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習近平總書記在2013年訪問中亞四國和東盟期間，先後提出了"絲綢之路經濟帶"和"海上絲綢之路"的戰略構想，並在2013年12月召開的黨的十八屆三中全會上通過的《中共中央關於全面深化改革若干重大問題的決定》關於"構建開放型經濟新體制"中進一步明確提出："加快同周邊國家和區域基礎設施互聯互通建設，推進絲綢之路經濟帶、海上絲綢之路建設，形成全方位開放新格局。""一帶一路"倡議的提出，是時代的要求，是把快速發展的中國經濟同沿線國家利益結合起來，利用中國自身發展優勢實現自身發展的同時，帶動其他國家乃至世界經濟發展的偉大創舉。

亞洲開發銀行(簡稱"亞開行")在2014年發佈的《亞洲發展展望報告》裡面指出，雖然亞洲區域的經濟增長速度有所放緩，但其仍然是全球主要國家中增速最快的區域，尤其是該區域主要經濟體正在執行的改革措施將繼續推動該區域領銜全球經濟增長，因此亞洲區域是實行"一帶一路"倡議的重點。

經濟的快速發展需要相應的配套設施，然而目前亞洲國家在基礎設施上依然存在巨大的不足。根據亞開行的預測，2010-2020年亞太地區對基礎設施的需求高達8萬億美元(見表1)。基礎設施的建設是支持經濟發展的重要保障，也是實現"一帶一路"倡議互聯互通的基本要求，而基礎設施的建設需要巨額資金的支持。

"一帶一路"倡議實施過程中的資金需求主要集中在以下幾個領域：一是通信、供水和環衛設施等基礎設施領域。沿線的中亞、東南亞等國家的基礎設施較為落後，對基礎設施的新增需求強烈。二是交通、港口等跨境通道領域。"一帶一路"的暢通需要提升鐵路、公路、管道等通道能力。三是能源、資源領域。"一帶一路"跨越的地區能源和資源豐富，特別是中亞、俄羅斯等地區蘊藏著豐富的礦產、石油、天然氣等資源，開發潛力巨大。"一帶一路"沿線國家雖然經濟發展迅速，但是差異較大，一些國家市場制度不完善，在這些國家進行基礎設施建設，存在資金需求量大，投資回報期長而且未來收益不確定的問題。與此同時，"一帶一路"沿線國家間目前跨境金融合作的層次較低，大部分的貸款集中在油氣資源開發，管道運輸等能源領域，其他領域未能從中受益。因此，為了順利推進"一帶一路"倡議的實施，為"一帶一路"沿線特別是亞洲區域的基礎設施建設提供資金支持，我們需要對融資進行總體的規劃，構建以絲路基金為引導，以亞洲基礎設施投資銀行等國際開發性金融機構為重要支撐，以國內政策性銀行、國內商業銀行以及民間投資機構為主要基礎的多元聯動的融資機制。

充分發揮絲路基金的引導作用

2014年11月，在加強互聯互通夥伴關係對話會上，習近平總書記發表了《聯通引領發展夥伴聚焦合作》的重要講話：中國將出資400億美元成立絲路基金。絲路基金成立的初衷是為"一帶一路"服務，主要使命是為"一帶一路"沿線國家提供基礎設施建設、資源開發、產業合作等有關項目提供投融資支持。絲路基金是一個開放的平台，它的包容性和多元化可以為"一帶一路"倡議實施提供豐富的融資渠道和方式，可以吸引有資金實力、有知識和管理經驗的銀行和投資機構參與，多方彙聚就可以優勢互補，博採眾長。絲路基金的定位是中長期的開發投資基金，注重合作項目，更注重中長期的效益和回報。不同於以往股權投資7~10年的投資週期，絲路基金的投資期限能夠到15年或者更長的時間，可以滿足一些發展中國家中長期的基礎設施建設的資金需求。絲路基金首期資本金100億美元(首期注入的資本為美元)，這主要是便於國內外投資者通過市場化方式加入進來，外匯儲備通過其投資平台出資65億美元，中國投資有限公司、中國進出口銀行、國家開發銀行亦分別出資15億、15億和5億美元。隨著"一帶一路"倡議的不斷推進，相信會有更多的資本進入。

2015年4月20日，絲路基金、三峽集團及巴基斯坦私營電力和基礎設施委員會在伊斯蘭堡共同簽署了《關於聯合開發巴基斯坦水電項目的諒解合作備忘錄》(以下簡稱《諒解備忘錄》)，該項目是絲路基金註冊成立後投資的首個項目。根據《諒解備忘錄》，絲路基金將投資入股由三峽集團控股的三峽南亞公司，為巴基斯坦清潔能源開發、包括該公司的首個水電項目——吉拉姆河卡洛特水電項目提供資金支持。電力行業是巴基斯坦政府未來十年發展規劃中優先支持的投資領域，絲路基金首個對外投資項目落地巴基斯坦的電力項目，標誌著絲路基金開展實質性投資運作邁出了重要一步，而"中巴經濟走廊"建設是"一帶一路"建設的旗艦，表明絲路基金服務"一帶一路"建設的使命。從項目運營管理模式來看，卡洛特水電站計劃採用"建設—經營—轉讓"(BOT)模式運作，於2015年底開工建設，2020年投入運營，運營期30年，到期後無償轉讓給巴基斯坦政府；從項目融資方式來看，絲路基金投資卡洛特水電站，採取的是股權加債權的方式：一是投資三峽南亞公司部分股權，為項目提供資本金支持。在該項目中，絲路基金和世界銀行下屬的國際金融公司同為三峽南亞公司股東；二是由中國進出口銀行牽頭並與國家開發銀行、國際金融公司組成銀團，向項目提供貸款資金支持；從控制風險方面來看，通過股權加債權的方式，一方面可以通過股權鎖定長期投資的高額回報，獲取一定股份，參與公司治理，提高投資收益的確定性，另一方面可以通過債權獲取優先清償權，有助於控制風險。絲路基金不是援助性的，在一定程度上也是逐利的，因此絲路基金在服務"一帶一路"建設的同時要評估項目的風險，平衡好風險和收益之間的關係……

綜上所述，助力"一帶一路"倡議實施的各個資金提供機構之間不是各自為戰、相互競爭的關係，而是相互合作、協同發展的關係。為了推進項目融資的有效進行，我們要形成多方聯動的融資機制。"一帶一路"建設中的一般項目都需要債權融資和股權融資相配合，在充分發揮絲路基金的引導作用的基礎上，由絲路基金聯合其他投資機構比如亞投行共同投資股權，中投也可以附加參與一部分股權投資，啟動一些本來因缺少資本金而難於獲得貸款的項目，然後由中國進出口銀行和國家開發銀行跟進發放貸款，由商業銀行為項目參與企業提供銀行業務，積極引進民間資本參與項目建設，多方聯動，共同促進項目實施，有力的推動"一帶一路"倡議的實施。

請按此閱覽原文。

By PwC

Foreword

Infrastructure development is crucial to improving connectivity and driving sustainable growth in ASEAN. It is important to identify the changing needs of each of these countries in order to leverage future opportunities and trends in infrastructure investments in the region.

This report is the second in a three-part Infrastructure Series. In the first report, Understanding infrastructure opportunities in ASEAN (2017), we discuss the existence of a widening infrastructure gap in the region, highlight the potential difficulties faced by countries in mobilising infrastructure investments, and examine measures that could potentially address these challenges. In addition, we introduce the future drivers that we believe will further increase infrastructure spending in the region.

In this second report, we take a closer look at how the identified drivers are shaping the pipeline of greenfield infrastructure projects in each ASEAN country. We also assess how the Public Private Partnership (PPP) project pipelines of these countries are shaping up in light of these driving forces.

The subsequent and final report of our Infrastructure Series, which will be published later in 2018, will cover infrastructure funding and financing, including developments in the funding landscape and alternative sources of financing.

We hope that you find our Infrastructure Series a useful resource that addresses some of the key issues that we as infrastructure practitioners grapple with. If you would like to discuss any of the issues raised here, please do get in touch with us.

