June 29, 2018

Mapping the China-Pakistan Economic Corridor’s Environmental Impacts

June 29, 2018|By Eunji OhPhoto credit: ADB Photo | Nikita Makarenko, Flickr

The China-Pakistan Economic Corridor (CPEC)includes projects ranging from western China to the southern tip of Pakistan. Energy projects account for more than 60 percent of CPEC’s roughly $62 billion in investment. Of these projects, about 70 percent of their planned energy capacity will be generated by coal-fired power plants. The rest is hydro (20 percent), solar (7 percent), and wind (3 percent). Pakistan’s energy needs are great, and its government aims to increase access to electricity from 67 to 90 percent of the population by 2025. However, decisions about increased energy output also need to be carefully weighed against potential environmental risks, including potential impacts on local protected species.

Below, a geographic analysis suggests that CPEC power plants have the potential to greatly increase access to electricity for Pakistan’s population, but they could also pose serious risks to surrounding wildlife, including some endangered species. Specifically, three coal-fired power plants and three hydro power plants are situated within 10 kilometers of UN-designated protected areas for local wildlife (the distance commonly used when conducting environmental impact assessments). Deeper analysis and on-the-ground evaluations could help balance Pakistan’s energy needs while protecting local wildlife.

Eunji Oh is a former researcher with the Reconnecting Asia Project.


Silk Road Headlines


27 June 2018

Source: Louis Vest/flickr

 This week's Silk Road news brings both geopolitics and geo-economics together, in a world that is undergoing complicated changes.

Asia Times article [Trump holds the clock on North Korea while Putin plans his moves]paints the geopolitical picture hinging on the North Korean issue. Kim Jong Un has a surprise two-day visit to China, signifying that China cannot be discounted in the North Korean issue. "Kim is indeed acting shrewdly by anchoring his dealings with Trump on his pivotal relationship with Chinese President Xi Jinping." Nor can one ignore the role of Russia in this situation. President Putin recently held a phone conversation with Xi Jinping. They discussed the North Korean situation in the backdrop of both countries experiencing increasing tensions with the US. Russia is arguing for the lifting of North Korean sanctions. President Moon of South Korea visited Russia last week as well, promoting trade between the two countries. Russia's profile in this situation is getting increasingly larger. The Sino-Russian 'close contact' and presence in the North Korean issue is something to be reckoned with.

The Bloomberg article [In China-U.S. Trade Spat, Treasuries Are Off-Limits for Now]points to the fact that China is keeping shy of making the treasuries part of the trade spat that President Trump has started between the two giant economies. "China, the largest foreign owner of Treasuries, has kept its holdings remarkably steady over the past year even as President Donald Trump ramps up threats of tariffs." The American economy cannot afford China selling its dollar holdings outright. Nor is it a good option for China. China's export-oriented economy is still dependent on the dollar. So is the People's Bank of China for its exchange rate. This puts the two countries in a mutually dependent and awkward position. The US will continue to issue more debt and China will continue to buy enough of that debt to keep its holdings steady.

M. Forough

This week's Silk Road Headlines

China building Tibet-Nepal railway is not quite a setback for India [Observer Research Foundation

France seeks leverage in Belt & Road initiative [ECNS]

Global economic uncertainty and Japan’s leadership in the Asia Pacific[Tomodachi]

China's Belt and Road Initiative, Five Years In [Stratfor Worldview]

Australia and Germany should work together on China [MERICS]

What Would Happen if China Started Selling Off Its Treasury Portfolio? [CFR]

Massive Regional Traction across Europe, Asia, and North Africa [Silk Road Briefing]

Trump holds the clock on North Korea while Putin plans his moves [Asia Times]

In China US-trade spat treasuries are off-limits for now [Bloomberg]

Next Steps in the Merger of the Eurasian Economic Union and the Belt and Road Initiative [Jamestown Organisation]

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.




28 JUN 2018 - 16:30




Al-Hashd al-Sha’abi (Popular Mobilization Forces) is an umbrella term for approximately 50 Iraqi armed groups of varying capabilities and interests. This policy brief explores the power base, relationships and attitudes of seven Hashd groups towards the Iraqi government between January and September 2017 to understand the effect they may have on the nature of the Iraqi state in the near future. It identifies and develops four key insights:

The Hashd are highly heterogeneous and need to be analysed as individual groups to develop strategies for their peaceful incorporation into the Iraqi security landscape. The Hashd groups’ sources of power – coercive/security, socio-religious, economic/financial and political – are connected, but not in equal measure. This means that only limited positive and negative power multiplier effects – in which power in one dimension can increase power in another dimension – can be created.All the Hashd groups have at least one vulnerable power dimension at the national level. This gives the Iraqi government leverage to ensure that groups fall in line with national priorities when the stakes are high enough. Few Hashd groups oppose the Iraqi government and shun political engagement with it. This means that there is scope to negotiate political solutions for incorporating the Hashd into the Iraqi security landscape. It also suggests that the threat of the Hashd to the legitimacy/existence of the Iraqi government is somewhat overstated.


The products and services that we offer range from trend analyses that are part of our Clingendael Strategic Monitor, to high-quality in-depth analyses, scenario-building, horizon scanning and alerts specifically geared to your organisation.

No “Global Britain” after Brexit


Leaving the EU Weakens UK Foreign and Security Policy, Closer Ties Remain in Germany’s Interest

SWP Comment 2018/C 24, June 2018, 8 Pages

Under the leitmotif of “Global Britain”, the British government is painting Brexit as a unique opportunity to rethink its foreign and security policy: stronger, more influential, more global. The heart of the concept is a global outlook and bilateral agreements to compensate the loss of EU ties. In fact, however, the looming reality of Brexit appears to be weakening the United Kingdom diplomatically and spotlighting the constraints that individual nation states face. Confronted with rising transatlantic tensions and a resurgent China and Russia, the EU has no interest in having a weakened and insecure neighbour right across the Channel. But neither will the EU offer the UK special access to its foreign and security policy as a third country. In parallel to the Brexit negotiations, Germany should therefore keep channels open by intensifying the bilateral relationship and proposing new European foreign policy consultation formats.

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No “Global Britain” after Brexit


Leaving the EU Weakens UK Foreign and Security Policy, Closer Ties Remain in Germany’s Interest

SWP Comment 2018/C 24, June 2018, 8 Pages

Under the leitmotif of “Global Britain”, the British government is painting Brexit as a unique opportunity to rethink its foreign and security policy: stronger, more influential, more global. The heart of the concept is a global outlook and bilateral agreements to compensate the loss of EU ties. In fact, however, the looming reality of Brexit appears to be weakening the United Kingdom diplomatically and spotlighting the constraints that individual nation states face. Confronted with rising transatlantic tensions and a resurgent China and Russia, the EU has no interest in having a weakened and insecure neighbour right across the Channel. But neither will the EU offer the UK special access to its foreign and security policy as a third country. In parallel to the Brexit negotiations, Germany should therefore keep channels open by intensifying the bilateral relationship and proposing new European foreign policy consultation formats.

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June 27, 2018

India must explore new strategies to counter Pakistan's hostility, and do it without firing a single bullet

India Smarak Swain & Pradeep Singh GautamJun 27, 2018 13:13:2 

India and Pakistan have been in a state of covert and overt aggression against each other since their partition in 1947. There have been sporadic efforts at peace, but Pakistan remains ideologically and irreconcilably hostile to India's growth and prosperity. With conventional war no longer an option between the nuclear-armed rivals, India needs to explore more effective methods of neutralising this threat. In his classic treatise The Art of War, Sun Tzu had argued that the perfect strategy would be to subdue the enemy without fighting. Novel strategies need to be explored to make the cost of Pakistan's unrelenting hostility literally unaffordable.

In a recent report on the state of Pakistan's economy, the International Monetary Fund (IMF) questioned its macroeconomic stability. Surging imports have led to a widening current account deficit and a significant decline in international reserves despite higher external financing. Pakistan's net international reserves in mid-February 2018 were in the negative by $ 7 million. The report highlighted the high likelihood of the country defaulting on its loans from the IMF. On several occasions over the past three decades the agency has issued similar warnings, but Pakistan has averted complete disaster. However, the situation that Pakistan finds itself in today is particularly grave, and even the slightest setback could plunge it into full-blown economic crisis.

