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The “Silk Railway” leads to Pyongyang

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Besides modernizing the Korean peninsula’s whole network, the railway cooperation between the two Koreas, ratified on June 26 last, will permit the connection to the Trans-Siberian Railway, which can be defined as the starting point of what is called “The Silk Road of the XXI Century” – in more precise terms the construction of a new”Silk Railway” as a bridge connecting two worlds, with a clear reference to the ancient Silk Road that united China with the territories of the Roman Empire. Instead, this rail network will connect South Korea to North Korea and – through the Trans-Siberian Railway – toEurasia, so as to allow the fast movement of people, goods and resources.

This agreement seems to have been the real goal of the joint declaration between the two Koreas on April 27 last – the day of the historic Panmunjom Summit – to open up to the world.

It is a grand program that could represent the mainstay of a new economic roadmap for a sound and balanced development of the whole peninsula, which is also very rich in mineral resources.

A high-speed railway line which would connect North and South Korea to Russia, as well as a series of ambitious economic projects, were discussed extensively during the memorable meeting held in Singapore on June 12 last between US President Donald Trump and North Korean leader Kim Jong Un.

The issue involves the whole Korean peninsula, which needs more modern infrastructure that can connect it to the rest of Asia and, at the same time, let it seize the same opportunities as countries like Thailand which are growing at a very quick pace.

Also supported by China, which has promised adequate investment, the South Korean government has announced its intention to back the construction of major works that can also benefit North Korea, such as the construction of modern railways capable of connecting the Korean peninsula to China and Russia.

The inter-Korean railway infrastructure

The ambitious plan envisages the construction of a modern railway network for the entire peninsula, through innovative projects enabling to relaunch the region. The strategic axis of the initiative is precisely the implementation of a railway line uniting the two Koreas which, according to the “Panmunjom Declaration” signed by the two leaders at the end of the Summit, should connect Seoul, the capital of South Korea, to Pyongyang, the capital of North Korea, by crossing the city of Kaeseong.

Once reached Pyongyang, the railway line should continue up to the city of Shinuiji, North Korea, thus reaching the border with Dandong, China. Indeed, the railway link is only the first step of a much more ambitious project, which would require an important investment of approximately 35 billion US dollars.

The South Korean government’s plan envisages the construction of a high-speed railway line connecting Seoul to Shinuiju, passing through Pyongyang, to be built by using the existing tracks of six old lines that currently allow the transit of trains travelling at a speed of just 50 kilometres per hour.

However, there is a wider plan behind this roadmap: the Gyeongui line can connect to the Trans-China Railway in Shinuiji, which is connected to Europe, while the Donghae line is connected to the Trans-Siberian Railway in Hasan. Instead, the east coast railway network would be the shortest way to the main port of Wonsan, the Trans-Siberian Railway and Vladivostok.

The modernization of the network would be matched with the construction of new tunnels for the installation of railway networks and bridges, because the current structures rely on small cars and narrower tracks (narrow-gauge) than those of a modern high-speed railway network.

High-speed rail networks and global trade

The plan of the “New Economic Map of the Korean Peninsula” fits into the broader context of the great project initially known as “One Belt One Road” (OBOR) – promoted by the President of the People’s Republic of China, Xi Jinping, with a view to improving global governance through international cooperation – which is designed to integrating Asia and Europe by building six land and sea transport corridors, through which goods, technologies and culture will circulate.

The “New Economic Map of the Korean Peninsula” is a major project for relaunching the region which depends on two components: geopolitical and diplomatic, on the one hand, structural and economic, on the other, because the huge infrastructure of high-speed rail networks will not only connect the two Koreas, but will also strengthen the link between the peninsula and the rest of Asia, particularly China and Russia. This plan should turn the region into a strategic hub for world trade, thus making it become a transit area for the goods travelling from East Asia to Europe.

These lines would connect the two countries to China, on one side, and to the Trans-Siberian Railway, which crosses Russia, on the other, thus enabling the goods coming from the Korean peninsula to reach Europe.

Moreover, the transit of the new trains will be matched by territorial development – especially where the new stops are located.

One of the foreseen stretches, the Pyongra Line, is expected to connect the two largest cities of the South, namely Seoul and Busan, to Chongjin, the third largest city in North Korea, and to the industrial district of Rajin, which can boast the highest per capita GDP in the country.

