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Zambia Cancels US$1.6 billion Chinese Loans and Halts Infrastructure Projects in Move to Avoid Debt Crisis

Jevans Nyabiage wrote . . . . . . . . .

Zambia has cancelled US$1.6 billion in agreed upon but not-disbursed Chinese loans, mostly from China Exim Bank and the Industrial Commercial Bank of China, to help manage its debt woes.

It is a portion of the US$2 billion that Lusaka has cancelled in undisbursed loans from its external creditors, coming shortly before its official bilateral lenders agreed on Saturday to provide debt relief to the Southern African nation.

Lusaka announced that it ceased the construction and rehabilitation of several roads, highways and information and technology projects, most funded by China Exim Bank, after it faced challenges in making loan payments.

“Measures have been taken by the government of the Republic of Zambia to address the current debt challenges – beyond the debt restructuring process. Cabinet, at its sitting on Thursday … took measures to discontinue some loan-financed projects,” Zambia’s Ministry of Finance and National Planning announced on Saturday.

Further, it said a few critical projects would be re-scoped to allow critical components to be finished using budget resources allocated over the medium term.

The ministry said it had started talks with creditors and contractors to formalise the cancellation of works contracts.

Among the projects cancelled are the rehabilitation of a major highway – the US$1.2 billion Lusaka-Ndola dual carriageway funded by China Jiangxi Corporation – which was to link the capital to the country’s Copperbelt Province. Lusaka has engaged China Jiangxi to cancel US$157 million in undisbursed loans.

Digital projects, such as Smart Zambia phase II and digital terrestrial television broadcasting systems in Zambia phases II and III, have also been stopped as the country moves to avert a debt crisis.

Zambia said it had notified Chinese lenders and contractors about plans to cancel undisbursed loan balances for 14 projects.

It will move to stop the disbursement of US$333.2 million for Smart Zambia phase II, which was being implemented by Huawei Technologies and funded by China Exim Bank.

The initial phase of the project involved building a national data centre and an ICT talent training centre. Huawei was to develop Zambia’s national broadband system to bolster public service delivery in subsequent phases.

The country has also asked China Exim Bank to cancel US$159 million earmarked to fund the building of Chalala army barracks in Lusaka.

Besides Chinese loans, Zambia also plans to cancel loans advanced by the British Standard Chartered Bank for the building of Kafulafuta Dam for US$381.7 million, of which US$224.6 million had already been disbursed. The other is a multimillion-dollar deal involving Israel Discount Bank to fund military aircraft and equipment.

In 2020, Zambia became the first African country to default during the pandemic when it failed to make payments on US$17 billion of external debt, including US$3 billion dollar-denominated bonds. Lusaka owes Chinese lenders about US$6 billion, which went into building mega projects, including airports, highways and power dams.

In addition to cancelling contracts and stopping the disbursement of loans, Lusaka has received a reprieve after official creditors led by China and France agreed to provide debt relief. The decision paves the way for the country to access a US$1.4 billion bailout from the International Monetary Fund. Still, Lusaka has to seek similar relief from private creditors over the US$3 billion it owes Eurobond holders.

It had sought debt relief from the Group of 20 wealthiest nations and its top private creditors under the G20’s new Common Framework to help more than 70 developing countries with post-Covid debt restructuring and relief. The process allows creditors to jointly renegotiate its foreign debt – even though China usually prefers bilateral negotiations.

The official creditor committee for Zambia – co-chaired by China and France with South Africa acting as a vice-chair and including IMF and World Bank staff – met on July 18 where they committed to offering Zambia debt relief.

IMF managing director Kristalina Georgieva welcomed the official creditors’ move to provide financial assurances, clearing the way for a fund programme, saying it showed the “potential of the G20 Common Framework for debt treatment to deliver for countries committed to dealing with their debt problems”.

“The delivery of these financing assurances will enable the IMF executive board to consider approval of a fund-supported programme for Zambia and unlock much needed financing from Zambia’s development partners,” Georgieva said.

“Amid elevated debt levels and tightening financial conditions, I look forward to the Common Framework working for other countries facing debt problems.”

Zambia’s Minister of Finance Situmbeko Musokotwane said the country would “continue to work with both official and private creditors to agree on the terms of the debt restructuring in line with the comparability of treatment principle”.

The Common Framework aims to help countries weather the Covid-19 storm with debt relief and restructuring, but besides Zambia, only Ethiopia and Chad have applied to join the plan, with most countries fearing that by seeking relief their credit rating will be downgraded by rating agencies.

