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China’s One Belt, One Road Initiative And Asia Is A Crucial Trade Route Starting Point, Part 6. Timor-Leste, Turkmenistan, Uzbekistan and Vietnam

ArmchairTechInvestor, May 30, 2018, by Brad Peery

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Below are summaries of the OBOR initiatives in the countries covered in the Asia Part 6 Region.

Timor-Leste

*Located on the eastern half of Timor Island in Southeast Asia, Timor-Leste lies close to Indonesia and about 375 miles away from Australia. Timor-Leste’s economy is very dependent on its offshore oil and gas resources. They generate more than 90% of the country’s revenue. A public-private partnership has been established to build a new seaport at Tibar Bay, west of the capital Dili, with an expected investment of about $490 million. Construction began in June 2017. “The new port is planned to handle the commercial cargo operations of the existing Port of Dili, which is highly congested with limited expansion possibilities.”

**Zhang Ping, special envoy and also vice chairman of the Standing Committee of the National People’s Congress of China said that China is willing to continuously make efforts with Timer-Leste to strengthen the alignment of their development strategies, actively engage in cooperation based on the OBOR Initiative and constantly push ahead a comprehensive partnership. Timor-Leste’s new President Francisco Guterres Lu-Olo said that his country supports and actively participates in the OBOR construction. Lu-Olo also said that Timor-Leste is willing to further strengthen its cooperation with China in various fields and constantly enhance relations between the two countries.

Turkmenistan

*Situated in the southwest of Central Asia and bordering Kazakhstan to the northwest and Uzbekistan to the north and east, Turkmenistan has budget surpluses resulting from the development of energy sources and commodities such as oil, natural gas and cotton. It has extremely large gas deposits underneath the Karakum Desert (which occupies 70% of the land area of Turkmenistan) gas is the core of Turkmenistan’s economy. These gas sources include the Galkynysh gas field, which has the second-largest volume of gas in the world after the South Pars field in the Persian Gulf.

It’s the Year of the Dog in China but here in Ashgabat, this year’s slogan is:”Turkmenistan is the heart of the Great Silk Road”. This, like much else in Turkmenistan, has been decreed by its strongman President Gurbanguly Berdimuhamedow. He has declared the nation to be a linchpin of central Asia’s new era of prosperity and promise. To illustrate its commitment, a container and ferry seaport has opened on the Caspian Sea, linking Turkmenistan with Azerbaijan, Kazakhstan, and Russia. There are also plans for a superhighway to Turkey, and more natural gas and oil exports.

***“Looked at from Turkmenistan, the motivation behind the OBOR Initiative includes promoting rapid economic development in China’s sprawling western Xinjiang province to contain its large, restive, Turkic language-speaking and Muslim Uyghur population. Many Uyghurs live in Turkmenistan, where the language spoken is close to their own.” Whatever the precise interpretations of China’s motives, Turkmenistan has climbed on board the OBOR Initiative.
***Turkmenistan dreaming: Gurbanguly Berdimuhamedow’s big bet on Belt and Road, Financial Review, by Andrew Clark, April 27, 2018

Uzbekistan

Uzbekistan Is very focused on the cultivation and processing of cotton, fruits, vegetables and grain (wheat, rice and corn).” Uzbekistan, is also a world leader in terms of its gas, coal and uranium resources, while also said to have more than 1,800 different mineral reserves.” It has population of over 30 million. It is the most populous country in Central Asia, accounting for 45% of the total population. This, however, has not led to the formation of a lucrative consumer market, despite the country enjoying average GDP growth of more than 8% per annum over the past decade.

Uzbekistan uses the Latvian seaport of Riga and also has some of the shortest overland routes connecting Europe and Asia.

****“Uzbekistan is located at the heart of Transport Corridor Europe–Caucasus–Asia (TRACECA) and three of the six Central Asia Regional Economic Cooperation (CAREC) corridors. Dating back to Soviet times, rail and road transport have been the country’s key and cheapest means of transport. According to current estimates, some 95% of cargo travelling through or to Uzbekistan still travels by road or rail.”

Uzbekistan was a key participant in the ancient Silk Road hundreds of years ago. When the OBOR Initiative was first raised by President Xi Jinping in 2013 the country responded to China’s initiative immediately, and signed agreements with the Chinese government, including investment and infrastructure construction for the Initiative.

Uzbek President Shavkat Mirziyoyev stated: “We believe participating in the OBOR Initiative meets the priority of our five-year development strategy for Uzbekistan 2017 – 2021.”
****Belt and Road a ‘great opportunity’: Uzbek official
China Daily, By Ren Qi, December 12, 2017

Vietnam

*”Vietnam is the sixth largest economy in the 10-member ASEAN bloc, trailing the Philippines yet followed by Myanmar. Its service, industry and agriculture sectors account for, respectively, 44%, 39% and 17% of GDP. Major industry and service sectors of the country include manufacturing, mining, construction, real estate and finance.

There were anti-Chinese riots in 2014, which damaged foreign-invested factories. The Vietnamese government undertook a series of remedial measures, including tax breaks and land rent exemption, to compensate the affected companies. Security conditions were reportedly enhanced that has improved foreign investors’ confidence has gradually improved, with investors remaining positive on Vietnam’s business environment and economic potential.

Vietnam’s top export markets in 2016 were the U.S., China and Japan.
Major imported items in 2016 consisted of machinery, equipment and parts, and electronics, computers and accessories. A large part of Vietnam’s imported capital goods is related to export assembly. China is the largest source of Vietnam’s imports, followed by Korea and Japan.

*****Vietnam, considered a key part of the maritime component of China’s ambitious OBOR Initiative, is a land full of opportunity. In particular, there has been a focus on Northern Vietnam’s Haiphong Port, with plans to complete a major facilities upgrade by the end of 2017. Haiphong is a key element along two of the proposed trade corridors. One is along a route connecting Nam Ninh, Lang Son, Hanoi and Haiphong, while the second connects Kunming, Lao Cai, Hanoi and Haiphong. “These proposals would see Vietnam playing an enhanced role in transporting goods produced in the Chinese mainland, while opening the local consumer market to external suppliers. Improved links are also expected to help develop Vietnam’s own industrial base.”
*****China’s One Belt One Road Initiative, WHAT IS BELT AND ROAD INITIATIVE?, Medium, By Markus Patrick Chan, September 9, 2017

China’s One Belt, One Road Initiative And Asia Is A Crucial Trade Route Starting Point, Part 4, Mongolia, Myanmar, Nepal, New Zealand, Philippines, and Singapore

ArmchairTechInvestor, May 30, 2018, by Brad Peery

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Below are summaries of the OBOR initiatives in the countries covered in the Asia Part 4 Region.

Mongolia

*“Mongolia has a land area of 600,000 square miles. The population of Mongolia was estimated at 3.06 million in 2015. According to Asian Development Bank, poverty remains widespread, with about 21.6% of the population living below the national poverty line.”

The leading economic sectors, including copper, gold, rare earth and coal mining. Some oil is produced in the south of the country. Because of the large mining sector, Mongolia is dependent on commodity prices, especially for cashmere wool and precious and industrial metals. China is the leading importer and accounted for 84% of total exports in 2015. It is reported that China is also the leading foreign investor in Mongolia.

**One of the corridors of OBOR Initiative linking China to Russia passes though Mongolia, with a plan underway to improve communication infrastructure between China and Mongolia.

Mongolia, unveiled its “steppe route” program. Planned are the construction of road links between its two neighbors and the development of the power grid. This national program must then be integrated into OBOR Initiative, as announced by the two countries several times.

“Thanks to the OBOR initiative, Mongolia hopes to reduce its dependence on extraction, diversify its economy and develop its industrial sector. Better integration into regional transport networks would enable Mongolia to increase its exports. Although the steppe route means greater integration with China. Mongolia also hopes that the new silk roads will diversify its economic partners, and attract European investors.
**Mongolia, a new link in the Belt and Road initiative, OBOReurope, April 10, 2017

Myanmar

Myanmar, being very small, is the seventh largest economy of the 10-member ASEAN bloc. It has a large service sector which accounts for about 46% of GDP. Industry and agriculture respectively account for 28% and 26% of GDP. Major sectors include agricultural processing, manufacturing, construction and transportation.

Myanmar’s GDP is forecast to expand by 7.7% in FY 2017/18 and 8% in FY 2018/19 on the back of improved global commodity prices and stronger demand from trading partners. Cumulative FDI into Myanmar had reached US$62.6 billion as of July 2017, with the Chinese mainland, Singapore and Hong Kong being the main sources.

***The Bangladesh-China-India-Myanmar (BCIM) OBOR Economic Corridor is the economic link connecting the Ganges River of India, the Ayerwaddy River of Myanmar, and the Mekong River of Indo-China. It is the lead bridge connecting the Pacific Ocean and the Indian Ocean. It is a market focus point for China, South and South East Asia. Therefore, building of the BCIM Economic Corridor could serve the common interests of the sub-regional countries’ economic and social development.”

The maritime route connecting Myanmar to India, is a transport loop which aims to provide maritime access of goods from Kolkata, via Myanmar’s port of Sittwe, to Paletwa by inland water transport along the Myanmar River, Kaladan, and back via highway to Mizoram in northeast India.
***”One Belt-One Road Initiative and MYANMAR” Connectivity: Synergy Issue and Potentialities, Global New Light of Myanmar, Than Zaw, March 11, 2018

Nepal

*”Nepal is a landlocked Himalayan country sandwiched between China and India. It maintains close relations with the two countries, especially with regard to infrastructure investment. Its hilly topography, however, poses a significant challenge to the improvement of transportation facilities within the country.”

In September 2015, after Nepal adopted a constitution that was received angrily by India, It imposed a five-month-long trade blockade on Nepal. The blockade proved to be a turning point for China, pushing Nepal closer to its neighbor.

****“Faced with crippling shortages of fuel, cooking gas, and even medicine, the then coalition government led by nationalist communist leader Khadga Prasad Sharma Oli signed agreements with Beijing to secure sea access via Chinese ports and to import petroleum products from China, breaking India’s monopoly over Nepal’s fuel supplies and access to seaports.”
****Nepal joins China’s ‘One Belt, One Road’ initiative, possibly alarming India, South China Morning Post, October 10, 2017

New Zealand

*“New Zealand is largely a service-based economy, with its services sector accounting for almost 72% of the country’s GDP, and the industry and agriculture sectors taking up GDP shares of about 20% and 8% respectively. Major economic sectors include real estate services, professional, scientific and technical services, manufacturing and retail trade and accommodation.”