Pakistan's economy has a historical vulnerability in the form of current account deficit. It has a burgeoning import bill for petroleum, consumer products and capital goods while 57 percent of its exports mainly comprise of textiles and cotton. The country bridges this deficit through foreign remittances, foreign aid and loans. Pakistan's current account deficit, which stood at $2.5 billion in 2015-16 has ballooned to $12.4 billion in 2016-17. Its exports that year stood at $20.45 billion while its imports were two and half times that figure at $53 billion. Remittances of $19.3 billion from Pakistanis working abroad helped close the gap.

Representational image. Reuters

Historically, the United States has been Pakistan's biggest donor and the IMF has been extending the country loans to tide over dollar shortages. Some estimate that Pakistan has received between $30 billion and $35 billion in aid from the US since the 1950s. A major part of this has been in the form of military aid. But, more recently as the US has begun to withdraw its support, Pakistan has been looking to China to fill its coffers. Their flagship joint venture, the China-Pakistan Economic Corridor (CPEC) is a $60 billion programme to construct ports, roads, power plants, telecoms and railway infrastructure. These fund flows are helping to boost the economy and, in the short term, ease its balance-of-payments problem. But these are loans bearing an interest of 6 percent-7 percent or assured high-return equity. Servicing them is going to put increased pressure on its balance-of-payments situation if CPEC investments do not generate commensurate exports. Thus, the CPEC could become another economic vulnerability.

Given its economic frailties, Pakistan is an extremely vulnerable situation. Being largely an agrarian economy, with its exports dominated by cotton, textiles, and apparel, a ▶hostile country needs only to increase the supply of textiles in international markets to make Pakistani exports non-competitive and shake its macroeconomic stability. ▶Squeezing the flow of remittances from its workers in the Gulf states would completely undermine Pakistan's economy.

The key question is: can India resort to such peacetime economic combat without expending too many resources? ✔The first leg of this strategy is to increase competition for Pakistan's textile exports in international markets. India's textile sector contributes to about 13% of its exports. The Indian textile industry is diversified, with hand-woven textiles at one end of the spectrum and production through capital intensive mills at the other. Pakistan's textile exports are low value-added products. India does have the ability to undercut Pakistan's textile export prices by pumping in targeted subsidies to its textile-export sector.

India can pump cheap capital into textile companies and create conducive environment to encourage Indian exporters to follow a predatory-pricing model. For instance, if Pakistan exports a textile product at $1 per piece to Europe, Indian companies can be encouraged to sell the same product at $0.95 per piece. European markets would prefer the cheaper product. This will reduce forex earnings of Pakistan and put an additional strain on its balance of payments. Over time, Indian companies could develop the economies of scale and efficiencies to sustain sales at $0.95, but ▶initially the government must make up for lost profits through subsidies and credit.

Such a strategy will have its own cost for India. Pakistan's textile manufacturing is dominated by labour-intensive processes. Labour is much cheaper in Pakistan than in India. Hence, unless India acquires economies of scale, it does not have a natural competitive advantage viz-a-viz Pakistan in the segments of textile goods that Pakistan specializes in. Pakistan also enjoys 'GSP+' preferential tariff treatment in its exports to the Europe which India does not. But Bangladesh enjoys the same preferential tariff treatment in the Europe. Wages in Bangladesh are low, and the country is already a global textile-export hub. So, any increase in Bangladeshi textiles exports also directly undercuts Pakistani exports to the Europe. Thus, in addition to boosting its own textile industry, India should promote Bangladeshi textiles by providing cheap credit and equity to it.

✔The second leg of the strategy is to create substitutes for manpower exported by Pakistan to the Gulf Cooperation Council countries. GCC countries have a longstanding relationship with Pakistan and they have encouraged the import of labour from Pakistan. But this relationship is fraying. The views of Lt. Gen. Dhahi Khalfan Tamim, head of Dubai's General Security, is a case in point. On 1 April 2018, in a series of tweets, he disparaged Pakistanis living in the United Arab Emirates as "smugglers, drug peddlers and criminals" and called upon Dubai authorities to stop hiring Pakistanis. By comparison, he said that Indians are disciplined.

As India also exports a significant number of skilled and semi-skilled workers to GCC countries, this presents a significant opening. While increasing its manpower exports to the Gulf countries, India should also try to promote Bangladeshi workers in GCC countries using its diplomatic resources. As Pakistan manpower exports to the Gulf are in the lower end of the skillset spectrum, Bangladeshi manpower will directly undercut it. India and Bangladesh working in tandem will also work as a bulwark against Pakistan using the religion card against India with the Gulf countries.
Such measures will have other benefits for India. Promoting Bangladesh's economy has direct consequences for India's national interest: it will reduce the distress migration of Bangla citizens to Assam and West Bengal through the long, porous border. It will also increase cooperation and goodwill with a neighbour that does not have any major strategic misalignment with us.

There are other factors in play currently which are likely to facilitate this strategy. The surge in global oil prices has put increased pressure on Pakistani reserves. The US has, in a major policy reversal, not just turned off the aid tap but is making it difficult for Pakistan to borrow in international markets. Due to violations of money-laundering and counter terror financing laws, the Financial Action Task Force has also put Pakistan on its 'grey' list, making its international financial transactions costlier, time consuming and difficult. In the meanwhile, Pakistani rupee has been devalued by nearly 20% in the last 6 months. Pakistan hopes that currency devaluation will boost its exports by making them cheaper, but its structural inefficiencies and growing dependence on China will increase its import bill and lead to inflation. Pakistan is facing a general election and is under a caretaker government. Its internal security and political situation remains fragile.

But even if India has the capacity to ravage Pakistan's economy, how wise would such a course of action be? What are the likely risks and benefits associated with it? No hostile action is devoid of🔷 risks and neither is this. Destabilising Pakistan's economy, and the resulting chaos, could increase support for extremist organisations and increase their ability to recruit. The military establishment in Pakistan may become desperate enough to sell nukes to the biggest bidder. This argument plays to the madman fiction created by Pakistan's propaganda machinery, that promotes fears that the Pakistani state does not behave rationally and can act unpredictably and recklessly when facing an existential threat.

The second unintended consequence is that an economic crisis of such a magnitude will 🔷push Pakistan deeper into China's embrace and create a more formidable enemy on our western borders. But, ✔the benefits of waging an economic war is that an economic crisis will deepen conflicts and fissures within the subject society. The resultant anarchy and political dissonance will put pressure on the Pakistani establishment to reorient its India-centric focus to a more development-centred one. That could spur faster economic growth in South Asia and bring peace to the subcontinent.

The authors are officers of the Indian Revenue Service. Views are personal.


EUISS Yearbook of European Security 2018

26 June 2018


Daniel FiottJakob Bund

The EUISS Yearbook of European Security (YES) 2018 is the Institute’s annual publication compiling key information and data related to the EU’s Common Foreign and Security Policy (CFSP) and Common Security and Defence Policy (CSDP) in 2017. YES 2018 opens with a preface by Federica Mogherini, High Representative for the Union’s Foreign and Security Policy and Vice-President of the European Commission (HR/VP). While the HR/VP recognises that ‘the very idea of a rules-based international order is questioned’, the EU ‘has emerged as a reliable force for diplomacy, dialogue and multilateralism’. YES 2018 provides an account of the EU’s engagement with the world through evidence-based, data-rich chapters that are designed to inform policymakers and officials, experts and academics and think tank representatives about the progress made by the EU and the challenges it faced in 2017.

All of the familiar features of the YES are present in this edition including details about the organisational aspects of the European External Action Service (EEAS), EU partners, restrictive measures, geographic instruments, CSDP missions and operations, EU agencies and bodies and the European Defence Technological and Industrial Base. However, this year’s version of the Yearbook includes new features including: an overview of the work programmes of the presidencies of the Council of the EU as they relate to foreign, security and defence policy; narratives of the EU’s engagement with select countries and regions in its southern and eastern neighbourhoods and the wider world; an overview of new EU defence initiatives such as Permanent Structured Cooperation; and a new chapter on European security that focuses on the internal-external nexus and cybersecurity. Furthermore, to improve the readability of the 2018 Yearbook there are a host of informative data visualisations and for the first time the Yearbook includes a statistical annex for data and an index for reference purposes.

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How China Got Sri Lanka to Cough Up a Port

New York Times

A cargo ship navigating one of the world’s busiest shipping lanes, near Hambantota, Sri Lanka, in May.ADAM DEAN FOR THE NEW YORK TIMES

By Maria Abi-Habib

June 25, 2018

HAMBANTOTA, Sri Lanka — Every time Sri Lanka’s president, Mahinda Rajapaksa, turned to his Chinese allies for loans and assistance with an ambitious port project, the answer was yes.

