Tag: Silk Road

Hungary joins Silk Road

Hungary has become the first European country to sign a memorandum of understanding with China on promoting the Silk Road Economic Belt and Maritime Silk Road, China media report. The MoU was signed on Sunday, during Chinese Foreign Minister Wang Yi’s visit to Budapest, where he met with Prime Minister Viktor Orban. In a statement on the occasion, Wang said he hopes more European countries will join in.

Hungary may be the first country in Europe to officially sign an MoU relating to China’s “One Belt, One Road” strategy, but the subject has cropped up repeatedly during Chinese interactions with Europe. When Xi Jinping toured Europe in April 2014, with stops in The Netherlands, France, Germany, and Belgium, he urged the EU and China to work together to combine EU policies with China’s Belt and Road. When Li Keqiang attended the China-Central and Eastern European (CEE) Leaders’ Meeting in Serbia in December 2014, he also highlighted the role Europe has to play in the Belt and Road – and the role China can play in completing infrastructure and energy projects in Central and Eastern Europe under the aegis of that initiative.

More recently, during Xi’s visits to Russia and Belarus this May, both countries agreed to work with China on the Silk Road Economic Belt. Belarus agreed to the project hoping to win Chinese infrastructure investments, while Russia promised to link its new Eurasia Economic Union with China’s Belt and Road.

While the Belt and Road are often discussed primarily in the context of China’s near neighbors – particularly Southeast and Central Asia – Beijing has long been clear about the importance of Europe, particularly Central and Eastern Europe, to the project. A few months after Xi Jinping first unveiled the twin Belt and Road concepts in speeches in Kazakhstan (September 2013) and Indonesia (October 2013), Li extended the Belt and Road all the way to Europe during a November 2013 visit to Romania.

Likewise, the official action plan for the Belt and Road, issues by Chinese government agencies in March 2015, described the Silk Road as “a new Eurasian Land Bridge” that “focuses on bringing together China, Central Asia, Russia, and Europe.” That means the Belt and Road, by China’s own definition, will be incomplete without buy-in from European countries. And Central and Eastern European countries in particular have a special role to play. As Xinhua put it on Monday, “CEE nations will be essential links in the Belt and Road Initiative.”

European countries, like many of the Asian supporters of the Belt and Road, are primarily focused on the economics. “Chinese firms have invested more than 5 billion U.S. dollars in CEE countries in sectors such as energy, infrastructure and machinery,” Xinhua reports. In coming years, China will build a high-speed railway connecting Hungary and Serbia and construct two nuclear reactors at a Romanian nuclear power plant. According to U.S. law firm Baker and McKenzie, Chinese investment in Europe doubled from 2013 to 2014, reaching $18 billion.

In other words, the Silk Road in Europe was alive and well before Hungary signed the MoU – and it will only continue to grow as more government agreements officially tie existing investments and initiatives to China’s Belt and Road strategy.

Source: The Diplomat

US attacks London’s ‘constant accomodation’ of China

The Obama administration accused the UK of a “constant accommodation” of China after Britain decided to join a new China-led financial institution that could rival the World Bank.

The rare rebuke of one of the US’s closest allies came as Britain prepared to announce that it will become a founding member of the $50bn Asian Infrastructure Investment Bank, making it the first country in the G7 group of leading economies to join an institution launched by China last October.

Thursday’s reprimand was a rare breach in the “special relationship” that has been a backbone of western policy for decades. It also underlined US concerns over China’s efforts to establish a new generation of international development banks that could challenge Washington-based global institutions. The US has been lobbying other allies not to join the AIIB.

Relations between Washington and David Cameron’s government have become strained, with senior US officials criticising Britain over falling defence spending, which could soon go below the Nato target of 2 per cent of gross domestic product.

A senior US administration official told the Financial Times that the British decision was taken after “virtually no consultation with the US” and at a time when the G7 had been discussing how to approach the new bank.

“We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power,” the US official said.

British officials were publicly restrained in criticising China over its handling of Hong Kong’s pro-democracy protests while Mr Cameron has made it clear he has no further plans to meet the Dalai Lama, Tibet’s spiritual leader — after a 2012 meeting that prompted a furious response from Beijing.

While Beijing has long been suspicious about US influence over the World Bank and International Monetary Fund, China also believes that the US and Japan have too much control over the Manila-based Asian Development Bank. In addition to the AIIB, China is the driving force behind last year’s creation of a Brics development bank and is promoting a $40bn Silk Road Fund to finance economic integration with Central Asia.

The Obama administration has said it is not opposed to the AIIB but US officials fear it could become an instrument of Chinese foreign policy if Beijing ends up having veto power over the bank’s decisions.

The UK Treasury denied that Britain had acted out of the blue, saying there had been “at least a month of extensive consultation” at a G7 level, including with Jack Lew, US Treasury secretary.

George Osborne, UK chancellor of the exchequer, was unrepentant, arguing that Britain should be in at the start of the new bank, ensuring that it operates in a transparent way. He believes it fills an important gap in providing finance for infrastructure for Asia.

“Joining the AIIB at the founding stage will create an unrivalled opportunity for the UK and Asia to invest and grow together,” Mr Osborne said. He expects other western countries, which have been making positive noises privately about the new bank, to become involved.

Beijing launched the AIIB in October with the backing of 20 other countries but Japan, South Korea and Australia —US allies in the region — did not become founding members. There has been a strong debate within the Australian cabinet about whether to join, after US pressure to stay on the sidelines.

Mr Osborne’s decision reflects London’s desire to pursue commercial relations with China aggressively, even at the expense of antagonising Washington.

The UK has been keen to establish the City of London as a platform for overseas business in the Chinese currency as it starts to play a bigger role in the global economy.

Source: FT