New Zealand has many free trade agreements (FTAs). It has bilateral FTAs with Australia, China, ASEAN, Singapore, Malaysia, Korea and Thailand. It is also a member of the Trans-Pacific Strategic Economic Partnership with Brunei, Chile, Singapore and New Zealand. The Trans-Pacific Partnership (TPP) Is trade deal that has not yet been approved by its members. Major pending FTAs are with Russia-Belarus-Kazakhstan, India and the EU.

*****New Zealand is wary of the Chinese objectives with regard to their OBOR Initiative, despite having signed a MOU with China. “In a statement, Foreign Affairs Minister Gerry Brownlee said Kiwi officials were still working with their Chinese counterparts on a detailed work plan, to be completed within the next 18 months. As a government, we are refining how we will engage with the Initiative. Brownlee said New Zealand’s approach to Belt and Road would ‘be consistent with our track record as an advocate for open, rules-based trading systems’.”
*****What does China’s Belt and Road mean for NZ?, Newsroom, Sam Sachdeva, July 21, 2017

Philippines

*The Philippine economy is expected to have growth of 6.6% in 2017, led by strong domestic demand and a recovery in exports.

President Rodrigo Duterte remains popular after a year in office. Underlining his policy is opening the door to closer economic cooperation with China.

“Infrastructure development has become a top priority, with a list of mega infrastructure projects amounting to US$160 billion in the pipeline. Infrastructure spending is ambitiously targeted to increase from less than 2% of GDP in 2016 to 5% by 2017, then further expanding to 7% by 2019. Infrastructure investment is expected to be a major economic driver over the next few years.”

******China’s President Xi met with President Duterte in November 2017. Both sides committed to cooperate in infrastructure construction, agriculture, investment and other areas aligned with the OBOR Initiative and with the Philippines’ development strategy. The Philippines has entered into over 10 bilateral co-operation agreements with China.
******Nomura: Philippines a winner, but also most at risk, under China’s ‘Belt and Road’ By Ian Nicolas Cigaral (philstar.com) – April 17, 2018

Singapore

*“Singapore’s services sector contributes some 70% of the country’s GDP with the sectors of wholesale & retail trade, business services and finance & insurance being the prime drivers. The industrial sector takes up almost the remaining GDP share, as agriculture contributes to less than 1% of GDP. Construction, electronics, biomedical, petroleum and petrochemicals are the key industry sectors, while precision engineering is also gaining impetus as a driver too.”

*******The top export markets for Singapore were the Chinese mainland first, Hong Kong second, Malaysia, Indonesia and the U.S. Although, many of the trade corridors under the OBOR initiative will bypass Singapore, China’s OBOR Initiative will be a focal point in its relationship with Singapore, Prime Minister Lee Hsien Loong has said. Mr Lee said Singapore and China have identified four major areas of cooperation: infrastructure connectivity, financial connectivity, joint collaboration to help other OBOR countries, and offer of services to resolve cross-border commercial disputes. Singapore is a global financial center and one of the largest offshore yuan centers in the world.

Also, many Chinese companies use Singapore as a base of operations in the region.
*******Belt and Road Initiative a focal point for Singapore’s ties with China, The Straits Times, By Danson Cheong, April 8, 2018

China’s One Belt, One Road Initiative And Asia Is A Crucial Trade Route Starting Point, Part 5, South Korea, Sri Lanka,Tajikistan, and Thailand

ArmchairTechInvestor, May 30, 2018, by Brad Peery

Book Under Development-Simon and Schuster: China vs. U.S. 2018, A Police State vs. A Democracy
Book on Amazon.com: Trump’s Political Agenda and Achievements

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Below are summaries of the OBOR initiatives in the countries covered in the Asia Part 4 Region.

South Korea

*The South Korean economy grew by 3.1% in 2017, following a 2.9% expansion in the previous year. Korea is very dependent on trade, with total foreign trade accounting for about 80% of the country’s GDP. China was Korea’s largest export partner 2017, and accounted for about 25% of total exports. Other major export destinations were the U.S., 12%, and Vietnam 8%. Major sources of imports to Korea were China, 20%, Japan, 12% and the U.S., 11%.

**The tensions between North Korea, and South Korea and the U.S. have slowed any benefit South Korea might get from China’s OBOR Initiative. So far, China’s Initiative has focused on investments, particularly infrastructure projects, in Central and Southeast Asia, Africa, and Europe. “However, the Chinese government’s Vision and Action Plan also foresees the provision of economic opportunities to regions in Northeast Asia. Specifically, three northern Chinese provinces — Liaoning, Jilin, and Heilongjiang — are positioned to become part of a Northeast Asian economic zone that could link Russia, Mongolia, and possibly even the Korean Peninsula.”

South Korea has developed its own Eurasia Initiative (EAI). EAI is also based on economic cooperation in Eurasia through infrastructure projects, such as the trans-Korean railway, that ultimately hope to promote peace to the Korean Peninsula. By doing so, South Korea could also access train routes over the Eurasian landmass, reducing the logistics costs of its exports to Europe by up to 30%. This initiative could also benefit North Korea, should a unified Korean Peninsula come about.

The OBOR Initiative makes no mention of South Korea or North Korea. By creating new access to the Eurasian market, South Korea hopes to create an improved economy, while becoming less dependent on trade with China and the United States. At the same time, the initiative foresees possible North Korean economic integration into the region, which might trigger changes for South Korea.

***“Comparing the outlook of the two initiatives for the peninsula, it seems that they cannot coexist at this state without creating further tensions in the region. If China does not include South Korea in its initiative, but approaches North Korea for trade, then relations between Seoul and Beijing might deteriorate. Likewise, China will not be too pleased if the South pushes forward with an initiative that diminishes China’s economic grip on the peninsula.”
**One Belt, One Road, One Korea?, Together, China’s Belt and Road and South Korea’s Eurasia Initiative could help pave the path to peace on the peninsula.
The Diplomat, By Maximilian Römer, February 10, 2018

Sri Lanka

Sri Lanka’s economy is growing at about a 4.5% rate. Sri Lanka is a mid-sized country in South Asia in terms of GDP and population. The services sector is about 60% of the Sri Lankan economy. Information technology, financial services, tourism and telecommunications are the main growth engines. The industry sector accounts for about 26% of GDP.

In July 2017, the Sri Lanka Ports Authority (SLPA) and China Merchants Port Holdings (CMP) signed an agreement under which the joint venture majority-owned by the CMP, which will invest up to US$1.12 billion, will handle the commercial operations of the Chinese-built Hambantota Port on a 99-year lease, with the port expected to play a strategic role in the OBOR Initiative.
In 2016, Sri Lanka granted China the permission to build its flagship Colombo Port City under the Megapolis initiative. Huawei has also invested significantly in Sri Lanka and teamed up with the major Sri Lankan telecom operators. Sri Lanka defaulted on its Hambantota Port project, and China traded debt for equity and basically owns the project for 99 years.

Sri Lanka has abundant potential as an investment destination, especially its location in the middle of the Indian Ocean. It is adjacent to one of the busiest sea lanes in the world and in the middle of the OBOR region. Its opportunity should be leveraged carefully by policy makers. “The clumsy foreign policy misjudgments of early 2015 must be carefully rectified and left behind. While the OBOR opens up enormous possibilities, Sri Lanka is also in a position to exploit its strategic location in the centre of the rapidly expanding South Asian economies.”
***One Belt One Road – A Unique Opportunity For Sri Lanka, by Dr Palitha Kohona, February 10, 2018

Tajikistan

*Tajikistan is the poorest country in per-capita GDP among the Central Asia countries. Surrounded by Afghanistan, China, Kyrgyzstan and Uzbekistan, Tajikistan is a landlocked mountainous country, with 90% of its country being mountainous. Tajikistan has close ties with Russia and is highly dependent on remittances coming from Russia. About half of its working-age males are working abroad, mostly in Russia. In 2014, the total volume of remittances amounted to US$3.9 billion, nearly 50% of the country’s GDP.

***“Tajikistan’s trade with China has been increasing. The value of bilateral trade increased from US$0.5 billion in 2007 to more than US$2.5 billion in 2014. Meanwhile, Chinese enterprises have been staffing more infrastructure projects in Tajikistan, including the Sahelistan Tunnel and Tajik-Uzbek Highway, as well as various resources extraction projects.”

Because of its geographical location and its isolated location, the government is focused on the development of transport infrastructure. Tajikistan has 14 bilateral and 12 multilateral agreements in place, has transport operations to 33 countries worldwide, and has a bilateral agreement on international road transport to China.

China’s OBOR Initiative opens up significant opportunities for the region’s carriers. It also gives them access to the sea. The OBOR development is also consistent with an important Tajikistan government strategic development initiative, which is to put an end to transport isolation and to transform Tajikistan into a transit country.
***Tajikistan – transport leader reveals how TIR in China will open up vast opportunities” for the region, IRU, September 5, 2017

Thailand

*“Thailand is the second largest economy in the 10-nation ASEAN, following Indonesia. Service is the largest sector of the economy with a GDP share of 55%, followed by 36% in industry, with agriculture constituting 9% of GDP. Major sectors include electronics, car making, transport, storage, communication, tourism, finance and real estate.”

Thailand is a very important electronics manufacturer. The largest exports are computers and parts, automobiles and parts, machinery and equipment. The most important imports are crude oil, parts of electronics and electrical appliances, chemicals, automobiles and parts.

Thailand’s top three trading partners were China, Japan and the U.S. in the first half of 2017. Thailand is a member of ASEAN, which has an agreement with China to establish the China-ASEAN Free Trade Area (CAFTA), and over 90% of the products traded between China and Thailand are now tariff-free. In November 2015, ASEAN and China concluded an improved agreement on CAFTA that projected that bilateral trade would increase to $1,000 billion, from about $480 billion in 2014. The improved CAFTA deal also covers technological cooperation.