Chapter 1: Infrastructure in ASEAN

All economies in ASEAN have been focusing their efforts on increasing both private and public sector investments in infrastructure. However, the region’s rapid growth has outpaced its infrastructure development, which has resulted in a huge need for infrastructure investments. The Asian Development Bank (ADB) estimated that ASEAN countries will require US$2.8 trillion in infrastructure investments from 2016 to 2030…

Transport

Asia Pacific is forecast to become the largest transport infrastructure market in the world with investments expected to increase from US$669 billion in 2016 to nearly US$1.2 trillion in 2025. Cumulatively, investments in transport infrastructure in Asia Pacific are expected to be almost US$9.0 trillion. This is due to the region’s diverse and difficult geography, rapid economic growth and increasing urbanisation, all of which culminates in an acute need to develop transport infrastructure and services.

Governments get ambitious
Governments in the region have identified transport infrastructure to be of strategic importance for their economic development and trade competitiveness. Given the rapid urbanisation and increasing mobility that many ASEAN countries are seeing, demand for transport infrastructure and more efficient transport networks is on the rise. This has placed pressure on governments to renew a commitment to transport infrastructure spending as part of their national development strategies.

Historically, there has been a focus on roads and bridges. Presently, 65% of projects under construction are roads and bridges. There were a total of 270 road and bridge projects in the past, accounting for more than 52% of the total transport projects. This emphasis is set to continue — of the total number of transport projects in the pipeline, 46% are roads and bridges, and 30% are rail.

Among the ASEAN countries, Indonesia, Vietnam and Philippines have historically had the largest share of transport infrastructure projects. In fact, Vietnam and Indonesia share the top spot with 97 projects each.

In Vietnam, road is the dominant mode of freight transport supporting the country’s development as a regional manufacturing hub. Statistics show that roads served about 77% of all freight transport and 94% of all passengers transported in 2016.

These countries intend to continue their emphasis on transport, as observed from their development plans. Thailand, too, has unveiled infrastructure plans that place emphasis on transport infrastructure.

Joining hands, regionally and cross-regionally
While many ASEAN countries are looking inward at their infrastructure needs, they remain acutely aware of their place in the wider global supply chain. Shifts in global economic power and trade competitiveness are driving regional cooperation and integration initiatives. Global and regional megaprojects arising from this trend, such as China’s BRI and the initiatives announced for the Greater Mekong Subregion (GMS), will boost infrastructure spending, particularly in ASEAN.

Rail attracts attention
With increasing urbanisation and mobility, ASEAN is seeing an increasing emphasis on rail projects, given their efficiencies vis-à-vis road transport. The cumulative railway spending between 2016 and 2025 in the Asia Pacific is expected to amount to US$2.3 trillion — the highest of all regions. Specifically, total investments in subway construction in Asia are projected to reach US$230 billion in the next 15 years…

Energy

The rapid economic and population growth of ASEAN is leading to a huge demand for energy — demand that is estimated to grow at a compound annual growth rate (CAGR) of 4% per year from 2014 to 2025.

In other words, the region has to be ready to handle a doubling of electricity demand between 2014 and 2025. Governments are responding accordingly by continuing their focus on power projects with a new focus on renewables.

Focusing on renewables

Climate change and resource scarcity are giving rise to concerns over energy security, which is driving the need for the development of sustainable infrastructure. One sector with high potential for ASEAN governments is renewable power generation, especially since many countries are rich in renewable energy sources.

In order to tap into this renewable energy potential and move towards more sustainable forms of energy, ASEAN is aiming for 23% of its total primary energy supply (TPES) to come from renewable energy by 2025.

This target is a significant, and ambitious, increase — in 2014, renewables only contributed to 9.4% of TPES. To achieve this, each ASEAN government has set out their own renewable energy targets.

In addition to renewable capacity addition targets, the governments in the region have also implemented various policies and regulations to stimulate the development of renewable energy.

In the past, the bulk of the renewable energy generated in ASEAN has come from hydropower projects. These were mainly found in Lao PDR and Vietnam. Geothermal and wind come next, in terms of number of projects, where most of the developments were found in Indonesia, Philippines, Thailand and Vietnam.

However, in the future and as illustrated in each country’s renewable energy targets, we expect an increasing emphasis on solar, wind and biomass power projects. Hydro still leads in the region, but it is worthwhile noting that this sub-sector is primarily led by Lao PDR. The country intends to leverage its hydro potential to transform itself into the “battery of Asia” and export electricity to neighbouring energy-deficit countries….

Chapter 4: What’s next?

The drivers influencing the pipeline of infrastructure projects in ASEAN are rapid economic growth and urbanisation; increasing need for efficient mobility; trade competitiveness; climate change and sustainability; and geopolitics. The influence of these drivers, or a combination of them, has resulted in various initiatives such as:

• Ambitious infrastructure strategic plans and targets announced by governments in ASEAN;

• regional and cross-regional initiatives that aim to integrate and improve connectivity within the region while influencing the geopolitical environment; and

• the push for clean energy by establishing an enabling policy environment and setting aggressive clean energy capacity targets.

This has translated into a strong pipeline of infrastructure projects, particularly in the transport and energy sectors. In transport, we see a continuing shift to rail-based transport over roads given the former’s advantages in transporting people more efficiently in terms of travel time, land take and pollution. In energy, there is clear and significant shift to all forms of renewable energy in a bid to address current and future power generation gaps in the region.

To achieve their ambitious infrastructure investment targets, governments in the region are actively looking to leverage PPPs to mobilise private capital and expertise. Most of the countries in the region have, or intend to, establish a strong PPP ecosystem and this has translated into a long pipeline of PPP projects. We would, however, like to highlight that not all of the projects in the pipeline are 'investor ready' and can be brought to the market in the short term. In ASEAN, there has historically been a tendency for governments to bring projects to the market too early before proper preparation has been done. While this is understandable, given the developer and investor appetite for more projects and the availability of financing, in the long run, it actually slows down the project procurement timeline and governments risk losing credibility in the marketplace.

That said, to overcome these issues, we hope that ASEAN countries will adopt best practices in infrastructure planning and PPP project preparation processes as explained in our first report of this Infrastructure Series, Understanding infrastructure opportunities in ASEAN (2017). A robust planning and preparation process will ensure that the pipeline of projects is bankable. This will go a long way in building confidence with potential investors, and, when coupled with a strong policy environment, will help in attracting infrastructure investments.

Please click to read full report.

Despite the two-year delay occasioned by land-acquisition issues, services on the China-funded Jakarta-Bandung High-Speed Rail Line are set to begin within three years, representing a new high-water mark for Beijing-Jakarta relations.

Express delivery could see Indonesia's first high-speed rail link calling at all stations by 2021.

The BRI-backed Jakarta-Bandung high-speed rail line is said to be back on track, with its contractors confident it will now enter operation in 2021. Although this is a full two years behind the completion date envisaged when the project was first given the go-ahead in 2015, it does mean that progress – long-stalled over land-ownership issues – is finally being made.

Once completed, the line will be 150km long and have the capacity to handle trains travelling at up to 250km/h. Initially, it is expected to have an average daily passenger flow of some 44,000, a figure expected to climb dramatically. Its most significant benefit, though, is the cut in transit time it offers for journeys between two of the country's primary hubs, with the present five-hour duration falling to just 36 minutes.

Summing up the current state-of-play on the project, Tumiyana Tumiyana, the President Director of Wijaya Karya (Wika) – the state-owned Indonesian construction company that is the local partner on the project – said: "If work on a 150km high-speed rail project occasionally experiences a few problems, that's only to be expected. Today, the level of physical construction stands at 65.1%, with 81.7% of the overall land clearance also completed.

"In fact, it's all starting to come together rather quickly now, with significant progress having been made at 22 key construction sites along the route. We are now confident that work on the line will finish by early 2021, with the service then starting to run once three months of trials have been completed."