These high-speed trains will become a crucial factor of economic development, both globally and nationally, considering that currently the development of the railway system can generate real benefits in terms of mobility, because it is viewed as an essential tool for growth, since it is powered by electricity and not by fossil fuels, which instead fuel road and air transport.

The railway expert, Mark Smith, has put together several statistics on his website, “The Man in Seat 61”, including an independent study  commissioned by Eurostar on the environmental impact of travelling by train. The reduction of carbon emissions per passenger achieved by taking a train instead of an airplane can even reach 90%.

I believe that the modernization of the railway system in the whole Korean peninsula will have a significant impact and, above all, a direct effect on the economy of transport and hence on the movement of goods.

Both the economic impact and the geopolitical effects, however, open up  further opportunities and initiatives after the successful outcome of the peace negotiations between the two countries, together with the regained stability of a region which is now also linked to international business interests, first of all  China’s and Russia’s.

Probably the new “wise diplomacy” shrewdly initiated by Marshal Kim Jong Un will provide opportunities for new and important stability-related goals, as well as a greater boost to the economy of the entire peninsula.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

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East Asia

Chinese Communist Party and the path of “high-quality development” at Guangdong Province

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A night view of Shenzhen, Guangdong province, on March 10, 2018. (PHOTO / VCG)

During the meeting of “Huang Kunming”, Secretary of Guangdong Provincial Party Committee mentioned that it is significant for Guangdong embark on a path of high-quality development fit for its own situation. According to my highly understand of China’s high-quality development and analysis to the nature of the Chinese society and the polices of the Communist Party of China regarding the development is meaning (all-round building a strong modern socialist country) and all-round rejuvenation of the Chinese nation still need to rely on development.

 With the continuous development of the Chinese economy and the deepening of reforms, China put forward a new expression of “high-quality development” for the first time at the 19th National Congress of the Communist Party of China in 2017, which indicates that China’s economy has moved from a stage of rapid growth to a stage of high-quality development.

 Changing China’s economic development strategy is an inevitable choice in line with the law of development and the demands of its development. Now, China is seeking to change its previous development pattern of relying on a large number of factors of production to focus more on quality and efficiency.  It has begun to adhere to the implementation of the new development philosophy that emphasizes innovative, coordinated, green and open development for all, and to build a new development pattern that relies on domestic trade and promotes integration between domestic and foreign trade to enable the Chinese society to complete the building of a strong modern socialist country in an all-round way, Chinese side should stick to advancing high-quality development as the top priority, as President Comrade “Xi Jinping” stressed in the report.

 High-quality development mainly depends on the economy’s vitality, innovation and competitiveness.  In order to improve these capabilities, China is accelerating the implementation of the innovation-driven development strategy, intensifying its efforts to achieve a high level of self-reliance in scientific and technological research, mobilizing forces and focusing on solving intractable problems in original and pioneering science and technology research to achieve breakthroughs in some crucial and pivotal technologies, which are guided by these strategies, China has achieved good results in manned space industry, lunar and Mars sounding, deep-sea and land exploration, supercomputers, satellite navigation, quantum information, electro-nuclear technologies, large-scale passenger aircraft, medicine, biopharmaceuticals and other fields over the past years, and joined the ranks of innovative countries in the world.

 Green development is an important symbol of the transition of China’s economy from the stage of rapid growth to the stage of high-quality development. In recent years, China has pushed the green transition to a development mode, implemented the comprehensive rationalization strategy, developed green and low-carbon industries, and advocated green consumption.

  The bright future of China’s economy stems from more flexible and high-quality development. In 2021, China calmly responded to changes in the world as well as the COVID-19 epidemic, took new steps to build a new development pattern, achieve new results in high-quality development, and achieve a good start for the 14th Five-Year Plan. China has maintained a leading position in the world in economic development and in epidemic prevention and control, accelerated the growth of national strategic scientific and technological forces, improved the flexibility of the industrial chain, continued to deepen supply-side structural reforms, and made solid progress in the green transformation of the low-carbon economy and prosperity subscriber.