*****Thailand has plans to build a 540-mile railroad link to its border to connect with the Laos-China railway, which is under construction and will go to the eastern ports and industrial zones of the EEC.

Thailand said a $44 billion plan to add infrastructure and upgrade industry on its eastern seaboard can link up with China’s OBOR Initiative. The US$44 billion EEC project is planned to turn Thailand’s Eastern provinces into a trade and industry hub creating as much as 100,000 jobs a year by 2020. The majority of the jobs will be in the manufacturing and service industries.

“The EEC plan covers Rayong, Chachoengsao and Chonburi provinces. Under the project, Thailand will aim to take on Singapore’s dominance in aircraft maintenance, repair and overhaul as part of a US$5.7 billion upgrade of U-Tapao International Airport. The Thai government has given approval for a 138 mile high speed train project worth $6.25 billion to link three airports as part of the development of its eastern economic corridor (EEC).”

A high-speed China-Thailand railroad under OBOR is under construction and will be the first high-speed railway in Thailand. The railroad will connect Thailand to Laos and Kunming in China. Submarine cables will connect Bangkok with Hong Kong and mainland China. This extensive connectivity is expected to boost tourism and attract investment.
*****Thailand To Integrate The EEC With China’s One Belt One Road Initiative, The Thai government intends to connect the Eastern Economic Corridor (EEC) to China’s One Belt One Road (OBOR), Thailand Business News, By Olivier Languepin, March 2, 2018

China’s One Belt, One Road Initiative And Asia Is A Crucial Trade Route Starting Point, Part 3, Indonesia, Kazakhstan, Kyrgyzstan, Laos And Malaysia

ArmchairTechInvestor, May 29, 2018, by Brad Peery

Book Under Development-Simon and Schuster: China vs. U.S. 2018, A Police State vs. A Democracy
Book on Amazon.com: Trump’s Political Agenda and Achievements

Blogs
www.ArmchairTechInvestor.com
www.ArmchairPolitician.US

Below are summaries of the OBOR initiatives in the countries covered in the Asia Part 3 Region.

Indonesia

One Belt, One Road Network
ArmchairTechInvestor, May 27, 2018, by Brad Peery

“Indonesia is the largest economy in the 10-nation ASEAN followed by Thailand. Service and industry are Indonesia’s main economic drivers, accounting for 46% and 40% of GDP respectively, with the remaining 14% attributable to agriculture. Major sectors include manufacturing (tobacco, food and beverages, transport equipment and machinery), mining, construction, transport and communication, finance and real estate.”

Indonesia’s major trading partners include China, Japan, Singapore and the U.S.
Chinese enterprises are actively participating in Indonesian infrastructure projects. A Sino-Indonesian joint venture was formed in 2016 to build the 142km high-speed railway between Jakarta and Bandung. CAMC Engineering Company is participating in the re-development of container facilities on Batam Island, a free trade zone of Indonesia just to the south of Singapore.

Indonesia has an ambitious infrastructure building plan and President Joko Widodo in May, 2017 attended an international forum in Beijing to promote the One Belt, One Road Initiative.

****“Chinese Premier Li Keqiang has said his country wants to work closely with Indonesia to better link its Belt and Road Initiative to the South-east Asian nation’s development strategy. Xinhua news agency quoted Mr Li as saying: ‘The economies of the two countries are highly complementary and the potential for economic and trade cooperation is huge.’ He added that China attaches great importance to developing ties with Indonesia.”
****China wants closer ties with Indonesia, says Premier Li Keqiang, The Straits Times, Feb 9, 2018. Goh Sui Noi

Kazakhstan

One Belt, One Road Network
ArmchairTechInvestor, May 27, 2018, by Brad Peery

*“Kazakhstan is an important world energy supplier due to its significant reserves of oil natural gas and coal. It is estimated that proven reserves in Kazakhstan account for some 3% of world oil reserves, 1% of world gas reserves and 4% of the world coal reserve. It is also endowed with some other mineral deposits like chrome, lead, tungsten, copper, zinc, iron and gold.”

****A visit by Chinese Premier Li Keqiang led to economic deals totaling $14 billion. This was followed by China officials announcing that Kazakhstan would launch more than 20 joint projects with Chinese companies, focusing on priority sectors in the Kazakh manufacturing industry, such as mining, oil and gas, construction, chemical and light industry, and transport. “In March 2015, the two countries signed a series of cooperation agreements worth of $23.6 billion, on closer co-operations in various sectors such as railway, electricity, nuclear energy and agriculture.”

An oil-and-gas development project in Aktyubinsk region of Kazakhstan involved oil pipelines being built to allow direct oil exports to China, including the pipeline running from Kazakhstan’s Caspian shore to Xinjiang of China. Major participants in the projects include the China National Petroleum Corporation and the Kazakh oil company KazMunayGas.

****Kazakhstan needs to find alternates for growth, by diversifying and innovating, itself instead of relying solely on natural resources. The OBOR Initiative provides an opportunity for Kazakhstan to attract Chinese money and technologies, and become one of the largest transit hubs in Eurasia.
Practitioners’ perspectives, Kazakhstan and the Belt and Road, GRATA Law Firm, Shaimerden Chikanayev, April 27, 2017

Kyrgyzstan

One Belt, One Road Network
ArmchairTechInvestor, May 27, 2018, by Brad Peery

“Kyrgyzstan is a mountainous country located at the crossroads of Asian cultures. Its economy relies heavily on the exploitation and export of gold, mercury, natural gas and uranium, along with agricultural products such as cotton, meat, tobacco, wool and grapes,. Due to its mountainous landscape, livestock farming dominates its agricultural economy, while aluminium production represents the bulk of its industrial production. Meanwhile, the service sector, including banking and tourism, has become an increasingly important growth driver.”

Business ties are improving. Bilateral trade is also looking better, with
Russia being the largest trading partner, followed by China. “There are now more than 250 Chinese companies registered in Kyrgyzstan, including Zhongda China Petrol Company and Zijin Mining Group, and covering various industries such as mining, trading, construction, telecommunications, agriculture and metallurgy.”

At a meeting in May, 2017, the Kyrgyz President praised the OBOR Initiative. According to the head of the foreign policy department of the Kyrgyz president’s office, Aizada Subakozhoeva, Atambayev “noted the importance of expanding fiber-optic communication lines from China to Europe via Kyrgyzstan, e-commerce, and the creation of logistics centers. The project of construction of the China-Kyrgyzstan-Uzbekistan railway was noted as promising.”

Central Asia, especially Kazakhstan, may be a bridge between markets but are there benefits beyond transit fees? As Fallon pointed out in her RFE/RL interview, “China’s investment in [rail links and connectivity] could be beneficial for connecting these various economies. But some are concerned that the trains will just go through Central Asia and bring these goods to Europe and not really help Central Asian economies as much.”
*****Majlis Podcast: What Does China’s One Belt, One Road Project Mean For Central Asia?, OBORwatch, December 6, 2016
*****What’s Next for the Belt and Road in Central Asia?, Three regional presidents attended the Belt and Road Forum in Beijing last weekend. By Catherine Putz, May 17, 2017

Laos

One Belt, One Road Network
ArmchairTechInvestor, May 27, 2018, by Brad Peery

*“Laos is the only landlocked ASEAN country, bordering Myanmar, Thailand, Vietnam and Cambodia, as well as China. With GDP growth averaged about 7.7% over the past decade, Laos is one of the fastest growing economies in ASEAN. The economy of Laos is heavily reliant on the mining and hydropower sectors.”

Thailand, China and Vietnam are the largest trading partners of Laos. Laos has entered free trade agreements with China, India, Japan, Korea, Australia and New Zealand under the ASEAN agreement. Laos has signed bilateral investment agreements with 25 countries, including China, Japan, Korea and UK. It has also concluded a bilateral trade agreement with the U,S., which includes some investment requirements.

China’s OBOR railroad with Asean linking China’s border to Vientiane has started. Construction in Laos has progressed to more than 10 per cent of the project. Daochinda Siharath, deputy director of the Lao National Railway State Enterprise and deputy general manager of the Laos-China Railway Co, said that the Laos section of the China-Laos-Thailand railway is about 13.5 per cent built after construction began in January, 2017. The five-year project runs until December 2021, It has an estimated total cost of $5.9 billion. Laos owns 30% of the company while China is owns the rest. The Export-Import Bank of China is the main source of loans for the project, in which debt financing accounts for 60 per cent of the total cost.

“The Chinese government’s initial 2013 OBOR Initiative vision dared to imagine a network covering 65 countries with 4.4 billion people and aggregate economic value to $21 trillion or 29 per cent of global GDP. The Asian Development Bank estimated that to bring it to reality, Asia would need to invest about $26 trillion between 2016 and 2030 in order to maintain growth momentum. For Asean infrastructure alone, the investment would need to be about $3.2 trillion.”

Malaysia

*Malaysia’s economy expanded by 4.2% in 2016, slowing from 5% in 2015. The IMF expects GDP growth at around 5.4% in 2017. Major Malaysian exports include electronics and electrical products (E&E), palm oil and palm oil-based products and refined petroleum products. Major export markets include Singapore, China, the U.S., EU and Japan.”

Malaysia’s major imports were intermediate goods and capital goods, including electronics, machinery and petroleum products. The major imports came from China, Singapore, EU, Japan, and the U.S.

*****“The Belt and Road Forum (BRF) held in Beijing in May 2017, yielded a total of nine memorandums of understandings (MoUs) and agreements signed between Malaysian and Chinese companies. Among the major projects under the initiative is the Malaysia-China Kuantan Industrial Park in Pahang, Melaka Gateway, East Coast Rail Link and Xiamen University Malaysia.”

******These agreements were mostly trade based and boasted a total value of US$7.22 billion or RM31.26 billion. Prime Minister Datuk Seri Najib Razak met with his Chinese counterpart President Xi Jinping in May, 2017. “Najib said the ‘One Belt One Road Initiative’ would derive massive benefits to Malaysia in terms of excellent infrastructure, connectivity, social facilities, better living standards and abundant business opportunities.”

A digital free trade zone was set up by Alibaba Group Holding Ltd (Alibaba Group), is expected to begin at the end of 2019.

