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Geo-Strategic Trend - 135. page

LTN: China’s One Belt One Road Plan Brought Economic Trouble to Eight Countries

Major Taiwanese news network Liberty Times Network (LTN) recently reported on China’s grand One Belt One Road plan, which involves a potential investment total of US$8 trillion and involves 68 countries in Asia, Africa, and Europe. The report showed however, that it actually has brought an economic crisis to eight countries: Djibouti, Kyrgyzstan, Laos, Maldives, Mongolia, Montenegro, Pakistan and Tajikistan. Not long ago, the Center for Global Development (CGD) published its analysis on the impact of One Belt One Road. The analysis indicated that many countries developed significant dependency on China and their debt level increased significantly. For example, the African country Djibouti’s Chinese debts are now as large as 91 percent of its GDP. Another example is Pakistan’s development plan of its Port of Gwadar. Now China has pocketed around 91 percent of the Port’s income with only 9 percent left for Pakistan. The income was obtained significantly based on the deep tax cut that Pakistan offered. Sri Lanka had to rent its port city Hambantota to China for nearly one century due to the fact that the government could not pay back its debt (US$1 billion) to China.

Source: Liberty Times Network, March 6, 2018
http://news.ltn.com.tw/news/world/breakingnews/2356725

Xinhua: Trade War Casts Shadow over EU-US Relationship

Xinhua recently published an analysis article discussing the intensified tough relationship between the European Union and the United States. As soon as U.S. President Trump announced the U.S. hike in the tariffs on steel and aluminum, the EU immediately described its counter measure to increase its tariffs on U.S. products such as Jeans and Harley-Davidson Motorcycles. However, Trump responded with threats against EU automobiles. The EU then promised to hold a “firm position” on defending EU interests. The French President even confirmed the position to take the fight to the WTO. Germany, the nation having the largest surplus with the U.S. in the EU, stated that “protectionism is the wrong path.” However, the U.S. is the EU’s largest trade partner. Just for the automobile and parts industry, the EU has a near US$40 billion trade surplus. The EU may not want to engage in an actual trade war against the U.S. or at least hopes to contain the conflict to a manageable level. Chinese analysts expressed their belief that Germany may not agree with the EU Council on increasing tariffs. The EU should also worry that its counter measures may end up pushing the U.S. to leave the WTO – if Trump actually delivers on his campaign promises. This may cause a global chain reaction leading to greater chaos. At the moment, with the EU-US strategic alliance relationship still in place, trade conflicts could be the new norm between the two in the years to come.

Source: Xinhua, March 8, 2018
http://www.xinhuanet.com/world/2018-03/08/c_1122507087.htm

China Review News: Russia Cannot Achieve Its Return to Being a Great Power without Cooperation from China

China’s state-sponsored media, China Review News, published an article stating that Russia recently gave its people the impression that it is filled with calm and confidence as a big country; however, Russia can only become a global power  if, in the future, it cooperates with China.

The article stated, “Look at the timeline over a longer period. Russia has not yet stepped out of the slow recession that occurred after the collapse of the Soviet Union. The Russian economy, which relied on abundant resources, has not had breakthroughs for a long time. Russia has a vast territory and fertile land. It is one of the few countries in the world with large resources. Russia, however, lags far behind developed countries in Europe and America in terms of industrial modernization.

“Putin positioned Russia as a Eurasian country and sought to find a way out from its role as a bridge connecting Asia and Europe. The situation of the Eurasian continent has undergone great changes in the past 20 years. At what speed and in what form China will exert its influence on the Eurasian continent is a major issue that is related to Russia’s national fate.

“President Putin is a realist. The border line between Russia and China is as long as 4,300 kilometers. Judging from the gap in economic strength between the two sides, Russia has been unable to compete with China. What is more, China is the most important buyer of Russian oil and natural gas. In the diplomatic field, in order to compete with the United States, China is an indispensable partner.

“In the future, Russia can only become a global power by cooperating with China. Therefore, cooperation with China is the way for Russia to survive as a Eurasian country.”

Source: China Review News, March 7, 2018
http://hk.crntt.com/doc/1049/9/9/1/104999100.html?coluid=58&kindid=1211&docid=104999100

Li Shufu Became the Largest Shareholder of Daimler

Well-known Chinese news site Sina recently reported that, based on official government documents dated February 23, Li Shufu, founder and chairman of China’s Geely Automobile, acquired 9.69 percent (around US$9 billion) of German automaker Daimler AG, thus becoming its largest shareholder. Daimler is one of the world’s top ten automakers, the world’s largest commercial vehicle manufacturer, and the world’s second largest truck manufacturer. It is also famous for its Mercedes-Benz product line. Geely Automobile is China’s largest privately-owned automaker. Li Shufu, currently also the owner of Volvo, described his strategic vision as forming an alliance with Daimler to become the “final two or three” automakers that will dominate the global market in the future. Daimler did not disclose whether Li will be on the Board of the company or not. However, Brigitte Zypries, Minister for Economics and Energy in the government of Chancellor Angela Merkel, commented on February 26, that the German government will look carefully into this deal and will seek an explanation from Daimler. She expressed the concern that it is troublesome to see Daimler have a competitor sit in its Board of Supervisors.

