China's Belt and Road Initiative

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Thomas Chan Paul Mooney Paulo G. Figueiredo José Luís Sales Marques

The Maritime Vision

2

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Maritime Vision

1

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Title China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries Co-ordinator Gonçalo César de Sá Authors Thomas Chan Paul Mooney Paulo G. Figueiredo José Luís Sales Marques Editor Louise do Rosário Copy Editor Paul Mooney Designer Fernando Chan Production Macaolink News and Information Services Limited Publisher International Institute of Macau Printer Welfare Printing Company Limited ISBN 978-99965-59-14-3 Circulation 500 copies Date February 2018 Partner

With support from

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Thomas Chan Paul Mooney Paulo G. Figueiredo José Luís Sales Marques

Contents 09

Foreword Gonçalo César de Sá

11 1. The Belt and Road Initiative: China Dream to Prosper Together with the World Dr. Thomas Chan

45

2. The Project of the Century Paul Mooney

69 3. Portuguese-Speaking Countries Well Positioned for The Belt and Road Initiative Paulo Guilherme Figueiredo

91 4. A Global Megapolis José Luís de Sales Marques

113

5. The Maritime Vision

125

About the Authors

127

Website References

129

Glossary

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Foreword

9

Gonçalo César de Sá Coordinator, Macaolink

It is with great pleasure that we launch this new book on China’s Belt and Road Initiative commissioned by the International Institute of Macau.

The IIM is a Macao-founded and based institution, with a Portuguese matrix and a universalist scope. It organises seminars, conferences, lectures, courses, classes and workshops.

The Initiative is one of the most important diplomatic and economic projects of our times, one that needs continuing in-depth coverage given its size and complexity. This book aims to provide the public with a comprehensive and easy-to-understand guide on this great national project. It also explains Macao’s role in the Initiative and in the Greater Bay Area, another important national project of the 21st century.

The book begins with an essay by Dr. Thomas Chan, a leading Hong Kong expert on the Initiative and an adviser to the Central Government. He describes the background leading to China’s decision to change its national economic strategy and launch the massive Initiative project, in the aftermath of the global financial crisis of 2008. He explains how China aims to build up giant new markets for its companies and manufactured goods, when those of the developed countries are nearly saturated. The Initiative has the ambitious goal of remaking the world’s economic and political map, with China sharing prosperity with business partners worldwide.

We have an essay by veteran journalist Paul Mooney who sets out the details of the Initiative and describes the many challenges it faces to achieve its aims. He explains how it is changing China’s relations with the West, especially the US. Third is an essay by Paulo Guilherme Figueiredo, an economic specialist and member of the New Silk Road Friends Association in Portugal. He describes the close ties between China and Portuguese-speaking countries (PSC) around China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

10

the world and how they fit into the Initiative. All the PSC are eager to be further involved. The essay includes a list of large investment projects by China in the PSC. Fourth is an essay by José Luís de Sales Marques, President of the Institute of European Studies of Macao and Vice-President of the Maritime Silk Road Association (Macao). He explains the role of Macao in the Initiative and in the Greater Bay Area, which includes nine major cities of Guangdong province, Hong Kong and Macao.

Finally, we also have a condensed version of the Vision for Maritime Cooperation under the Belt and Road Initiative. The official document, published on 20 June 2017, is an important blueprint for the development of the Maritime Silk Road. It sets out the different sectors in which China and other countries can work together to develop the world’s oceans, promote economic growth and jobs, as well as combat climate change.

We hope that this book will give readers a clear understanding of the Belt and Road Initiative and help them in their investment decisions as they position themselves to be part of it. Through our writers’ analyses, it is evident that Macao will play a special role in the Initiative, with individuals and companies making important contributions.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World Dr. Thomas Chan

1

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Dr. Thomas Chan

12

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World

Summary

13

In his essay, Dr. Thomas Chan explains the global strategy of China in its Belt and Road Initiative. He himself has travelled to and researched many of the countries included in the Initiative, giving him a first-hand understanding of this ambitious project.

He sees the Initiative as China’s effort to change the world and the economic trade and manufacturing system that has been in place for the past five centuries.

Those centuries were dominated by European maritime powers, first the Portuguese and the Spanish, then the Dutch, French and British. The British established their Pax Britannica – ruling the waves and keeping the peace – through their colonies around the world. Since 1945, the US has replaced Britain as the leading economic power and in turn established its Pax Americana. In this system, Western Europe and North America were the centre of the world in every sector of activity and the most important arteries of trade were by sea, through the Mediterranean, the Suez Canal, the Indian Ocean, the Straits of Malacca and the South China Sea, across the Atlantic via the Panama Canal and over the Pacific.

China wants to change this by building an overland Silk Road with a network of railways across Central Asia, Russia and the Middle East to Europe. Working with countries along the route, China wants to build rail lines that will be able to carry goods as quickly and cheaply from Asia to Europe and vice versa. These transport networks will also invigorate the economies of the countries through which they pass, giving them easy access to markets which they currently do not have. Since 2005, Asia has overtaken the Americas as Europe’s biggest trading partner.

For China, the Initiative is not a 21st century version of the Marshall Plan, which the US implemented after World War Two to rebuild Western Europe and promote global stability. Nor is it Chinese mercantilism. It is more ambitious than that.

It describes itself as an attempt to restore “a multipolar world, economic globalisation, cultural diversity”. It is instead “a positive endeavour to seek new models of international cooperation and global governance”; it emphasises tolerance among civilizations and respects the paths and modes of development chosen by different countries. It aims at an alliance of civilisations, the antithesis of US political scientist Samuel Huntington’s “clash of civilisations”. To achieve these objectives, China has already invested more than US$1 trillion in the different countries covered by the Initiative. This is an unprecedented sum.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Dr. Thomas Chan

14

Dr. Chan’s essay gives a detailed explanation of China’s objectives for the Initiative and of the many projects it involves. It is essential reading for anyone who wants to understand one of the most important events of the 21st century.

1. Foreword : Breaking the Economic Cycle China in 2017 attempted to break the economic cycle of most great powers throughout history. In the past centuries, the Italian city states, the Netherlands, and then the UK and the US, and probably also Japan, followed each other in achieving world or regional domination, first in the real sectors of trade and industry. Then, without exception, they began a process of deindustrialisation and decline in trade because of increasing labour disadvantages, an inevitable result of prosperity built upon domination of the real economy. Each of these countries has turned into a predominantly service-centered economy with financialisation permeating every sector with finance emerging as the commanding sector of the national economy. Their trajectory of sectoral changes in the economy has even been hailed as representing an economic law – servitisation as the highest level of economic development following the sequencing stages of first, agriculture/ primary industry, and then manufacturing/secondary industry. At the apex of the economic development, there are the global cities, which are characterised by FIRE (finance, insurance and real estate).

China in the mid-2010s seemed to follow the same logic. Financial liberalisation by deregulating the capital account of the national financial system was poised to follow trade and investment liberalization; this has stimulated rapid expansion in the trade and manufacturing industries, propelling the nation towards becoming the No. 1 economic power in the world. Deregulation has been widely promoted, aided by government support policies. It has been argued that the Chinese economy should enter into the service stage of economic development. There was much fanfare when the service sector grew to account for 50 per cent of the national and local economies. Financial liberalisation and the resulting asset bubbles in the stock market and real estate market were the order of the day in 2015, and as a result the Chinese economy has been highly leveraged.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World

Lingering Effects of the Financial Tsunami The financial tsunami, or the Great Recession (similar in scale to the Great Depression of the 1930s), its lingering consequences and China’s changed relationship with the US may have changed the economic thinking of the Chinese leadership in three respects.

First, the globalised financial crisis that originated in the US signified the structural vulnerability of the post-World War II international financial architecture upon which the US dollar and the strength of the US economy were built.

After recent waves of liberalisation and deregulation that negated many of the safeguard institutions against the crises of the 1930s, vulnerability seems to have returned to the world system.

Although China was not so hard hit because of its fiscal expansion measures and a financial system yet to be fully liberalised, the crises raised doubts about liberalisation; they also raised doubts about the hitherto unquestioned development strategy, in particular the export-oriented industrial processing dominated by multinational corporations and serving mainly the low-end markets of developed countries.

The financial tsunami hit the developed countries first, causing recession and hence a large drop in demand for goods from developing countries, in particular China, the largest in industrial processing. The troubles of China’s stock market and exchange rate reform in 2015 additionally cast doubts over the wisdom of further financial deregulation at a time of high leverage of the Chinese economy.

The anti-corruption campaign under President Xi Jinping is political in nature, but it also has strong implications for economic policies: corruption in the liberalisation process has been purged and related policies and measures have been placed under strict political scrutiny. There seems at least some correlation between corruption and some of the liberalisation reform measures. In the face of mounting economic and political problems, the Chinese leadership has been obliged to rethink the development strategy for the further reform of the nation.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

15

Dr. Thomas Chan

16

Increasing Tensions with the US Second, tensions between China and the US have been increasing over the last 10 years, partly because the economic success of China has started to pose a serious challenge to the global hegemony of the US. Despite embracing liberalisation pushed upon it by the Washington Consensus until doubts rose about it in the mid-2010s, China has never envisioned a subordinate role similar to Japan in its relationship with the US. It has persistently strived for an independent stance in all foreign policy areas. This has inevitably led it to disagree, and even oppose, suppressive policies, including invasions by the US of other sovereign states.

The tension has fueled distrust of the US among the Chinese leadership, reinforcing doubts about the liberalisation and development strategy imported from the US. At the same time, the tension has necessitated a return to the independent development of the Chinese military, and related science and technology policies.

Unlike other transitional economies, China has never abandoned its stateowned sector; its adoption of a hybrid corporate equity system allows the expansion and merging the state-owned sector with the private sector. Together with the defense sector, they have emerged strongly as a result of the rapid economic acceleration of the national economy. And they have become the major drivers for science and technology development, thus becoming the leading forces in rethinking development strategy and moving it away from its reliance on foreign investors.

In contrast with the past adherence to the imported model of export-oriented industrialisation, the new strategy focuses on the transformative role of science and technology. The policy outcomes have been “Made in China 2025”, an industrial strategy modeled after Germany, and “Internet +”, which has capitalised on the advances in network and telecommunications technologies with an intention to connect different milieus of the Chinese economy and society.

The focus on industrial upgrading and diffusion is significantly different from the previous emphasis on financialisation of the economy. This also converges with the recent call for the deleveraging of the economy. One might see it as the emergence of a new coherent development strategy for China in the post-catch up era.

This will break the cycle of deindustrialisation and financialisation that have affected the UK, US and even Japan.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World

Third, the development strategy of liberalisation also contains an outward investment component, as seen in the classical FDI by multinational corporations in China and other low-cost production countries. China seems to exhibit the same outbound investment tendencies for energy and resources. When local labour costs have risen, Chinese companies have relocated labour-intensive industries to low labour-cost countries.

Belt and Road Initiative In late 2013, President Xi launched the Belt and Road Initiative, basically a restoration of the ancient Silk Road regime. In subsequent years, the Initiative has been implemented through a reorientation of China’s outbound investment from profit-seeking to the promotion of local economic development of the host countries for longer-term co-operation and multiple purposes beyond commercial interests. In the tradition of the Silk Road, China has also invested and cooperated with other local and overseas investors to restore and improve facilities and institutions for physical connectivity, by building roads, railways, seaports, airports and power plants as well as information and communication networks.

Like the ancient Silk Road, the enhanced physical connectivity has fostered trade and production, and created an ever expanding market for China’s competitive industrial production capabilities. In a way, the Belt and Road Initiative complements the shift in development strategy of China by offering a much larger economic space for China’s post-catch up industrial upgrading and development.

2. The Historical Background of the Ancient Silk Road The outstanding characteristic of the Initiative is that it joins the maritime Silk Road with the overland Silk Road. In the past several centuries with the rise of the European maritime powers from the Portuguese to the Dutch and finally Britain, China/Asia trade with Europe had been carried out mostly by sea, bypassing the millennia-old overland Silk Road. The Great Game between Russia and Britain in dividing countries of Eurasia in the 19th century led Britain to blockade the overland trade routes dominated by the Russian empire. The Soviet revolution China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

17

Dr. Thomas Chan

18

Several routes are proposed for the “New Silk Road�

Source: Mercator Institute for China Studies

did not change this picture; there was containment of the Soviet Union by the Western powers, which also meant the closing of the overland trade routes from China to Europe via Central Asia.

The Great Game and the blockage of the overland routes continued even after the end of the World War II, with the US replacing Britain in the global race, which led to the Cold War, incorporating China into the sphere of economic and trade blockages. It was only in the 1990s when the Soviet Union collapsed and the economically liberalised China forcefully rejoined the world market with the blessings of the US, that the blockages were removed for the first time in two centuries. Today, overland long distance trade along the ancient Silk Road once again has a chance to be revived.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World

19

New Eurasian Transport Routes Since the 1990s, there have been many schemes to revive the Eurasian trade and transport routes. The Central Asia Regional Economic Co-operation (CAREC) Program, which has been promoted by the Asian Development Bank and supported by China, Central Asian countries and international organisations since the late 1990s, has formulated six transport corridors for investment and development. However, the six corridors do not go beyond Azerbaijan to the west.

CAREC has been almost exclusively dominated by the Asian Development Bank.

TRACECA (Transport Corridor Europe-Caucasus-Asia), funded by the EU, has been more ambitious. It aims to link Europe with Central Asia, but stops at the border with China. TRACECA was established in May 1993, upon the signing of Multilateral Agreement on International Transport for the development of transport initiatives (including the establishment and development of a road corridor) between the EU member states, the Caucasus and Central Asia countries. It started with strong political motivation as it was intended to support the political and economic independence of the former Soviet Union republics by improving their access to European and global markets through road, rail and sea.

As early as 1998, a conference was held on the restoration of the “Historical Silk Road” at the TRACECA International Summit in Baku.

The EU has been the most committed to restoring the Euro-Asian overland transport routes. Under the UN Economic Commission of Europe, meetings of the International Euro-Asian Conference on Transport have been used to promote a vision and projects for Eurasian transport and trade in parallel to TRACECA. In 2000, the United Nations Economic Commission for Europe and the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), promulgated the “Strategic Vision for Euro-Asian Transport Links”, which was adopted in the Conference’s third meeting in 2003; the two UN bodies later launched “The Euro-Asian Transport Links Project”. This is still in operation now and has produced a large volume of data, analyses and policy recommendations for Eurasian transport and logistics.

UNESCAP has a Trans-Asia Railway Network plan that is the most extensive of all transport projects running from the doorsteps of Europe to Russia, China, Southeast Asia and then all the way to the coast of the Pacific Ocean. It originated in the 1950s and was intended to link Istanbul with Singapore. Much of China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Dr. Thomas Chan

20

the network followed the southern coastal routes that conformed to the maritime interests of Britain and later the US. The plan has been revised and updated many times, and was launched with the Initiative in 1992 for the Asian Land Transport Infrastructure Development project. It was only in November 2006 that the Trans-Asia Railway Network Agreement was signed by 17 Asian nations as part of UNESCAP’s effort to build a transcontinental railway network between Europe and Pacific ports in China, not just Singapore or Southeast Asia as envisioned in past plans.

Eurasia Prospers However, despite the strong political and economic motivations and great international fanfare, these plans and programmes have not yet been fully implemented. This was due to a shortage of funding and a lack of co-operation and coordination among the governments of the countries involved. CAREC has completed most projects, but is far short of the infrastructural investment needed to facilitate and restore the Eurasian transport links. It was only in August 2015 that a container block train went through the trade route connecting the Kazakhstan-China border to Turkey. This project was first recommended at the International Euro-Asian Conference on Transport in 2003.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

China aims to build a global infrastructure network

The Belt and Road Initiative: China Dream to Prosper Together with the World

“Belt and Road” infrastructure projects, planned and completed (March 2017)

Source: Mercator Institute for China Studies

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

21

Dr. Thomas Chan

22

Nevertheless, the plans and their feasibility studies do contribute to China’s Belt and Road Initiative by laying the groundwork for cross-border infrastructure development. One might speculate that the Chinese Initiative came from the demands of Eurasian countries, including China, in the decades of deliberation and planning for the restoration of the ancient Silk Road, or at least the main part of it.

The aforementioned development plans by other countries can be easily incorporated into or become complementary to the Chinese initiative.

China’s Initiative will also support or complement the plans of individual countries for external connectivity, such as the Eurasian Land Bridge proposal of Russia and the Steppe Road of Mongolia. Even Poland, at the other end of the ancient Silk Road, had initiated a regional MOU on the development of railway transport on the Euro-Asian land-bridge in 1996.

Since the end of the Cold War in the early 1990s, with the removal of political confrontation and economic barriers, it has been natural for all countries in Eurasia to try to revive the ancient Silk Road for the benefits of all, at least in trade and exchanges. China’s Initiative may be regarded as a summation of the various local, regional and international efforts but with a crucial China factor – it provides the essential resources (especially financial resources), economic motivation and political will to complete what the previous plans and schemes were unable to accomplish.

The China factor also provides the economic incentive – the prospering Eurasian trade. Since 2005, Europe’s trade with East Asia has overtaken its trade with the Americas across the Atlantic. In 2014, EU-28 trade with Asia constituted over 50 per cent of its total world trade (China’s share was 14.8 per cent at around US$460 billion) as against trade with the Americas of around 25 per cent (the US accounted for 17.5 per cent).1 The increase in Asia’s share at the expense of the Americas continued steadily in subsequent years. With West Asian and Central Asian economies growing, there is great potential for the further expansion of Eurasian trade.

For example, the bilateral trade between China and Iran grew from US$4 1. In 2016 Asia’s share in EU’s trade had dropped to 40.3 per cent, but the eastward trade flow was still large, adding just Russia and Turkey the share would increase to 50 per cent.( European Commission Directorate General for Trade, EU Trade with Asia) The transport volume in terms of containers in TEUs has increased from 3,572 in 2012 to 21,192 in 2014, an increase of almost 6 times. Source: Henrik Christensen, President of KTS Express (the Kazakhstan’s state owned transport logistics company) Hong Kong Limited, “New Routes: New Opportunities”, presentation at Intermodal Asia 2015, 24 - 26 March 2015, Shanghai.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World

billion in 2003 to US$53 billion in 2013; the two governments committed in early 2016 to expand trade to over US$600 billion over the next decade. As Central Asia and South Asia are believed to become the new global center of economic growth and activity in the next decade2, trade among the countries and with both Europe and China is expected to expand exponentially. This means that there will likely be a further shift of global trade from across the Atlantic Ocean and the Pacific Ocean back to the Eurasian connections as it was during the era of the Silk Road.

3. C hina’s Belt and Road Initiative of 2013 and Subsequent Policies President Xi personally launched the Belt and Road Initiative in late 2013 when he visited Kazakhstan and Indonesia. China made a careful choice of locations to emphasise the overland belt and maritime road. However, it was only in early 2015 that the Chinese government, through the joint efforts of its National Development and Reform Commission, Ministry of Foreign Affairs and Ministry of Commerce, provided an official vision and an action plan. It took much policy discussion within the Chinese government to agree on a consistent policy, which was

Xinhua News Agency

launched a year and a half after the initial announcement.

President Xi Jinping (L.) in Kazakhstan with his Kazakh counterpart Nursultan Nazarbayev (2013) 2. Rohullah Osmani, The South Asia Channel: Chabahar Port: A Win for South Asia, Foreign Policy, 5 February 2016.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

23

Dr. Thomas Chan

24

The official vision starts with the Silk Road spirit of “peace and co-operation, openness and inclusiveness, mutual learning and mutual benefit” that was “a historic and cultural heritage shared by all countries around the world”.

The Initiative of China is to revive this spirit through rebuilding connectivity along these trade routes. This point of departure qualifies the Initiative as a grand strategy, not only of China, but of all other countries in Asia, Europe, Africa, and the rest of the world. In referencing the historical past, the “Silk Road Spirit of the 21st century” is an attempt to restore “a multipolar world, economic globalisation, and cultural diversity”.

It defines all the entailing strategies, policies and measures that China will undertake under the Initiative, and refutes squarely allegations that it is a Chinese Marshall Plan or a Chinese version of mercantilism. It is instead “a positive endeavor to seek new models of international co-operation and global governance”; it emphasises tolerance among civilisations and respects the paths and modes of development chosen by different countries. It aims at an alliance of civilisations, the antithesis of US political scientist Samuel Huntington’s “clash of civilisations”, and thus represents a peaceful and developmental approach to reshape the global governance system away from Pax Americana.

Under the Initiative, China is taking the lead. It has vowed to commit “to shouldering more responsibilities and obligations within its capabilities, and making greater contributions to the peace and development of mankind”.

More concretely, it will take the lead in financing “all-dimensional, multi-tiered and composite connectivity networks” that are the foundation of the rebuilding of the Silk Road.