“In Malaysia the effect has also been observed as OBOR-related projects such as the Melaka Gateway deep-sea port have faced heavy criticism in regards to its necessity, contract awards and funding.”
******China’s Belt and Road: What’s in it for Malaysia? The Borneo Post, September 3, 2017, Sunday Rachel Lau

China’s One Belt, One Road Initiative And Asia Is A Crucial Trade Route Starting Point, Part 2, India Is A Problem

ArmchairTechInvestor, May 28, 2018, by Brad Peery

Book Under Development-Simon and Schuster: China vs. U.S. 2018, A Police State vs. A Democracy
Book on Amazon.com: Trump’s Political Agenda and Achievements

Blogs
www.ArmchairTechInvestor.com
www.ArmchairPolitician.US

Below are summaries of the OBOR initiatives in the countries covered in the Asia Part 1 Region.

India

*“India’s exports expanded by 9.9% year-on-year (YOY) to US$191.3 billion in the first eight months of 2017, while imports grew 27.2% YOY to US$288.8 billion in the same period. India’s major export markets included the UAE, the U.S. and Hong Kong. Major import sources were China, the UAE, Saudi Arabia, Switzerland and the U.S.”

India’s technology services sector is a very important export source. A “Make in India” initiative was launched in September 2014 to make India into a world class manufacturing hub through attracting foreign direct investment (FDI). India recorded an FDI inflow of $100 billion between October 2014 and June 2017, up 64%. As of June 2017, India’s cumulative inward FDI amounted to $342 billion. Mauritius was the largest FDI source for India, followed by Singapore and Japan Cumulative FDI from Chinese mainland amounted to $1.7 billion.

China expressed an interest in setting up economic corridors with many countries in the region, including the Bangladesh-China-India-Myanmar (BCIM) Economic Corridor, which was jointly proposed by China and India in 2013. However tensions with China have increased.

India has concluded several free trade agreements (FTAs) with countries and regions including Afghanistan, Bhutan, Ecuador, Singapore, Malaysia, Sri Lanka, Nepal, Korea, Chile, Japan, Africa, the ASEAN and the MERCOSUR (Brazil, Argentina, Uruguay and Paraguay). India also engages in the Agreement of South Asia Free Trade Area (SAFTA), and the Asia Pacific Trade Agreement (APTA). Currently, India is negotiating FTAs with Australia, Canada, Egypt, Indonesia, Israel, New Zealand, Thailand, the Gulf Cooperation Council (GCC) and the EU.

China’s promotion and financing of its OBOR initiative is creating strains with India. An increase in tensions between these regional heavyweights is not an outcome China advertises.

“A quadrilateral meeting was held between senior officials from the United States, Japan, India, and Australia on the future of a ‘free and open Indo-Pacific.’ India’s participation in the dialogue is yet another signal that China’s method of implementing the OBOR is driving a wedge between China and India and creating an opportunity for the United States to strengthen its ties with New Delhi.”

One result of China’s OBOR initiative is that the Indian Ocean part of the Initiative threatens to surround India. So far that has not occurred.

******Beijing’s handling of territorial disputes in the era of OBOR has increased tensions in the region. The OBOR vision statement claims “Principles of Peaceful Coexistence” which include a “mutual respect for each other’s sovereignty.” Contrary to this principle, China has escalated sovereignty disputes by pressing territorial claims against its neighbors.

In the South China Sea, China has challenged Vietnamese claims by moving a state-owned oil-rig into disputed waters and constructed on disputed features in the Spratly Islands:
• Airstrips suitable for military aircraft; and,
• Other military installations,

On the Doklam Plateau in 2017, China challenged Bhutan’s sovereignty by attempting to extend a road into disputed territory. This lead to a military standoff with India, Bhutan’s protector. These actions directly contradict the OBOR vision statement and send a signal to China’s neighbors that it will aggressively use its power to assert claims over disputed territories. Neighboring states are now forced to consider how China’s OBOR investments may be leveraged to strengthen its position on competing territorial claims.

China’s OBOR Initiatives are challenging India’s territorial claims in Kashmir. The China-Pakistan Economic Corridor goes through territory in Kashmir that Pakistan controls and India claims. India believes that China has abandoned its neutral stance and sided with Pakistan. “China’s failure to address Indian concerns was the initial cause of New Delhi’s reluctance to join the One Belt, One Road Initiative. China’s unilateral implementation of its vision for the OBOR Initiative over Indian objections has increased bilateral tensions.

India has additional concerns in the Indian Ocean. “China has invested in port facilities in states surrounding India including Pakistan, Myanmar and Sri Lanka. Investment in these ports has given rise to the “string of pearls” theory which speculates that China will leverage these facilities for military use. When viewed on a map, these maritime investments represent the encirclement of India at sea. The Chinese docked attack submarines at a Chinese-constructed port in Sri Lanka. This indicates a militarization of these OBOR-related investments in India’s island neighbor. Naval encirclement is a significant security concern, as India depends upon sea transport for about 90 percent of its international trade.

“India is also concerned about shifting regional security alignments because of Chinese investments in its land and sea neighbors. Indian Foreign Secretary Jaishankar commented on New Delhi’s concerns about the potential consequences of the OBOR in March 2016: The interactive dynamic between strategic interests and connectivity initiatives … is on particular display in our continent… We cannot be impervious to the reality that others may see connectivity as an exercise in hardwiring that influences choices” they make.

India pundits have expressed concerns that countries such as Sri Lanka will get trapped in debt and servitude to China, as they did. Sri Lanka’s debt default resulted in China getting control of a deep-water port at Hambantota for 99 years in a debt for equity swap. In this exchange, the PRC gained a potential “pearl” to add to its string. Sri Lanka has actually renewed ties with India due to concerns about undue Chinese influence stemming from its debt. “If future trends align with the projections of OBOR critics, the PRC could parlay economic investment into puppet states that encircle India on land and sea. Unfortunately, if other potential puppet states turn toward India instead, it could still result in increased tensions as Chinese debtors become more entangled with India.”

India signed a bilateral logistics exchange memorandum of agreement (LEMOA) with the United States in 2016, which granted reciprocal logistics access to military bases. With Japan, India has increased security cooperation by selecting Japan as a permanent participant in the traditionally U.S.-Indian Malabar security exercise in 2015. These actions signal an active effort by New Delhi to address its security concerns with China by keeping friendly military powers engaged in the region.

India has also sought to increase its economic relationships with democratic regional powers to promote its own vision for connectivity development. Indian Prime Minister Modi has unveiled the Asia-Africa Growth Corridor (AAGC), a connectivity initiative conceived by India and Japan and seen as a potential counter to the OBOR Initiative. “If India chooses deepened cooperation with democratic powers in the wake of the initial “quad” meeting, it will be another sign of the ever-increasing tensions between New Delhi and Beijing due to the OBOR. More troubling, the ‘quad’ meeting portends a trend toward military and economic polarization in Asia.”
******China’s Belt and Road Initiative Is Stoking Tensions with India, The National Interest, Mitchell J. Hays, November 16, 2017

China’s One Belt, One Road Initiative And Asia Is A Crucial Trade Route Starting Point, Part 1, Azerbaijan, Bangladesh, Bhutan, Brunei and Cambodia

ArmchairTechInvestor, May 28, 2018, by Brad Peery

Book Under Development-Simon and Schuster: China vs. U.S. 2018, A Police State vs. A Democracy
Book on Amazon.com: Trump’s Political Agenda and Achievements

Blogs:
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www.ArmchairPolitician.US

Below are summaries of the OBOR initiatives in the countries covered in the Asia Part 1 Region.

Azerbaijan

*”Azerbaijan is one of the most convenient routes from Northeast Europe to Central Asia and the Middle East. Situated on the shores of the Caspian Sea in Southwestern Asia, it shares borders with Russia, Georgia, Armenia, Turkey and Iran. It has the biggest port on the Caspian Sea (Baku International Sea Trade Port), Azerbaijan is a logistics hub for the Caspian region”.
*The Belt and Road Initiative: Country Profiles, Hong Kong Trade Development Council, May 17, 2018

**Azerbaijan is ideally situated to be an important part of China’s OBOR Initiative. It has a modern port at Baku and is an ideal partner for a land route through the North that goes through Barda its capital in the old days. The shortest way to approach West Asia from China is via Baku, the current capital of Azerbaijan. China is the manufacturer of the world’s fastest and most luxurious trains. A railroad track is already operational from Aktau and Turkmenbashi, transporting goods to the New Baku International Sea Trade Port and then westward to Turkey and Europe.

Barda, about 150 miles west of Baku, was a trading hub on the ancient overland Silk Road. The China-Central Asia-West Asia Economic Corridor is a land-based substitute for these two traditional routes.

“Azerbaijan is an ideal partner for construction of the Belt for three reasons:
• The Azerbaijan-located Caspian rim area is becoming a new joint zone of East Asian, European and Russian economic interest;
• Azerbaijan is the forerunner in the rejuvenation of the ancient Silk Road in terms of re-development multiple large-scale transnational transport systems; and
• Azerbaijan bears similarities with China, which contribute to mutually beneficial cooperation.”

Azerbaijan and China need to identify specific areas of cooperation.
**Azerbaijan forms a key link in the Silk Road chain, By Malik Ayub Sumbal, China Daily Europe January 20, 2017

***“Azerbaijan is a major supporter of the Transport Corridor Europe-Caucasus-Asia project, initiated by the EU and considered the backbone of the Silk Road.
The Baku-Tbilisi-Kars railway has been dubbed the Iron Silk Road.

China has initiated the Silk Road Fund, for which the Asian Infrastructure Investment Bank will allocate very large sums for the construction of these international corridors. “According to estimates, the trans-Caspian route could be transporting around 300,000-400,000 containers by 2020, bringing in hundreds of millions of dollars.”
***Relations between China and Azerbaijan are growing fast and Azerbaijan has great potential to become a valuable partner in the Silk Road project – one of the great initiatives of the 21th century.
Malik Ayub Sumbal is the Editor in Chief of Eurasia Media Network and The Caspian Times., China Daily European Weekly, January 20, 2017

Bangladesh

1. *“Bangladesh is the third most-populated country in South Asia (after India and Pakistan). It shares borders with India to the north, west and east, and overlooks the Bay of Bengal to the south. It has two existing major ports, the Port of Chittagong and the Port of Payra, but should be converted to a deep sea port by 2025.

