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The chairman of the world's largest electric vehicle company, China's BYD, met with Vietnam's Deputy Prime Minister Trần Hồng Hà in Hanoi late last week to discuss the company's plans to expand in the Southeast Asian country.

BYD announced plans to build a new factory in northern Phú Thọ province to build cars that will be sold domestically and throughout the ASEAN market. (VIETNAM PLUS)

🇮🇱 ISRAEL: Chinese automakers BYD and Geely continue to lead the way in Israel’s EV market. In April, BYD sold 1,377 units, most of which were the BYD Atto 3. Geely kept its second-place position, selling 527 units in April. It was followed by Hyundai, with 260 units. (CLEAN TECHNICA)

🇹🇭 THAILAND: China's Hozon New Energy Automobile will make electric vehicles in Thailand for the Southeast Asian market, a Thai official said on Saturday, as it follows others in building facilities in the region's major auto production hub. (REUTERS)

German Chancellor Olaf Scholz will embark on a three-day, two-nation African tour, marking the second G7 leader this week to visit the continent. Scholz will arrive in Ethiopia on Thursday and then go to Kenya on Friday. The Chancellor's visit is widely seen as part a broader EU effort to rebuild its diminished diplomatic and commercial presence in Africa. (DEUTSCHE WELLE)

Sri Lanka granted the Chinese ports operator China Merchants Ports Holdings a 50-year exclusive lease to build and run a logistics center at Colombo Port. The deal is a public-private partnership, and the facility will be transferred to the Sri Lankan government after the lease period as part of a Build-Operate-Transfer (BOT) model. (SUNDAY TIMES)

Singapore conducted joint naval exercises with China on Monday. It marked the resumption of joint exercises for the first time since the COVID pandemic. Singapore is walking a careful line between the superpowers, with Foreign Minister Vivian Balakrishnan also expressing cautious support for the U.S.-led China-containing Aukus security pact (see below). (CHANNEL NEWS ASIA)

Pakistan’s ambassador to China Moin ul Haque has thanked China for aiding the evacuation of 216 Pakistani nationals from war-torn Sudan. The Chinese navy completed the evacuation of a number of other nationals together with 940 Chinese citizens during the weekend. (ASSOCIATED PRESS OF PAKISTAN)

The Indian navy confirmed on Tuesday it will deploy a destroyer and a guided missile stealth frigate to the South China Sea to participate in joint exercises with ASEAN countries. The harbor phase of the drills is underway now in Singapore while the seaborne exercises will begin on Sunday. (THE ECONOMIC TIMES)

Paraguay's President-elect Santiago Peña reaffirmed his country's ties with Taiwan following his victory on Sunday. Peña re-Tweeted a congratulatory message from Taiwan President Tsai Ing-wen and added "We are going to continue strengthening our historic ties of brotherhood and cooperation between our countries." (CENTRAL NEWS AGENCY)

Chinese Foreign Minister Qin Gang is expected to meet with his Indian counterpart Subrahmanyam Jaishankar in Goa on Thursday. The meeting is set to happen ahead of a Shanghai Cooperation Organization (SCO) foreign ministers’ gathering on Friday. Jaishankar will also meet with Russian FM Sergei Lavrov. (THE WIRE)

The International Monetary Fund has warned that Africa would suffer the most if the global economy splits into competing trading blocs. The body’s April 2023 Regional Economic Outlook estimated that Sub-Saharan Africa could lose $10 billion in foreign direct investment and aid, and its GDP could contract by 4% over ten years. (DAILY POST)

The U.S. ambassador to the UN Linda Thomas-Greenfield is leading a delegation to Brazil. The visit is seen as an attempt to re-energize U.S.-Brazil relations soon after a trip to China by Brazil’s President Luiz Inácio Lula da Silva, which was punctuated by his high-profile criticism of the global dominance of the U.S. dollar. Lula is not expected to meet with Thomas-Greenfield during this trip. (BLOOMBERG)

A post went viral this week on the Chinese social media platform Weibo that highlighted the growing insecurity in China about the prospect of more manufacturing companies moving their operations overseas in response to the pressures from the United States for companies to diversify their supply chains.

The post mentioned that some local Chinese governments near the border are even working directly with Vietnamese authorities to buy land and set up industrial parks that Chinese companies can use to base their operations.

Rather than resist the so-called "China+1" strategy that foreign companies are using to reduce their exposure to China, these local governments seem to be embracing the trend and adapting to the new market realities, according to some commentators.

Other readers, though, weren't as supportive and condemned the idea of off-shoring Chinese manufacturing to Vietnam since it will create even more unemployment among low-skilled workers in China.

But Lei Xiaohua, deputy director of the Southeast Asia Research Institute at Guangxi Academy of Social Sciences, said concern that Vietnam or any other Asian country will displace China is overblown:

CROSS-BORDER SUPPLY CHAINS: Even if final assembly moves to Vietnam, China will still provide the bulk of the inputs that are needed to manufacture most goods. Lei noted that this could actually benefit Chinese producers, given that it will allow some companies to avoid the current tariffs on Chinese-made goods.

