Management and Sustainability in the Belt and Road 1032055693, 9781032055695

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Management and Sustainability in the Belt and Road China’s Belt and Road Initiatives (BRI) is an ambitious infrastructure project conceived in 2013 by President Xi Jinping with development and investment initiatives stretching from Asia and Europe that reflect the original Silk Road with business networks through countries such as Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, as well as India and Pakistan, spanning a route of more than 4,000 miles and history that can be dated back more than 2,200 years. Given the background of China’s unique approach in fighting COVID-19, and against the backdrop of sluggish economic growth, innovation, and management, sustainable development of BRI will be the key and the driving force for the postpandemic economic recovery of many countries, especially as BRI countries now account for nearly 30% of China’s foreign trade and 15% of outward direct investment. The vision to create a vast network of railways, energy pipelines, highways, and streamlined border crossings to expand the international use of Chinese currency and improve connectivity to China is good foresight and proved fortuitous when the COVID-19 pandemic came to plague the world, and amid the conflicts between the United States and China as well as the war between Russia and Ukraine. Since the inception of BRI, many books have been written to cover topics ranging from globalization to detailing how China’s business and politics are a major motivation for China’s overseas economic activities with case studies and practices, yet few of these books provide a structured approach to the sustainable management of BRI projects. This book is about how to manage the innovation, sustainability, and business necessary to make BRI work and how to handle the issues, problems, and crises that may arise in the process. Participants of BRI projects can take many different roles, but ultimately, it is team effort and leadership that creates successful projects. Here the readers will find guidelines and insights to survive and prosper in a myriad of BRI opportunities and risks. Most important of all, this book provides a glimpse of different approaches for success in BRI projects, including sustainability, environmental issues, social and political aspects, technology, choice of industry, project management, education and training, governance, and many more.

Management and Sustainability in the Belt and Road

Edited by Andrew W. H. Ip

Professor Emeritus and Adjunct Professor of University of Saskatchewan, Canada Senior Research Fellow, The Hong Kong Polytechnic University, China

Lianne K. W. Lam

The Hong Kong Polytechnic University, China

First edition published 2023 by CRC Press 6000 Broken Sound Parkway NW, Suite 300, Boca Raton, FL 33487–2742 and by CRC Press 4 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN CRC Press is an imprint of Taylor & Francis Group, LLC © 2023 selection and editorial matter, Andrew Ip, Lianne Lam; individual chapters, the contributors Reasonable efforts have been made to publish reliable data and information, but the author and publisher cannot assume responsibility for the validity of all materials or the consequences of their use. The authors and publishers have attempted to trace the copyright holders of all material reproduced in this publication and apologize to copyright holders if permission to publish in this form has not been obtained. If any copyright material has not been acknowledged please write and let us know so we may rectify in any future reprint. Except as permitted under U.S. Copyright Law, no part of this book may be reprinted, reproduced, transmitted, or utilized in any form by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying, microfilming, and recording, or in any information storage or retrieval system, without written permission from the publishers. For permission to photocopy or use material electronically from this work, access www.copyright.com or contact the Copyright Clearance Center, Inc. (CCC), 222 Rosewood Drive, Danvers, MA 01923, 978–750–8400. For works that are not available on CCC please contact [email protected] Trademark notice: Product or corporate names may be trademarks or registered trademarks and are used only for identification and explanation without intent to infringe. Library of Congress Cataloging-in-Publication Data Names: Ip, Andrew W. H., editor. | Lam, Lianne K. W., editor. Title: Management and sustainability in the Belt and Road / Andrew W.H. Ip, Lianne K.W. Lam. Description: First edition. | Boca Raton, FL : CRC Press, 2023. | Includes bibliographical references and index. Identifiers: LCCN 2022057763 (print) | LCCN 2022057764 (ebook) | ISBN 9781032055695 (hbk) | ISBN 9781032055701 (pbk) | ISBN 9781003198147 (ebk) Subjects: LCSH: Sustainable development—China. | Economic development— China. | Management—China. Classification: LCC HC430.E5 M327 2023 (print) | LCC HC430.E5 (ebook) | DDC 338.951—dc23/eng/20230314 LC record available at https://lccn.loc.gov/2022057763 LC ebook record available at https://lccn.loc.gov/2022057764 ISBN: 978-1-032-05569-5 (hbk) ISBN: 978-1-032-05570-1 (pbk) ISBN: 978-1-003-19814-7 (ebk) DOI: 10.1201/9781003198147 Typeset in Times by Apex CoVantage, LLC

Contents Foreword�������������������������������������������������������������������������������������������������������������������� vii Preface������������������������������������������������������������������������������������������������������������������������ ix Acknowledgments�����������������������������������������������������������������������������������������������������xiii Editor Bios����������������������������������������������������������������������������������������������������������������� xv List of Contributors�������������������������������������������������������������������������������������������������� xvii 1. Building Innovative Mechanisms for International Development: A Case of Triangular Cooperation of Belt and Road������������������������������������� 1 Liguang Liu, Alimiremu Abudukeyimu, and Chao Luo 2. Sustainability Aspects�������������������������������������������������������������������������������������� 23 Shujahat Ali, Nabila Aftab, and Muhammad Fahim Khan 3. China’s Belt and Road Initiative and Its Impact on the European Union����57 Zuzana Kittová and Barbora Družbacká 4. A Case Study Comparing Two Different Environmental Education Approaches and Its Implications on Youth Education Policies������������������� 99 Lianne K. W. Lam 5. Applying Project Management Techniques in Service Learning Courses to Promote Sustainability Awareness������������������������������������������������������������121 Lianne K. W. Lam, Jessica Poon, and Andrew W. H. Ip 6. Overcoming Future Challenges for the Belt and Road Initiative through Building Resilience: Regional Lessons from the Tourism and Retail Industry in Hong Kong�����������������������������������������������������������������������143 Aureliu Sindila, Ayden Nicholas Lam, and Lianne K. W. Lam 7. Challenges and Opportunities for SMEs beyond Singapore through the Belt and Road Initiative: Industry 4.0����������������������������������������������������175 Mok Hon Yong 8. Would China Become the Next Natural Wine Hub?�����������������������������������199 Wu Hei Ming Amy, Lianne K. W. Lam, and Chun Kwok

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9. One Belt One Road: A Grand Strategy�������������������������������������������������������� 225 Muhammad Fahim Khan, Nabila Aftab, Shujahat Ali, and Syed Shahab Uddin 10. Geo-Economic and Geo-Political Aspects of One Belt One Road (OBOR)�������������������������������������������������������������������������������������������253 Muhammad Fahim Khan and Aamer Raza Index�������������������������������������������������������������������������������������������������������������������������279

Foreword The Belt and Road Initiative (BRI) is a global development strategy adopted by the  Chinese government in 2013  involving infrastructure development and investments in Asia, Europe, Africa, and the Middle East and covering over 100 countries where more than half of the world’s population lives. This book documents a compilation of the recent research in the business and management arena covering various development strategies and solutions to challenges where the One Belt One Road initiative is in place. In the midst of the changing world order or what we call the “new normal,” researchers and practitioners are studying how to face the challenges and opportunities. Infrastructure-based development drives the motivation of further studies in the areas of economic development, industrialization, business process, communications, cultural, social, and technological developments, and in particular sustainability and environmental protection. Here, Professor Andrew Ip and Professor Lianne K. W. Lam, and the contributing authors offer a comprehensive review of key aspects under the One Belt One Road for readers to gain a clearer picture of the strength and weakness of this Belt and Road development. The authors use an integrated and multidisciplinary approach on business and management, social and political descriptions supported by case studies, and empirical data to analyze One Belt One Road, in particular, the sustainability aspects of world growth and development. The book has a major focus on contemporary issues involved in geo-political and macroeconomics analysis related to the design, development, and implementation that contribute to the strategic and operational improvement of organizations within the OBOR business environment, addressing environmental friendliness and sustainable technologies. This book can be a good reference for teaching and learning on the latest theory and practices for academics and industry practitioners involved in the Belt and Road. It also serves as a book satisfying college course requirements for undergraduate and postgraduate degrees. Dr Hon Johnny Ng Kit-chong, MH Member of Chinese People’s Political Consultative Conference Member of the Legislative Council of Hong Kong SAR Chairman, Goldford Group

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Preface China’s Belt and Road Initiative (BRI) is a massive infrastructure project that was launched in 2013 by President Xi Jinping. The BRI is designed to promote development and investment initiatives across Asia and Europe, following the historical Silk Road path, with business networks that stretch through countries from Asia countries such as India and Pakistan to Africa and Europe etc., spanning a route of thousands of miles. This ambitious initiative reflects a history that dates back more than 2,200 years and is a testament to China’s commitment to international mutual cooperation, economic growth and development. Against the backdrop of sluggish economic growth and the unique approach that China has taken in fighting COVID-19, the sustainable development of the BRI will be the key and the driving force for post-pandemic economic recovery for many countries. This is especially true given that BRI countries now account for over 30% of China’s foreign trade and 15% of outward direct investment. It is clear that innovation and management within this initiative will play a crucial role in ensuring its success. The BRI’s vision to create a vast network of railways, energy pipelines, highways, and streamlined border crossings to expand the international use of Chinese currency and improve connectivity to China is a remarkable foresight. Interestingly, four years after the BRI was announced, President Trump came into office, followed by the COVID-19 pandemic in two more years; the conflicts between the United States and China, as well as a war between Russia and Ukraine. In this context, the BRI has become even more critical as it provides an alternative global economic framework that could potentially help reshape the world economic order. However, the BRI has also faced criticisms, particularly over concerns about debt sustainability, environmental impact, and transparency. Critics have raised questions about the economic viability of some of the BRI projects, as well as the potential for corruption and human rights abuses. Despite these challenges, the BRI has continued to gain momentum, with more and more countries signing on to participate in the initiative. The BRI has been reshaping the global economic and political landscape and in years to come, China’s sustained commitment to the initiative suggests that it will remain a significant force in the world for the foreseeable future. Overall, the BRI represents a significant opportunity while challenging countries across Asia, Africa and Europe to collaborate and engage in mutually beneficial economic and infrastructure development. By embracing innovation, investment, and sustainable management, the BRI has the potential to drive post-pandemic economic recovery and reshape the global economic landscape for the benefit of mankind. Since the inception of BRI, many books have been written to cover topics ranging from globalization to explaining China’s business and politics as a major motivation for China’s overseas economic activities with case studies and practices, yet seldom do these books provide a structured approach to the sustainable management of BRI projects. This book is about how to manage the innovation, sustainability, and business necessary to make BRI work and how to handle the issues, problems, and crises that may arise in the process. Participants of BRI projects can take many different ix

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roles, but ultimately, team effort and leadership are required for each project. Here, readers will find guidelines and insights to survive and prosper in a myriad of BRI opportunities and risks. Most important of all, this book provides a glimpse of different approaches for success in BRI projects, including sustainability, environmental issues, social and political aspects, technology, method of market entry, choice of industry, project management, education and training, governance, and many more. The first chapter summarizes lessons learned from the BRI project in terms of capacity building, partnership governance, technique standard formulation, and policy integration. It intends to promote discussion about China’s technology transfer policy and provide useful insights regarding the improvement of international aid policy cooperation. Chapter 2 describes the objectives, responsibilities, and research agenda that come with environmental and environmental management challenges faced by China’s government due to BRI’s massive infrastructure development and investment strategy related to more than 130 nations. Chapter 3 looks into the impact of the BRI on the EU in the form of case studies of selected EU countries. For each country, the attitudes to the BRI at both the government and corporate levels are highlighted and the development of bilateral foreign trade is evaluated. The chapter is supplemented by a quantitative analysis based on calculating the Trade Intensity Index that is used to evaluate the impact of BRI on trade in goods. Chapter 4 provides a case study from a typical Chinese rural village; it aims to compare and evaluate the effectiveness of two environmental education approaches among Chinese students between the age of 6 and 20 based on two implementations in the year 2012 and 2013. The objective is to evaluate how the education approach can help change the public’s opinions of commitment to environmental protection so as to nurture an ethic of sustainability for future generations. Chapter 5 covers an empirical research conducted by reviewing the attitudinal changes of students who enrolled in a university-wide Sustainability Service learning course between the years 2015 and 2021 at a Hong Kong university. The research results suggest that students who completed the course experienced greater levels of confidence in their ability, better attitudes toward protecting the environment, and an overall increase in willingness to become a volunteer. Chapter 6 is a study that provides a theoretically and practically insightful framework for strategizing under adversity that can be further applied in a regional and more general context of the BRI. The framework also serves as a starting point for a more nuanced discussion on the application of resilience strategies and their character during crises. Chapter 7 explores how small- and medium-sized enterprises can use Industry 4.0 tools and techniques to overcome the pandemic challenges and prepare for the BRI opportunities. This chapter further attempts to contribute to the literature by incorporating product exploration and exploitation strategies in technological innovation to affect EO-firm performance positively. Chapter 8 looks at the natural wine market in the context of BRI through China as a wine-producing partner to the old world wine countries with case studies exploring three countries along the Belt and Road to see how China can relate to their developments with a focus on the development in terms of grape varietals, farming, terroir, marketing strategies, government and industry support, as well as challenges going forward.

