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bne October 2019 Central Europe I 35
make its decision but perhaps, Ukraine will find a better choice that will have better economic consequences for its citizens," Bolton said during a visit to Kyiv. "Military and sensitive technologies should not end up with adversaries or potential adversaries."
In response, China urged the US not to interfere in the “internal and external affairs" of Ukraine, Beijing’s ambassador to Ukraine Du Wei said on August 30.
From a broader perspective, global poli- tics are also likely to determine the impact of the BRI over the next decade. A newly released report from BRI consultancy Silk Road Associates, compiled in partnership with global law firm Baker McKenzie, says that the 2020s could be a "golden era for emerging market infrastructure invest- ment" – but only if "leading economies can find ways to overcome geopolitical concerns to fund projects multilaterally, and private global capital can align with China's Belt & Road Initiative in
an ongoing and sustainable way."
This is the most optimistic of the five scenarios laid out in the BRI & Beyond Forecast published on September 11. The scenario sees investments of up to $1.32 trillion over the 2020s. By con- trast, the worst-case "Uni-Polar Model", which "sees the impacts of a signifi- cant recession coupled with increas- ing nationalism and more aggressive competition from other nations, values potential BRI-related investments in the 2020s at only $560bn."
A controversial investor
But the pressure isn’t always external. There has been an upturn in anti- Chinese sentiment in the Central Asian countries that border the East Asian giant, as while the billions of dollars poured into their transport and energy infrastructures are welcomed by politi- cians, some citizens fear a colonisation by stealth from Chinese investment in their most important physical assets, not to mention debt burdens mounting up for future generations.
A 2018 report from the Washington- based think tank the Center for Global Development found that in three Central
Asian economies, namely Kyrgyzstan, Mongolia and Tajikistan, future BRI- related financing will “significantly add to the risk of debt distress”, and it warns of similar risks in the small Balkan economy of Montenegro.
In Kazakhstan, protests have been ongo- ing for days in the remote oil town of Zhanaozen against aspects of Kazakh- stan’s growing investment reliance on Beijing, and have taken place (though in smaller numbers) in larger Kazakhstani cities including the capital Nur-Sultan. Zhanaozen has a reputation as a flash- point for unrest in Kazakhstan; following months of strike action, the authorities shot 16 rioters dead in December 2011.
The protesters are urging the Kazakh government to cease accepting loans from China. They are also challenging the official plan to construct 55 industrial facilities with Chinese assistance, and tried unsuccessfully to pressure President Kassym-Zhomart Tokayev to scrap his visit to China that started on September 11.
Although the demands of the protest- ers are unlikely to be met, the rallies
ref lect wider anti-China sentiments. These sentiments have been exacerbated
despite participating enthusiastically in the annual 16+1 forum that typically results in announcements of billions
of euros of funding and deals – though there is some scepticism about how many of these result in concrete invest- ments and how long the process takes.
Chinese investment in the region started with infrastructure projects, with early examples such as the Zemun-Borca Bridge, otherwise known as the “China- Serbia Friendship Bridge”, in Belgrade. This helped put to work the excess capacity of China’s huge engineering companies as economic growth within China started to slow. But Chinese investors have since branched out into other sectors, starting with the snapping up of cheap industrial assets in the wake of the international financial crisis.
This trend has continued; the RHG/ MERICS report finds that in 2018, “Chinese capital was spread more evenly across sectors compared to 2016 and 2017. Investment declined in transport, utilities and infrastructure, and real estate. The biggest increases were recorded in financial services, health and biotech, consumer products and services, and automotive.”
“Besides partnering up with dubious characters, Great Wall doesn’t seem to be very good
at doing the math either”
by constant news of China’s so-called “re-education camps”, which are said to hold thousands of ethnic-Kazakh citizens of China in Xinjiang.
There have been similar events in Kyrgyzstan recently. Chinese company Zhong Ji Mining has suspended its operations at Solton-Sary gold mine in the east of Kyrgyzstan following
a mass brawl between local residents and company workers in August.
A high-profile failure
Far from the border with China, the countries of Central and Southeast Europe have been wary about accepting investment and soft loans from Beijing,
One of the players that emerged in this increasingly diverse wave of investment was a conglomerate named CEFC China Energy that embarked on an acquisition spree across Central and Eastern Europe. It targeted not only energy assets, such as Romania’s Rompetrol Rafinare and Russia’s largest oil company Rosneft, but also a raft of assets in the Czech Republic and Slovakia in particular, including Czech top-tier football club Slavia Prague, hotels and office buildings.
But before several of its announced deals had time to close, rumours of serious financial problems at CEFC surfaced, and the company defaulted on its bond payments. Then it was reported that the
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