TECHNOLOGY & TALENT: China has spent the past four decades building its technological and labor expertise in manufacturing. Neighboring countries, many of which are far less developed than China, lack access to both. This will slow their ability to replace China as the world's production hub.

WHY IS THIS IMPORTANT? Anyone who thinks it's possible to decouple China from the industrial supply chain is deluding themselves, given the truly massive scale of Chinese manufacturing. No other country, especially Vietnam, comes close to matching the scale of China's manufacturing capabilities.

Consider that China's Guangdong province alone dwarfs Vietnam in population and manufacturing output.

Read the full article on the Observer (观察) website (in Chinese)

Palestinian militants in the Gaza Strip launched a barrage of 22 missiles on the neighboring Israeli city of Sderot on Tuesday, hitting a construction site where three Chinese workers were injured. 

One worker was hit by shrapnel and taken to the hospital for surgery. 

The CEO of the Israeli construction company said that noise from the building site prevented the Chinese workers from hearing the Red Alert siren that's used to warn residents to take cover from incoming missiles.

Kenyan avocados are once again flowing into the Chinese market, but not soon enough for many buyers who snapped 23 tons of the fruit that arrived last month in the Hunan capital of Changsha in central China.

Changsha is fast emerging as a key African agricultural import hub thanks in part to a new Ethiopian Airlines direct cargo flight from Addis Ababa and new fast-track agricultural inspection via so-called "Green Lanes." (CHINA-AFRICA ECONOMIC TRADE EXPO -- in Chinese)

The head of the International Monetary Fund (IMF), Kristalina Georgieva, is once again signaling that China is now serious about participating in multilateral debt restructuring efforts for the world's poorest countries.

Georgieva said on Monday that Beijing's reluctance to accept losses on its loans to developing countries and resistance to cooperating with other creditors is beginning to ease.

“Why? For a very simple reason,” the IMF chief said. “Because they are now being burned. Nothing makes you more eager to understand debt restructuring than when a country says, ‘Sorry, I can’t pay you back.’”

WHY IS THIS IMPORTANT? There's good reason to be skeptical of Georgieva's optimism about China's willingness to participate in the debt restructuring process. She's made equally upbeat remarks over the past six months, yet the Chinese position on debt restructuring remains largely unchanged, at least publicly.

SUGGESTED READING:

• Bloomberg: IMF Says China Shifting on Debt Restructuring After Being Burned by Eric Martin and Enda Curran
• African Business: World Bank-IMF Spring Meetings stoke anger in Africa by Shoshana Kedem

The Central African Republic (CAR)’s first photovoltaic power plant is now operational following the successful launch of operation of the Sakaï Solar Power Plant last week.

In the CAR, power cuts sometimes last 16 hours a day, badly hitting the country’s economic growth. The 15 MW installation was built by state-owned China Energy’s subsidiary, Energy China Tianjin Electric Power Construction Co., Ltd. should make it easier for the CAR  to deal with its electricity supply problems.

The World Bank notes that a measly 14.3% of CAR’s five million people have electricity access with the capital Bangui having the highest access rate at an estimated 35% while only 0.4% of rural Central Africans have access. CAR's energy access problems are not only limited to electricity but also to non-solid fuels.

In the broader sense, renewable energies are limited by factors including inadequate legal and institutional framework. The CAR also has insufficient internal capacity and lack of financing, among other challenges.

To address the electricity access problems, the CAR came up with the 2015-2030 Investment Project under which several dams will be constructed to help with electricity generation. The dams include Dimoli hydroelectric scheme (180 MW), Lobaye hydroelectric scheme (75 MW), Kotto hydroelectric scheme (40 MW), Lancrenon hydroelectric scheme (20 MW) which is on the border with Cameroon. The plan will also see the rehabilitation of the Boali II hydroelectric plant (10 MW to 15 MW). In total, these projects are estimated to cost an estimated $3.7bn in total.

The deal for the rehabilitation of the Boali II hydroelectric plant was signed between CAR authorities and the China Gezhouaba Group Company (CGGC) in Beijing during the China-Africa Forum Summit in September 2018.

There has been a slight increase in the shift to clean and renewable energy in the CAR but fossil fuels remain the biggest source of energy for the Central Africans. With the energy demand growth, the country has to provide solutions that increase not only energy access but also improve reliability.

Climate Change and Energy Generation in the CAR

Energy generation and access are critical for CAR’s development. According to the World Bank, constraints like limited generation, high cost, low access to modern services, irregular supply and high cost of energy investments hinder growth. 

The CAR is heavily reliant on biomass including wood fuel, charcoal, and agricultural waste. With fuelwood being the dominant source of energy for cooking, it threatens the environment and the country’s efforts to meet its greenhouse gas emission cuts by 2030. Irregular rainfall patterns which result in droughts and flooding are also a threat to power generation in the country.

WHY IS THIS IMPORTANT? The CAR urgently needs to provide clean energy access for its population and renewable sources including the dam projects offer several opportunities to investors.

