Exclusive: Beijing Moves Out Excess Industrial Capacity to BRI Countries

Internal government documents obtained by The Epoch Times suggest that one of the main drivers behind China’s Belt and Road Initiative (BRI, also known as “One Belt, One Road”) is to get rid of the country’s excess industrial capacity by moving them out to participating BRI countries. Under the Banner of International Industrial Capacity Cooperation The BRI is a far-reaching, strategic significance for the global leadership of the Chinese Communist Party (CCP), according to a report by the Jilin provincial government, titled, “The Blueprint of Jilin’s Participation in the BRI.” In response to this move, Jilin has made an all-out effort to move out its excess industrial capacity. Screenshot of an internal document of the Jilin provincial government describing the strategic significance of solving overcapacity. (Provided by The Epoch Times) The government of Chuzhou city, Anhui Province, carried out a BRI plan as outlined in a document, titled, “Implementation Plan of Participating in the Construction of the Silk Road Economic Belt and the 21st Century Maritime Silk Road.” Local authorities vowed to “fully follow” the guidelines of the CCP’s 18th National Congress and a series of speeches delivered by Chinese leader Xi Jinping on implementing the BRI plan and to stimulate key local enterprises to join overseas cooperative programs. In the plan, the local government encourages enterprises with excess industrial capacity to make investments in the BRI countries. It assists certain companies such as those in the cement, glass, and material fabrication businesses to set up foreign manufacture bases. Table of International Industrial Capacity Cooperation programs, Chuzhou city, Anhui Province. (Provided by The Epoch Times) China commentator Li Linyi said that Chuzhou’s plan revealed the real intention behind the CCP’s so-called BRI and relevant international cooperative programs is to shift China’s outdated and excess industrial capacity to the BRI countries. Chinese Automaker FAW The Jilin provincial government is a staunch supporter of BRI because of overcapacity in its auto industry. Jilin-based First Automobile Works (FAW) Group took part in the International Industrial Capacity Cooperation program in 2016. Chinese auto workers on the assembly line at the FAW-Volkswagen plant in Chengdu, in China’s southwest Sichuan Province, during the visit of German Chancellor Angela Merkel on July 6, 2014. (Got Chai/AFP via Getty Images) In 2015, according to China’s state-run media reports, China’s auto industry had a severe surplus capacity, with an 81 percent of passenger vehicle capacity utilization and a mere 52 percent of commercial vehicle capacity utilization. Capacity utilization refers to the manufacturing and production capabilities that are being utilized by a firm. Even worse, China’s auto capacity utilization has been on decline year by year. According to a 2019 auto industry study released by Hong Kong-based Guosen Securities, Chinese auto companies FAW Group, Geely Auto, Chery, and BYD Auto failed to reach 70 percent of capacity utilization in 2018. In 2018, FAW’s private brands, including Bestune, Hongqi, FAW Jilin, and Tianjin FAW, had a combined, planned capacity of 780,000 vehicles in total, according to Chedongxi, an independent Chinese media outlet focusing on the smart auto industry. In 2017, only 210,000 vehicles were sold, with less than 30 percent of capacity utilization. Public sources show FAW has secured an assembly plant in Pakistan, forming a capacity of 3,000 mini vehicles, and 1,000 medium and heavy trucks. It is also planning a 5,000-passenger vehicle program. Jilin’s internal document, titled “Jilin Province Equipment Manufacturing and International Capacity Cooperation Project Library” disclosed that the joint venture between Jilin’s First Automobile Works (FAW) and Pakistan has not made any profit due to poor sales in Pakistan. Jilin authorities had to ask the CCP’s central government for assistance, requesting the BRI project “to be included in the list of China-Pakistan capacity cooperation.” At the same time, Jilin hoped that the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) would ask Pakistan “to purchase FAW truck products as the priority for Pakistan’s major engineering projects.” The Party chief of Jilin Province, Bayanqolu, placed FAW’s overseas projects among his top agenda when he met with Laos and Burmese leaders during his visits to these two southeast Asian countries in 2016 and 2018 respectively. Alex Wu contributed to this report.