  Here, with the strong leadership of the Communist Party of China, the significant advantages of the socialist system with Chinese characteristics, the technological foundation accumulated since reform and opening up, the extremely large market advantage and domestic demand potential, and with huge human capital and human resources, the Chinese economy will continue to grow steadily on the path of high-quality development, enabling China to contribute in achieving a steady and stable progress in the recovery of the global economy.

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China’s Deflating Population: The Economic Marvel in Eclipse?

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So China’s population shrank last year. I admit my first instinct was … well, isn’t this a good thing? I mean, during the entire 1960s and 1970s, global discourse misted around how the world population kept growing beyond the finite resources of this world. And how food scarcity and poverty would create a social depression. China, with a population of roughly 1.4 billion people, was specifically a focal point of population reduction strategies. After the widespread catastrophe of the Great Leap Forward, a debilitating social program orchestrated by Mao Zedong in the late 50s, China’s population was on the up and up in the following decade, to the point that the infamous ‘One-Child Policy’ was introduced in the late 70s to inhibit the burden of a growing population – and concomitant poverty. Since then, however, China has dynamically transformed into an economic powerhouse – a factory floor for global manufacturing. And here lies the answer to this population conundrum: Shrinking population in China is a problem now!

According to the data released by the Chinese government last week, China’s population contracted by circa 850,000 people in 2022; with 9.56 million births against 10.41 million deaths, it was the first time in more than half a century that deaths outnumbered births in China. The initial thought would be to blame it on the pandemic. But that would be a blinkered assumption without gauging the stunted birth rate. It was the sixth consecutive year that the number of births fell, down from 10.6 million in 2021, according to the National Bureau of Statistics. Many demographers and statisticians warned for years about a population decline on the cards, albeit much later in this decade. This presage was why the government reposed its one-child policy in 2016 and extended the limit to three children in 2021. Local governments offered tax rebates and outright cash handouts to couples having children. The source of anxiety was partly social and partly economic – or maybe socioeconomic is the correct juxtaposition.

China is a rising economic power, the world’s second-largest economy, and the strongest contender to dethrone American supremacy. But in listing all the superlatives, we sometimes forget that China is still a developing economy. Despite its phenomenal evolution from endemic poverty, its average population still earns less than the average earnings in advanced economies. And the shrinking population is a two-pronged issue that could constrict China, like other leading developing economies, into a middle-income trap.

Just by simple inference, we can judge that a declining population is also an aging population. Impressive modernity in China’s healthcare system has led to an increase in life expectancy. Meanwhile, a decades-long hiatus in birth-conducive policies and changed mores of young Chinese couples, often antipathetic to having children altogether, have led to a sharp decline in births. A combination of these factors has invited a conspicuous outcome: Shrinkage in China’s working-age population. In fact, China’s working-age population has been in decline since 2015; according to a government spokesman, it could fall to roughly 700 million (approximately 23%) by 2050. This factor would be particularly problematic for China, which has long been a competitive labor market for manufacturing heavyweights like Apple and Microsoft. But moreover, a bulging elderly population amidst falling tax receipts would pose a challenge to government finances, especially given the comparably underdeveloped social safety net programs in China. Therefore, either taxes ought to be raised sharply or state pensions to old-age dependents would hit the skids – a spartan policy dilemma either way.

We can draw apt comparisons from Japan – the world’s third largest economy – which has notoriously suffered from a lopsided aging population and accompanying anemic economic growth since the asset bubble burst of the 1990s. I mean, China’s real estate market does look like a financial crisis just waiting to happen. But post-boom Japan has tried virtually every bizarre economic strategy – from negative interest rates to yield curve control – yet has failed to spark demand-led inflation. Strangely, however, China has sustained its bustling economy on prohibitive rates of investment rather than consumer demand, which has remained relatively lukewarm due to policymakers’ reluctance to pass the complete scope of economic growth to households. Nonetheless, a contracting labor force would perhaps accelerate the exodus of manufacturing from China unless the government finds alternatives to sustain China’s unrivaled productivity levels.

