Weekly News Roundup: Dispatches from the Silk Road Economic Belt

CEE Is Key to China’s Belt and Road Initiative

With deep government pockets, technical sophistication and a comprehensive investment plan behind it, China’s Belt and Road Initiative (BRI) can have a big impact on the transformation of the Western Balkans. There are caveats, not least debt dependency on cheap Chinese loans, but a proactive approach throughout the region could bring welcome development for many in countries that are not prime investment destinations. That is the conclusion of a major new report, commissioned by the EBRD, which looks at the potential for growth through Chinese infrastructure investments in Central and South-Eastern Europe. (emerging-europe.com)

Could Nepal’s new communist pact mean closer ties with China?
The creation of an alliance of communist parties in Nepal ahead of the upcoming provincial and national elections could lead to closer ties between Kathmandu and Beijing, observers said.

Exclusive: The CPEC plan for Pakistan’s digital future

A new, upgraded cross-border fibre optic cable will address multiple challenges faced by China and Pakistan. (Dawn)

Russia turns to new friends from China and the Middle East
Six years after Rosneft marked a new high watermark in US-Russian corporate relations by agreeing a co-operation deal with ExxonMobil, the Kremlin-controlled oil company has found alternate support from the east. CEFC China Energy agreed last month to pay $9.1bn for a 14.16 per cent stake in Rosneft — and it is not the only Russian company to find new friends in China. (FT)

Rosneft aims to up oil exports to China through Kazakhstan
Russia’s largest oil producer Rosneft wants to boost its supplies of oil to China through Kazakhstan to as much as 18 million tonnes (360,000 bpd) per year from around 10 million tonnes in 2017, industry sources told Reuters. Such a big increase may significantly drain flows of Urals blend to Europe at a time when Russian oil output has been reduced as part of a global pact to support prices. (Azernews)

Xinjiang university calls for promoting Putonghua - Global Times

Professors at Kashgar University in Northwest China's Xinjiang Uyghur Autonomous Region have called for the faculty and students there to speak Putonghua to promote social stability, in a letter published on the school's WeChat account on Sunday. They asked that all members of the faculty and students from all ethnic groups use Putonghua to communicate as a common language, meaning they are asked to speak Putonghua both in and outside the classroom, and between teachers, students, friends and family. (globaltimes)

Construction of new airport begins near China-Russia border

Construction of a new civilian airport has started on China's border with Russia in the northeastern province of Heilongjiang, authorities said on 11 October. Construction of Dongning Airport began 10 October in the border city of Suifenhe, with an estimated budget of 1.15 billion yuan (174 million U.S. dollars), said a city official. Xinhua

How China’s biggest debtors may struggle to pay off their loans

According to the Scmp, Chinese investments in the Karachi Nuclear Power Plant Complex are a rare example of a major Chinese loan that does not face specific concerns about repayment. The Chinese bank is financing most the project with US$4 billion of preferential buyer credit at an interest rate of 2 per cent, a buyer credit of US$2.2 billion at a rate of 6 per cent, and the remainder is a concessional loan at a rate of 1 per cent. (Scmp)

China's CEFC set to raise $5.1 billion from VTB for Rosneft deal: sources
CEFC China Energy is set to raise $5.1 billion in short-term loans from VTB (VTBR.MM), Russia’s second-biggest lender, to part finance its $9.1 billion purchase of a stake in Rosneft Oil ROSM.NN, three people with knowledge of the matter said. CEFC last month said it will buy a 14.16 percent stake in the Russian oil major from a consortium of Glencore and the Qatar Investment Authority, strengthening energy ties between Moscow and Beijing. (Reuters)

If You Build It, They Will Lend: Why Japan May Fund More Infrastructure than China

Demand for infrastructure is growing as developed countries replace deteriorating infrastructure and emerging economies invest in new projects. China has attracted significant attention through its One Belt, One Road initiative and the founding of the Asia Infrastructure Investment Bank, but Japan has recently dominated global project finance. With low borrowing costs and limited domestic credit demand, Japanese banks may be best positioned to lead the financing of a global infrastructure push. (FEDERAL RESERVE BANK OF SAN FRANCISCO)


Afghanistan obtains AIIB permanent membership
Afghanistan has obtained the permanent membership of the Asian Infrastructure Investment Bank (AIIB), the country's finance ministry reported on its website Sunday. Afghan Finance Minister Eklil Hakimi received the Certificate of Permanent Membership of the AIIB on the sidelines of the World Bank and International Monetary Fund (IMF) meeting earlier this week in Washington, the United States, the ministry said in a statement. (globaltimes)