The Initiative has already been translated into action plans. Institutionally China will rely on existing bilateral, multilateral and global mechanisms. It will add a new momentum by taking the lead to set up the Asian Infrastructure Investment Bank (AIIB), along with support for the BRICS New Development Bank and the Shanghai Co-operation Organisation (SCO). It has also set up its own Silk Road Fund that will work with the sovereign funds of other countries to offer an alternative or supplement to the existing funding institutions of the developed world – the World Bank, IMF, Asian Development Bank and other regional development banks.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World

25

Six Corridors The Initiative also divides spatially the Eurasia-Africa venture into six corridors plus the maritime sea lane.

The six corridors are: • The China-Mongolia-Russia Economic Corridor, focused on the TransSiberian railway; • The New Eurasian Land Bridge centred on railways running from central China (Wuhan, Chongqing and Chengdu) to Europe via Kazakhstan, Russia and Belarus; • The China-Central Asia-Western Asia Economic Corridor, which passes through Central Asia, Iran and Turkey on its way to Europe; • The China-Pakistan Economic Corridor, which would extend the Karakoram Highway and build road and rail links all the way through Pakistan to the Port of Gwadar; • The Indochina Peninsula Economic Corridor; • and The Bangladesh-China-India-Myanmar Economic Corridor.

The Belt and Road Initiative: Six Economic Corridors Spanning Asia, Europe and Africa

Source: Hong Kong Trade Development Council, http://china-trade-research.hktdc.com/business-news/article/ The-Belt-and-Road-Initiative/The-Belt-and-Road-Initiative/obor/en/1/1X3CGF6L/1X0A36B7.htm

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Dr. Thomas Chan

26

The Chinese had already invested close to US$1 trillion overseas before the launch of the Initiative. The Initiative serves to coordinate and refocus the hitherto disparate and often unsuccessful investment ventures of Chinese enterprises and banks. The general direction is to shift from concentrating in developed countries to developing countries, from services (real estate, finance, and mergers and acquisitions) to industries, and within industries, and from overwhelmingly energy and minerals to a more balanced spread to infrastructure and manufacturing (with infrastructure serving manufacturing).

Two Official Policies Since the Vision and Action Plans, the Chinese government has promulgated two official policies with regard to the development of the Belt and Road Initiative in 2016 and 2017.

The first is a plan for the remaining period of the 13th Five-Year Plan (20162020) to coordinate and speed up the development of freight cargo train services from China to Europe and Central Asia. This represents the most visible success of the regained connectivity of the ancient Silk Road. The freight train services were announced in 2011, but didn’t actually get started until the launch of the Belt and Road Initiative that gave them financial and policy support from the Chinese government and attention from foreign governments. The more pro-active attitude of the Chinese and foreign governments to invest and improve physical connectivity through railways and the inter-government efforts to harmonise cross-border checks and controls has been the primary factor for the sudden burst of demand for international freight transport.

The plan delineates three corridors for the freight service: the northern route through Xinjiang, the central route through Inner Mongolia, and the eastern route through Inner Mongolia and Heilongjiang. They are either directly going to Europe or to the Central Asian countries, mainly Kazakhstan. The plan is targeted to have 5,000 trains by 2020. It also calls for the development of transit trains connecting more nodes along the routes, as well as increased inter-modality to enhance the connectivity and its breadth of coverage. In addition, it encourages Chinese firms to set up overseas logistics and distribution hubs, and related industrial parks and port industrial zones.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World

27

Shortcomings of the Plan The plan has its shortcomings. It reflects the preoccupation of the Chinese government with China-Europe trade, a continuation of the past policy – but with less attention to the commitment of the Chinese Initiative to a more extensive trade with the developing countries of Eurasia. Despite the lesser policy attention given by Beijing’s central government ministries, market forces have promoted China-Central Asia trade and China-Vietnam/ASEAN rail freight expansion. The expansion to Central Asia has taken place in the last two years, and to Vietnam/ASEAN only in 2017, probably a result of the infrastructure investment and facilities coordination of China in the regions under the Belt and Road Initiative.

The Maritime Silk Road The second policy to be promulgated was related to the Maritime Silk Road. Released in June 2017, it is called the Vision for Maritime Co-operation under the Belt and Road Initiative. The Vision, which adds the ocean elements to the Belt and Road Initiative, includes the following: • China-Indian Ocean-Africa-Mediterranean Sea Blue Economic Passage, by linking the China-Indochina Peninsula Economic Corridor, running westward from the South China Sea to the Indian Ocean, and connecting the China-Pakistan Economic Corridor (CPEC) and the BangladeshChina-India-Myanmar Economic Corridor (BCIM-EC); • the blue economic passage of China-Oceania-South Pacific, travelling southward from the South China Sea into the Pacific Ocean; and • the passage from China to Europe via the Arctic Ocean.

The policy documents also revealed projects currently implemented, under construction and negotiated, such as: • Projects implemented: Malaysia Malacca Seaside Industrial Park, the Pakistan Gwadar Port, the port+industrial park+city mode of integrated China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Dr. Thomas Chan

28

development of the Kyaukpyu port in Myanmar, the Colombo Port City and the Phase II Hambantota Port Project in Sri Lanka, the railway linking Ethiopia and Djibouti, the railway between Mombasa and Nairobi in Kenya, and the Piraeus port in Greece.

• Projects undergoing construction: collaboration with the Netherlands in developing offshore wind power generation; with Indonesia, Kazakhstan and Iran in implementing seawater desalination projects; the Asia-Pacific Gateway (APG) submarine optical fiber cable; industrial parks in China’s Qinzhou and Malaysia’s Kuantan; the Sihanoukville Special Economic Zone in Cambodia; and the Suez Economic and Trade Cooperative Zone in Egypt.

Everyone Included The Belt and Road Initiative is inclusive for all countries and for all sectors and milieus. It is a grand strategy. Similar to the ancient Silk Road, it is a result of interactions between governments and markets, with all kinds of macro and micro factors (including climatic factors) impacting on it, and thus it is bound to be largely open-ended as a result. However the commitment of China, the largest economic system in the world with the largest share of manufacturing output and exports among all nations, will play the same pivotal role as in the past. China offers manufactured products for exports, large and growing consumption markets for primary products, and engineering expertise to build infrastructure. Most importantly, it has the money and willingness to invest in building up connectivity in all areas and with all other countries. The Initiative once turned into action will follow to a large extent the policy intentions of China more than other governments. This is particularly true when China’s investment is put disproportionately into individual countries, such as Pakistan and Djibouti in the last few years. The result should be more in line with the purposes of China.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Xinhua News Agency

The Belt and Road Initiative: China Dream to Prosper Together with the World

Hambantota harbour, southern Sri Lanka (2010)

4. Strategic Considerations It is often said that the Initiative has a major strategic logic, which is to reduce China’s dependence on US-secured chokepoints. In fact, China’s economy is dependent on foreign trade, 90 per cent of it transported by sea. China’s near seas — the Yellow Sea, the East China Sea and the South China Sea — are bordered by the so-called “First Island Chain”, a series of islands (many of which are controlled

by US allies) that stretches from Japan to the Philippines and Indonesia. More importantly, since China is now the largest importer of oil and gas in the world, the chokepoints for oil transport are a very serious concern for China, and not just for energy security, but also for economic security and political stability. It is a serious issue of national security.

There also appears to be an economic logic at the heart of the Initiative – it supports China’s economic rebalancing. It is said that the aim is to reinvigorate China’s slowing economy by shifting its industry away from the coast to the relatively under-developed inland provinces. China’s ideal would be to link its inland China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

29

Dr. Thomas Chan

30

cities to global markets with diversified networks of transit routes and energy pipelines, many of which would take inland routes and serve as alternatives to existing sea lanes. The western region development strategy which began in 2000 has failed. So have the revitalisation efforts for the old industrial region in the northeast. The coastal region also faces the need for industrial relocation and upgrading. The conventional wisdom from the West is to shift the labour-intensive industries away from the coast, not just to the inland provinces, but more to other low-cost production locations in the developing countries along the Belt and Road. The Chinese government raises the issue of production capacity co-operation, which is in fact relocation of low-cost production overseas.

These interpretations have some grains of truth. Yet China has broader and more far-reaching strategic considerations for the Initiative, many of which will unfold in the course of development. First, China is surely trying to reduce its dependence on the US, in a more general way and not only in trade and energy transport, but more about a better and freer space for the independent development of its economy, polity and society, to realise the Chinese dream.

The aim is to promote a multi-polar and globalised world for the co-evolution of civilisations and societies. Second, China is rethinking the conventional or Euro-centric model of development. Its own success of resurgence as a global power provides evidence of the feasibility of alternative models of development. Upon becoming the largest economy in the world, China needs to discover a new approach for its further development through innovation and continuous industrial development. It will be of a different order and nature compared to traditional industrialisation. The Silk Road, its spirit and practices, were responsible for growth and development for two thousand years, and is thus the best reference for China in its search for sustainability and persistent development in the coming decades. The Belt and Road Initiative serves the purpose not by providing a straightforward and linear formula for growth and development, but rather for offering very rich holistic experiences, many of them unexplored and unknown, of collective efforts of civilisations over a very long period of time for China and other countries to draw lessons from.

This is probably the reason why China emphasises the Silk Road spirit and its open-endedness, rather than selling a Beijing consensus in place of the much-criticised Washington Consensus.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World

5. Progress of the Initiative – the First Five Years The Western press has published negative comments about the Initiative, arguing either that the Chinese projects are up in the air without a chance of realisation or that the projects are not financially and economically viable and bound to fail. The Chinese government has remained steadfast in aggressively promoting the projects under the Initiative. In terms of institutional arrangements, China has set up the Asia Infrastructure Bank (AIIB) which gained the enthusiastic support of dozens of countries. It set up the Silk Road Fund and that too has gone into operation. Together with the policy banks of China, including China Development Bank and the Export-Import Bank of China, they have financed numerous infrastructure projects initiated by Beijing.

In addition, China has pushed ahead with its regional and bilateral agreements with countries in Asia, Southeast Europe and Africa. China and its partners have engaged in local projects aimed at overcoming local and regional infrastructure deficits that have long held back development of these countries. The new projects under the Initiative add substantially to China’s existing tally of investment projects. We do not have comprehensive statistics of China’s investment in the Belt and Road countries, but we can safely say that, with all the commitments and projects under construction, China has already devoted about US$1 trillion to

Xinhua News Agency

the Initiative, a scale which is unprecedented in history.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

31

Dr. Thomas Chan

32

China-Pakistan Economic Corridor The China-Pakistan Economic Corridor is the first national programme under the Initiative; it has attracted the most attention because of its geostrategic implications. However, there are other regional projects of equal importance, like that of Djibouti and Ethiopia, Central Asia, the Greek port of Piraeus and the proposed Balkan Silk Road as well as the East African project of Kenya and Tanzania.

There is also the challenge to container ports and fleets, and even the diversion of Asia-Europe maritime trade flows, by the rise of the Chinese alliance led by COSCO. The emergence of the Iron Silk Road in the form of the growing ChinaEurope, China-Central Asia and more recently China-Vietnam/ASEAN cargo freight rail services may start to challenge the existing Maritime Silk Road after a lapse of over 300 years. In a short span of just five years, the Initiative is making an impact on the global economic order shaped under Pax Britannica and its successor Pax Americana that have ruled global trade and economic development until now.

The China-Pakistan Economic Corridor has been hailed as game-changing and even destiny-changing in Pakistan. It is significant for two major reasons.

First, the scale of the Chinese planned investment is disproportionately large. The first agreement was worth US$46 billion, which amounted to three times the total FDI Pakistan had received in the previous six years. In late 2016 the total was raised to US$62 billion; in early 2017, a further US$50 billion was added for hydroelectric projects over a 10-year period. Neither Pakistan nor any other developing country has ever dreamt of such an enormous capital injection in such a short period of time. In recent years, Pakistan has suffered from the spillover of the continued conflict in Afghanistan China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World

and sanctions by the US. In general FDI has not been forthcoming. Local accumulation of capital has been rather slow because of the lack of resources and exports. The Chinese investments have arrived swiftly, however, with projects having begun in 2015. The first power plant project was completed and went operational in 2017. It is expected that all 17 energy projects will be completed before 2019.

Second, the Pakistan case shows the shift in China’s outbound investment focus under the Belt and Road Initiative. China’s investment interest is no longer concentrated on energy and mineral extraction as in past decade. This has been a typical investment strategy of multinational corporations in developing countries. As guided by the Initiative, all projects aim to stimulate local economic development and have been infrastructure-based: in energy (power generation), roads, railways, port and optical fibre links. In Pakistan the projects are aimed

Xinhua News Agency

at overcoming a serious infrastructure deficit to clear the path for industrial and economic development. The Chinese projects have been supported by domestic investments. The Pakistan government has proposed 29 industrial parks and 21 mineral/ economic processing zones in all four provinces along the corridor.

The

geo-strategic

importance

of

the China-Pakistan Economic Corridor extends beyond Pakistan. The corridor links Kashgar in southern Xinjiang to Gwadar Port in Pakistan, providing access to the Persian Gulf and the Indian Ocean. Scheduled truck services and container shipments have started down the Karakunlun Highway, which China built and will upgrade under the Initiative. If Pakistan becomes more economically developed and connected within and without, it would have a positive impact on the civil war politics in neighbouring Afghanistan. Central Asian countries also China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

33

Dr. Thomas Chan

34

wish to join the corridor programme, so that they can also be connected to the sea at Gwadar. The Chinese government proposed extending the China-Pakistan Economic Corridor to Afghanistan in late 2017, an attempt probably to draw the Central Asian countries closer to Pakistan and China economically. The move also shows how the Chinese Initiative is evolving.

Djibouti and Ethiopia Poised for Takeoff with Chinese Infrastructure Investment At the junction of the Red Sea and the Gulf of Aden, Djibouti is another geo-strategic focus of the Initiative. The direct route from Asia to Europe by sea is through the Red Sea via the Suez Canal, then reaching the Mediterranean Sea. The 2015 completion of the expansion of the Suez Canal shows the demand for increased shipping traffic along this route. The rapid growth of China/Asia-Europe trade (over 50 per cent from 2006 to 2015) provides Djibouti with great optimism that it can become the next Dubai or Singapore on the trade route.

However, while the former French colony itself lacks the capital necessary, it has a chance to fulfill its goal through the massive investment that has come from China since 2015. Djibouti has a population of only 800,000, but the Chinese have committed infrastructure investment of US$14 billion there, a disproportionately large sum that could not be found coming from the developed countries of Europe and North America, or from international organisations such as the World Bank or the IMF. The Chinese package includes 14 major infrastructure projects currently planned and under construction — all financed mainly by Chinese banks and amounting to US$14.4 billion, including: 1.

Ports – A US$185 million stake in the port of Djibouti with management of the port from 2015, and US$400 million to develop port facilities; 2.

Railway – the recently completed US$4 billion, 750 km- railway line linking Djibouti Port with Addis Ababa, the capital of its landlocked neighbour Ethiopia. It carries 100 per cent of Ethiopia’s exports, reducing the journey from two days by truck to 10 hours; 3.

Two airports; China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World

Xinhua News Agency

35

Djibouti (2017)

4. Free Trade Zone (FTZ) – A 10-year project to create new warehouse and office space facilities near the port, the largest FTZ in Africa.

In addition, in November 2017, an agreement for a US$4 billion natural gas project was also signed with a Chinese company which will likely include the socalled Horn of Africa LNG pipeline from Djibouti to Ethiopia. There is also construction of a water pipeline and electricity supply network from Ethiopia to Djibouti.

Overseas reports often focus on the setting up of a naval logistics base in Djibouti by China in 2016. It is true that the Chinese naval base in Djibouti is its navy’s first ever overseas establishment. However, Djibouti is the present-day Casablanca, with six countries, including China, having military bases there.

(Saudi Arabia is also negotiating to join, while a Russian request was turned down). However, the Chinese interest is actually about broader geo-strategic development.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Dr. Thomas Chan

Xinhua News Agency

36

Xinhua News Agency

Addis Ababa, Ethiopia (2016)

Training Ethiopian drivers (2016)

Ethiopia is the second most populated country in Africa and has been one of the fastest growing economies in the world. China is now the largest builder of infrastructure in Africa, but its investment in the continent concentrated first in the oil industry of Angola and more recently in transport facilities in Ethiopia. The Djibouti-Addis Ababa Railway was built and funded by China and became operational in October 2016; it is part of China’s planned East Africa railway network.

On 30 May 2017, the Chinese-funded and built Mombasa-Nairobi standard gauge railway went into operation, Kenya’s largest project since the country’s independence in 1964. It is the first phase of the East African Railway network which will extend to the landlocked countries of Uganda, Rwanda and South Sudan as well as Ethiopia. The railway projects are also linked to the modernisation and upgrading of Kenyan ports at Mombasa and Lamu.

One could compare the importance of the East Africa regional railway network built with China’s assistance to the role of the Suez Canal for Africa and the Middle East. The project is regarded as a game-changer that could help accelerate political integration in the region.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World

The East African projects demonstrate the commitment of China in Africa.

It has been investing in Africa for decades. The Belt and Road Initiative simply reinforces existing investment programmes and provides better coordination guidelines. China had built 6,200 km of rail lines in Africa by early 2017, including a railway in Angola as well as the Abuja-Kaduna railway and the Lagos-Ibadan railway, both in Nigeria.

China set up a China Africa Development Fund in 2007 with US$5 billion in funding. Under the Initiative, the Chinese government injected a further US$5 billion in 2016. The fund is for equity investment, and has invested almost US$3.5 billion in 87 projects in 30 African countries, including Zimbabwe. When all the projects become fully operational, Chinese firms will have invested almost US$16 billion in such joint ventures.

Piraeus and the Balkan Silk Road The talk of a Balkan Silk Road predates the Belt and Road Initiative. It is used to describe the transport route and logistics corridor China has begun to establish in the Balkan region. The corridor will link up with the Greek port of Piraeus where China made its first investment in 2009. It could stretch to the north reaching the Danube and the European countries on the Baltic Sea. The geo-strategic importance of the Balkan Silk Road is that it bridges the Mediterranean Sea, the Black Sea and the Middle East and reaches Russia. In 2014, Chinese Premier Li Keqiang labelled it “the gate towards Europe”. The Chinese have seen the Balkan Silk Road as part of the larger regional bloc of Central and Eastern Europe comprising 16 countries under the institutional mechanism of 16+1. There are two aspects to the development of the Balkan Silk Road that are connected to the various routes of the Belt and Road Initiative.

The first one is the planned railway corridor running from Piraeus to Budapest. The Chinese have entered into an agreement with the governments of Hungary, Serbia, the Former Yugoslav Republic of Macedonia to develop the corridor, with the Budapest to Belgrade high speed railway as the first project. Despite challenges and opposition from the EU, construction on the railway commenced in 2017. The corridor could also serve as the gateway to Europe, with China-Europe freight train services between Chinese cities and cities in Poland and Hungary China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

37

Dr. Thomas Chan

and passing through Eastern Europe to Germany, France, Spain, the UK and the Netherlands. Hungary, Yugoslavia, Ukraine and Baltic countries aspire to be the hub for the new Silk Road between China/Asia and Europe.

The second is investments by COSCO, a Chinese state-owned shipping company which is the third largest container operator in the world, and which has organised an ocean alliance to compete against the oligopoly in global shipping

by European majors. Apart from Piraeus, COSCO has invested in port infrastructure in Albania, Montenegro, Israel, Turkey and Egypt. Piraeus port serves as the anchor for the feeder ports in the East Mediterranean Sea. Together, they link up with the maritime sea routes out of the Red Sea from Djibouti Port in the Indian Ocean, either coming from the already functioning Gwadar Port in Pakistan to the west and the Kyaukpyu Port under construction in Myanmar to the east or down to the East African coastal ports.

The Chinese have also set up financial instruments to channel Chinese funds and loans to the region’s infrastructure projects. There is the creation of the China-Central and Eastern Europe Investment Co-operation Funds, the first in 2012 and the second in 2016. The second has an initial investment capital of US$11 billion, with a leverage ratio of one to five; it is seeking to raise US$61.8 billion in project finance. Such volumes of financial contributions being made available by a single country for Central and Eastern Europe is unprecedented in the 29 years since the Berlin Wall fell in 1989.

Xinhua News Agency

38

Chinese Railway Express cargo train leaving for Duisburg, Germany, from Shenyang, capital of northeast China’s Liaoning Province China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World

Significant amounts of Chinese funding have emerged only since 2012.

With a decline in natural demographic growth and extensive brain drain, Central and Eastern Europe in general, and the Balkan states in particular, have suffered a loss of growth dynamism. China’s massive investments are the unexpected hope for possible revitalisation of their economies, even if they only serve as the transit hubs for the rapid growing China/Asia – Europe trade.

