Towards a Greener Belt and Road?
On September 22, President Xi Jinping told the United Nations in a prerecorded address that China “will not build new coal-fired power projects abroad."39 Chinese institutions have become last resort lenders for many international coal projects, so Xi’s pledge could be a significant step forward in the battle to phase out coal.
In practice, much will depend on the interpretation of “build” and “new.” A total ban on Chinese participation in coal projects would inflict heavy damage on major state-owned enterprises (SOEs). Between June and September, Chinese companies signed contracts to build a 300 MW coal plant in Mozambique;40 two separate 1320 MW coal plants in Vietnam;41 and a 700MW coal plant in Bosnia and Herzegovina (BiH).42 Chinese companies are also intent on pursuing Tuzla B, a Chinese funded coal plant that the EU is trying to put a stop to.43
The end of China’s financial involvement in coal has been predicted for some time. Host country demand for coal projects in countries like Pakistan44 and Bangladesh has waned, so BRI-related coal investments have declined. In June, the Industrial and Commercial Bank of China (ICBC) announced it would begin to phase out funding for coal.45 Two weeks later, it told Go Clean ICBC, a coalition of 32 environmental NGOs, that it was dropping plans to fund Sengwa coal-fired power plant, a 2.8 GW project contracted to China Gezhouba Group.46
On July 16, China’s Ministry of Commerce (MOFCOM) and Ministry of Ecology and Environment (MEE) also issued new guidelines for greening foreign investment.47
Chinese companies sign oil and gas contracts in Iraq and Kazakhstan
In the past quarter, Chinese companies have signed 27 agreements overseas linked to oil and gas extraction and processing. Oil and gas will likely become the next frontier for emissions cuts campaigners as coal funding is phased out.
On June 30, China Petroleum Engineering and Construction Corporation (CPECC) signed a contract, along with Italy’s Eni Oil Company, for the expansion of Iraq’s Zubair oil field. The contract is valued at approximately USD 690 million. Also in June, China CAMC Engineering Co., Ltd. (CAMCE) signed a USD 1.2 billion contract with Sozak Oil & Gas JSC to develop a gas field in southern Kazakhstan’s Sozak region. In September, CITIC Construction signed a USD 905 million contract for the Kirkuk oil refinery project in Iraq.48
TRANSPORT & LOGISTICS
Israel opens Chinese operated port
On Sep 1, Israel inaugurated a new port terminal in Haifa Bay. The USD 1.7 billion Haifa Port will be operated by Shanghai International Port Group (SIPG).49 SIPG won the tender to operate the port in 2015, prompting security concerns within Israel and abroad, especially from the United States. Israel is selling state-owned ports and building private docks in an effort to cut costs and improve efficiency.
Controversial Chinese built bridge completed in Croatia
On July 28, the final steel segment of Pelješac Bridge was installed, connecting the Dubrovnik peninsula to the rest of Croatia. European companies protested when the tender for the EU funded project went to China Road and Bridge Corporation (CRBC) in April 2018. The unsuccessful bidders accused CRBC of price-gouging.50 The bridge cost EUR 550 million, of which EUR 357 million came from the EU.
DIGITAL AND HEALTH
China’s vaccine makers expand local production
On September 9, Serbia’s president held a groundbreaking ceremony for a factory to produce Sinopharm’s COVID-19 vaccine. He said the factory is expected to ramp up production to a capacity of 30 million doses a year in its first six months, far more than is needed for Serbia’s population of 7 million. In the past quarter, Chinese vaccine makers have struck deals or are in talks to produce Covid-19 vaccines locally in multiple countries, including Algeria,51 Bangladesh,52 Belarus,53 Chile,54 Morocco,55 Russia,56 and Uzbekistan.57 In July it was reported that Egypt had manufactured its first one million doses of Sinovac’s Covid-19 vaccine.58 In other Covid-19 vaccine news, Chinese firm Everest Medicines has bought an mRNA vaccine license from Canada’s Providence Therapeutics Holdings, continuing China’s pivot toward mRNA technology.59
Senegal aims for digital sovereignty with Huawei data centre
On June 22, President Macky Sall announced that Senegal will move all government data from foreign servers to a new national data center to guarantee “Senegalese digital sovereignty.”60 The new data center is being built with Huawei equipment and a loan from the Export-Import Bank of China.
MANUFACTURING, CONSTRUCTION, AND RESOURCES
Indonesia opts for Japanese not Chinese developers
In July, a USD 2.7 billion contract was awarded to Japan-based Chiyoda Corporation for a copper smelter in Gresik, Indonesia. The Indonesian developer originally held talks with China’s Tsingshan Holding Group to build the new smelter – a reminder of the fierce competition between Chinese and Japanese engineering firms in Southeast Asia.61 In other news, Chinese company Huayou Cobalt Co., Ltd announced in late May that it will jointly carry out a USD 2.08 billion nickel-cobalt project in Indonesia's WedaBay Industrial Park.62
Democratic Republic of Congo reviews mining deals with China
On August 27, the Democratic Republic of Congo (DRC) finance minister announced the country was reviewing its USD 6 billion “infrastructure-for-minerals” deal with China, amid concerns that current mining deals to not bring sufficient benefit to the DRC. Chinese firms control around 70 percent of the DRC’s mining portfolio.63