Wika, the company Tumiyana represents, is part of Kereta Cepat Indonesia China (KCIC), the Chinese-Indonesian consortium responsible for developing the project, the country's first high-speed rail line, in association with the China Railway International Corporation (CRIC). The optimism shown by such a senior figure within the cross-country partnership will, no doubt, come as some reassurance to many of the project's stakeholders, with several of them having become notably jittery over the delays and uncertainty that has dogged the development of the line.

Given the scale of the project, it is somewhat unusual that its two-year overrun is more down to land-acquisition issues than the somewhat more common problem of nailing down the finance. The funding for the project, indeed, has been in place almost since the outset.

In line with this, earlier this year, Wika received US$770 million (Rp 11.1 trillion) from the China Development Bank, the latest tranche of the $5.5 billion China has allocated to the project. The funding comes within the remit of the BRI – the Belt and Road Initiative, China's ambitious international infrastructure development and trade facilitation programme.

Despite some concern on the part of local opposition groups that Indonesia will be permanently in hock to China and unable to meet its repayment obligations, Tumiyana is confident the financial targets are realistic. Assessing the profit potential of the line and the agreed repayment terms, he said: "Firstly, you have to remember that we have been given a 40-year soft loan at a very cheap rate. Secondly, as part of the overall plan, the consortium will develop the property in the immediate vicinity of the railway stations, a strategy that, we believe, will generate up to Rp362 trillion in revenue over the next 40 years."

The city of Bandung: Set to get four-and-a-half hours closer to Jakarta, the national capital.

Despite Tumiyana's optimism, the project's progress may yet be far from smooth, with a number of land-acquisition issues remaining unresolved. As of May this year, only 73% of the designated land had been successfully acquired, with just 60% of that officially allocated to the developer.

Murkier still, five companies whose premises need to be acquired and demolished to make the proposed route viable, have initiated legal action against the consortium, demanding total compensation of $141 million. Of these actions, three have already been granted leave to proceed to court by state legislators.

In light of these actions, it is believed that that consortium is considering a number of changes, which would see the proposed rail line diverted away from the contested properties. Despite this apparent late-in-the day rethink, the consortium has officially stated that this will not push completion beyond the proposed 2021 deadline.

Despite these local difficulties, it is believed that both China and Indonesia remain firmly committed to making the completion of the line a reality. A similar optimism also characterises many of the other BRI-related infrastructure projects under way in Indonesia.

Since 2015, when China first committed to developing the Jakarta-Bandung line, mainland investment in Indonesia has more than doubled and seems set to continue to grow. As recently as April this year, China agreed an additional $23.3 billion in funding for five further Indonesian infrastructure projects.

Indonesia, however, is keen not to appear wholly dependent on China for its programme of economic renewal. This has seen it partner with Japan on the 730km long Jakarta-Surabaya High-Speed Rail Link, a route five times the length of the China-backed Jakarta-Bandung line.

Overall, though, the closer links wrought between China and Indonesia by the scale and scope of the BRI have clearly benefitted both countries. For Indonesia, the advantages are obvious – in order to continue to develop economically it has no choice but to improve connectivity both within the country and with its neighbours and the high-value importers in the more developed economies. China picking up the tab for such an undertaking was clearly an opportunity the country could not turn down.

For China, the benefits of its BRI partnership with Indonesia are both multifold and slightly more nebulous. Most obviously, this closer collaboration gives China easier access to Indonesia's strategically significant ports and marine facilities. At the same time, it also gives China a direct route into Indonesia's relatively-young, newly-affluent consumer base. With a population in excess of 261 million, Indonesia has more than twice as many consumers as any other country in the ASEAN bloc, making it a priority target for China's export-oriented business sector.

Less obviously, the improved working relationship allows China to develop an affinity with one of the world's leading Muslim nations, a major bridge-building exercise for a country that is often seen as at odds with its own domestic Muslim population. It also sees China establish a distinct alliance with a country that is fast emerging as a force in its own right within the region. With its focus on soft-power, China is understandably keen to nurture as many influential friends within the wider Asia-Pacific region as it possibly can.

Marilyn Balcita, Special Correspondent, Jakarta

By Michael J. Green, Senior Vice President for Asia and Japan Chair at the Center for Strategic and International Studies (CSIS)

China unveiled the concept for the Twenty-First Century Maritime Silk Road (MSR) in 2013 as a development strategy to boost infrastructure connectivity throughout Southeast Asia, Oceania, the Indian Ocean, and East Africa. The MSR is the maritime complement to the Silk Road Economic Belt, which focuses on infrastructure development across Central Asia. Together these initiatives form the One Belt One Road (OBOR) initiative designed to enhance China’s influence across Asia.

There is a shortage of infrastructure investment to meet the needs of developing nations across the Indo-Asia-Pacific region and most nations have welcomed the opportunity to bid for Chinese funding. At the same time, there are growing questions about the economic viability and the geopolitical intentions behind China’s proposals. Thus far MSR initiatives have mainly been concentrated in the littoral states of the Indo-Pacific region, especially port-development projects, which is raising questions about whether these investments are economic or military in nature. These large-scale investments are also structured in ways that invite questions about the potential for China to exert undo leverage over the domestic and foreign policies of heavily indebted recipient countries.

To shed light on some of these themes, CSIS has commissioned seven experts to unpack the economic and geostrategic implications of China’s infrastructure development across the Indo-Pacific region under the MSR. Their research is presented in this volume. The essays begin with analysis of four infrastructure projects, three by China under MSR and one by India as a counter to MSR. These are: Kyaukpyu (Myanmar), Hambantota (Sri Lanka), Gwadar (Pakistan), and Chabahar (Iran):

• Kyaukpyu: Greg Poling explains the economic and strategic rationale behind China’s investments in Kyaukpyu, a coastal town along the Bay of Bengal in Myanmar’s western-most state of Rakhine. China recently won contracts to develop a deep-sea port at Kyaukpyu and an industrial area in a special economic zone (SEZ) nearby. Kyaukpyu is also the terminus for an oil pipeline and a parallel natural gas pipeline running to Kunming, capital of southwestern China’s Yunnan Province. Those projects reflect a strategic effort by Beijing to reduce its reliance on oil and gas imports through the Strait of Malacca, and a deep-sea port at Kyaukpyu could similarly help China in its drive to develop its inland provinces. Poling references regional concerns about the potential that China would leverage a port at Kyaukpyu for military purposes but concludes that at present the overriding fear within Myanmar is China’s potential economic leverage via debt financing.

• Hambantota: Jonathan Hillman examines China’s development of the Hambantota port in Sri Lanka and questions the economic rationale of this project given existing capacity and expansion plans at Colombo port, fueling concerns that Hambantota could become a Chinese naval facility. This case also highlights the potential risks of becoming a debt trap as Sri Lanka handed the port over to China in December 2017 with a controlling equity stake and a 99-year lease—eerily similar to the imperial strategies Britain imposed on Qing China with Hong Kong in the Nineteenth Century. Hillman suggests the Hambantota case reveals the need for recipient countries to tie infrastructure projects to larger development strategies in order to better monitor debt levels, and for the international community to expand alternatives to Chinese infrastructure financing.

• Gwadar: Gurmeet Kanwal highlights the development of Gwadar port as a key element in the larger China-Pakistan Economic Corridor (CPEC) initiative. Though CPEC is branded as a symbol of strong bilateral ties between China and Pakistan, Kanwal argues that both sides have misgivings about the project, including China’s concern about the safety of its workers and fears in Pakistan about increased indebtedness resulting from the project, that could increase tensions. Kanwal also addresses the security implications of China’s potential naval access to Gwadar as a gateway to the Indo-Pacific, and concludes by examining the potential from the revived quadrilateral framework of security dialogue and cooperation among India, Japan, Australia, and the United States as a way to counter China’s strategic outreach.