More strategically, the countries in the region want China to be embedded in their economies. For countries in the Balkans in particular, this embedding can serve as a hedge against Russian and Turkish involvement, or present itself as an alternative to EU investment.3 They enthusiastically welcome the trade and investment coming from China under the Belt and Road Initiative. Hungary, which has been alienating itself from the EU bureaucracy in Brussels, has embraced much more eagerly than others the internationalisation of the renminbi through currency swaps and selling renminbi bonds in China.

Extension of China-Europe Freight Service In terms of connectivity, the most visible outcome of the Initiative is the mushrooming of overland rail freight services from China to Europe and Central Asia. There were limited, infrequent train services before, but it was not until only 2011 that regular services began. These have become a viable alternative to maritime transport only since the launch of the Initiative, and most obviously since 2014.

There have been railway connections from China all the way to Europe, the most famous of which is the Trans-Siberian Railway that crosses the entire length of Russia’s Eurasian territories. In the Cold War period, political factors disrupted international railway transport from China to Europe. The end of the Cold War and the collapse of the Soviet Union offered the chance for Eurasian connections by train, but the post-independence political and economic chaos in the former Soviet republics, the Middle East and Central Asia (in particular Afghanistan) have frustrated any attempt to revive the overland Silk Road.

There are also physical obstacles, such as the different gauge systems used for railways in the former Soviet Union and the multiple customs and other 3. Jens Bastian, China’s footprint in Southeast Europe: Constructing the “Balkan Silk Road”, AGORA, 22 September 2017, http://www.macropolis.gr/?i=portal.en.the-agora.6034.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

39

Dr. Thomas Chan

40

regulatory institutions that add to transport costs. Apart from the former Soviet republics, which inherited a unified railway system, there is a lack of efficient rail connections with neighbouring states and with China and Europe. However, in recent years with the support of the Asian Development Bank, the EU and other regional organisations, and with investments from individual countries, most notably Kazakhstan, and with multilateral agreements in transport facilitation, Eurasian railway connections have gradually been installed and taken off.

The leading force within the action plan framework of the Initiative has again been China. Rail freight services start from cities in China and, in the initial stage, have been subsidised by local Chinese governments. Local subsidies are important as this helps to make the overland train services competitive with traditional maritime routes and ensures that delivery time advantages can attract more users.

The cases of Chongqing and Chengdu, the two inland Chinese cities that have been most aggressive in promoting China-Europe rail freight services, show that the subsidies can serve as an important incentive in attracting foreign direct investment in these cities. The manufactured products from the new investments, mostly in the IT sector, can be shipped to European markets with the crucial advantage of speedier delivery to market. China’s revenues from foreign direct investment can more than offset the subsidies.

New Rail Traffic on the Rise In 2013 as a share of the Eurasian trade traffic, the China-Europe train services were insignificant and regarded as unable to command any significant share in the coming years. However, by 2017, they had proved to be a viable alternative and diverted probably close to 5 per cent of the inter-continental trade flows. By October 2017, there were 57 China-Europe train services connecting 34 pairs of cities in China and Europe. In that year, there were over 3,000 trains in service, more than the total from 2011 to 2016, exceeding the planned target of 2,200 trains by 2017 of China’s 2016-2020 Five-Year-Plan. There are also more than 2,000 trains running on China-Central Asia services, bringing the total number of trains in operation in 2017 to more than 6,000. The previous target of 5,000 China-Europe trains set for 2020 has easily been exceeded.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World

The freight train services are concentrated in Poland and Belarus as the transit points to the rest of Europe. There are also direct services to Germany, the Netherlands, France and even London and Madrid – the longest distance travelled.

The traveling time ranges from 10 days to about 20 days. There has been substantial reduction in transport times over the past years. There are three main routes: the northern one by means of the Trans-Siberian railway in Russia; the central one via Kazakhstan, which joins the Trans-Siberian railway again; and the southern one which goes from Kazakhstan, crosses the Caspian Sea to the South Caucasus, and then again crosses the Black Sea to the Ukraine, and then onward to Europe.

More recently, the rail line from Kazakhstan can reach Iran via the newly commissioned Kazakhstan-Turkmenistan-Iran railway line.

This enables the line to join the railway system of Iran and later that of Turkey, and continue onward to Europe. With the expansion of the China-Europe services, the whole of Europe can be covered, thereby offering direct delivery of cargo goods from China with the last mile probably taken over by trucks at a cost similar to shipping. But the time is much shorter, saving 20 days or more and with more frequent services for smaller batches of cargo.

The services started with China-Europe trains. In the process, the availability of railway connections stimulated the growth of China-Central Asia services to Central Asian countries; the rail links go through Central Asia into Iran, possibly using Iranian ports later at the Persian Gulf for transshipment to other coastal cities of the Indian Ocean. Since 2016, there have been freight services from coastal China to even Afghanistan via Central Asia (Kazakhstan and Uzbekistan).

The freight train services explore and develop new markets and new local products for export. For example, corn from Ukraine has since 2015 replaced that from the US as the largest import source for China; and wheat from Kazakhstan can now reach Vietnam by means of China-Central Asia services.

The train services have become two-way, unlike the maritime shipping, which is basically one way from China to Europe. In 2017, about half of the rail connections have carried back cargo from Europe and/or Central Asia. Zhengzhou now has eight trains a week going both ways between China and Europe.

More significantly, there are two new developments emerging from these train services.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

41

Dr. Thomas Chan

42

First, goods have begun to be shipped to coastal ports of China from Japan, South Korea and Taiwan, using the China-Europe services to take advantage of the shorter travel time.

Second, there has been a branching out of the freight train services. For example, there are services from the Pearl River Delta region and the Yangtze Delta region to Nepal via Tibet using the existing railway network of China and supported by the cross-country highways. From Guangzhou there are train services to Vietnam in competition with nearby sea shipping lanes. Since September 2017, Singapore has cooperated with Chongqing to offer an inter-modal southward transport route going to Singapore via ports in Guangxi region.

Through all the efforts of local governments under the Initiative, the China-Europe rail freight services have evolved in a very short span of time into the inter-modal international network that was the ancient Silk Road.

Conclusion The Belt and Road Initiative of China is a grand project. The ancient Silk Road flourished only after centuries of development of civilisations and long-distance trade expansion. The ancient Silk Road was transformed during the past centuries of European and American seapower, with the overland routes almost all disrupted and disbanded. The end of the Cold War and the resurgence of China offer the best chance for its revival. The Chinese government under President Xi and the Belt and Road Initiative are able to mobilise the resources and efforts of what is now the largest manufacturing economy in the world with a monetary reserve that has never been seen before for such a purpose.

It may take decades to realise the Initiative’s goal of reconnecting Asia, Europe and Africa, and the result may be less than the global trade system in the Ming and Qing Dynasties in China. However, the progress of the first few years has shown great promise. Not only has China honoured its financial commitments, but even more important, other countries along the Belt and Road have actively embraced the proposed connection programme and mobilised their own resources to supplement the efforts of China. It is still at a very early stage China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World

of building up physical connectivity, which will require several trillion dollars to match the smooth and seamless connections that have already been achieved between China and the EU. The success of trade seems to provide the incentives and dynamism to drive progress faster and further, as in the golden age of the ancient Silk Road in the past millennium. In any case, the Silk Road, ancient or present, is first about trade expansion. Only on the basis of trade development can other exchanges and forms of connectivity emerge and evolve to create an interactive transformational impact on all countries involved. This should be the global and historical perspective to China’s Belt and Road Initiative.

China is, of course, the main beneficiary of the Belt and Road Initiative. It is the largest manufacturing economy in the world and is still engaged in industrial upgrading and expansion. Bringing dozens of countries in the pre- or early industrialisation stage to aggressive industrialisation and globalisation means the creation of huge new markets for China’s industries, a scale many times larger than the current saturated markets of developed countries.

The further expansion and growth of the Chinese economy will definitely affect the global system of economics and politics. China will be stronger and will have a chance to return to the position of world dominance that it enjoyed prior to the 19th century, a period which marked its decline. China’s relations with the European and American powers will definitely be reshaped. Moreover, the African continent and the less developed countries in Central Asia, West Asia and elsewhere that have been economically marginalised in the past will have a chance to reach their expanded potential, thereby creating a genuine multipolar world that also includes China and the European and American powers. This is probably the larger and more historical consequence that will result from the Belt and Road Initiative.

As the Chinese government publicly stated in the Report to the 19th National Party Congress of the Chinese Communist Party, realising the great dream of China will be a great enterprise, but there will also be great challenges along the way. A sweeping transformation is bound to encounter resistance from the vested interests of the old regime. The Belt and Road Initiative depends upon peace and development in regions the trade routes pass through and in the world as a whole.

This cannot be guaranteed by China alone.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

43

44

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Belt and Road Initiative: China Dream to Prosper Together with the World

45

The Project of the Century Paul Mooney

2

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Paul Mooney

46

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Project of the Century

Dubbed “the project of the century,” China’s Belt and Road Initiative is a network of railroads, highways, gas and oil pipelines, and ports across Asia, Europe and beyond that could bypass geopolitical deadlocks, boost world trade, and kick off an exciting new stage of globalisation.

One of the most ambitious cross-border inter-connectivity plans in the history of the world, the Belt and Road Initiative is expected to encompass some 70 countries and regions, draw on the resources of governments, international organisations and the private sector, and more tightly bind the economies of Asia and Europe in an intricate web that also covers Southeast Asia, South Asia, Central Asia, West Asia and the Middle East. Together, the participating nations make up 62 per cent of the world’s population.

The Initiative is a blueprint for economic development that will provide global businesses – multinationals as well as small- and medium-sized enterprises - with unprecedented opportunities to reach new markets along the Belt and Road route, in addition to gaining greater access to markets around the world.

The cost of the entire programme is expected to amount to about US$1 trillion, the official Global Times reported in February 2017. These infrastructure projects and business investments have the potential to revive ancient links to the Middle East, Central Asia and Eastern Europe, while at the same time offering improved regional ties and the promise of significant economic growth.

Modern-Day Silk Road The Initiative is inspired by the ancient Silk Road, an historically important trade route that connected Rome and China. Along the Road goods like silk, wool, gold, tea, and spices were traded for more than 2,000 years. The route, which traces the trade passages of successive Chinese dynasties across Eurasia, changed the face of international trade in past centuries.

The Belt and Road Initiative will create closer connections among nations and enhance development by creating new opportunities for trade, investment, economic activities, technological innovation, and the movement of people.

It is made up of two economic components: a series of land routes passing through western China, the resource-rich countries of Central Asia, and finally onto Europe; and a maritime route, which runs along the east coast of China, China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

47

Paul Mooney

48

winds its way through Southeast Asia, and then heads to Africa before finishing up in Europe. These two components are respectively known as the Silk Road Economic Belt and the 21st century Maritime Silk Road.

In the nomenclature of Belt and Road, “Belt” points to the land-based trading routes while “Road,” refers somewhat counterintuitively to the maritime route.

The concept has a long history in Chinese planning. Former Premier Li Peng was the first to raise the idea when he urged the construction of a new Silk Road on a 1994 visit to Kazakhstan. Chinese President Xi Jinping, known as the public architect of the Belt and Road Initiative, set his sights even higher, calling for a “Silk Road Economic Belt” in a speech to students at Kazakhstan’s Nazarbayev University in 2013.

President Xi spoke of the new Silk Road in romantic terms. “My home, Shaanxi province, is the start of the Silk Road,” he said in Kazakhstan. “I can almost hear the ring of the camel bells and [see] the wisps of smoke in the desert.”

Xi told his young audience that the new Silk Road was “becoming full of new vitality with the rapid development of China’s relations with Asian and European countries.” And he went on to say that the 2,000-plus-year history of exchanges had proven that nations with different races, beliefs and cultural backgrounds could share peace and development, as long as they strove for unity, mutual trust, equality, mutual benefit, and mutual tolerance.

A Milestone in the Belt and Road Initiative The year 2017 marked a milestone, with an explosion of investment in the countries participating in the Belt and Road Initiative. China had signed 109 deals worth US$33 billion in Belt and Road countries as of the end of October 2017, beating the US$31 billion that was recorded for all of 2016, reported the China Daily on 18 August 2017. In addition, 86 countries and international organisations had signed 100 cooperation agreements with China by end-2017, according to a report in the same paper on 23 December 2017.

In 2017, good progress was made in the construction of the China-Pakistan Economic Corridor and the Mombasa-Nairobi railway went into operation.

Construction also began on an overhaul of the Belgrade-Stara Pazova section of the Hungary-Serbia railway and the Khalifa Port in the United Arab Emirates.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Project of the Century

Where China’s “Belt and Road” Priorities Lie

49

Value of China’s M&A activity in “Belt and Road” countries 2005-2016, by sector (in billion US$)*

38.6

Oil & gas Diversified industrial products

14.5

Financial services

14.3 12.4

Technology, media and telecom

11.0

Power & utilities Consumer products

6.7

Mining & metals

6.6 5.6

Automotive & transportation

4.9

Real estate, hospitality & consctruction Life science

2.7

Agriculture

1.8

Other

2.0

*To June 2016.

Including Hong Kong, Macao and Taiwan Source: Mergermarket via EY

Trade between China and countries along the Belt and Road rose to US$786 billion in the first three quarters of 2017, a year-on-year 15 per cent increase, the Ministry of Commerce announced in November 2017.

From January to September 2017, Chinese businesses directly invested US$9.6 billion in countries along the Belt and Road, up 29.7 per cent year-on-year.

Meanwhile, investments in China by Belt and Road countries in the same period reached US$4.24 billion, up 34.4 per cent over the previous year, Xinhua News Agency reported on 2 November 2017.

Chinese enterprises have invested roughly US$50 billion and helped establish 75 economic and trade cooperation zones in 24 countries along the routes of the Initiative, generating over 209,000 jobs, said Foreign Minister Wang Yi at the Symposium on International Developments and China’s Diplomacy, on 10 December 2017.

Fifty Chinese state-owned enterprises have invested in or participated in some 1,700 projects in countries along the Belt and Road region over the past three years, Caixin magazine reported on 9 May 2017. Major players include: China Communications Construction, China State Construction Engineering, PowerChina, Sinomach, China Railway Group, State Grid, and China Railway Construction Corporation, a leading global civil engineering company, which China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Paul Mooney

50

builds highways, bridges and high-speed rail lines. Guangxi LiuGong Machinery Co., which makes construction equipment such as bulldozers, excavators, road rollers and forklift trucks, is also an investor.

One major deal in 2017 was a Chinese consortium’s US$11.6 billion buyout of the Singapore-based Global Logistics Properties in July. The consortium is comprised of Hopu Investment Management, Hillhouse Capital Group, Vanke Group and Bank of China Group Investment. Meanwhile, China National Petroleum Corporation also paid US$1.8 billion for an 8 per cent share of Abu Dhabi National Oil Company in February 2017.

A Stark Departure from the Past The Belt and Road Initiative is key to Xi’s “neighbourhood diplomacy,” which is aimed at improving ties with nations on China’s periphery by creating much-needed public works, such as transport links and power infrastructure.

Analysts say that Xi’s bold programme is a stark departure from the policies of his predecessors, such as the late Chinese strongman Deng Xiaoping who espoused “taoguang yanghui (韜光養晦)”—or hiding one’s capabilities while biding one’s time on the international stage and avoiding involvement in faraway issues.

On connectivity, the Belt and Road Initiative aims to accomplish two tasks: connecting regional hubs to China and linking these hubs to each other.

Official statements have consistently called for greater regional integration, focusing on the establishment of cross-border transportation and logistics networks as key to the project.

It is a framework for economic diplomacy and taking advantage of China’s strengths – large reserves of capital and low-cost loans, engineering skills, and enormous production and construction capacity – to advance Beijing’s global influence and establish a new agenda for globalisation on China’s terms. And it is also a way of promoting China, both at home and abroad, as a new agenda-setting power.

China held the high-powered Belt and Road Forum for International Cooperation in Beijing on 14-15 May 2017. There were leaders of 29 nations and 1,200 delegates from more than 100 countries at the summit, including Russian President Vladimir Putin, Turkish President Recep Tayyip Erdoğan, Italian Prime Minister Paolo Gentiloni, and United Nations chief Antonio Guterres. Many Western China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Project of the Century

countries sent representatives. The US, which earlier expressed doubts about the Initiative, announced at the last minute that it would send a government delegation to attend the forum.

At the forum, President Xi called on countries around the world to join the Belt and Road Initiative, promising at least US$113 billion in extra funding for the plan. Xi also used the occasion to present what he called his “five proposals” for the Initiative.

First, the Belt and Road Initiative should build a “road of peace” that brings about a peaceful, stable environment and a new kind of international relationship based on “cooperation and mutual benefit.”

Second, the project should establish a “road of prosperity.” Xi said that development is the “key to solve all issues”, and that the Initiative should concentrate on “setting free the development potential of each country and realising a great economic harmonisation.”

Third, Xi explained that the Initiative will be “a road of openness” and that “opening up leads to progress, isolation leads to decline.”

Fourth, the Initiative should be a “road of innovation.”

Fifth, it should be a “road of civilisation” aimed at overcoming “cultural barriers through exchange.”

China Retaking Its Rightful Historical Place The Belt and Road Initiative highlights China’s desire to realise the dream of the Chinese people for the country to retake its “rightful” and historical place in the world as a great power. And the Belt and Road Initiative has become a core piece in achieving this dream.

Such determination is reflected in the inclusion of the Initiative in China’s Constitution at the 19th National Congress of the Communist Party of China in October 2017. The decision has added more muscle to the plan, but it is also creating additional pressure for the leadership to succeed.

The Belt and Road Initiative serves as a challenge to the economic development model advanced by Western nations, which stresses structural and policy reforms, as well as technical assistance in areas such as education and health.

The Initiative is welcomed by many countries, in light of the uncertainties China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

51

Paul Mooney

52

arising from foreign policy and trade policy shortcomings of the former Obama Administration in Asia. Another factor is the Trump Administration’s retreat into its “America First” policy, and its numerous policy flip-flops and ill-conceived positions on issues from multilateral trade to North Korea. This has opened a door for China to expand its global presence.

Beijing has made an effort to distance the policies of the Belt and Road Initiative from those of capitalist rulers of the past. In an English-language commentary published on 13 May 2017, Xinhua wrote that the Initiative would boost the economies of developing countries that had been ignored by Western countries.

“As some Western countries move backwards by erecting ‘walls,’ China is contriving to build bridges, both literal and metaphorical,” Xinhua wrote. “These bridges are China’s important offering to the world and a key route to improving global governance.”

Greater Connectivity with Railways The Belt and Road Initiative is bringing participating countries closer together, by connecting regional hubs to China and connecting them to each other.

Railways are a major component of such transportation integration. With a new freight rail network cutting across Central Asia, it now takes just two weeks to transport goods from Shanghai to Europe—just half the time required for seaborne shipments. While shipping by sea is about 25 per cent less costly than transport by rail, the cost of the additional time on the sea can be significant.

The new Baku-Tbilisi-Kars (BTK) railway and a deep-sea port to be built in Anaklia, on the Black Sea, with Chinese investment, will make Georgia an important hub in the China-EU connection. The line, launched in November 2017, is the shortest and most reliable link between Asia and Europe. It will lessen the distance between China and Europe, increase passenger and cargo transportation, and bring economic benefits to the three countries served by the railway – Georgia, Turkey and Azerbaijan. The BTK railway will reduce the time needed to move goods from China to Europe to 15 days - less than half of the time it takes by sea. In the initial stage the railway was intended to have the capacity to transport one million passengers and 6.5 million tonnes of freight a year. Peak capacity will be 17 million tonnes of cargo per year.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Project of the Century

The new railway provides a route to Europe that bypasses Russian territory and potential political complications such as trade sanctions. The 850 km line links Baku, the capital of Azerbaijan, with the Georgian capital of Tbilisi and Kars in eastern Turkey, with onward access to the European rail network.

The Initiative aims to bring about a seamless flow of capital, goods and services along the Belt-Road route through the promotion of market integration and new ties among communities. Beijing envisions a state-led, credit-fueled program of huge investments in infrastructure projects that will boost regional economic growth.

Chinese policymakers also hope that the Initiative will reduce the widening economic disparity between the poorer, landlocked western and interior regions of China, and the more developed east coast; this will in turn improve internal social stability. Another goal is to create a peaceful buffer on China’s western borders. Neighbouring states in Central Asia could therefore become a testing ground for new ideas in China’s economic policy; Chinese investments will continue to focus on Pakistan, Afghanistan, Kazakhstan, Uzbekistan and other neighbouring countries.

Strategic Dimension Under the Initiative, China aims to search for new markets for Chinese goods and to absorb the country’s excess production.

There are two key strategic objectives. First, to provide China with alternative routes for imports and exports, particularly supplies of energy. Beijing also hopes that this will result in reduced reliance on sea transport.

