Vol. II Issue. 18
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China's engagement in Sudan and S. Sudan
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Priyanka Mehrotra
30 April 2012
In a recent event, that has strengthened the economic ties between China and South Sudan, Beijing announced that it will provide South Sudan $8 billion in development loans over the next two years. The funds will be used for hydropower, infrastructure and agriculture projects and more importantly these projects will be conducted by Chinese companies. The timing of this new investment is crucial, considering Sudan and South Sudan are in a state of conflict. Though Beijing has avoided taking sides, the growing ties with the South and the decision to cooperate with the United States and send an envoy to Africa in order to put an end to the fighting, reflect China's urgent need to protect its economic interests in the region.
Following the declaration of independence by South Sudan in July 2011, which resulted in a concentration of oil producing sites in the South, China recognised the need to build commercial ties with the newly independent State. South Sudan holds three-quarters of Sudan's known oil reserves as well as unexploited deposits, while the Chinese-built pipelines, that are used to transport oil to refineries and ports, are located in the North. The need to establish ties with the South has pulled China into the embroiling conflict between the two states as it struggles to maintain the delicate balance between old and new friends.
Disagreements over transit fees and border issues resulted in Sudan halting South Sudan's oil exports in November 2011. In January, South Sudan halted production of crude oil after accusing Khartoum of "stealing" oil. The rising conflict has affected China as more than five per cent of its crude oil is imported from Sudan. Thus, as the second-largest consumer of oil in the world, normal oil production and export in both Sudan and South Sudan is extremely important for China. In a recent news briefing, Chinese Foreign Ministry spokesman Mr. Liu Weimin, announced that China is willing to work together with other parties of the international community to continue making efforts to promote peaceful coexistence between Sudan and South Sudan.
While China's re-orientation of its engagement with South Sudan is becoming obvious, it is aware of its historical ties with Khartoum and the need to protect its oil investments in the country. The China National Petroleum Company, that entered Sudan in 1996, is the largest investor in Sudan. China's oil imports from Sudan increased sharply from 270,000 tonnes in 1999 to 13 million tonnes in 2011.
Though oil has become a driving force for China's intervention, it cannot be seen in isolation. Factors such as internal conflict, instability, lack of infrastructure and low level of investments in most African countries has made the Sino-Africa relation much more complex. China has invested heavily in African countries, such as Sudan, in terms of foreign aid and infrastructure. In 2008, China provided Sudan with an aid package worth $2.8 million. It has been known to provide Sudan with millions of interest free loans to expand cooperation on oil exploration and increase investments by Chinese companies. An indirect result of these investments and China's policy of "non-interference" has been the rise in arms sales that have been used during internal conflicts, especially in Darfur. China has been severely criticised by the international community and organisations for its "oil for guns" approach in Sudan. In February 2012, Amnesty International announced that China was carrying on arms sales to Darfur along with Russia. In addition there was a report submitted by former United Nations experts that pointed to the supply of Chinese made ammunition to the Sudan government which were being used against civilians in Darfur.
As the major oil production sites have come under South Sudan, Khartoum will increasing look towards China for greater investment in other sectors such as agriculture and mining. The preferential policies formulated by Sudan towards China, allow Chinese companies to own the local companies completely. On the other hand, with the pipelines and export ports under Sudan, Juba is hopeful of receiving Chinese investment to build new pipelines. South Sudan's President Salva Kiir has already completed his first official trip to Beijing and signed an important investment deal. China's decision to reduce oil imports from Iran since March means China will look towards Middle East and Africa to fulfil its oil needs.
While the division of Sudan did create problems for China, it has also given it new investment opportunities. China needs to tread carefully so as to be able to use these opportunities to its benefit. The conflict in Africa is costing China. The halt of oil production by South Sudan, in January, caused a loss to China that amounted to 260 thousand barrels per day of imports. Besides the economic losses, the Chinese workers have also been affected. 29 Chinese construction workers were abducted in Southern Kordofan in January 2012.
As China avoids taking sides in the conflict, its foreign policy in the region is going to be dominated largely by the need to balance its relations with the two Sudans. Chinese support to the African Union's efforts to resolve the conflict and cooperation with the international community can play an important role in bringing the leaders of the two countries to work towards resolving their issues.
(Priyanka Mehrotra is a Research Assistant at ORF)
POLITICS AND SOCIETY
Chinese VP stresses defense co-op within SCO
Meeting the defense ministers of the other Shanghai Cooperation Organization (SCO) members, the Chinese Vice President Xi Jinping, expressed China's readiness to work with other SCO members to develop a blueprint for defense and security cooperation in the future.
Emphasizing the importance of defense cooperation within the SCO framework, Xi stated, SCO defense cooperation had added fresh content to relations among members, injected positive factors into maintaining regional security and made contributions to building a harmonious region.
The SCO defense ministers also expressed readiness to continue cooperation on joint anti-terrorist military drills, cooperation among border defense forces and other defense and security cooperation in a bid to safeguard regional security and stability.
Source (s): Xinhua, April 24, 2012.
Work visa proposals considered
A new visa category has been proposed, in a draft law by the top legislature, to streamline the hiring procedures for international talent and to centralize records of foreigners.
This is seen as an attempt by the authorities to attract more expatriate workers across a wide sector of professions. The new policy is, however, being challenged as having failed to address the "crux" of the matter.
A survey released by a magazine affiliated to the State Administration for Foreign Affairs earlier this month, reported that more than 180,000 expatriates living in China indicated that the environment, education, air pollution and traffic congestion, play a role in shaping opinion.
