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Leaked Railway Contract with China Poses a Risk to Kenyan Sovereignty

According to Kenya’s largest independent newspaper, the Daily Nation, the Kenyan government is trying to cope with the news that a multi-billion dollar contract with China may jeopardize its sovereignty.

On Sunday, January 13, 2019, the newspaper published part of the details of a contract between the Export-Import Bank of China and the Republic of Kenya, which was generated in  2014. It revealed the details of the Standard Gauge Railway (SGR) loan. SGR is the country’s largest infrastructure project since Kenya’s achieved independence.

A clause in the contract regarding the scope of assets that would be confiscated in the event of a loan default raised the greatest concern. Clause 5.5 of the Preferential Buyer Credit Loan Agreement on the Mombasa-Nairobi SGR reads as follows: “Neither the borrower (Kenya) nor any of its assets is entitled to any right of immunity on the grounds of sovereignty or otherwise from arbitration, suit, execution, or any other legal process with respect to its obligations under this Agreement, as the case may be in any jurisdiction.”

In the deal, Kenya is also compelled to import goods, technology and services from China.

The confidentiality clause reads, “Without the prior written consent of the lender (China), the borrower shall not disclose any information hereunder or in connection with this agreement to any third party unless required by applicable law.”

The disclosure of these details provides the most convincing evidence to date that the Chinese government may adopt “debt-trap diplomacy” to force a country to surrender land, minerals, or strategic assets in the event of a default.

The wording in the document fits well with the contract for the “Belt and Road” project in Serbia, Kyrgyzstan and Guyana, as Voice of America revealed earlier. The “Belt and Road” is China’s multi-trillion dollar global infrastructure project. This suggests that the terms of the Kenyan loan – from asset confiscation and confidentiality provisions to the requirement to use Chinese suppliers – may be a reflection of the Beijing’s model of lending in Africa and in other places.

Another worrisome aspect is a clause that states that any disputes on the loan would only be resolved in Beijing through the China International Economic and Trade Arbitration Commission (Cietac).

The agreement says, “The arbitration award shall be final and binding on both parties. The arbitration shall take place in Beijing.”  This effectively blocks other international commercial dispute resolution avenues.

Source: Voice of America, January 16, 2019

Beijing Imposes Brainwashing Courses in Universities

During Hu Jintao’s era, the Chinese government mandated four compulsory political courses in universities and colleges. Recently, the Ministry of Education issued a high-profile announcement to strengthen and improve the “Current Affairs and Policies” course, as an attempt to continue the party’s ideological control.

The Ministry of Education circulated a notice in April 2018, recommending that all higher education institutions in the country strengthen and improve the “Current Affairs and Policies” course to “help college students understand the situation at home and abroad in the new era correctly, and to obtain a thorough understanding of the historical achievements and historical changes of the party and the state and of the historic opportunities and challenges they are facing.” The purpose was to “further push Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era into the students’ minds, to promote the party’s major policies … and to train a new generation that will undertake the great mission of national rejuvenation.”

One student told Radio Free Asia that the course is actually “brainwashing” education in combination with current events. He cited the US-China trade war as an example. “The course tells how the United States is rude and unreasonable toward China. It also preaches that the party is very great and instills ideas about the party-state system and about xenophobia.”

The Ministry of Education stipulated that bachelor’s degree students should take no less than 8 class hours for a total of 2 credits per semester, and associate degree students no less than 8 class hours for a total of 1 credit per semester, to “ensure that the undergraduate students on campus take the course uninterrupted.”

Another student told the reporter that the “Current Affairs and Policies” course is compulsory and one cannot graduate without completing it. The credits for each political class are similar to major related classes. Many students choose to memorize the course contents.

The student also mentioned that his school once distributed questionnaires on the “Current Affairs and Policies” class, but it touched on little of the contents in the curriculum.

“A lot of stuff in the questionnaire is actually to evaluate the students’ political views. There are questions such as the following: ‘Do you agree with constitutional democracy?’ ‘Do you agree with the leadership of the Communist Party?’ ‘What do you think about religious beliefs?  One of my high school classmates who answered that he is a religious believer was called into the school for a conversation. Therefore we don’t dare to tell the truth on these questionnaires. I’m afraid that if the questionnaire is checked, the respondent will be called in for a conversation.”  Feng Chongyi, a professor at the University of Technology in Sydney, said in an interview that the “brainwashing” education exists because the Chinese ruling party must control the students’ ideological dynamics.