• Chabahar: Harsh Pant notes that China is not the only country playing the great game through infrastructure investment. India’s efforts to help develop Iran’s Chabahar Port reflect Delhi’s own ambitions as a driver of infrastructure development and improved regional connectivity, particularly with Afghanistan. Close to the Chinese-backed, Pakistani port of Gwadar, the Chabahar project is also seen as a strategic play to limit the influence China seeks to gain and wield through its Belt and Road Initiative and MSR. Pant concludes by identifying complications in India’s strategy stemming from Iran’s openness to Chinese and Pakistani participation in the development of Chabahar.

These four infrastructure case studies are followed by two essays addressing the broader economic and military implications of China’s MSR initiative:

• Economic Implications: Matthew Funaiole and Jonathan Hillman begin their chapter by framing the larger economic significance of the Indo-Pacific region, noting for example that each of the 10 busiest container ports in the world are along the shores of either the Pacific or the Indian Ocean, and more than half of the world’s maritime trade in petroleum transits the Indian Ocean alone. In order to begin addressing whether China’s infrastructure investments serve economic or strategic purposes—or both—the authors introduce three criteria for assessing the economic viability of infrastructure development projects: proximity to shipping lanes; proximity to existing ports; and hinterland connectivity, or the degree to which port projects are connected to larger development strategies inland (though some ports can arguably serve meaningful economic purposes as hubs for cargo transshipment). In their view, all three of the Chinese infrastructure projects examined in this volume are somewhat misaligned with economic objectives, particularly with respect to the third criterion of connectivity.

• Military Implications: Zack Cooper posits that China’s increased military presence in the Indian Ocean should not come as a surprise. China is following in the traditional path of other rising powers; it is expanding its military operations to match its interests abroad. The Chinese economy is highly reliant on trade routes that pass through the Indian Ocean, which serves as a vital pathway, particularly for energy supplies, and it is therefore natural for the Chinese government to seek to protect its interests along these sea lines of communication. In his view, the security implications of China’s push into the Indian Ocean are mixed. In peacetime, these efforts will certainly expand Chinese influence in the region, possibly through access to port facilities to refuel or resupply naval vessels and in terms of anti-piracy operations and familiarization with other regional militaries. At the same time, however, China’s Indian Ocean presence will likely create as many vulnerabilities as opportunities in terms of protecting trade routes, bases, and ships—particularly in wartime. Nevertheless, Beijing’s political, economic, and military influence is likely to expand in future years and will remain a concern for strategists focused on the Indian Ocean, which has long been seen by the United States and Australia as a critical transit point from the Pacific to the Middle East and critical for maritime defense in depth to manage any threats to the critical chokepoints of the Gulf of Hormuz and the Strait of Malacca. These concerns are increasingly on Japan’s radar and India has also grown concerned that China’s so-called “string of pearls” in the Indian Ocean would give Beijing new options to horizontally escalate beyond long-standing Sino-Indian competition in the Himalayas.

The series concludes by examining how the maritime democracies of the United States, Japan, India, and Australia might respond to the uncertainties posed by the MSR through the newly reconstituted “Quad.”

• Quad Response: Jesse Barker Gale and Andrew Shearer review the history of the Quadrilateral Security Dialogue, or “Quad,” which began when Australia, Japan, India, and the United States first came together to provide humanitarian assistance after the 2004 Indian Ocean tsunami. In subsequent years, the four governments failed to formalize the construct because of differences within each capital about China’s possible reaction. Fast-forward a decade, and the four countries have now reestablished the Quad in what the authors consider a response to China’s unexpected economic and military assertiveness in the region. They argue that with increasing convergence among the four maritime democracies on the need to coordinate on a broader strategy to ensure a free and open Indo-Pacific region, the “Quad 2.0” has potential to shape China’s strategy in a more benign direction, but remains underutilized and under-operationalized.

This study builds on prior work at CSIS on the geopolitics of the Indo-Pacific, including: the Asia Maritime Transparency Initiative; Reconnecting Asia; China Power; and  Countering Coercion in Maritime Asia. The idea for a focused examination of China’s Maritime Silk Road grew out of discussions with senior leadership on Japan’s National Security Council staff, who then provided some funding for a conference on the subject. As with our other research on maritime Asia, we have endeavored to integrate political, military, economic, and historical considerations. The analysis and prescriptions are entirely those of the authors and do not represent the official positions of any government in the region.

The overall conclusion is mixed. China’s MSR projects are neither purely military nor purely commercial. Moreover, China’s overall approach is probably evolving. It is our hope that this study will help the United States and like-minded states refine their own response to MSR—hedging or deterring where necessary, but also working to encourage a more transparent and economically viable approach from Beijing.

I am grateful to the authors for their expertise and careful work and to Nick Szechenyi for leading the project and pulling together the essays for this study.

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By Donovan Ferguson, James Mckenzie and Felicity Ng

Investors journeying along Belt and Road Initiative (BRI) countries will be wary of the operational, political and legal risks that come along on the route. To mitigate these risks, aside from the usual prudent contracting and investment structuring, investors should also be aware of their rights under the web of investment treaties which cover the route. However, knowing about the existence of investment treaties is only the first step.

Investors should familiarise themselves with the particular dimensions of substantive rights as expressed in the various Chinese Bilateral Investment Treaties (BITs) and Multilateral Investment Treaties (MITs).  As at the time of writing, 61 BITs exist between China and BRI nations as well as several MITs. Of these BIT-contracting states, 49 are parties to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (Washington Convention), which provides for enforcement of arbitration awards.

While these treaties and the Washington Convention provide a robust source of potential investor protections, they must be understood and carefully planned for by BRI investors. There remain key differences between BITs with BRI countries. In this article, we detail some of these differences and some of the key considerations for making BRI investments.

Why do investment treaties matter?

BITs are international law instruments agreed between two states. MITs are treaties agreed between more than two states. BITs and MITs trace their history back to the post-Second World War era, originally created by developed countries to protect their investments in developing countries. Modern BITs and MITs aim to create a stable legal environment that fosters direct foreign investment. This is achieved by the “host state” (i.e. the state in which the investment is made) agreeing to provide certain guarantees and standards of protection to the investments of private foreign investors (i.e. those with the nationality of, or where they are a corporation the place of incorporation in, the “home state”).

A major innovation was introduced into investment treaties in the mid-1960s: arbitration mechanisms which give investors an effective remedy against unlawful actions of the host state, known as Investor State Dispute Settlement (ISDS). With the inclusion of ISDS mechanisms in investment treaties, corporate and individual investors can bring claims against governments for breaches of the substantive investor rights set out in those treaties. The ISDS process is independent from domestic legal systems, which means that BIT and MIT protections are a crucial bulwark against political and legal risks that BRI investors are likely to face in some of the high risk jurisdictions amongst the BRI countries. Importantly, investor rights and remedies through ISDS are often in excess of those that a BRI investor will enjoy under their BRI contract.

Notably, the usual dispute resolution method under Chinese investment treaties, arbitration submitted to the International Centre for Settlement of Investment Disputes (ICSID), allows investors to rely on simplified enforcement mechanisms under the Washington Convention. Host states that are party to the Washington Convention are required to enforce arbitral awards made under that Convention, making enforcement of awards an obligation under international law. While voluntary compliance with the Washington Convention is the norm rather than the rule, concerns surrounding reputation and creditworthiness are likely to continue to encourage government compliance with enforcement, particularly where the investments are made against a backdrop of a myriad of geo-political intricacies amongst BRI countries.

Investor protections covering the BRI route

Typically, the protections offered in BITs are similar to the protections offered in MITs, but the scope of guaranteed protection offered by each treaty will be set by its wording. Common forms of guaranteed protection include:

• compensation for expropriation or nationalisation of an investor’s assets by a state;

• fair and equitable treatment, which creates an obligation to provide a stable and predictable investment environment, to act transparently, and to act consistently;

• full protection and security, which provides a positive obligation to protect investment by the exercise of reasonable care;

• protection against discriminatory measures, e.g. taxes, fines, penalties, licences, permits, visa restrictions; and

• “umbrella clauses”. These clauses may incorporate contracts entered into between a host state and investors as BIT obligations.