Beijing hopes it can shift excess production capacity out of China, especially in the sectors of steel, aluminum and cement. China produces almost 1.1 billion tonnes of steel annually, but domestic demand stands at just about 800 million tonnes, reported the China Daily. Beijing hopes that demand from BeltRoad countries might be able to soak up about 30 million tonnes a year, according to a study by the European Union Chamber of Commerce.

Plans for 20,000 km of new railways in Vietnam, Turkey, Iran and Saudi Arabia as well as other countries participating in the Belt and Road Initiative could result in demand for as much as 85 million tonnes of steel, according to China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

53

Paul Mooney

54

a study by the European Union Chamber of Commerce. It is expected that this will further encourage Chinese steel companies to compete for international contracts.

As noted earlier in this report, expanding China’s access to natural resources, particularly energy, is another motivating force of the Initiative. As such, the majority of six identified economic corridors (the China-MongoliaRussia Economic Corridor; the New Eurasian Land Bridge; the China-Central and West Asia Economic Corridor; the China-Indochina Peninsula Economic Corridor; the China-Pakistan Economic Corridor; and the Bangladesh-ChinaIndia-Myanmar Economic Corridor) have significant energy-related infrastructure investments, including pipelines to Russia, Central Asia, and the Indian Ocean.

Promise of Non-Interference Internationally, the Initiative is supposed to improve China’s security by making neighbouring regions more prosperous, notably by building infrastructure that Chinese companies can employ for trade and investment. And it is also a vehicle by which China can internationalise its currency and make its regulatory standards more widely adopted by trading partners.

Xi’s keynote speech at the Belt and Road Forum in May 2017 included an attempt to assuage concerns about China’s real intentions.

“We are ready to share practices of development with other countries, but we have no intention to interfere in other countries’ internal affairs, export our own social system and model of development, or impose our own will on others,” state media quoted him as saying. “In pursuing the Belt and Road Initiative, we will not resort to outdated geopolitical manoeuvring. What we hope to achieve is a new model of win-win cooperation.”

Anxious to fend off criticisms that the Belt and Road Initiative is mainly a vehicle for Chinese expansionism, President Xi has emphasised his pledge of greater regional commercial co-operation, and called for stronger trade ties and regional cooperation to reach shared economic and development goals. And he is succeeding to a certain extent to allay concerns among regional participants regarding China’s intentions.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Project of the Century

Belt and Road Initiative

Challenges Some countries are sceptical about the feasibility of many of the Belt and Road projects; others have kept a distance due to doubts about China’s commitment to environmental sustainability and transparency.

Environmental experts believe that Chinese-funded projects along this modern-day Silk Road might also lead to increased

About 62% of the world’s population Extending from China to Europe, the Belt and Road will run through over 60 countries, which together accounted for about 62% of the world’s population in 2015.

circulation of climate-damaging fossil fuels.

For decades, China has relied on polluting fuels to power its own economic growth.

The Chinese NGO Global Environmental Institute estimates that China was involved in 240 coal-fired power projects in 25 of the Belt and Road countries as of the end of 2016. And, with another 52 projects in the pipeline, Chinese-backed coal projects in Belt-Road countries alone account for 12.66 per cent of the world’s planned projects, the Institute notes.

About 63% of the world’s total merchandise trade Countries along the Belt and Road routes are rich in resources and their economies are highly complementary. Under the Belt and Road Initiative, imports and exports are expected to grow faster with efforts being made to broaden the scope of trade, while promoting free trade areas.

Chinese officials say the country has learned from its history of relying heavily on fossil fuels and has begun to promote renewable energy at home to deal with its air, soil and water problems; it is also exporting clean technology and promoting the use of renewable energy in countries covered by the Initiative.

Beijing has created dedicated financial institutions such as the Silk Road Fund and the Asia Infrastructure Investment Bank to support the Initiative. Discussions have

Facilities connectivity will require huge infrastructure investment The goal of establishing an infrastructure network, connecting the various Asian subregions with other parts of Asia, Europe and Africa, will require immense investment. In Asia alone, infrastructure investment costs could reach US$1.7 trillion annually during the period 2016-2030, according to figures from the Asian Development Bank.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

55

Paul Mooney

56

been held on the possible creation of a stock index tracking shares of companies with significant business related to the Initiative.

Banks say the Belt and Road programme will require a great deal of investment – and financing – for the roads, rail lines and ports that are on the drawing board. The Asia Development Bank estimates that its 45 members, primarily Belt and Road-related countries, will need US$22.6 trillion of infrastructure investment by 2030, or US$1.5 trillion a year. No single source of funding can supply that.

China’s State Council Development Research Centre estimates that demand for national infrastructure investment from countries participating in the Belt and Road Initiative for 2016-2020 will be at least US$10.6 trillion.

International commercial banks have been quick to seize the opportunities offered by the Initiative. HSBC, for example, has promoted itself as a leading financial partner with clients engaged in Belt and Road projects. In a research report, the bank notes that many countries along the Belt and Road routes lack funds and need expertise; as a result, it says, there are “huge opportunities for international businesses from financial services to construction, supply chain management to professional services.”

In November 2014, President Xi launched a US$40 billion Silk Road Fund “to provide investment and financing support for infrastructure, resources, industrial cooperation, financial cooperation and other projects in countries along the Belt and Road.” As of late 2016, the Fund had signed deals amounting to at least US$3.25 billion, with initial investments going to Russia, Pakistan and Europe, and not Central Asia as was expected.

China’s National Development and Reform Commission announced in March 2017 that China had signed contracts for new international construction projects amounting to US$304.9 billion between 2014 and 2016.

Financing Needs With so many deals on the drawing board, China’s policy banks, such as the Export-Import Bank of China, the China Development Bank, and the Agricultural Development Bank of China, will also provide much-needed funding to Belt-Road projects. Such funding will primarily go to projects in Central Asia, using the established practice of providing soft loans to governments that are required to use Chinese China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Project of the Century

57

contractors. In addition, China’s major commercial banks will also participate in the financing of this key government programme.

AIIB, with US$100 billion in capital, is also expected to be an important source of financing for the Initiative’s projects. After being in operation for a year and a half, the lender had approved US$3 billion in loans for projects across Europe, Asia, and the Middle East. The AIIB has focused on joint projects cooperating with established multilateral lenders.

Overland transportation time from China to Europe shortened to 13 days The Yuxinou railway running from Chongqing to Germany via Kazakhstan, Russia, Belarus and Poland, has introduced “one-stop declaration, inspection and release” along the route. Transport time is less than onethird of that by sea, while the transportation costs are 40% lower than by air.

The World Bank, the European Bank for Reconstruction and Development (EBRD) and the Asian Development Bank (ADB) have said they are willing to take part in the Belt and Road Initiative.

The World Bank is also involved in joint projects with the AIIB, including in Central Asia. One example is a road project in Almaty, Kazakhstan, that has been jointly funded by the World Bank, the EBRD and the AIIB. In January 2016, China became a shareholder in the EBRD. Five months later, the AIIB and the EBRD signed their first joint contract, a US$55 million road construction

Integrated multimodal transportation The construction of port infrastructure facilities, creating land/water intermodal transport passages, and enhanced connectivity of railways, highways and air routes will all promote multimodal transportation. Guangdong, for example, will work with Sri Lanka to establish a sea/ rail multimodal transportation corridor as part of its participation in the Belt and Road Initiative.

project to upgrade parts of a road linking Tajikistan’s capital Dushanbe with neighboring Uzbekistan.

With the demand for national infrastructure investment expected to rise sharply between 2016 and 2020, there will be ample opportunities for foreign banks to capitalise on large business opportunities.

26% of China’s external trade In 2016, China’s trade with other Belt and Road countries was worth some RMB6.3 trillion, accounting for around 26% of its total external trade.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Paul Mooney

58

Chinese Entities Support the Initiative Following the lead of Beijing, every level of the Chinese government is working hard to make the Initiative a success: economic actors, financial players, state-owned enterprises, the Foreign Ministry, the private sector, and think tanks are all behind the effort.

The northeastern port of Tianjin has been laying the groundwork for the development of the Initiative with growing connections to the Middle East, West Africa, the United States and Europe.

The port, the largest comprehensive facility in northern China, has specialised terminals for containers, iron ore, coal, coke, crude oil and petrochemical products, steel, machinery, LNG and bulk grains. In 2016, the Tianjin Port Group opened various new routes, including 10 container services to destinations such as Minsk and Moscow.

China’s State Grid, the country’s top power distributor, is another Belt and Road player. It has worked on a number of national power grid projects in Belt and Road countries, with a total contract value of nearly US$40 billion, the Xinhua News Agency reported in December 2017.

At the annual B20 China Business Council meeting in Beijing in December 2017, Shu Yinbiao, State Grid chairman, said power investment demand would reach an estimated US$1.5 trillion in Belt and Road countries over the next five years, Xinhua reported.

Shu said this demand would arise from bringing power to the 1 billion people without access to electricity in Africa and South Asia, as well as the need to upgrade power facilities in Central and Eastern Europe and make energy system transitions in Western Asia.

While many Chinese state-owned enterprises will be at the forefront of the Initiative, China’s more creative private sector will also play a key role. In comparison to state-owned enterprises, China’s private companies are in general more agile, market-driven and entrepreneurial.

As growth slows at home, many private companies are looking for new opportunities; others are realising that their products and price points are well suited for consumers in the countries covered by the Initiative. This particularly applies to Chinese manufacturers of smartphones and household appliances.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Project of the Century

59

Chinese companies are also keen to establish production facilities in the region in response to rising overhead costs in China. The Initiative could provide the best platform for China’s smaller private companies to evolve into global companies.

Many private Chinese companies are already winning contracts in Belt-Road markets. They include: Oppo, a Dongguan-based smartphone manufacturer with retail outlets across Asia; Country Garden, a Shunde-based real estate developer building large-scale projects in Southeast Asia; and Tencent, China’s top internet firm buying start-ups in India.

China’s Rust Belt Looks to the Initiative for Renewal China’s Rust Belt, which includes Liaoning, Jilin and Heilongjiang provinces in the far northeast, is looking to the Initiative to be a new engine of growth for the lagging region which shares a border with Russia and North Korea. This was one of the first areas in China to

Open to all: Opportunities in trade, investment and finance The Belt and Road Initiative is open to all countries, international and regional organisations, for participation. This includes the founding members of the AIIB, now investing in the development of infrastructure and other productive sectors in Asia, as well as non-classic Silk Road countries such as Australia, Austria, France, Germany, the Netherlands, New Zealand, Spain, Sweden, Switzerland and the UK.

be industrialised; its traditional industries include steel, automobile production, shipbuilding, aircraft manufacturing, and petroleum refining.

These three provinces saw double-digit growth begin to shrink in 2012 as a result of the global economic slowdown. In 2015, economic growth in the region trailed behind the national average, with Heilongjiang, Jilin, and Liaoning posting annual growth of 5.7 per cent, 6.5 per cent and 3 per cent, respectively. The 3-per-cent growth rate in Liaoning was China’s lowest.

Construction of the long-delayed bridge across the Heilongjiang (Amur) River, began in 2016 after 28 years of

Around 31% of global GDP China and the other Belt and Road countries accounted for some 31% of global GDP in 2015.

Source: Hong Kong Trade Development Council, http://info.hktdc.com

talks between China and Russia. The bridge and its related China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Paul Mooney

60

infrastructure are key parts of the China-Mongolia-Russia Economic Corridor under China’s Belt and Road Initiative. It is expected to kick off a development boom in the region on completion.

After the Belt and Road Initiative was announced, economic planners worked hard to improve cross-border transport facilities and build export-oriented industries to renew the Rust Belt economy by leveraging its geographic location.

In September 2017, China’s first international cold chain logistics cargo train left Qiqihar City in Heilongjiang for Moscow. The rail link mainly carries fruit, vegetables and frozen food produced in China’s northeast to Russia, and then carries Russian dairy products to the China market.

Authorities in China’s Rust Belt have also encouraged local companies to go global. Chinese automaker FAW Group, founded in 1953 in Changchun, established an international investment company in September, teaming up with five other Chinese firms, to accelerate its expansion in countries in the Belt and Road region.

Additionally, Jilin province has set up a cooperation relationship with local governments from 83 countries and regions, and 382 multinational companies under its plan to expand international markets.

Japan to Improve Bilateral Relations with Belt-Road Co-operation Japan has moved cautiously with Belt-Road economic cooperation with China, partly due to its own frictions with Beijing as well as concerns over Washington’s response to any warming of relations. But it also wants to gain Beijing’s support to defuse the North Korea nuclear missile crisis, and that may permit greater levels of cooperation.

Japan’s somewhat greater willingness to cooperate first became known after a meeting between Prime Minister Shinzo Abe and Chinese President Xi Jinping in Germany on 8 July 2017. During this meeting, Abe called the project an “initiative with potential” and said Japan was keen to participate. The two men also discussed potential bilateral cooperation at another meeting in Hanoi on 11 November 2017.

Tokyo’s Cabinet Secretariat, the Foreign Ministry, the Finance Ministry, and the Ministry of Economy, Trade and Industry have worked out a concrete plan for Japan’s participation in several sectors: energy efficiency; the green sector; industrial modernisation; and improving logistics networks.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Project of the Century

Japan is also considering funding bilateral projects involving solar and wind power, power grids, and industrial park development in a third country along the Belt and Road route. It is also interested in Thailand’s Eastern Economic Corridor, a plan to develop three eastern provinces of that country. Analysts in Thailand see the Eastern Economic Corridor leveraging off expected Chinese investment in this eastern region of the country.

Beijing is actively developing a railway network as part of the Initiative that would be advantageous to Japanese companies working in China. These rail lines, connecting China and Europe via Central Asia, will be fitted with a digital customs clearance system and other innovations benefitting Japanese corporations with factories in China.

South Asia The China-Pakistan Economic Corridor project has seen the construction of expressways and railways, as well as oil and gas and cable projects of Chinese companies. China has promised to build coal and hydroelectric power plants, and an oil pipeline between the Pakistani port of Gwadar and Kashgar in China’s far west.

Chinese companies have invested heavily in the Gwadar Port since taking over management rights in this deep-sea port on the Arabian Sea in Pakistan’s Balochistan province.

In December 2017, the port of Hambantota in Sri Lanka was opened, enabling it to join other hubs along the Belt and Road route, including Piraeus in Greece and Gwadar in Pakistan.

Southeast Asia A report by the United Nations Conference on Trade and Development estimates that ASEAN will require infrastructure investment of up to US$146 billion per year up until 2025. This group of countries is already benefiting from the building and upgrading of infrastructure in the region, thanks to the Belt and Road Initiative.

The Initiative complements the ASEAN Community Vision 2025, AEC Blueprint 2025 and Master Plan on ASEAN Connectivity 2025, which are highly compatible with the objectives of China’s Belt and Road Initiative.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

61

Paul Mooney

62

Cambodia in particular stands to benefit from improved infrastructure, specifically roads, bridges, ports and airports. Under the Cambodia-China Belt and Road Initiative, China has invested in several large-scale projects in Cambodia, according to a report by Xinhua News Agency on 5 November 2017. The projects include: the 400-megawatt Lower Sesan II hydropower plant at a cost of US$816 million, a 246-megawatt Tatay River hydropower plant costing US$540 million, 16 road projects worth US$1.6 billion, and a US$880-million new airport in Siem Reap province.

In July 2017, the Thai cabinet approved the building of the first phase of a US$5-billion railway project to link the industrial eastern seaboard with southern China through Laos. There will be six railway stations along a 250-km highspeed line linking Bangkok and the northeastern province of Nakhon Ratchasima.

Thai Prime Minister Prayuth Chan-ocha issued an executive order a month early to open the way for the project, which had been hit by delays, including disputes over loan terms. The project is part of a regional transport network connecting Europe, Asia and Southeast Asia, as well as linking Chinese cities with Southeast Asia, including Thailand’s industrial zones and its eastern deep sea port.

Thailand has won terms that appear to contradict critics who have argued that China seeks to monopolise the most important aspects of these projects.

Bangkok says Thai firms will carry out the construction of the project and provide Thai materials, while China will provide railway technology, signal systems and technical training.

Beijing sees Myanmar as an important partner for the Initiative; it is talking to its government about the building of a China-Myanmar economic corridor.

The China Economic Information Service and the Lao Chinese Chamber of Commerce announced in November 2017 that they would jointly host a forum on the opportunities and outlook for Laos-China cooperation.

Africa and Middle East One of the lesser-known areas of the Belt and Road Initiative is East Africa.

On official maps, the Initiative’s blueprint skirts the region before turning towards Europe. However, the Initiative could have a significant effect on the region’s economic integration locally and connections between East Africa and neighbouring areas.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Project of the Century

The southern leg of the Belt and Road Initiative, two westward routes of the Maritime Silk Road, is expected to reach Africa at the Kenyan port of Mombasa.

There it will connect with a rail line inland to Nairobi. The sea route then moves northward towards the Suez Canal and Greece.

If the Belt and Road Initiative goes ahead as planned, it will likely increase Chinese influence on the macro level in Africa, as well as connect East Africa with nearby hubs to the north and east.

Djibouti in east Africa is benefiting from the Belt and Road’s construction of a new free trade zone, which is said to be the largest in Africa.

Through the Initiative, China has become more active in the Middle East.

One example is its effort to have a pacified Syria eventually become a hub of the new Silk Road, building on the pre-war plethora of small traders who commuted between Yiwu, in Zhejiang province, and the Levant.

In September 2017, while attending the United Nations General Assembly in New York, Foreign Minister Wang Yi met Syrian Foreign Minister Walid Muallem, and invited Syria to join the Initiative. According to an official news release by China’s Ministry of Foreign Affairs, Wang told his counterpart that Syria was an important part of the ancient Silk Road, and that Belt and Road construction can serve as a significant opportunity for bilateral cooperation in future. If fighting in the prolonged civil war in Syria subsides, China has suggested a possible investment of US$2 billion in an industrial park for 150 Chinese companies.

Latin America Panama’s accession to the Belt and Road Initiative marked the first time China had signed a specific agreement to incorporate a Latin American country into this Initiative.

On June 12, 2017, the private China Landbridge Group began building the Panama-Colón Container Megaport, which will be capable of handling Super PostPanamax ships.

Other projects under the agreement will involve the maintenance and supply of large and modern ships. A railroad connecting the Pacific and Atlantic Oceans with special economic zones will also be built in Panama.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

63

Paul Mooney

64

Cuba is seeking to increase trade with China by joining the Initiative as a possible “regional node”, enabling the project to extend its reach throughout Latin America and the Caribbean. The Caribbean nation wants to become a hub of maritime and air transport in the region, mainly through its Mariel Special Development Zone.

Arctic Circle - The Silk Road on Ice The Silk Road on Ice via the Arctic is seen as the third pillar of the Belt and Road Initiative. This route will add another sea route to the ones linking the South China Sea to the Indian Ocean, Africa and the Mediterranean, and finally to the South Pacific and Oceania.

Included in this are the Eurasian Land Bridge, which will cross the revamped Trans-Siberian railway, and a section of the Maritime Silk Road (the Northern Sea Route that will cross the Arctic).

The formal name of the Arctic part of the Initiative will be “One Belt, One Road, One Circle,” the circle referring to the Arctic Circle, according to the OBOR Media Centre.

This part of the project has become more important with the faster-than-expected melting of Arctic ice. Scientists now believe a large part of the Arctic will be ice-free by the summer of 2050.

Chinese Premier Li Keqiang met Finnish Prime Minister Juha Sipila in June 2017 in Dalian in northeast China during the World Economic Forum. The meeting was to improve bilateral cooperation in Arctic affairs, with the focus on a Belt and Road project that has an Arctic angle in which Finland could play a key role.

On the Finnish side is a US$3.4 billion “Arctic Corridor” railway that would link Northern Europe with China and Arctic Ocean deep-water ports. The corridor would connect the city of Rovaniemi in northern Finland with the Norwegian port of Kirkenes on the Barents Sea. The project is the brainchild of a group of Finnish academics and business leaders.

With the Arctic Corridor railway, ships could transfer goods from China as well as oil and gas from Arctic fields in Russia westward along the Northern Sea Route to Kirkenes. The cargo would then be offloaded to the railway and sent southward via rail connections to other destinations in Scandinavia, as well as China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Project of the Century

Finland, the Baltic states and the rest of Europe.

Kirkenes is the closest Western port in the Arctic to Asia. Furthermore, the port is usually ice-free, allowing the use of larger ships and cutting costs for icebreaking.

The Northern Sea Route, which runs along the Russian Arctic coast from the Kara Sea north of Siberia, and then on to the Bering Strait, is taking on growing importance under the Belt and Road Initiative.

