The Dragon’s Tale: What does China Want?

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In 40 years only, China has passed from an under-developed country emerging from a tragic civil war, to a world superpower, possibly challenging the USA – in the not-so-distant future –  into becoming the planet’s number one leading economy.

Far away from Descartes’ strict western rationalism, Chinese Taoist fundamentals of Ying and Yang, where opposites belong to the same ensemble and complete each other, have imprinted the vision of a world in continuous mutation, where change is the only constant. A constant that is to be accompanied, surfed, not fought; as Laozi the famous ancestor of Taoism recommends.

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Huge stone statue of the ancestor of Taoism named Laozi in Fujian, China.

In this particular context, the special term “socialist market economy” was first used during the 14th National Congress of the Communist Party of China in 1992, to describe the goal of China’s economic reforms. A concept that some Western experts have defined as “state capitalism”.

Today, all over the globe, ‘Zhong Guo – the Middle Kingdom (China)’ is expanding at exponential speed. Chinese investors are acquiring leading economic infrastructures, as well as major stakes in multinational companies in the fields of tech, energy, agri-food, tourism, real estate, information and communications technology, AI, Space exploration, medical, fashion, luxury, shopping malls, wine châteaux.. Such acquisitions have sometimes sparked worried reactions and push-back by the authorities of countries concerned by the strategic nature of some of the sectors in question.

Because Chinese have a sharp sense of History, infused by Confucianism, often the thousand-year-old principles guiding their strategic choices can be compared to running a marathon across the centuries. This can also help understand China’s ambition to ‘‘restore its past greatness’’ where strategy always played a big part, from the subtle game of GO, invented in China more than 2,500 years ago, and believed to be the oldest board game continuously played to the present day; to ”the Art of War”, written by Sun Tzu 5th century B.C.

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GO board strategy game

”The Art of War” remains the most influential strategy text in East Asian warfare, and has influenced both Eastern and Western military thinking, business tactics, legal strategy and beyond. The book was translated into French and published in 1772 (re-published in 1782) by the French Jesuit Jean Joseph Marie Amiot.

Meanwhile, China’s share in the world’s economy has grown from 2% in 1908 to 18% in 2016. While the USA’s share in the world’s economy has passed from 50% after world-war two to 22% in the 1980s. Which now makes China a serious political, economic and military competitor to the USA. A situation that explains the multiple recent manifestations of tensions between the two countries: the Huawei case, the freeze of 5G tenders, the mutual rise of tarifs..

China Vice-President Xi stands during trade agreement ceremony between two countries at Dublin Castle in Dublin
President Xi Jinping of the People’s Republic of China

Since President Xi became leader of the People’s Republic of China, the international relations of the country with its neighbors, has reflected the principle of strong regional leadership due to China’s ancestral weight. Such relationships which are often hierarchal, have been integrated in the ‘‘Belt and Road Initiative- BRI’’ lead by China, which is seen as a ‘‘new silk-road’’ aimed at ‘‘organizing a harmonious coexistence’’ with neighboring countries.

Therefore, China has launched a gigantic worldwide investment plan to secure its exports and to control the logistics flux. This also helps the Chinese more easily access the infrastructure of countries in the BRI, by expanding their ports and airports, as well as connecting them to transcontinental railways and building massive warehouses that are referred to, by people in the know, as a ‘‘necklace of pearls’’.

Many countries in the Belt and Road Initiative are under-served on the connectivity front. Therefore there is a need for financial backing from deep-pocketed investors with a long-term view. China positions itself on that level:

Large state-owned enterprises such as the Industrial & Commercial Bank of China, China Construction Bank, China State Construction Engineering Corporation are always looking to develop, facilitate and bankroll infrastructure projects globally, as they can afford to take a long-term view.

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According to some, while in exile in St-Helena in 1816, Napoleon Bonaparte reportedly said ‘‘So let China sleep, because when China wakes up the whole world will tremble’’ after reading ‘The Voyage to China’ by Lord Macartney, first Ambassador of the King of England at that time.

