks responded by saying they “actively support” or “support” expanding the NDB and AIIB’s capital with reserve currencies, while 38% objected. Further, 60% of respondents favoured expanding capital in national currencies, while 40% objected. 

“The central bank supports the capital increase in the NDB and AIIB to strengthen the role of institutions in financing the projects of the BRI,” said an Asian central bank.

But not all institutions favoured additional capital raising. “Our answers concern only the AIIB as we are not a member of the NDB. The AIIBseems to be well capitalised at the moment,” said one European central bank. Another stated: “The current economic conditions and fiscal position constrain us from expanding our share in the NDB.” 

9a. Should central bank forex reserves and sovereign wealth be used to invest in BRIinfrastructure strategies?

15 respondents did not reply.

Although the challenging yield environment in traditional reserve currency assets is making it difficult for central banks to earn a profit on their foreign exchange reserves, central banks that responded unanimously rejected the idea of using reserves and sovereign wealth assets in BRI infrastructure projects – despite the Hong Kong Monetary Authority unveiling plans to invest US$1 billion in International Finance Corporation infrastructure projects last year. 

“The role and function of central banks’ forex reserves and SWF should not be changed,” said one mid-size central bank. 

“The purpose of international reserves is primarily to ensure a country’s international liquidity. Therefore, we believe that – in line with the principles of liquidity and safety – the decision on the investment of the international reserve funds should not be bound to any specific project, but determined by the securities’ credit rating,” added another, echoing the thoughts of many central banks. 

Indeed, this was the view even in countries that have SWFs or whose central bank reserves are viewed as being sufficiently large that they can invest in less liquid financial instruments. 

10. How important are ethical standards and transparency in the development of the BRI?

Eight respondents did not reply.

Central banks overwhelmingly support the practice of sound ethical standards and transparency for BRI projects, with 89% of participants describing it as “very important”. Just 11% said ethical standards and transparency are “important, but not essential”, and no central bank viewed them as “not very important” or “irrelevant”.

A Eurasian central bank said: “Ethical standards and transparency are essential and very important principles for us”; while an Asia-Pacific central bank added: “Ethical standards and transparency are equally important for developments outside the BRI.” 

A small European central bank also highlighted the benefits of transparency: “It should always be the case with major infrastructure projects so that benefits and cost associated with it are clear to all market agents.”

11. Which best describes your central bank’s view of the development of the BRI? 

Nine respondents did not reply.

A total of 35% of respondents say they view the BRI as “developing from an initiative to regional or international co-operation mechanism”, with one Asian central bank stating: “Regional financial connectivity has long been a key driver behind the flourishing economic ties between ourselves and countries in the region”.

However, 35% felt the initiative needs to be more specific and that standards need to be created to ensure the successful implementation of projects; while 30% say the BRI needs to be more transparent and the institutional mechanisms need to be improved. 

11a. Do you believe the BRI will contribute to green finance?

12 respondents did not reply.

There was a split between European central banks – particularly those with close ties to the EU – and other central banks when it came to views on the BRI contributing to green finance. Half of those that voted said they thought the BRI would boost green finance – many of them European. “We believe that the projects under the BRI will be implemented in accordance with key international agreements regarding climate change and emerging tendencies in financing infrastructure,” said a respondent from a medium-to-large-sized EU central bank. 

“It is very important that all future projects within the BRI have a focus on green financing as environmental preservation and the appropriate usage of natural resources become more and more important,” added a central bank based in the Balkans region.

“Our country is committed to environmental protection and believes that green funding can play an increasingly important role in securing sustainable economic growth and long-term investments,” said another European central bank. 

China has received criticism from some of the backers of Bretton Woods institutions for its financing of higher-polluting, coal-fired power stations in countries such as Pakistan. Bankers in the south Asian nation – which produces its own coal and has to import gas – believes it would have struggled to fund new coal-fired stations from sources other than China. This may explain why 43% of respondents – particularly those in Asia – viewed green financing as “not relevant” to the BRI. 