Melting Arctic ice makes it possible to ship gas by tanker from Siberia’s large US$27 billion Yamal LNG project, in which Chinese firms and development banks have significant stakes. The Arctic Corridor railway could also be joined at the Finnish border to Russia’s rail network, which in turn connects to China.

Overall, the potential of the Silk Road on Ice will take many years of global warming to realise.

Russia was slow to get involved in the Initiative, but has more recently decided to take an active role to ensure that its own regional economic framework, the Eurasian Economic Union (EAEU), is linked to the upgraded infrastructure.

In addition, Georgia has signed free trade agreements with both the EU and China. It is also set to benefit from the interconnection of the Initiative with the Russian-led EAEU. Beijing and Moscow also signed an agreement in June 2016 on the Initiative and EAEU. American Scepticism Fades Until recently, Western countries were sceptical about the Initiative, concerned that the modern-day Silk Road might end up as a one-way project with all roads leading back to China.

Supporters of the Initiative say that the US should get involved, adding that US technology, engineering and construction companies participating in the Initiative can provide best practices and safety standards. Furthermore, the US could use its participation to promote from within China’s adherence to international labour, environmental and corporate practices.

The US and China also have a great deal to gain from cooperation on a wide array of transnational issues, such as monetary stability, climate change, cyber rules, and anti-terrorism.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

65

Paul Mooney

66

However, for this to happen, the US will have to play a more constructive role in the Belt and Road Initiative, analysts say.

There are signs that US business participation in China’s Belt and Road Initiative is no longer as unlikely as was once thought. Matthew Pottinger, a senior director for Asia at the National Security Council, attended the Belt and Road Summit in Beijing in May 2017. He is a key China expert in the Trump administration; his presence at the Beijing conference was the first sign that Washington is aware of the Initiative’s importance as a trans-regional economic project.

American companies are keen to get in on the action. Chinese construction and engineering companies just bought US$400 million worth of equipment from GE to install overseas in 2014, the bulk of sales going to Belt and Road participants. In 2015, however, those orders shot up to US$2.3 billion, reported China Daily in December 2017.

Portuguese-Speaking Countries China is also keen to take advantage of the unique position of Portuguesespeaking countries (PSC) in its ambitious Initiative. The project is very compatible with the development goals of PSC, and China has repeatedly said that it is ready to cooperate with them.

Economic relations between China and PSC are at an all-time high. Bilateral trade rose 29.47 per cent year-on-year between January and November 2017 to US$107.75 billion, according to official Chinese figures published by Forum Macao.

Portuguese Prime Minister António Costa, speaking at the fifth Ministerial Conference of the Forum for Economic and Trade Cooperation between China and the PSC in October 2016, expressed a strong interest in getting involved in the project.

“Portugal is willing to participate in building the new Maritime Silk Road, and make the best use of its strategic position in Europe and the Atlantic Ocean, such as the Port of Sines, to deepen the connection between Asia, Europe, Africa and South America,” Xinhua News Agency quoted Costa as saying.

The large capacity of the Port of Sines makes it excellent for moving many different types of goods; the port is linked to critical railroad networks connecting Portugal to greater Europe.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Project of the Century

67

Conclusion The Belt and Road Initiative is a very challenging undertaking that meshes with China’s dream of becoming a leading global economic power.

Its ambitious projects will take time to complete, their required funding is still insufficient, and benefits will not be immediately visible in many cases. Still, if successful, the Initiative will transform the world economic system, especially the economies of those lesser developed countries cut off from convenient physical access to global markets.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

68

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Portuguese-Speaking Countries Well Positioned for The Belt and Road Initiative

Portuguese-Speaking Countries Well Positioned for The Belt and Road Initiative Paulo Guilherme Figueiredo

3

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

69

Paulo Guilherme Figueiredo

70

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Portuguese-Speaking Countries Well Positioned for The Belt and Road Initiative

Portuguese-speaking countries are well-placed to make great economic strides as participants in China’s new and promising Belt and Road Initiative.

Chinese authorities have made clear that the inclusion of PSC in the Belt and Road Initiative is possible. These countries have a lot to gain from the extension by China of the original geographical scope of the Silk Road Economic Belt and the 21st century Maritime Silk Road Initiatives.

Interest has been growing, particularly with Portugal and Cabo Verde, which are closer to the original routes, and which are also strategically important countries with close ties to Beijing. Timor-Leste and Brazil were represented at a high level meeting during the May 2017 One Belt, One Road Summit in Beijing. Other PSC also stand to benefit, either by inclusion in specific projects connected to the strategies, or through connection to regional “hotspots”, with new infrastructure.

Considering the amount of financial resources made available for the Belt and Road Initiative, a significant boost in trade is expected, particularly on the African continent.

In fact, PSC share a set of characteristics that make them particularly wellplaced to benefit from the strategy.

PSC fare well compared to their regional partners in terms of infrastructure.

All have international airports and none are landlocked. All have, or will soon have, deep water ports. In São Tomé and Príncipe, China Road and Bridge Corporation (CRBC) is preparing to start construction on a new seaport, which the government wants to turn into a centre for regional transshipment.

In Guinea-Bissau, China Machinery Engineering Corporation (CMEC) signed an agreement with the government in 2016 to undertake the construction of similar infrastructure in Buba (south of the capital, Bissau), as well as a new international airport.

Angola In Angola, a massive effort to rebuild infrastructure has been underway for over a decade with the support of China. Thousands of kilometers of roads, railways and other infrastructure have been built with Chinese funding, and the technical know-how of Chinese companies. The new international airport, north of Luanda, is being built by the China National Aero-Technology International China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

71

Paulo Guilherme Figueiredo

Kostadin Luchansky ( Angola Image Bank)

72

Engineering Corporation. Road connections to the new infrastructure are being carried out by China Hyway Group Limited.

According to recent estimates by the China-Africa Research Initiative (CARI) at Johns Hopkins University, Angola received US$6.9 billion from China’s Eximbank between 2000 and 2015. On the African continent, only Ethiopia received more funding (US$7.2 billion). The Economist Intelligence Unit estimates that “Chinese sources are predominant” in new loans contracted by the country since November 2015, worth at least US$11.5 billion. “The government will continue to seek loans from China to enable it to continue with much-needed capital expenditures to build roads and factories,” EIU analysts say.

According to figures recently compiled by Reuters, China’s funding to Angola, including the latest credits from the Eximbank and other sources, is already at US$20 billion, a level of support that has become increasingly necessary due to the collapse of oil revenue over the last few years.

Data from the CARI comparative study of Chinese and US trade and finance policies for Africa indicates that credit to Angola accounted for 11 per cent of the China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Portuguese-Speaking Countries Well Positioned for The Belt and RoadAngola Initiative Luanda,

73

total financing by the Eximbank to the African continent, a percentage similar to that of Ethiopia and higher than that of Kenya (10 per cent), one of the regional “hotspots” for the Belt and Road Initiative. It also adds that Chinese engagement in Africa “emphasises the infrastructure needs” of the continent, and that the construction sector is one of the main destinations of Chinese FDI, along with transport (roads, railways, airports, and ports).

By 2015, Angola was at the top of the list of African exporters to China, accounting for 16 per cent of the total. Chinese imports from Angola grew rapidly between 2002 and 2011, and remained stable between 2011 and 2014. The drop in oil prices caused the export value to decline, but it has picked up recently. In the last decade, Angola was also the eighth largest market for Chinese exports on the continent.

With Chinese-rebuilt Caminhos de Ferro de Benguela connecting the Port of Lobito on the Atlantic with the Democratic Republic of Congo – stretching some 1,300 km – Angola is particularly well placed for future Belt and Road-connected railway projects linking the west and east African coasts.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Paulo Guilherme Figueiredo

74

Kenya and Mozambique On the east coast, Kenya will be a hub for the maritime route, connecting to the interior of the continent with a recently completed standard gauge railway, which garnered an investment estimated at US$3.8 billion. The Chinese project, under a US$60 billion package pledged in December 2015, also includes funding for rail, road and energy infrastructure corridors, linking neighbouring countries (Burundi, the Democratic Republic of the Congo, Rwanda, South Sudan, Tanzania and Uganda).

Mozambique could soon undergo an infrastructure revamp similar to Angola’s, which would give it a major role in the continent´s transport infrastructure. Although the country has drawn attention for its liquefied natural gas (LNG) projects, which will make the country a key global energy source within five to six years, the government is conscious of the need to diversify the economy. In June 2017, Mozambique presented an important set of projects, for which it is now seeking to raise US$2.67 billion in foreign direct investment. One of the major projects involves the construction of a railway connecting the north to the south of the country.

For transport and communications, the government envisages the creation of logistics hubs in the dry port of Dondo (Beira province) and in Montepuez (Cabo Delgado province), to serve the Port of Pemba. New infrastructure is also planned for the ports of Beira and Nacala. Other projects

Portuguese-Speaking Countries Well Positioned for The Belt and Road Initiative

75

presented by the government include 1,700 km of roads across the country in need of rehabilitation and expansion, the Tsatse Hydroelectric Power Station, with a projected capacity of 50 MW of electricity designed for the central province of Manica, the construction of the Namialo-Metoro energy transmission line, and agriculture projects covering a total area of over 115,000 hectares in four provinces.

According to Africa Monitor Intelligence, the government’s initiative was presented as a portfolio of opportunities for investors, but was inspired essentially by the public-private partnerships (PPP) model adopted for the Nacala Corridor.

This was inaugurated on 12 May 2017 and includes a 912-km rail line between the coal mine in Moatize (Tete province) and the port terminal of Nacala-a-Velha in the north. A 200-km stretch of the railroad crosses neighboring Malawi. In September, both countries signed an agreement to further expand the project.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Saint-Louis Studio

Maputo, Mozambique

Figueiredo Mindelo,Paulo Cabo Guilherme Verde

CaboVerdeSite

76

Cabo Verde If a big part of these projects has the potential to play a direct or indirect role in the future Belt and Road strategy, one project of PSC in Africa is a lot closer to being part of it. In Cabo Verde´s northern island of São Vicente, China is helping to create a Special Economic Zone (SEZ), which will focus on services for the shipping and fishing industries, as well as other economic activities linked to the sea. While the details are being outlined, both governments have emphasised the immense potential impact.

Several weeks prior to the June 2017 China-PSC business forum, organised by Macao Trade and Investment Promotion Institute (IPIM), Chinese Foreign Minister Wang Yi underlined, during a quick trip to the archipelago, how important Cabo Verde’s geography is, as it is located between Europe and Africa. His Cabo Verdean counterpart, Luís Filipe Tavares, declared his government’s intention to make the business-friendly country part of the Belt and Road Initiative. The SEZ is expected to begin operations in about three and a half years, giving the China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Portuguese-Speaking Countries Well Positioned for The Belt and Road Initiative

Portuguese-speaking archipelago a bigger foothold in the global Blue Economy.

At the June event in Praia, which brought together over 500 people, including government and business leaders from all Lusophone countries, IPIM President Jackson Chang told Macao Magazine that the Cabo Verdean authorities had expressed their wish to bring in Chinese investment in order to make greater use of Cabo Verde’s potential in maritime technologies and resources.

“We are looking for companies in the interior of China interested in visiting Cabo Verde and perhaps making investments,” Chang said, adding that Cabo Verde is a small country suitable for small and medium-sized enterprises.

At the conference in Praia, participants were eager to know more about the Belt and Road Initiative.

In an interview with Macao Magazine in June 2017, Cabo Verdean Prime Minister Ulisses Correia e Silva called the SEZ “an integrated concept of the maritime economy” including transportation, support systems for fishing operations, specialised services in the training for the merchant marine sector, and services linked to the fishing industry.

“With China as a privileged partner”, he said, “we are making a strong bet on this concept, because it will boost the economy of São Vicente island and will have a major effect on the national economy.”

Portugal The Belt and Road Initiative includes an infrastructure plan aimed at reactivating the old Silk Road between China and Europe through Central Asia, Africa and Southeast Asia. Portugal is keen to make the port of Sines, co-owned by the Port of Singapore Authority, a relevant pole of the Belt and Road Initiative. Tourism and real estate are also areas in which the Portuguese government believes it can rely on for future economic growth. China can play a major role in boosting these sectors, officials believe.

The Portuguese prime minister António Costa said during his visit to China in 2016 that the country wanted to “actively participate” in the Belt and Road Initiative, namely through the port of Sines; the first such bilateral memorandum of co-operation, which mentions Portugal’s participation in the new Silk Road project, was formalised on 11 July 2017 in Lisbon.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

77

Paulo Guilherme Figueiredo

78

Signed by Ferro Rodrigues, president of the Assembly of the Republic, and Zhang Dejiang, Chairman of the Standing Committee of the National People’s Congress, during the latter’s visit to Lisbon, the agreement states that, “within the framework of their responsibilities, both parties will support their governments in improving the documents and consolidating the legal basis for bilateral cooperation in all areas.” It also specifies that co-operation extends to the Belt-Road strategy “in order to create a better legal and political environment for enhancing mutual political trust, promoting economic and trade cooperation and exchanges between the two peoples.”

The Port of Sines, which is undergoing an expansion (known as “Atlântico XXI”, a logistical and industrial platform concept), opens up two avenues for the Belt and Road Initiative -- one to the Atlantic, with multiple maritime connections to PSC: and two, to the Iberian “hinterland,” by train. The railway connecting to the border with Spain is to be modernised, increasing speed and transport capacity. Once completed, the project will also link Sines to the cities of Évora, Portugal’s main aeronautic industry hub supported by a factory operated by Brazilian manufacturer Embraer; and also to Beja, where the airport infrastructure has been lying virtually unused for several years.

Portugal has become a more important partner for China, and in particular for key Chinese public enterprises. The privatisations carried out by the Portuguese state between 2011 and 2013 provided Beijing with more business opportunities in the Portuguese economy - from energy to health care and banking - unlike in any other EU country.

A recent study by the ESADE Faculty of Economics and Law in Spain places Portugal as the biggest recipient of Chinese investment in Europe in proportion to the size of its economy. Among the Portuguese companies in which Chinese companies have taken a substantial stake in recent years are Energias de Portugal (China Three Gorges, with a stake of 21 per cent); Redes Energéticas Nacionais (China State Grid Corporation, 25 per cent); Banco Comercial Português (Fosun, 24 per cent); and Luz Saúde (Fosun). All of these investors have a substantial presence in PSC, with trilateral cooperation being a focus.

In 2014, the two countries marked the 35th anniversary of the establishment of bilateral ties, with a visit to Beijing by former Portuguese President Cavaco Silva. Talks with Chinese President Xi focused on further promoting the China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Portuguese-Speaking Countries Well Positioned for The Belt and Road Initiative

Macaolink

Lisbon, Portugal 79

existing “bilateral comprehensive strategic partnership� - a Chinese concept of cooperation that was global, far reaching and broadened to multiple areas.

This partnership covers the economic, scientific, technological, political and cultural sectors, which includes both bilateral and multilateral levels, and both governments and non-governmental groups. Xi highlighted that the two nations have treated each other equally with mutual respect and trust, and handled bilateral ties from a strategic, long-term standpoint. Portugal is also a founding member of the AIIB, a major financing institution of the Belt and Road Initiative.

At the Forum of Opportunities between Portugal, China and Macao, held in June 2017 in Lisbon, Chinese ambassador to Portugal Cai Run said relations between the two countries were at an all-time high, adding that the Belt and Road Initiative could further reinforce these ties.

This historic achievement, said Cai, is based on high-level bilateral contacts, mutual political trust, pragmatic and fruitful cooperation, as well as close communication and coordination in key international and regional affairs.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Paulo Guilherme Figueiredo

80

During a visit to Portugal in June 2017, Zhang Wei, vice-president of the China Council for the Promotion of International Trade, stressed the importance of the Belt and Road Initiative and the opportunities it opens up for Portugal, namely in tourism, given that China is forecast to have 700 million tourists travelling abroad annually.

At the same event, António Silva, a member of the Portuguese foreign trade agency, Aicep Portugal Global, encouraged Portuguese companies to establish partnerships and exchange experiences with Chinese counterparts, with a focus on the Belt and Road Initiative. He pointed out the areas with the greatest potential: transport, in particular the Port of Sines, renewable energy, and innovation.

Kang Wen, deputy director-general of the Department of Taiwan, Hong Kong and Macao Affairs, Ministry of Commerce, underlined the enthusiasm experienced with the Initiative, which is open to all and offers great benefits with concerted cooperation.

From Portuguese finance for the new Maputo Ring Road, and the soon to be inaugurated Catembe Bridge, both in the Mozambican capital, Chinese investment is very visible throughout PSC as a result of the interest the Chinese government and companies have shown over the years.

At the May 2017 Beijing summit on One Belt, One Road, Timor-Leste Planning and Strategic Investment Minister Xanana Gusmão said his country is assessing its needs, as well as the conditions for participation in the Chinese global strategy.

“The contacts we have been making here (in Beijing) with financial institutions is more to understand what the rules are, the criteria, and how we can apply for loans,” Gusmão said.

PSC Have Strategic Value China’s trade with PSC has grown quickly in the past decade, almost ten-fold as of the end of 2015. Bilateral trade amounted to US$11 billion in 2003, and rose to US$98 billion in 2015. That came even as commodity prices slumped. Additionally, Chinese companies have made a variety of investments in PSC. More than 400 Chinese companies had invested a total of US$6.3 billion by 2015. China has also approved loans worth more than US$945.5 million, with favorable terms for PSC, since the forum was set up in 2003.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Portuguese-Speaking Countries Well Positioned for The Belt and Road Initiative

In addition to Maputo and Luanda, another good example of Chinese investment is Praia, where the local government is striving to attract Chinese manufacturers. An investment hotspot for the authorities is the renewable energies sector, and in particular CERMI, a newly-built centre for training in clean energies just outside Praia, which is equipped with new generation solar panels. The centre trains technicians and experts from Guinea-Bissau and other countries in the West African region, and it is already cooperating with a Chinese electrical equipment provider. However, Cabo Verde has a bigger vision: investments in solar or wind parks, which the country has a dire need of.

The high cost of electricity, which the country is trying to bring down, is considered one of the obstacles for industrial investment in the country.

Just outside CERMI is the future campus of Cabo Verde University, also being built with Chinese co-operation. Huawei signed an agreement in April with NOSI, the government´s IT unit. The project aims to develop and launch e-government end-to-end solutions in education, health, social security, municipalities and land, as well as public records.

A Memorandum of Understanding between China and the African Union, signed in January 2015, plans to link the 54 African states through transport infrastructure projects. Though not officially part of the Belt and Road Initiative, this masterplan for Africa goes hand-in-hand with China´s ambition to boost trade within the continent.

The PSC group has great strategic value. It includes Brazil, the biggest South American economy, which has China as its main trading partner; TimorLeste, a candidate for membership in ASEAN; Portugal, a maritime country, part of the EU market; Angola, a West African country that has become a key oil supplier for China and is a member of the Southern African Development Community; Mozambique, an East African country that will emerge in a few years as a global LNG player and logistics hub; and Cabo Verde and Guinea-Bissau, two countries that belong to the Economic Community of West African States (ECOWAS).

The most recent addition to the Forum on China-Africa Co-operation (FOCAC) and the Macao Forum is São Tomé and Príncipe, situated at the heart of the strategic Gulf of Guinea, less than two hours away from some of the continent´s major cities, such as Lagos, Accra and Luanda.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

81

Paulo Guilherme Figueiredo

82

Overland Silk Road

Moscow

Rotterdam Duisburg

Venice Istanbul

Lisboa

Athens Tehran

Praia Bissau

São Tomé

Nairobi

Luanda

Silk Road Economic Belt Maritime Silk Road Portuguese Speaking Countries route

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Maputo

Portuguese-Speaking Countries Well Positioned for Belt and Road Initiative

83

Khorgas Almaty Bishkek

Urumqi Beijing

Samarkand Lanzhou Xi’an

Dushanbe

Shanghai

Kolkata

Quanzhou Zhanjiang Beihai Hanoi

Fuzhou

Guangzhou Macao Haikou

Colombo Kuala Lumpur

Jakarta

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Macaolink

84

Macaolink

Paulo Guilherme Figueiredo

Rio de Janeiro, Brazil

Dili, Timor-Leste China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Portuguese-Speaking Countries Well Positioned for The Belt and Road Initiative

“The positioning of São Tomé and Príncipe as a services and logistics platform could make it possible to take advantage of opportunities for the future development of the economy,” Prime Minister Patrice Trovoada said in an interview with the Macao Magazine in March 2017. He further noted that his country was well placed to capitalise on projects in air and airport services.

In addition to its membership in ECOWAS, Cabo Verde benefits from its proximity to the European Union - the Portuguese islands of Madeira and the Spanish archipelago of Canarias - and also has preferential access to the US market.

At the recent business forum in Praia, Jin Guangze, managing director of the China-Portuguese-speaking countries Co-operation and Development Fund Management Company, emphasised that Cabo Verde “has a strategic position,” pointing to the potential of areas such as the Blue Economy and renewable energy, in which China has “great skills.”