Today, as the world’s tectonic power plates are evolving much faster, and as the Chinese Dragon is proposing other trade networks than the traditional structures that have been progressively put in place for the past hundred years; to avoid or delay trying to understand China’s internal functioning and its relation to the world could lead to significant incomprehension, increased friction and to considerable risk for international stakeholders aiming to best secure their strategic interests in such a mutating topography.

For the average business player interested in knowing more about China, preliminary understanding is not always easy however, as Internet is tightly regulated and widely-used platforms such as Facebook, Instagram, Twitter, WhatsApp do not have access and are replaced by counterparts such as WeChat, Sina, Weibo, Tencent, Baidu, Toudou Youkou.. Hence the importance of the cultural actions launched by Chinese Embassies and cultural centers aiming to bridge the gap.

Aware of the challenges ahead, and the possible threats to their leadership, the USA are fully engaged to sharply focus on such topics to maintain their number one position and strategic interests. And although Europe could reinforce the West’s approach in its complex relationship with China, specifically as its concerns are human rights, and reciprocity in terms of strategic investment access. It still stands divided on the attitude to adopt in respect to Chinese ambitions, due to the many opportunities available and the challenges ahead. Europe’s place in the middle could be of a mediation, to avoid a new cold war or worse. Access to scarce ressources such as rare earth minerals essential for high-tech and defense industries is only one example..

Closer neighbors to China like India and Pakistan are also stakeholders in the geopolitical  ballet developing.

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USA President Trump and President Xi Jinping of People’s Republic of China

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Analysts looking at Chinese investments in Europe find that they have been multiplied by eight in the last four years, and that Beijing’s Expansion Plan for 2025, which defines the objectives, market shares and infrastructures to be controlled by Beijing by then, suggest a new wave of investments for the years to come. Often seen as an opportunity by countries in development who have big potential and are in need of foreign investments; some of the recent experiences have proven the saying: in international relations, there is no free lunch. Investments come with counterparts that are sometimes hard to meet. The recent example of Sri Lanka’s Hambantota port falling in debt and having to transfer its control to China for 99 years, is an illustration of what some see as the risk of debt trap.

In that expanding international context, how active is China in the Middle East in general? What are its strategic priorities? In Lebanon in particular, in the context of the future reconstruction of neighboring Syria?

The full detailed study is available to the clients of KAMSYN Strategic Communications & PR.

NB: The Paragraphs below are compiled by KAMSYN PR, to provide additional preliminary examples from various published articles. Sources and authors of articles cited.

The port of Tripoli in Lebanon - Chinese cranes and equipment are expected to boost the port's capacity © Alamy
The port of Tripoli in Lebanon – Chinese cranes and equipment are expected to boost the port’s capacity © Alamy

China: A Fast-growing presence in the Middle East

The Middle East and North Africa (MENA) region is expected to play a central role in the connectivity agenda of China’s Belt and Road Initiative (BRI). Connecting Chinese trade hubs such as Hong Kong and Shenzhen to the Egyptian Suez Canal, the UAE’s Jebel Ali Free Zone and Oman’s Duqm Special Economic Zone forms a crucial part of the Asian giant’s overarching ambition to boost trade flows. With much of the Middle East region under-served on the connectivity front, what the regions needs is financial backing from deep-pocketed investors with a long-term view.

China, flush with cash, and with large state-owned enterprises such as the Industrial & Commercial Bank of China, China Construction Bank, China State Construction Engineering Corporation looking to develop, facilitate and bankroll infrastructure projects globally, can afford to take a long-term view.

Last July, the Chinese president Xi offered $20 billion in loans and around $106 million in financial aid to Arab states for “economic reconstruction” and “industrial revival”. Some of the loans and aid packages were earmarked for Palestine, Jordan, Lebanon, Syria and Yemen – some of the region’s poor and/or troubled countries.

Middle East countries, with an eye on diversifying the economy and implement shovel-ready projects that bring jobs and investments, are emerging as eager participants in China’s BRI agenda. While some projects fall within the BRI scope, Chinese contractors are also participating in a number of infrastructure projects that add to China’s order books.

While China has not clearly defined which projects are within the BRI scope and which are outside, there is a sense that transportation – major road, maritime, airport and railway projects – is a crucial piece of the puzzle as China slowly realizes its ambition to connect the nearby continents.

