Live Feed

🇩🇯 DJIBOUTI: The government reportedly suspended debt repayments to two of its largest creditors, likely China and Kuwait, in response to a dramatic increase in the country's debt servicing costs in 2022, according to a new World Bank report. (SOUTH CHINA MORNING POST)

🇷🇼 RWANDA: China offered to write off a $7.1 million interest-free loan used to build the 6km Masaka-Kabuga road in the capital Kigali. Chinese cancellations of these types of zero-interest loans in Africa are quite common. (THE EAST AFRICAN)

The United States military is forecasting an expansion of China's security presence around the world, particularly in Belt and Road countries, to better protect its people and interests abroad. The Pentagon on Tuesday laid out its concerns about China's military and security ambitions in its annual report to Congress.

The nearly 200-page report builds on the recently-published National Security Strategy that labeled China as the U.S.'s primary geopolitical competitor with an aim to reshape the current international order.

The report also acknowledged China's determination to build overland trade routes via Pakistan and Myanmar to reduce its reliance on transiting energy shipments through the narrow Straits of Malacca in Southeast Asia. This route could be cut off in the event of a conflict with the United States.

Key BRI Highlights From the DoD's Annual Report to Congress on the Chinese Military

• CHINA'S "ROADS" IN THE MIDEAST AND AFRICA: 2021 saw two key shifts in how Beijing implements BRI: The PRC significantly increased engagement with African and Middle Eastern countries, particularly Iraq, and began prioritizing public health, digital infrastructure, and green energy opportunities through its “Health Silk Road (健康丝绸之路)” (HSR), “Digital Silk Road (数字丝绸之路)” (DSR), “Space Information Corridor ( 空间信息走廊) ” (SIC), and “Green Silk Road (绿色丝绸之 路)” (GSR).

• CHINA'S EXPANDING SECURITY INTERESTS: As the PRC’s overseas development and security interests expand under BRI, the CCP has signaled that its overseas security footprint will expand accordingly to protect those interests, which Beijing recognizes may provoke pushback from other states

SUGGESTED READING:

• The United States Department of Defense: Military and Security Develops Involving the People's Republic of China
• Al-Arabiya: Pentagon: China ‘significantly’ increased efforts to engage with Middle East in 2021 by Joseph Haboush

The European Union unveiled a $776 million infrastructure financing package for Africa on Tuesday as part of its Global Gateway initiative that is aimed at challenging China's growing influence in developing regions.

European Commission President Ursula von der Leyen announced the new program during talks with the visiting Chairperson of the African Union Commission, Moussa Faki. The new funding will finance investments in transportation, digitization, and energy connectivity under the auspices of the Global Gateway.

EU stakeholders are undoubtedly also hoping that the money will help to soothe ties with African countries that have become strained over the war in Ukraine, climate change issues, and the continent's close ties with China. Last week, the EU's top diplomat, Josep Borrell, even acknowledged that "little by little" Europe's diplomatic influence in Africa is waning.

SUGGESTED READING:

• Euractiv: EU promises investment in African energy in post-summit meeting by Benjamin Fox
• African Business: EU reveals details of $150bn Global Gateway Plan for Africa by Leo Komminoth

China's once-dominant role in Apple's supply chain appears to be ending as the technology giant relocates more and more of its production to other countries in Asia, particularly Vietnam and India.

Since 2019, according to data from Reuters, the total share of Apple suppliers in China fell from 47% to 36% last year.

But even as the company moves to diversify its supply chain to other countries, experts say it's going to take years, if not decades, to match the output that China currently provides. 

"The China supply chain is not going to evaporate overnight," said Eli Friedman, an associate professor at Cornell University who studies labor in China. "Decoupling is just not realistic for these companies for the time being," he added.

SUGGESTED READING:

• Reuters: Analysis: Apple supply chain data shows receding exposure to China as risks mount by Josh Horwitz
• Investment Monitor: Will China’s decline boost FDI in other Asian countries? by Jon Whiteaker

High-level Chinese visits to Central and South America have become rare in recent years, so it was notable when Beijing's special representative for the region embarked on a five-nation tour to Mexico, Peru, Colombia, Venezuela, and Bolivia.

The Chinese Foreign Ministry did not release specific details about Qiu's discussions, and it's not clear if he was pursuing a specific agenda or if this was more of a relationship-building exercise.