A small internal market in terms of population size and income (with a per capita GDP of about US$4,000), Cabo Verde is looking for projects that take into account its belonging to an economic community with free circulation of goods and people, as well as trade facilities, namely in customs - a door to Africa with stability and low political and social risks.

In Portugal, on the island of Madeira, authorities are also looking at the Belt and Road Initiative as an opportunity to attract Chinese investment and boost exports, using its geographic location and free trade zone. On 24 March 2017, the regional capital, Funchal, hosted a conference attended by Miguel Albuquerque, president of the Regional Government, and Cai Run, the Ambassador of China in Lisbon. An agreement was signed between the Madeiran executive and the Friends of the New Silk Road Association in order to establish joint initiatives to attract investments.

Considering the privileged location of Madeira, the agreement aims at its possible inclusion in the Belt and Road Initiative. The Madeira Free Trade Zone has a parallel in the Chinese Special Economic Zones. It aims to promote investment and international financial services, industrial and technological parks, technological development, and tourism. Madeira wants to position itself for the Blue Economy, given the vast territorial waters under its jurisdiction, to develop energy resources, aquaculture, tourism and ports.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

85

Paulo Guilherme Figueiredo

Great Tourism Potential PSC group includes countries where tourism is already a major industry Portugal, Cabo Verde and Brazil - and others where it is gaining importance - São Tomé and Príncipe and Mozambique. Then, there are those that are eager to bring in more tourists - Timor-Leste, Angola and Guinea-Bissau - as a way to diversify their economies.

All of them show great potential, considering their extraordinary natural resources, from safari parks to beaches and virgin islands, all largely untapped.

Investments in infrastructure, human resources, and health care sectors are needed in order to enhance the competitiveness of the sector.

For African countries, tourism offers important potential for the diversification of their economic base, in addition to the extraction of natural resources.

Countries such as Angola have been prioritising the development of this sector, important for the increase of revenues and foreign exchange.

A World Travel and Tourism Council (WTTC) survey said the sector will continue to grow between 2016 and 2026, with the projected growth of the global Yallabook

86

São Tomé and Príncipe China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Portuguese-Speaking Countries Well Positioned for The Belt and Road Initiative

middle class. With more purchasing power, according to the WTTC, more people will travel. In China, for example, it is estimated that currently only five per cent of its citizens hold a passport, a situation similar to that of other emerging countries.

According to the WTTC, India will be the fastest-growing destination for leisure travel, followed by Angola, Uganda, Brunei, Thailand, China, Burma, Oman, Mozambique and Vietnam.

In the Travel and Tourism Competitiveness Report 2017, Portugal was rated the best among PSC to visit, in 14th place globally, followed by Brazil, at 27th.

Chinese tourism has been growing steadily in both countries. Cabo Verde has risen to 83rd, with higher scores on the “air transport infrastructure” criteria (43rd overall, with the 2nd highest density of airports in relation to the size of the population), “environmental sustainability“ (44th), and ”price competitiveness“ (49th).

The Cabo Verdean government hopes to join the ranks of the 30 most competitive countries in the world in terms of tourism, and among the top five in Africa by 2021.

Mozambique is already among the continent´s main destinations; it has

Macaolink

been improving greatly its performance since 2015 in the WTTC rankings.

Bissau, Guinea-Bissau China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

87

Paulo Guilherme Figueiredo

88

Macao In Macao, the authorities and institutions dedicated to PSC have been actively positioning themselves to take part in the Belt and Road Initiative. A high-ranking Macao delegation attended the Beijing summit on One Belt, One Road in May 2017, headed by Chief Executive Chui Sai On. Other attendees included Leong Vai Tac, Secretary for Economy and Finance, and Alexis Tam Chon Weng, Secretary for Social Affairs and Culture.

In addition to Hussein Ali Kalout, the Brazilian Secretary for Strategic Affairs, the Macao delegation “represented” the interests of PSC at the Beijing conference. Chui Sai On expressed his interest in Macao’s participation in the national development of the Belt and Road Initiative.

The contribution will also cover the Greater Bay Area Plan, which will promote development opportunities in the Pearl River Delta.

Speaking at a Cabo Verde business forum in June 2017, Kang Wen of the Department of Taiwan, Hong Kong and Macao Affairs under the Ministry of Commerce, highlighted the track record of Macao, and, in particular, that of the Macao Forum, as a services platform to boost trade and investment in PSC. The moving of the Co-operation Fund to Macao should benefit all countries involved, Kang Wen said, adding that new inroads of co-operation are being created with the Initiative, namely in productive capacity.

“The Belt and Road Initiative is open and inclusive,” she said. “All countries can participate and we expect to count on the Lusophone countries.”

At the same event, Jin Guangze, Managing Director of the management company of the China-Portuguese-Speaking Countries Co-operation and Development Fund (CPD Fund), stressed that the financial institution will benefit from the Macao platform. Referring to a number of businessmen interested in applying to the Fund for their projects, Jin pointed out that there are three selection criteria: “strategic character, financial viability - a reasonable return for shareholders within four to five years - and rational investment.”

The CPD Fund was officially announced by then Chinese Premier Wen Jiabao at the Forum’s third ministerial-level conference in Macao in October 2010. The US$1 billion fund for promoting economic co-operation between China and PSC was formally set up in 2013. It focuses on the financing needs of companies in China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Portuguese-Speaking Countries Well Positioned for The Belt and Road Initiative

Forum member states. The 10-year fund, with an initial outlay of US$125 million, is to be jointly sponsored by the China Development Bank and the Macao Industrial and Commercial Development Fund.

Given the know-how and track-record of public and private institutions in Macao, as well as the resources available, the Chinese SAR is well positioned to become an engine for PSC involvement in the Belt and Road Initiative.

To this end, making PSC governments, especially those in Africa, more aware of what the Belt and Road strategy is, and showing them how they can participate in the project and stand to benefit, could be the key to effectively attracting countries that share deep, historical ties to China into its global strategy.

China’s Investment Spree in PSC Country

Angola

Brazil

Company

Project(s)

China National Aero-Technology International Engineering Corporation

New Luanda International Airport

China Gezhouba Group Co. Ltd (CGGC).

Caculo Cabaça dam, Kwanza River, Kwanza Norte province

China Railway 20 Bureau Group (CR20)

New Luanda southwest bay road construction

China Hyway Group Ltd.

New Luanda International Airport road network

China Tiesiju Engineering Group Co. Ltd

New Luanda International Airport road network

China Harbour Engineering Company (CHEC)

Solid waste recycling plant construction in Luanda

Global Safety Technology Co. Ltd

Integrated global security system

China National Electronics Import & Export Corporation

Public records system implementation

China Railway Construction Corporation Ltd.

Cabinda Port upgrade

Sinohydro Engineering Bureau N0.4 Co. Ltd.

Nzeto-Soyo Highway (Zaire province)

CITIC International Contracting Co. Ltd.

Sanza Pombo rice farm

China Merchants Port

TCP Participações, Paranaguá Port managing company - 90% of share capital

State Grid Brazil Holding

CPFL Energia, 54% of share capital

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

89

Paulo Guilherme Figueiredo

90

Hunan Dakang Pasture Farming (Shanghai Pengxin Group)

Fiagril, Lda, 57% of share capital

Chery Automobile

Car factory in Jacareí, São Paulo state

Cabo Verde

Macao Legend

Praia 5-star hotel and casino

Timor-Leste

Guangxi International Construction Engineering (in partnership with local company Li Tyen Development SA)

Construction of an office tower in Dili

China Machinery Enginering Corporation

Bissau International Airport/ Buba Deepwater Port

Shenyang Lan Sa Trading Co. Ltd.

Mansoa thermoelectric plant construction

Fujian Shihai

Construction of fishing port and hotel in Prábis

Huawei

Cell phone network upgrade for Guinea-Bissau Telecom

China Road and Bridge Corporation

Catembe bridge construction, Maputo city

China Road and Bridge Corporation

Incomati bridge construction, Maputo province

Shanghai Electric Power

Ncondezi Power Company, 60% of share capital

Jiangsu Dolphin International Trading Co. Ltd.

Wood trade

China Three Gorges

Energias de Portugal, 21% of share capital

China State Grid Corporation

REN - Rede Eléctrica Nacional, 25% of share capital

Fosun

Banco Comercial Português, 24% of share capital

Fosun

Fidelidade, 85% of share capital

Fosun

Luz Saúde, owned through Fidelidade

Haitong Group

Haitong Bank (former BESI investment bank)

Huawei

Innovation and test center

Level Constellation

Real estate

China Road and Bridge Corporation (CRBC)

São Tomé Deepwater Port

Brazil

Guinea-Bissau

Mozambique

Portugal

São Tomé and Príncipe

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

A Global Megapolis

91

A Global Megapolis José Luís de Sales Marques

4

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

José Luis de Sales Marques

92

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

A Global Megapolis

Macao’s Role in the Greater Bay Area Plan and the Belt and Road Initiative During President Xi Jinping’s official visit to Hong Kong for the celebration of the 20th anniversary of its return to the People’s Republic of China (PRC), Xi presided over the signing of the Greater Bay Area (GBA) Framework Agreement between the National Development and Reform Commission (NDRC) and the governments of Guangdong, Hong Kong and Macao.

This agreement is aimed to improve cooperation and coordination among the aforementioned parties to further integrate those three regions in the Pearl River Delta region into a global megapolis, according to their respective competitive advantages.

The agreement will also implement the principle of one country, two systems, fully and accurately. The ultimate goal of the project is to turn the GBA into a highly competitive world region by the year 2030, making it a high-quality area for living, working and traveling, and a showcase for in-depth cooperation between the mainland, Hong Kong and Macao, and a first-class bay area city cluster.

GBA includes nine cities of Guangdong Province: Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen, and Zhaoqing and the Hong Kong Special Administrative Region (HKSAR) and Macao Special Administrative Region (MSAR), a cluster of cities and regions also known as the Greater Pearl River Delta.

The inclusion of Hong-Kong and Macao into China’s 11th (2006-2010), 12th (2011-2015) and 13th Five-Year Plans (2016-2020) was a major step in the institutional effort to reinforce the idea of “one country,” while retaining the autonomy of “two systems.”

In the last two plans, China’s two Special Administrative Regions (SARs) were given roles in the Belt and Road Initiative, the great Chinese strategy first announced by Xi in 2013. The project became official national policy in 2015 and was enshrined in the Party Constitution at the 19th National Party Congress of the Communist Party of China on 24 October 2017.

This ambitious Initiative, whose internal and external dimensions are like two faces of the same coin, “aims to promote the connectivity of the Asian, European and African continents and their adjacent seas” and to “realise diversified, independent, balanced and sustainable development in these countries,” China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

93

José Luis de Sales Marques

94

according to the State Council action plan on the Belt and Road Initiative, which was promulgated on 30 March 2015.

The plan is a bold initiative presenting China’s vision of globalisation for the 21st century; it is inclusive, participatory and generates inclusive development to all partners along its several corridors of connectivity, in a win-win paradigm of multinational cooperation.

The Five-Year Development Plan of the MSAR (2016-2020) includes a chapter on Macao’s participation in the Belt and Road Initiative as well as the merger of the platform between China and Portuguese-speaking countries and the Belt and Road Initiative.

Moreover, the GBA development plan is also linked to the role of Macao, as it establishes the connections between the platform and the Belt and Road Initiative.

This article will look at the GBA and will offer insights into how integration of the area has evolved from market-driven to institution-driven and the current “led by the market and driven by the government” formulae.

Development of the Pearl River Delta as an Economic Region The pillars of this new megapolis in the making, Guangdong, Hong Kong and Macao, were also at the forefront of China’s historic opening to capitalism and the modern industrial revolution that began in 1979. These important changes were marked by the pragmatic policies set out by paramount leader Deng Xiaoping, which transformed a backwater economy into a powerful economic giant over the course of just 40 years.

It all started in southern China in the marshes, wetlands, small villages and emerging town and village enterprises of Guangdong province. These small towns and villages took advantage of the proximity of Hong Kong and Macao. The former was the champion of freewheeling capitalism and an established light manufacturing and international trade powerhouse, while the small economic enclave of Macao thrived on gambling, tourism and low-tech manufacturing along with significant amounts of accumulated capital ready to be invested in new ventures across the border.

It was Hong Kong, Macao and Taiwan that introduced the ways of capitalism and early Foreign Direct Investment (FDI) into places such as Guangzhou, Foshan, China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

A Global Megapolis

Xinhua News Agency

Guangzhou, China 95

Shenzhen, and Zhuhai, through networks of kinship and guanxi, or relationships.

Shenzhen and Zhuhai were two of the first Special Economic Zones authorised by Beijing in 1984. Hong Kong and Macao were the early windows and doors of the growing industrial export model China was introducing to the world, simple in its principles but complex in its making.

The initial process of economic cooperation in these regions was market-driven induced by China’s reform and opening up; the policies and measures taken by different levels of government expedited these processes, including offering many kinds of incentives to attract foreign investment as well as to push forward rapid urbanisation and infrastructure-building. This trend was driven by exponential growth of world demand for China-made goods. The PRD was the foremost processing and trade-oriented manufacturing cluster in the world.

In 2001, with accession to the World Trade Organization (WTO), a new impetus was given to China’s integration into the world economy. At the regional level, a sub-state process of regional integration and coordination of the Pearl China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

José Luis de Sales Marques

96

River Delta region started taking place after the return of Hong Kong and Macao to China. The historic connections of those territories at the Asian and international level added value and diversity to a region already standing out for its entrepreneurship, connectivity, rich cultural tapestry, openness to the world and economic experimentation.

Evolution of the Pearl River Delta and Birth of the Greater Bay Area The Greater Pearl River Delta Region, including Hong Kong and Macao, benefited greatly from China’s opening up and reform processes, while keeping its cultural particularities as well as economic and legal systems.

Before the return of Hong Kong and Macao to the PRC, the integration process was fundamentally market-driven. Cooperation across the Pearl River Delta was bilateral in nature, with Guangdong-Hong Kong and Guangdong-Macao focusing on improving communications, transportation and coordination in trans-border issues of mutual interest.

While highly successful, this tripartite regional cooperation was also sensitive to external shocks, whether caused by the world at large or by the region.

Two major shocks in the previous 15 years exposed the structural challenges the region faced due to the strong integration of its economies, on the one hand, and their openness to the world, on the other.

The SARS (Severe Acute Respiratory Syndrome) crisis in 2003 triggered intervention by Beijing, which looked for solutions to help speed up the economic recovery of Hong Kong and Macao. The remedy came in the shape of the Closer Economic Partnership Arrangement, a preferential trade agreement that gradually opened the door of the Mainland market to free trade in goods and services from the Special Administrative Regions and encouraged Chinese tourists to visit the two destinations through the Individual Visit Scheme. These measures have had an enduring impact; the individual visas stimulated exponential growth of incoming tourists from China and played a crucial role in the gaming liberalisation process in Macao, which kicked off in 2002.

Subsequent to the 2008 world financial crisis, Guangdong’s export-oriented industries suffered a hard landing, provoked by reduced demand from some of China’s main export markets, namely the US and across Europe. In the meantime, China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

A Global Megapolis

97

first-generation export industries established in and around the coastal areas of the province were encouraged to move to the hinterland as the central government issued stricter environmental policies and standards to reduce industrial pollution.

The spatial integration of the Pearl River Delta aims to achieve multiple goals, including increasing mobility and accessibility of resources across the region and building multiple infrastructures connecting within and across the three vertices of the triangle: Guangdong-Foshan; Hong Kong- Shenzhen; and, MacaoZhuhai. The Hong Kong–Zhuhai–Macao Bridge, set for completion in 2018, is the highest-profile project among dozens of other bridges, highways, high speed train lines and metro lines built in the last five years.

The GBA had a combined GDP of US$1.3 trillion in 2015 (Fung Business Intelligence, May 2017), which makes it the 12th largest economy in the world,

Xinhua News Agency

on a par with Russia. It had a total population of 68 million people as of 2015,

Hong Kong–Zhuhai–Macao Bridge China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

José Luis de Sales Marques

98

the same as Thailand, and more than the UK, making it the most populous major metropolitan area in the world vis-à-vis the Greater Tokyo Bay Area (43.84 million), the New York City Area (8 million) and the San Francisco Bay Area (7.6 million). Three of the major container ports in the world are located in the GBA – Shenzhen (3rd) Hong Kong (5th) and Guangzhou (7th) -- a perfect mirror image of its combined export capacity, second only to the US and Germany, according to InvestHK Annual Report 2016. The GBA is improving its international competitiveness from a processing trade-oriented manufacturing cluster into a high- technology-oriented export region. In the meantime, its economic orientation is shifting to a modern and internationally competitive service economy through the process of regional integration with Hong Kong and Macao.

Along with the two Special Administrative Regions, the GBA is the most globally integrated mega-region in China surpassing the Yangtze River Delta Region and the Bohai Rim. China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

A Global Megapolis Hong Kong

Xinhua News Agency

99

Transformation of the GBA into a Dynamic Economic Region The Framework Agreement on Deepening Guangdong-Hong Kong-Macao Cooperation for the development of the Greater Bay Area, signed on 1 July 2017, is a comprehensive document dedicated to the objective, goals and principles of multi-party cooperation. It combines the central authority of the NDRC with the provincial government of Guangdong and the regional governments of Hong Kong and Macao.

These four parties agreed to improve coordination and to convene annual meetings to coordinate and resolve major problems and issues of cooperation arising from the GBA development process. The goals of cooperation are tailored to each region’s characteristics and competitive advantages. The goals set for Macao are in conformity with previous documents of the Central Government, namely its 12th and 13th Five- Year Plans, as well as MSAR’s cultural and historical background. Those goals are: China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

José Luis de Sales Marques

100

• To take forward its development as a global tourism and leisure centre; • To establish an economic and trade cooperation platform between China and PSC; • To establish an exchange and cooperation base with Chinese culture as its mainstream and ensure the co-existence of different cultures; • To foster the appropriately diversified and sustainable development of the economy.

This new enhanced mechanism for cooperation aims to develop the GBA into a more dynamic economic region, a high-quality living circle, which is an ideal place for living, working and travelling, and a showcase for in-depth cooperation between the Mainland, Hong Kong and Macao. It aims to build together a first-class bay area and world class city cluster. (A translation of the Agreement is available at gia.info.gov.hk).

The principles of cooperation established in the Agreement are dominated by a catchy phrase: to be led by the market and driven by the government. This means that markets will determine the allocation of resources according to the rules of supply and demand.

However, the government will not be a passive onlooker. On the contrary, it will facilitate the flow and optimum distribution of the factors of production and essential elements for living within the region. In other words, the governments of these regions together with the NDRC will supply the hardware and software needed for the market to move toward the optimum distribution of production factors. These facilitations will face challenges, namely harmonising cross-border control mechanisms, customs clearance, transportation networks, capital circulation, people-to-people connections and a smooth circulation of human capital.

Cornerstone of China’s Development Strategy The Belt and Road Initiative is the cornerstone of China’s development strategy and foreign diplomacy; it is a strategy that connects China’s domestic economic development agenda with its engagement at various levels, and with the world economy.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

A Global Megapolis

The most familiar dimension of this Initiative is its connectivity program across six economic corridors, three different continents (Asia, Europe and Africa), over 60 countries, and several high-profile infrastructure projects. But, in its entirety, the Initiative is much more than the sorely-needed roads, railroads, ports and high-speed trains that China is helping to build, redevelop, expand, or administer in Pakistan, Central Asia, Greece, Hungary and elsewhere. It is a grand multi-state cooperative project involving multilateral and bilateral relations, economy, culture, security and people-to-people dialogue.

To finance Initiative-related projects, China created its own Silk Road Fund (SRF), endowed with US$40 billion. Moreover it initiated the process that led to the founding of the AIIB, a multilateral financial institution based in Beijing with a total membership of 84 members as of the end of 2017. The priorities of the bank are as follows: Sustainable Infrastructure – promoting green infrastructure and supporting countries in meeting their environmental and development goals.

Cross-country Connectivity – prioritising cross-border infrastructure ranging from roads and rail lines, to ports, energy pipelines and telecoms across Central Asia and the maritime routes in Southeast and South Asia, and in the Middle East and beyond.

Private Capital Mobilisation – devising innovative solutions that catalyse private capital in partnership with multilateral development banks, governments, private financiers and other partners.

AIIB, endowed with around US$100 billion in capital, was not created exclusively for the Belt and Road Initiative and its geographical scope of activity is clearly the four corners of Asia. The Silk Road Fund, however, as a Chinese stateowned fund, has a wider scope of geographical coverage, with Eurasia as a central focus, and providing equity financing, which AIIB does not.

The Silk Road Fund also does not provide aid funds, since it works as a commercial venture; investments from the Silk Road Fund follow commercial principles and international rules.

