China Inc.’s political and diplomatic developments
China shifts some financing with BRI partners towards short-term and emergency lending
According to Aid Data, China has shifted at least some of its BRI financing priorities away from infrastructure projects and towards issuing emergency loans to ease foreign currency shortages since 2018. China has “pivoted in in a significant way away from project lending and toward balance of payment lending, doing emergency rescue lending” the author says. For example, Chinese state-owned banks have lent 21.9 billion USD and 3.8 billion USD to Pakistan and Sri Lanka since 2018. While considerable sums, they come in the context of the hundreds of billions in BRI financing over the last decade.
Mounting debt related to the BRI
China announced waivers for 23 interest-free loans that reached maturity by the end of 2021 for 17 unspecified African countries. A policy brief by the Boston University Global Development Center estimated Chinas interest-free loan forgiveness to Africa could amount to between 45 million USD and 619 million USD, comprising a modest share of China’s lending to Africa. China’s debt forgiveness in Africa is not new. Between 2005-2022 the researchers of the brief identified ten instances of China’s interest-free loans debt cancellation announcements for African countries at United Nations high-level meetings and the Forum on China-Africa Cooperation (FOCAC).
Digital, Health, and Technology
Huawei’s artificial intelligence alliance in Mexico
The Ministry of Foreign Affairs of Mexico, the National Autonomous University of Mexico and Huawei jointly established an artificial intelligence alliance in Mexico City, on August 2nd, to strengthen the training of digital technology talents and to “support the use of artificial intelligence to solve social problems.”
Kuwait recognizes HUAWEI CLOUD as its cloud service provider
HUAWEI CLOUD was officially licensed by the Ministry of Communications and Information Technology Supervision of Kuwait as a nationally recognized cloud service provider. This license means that HUAWEI CLOUD is now able to offer its cloud services in the market. The Ministry is pursuing a "Cloud First" approach to support Kuwait's 2035 national goal of sustainable economic development, making the country an appealing target market for Huawei.
Energy, Resources, and Commodities
Chinese companies help Brazil build “electric” highway
Chinese companies helped construct transmission lines using Ultra High-voltage (UHV) technology to solve the problem of uneven geographic distribution of electricity generation and consumption in Brazil, completing the second phase spanning 2550 km. The transmission project will deliver electricity from the second largest hydropower station in Brazil to the southeast of the country. The project was launched in February 2014, as a joint venture between State Grid Corporation of China and Brazil's National Electricity Company (with the Chinese side accounting for 51 percent of the shares).
Sinopec and Saudi Aramco strengthen cooperation
Sinopec and Saudi Aramco signed a memorandum of cooperation in Saudi Arabia. Collaboration between the two companies existing joint ventures including Fujian Refining and Petrochemical Company (FREP) and Sinopec Senmei (Fujian) Petroleum Company (SSPC) in China, and Yanbu Aramco Sinopec Refining Company (YASREF) in Saudi Arabia. The memorandum includes potential collaborations across all lines of business from traditional oil and gas extraction and refining to material supply and equipment manufacturing, and even to new technologies like carbon capture, hydrogen energy and other areas.
Vale Indonesia launches nickel projects with Chinese firms
The mining giant Vale’s Indonesian unit is embarking on three nickel processing projects in Sulawesi worth a combined 8.6 billion USD with partners including Chinese battery materials producer Zhejiang Huayou Cobalt, Tisco and Shanding Xinhai Technology and others. Indonesia is the world's largest producer of nickel, a key ingredient in EV batteries. The government is pursuing an ambitious program to encourage production of batteries and finished vehicles by foreign manufacturers and position the country as a key player in the global EV industry.
Manufacturing and Construction
Chinese EV-related investments in Hungary on the rise
Chinese battery manufacturer CATL kicked off its Hungarian factory project, signing its pre-purchase agreement in Debrecon on September 5. It is the largest greenfield investment in Hungary’s history at 7.34 billion EUR. NIO, the Chinese EV maker, also opened its first overseas factory in Hungary. It is set to mainly be used to produce battery swapping stations that provide battery replacement services for electric vehicles as an alternative to charging stations. It will become the European manufacturing center, service center and R&D center for NIO products. Both Chinese investments received subsidies from Hungary.
