Month: November 2015

November 29, 2015

Hålogaland: the first Chinese-built bridge in the Arctic

After winning a tender in ways unorthodox enough to land two engineers in jail, a Sichuan SOE has become the first Chinese company to be involved in a major transport infrastructure project in the Arctic region. A rather peculiar kind of partnership with a German bridge-builder helped a company whose previous activities abroad were concentrated in Eritrea to be chosen over established Western competitors to build the steelwork for large bridge in northern Norway. The fact that the project, started in late 2013, has gone unimpeded despite the freeze in Chinese-Norwegian relations after Liu Xiaobo’s Nobel provides an interesting data point to understand what exactly falls under the boycott.

An unprecedented success

In October 2013, Sichuan Road and Bridge Group (SRBG, 四川路桥), owned by the provincial government, won the tender to build the steelwork of the Hålogaland bridge near Narvik, some 200 km inside the Arctic circle. Over 1500 m long, the suspension bridge will be the second longest of its kind in the country and will shorten the travelling distance northwards from Narvik by 18 km. It was the first time a Chinese contractor was awarded such a project in the West, and SRBG’s first-ever contract in Europe.

SRBG has completed a number of technically impressive projects in China, such as the suspension bridge with the second longest mainspan in the world, the Xihoumen 西堠门 that links Zhoushan 舟山 to the mainland. In contrast to the multiple collapses of often just-built bridges that have made news in China in recent years, SRBG has a comparatively clean record. Serious damages to SRBG bridges have been blamed on exceptional natural conditions, such as the 2009 collapse of the Chediguan 彻底关 bridge SRBG was chosen to rebuild after the Wenchuan earthquake. (The new collapse was personally explained by company chairman Sun Yun 孙云 as due to the unforeseeable impact of an “enormous rock”.) But a company partially established by SRBG, Sichuan Chuanjiao Road and Bridge (四川川交路桥有限责任公司), has a decidedly less stellar record: the partial collapse in 2013 of the third Tuojiang 沱江 bridge Chuanjiao was building in Ziyang, eastern Sichuan caused five deaths. At the time, the chairman of Chuanjiao was Huang Jinping 黄金平, also a vice-general manager at SRBG. Huang would eventually fall victim to an investigation for “serious violations of discipline”, usually a euphemism for corruption.

Impressive though SRBG past achievements in bridge building already were, the Norwegian tender was an unprecedented success. Although the company’s activities abroad began as far back to 1979, their major operations so far have been in Cambodia, Yemen, Tanzania, Micronesia, and most saliently Eritrea, where SRBG have even diversified into gold mining. Winning contracts in at least some of those locations, Eritrea in particular, surely involves more government-to-government contacts to a greater degree than technically outcompeting other bidders. SRBG’s Hålogaland contract, the second cheapest contender for which was MT Høygaard, looked like the first such infrastructure project awarded to a Chinese company in Scandinavia.

An unorthodox partnership

The thing is, SRBG weren’t competing on their own. As I, and seemingly nobody else in a Western language, reported in 2013, SRBG won the tender in partnership with DSD Brückenbau, part of a German group with a long experience in steel construction in Europe, the Middle East and China. The exact nature of the partnership remained elusive: while Chinese reports mentioned SRBG had sought DSD’s help to enter the European market, the contract was formally awarded to a joint venture of SRBG with a little-known Serbian company that shared an address with a DSD subsidiary. The German connection was still obvious: the contract was officially signed on SRBG’s side by He Saizhong 何赛中, a senior engineer with a decades-long career in the German bridge-builder, not known to work for the Sichuan SOE.

The truth would emerge a year later, during a trial conducted in Saarbrücken, Germany. He Saizhong, the DSD engineer, and Frank Minas, a colleague, were accused of defrauding their employer by preparing the Hålogaland bid at DSD, only to eventually present it as their own. As I have learnt from Helmut Jakob, a journalist who covered the trial for local media, the two first convinced the company to act as a subcontractor, managing the project through a Serbian company they were connected to. In the end, DSD was completely left out of the project when the project management was taken over by a company led by the wives of the two engineers. He Saizhong and his colleague were found guilty of ‘breach of trust’ (Untreue) and sentenced to four years’ imprisonment. The Chinese company has not itself been accused of fraud.