The Belt and Road Initiative does not only mobilise outward Chinese investment. It is also the centrepiece of economic priority within the provinces and main cities in the Chinese mainland as well as the Special Administrative Regions.

Hundreds of infrastructure projects, as well as public and private investments China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

101

José Luis de Sales Marques

102

in China’s domestic economic environment, are realised as pertaining to the Initiative or because of that.

The two Special Administrative Regions have been given roles appropriate to their features. Hong Kong as a world level financial hub is actively promoting business opportunities along the six economic corridors that are a part of the Initiative, as well as being a prime market for the internationalisation of the Chinese yuan.

On the other hand, Macao has centred its efforts on the PSC. In the meantime, public and private academic institutions and think tanks are developing efforts to contribute to a clear strategy for Macao’s involvement in the initiative.

Interconnectivity of Belt-Road Initiative and GBA By developing the GBA the central authorities in Beijing and local authorities are integrating simultaneously the development of this regional space constituted by Guangdong-Hong Kong-Macao into the national development strategy of the Initiative. They are also working towards a systemic long-term integration of the two Special Administrative Regions of China into a national space. The GBA is upgrading the quality of living standards in the whole area, building the required infrastructure for efficient circulation of economic resources and maximising its internal and external potential. The goal is to be one of the most important mega-regions in the world by 2030.

In the process of constructing this new regional pole and fulfilling the internal and external roles attributed to each one of them, Guangdong, Hong Kong and Macao are effectively participating in the Belt and Road Initiative. And at the same time, they are also restructuring their own economies in a way that will guarantee sustainable development and convergence with national goals.

Macao’s challenge is to address its internal and external needs in terms of infrastructure development, educational prominence, cultural attractiveness and diversity, and the provision of human capital, economic diversification and entrepreneurship.

Macao must pool together public and private resources and know-how and mobilise all sectors of society in order to serve as a centre for tourism and leisure, including training and education in this area. Furthermore, it must upgrade its role as a platform for the relations between China and PSC, and act effectively as China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

A Global Megapolis

a base for multi-cultural dialogue based on Chinese culture, while diversifying its economy and building the foundation for sustainable development.

How prepared is Macao to contribute to the GBA and Belt and Road Initiative?

Macao must build upon its experience and knowledge of how to interact in a context much wider than the limited horizons offered by its 30 sq km of land area and the additional 85 sq km of maritime jurisdiction offered by the Central Government, in order to grasp the multiple opportunities presented by China’s grand initiatives.

It has to do so to secure a better future for its population, and overcome the vicious circle of a rent-seeking economy, typical of jurisdictions over-dependent on gaming. Much has been written and said about Macao’s participation in the construction of the Grand Bay Area and the Belt and Road Initiative, and how important these initiatives are as opportunities for economic diversification and sustainable development of the region.

However, not much has been said of the systematic aspects of the economy and society at large that require restructuring, re-orientation and upgrading in order to confidently face the tremendous challenges of the present and future.

Macao’s economic over-dependence on the gaming sector has led to the declaratory goal of economic diversification as a top priority of the government’s economic agenda. It is not only about how much of Macao’s GDP and fiscal revenues have been generated by the industry, or how sensitive the sector is to external shocks. It is about the social and economic consequences derived by high growth rates since 2001.

With great rapid economic expansion, they have created tensions between the gaming industry and related economic activities with traditional sectors of the economy, particularly the small to medium-sized enterprises, in terms of uneven competition for labour, capital, access to political contacts, and competition for land.

In spite of the positive impact on the employment rate and the new opportunities and diversified demand for qualified workers, improved income, fiscal revenues and a more cosmopolitan way of life, this over-dependence on the gaming industry has also had a negative impact. This includes rising inflation for all consumer products and services, overpricing, speculation in the land market and income inequalities, all ingredients for social instability.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

103

José Luis de Sales Marques

104

Cities in the Guangdong-Hong Kong-Macao (GDHKMC) Bay area

Guangzhou

Area 7,436 sq km GPD US$284.6 billion Population 14.04 million

Zhaoqing

Area 15,006 sq km GPD US$30.2 billion Population 4.06 million

Huizhou

Area 11,159 sq km GPD US$49.5 billion Population 4.78 million

Zhaoqing Guangzhou Huizhou Foshan

Foshan

Dongguan

Area 3,875 sq km GPD US$125.3 billion Population 7.50 million

Dongguan

Area 2,512 sq km GPD US$99.1 billion Population 8.25 million

Shenzhen Zhongshan

Zhongshan

Jiangmen

Area 1,770 sq km GPD US$46.4 billion Population 3.23 million

Zhuhai

Shenzhen

Hong Kong

Area 2,007 sq km GPD US$283.0 billion Population 11.90 million

Macau

Jiangmen

Area 9,554 sq km GPD US$34.8 billion Population 4.54 million

Hong Kong Zhuhai

Area 1,696 sq km GPD US$32.3 billion Population 1.68 million

Macao

Area 1,104 sq km GPD US$319.3 billion Population 7.37 million

Area 30.5 sq km GPD US$44.7 billion Population 644,900 Source: Ta Kung Pao

Many questions were also raised about how easy money from the mainland would gain access to Macao, leading the central authorities to cooperate with local law enforcement to tighten control of several mechanisms of illegal transfer of funds to the MSAR. Moreover, the goal of economic diversification has been given high visibility in the political discourse of national and local political leaders. It is also enshrined in several national documents, including national five-year plans dating back a decade ago as well as the most recent GBA agreement.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

A Global Megapolis

However, economic diversification is not a walk along the waterfront.

It is a high hill to climb, requiring cooperation between the government and the private sector, balanced policies and a long-term plan. Whatever measures are designed to fulfill those goals, Macao will still have to maintain a stable development of the gaming sector and, ironically, build upon its strengths as a market where there is a wide range of products and services required for its daily operations.

Therefore, the strategic question is how to link the sustainable development of Macao’s economy, with diversification as a component of sustainability, and the MSAR participation in GBA and the Belt and Road Initiative. As a first step, it is important to identify MSAR’s current strengths and weaknesses in engaging in those large projects that are both regional and international by nature.

Strength and Weaknesses of Macao’s Participation in GBA and Belt and Road Initiative Strengths

Weaknesses

Good financial base, strong financial reserves and sound external accounts

Limited international investment experience Direct investment concentrated in HK and the Chinese Mainland

History, culture and language

Competition avoidance; preference for rent seeking deals

Experience in dealing with GBA in manufacturing and traditional services

Inward looking mentality, preference for staying in the comfort zone

Some experience in dealing with PSCs in trading and real state

Limited or no participation in bigger scale investments

Young and qualified professionals

Young talents find it difficult to get quality employment. Deficit in know-how. Conservative policies in recruiting foreign professionals

World leader in gaming

Overdependence on gaming

Well-developed tourist sector

Outbound tourism not significant

Good tertiary education in several areas

Education needs improvement and tertiary education needs further international recognition and qualification

Positive attitude of government in supporting emerging business and diversification

Emerging business is too small in scale, not able to reach external markets on their own China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

105

José Luis de Sales Marques

106

In dealing with participation in the GBA and the Belt and Road Initiative, some business sectors are more relevant than others. At the same time, Macao’s comparative advantages are not limited to business; non-business sectors such as education and culture must also be taken into consideration.

In addition, public finances, the fiscal reserve fund of the MSAR and the resulting Macao “sovereign fund” (in the making) are of great relevance. Therefore, the following paragraphs will be dedicated to a review of the state of Macao’s economy and the process of economic diversification.

With gross gaming revenue (GGR) totalling US$33.2 billion for 20171, a 19.1 per cent year-to-year increase over 2016, Macao’s economy seems firmly set on the road to recovery. This figure is, however, far from the astronomic levels of 2013-14, when GDP recorded its highest level ever, rising to US$55.55 billion.

Some readjustments in the sector, namely reducing the structural weight of VIP gaming in relation to mass-market gaming, were triggered by political and economic developments in Macao’s main gaming market – the Chinese mainland.

On the one hand, the anti-corruption campaign played a role in keeping out high-rollers. On the other hand, restrictive anti-capital flow policies and measures forced certain well-known practices of illegal channels of money transfers out of the PRC to Macao and elsewhere to be more restrained. As a very open economy sensitive to external factors, Macao can do little in terms of policy to avoid those impacts. Nevertheless, after two consecutive years of economic downturn, the first signs of recovery started to appear by the end of 2016 and were sustained throughout 2017, with GDP expected to exceed US$45 billion.

As a result of the aforementioned adjustment process, as well as internal pro-diversification economic policies, the contribution of gaming to Gross Value Added (GAV) of Macao’s economic structure fell from 63.10 per cent in 2013 to 47.15 per cent in 20162. The relative weight of other sectors increased significantly, namely, real estate (7.13 per cent to 10.60 per cent), construction (2.86 per cent to 5.33 per cent), commerce (5.28 per cent to 5.30 per cent), financial activities (3.94 per cent to 6.90 per cent), rentals and commercial services (3.32 per cent to 4.12 per cent), and hotels and restaurants (4.61 per cent to 5.93 per cent).

1. DICJ, http://www.dicj.gov.mo/web/en/information/DadosEstat_mensal/2017/index.html 2. DSEC, Relatório de Análise “Sistema de Indicadores Estatísticos para o Desenvolvimento da Diversificação Adequada da Economia de Macao-2016”, http://www.dsec.gov.mo/getAttachment/4a76d152-e8e5-4c02-b6b79b71a22e4a23/P_SIED_PUB_2016_Y.aspx, 6 January 2018.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

A Global Megapolis

GDP and GDP per capita (2016)

er, still too soon to determine how the quota

100

documents,

idents in Macao during a period of time in

ing revenue and around 30 million visitors arriving every year, the current account balance has been historically positive, with the cit in trade in goods since Macao, a small city with limited resources, imports everything

15%

Nine Guangdong cities in Bay Area

The rest of China* 88%

of

goods

amounted to US$1.25 billion, with imports rising to US$8.9 billion, resulting in a trade deficit of US$7.7 billion. Mainland China was the main trade partner, followed by the

Other 12 cities in Guangdong

85% 12%

for internal consumption. export

Zhuhai

The GDHKMC Bay Area is comparable to a nation by many economic indicators

surplus of trade in service balancing the defi-

the

Zhaoqing

0

GDP (2016)

With the dimension and scale of gam-

2016,

Macao

10,000

gaming and other activities.

For

Huizhou

20,000

is dominated by “export of services,” the amount of expenditures made by non-res-

Zhaoqing

External trade in goods and services

Jiangmen

dealings with other markets are important.

30,000

Dongguan

investment and financial

40,000

Foshan

external trade,

60,000 50,000

Zhongshan

cooperation of residents and enterprises,

GDP per capita

70,000

US$

tion. Among these, the external and regional

Jiangmen

80,000

monitor the process of economic diversifica-

Huizhou

annual report issued by the same bureau to

Zhongshan

Statistics and Census Bureau (DSEC), and an

Foshan

0

there is a set of indicators compiled by the

Dongguan

50

Zhuhai

official

Shenzhen

to

150

Shenzhen

According

200

Guangzhou

dramatic slump of 2014-16.

250

Hong Kong

the recovery of the gaming sector from the

GDP

300 Billion US$

gains of those sectors will stand up against

350

Guangzhou

per cent for the gaming sector. It is, howev-

Macao

per cent to GAV in 2016, compared to 47.15

107

Fast facts of the Guangdong-Hong Kong- Macao Area

Hong Kong

Altogether, they only contributed 38.18

The Bay Area*

* Total GDP of the mainland, Hong Kong and Macao

Utilised foreign direct investment (2015)

The rest of Mainland China

20%

Nine Guangdong cities in Bay Area

80%

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

José Luis de Sales Marques

108

EU. Trade with PSC reached US$83.2 million for imports and less than US$1 million for exports (including re-exports), a negligible figure by any standard. A rough indication of how much potential Macao is missing as, at least, a re-exporter, is that trade between China and PSC exceeded US$100 billion for the first 11 months of 2017, up 20.47 per cent year-on-year, according to a report by Macauhub on 5 January 2018.

Direct Investment – Macao’s business environment is attractive for FDI3, with inward FDI climbing to US$30.5 billion in 2016, the bulk for the development of private gaming infrastructure. The realised FDI of Macao’s residents abroad is, however, modest, with a total of US$2.1 billion in the same period, spread between Hong Kong (37.9 per cent) and Mainland China (32.7 per cent, of which over 80 per cent was invested in Zhuhai, a prefecture-level city). The economic activity of Macao investors in Zhuhai still follows the patterns of 30 years ago, with most investment in the manufacturing industry.

In 2016, there were 1,963 enterprises in Guangdong province with significant Macao investment, employing 110,028 workers and with a yearly revenue of US$7.4 billion, of which 89 per cent was in manufacturing.4 This suggests that on average these investments are in factories or workshops with around 50 workers each. This is a pattern of labour-intensive industries that is being moved elsewhere from the GBA to give way to technologically innovative industries and sophisticated services developing in the mega-region rapidly developing under the GBA plan. There is, however, a great difference between the value of projects actually realised and those that have been contracted for. For example, Macao investors signed 589 investment projects in Guangdong province in 2016 worth US$3.21 billion, of which 89.4 per cent was in Zhuhai, most probably related to the development of the Hengqin New Area of Zhuhai.

If those projects are realised, the total of Macao’s investments in cities in the GBA will soon reach US$4 billion. And it is likely to grow further since new commitments are being announced by Macao officials, both for Hengqin as well as other areas in Guangdong province.

These include investments in infrastructure development and a Traditional Chinese Medicine Innovation and Technology Zone in nearby Zhongshan city, 3. FDI includes investment in equity, profit reinvesting and other capital.

4. See 2) for source.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

A Global Megapolis

109

Population (2015)

fund, the Macauhub reported on 11 January 2018.

Germany

81.7

There are no figures yet from official

Turkey

78.7

sources regarding investment of Macao resi-

Thailand The Bay Area

68.0

the acquisition of a controlling stake worth €15

UK

65.1

France

64.3

million in the Portuguese Global Media Group

Italy

by Macao’s KJN Investment came to light, rep-

South Africa

resenting a fresh outward move by the local group. There is also no available official information on real estate acquisitions by Macaobased investors in Portugal.

Financial Leasing – Those activities related to financial leasing and wealth management are within the scope of emerging indus-

60.8 55.0

Myanmar

51.8

Korea

51.0

Top 10 container ports in the world (2016) 1

Shanghai

37,133

2

Singapore

30,904

3

Shenzhen

23,979

4

Ningbo-Zhousan

21,561

tries encouraged by the MSAR government

5

Hong Kong

19,813

under its policies for economic diversification.

6

Busan

19,455

The same could be said in regard to the use of Macao as a platform for the internationalisation of the Renminbi in the Portuguesespeaking economic space.

As for the role of Macao’s financial institutions in financial leasing, so far the most significant financial activity is mainly as suppliers of capital, making use of the excess liquidity in the system. The volume of loans and rents related to that activity reached US$1.55 billion in 2016. These loans were destined almost entirely for companies operating outside Macao, 88.6 per cent in mainland China and 11.1 per cent in Hong Kong. Ships, aeroplanes, motor vehicles, equipment and machinery are the main real assets benefiting from those leasing activities.

Million

dent and companies in PSC. Recently, however,

68.8

7

Guangzhou

18,850

8

Qingdao

18,050

9

Dubai

14,772

10

Tianjin

14,519

Thoughput (thousand TEUs)

financed by the Macao government’s reserve

The Bay Area vs. major metropolitan areas in the world GDHKMC Bay Area

Greater Tokyo Area

San Francisco Bay Area

New York City

Area 56,000 sq km GPD US$1.3 trillion Population 66.72 million Administrative units included 9 cities+ 2 SARs

Area 17,900 sq km GPD US$0.8 trillion Population 7.6 million Administrative units included 9 counties

Area 36,800 sq km GPD US$1.8 trillion Population 43.84 million Administrative units included 1 capital+ 7 counties

Area 783.84 sq km GPD US$1.7 trillion Population 8.6 million Administrative units included 5 counties

Sources: Wen Wei Po, Ta Kung Pao, Zijin Magazine, IMF, Statistical Communique of China, China Statistical Yearbook, Guangdong Statistical Yearbook, Census and Statistics Department of Hong Kong, Marine department of Hong Kong, Statistics and Census Service of Macao

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

José Luis de Sales Marques

110

Macao

Macao’s financial system acts mostly as financial leasing companies, without further involvement in the technical complexities of the operation. It is also questionable whether, at present, there is enough local know-how to further develop this line of activities. However, it is worth mentioning that financial leasing was identified as one of the promising sectors for Macao’s involvement in the Belt and Road Initiative by speakers at the international conference dedicated to the Initiative, organised by the MSAR government on 12 June 2017.

Macao sovereign fund - With several years of continuous fiscal surplus, the government of Macao SAR has accumulated substantial financial reserves that now stand in excess of US$60 billion, an extraordinary amount considering the small scale of Macao’s economy. These reserves, or part of them, will constitute a “sovereign fund” with the aim to invest in projects able to secure its sustainability.

Investment projects under the GBA and Belt and Road Initiative might offer interesting prospective returns, particularly if they are supported by sound investment appraisals such as those of the AIIB, the multilateral bank based in Beijing and professionally run by an international management team. Macao China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

A Global Megapolis

Macao Government Information Bureau (GCS)

111

could become a member of the AIIB, which Hong Kong recently joined. (Earlier we mentioned 84 members as of late 2017) Cultural Industries - Government support for the development of cultural and creative industries has been one of the pillars of public policies in Macao for the past decade. The Committee of Cultural Industries was founded in 2010, followed by the Cultural Industries Fund in 2013, which was endowed with a budget of over US$20 million every year to support the development of those industries.

They employed 11,000 workers and had a turnover of US$850 million in 2016, and a GAV of US$285 million. There are four areas considered by the government as most relevant to the sector: creative design, exhibitions and cultural entertainment, art collections and digital media, including movie-making, which has the highest turnover of all those sectors.

The highest local content, measured by value-added, is provided by architectural design. Considering Macao’s cultural background and the Portuguese connection, as well as local talented creative minds, cultural industries could be a potential winner in the engagement between Macao and the GBA, as well as the Belt and Road Initiative, taking advantage of a wide market that is waiting to be exploited.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

José Luis de Sales Marques

112

Education - It is well known how much Prof. Lei Heong Iok, the dynamic president of Macao Polytechnic Institute (MPI), has been promoting Macao as the centre for Portuguese-language teaching in China, if not in Asia. It seems an obvious choice, and one that must be promoted in a much wider context.

IFT, the Institute for Tourism Studies, has a solid international reputation for its excellent programmes, as well as students well proven in the industry. As one of the goals set for the GBA strategy for Macao to become an international centre for tourism training and education, IFT is well placed to take advantage of that objective. The same could be said of gaming management and operations, offered by several higher learning organizations in the MSAR. By working closely with the industry, they are able to provide insights and real experience for how the most successful gaming destination by revenue figures in the world is run. Universities and higher education institutions should also actively promote international seminars and workshops on the Belt and Road Initiative and the construction of the GBA. Cultural entrepreneurship - Macao is a base for multi-cultural dialogue with Chinese culture as the mainstream. This is an open invitation for regional and international initiatives in the fields of art, literature, cinema, music, multi-media, and other forms of communication. Macao is well-placed to attract the attention and audience of the Belt and Road countries, PSCs and the Latin world.

Conclusion The GBA and the Belt and Road Initiative are national development plans that are connected primarily through Guangdong, Hong Kong and Macao. Those plans will generate spillover effects that will induce growth and functional integration.

They will also make the GBA an international economic and urban multipolar region, and one of the most important ones in the world. These two projects will be extremely relevant to the process of globalisation with Chinese characteristics that President Xi Jinping has put into motion since 2013.

There is no other way for Macao to proceed on its path of sustainable development than to ride that wave and make the most of it. In this way, it will guarantee the well-being and growing opportunities for its population in a modern and inclusive way as well as the development of Macao’s own cultural and political features, under the principle of “one country, two systems.”

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Maritime Vision

113

The Maritime Vision

5

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Maritime Vision

114

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Maritime Vision

On 20 June 2017, China announced the Vision for Maritime Co-operation under the Belt and Road Initiative, to promote maritime co-operation under the Belt and Road Initiative. This wide-ranging plan highlights three ocean-based “blue economic passages” connecting Asia with Africa, Oceania, Europe and beyond. Portuguese-speaking countries stand to benefit much from this newly promulgated Blue Partnership.

Summary of the Vision In 2013, President Xi Jinping launched the Initiative to jointly build the Silk Road Economic Belt and the 21st century Maritime Silk Road. In 2015, China issued The Vision and Actions on Jointly Building the Silk Road Economic Belt and the 21st Century Maritime Silk Road to promote policy co-ordination, connectivity of infrastructure and facilities, unimpeded trade, and financial integration to achieve shared growth through propelling the Belt and Road construction.