Chinese companies have successfully managed to bag multi-billion dollar projects across Africa and could be the front runners in the CAR's energy development projects. Countries like Kenya, which embraced Chinese contractors in the last 2 decades are now moving to curtail Chinese monopoly in infrastructure development. If the CAR goes Kenya’s way, the country could see many of its infrastructure projects undertaken by Chinese companies.

SUGGESTED READING:

• Business Daily: Bill blocks Chinese contractors from projects below Sh20bn by Edwin Mutai
• Seetao: Central African Republic: Sakai PV plant is a gift from China

Researchers at the Kiel Institue for the World Economy in Germany launched a new database of African debt that confirms a key Chinese talking point: Beijing's loans to African countries are significantly cheaper than those of commercial creditors.

However, David Mihalyi and Christoph Trebesch, both prominent scholars on African debt issues, also found that Chinese loans are considerably more expensive than those from multilateral lenders like the World Bank and the International Monetary Fund.

Mihalyi and Trebesch unveiled their findings this week as part of the launch of the new Africa Debt Database that indexed more than 7,400 loans between 2000 and 2020 worth $790 billion.

Key Highlights of the Kiel Institute's New African Debt Database

• AVERAGE INTEREST RATES: "We document a large variation in lending terms across countries, time, and creditors by leveraging the rich microdata that is now available. Sovereign external bonds have interest rates of 6%, on average, Chinese banks charge 2-4%, and multilateral organizations just 1%."

• SAME CREDITOR, DIFFERENT RATES: Strikingly, many governments borrow simultaneously from these different creditor groups at vastly different rates. The large differences in debt servicing costs are indicative of a cross-creditor subsidy, as concessional loans can be used to pay higher interest to private or Chinese creditors.

WHY IS THIS IMPORTANT? This database highlights the complex matrix of debt that exist in many African countries today, undermining the reductionist narrative put forth by U.S. stakeholders that China is largely responsible for the problem. However, the data also undermines China's oft-stated assertion that its loans are among the cheapest available when, in fact, they're not.

SUGGESTED READING:

• Kiel Institute for the World Economy: Who Lends to Africa and How? Introducing the Africa Debt Database by David Mihalyi and Christoph Trebesch
• South China Morning Post: China denies creating ‘debt trap’ for African countries by Jevans Nyabiage

U.S. intelligence sources say construction has resumed on a suspected Chinese military facility in the United Arab Emirates, reports the Washington Post. The allegations form part of a recent leak of classified documents on the social media site Discord.

The Discord leaks reportedly included intelligence briefings stating that construction had resumed in December and that Chinese military personnel were spotted at the site.

It reportedly also included Pentagon documents outlining ‘Project 141’ an alleged expansion of the Chinese military’s global presence that would include five overseas bases and ten logistical support sites by 2030.

The UAE was understood to have abandoned construction of the disputed facilities at its Khalifa Port after the U.S. raised security concerns in 2021. This followed reports of the construction of facilities with possible military use as part of a container terminal being built by the Chinese shipping company Cosco.

Muted Response to UAE Base Allegations:

• UAE: “Our policy is not to comment on out-of-context material purported to have been criminally obtained.” -- An unnamed UAE representative to WaPo referring to the recent arrest of a U.S. National Guard member suspected of leaking the documents.

• CHINA: “As a principle, China conducts normal law enforcement and security cooperation with other countries on the basis of equality and mutual benefit ... The U.S. runs more than 800 overseas military bases, which has caused concern by many countries around the world. It is in no position to criticize other countries." -- Liu Pengyu, spokesperson for the Chinese embassy in Washington DC.

WHY IS THIS IMPORTANT? While apparently some Washington officials are more alarmed about these rumors than others, their release is sure to add U.S. pressure on the UAE, especially amid reports that Emirati and Chinese companies will also collaborate on building aircraft and drones.

SUGGESTED READING:

• The Washington Post: Buildup Resumed at Suspected Chinese Military Site in UAE, Leak Says by John Hudson, Ellen Nakashima and Liz Sly
• The Guardian: Work on “Chinese Military Base” in UAE Abandoned After U.S. Intervenes - Report by Julian Borger

Japan’s Prime Minister Fumio Kishida announced his government will provide $500 million to promote peace and stability in Africa.

He made the announcement in Accra, the second stop in a week-long African tour explicitly aimed at countering Russia and China’s influence on the continent.

This is a change for Tokyo, which has historically tended to avoid openly challenging Chinese influence in favor of promoting its own development cooperation with African countries.

Kishida criticized Russia during an address to the Arab League in Cairo. Before leaving Tokyo, he also told reporters that the trip is aimed at countering the influence of Chinese officials who “have been going all over Africa and Latin America … at this rate we’ll lose to them.”

In addition to Egypt and Ghana, Kishida will also visit Mozambique and Kenya.

