By Godfree Roberts selected from his extensive weekly newsletter:
This week’s selection is only three pieces from the Here Comes China newsletter and this selection corresponds with recent essays and discussions on the Saker Blog. The first piece is Belarus and the New Silk Road, then a BRI update and finally the question that we face frequently: How does Russia and China cooperate. (No, you won’t see this in the western media).
Belt and Road and Belarus
It is a matter of fact (as will be described below) that Belarus has emerged as a key nodal point for the rail traffic between the EU countries, especially in Northern Europe, and China along the New Silk Road (C in map). This New Eurasian Land-Bridge corridor is one of the key routes of the 6 land-based corridors of the Belt and Road Initiative (BRI). Chinese President Xi Jinping even called Belarus “a pearl” on BRI, and Chinese banks and companies have invested billions of dollars in the country. With the outbreak of the Corona Pandemic, this route became decisive for the shipment to Europe of medical materials such as medicines, ventilators, and personal protection materials (PPM) mostly produced in China. Besides this fact, China’s massive investments in Belarusian industrial parks and free trade zones are helping this country to regain, but in a modern and efficient way, its Soviet-era industrial capacity, promoting, thus, economic and social development of the Belarusian people.
Is this China-Belarus-EU cooperation a target of political forces who are calling for a sudden, and consequently, violent overthrow of the Belarusian President Alexander Lukashenko? We hope not. But a look at some commentaries in Swedish and other media suggest that this might be a strong factor in the sense of “urgency” in the calls to overthrow the Belarusian government.
The Swedish think tank, Dagens Arena, which is connected to the ruling Social Democratic Party, published an editorial on the situation in Belarus, in which the author stated the following: “At the same time, Lukashenko has taken steps to become more independent of both Russia and the EU. Belarus is strategically located along the new Silk Road, China’s gigantic infrastructure project that will, among other things, connect China with the Baltic Sea. And China has no interest in democracy in Belarus. On the contrary. It is urgent for the EU to take the side of the people.” From: Is the Belt and Road Initiative a Target in The Unrest in Belarus? By Hussein Askary, Belt and Road Institute in Sweden [MORE]
Belt and Road Update
China has placed its productive capabilities, in addition to US$ 3 trillion in foreign reserves, behind the BRI. It has also taken the lead in establishing international financial institutions to provide credit for development projects like the Asian Infrastructure Investment Bank (AIIB), with a capital of US$100 billion and the membership of 100 (as of September, 2019)13 nations including Sweden, and The Silk Road Fund (US$ 40 billion). China is also a major contributor to the New Development Bank (NDB) established in 2014 by the BRICS nations (Brazil, Russia, India, China, and South Africa) with an initial capital of US$ 100 billion. The NDB headquarters is located in Shanghai14.
The “big four” public commercial banks of China (Export-Import Bank, China Construction Bank, China Development Bank, and China National Agricultural Bank) are world-leading examples of the issuance of “productive credit”. They have created nearly (US$ 14 trillion) new currency—“money”—in the form of loans over the past decade. While not banks of deposit for the government of China, these public commercial banks have not claimed the ability to create credit simply as fiat currency; rather they have issued credit anchored by the People’s Bank of China’s loans to them, of China’s foreign exchange reserves earned by production and export.
Between 2014 and 2017, they extended roughly $300 billion in additional credit for infrastructure projects outside China through the Belt and Road Initiative. The result has been an extraordinary 8-10% of GDP invested in economic infrastructure for 20 years; and multi-factor productivity growth averaging 3.11% annually from 2001-2014 according to the Bureau of Economic Analysis in the United States (which compared this to U.S. multi-factor productivity growth just one-seventh as great).
In contrast The “big three” central banks of the United States (Federal Reserve), Europe (European Central Bank) and Japan (Bank of Japan) have created, by rough estimates, $13-14 trillion equivalent in money since the outbreak of the financial and banking crisis in 2008 (by “quantitative easing” programs. But none of that money has been created for an economic purpose, nor for a trade purpose. It has been created for a strictly financial purpose: providing the largest banks in the Trilateral countries’ enough capital and liquid reserves to survive massive losses and bad debts in financial speculation. FROM: Report by the Belt and Road Institute in Sweden by Hussein Askary, Ulf Sandmark, Lars Aspling. [Download their report here]
Russia and China ties
Russia and China deepened their ties with the construction of a massive polymer plant. The $11 billion venture in Russia’s Far East is the latest of their collaborations. Russia has started work on one of the world’s largest polymer plants, a facility that will produce plastic components aimed at the Chinese market, in a display of its strengthening economic ties with Beijing.[MORE]