China Reform Monitor: No. 1112

June 26:

By year’s end China will dedicate $100 billion to establish an Asian Infrastructure Investment Bank (AIIB) to finance large infrastructure projects that boost connectivity among Asian countries, reports UzReport Information Agency. The decision will be formally announced after a two-day multinational conference beginning on June 28 in Beijing entitled Infrastructure Connectivity in Asia-the Financing Challenge. Twenty-two countries have indicated their interest in the AIIB, which will function like the World Bank and Asian Development Bank (ADB), but with its own procurement guidelines. One of the infrastructure projects funded by the AIIB will be a direct railway link between Beijing and Baghdad, part of China’s ‘new silk road’ project. The ADB is able to provide around $13 billion annually in new lending, but for Asia to maintain its current growth trajectory AIIB needs to provide $8 trillion over the next decade on infrastructure projects.

June 27:

More than 1,000 employees of the state-owned China Machinery Engineering Corp. (CMEC) remain stranded in war-torn Iraq with dwindling food and water supplies after the failure of two missions to evacuate them. Workers were to be airlifted via helicopter from their camp in Samarra on June 22 and 23, but no helicopters came. The company then attempted to evacuate employees on buses, but the first bus was stopped by Iraqi troops near Baghdad and forced back to Samarra. China’s Embassy in Iraq has refused to respond to questions about the failed evacuations. In August 2012 CMEC was contracted to build the new $1.2 billion power station in Iraq, the Shenzhen Daily reports.

[Editor’s Note: Iraq is combatting an offensive by the jihadist group the Islamic State of Iraq and the Levant that has overrun swathes of five provinces in the north and east, killed over 1,000 people, displaced hundreds of thousands, and threatens to tear the country apart.]

June 29:

Beijing is developing a “preliminary research study” on the construction of an 1,800 km rail link connecting Kashgar, Xinjiang with Pakistan’s deep-sea Gwadar Port on the Arabian Sea. According to Chinese officials, the new rail link’s costs will be inflated by complicated geographic conditions on the Pamir Plateau and Karakorum mountains, and recurrent extremist attacks along the route, which includes Islamabad and Karachi. China and Pakistan have already signed a multi-billion-dollar deal to construct an Economic Corridor connecting Kashgar with Gwadar including repairing the existing Karakorum road link, though some have questioned the prudence of such investments in view of present conditions, Pakistan’s The News reports.

July 1:

The security of military bases on Hainan Island, the province responsible for administering disputed territories in the South China Sea, is being threatened by illegally-built high-rise buildings and fake tourists seeking access to sensitive sites for intelligence collection. Only a tiny fraction of the 4,800 local government and military bodies charged with protecting such facilities are currently doing their jobs properly, Reuters cited senior military officers as saying. “Fake companies or sight-seeing tours are often used as pretexts by outside entities to approach sensitive Chinese facilities for the purpose of gathering military secrets,” said one officer. One local government allowed a foreign firm to build villas inside a base. “There are more than 1,000 high-rises that exceed their approved heights inside the flight security perimeters of our air bases, leading to the closure of nearly 20 bases and about 100 accidents,” said another officer. In response Beijing has passed a new law to protect military bases.

July 2:

President Xi Jinping, chairman of the Central Military Commission, recently signed an order approving new regulations for military personnel allowing them to have two children if one of the parents is a “single child.” According to the official PLA Daily: “The decision is of great significance for implementing the ‘second child for one-child family’ policy in the military and protecting the reproductive rights and interests of the service persons.”