Explaining the need to centralize information about the foreigners, it has been stated currently individual records are kept in various places making them difficult to access. If the government wants to have a tighter control on illegal employment then centralized information will be the first effective steps towards this goal.
Source (s): China Daily, April 25, 2012.
Beijing to see acute water shortage in 2012
Beijing is expected to face a water shortage of 1.3 billion cubic meters in 2012, accounting for a third of the city's annual water usage, according to local water authorities. The available per capita water usage in Beijing has dropped to 100 cubic meters, about one-tenth of the internationally acknowledged warning level.
The municipal government will work to keep the capital's water consumption within 3.7 billion cubic meters this year, as only 2.4 billion cubic meters will be supplied by local water resources, Cheng Jing, head of the Beijing Water Authority stated.
The gap is expected to be bridged via a combination of measures, including the use of recycled water, water diversion and moderate exploitation of underground water.
Local authorities have tightened water management by setting a ceiling for the city's annual water consumption at 4 billion cubic meters by 2015.
Source (s): China Daily, April 24, 2012.
ECONOMY
Wary of growth weakening
China's Ministry of Industry and Information Technology warned that the economy still faced downward pressure and that the domestic and external situations were "grim" as industrial output posted its slowest growth in nearly three years. Industrial output grew by 11.6 percent year-on-year in the first quarter of 2012, the slowest growth since July 2009.
Chinese companies were facing increasing operational difficulties, as higher electricity and fuel prices were pushing up costs and average wages across the nation by nearly 20 percent. Rising costs and difficulty in securing finance were causing problems for firms further increasing labor costs and squeezing margins.
This could adversely impact the 10 million SMEs, which account for more than 95 percent of the country's companies, 80 percent of national employment and 60 percent of GDP.
Source (s): China Daily, April26, 2012.
Urbanization, Energy and Technology cooperation with Europe
China expects to strengthen cooperation with European countries in urbanization and energy during Vice Premier Li Keqiang's visits to Hungary, Belgium and European Union headquarters in Brussels. The two sides will attend a high-level urbanization forum and an energy meeting. Urbanization is an important part of China's 12th five-year plan and will define China's economic growth, while Europe has an urbanization rate of 72.6 percent and advanced technology in energy conservation and environmental protection.
China will also seek technology cooperation from Germany, a relationship which is said to enjoy the status of an "equal partnership". German-Chinese economic relations have improved as the bilateral trade volume grew by 13.8 percent to 143.9 billion Euros ($190.0 billion) in 2011.
China's investment flow into the European Union nearly doubled to $4.3 billion in 2011, including a good portion to Germany. However, the deficit remains substantial, as German investment in China amounts to nearly 21 billion Euros, while China's investment in Germany stands at less than 1 billion Euros.
Source (s) Xinhua, April21, 2012.
Fourth Sino-US S&ED dialogue
China and the United States will hold the fourth round of their Strategic and Economic Dialogue (S&ED) from May 3 to 4 in Beijing. The S&ED was created in 2009 to help both nations manage their bilateral relations and promote communication. The meeting is likely to further implement the consensus of both leaders, advance the construction of their bilateral cooperative partnership, and deepen communication and coordination on macroeconomic policies and major issues in the world economy.
Source (s): China Daily, April 23, 2012.
South Sudan Issue
Chinese Vice-Premier Li Keqiang called on the South Sudan government to properly deal with bilateral cooperation in oil and ensure the stability and continuity of the oil cooperation. Visiting South Sudan President Salva Kiir arrived in China this week even as violence between the South Sudan and Sudan intensified over the unresolved issues of oil revenues and their disputed border.
Sudan and South Sudan, which broke away and became independent last year, have been unable to resolve disputes over oil revenue sharing and border demarcation. South Sudan got most of Sudan's oil and provided some 5 percent of China's oil until it shut down production in January due to simmering tensions.
Given its substantial investments in the region, China has been attempting to broker a truce to protect its investments and also secure economic gains while maintaining an overall situation of safety for its personnel working there.
Source (s): China Daily, April 26, 2012.
FOREIGN AFFAIRS
China pushes for greater ties with Russia
China's Vice-Premier Li Keqiang, who is currently on an official visit to Russia, has urged greater cooperation between the two countries. On his trip, he met with Russian business people in Moscow and expressed his hopes for advancing China-Russia trade and economic cooperation.
Speaking at the China-Russia Trade and Investment Promotion Forum in Moscow, he said, "With ties between China and Russia at a "new historical point", now is the time for the two nations to work closer together on major projects in energy, high technology and finance." China is already Russia's largest trading partner and its second-largest export market. The two countries have signed 27 agreements worth $15 billion, covering the energy, equipment, IT and finance sectors.
Source (s): China Daily, April 29, 2012.
China: Philippines sovereignty claim over Huangyan Island is "illegal"
China has stated that the Philippines' sovereignty claim over Huangyan Island is "illegal", and against basic principles of international relations. The Philippine Department of Foreign Affairs said that a Chinese ship approached several Philippine vessels and generated a two-meter wave to bully them on April 28.
Mr. Liu Weimin, spokesman of Chinese Foreign Ministry, has rejected the Philippines Foreign Secretary's accusations that China violated agreements on conduct in the South China Sea. He says the incident at Huangyan Island was triggered by a Philippine warship's violent harassment of Chinese fishermen.
Source (s): Xinhua, April 29, 2012.
Contributors:
• Sadhavi Chauhan
• Priyanka Mehrotra
• Akhilesh Variar
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