Stories of China’s economic achievements are nothing new. The country has managed to pull itself out of abject poverty in just over forty years racing up league tables to become the second largest economy in the world. Factories, modern highways and shopping malls have all sprung up across the country fuelling this impressive economic growth. However, since 2000 a national strategy has been put in place to take the Chinese economy to the next level, away from dependency on exports and foreign investment and instead go out and conquer the world.
Since then, Chinese investment overseas has grown at an unprecedented rate, with total foreign direct investment in 2012 coming in at $111.7 billion and outbound direct investment reaching $77.22 billion, according to the Ministry of Commerce. A report by the National Development and Reform Commission predicts a 15 percent increase in foreign investment in 2013 furthering China’s plan to go global. From monumental mining projects in Africa to the acquisition of Canadian oil and gas giant Nexen, China is keen to widen its investment portfolio across the world. However, some projects have been more controversial and intriguing than others.
1) Nicaraguan canal
In the news recently has been the story of Nicaragua awarding a Chinese company the rights and a 100 year concession to build what is basically an alternative to the Panama Canal. The news has been met with amusement by canal experts calling it a joke and critics have called it financially impossible saying there is not even enough demand for a new canal. If built it would have serious geopolitical ramifications weakening the US’s dominance over a key shipping route while increasing China’s growing influence. Wang Jing, the businessman whose company was hired to undertake the controversial project said, “We don’t want it to become an international joke, and we don't want it to turn into an example of Chinese investment failures”.
Given the fact that his business history is basically unknown prior to 2010, skeptics are not convinced he has the expertise to carry out the ambitious $40 billion shipping channel. Critics have panned his company HKND Group, citing that this would be the company’s first attempt at any such infrastructure project of such significance, concerns which have been mirrored by officials in Nicaragua.
HKND Group previously invested in the Chinese telecommunications company Xinwei Telecom Enterprise Group in 2010, which was granted an operating license in Nicaragua last year. However, little has happened since then casting doubt over Wang’s competence to take on the mammoth canal project. Wang said he hopes to break ground on the canal before the end of 2014 and have the project completed within six years. Ambition and skepticism aside, if completed it would be another feather in the country’s cap showcasing the capabilities of 21st century China and cementing its ever growing global influence.
Grand Mosque of Algiers. Photo: alarabiya.net
2) Grand Mosque of Algiers
A Chinese company signed a deal last year to build the Grand Mosque of Algiers which will overlook the sea in the Mohammadia area of Algiers, the eastern part of the Algerian capital. Set to sit on 49 acres, with its minaret soaring almost 900 feet, this mega mosque would be the third largest mosque in the world upon completion with only the mosques in the two holy cities of Medina and Mecca ahead of it. Able to house 120,000 worshippers, this one-of-a-kind place of worship is said to cost $1.3 billion. It will also play home to a museum, a research center and a library with one million volumes and seating for 2,000 visitors.
Algeria chose the China State Construction Engineering Corporation (CSCEC) for the project, a company that has been active in Algeria for 30 years, having built the five biggest hotels in the country. Interestingly, since 2009 CSCEC along with three other Chinese companies has been banned from bidding on any World Bank projects amid investigations over corruption leading the company to seek alternative investment routes.
Nova Cidade de Kilamba. Photo: morningwhistle.com
3) African ghost towns
People are already aware of the ghost towns that have sprouted up around China and their possible implications for the future of the country’s economy, but less known are the Chinese built ghost towns across Africa. One such example is the state-owned China International Trust and Investment Corporation (CITIC) built town in Angola on the outskirts of the nation’s capital Luanda.
Nova Cidade de Kilamba has 750 eight-story apartment blocks to house 500,000 people with more than 100 shop units and a dozen schools. The 12,355 acre development was built in three years in exchange for oil, costing a reported $3.5 billion. However, there was one major flaw in this ambitious project. Apartments cost between $120,000 and $200,000, with a 3-bedroom apartment priced at roughly $250,000, far out of the price range of the average salary of a few dollars per day. Netizens have hinted that it was never intended for Africans, but at present the site remains largely empty with its fortunes unlikely to change in the near future.
4) 200 acre “China City” in Michigan
Reports have been making the rounds that Sino-Michigan Properties LLC paid $1.9 million for 200 acres near the town of Milan, a farming community in Michigan located 40 minutes between both Detroit and Toledo. The idea is to build a fully operational “China City” complete with lakes, a Chinese cultural center and 415 housing units (some up to 6,000 square feet in size) to house Chinese citizens, a little slice of China in the heart of the United States.
Reports suggest that it would not be integrated into the existing town, but instead used as a base for Chinese businessmen wanting to open businesses in the US. For Milan, a town of only 6,000 residents, this “China City” is bound to be controversial.
5) New Silk Road
Once the backbone of trade between Europe and Asia it helped bring prosperity and new ideas to the two regions, shaping history. At present, a $6.5 billion project is underway between China and several countries linking China and India with Europe to recreate this ancient Silk Road. More than just a highway it is a network of roads aimed at enhancing the development of land locked countries and regions along the way. In fact, even without this Silk Road renaissance project, the flow of goods by land between Europe and Asia has already been reestablished. Since July 2011 China’s Western city of Chongqing has been linked to Duisburg in Western Germany by a freight railway reducing the journey from approximately 36 days (container ship) to 13 days (freight train).
It goes without saying that the Chinese think big. From the Great Wall to the famed Grand Canal serving as a vital vein throughout the country, China has a track record of massive projects. With China gearing up to change the focus of its economy, setting its sights on a bigger playing field, look forward to more sizeable projects on the horizon. Watch this space, China might be coming to a town near you.
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Keywords: Nicaraguan canal Chinese investment abroad Chinese projects abroad
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Certainly an interesting article and Chinese companies sure have been busy. But where? The countries in which Chinese companies have built, are building or are planning to build are poor, developing countries. As a result of their economic standing the use of local labor is probably as cheap if not cheaper than Chinese labor. That's probably one of the main reasons the bids of Chinese companies have been successful. Okay, let's look at them trying to do the same thing in countries like the USA, Canada and Australia to name just three. You have to assume they will use the local work force in, say Michigan, because they have a snowball's chance in hell of bringing in cheap labor from India, South America, Indonesia or China. Construction rules and standards might be a speed hump in quick Chinese overseas developments too. Add to that the stress on the importance of SAFETY on the job, unions and minimum wages and the Chinese company would see a blow out of crippling proportions that would result in the project never being finished. Don't get me wrong, I think it's great that China is making inroads into other countries I just don't think that those countries will include those I have mentioned for some time.
Jul 15, 2013 11:36 Report Abuse
China City, Michigan... talk about an opium dream. Since 75% of the American population is within 500 km of either coast, why would they put a "business city" 2000 km away from either side in a town that has been dying since any remnant of business moved away in the 80's? Not too mention the only way out of the city is by car or plane, but with six months of the year seeing sub-zero temperatures and white-out blizzards that can last days or even weeks, even if you had an appointment in New York or Los Angeles, good luck getting there. And this doesn't even begin to discuss racism, crime, or the hundreds of other problems that would spring up...
Jul 15, 2013 05:29 Report Abuse