When Chinese football fans turned on their TVs to watch World Cup matches from Qatar, there was a sense of disbelief over how tens of thousands of maskless fans were all packed together in stadiums while millions of Chinese compatriots at home are still confined to their homes as part of the government's strict Zero COVID policy.

Once they started to realize that Qatar, like pretty much everywhere else, had long abandoned social distancing and mask protocols, furious Chinese netizens began to vent their anger on WeChat and other social media platforms, prompting an immediate response from state broadcast CCTV.

Now when Chinese viewers watch the World Cup, they won't see a single crowd shot or any uncovered faces beyond those of the players on the pitch.

SUGGESTED READING AND VIEWING:

• South China Morning Post: Chinese TV cuts maskless World Cup scenes as Covid anger mounts
• BBC: Zero-Covid China asks: Is World Cup on another planet? by Kerry Allen

New research reveals fascinating patterns in Chinese overseas foreign direct investment in the nearly twenty-year period from 2003 to 2021. Not surprisingly, Asia has been the preferred destination, followed by Latin America, most of which has gone to Brazil, Chile, and other resource-rich countries in South America.

The comparatively small share of FDI that's gone to Africa during that period did take some scholars by surprise. "It is noteworthy that for all the ink spilled, Africa is basically a rounding error on the graph," observed University of Notre Dame China-Africa professor Joshua Eisenman.

The data was compiled by Fudan University Assistant Professor Andrea Ghiselli, who consolidated disparate FDI databases from the Chinese Ministry of Commerce, the National Bureau of Statistics and the State Administration of Foreign Exchange.

Chinese President Xi Jinping said Beijing is considering hosting a third Belt & Road forum next year, the first time a major BRI event would be convened in China since the beginning of the pandemic. The key question is whether China will relax its strict COVID travel restrictions or organize the event as a "closed loop" as it did with the Winter Olympics earlier this year. (REUTERS)

The Pentagon's top policy official warned Middle Eastern countries that if they cooperate too closely with China on security issues, it could damage ties with the U.S. Undersecretary of Defense Colin Kahl's comments on Friday at the Manama Dialogue in Bahrain point to mounting unease in Washington over China's surging influence in the region, particularly among Persian Gulf countries. (AXIOS)

China and Indonesia will resume joint military exercises previously suspended due to the COVID-19 pandemic.  Friday's announcement follows high-level talks in Jakarta last week between Presidents Xi Jinping and Joko Widodo on the sidelines of the G20 leaders' summit. Indonesia also conducts similar joint annual exercises with the U.S. Navy. (JAKARTA POST)

QatarEnergy, the state-owned oil and gas company, signed a 27-year deal to provide China’s Sinopec with 4 million tons of liquefied natural gas per year. It's the longest deal of its kind yet, showing buyers’ desire to lock in supplies amid an intensified global competition for natural gas resources. (REUTERS)

Cuba’s President Miguel Diaz-Canel will visit China this week. Cuba is seeking debt relief as it struggles with hurricane damage and extensive blackouts. Diaz-Canel is also visiting Russia, Algeria, and Turkey. (SOUTH CHINA MORNING POST)

The South African rand weakened due to market concern that a rise in COVID cases in China will spark more stringent lockdown measures. The slide reflects how intermeshed SA’s economy is with China’s. The announcement of increased electricity blackouts in South Africa also dented the currency. (NASDAQ)

U.S. Vice President Kamala Harris reaffirmed Washington's commitment to defend the Philippines in the event of a conflict with China over disputed territories in the South China Sea. Harris made the remarks during a visit to Palawan island. It follows a series of recent confrontations between Chinese and Filipino forces in the nearby Spratly archipelago. The Philippines is one of the U.S.' oldest treaty partners in Asia. (FINANCIAL TIMES)

U.S. Defense Secretary Lloyd Austin complained to his Chinese counterpart General Wei Fenghe about what he said was the "increasingly dangerous" behavior of Chinese military aircraft operating in the Western Pacific. The two defense chiefs met on Tuesday for 90 minutes on the sidelines of the ASEAN Defense Ministers meeting currently underway in Siem Reap, Cambodia.(REUTERS)

Police leaders from six Pacific Island Countries took part in a first-ever ministerial-level dialogue with senior law enforcement officials from China. Wang Xiaohong, China's Minister of Public Security, hosted the virtual event on Tuesday with counterparts from the Solomon Islands, Fiji, Vanuatu, Kiribati, Tonga, and Papua New Guinea.  (XINHUA)

The long-delayed 609-kilometer China-Thailand high-speed standard gauge railway is once again a top priority for both sides following Chinese President Xi Jinping's visit to Thailand last week, where the project topped the agenda in bilateral talks.