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Driver Killed After Crane Vehicle Overturned on Rail Bridge Over Laos’ Mekong River

A freak accident on an unfinished rail bridge over the Mekong River in Laos has killed a 43-year-old crane truck driver, whose body was discovered nearly 50 miles downstream from where his vehicle was found hanging perilously upside down over raging waters, RFA has learned. The accident occurred on Sept. 15 when the vehicle fell through a guard rail on the bridge in northern Laos’ Luang Prabang province. Authorities and the construction company were looking for the driver shortly after the accident, a source living near the construction site told RFA’s Lao Service last week. At the time of the accident, the vehicle had been installing streetlight posts on the bridge. The weight of the posts caused the crane to skid into a fenced guard rail, damaging it slightly. The source said the driver may have become unconscious and fallen into the river below and drowned. A member of a rescue team in Luang Prabang told RFA that a dead body, believed to be the driver’s, was recovered from the Mekong on the evening of Sept. 18 about 75 kilometers (47 miles) away from the construction site. RFA contacted a family member of the driver, who asked not to be identified. She said the driver was employed by a Chinese company that had been subcontracted to work on the bridge project. Upon investigation it was determined that the driver was at fault in the accident, but the family was able to completely settle with the company for an undisclosed amount and funeral costs. This file photo from 2019 shows the same bridge, a key landmark on the 257 mile (414 kilometer) Lao-China Railway that will run from the Chinese border to near the capital Vientiane at the border with Thailand when complete in 2021. RFA The Lao-China railway project—now 83 percent complete—will be part of the part of the 257 mile (414 kilometer) Lao-China railway that will run from the Chinese border to near the capital Vientiane at the border with Thailand. The railway is being touted as a boon for the impoverished nation of nearly 7 million people because it is expected to lower the cost of exports and consumer goods while boosting socioeconomic development. The $6 billion project is due for completion in December 2021 and is part of Chinese President Xi Jinping’s massive Belt and Road Initiative of infrastructure to support trade with China. Reported and translated by RFA’s Lao Service. Written in English by Eugene Whong.

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Cypriot Passport Bought by Shadowy Ally of Cambodian Interior Minister