Changchun starts freight train service to Hamburg
China's northeast city Changchun saw its first freight train depart to Hamburg, on 13 October. The trip will take 12 to 15 days at the maximum speed of 120 kilometers per hour, according to a local official. Liu Changlong, Changchun's mayor, said at the opening ceremony that the move will give an impetus to the city's economy and further integrate Changchun with the rest of the world. (China Daily)

Direct China-Britain freight train likely to reshape trade, says logistics chief
The direct China-Britain freight train is likely to shake up traditional trade patterns as speed and reliability are the key in modern supply, said Nichola Silveira, general manager of Logistics of DP World London Gateway. The first China-bound freight train carrying British products left DP World London Gateway terminal on April 10 and arrived at eastern China's Yiwu city known as China's "world supermarket" after a 19-day journey. (China Daily)

CENTRAL ASIA

The Domestic Challenge to Kyrgyzstan’s Milestone Election
Kyrgyzstan’s forthcoming presidential elections on 15 October are a milestone for Central Asia: for the first time, a president from the region will voluntarily stand down at the end of his constitutionally mandated term. Kyrgyzstan has come far in the seven years since the tumultuous events of 2010, when President Kurmanbek Bakiyev was ousted in Bishkek and ethnic violence engulfed the southern city of Osh, killing over 400 people, mostly Uzbeks. The presidential race is tight and unpredictable. Sooronbai Jeenbekov, from the southern province of Jalalabad and representing the ruling Social Democratic Party of Kyrgyzstan (SDPK) party, faces Omurbek Babanov, a wealthy independent candidate from the northern province of Talas, still closely aligned with the party he formed in 2010, Respublika. But whoever wins the ballot will face renewed north-south regional tensions as well as rivalries within Osh, where the memory of violence is still fresh and small arms abound. (Crisis Group)

Will Kyrgyz Democracy Pass Its Next Test?
The outcome of this weekend’s election usher in an unprecedented transfer of power between elected presidents. (Diplomat)

Kyrgyzstan to vote in Central Asia's first real election
Kyrgyzstan will vote on Sunday in the first genuinely competitive leadership election in Central Asia.
The vote on Oct. 15 is Kyrgyzstan's second presidential election since a revolution in 2010 but its first competitive one, a watershed for a region more closely associated with Soviet-tinged autocratic leaders. (Nikkei)

Turkmenistan Downgrades Parliament in Favor of People’s Council
The president of Turkmenistan has approved changes to the constitution downgrading the role of parliament in favor of a revived People’s Council, canceling a minor token gesture toward democratization adopted a decade ago.At the same time, President Gurbanguly Berdymukhamedov has followed through on his long-awaited plan to cancel wide-ranging subsidies that guaranteed Turkmen households free gas, water and electricity. (eurasianet)

Junk Bond Boom Reaches Far Corners of the World
Investors’ thirst for income is enabling governments and companies in some of the world’s poorest countries to sell debt at lower and lower interest rates. And the global bond boom has even reached Tajikistan. (WSJ)

Chief National Security Official of Kazakhstan almost secretly met with the US Secretary of State

Chairman of the National Security Committee of Kazakhstan Karim Masimov, while in Washington, met with Secretary of State Rex Tillerson. The State Department informs on Facebook. The statesmen met on 10 October behind closed doors. Neither details of the meeting, nor the official purpose of the visit is known. Not a single Kazakh media reported a visit. (Fergana News)

Pakistan investment climate

On October 4, the Karachi Stock Exchange 100 index closed at 40,461 points, touching as low as 39,869.88 intraday, Kunwar Khuldune Shaid writes. The market had lost 1,948 points in three days as selling pressures took their toll. However, the tumble in the markets was just the tip of the iceberg. While investors and market analysts feel that the Pakistani government is “distracted,” they are also worried about taxation policies. Altogether, they anticipate that this is going to start hurting the economy and the country’s investment climate. The main driver behind all of this is the ongoing political turmoil in the country following the ouster of Nawaz Sharif as prime minister in July. He had been serving for a third time before his disqualification by Pakistan’s Supreme Court. The KSE-100 Index shed 1,670 points (3.6%) in the immediate hours after the apex court’s verdict. (Asia Times)