Yes, though feasibility studies said the port wouldn’t work. Yes, though other frequent lenders like India had refused. Yes, though Sri Lanka’s debt was ballooning rapidly under Mr. Rajapaksa.

Over years of construction and renegotiation with China Harbor Engineering Company, one of Beijing’s largest state-owned enterprises, the Hambantota Port Development Project distinguished itself mostly by failing, as predicted. With tens of thousands of ships passing by along one of the world’s busiest shipping lanes, the port drew only 34 ships in 2012.

And then the port became China’s.

Mr. Rajapaksa was voted out of office in 2015, but Sri Lanka’s new government struggled to make payments on the debt he had taken on. Under heavy pressure and after months of negotiations with the Chinese, the government handed over the port and 15,000 acres of land around it for 99 years in December.


The transfer gave China control of territory just a few hundred miles off the shores of a rival, India, and a strategic foothold along a critical commercial and military waterway.

The case is one of the most vivid examples of China’s ambitious use of loans and aid to gain influence around the world — and of its willingness to play hardball to collect.


The debt deal also intensified some of the harshest accusations about President Xi Jinping’s signature Belt and Road Initiative: that the global investment and lending program amounts to a debt trap for vulnerable countries around the world, fueling corruption and autocratic behavior in struggling democracies.

Former President Mahinda Rajapaksa of Sri Lanka, center, holding court at a wedding in Colombo in June.ADAM DEAN FOR THE NEW YORK TIMES

Months of interviews with Sri Lankan, Indian, Chinese and Western officials and analysis of documents and agreements stemming from the port project present a stark illustration of how China and the companies under its control ensured their interests in a small country hungry for financing.

 During the 2015 Sri Lankan elections, large payments from the Chinese port construction fund flowed directly to campaign aides and activities for Mr. Rajapaksa, who had agreed to Chinese terms at every turn and was seen as an important ally in China’s efforts to tilt influence away from India in South Asia. The payments were confirmed by documents and cash checks detailed in a government investigation seen by The New York Times.

• Though Chinese officials and analysts have insisted that China’s interest in the Hambantota port is purely commercial, Sri Lankan officials said that from the start, the intelligence and strategic possibilities of the port’s location were part of the negotiations.


• Initially moderate terms for lending on the port project became more onerous as Sri Lankan officials asked to renegotiate the timeline and add more financing. And as Sri Lankan officials became desperate to get the debt off their books in recent years, the Chinese demands centered on handing over equity in the port rather than allowing any easing of terms.

• Though the deal erased roughly $1 billion in debt for the port project, Sri Lanka is now in more debt to China than ever, as other loans have continued and rates remain much higher than from other international lenders.

Mr. Rajapaksa and his aides did not respond to multiple requests for comment, made over several months, for this article. Officials for China Harbor also would not comment.

Estimates by the Sri Lankan Finance Ministry paint a bleak picture: This year, the government is expected to generate $14.8 billion in revenue, but its scheduled debt repayments, to an array of lenders around the world, come to $12.3 billion.


“John Adams said infamously that a way to subjugate a country is through either the sword or debt. China has chosen the latter,” said Brahma Chellaney, an analyst who often advises the Indian government and is affiliated with the Center for Policy Research, a think tank in New Delhi.

Indian officials, in particular, fear that Sri Lanka is struggling so much that the Chinese government may be able to dangle debt relief in exchange for its military’s use of assets like the Hambantota port — though the final lease agreement forbids military activity there without Sri Lanka’s invitation.

“The only way to justify the investment in Hambantota is from a national security standpoint — that they will bring the People’s Liberation Army in,” said Shivshankar Menon, who served as India’s foreign secretary and then its national security adviser as the Hambantota port was being built.

The Hambantota Port gets only a small percentage of Sri Lanka’s port business, overshadowed by the main complex in the capital.ADAM DEAN FOR THE NEW YORK TIMESADVERTISEMENT

Sri Lankan workers processing cars being unloaded from a ship at Hambantota Port.ADAM DEAN FOR THE NEW YORK TIMES

An Engaged Ally

The relationship between China and Sri Lanka had long been amenable, with Sri Lanka an early recognizer of Mao’s Communist government after the Chinese Revolution. But it was during a more recent conflict — Sri Lanka’s brutal 26-year civil war with ethnic Tamil separatists — that China became indispensable.

Mr. Rajapaksa, who was elected in 2005, presided over the last years of the war, when Sri Lanka became increasingly isolated by accusations of human rights abuses. Under him, Sri Lanka relied heavily on China for economic support, military equipment and political cover at the United Nations to block potential sanctions.

The war ended in 2009, and as the country emerged from the chaos, Mr. Rajapaksa and his family consolidated their hold. At the height of Mr. Rajapaksa’s tenure, the president and his three brothers controlled many government ministries and around 80 percent of total government spending. Governments like China negotiated directly with them.


So when the president began calling for a vast new port development project at Hambantota, his sleepy home district, the few roadblocks in its way proved ineffective.

From the start, officials questioned the wisdom of a second major port, in a country a quarter the size of Britain and with a population of 22 million, when the main port in the capital was thriving and had room to expand. Feasibility studies commissioned by the government had starkly concluded that a port at Hambantota was not economically viable.

“They approached us for the port at the beginning, and Indian companies said no,” said Mr. Menon, the former Indian foreign secretary. “It was an economic dud then, and it’s an economic dud now.”

But Mr. Rajapaksa greenlighted the project, then boasted in a news release that he had defied all caution — and that China was on board.


The Sri Lanka Ports Authority began devising what officials believed was a careful, economically sound plan in 2007, according to an official involved in the project. It called for a limited opening for business in 2010, and for revenue to be coming in before any major expansion.

The first major loan it took on the project came from the Chinese government’s Export-Import Bank, or Exim, for $307 million. But to obtain the loan, Sri Lanka was required to accept Beijing’s preferred company, China Harbor, as the port’s builder, according to a United States Embassy cable from the time, leaked to WikiLeaks.

That is a typical demand of China for its projects around the world, rather than allowing an open bidding process. Across the region, Beijing’s government is lending out billions of dollars, being repaid at a premium to hire Chinese companies and thousands of Chinese workers, according to officials across the region.

There were other strings attached to the loan, as well, in a sign that China saw strategic value in the Hambantota port from the beginning.


Nihal Rodrigo, a former Sri Lankan foreign secretary and ambassador to China, said that discussions with Chinese officials at the time made it clear that intelligence sharing was an integral, if not public, part of the deal. In an interview with The Times, Mr. Rodrigo characterized the Chinese line as, “We expect you to let us know who is coming and stopping here.”

In later years, Chinese officials and the China Harbor company went to great lengths to keep relations strong with Mr. Rajapaksa, who for years had faithfully acquiesced to such terms.

In the final months of Sri Lanka’s 2015 election, China’s ambassador broke with diplomatic norms and lobbied voters, even caddies at Colombo’s premier golf course, to support Mr. Rajapaksa over the opposition, which was threatening to tear up economic agreements with the Chinese government.

As the January election inched closer, large payments started to flow toward the president’s circle.


At least $7.6 million was dispensed from China Harbor’s account at Standard Chartered Bank to affiliates of Mr. Rajapaksa’s campaign, according to a document, seen by The Times, from an active internal government investigation. The document details China Harbor’s bank account number — ownership of which was verified — and intelligence gleaned from questioning of the people to whom the checks were made out.

With 10 days to go before polls opened, around $3.7 million was distributed in checks: $678,000 to print campaign T-shirts and other promotional material and $297,000 to buy supporters gifts, including women’s saris. Another $38,000 was paid to a popular Buddhist monk who was supporting Mr. Rajapaksa’s electoral bid, while two checks totaling $1.7 million were delivered by volunteers to Temple Trees, his official residence.

Most of the payments were from a subaccount controlled by China Harbor, named “HPDP Phase 2,” shorthand for Hambantota Port Development Project.

An expressway extension to Hambantota Port. Chinese analysts have not given up the view that the port could become profitable.ADAM DEAN FOR THE NEW YORK TIMESADVERTISEMENT

China’s Network

After nearly five years of helter-skelter expansion for China’s Belt and Road Initiativeacross the globe, Chinese officials are quietly trying to take stock of how many deals have been done and what the country’s financial exposure might be. There is no comprehensive picture of that yet, said one Chinese economic policymaker, who like many other officials would speak about Chinese policy only on the condition of anonymity.