With a price tag of $12 billion, this is one of China's largest and most expensive BRI projects to date. Thai authorities are hoping to finish the first two stages by 2026 and have the entire project completed no later than 2026 -- 14 years after it was first conceived.

Ugandan President Yoweri Museveni is the latest head of state to visit Vietnam as more countries look to expand their Asia engagement strategies beyond China. President Museveni arrived in Hanoi on Wednesday for a three-day state visit that will include talks with his Vietnamese counterpart Nguyen Xuan Phuc.

Two weeks ago, German Chancellor Olaf Scholz also traveled to Vietnam, and the Philippines' President Ferdinand Marcos, Jr. last week accepted an invitation to come in January.

For a country like Uganda, Vietnam, and the ASEAN region more broadly, represents new options for expanded trade. Whereas for countries like Germany that rely on China for manufacturing, Vietnam provides important supply chain diversity that is now deemed essential amid worsening ties between China and EU countries.

400 participants from 47 different African countries are participating in this week's China-Africa trade and economic relations forum now underway in the eastern Chinese province of Zhejiang.

The event highlights the increasingly prominent role that Chinese provinces are playing in the broader China-Africa relationship. Zhejiang and the central province of Hunan are among the most active, with both serving as key African trading hubs.

While these trade forums rarely produce meaningful outcomes, they do provide invaluable opportunities for the kinds of people-to-people exchanges that are less frequent in other parts of the world. (CHINA DAILY)

The creator of the widely-debunked Chinese "debt trap" meme is at it again with a new litany of breathless warnings about the risks developing countries take on when they borrow money from China. 

Indian pundit Brahma Chellaney on Tuesday published a new article on the topic in the normally dependable academic publishing site Project Syndicate. His piece was riddled with inaccuracies. Repeated factual errors aside, Challeney's writing is important because it buttresses many of the powerful Indian and Western narratives that frame Chinese engagement in the Global South.

It's also worth noting that Chellaney was among several high-profile Indian commentators who contributed to the false rumor that Xi Jinping had been deposed in a coup.

Chellaney should not be regarded as a serious analyst, even though his ideas get a lot of traction.

SUGGESTED READING:

• Project Syndicate: A Spotlight on Chinese Debt Bondage by Brahma Chellaney
• Third World Quarterly: The myth of 'debt-trap diplomacy' and realities of Chinese development finance by Ajit Singh

One of China's hottest electric vehicle battery makers announced plans to go public on the Shanghai Stock Exchange's NASDAQ-like STAR market in a bid to raise $2 billion to build next-generation EV power packs.

SVOLT Energy Technology Co. is an important player in the Chinese EV battery space as it's the offspring of auto major Great Wall Motors and is now partially owned by electronics giant Xiaomi. It also has the backing of some of China's largest and most influential state-owned enterprises, including China Mobile and insurance giant PICC.

What makes SVOLT particularly interesting is that it's pioneering the development of high-energy cobalt-free batteries that, if successful, would eliminate China's current dependence on sourcing the blue metal from the Democratic Republic of the Congo.

SUGGESTED READING:

• Deal Street Asia: Xiaomi-backed Chinese EV Battery Maker SVOLT Files for $2.1b STAR Market IPO by Eudora Wang
• Yicai: Global Top 10 Battery Maker Svolt Gets Go-Ahead for USD2.1 Billion Star Market IPO by Zhang Yushuo

Chinese President Xi Jinping wrapped up a week-long diplomatic sprint in Southeast Asia this weekend with the conclusion of the APEC summit in Bangkok. Prior to his return to China on Saturday, President Xi restated his ambition to "foster an open, fair and non-discriminatory trade and investment environment" in Asia.

While that sounds benign, the President's remarks were pointed criticism of the United States and a rebuttal to Washington's new Indo-Pacific Economic Framework that Beijing dismisses as an "economic clique."