Source : Yahoo!

New Mega Tunnel in China Will Transfer Water from the Three Gorges Dam to Beijing

Aniket Dixit wrote . . . . . . . . .

China has launched a new tunnel project to send water from the Three Gorges Dam to Beijing, as part of plans to build massive infrastructure to boost food production and the economy.

The Yinjiangbuhan Tunnel will transport water from the world’s largest Three Gorges Dam to the Han River, a major tributary of the Yangtze.
After reaching the Danjiangkou Reservoir on the lower reaches of the Han, the water will travel north to Beijing via the midline of the South-to-North Water Diversion Project, a 1,400 km (870 mi) open canal.
The longest water tunnel in Finland, the Paijane, extends up to 130 meters deep at a depth of 120 kilometers.

The project will take a decade to complete and cost 60 billion yuan (US$8.9 billion), according to the Beijing-based state-owned newspaper Guangming Daily.

“The Yinjiangbuhan Tunnel will establish a physical connection between two important infrastructures in China, the Three Gorges Dam and the South-to-North Water Diversion Project,” said Niu Xinqiang, president of the Changjiang Institute of Survey, Planning, Design and Research. Reportedly, during the groundbreaking ceremony on July 7.

According to Zhang Jiangwei, director of the planning department of the Ministry of Water Resources, the Yinjiangbuhan project is “a curtain raiser” for other projects.

Water resources in China are unevenly distributed. The east and south of the country are frequently flooded, while water scarcity severely limits economic development and food production in the west and north of the country. The economic slowdown of the pandemic prompted the government to invest in large-scale infrastructure projects to stimulate growth.

According to Liang Shumin, an economic and development researcher at the Chinese Academy of Agricultural Sciences, the total length of tunnels and canals under construction or planned for water diversion in China could reach up to 20,000 km – roughly the distance between Shanghai and Seattle.

However, whether these projects should be built is still under debate, he said. According to Liang’s calculations, the projects will cost taxpayers more than 9 trillion yuan over the next 30 years, which is about 8% of the country’s GDP last year.

However, he believes the infrastructure could increase China’s annual food production by more than 540 million tons, which is equivalent to the total agricultural output of the United States at the moment.
China currently produces 660 million tonnes more food per year than any other country. However, to meet the rising living standards of its 1.4 billion citizens, the country imports more than 100 million tons of grain every year, raising concerns about food security at home and accusations of hoarding from other countries.

According to Liang, the new water diversion infrastructure could turn about 750,000 square kilometers of barren land – an area larger than Chile – into fields suitable for growing wheat, rice, corn, beans and other crops.

“Given that the rate of growth in food consumption will slow in the future (due to declining population), China could become a net exporter of grains and oilseeds in 2043,” Liang said in a paper published last month in Water Resources Planning and Design. was written in , a magazine published by the Ministry of Water Resources of China.

Since it began in 2014, for example, the South-to-North Water Diversion Project has sent 54 billion cubic meters of water from the Yangtze River region to meet the demand of more than 140 million people in northern China – roughly equal to The amount of water in the entire Yellow River.

This resulted in almost immediate changes, some of which were completely unexpected. According to local news reports, in some cities such as Jingtai, groundwater rose so rapidly that it spread to underground car parks and shelters.

According to scientists involved in the project, China is building the world’s longest tunnel in Xinjiang with more than 20 tunnel boring machines – the world’s largest fleet of its kind – working together.

Source : News Track

China Doubles Down on Infrastructure to Spur Growth

Renewable energy, technology and water management projects are set to be among the largest beneficiaries of China’s latest infrastructure investment boom, the likes of which has not been seen since the global financial crisis.

Policymakers are doubling down on infrastructure in the second half of the year, putting more than 1 trillion yuan ($149 billion) in additional funding to work as they try to revive the economy, which recorded the weakest quarterly growth since early 2020 in the second quarter.

Source : Caixin

G7 Aims to Raise $600 billion to Counter China’s Belt and Road

Andrea Shalal wrote . . . . . . . . .

Group of Seven leaders on Sunday pledged to raise $600 billion in private and public funds over five years to finance needed infrastructure in developing countries and counter China’s older, multitrillion-dollar Belt and Road project.

U.S. President Joe Biden and other G7 leaders relaunched the newly renamed “Partnership for Global Infrastructure and Investment,” at their annual gathering being held this year at Schloss Elmau in southern Germany.

