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Geo-Strategic Trend

South Korea Notified U.S. Only Hours before Its Negotiation with North Korea

Well-known Chinese news site Sina recently reported that the South Korean leadership team had a very hasty discussion right after Kim Jong-un, in his New Year’s Day speech, expressed the intent to participate in the Winter Olympics. The United States was not in the loop regarding the decision making to send a quick and friendly response. To the surprise of the U.S. officials, South Korea notified its U.S. ally only hours before they officially proposed to North Korea that they start a negotiation session. This caused tension between South Korea and the United States, although both emphasized their unity publicly thereafter. Anonymous sources said the officials from the U.S. Embassy in South Korea expressed their unhappiness. South Korea explained that they had an extremely tight window of time to accommodate the sudden change, which left them no time to go through formal communications. A South Korean government official also expressed the hope that, when U.S. Vice President Pence visits South Korea for the Winter Olympics, he could talk more about peace.

Source: Sina, February 6, 2018

RFI Chinese: China Has Been Stealing Information from the African Union Headquarters

Radio France Internationale (RFI) recently reported that two French reporters revealed the news that China has been spying on the African Union. Multiple staff working at the African Union Headquarters found suspicious network traffic over a year ago. The technicians discovered that, on a daily basis at around one or two o’clock a.m. local time, all communications among African Union staff were captured and transmitted to servers located in Shanghai. Six years ago, China constructed the African Union Headquarters building and gave it to the African Union as a gift. China provided all networking equipment as well. Anonymous African Union officials expressed the belief that Beijing had stolen all sensitive information transmitted between January 2012 and January 2017. The Union has now completely replaced the technology equipment from independent suppliers and purchased its own servers not sourced from China. Chinese technicians were laid off one month after the breach was discovered last year. China’s Representative to the African Union did not respond to media inquiries.

Source: RFI, January 27, 2018

DailyNK: North Korea Suddenly Banned Chinese Products

DailyNK, a news site based in South Korea that focuses on North Korean activities, recently reported, based on its own sources, that the North Korean authorities suddenly ordered a ban on Chinese products in the retail market, especially Chinese food products and home appliances. The current ban does not include Chinese “industrial products.” Typically, this type of ban only applies to South Korean products. The ban started in late December in some regions and is now widespread. However, most of the products in the North Korean markets are made in China, especially food and daily necessities. A large number of people complained that the ban is too “reckless,” and it is very hard to fill the market gaps with domestic products in a short period of time. Anonymous sources said that the primary goals of the Chinese product ban are to demonstrate “confidence” and also to tell people the danger of depending on nations that “help the United States.” The ban is causing major damage to those who rely on trade with China for a living. In many areas, law enforcement officers have not fully implemented the government’s policies; they have a dependency on Chinese products as well.

Source: DailyNK, January 25, 2018

Sinchew: Most of the Contractors of “The Belt and Road Initiative” Are Chinese

Major Singapore newspaper Sinchew recently reported that, based on a U.S. think tank study, China’s grand “The Belt and Road Initiative” which pushes infrastructure work across Eurasia has largely contracted out work to Chinese bidders. Among the 34 current projects in Europe and Asia, around 89 percent have been contracted to Chinese construction companies and only 11 percent have been given to contractors from other countries. This dramatic difference made the lofty tone of the Belt and Road Initiative look questionable, especially when China is counting on the Plan to win friends in over 70 countries. International analysts have expressed their concern about this China-centric approach, since more and more countries are rethinking their support for the grand Chinese Plan. Compared to the Chinese way of favoring its own contractors, contracts that the West has funded, typically under the World Bank and the International Monetary Fund (IMF), are more neutral toward the bidders and the grants have been more diversified. The study showed that 41 percent of these grants were given to local contractors, 29 percent went to Chinese contractors, and 30 percent went to a bidder from a third country.

Source: Sinchew, January 25, 2018

South Korean Duty-Free Stores Saw Record High Sales

Well-known Chinese news site Sina recently reported that South Korean duty-free stores experienced a major loss of customers last year due to the conflict with China on the issue of deploying the U.S. THAAD missile defense system. For example, in the month of November, Chinese visitors to South Korea declined by 42.1 percent. Chinese visitors were the primary buyers at duty-free stores; the headcount reduction caused major concerns earlier last year. However, last November’s nearly US$1 billion in duty-free sales set a historic high for November. This became a typical situation in almost all months last year and duty-free stores achieved their best sales records when having the lowest number of Chinese visitors. Analysts found that the high sales volume were supported by the Chinese proxy shopping channels, which allowed Korea-based agents to make purchases for their Chinese buyers when paid a small fee. The duty-free stores saw a significant increase in sales through these channels.

Source: Sina, January 13, 2018

Bangladesh Government Terminates Contract with CHEC and Adds CHEC to Its Black List

VOA reported that, according to The Daily Star of Bangladesh, the Finance Minister of Bangladesh told the reporter that Bangladesh has canceled the Dhaka-Sylhet road expansion project that was awarded to the China Harbour Engineering Company Ltd. (CHEC). CHEC has been added to the Bangladesh blacklist for alleged bribery of a Bangladesh official and is forbidden from participating in any future projects in Bangladesh. CHEC is a subsidiary of the China Communications Construction Company Ltd. (CCCC) and is a star company in China’s “one belt one road” project. A news article from the Indian media The Print stated that there was also a dispute about the total amount of the project where CHEC proposed a cost that was twice the amount that the Bangladesh Highway Department estimated. The Dhaka-Sylhet road project is one of the US$2.1 trillion investment projects that Xi Jinping signed with Bangladesh when he visited in October 2016.

According to The Daily Star, this is not the first time that CHEC attempted to bribe Bangladesh officials. The CHEC’s last attempt at bribery cost the sons of two Bangladesh senior officials a sentence to six years in jail. China is the largest country to provide foreign aid to Bangladesh. Currently it has several other projects including a highway, an Industry Park, and a harbor expansion going on in Bangladesh. The Daily Star reported that the termination of CHEC contract does not affect these projects.

Source: Voice of America, January 19, 2018

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