****“China intends to set up an economic corridors in alliance with other countries – with one covering Bangladesh, India and Myanmar (i.e. the BCIM Economic Corridor). The Corridor will link India’s Kolkata with China’s Kunming, with Myanmar’s Mandalay and Bangladesh’s Dhaka among the key points.” The Port of Dhaka is a major river port on the Buriganga River. The Chinese government has pledged to finance multi-billion infrastructure projects in Bangladesh.

Bangladesh and China have formed a joint venture, Bangladesh-China Power Company Limited, to invest US$1.56 billion to build a coal-fired electricity plant near the proposed sea port south of Dhaka.

During Chinese President Xi Jinping’s visit to Bangladesh in October 2016, the first of its kind in 30 years, he elevated the two countries’ partnership to the strategic level and committed to fully integrating Bangladesh into the OBOR Initiative.
****Xi Jinping’s infrastructure initiative will help power-starved South Asian nation fire up more manufacturing capacity, South China Morning Post, April 10, 2017, Sidney Leng

Bhutan

*”Bhutan, with the smallest population in South Asia, is a small, landlocked Himalayan kingdom set in between China to the north and India to the south. Bhutan has forged a close relationship with India, with its robust GDP growth driven primarily by selling hydropower to India in recent years. Indeed, about 90% of Bhutan’s exports go to India, which mainly composed of hydropower and base metals. As to imports, about 80% are sourced from India, including fuel and machinery. Other import sources include France, Japan, Singapore and China.

Bhutan has a weak relationship with China, and is being bypassed by China’s OBOR Initiative.

Brunei

Brunei is located on the north coast of the island of Borneo, facing the South China Sea and surrounded by East Malaysia. Its economy is heavily resource-dependent, with the oil and gas sector accounting for some 60% of GDP and more than 90% of its export and fiscal receipts. Despite having the smallest population in ASEAN, Brunei’s per-capita income is the second highest in ASEAN after Singapore.

Brunei is a member of the ASEAN Economic Community (AEC), Brunei has entered free trade agreements (FTAs) with China, Korea, India, Australia and New Zealand under the ASEAN context. A bilateral FTA with Japan was also entered into. Also, Brunei has participated in the negotiation of the Regional Comprehensive Economic Partnership (RCEP), and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

On a tiny island of Muara Besar, off Brunei’s northern tip on the South China Sea, thousands of Chinese workers are building a refinery and petrochemical complex, along with a bridge connecting it to the capital, Bandar Seri Begawan. It is a $3.4 billion complex, and is run by China’s Hengyi Group. When completed, it will be Brunei’s largest-ever foreign investment project, and comes at a time when the oil-dependent country badly needs it. The Muara Besar project is expected to provide over 10,000 jobs, but claims that thousands of Chinese workers have been shipped in to build the complex has angered some local residents.

“Brunei is an important country along the 21st century Maritime Silk Road,” China’s Ambassador to Brunei Yang Jian said at the opening ceremony in February 2017 for a joint venture, running Brunei’s largest container terminal.
*****As Western banks leave, China adds Brunei to new silk road, Reuters, By Praveen Menon, March 4, 2018

Cambodia

*Cambodia is part of the China-ASEAN Free Trade Area (CAFTA).
Foreign direct investment in Cambodia reached US$16.7 billion in 2016, with projects mainly in the sectors of banking and finance, manufacturing, real estate, agriculture, tourism, energy, transport and telecom.

*****“Cambodia has been an enthusiastic supporter of China’s Belt and Road Initiative (BRI) and has made significant in-roads linking its own development to Chinese expansion; however, with the influx of Chinese capital, Cambodia will find itself drawn further into the sphere of China’s economic and strategic influence.”

Cambodia has become an attractive country for Chinese foreign direct investment. It offers political stability, low labor costs, easy market access, and a strategic location in Southeast Asia that have all led to a very large increase in Chinese money.

“During Xi Jinping’s 2016 visit, China signed 31 economic agreements, including $237 million in soft loan deals with Cambodia. Xi also pledged to push for Chinese investment in Cambodian infrastructure and cancelled roughly $89 million in Cambodian debt.”

Despite having a rapidly growing economy, Cambodia has infrastructure problems that include:
• Electricity;
• Rural road transport; and,
• Water sanitation.

With few other financial alternatives sizeable enough to cover Cambodia’s infrastructure needs, the promise of a large, no-strings-attached loan makes China’s OBOR proposal difficult to resist.

“Participation in the OBOR Initiative, brings with it access to the enormous infrastructure funding of Chinese-led financial institutions, such as the Asian Infrastructure Investment Bank, the Export-Import Bank of China, the China Development Bank, and the Silk Road Fund.”

China is the largest foreign investor in Cambodia’s energy sector, with more than $7.5 billion of total investments in hydropower plants. Cambodia and China have agreed on several hydropower dam projects. Kemchay Dam was constructed with Chinese assistance and possesses an electrical capacity of 194 megawatts, enough to cover a very large area of the country.

“The biggest hydropower dam, Lower Sesan II Hydropower Plant, will generate up to 400 megawatts per hour once operational, providing enough power to radically transform Cambodia’s energy infrastructure.”

China also offers developmental assistance on Cambodia’s transportation infrastructure, including bridges, highways, railways, and ports.

China has also helped Cambodia to upgrade its deep water Sihanouk Autonomous Port, which could contribute to expand China’s growing influence and expansion in the Indian Ocean.

The Chinese investments involve economic and strategic risk to Cambodia. With an increasing number of plants to generate electricity, Some of China’s projects do not meet international standards, which has resulted in adverse impacts on local livelihoods and the ecosystem.

“Nearly 5,000 families are likely to be evicted from their villages when the dam’s reservoir fills, and the dam may block key fish migration routes, which would threaten loss of most of the fisheries resource that many people depend on. Deals between China and Cambodia have met with additional criticism over major land concessions, the disregard of human rights, and the extent of control over Cambodian development given to Chinese contractors.”

China is Cambodia’s largest creditor. As their debt grows, it may increase beyond their ability to pay it, and Cambodia may find itself in a similar scenario to Sri Lanka in which state property is used as equity to pay their Chinese creditors.

The China relationship may have the following negative effects:
• Lock this small state securely under China’s growing strategic sphere of influence;
• Cause Cambodian foreign policy to prioritize short-term benefits in a way that privileges Chinese political and diplomatic interests at the expense of ASEAN counterparts and other regional powers;
• Prejudice negatively Cambodia and their partners territorial claims on the South China Sea; and
• Cause concerns that China’s growing political and economic leverage over Cambodia will bring a future of Cambodian foreign policy as no more than an extension of Chinese regional influence.
*****Money talks: China’s belt and road initiative in Cambodia, Global Risk Insights, by Qi Lin, January 7, 2018

China’s One Belt, One Road Initiative And The Middle East Is A Crossroads, Part 4, Pakistan, Turkey, United Arab Emirates, And Yemen

ArmchairTechInvestor, May 27, 2018, by Brad Peery

Book Under Development-Simon and Schuster: China vs. U.S. 2018, A Police State vs. A Democracy
Book on Amazon.com: Trump’s Political Agenda and Achievements

Blogs:
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www.ArmchairPolitician.US

Below are summaries of the OBOR initiatives in the countries covered in the Middle East Part 4.

Pakistan

*”Pakistan is part of the southern region of the Asian continent that is known as South Asia. It is located on the crossroads of Asia and the Middle East, bordering China in its north-most area, India in the east and Iran and Afghanistan in the west. Pakistan is the world’s sixth most populous country with about 200 million people. It is the second largest economy in South Asia after India.”

Pakistan is a member of the South Asian Association for Regional Cooperation (SAARC), Pakistan is also a member of the South Asia Free Trade Area (SAFTA). Pakistan is one of the member states of Central Asia Regional Economic Cooperation (CAREC) and Economic Cooperation Organization (ECO). Importantly Pakistan has signed a bilateral a trade agreement with China, and agreements with Malaysia and Sri Lanka that also have ports financed and managed by China.

The China-Pakistan economic corridor is being established to develop modern infrastructure projects that include roads, railroads and power plants. A 250-mile Multan-Sukkur section of the Peshawar-Karachi Motorway began construction in 2016 for completion in August 2019.

Gwadar Port is financed and operated by China Overseas Port Holding Co., It started operations in November 2016. Located at the mouth of the Persian Gulf, it is close to the Straits of Hormuz, and the Gwadar Port provides China with an important shipping route to the Middle East. In April 2017, China provided a loan of US$1.2 billion to Pakistan to help it with a currency crisis.

**“China has reportedly halted funding for three road projects that are part of the China-Pakistan Economic Corridor, a centerpiece of the so-called Belt and Road initiative. The sudden decision reveals how unilateral Chinese decision-making is on Belt and Road investments, according to analysts.

Turning off the money for the project is “China’s way of conveying a diplomatic yet strong message to the Pakistanis: We will pay, but only on our terms,” the European Foundation for South Asian Studies, an Amsterdam-based think tank, said in a note, describing the situation as “a temporary punitive step to affirm control.”

This is another example of the risk that Sri Lanka learned about when it couldn’t make payments on the Chinese loans that financed its port project and led to China essentially owing the port. The same thing has happened to Pakistan’s Gwadar Port. Pakistan has no control of it.

China’s One Belt One Road Initiative is likely to end up being a way for China to expand its territorial presence in Asia, Africa, the Middle East and even Europe.
**Pakistan learns the downside of taking infrastructure money from China, China giveth, and China taketh away. CNBC Asia-Pacific, Nyshka Chandran, December 12, 2017

Turkey

*Turkey has been going through mounting geopolitical tensions with neighboring countries. It has also had high inflation because of a weak lira, which is casting doubt on its growth prospects. Despite these problems, government-sponsored credit guarantees have restored confidence in the Turkish economy. Its economy grew at a 5.1% annual rate in the six months through June 2017, and was expected to grow by 5.3% in the year 2017.

But given further recovery of the global economy and solid gains in industrial production and investment, the Turkish economy is forecast to see 4.0% growth in 2018. This is despite its geopolitical problems.