We could blame China’s ‘zero Covid’ policy for strangling economic growth. It is no surprise that China’s economy grew by a modest 3% in 2022, its slowest rate in nearly four decades, barring 2020. Intermittent lockdowns and pedantic mass testing regimes cast a pall over economic activities. And higher interest rates imposed by the Federal Reserve and other central banks have dampened global demand and diluted appetite for Chinese imports. According to government officials, year-on-year Chinese exports fell by 9.9% in December. While an economic turnaround is widely expected later this year, a falling working-age population; a skyward old-age dependency ratio; and the ongoing trade tussle with the United States could cost China many more decades to supersede the American edge. However, China has been an iridescent success story, an economic miracle of sorts. And therefore, if the Chinese Communist Party (CCP) could somehow prioritize economy over national security; social reforms over governmental control; and collaboration over confrontation, I reckon China can again defy the odds and achieve its dream.

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Nepal-China Relations and Belt and Road Initiative

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Image source: xinhua

China appears to be more “functional” in Nepal recently. A new administration led by leader Pushpa Kamal Dahal has acted on the same pitch initially also. The Rasuwagadhi border crossing, which had been blocked for three years, has been reopened for two-way trade, and the much-anticipated Gyorong-Kathmandu train project’s final survey has also begun as of January 1, 2023. The second phase of the 10-lane ring road project from Kalanki to Chabhil is anticipated to start soon as well. All these accumulatively demonstrate the current nature of friendship between them and the profound Belt and Road Initiative is the key rostrum for the current complexion of the relationship between them. Hence, the trends are indicating a greater form of cooperation even in the regional domain as well.

Meanwhile, China and Nepal have inked a six-point agreement to strengthen bilateral collaboration and exchanges on governance, legislation, and supervisory practices, in line with Beijing’s Belt and Road Initiative (BRI). On September 12, 2022, in Kathmandu’s federal parliament building, Agni Prasad Sapkota, Speaker of the Parliament, and Li Zhanshu, Chairman of the Standing Committee of the Chinese National People’s Congress, signed the agreement. According to the agreement, the nations would exchange information about each other’s legislative, oversight, and governance activities. Five years after BRI’s founding, on May 12, 2017, Nepal formally joined the process. Nine projects – the upgrading of the Rasuwagadhi-Kathmandu road, the construction of the Kimathanka-Hile road, the construction of the road from Dipayal to the Chinese border, the Tokha-Bidur Road, the Galchhi-Rasuwagadhi-Kerung400kv transmission line, the Kerung-Kathmandu rail, the 762MW Tamor Hydroelectricity Project, the 426MW Phuket Karnali were on the to do list. However, more than any other nation, China invested US$188 million in Nepal during the 2020–21 fiscal year. During KP Sharma Oli’s visit to Beijing in 2016, Nepal and China also ratified a transit transport agreement for commerce with other parties.

However, amidst the current global tension and the changing rapport of international politics, China remains as a key investor in Nepal. Besides, the recent activities from the Nepal administration showed a shift in policy domain from the previous regime which in some cases was rigid to Chinese projects. Meanwhile, the BRI becomes more eminent in the strategic, political and economic domain of the status quo. Against such backdrop, the next sections will discuss current trends of the BRI in Nepal.

Nine Projects: Token of Continuation of the Initiative

Nepal put forward nine potential projects to be undertaken under the BRI at the beginning of 2019. These included setting up a technical institution in Nepal, building new highways, tunnels, and hydroelectricity dams, as well as conducting a feasibility assessment for a trans-Himalayan railway that would connect Jilong/Keyrung, a Chinese port of entry, with Kathmandu. This enhanced the significance of the project which will direct to more prosperous China- Nepal relations.

Nepal, the “Pillar”

Hou Yanqi, the Chinese ambassador to Nepal, stated in April 2022 that Nepal was one of the BRI’s most significant pillars and that projects were still moving forward despite the “speed of pragmatic collaboration” slowing down because of the coronavirus pandemic and Nepal’s changing political climate.

Transit Through China: Better Connectivity and Trade

Kathmandu protocol agreement with Beijing, Nepal will import and export goods from a third country through China through Tianjin, Shenzhen, Lianyungang and Zhanjiang seaports and land ports of Lanzhou, Lhasa and Shigatse. They will also get the facility of transporting goods through six dedicated transit points of the two countries. It will boost the trade for improved connectivity.

Extended Cooperation in Domains Except for BRI

In addition to the BRI projects, China is currently making significant investments in Nepal’s infrastructure, including ring road expansion, dry ports at the border crossings of Larcha and Syabrubesi, the establishment of China Study Centers, a new international airport in Pokhara, and optical fiber cable connectivity from Kathmandu to the Chinese border.