SUGGESTED READING:

• Kyodo: Kishida Pledges to Provide $500 in Financial Support to Africa
• Quartz: Japan’s Prime Minister is Visiting Africa in an Attempt to Counter China’s Influence by Diego Lasarte

Beyond the central government and the Chinese Communist Party, China's engagement with African countries is increasingly being driven by its provinces. Hebei, the crescent-shaped province circling Beijing, is a key example. We tracked how Hebei is boosting China's presence in Africa across three different sectors:

• AGRICULTURE: Hebei Seed Association and the Nairobi-based African Academy of Sciences signed an agreement on scientific and technological cooperation in seed development. Varieties of corn, cotton, grain, soybeans, sorghum, sesame and vegetables from Hebei will be piloted in Africa. This includes experiments with drought-resilient seed in Ethiopia, Uganda, Nigeria, Namibia, and Sudan.

• MILITARY: Numerous African military personnel receive training at Hebei's Shijiazhuang Army Command College, sometimes known as “China' West Point.” Beyond military-to-military ties, this training is also being promoted as a popular talking point among the Chinese general public.

• BUSINESS: The Foreign Affairs Office of Hebei Province organized a briefing about investment opportunities and security challenges facing Chinese companies in Africa in late April. The session involved Hebei officials as well as more than 70 companies. 

WHY IS THIS IMPORTANT? Provinces like Hebei form a little-examined third axis of engagement with Africa, boosting government and Party diplomacy.

China’s Hinen Group is expanding into South Africa with a promise to make renewable energy accessible and affordable for everyone, according to the company’s Country Manager, Andy Zhou Xiang Yang.

Hinen Solar South Africa is launching in the Southern African nation that has found it hard to wean itself off coal. This is a hurdle in the country’s shift to renewable energy.

Headquartered in the southern Chinese industrial city of Dongguan, the Hinen Industrial Group under which Hinen Solar South Africa falls specializes in energy storage solutions, solar panels, and inverters. The company has showcased its latest solar products and services range designed to mitigate the effects of frequent power outages in Johannesburg at the just concluded South Africa Solar Show.

Established in 2004, the company does not feature among the top solar panel manufacturers in China but its expansion into South Africa comes at a time when alternative sources of energy could help address the incessant power blackouts.

Hinen Solar- and other such companies- face an enormous task since South Africa is heavily reliant on coal with more than 100,000 people directly employed by the sector which potentially complicates any transition to cleaner energy sources like coal. With unemployment levels already hovering above 30%, particularly among young people, displacing a hundred thousand workers in the coal sector is something the government will no doubt seek to avoid.

South Africans Going off Grid Surpass Government’s Solar Energy Generation

In addition, small-scale solar installations are only for those who can afford to cut out a large percentage of the South African population. Despite the costs, solar power installations have been surging as those who can afford to go off-grid.

So far, small-scale solar power generation has surpassed what the government has managed to produce in a decade despite President Cyril Ramaphosa repeatedly promising to boost renewable energy generation by cutting the red tape.

Earlier this week, South Africa’s Electricity Minister Kgosientsho Ramokgopa recommended the purchase of the already planned minimum of 15,000 megawatts of renewable-power supply.

Speaking at a solar-energy conference in Johannesburg on Tuesday, Ramokgopa said the proposal was evidence that South Africa is committed to green power.

During their meeting last week, the Chinese Ambassador to South Africa, Chen Xiaodong, and Ramokgopa discussed China's assistance in South Africa's energy crisis. Chen expressed China's willingness to assist by providing emergency power equipment, dispatching technical experts, and offering technical consultation and personnel training to South Africa.

Additionally, they will jointly prepare for the China-South Africa New Energy Investment Cooperation Conference in June, to be held in South Africa. Ramokgopa welcomed the offer and emphasized that China's support would be a significant boost to South Africa's efforts to alleviate its power shortage problem, further cementing the friendship between the two nations.

WHY IS THIS IMPORTANT? As the energy crisis worsened in South Africa this year, the central bank warned that the country’s economy was losing $51 million every day there was power rationing. By the end of 2023, the country expects 250 days of blackouts which could cost the economy nearly $13 billion. With this reality, South Africa which has been load shedding since 2007 has to find a way to mitigate the effects of the rolling blackouts.

SUGGESTED READING:

• The Conversation: South Africa’s Power Crisis: Going off the Grid Works for the Wealthy – but Could Deepen Injustice for the Poor
• Climate Home News: Uncertainty On Renewable Retraining Frightens South Africa’s Coal Communities By Thabo Molelekwa

The United Nations confirmed that India’s population will surpass that of China by the end of this week, hitting 1,425,775,850 people. This follows an earlier report from a different UN agency that predicted that India will become the world’s most populous country by the middle of this year. (BBC)

President Xi Jinping on Sunday ordered the protection of Chinese nationals stranded in Sudan, clearing the way for an evacuation. Chinese marines stationed in Djibouti will likely lead the operation this week to airlift hundreds of Chinese nationals along with residents of Hong Kong, Macau and certain Taiwan passport holders. (SOUTH CHINA MORNING POST)

Senior Chinese and Indian military commanders met for high-level talks in a bid to de-escalate tensions along their disputed border region in the Himalayas. Sunday's negotiations come just days before Chinese Defense Minister Li Shangfu arrives in New Delhi for this week's Shanghai Cooperation Organization Defense Ministers meeting. (THE HINDU)

