China'a Asian Dream by Tom Miller

I borrowed this book from my local library during winter break and only got through a portion of it before I had to return it. We discussed some similar things in an international relations class today, so I thought I'd post the notes I took -- as they're quite pertinent. 

• "One Belt, One Road": Financing The New Silk Road

  • Founding of Asian Infrastructure Investment Bank (AIIB) and Silk Road Fund are evidence of China's deepening strategic ambitions in Asia

  • Wang Yi announced "community of shared destiny": greater economic integration from infrastructure spending + mutual defense of national interests

  • Departure from Deng Xiaoping's strategy of stay low, never claim leadership, bide time --> Xi Jinping's policy of being proactive, common destiny in Asia, inject Chinese elements into international rules

  • China's neighbors fear it's economic might and potential economic over-dependence, it is seen as much as a threat as an opportunity

  • Belt and Road Initiative

    • (Yidai Yilu) Run through 67 countries, network of trading routes influenced by competing demands in geography, commerce, and geopolitics

    • Protect national security; diversify energy supplies; create network of economic dependency that will hedge against the US-Asian alliance structure; Chinese firms will find lucrative source of growth; strengthen monetary policy sphere of influence (Renminbi) by investing in foreign infrastructures instead of low yield US t-bills

    • In china, reform is viewed in 3 periods: Mao consolidated power and strengthened China against foreign humiliation; Deng started China on course to become a great economic power; Xi will give China its rightful place in new world

  • Asian Infrastructure Investment Bank (AIIB)

    • China tried to change agendas from within the World Bank, International Bank for Reconstruction and Development (IBRD), ADB, IMF, etc... didn't find much luck

    • AIIB is a multilateral development bank but China's 26% stake gives it an effective veto since a supermajority of 75% is needed to make significant decisions

    • US is absent from the bank... it tried to dissuade allies but when UK joined, most other countries joined.

      • Fears this as an alternative to the Bretton Woods system... feared its commitment to adhere to good governance, responsible lending, and env protection.

    • Japan is absent -- it is a direct threat to their Asian Development Bank (ADB)

    • New Development Bank (NDB) is sister institution -- five BRICS countries are in it (Brazil, Russia, India, China, South Africa)

    • AIIB will lend no more than $2B/yr for first 5 yrs... Silk Road Fund is funded by China's ForEx reserves but it's also ~$2B

    • Loans made to companies with interests overseas can be labelled under "Belt and Road" by savvy execs looking to impress political masters... it's an excuse for regional investment

    • Really large amounts of money will be coming from China Development Bank (CDB) and China Exim Bank... these policy banks will not work on a multilateral basis

    • Biggest beneficiaries will be Chinese-state owned construction firms (reminds me of something Vikram told me about when summarizing Confessions From an Economic Hitman)

  • Asia's Infrastructure Arms Race

    • Developed Asia has some of the best infrastructure in the world, undeveloped Asia has some of the worst

    • China and Japan are competing to invest billions in infrastructure... Japan focusing on high quality to contrast China's track record for more shoddy construction

    • Half of japan's funds are bilaterally and half with the ADB

    • Countries like Cambodia would prefer to borrow from multilateral organizations so they won't owe money to a single country

    • Bottleneck: finding bankable projects for infrastructure deficits, not lack of funds

    • China's loans with corrupt regimes like Zambia, Liberia, South Sudan, Myanmar, etc may backfire heavily

    • For China, A full year of spending on the Belt and Road is unlikely to match even a single month's spending at home

• Marching West: The Economics of Power in Central Asia

  • China's influence in the Central Asian countries is increasing at Russia's expense, even though they've been careful to deem it as purely "commercial'

  • Capital of Kazakhstan moved from Almaty to Astana... represents new power, especially China's ownership of the second largest building

  • Xinjiang

    • Shanghai Cooperation Organization (SCO): combat "three evils" of terrorism, separatism, and religious extremism... China also views it as a vehicle for economic cooperation

      • Roads, railways, pipelines along landlocked Xinjiang --> more cross-border trade --> keep separatists in check

    • Central Asia has rich natural resources of oil and gas, deep uranium reserves, and lots of potential for hydro power

    • "The New Silk Road" concept marks a rediscovery of China's traditional continental ambition to be a central economic power in Eurasia

    • China has habit of portraying Uyghur nationalism as religious extremism

      • Blames East Turkestan Islamic Movement (ETIM) for masterminding terrorist attacks from abroad

      • China's Forgotten People by Nick Holdstock argues that Beijing's police state policies to control terrorism are a self-fulfilling prophecy that has now become the real thing

    • Most of the wealth from developing resources Xinjiang in has flowed back into Han immigrants, not Uyghur's... fueling resentment and protests among the native population

    • Urumqi: regional transport and financial hub... has high speed passenger railway, new freight rail lines, and expressways running to Kazakhstan border

    • Khorgos is becoming a "dry port" with acres of warehouses and industrial parks

      • Transcontinental services take 15 days by train for 10,000 km journey (30 days quicker than sea)

      • Computer manufacturers use these land routes heavily

      • Some European businesses complain the land route is too expensive to be economical and that they do it to keep govt officials happy

    • Kashgar: trying to re-establish it as a gateway to Central and South Asia... borders Kyrgyzstan, Tajikistan, Afghanistan, and Pakistan

      • Given SEZ (special economic zone) status and Guangdong province will invest $1.5B

      • Little economic rationale for such large development in a remote corner of the country

  • Central Asia

    • CNPC outbid India's Oil and Natural Gas Corporation (ONGC) to buy Canadian PetroKazakhstan... --> Kazakhstan became second largest foreign production base overnight

    • CNPC pumps most oil from Kazakhstan to Europe, but it's feeding a rising share to China

    • Russian firms (Gazprom, Lukoil, Transneft, Rosneft) retains considerable economic leverage in Central Asia but is unable to compete with China's easy funding & rapid constructions

    • "Power Silk Road": new electricity grid linking Central Asia to Xinjiang