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Chapter 9 uses an exploratory and descriptive technique to review written materials related to CPEC, an economic corridor between China and Pakistan that may also serve as a link between China’s OBOR and Russia’s RICE, it helps the readers in understanding the current waves of CPEC and predicting its future direction. In the last chapter, regional dynamics of the Belt and Road are covered, with particular attention paid to the relationship between Pakistan and China (RSC). A survey of CPEC experts and interviews with renowned national and international scholars is used to answer research questions and test the hypothesis using sequential methodological triangulation. It is found that China’s ties with other countries, particularly those along the OBOR, would be shaped in large part by the future geo-economic, geo-political, and geo-strategic components of BRI and CPEC projects.

Acknowledgments First and foremost, we would like to thank all the contributing authors and the supporting team for the development of this book. In addition, our deep appreciation goes to our family members, friends, mentors, professors, and practitioners who have provided us with the encouragement and inspiration to write this book from concept to publication. They have supplied us with tremendous ideas, data, and information on the Belt and Road initiative and we have shared precious time and moments together to discuss Belt and Road opportunities and challenges. Our gratitude also goes to Hu Bin of Changsha Normal University for his assistance and involvement funded by the project of the Hunan Provincial Department of Education (21C1632). The academic research network of IRNet China also provided the platform for the promotion and development of some of the chapters. Last but not least, we are truly grateful for the publisher, Gabriella Williams, Khushbu Vora, Kabra, Vaishnavi, and many more who have guided us with their expert opinions, supporting us with the process of making this book, and not to mention giving us all suggestions and directions to make this book a successful one. Appreciation also given to Mr. James Ng and Mr. T.F. Leung of African General Chamber of Commerce (Greater China) for sharing with us the Sino-African developments in Belt and Road. Prof. Andrew W. H. Ip Prof. Lianne K. W. Lam

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Editor Bios Prof. Andrew W. H. Ipreceived his PhD from Loughborough University (U.K.), MBA from Brunel University (United Kingdom), MSc in Industrial Engineering from Cranfield University (United Kingdom), and LLB (Hons) from the University of Wolverhampton (United Kingdom). He is now Professor Emeritus of Mechanical Engineering at the University of Saskatchewan and Senior Research Fellow in the Department of Industrial and Systems Engineering of The Hong Kong Polytechnic University. He is also Honorary Industrial Fellow of the University of Warwick, Warwick Manufacturing Group. Prof. Ip and his research team were awarded “Gold Medal with the Congratulations of Jury” and “Thailand Award for Best International Invention from The National Research Council of Thailand (NRCT)” at the 43rd International Exhibition of Inventions of Geneva. And in 2013, he obtained the Natural Science Award—Second Class, presented by the Ministry of Education of Mainland China. Prof. Ip has published over 300 papers with over 150 papers in SCI-indexed journals and has written various books and invited book chapters. He is also Editor-in-Chief of Enterprise Information Systems and Taylor and Francis publishing, Editor-in-Chief and Founder of International Journal of Engineering Business Management and SAGE publications, and Editorial Member of various international journals. He is Distinguished Professor and Visiting Professor at various universities in Mainland China. He is a senior member of the Institute of Electrical and Electronics Engineers and the Hong Kong Institution of Engineers. In 2022, Prof. Ip is listed as the World Top 2% Cited Scientists (Stanford Ranking). Prof. Lianne K. W. Lamcurrently appoints as Professor of Practice at the Hong Kong Polytechnic University and Visiting Professor at the Hunan University of Finance and Economics and Hunan International Economics University in Hunan, China. Prof. Lam began her career in Hong Kong with marketing and public relations roles at the Far East Group of Companies and the Palm Island Resort (China) before setting up her own public relations firm handling integrated marketing for clients. In 2003, she was approached by the Cogitoimage Group to become a partner, managing the firm’s Hong Kong and China “Space Branding” business. After graduating with her doctoral degree in 2013, she puts her research into practice and set up Hong Kong Sustainable Society—a non-profit organization dedicated to engaging positive thinking to promote sustainable development in Hong Kong. Prof. Lam holds a Bachelor of Science degree in Actuarial Science from the University of Toronto, a Bachelor of Law degree from Peking University, an MBA degree from Peking University, and a DBA degree from the Hong Kong Polytechnic University. Prof. Lam is married with two children and enjoys sailing, skiing, and music. The family has invested and obtained license to operate an international primary school, a local primary school, and a kindergarten in China. xv

Contributors Alimiremu Abudukeyimu Central University of Finance and Economics China Nabila Aftab University of Peshawar Pakistan Shujahat Ali University of Peshawar Pakistan Barbora Družbacká University of Economics in Bratislava Slovakia Andrew W. H. Ip The Hong Kong Polytechnic University Hong Kong SAR Muhammad Fahim Khan University of Peshawar Pakistan Zuzana Kittová University of Economics Slovakia Chun Kwok Faculty of Business, City University of Macau China

Lianne K. W. Lam Department of Management and Marketing, The Hong Kong Polytechnic University Hong Kong SAR Liguang Liu Central University of Finance and Economics China Chao Luo Central University of Finance and Economics China Jessica Poon Princeton University USA Aureliu Sindila Department of Management and Marketing, The Hong Kong Polytechnic University Hong Kong SAR Wu Hei Ming Amy Hong Kong Sustainable Society Hong Kong SAR Mok Hong Yong The Hong Kong Polytechnic University Hong Kong SAR

Ayden Nicholas Lam Ecole Hôtelière de Lausanne Switzerland

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1 Building Innovative Mechanisms for International Development: A Case of Triangular Cooperation of Belt and Road Liguang Liu School of Government, Central University of Finance and Economics, Beijing, China Center for Global Economy and Sustainable Development, Central University of Finance and Economics, Beijing China [email protected] Alimiremu Abudukeyimu School of Government, Central University of Finance and Economics, Beijing, China [email protected] Chao Luo School of Government, Central University of Finance and Economics, Beijing, China [email protected]

CONTENTS 1.1 Introduction�������������������������������������������������������������������������������������������������������� 2 1.2 Triangular Cooperation and China’s Belt and Road Initiative��������������������������� 3 1.2.1 Triangular Cooperation as an Attractive Development Cooperation Approach�������������������������������������������������������������������������� 3 1.2.2 Technology Transfer on the Belt and Road Initiative���������������������������� 5 1.3 Case Study: China–Zambia Renewable Energy Technology Transfer (RETT) Project�������������������������������������������������������������������������������������������������� 6 1.3.1 Rationale and Motives��������������������������������������������������������������������������� 8 1.3.2 Governance and Partnership����������������������������������������������������������������� 9 1.3.3 Policy Directions and Priority Setting�������������������������������������������������11 1.3.4 Management and Funding��������������������������������������������������������������������13 1.3.5 Monitoring and Evaluation�������������������������������������������������������������������14 1.4 Findings from the Case Study���������������������������������������������������������������������������15 1.4.1 Good Practice���������������������������������������������������������������������������������������15 1.4.2 Challenges and Possible Solutions�������������������������������������������������������17 1.4.3 Sustainability of the Project Interventions�������������������������������������������18 1.5 Conclusions and Perspective�����������������������������������������������������������������������������19 Note������������������������������������������������������������������������������������������������������������������ 20 1.6 References�������������������������������������������������������������������������������������������������������� 20 DOI: 10.1201/9781003198147-1

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1.1 Introduction China’s global development engagement has been gaining momentum over the past decade, and it has gradually shifted its role from an international aid recipient to a donor in areas of overseas investment and technology transfer. Potentially, technology transfer brings out cooperation, but it may lead to concerns about competition or even economic exploitation. Although African countries have achieved economic growth in the past decade, the development is still fragile and many countries heavily depend on international investment and aid to maintain their economic development. How international cooperation can help facilitate developing countries, in particular, those least developed countries to reform their policies and institutions and build selfsufficiency capabilities has been heatedly discussed for many years. Traditionally, international development cooperation is between developed countries and developing countries, referred to as North–South Cooperation (NSC). With developing countries gradually earning economic and political strengths, emerging economies and more developing countries have shifted their roles from recipients to development donors. As a result, South–South Cooperation (SSC) has become a meaningful supplement, not a substitute, to the traditional NSC format, and the North’s reaction to the rise of SSC has evolved “from fear to cooperation and attempted capture” (Kragelund, 2019: 114). There is no doubt that China is one of the most prominent countries actively involved in advocating and practicing SSC in recent years. Since the 2000s, a new form of cooperation, called triangular cooperation, has emerged in different parts of the world.1 Triangular cooperation is a partnership between developed donor countries and pivotal countries (providers of SSC) to implement development cooperation programs/ projects in beneficiary countries (recipients of development aid) (Fordelone, 2009). With the continued economic growth since China initiated its market-oriented reforms three decades ago, China has gradually become a leading lender and infrastructure builder in the developing world. China’s experiences in achieving economic growth and promoting technology transfer and diffusion are influential and attractive to other developing countries. Under the Belt and Road Initiative (BRI), which was launched in 2013, China has greatly increased its investment, development, and trade in a diverse array of infrastructure projects in over 70 countries, constituting an ambitious foreign policy with deep geopolitical implications. Has a triangular cooperation project been considered to promote development in beneficiary countries of the South? How has China been involved in such a project? How has the international development project contributed to the strategic needs of the BRI? This research provides an intrinsic case of a triangular cooperation project, the China-Zambia SSC on Renewable Energy Technology Transfer (RETT) Project (hereinafter referred to as the China–Zambia RETT Project), broadly categorized as an international development attempt under the context of the BRI. Funded by the Danish Government, the China–Zambia RETT project is administered and facilitated by the United Nations Development Programme (UNDP) and implemented by the governments of China and Zambia, acting as pivotal and beneficiary partners, respectively. The project adopts the model of North–South–South triangular cooperation to facilitate technology transfer and cooperation. Both primary data from fieldwork and interviews of involved parties and secondary data from literature are used as evidence. The remainder of the chapter is arranged as follows. It first describes the triangular cooperation and the BRI proposed by China as the contextual background. Section 1.3

Innovative Mechanisms for International Development

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provides an analytic overview of the China–Zambia RETT project, including its rationale and motives, governance and partnership, policy direction and priority setting, management, and monitoring and evaluation (M&E). Discussions are taken in Section 1.4 to summarize lessons learned from the project and discuss the challenges that the triangular cooperation of Belt and Road could bring to the benefit of the countries of the South. Section 1.5 concludes and provides a perspective of the future triangular cooperation of the Belt and Road.

1.2 Triangular Cooperation and China’s Belt and Road Initiative 1.2.1 Triangular Cooperation as an Attractive Development Cooperation Approach International communities take different approaches to promote international cooperation toward achieving sustainable development goals (SDGs). Traditionally, financial contributions and technical assistance are taken in the form of one-way cooperation between the North and the South. As countries of the South engage in sharing knowledge and solutions to address common development challenges, the SSC has earned prominence and has proved to be a valuable complement to the NSC (OECD, 2011). In 1974, a special unit, the predecessor of the United Nations Office for South–South Cooperation (UNOSSC), was established within the UNDP to promote technical cooperation among developing countries. Although the countries of the South share a common heritage of their struggle toward independence and economic development, there is no distinctive and concrete SSC model of technology transfer (Raslan, 2021). Furthermore, the countries are not homogeneous since the countries of the South are also diverse in “conflicting priorities, differing development narratives and problems in the suitability of local technologies to other Southern countries’ needs” (Dahi & Demir, 2017). Under the changing context, a new form of cooperation, called triangular cooperation, has been developed to promote win-win-win situations. Under the UN’s definition, triangular cooperation is “Southern-driven partnerships between two or more developing countries, supported by a developed country(ies)/or multilateral organization(s), to implement development cooperation programmes and projects” (Raslan, 2021). Viewed as a bridge between traditional NSC and SSC, triangular cooperation is “an arrangement under which donor and international organizations support and complement specific South-South cooperation programs or projects by providing technical, financial, and material assistance” (OECD, 2011). According to Han (2016), the triangular cooperation can take several forms depending on donors or the scope of the project: (a) all sides make complementary technical and financial contributions; (b) the traditional donor member or multilateral development agency fully funds the project, while an emerging pivotal country provides development expertise and know-how derived from its own experience; and (c) in the case involving more than two development cooperation providers, donor countries and pivotal countries can share responsibilities of financial support and technical expertise. Triangular cooperation is a transformative modality that builds on the complementary strengths of different development partners. Besides, it encourages matching demand and partnership development as the primary steps in establishing new

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triangular cooperation initiatives (OECD, 2020). However, triangular cooperation confronts a range of challenges, some of which include coordination among partner countries, lack of engagement in the planning and execution of the beneficiary countries, limited scale and scope of triangular cooperation projects, the potentially higher transaction costs, the alignment of triangular cooperation with the normal set of instruments of all development stakeholders, systematic reporting, and learning capacity (Fordelone, 2009; OECD, 2020). China has viewed itself as a firm advocate and practitioner of the SSC, solidifying its position as a reliable development partner with other developing countries and combining the group to find solutions to development challenges. China’s engagement in SSC grew out of the Bandung Conference in 1955 and later expanded its policy concerns from Asia to involve Africa. With the economic globalization, the development of new emerging economies, mainly BRICS countries (i.e., Brazil, Russia, India, China, and South Africa), has rebalanced the global governance and come to strengthen SSC since the mid-2000s. China has developed its overall international cooperation strategy and reformed its institutions for its involvement in triangular cooperation. Recognizing the gradually expanding scope of international aid for development, starting in 2011, China began to issue white papers to clarify its stance on foreign aid. In its first White Paper (State Council, 2011), triangular cooperation, as a new form of cooperation, was taken under the framework of SSC and operates on the basis of respecting the needs of recipient countries and jointly promoting the process of global poverty alleviation. The Ministry of Commerce was authorized to oversee foreign aid. In the White Paper on Foreign Aid (State Council, 2014), China claimed that to effectively learn international experience, improve assistance efficiency and enrich assistance forms, China intensified efforts to promote international cooperation in development assistance, and conducted trilateral cooperation featuring complementary advantage with multilateral and bilateral assistance providers by leveraging each party’s strengths on the premise of fully respecting the will of recipient countries.