Guatemalan President Alejandro Giammattei started a three-day visit to Taiwan on Monday that will also include a meeting with President Tsai Ing-wen. Giammattei said he will "reaffirm" ties with the island nation will come as a relief for Taipei following Honduras' recent decision to switch its allegiances to China. (@DRGIAMMATTEI)

Zambia sent a debt restructuring proposal to China and its other government creditors. This is a key step in moving towards an IMF-led debt restructuring. Zambia has been in default on its loans since 2020. (REUTERS)

Paraguay’s opposition leader Efrain Alegre on Monday repeated his aim to switch diplomatic ties from Taiwan to China if he wins Sunday’s presidential election. He said the allegiance is costing Paraguay opportunities: “We don’t see that Taiwan is doing the same for Paraguay. Taiwan needs to recognize and compensate Paraguay for what it’s losing from this relationship. It’s only fair.” (BLOOMBERG)

Pakistan's Army Chief Asim Munir arrived in Beijing on Tuesday for four days of talks that will largely focus on securing Chinese interests in the China-Pakistan Economic Corridor (CPEC). The two sides will also discuss new threats by ISIS militants in Afghanistan to attack CPEC. (FIRST POST)

Defense Minister Li Shangfu will travel to New Delhi on Wednesday, marking the first visit to India by a Chinese defense chief in three years. Li will be in town for a Defense Ministers meeting of the Shanghai Cooperation Organization and he is expected to meet separately with his Indian counterpart Rajnath Singh. (HINDUSTAN TIMES)

Chinese Foreign Minister Qin Gang will host his counterparts from all five Central Asian countries in Xi'an on Thursday to plan a leaders summit set for June in Kazakhstan. The ministers will also discuss how to coordinate their responses to the war in Ukraine and the deteriorating security situation in Afghanistan. (SOUTH CHINA MORNING POST)

China’s Foreign Minister Qin Gang assured Central Asian counterparts that China will respect their sovereignty and territorial integrity. His remarks, made during a meeting with foreign ministers from Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and Turkmenistan in the northwestern Chinese city of Xian, reflected damage control after China’s ambassador to France, Lu Shaye, drew complaints after questioning Ukraine’s sovereignty. (REUTERS)

Indian Defence Minister Rajnath Singh will meet his Chinese counterpart Li Shangfu in Delhi on Thursday, ahead of a Shanghai Cooperation Organization ministerial gathering. Li is the first Chinese defence minister to visit India since the deadly border disputes between soldiers from both countries in 2020. (WION)

Chinese President Xi Jinping met with Truong Thi Mai, a member of the Political Bureau of the Communist Party of Vietnam (CPV) in his capacity as General Secretary of the CPC. He called for the two countries to unite as a community with a shared future. Party-to-party diplomacy features large in China-Vietnam relations, with CPV General Secretary Nguyen Phu Trong also visiting China in October. (CGTN)

An inauguration ceremony for a new Confucius Institute was held at Bangui University in the Central African Republic last week. It comes only a few weeks after nine Chinese mining personnel were killed and two injured in a gun attack in the city. There is still no clarity on who was behind the attack, which also triggered the evacuation of 80 Chinese nationals.

Confucius Institutes are state-funded language learning centers that have come under attack in the United States and elsewhere amid suspicions that they function as influence operations. (@WUPENG_MFACHINA)

Western companies like Apple aren’t alone in trying to limit their exposure to China. Chinese companies are increasingly eyeing overseas expansion too. While some of these moves are due to cost factors like lower salaries in countries like Bangladesh, increased geopolitical tensions are playing a growing role.

“We already see a lot of China-based manufacturers are actively looking at setting up overseas productions with anticipation of the supply chain challenges and political risks,” said Shay Luo from the consulting firm Kearney.

These moves come as countries like Vietnam appeal to both U.S. and Chinese companies as low-cost, low-risk manufacturing hubs.

The relocation mainly benefits China’s immediate neighbors in South and Southeast Asia, but it is already reshaping investment patterns much further afield too.

Where are Chinese Companies Going?

• SOUTH ASIA: India and Bangladesh are expected to be the major beneficiaries of Chinese offshoring due to their large territories and young populations. This continues pre-pandemic trends, with rising Chinese wages pushing companies to South Asia. India is an increasingly prominent destination for Chinese companies trying to diversify their political risk. Many are also relocating some of their operations to produce lower-price products for South Asia's huge markets.

• SOUTHEAST ASIA: Thailand is emerging as a key hub for Chinese manufacturers of auto parts. As Chinese companies occupy more of the global electric vehicle market, they are also under pressure from large clients (reportedly particularly in Europe) to move component supply chains out of China. Vietnam is another favorite destination, particularly for Chinese manufacturers of solar panels. It is also benefiting from U.S. attention, with giants like Netflix, Meta, SpaceX and Lockheed Martin exploring their options.