Although He Saizhong’s central role in the project should have made it clear to everyone from the beginning that the well-known German company was in some way behind SRBG’s bid, the Norwegian public roads authority (Statens vegvesen) have denied they were misled by the way the offer was presented. Einar Karlsen, a project manager for the project, told me in March that, although DSD had been originally mentioned as a possible subcontractor, the German company “was not important” in the evaluation of the bid. It is possible that the evaluation was only based SRBG’s past merits, but the fact that the offer was prepared at DSD by a DSD team, together with reports that SRBG had sought to partner with the German company, make it safe to conclude that SRBG did indeed benefit from the unorthodox way the offer was prepared. A source suggests it was He Saizhong who facilitated the Sichuan company’s partipation in the project.

An unimpeded deal

Construction is going ahead, seemingly unhindered by the German trial and the imprisonment of the contractor’s “representative”, and is expected to finish in 2017. Norwegian reporting on the bridge, an important project for the region, appears to have made no mention of the trial in Germany before an article published in a local newspaper last September (paywalled).

The defrauded German company and the now imprisoned He Saizhong are not the first to be sacrificed for Sichuan Road and Bridge to win contracts. In 2008, a manager with SRBG had admitted to bribing an official to earn the company the contract for the Xinlongmen 新龙门 bridge near Chongqing.

The fact that SRBG’s participation in a major project in Norway was not blocked by Chinese authorities is a telling detail about the unofficial boycott imposed on Norway after the award of the Peace Nobel prize to Liu Xiaobo in 2010. This could be the result of a publicity calculation. Most known aspects of the boycott can be interpreted as ways of showing the Norwegian public they were being punished: it became harder for Norwegians to get Chinese visas, salmon shipments were rejected; real-estate tycoon Huang Nubo 黄怒波 could not buy a 100 hectare plot in the north of the country until relations get better. Not letting SRBG bid to build their bridge would have simply meant a European competitor would build it.

November 25, 2015

Greenland minister optimistic on financing for Citronen Fjord Pb+Zn mine

Vittus Qujaukitsoq, a Greenlandic minister (naalakkersuisoq) whose portfolio now includes natural resources, has expressed optimism that Ironbark’s zinc and lead project in Citronen Fjord is likely to succeed in attracting financing and start production as planned. The mine is located in the island’s far North (KNR). The statement came during a public meeting on the project in Nuuk, a step in the approval process for an exploitation license. Meetings planned in other Greenlandic towns have been suspended due to bad weather.

At least part of the financing for the Citronen mine is likely to come from China. Ironbark has signed (non-binding) agreements with China Nonferrous (中色) according to which the Chinese SOE could help finance and build the mine, as well as eventually own a stake in it. China Nonferrous is also expected to be involved in the Kvanefjeld U+REE mine in the south of the island. Another Arctic project of them is a plan to build Iceland’s fourth aluminium smelter in Hafursstaðir.

Although Chinese SOEs have been involved in exploration in Greenland since 2009 (and their interest in the island’s ores goes back to four years earlier), China Nonferrous seems likely to be the first Chinese company to actually take part in the extraction of Greenlandic minerals.

If it goes ahead, the project will require a couple hundred (mostly foreign) workers.

Citronen Fjord is above 80°N, probably the world’s northernmost mine. The second northernmost mine with Chinese involvement could well be in Russia: as I mentioned in my latest post on Yakutia, Heilongjiang province companies are considering investing in the Tirekhtyakh Тирехтях lead deposit, at around 69°N.

November 23, 2015

update on CRI’s borrowed boats: source translated

An important source text for understanding how China Radio International’s “borrowed boat” strategy has been presented to the Chinese media establishment, an account of CRI’s 2014 ‘Two Sessions’ coverage, has been partially translated into both English and German by the blogger Justrecently as a community contribution on Der Freitag.

The account, originally published by Xinhua, was one of the Chinese sources for my July posts on the borrowed-boat network.

Justrecently‘s blog provides careful, precise translations from Chinese-language media, together with the source texts, analysis, and what appear to be original drawings. It has been covering official discourse on “guidance of public opinion” soft power strategies abroad since the Hu Jintao era. Anyone interested in those topics, or indeed in what appear to be original drawings, should go read it without delay.

November 12, 2015

near-Arctic gambling: Russia’s largest casino opens near Vladivostok, most customers Chinese

After running for one month on a trial basis, a casino near Vladivostok managed to attract more customers from Mainland China than from anywhere else, despite not having yet advertised there.

