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#China: From the physical Silk Road to a digital Silk highway

EU Reporter Correspondent

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digital-silk-road_650x400_71463490740The G20 in the conclusions of its 4-5 September Hangzhou Summit advocated among others inclusive economic growth and investments as its ultimate goals to be pursued globally. To achieve these goals, the G20 listed in particular connectivity enhancement, digital cooperation and innovation. China gave its One Belt, One Road Initiative as a concrete example on how it is pursuing these G20 goals.  

In the late antiquity and the middle ages, Xi’an, a town located in the northwest of current China, was the starting point of the ancient Silk Road. Today Xi’an is a second-tier city. But the New Silk Road initiative has brought Xi’an back in the spotlights and promises renewed economic growth for the town, which is dreaming of a new golden age. In the early middle ages, Xi’an’s prosperity was beyond imagination.

It was one of the most dynamic, open and prosperous cities in the world and counted more inhabitants than Europe’s largest town, Constantinople. Speaking about Xi’an today, people tend to refer to it as a cultural and historic city but it is becoming also a modern city embracing financial centers and business incubators.

In the wake of the G20 Summit, the China Chamber of International Commerce (CCOIC) and the newly set up Silk Road Chamber of International Commerce (SRCIC) organized the Silk Road Business Summit and SRCIC Cooperation and Development Conference in Xi’an.   Entitled ‘Joint Efforts in Building a Platform for Business Collaboration and the Belt and Road’, the two-day event gathered more than 500 participants, including chairmen of commercial chambers, federations and funds from 51 countries, international organizations such as UN Department of Economic and Social affairs, together with think tank scholars as well as business leaders.

Jean-Pierre Lehmann, emeritus professor of international political economy at IMD Business School in Switzerland and visiting professor at Hong Kong University, summarized the New Silk Road as a “ray of sunlight on a gloomy horizon”, with the potential to inject a new sense of optimism and excitement at a time when the world economy is entering a "new normal" of low growth and secular stagnation, deep lack of confidence, and trade politicization.

In his eyes, “the New Silk Road and Maritime Route is the most ambitious and exciting business and economic project of the 21st century”. And who would disagree with him, once looking at the size of such project, which engages 65 countries and over half of the world’s population across western, central and eastern Europe, the east coast of Africa, and western, central and eastern Asia, stretches from Xi'an in China to Rotterdam, across the Pacific and Indian oceans, from Indonesia into the Mediterranean to Venice – from where Marco Polo started off his expeditions.

The summit was concluded with the Xi’an Declaration. The participants state in this declaration that construction of the Belt and Road requires not only the participation and joint efforts from government sectors, but that it should address also social aspects and involve NGOs. According to the declaration the governance model of the new Silk Road should consist of , the trinity of government, civil society and business enterprises.   China’s giant blueprint of the New Silk Road initiative has drawn great attention far beyond Xi’an.

Everyone sees the great potential of co-operating with the world’s second largest economy and thus tries to seize any opportunity to participate in possible projects along the Silk Belt and the Maritime Road.

China has made great effort ever since to guarantee the open nature of the initiative and welcomes any new projects and fresh ideas. Thanks to it, the initiative is no longer limited to infrastructure connectivity, but has been expanded to enhancing connectivity in energy, education, medical and other domains.

Most recently, President Xi Jinping called for a "green, healthy, intelligent and peaceful" Silk Road while addressing the Uzbek Parliament on 22 June.

Enormous opportunities have been and will be brought to the countries along the Silk Road. By the end of 2015, China has invested more than$14.8 billion in 49 countries along the route, accounting for 12.6% of China’s total overseas investments. Besides, China has contracted projects of $64.5bn in 60 countries along the route, taking up 44% of Chinese foreign contracting projects. And according to The Economist, there are 900 deals under way along the route, worth $90bn, and China alone will invest a cumulative $4 trillion in countries along the road.

President of ChinaEU Luigi Gambardella believes there is more we can do: “Why don’t we look a bit further and let’s not ignore that there is another invisible Silk Road which will benefit everyone: A Digital Silk Road.”