In 2015, China set up the Institute of South-South Cooperation and Development at Beijing University to share China’s experience in state governance and train talent from other developing countries to modernize their governance capacity. In the same year, the South-South Cooperation Assistance Fund (SSCAF) with an initial contribution of US$2 billion to launch development cooperation programs provided an additional contribution of US$1 billion in 2017. By the end of 2019, 82 projects had been launched in cooperation with 14 international organizations under the SSCAF framework (State Council, 2021). In April  2018, China set up a specialized agency, the China International Development Cooperation Agency being in charge of international development cooperation. In its new White Paper on China’s International Development Cooperation in the New Era, China stated it has “held dialogues and exchanges with international institutions and bilateral donors to explore and conduct tripartite cooperation with an open and pragmatic attitude, thus injecting new impetus into international cooperation” (State Council, 2021). Triangular cooperation has earned higher attention.

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1.2.2 Technology Transfer on the Belt and Road Initiative There is no consensus on a definition of technology transfer. It means “the process of conveying results stemming from scientific and technological research to the marketplace and wider society, along with associated skills and procedures, and is as such an intrinsic part of the technological innovation process” (Knowledge4policy website). Technology transfer covers the complex value chain and includes non-technological activities, such as risk finance and intellectual property (IP) management. But this is more from the perspective of developed countries. For developing countries, it has a broader meaning of transferring systematic knowledge that leads to “building the technological capacities of the user/recipient” (UNCAD, 2012: 15). The term has a close link to “technological exchange/cooperation,” a process whereby two or more developing countries share skills, knowledge, resources, technical know-how, and facilities among industries, universities, governments, and other institutions. Since the host developing country often lacks the absorptive capacity to capture the advanced technology from the North, one of the major drawbacks of technology transfer between countries of the South is that the many imported technologies are adapted to the current needs of host countries but are outdated (Raslan, 2021). The rise of emerging economies, especially China, has a great impact in respect of foreign aid since it has become a new donor in the turf that was traditionally dominated by countries of the North. Arguably, one of the most ambitious strategies in international development is China’s BRI, which was announced by President Xi Jinping in 2013 and involved infrastructure development and investments in nearly 70 countries and international organizations, covering 65% of the world’s population and approximately 40% of the global gross domestic product as of 2017. The scope of the BRI has since extended to cover 138 countries, including 38 in sub-Saharan Africa and 18 in Latin America and the Caribbean (Economic News, 2020). The initial plan of the BRI by the Chinese government was to enhance regional connectivity and construct a unified large market, whereas many low- and middle-income countries saw the BRI as a vehicle for catalyzing much-needed investment in capital projects. Emerged as a new arena for development cooperation, the BRI is aimed at promoting high-quality Belt and Road cooperation and contributing to policy, infrastructure, trade, financial, and people-to-people connectivity based on the needs of individual countries. By early January 2020, 2951 BRI-linked projects were planned or underway across the world with a total value of $3.87 trillion (Economic News, 2020). The BRI is believed to have extended China’s global influence and served as a platform to fulfill President Xi’s vision of building a community with a shared future for mankind. However, it was reported that this created unsustainable debt burdens since eight BRI countries had been vulnerable to debt crises as of 2018 (Chatzky & McBride, 2020). China has committed to advancing “Belt and Road” cooperation and exchanges in priority areas including people-to-people exchange and technology transfer and promoted a community of collaborative innovation (MOST, 2017, 2018). China signed 46 agreements on cooperation in science and technology with other BRI countries and launched China–ASEAN and China–South Asia science and technology partnership programs to introduce advanced and applicable technologies through technical dovetailing, demonstration, and training programs. Besides, China has built five regional platforms for technological transfer with ASEAN, South Asia, Arab States, Central Asia, and Central and Eastern Europe and co-established the Alliance of

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International Science Organizations in the Belt and Road Region (Office of BRI Leading Group, 2019). The State Council also planned to build a uniform and open national technology transfer system by 2020, embedded with extensive international cooperation under the BRI (State Council, 2017). In the 2018 Forum on China–Africa Cooperation held in Beijing, Chinese President Xi Jinping announced China would extend a total of 60  billion US dollars of financing to Africa. Therefore, China’s attitude toward aiding Africa’s development is undoubtedly unflagging at least in the short term. China’s ambition in promoting international development is revealed in its deterministic voices and tangible involvement in the increase of the outbound direct investment (ODI) in developing countries, in particular, African countries. In August 2017, China’s National Development and Reform Commission (NDRC) has formalized the ODI transaction regulation to classify outbound investment into three groups: encouraged, restricted, and prohibited transactions. The share of investment in BRI countries increased to 12% of total ODI in 2017 from 8% in 2016, covering 65 countries (Huang & Xia, 2018). China has stressed that BRI is a major platform for international development cooperation. By joining hands with other countries to promote policy, infrastructure, trade, financial, and people-to-people connectivity, China proposed to build the Belt and Road into a “path towards peace, prosperity, opening up, innovation, green development, cultural exchanges, and clean government” (State Council, 2021). Not setting restrictive conditions for partners, as often the case in NSC, in the context of the BRI, all states are equal partners for cooperation that respects openness, transparency, inclusiveness and a level playing field. We respect the sovereignty and territorial integrity of each other and affirm that each country has the right and primary responsibility to define its development strategies in accordance with its national priorities and legislation. (BRI Forum, 2019)

The promising South–South and triangular cooperation and the ambitious BRI have exhibited a spectacular vision that China’s involvement in the renewable energy market in Africa will be toward a broader and more strategic engagement, and the case illustrated in this study is such an attempt that stresses cooperation and partnership and brings bilateral governmental agencies, businesses, communities, and public and private stakeholders together, although some challenges exist to duplicate the model into a large scale.

1.3 Case Study: China–Zambia Renewable Energy Technology Transfer (RETT) Project The China–Zambia RETT project is aimed at achieving policy, market, technological, and economic benefits by sharing China’s experiences in promoting its renewable energy development and transferring applicable renewable technologies to Zambia.

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It took the triangular approach that involves multiple partners operating the project: the Danish Government (donor), the Chinese government (pivotal actor), the Zambian Government (beneficiary), and the UNDP (facilitator). The Administrative Center for China’s Agenda 21 (ACCA 21) on behalf of the Ministry of Science and Technology (MOST) in China and the Ministry of Mines, Energy and Water Development (MEWD) in Zambia cooperate to share China’s experiences in the renewable energy development and make local absorption of these technologies more effective in Zambia. The UNDP offices in China and Zambia provide networks, international management experiences, knowledge of the local development context, rich global knowledge, and strong partnership-building abilities. The international donor is the Danish Government, which provides funding for the project, as well as information and experience. The project directly contributes to fulfilling Zambia’s renewable energy strategy and contributes to the promotion of the United Nations’ Sustainable Energy for All initiative. Besides, a variety of stakeholders from government agencies, universities, research institutions, industrial associations, non-governmental organizations (NGOs), and private sectors are also involved. The China–Zambia RETT project aims to support the access to electricity for rural communities in Zambia by creating enabling environment for renewable energy technology deployment and up-scaling, removing market barriers for the introduction of improved renewable energy technologies, as well as the strengthening of SSC between Zambia and China. The project was scheduled to implement from July  2014 to June  2018, with a total budget of 2.62  million US dollars. It was later extended to June  2019 due to some task delays and this project runs in parallel with another RETT project between China and Ghana. To highlight the key features of the China–Zambia project, the analysis is focused on the aspects of rationale and motives, governance and partnership, policy directions and priority setting, management, and M&E. The case study adapts the template of “STI (Science, Technology and Innovation) Policy Initiatives on International Cooperation for Addressing Grand Challenges,” proposed by the OECD (Organisation for Economic Cooperation and Development) research team (OECD, 2017). Table 1.1 lists the analytic framework for the case study.

TABLE 1.1 Analytic Framework for the Case Study Elements Rationale and motives Governance and partnership Policy directions and priority setting Management and funding Monitoring and evaluation (M&E)

Characteristics Working mechanism and underlying motives for initiating the project from domestic and international perspectives Governance structure and process in the decision-making body; organization, function, and roles of implementing actors Policy directions and project-selecting procedure and criteria; project goals and outcomes Main activities for implementing the project; main funding for supporting the project; other management instruments Periods, procedures, and methods for the project monitoring and evaluation; the roles of M&E

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1.3.1 Rationale and Motives Although Zambia still faces challenges in renewable energy deployment and rural electrification, it has great potential to leverage its abundant renewable energy resources to electrify the rural areas, where the electrification rate was as low as 5% in 2016. With the declining technology costs, the development of solar PV-based generation is possible. Solar and hydropower have been identified as the most applicable renewable energy technologies for Zambia, though the country has not fully exploited its potential for solar use (UNDP, 2014). Studies also show that other renewable energies, such as wind, bioenergy, and geothermal energy, have the potential to expand their utilization (RECP website). Developing creative, sustainable solutions to the rural electrification deficit, therefore, contributes to the achievements of SDGs in Zambia. China is currently one of the world leaders in both the production and installation of renewable energy technologies. Renewable energy’s shares in generation and consumption have been growing. In 2017, renewable energy comprised 36.6% of China’s total installed electric power capacity and 26.4% of total power generation (Dong & Qi, 2018). The upgrade of China’s renewable energy technologies provides an opportunity for developing countries like Zambia to learn the experience and transfer appropriate catch-up technologies. The China–Zambia RETT project had strong links to the previous Denmarkfunded projects in China and Africa regarding renewable energy and climate change. It continued the process of exploring Denmark’s development cooperation strategy by involving the China National Renewable Energy Centre, co-established by Denmark and China, in the project. In addition, The Sustainable Energy for Africa Program, funded by the Danish Government, had been operated by the African Development Bank with a budget of 300 million DKK. Another motivation comes from China’s strategy as a new donor in the area of technology transfer. Despite the uncertain global political and economic environment, China’s ODI has boomed and overtook foreign direct investment in 2015 (Huang & Xia, 2018). The promising SSC and the ambitious BRI have exhibited a spectacular vision that China’s involvement in Africa will be toward a broader and more strategic engagement, and the RETT project is such an attempt that involves donor agencies, enterprises, and public and private stakeholders, both internationally and domestically. Through joint efforts, the China–Zambia RETT project potentially benefits all involved parties. For Zambia, the project is conducive to the improvement of the electrification and power supply in rural areas, the enhancement of the capacity of applying renewable energy technologies, and the promotion of the local market environment for renewable energy adoption on a large scale. For China, the project adds momentum to South–South and Triangular Cooperation and helps accelerate the development of renewable energy technology in China, as it has become the largest renewable energy market in the world and accumulated many cost-effective technologies in solar, hydropower, wind, and biomass technologies. To transform into an innovative country with indigenous intellectual property rights, China needs to accelerate the flow of knowledge and create an effective operational mechanism (Miesing  & Tang, 2016). For UNDP, the RETT project helps the partnership between UNDP and the Chinese government and enhances China’s regional and global engagement in international development and cooperation.