***The relationship between Turkey and China is turning into one of a strong friendship. Turkey’s sour relationships with NATO, the EU and Germany are driving it into the arms of China. Also Turkish President Recep Tayyip Erdogan’s human rights abuses, and use of the electoral process to essentially create a dictatorship are ignored by China. The Turkish Foreign Minister promised to eliminate any anti-Chinese media reports and stated “we see China’s security as our security”. Turkey and China are developing shared interests. This is an example of China befriending countries that are looking for alternatives to the West.

“The friendship has, to a substantial extent, already been struck. Beijing purchased a stake in Turk Telekom, a company that has been allegedly used by the Turkish government to spy on Turkish citizens and regime opponents. High-speed rail, ports and other infrastructure projects have all been lined up. The OBOR will also assist Ankara in promoting its construction industry in Central Asia, where Turkish firms have been operating since the 1990s.”
***Why is Turkey so eager to be led down the Belt and Road?, East Asia Forum, Nicol Brodie, October 28, 2017

United Arab Emirates

The United Arab Emirates (UAE) is heavily on the oil-related sectors. It is trying to diversify in several ways. It has an $81.7 billion plan to promote a knowledge-based economy which will include investments in education, health, energy, transportation, water and the space industry. It is already diversified to the extent that slightly less than 70% of its GDP is non-oil related, with the objective being to take that to as high as 80% by 2021. The plan also includes tripling the labor force in the “knowledge economy” by 2021.

“China’s investment in the UAE has been growing in recent years, with cumulative FDI rising from US$764.3 million in 2010 to US$4.6 billion in 2015.” In May 2017, UAE Minister of State Sultan Ahmed Al-Jaber commented that the UAE strongly supports China’s OBOR Initiative. “Foreseeing a 50% growth by 2040 in the energy demand in Belt and Road countries, he noted that both China and the UAE have made strategic co-investments in the energy sector. For example, China National Petroleum Corp. (CNPC) and China CEFC Energy Co., have recently taken a minority share in the UAE’s onshore oil reserves.”

On the regional level, The UAE is trading with Arab nations through the Greater Arab Free Trade Area Agreement (GAFTA). Under the GAFTA, the UAE has free trade with Algeria, Bahrain, Egypt, Iraq, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Syria, Tunisia and Yemen.

****Chinese contractors have become increasingly active in local construction projects and Chinese visitors continue to increase according to consultants JLL. According to JLL, the UAE plays a crucial role in China’s proposed OBOR Initiative.
Dubai is a key city in this strategy, and a gateway to stable markets, especially in Africa. Currently about 60 percent of Chinese exports to regional markets are channeled through the UAE. JLL pointed to a number of significant Chinese investments in the UAE – such as in Abu Dhabi Industrial Park and Dubai Food Park – as signs of growing Chinese economic involvement in the country.
****Chinese economic influence in the UAE growing, says JLL
The UAE is a significant part of the country’s $124 billion ‘one belt, one road’ initiative
Asian Business, By Bernd Debusmann Jr, February 7, 2018

*****Another indication of the involvement of China in the UAE is an MOU that has been signed with the Shanghai Stock Exchange with Dhabi Global Market (ADGM) to establish a Belt and Road Exchange,” Richard Teng, chief executive of ADGM’s Financial Services Regulatory Authority, told CNBC.

“The joint exchange is poised to support businesses and investors along the Belt and Road. This Beijing-backed scheme plans to link the world’s second-largest economy to the west via a vast land and maritime infrastructure network across Eurasia.”
****China and UAE move a step closer to opening a ‘Belt and Road Exchange’, CNBC, Sam Meredith, April 24, 2018

Yemen

*”Yemen sits at the southwest tip of the Arabian Peninsula, between Oman to the east and Saudi Arabia to the north. It overlooks the Bab al-Mandab Strait where the Red Sea joins the Gulf of Aden. It has been locked in a complex civil war since 2015, with the rebel Houthi group fighting against the Yemen government backed by a Saudi-led coalition, the Islamic State and Al-Qaeda. The prolonged civil war has led to famines and humanitarian crises in the country.”

The Houthi group, backed by Iran, is fighting against the Yemen government backed by a Saudi-led coalition, the Islamic State and Al-Qaeda.

Yemen is a small oil-producing country, not a part of OPEC. It is one of the world’s poorest countries, and has a young population. “Yemen allows foreign oil companies to exploit its oil fields in light of their capital and technology resources. Prior to the civil war in 2015, the oil sector accounted for 65% of its fiscal revenue and one-quarter of its GDP. Yemen’s oil exports had been suspended since early 2015, but were resumed in 2017. “International oil companies in Yemen, such as Austria’s OMV are also looking to resume oil production in south Yemen in 2018.”

*****’Yemen is facing an acute humanitarian crisis after nearly three years of civil war, with more than 10,000 deaths and three-quarters of the country’s population in dire need of humanitarian assistance.’ China has not been a leader in Yemen, but has supplied humanitarian role, largely driven by China’s close relationship with Saudi Arabia.

“As Yemen’s major trade partner, China has an outsized economic presence in the country and can play a significant economic role in Yemen’s postwar reconstruction through its OBOR Initiative.”
*****China and Yemen’s Forgotten War, US Institute of Peace, By I-wei Jennifer Chang, January 16, 2018

China’s One Belt, One Road Initiative And The Middle East Is A Crossroads, Part 3, Oman, Palestine, Qatar, Saudi Arabia And Syria

ArmchairTechInvestor, May 26, 2018, by Brad Peery

Book Under Development-Simon and Schuster: China vs. U.S. 2018, A Police State vs. A Democracy
Book on Amazon.com: Trump’s Political Agenda and Achievements

Blogs:
www.ArmchairTechInvestor.com
www.ArmchairPolitician.US

Below are summaries of the OBOR initiatives in the countries covered in the Middle East Part 3.

Oman

*Oman is located “in the Gulf of Oman, the Arabian Sea and the Strait of Hormuz, a major transit point for crude oil and a trade route connecting the Middle East, India, Africa and Europe. Oman ranks the fourth out of the six members in the Gulf Co-operation Council (GCC) by population, after Saudi Arabia, the UAE and Kuwait.” The deep-sea SOHAR Port is “located at the centre of global trade routes between Europe and Asia, making it an ideal business location.”
*The Belt and Road Initiative: Country Profiles, Hong Kong Trade Development Council, May 17, 2018

“New Chinese investments are working to transform a small fishing village in Oman into the country’s new industrial center, according to a new report by Reuters. The city receiving all of the industrial attention is located 345 miles south of Muscat. The project promises an overall surge in Chinese investment in the country if it shows any indications of a success.”

**Oman is central to China’s OBOR Initiative, with oil being a prime driver, at least for the next few years. However, longer term, China could ban fossil fuel cars in China, with them being replaced by electric vehicles. This could happen by about 2030.
**Oman To Become A Key Part Of China’s Silk Road, Oilprice.com, By Zainab Calcuttawala, September 7, 2017

Palestine

One Belt, One Road Network
ArmchairTechInvestor, May 25, 2018, by Brad Peery

* “Palestine is located on the eastern coast of the Mediterranean Sea. It comprises two non contiguous areas – the Gaza Strip and the West Bank. Gaza, the smaller of the two, is bordered by Egypt and Israel, while the West Bank is surrounded by Jordan and Israel.”

The overall unemployment rate in Gaza was 44% while that in West Bank was lower at 18% in 2017.”

Palestinian president Mahmoud Abbas visited China in July 2017. Four agreements were signed including promoting tourist destinations and economic cooperation. Also, “China will support the building of Palestine’s Tarqomia Industrial Zone, west of Israeli city Hebron.”

***China’s peace initiative for the Israeli-Palestinian conflict was announced on July 31, 2017. Few new ideas were included in the plan, and this was not the first time China has proposed a plan, with the last one being in 2013. This proposal is even more vague. It omits Palestinian demands to establish an independent Palestinian state that enjoys full sovereignty, as well acknowledging Israel’s right to exist while addressing its legitimate security concerns.

“The 2017 proposal is the first to be made in the context of the One Belt, One Road (OBOR) vision. This vision has unprecedentedly advanced China’s interest in the Middle East, and its stake in regional stability has grown significantly. Concomitantly, OBOR provides China with unprecedented means to influence regional processes in ways that it finds acceptable under its “business first” approach to the Middle East. As for similarities, both proposals are finely balanced in their requirements from the involved parties.”
***China Has a New Middle East Peace Plan, What’s new in Beijing’s latest proposal and what does it tell us about China’s views and intentions concerning the region?, The Diplomat, By Yoram Evron, August 14, 2017

Qatar

One Belt, One Road Network
ArmchairTechInvestor, May 25, 2018, by Brad Peery

Qatar is one of the wealthiest countries in the world in terms of GDP per capita. Qatar’s economy is highly dependent on oil and gas, which accounts for over 50% of GDP, 85% of export earnings, and 70% of government revenues. The government has been making efforts to diversify the economy into a sustainable long-term income model. This includes investments in the petrochemical sector, promotion of business tourism, and financial sector improvements.

*“Qatar’s real GDP growth expanded by 2.5% YOY in Q1 2017 on the strength of its non-oil sector. The country is projected to expand by 3.4% in 2017 due to massive infrastructure investment and further economic diversification.”

Oil and gas rich Qatar is viewed as an important staging point for the OBOR Initiative. China is the world’s leading buyer of oil and gas.

***“Professor Wang Yiwei of the People’s University in China believes that even though Chinese investments will not be directly affected by the current conflict, the growing instability in the region could still have a negative impact on China’s economic cooperation with the Gulf States.”

Bahrain, Saudi Arabia, Egypt and the United Arab Emirates have severed diplomatic ties with Qatar. They accused Qatar of supporting terrorist groups and of interfering in other states’ internal affairs. Libya also severed ties, as did Yemen, the Maldives and Mauritania.