• GLOBAL NORTH FRONTIERS: Several Chinese companies are moving further afield, with an eye on large Global North markets like the U.S. and Europe. Mexico and Poland are emerging as key cross-border manufacturing hubs feeding directly into these markets. Relocating to Mexico is seen as a way to shelter major Chinese companies from U.S. sanctions. This is triggering additional waves of migration by second and third-tier Chinese companies that serve them.

WHY IS THIS IMPORTANT? As the idea of ‘decoupling’ from China gains popularity in Washington, the counter-tactics from Chinese companies show exactly how complicated such an economic divorce will be.

SUGGESTED READING:

• South China Morning Post: Chinese Companies are Moving Supply Chains Out of China to Manage Risks, with India, Malaysia and Indonesia Benefiting
• Nikkei Asia: Vietnam’s Digital Ambitions Spur Hope Among U.S. Businesses by Lien Hoang

The African pangolin is a small mammal covered in hard scales. These scales are used in Chinese traditional medicine, fueling an illegal global trade that is driving these shy animals to extinction. Pangolins are now the most poached animal on earth, with one being killed every three to five minutes.

The trade is also fueling organized crime networks that threaten peace and security in rural Cameroon. A new investigative report by Alexia Tata, published by the U.S. Institute of Peace, draws on undercover reporting to show that the pangolin trade is exacerbating both corruption and violence in Cameroon.

• CHINA’S ROLE: China is a key destination for pangolin scales, together with Vietnam, Laos, and Malaysia. While China has removed pangolin scales from an official list of traditional Chinese medicinal ingredients, loopholes allow the continued use of these products by hundreds of companies.

• PEACE AND SECURITY IMPACT: The undercover reporting reveals that the pangolin trade is funding armed gangs who are markedly worsening safety and security in rural Cameroon. Villagers on the margins of the country's last intact rainforest report being threatened at gunpoint by poachers. The trade is also fueling corruption of customs and wildlife officials.

Read the full report on the U.S. Institute of Peace website.

China is bearing the bulk of financing Egypt’s Horus Satellite program meant to boost Africa’s fight against climate change.

Last month, Egypt’s space program launched another satellite, Horus-2, to help with monitoring climate change in the country that is increasingly edging towards water scarcity. The launch took place at the Jiuquan Satellite Launch Center in China where Horus-1 was launched into the sun-synchronous polar orbit (Chinese) in February 2023.

Egypt has been using satellites to measure land surface changes and topography since the 1970s. The North African nation is working with five African countries on the African Development Satellite Initiative (AfDev-Sat) to study the climate change impacts across Africa.

During the launch of Horus-2, the Egyptian Space Agency CEO, Sherif Sedky, said that the satellite program would enable the country to meet its 2030 sustainable development vision.

He added that the Horus satellites would support the identification of Egypt’s finest crops in various sectors while also improving the use of Egypt’s natural resources. The success of the project would be a boost for the country’s agricultural exports.

Using the satellite technology, Sedky added that information gathered would help in the utilization of agricultural land maximally to increase food self-sufficiency.

As a pioneer in launching satellites in the Arab world, Dr. Sedky added that Egypt is localizing the satellite technology and industry by cooperating with China.

This year, China has planned more than 60 launches which target launching at least 200 spacecraft.

For Africa, early warning systems and multi-hazard warning systems can greatly help in alleviating the effects of drought, according to Levis Kavagi, the ecosystems, and biodiversity, Africa coordinator at the United Nations Environment Program (UNEP).

He adds that proper ecosystems management and innovative agricultural/farming techniques including herd management are key to addressing climate change effects like droughts. From Egypt’s Horus satellite launches, it is evident that it is already embracing technology to better deal with climate change.

WHY IS THIS IMPORTANT? According to the IPCC report (2022), climate change will increase the frequency and magnitude of extreme hydro-climatic events, such as floods and droughts. The consequent impacts will be felt on national and regional economies, livelihoods, and the environment.

Africa is particularly vulnerable where the occurrence of multi-hazard events is likely to amplify disasters. Egypt is taking the lead towards addressing the challenges brought by the unpredictable weather patterns which could become a blueprint for many African countries.

SUGGESTED READING:

• Arab News: Egypt’s Satellites to Boost Africa’s Climate Change Fight by Dr. Theodore Karasik
• SpaceWatch: Egypt Discloses Plans to Launch Climate Monitoring Satellite

Kenya, Nigeria and Zambia are among a number of African countries that borrowed billions of dollars over the past twenty years to build massive infrastructure projects that policymakers in those countries all thought would help grow their economies.

That didn't happen and now those countries are wilting under a pile of debts they may never be able to repay.

These policymakers were all led by the perception, often propagated by Chinese stakeholders, that building large-scale infrastructure like roads, ports and railways is the key to moving up the development pyramid. 

Not so, said prominent Kenyan economist David Ndii in a report published this week by the Carnegie Endowment for International Peace, where he made the case that many African leaders made a big mistake betting on infrastructure-led growth:

• INFRASTRUCTURE HAS NOT PRODUCED THE PROMISED DIVIDENDS: "The claim of infrastructure-constrained economic growth lacks a theoretical foundation or empirical evidence. Over the last three decades, a third wave of Asian countries—including Bangladesh, Cambodia, and Vietnam—have leapfrogged African countries in terms of per capita income using export-led manufacturing with similarly deficient infrastructure."