Whilst China began its negotiation process for investment treaties in 1982, its treaty-making practice has varied over time and with its rise in economic power. While Chinese BITs generally contain all of the substantive protections outlined above, many of the earlier Chinese BITs entered into between the 1980s and the mid-1990s do not allow for umbrella clauses. Examples of BRI contracting states which have entered into such BITs are Indonesia, Laos, the Philippines, Saudi Arabia and Vietnam. Consistent with China’s earlier conservative approach, a further obstacle is posed by the limited scope of ISDS provisions in these treaties, as they only permit disputes relating to the compensation amount for expropriation. These treaties were concluded at a time when China was mainly acting as the host state, i.e. the recipient of foreign investments.

By contrast, China’s more recent BITs, especially those concluded post-2000s, have a different approach to investment protection and host state interests. BITs with BRI contracting states like Bosnia and Herzegovina, Iran, Myanmar, South Africa and Uzbekistan not only incorporate umbrella clauses but allow for ISDS in relation to any dispute relating to the investment. This shift in practice reflects China’s interest in protecting its own investors abroad. Given the increase in Chinese outbound investments and developments along the BRI countries, China may in the future renegotiate its earlier generation BITs to incorporate more liberal standards and to align with its policy orientation as exemplified in its more recent BITs.

To minimise risk exposure, investors should therefore carefully check the BITs and MITs between China and the BRI country where an investment is being made and their specific provisions. Investors should also check whether there are any treaties that are still in force and verify the BRI country’s history in dealing with ISDS claims.

How to make use of investment treaties?

The most important first hurdle for an investor seeking to make use of an investment treaty is to make sure that their investment falls within the definition of “investment” under a particular investment treaty. As of 2015, 32% of all ICSID arbitrations failed at the jurisdiction stage, as claimants did not qualify as an “investment” or being an “investor” under the relevant investment treaties.

The definition of investment has been subject to significant arbitral scrutiny. Notably, in Salini v Morocco (ICSID Case No Arb/00/04 (Decision on Jurisdiction, 23 July 2001)), the tribunal identified five criteria indicative of the existence of an investment under the Washington Convention, namely:

• a substantial commitment or contribution to the state;

• duration (i.e. a certain degree of longevity);

• assumption of risk;

• contribution to economic development; and

• regularity of profit and return.

Chinese BITs tend to adopt the commonly used asset-based definition of “investments” that is broad in scope, meaning that, apart from direct investments, this would include portfolio investments and intangible assets like intellectual property. However, there is often the requirement that such investments have to be made in accordance with the laws and regulations of the host state, which may narrow the scope of “investments”. This can be a challenge for BRI investors navigating through the interface between these multi-levelled requirements when structuring their investments so careful consideration should be given to fitting into the investment definitions before a project is commenced.

Conclusion

Investors should structure or restructure their investments to ensure that they qualify for ISDS protections. When structuring investments, investors ought to give similar weight to considerations regarding ISDS and falling within the scope of investment treaty protections, as they do the usual tax, funding and corporate governance considerations. BRI investors should therefore engage professional advisors at an early stage to structure their investments with this in mind, so that if a dispute does arise, they have the potential benefit of these additional protections.

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A critical component of one of China's most successful Belt and Road Initiative (BRI) projects – the China-Pakistan Economic Corridor (CPEC) – was inaugurated last month. This saw the high-speed, state of the art Pak-China Optical Fibre Cable (Pak-China OFC) network, which digitally connects Pakistan with China, officially enter service on 13 July.

Linking up the virtual Belt and Road: China boosts Pakistan's digital connectivity.

Jointly operated and maintained by the Special Communication Organisation of Pakistan and China Telecom, the two-year, US$44 million project saw a China-led consortium lay a total of 2,950km of cable, most of which was supplied by Shenzhen-headquartered Huawei Technologies. With the largest proportion of the cabling laid within China, the Pakistan segment runs for 822km and extends from Rawalpindi and into China via the Khunjerab border pass. At 4,733m above sea level, this makes it the world's highest cable-related project.

As part of the next phase, the cable will be extended through to Gwadar, the site of the CPEC's deep-water port, a major BRI project in its own right. For many of the CPEC stakeholders, the Gwadar link cannot be completed too soon.

At present, the port is suffering something of a logjam due to a series of ongoing customs delays triggered, in part at least, by the severing of a series of submarine cables in August last year, an incident that has made internet connectivity, throughout the whole country, intermittent at best. With a vast volume of time-sensitive produce – notably seafood – dispatched via the port on a daily basis, the delays are proving to be a logistical and cash-flow nightmare for the port's operators and for many of the export-oriented businesses that rely on it.

Thankfully, additional connectivity – beyond even that offered by the Pak-China OFC – is literally in the pipeline. Indeed, the best hope for the bandwidth-bereft port comes courtesy of PEACE – the Pakistan East Africa Cable Express – a new high-speed connection that will link Karachi and Gwadar by submarine cable to Djibouti and then on to a number of other African, Middle Eastern and European countries before its initial phase terminates in France. With this first section set to be completed before the end of next year, the project has now been under way for a little more than nine months.

Work on the submarine cabling is being headed by Huawei Marine, with the project co-funded by Tropic Science, a China-backed investment vehicle. Once operational, the network will be managed by Hong Kong's PCCW Global, with two Pakistan-based businesses – Cybernet and Jazz – handling local connectivity.

Initially stretching more than 6,200km, the PEACE network will eventually extend across 13,000km, with the aim of giving Pakistan world-class internet connectivity for the first time. Utilising high-calibre cabling, based on 200G DWDM technology, the network will ultimately deliver more than 60Tb in terms of capacity.

In a related development, last month China successfully launched two communications satellites on behalf of Pakistan. The Pakistan Remote Sensing Satellite 1 (PRSS 1), which formed the mission's primary payload, has been designed to boost the country's monitoring capabilities with regard to natural resources, environmental protection, disaster management, crop yield estimation and urban planning. It will also provide remote sensing information for the development and operation of the CPEC.

While it's the physical components of the BRI that frequently steal the headlines, the significance of its digital contribution should not be overlooked. It could be that these virtual networks play just as much a key role in delivering China's long-term trade objectives as any of the concrete and steel infrastructure installations that fall within the BRI's remit.

Geoff de Freitas, Special Correspondent, Islamabad

By Jonathan Hillman,  Director, Reconnecting Asia Project, Centre for Strategic and International Studies

The Dawn of a New Commercial Era?

For over two millennia, technology and politics have shaped trade across the Eurasian supercontinent. The compass and domesticated camels helped the “silk routes” emerge between 200 and 400 CE, and peaceful interactions between the Han and Hellenic empires allowed overland trade to flourish. A major shift occurred in the late fifteenth century, when the invention of large ocean-going vessels and new navigation methods made maritime trade more competitive. Mercantilism and competition among Europe’s colonial powers helped pull commerce to the coastlines. Since then, commerce between Asia and Europe has traveled primarily by sea.

Against this historical backdrop, new railway services between China and Europe have emerged rapidly. Just 10 years ago, regular direct freight services from China to Europe did not exist. Today, they connect roughly 35 Chinese cities with 34 European cities. Rail services are considerably cheaper than air and faster than sea, as Figure 1 illustrates, and could provide a compelling middle option for more goods in the coming years. Rail’s share of cargo by value is already growing, increasing 144 percent during the first half of 2017, as compared to the same period in 2016. A study commissioned by the International Union of Railways estimates that China-Europe rail services could double their share of trade by volume over the next decade….

The main challenge in squaring all these factors is that despite the attention they receive, there is little reliable and centralized information about these new services. Frequency of China-Europe rail services, cargo volume, cargo rates, and other basic information is hard to find, especially compared to maritime and air freight data. Many of these shortcomings stem from the newness of these routes, the complexity inherent in moving goods across many borders, and the resulting disaggregation of data. Data could improve in the coming years, but there are also incentives for obscuring the information. These trains carry not only commercial goods but also political ambitions.