“Despite some temporary problems, China has nothing to worry [about the present row],” Bian Yongzu, an expert at Chungyang Financial Research Center said.”
*** How Qatar Row Could Impact China’s One Belt, One Road Project
Sputnik International, Aleksey Nikolskyi, August 6, 2017

Saudi Arabia

One Belt, One Road Network
ArmchairTechInvestor, May 25, 2018, by Brad Peery

*“Saudi Arabia is part of the Greater Arab Free Trade Area Agreement (GAFTA). Under the GAFTA, the country enjoys free trade with Algeria, Bahrain, Egypt, Iraq, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Sudan, Syria, Tunisia , the UAE and Yemen. As member of the GCC, Saudi Arabia also has free trade agreements (FTAs) with Singapore, New Zealand and the European Free Trade Association (EFTA) comprising Switzerland, Norway, Iceland, and the Principality of Liechtenstein.”

There are negotiations underway on the establishment of FTAs with the EU, Japan, China, India, Pakistan, Turkey, Australia, Korea and the Group of Mercosur (Brazil, Argentina, Uruguay Paraguay, and Venezuela).

****China’s “One Belt and One Road” initiative is expected to make “creative” contributions to helping Saudi Arabia realize its “Saudi Vision 2030” plan, Saudi Ambassador to China Turki Bin Mohamed Al-Mady said. To diversify its heavily oil-dependent economy, Saudi Arabia announced a “Saudi Vision 2030” growth strategy in 2016, which includes privatizing some state-owned companies.”

Chinese President Xi Jinping visited Saudi Arabia in January 2016. Both countries agreed to form a comprehensive strategic partnership. The areas of cooperation could include technology, security and defense, which would be addressed in separate agreements.

“Saudi Arabia was one of the first countries to respond positively to the [Belt and Road] initiative,” he said. “In terms of strategic location, Saudi Arabia serves as the central hub connecting three continents – Asia, Africa and Europe, and has been an important part of the initiative.”

Al-Mady said that he hopes Saudi Arabia can play a more central and positive role in promoting the initiative to strengthen the in-depth integration of the initiative and the “Saudi Vision 2030.”
****Belt, Road initiative will help Saudi Arabia realize 2030 vision, ambassador says, ChinaGoAbroad, Xinhua, May 25, 2018

Syria

One Belt, One Road Network
ArmchairTechInvestor, May 25, 2018, by Brad Peery

*”Syria is a Middle East country at the eastern end of the Mediterranean Sea, bordered by Iraq, Israel, Jordan, Lebanon and Turkey. Damascus is the capital, while Aleppo is the largest city. Syria has a young population, with more than 50% of its citizens aged below 25.”

Sanctions were imposed on Syria by the U.S., the EU, the Arab League, Turkey and Canada. Since then Syria has traded heavily with Iraq. Most Chinese companies have discontinued their operations, but indicated in 2017 that they looked forward to reconstruction projects following the war in Syria. The China Petrochemical Corporation and China National Petroleum Corporation have previously invested in Syria’s hydrocarbon sector.

*****“By working through what is still the internationally recognized government of Syria, Beijing will be able to claim that it has avoided taking sides in a civil war (now nearly over) but is now engaging with a sovereign state…While relying on Middle Eastern oil supplies, China has traditionally avoided diplomatic entanglements there, so this support for Assad marks a shift in regional diplomacy that Chinese diplomats will undoubtedly try to conceal behind the language of non-intervention.”
*****Is China coming into Syria for its “One Belt, One Road”?
Informed Comment, By Neil Thompson, January 1, 2018

China’s One Belt, One Road Initiative And The Middle East Is A Crossroads, Part 2, Iran, Iraq, Israel, Jordan, Kuwait And Lebanon

ArmchairTechInvestor, May 26, 2018, by Brad Peery

Book Under Development-Simon and Schuster: China vs. U.S. 2018, A Police State vs. A Democracy
Book on Amazon.com: Trump’s Political Agenda and Achievements

Blogs:
www.ArmchairTechInvestor.com
www.ArmchairPolitician.US

Below are summaries of the OBOR initiatives in the countries covered in the Middle East Part 2.

Iran

*Iran is on the China-Central-West Asia (CCAWA) Economic Corridor of the OBOR Initiative. Chinese President Xi visited Iran in January 2016 and the two dictatorship countries agreed to increase bilateral trade by more than tenfold to US$600 billion in the next decade. Areas of cooperation include energy, trade and industry. Iran is located in Southern Asia bordering the Persian Gulf, the Caspian Sea and the Gulf of Oman. It has an attractive opportunity to serve as a gateway to a regional market of 400 million people that includes Afghanistan, Iraq, Russia and Turkey, and the Central Asian countries. The OBOR Initiative is primarily intended to promote land and sea connectivity with countries along its key routes. However, the International North-South Transport Corridor (INSTC), which was established by Iran, India, and Russia in 2000, plans to connect the Indian Ocean and Persian Gulf to the Caspian Sea via Iran, and onward to northern Europe via St. Petersburg, Russia. As a multi-modal transport corridor, INSTC will make Iran a key link in connecting the three founding members and 11 other state members.

China has become Iran’s top trading partner. Chinese companies have gradually replaced those in the EU and the U.S. following nuclear sanctions. In 2016 trade with China reached $31.2 billion, and grew to $18.1 billion in the first half of 2017. China became the largest crude oil export market of Iran in 2017, followed by India. Additionally, Chinese companies China National Petroleum Corporation (CNPC) and the Sinopec Group, have won major oil exploration contracts in Iran. In 2021, another recent example of Iran-China co-operation can be found in the $4.8 billion South Pars contract to develop the largest natural gas field in the world. Iran’s other key trading partners include Turkey, Korea and the UAE. Iran is proposing trading agreements with a number of countries including Malaysia, Pakistan, Turkey, India and the Eurasian Economic Union (EEU).
*The Belt and Road Initiative: Country Profiles, Hong Kong Trade Development Council, May 17, 2018

**“Chinese businesses involved in Iranian developments are worth at least $33 billion as of June 2017 according to Beijing’s Commerce Ministry”, part of China’s OBOR Initiative. “In September 2017, China provided a $10 billion credit line to five Iranian banks financing water, energy and transport projects, and in March the two countries inked a $700 million deal allowing China to build a train line that links the port of Bushehr to the rest of Iran’s railway network.”
**China stands to gain in Iran after US quits nuclear deal, AFP, Julien Girault, May 17, 2018

Iraq

*Iraq has the world’s fourth largest proven oil reserves, which puts it in a favorable position because of China’s thirst for oil. Iraq’s oil output has increased following its gaining strength follow the U.S.-led invasion in 2003. Iraq mainly exports crude oil to India, China, the U.S. and South Korea, and imports food, medicines and manufactured items from Turkey, China, Syria and the U.S.

Iraq has established four free zones to promote trade through advantageous customs incentives. Chinese companies are among the largest foreign investors in Iraq’s oil sector, with PetroChina, Sinopec and China National Offshore Oil Company (CNOOC) involved in development of many of the country’s oil projects.

Iraq borders on the Persian Gulf. At present, Iraq is not listed as a participant of the OBOR Initiative. However, the country is one of the principal suppliers of oil to China. Bilateral trade between the two countries has been increasing steadily. Given that Iraq’s southern (Saudi Arabia), northern (Turkey) and eastern (Iran) neighbors are all slated to be participants of the OBOR Initiative, it is unclear to to what extent Iraq might benefit from the Initiative at the expense of its neighbors.

Israel

*Israel grew GNP by 4% in 2016 and by 3.3% in 2017. Israel is considered to be one of the most advanced countries in the Middle East and is a high-tech powerhouse. Despite the fact that Israel is a democracy, China might find it advantageous to develop businesses that use their technology and geographic location.

Many international high-tech companies have opened up branches as well as research and development centers in Israel. They include Microsoft, IBM, Cisco and Motorola. There have been a number of acquisitions of Israeli technological companies by U,S, firms such as Google, IBM and Facebook. Major transactions span various high-tech sectors, including software, mobile application and digital advertising. Such acquisitions could be of interest to Chinese companies.

“Israel is actively promoting cooperation with China and other parties under the Belt and Road Initiative, welcoming Chinese enterprises to participate in various infrastructure projects in Israel. Israel is attempting to add sea ports and new railroad networks. China Harbouris is building a new port next to Ashdod’s existing one, and the Shanghai International Port Group (SIPG) has won a 25-year license to operate another deep-sea private port planned in Haifa. It is reported that Israel would like China to participate in the building of a railroad connection between the ports in Eilat and Ashdod, connecting the Red Sea to the Mediterranean Sea.”

Jordan

*Jordan’s economy is about 67% services, 30% industry and 3% agriculture. The major export markets are 50% Arab countries. Exports to the U.S. are almost 20% of the total, and Jordan’s currency is pegged to the U.S. dollar.

“Jordan has signed free trade agreements (FTAs) with the US, Canada, Turkey, MERCOSUR (which includes Argentina, Brazil, Paraguay and Uruguay), Egypt, Morocco, Tunisia (the Agadir Agreement), the EFTA states (which includes: Switzerland, Norway, Iceland and Liechtenstein), and Singapore. Jordan is a member of the Pan Arab Free-Trade Area (PAFTA) Treaty, with members including: Egypt, United Arab Emirates (UAE), Bahrain, Jordon, Tunisia, Saudi Arabia, Sudan, Syria, Iraq, Oman, Palestine, Qatar, Kuwait, Lebanon, Libya, Morocco, and Yemen.”

***Chinese Ambassador to Jordan Pan Weifang spoke during a press conference in Amman. “AMMAN — Jordan and China are holding talks regarding the signing of a memorandum of understanding (MoU) on cooperation, as part of China’s One Belt, One Road initiative, according to the Chinese ambassador. A multibillion land and maritime project, the One Belt One Road project aims to connect China to the rest of the world, including Jordan.”

“Following the signing of the MoU, we will witness increased cooperation and projects between the two sides in various areas,” Chinese ambassador to Jordan, Pan Weifang, said at a press conference in November, 2017.”
***China’s One Belt, One Road initiative to benefit Jordan — ambassador, The Jordan Times, By Mohammad Ghazal, November13, 2017

Kuwait

*Kuwait participates in the China-GCC Free Trade Agreement negotiations. The oil sector plays a dominant role in the Kuwaiti economy, with the country estimated to own roughly 6% of the world’s oil reserves. Oil exports account for over 90% of Kuwaiti government revenues and 50% of nominal GDP. Kuwait’s major export markets include India, Saudi Arabia, China, Iraq and the UAE.”