SVOLT confirms second battery cell plant in Germany
Chinese global high-tech company SVOLT confirmed it is building an additional battery cell plant in Lauchhammer, Brandenburg. The second plant was purchased to make up for delayed construction SVOLT is facing in Saarland. BASF which had entered a partnership with SVOLT for battery materials and recycling in 2021, is also building a pilot plant nearby. Production in Saarland will start in 2028 while the site in Brandenburg is expected to begin assembly by February 2024.
BYD’s plans to set up production in Thailand
China‘s electric vehicle (EV) maker BYD announced it would set up a facility in Thailand to produce 150,000 passenger cars per year starting in 2024. BYD signed a purchase agreement for 96 hectares of land in the eastern province of Rayong for the plant and plans to use the site for selling 10,000 units in Thailand, with the remainder planned for export to the rest to Southeast Asian and European countries.
Lusail Stadium – main venue for the 2022 Qatar World Cup
The Lusail Stadium near Doha, the main venue for the 2022 Qatar World Cup, constructed by China Railway Construction, was inaugurated on September 9th. The stadium began construction in April 2017, and will be the venue for the World Cup Final in December 2022.
Trade and Finance
Chinese automotive giants launch new models in Europe, global markets
MG, an auto brand owned by SAIC, launched 10,000 units of the new model simultaneously in nearly 20 European countries and China. MG Motors has been accepting reservations for the model across Europe since August. The model aims to compete with equivalent VW models, which it is also cheaper. Meanwhile, SAIC announced plans to launch the MG4 Electric in other countries and regions such as Australia, New Zealand, the Middle East and South America next year with the plan to act sell in more than 80 countries around the world.
Chinese brand cars in Russia ranked second for the first time
A total of 8,642 new cars from Chinese brands were sold in the Russian market in July 2022, accounting for 24.3 percent of the total Russian market according to data released in August by Autostat. In July, Chinese brands surpassed Korean brands which made up a share of 21.2 percent for the first time to become the second largest brand in the Russian auto market after Russian local brands (30.9 percent). The data show that the share of Chinese brand cars in the Russian market has increased in the past three months.
Transport and Logistics
Delay in Germany’s decision on COSCO’s investment in Hamburg Port terminal
Amidst disagreements within the German government over COSCO’s bid for shares in Hamburg Port, the deadline for approving or rejecting the investment has been extended to the end of the year. COSCO set out to take a 35 percent stake in the Tollerort container terminal one year ago, after which anti-trust review began. The port of Hamburg has warned the German government against blocking the deal, while the German coalition is divided – with one side expressing concern over China’s presence in critical infrastructure as well as competition risks and the other side focusing on the economic benefits of the investment and the danger of setting a precedent.
COSCO’s quest to become the biggest shipping company
China's state-owned shipping giant COSCO Group announced it will spend 4.9 billion USD to expand its fleet. COSCO had 512 vessels in its fleet at the end of June, amounting to a carrying capacity of 2.92 million twenty-foot equivalent units. If it does not scrap any ships, the investment would boost capacity by roughly 20 percent. Pandemic-induced demand for stay-at-home consumption and the restriction of Russian airspace due to the Ukraine war have spiked demand for overseas shipping. COSCO Shipping Holdings reported that net profits last year ballooned ninefold, giving them the resources to make such a large investment.
CIMC abandons deal with Maersk
China International Marine Containers (CIMC) pulled out from plans to acquire Danish Maersk’s one billion USD refrigerated container manufacturer after parties found out the US Department of Justice was planning to block the deal. US authorities had planned to take action because the deal would have generated excessive market concentration, leading to entities linked to the Chinese government in control of the vast majority of refrigerated container supply and potentially driving up the costs. Germany’s competition regulator was also considering blocking the transaction.