However, attitudes may be changing. One small central bank reported: “Investments in the power plants based on renewable energy sources could contribute to green finance.” Another added: “China is putting green finance at the centre of its development plans. The BRI could be used as a platform for the delivery of green finance, [enabling a] greater amount of finance for construction of non-hydrocarbon energy-generating facilities.” 

12. What is causing the biggest roadblock to the development of BRI projects in your country?

Votes were cast using a scale of 1–5, where 1 denotes the most significant roadblock and 5 the least significant. 14 respondents did not reply.

The biggest blockage to the development of BRIprojects are the legal framework, financing, the government sector and credit ratings. A total of 45% of survey respondents ranked the legal framework as the most significant roadblock when facing the development of BRI projects, with 36% citing financing. Furthermore, 44% of second-placed votes went to the government sector, and 9% of first-ranked and 33% of second-ranked concerns were related to credit rating.

Many legal challenges are related to compliance commitments to rules that are part of being a member of an existing trading bloc. “Most impediments arise from legal rules – which originate in the EU legal framework,” explained one European central bank. 

An Asian central bank said that despite attempts to “streamline regulations”, “foreign contractors participating in the projects may still be subject to regulatory burdens”.

One central bank referred to the high costs related to Chinese funding. “The biggest roadblock to developing BRI projects is expensive financing from China, including the insurance of funding costs,” said a CEE central bank. “Adjustment in this area would provide far more BRI projects.”

13. What is the greatest policy barrier related to the BRI? 

Votes were cast using a scale of 1–5, where 1 denotes the greatest barrier and 5 the least. 13 respondents did not reply.

Respondents voted policy risks (18% of first-ranked votes and 45% of second-ranked) and political risks (36% of first-ranked votes and 9% of second-ranked) as the greatest barriers to the BRI. “We are in a very specific position,” said one mid-sized BRI country central bank. “We are based in a country that has had many political tensions in the past and many different foreign influences, so the biggest risk to development is a political risk coming from different international forums.” 

Some parties also highlighted a lack of clarity around the BRI. “Stakeholders are uncertain about the policy implementation plan,” said one Asian central bank.

Many more central banks were worried about exchange rate fluctuations (27% of first-placed votes) and others expressed concerns over investment risks (9% of first-placed votes and 45% of second-placed). 

A small European central bank worried that forex inflows “might engender exchange rate volatility and induce economic and financial stability shocks”. Forex volatility was also cited by a Group of 20 central bank: “Some participants of investment projects under the BRI pointed out the importance of hedging risk of exchange rate fluctuation.”

14. Is your central bank concerned the BRI may create friction with any of its strategic partners? 

14 respondents did not reply. Respondents were invited to select more than one answer.

China has presented a philosophy of embracing nations engaging in the BRI. But with so many nations and vested interests involved there are bound to be tensions. 

Central banks that voted in the survey believe the BRI may create greatest friction with the EU(42%) and the US (33%). This is perhaps not surprising, given the decision by EU members not to endorse part of the multi-billion dollar plan in 2017 because it did not include commitments to social and environmental sustainability and transparency. The US, meanwhile, has recently named China a “strategic competitor” and moved to impose trade sanctions on it, including restrictions on investment and tariffs on US$60 billion worth of products. 

“If the [BRI] initiative does not develop in compliance with EU/US projects and policies, or does not duly take into account their economic or political concerns, the risk of friction is certainly there,” said one CEE central bank. “Considering the size and scope of current investments here, we do not see that they could create frictions [at the moment].” 

“There is a possibility that the BRI could in some way conflict with EU goals, but we are strongly committed to the European integration process, while trying to have very friendly and prosperous relations with China through the BRI,” said another European central bank. “In our view, these two processes should accompany one another.”