****Kuwait’s Silk City and the five-island developments are a key project in the One Belt One Road initiative. Kuwait is expecting to spend over $100 billion to build one of the world’s longest causeways to their northern area. “The plan is to reinvigorate the ancient Silk Road trade route by establishing a major free trade zone linking the Gulf to central Asia and Europe. The 36-kilometre (22-mile) bridge, three-quarters of it over water, will cut the driving time between Kuwait City and Subbiya to 20-25 minutes from 90 minutes now. It is already nearly three-quarters completed. A $3 billion 5,000-megawatt power plant has already been built in Subbiya.”
****Kuwait’s Silk City project expected to top $100B, Daily Sabah, March 8, 2017

*****“Mr. Jiang Zengwei said Kuwait and China have signed several cooperation agreements, which have further laid the foundations for promoting mutually beneficial growth. “China is today one of the Kuwait’s most important trading partners and an important source of crude oil from Kuwait. Bilateral trade was US$12 billion in 2017, recording a year-on-year growth of 28%.”
*****Kuwait’s Silk City is key project in China’s One Belt One Road initiative, AME info, March 22, 2018

Lebanon

*Lebanon is at the eastern end of the Mediterranean Sea. Syria is to the north, and Israel is to the south.

Ravaged by civil wars over the years 1975-1990, Lebanon has seen its debt balloon to 150% of GDP as it went through reconstruction. The government has been divided, but has seen the influence of Hezbollah increase.

“Lebanon has expressed a keen interest in China’s Belt and Road Initiative, seeing itself as a gateway to the Arab world. Al-Fayhaa Union of Municipalities, a union of three municipalities in Lebanon, signed an agreement with the Silk Road Chamber of International Commerce (SRCIC) in November 2017 for an active role in the OBOR.”

******The Union of Tripoli’s municipalities was hailed for joining the SRCICI, pointing to the “special importance of Tripoli and its huge potentials not only for Lebanon but for the whole region which enables it to enhance trade with China.”

During the signing it was stated “we will not spare any effort in boosting Tripoli’s standing and its openness on Chinese markets and such an alliance will prepare it to become a special hub for cooperation with China within the Belt and Road initiative.”

Important to success will be “the strategic location of Tripoli and its seaport on the Mediterranean and its human resources and infrastructure including the airport and railroads and logistic services it provides.”
******Lebanon’s Tripoli keen for active role in Belt and Road initiative, Xinhua, November 11, 2017

China’s One Belt, One Road Initiative And The Middle East Is A Crossroads, Part 1, Afghanistan, Armenia, Bahrain, Egypt And Georgia

ArmchairTechInvestor, May 24, 2018, by Brad Peery

Book Under Development-Simon and Schuster: China vs. U.S. 2018, A Police State vs. A Democracy
Book on Amazon.com: Trump’s Political Agenda and Achievements

Blogs:
www.ArmchairTechInvestor.com
www.ArmchairPolitician.US

Below are summaries of the OBOR initiatives in the countries covered in the Middle East Part 1.

Afghanistan

*In May 2016, Afghanistan signed a Memorandum of Understanding (MOU) with China on the One Belt, One Road (OBOR) Initiative. The aim is to foster cooperation that includes policy coordination, infrastructure development, trade and investments. Projects implemented include a cargo railway connecting China to Northern Afghanistan and a direct flight between Kabul and Urumqi. China has committed to invest $100 million in OBOR projects in Afghanistan.

In August, 2017, the U.S. implemented a new Afghanistan policy which adds 4,000 U.S. troops to facilitate the efforts directed at terrorists and criminal networks while expanding the use of unmanned aircraft and special operations teams.

China is Afghanistan’s third largest trading partner, with bilateral trade estimated to have been over $1 billion in 2015. Afghanistan is in the middle of some very large OBOR investments being made by China. There is a China-Pakistan Economic Corridor in which China is investing $46 billion. China is making a very large commitment to Pakistan. With militants using Pakistan as a sanctuary to attack Afghanistan, some uncertainty is introduced into how the investments China is making in Afghanistan will tie into the larger OBOR plans for the area. China and the U.S. should be partners in Afghanistan, as both need a peaceful country and a stable government.
*China’s Belt and Road Meets Trump’s Afghanistan Plan
Could China play the good cop while the U.S. plays the bad cop?
The Diplomat, By Yu Fu, December 21, 2017

Armenia

**Armenia borders Iran and Turkey in the Middle East, and is at the crossroads between Asia and Europe. It has mountainous terrain and is rich in minerals that include aluminum, iron, gold and silver. As a way station on the original Silk Road, Armenia has planned a new rail link to Iran and a new North-South highway which will allow goods to be transferred from Armenia’s southern border to Georgia and beyond to Black Sea ports that include Batumi and Poti in Georgia.

Armenia is a small country with a GDP of about $10.6 billion. It has not been formally invited to join the OBOR Initiative. “There is no formal invitation to the country,” says Hrant Abajyan, Armenia’s trade representative to China in Beijing.

Armenia states that it is convinced that the Initiative will be important in developing relations between participants, and that “it can and must be an *integral and indivisible part of this initiative.”
**Making sense of Belt and Road – The Belt and Road country: Armenia
EUROMONEY, By: Chris Wright, September 26, 2017

Bahrain

***Bahrain is an island country in the Persian Gulf. It is connected to Saudi Arabia by the 15 mile long King Fahd Causeway. It is the smallest country among the six-member Gulf Co-operation Council (GCC). More than 50% of the people in Bahraini are expatriates, including Indians, Pakistanis, Bangladeshis and Filipinos. Bahrain has signed free trade agreements with the US, Singapore and the European Free Trade Association.

Bahrain has a double taxation agreement with China. Many Chinese enterprises have set up businesses in Bahrain. They include the Bank of China, the China Harbour Engineering Company and Huawei. Huawei, which may be banned in the U.S. because of possible spying by the Chinese government, opened its first Middle East IT tech center in 2012. Mainland China company Chinamex partnered with Bahrain’s Diyar Al Muharraq and built Dragon City, a retail and wholesale mall development modeled on the UAE’s successful Dragon Mart. Dragon City began operations in December 2015.

The six member-countries of the GCC (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE) are considered an important trade region and was the EU’s fourth-largest export market in 2016.

**“According to Bahrain’s Minister for Transportation and Telecommunications Kamal bin Ahmed Mohammed, the ambitious multi-trillion-dollar Belt and Road Initiative (BRI) by China could become a great opportunity for the Gulf nations.
The Gulf region, which is a central location of the BRI, is a prime market for China and vice versa.”
***China’s ‘One Belt, One Road’ is a ‘win-win’ for GCC – Bahrain Minister, GulfInsider, May 13, 2018

Egypt

Egypt’s GDP growth rate was 4.3% in 2016, and reached 5.4% in the March quarter of 2018. The Suez Canal is a vital shipping lane that connects the Mediterranean Sea with the Red Sea. To double the shipping capacity of the Canal, the Egyptian government started the Suez Canal Corridor Area Project (SCCAP) in August 2014. The project will include industrial and technology parks in addition to the new Canal sector. Revenue is projected to increase to $15 billion in 2023 from $5.3 billion in 2015. with the SCCAP expected to spur foreign investment and create jobs.

****Egypt should be able to serve as the hub for OBOR Initiative into the Middle East and Africa. With Egypt viewed by China as one of the five most attractive countries for mergers and acquisitions potential, their relationship has been elevated to a “strategic partnership”. There is now a growing new commercial relationship between them.

New elements in attracting Chinese capital are new standards that define and require that developments be green. The definition of green is being developed by China to suit its own needs.
****Greening the belt and road: opportunities for Egypt, Middle East Institute, By Deborah Lehr and Yasser Elnaggar January 23, 2018

Georgia

One Belt, One Road Network
ArmchairTechInvestor, May 24, 2018, by Brad Peery

*****Georgia is well situated to be an important participant in the OBOR Initiative. It is located at the eastern part of the Black Sea. Russia is north and northeast and to the south are Armenia and Turkey. Georgia is a logistics and transshipment corridor to the Caucasus mountains and Central Asia. 60% of all types of its overland international freight are in transit. Infrastructure upgrades are underway at the major seaports of Batumi and Poti. There are several other planned projects, as well as the construction of a deep-sea port at Anaklia. This port will accommodate larger vessels. All of these projects should strengthen the country’s logistical importance.

Former Georgian President had a disastrous plan to build skyscrapers that would house 500,000 residents. The city of the future is today an array of tetrapods that form a breadwater for the Anaklia Black Sea Deep Water Port, which Georgia hopes will be a key link on China’s OBOR initiative.

This is the foundation for the Anaklia Black Sea Deep Water Port, Georgia’s bid to become a key link in China’s sprawling Belt and Road Initiative. The bid to construct the $2.5 billion port was expect to go to Chinese investors, but instead went to a group of Americans and Georgians. A key factor was that of the jobs going to Chinese workers, an estimated 6,400 jobs will go to Georgians, easing the 12.5% unemployment rate. In Pakistan, the Chinese port development there resulted in the jobs going to the Chinese.

The South Caucasus offers the West an attractive alternative to other OBOR trade routes. Georgia is more geopolitically palatable than Iran. Tbilisi, where the port is located ranks favorably in global indices measuring corruption and ease of doing business. Also, Georgia signed a Deep and Comprehensive Free Trade Agreement with the EU that became effective in 2016 allowing Georgia to serve as a logistics hub with the EU. China followed suit with a bilateral free trade agreement that came into effect on January 1, 2018.

Georgia became directly involved in OBOR 2016 when it joined the Asian Infrastructure Investment Bank (AIIB), a $100 billion fund designed to finance Belt and Road projects. Georgia has signed an agreement under which the bank will provide $114 million to build the Batumi Bypass Road, a new highway to connect Georgia’s outlying areas through a series of mountain tunnels.

Georgia seems to have avoided the pitfall of having China build and manage its most important port project and instead can manage its three ports as a integrated program, with the larger vessels going to the Anaklia port.
*****With Port Project, Georgia Seeks Place on China’s Belt and Road.
Georgian infrastructure remains underdeveloped, which could leave Anaklia disconnected, Eurasianet, Bradley Jardine, February 21, 2018