Melco Crown, chaired by Lawrence Ho (何猷龙), the son of Macau’s ‘King of Gambling’, have just grand-opened the ‘Tigre de Cristal’ (水晶虎宫殿) casino on Ussuri bay, near Vladivostok. Specifically, it’s in the “Gambling Zone Primorye” being developed on a certain Muravyinaya bay (or cove: бухта Муравьиная; more about the name later). The general area along Ussuri bay is locally popular as a holiday destination. The specific location of the ‘gambling zone’ has not only a bay, but also a small lake and low hills. In short, enviable fengshui.

Possibly even more than the geomantic appeal, the casino’s location near northern China has meant that around 60% of its customers during the trial period after a ‘soft opening’ were Chinese. And that, says Bill Hsu (徐明哲), chairman of Firich Enterprises, a Taiwanese investor in the casino, before even advertising the casino to Mainland customers: they “came on their own.” After such a success, adds Hsu, “adjustments” will be made to the facilities to appeal more specifically to Chinese players. Casinos are illegal in Mainland China.

Gambling holidays, offered to Mainland customers through junket operators, are scheduled to begin next month.

The casino is being described as the largest in Russia.

The location of the casino is literally called ‘Ants’ cove’ in Russian, but I’m not sure the name literally refers to an insect infestation. Another possibility that comes to mind is an allusion to Nikolay Muravyov-Amursky, a diplomat who played a major role in acquiring territory for Russia in the Amur basin (and the ‘Amursky’ title for himself). It was Muravyov who signed the Treaty of Aigun with the Qing Empire in 1858, later denounced as an “unequal treaty” (不平等条约). For China, the treaty meant the loss of the lands that now include Vladivostok, but on the positive side it also means Chinese people can now legally gamble there.

The myrmecological toponym is itself rather new. Like many other geographical features in the area, Muravyinaya cove used to be known by a non-Russian, most likely Chinese, name. Toponyms were Russified wholesale in 1972, but some of the old names are still in use by the local population, as well as by Chinese visitors and tourist guides. Gamblers at the Crystal Tiger might prefer to avoid the offending allusion to Count Muravyov and the unequal treaty by calling the bay by its older name, Tavayza Тавайза, etymologised as Chinese Daweizi (大崴子 or 大嵬子).

November 4, 2015

CRI’s network of ‘borrowed boats’ hits the news, state media responds

A Reuters report on China Radio International’s “covert radio network” has suddenly put the state broadcaster’s little-known affiliates in the news and triggered an official investigation in the US. A response from Chinese state media has already come out in the form of an angry Global Times editorial. Meanwhile in Beijing, a CRI meeting yielded a decision to deepen cooperation with ‘partner stations’ abroad.

The network began to take shape around 2009, as a novel approach to soft power involving a certain degree of ‘outsourcing’ of both the production and the delivery of media content for foreign audiences. This is what CRI president Wang Gengnian 王庚年 has called “borrowing a boat to go out to sea (借船出海)”. CRI (国际台) is older than the PRC itself and has been broadcasting in several languages for decades, but before the ‘borrowed boat’ network its radio and web content used traditional formats that clearly identified it as coming from the Chinese state. In the new strategy, content is produced closer to the audience, in tandem with non-CRI staff, at a number of companies (Wang’s ‘borrowed boats’, or the ‘covert network’ of the Reuters report) where the state broadcaster’s role is hardly mentioned. Such content is then delivered through media platforms where the connection to a Chinese state entity is further obscured.

The theoretical basis underlying the ‘borrowed boat’ strategy has been laid out in Chinese publications and media interviews by CRI officials, as I took the trouble to quote in a post last July on the University of Nottingham’s CPI blog (‘China’s state media and the outsourcing of soft power‘). In a nutshell, the intention is to present the views of the Chinese government to a worldwide audience (“compete to lead international opinion”) while crafting a delivery suitable to the “thinking, listening and watching habits of Western audiences”.

In a separate blog post from early July, I gave striking examples of how far this ‘localisation’ of the message could go: the motto of one of the affiliates used to refer to a “third angle” on China-related news, and while the overall line is clearly aligned with official views, occasional stories have referred to the “plight of China’s Uighurs” and to the 8th century Tibetan empire as an entity disjoint from China. Surely a first for Chinese state media.