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Port of Duqm in Oman         photo Times of Oman

In Oman, Duqm Special Economic Zone (SEZAD) anchored by the Port of Duqm is transforming into a strong manufacturing, logistics and innovation hub that takes advantage of its geostrategic location outside the Strait of Hormuz trade route.

The Chinese regard Duqm as an alternative route into the Middle East and African markets. As such, Wanfang China from the Ningxia Hui Autonomous Region is developing a 40,000-square-metre (sqm) Sino-Oman Industrial park in SEZAD that aims to attract other Chinese companies to invest $10.7 billion in the development.

Oman Wanfang Company plans to co-operate with Chinese investors to set up 35 projects across three locations in SEZAD in heavy industries, light and medium industries, and a tourist zone, according to a SEZAD document.

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Chinese President Xi Jinping with Egypt’s President Abdel Fattah El-Sisi before a bilateral meeting of the Second Belt and Road Forum at the Great Hall of the People, in Beijing, China April 25, 2019.
REUTERS/Andrea Verdelli

Similarly, Egypt’s plans for Suez Canal dovetail with the sprawling BRI agenda.

China’s Tianjin TEDA Investment Holding Co was one of the earliest investors in the China-Egypt joint economic co-operation zone, which takes up a third of Egypt’s Suez Canal Zone and is being expanded in second phase. TEDA is currently developing an industrial zone of 7.23 square kilometers in Ain Sokhna on the Red Sea coast, with the first phase hosting 68 enterprises engaged in various areas of production.

Growing involvement of Chinese firms in developing, financing and operating railway projects in the MENA region is expected to help China achieve the connectivity piece of its BRI agenda.

State-owned China Railway Construction Corporation (CRCC) constructed the 18.25-km-long elevated Makkah Light Rail Project, which has helped ease traffic congestion in the holy city during the Haj season. The Beijing-headquartered firm was also the civil works contractor for the first phase of the 453-kilometre high-speed Haramain High Speed Rail Project, connecting Makkah and Madinah. The rail link is the first high-speed railway in the Gulf and is expected support the Kingdom’s plans to attract more tourists.

In 2017, Egypt signed a $1.24 billion light rail deal with China’s AVIC International and China Railway Group. Under the deal Egypt’s National Authority for Tunnels (NAT), China’s AVIC international and China Railway Group will build a 66-km network with 11 stations, on which trains will run at speed of up to 120 km per hour to Cairo’s surrounding districts.

Syed Hussain, Anoop Menon, ZAWYA.

Cairo –   Trade exchange between Egypt and China grew by 7.6% year-on-year to $4.188 billion during the first four months of 2019, according to data released by the Chinese General Administration of Customs (GAC). Chinese exports to the most populous Arab nation rose by 13.2% year-on-year to $3.73 billion from January to April, state-run Middle East News Agency (MENA) reported.

Meanwhile, the Asian country’s imports from Egypt fell by 23.4% year-on-year to $458 million in the four-month period ended 30 April. In April, Egypt-China bilateral trade reached $1.029 billion as Chinese exports to the North African nation totaled $939.6 million, while the imports stood at $89.5 million.

Mubasher, All Rights Reserved – Mubasher Info © 2005 – 2019 Provided by SyndiGate Media Inc

In RIYADH: Chinese Ambassador Chen Weiqing said his country’s Belt and Road Initiative is consistent with the Saudi Vision 2030 reform plan, and he praised communication between the two countries. Chen who was appointed ambassador to Saudi Arabia This month, said: “Cooperation between China and the Kingdom enjoys the characteristics of strategy, harmony and mutual benefit”.  The Belt and Road Forum for International Cooperation was held in Beijing last month, and a Saudi delegation attended. It was an occasion for countries to pitch for investment in a massive infrastructure project aimed at connecting China with the rest of the world.“Saudi Arabia has applied economic and social reforms over the past few years, and has made significant progress toward achieving its goals” Chen said.

Source: Staff Writer, Arab News, 2019 All rights reserved. Provided by SyndiGate Media Inc

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LEBANON, Lebanon’s New Government encourages more investments from China in an effort to boost the country’s economy and develop it as a logistics hub in the region. The Lebanese government is also aware of the importance of its ports: mainly Tripoli and to a lesser extent Beirut, to launch investments in Syria. Communist party officials and private business have sent some six delegations to Lebanon since 2017, which is an unusual frequency.