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1.3.2 Governance and Partnership All parties in the China–Zambia RETT project made complementary technical and financial contributions. The organizational structure as shown in Figure 1.1 reflects the key elements of the triangulation cooperation project. The Project Steering Committees (PSC) were set up, respectively, in China and Zambia to provide strategic direction to project activities and oversee the project implementation. The PSCs were chaired by national authorities with the participation of relevant partners, including the respective Danish Embassy representatives and the UNDP office officials. The Danish government, as a member of the Development Assistance Committee, acted as the financial donor. China provided technical expertise, experience, and other in-kind support, and Zambia was the beneficiary country of renewable energy technologies. The UNDP, via its country offices in Beijing and Lusaka, provided project management and coordination in the two countries. Therefore, instead of the traditional bilateral technology transfer directly organized by country governments, in the RETT case, the UNDP bridged the technology transfer between two countries and monitored the performance. Besides, agencies of national governments coordinated the domestic actors and institutions for implementation. The executing governmental entities were the MOST in China and the MEWD in Zambia. Project Management Units (PMU) were set up within the Administrative Center for China Agenda 21 (ACCA21) on behalf of the MOST and the MEWD, respectively, each led by a project manager. A major focus of the PMU is to oversee the day-to-day implementation of the national components of the project and prepare detailed work plans and monitoring reports.

Figure 1.1  The China–Zambia RETT project organization structure.

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In China, the MOST is responsible for all national science and technology planning and regulation, including renewable energy technologies. It also holds substantial responsibility for the implementation of China’s sustainability commitments and international cooperation in Science, Technology, and Innovation (STI). China has initiated a plan to establish a fairly complete technology transfer system under the guidance and management of the MOST. Affiliated with the MOST, the ACCA21 is responsible for facilitating China’s Agenda 21 and the SDG implementation programs concerning STI development and providing STI policy support to government decision-making. In promoting the RETT project, the ACCA21 hosted the PMU for managing and coordinating Chinese stakeholders. The PMU reshuffled to the Technology Transfer South-South Cooperation Center (TTSSCC) within the ACCA21 in late 2019 as one of the outcomes of the project. In China, there is no single agency that is in full charge of the overall renewable energy policy development and implementation. Besides the MOST, the NDRC, the National Energy Commission (NEC), and the Ministry of Finance (MOF) are also key governmental agencies under the State Council that influence renewable energy policy making, implementation, and supervision. The NDRC is responsible for drafting the overall national economic development plan; the NEC is in charge of planning and monitoring specific energy sources, whereas the MOF formulates and monitors financial strategies and plans under the direct leadership of the State Council. From the Zambian side, the Ministry of Mines Energy and Water Development (MEWD), which houses the Department of Energy, is responsible for the development and management of energy and water resources in a sustainable manner. The MEWD is the principal institution with the mandate of carrying out energy planning and policy development, coordinating stakeholders in the sector, monitoring and evaluating current policies, and developing new energy programs. Concerning the RETT project, the MEWD coordinated domestic governmental institutions that relate to renewable energy development, such as Office for Promoting Private Power Investment, Energy Regulation Board, Rural Electrification Authority (REA), Zambia Development Agency, Zambia Industrial Development Corporation, Zambia Revenue Authority, and Zambia Environmental Management Agency, among others (RECP website). At the implementation level, a variety of stakeholders from the public and private sectors were involved in the project implementation process. The partners acted differently in their functions and roles as the two countries played different roles in the technology transfer process. Aiming at selecting the participants with strong willingness and best qualifications, the ACCA21 and UNDP China Office followed the public tendering procedures to recruit the most competent bidders, ranging from public and private businesses, universities, research institutions, and industrial associations to NGOs and international organizations, whereas the MEWD in Zambia cooperated with UNDP Zambia Office to single out the most capable actors as the receivers of the technology transfer activity. The Zambia Electricity Supply Corporation (ZESCO) has been retaining a monopoly on operating the distribution and transmission of the electricity network in Zambia; however, to pilot concrete solutions for rural electrification to meet the increasing demand and policy interests in renewables, the activities to promote off-grid energy market and local independent electric suppliers were initiated. Successful Chinese experience in off-grid energy market development was directly transferred to the set-up

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of demonstration sites and training centers in Zambia. These pilot sites and training centers, for example, 200-kW Chipota Falls Hydropower Station and the practice at the Kafue Gorge Regional Training Center (KGRTC) were envisaged to diffuse such knowledge and experience to other sites and locations. The MEWD in Zambia has dispatched several delegations to China to obtain know-how, attend capacity-building training, and participate in technological match-making events. Cooperation agreements have been signed between Chinese solar enterprises, University of Zambia, and UNIDO-ISEC (International Solar Energy Center for Technology Promotion and Transfer).

1.3.3 Policy Directions and Priority Setting Zambia is rich in its renewable resources. However, most rural areas are still not connected to electric grids, and the renewable energy industry has not reached scale, which poses great challenges to the economic development and people’s living. The China–Zambia RETT project was designed to improve energy access and living conditions in rural Zambia through technology transfer and SSC. Seeking policy coherence that encourages capacity building, fosters collaboration, and balances policy trade-offs, the project operated with a holistic approach. At the upstream level, it created an enabling environment for technology transfer and invigorated the capacity for SSC; at the downstream level, it enhances the actual transfer and demonstration of technologies with potential upscaling by the private sector (UNOSSC, 2018). By involving a wide range of stakeholders, from the private sector to research institutions, the project created communities of practice in the sphere of renewable energy in Zambia and China that facilitated project implementation and continued cooperation beyond the project. The policy directions were to reflect the mutual concerns and commitment of all relevant parties. Built on multiple stakeholder meetings and negotiations, and considering the recipient country’s intentions, the RETT project finalized its project objectives, which were consistent with Zambia’s development plan (e.g., the Sixth National Development Plan, the Rural Electrification Master Plan, and Vision 2030). As shown in Figure 1.2, the main policy directions include the general strategic context and the specific project context. The UNDP and implementing partners process and prioritize the challenge and demands into a comprehensive project for implementation. The China–Zambia RETT project was implemented under the contexts of SSC and international technology transfer. Aiming to strengthen cooperation between developing countries for the achievement of the SDGs, SSC includes cooperation that creates jobs, strengthens trade, improves infrastructure, transfers technology, promotes regional integration, and benefits all countries involved. UNDP has made a strategic commitment to helping countries expand engagement through mutual learning and knowledge sharing. In 2016, as many as 500 projects that utilized the SSC across 127 countries were supported by the UNDP (UNDP website). Technology transfer is the process of transferring or disseminating technologies from one organization to another for further development and commercialization. In the international development area, it helps less-developed countries develop capacities to mitigate and adapt to the impacts of global climate change, poverty reduction, and energy crisis. The process of technology transfer typically includes identifying new technologies, protecting technologies through patents and copyrights, and forming development and commercialization strategies. The technology transfer under the

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Figure 1.2  Shaping of the China–Zambia RETT project.

Figure 1.3  Mission flow in identifying the priority tasks.

RETT project included a technical component of supporting institutional capacities in research, as well as a financial component of business models for institutional development (UNDP, 2014). Notably, the SSC and technology transfer are consistent with Chinese policy directions, which have given priority to initiatives, such as BRI, “Made in China 2025,” and the establishment of a national technology transfer system. According to the Development Scheme of National Technology Transfer System promulgated by the State Council in 2017, China would build a basic national technology transfer system

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and a national market for technology transfer by 2020, embedded with market-oriented transfer institutions, professionals, and extensive international cooperation under the BRI. The government would also encourage universities and research institutes to set up technology transfer institutions and private intermediaries to provide professional services through improved government guidance and public services. The scheme stressed technological cooperation and transfer with countries on the BRI (State Council, 2017). Given that China has achieved the goal of realizing full rural electrification over the past two decades and it leads the world in the production and installation of renewable energy technologies in rural areas and owns the most mature technologies and experiences in rural renewable energy development, the China–Zambia RETT project provided an opportunity that Zambia can learn to address its regulatory, technical, institutional, and financial barriers to promote and disseminate renewable technologies. Figure 1.3 illustrates the mission flow that guides the project design. A series of priority tasks was identified, including diversifying electricity suppliers, building offgrid power farms, developing pilot solar and mini-hydro projects, arranging matchmaking events, and developing partnerships.

1.3.4 Management and Funding The China–Zambia RETT project included the support of removing regulatory impediments to promoting renewable energy in Zambia, the development of financing options for renewable energy, the establishment of demonstration facilities to showcase renewable energy technologies, and direct financing of a pilot project for rural electrification to highlight the opportunities for rural development. As shown in Figure 1.4, the project consisted of four components: institutional capacity building for an enabling environment; reducing market barriers to technology adoption in rural

Figure 1.4  Activities and tasks in China–Zambia RETT project.

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TABLE 1.2 Budget Overview of China–Zambia RETT Project (Unit: USD) Year 1 Activity 1 Activity 2 Activity 3 Activity 4 Overheads General Management Service (GMS) Total

Year 2

Year 3

Year 4

Total

18,000 44,500 3,80,350 1,28,000 45,668

63,150 9,60,750 3,83,250 1,35,500 12,3412

17,000 3,000 51,250 96,500 13,420

0 3,000 51,250 94,500 11,900

98,150 1,011,250 866,100 454,500 194,400

6,16,518

1,666,062

1,81,170

1,60,650

2,624,400

areas; enhancement of China’s capacity in SSC and technology transfer; and project organization and coordination in Zambia and China. To ensure the reliability and applicability of the transfer of technologies, the criteria for technology selection were clarified. These include (a) appropriateness to Zambian conditions (including institutional capacity and natural resources such as availability of sunshine, water, and wind); (b) appropriateness to the objective of supporting rural electrification; (c) the proven potential and degree of confidence in the particular type of renewable energy and the risks associated with the technology; and (d) availability of institutional support systems, including technology expertise from Chinese project partners. The PMU in China organized two rounds of technical review sessions with experts and interested clients from both countries, and a total of 150 technologies had been selected on the recommended list. Renewable technologies were categorized into four major types: mini-hydropower technology, solar power technology, wind technology, and biomass technology. Training activities and matchmaking events were organized to strengthen mutual communication and interaction. With a total budget of 2.62 million US dollars, the China–Zambia RETT project was designed to run for four years with a clear indication of annual financial requirements. Table 1.2 provides an overview of the planned project budget. UNDP China was responsible for overall UNDP financial management and oversight, and UNDP national components disbursed funds to local implementing institutions.

1.3.5 Monitoring and Evaluation The China–Zambia RETT project took the result-based management (RBM) approach to ensure the implementation performance. Based on clearly defined results and the methodologies to measure and achieve them, the RBM approach supports better monitoring and greater accountability by applying a clear, logical framework to plan, manage, and measure the performance. The RETT project designed the four-tier result-oriented system to manage the intervention, ranging from outcomes, outputs, and activities to sub-activities and covering all assignments in the project’s lifetime. As a critical part of the RBM, M&E formed the basis for clear and accurate project reporting and disclosure, which were conducive to adjusting project activities, informing the performance, and stimulating organizational learning. Besides, since the technology transfer occurred in countries with different policies,

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institutions, and contexts, M&E was also important to tune up or test locally successful policies and practices. Given that PMUs’ responsibilities in overseeing the day-to-day implementation activities within the national component and managing work plans for the project including activity budgets, the PMUs in Zambia and China undertook a series of M&E activities and submitted reports of regular project implementation activities to UNDP for review and approval. These include quarterly reports, issue logs, risk analysis, monitoring plans, field visit reports, and so on. On an annual basis, a progress report in UNDP’s format was prepared by the UNDP China office for the donors to review and approve. Upon completion of the project, the final report acted as a comprehensive statement of the project activities that summarize all activities, achievements outputs, and lessons learned. In addition to the regular monitoring activities, the project underwent a midterm evaluation following the normal UNDP rules and procedures. Due to a lack of local capacity, good-quality, and credible evaluation often posed challenges, the midterm evaluation was performed by a qualified evaluator team, comprised of external and internal independent consultants. The consultancy team reviewed the project’s progress against the set objectives, outcomes, outputs, and targets. Communication strategies were designed and supported by specialists in communications, education, and awareness to discuss lessons learned and share them among project stakeholders as appropriate. Additionally, the risk assessment was adopted. The risks were categorized into different levels based on the attributes of likelihood and impacts, which were further classified into eight categories, namely, environmental, financial, operational, organizational, political, regulatory, strategic, and other. These risks and mitigation measures were monitored and updated annually throughout the project. The outputs achieved from the project include the following: a database highlighting appropriate technologies and RETT solutions was established; a website serving as an online matchmaking platform has been launched; alliance technology companies and research institutes supporting RETT in Zambia and other African partner countries were set up in China; and annual training events on solar, hydro, and biogas technologies and key processes of system design for stakeholders in China and Zambia were held to remove knowledge barriers for RETT (UNOSSC, 2018).

1.4 Findings from the Case Study This section summarizes good practices learned from the case study and discusses the challenges of promoting technology transfer on the Belt and Road, and then it analyzes the working mechanism of the technological cooperation in the China–Zambia RETT project, and explores the approaches to ensure effective triangular cooperation to boost the technology transfer under the BRI.

1.4.1 Good Practice The China–Zambia RETT project has proved its accomplishment in promoting technological cooperation, sharing experience of governance, enhancing mutual understanding, and reinforcing the foundation of further cooperation.