Some Chinese officials have become concerned that the nearly institutional graft surrounding such projects represents a liability for China, and raises the bar needed for profitability. President Xi acknowledged the worry in a speech last year, saying, “We will also strengthen international cooperation on anticorruption in order to build the Belt and Road Initiative with integrity.”

In Bangladesh, for example, officials said in January that China Harbor would be banned from future contracts over accusations that the company attempted to bribe an official at the ministry of roads, stuffing $100,000 into a box of tea, government officials said in interviews. And China Harbor’s parent company, China Communications Construction Company, was banned for eight years in 2009 from bidding on World Bank projects because of corrupt practices in the Philippines.

Since the port seizure in Sri Lanka, Chinese officials have started suggesting that Belt and Road is not an open-ended government commitment to finance development across three continents.


“If we cannot manage the risk well, the Belt and Road projects cannot go far or well,” said Jin Qi, the chairwoman of the Silk Road Fund, a large state-owned investment fund, during the China Development Forum in late March.

In Sri Lanka’s case, port officials and Chinese analysts have also not given up the view that the Hambantota port could become profitable, or at least strengthen China’s trade capacity in the region.

Ray Ren, China Merchant Port’s representative in Sri Lanka and the head of the Hambantota port’s operations, insisted that “the location of Sri Lanka is ideal for international trade.” And he dismissed the negative feasibility studies, saying they were done many years ago when Hambantota was “a small fishing hamlet.”

Hu Shisheng, the director of South Asia studies at the China Institutes of Contemporary International Relations, said that China clearly recognized the strategic value of the Hambantota port. But he added: “Once China wants to exert its geostrategic value, the strategic value of the port will be gone. Big countries cannot fight in Sri Lanka — it would be wiped out.”


Although the Hambantota port first opened in a limited way in 2010, before the Belt and Road Initiative was announced, the Chinese government quickly folded the project into the global program.

Shortly after the handover ceremony in Hambantota, China’s state news agency released a boastful video on Twitter, proclaiming the deal “another milestone along the path of #BeltandRoad.”

The Mahinda Rajapaksa International Cricket Stadium in Hambantota. The stadium has more seats than the population of the area’s main town.ADAM DEAN FOR THE NEW YORK TIMESPilgrim monks visiting the largely empty Mattala Rajapaksa International Airport, just 150 miles southeast from the country’s main airport.ADAM DEAN FOR THE NEW YORK TIMESADVERTISEMENT

A Port to Nowhere

The seaport is not the only grand project built with Chinese loans in Hambantota, a sparsely populated area on Sri Lanka’s southeastern coast that is still largely overrun by jungle.

A cricket stadium with more seats than the population of Hambantota’s district capital marks the skyline, as does a large international airport — which in June lost the only daily commercial flight it had left when FlyDubai airline ended the route. A highway that cuts through the district is traversed by elephants and used by farmers to rake out and dry the rice plucked fresh from their paddies.

Mr. Rajapaksa’s advisers had laid out a methodical approach to how the port might expand after opening, ensuring that some revenue would be coming in before taking on much more debt.

But in 2009, the president had grown impatient. His 65th birthday was approaching the following year, and to mark the occasion he wanted a grand opening at the Hambantota port — including the beginning of an ambitious expansion 10 years ahead of the Port Authority’s original timeline.


Chinese laborers began working day and night to get the port ready, officials said. But when workers dredged the land and then flooded it to create the basin of the port, they had not taken into account a large boulder that partly blocked the entrance, preventing the entry of large ships, like oil tankers, that the port’s business model relied on.

Ports Authority officials, unwilling to cross the president, quickly moved ahead anyway. The Hambantota port opened in an elaborate celebration on Nov. 18, 2010, Mr. Rajapaksa’s birthday. Then it sat waiting for business while the rock blocked it.

China Harbor blasted the boulder a year later, at a cost of $40 million, an exorbitant price that raised concerns among diplomats and government officials. Some openly speculated about whether the company was simply overcharging or the price tag included kickbacks to Mr. Rajapaksa.

By 2012, the port was struggling to attract ships — which preferred to berth nearby at the Colombo port — and construction costs were rising as the port began expanding ahead of schedule. The government decreed later that year that ships carrying car imports bound for Colombo port would instead offload their cargo at Hambantota to kick-start business there. Still, only 34 ships berthed at Hambantota in 2012, compared with 3,667 ships at the Colombo port, according to a Finance Ministry annual report.


A fish stall in a zone that is due to be turned into a large industrial area surrounding the Hambantota Port.ADAM DEAN FOR THE NEW YORK TIMESHarvesting rice in a field where the industrial area is due to be built.ADAM DEAN FOR THE NEW YORK TIMES

“When I came to the government, I called the minister of national planning and asked for the justification of Hambantota Port,” Harsha de Silva, the state minister for national policies and economic affairs, said in an interview. “She said, ‘We were asked to do it, so we did it.’ ”

Determined to keep expanding the port, Mr. Rajapaksa went back to the Chinese government in 2012, asking for $757 million.


The Chinese agreed again. But this time, the terms were much steeper.

The first loan, at $307 million, had originally come at a variable rate that usually settled above 1 or 2 percent after the global financial crash in 2008. (For comparison, rates on similar Japanese loans for infrastructure projects run below half a percent.)

But to secure fresh funding, that initial loan was renegotiated to a much higher 6.3 percent fixed rate. Mr. Rajapaksa acquiesced.

The rising debt and project costs, even as the port was struggling, handed Sri Lanka’s political opposition a powerful issue, and it campaigned heavily on suspicions about China. Mr. Rajapaksa lost the election.

The incoming government, led by President Maithripala Sirisena, came to office with a mandate to scrutinize Sri Lanka’s financial deals. It also faced a daunting amount of debt: Under Mr. Rajapaksa, the country’s debt had increased threefold, to $44.8 billion when he left office. And for 2015 alone, a $4.68 billion payment was due at year’s end.


Chinese construction workers, bottom left, walking home from work in front of Colombo’s changing skyline.ADAM DEAN FOR THE NEW YORK TIMES

Signing It Away

The new government was eager to reorient Sri Lanka toward India, Japan and the West. But officials soon realized that no other country could fill the financial or economic space that China held in Sri Lanka.

“We inherited a purposefully run-down economy — the revenues were insufficient to pay the interest charges, let alone capital repayment,” said Ravi Karunanayake, who was finance minister during the new government’s first year in office.

“We did keep taking loans,” he added. “A new government can’t just stop loans. It’s a relay; you need to take them until economic discipline is introduced.”


The Central Bank estimated that Sri Lanka owed China about $3 billion last year. But Nishan de Mel, an economist at Verité Research, said some of the debts were off government books and instead registered as part of individual projects. He estimated that debt owed to China could be as much as $5 billion and was growing every year. In May, Sri Lanka took a new $1 billion loan from China Development Bank to help make its coming debt payment.

Government officials began meeting in 2016 with their Chinese counterparts to strike a deal, hoping to get the port off Sri Lanka’s balance sheet and avoid outright default. But the Chinese demanded that a Chinese company take a dominant equity share in the port in return, Sri Lankan officials say — writing down the debt was not an option China would accept.

When Sri Lanka was given a choice, it was over which state-owned company would take control: either China Harbor or China Merchants Port, according to the final agreement, a copy of which was obtained by The Times, although it was never released publicly in full.

China Harbor employees heading to work in Colombo.ADAM DEAN FOR THE NEW YORK TIMESADVERTISEMENT

Chinese workers in their dormitory in Colombo.ADAM DEAN FOR THE NEW YORK TIMES

China Merchants got the contract, and it immediately pressed for more: Company officials demanded 15,000 acres of land around the port to build an industrial zone, according to two officials with knowledge of the negotiations. The Chinese company argued that the port itself was not worth the $1.1 billion it would pay for its equity — money that would close out Sri Lanka’s debt on the port.

Some government officials bitterly opposed the terms, but there was no leeway, according to officials involved in the negotiations. The new agreement was signed in July 2017, and took effect in December.

The deal left some appearance of Sri Lankan ownership: Among other things, it created a joint company to manage the port’s operations and collect revenue, with 85 percent owned by China Merchants Port and the remaining 15 percent controlled by Sri Lanka’s government.


But lawyers specializing in port acquisitions said Sri Lanka’s small stake meant little, given the leverage that China Merchants Port retained over board personnel and operating decisions. And the government holds no sovereignty over the port’s land.