Drawing from interviews with 34 stakeholders, this report contributes to filling that gap in two parts. First, it examines the rise of China-Europe railway services and their drivers. China-Europe rail has grown not only in terms of origins and destinations but also in terms of cargo volume, cargo type, and overall competitiveness. Driving these trends are several political, technical, and technological factors, chief among them subsidies and improvements in logistics processes. Second, it considers these developments within a broader trade context and identifies several challenges to future growth, including trade imbalances, capacity constraints, and the enduring strengths of maritime shipping….

Drivers

A mix of political, economic, and technical factors are driving these new services, the exact balance of which varies from route to route. As mentioned earlier, some services have run only once, entirely for promotional purposes. Others, particularly those further inland, offer a more competitive middle option between maritime and air freight. Overall, however, it is difficult to imagine these routes emerging as rapidly as they have in recent years without China putting its political and financial weight behind them….

China also provides generous subsidies for these routes, making their true economic viability more difficult to assess. According to reports, subsidies can range from $1,000 to $5,000 for each FEU, accounting for up to one-half the total cost.20 One study that examined subsidies in 2014 found an even higher range, up to $7,000 per container.21 The same study estimated that China’s provincial governments collectively spent over $300 million subsidizing China-Europe block trains during 2011 to 2016. That sum is modest when compared to the $113 billion that China plans to spend on its railways in 2018.

To be sure, China is not the only subsidy provider, nor are shipping subsidies the only avenue for state support. The European Union and its members subsidize both railway infrastructure and operations. Some groups support these measures on social grounds, noting that rail is a more environmentally friendly form of transportation. But Europe’s subsidies largely predate the emergence of China-Europe railway routes. In contrast, China’s financial and political support for these routes has coincided with their rise….

Speed Without Scale

This examination of China-Europe railways has provided two views. The first view, considering these services in isolation, is dramatic. From virtually nothing, they have grown rapidly. The network has expanded to link more Chinese and European cities. These services are faster, cheaper, and more frequent. Increasingly, they carry not only more goods but also a greater variety of goods. China’s political and financial support has paved the way.

The second view is more modest. In a broader trade context, the China-Europe railways present a new offering that has not yet grown from niche to mainstream. Future growth is limited by trade imbalances, the comparative value that maritime shipping offers, and infrastructure constraints. None of these challenges is likely to vanish anytime soon. In the meantime, these services will depend on Chinese subsidies, and the risk of delays will rise as they handle more cargo.

An optimistic scenario for China-Europe rail growth does not dramatically alter these two views. If railways double their current share of trade by value, taking on 2.5 percent of China-Europe trade by volume, that would be a major development for those involved in the rail systems. The sheer size of the China-Europe trade relationship, which exchanged some $570 billion in goods in 2016, means that modest gains produce significant sums. Railway manufacturers, owners, operators, logistics firms, and freight forwarders all stand to gain. A set of businesses would benefit from lower inventory costs. Among cities, those located near the routes and inland, further away from the coastlines, are likely to see the most gains.

But these changes do not add up to wide-ranging economic or political impacts. Maritime trade will remain dominant. The vast majority of the geographic space the railways pass through will experience no difference. The railways are not roads. They are not as accessible to the general public, and opportunities to provide services around them are limited. Of course, the public can benefit indirectly from these services, whether through taxes captured by tariffs or through benefits passed to consumers. But the emergence of China-Europe railways does not signal the return of a world in which overland trade dominates. The railways have found speed, but their scale remains limited.

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宋爽：中國社會科學院世界經濟與政治研究所國際金融室助理研究員
王永：中中國社會科學院世界經濟與政治研究所世界能源室主任研究員

中國金融支持"一帶一路"建設面臨的挑戰
 
(一) 中國承擔大量的融資壓力和風險

"一帶一路"倡議雖然旨在推動沿線國家共同發展，但在實施過程中卻是我國承擔了主要的融資壓力和風險。如前所述，"一帶一路"倡議實施四年來，我國在沿線國家提供的金融支持已超過3000億美元，涵蓋了基礎設施、資源能源領域的許多大型項目。其中相當部分由中國金融機構主要出資甚至唯一出資，導致我國承擔了"一帶一路"建設的大部分資金壓力和風險。例如，近年來我國金融機構在沿線國家開展的最大貸款項目之一，俄羅斯Yamal液化氣公司的生產線項目，就是由進出口銀行和國開行聯合提供了高達120億美元的貸款，佔該項目貸款融資總額的74%。再如，絲路基金雖然一直對國際合作持開放態度，但到目前為止也僅在兩個項目中加入了銀團貸款的融資方式，而在哈薩克斯坦設立的中哈產能合作專項基金則由其獨自出資。
 
從更深層次來看，沿線國家政府財力不足和危機後國際金融機構業務收縮，是造成中國獨自承擔巨大融資壓力的重要原因。一方面，"一帶一路"沿線多為發展中國家，政府財政實力比較薄弱。根據世界銀行數據，沿線約一半國家的外債與GDP之比已經超過60%的警戒線，如吉爾吉斯斯坦、烏克蘭、格魯吉亞和蒙古等國甚至已經超過100%。通常而言，東道國政府應當作為基礎設施項目的主要投資者，因為這類項目建成後將對國家經濟產生巨大的外部性效益。然而，中國卻成為沿線貧困國家項目的主要出資人，同時無法享受項目的外部性收益，因此承受了大量額外的風險。另一方面，發達國家金融機構都在危機後收縮業務，對海外大型項目貸款越發慎重。國際金融機構本來就對投資週期長、收益率低的基礎設施項目興趣不高，而金融危機後監管約束的強化使其在缺乏公開透明商業環境和國際通行市場規則的發展中國家放貸更加謹慎。因此，我國金融機構難以找到志同道合願幫助發展中國家進步的國際金融機構，來共同融資、分擔風險。

(二) 國內私營資本參與程度不高

中國對"一帶一路"沿線項目的金融支持仍以官方資本為主，私營資本的參與程度較低。從前面分析中可以看到，國有大型銀行以及中央和地方政府發起設立的投資基金一直是"一帶一路"項目的主要資金來源。這不僅容易在沿線國家引發經濟安全憂慮(非商業動機)和道德風險，也不利於金融機構之間的公平競爭。首先，資金接受國的政府和民眾很可能質疑中國官方背景的金融支持具有政治動機，甚至危害其國家經濟安全，從而對"一帶一路"倡議產生抵觸情緒，並出台一些帶有防範意圖的政策和法規。其次，部分國家可能會將我國官方提供的金融支持視為援助資金，為一些高風險項目爭取融資，或在獲得融資後對項目疏於管理，從而將我國資金置於較大風險中。最後，如果國有金融機構在為沿線項目提供金融支持的過程中總是處於優勢地位，也不利於它們持續性地改進治理結構和運營效率。

同時，國內私營金融機構在參與沿線項目的資金活動時也面臨著諸多瓶頸。一方面，私營金融機構的業務規模和資金實力都遠遜於國有機構。從年報數據對比來看，作為民營背景商業銀行中的佼佼者，民生銀行2016年的營業收入和資產規模分別為1552億元和5.9萬億元，遠落後於工商銀行的6759億元和24萬億元。因此，私營金融機構通常很難像其國有對手一樣獨立為海外大型項目提供融資。另一方面，國有金融機構在業務過程中也缺少向私營機構開放的機制。從Dealogic數據庫的銀團貸款信息來看，國開行、進出口銀行等活躍在"一帶一路"融資前線的國有金融機構，在開展銀團貸款時主要的合作對象也是中國銀行、工商銀行等國有大行，很少見到私營金融機構的參與。此外，私營金融機構還面臨著信息不對稱的問題。雖然國有銀行和絲路基金都建立了自己的項目儲備庫，但是這些信息並不向私營機構開放。