The Digital Silk Road has started to attract attention, with the official inauguration of the so-called e-SilkRoad, a new one-stop on-line platform that collects information on capital flows, matches businesses, and provides advisory consulting for traders and investors of the member countries.   Gambardella pointed out that this initiative is in the interest of both parties as the digital transformation is underway in both China and the EU.   On the one hand, Europe is completing its Digital Single Market, whose main aim is the harmonization of national regulations by reducing barriers of business operation across the EU’s internal borders, providing EU companies scale and resources to grow, as well as making the EU an even more attractive location for global companies. On the other hand, China is betting on initiatives such as the ‘Internet Plus’ policy and the national Big Data Strategy to boost its digital growth as a springboard to the country’s economic development.   “Why not combining both in the framework of a Cyber Silk Road Treaty?” proposed Gambardella, “Chinese businesses have reacted to the digitalization of the industrial production processes swiftly and are fast in taking steps to adapt. The European manufacturing industry must be ready for this challenge as well. Creating an alliance with China, who is interested to increase its investment levels and cooperation opportunities in Europe, can be a precious opportunity for the European industry to accelerate its digital transformation.”

As concrete projects, Gambardella suggested: The infrastructure foundation of a digital silk road: 5G and Internet of Things: China and EU should conduct joint actions both in the field of research and in technology trials. Concrete joint initiatives are also expected, such as the first 'Full 5G Cities', located along the Silk Road.

New e-services and applications for the Silk Road: Cross-border e-commerce along the Silk Road will facilitate SMEs located in Silk Road countries to reach the ever expanding and increasingly demanding Chinese middle class consumers. Implementing Alibaba’s e-WTP initiative along the Silk Road can be a good start.

A Silk Road Digital Fund: The fund would support and invest in SMEs and Startups along the Silk Road operating in 5G, Hi-tech, ICT who are passionate about expanding business in other markets and those who are interested in transform their traditional businesses into digital ones.

Approximation of administrative requirements and rules: negotiations should be opened to harmonize Chinese and EU rules for online purchases of digital contents, promote affordable high quality parcel delivery, harmonize IP regimes, and reduce the taxation burden in the EU and along the Silk Road.

He emphasized: “If the EU Digital Single Market initiative was widened from the EU to China, this would create a regulatory framework that can be invoked by nearly two billion end‐users to protect their interests.”

Gambardella added that such negotiations should be based on thorough academic study of respective Internet regulations in China and EU, and CEOs should be involved through a stakeholders’ forum to provide their inputs on bottlenecks and problems dissuading direct investment and trade.

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China-EU relations face challenges, Xi tells Germany's Merkel

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President Xi Jinping told German Chancellor Angela Merkel on Wednesday (7 April) that he saw “various challenges” in relations between China and the European Union and hoped the EU could “independently” make correct judgements, a Chinese government statement said, writes Michael Nienaber in Berlin.

The statement quoted Xi as saying during a phone call that the EU and China should respect each other and “eliminate interference”, adding that China is willing to work with the global community to promote “fair and reasonable distribution” of COVID-19 vaccines and opposes vaccine nationalism.

Last month, the EU imposed its first significant sanctions against Chinese officials since 1989 over alleged human rights abuses in China’s Xinjiang region. Beijing, which denies the allegations, hit back by blacklisting some EU lawmakers and entities.

The United States, Britain and Canada also sanctioned Chinese officials over Xinjiang, and the row threatens to derail an EU-China investment pact agreed in late 2020 after years of negotiations.

German government spokeswoman Ulrike Demmer said Merkel and Xi had discussed international efforts to produce and distribute COVID-19 vaccines, deepen economic cooperation and steps to protect the climate and biodiversity.

She said the leaders agreed to deepen bilateral ties in Sino-German government consultations planned for late April.

“The Chancellor stressed the importance of dialogue on the full range of ties, including issues on which there are different opinions,” Demmer said, without giving details of the areas where Germany and China differ.

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The Belt and Road in Italy: Two years later

Belt & Road News Network

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On 23 March 2019, Italy officially became part of the Belt and Road Initiative (BRI). Two years since the first G-7 country became part of the controversial Chinese project, it is time to make an initial assessment of Italy’s highly contested membership in the BRI, writes Francesca Ghiretti.

Three important elements, two external and one internal, have been fundamental in shaping the development of the BRI in Italy. The two exogenous elements are the increasing tensions between the China and the United States, and the outbreak of the COVID-19 pandemic. The former has translated into more U.S. engagement with Europe, including Italy, to secure alignment in policies toward China. A sample result of this effort was the cancellation of a potential collaboration between the Italian Space Agency (ISA) and China National Space Administration (CNSA) to build habitational modules for the Chinese space station Tiangong 3. Another result, which falls in line with steps taken in other EU countries, regards changes that curtail the possibility of Huawei participating in development of the Italian 5G network.