The actual ‘borrowed boats’ are a handful of companies (three in the Reuters article, four or five by my count) based in Europe, Australia and the US. Each existed as an independent business of some sort before partnering with CRI, and each is led by a Chinese businessman. In at least some of them, the partnership with CRI eventually grew to become the company’s main visible activity, with CRI becoming a shareholder, in some cases with a majority stake. Crucially, the companies aren’t particularly loud about clarifying this ownership or partnership status, and, as we shall see, the recent response from Chinese state media explicitly denies it, even when the companies have admitted to it. In short, CRI owns at least some of the companies, but we aren’t supposed to know.

Time to list the companies. GB Times (环球时代), based in Tampere, Finland, produces radio and web content in several European languages. GB Times was the focus of my Nottingham post, whither I refer you for the details. The Reuters story focuses especially on G&E (环球东方), that marshals a dozen of radio stations in the US and Canada. My post only mentioned G&E in passing; the Reuters analysis is a must-read. CAMG (环球凯歌国际传媒集团), mentioned by both Reuters and me, is based in Melbourne and covers mostly Australia, but also Thailand and Nepal.

To add something to what’s already been made widely known by the Reuters report, I’ll mention CAMG’s radio station in Mongolia: Evseg Mongol Эвсэг Монгол radio (91.7 FM, Ulaanbaatar). Here again, the station’s affiliation with CRI isn’t evident from looking at their website, but a partnership with CAMG is mentioned in a post about a visit from a CAMG representative, and the CEO of the local company that owns the station also describes herself as “CEO of Global CAMG Group in Mongolia”. The station began broadcasting in January this year. Both Mongolian and Chinese sources (an account of a Beijing trip by two Mongolian journalists, who visited CRI’s Mongolian-language section as part of an exchange connected to the WW2 armistice commemorations; Chinese state-owned Mongolian-language news portal Solongo; CRI-connected portal china.com; CAMG themselves) talk about the Ulaanbaatar station broadcasting up to 18 hours a day of CRI content in Mongolian, but a quick look at the schedule for today doesn’t really suggest an obvious Chinese theme, at least judging from the names of the programmes.

Besides G&E, GB Times and CAMG, the three companies covered in the Reuters report, there are another two broadcasting CRI content in Europe, which, at least originally, existed independently of GB Times: Rádio Íris (91.4 FM, Lisbon) and Propeller TV in the UK. Details about ownership in the CPI blog piece.

The ‘borrowed boat’ strategy has had mixed success. While the radio and web content has indeed reached an audience beyond whatever CRI’s traditional listeners used to be (at one point GB Times content was aired on such mainstream commercial stations as BFM in France or Nova in Denmark), its visibility is surely well below that of the more traditional Chinese media outlets. The most comparable attempt to get state-aligned views into the Western mainstream would probably Russia’s Sputnik news or Russia Today, and those have arguably had managed successes Chinese media can still only dream of. The attempt to obscure a connection to the Chinese state to avoid the ‘propaganda’ label has failed rather spectacularly: whenever GB Times attracted mainstream media attention in Europe, they were called just that; CAMG’s reporters were chided for asking innocuous questions at staged official press conferences; and now the whole enterprise is described under ‘covert network’ headlines. The legality of the tactic has even attracted regulatory attention: GB Times’ Danish programmes went off air in 2013 after a government body found they were being ‘illegally sponsored’ by not disclosing they were being broadcast on paid airtime; and the Reuters story has prompted the US Federal Communications Commission to investigate whetheer G&E’s connection to the Chinese government violate regulations on state ownership of radio licenses.

For the time being, CRI seems undeterred. Chinese media report on a recent CRI meeting on measures to “optimise existing overseas projects” with one of the basic principles being the development of overseas business “through partner stations abroad”. The information is too laconic to derive too much from it, but if by ‘partner stations’ they mean the ones they have so far, this would suggest the ‘borrowed boat’ strategy hasn’t been abandoned. Judging from the dates, it’s likely that the meeting took place when people close to CRI already knew the Reuters story was coming their way.

A reaction to the Reuters story has already come from Chinese state media, in the form of an angry editorial in the Chinese edition of the Global Times. The article reacts with indignation at accusations that CRI’s affiliate network is involved in ‘propaganda’ or ‘ideological penetration’ and questions Western hypocrisy: CRI’s broadcasts are nothing compared to Western influences in China, viz. countless translations of “works of Western thought”, European football championships, the NBA or Hollywood films. Behind the paper’s usual rhetoric, the crucial point is a denial of CRI’s involvement: “those local American stations are not controlled by CRI” but only broadcast their content.