China Reform Monitor: No. 993

September 27:

China and Bangladesh are in talks to establish “a special economic zone for Chinese companies” to support a “high wave” of Chinese investment into Bangladesh over the next 3-5 years, Ambassador to Bangladesh Li Jun told The Daily Star. Li said rising labor costs and economic restructuring in China is forcing businesses to relocate to developing countries like Bangladesh, for cheap labor. In fiscal 2011-12 Bangladesh’s exports to China totaled $320 million, while imports’ from China were $5.9 billion. To right this massive trade deficit Li said China is offering zero tariff rates on 4762 products from Bangladesh and beginning next year that number would be raised to over 7000. Li stressed that “in a bid to have a positive impact on the trade balance” Chinese firms in Bangladesh want to sell to China, not the U.S. or Europe.

In the wake of large-scale protests this month against Chinese merchants in Nairobi, Kenya the African country’s Vice President Kalonzo Musyoka and several cabinet ministers attended a luncheon at the Chinese embassy. Over lunch Musyoka “offered an apology to China” for the anti-Chinese street demonstrations, Kenya’s Daily Nation reports. He said all Chinese entrepreneurs in Kenya will be protected “as long as they have valid immigration documents” and that “diplomatic channels” will be used to deal with those without permits. China’s ambassador to Kenya Liu Guangyuan urged Musyoka not to “allow anyone to undermine the relations between these two countries.” He said bilateral trade and investment volume would continue to grow apace with the number of Chinese tourists and entrepreneurs going to Kenya.

September 28:

Citing risks to U.S. national security President Barack Obama has evoked the Defense Production Act to force a Chinese company to divest in four wind farm projects near a Navy base in Oregon that houses a drone aircraft training facility. The order marked the first time in 22 years a president has blocked a business deal on national security grounds. The wind farm sites are near a naval weapons training facility that tests remotely piloted unmanned aerial vehicles. The president’s order bars the Chinese-owned wind turbine maker Ralls Corp. from any ownership position the wind farms, The New York Times reports.

October 2:

The South China Morning Post reports that former President Jiang Zemin, 86, played a key role in Beijing's decision to harshly punish Chongqing Party chief Bo Xilai and “continues to work behind the scenes to influence key personnel decisions before the 18th national congress slated for November 8.” Jiang reportedly provided crucial support that broke a months-long impasse over how severely to punish Bo. Hu and Xi had agreed to oust and harshly punish Bo, but they met resistance because Bo is the “princeling” son of a revolutionary elder and is popular among leftists. His downfall may have helped reformists lead by Guangdong party secretary Wang Yang. Wang, a one-time Bo rival, was the first cadre to publicly denounced Bo at a provincial party committee meeting the day after the Politburo decision.

October 3:

An alliance of civil society groups in Myanmar has called for the suspension of construction on the 800km long Shwe oil and gas pipelines from Burma’s western coast to Yunnan. The alliance called on Myanmar’s government to enforce safety regulations, ensure transparency and conduct environmental and social impact assessments before construction is restarted after the rainy season. The pipelines passes through 21 townships across Burma and the remaining 20 percent of its construction will be in two areas: the northern Shan State highlands controlled by the Kachin rebels and the Arakan Roma mountain range. The Irrawaddy reports that construction has already damaged farmlands, roads, lakes and groundwater, religious grounds, watershed areas, forests, marine life and coral reefs. Opponents claim double the amount of land has been used for pipelines than promised and landowners have received less compensation than expected.

[Editor’s Note: The Shwe pipeline project is a joint venture between China National Petroleum Corp. and Myanmar Oil & Gas Enterprise. It is scheduled to be completed in May and are expected to start transporting gas and oil in September.]