Admittedly, neither example cited above directly relates to the Memorandum of Understanding signed during Chinese President Xi Jinping’s state visit to Italy in March 2019. However, both are examples of a change of Italy’s position toward collaboration with Chinese entities, whether public or private, following pressure from the United States. The collaboration regarding the Chinese space station, interestingly, was abandoned soon after March 2019.

The second external element is the outbreak of COVID-19. Last year was meant to be very important for the relationship between Italy and China. In 2020, Italy and China celebrated the 50th anniversary of their diplomatic relationship and were meant to celebrate the Year of Tourism Italy-China, now postponed to 2022. A line-up of events and celebrations had been organized for both, which had to be cancelled amid the pandemic. Furthermore, as the first year after the signing of the MoU, 2020 should have seen the initial materialization of the agreements signed on the occasion of Xi’s state visit. It is difficult to say whether in the absence of the pandemic, most of the BRI-related agreements would have materialized, but it can be confidently stated that without the pandemic we would have witnessed further developments. In fact, even with the pandemic, a series of deals materialized, and a limited number of new ones were reached, although mostly among private actors, at least on the Italian side.

The internal element shaping the BRI’s development in Italy is the numerous changes to the Italian government in the past two years. When the MoU for the BRI was signed, Italy was governed by a populist coalition formed by the Five-Star Movement (5SM) and the far-right League. The latter would rediscover its transatlantic call shortly before Xi’s state visit. Within this coalition, a mixture of rejection of Italy’s traditional alliances, Euro-skepticism, naïveté, and interests that pointed in favor of China led to the decision to sign the MoU. In September 2019, however, that government was replaced by a new coalition, which saw the 5SM being joined by the mainstream center-left Democratic Party (PD). The prime minister, Giuseppe Conte, remained the same.

The new coalition did not necessarily have a less favorable view of China. Historically, Italy’s left has cultivated very positive relations with China. However, it adopted a less sensationalistic approach and placed Italy back into its traditional alliance systems. Notably, after September 2019, Italy adopted a very European approach in its dealings with China. Italy quietly maintained a rather positive relationship with China, while joining with the other EU countries in occasional critiques of China, and, as already mentioned, adopting a response to 5G similar to its fellow Europeans: excluding Huawei without imposing a blanket ban.

At the beginning of 2021, Italy underwent another change of government. It is now led by Mario Draghi and is even more embedded in Italy’s traditional alliances than the previous government. Given that this government has not been in power long, the assessments that will be made here mostly relate to the government of Conte II, when the 5SM governed with PD.

Keeping in mind what has so far been said, the examples that follow will show that the great majority of MoUs signed between Italy and China were either an expression of intentions that were rarely materialized or the consolidation of an already established relationship.

A notable lack of materialization can be found in the MoUs signed between the port of Genoa and the port of Trieste with China Communications Construction Company (CCCC). In brief, so far, there has been a lack of developments in the collaborations in this sector and it seems there will not be any in the future. The new BRI terminal of Vado Ligure, near Genoa, is the result of an agreement that long predates the MoU of March 2019. It dates back to the creation of the joint venture APM Terminals Vado Ligure Spa back in 2016. Furthermore, the joint venture does not involve of CCCC, the signatory of the MoU, but of COSCO and Qingdao Port. In other words, so far, the only development in the maritime sector linked to the BRI involves a project that is not part of the MoUs of March 2019.

Another example is the collaboration between the Italian Space Agency and the China National Space Administration for the mission “China Seismo-Electromegnatic Satellite 02” (CSES-02). This project is also predated the signing of the MoUs. It represents phase two of an already ongoing collaboration between ISA and CNSA on CSES-01. The collaboration in the energy sector between Ansaldo Energia and both China United Gas Turbine Technology Co. and Shanghai Electric Power Corp. was also established before 2019. Other examples of already existing relationships that were formalized by signing MoUs in March 2019 are those of Cassa Depositi and Prestiti, Eni and Intesa San Paolo with Chinese counterparts such as Bank of China and the city of Qingdao.

Some successful developments of the MoUs have been the restitution of 796 archaeological artifacts from Italy to China, which occurred in March 2019. There was also collaboration between the Italian Trade Agency (ITA) and the Alibaba Group for the creation in 2020 of an online Made in Italy Pavilion for Business to Business (B2B) commerce. Finally, one notable successful MoU has been that between the Italian news agency Ansa and its Chinese counterpart Xinhua. Despite the relationship again predating March 2019, it was only after March 2019 that news from Xinhua translated in Italian began to appear on the website of Ansa, labelled as Xinhua News.