• AGRICULTURE, NOT INFRASTRUCTURE IS THE REAL PROBLEM: "The infrastructure-led growth paradigm has channeled debt finance into investments that have contributed little, if anything, to agricultural development. Rather than a scarcity of infrastructure, the real binding constraint on growth in Africa is low agricultural productivity."

• POLICYMAKERS ARE IGNORING AFRICA'S ADVANTAGES: "It is no surprise that Africa’s massive industry-focused infrastructure investment drive of the last two decades has precipitated debt distress rather than accelerated growth, given that the industry-focused investments, such as massive electric power projects, are not aligned with Africa’s comparative advantage."

WHY IS THIS IMPORTANT? David Ndii is a prominent thought leader in Africa, especially in his new role as an economic policy advisor to Kenyan President William Ruto. He has been a key critic of the idea that China's development model is suitable for a region like Africa.

SUGGESTED READING AND VIEWING:

• Carnegie Endowment for International Peace: Africa’s Infrastructure-Led Growth Experiment Is Faltering. It Is Time to Focus on Agriculture by David Ndii
• The Elephant: The Standard Gauge Railway (SGR) Does Not Make Any Sense by David Ndii

More than 400 Chinese nationals were evacuated from the Sudanese capital of Khartoum on Tuesday and taken by bus to the Red Sea city of Port Sudan.

The Chinese Foreign Ministry said that the majority of its people in Sudan have now been evacuated to safety either to port cities or neighboring countries. 

Meantime, armed Chinese peacekeepers in neighboring South Sudan are reportedly on heightened alert in response to the conflict in Sudan and are conducting regular emergency drills in the event that the fighting spills across the southern border.

WHY IS THIS IMPORTANT? It's notable that the Chinese government used civilian methods to evacuate its people from Sudan rather than any of its military forces stationed in nearby Djibouti.

SUGGESTED READING:

• Global Times: Chinese embassies in Egypt, Ethiopia, Eritrea assist with evacuation from Sudan
• China Military: Chinese peacekeeping engineering contingent to South Sudan (Wau) conducts emergency defense drill

The Nigerian government will pick up the tab to build the last portion of the 614-kilometer AKK natural gas pipeline that China had originally agreed to finance.

In 2017, the Bank of China negotiated a deal to fund the $2.5 billion project but those agreements were never finalized. But the Nigerian government decided to proceed anyway hoping that the Chinese money would eventually come through.

Now, project leaders say they are no longer counting on Chinese finance and the government will instead underwrite construction of the last 30% of the project.

WHY IS THIS IMPORTANT? The AKK pipeline is one of numerous Nigerian infrastructure projects that Chinese financiers walked away from and it highlights the apprehensiveness in Beijing about funding large-scale infrastructure initiatives in Africa.

SUGGESTED READING:

• Bloomberg: Nigeria Spends Own Money Completing $2.5 Billion Gas Pipeline After China Snub by William Clowes
• Premium Times: The NNPCL and the near completion of the $2.5bn AKK Gas Project, By Ifeanyi Onuba

Guatemalan President Alejandro Giammattei pledged his country’s unconditional support for what he repeatedly called ‘the Republic of Taiwan.’ He is on a trip to Taipei following a visit by Taiwanese President Tsai Ing-wen to Guatemala City in early April.

Giammattei repeatedly expressed support for Taiwan’s independence. Before he left, he told reporters that the trip sends a "clear message that countries have a right to self-governance."

This drew a tart response from China’s Foreign Ministry spokesperson Mao Ning on Monday. She said switching diplomatic ties away from Taiwan would be "in line with the fundamental interests of Guatemala and the aspirations of its people."

Guatemalan officials emphasized that they’re not looking for ‘free money.’ Unlike Honduras, they’re also not trying to renegotiate Taiwanese loans. Rather, they’re trying to rebalance their trade with the island and foster long-term joint projects.

WHY IS THIS IMPORTANT? Giammattei ended his speech in Taipei with "Long live Taiwan: free, sovereign and independent," which is sure to further inflame Beijing’s campaign against the relationship. Taiwan now has thirteen international allies left.

SUGGESTED READING:

• Reuters: Guatemala President Pledges Strong Support for ‘Republic of Taiwan’
• Reuters: Guatemala Not Asking Taiwan for ‘Free Money,’ Does Not Owe Debt Like Honduras

A tense stand-off played out on Sunday in disputed waters off the Philippines when a pair of coast guard vessels were closely followed by a Chinese Coast Guard ship and other unidentified vessels that are presumed to be Chinese fishing trawlers.

Satellite data monitored at Stanford University in California tracked the showdown that revealed the Philippines Coast Guard ships being blocked by the Chinese vessels from reaching a Filipino landing craft known as the Sierra Madre that serves as a territorial claim in the South China/West Philippines Sea.