Energy Exploration: New Domain of Cooperation

China is also looking into the prospect of discovering gas and oil deposits in Nepal and is building a border river crossing at Hilsa, Humla. It will open a new domain of cooperation based on mutual interest.

Poverty Reduction and Generating Newer Income Sources

Currently, roughly six Chinese airlines offer regular flights to Nepal. Nepal has the fastest-growing Chinese tourist industry. Nepal granted China access to choose 16 Himalayan regions that border China to develop as part of a program to fight poverty.

Security: Bringing Peace

Joint military drills between China and Nepal are also a new development in security cooperation. It will bring peace in the region since the image of Nepal is very clean.

Increased Diplomatic Connectivity

The BRI appears to be one of the three priority pillars for the Chinese government’s organizing principles of foreign policy, along with the Global Development Initiatives and the Global Security Initiatives, in terms of developing successful international relations rather than just an economic endeavor. It will bring a fresh start in the diplomatic domain of both countries and the future prospects of ties in the diplomatic arena can be discussed robustly.

No More Landlockedness

Under BRI and the Trans-Himalayan Multi-dimensional Connectivity Network, which will transform Nepal from a landlocked country to a land-linked one, there are multiple road, sea, and corridor networks throughout the world. It will boost the relationship to a great extent while there will be a surge in the arena of export and import.

Regional Connectivity

The extension of the Qingzang railway from Tibet to Nepal and the border with India is among the most significant BRI projects. Three routes are being considered for this railway. The first would connect Shigatse to Kathmandu via Kerung and continue on to Pokhara and Lumbini before reaching the Indian border. The second would run from Shigatse to the Burang border and connect Humla and Darchula districts in Nepal with Pithoragdh, Uttarakhand, while the third would link Shigatse to the Yandong border of Sikkim, India.

As China and India have no trade disputes with one another, India would gain from this project as well after trading through this route. In comparison to other industrialized parts of the world, South Asia could see an increase in commerce and investment if this project is carried out on a win-win basis between China and Nepal.

Challenges

Additionally, loans are typically provided on commercial terms through the Silk Road Fund and the Asian Infrastructure Investment Bank (AIIB), both of which are led by China (SRF). Due to project site clearance delays and the nation’s political instability, along with its comparatively short repayment time, Nepal’s big projects have raised concerns that they may not get off the ground.

Besides, three primary issues with China are of particular concern to the Nepalese government. First, instead of commercial loans, the nation favors grants and lenient loans from China. Second, it wants the interest rate and repayment period to be comparable to those of multilateral funding organizations like the Asian Development Bank and the World Bank. Thirdly, it thinks that bid competitions ought to be allowed for the BRI projects. But the Chinese authorities are not responding on the same page.

The Inception of a Recommenced Cooperation

Pradeep Gawali, Foreign Minister in the KP Sharma Oli’s government, said that from the perspective of Nepal, the BRI projects were the way to be connected to the trans-Himalayan multipurpose connectivity network. Nepal had been able to select the nine projects included in the BRI with great success. However, Chinese authority said on December 26 that it looks forward to cooperating with the new government to advance projects under the ambitious Belt and Road Initiative, a day after the Maoist party chairman Pushpa Kamal Dahal alias Prachanda was named as Nepal’s new prime minister (BRI). China aims to develop initiatives under the Belt and Road collaboration, according to Mao Ning, the official spokesperson for the Chinese foreign ministry, who congratulated Prachanda on his appointment. Beijing claims that as a longtime ally and neighbor of Nepal, China cherishes Nepali relations very highly. China is prepared to collaborate with the new Nepalese administration to broaden and deepen friendly relations and cooperation on all fronts, pursue high-quality Belt and Road cooperation, strategic cooperative alliance marked by enduring friendship for growth and prosperity new impetus, and bring more benefits to peoples from both sides.

Hence, it is evident that China’s policy toward Nepal is generally stable and uncomplicated, and the two countries’ bilateral relations have been cordial and shaped by Nepal’s strategy of balancing the divergent impact of China and its southern neighbor. Through BRI projects, Nepal could gain better connectivity relations with its northern neighbors, but in order to do so, Nepal must enhance its negotiations with China.

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