Biden said the United States would mobilize $200 billion in grants, federal funds and private investment over five years to support projects in low- and middle-income countries that help tackle climate change as well as improve global health, gender equity and digital infrastructure.

“I want to be clear. This isn’t aid or charity. It’s an investment that will deliver returns for everyone,” Biden said, adding that it would allow countries to “see the concrete benefits of partnering with democracies.”

Biden said hundreds of billions of additional dollars could come from multilateral development banks, development finance institutions, sovereign wealth funds and others.

Europe will mobilize 300 billion euros for the initiative over the same period to build up a sustainable alternative to China’s Belt and Road Initiative scheme, which Chinese President Xi Jinping launched in 2013, European Commission President Ursula von der Leyen told the gathering.

The leaders of Italy, Canada and Japan also spoke about their plans, some of which have already been announced separately. French President Emmanuel Macron and British Prime Minister Boris Johnson were not present, but their countries are also participating.

China’s investment scheme involves development and programs in over 100 countries aimed at creating a modern version of the ancient Silk Road trade route from Asia to Europe.

White House officials said the plan has provided little tangible benefit for many developing countries.

Biden highlighted several flagship projects, including a $2 billion solar development project in Angola with support from the Commerce Department, the U.S. Export-Import Bank, U.S. firm AfricaGlobal Schaffer, and U.S. project developer Sun Africa.

Together with G7 members and the EU, Washington will also provide $3.3 million in technical assistance to Institut Pasteur de Dakar in Senegal as it develops an industrial-scale flexible multi-vaccine manufacturing facility in that country that can eventually produce COVID-19 and other vaccines, a project that also involves the EU.

The U.S. Agency for International Development (USAID) will also commit up to $50 million over five years to the World Bank’s global Childcare Incentive Fund.

Friederike Roder, vice president of the non-profit group Global Citizen, said the pledges of investment could be “a good start” toward greater engagement by G7 countries in developing nations and could underpin stronger global growth for all.

G7 countries on average provide only 0.32% of their gross national income, less than half of the 0.7% promised, in development assistance, she said.

“But without developing countries, there will be no sustainable recovery of the world economy,” she said.

Source : Reuters

In Pictures: Asia’s Largest Rail Hub Beijing’s Fengtai Railway Station Reopens

The station resumed services on June 20, 2022 after four years of reconstruction. First built in 1895, it is Asia’s largest rail transport hub. The remodeled station spans 400,000 square meters and includes 32 platforms and rail lines. It is China’s first railway station featuring a double-deck structure that serves both high-speed and regular train services.

Source : Caixin

In Pictures: China’s New World-Class Theaters Under Construction

The Sub-center Theatre in Beijing’s Tongzhou district

Shanghai Grand Opera House

Yiwu Grand Theater

International Performance Center in Shenzhen

Shenzhen Opera House

The Zhuhai Jinwan Civic Art Centre in Zhuhai

Nanchang Poly Grand Theatre

Xingtai Grand Theatre in Hebei province

Hainan Performing Arts Centre

Huanghe Song Theatre in Henan province

Source : Caixin

Transportation Infrastructure Linking Mainland, Taiwan Planned

Zhang Yi wrote . . . . . . . . .

The Chinese mainland is planning infrastructure to connect Fujian province to Taiwan, a mainland spokesperson said on Wednesday.

Zhu Fenglian, a spokesperson with the State Council’s Taiwan Affairs Office, said cross-Straits transportation infrastructure meets the need for deeper integrated development across the Taiwan Straits and serves the fundamental interests of people on both sides.

The construction of a branch line from Fuzhou, the capital of Fujian, to Taipei in Taiwan has been planned out in a guideline on developing a comprehensive transport network that was jointly released by the Central Committee of the Communist Party of China and the State Council, Zhu said.

Fujian province has completed preliminary technical plans for bridges connecting the coastal area of Fujian with Taiwan’s Kinmen and Matsu islands, she said.

The Pingtan Haixia Rail-Road Bridge, connecting the mainland with Pingtan, an island county in Fujian province, has already opened to traffic, linking it to the national railway network, she added.

Pingtan, which lies 126 kilometers from Hsinchu in Taiwan, is the largest island in Fujian province, and is also the closest mainland location to the main island of Taiwan.

Zhu said the establishment of a more convenient and unobstructed transportation network spanning the Straits will provide better service for the benefit of compatriots on both sides.