When the agreement was initially negotiated, it left open whether the port and surrounding land could be used by the Chinese military, which Indian officials asked the Sri Lankan government to explicitly forbid. The final agreement bars foreign countries from using the port for military purposes unless granted permission by the government in Colombo.

That clause is there because Chinese Navy submarines had already come calling to Sri Lanka.

The Port of Colombo, Sri Lanka.ADAM DEAN FOR THE NEW YORK TIMES

Strategic Concerns

China had a stake in Sri Lanka’s main port as well: China Harbor was building a new terminal there, known at the time as Colombo Port City. Along with that deal came roughly 50 acres of land, solely held by the Chinese company, that Sri Lanka had no sovereignty on.


That was dramatically demonstrated toward the end of Mr. Rajapaksa’s term, in 2014. Chinese submarines docked at the harbor the same day that Prime Minister Shinzo Abe of Japan was visiting Colombo, in what was seen across the region as a menacing signal from Beijing.

When the new Sri Lankan government came to office, it sought assurances that the port would never again welcome Chinese submarines — of particular concern because they are difficult to detect and often used for intelligence gathering. But Sri Lankan officials had little real control.

Now, the handover of Hambantota to the Chinese has kept alive concerns about possible military use — particularly as China has continued to militarize island holdingsaround the South China Sea despite earlier pledges not to.

Sri Lankan officials are quick to point out that the agreement explicitly rules out China’s military use of the site. But others also note that Sri Lanka’s government, still heavily indebted to China, could be pressured to allow it.


And, as Mr. de Silva, the state minister for national policies and economic affairs, put it, “Governments can change.”

Now, he and others are watching carefully as Mr. Rajapaksa, China’s preferred partner in Sri Lanka, has been trying to stage a political comeback. The former president’s new opposition party swept municipal elections in February. Presidential elections are coming up next year, and general elections in 2020.

Although Mr. Rajapaksa is barred from running again because of term limits, his brother, Gotabaya Rajapaksa, the former defense secretary, appears to be readying to take the mantle.

“It will be Mahinda Rajapaksa’s call. If he says it’s one of the brothers, that person will have a very strong claim,” said Ajith Nivard Cabraal, the central bank governor under Mr. Rajapaksa’s government, who still advises the family. “Even if he’s no longer the president, as the Constitution is structured, Mahinda will be the main power base.”

The Colombo Port City development.ADAM DEAN FOR THE NEW YORK TIMES

Reporting was contributed by Keith Bradsher and Sui-Lee Wee from Beijing, and Mujib Mashal, Dharisha Bastians and Arthur Wamanan from Sri Lanka.

June 26, 2018



Pentagon chief in Beijing with open mind
Mattis to become first Pentagon chief to visit China since 2014 / Bloomberg (paywall)
“Jim Mattis was set to arrive Tuesday in Beijing on the first China visit by a U.S. defense secretary in four years, as the Trump administration moves to push back against the country’s growing economic and military influence.”
Amid tensions, Mattis arrives in China to ‘have a conversation’ / NYT (paywall)
“I want to understand how they see the strategic relationship developing,” Mr. Mattis told reporters that day before the first stop of his trip, in Alaska. “And so I want to go in, right now, without basically poisoning the well at this point, as if my mind’s already made up.”
Mattis arrives in China; NKorea to be key topic of meetings / AP
“The North Korean negotiations are expected to be a primary discussion during Mattis' meetings in China. Beijing is considered a key influencer on Pyongyang and Chinese President Xi Jinping said last week that China would ‘as always play a constructive role’ in the process.”How China got a Sri Lankan port
How China got Sri Lanka to cough up a port / NYT (paywall)
“Under heavy pressure and after months of negotiations with the Chinese, the government handed over the port and 15,000 acres of land around it for 99 years in December.”
“Months of interviews with Sri Lankan, Indian, Chinese and Western officials and analysis of documents and agreements stemming from the port project present a stark illustration of how China and the companies under its control ensured their interests in a small country hungry for financing.”
“Nihal Rodrigo, a former Sri Lankan foreign secretary and ambassador to China, said that discussions with Chinese officials at the time made it clear that intelligence sharing was an integral, if not public, part of the deal. In an interview with The Times, Mr. Rodrigo characterized the Chinese line as, ‘We expect you to let us know who is coming and stopping here.’South China Sea 
US aircraft carrier patrols disputed sea amid China buildup / AP
“The 97,000-ton USS Ronald Reagan, carrying more than 70 aircraft, anchored in Manila Bay on Tuesday after plying the contended waters for meetings between navy officials of the two countries and liberty for its thousands of sailors after weeks at sea.”
Australia invests in unmanned spy drones to fly over South China Sea / CNN
Australia recently spent $6 billion on remotely piloted aircrafts that will “complement the current surveillance aircraft Australia already uses to survey its maritime borders, conduct search and rescue, and carry out Freedom of Navigation exercises in the contested South China Sea.”Taiwan
Interview: Taiwan Pres. Tsai Ing-wen urges world to stand up to China and reaffirm democratic values / AFP via HKFP
“Taiwan’s President Tsai Ing-wen called on the international community to ‘constrain’ China by standing up for freedoms, casting her island’s giant neighbour as a global threat to democracy.”
Chinese warships drill in waters near Taiwan / Reuters
“A formation of Chinese warships has been holding daily combat drills for more than a week in waters near Taiwan, China’s state media said on Tuesday, amid heightened tension between Beijing and the self-ruled island.”
Beijing’s demand to refer to ‘China Taiwan’ still being defied by US airlines/ SCMP
“With a month to go for the world’s major airlines to meet Beijing’s demand that they recognise Taiwan as part of China, US carriers risk flying fewer mainland passengers by staying defiant.”Australia-China relations: it’s still very complicated
Australia to ban covert foreign interference in politics / AP
“Australia's House of Representatives has overwhelmingly approved national security legislation that would ban covert foreign interference in domestic politics and make industrial espionage for a foreign power a crime.”
China's Huawei top sponsor of Australian politicians' overseas trips / Channel NewsAsia
“The report comes as several politicians have called for Huawei to be banned from participating in a roll-out of Australia's 5G next-generation communications network, amid fears the company is effectively controlled by the Chinese government.”Chinese asylum-seekers in America
New life but families’ trauma in China’s human rights sweep remains / SCMP
Documentary 709 The Other Shoredelves into the traumatic experiences of the families of prominent human rights lawyers seeking refuge in the United States both inside and outside of China.Ivanka Trump investigators out on bail
Men who investigated Ivanka Trump China suppliers off bail / AP
“Three China Labor Watch activists arrested last year while investigating abuses at Chinese suppliers for Ivanka Trump's fashion brand were released from bail Tuesday, the New York non-profit group said, but questions remain about their ability to live and work freely in China.”Tibet
Tsering Shakya on Tibet, development, and diversity / China Digital Times
University of British Columbia historian Tsering Shakya discusses a wide range of Tibet-related topics in an interview with Himal Southasian, including “the region’s place in Beijing’s Belt and Road Initiative; inequalities in development; similarities and differences between the situations in Tibet and Xinjiang” and more.The Xinjiang gulags
Uighurs live with fear, trauma as families remain stranded in China's growing 're-education camps' / ABC
Life in Australia may seem idyllic compared to the discrimination and oppression many Uighurs face at home, but the community in Australia reports feeling “hopeless, helpless, and unable to trust anyone.”