All in all, Italy has undeniably witnessed the developments of many of the MoUs signed in March 2019. However, as anticipated, most of the MoUs were the result of collaboration that already existed before 2019 and thus, arguably, Italy would have witnessed the same type of developments even without joining the BRI, with some exceptions. Furthermore, if the BRI is analyzed uniquely as a connectivity and infrastructure project, then only a handful of the examples presented above can be considered as being part of the BRI.

However, the mere fact that alongside the signing of the BRI MoU, other MoUs belonging to diverse sectors were also signed means that not only for China, but also for Italy, the BRI is about a lot more than just connectivity. The BRI is a way to frame the relationship between a country and China. In both cases, one can easily say that yes, the BRI has not been as successful as one would have thought, in Italy and elsewhere. But it is not dead. Authors

Francesca Ghiretti is a research fellow at Istituto Affari Internazionali (IAI), where she specializes in the Italy-China relationship, Europe-China relationship and Chinese foreign policy. She is a Leverhulme doctoral fellow at King’s College London, looking at Chinese FDI in the EU.

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China: Bomb attack in Mingjing kills 5

EU Reporter Correspondent

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A man detonated a homemade bomb blowing up four other people besides himself in Mingjing, a small village in Guangzhou on 22 March. Jeimian, a news website, shared a video of the aftermath, a destroyed office, with blood splattered on the walls and at least two people motionless on the ground.

The Guangzhou Panyu Security Bureau confirmed the bomb blast on its Weibo account. Investigations into the explosion are still ongoing. Xinhua, China’s news agency, described the blast as an ‘act of sabotage’, while several others are attributing it to an ongoing dispute due to the forcible land grab by the government that is causing hardship to the residents. Meanwhile, the blast was claimed online by a pro-TIP telegram channel. The message indicated the blast as the result of the oppression of the Uyghurs by China. It urged more attacks on government buildings and officials across China. The message ended with a shout out call to all Uyghurs to make their voices heard.

However, this is not the first time such a blast has happened in Guangzhou. In 2013, a similar blast had happened in a storehouse for shoe-making materials, in Baiyun district, killing 4 people and injuring 36. The coercion  of Uyghurs is causing a lot of resentment and the brunt of this resentment has been borne by Beijing (2013) and Kunming (2014) as well.

Guangzhou has been witness to several such incidents which have highlighted the simmering resistance in the society. Guangzhou is a commercial hub and hosts a lot of industries. The labour in these industries is sourced from Xinjiang. This serves the twin purpose of changing the demography of Xinjiang and providing for cheap captive labour. Studies have pointed out that between 2017-2019 alone, 80,000 Uyghurs have been relocated from Xinjiang to other parts of China. Footage of these Uyghurs being transported to remote parts of China as forced labour (CBN News, Channel 4 News, BBC) confirms this. The policy involves a high degree of coercion and is designed to assimilate minorities by changing their lifestyles.

Guangzhou by virtue of being an industrial hub has afforded more opportunities for the expression of this angst. Guangzhou hosts a large number of people from Africa and Middle East, who demand halal meat. This is provided by ethnic Uyghur restaurants in the city. The increasing crackdown on Islam in China initially forced these restaurants remove the Arabic signage’s, which brought a dip in their business. Added to this was the ousting of foreigners by the Chinese government to rein in the corona virus spread has resulted in hardships to these Uyghur eateries.

The forced relocation and the restrictive employment opportunities have added to the frustration of the Uyghur minority. This oppression has formed the bulk of the propaganda for Uyghur militant groups such as TIP. Last year, the TIP chief Abdul Haq Turkistani, had appealed to the Taliban and Al Qaeda to support the Uyghur cause. It is not surprising that inspired by the success of the Taliban, the Uyghurs are emboldened to stand up for their rights. A pro-TIP telegram channel claimed the blast as retribution for the injustices met out to the Uyghurs. It further warned of similar attacks across China.

The growing restlessness and insecurity amongst the Uyghur is a cause for concern. Irrespective of the justification and success stories that the government peddles to support its education camps, the fact remains that denying the Uyghurs right to religion and freedom of expression is not only a violation of the Chinese constitution, it is also repression of the human rights. The government will have to rework its policy and ideate on a more heterogeneous approach to the issue.

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