A respondent from a Middle Eastern central bank also expects the BRI to offer a net benefit. “The BRI is expected to strengthen the economic and trade relations with our existing trading partners and create new opportunities and new economic partners,” the bank said. 

“The BRI can be regarded as win-win co-operation. The initiative should be considered as an opportunity that is not intended to divide the countries,” added another European central bank.

“As far as we are concerned, we do not foresee any friction arising from the BRI with our strategic partners,” added an Asian respondent.

Despite many BRI countries in central Asia and central and eastern Europe falling within Russia’s traditional sphere of influence, there did not appear to be much concern about frictions with Russia and the Eurasian Economic Union. This may be in part due to Russia – itself already benefiting from BRI projects – appearing to embrace China’s strategic initiative. 

“We are not concerned the BRI may create friction with any of the strategic partners,” explained a Eurasian central bank located within Russia’s traditional sphere of influence. 

Perhaps surprisingly, no central bank predicted the BRI would cause frictions with India. One of the original Brics nations, India notably stayed away from Belt and Road Forum for International Cooperation in May 2017 in Beijing. It has also expressed its opposition to the economic corridor China is building in Pakistan, as it passes through the disputed Kashmir region controlled by Pakistan but claimed by India. 

14a. Are there concerns that the BRI may pose risks to any of these areas at a national level?

15 respondents did not reply. Respondents were invited to select more than one answer.

The main risks the BRI could pose for their nations, as the central banks highlighted,  were related to its impact on domestic funding capabilities (36%), followed by monetary policy (27%) and then financial stability (18%) – although a large number did not answer or did not see risks in the indicated areas. “We consider the BRI an opportunity that will not pose risk to the mentioned areas,” said one CEEcentral bank. “We do not foresee that the BRIcould pose risks to the mentioned areas at a national level,” added a Southeast Asian central bank.

Central banks did not elaborate on the reasons for their concerns about domestic funding capabilities being damaged by the BRI, but they did add some details about other concerns. “Projects need to be well chosen, designed and implemented. Otherwise they can create a dangerous fiscal burden, which would then spill over to the rest of the economy – the financial sector in particular,” said one Balkans-based central bank. 

Another small central bank reiterated earlier concerns about foreign-exchange funding risks. “If financing occurs in forex it jeopardises monetary policy operations,” a respondent from the central bank said. “If the projects engage in large domestic borrowing, as some of the construction contracts could be outsourced to domestic implementers, financial stability could be affected.”

15. Has your country drawn up corresponding plans to participate in the BRI? 

12 respondents did not reply.

While China has moved quickly to turn the BRI into a major initiative involving some 71 territories, engagement still appears to be patchy – and the majority of central banks said their countries have yet to draw up plans to participate in the BRI. 

A response from a mid-size Asian central bank sums up the view of many: “We have not drawn up corresponding plans to participate in the BRI. However, our nation has signed a memorandum of understanding with the People’s Republic of China on co-operation within the framework of the Silk Road Economic Belt and the 21st Century Maritime Silk Road Initiative.”

Another central European central bank added: “Our government adopted a directive in May 2017 in which it gave full support to the BRI and its guiding principles, but a detailed plan to participate in this initiative is still to be developed.” 

One larger Middle-Eastern economy central bank said it has initiated plans for “investments of Chinese infrastructure corporations” in its country – but this has yet to be extended to the BRI more broadly. 

Another central bank whose nation looks set to benefit from a major infrastructure project funded largely by the Export–Import Bank of China since 2014 said it has also signed a memorandum of understanding on the BRI in May 2017. Other nations have advanced beyond signing general memoranda of understanding on co-operation within the framework of the BRI to move towards more specific co-operation, for example, on ports and port industrial parks. This was particularly the case for some 16+1 central banks.


This article is part of The IFF China Report 2018, which draws mainly on content provided by China-headquartered think tank, the International Finance Forum, and is published in association with Central Banking