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First, triangular cooperation provides a new modality to operate technology transfer between developing countries and is in the best interest of China. As seen from the case, China has shown its readiness to provide policy and technical assistance to Zambia via SSC, while Zambia needed external capital support and technical assistance to achieve development. Meanwhile, Zambia had the discretion to select applicable renewable technologies for cooperation based on its prioritized local development needs. The participation of Denmark and the UNDP helped meet the donor’s needs and fill up the gaps in project management. It is the UNDP that on behalf of the Danish government developed project proposals and monitored the performance to enable better and more coherent cooperation between China and Zambia. Triangular cooperation proved to be acceptable to China since the approach demonstrates China’s willingness and expands the scope of its development cooperation; it also drew from co-financing and in-kind support provided by the UN agencies, which are seen as neutral partners that process global footprint and networks (Han, 2016). Second, it is crucial to improve capacity in promoting the beneficiary country’s domestic renewable energy technologies and increasing rural electrification. Zambia has confronted numerous regulatory, institutional, information, financial, and technical barriers in renewable energy development; however, the material exports and financial supports cannot ensure self-sufficiency development in the future. The RETT project’s improved institutional capacity shares the experience in innovationdriven development and builds robust partnerships among national stakeholders. Through the efforts of all parties, the Zambian government completed the review of its renewable energy development policies for rural off-grid electrification and drafted the Renewable Energy Strategy. A large number of relevant staff from government agencies, universities, research institutions, businesses, NGOs, and local communities received training and have been readily involved in disseminating knowledge and technologies on a large scale. Third, the RBM approach is taken to inform project planning and implement effective M&E. The China–Zambia RETT project effectively integrated activities of monitoring, evaluation, review, and reporting. By collecting the information, checking the progress against set plans, and reflecting upon the outcomes, the quality of the implementation was generally ensured according to the budget and time frame. The experience of learning the RBM approach also provided important “organizational process assets” to the project management team. Fourth, the scheme of establishing the TTSSCC in 2019, as one of the outcomes of the project, helped to consolidate the achievements of the project. The center was approved by the Chinese MOST and jointly formulated by ACCA21 and UNDP. The center addressed the lack of an institution in China to coordinate stakeholders in renewable energy technology development and the lack of a central public agency in coordinating technology transfer issues among ministries. The mission statements of the TTSSCC include: establishing a technology transfer platform and database to enable match-making of the demands and supplies of technology transfers; providing the SSC partners with suitable solutions for sustainable development technology; formulating a high-profile think tank on SSC for sustainable development to conduct strategy research; exploring new modality that could apply China’s best practices into full play; establishing pivot along the BRI for the demonstration and promotion of advanced and applicable technologies; constructing a base that addresses climate mitigation by technologies and accelerates sustainable development capacity building;

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and undertaking sustainable development capacity building and development assistance programs that are entrusted by governments and international organizations. In the future, the cooperative areas among the South countries are envisaged to extend to a broader scope and such an arrangement is thought to be conducive to the accumulation of knowledge.

1.4.2 Challenges and Possible Solutions Several challenges are identified when evaluating the quality of implementation of the China–Zambia RETT project. First, the constraints of capacities and resources in the beneficiary country in designing, implementing, and integrating policies. China has been remarkably successful in renewable energy development and performed well in reforming institutions and policy mix to encourage technology innovation and diffusion. Despite the great potential of resources, restricted by the substantive barriers and gaps in physical, human, and knowledge assets, the renewable energy technologies in Zambia are still highly dependent on external inputs. To achieve self-sufficiency in technology development, the country has to address fundamental issues other than the shortage in knowledge accumulation and innovation, such as making the market function well, improving infrastructure and investment environment, decentralizing electricity generation and transmission, and enhancing education quality. Building complementary capability, instead of solely relying on independent research and development, is an often overlooked but critical point for most developing countries (Cirera & Maloney, 2017). More importantly, the learning process of acquiring and upgrading the capacity to absorb, adapt, diffuse, disseminate, and improve ideas could take a long time. This process should be aligned with the country’s tradition and its characteristics, and not just mimic other countries’ institutional setup. The second challenge comes from the lack of integrated institutions to absorb and retain the project knowledge and experiences in the beneficiary country. As shown in the case, the UNDP Zambia Office was the unit that hosted the local PMU and coordinated project activities. However, the main implementing agencies, as well as the recipients of technology assistance, were mainly a limited number of governmental or public agencies: such as the University of Zambia, ZESCO Power, KGRTC, REA, etc. There has been a serious lack of local capacities to appropriately deploy and manage technologies that could have better supported the rollout of the national renewable technologies after the completion of the project. Therefore, it is important to develop a plan to foster such a hub within the government similar to the approach in China. In addition, the Zambian government needs to leverage the resources and develop private electricity suppliers to better address the local off-grid electricity demand. Another challenge is to achieve the synergy of the China–Zambia RETT project with other international aid projects. There had been quite some relevant international aid projects that focus on Zambia’s development and capacity development, with diverse donors, such as the OECD, World Bank, European Union, and the US Agency for International Development. Although the RETT project concentrated on the technology transfer between China and Zambia, the scope of the project frequently overlapped with others. To maximize the benefits and positive results of the projects, the future project needed to strengthen its external connection and information sharing with existing ones and treated these projects as complementary, instead of competitive counterparts. An example is the recent Zambian Off-grid Investor Forum held in

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June 2018, which convened 240 financiers, developers, public authorities, and international development partners from 40 countries to build partnerships around off-grid energy solutions in Zambia. It seemed that much information from the forum could be shared and integrated for decision making if the external communication system of the project functioned more proactively. Seeking project synergy calls for more input into the project communication, outreach readiness, and inter-disciplinary research preparedness that can break the silo approach. It had been reported that the Ministry of Commerce, Trade and Industry in Zambia has initiated several Multi-Facility Economic Zones (MFEZs) for promoting manufacturing, exports, technology transfer, and job creation; however, the actual linkage between local firms and the MFEZs was still weak (Zeng, 2016). Some synergies shall be sought at the ministerial level or the program/project level to target the real challenge and facilitate cooperation.

1.4.3 Sustainability of the Project Interventions The China–Zambia RETT project presents a case of how the triangular cooperation is working to help rural communities in Zambia gain access to electricity to support local sustainable development. By combining Denmark’s funding, Zambia’s local needs, China’s experience and technical know-how, and UNDP’s facilitation, the triangular cooperation transfers renewable energy knowledge and skills to promote mutual benefits for the countries involved. To effectively engage in technology transfer in terms of equipment and tacit knowledge needs persistent support for capacity building for both China and Zambia. For China, the launch of the TTSSCC is an attempt to better address the needs of developing countries in search of application technologies. For Zambia, this brings to the requirements of mobilizing and improving the country’s institutions to develop technical and financial capacities. Given that mere possession of technology by importing is not enough to secure technology development, a host state that opts to develop technology needs also to develop a sound absorptive capacity (Ruslan, 2021). This could induce some adverse consequences: the project works fine in the pilot phase but could not be diffused on a larger scale, or the outdated technologies are more easily to be imported which causes negative economic, social, and environmental impacts. The accumulation of capabilities can vary over a continuum of capabilities building in three stages: (1) production and management capabilities, (2) technological capabilities, and (3) innovation and technology-generation capabilities (Cirera & Maloney, 2017). Most technology-recipient countries from the South are on the lower end of this escalator and institutional capabilities need to be strengthened to move up to higher stages. Comparatively, China has advantages over other developing countries in providing innovation policy and implementation capacity, and in many cases, has advantages over developed countries in providing application technical support that host countries need with multiple choices. The BRI provides such a platform that China has the maneuvres and flexibility to participate in technological exchange and cooperation with other countries. Such technological cooperation can be taken in different forms, and China has steadily increased the scale and further expanded the scope. Take the development cooperation between China and Zambia as an example. In wake of the RETT project, several large-scale industrial projects have been carried out, such as the construction of the

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Kalulushi solar concentration plant that will produce 600 MWp of electricity from solar energy (Solarpaces, 2020), and the solar PV project between ZESCO and Power China with a capacity of 600 MW (Reuters, 2020). Besides, following the format of the China–Zambia RETT project, other RETT projects emerged in the form of triangular cooperation and involved other BRI countries, such as Sri Lanka and Ethiopia (Xinhua, 2019). Research by the OECD (2019) has provided a portfolio of five options to engage in triangular cooperation, namely: standalone triangular cooperation projects; standalone triangular training activities; open competition for triangular project proposals; scaling up to triangular cooperation; and triangular cooperation as a component of larger development cooperation programs. As a new model based on SSC, the triangular cooperation has been gaining vitality with the spreading of more international development initiatives, such as the BRI. There is no one-size-fits-all option for engaging effectively in triangular cooperation; it depends on the specific context, political and institutional requirements, and objectives of each trilateral partnership (OECD, 2019).

1.5 Conclusions and Perspective Triangular cooperation has significant potential to contribute to the effectiveness of development cooperation. Since 2014, the Chinese government has initiated a reform process for its development cooperation and triangular cooperation has gained greater support and momentum in its new initiatives. Under the context of the BRI and built on the research of the renewable energy market landscape and stakeholder analysis, the China–Zambia RETT project matched the demand for renewable energy technology with effective supply, encouraged the exchange and communication between the two developing countries, and fostered technical and entrepreneurial partnership in the field of RETT. The technical expertise and experiences were successfully shared between China and Zambia, and a series of market-matching events was organized to pave the way for further cooperation. The BRI, giving high priority to the least developed countries in Asia and Africa and developing countries, has become a major platform to boost China’s development cooperation. China has reformed its institutions to adapt to the changes in the domestic and international context. Although China has made great achievements in enhancing policy coordination, strengthening infrastructure connectivity, promoting unimpeded trade, deepening financial integration, and fostering closer people-to-people ties, concerns and doubts over the BRI have never ceased. To promote high-quality BRI and international development cooperation, further efforts to reform institutions are needed in China to ensure accountability, fairness, and transparency. The breakout of COVID-19 has brought a tremendous blow to the global economy. It also heavily impacted the BRI, even though China has been relatively successful at containing the spread of the coronavirus within its borders. It was reported that 30–40% of BRI projects had been affected by the virus while a further 20% had been “seriously affected.” China announced its confidence in continuing the BRI projects but sketched a reformed scheme with new elements in pursuit of green, healthy, and digital needs (Economic News, 2021).

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Nevertheless, from comprehensive and more critical perspectives, the persistent suspicions about the profitability of China’s investment in the BRI projects and the insolvency of some projects funded by China have continued and deepened during the COVID pandemic, which has aggravated the long-standing concerns about the consistency of China’s technology transfer and international aid policy. These concerns have coupled with a host of other events that are full of uncertainties, including the uncertain trade relations between China and the United States, the challenging debt issues of subnational and local governments in China, the concerns of policy transparency and intellectual property rights protection in China, the restructuring of foreign aid institutions in China, and the more complicated international politics among countries. How China and the international community will address these uncertainties and what the future holds for technology transfer through South–South and Triangular Cooperation remain to be seen.

NOTE

1 The terms “triangular,” “trilateral,” and “tripartite” cooperation are often used interchangeably to describe the same phenomenon.

