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China Reform Monitor - No. 1342

A new push for academic patriotism;
Second thoughts about the BRI

Edited by Joshua Eisenman
September 18, 2018

August 2:

Nigeria is the latest African country to consider adopting China's yuan as a reserve currency,
Quartz reports. Two months after inking a $2.5 billion currency swap with China to boost its reserves and facilitate bilateral trade, Nigeria has begun selling yuan to local businesses. The deal is intended to ease the Nigerian naira's slide against the U.S. dollar since 2015, which followed the drop in global oil prices. As dollar reserves dwindled, the ability of local businesses to pay for imports was hobbled. Now Nigeria is turning to the yuan as an alternative currency so businesses can trade with China without first converting to dollars. Other African countries are also considering a similar policy, Quartz reports.

August 8:

The CPC has launched a campaign to "enhance patriotism" among academics and intellectuals,
the China Digital Times reports. The campaign will be "launched mainly among young and middle-aged intellectuals at schools, research institutes, enterprises and public institutes," to strengthen their political consciousness, thereby improving their sense of identity with the Party and the country, read a notice from the CPC Central Committee's Organization Department and the Propaganda Department. "To achieve the Chinese dream of rejuvenation" teachers and students are being required to participate in patriotism-themed activities and training and study Marxism and Xi Jinping Thought," the official Global Times reports.

To ensure the campaign's success, authorities will ask intellectuals to integrate patriotism education with their personal work through seminars, training and daily studies. The campaign is a response to rising discontent among intellectuals, some of whom have begun to question Xi's policies. "It is about indoctrinating academics, teachers and ‘intellectuals' to ensure they all support the party as led by Xi Jinping under the banner of promoting patriotism. The party document makes this clear. No one will be considered patriotic or loving China or acting in the interest of China unless [they] support the party line as laid down by President Xi," said Steve Tsang at the School of Oriental and African Studies in London in
comments carried by the South China Morning Post.

August 13:

In the first half of 2018, financing associated with China's Belt and Road Initiative (BRI) dropped considerably,
the Asia Times reports, citing the Chinese Ministry of Commerce. The slowdown reflects the fact that the most viable projects have already been funded, while concerns are mounting among both domestic experts and foreign borrowers. Some fear that the combination of low-interest rates and China's reluctance to grant debt forgiveness could leave many countries with mushrooming debt payments. "China has spent billions of dollars overseas. Yet, national wealth, including the $3 trillion in foreign reserves, has been accumulated by the sweat of generations," wrote Xu Zhangrun of Tsinghua University in an essay entitled "Imminent Fears, Immediate Hopes". Xu added that: "Recently, during the China-Arab Forum, it was announced that $20 billion would be allocated to set up a so-called ‘Reconstruction Special Plan' for Arab countries. Yet the Gulf nations are rich in oil, so why is China, which still has hundreds of millions of poor people, playing such a big role?"

August 18:

"The British expanded the empire through conquest, China understands a subtle approach, which is sovereign debt. It is now the ammunition of choice for China to penetrate developing countries and get them to suit its expanding economic and military interests,"
Kenya's The Nation notes. China controls 66 percent of Kenya's bilateral debt and, in order to repay it, the African nation has adopted austerity measures and increased taxes on staple products, including petroleum. As The Nation puts it: "The Trojan horse in form of the sweet loans is turning out to be anything but a gift. If not tamed, the loans from China will continue to subject poor nations into new rounds of dependency, and therefore, will lead them down a path to more underdevelopment." Kenya, like many African countries, developed a "Look East" foreign policy in order to attract Beijing's soft loans and investment. But borrowing from China for infrastructure now faces pushback from local communities, opposition political leaders, and international institutions like the IMF and World Bank.

August 20:

The Prime Minister of Tonga, Akilisi Pohiva, said the small Pacific Island nation is struggling to repay the $160 million it borrowed from China's Export-Import Bank and urged other Pacific Island nations facing the same problem to use the Pacific Islands Forum to lobby Beijing for debt relief. "I think these small countries will eventually come together to find a way out,"
Pohiva told the Australian Broadcasting Corporation
. The next day, however, he released another statement: "After further reflection, I now believe that the Pacific Islands Forum is not the proper platform to discuss this debt issue. Each Pacific Island country [should] independently seek solutions through bilateral channels." It was unclear what caused the abrupt change, but according to Graeme Smith of the Australian National University: "The Chinese contractor gave assurances privately to Tongan Government officials not to worry, that down the line this debt would be forgiven. This is part of the pitch when a loan is being sold at the beginning. And it's disingenuous. China does forgive loans, but only zero interest loans. It has almost no record of forgiving concessional loans."

Related Categories: China; China and East Asia Program

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