Smoking prohibited on Chinese trains
Chinese court removes smoking areas from trains / Sixth Tone
“A Beijing court ruled Monday that a train operator should cancel all designated smoking areas on its trains after a passenger sued the company over secondhand smoke, The Beijing News reported.”
Chinese woman wins case after suing rail operator over smoking on ‘no smoking’ train / SCMP
“Beijing Railway Transport Court ruled on Monday in favour of the plaintiff, Li Ying, who had sued the train operator, Harbin Railway Bureau, for breaking its own smoking ban in her carriage.”Defying spinster stereotypes 
Why Chinese unmarried women are rooting for actress Faye Yu / What’s on Weibo
“The various quotes show how Yu, in a relaxed and matter-of-fact way, addresses questions about her being unmarried, expressing that she does not need a partner to fulfill her needs, and that she did not feel she wants or needs to adapt her life to existing social expectations on the right age to get married.”Serving tea instead of holding up half the sky 
'Hold in your belly . . . legs together': Chinese college teaches female students to be 'perfect' / “The Communist Party wants women educated, yes, but with economic growth slowing and the population shrinking, it is bringing back the idea that men are breadwinners and women are, first and foremost, wives and mothers — so it is teaching young women that this is the norm.”Organ donation
Phillip Hancock: Rare foreign organ donor praised in China / BBC
“Phillip Hancock had been working as an English teacher in China when he unexpectedly fell ill and died last month. The posthumous gift of the Australian's organs has been lauded in China, a nation with few foreign donors, and changed five lives.”Beijing clamps down on auto emissions
Odds of getting a Beijing license plate are now 1 in 2,031 / Sixth Tone
“Beijingers cannot legally buy a car until they obtain a license plate, which are given out according to a lottery system designed to limit the number of vehicles on the road.”Drug trafficking
Chinese city barbecues 4 tonnes of illegal drugs as crime rate soars / SCMP
“The publicity stunt was held in Lincang, Yunnan province, as part of a national campaign to mark International Day Against Drug Abuse and Illicit Trafficking.”Gun crime in Hong Kong
Hong Kong shooting: One killed, two critically injured and another wounded as female bodyguard guns down relatives in inheritance feud / SCMP
“A woman was apprehended by police in a busy Hong Kong shopping mall on Tuesday after four people were injured in a shooting at a nearby park.”Photographing the Yangtze River
Mapping China's frontline: The Yangtze at 100km intervals / The Guardian

Three Common Misconceptions About China

Kuora: Three Common Misconceptions About China

How many are you guilty of?


This week’s column comes from one of Kaiser’s answers originally posted to Quora on December 27, 2017:

What are the most common misconceptions about Chinese history among Westerners?

I’m not sure how “common” these misconceptions are, as I’m pretty sure the knowledge of China’s history among 90 percent of “Westerners” doesn’t even rise to the level where there’d be misconceptions such as the ones I’ll haphazardly list below. But among reasonably educated Europeans and Americans I’ve chatted with — even those with some exposure to Chinese history — I do encounter these ideas with some frequency:

1. That China’s imperial past is a long series of sequential dynasties. 

This idea is completely understandable, because often this is how it’s taught. There were these three pre-imperial dynasties called Xia (shrouded in myth), then Shang, then Zhou; then after Zhou broke apart there was the Spring and Autumn period, then the Warring States, then Qin unified China and the imperial period begins: Han, Sui, Tang, Song, Yuan, Ming, and Qing.

But Qin didn’t give way neatly to Han; there was a long and horrifically bloody war between rival contenders before Liu Bang emerged on top to found a new dynasty. There was a staggeringly long period of disunity from the end of the Han (nominally in AD 220, in fact arguably more than 30 years earlier than that) that lasted all the way until the Sui reunified China in the late 6th century. That’s a period longer than any of the big dynasties unless you count Western and Eastern Han as one — which you shouldn’t, since there was actually a short-lived dynasty, the Xin dynasty, set up by a usurper named Wang Mang who might have made a decent emperor but had absolutely shit luck with natural catastrophes.

Tang nominally lasted until 907, but in 751 it was riven by a huge rebellion that nearly did the dynasty in, and it never quite recovered afterward, and the territory it directly controlled shrank appreciably. There was another (shorter) period of disunity that followed the Tang collapse, with five dynasties rising in quick succession and 10 kingdoms carved out all in the course of just 50-odd years.

Song reunified things in 960, but Song never really ruled all of China, as the Khitan Liao held a good swath of territory south of the Great Wall, and then in the early 12th century Song had to give up the whole north to the invading Jürchen, then dealt with the Mongol threat for many decades after their first brushes with them in the 1220s before they were finally snuffed out.

The Mongol Yuan dynasty didn’t give way neatly to Ming: the Ming founder, Zhu Yuanzhang, was just one of many rebel leaders who rose up to toss out the Mongols. Even the Qing weren’t the ones who actually overthrew the last Ming emperor in 1644. Some weeks before they entered the city, a rebel leader named Li Zicheng had taken Beijing and compelled the last Ming emperor to hang himself.

In mid-19th century, China was effectively divided north and south, with the south ruled by the Taiping, a quasi-Christian millenarian sect that had made its capital at Nanjing and were only defeated after a long, long war that cost an estimated 20 million lives. The transition to a Republic — never quite complete — was vexed by the many warlords who vied for power from 1916 through the ensuing couple of decades.

Does this mean it’s meaningless to speak of China as a continuous civilization? Probably not. But it’s more complicated than your basic layman’s notion of history — whether that layman is Chinese or otherwise.

2. That China always saw itself as a “middle kingdom” and the only center of civilization. 

China is certainly guilty of a kind of civilizational arrogance, but the notion that it has always regarded itself as the center of the universe and that even its very name implied this is just incorrect. “Middle Kingdom” — 中国 (zhōngguó) — is first used to refer to the “central states” of the Eastern Zhou — the royal domains of the Zhou, enfeoffed to close family relations, that were close to the Zhou capital itself, in the heartland of the Yellow River floodplain in what is today North China’s Henan Province. It wasn’t really used to refer to the “country” except occasionally by the Qing dynasty in the 17th and 18th centuries — so it’s hardly evidence of this “middle kingdom” mentality. Nor was it China’s assumption that it was the only civilization. The Roman Empire was known to the Chinese of the Qin and Han dynasties; they called it 大秦 (dàqín)or “Great Qin,” which some have suggested means they believed Rome to be a power greater still than the Qin. The Northern Song recognized another “son of heaven” in the person of the Khitan Liao emperor.

In the 1950s, Western sinologists like the late great John King Fairbank described imperial China’s foreign relations in terms of something they called the Tribute System, in which China supposedly required supplicant nations from around Asia to bring it valuable goods and prostrate themselves before the Son of Heaven. Some rituals like this probably did exist, but modern scholars have debunked the idea that it was ever a “system.” Indeed no Chinese word for “tribute system” ever existed — until they were forced to translate it from English much later.

This whole “middle kingdom mentality” myth is a particularly pernicious one; it’s deeply essentialist, and from it, some have concluded that a strong China will somehow spring back into that form and seek to reimpose this imaginary “tribute system” on the rest of Asia — indeed, on the rest of the world.

3. That China has always been a peaceful nation. 

You only hear this from rank apologists who repeat official propaganda, but this assertion is easily disproved. “China,” after all, has not always occupied its modern political borders, and to believe that it expanded to said borders entirely through peaceful cooptation of indigenous peoples is deluded. We have many clear descriptions of, for instance, the expansion of Han peoples into what is now southern Sichuan and Yunnan provinces in the annals of the Three Kingdoms — fictionalized but still somewhat factually based in the beloved Romance of the Three Kingdoms. Long chapters are devoted to the great strategist Zhuge Liang’s campaigns against the “Southern Barbarian” kings of that region, especially one Meng Huo (who Zhuge captures and releases six times before he finally submits with his seventh capture). More recent expansive warfare is abundantly obvious, with the campaigns of the Qianlong Emperor in mid-18th century, by which he conquered Mongolia, Turkestan (now Xinjiang), and Tibet. Though China arguably never “seized” territory in the war with India in 1962 — Chinese troops withdrew to the pre-war “actual line of control” — this was not exactly a “peaceful” approach to settling a border dispute. And then of course there was Vietnam, against which China fought a “punitive” campaign in 1979 and 1980.

Kuora is a weekly column.


The global Mandarin robocall scam


“Mandarin robocalls are flooding U.S. cities” says the South China Morning Post, in the latest report of a global scam that targets PRC citizens abroad. The basic setup seems to be the same in the U.S., Canada, Australia, and New Zealand: robocalls targeting Chinese speakers claim to be from Chinese consulates and says there is an urgent message or some kind of trouble. People who fall victim to the con end up handing over their bank details.

See also:

Scam calls target Chinese-Vancouverites, demanding personal details and money (Canada)

Been getting voicemails in Mandarin left on your phone? Here’s what to do(Australia)

,Scammers impersonate the Chinese Consulate (U.S.)

Been receiving phone calls from a stranger speaking Mandarin? It's a scam: here's what to do (New Zealand)

—Jeremy Goldkorn

Yan Xuetong and Xi Jinping on China’s place in the world

Yan Xuetong and Xi Jinping on China’s place in the world

If you want to read one thing about China today, this is it: Yan Xuetong on the bipolar state of our world.