1.6 REFERENCES BRI Forum. (2019, April 27). Joint communique of the leaders’ roundtable of the 2nd belt and road forum for international cooperation, belt and road cooperation: Shaping a brighter shared future. Retrieved from http://en.people.cn/NMediaFile/2019/0428/ FOREIGN201904280729000369314543150.doc Chatzky, A., & McBride, J. (2020). China’s massive belt and road initiative. Retrieved from www.cfr.org/backgrounder/chinas-massive-belt-and-road-initiative Cirera, X., & Maloney, W. (2017). The innovation paradox: Developing-country capabilities and the unrealized promise of technological catch-up. Washington, DC: World Bank Group. Dahi, O., & Demir, F. (2017). South-South and North-South economic exchanges: Does it matter who is exchanging what and with whom? Journal of Economic Surveys, 31(5), 1449–1486. Dong, W.,  & Qi, Y. (2018). Utility of renewable energy in China’s low-carbon transition. China’s Energy in Transition. Brookings. Retrieved from www.brookings. edu/2018/05/18/utility-of-renewable-energy-in-chinas-low-carbon-transition/ Economic News. (2020, April 20). How will the international Covid-19 outbreak impact the belt and road initiative? Transport and Infrastructure, Construction. Retrieved from https://oxfordbusinessgroup.com/news/how-will-international-covid-19-outbreakimpact-belt-and-road-initiative Economic News. (2021, January 28). Has Covid-19 prompted the belt and road initiative to go green? Construction. Retrieved from https://oxfordbusinessgroup.com/news/ has-covid-19-prompted-belt-and-road-initiative-go-green Fordelone, T. Y. (2009). Triangular co-operation and aid effectiveness: Can triangular cooperation make aid effective? Retrieved from www.oecd.org/dac/46387212.pdf Han, C. (2016). Trilateral cooperation with China: Sharing China’s development experience through innovative partnerships (Discussion Paper). Retrieved from www.oecd. org/dac/dac-global-relations/Discussion%20Paper_Trilateral%20Cooperation%20 with%20China.pdf. UNDP

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Huang, B., & Xia, L. (2018, February). China | ODI from the middle kingdom: What’s next after the big turnaround? China Economic Watch. BBAV Research. Knowledge4policy website. What is technology transfer? Competence Centre on Technology Transfer. Retrieved from https://knowledge4policy.ec.europa.eu/technology-transfer/ what-technology-transfer_en Kragelund, P. (2019). South-South development. London: Routledge. Miesing, P.,  & Tang, M. (2018). Technology transfer institutions in China: A  comparison of value chain and organizational structure perspectives. In Dirk Libaers and Denise Dunlap, (eds.), Technology transfer mechanisms in China: A comparative study from value chain and organizational structure perspectives. Singapore: World Scientific Publishing Co. Ltd., pp. 43–60. MOST. (2017, July 14). MOST contributes science and innovation deliverables to BRF. Retrieved from www.most.gov.cn/eng/pressroom/201707/t20170714_134070.htm MOST. (2018, July 4). The 3rd forum on China-South Asia technology transfer and collaborative innovation held in Kunming. Retrieved from www.most.gov.cn/eng/ pressroom/201807/t20180704_140454.htm OECD. (2011). Unlocking the potential of South-South cooperation: Policy recommendations from the task team on South-South cooperation. Retrieved from www.oecd. org/dac/effectiveness/TT-SSC%20Policy%20Recommendations.pdf OECD. (2017). International cooperation in STI for the grand challenges—insights from a mapping exercise and survey. DSTI/STP(2017)13. Retrieved from https://one. oecd.org/document/DSTI/STP(2017)13/en/pdf OECD. (2019). Enabling effective triangular cooperation. OECD Development Policy Papers. No. 23. Paris: OECD Publishing. OECD. (2020). Triangular co-operation in the era of the 2030 agenda. Retrieved from www. unsouthsouth.org/2020/01/30/triangular-co-operation-in-the-era-of-the-2030-agenda/ Office of BRI Leading Group. (2019). The belt and road initiative progress, contributions and prospects. Office of the Leading Group for Promoting the Belt and Road Initiative. Retrieved from http://gy.china-embassy.gov.cn/eng/xwfw/201907/P0202107300546 46165718.pdf Raslan, R. (2021). Transfer of technology: A North-South debate? Queen Mary Journal of Intellectual Property, 11(3), 339–361. RECP (Africa–EU Renewable Energy Cooperation Program) website. (2018). Retrieved from www.africa-eu-renewables.org/ Reuters. (2020). Zambia’s Zesco, Chinese firm signs $548 mln solar power contracts. Reuters News. Retrieved from www.reuters.com/article/zambia-electricity-idUSL8N2D31ZJ Solarpaces. (2020, July  22). China wins first CSP for Hydro-Rich Zambia as drought increases. Retrieved from www.solarpaces.org/china-wins-first-csp-for-hydro-richzambia-as-drought-increases/ State Council. (2011). China’s foreign aid. The State Council Information Office. Retrieved from http://english.www.gov.cn/archive/white_paper/2014/09/09/content_28147498 6284620.htm State Council. (2014). China’s foreign aid. The State Council Information Office. Retrieved from http://english.www.gov.cn/archive/white_paper/2014/08/23/content_281 474982986592.htm State Council. (2017, September 26). Notice of the issuance of the development scheme of the national technology transfer system. Retrieved from http://www.gov.cn/zhengce/ content/2017-09/26/content_5227667.htm (in Chinese) State Council. (2021). China’s international development cooperation in the new era. The State Council Information Office. Retrieved from http://english.www.gov.cn/ archive/whitepaper/202101/10/content_WS5ffa6bbbc6d0f72576943922.html

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UNCAD. (2012). Technology and innovation report: Innovation, technology and SouthSouth collaboration. UNCAD. Retrieved from https://unctad.org/system/files/ official-document/tir2012_en.pdf UNDP. (2014). The China-Zambia South-South cooperation on renewable energy technology transfer (RETT) project. Document Report. Retrieved from https://info. undp.org/docs/pdc/Documents/ZMB/China%20Zambia%20South%20South%20 Renewable%20Energy%20Technology%20Transfer%20Project%20Document.pdf UNDP. (Website). China-UNDP South-South and global partnership 2016 highlights. Retrieved from www.cn.undp.org/content/china/en/home/library/south-southcooperation/-.html UNOSSC. (2018). Good practices in South-South and triangular cooperation for sustainable development, vol. 2. New York: United Nations Office for South-South Cooperation, pp. 129–130. Xinhua. (2019, September 1). Ethiopia, China, Sri Lanka to spur cooperation in renewable energy technologies. Retrieved from http://en.people.cn/n3/2019/0801/c900009602460.html Zeng, D. (2016). Multi-facility economic Zones in Zambia: Progress, challenges and possible interventions (Working Paper). Retrieved from http://documents.worldbank. org/curated/en/720981495115586647/pdf/115143-WP-PUBLIC-Feb-2016-GTCCSZambiaMFEZ.pdf

2 Sustainability Aspects Shujahat Ali*, Nabila Aftab, and Muhammad Fahim Khan University of Peshawar Pakistan CONTENTS 2.1.1 China’s Environmental Performance�������������������������������������������������� 24 2.1.2 The Belt and Road Initiative’s Long-Term Viability��������������������������� 25 2.1.3 Green Finance Opportunities���������������������������������������������������������������29 2.2 Conflict between Economic Development and Environmental Protection in the Belt and Road Initiative������������������������������������������������������������������������� 30 2.2.1 Introduction������������������������������������������������������������������������������������������31 2.2.2 Environmental Challenges and BRI Opportunity��������������������������������32 2.2.3 Governance of the BRI Environment���������������������������������������������������33 2.2.4 “Green BRI” Chinese Institutions������������������������������������������������������� 34 2.2.5 BRI’s International and Transnational Environmental Bodies������������36 2.2.6 Framework for Cooperation between China and 17 Countries of Central and Eastern Europe�����������������������������������������������������������������36 2.2.7 BRI Partner Countries’ Environmental Governance���������������������������37 2.2.8 Challenges of the Green BRI Governance�������������������������������������������39 2.3 Potential Impacts of Education for Sustainable Development in the Belt and Road Initiative��������������������������������������������������������������������������������������������42 2.3.1 Cooperation in the Development of Education Among the Countries along the BRI Route������������������������������������������������������������42 2.3.2 Road and Belt Building Is an Essential National Strategy�������������������42 2.3.3 The Belt and Road Building Raises Further Missions and Demands for China’s Educational Opening�����������������������������������������43 2.3.4 Unique Education Mission������������������������������������������������������������������ 44 2.3.5 Top Education Priority, Notably Higher Education�����������������������������45 2.3.6 Enhance Understanding and Education for Nations and Cultures and Promote the Bond between Individuals��������������������������������������� 46 2.3.7 Education, Notably Higher Education, Should Strive to Provide Intellectual Support to Contribute to Existing Wisdom���������������������� 46 2.3.8 Enhanced Education and Development Cooperation between Countries along the Routes�������������������������������������������������������������������47

DOI: 10.1201/9781003198147-2

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2.3.9 Increase the Number and the Cultivation of International Students in China Abroad������������������������������������������������������������������� 48 2.3.10 Setting Up Overseas Universities and Education Centers in Countries along the Route��������������������������������������������������������������������49 2.3.11 Enhancing Chinese Higher Education’s International Vision������������� 50 Notes�����������������������������������������������������������������������������������������������������������������51 2.4 References......................................................................................................... 55

In 2013, China unveiled a comprehensive initiative for the Belt and Road Initiative (BRI) to strengthen connections between Asia, Europe, and Africa, covering almost half of the world’s population and one-third of the global GDP. Chinese President Ji Jinping has commended the program: a “project of the century,” with the price tags of trillion dollars intended, among other things, to assist trains, roads, seaports, and airports. Although there is a significant prospect of unlocking the region’s economic potential and influencing the future of global trade, the environmental effects of the initiative could be severe—and enduring. Creating a green belt and road that includes the development of renewable energy infrastructure and compliance with environmental standards is essential for Chinese governments and business leaders. It is crucial.

2.1.1 China’s Environmental Performance No country provides such bittersweet superlatives as China regarding energy and sustainability. While no country has ever become an enormous industrial and economic power without producing significant environmental damage, China’s rapid rise has led to catastrophic ecological degradation even before the economy matured. China saw unprecedented growth under a “pollute first, control later” paradigm of development after Déng Xiaoping initiated market reforms four decades ago. Since 1978, China has sustained yearly growth rates of above 9%, driving 800 million people from poverty as it became renowned for being the “global factory,” despite a recent dip.1 The second-largest economy in the world presently ranks among G20 nations regarding lethal outdoor pollutants. As a result of this rapid manufacturing boom, five cities are the most polluted.2 Like China, the biggest and most significant greenhouse gas emitter globally, businesses that break pollution laws have failed to penalize. Last year in Northern China, environmental inspectors found that 14,000 companies, or 70% of those evaluated, did not comply with the requirements on air pollution control.3 Earlier this year, the Ministry of the Environment in China revealed that in less than a decade, the number of sources of contamination in the country had increased by more than 50%.4 As a result of the increasing incidence of lung and other respiratory diseases, the sins contribute to an estimated 1.6 million premature deaths in China. Each ear contributes to the early deaths of an estimated 1.6 million individuals each year.5 On the other hand, China is an environmental leader in many sectors. China must be recognized. China’s renewable energy producer worldwide is more than twice that of the United States; the world’s second-placed energy producer invested invests in domestic renewable energy more than $100 billion every year (more than the US and EU combined yearly investments) and in renewable energies abroad in more than 32 billion dollars by 2017.6 After the International Energy Agency, China has one-third

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of global wind power, one-quarter of its solar capacity, six of the world’s top ten solar panel manufacturers, four of its top ten wind turbine makers, and sells a greater combined volume of electric vehicles than the rest of the world.7 Last year, Shenzen and China’s tech center announced that all of its 16,359 buses had passed electricity, making the world’s first 100 proper electric bus fleet since 2010, I Xiongxian North, the first geothermal energy for the whole heating industry. Together with the environmental degradation of China, these remarkable achievements form a distinctive picture of the Chinese climate and energy landscape.

2.1.2 The Belt and Road Initiative’s Long-Term Viability Many BRI countries are targeted—in a desire to finance and have historically weak environmental governance—and are open to exploitation by Chinese businesses because China wants the BRI to increase its policy and economic influence (also known as the 21st-century Silk Road). Beijing’s environment regulatory approach will be essential if the global climate targets are achieved. China has adopted an infrastructure-based economic strategy within its boundaries and is currently a world leader in infrastructure spending. Other nations use economic models to enhance connectivity and cut business costs, leading to cross-border commerce and BRI investment growth. Regional collaboration on new and enhanced transport infrastructures and policy reforms can benefit the BRI Member States. But economic growth doesn’t come at all expense, as China’s progress has proved. A consideration site is needed to develop the new Silk Road, which could lead to substantial water contamination and soil erosion. In addition, the project will undoubtedly increase the extraction and utilization of raw materials, such as sand and chalk for concrete and cement and fossil fuels. All have a significant effect on world carbon emissions. In addition, the BRI corridors will cover the habitats of 265 vulnerable species, according to the World Wildlife Fund.8 The New Silk Road is expected to aggravate the levels of pollution, overexploitation of resources, and habitat destruction by developing transit networks. Several foreign organizations have been concerned about the potentially disastrous consequences of the BRI. Some of the organizations that have published reporting on the “greening” of the Belt and Road are the UN, the World Economic Forum, and the World Wildlife Fund. In November 2017, Columbia University and Chinese Renmin University co-sponsored the BRI Green Development Conference to evaluate energy infrastructure plans and strategies for BRI, underlining the necessity of sustainability on the new Silk Road. China’s leadership, faced with foreign pressures, acknowledges the significance of strengthening its flagship’s sustainability. In May of last year, the government adopted two guidelines: the ecological and environmental cooperation Belt and Road [Belt and Road Ecological and Environmental Cooperation Plan (BREECP)], which comprises 25 green BRI projects, and the road and belt guidelines that encourage environmental philosophy in the Belt and Road projects. The guidelines for greenbelt promotion include the BREACH. The policies have been co-issued by the National Development and Reform Commission (NDRC). The NDRC has co-issued the policies. The Guides outline the priorities for infrastructure and capability-building projects on conservation, emission reduction, and environmental conservation; green management guidelines; and the Ministry of Foreign Affairs, Ministry of Commerce, and Ministry of