Chinese officials have become increasingly anxious about the U.S.-led drive to withdraw manufacturing and withhold technology from China, known as the de-coupling, and about the Biden administration's newfound enthusiasm to engage the Asia-Pacific region.

"The Asia-Pacific region has become a driving force of global growth, so an open and free environment for investment and trade is extremely important, especially when there have been trends of decoupling and setting up barriers," said Xu Liping, director of the Center for Southeast Asian Studies at the Chinese Academy of Social Sciences.

Key Highlights of Xi's APEC Meetings in Bangkok

• JAPAN: Prime Minister Fumio Kishida said he conveyed concerns over regional security to Chinese leader Xi Jinping on Thursday amid growing tensions in Asia over China's maritime ambitions. (REUTERS)

• VIETNAM: President Nguyen Xuan Phuc met with his Chinese counterpart in Bangkok. No major outcomes emerged from their brief interaction but it did mark the second time in less than a month that a senior Vietnamese leader met with the Chinese president. (SAIGON GIA PHONG)

• THAILAND: Prime Minister Prayut Chan-o-cha hosted President Xi at the Government House in Bangkok on Saturday. Infrastructure development, particularly the China-Thai railway, was high on the agenda. Neither side made any mention of Xi's apparent refusal to shake the PM's hand earlier in the week. (XINHUA)

President Xi also held brief sideline meetings with the Sultan of Brunei Hassanal Bolkiah and the Papua New Guinea Prime Minister James Marape.

Chinese President Xi Jinping held dozens of quick sideline bilateral meetings with various international leaders over the past several weeks but few were as important as the one with Chile's Gabriel Boric at the APEC summit in Bangkok on Friday.

President Boric was elected earlier this year and is part of the leftist wave that swept across South American politics with a new slate of leaders who are all eager to forge closer ties with China. But what makes Chile important to China is its location atop some of the world's largest reserves of lithium -- a key ingredient to power electric vehicle batteries.

Chile, together with Argentina and Bolivia, make up the "Lithium Triangle" that collectively accounts for a third of the world's known reserves.

It's not surprising then that President Xi was eager to invite his Chilean counterpart to visit Beijing next year. (REUTERS)

PERU: Foreign Minister Cesar Landa met with his Chinese counterpart Wang Yi on the sidelines of the APEC summit in Bangkok. No specifics from the meeting were released. China has been keen to lobby CPTPP members, including Peru, in an effort to bolster its application to join the regional trade pact. (XINHUA)

PERU: While Kenya, Colombia and the U.S. are all struggling to boost avocado exports to China, new data shows that Peru is absolutely dominating the market with 26,000 metric tons shipped this year -- 11% more than in 2021. (U.S. FOOD AND DRUG ADMINISTRATION)

Tens of thousands of Brazilians waited in line for hours last week for their chance to get into a pop-up store in São Paulo that was open for just five days by Chinese fast fashion giant Shein. On the last day, the line was more than a kilometer long.

Given that clothing prices in Brazil have surged 19% this year, it's not surprising so many people were drawn to Shein's incredibly low prices where everything on sale in the pop-up store was priced between $3 and $30. 

Kenya's Road and Transport Cabinet Secretary Kipchumba Murkomen was all smiles last week when Chinese ambassador Zhou Pingjian made a courtesy call to his office in what appears to be an effort to show that ties between the two had not been impacted by the CS's controversial decision to override secrecy clauses relating to the Chinese loan for the Standard Gauge Railway.

Two weeks ago, Murkomen provided the media and legislators copies of the loan agreement with the China Exim Bank for the Standard Gauge Railway.

While the release partially fulfilled a campaign promise by newly-elected president William Ruto, the move also sparked concerns China would retaliate against Kenya for breaking the non-disclosure clauses in those agreements.

But from the looks of the meeting with Zhou, it does not appear there will be any lasting damage from the loan revelations.

(Footnote: it's important to note that despite repeated assurances, President Ruto has yet to release the full SGR contract).