It’s a translation by the David Bandurski of an interview with Yan Xuetong 阎学通, director of the Institute for International Relations at Tsinghua University and perhaps China’s most respected thinker on foreign policy. You should read the whole thing, but if you only have a minute, here’s the ADHD version:

The international system of the post world war period remains “hegemonic” and has not yet fundamentally changed.However, Western liberalism (西方自由主义 xīfāng zìyóu zhǔyì) is no longer leading international norms, and we are moving to a state where international norms are no longer respected. Power will be redistributed around the world instead of focused in the West.Protectionism and economic sanctions will be the primary means of competition among major powers, as nuclear weapons will continue to successfully deter conflict.U.S. supremacy is ending, and the unipolar state of the post cold war period will be replaced by a bipolar system (两极格局 liǎngjí géjú), possibly within five years. Yan believes a multipolar world is not possible: China and the U.S. are the only players, and the world is destined to be bipolar (pun intended by me, but not Yan).Western countries are ceasing to influence international politics in a unified manner, and at some point, “the political concept of ‘the West’ will no longer objectively suit the study of international relations.”On Trump: “From the standpoint of international relations, within the next two years, one of the biggest problems we will face is how to deal with Trump’s unpredictability. Because he essentially makes decisions according to his own, there is little continuity between these decisions, and it is very difficult to predict.”Taiwan independence and the concomitant “risk of a full-fledged standoff between China and the United States” is Yan’s biggest worry for the next ten years.

Xi Jinping is doing his best to ensure that China does become one of our world’s bipolar powers within Yan's five year timeline. On Sunday, Xinhua News Agency published notes from Xi’s address at the Central Conference on Work Relating to Foreign Affairs (EnglishChinese).

Xi said the years 2017 to 2022 — the period between the 19th and 20th Party congresses — are "a historical juncture for realizing the two centenary goals of China, and of great significance in the historical progress of the great rejuvenation of the Chinese nation.”The use of “historical juncture” (历史交汇期 lìshǐ jiāohuì qī) rather than a previous Party favorite, “period of strategic opportunity” (战略机遇期 zhànlüè jīyù qī), is seen by noted China watcher Bill Bishop (paywall) as “a big deal” that “shows a recognition that the security environment is no longer benign and signals a belief that while China’s external challenges are more complicated the opportunities for China are even greater than they were just a year ago.” Bishop sees more Chinese assertiveness ahead.

—Jeremy Goldkorn


by David Bandurski | Jun 26, 2018

Over the weekend, Reference News (参考消息), the newspaper published by the official Xinhua News Agency that clips news coverage from around the world, ran an interview with Yan Xuetong (阎学通), director of the Institute for International Relations at Tsinghua University and one of China’s leading foreign policy experts. In the interview, Yan discusses the rise of China and substantial changes — but not yet fundamental, he says — to the global political and economic system.

At the website of Reference News, the interview carried the headline, “Push for Independence in Taiwan Would Be the Biggest Crisis in the Future for China-US Relations.” At the website Aisixiang (爱思想) the headline was instead: “‘Chaos and Disorder’ Are Becoming the Normal State of the World.”

The following is a partial translation of the interview with Yan, for whom the return of bipolarity in world affairs is clearly a fait accompli.

Editor’s Note:

As a well-known scholar of international relations, and director of the Institute for International Relationsat Tsinghua University, Yan Xuetong (阎学通) has long observed the shift of global power and researched China’s foreign policy strategies. In his books Inertia of History: China and the World in the Next Ten Years and The Transfer of Global Power, he explicates his theory of “moral realism” (道义现实主义) and his views on “political determinacy” (政治决定论), that “the success of a rising power comes when its political leadership is stronger than that of dominant countries.”

This year, as the West bursts out with the concept of “sharp power” (锐实力), whipping up a fresh round of “China Threat Theory” (中国威胁论), and is reduced to a “New Cold War” (新冷战) mentality, the familiar old predicament of China’s rise (崛起困境) has emerged once again. How can [China] accurately grasp the development of world affairs and determine a strategy for China’s rise? How can China face the risks and challenges that attend its rise? How can China’s international leadership be constituted? With these questions, our reporters sought out Director Yan Xuetong.

The Nature of the Global Order Has Not Fundamentally Changed

Cankao Xiaoxi: In the world today, it seems that “chaos and disorder” have become the ordinary state of things. How do you see the state of affairs today?

Yan Xuetong: We see different changes in the state of the world along different dimensions. When we compare today to the 20 years following the break up of the Soviet Union (1992-2011), we see that the world is moving now from a unipolar situation in which the United States is supreme, to a bipolar world in which the supreme powers are China and the United States. We are moving away from a state in which international norms are led by Western liberalism (西方自由主义) to a state where international norms are no longer respected; the international system is moving from a West-centered model to one in which power is redistributed; and [at the same time], the nature of the international system (国际体系) remains the hegemonic system of the post world war period, with no fundamental change in its nature.

The making of the new world order will take some time. The process of redistribution of power is the process of power devolution (权力分散) and the reconstitution of influence (势力重组), and so the normal state of things is chaos and disorder. In the midst of this process, as there is a lack of a dominant set of values, the bond of old norms is weakened, and new norms have not yet been built. The use of strategies of competition that do not respect norms or uphold commitments will become the normal state, and the worship of resourcefulness and lack of strategic credibility (战略信誉) will become a path that many countries are inclined to.

As nuclear weapons will prove a deterrent to war by any major power, these countries will tend to use economic sanctions as a means of competition, and protectionism will carry the day. Major powers will not wish to bear the costs of global governance and the preservation of order. Global governance and regional cooperation will stop in their tracks, and it’s possible that regionalization will see a reverse trend, including in the European Union. We could quite possibly be in a situation in which there is no global leader. The situation in the world right now has only undergone a change in degree (程度变化), and not a fundamental change in nature, a change in terms of the order but not a change in terms of systems — and this can’t be compared with the changes brought on by the two world wars. If we compare the situation of the past 50 years to what we face now, we can say that we are in an intermediate phase of change, because the changes now have not yet reached the immensity of what we saw with the end of the Cold War.

A “Bipolar System” Will Take Shape Within Five Years

Cankao Xiaoxi: Back in 2013 you predicted that by 2023 a bipolar system between China and the United States would establish itself. Is this still your view, and why?

Yan Xuetong: After the Cold War, the United States became the absolute leading power in the world, but its leadership position of late is not like that of the 1990s. In 2013, I predicted complete bipolarization by 2023. Looking at things now, we can ascertain even more clearly that multipolarity is impossible, and a bipopular system (两极格局) within five years is extremely possible.

We can judge the international system by comparing the strength (实力) of the major powers and their strategic relationships. Lately, the world’s third-ranked power cannot in terms of national strength be compared on the same level as China or the United States. By 2023, this gap will widen even further. Strategic relationships have also become quite clearly a matter of other major nations choosing between the United States and China. The international system after 2018 will be decided by the relative development speeds of the major powers. I believe that there is no science to determining what the international situation will be like after 10 years. The most I’ll project ahead is 10 years. Within 10 years, there is no way that China will be on par with the United States. The growth of our country’s comprehensive national strength (综合国力) has already slowed down, and there is a risk that this rate of growth in strength could continue to decrease.

Once the bipolar system is established, there will be a real question of whether the concept of “the West” as it is now used in international relations will be applicable. “The West” was originally a geographic concept, later it became a cultural concept, and in the wake of the Cold War it became a political concept. The present [process of] bipolarization has meant that Western countries and developing countries alike are experiencing internal splits, and the remaking of political strength will very possibly not happen any longer along Western and non-Western lines, but along ideological lines. . . . When Western countries no longer influence international politics in a unified manner, the political concept of “the West” will no longer objectively suit the study of international relations.

The Risks of Trump Uncertainty

Cankao Xiaoxi: You have said before that with the rise of China, we will face greater troubles and threats. Trade tensions between China and the United States have impacted the bilateral relationship. In the future, what risks and challenges do we need to prepare for?

Yan Xuetong: From the standpoint of international relations, within the next two years, one of the biggest problems we will face is how to deal with Trump’s unpredictability. Because he essentially makes decisions according to his own, there is little continuity between these decisions, and it is very difficult to predict, and so we must ensure that bilateral tensions do not spread to the ideological sphere. The core of the Cold War was about ideology, and only by preventing ideological tensions can we prevent a Cold War. Over the next five years, ideas of independence in Taiwan could develop further, bringing the risk of a full-fledged standoff between China and the United States, which we must be one guard against. Over the next 10 years, the biggest danger on the outside will probably be the question of Taiwan independence. For this we need to build effective prevention mechanisms to avoid [a crisis

Karachi’s Jewish community


Not many people know that a number of Karachi’s landmark buildings were designed by a Jewish architect Moses Somake (1875-1947). While he was born in Lahore, he lived most of his life in Karachi before migrating to England a few months before the Partition of India.