With a view to synchronising development plans and promoting joint actions amongst countries along the Maritime Silk Road, setting up the all-diing and sustainably utilising marine resources to achieve harmony between man and the ocean for common development and enhancement of

Xinhua News Agency

mensional, multi-tiered and broad-scoped Blue Partnership, jointly protect-

marine welfare, the National Development Commission

and

Reform

and the State

Oceanic Administration issued The Vision for Maritime Co-operation to build the 21st-Century Maritime Silk Road.

President Xi Jinping with delegates of the 19th CPC National Congress China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

115

The Maritime Vision

116

I. Background The oceans comprise the largest ecosystem on earth, contributing valuable assets for human survival and a common arena for sustainable development. As globalisation and regional economic integration progress, oceans have become a bridge for market and technological co-operation. Developing the blue economy is ushering in a new era of increased focus and dependence upon maritime co-operation and development. Strengthening maritime co-operation contributes to closer links between world economies and deeper beneficial co-operation. Enhancing maritime co-operation also enables countries to jointly tackle challenges, thereby promoting regional peace and stability.

China is willing to work with countries along the Road, to engage in broad-scoped maritime co-operation and to build co-operation platforms, and to establish a Blue Partnership to forge a “blue engine� for sustainable development.

II. Principles Shelving differences and building consensus. We call for efforts to uphold the existing international ocean order, and to respect diversified concepts of ocean development in the countries along the Road.

Openness, co-operation and inclusive development. We advocate further opening up the market, improving the investment environment, eliminating trade barriers and facilitating trade and investment.

Market-based operation and multi-stakeholder participation. We abide by market rules and international norms, giving play to the primary role of enterprises. We encourage the creation of stakeholder partnerships and promote the broad participation of governments, international organisations, civil society, and industrial and commercial sectors in ocean co-operation.

Joint development and benefits sharing. We respect the will of the countries along the Road, take into account the interests of all parties and give play to the comparative strengths of each. We will plan together, develop together and share the fruits of co-operation.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Maritime Vision

The Silk Roads

117

Source: Xinhua News Agency

III. Framework Leveraging the ocean as the basis for enhancing common welfare, with the theme of sharing a blue space and developing the blue economy, China encourages countries along the Road to align their strategies and jointly build unobstructed, safe and efficient maritime transport channels. Together we will build platforms for maritime co-operation and develop the Blue Partnership, pursuing a path of harmony between man and the ocean, characterised by green development, ocean-based prosperity, maritime security, and innovative growth.

In line with the priorities of the 21st century Maritime Silk Road, China will deepen ocean co-operation by fostering closer ties with countries along the Road, supported by the coastal economic belt in China. Ocean co-operation will focus on building the China-Indian Ocean-Africa-Mediterranean Sea Blue Economic Passage, by linking the China-Indochina Peninsula Economic Corridor, running westward from the South China Sea to the Indian Ocean, and connecting

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Maritime Vision

118

the China-Pakistan Economic Corridor (CPEC) and the Bangladesh-China-IndiaMyanmar Economic Corridor (BCIM-EC). Efforts will also be made to jointly build the blue economic passage of China-Oceania-South Pacific, traveling southward from the South China Sea into the Pacific Ocean. Another blue economic passage is also envisioned leading to Europe via the Arctic Ocean.

IV. Co-operation Priorities Based on priorities to build a mutually beneficial Blue Partnership, efforts will be made to set up new cooperative platforms, jointly develop action plans, and implement cooperative projects. Together, we will embark on a path of green development, ocean-based prosperity, maritime security, innovative growth and collaborative governance.

4.1 Green development Ensuring that the health of the ocean contributes to improving human well-being. China proposes that countries along the Road jointly undertake marine ecological conservation and provide high quality marine ecological services, thus safeguarding global marine ecological security.

Safeguarding marine ecosystem health and biodiversity. Pragmatic co-operation will be strengthened to protect and restore the marine ecosystems, and to conserve rare and endangered species. Cross-border marine ecological corridors will be built. Efforts will be made to jointly monitor, evaluate, preserve and restore the health of mangroves, sea-grass beds, coral reefs, island ecosystems and coastal wetlands.

Promoting the protection of regional marine environments. Co-operation will be enhanced in addressing marine pollution, marine litter and ocean acidification, and in red tide monitoring and pollution emergency responses. Collaborative assessments of the marine environment will be carried out and status reports of the marine environment jointly issued. A China-ASEAN co-operation mechanism for marine environmental protection will be established under the framework of the China-ASEAN Environment Co-operation Strategy and Action Plan.

Strengthening co-operation in addressing climate change. Demonstration projects for recycling and low carbon development in maritime sectors will be China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Maritime Vision

encouraged. China is willing to support small island states in adapting to climate change, and to provide technical assistance in response to marine disasters, sea level rise, coastal erosion and marine ecosystem deterioration. Support will also be provided to the countries along the Road in conducting island and coastal assessments.

Strengthening international blue carbon co-operation. China proposes the 21st century Maritime Silk Road Blue Carbon Program to monitor coastal and ocean blue carbon ecosystems, develop technical standards, promote research on carbon sinks, launch the 21st century Maritime Silk Road Blue Carbon Report, and establish a Blue Carbon co-operation mechanism.

4.2 Ocean-based prosperity Promoting development and eradicating poverty are the common aspirations of the people along the Road. Countries are encouraged to give full play to their comparative advantages in sustainably utilising marine resources, enhancing interconnectivity and promoting the blue economy for a shared future.

Enhancing co-operation on marine resource utilisation. China will work with countries along the Road to jointly survey and develop inventories and banks for marine resources. China will provide assistance to countries along the Road in drafting plans for sustainably utilising marine resources. Enterprises are encouraged to participate in marine resource utilisation in a responsible way.

Participation is also encouraged in assessment of marine resources organised by international organisations.

Upgrading marine industry co-operation. China will join countries along the Road in establishing industrial parks for maritime sectors, and economic and trade co-operation zones, and will promote the participation of Chinese enterprises in such endeavors. Demonstration projects for developing the blue economy will be implemented, and developing countries along the Road will be supported in mariculture to improve livelihoods and alleviate poverty. China will also work with countries along the Road in developing marine tourism routes and high-quality tourism products.

Promoting maritime connectivity. Efforts are needed to strengthen international maritime co-operation, improve shipping networks among countries along the Road, and to establish international and regional shipping centres. Countries China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

119

The Maritime Vision

120

China’s Belt and Road

along the Road are encouraged to enhance co-operation through forging port alliances. Chinese enterprises will be guided to participate in the construction and operation of ports. Projects for the planning and construction of submarine cables will be jointly advanced to improve international communications.

Facilitating maritime transport. Coordination with relevant countries are encouraged in this area. Closer co-operation will be carried out to improve the market environment for international transportation.

Participating in Arctic affairs. China will work with all parties in conducting scientific surveys of navigational routes, setting up land-based monitoring stations, carrying out research on climatic and environmental changes in the Arctic, as well as providing navigational forecasting services. China supports efforts by countries bordering the Arctic to improve marine transportation conditions, and encourages Chinese enterprises to take part in the commercial use of the Arctic route. China is willing to carry out surveys on potential resources in the Arctic region in collaboration with relevant countries, and to strengthen co-operation in clean energy. Chinese enterprises are encouraged to join in sustainable exploration of Arctic resources in a responsible way.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Maritime Vision

121

4.3 Maritime security Efforts will be made to promote maritime security. Co-operation in maritime public services, marine management, maritime search and rescue efforts, marine disaster prevention and mitigation, and maritime law enforcement will be strengthened to enhance capacities for minimising risks and safeguarding maritime security.

Strengthening co-operation in maritime public services. China proposes jointly developing and sharing maritime public services along the Road, encouraging countries to jointly build ocean observation and monitoring networks, sharing the results of marine environmental surveys, and providing assistance to developing countries in this area. China is willing to strengthen co-operation in the application of the BeiDou Navigation Satellite System and remote sensing satellite system to provide satellite positioning and information services.

Co-operation on maritime navigation security. China will shoulder its due international obligations, participate in bilateral and multilateral maritime navigation security, and work with all parties to combat non-traditional security issues, such as crimes on the sea.

Conducting joint maritime search and rescue missions. Under the frameworks of international conventions, China will shoulder its international obligations, and strengthen information exchange and collaboration in joint search and rescue missions with countries along the Road. Countries are encouraged to expand co-operation in information sharing, training and joint drills to enhance capacities in dealing with emergencies at sea, including major disasters and security threats to tourists.

Jointly enhancing capabilities to prevent and mitigate marine disasters. We propose jointly setting up marine disaster warning systems in the South China Sea, the Bay of Bengal, the Red Sea and the Gulf of Aden, and suggest jointly developing marine disaster warning products for transportation, escort, disaster prevention and mitigation. The IOC South China Sea Tsunami Advisory Center will play an active role in providing services to neighboring countries. Efforts will be made to work with countries along the Road to build cooperative mechanisms, set up training centres, conduct joint research and applications in marine disaster prevention and catastrophe response, and to provide technical assistance for countries along the Road.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Maritime Vision

122

Strengthening co-operation in maritime law enforcement. Maritime law enforcement will be boosted under bilateral and multilateral frameworks.

Cooperative mechanisms for joint maritime law enforcement, fishery law enforcement, and anti-terrorism and anti-violence on the sea will be developed and improved. Liaison networks for maritime law enforcement will be established, and emergency plans developed through collective efforts. Exchanges and co-operation among the maritime law enforcement agencies of countries along the Road will be promoted, and necessary assistance provided for training.

4.4 Innovative growth Innovation is one of the main drivers for the sustainable development of oceanbased economies. Efforts will be undertaken to improve co-operation in the fields of marine scientific research, education and training to enhance understanding of the ocean, and facilitate the application of scientific and technological innovations.

Furthering co-operation in marine scientific research and technological development. China will launch a joint Marine Science and Technology Co-operation Partnership Initiative, survey and research the key waters and passages along the Road, forecast anomalies and assess impacts by researching the interactions between monsoons and the ocean, and by conducting geoscience surveys of the continental margin of the Indian Ocean. Further efforts will be undertaken to intensify co-operation in the fields of marine survey, observation technologies, renewable energy, seawater desalination, marine bio-pharmacy, seafood technology, drones and unmanned vessels.

Building platforms for marine technology co-operation. Efforts will be made to facilitate the development of the APEC Marine Sustainable Development Center, the East Asia Marine Co-operation Platform, the China-ASEAN Marine Cooperation Center, the China-ASEAN College of Marine Sciences, the China-PEMSEA Sustainable Coastal Management Co-operation Center, the China-Malaysia Joint Marine Research Center, the China-Indonesia Center for Ocean and Climate, the China-Thailand Joint Laboratory for Climate and Marine Ecosystem, the ChinaPakistan Joint Marine Scientific Research Center, and the China-Israel Seawater Desalination Joint Research Center, so as to improve our capacity to achieve innovation in marine technology.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Maritime Vision

123

4.5 Collaborative governance The Blue Partnership is an effective way for promoting ocean co-operation.

Efforts will be made to promote policy coordination, deepen common understanding, enhance mutual political trust, and build bilateral and multilateral cooperative mechanisms, and to jointly participate in ocean governance.

Developing mechanisms for co-operation in the blue economy. The Global Blue Economy Partnership Forum will be launched to promote new concepts and best practices and to boost marine industrial integration and capacity co-operation. Efforts will also be made to jointly develop international blue economy classification standards. Ocean-related public finance products will be explored to support the development of the blue economy.

Jointly conducting marine spatial planning and application. Cross-border marine spatial planning for blue growth will be promoted, common principles and technical standards implemented, and best practices and evaluation methods shared.

Strengthening co-operation through multilateral mechanisms. China supports the development of mechanisms for ocean co-operation and the formulation of policies and rules under the Asia Pacific Economic Co-operation (APEC), the East Asia Leaders’ Meetings, the China-Africa Co-operation Forum, and the ChinaPacific Island Countries Economic Development and Co-operation Forum. China will boost co-operation with multilateral cooperative organisations and support the Intergovernmental Oceanographic Commission of UNESCO (IOC/UNESCO), the Partnership in Environment Management of Seas of East Asia (PEMSEA), the Indian Ocean Rim Association, and the International Ocean Institute in jointly organising and promoting major programs and projects.

V. China in Action Since the implementation of the Belt and Road Initiative three years ago, the Chinese government has been actively seeking ocean co-operation with countries along the Road.

High-level guidance and facilitation: China has signed intergovernmental agreements, MOUs and joint statements for ocean co-operation with countries such as Thailand, Malaysia, Cambodia, India, Pakistan, the Maldives and South Africa.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Maritime Vision

124

Increasing financial investment: The Chinese government has mobilised domestic resources and set up the China-ASEAN Maritime Co-operation Fund and the China-Indonesia Maritime Co-operation Fund. We have also implemented The Framework Plan for International Co-operation for the South China Sea and its Adjacent Oceans. Meanwhile, the Asian Infrastructure Investment Bank and the Silk Road Fund have provided capital support for major ocean co-operation programs.

China’s regions promoting opening-up: The Chinese government has encouraged economic zones in China to leverage local advantages. It has supported Fujian Province in becoming a core area of the 21st century Maritime Silk Road and promoted the development of the Zhejiang Marine Economy Development Demonstration Zone, the Fujian Marine Economic Pilot Zone and the Zhoushan Archipelago New Area.

Projects being implemented: Progress has been achieved in implementing a series of projects, including the Malaysia Malacca Seaside Industrial Park, the Pakistan Gwadar Port, the port+industrial park+city mode of integrated development of the Kyaukpyu port in Myanmar, the Colombo Port City and the Phase II Hambantota Port Project in Sri Lanka, the railway linking Ethiopia and Djibouti, the railway between Mombasa and Nairobi in Kenya, and the Piraeus port in Greece.

China is collaborating with the Netherlands in developing offshore wind power generation, and with Indonesia, Kazakhstan and Iran in implementing seawater desalination projects. The connectivity of submarine communication has been remarkably enhanced and the Asia-Pacific Gateway(APG) submarine optical fiber cable is already in operation.

We look forward to creating opportunities and seeking common development to protect our blue home, and collectively draw up the blueprint for the 21st century Maritime Silk Road.

Source: Xinhua News Agency, http://news.xinhuanet.com/english/2017-06/20/c_136380414.htm

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

About the Authors

Dr. Thomas Chan is the Director of the One Belt One Road Research Institute, Hong Kong Chu Hai College of Higher Education. He served as head of the China Business Centre of the Polytechnic University of Hong Kong from 1992 to 2016.

Chan has served as a consultant to the World Bank (1992) and as a Hong Kong affairs advisor to the Chinese government (1994-1997). He has been a member of Hong Kong’s Central Policy Unit (2013-2015). He served as an Expert Advisor to the Hong Kong 2030: Planning Vision and Strategy of Hong Kong’s Planning Department. Chan is President of the Maritime Silk Road Association (Macao) and writes extensively in newspapers, magazines and scholarly publications.

Paul Mooney is an American journalist who reported from Burma, China, Taiwan, and Hong Kong for more than 30 years. He has a Master’s degree in International Affairs from Columbia University. He has been on staff at Reuters, Newsweek, the Far Eastern Economic Review, the South China Morning Post, and Knight-Ridder Financial News. His articles have also appeared in leading publications and websites around the world. Mooney, who reads and speaks Chinese, was based in Beijing for 18 years.

Paulo G. Figueiredo is a political and economic affairs researcher and analyst, focussing on emerging markets in Africa. He holds a Master’s degree in Management from the Catolica Lisbon School of Business and Economics, Portugal, 2017-2018. He is a member of the New Silk Road Friends Association (Portugal). He has extensive experience in journalism between 2002 and 2012, covering business, the United Nations and African countries. He worked in the Portuguese government from 2013 to 2016.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

125

About the Authors

126

Dr. José Luís de Sales Marques has been President of the Board of Directors of the Institute of European Studies of Macao since January 2002. A graduate of the University of Porto, he has worked for the Macao government since 1983. In 1987, he became department head of the Macao Government Tourism Office. From 1993 to 2001, he was President of Leal Senado (City Hall), Macao’s most historic institution. He also served as Chairman of the Macao Environmental Council between 1998 and 2000.

Sales Marques is the president of the Council of Macanese Communities, a member of the Board of the Portuguese School Foundation and of the Board of Trustees of the Rui Cunha Foundation. He has been Vice-President of the Maritime Silk Road Association (Macao) since 2006.

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Website References

127

1) Xinhua Silk Road Information Service http://en.silkroad.news.cn/?gclid=CjwKCAiAm7LSBRBBEiwAvL1-L-tc20bFafLD0tuUqjX0OMbnjuIJWJLVwc4UeXQdWYWUXrgVqwNrjBoCpuIQAvD_BwE 2) Initiative on Promoting Unimpeded Trade Cooperation along the Belt and Road Released in Beijing http://english.mofcom.gov.cn/article/newsrelease/significantnews/201705/20170502578235.shtml 3) Full text: Vision for Maritime Cooperation under the Belt and Road Initiative http://www.china.org.cn/world/2017-06/20/content_41063286.htm 4) Vision and Actions on Jointly Building Silk Road Economic Belt and 21stCentury Maritime Silk Road http://en.ndrc.gov.cn/newsrelease/201503/t20150330_669367.html 5) State Council of the People’s Republic of China (Belt and Road Initiative) http://english.gov.cn/beltAndRoad/ 6) The Belt and Road Initiative http://www.xinhuanet.com/silkroad/english/index.htm 7) Full text: Joint communique of leaders roundtable of Belt and Road forum http://news.xinhuanet.com/english/2017-05/15/c_136286378.htm 8) Full text: List of deliverables of Belt and Road forum http://news.xinhuanet.com/english/2017-05/15/c_136286376.htm 9 ) Essential guide to understanding Belt and Road Initiative http://news.xinhuanet.com/english/2017-05/13/c_136279142.htm China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Website References

128 10) Backgrounder: Projects underway under Belt and Road Initiative http://news.xinhuanet.com/english/2017-05/10/c_136271092.htm 11) Backgrounder: Keywords on Belt and Road Initiative http://news.xinhuanet.com/english/2017-05/06/c_136261504.htm 12) Chronology of China’s Belt and Road Initiative http://news.xinhuanet.com/english/2016-06/24/c_135464233.htm 13) Belt and Road http://beltandroad.hktdc.com/en 14) Silk Road Fund http://www.silkroadfund.com.cn/enweb/23773/index.html 15) One Belt One Road Research Center (Chinese) http://www.ciis.org.cn/chinese/node_544601.htm 16) Belt and Road Portal https://eng.yidaiyilu.gov.cn 17) Belt and Road Initiative http://www.beltandroad.gov.hk 18) HKTDC Research http://china-trade-research.hktdc.com/business-news/article/The-Belt-andRoad-Initiative/The-Belt-and-Road-Initiative/obor/en/1/1X3CGF6L/1X0A36B7.htm 19) Asian Infrastructure Investment Bank https://www.aiib.org/en/index.html

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

Glossary

129

AIIB Asian Infrastructure Investment Bank

ASEAN Association of Southeast Asian Nations

BRICS Association of five major emerging national economies: Brazil, Russia, India, China and South Africa

CERMI Centre of Renewable Energy and Industrial Maintenance of Cabo Verde

COSCO China Ocean Shipping (Group) Company

EU European Union

FDI Foreign Direct Investment

GBA Greater Bay Area

GDP Gross Domestic Product

IMF International Monetary Fund

IPIM Macao Trade and Investment Promotion Institute

IOC Intergovernmental Oceanographic Commission

IT Information Technology

LNG Liquefied natural gas

Macauhub Macauhub News Agency

MOU Memorandum of Understanding NDRC National Development and Reform Commission (People’s Republic of China)

NOSI Núcleo Operacional da Sociedade de Informação – Cabo Verde

OBOR One Belt, One Road

PRD Pearl River Delta

PEMSEA Partnerships in Environmental Management for the Seas of East Asia

PSC Portuguese-speaking countries

SAR Special Administrative Region

UNESCO United Nations Educational, Scientific and Cultural Organization China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

The Maritime Vision

132

China’s Belt and Road Initiative The role of Macao and the Portuguese-speaking countries

C

hina’ s Belt and Road Initiative is one of the most important diplomatic and economic projects of our times, one that needs continuing in-depth

coverage given its size and complexity. This book aims to provide the public with a comprehensive and easy-to-understand guide on this great national project. It also explains the role of Macao and the Portuguese-speaking countries in the Initiative and in the Greater Bay Area, another important national project of the 21st century.

The Initiative has the ambitious goal of remaking the world’s economic and political map, with China sharing prosperity with business partners worldwide.