The Ministry of Natural Resources said recently that it will work with relevant departments and Fujian province to study the integration of major transportation and infrastructure development across the Taiwan Straits into relevant national planning.

Source : China Daily

President Biden and G7 Leaders Launch Build Back Better World (B3W) Partnership

On June 12, 2021, President Biden met with G7 leaders to discuss strategic competition with China and commit to concrete actions to help meet the tremendous infrastructure need in low- and middle-income countries.

Build Back Better World: An Affirmative Initiative for Meeting the Tremendous Infrastructure Needs of Low- and Middle-Income Countries. President Biden and G7 partners agreed to launch the bold new global infrastructure initiative Build Back Better World (B3W), a values-driven, high-standard, and transparent infrastructure partnership led by major democracies to help narrow the $40+ trillion infrastructure need in the developing world, which has been exacerbated by the COVID-19 pandemic.

Through B3W, the G7 and other like-minded partners will coordinate in mobilizing private-sector capital in four areas of focus—climate, health and health security, digital technology, and gender equity and equality—with catalytic investments from our respective development finance institutions.

B3W will be global in scope, from Latin America and the Caribbean to Africa to the Indo-Pacific. Different G7 partners will have different geographic orientations, but the sum of the initiative will cover low- and middle-income countries across the world.

In announcing this partnership, the United States and its G7 partners are expressing a unified vision for global infrastructure development. As a lead partner in B3W, the United States will seek to mobilize the full potential of our development finance tools, including the Development Finance Corporation, USAID, EXIM, the Millennium Challenge Corporation, and the U.S. Trade and Development Agency, and complementary bodies such as the Transaction Advisory Fund. In doing so, the Biden Administration aims to complement domestic infrastructure investments in the American Jobs Plan and create new opportunities to demonstrate U.S. competitiveness abroad and create jobs at home.

In addition to the billions of dollars which the United States mobilizes in overseas infrastructure financing through existing bilateral and multilateral tools, we will work with Congress to augment our development finance toolkit with the hope that, together with the private sector, other U.S. stakeholders, and G7 partners, B3W will collectively catalyze hundreds of billions of dollars of infrastructure investment for low- and middle-income countries in the coming years.

Together with leaders of the G7, the Biden Administration fully endorses the guiding principles of B3W:

  • Values-Driven. Infrastructure development carried out in a transparent and sustainable manner—financially, environmentally, and socially —will lead to a better outcome for recipient countries and communities. We will offer countries a positive vision and a sustainable, transparent source of financing to meet their infrastructure needs.
  • Good Governance and Strong Standards. High standards have become ever more important at a time when governments are grappling with complex decisions on how to tackle climate change, build back local economies, direct scarce financing, and boost employment in an inclusive way. We are committed to providing citizens of recipient communities with the long-run benefits they expect and deserve from infrastructure projects. Our efforts will be guided by high standards and principles, such as those promoted by the updated Blue Dot Network, relating to the environment and climate, labor and social safeguards, transparency, financing, construction, anticorruption, and other areas.
  • Climate-Friendly. The investments will be made in a manner consistent with achieving the goals of the Paris Climate Agreement.
  • Strong Strategic Partnerships. Infrastructure that is developed in partnership with those whom it benefits will last longer and generate more development impact. Infrastructure created under the B3W will be developed through consultation with communities and assessing local needs as a true partners. We will establish a taskforce together as a G7, and with others, to coordinate, harmonize our efforts, and increase our impact and reach.
  • Mobilize Private Capital Through Development Finance. Status quo funding and financing approaches are inadequate to address the tremendous infrastructure gap in low- and middle-income countries. We are committed to augmenting the development finance tools at our disposal to support and catalyze a significant increase in private capital to address infrastructure needs. Infrastructure investment by a responsible and market-driven private sector, paired with high standards and transparency in public funding, is crucial for long-run development effectiveness and sustainability.
  • Enhancing the Impact of Multilateral Public Finance. Multilateral development banks and other international financial institutions (IFIs) have developed rigorous standards for project planning, implementation, social and environmental safeguards, and analytical capability. The United States will incorporate these standards and safeguards to help ensure that U.S. taxpayer resources are used appropriately and effectively. We will work with the IFIs to enhance their catalytic impact and increase the mobilization of capital—both public and private—needed for impactful and sustainable infrastructure investment.

    Source : The White House