Infrastructure

Local governments in China are facing a problem of not having enough in their coffers, leading to various measures such as a hiring freeze in Hegang city. Corruption also remains a problem, with some officials using their authority and influence to line their own pockets. Zaobao correspondent Yang Danxu notes that there is a danger of such debt issues becoming a risk to social stability.

In 2022, as global supply chains normalise and inflation gradually decreases, there is room for cautious optimism in the global economic outlook, but much will depend on countries’ fiscal policies and the extent to which the US Federal Reserve adjusts its interest rates. Economics professor Zhang Rui predicts that if investments of economic giants such as the US, the EU, Japan and China continue to rise, the global economy will expand, but emerging countries will need to be wary of increasing their debt burdens.

The China-Laos railway linking China’s Yunnan province to Vientiane, the capital of Laos, was officially opened in December 2021. This mega project under China’s Belt and Road Initiative is expected to improve connectivity and stimulate the economy but Laos has incurred hefty external debt to achieve this, says EAI academic Yu Hong. The railway alone is also just the hardware; the Laotians will have to do more to make the best of its investment.

ISEAS academic Nick Freeman says that Laos’ first major railway, inaugurated on 3 December 2021, will create a new link with the Chinese market and has the potential to be a game changer for the Lao economy. This comes at a good time, as Laos seeks post-pandemic recovery in 2022. But the opening of the railway alone does not guarantee such a prospect. While the railway might boost industries such as tourism and exports, leading to a shift away from traditional sectors such as power generation and mineral mining, Laos needs to develop economic "muscle tissue" to ensure that the potential of the railway is translated into tangible results through investing in both hard and soft infrastructure.

A virtual summit between US President Joe Biden and Chinese President Xi Jinping will allegedly be held next week. However, with comments from the White House that the meeting is not about deliverables, and the US’s continued attacks such as Biden’s criticism of China’s non-appearance at the recent UN climate change conference in Glasgow, are prospects for major breakthroughs bright? Zaobao correspondent Edwin Ong looks at what the session might bring.

Policymakers have imposed a series of measures to limit rampant borrowing by developers and tighten standards for mortgage lending since Chinese President Xi Jinping declared in 2017 that “houses are for living in, not for speculation”. Following this, developers are experiencing a sharp drop in home sales, which adds to their financial burdens. In spite of this, industry experts opine that Beijing’s determination to reduce dependence on real estate investment will not change easily.

In the last few years, China has implemented policies to ban or impose strict restrictions on building supertall buildings. The government is acutely aware that provincial competition to outbuild each other may hurt the country’s overall economy. Not only that, high investment costs aside, the finished buildings may end up as energy-guzzling white elephants.

Chinese Foreign Minister Wang Yi paid an official visit to Vietnam on 10-12 September as part of Beijing’s efforts to reassert its influence on Vietnam and pull Hanoi back from its perceived ‘tilt’ towards Washington. Hosting Wang Yi provided Vietnam with an opportunity to address existing issues in bilateral relations and certain domestic concerns, especially to secure China’s support for the Covid-19 response. However, Vietnam-China relations are fundamentally constrained by strategic distrust over the South China Sea dispute. The intensifying China-US strategic competition is another challenge for Hanoi.

Many were caught off-guard when China made forceful statements against the military coup in Guinea. Hasn't China always been circumspect and asked countries to resolve their internal issues well in past such cases? Perhaps Guinea being China’s leading source of bauxite for its aluminum industry is a key motivation. Or perhaps it is a case of finally feeling the need to step up to a greater international role? Zaobao’s China Desk examines the issue.