“After June 4, the universities intensified political classes. The democratic movement in 1989 posed great challenges to the Chinese ruling party. The government regarded students as the “worst-hit area” in terms of challenges to the Chinese Communist regime.” “(‘Brain-washing’ education) is something special in a totalitarian regime; starting at the kindergarten stage, it puts political education in the first (place). From childhood on, people have not been able to cultivate the ability to think and judge things independently and the real cognitive ability of a human being has been destroyed.”

Source: Radio Free Asia, January 10, 2019

China Tightened Religious Control

China published a new rule to request blockchain service providers to get the real name of each user and not to publish contents that do not conform to the authorities’ requirements.

On January 10, 2019, the Cyberspace Admission Office issued the “Regulations on the Management of Blockchain Information Services,” which will take effect on February 15, 2019.

The Regulations state that the blockchain service provider holds the main responsibility for the safety management of the contents, that it should implement the real ID identification system for its users, and that it cannot use blockchain to conduct activities prohibited by the law or administrative regulations or produce, replicate, publish, or spread information prohibited by the law or by administrative regulations.

Source: Cyberspace Admission website, January 10, 2019

Xinhua Finance: Chinese Acquisitions in the U.S. Saw Sharp Decline

Xinhua Finance, a Hong Kong financial news branch of the Xinhua News Agency, recently reported that the market research institute, Mergermarket, just released its report on global mergers in 2018. The report showed that 2018 had a decline in the number of mergers in the global market and that this was the first decline since 2010. The research found that geopolitical tension has started demonstrating its impact. A noticeable example is that the Chinese acquisition activities in the U.S. suffered a dramatic year over year decline in 2018 of 94.6 percent. The Chinese acquisition volume (in the U.S.) had a free fall from the US$55.3 billion peak in 2016 to US$3 billion in 2018. Data also showed that the Chinese shifted their focus to Europe and the acquisitions increased by 81.7 percent to US$60.4 billion. Global mergers in 2018 mainly occurred in the areas of energy, mining, construction, and defense.

Source: Xinhua Finance, January 4, 2019

Lianhe Zaobao: Seventy Percent of Southeast Asian Organizations Concerned about One Belt One Road Debts

Singapore’s primary Chinese language newspaper Lianhe Zaobao recently reported that Singapore’s research organization, the ISEAS-Yusof Ishak Institute, just completed a survey among 1,008 ASEAN (Association of Southeast Asian Nations) organizations including companies, academic institutes and government branches. The released report shows that around 70 percent of the entities surveyed expressed the belief that their governments, in order to manage the risk of shouldering high debts, should take a very careful and conservative attitude when discussing the One Belt One Road initiative with China. The organizations in Malaysia, The Philippines, and Thailand are especially concerned about this risk. One third of those surveyed complained about the (lack of) transparency of the One Belt One Road plan, and 16 percent predicted the plan will eventually fail. Around half of the people surveyed recognized that China has a more superior regional influence than the U.S. Sixty percent of the sample expressed the belief that the U.S.’ global power has declined in the past year. One third actually thought the U.S. has completely lost its influence in the region.

Source: Lianhe Zaobao. January 7, 2019

China Times: German BDI Asked EU to Take a Tougher Position against China

The major Taiwanese newspaper China Times recently reported that The Federation of German Industries called on the European Union to take a stronger economic position against Mainland China to help EU companies fight against unfair competitive methods like product dumping, compulsive technology transfer, and inequality in financial backing. The BDI published its official announcement on January 10 with 54 requests for the German government and the EU to provide assistance. The announcement emphasized that, while German companies need the Chinese market, the Chinese government has refused to provide necessary market access. The BDI also called for establishing a stronger economic framework to regulate companies from non-market economies. The announcement highlighted the requests to stop subsidizing products not manufactured in the EU and to increase EU investments on EU infrastructure and innovation. The German BDI is the joint organization of 36 industrial associations. It is the most important lobbying organization representing the German Industries.

Source: China Times, January 10, 2019