而且，當前官方資金主導的"一帶一路"融資支持更偏向國有企業，針對民營企業、中小企業的融資機制尚未形成。以絲路基金為例，其最初的兩筆投資就是入股三峽集團和中化集團的控股子公司，以支持它們在巴基斯坦開展Karot水電項目和在意大利收購Pirelli輪胎公司。雖然少數民營企業已經參與"一帶一路"的投資基金體系，但是這些民營基金無論在數量還是規模上都與官方背景的基金存在很大差距。而政府性投資基金對民營企業的開放程度不高、使用情況不透明，難以有效撬動民營資本參與"一帶一路"建設。類似地，在國有政策性銀行和大型商業銀行主導的"一帶一路"貸款體系中，民營企業由於規模和業績的限制以及信息不對稱等市場缺陷，也很難獲得有力的資金支持以參與"一帶一路"沿線的投資項目和公私合營項目。

(三) 資本市場未能發揮有效作用

中國主要通過銀行貸款和股權投資基金向"一帶一路"沿線項目提供金融支持，企業依託資本市場開展直接融資的比例很低，不利於融資風險的疏散。這一方面與國內資本市場開放程度不高密切相關。目前，我國僅允許境外機構和企業在境內資本市場上發行熊貓債。雖然這一市場最早在2005年開始試點，但是直到2015年才加快了開放步伐。根據萬得數據，截至2017年11月，已有約48家境外機構和企業在我國發行了2000多億元熊貓債。不過，發行主體多為外國政府、國際金融機構和國內企業的海外子公司，像俄羅斯鋁業聯合公司這樣的沿線國家企業主體還很罕見。這主要是因為國內資本市場制度和金融基礎設施還存在局限性，例如：企業跨境發行面臨著信用評級體系、會計審計標準的國際一致性等問題，而資本賬戶管制和匯率的不確定性也限制了境外企業前來發債。

另一方面，通過國際資本市場為"一帶一路"項目融資也面臨著諸多挑戰。首先，多數沿線國家落後的資本市場難以滿足境外企業的融資需求。除新加坡、印度、以色列、俄羅斯和少數中東歐國家擁有規模較大、開放較深的資本市場以外，多數沿線國家還處於商業銀行主導的金融體系，國內資本市場孱弱且封閉，缺乏針對境外主體證券發行的法律法規。其次，我國企業在國際資本市場上面臨著較高的融資成本和風險。企業的信用評級通常以國家主權信用評級為上限，我國主權信用評級長期低於英國、德國等傳統發達國家，而2017年穆迪和標普又先後將我國評級下調，進一步增加了中資企業海外融資的難度和成本。而且，我國企業在國際融資時通常需要以美元、歐元等第三方貨幣計價，因而還面臨著較高的匯率風險。最後，我國努力推行的絲路債券也面臨重重困難。由於絲路債券可能涉及多個項目或國家，因此如何建立一個各方認同的發行體系是當前迫切需要解決的問題；而為了實現絲路債券在沿線各國的自由流動和交易，又需要沿線國家都具有足夠深度及流動性的債券二級市場。

(四) 區域分佈和行業結構不平衡

中國對"一帶一路"項目的金融支持存在比較嚴重的佈局不平衡問題，區域風險和行業風險過於集中。如前所述，我國金融機構支持的項目多位於距離臨近、資源豐富的區域(國家)，其中相當部分面臨著較高的國別風險。根據世界銀行的營商環境排名，在獲得中國資金支持最多的東盟地區，印尼、越南、柬埔寨、老撾和緬甸均排在100名之後。有些國家還曾因政局動盪、政黨輪替導致項目受阻，如一波三折的中泰"大米換鐵路"項目和歷經曲折的菲律賓北呂宋鐵路項目。同時，中國提供大量能源貸款的國家也普遍具有較差的風險評級，如巴基斯坦、土庫曼斯坦、柬埔寨等。雖然中國在這些國家提供貸款時常常要求他們以石油、天然氣、有色金屬等資源的出口收入作為擔保，以適當規避貸款風險。但是，隨著近年來國際市場大宗商品市場走低，這種做法實際上使中資銀行面臨著雙重風險：一是擔保品價值的下跌；二是借款國出口減少和財政收入下降所導致的貨幣貶值與美元償付能力的下降。

與此同時，中國資金支持的沿線項目大多分佈在能源和基礎設施領域，也導致行業風險太過集中。特別是金融危機後，中國在這些行業提供的海外貸款規模已超過世界銀行和一些主要的區域性多邊開發機構，從而面臨著較高的經濟、政治乃至社會風險。雖然能源和基礎設施項目符合"一帶一路"倡議的重點方向，並且有助於保障我國的長期能源安全，但是也存在資金投入大、回收週期長、政治敏感性強等問題，蘊含著較高的經濟和政治風險。另外，許多大型工程和資源利用項目還易引發有關氣候變化和環境保護的爭議，潛在的社會風險不容忽視。在一些沿線國家，已經出現過由燃煤電廠建設引起的示威遊行和警民衝突。這無疑將對銀行的資產收益和聲譽產生不利影響。

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By Gisela Grieger, Members' Research Service, European Parliamentary Research Service

SUMMARY

Five years since China launched its 21st Century Maritime Silk Road initiative, with the aim of improving its maritime links – on its own terms – with south-east and south Asia, east Africa and ultimately Europe, the country has made significant progress in gaining long-term control over strategic overseas ports. Moreover, the state-driven merger of two giant state-owned shipping conglomerates, China Shipping and China Ocean Shipping Company (COSCO) in 2016, and the subsequent debt-financed takeover of rival Orient Overseas, have brought China closer to global leadership in container lines, with it now in third place.

China's massive push for the construction of large-scale, high-risk and debt-financed infrastructure along the Maritime Silk Road has raised concerns about white elephants being built, and host countries becoming overburdened from servicing their debts to China. The large numbers of such projects has seen some host countries forced to repay their loans by handing over the operation of strategic assets to China for decades ahead. Their experience suggests that, while host countries may never see the much touted 'win-win' results of these projects, China may be poised for double wins from them. Among the requirements applicable to securing loans for Chinese-funded projects is that engineering contracts be awarded directly to Chinese firms without public tender. While this requirement practically excludes other countries' contractors from participation, it also challenges China's repeated rhetoric that its initiative is open to third-party participation.

In recent years, China has made major inroads into the EU by acquiring minority or majority stakes in port infrastructure of strategic relevance for China. Hence, China is increasingly able to shape outcomes in its interest from within the EU.

Introduction

China's 21st Century Maritime Silk Road initiative, which aims to boost maritime connectivity between China, south-east and south Asia, east Africa and Europe, as part of the One Belt, One Road (OBOR) umbrella project, has entered its fifth year. While construction of port infrastructure outside the EU is unfolding on a large scale thanks to massive lending from Chinese banks and extensive involvement of Chinese labour and material, China-led port development in EU Member States is still in its infancy. However, China's maritime footprint in the EU has recently grown at an unprecedented pace as a result of its acquisitions of strategic port infrastructure.

Port connectivity under the Maritime Silk Road initiative

China's expanding global footprint in deep-sea ports

For a rising maritime power like China, gaining access to foreign deep-sea ports is not only vital from a mercantilist perspective, but is also a critical geostrategic asset when it comes to projecting the country's development and governance model on a global scale. Ports are thus at the heart of the Maritime Silk Road initiative. The latter enables China to pursue two avenues to access overseas ports for dual (civil and military) use: 1) Chinese-funded port infrastructure development that may lead to the conversion of debt into equity (port of Kyaukpyu, Myanmar), and 2) acquisition or lease of ports (port of Darwin, Australia, for a period of 99 years). Prior to the initiative’s launch in 2013, Chinese state-owned enterprises were already prominently engaged in large-scale loan-financed infrastructure development in deep-sea ports in Sri Lanka and Pakistan, which were subsequently rebranded as OBOR projects. They may serve as lessons for ongoing and planned projects in Asia, Africa and Europe.

Chinese-funded port development without a 'win-win' guarantee?