Reading a paper at Karachi conference here on Saturday, Gul Hasan Kalmatti, traced the history of Karachi’s Jewish community and recalled their contribution in making Karachi a vibrant metropolis.

“It’s funny how [the other speakers] have mentioned Kalhoros and Jatois,” said Kalmatti, referring to tribes who still exist today. “But today I am speaking of the Yahudis [Jews]. The Kalmattis are still here but the Jews are not.”

He revealed that historic buildings like Mules Mansion in Keamari, BVS Parsi High School and the Karachi Goan Association Hall in Saddar, Khaliqdina Hall on Bunder Road, Jaffer Faddoo Dispensary in Kharadar, Edward House on Victoria road and the famous Flagstaff House were all designed by Moses Somake. “They were our stones, our buildings,” he said. They are no longer there. The design and architecture of some famous hotels of yore – North-Western Hotel, Bristol Hotel and Carlton Hotel – was also conceived by this architect of Iraqi origin.

Tracing the history of Karachi’s lost Jewish community, Kalmatti said they belonged to the Bene Israel diaspora who had settled in the early 19th century coastal towns of India, including Karachi. Most of these people had settled in quarters along Lawrence Road, Ramswami Quarters and Ranchore Lane.

You will still  find nine streets from Jubilee market with the names from our Hindu, Jewish and Muslim heritage: Solomon David street, Seth Harchand street after the mayor of 18 years, one named after Yousaf Ali Alibhai who organised cricket.

Kalmatti regretted that the synagogue known as the Magen Shalom Synagogue was razed to the ground in July 1988, paving the way for a shopping plaza – Madiha Square. The synagogue was built by Solomon David Omerdekar in 1893. In 1895, a community hall was added to this synagogue in memory of Solomon’s wife, Shegulbai. His sons established a Hebrew school in the synagogue’s premises in 1918 and constructed a Nathan Abraham Hall. Solomon, who was the chief of the city’s Jewish community and a surveyor of the Karachi Municipality, lies buried along with his wife in Karachi.

According to Kalmatti, a leading member of city’s Jewish community, Abraham Reuben, was elected to the Karachi Municipal Corporation thrice – in 1919, 1936 and 1939. He established a school in 1927 that still exists in Liaquatabad’s Haji Mureed Goth and is named after him.

Giving the estimates about the growth of Jewish population in Karachi, Kalmatti said that according to the 1881 census, there were only 153 Jews in Karachi and the number at the time of Partition of India stood at 2,500. But most of them migrated to Israel after it came into being in 1948. However, by 1968 there were only 250 Jews living in Karachi. After their synagogue was destroyed, the remaining few Jews, fearing for their lives, started identifying themselves as Parsis and Christians.

At the end of his presentation Kalmatti sounded quiet poignant, recalling that Karachi was a tolerant, peaceful city when inhabited by people from diverse religious backgrounds. “We are 99% Muslims now but we’re cutting each other’s throats,” he said. Today when there are no Jews, fewer Hindus and only a few Goans and Parsis and the overwhelming majority subscribe to the same religion, they are after each other’s blood.

Published in The Express Tribune, November 3rd, 2013.


Jun 25, 2018

Jian (Jay) Wang
Erik Nisbet

From the earliest days of statecraft, cultural exchanges informed foreign publics of the world beyond their borders. To this day, they remain of enduring importance as a means of promoting peace and mutual understanding while supporting foreign policy objectives. Most major nations have devoted substantial resources and dedicated considerable effort to developing state-sponsored cultural exchange programs coupled with programs created by non-governmental organizations and interest.

Typically, these programs select and sponsor international visitors for short-term stays in the host country, providing opportunities for them to interact with individuals and organizations in the host community. Even though “mutual understanding” is often stated as a program goal, the overwhelming emphasis is on shaping international participants’ perception and attitude toward the host nation. In turn, program impact, and its conception, reflects this orientation. Program impact is generally defined and measured primarily in terms of visitor experience, program satisfaction and a “multiplier effect” on their family members, friends, colleagues and others after their return to their home countries.

Unfortunately, what has been conspicuously missing from traditional evaluations of cultural exchange programs is a deeper conceptualization of “exchange.” In other words, fully understanding the two-way flow of information and experience, not to program participants, but also in turn to local communities and organizations that host them. This local impact of hosting international visitors is an indispensable aspect of the larger goal of creating mutual understanding through cultural diplomacy.

Improving and innovating cultural exchanges requires understanding the experiences and impact for international visitors as well as host communities.

Delivering a distinctive experience to international visitors is essential to program success. Contemporary exchanges are experience-based rather than information-driven. As we live in an age of information abundance and accelerating flow of ideas and people, information about other countries is now a commodity and easily accessible, while experience—the time spent with people and organizations—becomes more valued. In-person interactions represent a more fundamental form of human experience based on authenticity and mutuality, especially in an increasingly hyper-techno world. As the American playwright David Henry Hwang has noted, cultural exchanges are critical to “forging human connections and exchanging ‘soft power’.”

Moreover, we argue that the consequences of hosting international exchanges are desirable for local communities as they seek to thrive in a global economy and society. As an example, the most export-dependent places in the United States are small rural or suburban counties—according to a Pew Research Center study from 2017. At the same time, the opportunities and resources for organizations, companies and professionals to have global connections or to enjoy foreign travel are limited. Thus, sustaining and growing local economies requires that we provide local communities the resources and opportunities they need to first understand, and then to compete, in a global marketplace.

There is overwhelming evidence of the value of exchange programs to exchange participants. But do local communities also benefit from cultural exchanges?

This in fact is an empirical question. To answer it, we created a conceptual framework for capturing and estimating how exchange programs impact local communities. In this case, we define “local community” as composed of all the various groups, organizations and individuals that interact with international exchange participants. This definition is wide-ranging and includes volunteers, youth (K-12 and higher education students), community leaders, businesses and companies, professional and labor associations, diaspora and immigrant communities, advocacy organizations, arts and cultural centers, economic development and trade bodies, local government agencies, media and journalists, etc.

“Impact” on local communities is defined as creating capital or resources that enable the community to do something better and/or achieve organizational or community goals. Based on our review of the extant literature on community capital and cultural exchange, we identified five categories of “capital” that cultural exchange programs may impact:

Knowledge Capital — Resources that enable one to be better informed about other countries and international affairs. This knowledge impact is manifested in the local community’s learning more about the country and culture of the international visitors as well as gaining a deeper understanding of the country’s own foreign policy.

Cultural Capital — Resources that enable one to develop cultural literacy, empathy, effective cross-cultural communication skills, appreciation of diversity and global-mindedness. The sort of impact effectuated on the local community could include an expanded global outlook and enhanced cultural competencies through interactions with international visitors.

Social Capital — Resources that enable one to connect to larger social networks, international as well as local connectivity. Through hosting and participation, individuals and organizations form social connections—not only with international visitors—that provide opportunities for travel and business collaboration, but also form tighter bonds with other individuals and organizations within the local community that may be leveraged for local needs.

Civic Capital — Resources that enable one to develop civic spirit: Volunteering, contribution to community and community belonging. That is community-building by virtue of fostering civic engagement and volunteerism in supporting these exchange programs.

Economic Capital — Resources that enable one to develop business connections and opportunities and to improve local workforce through professional capability-building. Through exposure to different cultures, local professionals gain experience and insights that either amplify, or substitute for, formal training in cross-cultural business activities. They have the needed capital to not only pursue international opportunities and interact with foreign clientele, they also are better equipped to function locally in a multicultural environment.

We tested the local impact framework in a pilot study of a major U.S. cultural exchange program through a survey of individuals and organizations involved in hosting international exchange participants. Our study shows that the framework and the employed measures are generally reliable and consistent with qualitative findings.

In short, improving and innovating cultural exchanges requires understanding the experiences and impact for international visitors as well as host communities. Ultimately, if we are to maximize the benefits of both sides of the exchange equation and to capitalize on mutuality inherent in dual impacts, we must first fully conceptualize and measure the extent that cultural exchanges improve and enhance the quality of life in their host communities