Sources:
(1) Sina, February 24, 2016
http://auto.sina.com.cn/news/hy/2018-02-24/detail-ifyrvspi1285407.shtml
(2) Reuters Chinese, February 26, 2016
https://cn.reuters.com/article/germany-geely-daimler-stock-0226-idCNKCS1GA1LQ?il=0

Russian Energy Expert: Power of Siberia Natural Gas Pipeline Project Was a Costly Mistake

According to an article that Radio Free Asia published, Mikhail Krutikhin, a Russian expert with 25 years of experience in the energy field, recently stated that the Power of Siberia, the natural gas pipeline under construction in Eastern Siberia, represents the complete failure of Putin’s Asia policy. Krutikhin’s comments indicated that, as Beijing is abandoning Russia as a supplier of natural gas and has turned to the U.S. for natural gas imports, the official project launch date in May of 2019, would be postponed. Even if it weren’t postponed, the total volume would be less than the original projection. Power of Siberia, which is worth US$4 billion is a natural gas project for which an agreement was signed in May 2014. Due to Beijing’s lack of trust, Putin didn’t build a pipeline that directly connected to the pipeline from China but rather built a pipeline for China that was part of the pipeline that expands around the Russia-China border connecting to Vladivostok. Unlike what was officially communicated, the current project has two pipelines. One of them has a source of natural gas which is almost depleted and the other one does not even have a customer. The timing, however, is ironic in that, just when the Siberia natural gas pipeline project was about to be completed, the U.S. succeeded in its shale oil technology and China turned to the U.S. for its natural gas, which increased its domestic natural gas supply. The article stated that, meanwhile, oil prices have continued to be weak, which means that Russia may not be able to recover its investment on this project.

Source: Radio Free Asia, February 28, 2018
https://www.rfa.org/mandarin/yataibaodao/junshiwaijiao/lxy-02282018130955.html

Chosun: North Korean Newspaper Rodong Sinmun Distribution Volume Fell Sharply

In its Chinese Edition, South Korea’s largest newspaper, Chosun, recently reported that the daily distribution of Rodong Sinmun, North Korea’s official newspaper of the Central Committee of the Workers’ Party of Korea, dropped in volume from 600,000 down to 200,000. Sources said the Party stopped the distribution to all individual families due to a lack of paper. Rodong Sinmun is North Korea’s official newspaper; it has been serving three million Party members since 1945, with an original distribution population of 1.5 million. The volume got cut in half in the 1990’s due to an economic downturn. Last year it was reduced down to 600,000. North Korea does not produce enough paper with good quality and half of the paper supply depends on China. With the recent tightened international sanctions in place, there has been a sharp decline in paper imports. Analysts expressed the belief that the importation of paper is not the issue since paper does not fall within the scope of the sanctions and that, therefore, the cause must be the lack of funds.

Source: Chosun, February 22, 2018
http://cnnews.chosun.com/client/news/viw.asp?cate=C01&mcate=M1001&nNewsNumb=20180249333&nidx=49334

China’s One Belt One Road Project Faces Resistance

The BBC reported that China’s One Belt One Road Project is facing resistance from countries around the world. German Foreign Minister Sigmar Gabriel said at the Munich Security Conference on Saturday, February 17, that “China’s ‘One Belt, One Road’ initiative amounts to a struggle between democracy and a dictatorship, so the West should come up with an alternative.” In his speech, Gabriel said that, “China is using ‘One Belt, One Road’ to influence the world and create a value system different from that in the West and is pushing back the conflict between democracy and dictatorship to the fore again.” France’s Prime Minister Philippe endorsed Gabriel’s statement. Also in his visit to China, French President Macron verbally supported the “One Belt One Road” project with the condition that it can’t become a new hegemony path for China where the countries on the path become subordinate to China. When the Prime Minister of the United Kingdom, Theresa May, visited China, she refused to sign any written statement to support the “One Belt One Road” project, saying that she welcomes the new opportunities that the project brings, but it should also come with transparency and compliance with international standards. Meanwhile on February 19, an Australian media reported that the U.S., Australia, Japan, and India are discussing a replacement plan for China’s One Belt One Road project to counter Beijing’s international influence. It also mentioned that the prime minister of Australia will discuss the replacement plan with President Trump when he visits the U.S. later this week.

Source: BBC, February 19, 2018
http://www.bbc.com/zhongwen/simp/world-43120078

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
http://news.sina.com.cn/w/2018-02-06/doc-ifyremfz5586584.shtml