The incident occurred just hours after Chinese Foreign Minister Qin Gang wrapped up a three-day visit to Manila that was intended to repair badly-damaged ties between the two countries.

Qin's visit also coincided with the largest-ever joint military exercises between the United States and the Philippines, known as Balikatan, that will end on Friday.

On Saturday, Qin met with President Ferdinand Marcos, Jr. at the Malcalang Palace in Manila and also held separate talks with his Filipino counterpart Enrique Malano in a bid to "iron things out."

Relations between the two countries have deteriorated considerably over the past few months due in part to a series of confrontations in the South China/West Philippine Sea and Manila's decision to expand basing access to the United States military.

Just last week, tensions flared anew when China's ambassador to Manila, Huang Xilan, provocatively implied that 150,000 overseas Filipino workers in Taiwan would be at risk in the event of a conflict with the U.S. The embassy said he was misquoted but his remarks nonetheless provoked widespread condemnation. 

So, it was up to Qin to come in and try to calm things down. Key issues on the agenda this weekend included:

• IMPROVED COMMUNICATION: The main takeaway from Qin's talks with both Marcos and Manalo was the desire on both sides to improve communications amid obviously deteriorating ties. Marcos acknowledged that there have been misunderstandings: “Some of the pronouncements that have been made recently by our two countries and many other countries might be misinterpreted.” (INQUIRER)

• TAIWAN: Even though the Philippines has said clearly and emphatically that it will not permit U.S. forces stationed in the country to participate in a conflict with China over Taiwan, Qin nonetheless wanted reassurances from his hosts that they still adhered to the One China Policy. (REUTERS)

• TERRITORIAL DISPUTES: No specific resolutions emerged from the talks over the ongoing territorial disputes in the South China/West Philippine Sea, but it was clearly one of the top priorities, particularly for the Filipino side that is becoming increasingly concerned that Chinese harassment is adversely impacting the rights of its fishing crews. (RAPPLER)

The timing of Qin's visit was also notable given that it comes just one week before Marcos is to head off to the United States for meetings with U.S. President Joe Biden at the White House.

WHY IS THIS IMPORTANT? The Philippines is now the most important flash point in Southeast Asia in the escalating rivalry between the U.S. and China. Manila is seemingly trying to forge a strategic autonomy policy that balances ties between both powers, but that's proving to be difficult amid a series of provocations by China that has sparked anti-Chinese sentiment in the country.

SUGGESTED READING:

• Al Jazeera: Can China woo the Philippines away from the U.S.?
• Financial Times: Ferdinand Marcos Jr says Taiwan tensions ‘very, very worrisome’ for Philippines by Gideon Rachman

This month's massive 17,000-strong joint U.S.-Philippines military exercises code-named Balikatan (Tagalog for "shoulder-to-shoulder") focused a lot of attention on drills in the South China/West Philippine Sea.

The U.S. has deployed considerable military force to the South China Sea region in recent years, ostensibly to confront Chinese territorial claims and ensure freedom of navigation for the estimated $5 trillion a year of annual trade that passes through these contested waters.

But don't believe it, say Chinese analysts and scholars. The expanding U.S. military presence in the Philippines is about countering China's military encirclement of Taiwan, not the South China Sea.

Liu Heping, one of China's most well-known international affairs commentators, explained in a post published on the Shenzhen Satellite TV's Straight News WeChat page that the Philippines is now just as critical as Japan in the U.S. effort to block the PLA from fully taking control of Taiwan in the event of a conflict:

• U.S., CHINESE ENCIRCLEMENTS: "Why do China and the United States both attach so much importance to the Philippines? In my opinion, this is actually part of the deterrence and counter-deterrence, encirclement and anti-encirclement strategies launched by China and the United States related to the situation in the Taiwan Strait. Over the years, the real purpose of China's military exercises around Taiwan is to build a fluid wartime encirclement around Taiwan against the "Taiwan independence" forces, so as to block "Taiwan independence" and prevent aid from foreign forces. In this process, the U.S. side has not been idle. They are trying to build a larger and permanent encirclement around Taiwan in response to China's wartime encirclement of the island."

• WARNING TO THE PHILIPPINES: "China still needs to remind the Philippines that once a war in the Taiwan Strait breaks out in the future, whether or not the U.S. military uses military bases stationed in the Philippines to intervene in the Taiwan Strait, war will not be decided by the Philippines, but by the United States. Therefore, the Philippines still has to further weigh the consequences [of hosting U.S. military troops in its country]."

WHY IS THIS IMPORTANT? Liu's views are representative of the broader commentariat in China that no longer regards the Philippines as a neutral actor in this conflict. For now, the Chinese government isn't quite there yet and hasn't shifted its policy towards the Philippines to be more confrontational (trade sanctions, heightened maritime harassment, etc...), but if these commentaries are anything to go by, that may soon happen.

SUGGESTED READING:

• Straight News: Liu Heping: At a critical moment, Qin Gang visited the Philippines (in Chinese)
• Guancha: The United States resets the geopolitical structure of the South China Sea, and Southeast Asian countries have four concerns by Chen Xiangmiao (in Chinese)