SUGGESTED READING:

• The East African: Ruto minister, envoy meeting signals China’s return to Kenya’s good graces by Aggrey Mutambo
• Pulse Kenya: CS Murkomen strikes new deal with Chinese gov't on JKIA by Miriam Mwende

The G77 bloc of countries together with China is reportedly going to propose a new "loss and damage" fund at the COP27 summit to provide finance to poor countries impacted by climate disasters. The fund appears to be a repackaged version of the failed "climate adaptation fund" that wealthy countries balked at financing. Supporters say they hope the new initiative will be established before the next round of climate talks in Dubai in 2023. (REUTERS)

U.S. Ambassador to Zambia Michael Gonzales called on all of Zambia's creditors to accept debt write-offs. Although he didn't specifically mention Chinese creditors that own more than a third of Zambia's external debt, he did say there was a "stinky debt'. "There’s a lot of shenanigans that went into the debt that the Zambian people are now saddled with for a generation,” he said during a Sunday interview on state television.(BLOOMBERG)

Officials in El Salvador are denying China had reportedly "offered to buy" the country's distressed bonds as part of a debt restructuring deal. Last week, Vice President Felix Ulloa told Bloomberg Beijing had expressed interest in bailing out the country but later authorities said his comments were taken out of context. In Beijing, Foreign Ministry spokesman Zhao Lijian also said he's unaware of any debt bailout initiative with El Salvador. (BLOOMBERG)

Boosting trade and strengthening regional security will top the agenda when Chinese President Xi Jinping supposedly plans to visit Saudi Arabia next month according to Saudi minister of state for foreign affairs Adel Al-Jubeir. China has still not confirmed whether President Xi will travel to the Kingdom next month despite the fact that Saudi officials have repeatedly said the Chinese leader plans to attend to the upcoming China-Gulf summit and a summit of the six-nation Gulf Cooperation Council. (REUTERS)

The Prime Minister of Singapore, Lee Hsien Loong expressed support in principle for China to join the Comprehensive and Progressive Agreement on the Trans-Pacific Partnership (CPTPP), the Obama-era trade bloc aimed at containing China, from which former President Donald Trump withdrew. However, Lee denied that China had already been accepted, saying: “China will have to meet the high standards which are expected of all the members but that is something which has to be established and worked out between China and all the members of the CPTPP.” (CHANNEL NEWS ASIA)

The Chinese Foreign Ministry acknowledged that China is “helping” Cambodia to upgrade its Ream naval base, a day after U.S. President Joe Biden pressed his Cambodian counterpart Hun Sen for clarity on China’s involvement. Up to now, China’s line was that its role is simply as a contractor. In her regular news conference, FM spokesperson Mao Ning called the cooperation "a normal exchange." (REUTERS)

The South African mobile phone company Vodacom is planning an Egyptian roll-out for a financial services super-app it is developing with China’s Alibaba. This comes as the Johannesburg-based company purchased its UK parent Vodafone’s business in Egypt for $2.7 billion. It is also reportedly applying for a mobile money license in Ethiopia, where it will use the M-Pesa micropayment service, which runs on an Alibaba platform. (BLOOMBERG)

Zambia's debt restructuring process is going to take longer than expected and will not be resolved before the end of the year, according to insiders. World Bank and IMF officials are pressing the Zambian creditor committee to get a deal soon but it probably won't happen until early next year. China's a key player in these talks, both as co-chair with France of the creditor committee and as Zambia's largest external lender. (REUTERS)

A Pakistani anti-terrorism court sentenced two men to death for their involvement in a suicide attack last year that killed nine Chinese nationals and four Pakistanis. The assailants targeted a bus carrying workers to the Chinese-built Dasu Hydropower Project in northwest Pakistan. The attack was reportedly carried out by Tehreek-e-Taliban Pakistan, an armed group also known as the Pakistani Taliban.  (AL JAZEERA)

China agreed to extend an earlier currency swap deal with Argentina by $5 billion. The deal is expected to shore up the embattled peso, which has lost 40% of its value against the dollar in 2022. Inflation in Argentina is expected to hit 100% this year. (REUTERS)

Cainao, the logistics division of the Chinese e-commerce giant Alibaba, set up a new South American headquarters in São Paulo. Alibaba is expanding internationally as retail cools in China. This is the first year that the company didn’t release sales figures for its November 11 Singles Day shopping event (akin to Black Friday in the U.S.) (EXAME – in Portuguese)

Indonesia and China will jointly develop and produce new COVID vaccines. This follows a meeting between Chinese President Xi Jinping and his Indonesian counterpart Joko Widodo. Indonesia depended heavily on Chinese vaccines during the pandemic, and was the first country to grant approval to a new Chinese mRNA vaccine, even before it was approved within China. (REUTERS)