The Chinese-financed construction of Sri Lanka's Hambantota deep-sea port illustrates some of the possible pitfalls involved in loan-based construction of infrastructure with 'no strings attached'. The lack of transparent competitive awards of contracts or of assessments of the economic viability and the overall social and environmental impact of projects may undermine the prospects for 'win-win' results. This may notably be the case in asymmetric relations, where a small partner may ultimately end up in a debt trap. Sri Lanka's debt load to China was US$1.5 billion when Hambantota port opened in 2010. This added to the debt piled up earlier for other China-funded infrastructure projects, including the controversial Colombo Port City project. For lack of commercial activity, the Hambantota port was incurring losses and Sri Lanka, hard-hit by a faltering growth rate of 3.5 % in 2016, failed to repay its debt to China. Under a plan to convert loans into equity, in 2017 the port was handed over to China on a 99-year lease – after pressure from India for this to be for non-military use only.

To avoid similar constraints, Pakistan withdrew, inter alia, from an ambitious dam project, citing excessively strict financial terms. Pakistan faces a ballooning debt linked to Chinese-funded projects on the China-Pakistan Economic Corridor, including work in the Gwadar port, which China will operate for 40 years under a 'build-operate-transfer agreement'. Myanmar and Nepal cancelled Chinese-financed projects over environmental concerns and financial irregularities. Allegations of corruption against China Harbour Engineering Company, which the World Bank blacklisted until early 2017, have undermined China's 'win-win' rhetoric. Bangladesh even banned the Chinese firm for attempted bribery.

How is the Maritime Silk Road initiative advancing in the EU?

China as an investor in EU ports

Recently, China has accelerated its acquisition of stakes in EU ports whose location is strategic for the Maritime Silk Road initiative. This has spurred competition among EU ports keen on using their geostrategic position to attract Chinese investment and cargo. The main Chinese investor in EU ports is state-owned China Ocean Shipping Company (COSCO), which is on a debtfinanced global expansion with the aim of ending its recurrent losses. COSCO had already seized investment opportunities prior to the 2008 financial crisis, but later acquisitions under the Maritime Silk Road umbrella turned into a more ambitious state-funded shopping spree. Given China's Polar Silk Road plans, Lithuania's Klaipeda port and ports in Norway and Iceland have attracted investment proposals from China Merchants Group.

China as a contractor for EU port development

The arrival of state-owned China Communications Construction Company (CCCC) on the EU market as a port developer is likely to change the nature of competition in the sector. In 2017, CCCC won an ideas competition to develop an area in the port of Hamburg, by suggesting an additional automated container terminal, sparking a storm of opposition from local stakeholders. In 2016, the Venice Port Authority awarded a €4 million contract to a CCCC-led consortium to design an innovative onshore-offshore port system. The new president of the port authority, however, has questioned the project's unrealistic assumptions on the future container throughput in Venice required to guarantee its viability. China meanwhile favours the ports of Genoa and Trieste.

Challenges and opportunities for EU stakeholders

As China pushes for inter-modal connectivity between EU ports and the Eurasian cargo rail network along its Silk Road Economic Belt (SREB), it may re-shape trade patterns and transport routes to its own benefit. For instance, as a result of COSCO's focus on the port of Piraeus as a gateway to central and eastern Europe, so that it now benefits from 'guaranteed' Chinese demand, the port of Naples witnessed COSCO's divestment in 2016 and shrinking container throughput. On the other hand, new inter-modal connections between Italy and Switzerland provided by the new Gotthard rail tunnel may increase the competitive edge of northern Adriatic ports over northern European ports in terms of shorter shipping times to and from China. While the Adriatic ports still face challenges as regards the financing of deep-sea port capacities and hinterland connectivity, in 2017 the port of Trieste signed an agreement on logistics cooperation with the German inland port of Duisburg to respond to such new intermodal opportunities. A recent study estimates that by 2040, EU-Far East maritime freight will be 40 million TEUs (twenty-foot equivalent units), up from 16 million TEUs in 2016. If about 2.5 million TEUs were transferred from maritime transport and 0.5 million from air transport to rail transport, this would create 50 to 60 additional trains per day (two to three trains per hour) in each direction between China and Europe. However, this would not affect the dominant position of maritime trade.

EU policy for infrastructure cooperation with China

The 2016 EU strategy on China and the related Council conclusions define the principles of EU-China relations, including for infrastructure cooperation, which seek to gain synergies between OBOR and the trans-European transport network (TEN-T). These principles include transparency, adherence to international standards and reciprocity, i.e. a level playing field for EU and Chinese firms in the EU and in China. Projects must meet EU internal market rules on public procurement and technical standards, and must also undergo fiscal, environmental and social sustainability assessments. The 2015 EU-China Connectivity Platform promotes cooperation in infrastructure, financing, interoperability, logistics, and maritime and rail links across Eurasia. Lists of proposed projects were published in 2016 and in 2017.

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With the win-win nature of the relationship clearly established, it's full-steam ahead on the Burmese BRI front.

The soon-to-be upgraded Road to Mandalay.

Early last month, the planned development of the China-Myanmar Economic Corridor (CMEC) was given the formal go-ahead, with representatives of both parties agreeing the terms of the 15-point Memorandum of Understanding (MoU) that defines the scope and intent of the project, while also allocating the specific responsibilities and entitlements. With the wording and the fine detail in place, the MoU is expected to be signed before the end of the year, with work on the project – a key element of the Belt and Road Initiative (BRI) – expected to begin soon after.

Plans to establish the CMEC were first mooted last year when officials from the two countries jointly floated the idea of establishing rapid-transit links between Kunming, the capital of China's southwestern Yunnan province, and Mandalay, Myanmar's second-largest city, and then on to Yangon, its former capital. The route would also branch off to the west, connecting the Kyaukphyu Special Economic Zone and its deep-water port to the wider transport network.

In addition, with enhanced connectivity the overall priority, it was also envisaged that a number of additional roads, railways and pipelines would be constructed with a view to linking up many of the megaprojects already under way in Myanmar, including the Kyaukphyu Port and the China-Mandalay High-Speed Railway. This would be a precursor to the establishment of an enhanced logistics network across the region, together with an upgraded telecommunications system and a series of new agricultural projects.

Prior to that, agreement had already been reached on the implementation of a number of other joint projects, including the construction of the Kwanlon Bridge and the implementation of a road / rail link between Chinshwehaw, a town on the Myanmar / China border and Lashio, the administrative capital of Shan, Myanmar's largest state. Discussion has also focused on upgrading Chinshwehaw to international border gate status and the construction of a nearby Special Economic Zone (SEZ) as a means of boosting cross-border trade and tourism between the two neighbouring countries.

It is the CMEC, however, that is seen as offering the biggest benefits to both countries. In China's case, it will secure access to Kyaukphyu, its second deep-water Indian Ocean port. Together with Pakistan's Gwadar Port, both offer considerable strategic advantages in line with the long-term aims of the BRI. Additionally, it will be well-placed to up its level of trade with resource-rich Myanmar, while playing a leading role in upgrading its neighbour's infrastructure will also use up much of its surplus construction capacity.

For its part, Myanmar gets access to China's massive consumer market, while also gaining an international state-of-the-art port facility in its less-developed north. In the same region, the Corridor could also make a considerable contribution to ending the enduring ethnic unrest through the provision of better employment prospects and a higher level of overall prosperity.

The go-ahead for the CMEC has also seen a number of the previously stalled Myanmar-sited BRI projects suddenly restored to active duty. Most notably, the apparently becalmed plan to complete work on the Kyaukphyu Deep-sea Port has taken on a new lease of life.

Another key project, the China-Mandalay High-Speed Railway – not long ago put on indefinite hold following uncertainties over its forward financing – now also appears to be back on track. The news of its return to active status was announced by the senior team of Myanmar government officials that attended the HKTDC Belt and Road Summit in Hong Kong in June. At the time, it was reported that not only was work on the project set be resumed imminently, but also that the line would now extend to Yangon and then on to Kyaukphyu, the site of the China-backed Special Economic Zone and deep-sea port.

Geoff de Freitas, Special Correspondent, Yangon