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Environmental Protection.9·These guidelines indicate a long-term belt and road potential but are hazy on implementing and accounting systems. Due to its nature and scale, if Chinese companies operating outside the country are not adequately regulated, BRI is projected to negatively impact air and water quality in recipient countries and worldwide emissions. Dr  Abdul Rauf has expressed his skepticism about the environmental criteria of the BRI graduate student at China’s Southeast University. “China supports only one side of the economic cooperation and trading coin,” said Dr Rauf, “but it does not talk about specific environmental enterprises.” Dr Rauf has also commented that “many of the renewable energy projects that have been promoted have not yet been realised” with his study on the environmental impact of the Belt and Road and that “China should become more focused on the environment.” “They’re currently only dealing with the [and] industry.” This is a typical critique of the government of China; however, given the significant use and investment of renewable energies stated earlier, they may see the BRI as an opportunity to become the leader in clean energy worldwide and assume responsibility for “greening” the road. Despite the concerns, the BRI offers many opportunities for engagement with the environment and the growth of renewable energy. Early in its development, from building environment-friendly communities and responsible waste management to the option for renewable energy projects in Belt and Road countries, the initiative might set a key precedent for developing economies. Malaysia, for instance, has vast solar potential: large-scale solar power plants may supply up to 20% of the country’s current need for electricity.10 There are mainly small-scale solar projects with less than 100 MW of installed capacity; Malaysia is the third-largest photovoltaic cell manufacturer.11 The overall electricity generation in Malaysia accounts for less than 1%. In the same context, Vietnam is believed to have the g wind turbines in Southeast Asia, with an economically viable wind capacity of at least 24 GW. But the current contribution of wind power is minimal to Vietnam’s overall energy consumption. Moreover, several African countries can utilize massive solar, wind, and hydropower resources. China’s renewable energy projects are financed and developed to address their growing energy demand. In the annual 2018 report, an IEA cited proposals for clean energy projects for Chinese enterprises (e.g., Ghana’s 200 MW solar farm Power China, South Africa’s 244.5 MW Longyuan Power Group Corporation) to illustrate the measures previously implemented.12 This opportunity should be taken by policymakers and investors, given the decreasing costs of renewable energy technology. As the Belt and Street Initiatives (also known as the 21st-century Silk Road) try to spread China’s political and financial influences, many BRI countries are exposed to exploitation, desperate funding, and historically inadequate environmental supervision by Chinese enterprises. Beijing will play an essential role in helping the world achieve its climate goals. China has adopted an infrastructure development plan within its borders and has become a global leader in investment infrastructure. This global economic model has the possibility of improving connectivity and significantly reducing business costs, resulting in higher BRI-wide transboundary trade and investment locations. The BRI Member States can strengthen cooperation with consistent operation with concomitant policy reforms for new and enhanced transportation infrastructures. But, as Chinese progress indicates, this economic growth will not

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come at a cost. Building the new Silk Road requires many sites to pollute the water and erode the soil. In addition, the program will inevitably raise the extraction and utilization of, for example, sand and Silestone and fossil fuels in concrete and cement manufacture, significantly affecting global carbon emissions. Furthermore, the World Wildlife Fund states that 265 endangered species will cross the BRI corridors.13 The transportation network Silk Road expansion is projected to promote pollution, overfishing, and habitat loss. Some institutions worldwide have noted the potential for catastrophic consequences of the BRI. Only some of the organizations that had previously released reports on the Belt and Road greening were the United Nations, the WEF, and the World Wildlife Fund. The Columbia University and the Renmin University of China co-sponsored the BRI Green Development Conference in November 2017 to examine BRI energy infrastructure plans and policies that underscore the importance of sustainable development on the new Silk Road. In its distinctive endeavor, China’s government is fully conscious of the need to increase sustainability in the face of international pressures. In May of last year, the government issued the BREECP, including 25 green BRI projects. The Belt and Road ecological and environmental cooperation plan fosters a philosophy of the environment across the belt and roads. The guidelines cover the areas of “infrastructure and building of capabilities for energy, emissions, and environmental protection projects,” which are commonly adopted by the National Development and Reform Committee, the Minister of Foreign Affairs, and the Minister of Commerce and Environmental Protection. Although the Guidelines demonstrate the promise of sustainable development, they do not provide concrete details for its implementation or accountability measures. Due to their nature and size, without proper rules for Chinese enterprises operating overseas, BRI will significantly negatively impact the air and water quality in beneficiary nations and global CO2 emissions.14 Dr Abdul Rauf, a graduate student at Chinese Southeast University, was hesitant concerning environmental requirements. “China just supports one side of the EMC, Dr Rauf said, but the industries are not particular to the environment,” he said. Dr Rauf said, whose study focuses on the environmental implications of highways and the belt: “Chinese renewable energy projects have not yet been implemented,” “China needs to be focused on a better environment. The [and] industry is their primary preoccupation at the moment.” It is a criticism that the Chinese government regularly makes. Alternatively, it can be seen as an opportunity to take on the duty of “greening” the Belt and Road as a world leader in sustainable energy. The impressive deployment and investment of renewables discussed earlier show this. Despite the concerns, there are plenty of opportunities for environmental partnership and renewable energy development on the Belt and Street. The effort may set an important precedent in the early growth of increasing economies in Belt and Road Countries, from creating environmentally pleasant settlements and waste management to potentially clean power projects. Malaysia, for example, has a high solar energy potential: up to 20% of large solar power plants might be created to satisfy Malaysia’s present electricity demands. While Malaysia is the world’s third-largest manufacturer of solar photovoltaic cells, solar power plants remain tiny, with an installed capacity of up to 100 MW. This represents less than 1% of Malaysia’s overall energy supply.15 Likewise, Vietnam is believed to have at least the highest wind power level in Southeast Asia and has an estimated 24 GW economically feasible wind potential.

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However, the present wind energy share is modest in total electricity consumption in Vietnam.16 Furthermore, some countries on the African continent have the ability, with an abundance of energy, solar, wind, and hydroelectric resources, to make good use of Chinese-funded and well-developed renewable energy projects.17 Clean energy initiatives established by Chinese enterprises are quoted by the Institute for Energy Economics and Financial Analysis (e.g., 200 MW of the Power Chinese solar plant built in Ghana and 244.5 MW of the Aar wind farm constructed in South Africa by the China-based Longyuan Power Group Corporation).18 It’s time for policymakers and investors to move forward with decreases in renewable energy technology. With the Belt and Street Initiatives (also called the 21st-century Silk Road), China’s efforts to spread its political and economic influences, many BRI countries are exposed to the exploitation of Chinese businesses, which is desperately financed with historically inadequate environmental governance. Beijing will play a significant role in helping the world reach its climate targets. China has followed an infrastructure development strategy within its boundaries and has become a global leader in infrastructure investment. This international economic model offers the possibility of improving connectivity and reducing commercial expenses substantially, resulting in increased cross-border commerce and investment areas throughout BRI. The BRI Member States can considerably increase regional cooperation with concomitant policy reforms on improving new transport facilities. But, as Chinese development indicates, this economic increase will not be costly. The building of the new Silk Street requires a wide range of sites that lead to high levels of water contamination and soil erosion. The project will also necessarily enhance the extraction and use, with a considerable impact on global carbon emissions, for the manufacturing of concrete, such as sand, Silestone, and fossil fuels. The BRI corridors will also intersect the habitats of 265 endangered species, according to the World Wildlife Fund.19 Expansion of transportation networks through the new Silk Road will likely promote pollution, overuse, and loss of environment. Many institutions worldwide have taken note of the potentially disastrous effects of the BRI. Only a few of those organizations have already issued reports on “greening” Belt and Road the United Nations, the WEF, and the World Wildlife Fund. Columbia University and the Renmin University of China co-sponsored the BRI Green Development Conference to address BRI’s energy infrastructure plans and policies, stressing sustainability’s relevance in the new Silk Road in November 2017. In the distinctive endeavor, and under international pressure, the Chinese Government is well aware of the significance of enhancing sustainability. The BREECP, which includes 25 Green BRI projects, was published in May of last year by the government and guides promoting Green Belt and Road that promotes environmental philosophy across the belt and road projects. In this guideline, the Ministry of Foreign Affairs and Trade and Environment Protection jointly laid out by the NDRC the priority areas for “Energy-, Emissions and Environment protection projects in infrastructure and capacity building.” While these principles reflect the commitment to a sustainable road, there is a lack of specifics on their systems of implementation or accountability. Due to its nature and scope, without sufficient regulations on Chinese

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enterprises abroad, BRI would have severe negative repercussions on air and water quality in the beneficiary nations and worldwide CO2 emissions. Dr  Abdul Rauf, a graduate student at Chinese Southeast University, was hesitant concerning environmental requirements. “China just supports one side of the EMC, Dr Rauf said, but the industries are not particular to the environment,” he said. Dr  Rauf said, whose study focuses on the environmental implications of highways and the belt: “Chinese renewable energy projects have not yet been implemented,” “China needs to be focused on a better environment. The industry is their primary preoccupation at the moment.” It is a criticism that the Chinese government regularly makes. Alternatively, it can be seen as an opportunity to take on the duty of “greening” the Belt and Road as a world leader in sustainable energy. The impressive deployment and investment of renewables discussed earlier show this. Despite the concerns, there are plenty of opportunities for environmental partnership and renewable energy development on the Belt and Street. The effort may set an important precedent in the early growth of increasing economies in Belt and Road Countries, from creating environmentally pleasant settlements and waste management to potentially clean power projects. Malaysia, for example, has a high solar energy potential: up to 20% of large solar power plants might be created to satisfy Malaysia’s present electricity demands.20 While Malaysia is the world’s third-largest maker of PV cells, solar facilities remain tiny, with an installed capacity of up to 100 MW.21 This represents less than one percent of Malaysia’s overall energy supply.22 Likewise, Vietnam is believed to have at least the highest wind power level in Southeast Asia and has an estimated 24 GW economically feasible wind potential. However, the present wind power share is tiny in Vietnam’s total energy consumption.23 Furthermore, some countries on the African continent have the ability, with an abundance of energy, solar, wind, and hydroelectric resources, to make good use of Chinese-funded and well-developed renewable energy projects.24 Clean energy initiatives established by Chinese enterprises are quoted by the Institute for Energy Economics and Financial Analysis (e.g., 200 MW of the Power Chinese solar plant built in Ghana and 244.5 MW of the Aar wind farm constructed in South Africa by the China-based Longyuan Power Group Corporation).25 The time has now come for policymakers and investors to press on with the decrease in renewable energy technologies.

2.1.3 Green Finance Opportunities The projects of the BRI are built primarily on three organizational types: Chinese state-owned banks, Special Investment Funds, and MFIs. For instance, China Development Bank (CDB) provides providers with anticipated BRI projects at an estimated $40–45  trillion annually. Compared to multilateral development banks, this is a significant commitment: BRI’s yearly CDB budget exceeds BRI c’s total annual budget by at least $10  billion26; in combination with private investments, the overall cost of these institutions is nearly $100 trillion a year. In addition, some experts believe that up to half the BRI funding may be funded by MDBs and private investors, such as pension funds, insurance firms, and foreign governments, by 2030. The entities and monies described earlier are how the BRI is financed. However, according to Helen Wong, CEO of HSBC’s Greater China, China’s position as an infrastructure powerhouse is a unique chance for the country to lead green finance developments.

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Management and Sustainability in the Belt and Road China intends to become a pillar of its industry in protecting the environment. The drive was at 4.5 billion yuan by the end of 2015. By 2020, it is estimated to reach 17 trillion yuan. We thus expect further growth initiatives from the green technology industry–with the opportunity to launch new green investment funds and green investments banks to meet the funding shortage, Wong said.

In particular, BRI projects offer the potential to expand Chinese Green Finance markets, with green bonds covering a range of environmental issues, which finance a wide range of domestic and foreign and energy infrastructure projects in China. Green bonds are usually connected to a particular asset for climate projects and environmental projects such as infrastructures and energy assets that the BRI is developing and are also known as climate bonds. Since 2015, China has been one of the world’s largest issuers of green bonds. According to Moody, China was at the top of its emissions with 17.2 billion dollars, with France closely following it with 17.1  billion dollars, while the United States had 11.7  billion dollars. Governmentwidespread financial institutions are the Green Silk Road Fund, with $4.5  billion in volume, and the China Ecological Development Bank (CEDB), with $16 trillion expected. Though these assets are considerable, they only form a percentage of the yearly investments of the CDB, which is estimated to be between $40,000,000 and $45,000,000 and a trillion euros. Furthermore, it is difficult to determine the role they will be playing in the coming years, as in March 2015, the GSRF only invested in China until the CEDB was in place.27 BRI is the largest global infrastructure initiative. It can boost trade and accelerate growth across Asia, Europe, and parts of Africa. However, the environmental impact of the endeavor may be substantial. The Chinese government must hold enterprises with strong environmental standards outside their boundaries. This can be achieved by promoting the integration of sustainable practices in the first stages of the construction, demonstrating and promoting sustainable entrepreneurial prospects by developing green finance, and supporting sustainable infrastructure projects. The Chinese government pledged these targets; however, it must consider legislating the enhancement of the environmental standards of Chinese companies. A  comprehensive, coordinated plan will be necessary to ensure that the BRI is both developed and sustainable.