China is also cultivating soft power in Lebanon, through a Confucius Institute at USJ Saint-Joseph University. Wang Kejian, Chinese ambassador, judged a Chinese singing contest for Lebanese children.“Lebanon can become a charming pearl in the Belt and Road Initiative” said Ambassador Kejian at the China-Arab Banking and Business Forum. The BRI route has a gap which Tripoli could bridge, explained Tao Duanfang, researcher at the Center for China and Globalisation, a Beijing think-tank.

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In addition, a National Conservatoire for Music in Dbayeh, Lebanon, has been announced. Through an agreement with China that has been signed for a grant of $76 million. The Conservatoire will have several music halls for training purposes as well as a large amphitheatre, unique in its kind.

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Adnan Kassar, Honorary Chairman of General Union of Chambers of Commerce Industry and Agriculture in the Arab countries made the remarks as he was attending an investment forum between China and Lebanon held in Beirut on March 30. Kassar said Lebanon Government also welcomes Lebanese enterprises to participate in the Belt and Road construction.

The forum was co-hosted by China Council for the Promotion of International Trade (CCPIT), Lebanon Fransabank, The Federation of Chambers of Commerce, Industry & Agriculture in Lebanon (FFCCIAL) and General Union of Chambers of Commerce Industry and Agriculture in the Arab countries. CCPIT Chairperson Gao Yan hailed the long-term friendly relations between China and Lebanon and the bilateral economic progress in the recent years. China now is Lebanon’s largest trade partner.

Gao proposed both countries expand bilateral trade and investment, foster infrastructure construction, and deepen cooperation in finance and tourism industry. Gao welcomed Lebanese government and business community to participate in the 2nd Belt and Road Forum for International Cooperation and Belt and Road CEO Conference, to organize more exchange of visits, and to foster cooperation in information sharing, commercial and legal services. Gao also called upon Chinese companies to invest in Lebanon’s industrial zones. Gao’s remarks aimed at drawing a roadmap for the future of cooperation between Lebanon and China on various levels.

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Chinese Ambassador to Lebanon Wang Kejian

Chinese Ambassador to Lebanon Wang Kejian said Chinese government will enhance coordination in policy match-making, back up the integration of Lebanon’s development plan with China’s Belt and Road Initiative. China will assist with the matching of enterprises of both sides and bolster up Lebanon’s efforts in safeguarding the country’s sovereignty, security and stability.

On behalf of Lebanon’s Prime Minister Saad Hariri, Minister of Telecommunications of Lebanon Muhammad Choucair sent Hariri’s good wishes for the success of the investment forum. Choucair hailed China as Lebanon’s largest trade partner and the Belt and Road Initiative giving new impetus to China-Lebanon business cooperation.

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Lebanese Telecom Minister Mohammad Choucair, representing Prime Minister Saad Hariri.

Meanwhile, an arbitration coordination platform was established following an MoU signed between CCPIT and FFCCIAL. More than 200 entrepreneurs from both countries attended the Forum.

Source Xinhua, Chloe Cornish in Tripoli, Lebanon and Archie Zhang in Beijing, Financial Times. China-Lebanon Investment Forum.

The Full Study available for KAMSYN PR’s clients, explores in more details: China’s priorities and latest main investments in LEBANON, DUBAI, KUWAIT, RIAD, INDIA, PORTUGAL ..

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Featured Image: Illustration: Rebecca Zisser / Axios

Main Sources:

–       ZAWYA, Arab News, Syndigate Media Inc, Khaleej Times, Reuters News, KUNA, Thomson Reuteurs, Belt and Road News, Xinhua, Financial Times, Valeurs Actuelles, Le Spectacle du Monde.

–       Sources Main authors: Antoine Colonna, Graham Allison, Laurent Izard, Général de Division (2S)  Éric de La Maisonneuve Syed Hussain, Anoop Menon, Ravi Bhoothalingam, Mubasher, Syed Ameen Kader, Chloe Cornish, Archie Zhang.