A mysterious Chinese-Cambodian tycoon with ties to Interior Minister Sar Kheng purchased Cypriot citizenship in 2018, according to documents shared exclusively with Radio Free Asia by Al Jazeera as part of their Cyprus Papers investigation. With a goatee beard and an impish demeanor, 33-year-old Chen Zhi makes for an unlikely “oknha,” the honorific title bestowed on businessmen who donate at least $500,000 to public works approved by the ruling Cambodian People’s Party. Such sums are pocket change to the likes of Chen, one of a growing class of tycoons capitalizing on China’s Belt and Road Initiative, or BRI, which aims to improve commercial infrastructure linking China with the rest of the world. Chen’s Prince Group of companies have invested more than $1 billion into corporate ventures across Cambodia, according to media reports. Evidence uncovered by RFA suggests he’s leveraged political connections in both Cambodia and his native China to make that happen. Originally hailing from the Chinese city of Fujian, Chen became a naturalised Cambodian citizen in February 2014. The timing was perfect. Just five months earlier, Chinese President Xi Jinping had launched BRI, which unleashed a flood of Chinese capital into Cambodia, inflating a real estate bubble that has yet to burst. A powerful friend in the shadows Foreigners constitute the vast majority of buyers for condo units in the high-rises that have sprouted in Cambodian cities – many of them Chinese. While non-citizens are forbidden by law from buying land in Cambodia, Chen’s naturalized status means that his Prince Real Estate (Cambodia) Group has been able to make a fortune building and selling such units. Evidence uncovered by RFA suggests Chen had a powerful silent partner in China involved the venture. Marketing materials used by Prince Real Estate when it first set up shop in Cambodia point to a now-mothballed website that promoted its real estate offerings in the country from 2015 to 2018. Archived versions of the site show in the bottom-left hand corner an Internet Content Provider, or ICP, license number. (Any website wishing to operate within China is required under Chinese law to apply for a unique ICP number from the Ministry of Industry and Information Technology or else find themselves blocked). A search of the ministry’s official database revealed that the Prince Group’s domain name and ICP number matched. However, the database recorded them as having been registered by Chongqing Qijiang District Julong Industry, a construction and real estate company owned by Zhao Mozhang, a municipal official in the western Chinese metropolis of Chongqing. A Phnom Penh proxy? Born in 1943 and an engineer by training, local press reports describe Zhao as having made his fortune after communist China eased restrictions on private business from the late 1970s. He was reportedly first elected to a local People’s Congress in 1990 and has maintained parallel careers in construction, real estate and politics ever since. In March 2014, a Chinese real estate company wholly owned by Zhao became a founding partner in a newly formed Chinese firm: Chongqing Phnom Penh Trading Company. The new company’s name seems to imply Zhao was eyeing business opportunities in Cambodia’s capital. The management of his shareholding in it through his pre-existing real estate firm suggests it was bricks and mortar he was interested in. Zhao Mozhang, a municipal official in western China’s Chongqing metropolis and founding partner of the Chongqing Phnom Penh Trading Company. Credit: Chongqing Morning Post But without Cambodian citizenship, Zhao would be unable to buy land there. China’s laws prohibit its citizens from holding dual nationality. While the legislation is sometimes loosely enforced, it is unlikely an elected official like Zhao taking a second citizenship would go unnoticed. Conveniently, Chen was awarded Cambodian citizenship less than one month before Zhao’s real estate company became a founding partner in Chongqing Phnom Penh Trading Company. Chen did not respond to a detailed request for comment, including questions about the nature of the relationship between the Prince group of companies and those of Zhao, who reporters were also unable to reach for comment. Joining the Cambodian elite Chen certainly enjoys high-level political connections in Cambodia. In July, King Norodom Sihamoni designated him “neak oknha,” an honorific political scientists say indicates a track record of extensive generosity towards the ruling CPP. Chen was subsequently appointed personal advisor to Cambodian Interior Minister Sar Kheng, for whose ministry he has already served as an unsalaried advisor since February 2017 -- a position with equal status to an undersecretary of state. Interior Minister Sar Kheng, shaking hands with National Police Commissioner Neth Savoeun, May 16, 2020. Credit: www.sarkheng.com Chen’s association with Sar Kheng extends to business ties his son, Sar Sokha. Two weeks after Chen’s appointment as a ministerial advisor in 2017, Chen and Sar Sokha established Jinbei (Cambodia) Investment. While the company’s precise activities are unclear, it is likely connected to Chen’s Jin Bei Group, which owns a casino in the Cambodian resort city of Sihanoukville, a magnet for Chinese gamblers. Sar Sokha, who did not respond to a request for comment, is also a secretary of state at the Ministry of Education. But that didn’t stop him participating in a showy Prince Real Estate public relations exercise in Sihanoukville in April 2017. For many years, Sar Kheng has been widely perceived as a moderate, reformist alternative to Prime Minister Hun Sen. According to Sebastian Strangio, author of “Hun Sen’s Cambodia,” the overlapping of the political and business links between Chen and the Interior Minister undermine this narrative. “It shows that he continues to play the same sort of patronage politics that Hun Sen does in a similar sort of way,” Strangio told RFA. “I think this is evidence of just that.” Jin Bei Casino in the southern resort city of Sihanoukville, a magnet for Chinese gamblers visiting Cambodia. The casino is owned by Chen Zhi’s Jin Bei Group. Credit: Jin Bei Casino's Facebook page Following the Khmer Riche to Cyprus In early 2018, Sar Sokha divested his shares in Jinbei (Cambodia) Investment, according to Cambodian Ministry of Commerce records. Meanwhile, Chen had been busy procuring one of the ultimate status symbols among Cambodia’s political and business elite: a Cypriot passport, which allows ease of travel and doing business across the European Union. Over the last year, the government of Cyprus has come under increasing pressure from opposition lawmakers, NGOs and the European Commission to reform its highly lucrative citizenship-by-investment scheme. Under the scheme, persons wishing to obtain a Cyprus passport are required to invest $2.5 million in businesses or real estate on the island nation. A Reuters investigation last November revealed that more than a dozen politically connected Cambodians had obtained Cypriot passports through the scheme. The government in Nicosia reacted by announcing that it would revoke the citizenship of eight of those Cambodian-Cypriots, although they would have to rewrite the scheme’s legislation to do so. Today, almost a year later, the eight are yet to lose their passports. As previously reported by RFA, they include National Police Commissioner Neth Savoeun, who in January 2018 joined Chen at a ceremony to mark a donation by the Prince Group of 13 transport trucks to the Cambodian police. This August, another damning leak of documents from the scheme was made available to Al Jazeera. Dubbed the Cyprus Papers, they contained details of 2,500 people who had paid for a Cypriot passport. Documents shared with RFA by Al Jazeera reveal that Chen Zhi was among those 2,500. His application, submitted in 2017, was approved by the Cyprus Ministry of Interior in May 2018. Chen Zhi pictured (right), visiting a Prince Group construction site in Sihanoukville, accompanied by company vice president Qiu Guo Xing (left), in an advertorial in the Phnom Penh Post April 27, 2017 Credit: Phnom Penh Post Mystery millions Neither Chen nor the Cyprus Ministry of Interior official who signed off on his citizenship application responded to questions about what investments the young Chinese-Cambodian-Cypriot made in order to obtain his latest passport. A similar shroud of mystery hangs over much of the oknha’s wealth. He is listed as a director of 10 Hong Kong companies. In many of those cases he is the sole listed director and the companies’ shares are held by shell companies in offshore secrecy jurisdictions such as the British Virgin Islands, making it impossible to know who truly owns the Hong Kong firms. So where exactly Chen’s money came from is unclear – as is how he transformed from a 27-year-old nobody into one of Cambodia’s most successful tycoons in just six years. One thing is clear, however: whether in China or Cambodia, Chen has not been shy of cosying up to the politically connected – a quality that has brought commercial success for many Cambodian tycoons before him. RFA's Mandarin Service contributed to this report.

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