2.2 Conflict between Economic Development and Environmental Protection in the Belt and Road Initiative The China BRI, launched in 2013, soon subsumed much of China’s political and economic participation outside the nation. As a broad-based investment and infrastructure strategy involving more than 130 nations, the expansion of the BRI has significant challenges concerning its environmental repercussions and environmental impacts. This chapter discusses China, taking account of BRI’s critical environmental governance actors, policies and initiatives, activity, and the rapid development of the Green BRI institute architecture. Several international and transnational sustainable development initiatives underpin the current BRI’s institutional architecture. The BRI’s environmental governance efficiency depends on BRI partner nations’ policy willingness and capacity to maintain, implement, and implement strict

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environmental regulations and rules, not merely Chinese aims and commitments. Finally, we present various obstacles to ecological management and a research agenda for the future.

2.2.1 Introduction Initiated in 2013, a substantial part of Chinese political and economic participation abroad is rapidly supplanted by China’s BRI. With its enormous infrastructure development and investment strategy with the official engagement of more than 130 nations, BRI expansion has significant challenges regarding its effect on environmental and environmental management. This study examines how China is creating a robust institutional structure for its intended “green BRI” as a critical stakeholder policy and initiative involved in environmental governance in the BRI. In the present institutional architecture of the Green BRI, the results are based on voluntary selfgovernment and numerous international and transnational sustainable projects. The efficacy of environmental governance in the BRI rests not only on the political will and competence of the BRI partner nations to retain, implement, and apply stringent ecological law and regulatory standards, in addition to the Chinese aims and obligations. In conclusion, we highlight various environmental governance concerns and a future research agenda. President Xi Jinping announced the BRI in 2013 to enhance regional and transcontinental cooperation and connectivity through investment, business, and infrastructure projects. In the BRI framework, China invests in transport and energy facilities such as railways, roads and ports, airports, and pipelines via the Eurasian, Asian, and African continent continents through the “Silk Road Economic Belt” on land and the “Maritime Silk Road”28 into policy coordination, facilitation of commerce, financial inclusion, the BRI aims, and the exchange of culture and science over infrastructure. Chinese policy banks and publicly owned commercial bonds are the primary sources of BRI funding, totaling US$500 trillion by 2019, and additional supplementary investment is made by Chinese enterprises, non-China companies, banks, international agencies, and partner states’ governments. The activities related to BRI are formed by the majority of social or economic cooperation agreements, schemes, or projects between China and international nations.29 The Government of China has inked 200 cooperation papers with 138 countries and 30 international organizations until January 2020. Since BRI continued to develop and there is no official registry for all the BRI projects, the geographical breadth and the total number of BRI projects remained challenging. Also, BRI members are regarded as BRI countries like Turkmenistan, which has not signed bilateral BRI cooperation documents with China.30 Because of their unparalleled dimension, academics and civil society organizations expressed concerns about the environmental ecological initiative.31 The environmental protection duty and the economic development of the BRI are challenging to achieve because the initiative involves several vulnerable environments. The Tibetans and the Malaysian rainforests, from forests in Russia to ice, Snow and Permafrost, are covered under biophysical circumstances. To respond to the “world trends towards green, low-carbon and circulatory changes,” several Chinese ministries jointly adopted “the Green Belt and Road ‘or the Green Silk Road’ policies in response to mounting international criticism.”

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The majority of research on geopolitical and geoeconomic implications, which focus on internal order, has been conducted by the BRI. Together BRI is considered to play China’s more active role in a new phase of globalization.32 Scholars broadly agree that if executed as planned, the BRI will rebuild the existing geopolitical landscape.33 On the other hand, environmental issues were not focused, and little research on environmental governance issues and institutional frameworks is being undertaken within the Green BRI.34 BRI Emerging environmental governance architecture comprised organizations, systems, and other forms including norms, principles, regulations, and decisions—Initial assessment.35 We raise the issue of how Chinese, BRI-host nations and international and transnational entities impact the environmental governance of the BRI. Since diverse yet interacting governance arrangements control BRI, consideration of the governance architecture of the BRI must not be given to the design or efficiency of individual institutions. This is followed by Dauvergne and Clapp (2016). They argue that a global environmental governance scholarship focuses far too closely on specific international governance systems. Thus, it lacks significant developments in emerging ecological issues, which are not yet covered by sophisticated governance frameworks. This analysis is limited to formal institutions; therefore, no consideration is given to the role of social standards or implicit regulations. Our insights include official government documents, peer-reviewed publications, pieces from the media, reports, and work papers published in English. While Chinese sources could have enhanced this, all policy papers referred to in BRI are available in English. BRI is a young and rapidly evolving project requiring more empirical and cooperative study from Chinese and non-Chinese researchers. After addressing the primary environmental dangers and prospects of the BRI, we explain the evolving environmental governance architecture of the BRI. Then we discuss the significance of the BRI in global environmental management and three critical difficulties in governance. Finally, the BRI’s future research program is presented.

2.2.2 Environmental Challenges and BRI Opportunity There are two global outlooks for the BRI to contribute to sustainable development. BRI is a chance for sustainable development for a student, policy analyst, and politician. Chinese President Xi Jinping stressed at the BRI meeting in 2017 that the Sustainable Development Agenda 2030 are to improve the collaboration on ecolabels and the environment and develop a sound ecosystem.36 Green trade, finance, investment, investments in investment, and green technology and innovation are central mechanisms via which the BRI may accelerate progress on the sustainable development goals (SDGs). Chinese financial institutions can give financial resources to BRI nations to implement their nationally set contributions to the Paris Agreement.37 China can contribute to the exploitation of exploiting the BRI countries’ enormous potential for renewable energy, sharing expertise and knowledge on the adaptation of political objectives, modifying subsidy arrangements, and lowering waste energy.38,39 For example, the Digital Silk Road might enhance environmental monitoring and sound in the BRI countries, which seeks to develop a network for collecting and sharing data on earth observation.40 The BRI could thus contribute to the Paris Agreement and the SDGs from this point of view, but particular empirical proofs still need to be carried out. The environmental concerns posed by the BRI concern the observers from another standpoint. Infrastructure development, commerce, and investment in BRIs could have

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significant detrimental environmental repercussions that could offset the economic benefits of these investments.41 The potential implications of the BRI are different. Infrastructure projects have direct and indirect consequences on ecosystems and wilderness, such as logging, wildlife attractiveness, and settlements. The effect of habitat breakdown and degradation and rising greenhouse gas emissions resulting from transport infrastructure and maintenance and more investments in Chinese coal-fired power stations might be the loss of biodiversity.42 The extraction of natural resources, including water, sand, and ferrous metal ores, might also be accelerated in the BRI countries. Still, efficient ecological governance is possible; it can, directly and indirectly, impact the environment. It is difficult to draw concrete evidence on the global environmental impact of the BRI by specifying the scope and extent of the BRI and its related operations. The Mercator Institute for Chinese Studies (MERICS) has reported that some two-thirds of Chinese spending on completed BRI projects (over 20 billion dollars) were invested in the energy sector, and subsequent grid and renewable energy projects (approximately 15 billion dollars) have taken part in research projects (about US$12 billion). Many significant hydroelectric projects help to increase the overall investment in renewable energy. Furthermore, US$15 billion has been invested in projects on rail and US$10 billion in the Digital Silk Road. Fifty-one nation studies discovered in the Asia database analyze 374 BRI initiatives. The majority of BRI initiatives, in our opinion, relate to transport (215 projects) (159 projects). The primary source of energy projects is still fossil fuels despite China’s leadership in producing and using renewable energy.43 Given the restrictions of the official evidence, they contribute to understanding the breadth of the BRI. However, these statistics represent only an overview of all BRI projects and differ from MERICS results. Funding is around US$500 billion for 300 data-producing initiatives. Pakistan, Bangladesh, China, Indonesia, and Cambodia are among the top five BRI beneficiaries. Overall highest costs are reported in Pakistan, China, Russia, Bangladesh, and Belarus.

2.2.3  Governance of the BRI Environment China’s attempts to construct complex infrastructure worldwide will be accompanied by efforts to establish the soft infrastructure needed to coordinate and conduct BRI initiatives such as the green BRI. Governance means discovering common answers to several player problems that are too difficult to tackle by individuals, organizations, or non-state entities. Kooiman (1993) defined management in all these social, political, and administrative activities as a model for leading, controlling, and managing societies. EMS deals with the set of regulatory systems, processes, and organizations influencing environmental actions and the results of political actors’ environmental governance. Our analysis focuses on institutions that are “permanent and interrelated practises that impose behavioural roles, activities and expectations,” as defined in the BRI framework for Environmental Government.44 The architectural governance notion allows us to analyze a problem area regulated by many institutions. All architectural management is somewhat fragmented, as it consists of several aspects that are rarely entirely connected or integrated. This is true for the “green BRI” because in Chinese, BRI host nations and worldwide, it governs

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several autonomous government and business agencies. Although some scholars analyze these complex governance systems using fragmentation, others employ a polycentric approach, highlighting the system’s ability to arrange itself. Concentrating on a broader governance architecture allows us to be aware of significant changes in the field of governance, such as new, more or less integrated management modes with established forms of government governance. The increasing flows of traded longdistance products and foreign direct investment (FDI) create issues of the primary significance of power, which, nonetheless, demand the participation of States, civil society actions that require the involvement of States, civil society actions, and market players in the national public administrations. We analyze the environmental management of the BRI through consideration of the role of non-governmental organizations such as banks, interactions between BRI institutions and established international government institutions, and the use of non-obligatory policy instruments. This theoretical outlook is discussed.

2.2.4 “Green BRI” Chinese Institutions Several stakeholders at different levels, including government ministries, public organizations banks, and government and private enterprises, have planned and operated BRI operations and BRI activities. China’s BRI-specific and BRI-related composite policies have built a comprehensive framework for institutional protection. In addition to the official rules of the government, industrial organizations and business networks have drawn up environmental directives that are often based on international recommendations drawn up by the OECD or the United Nations. These policies and guidelines, which contradict enforceable laws and broadly describe ambitious objectives and ideals, are voluntary. The two key policy documents relating to the BRI are “the Silk Road and Economic Belt and 21st-Century Maritime Silk Road Joint Building Visions and Actions” and a Sea Cooperation View under the BRI, issued in 2015 and 2017, respectively. The guidance for promoting the green belt and roads is the most critical environmental policy of the BRI. A complete overview of regulations governing Chinese outward FDI can be found in Gallagher and Qi’s (2018) “The Belt and Road Plan for Environmental Cooperation.” They advocate a solid environmental narrative about the BRI, highlighting the need for programs to promote green and low-carbon development, protect biodiversity, promote green and quiet carbon development, and address climate change. China is therefore projecting itself through these regulations as a vital contributor to global environmental governance. The Green Gang and Roads promotion is a significant step forward in global governance. It emphasizes the purpose of linking the Green BRI with the world’s most important sustainable development agenda— the 2030 Sustainable Development Agenda. The Cooperation Plan contains 25 specific initiatives without additional specifics. While certain projects have already been initiated, others have still not begun, such as the “Shared Eco-Label,” or the Biodiversity Conservation Demonstration Corridor projects. The aims are to incorporate the concept of “Ecological Civilization” in BRI by 2025 and encourage environmental cooperation to meet SDGs by 2030 “Higher and more profound standards.” The fact that China promotes corporate environmental governance under the BRI is one of the essential elements of the two strategies. Both show the distinct duties

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and responsibilities of the governing actors: The State is responsible for guiding and developing platforms for communication, information assistance, technology transfer, big data cooperation communication, information assistance, technology transfer, and big data cooperation platforms. Companies are anticipated to be the key stakeholders in environmental governance in the BRI and are willingly responsible for the environment and society. It is urged that international standards, policies, standards, and nations of the host be respected. Businesses should follow standards set by several departments for “green business behaviour,” strengthen environmental management, and give environmental information. “Leadership, entrepreneurship and social engagement” cooperation is the primary vehicle for fulfilling the BRI sustainable development objectives. In addition to BRI-specific policy texts, China has created a broader governance structure to guide and monitor Chinese investment abroad. The BRI has been predated by several laws that govern the conduct and reporting of the foreign Chinese government and commercial companies. Due to establishing increasing concern over the environmental practice in Chinese foreign – rms (Risk Management Solutions), the Chinese administration has been led to develop several policies and initiatives that demand conformity with the rules and regulations of the host nations, China; themes this administration has been shown to been shown develop several policies and initiative required demand agreement with the host nations’ rules and regulations.45 There is no legal or environmental law in China’s investments abroad. Several public authorities have produced policy guidelines establishing voluntary ecological protection measures. For example, the “Overseas Investment and Cooperation Environmental Protection Guides” encourage but do not compel the performance of Chinese firms of overfishing environmental evaluations.46 EIAs in China have been required legally since 2003 for any building projects or plans with possible environmental impacts. While companies may be responsible for their potential impact in China, they are not formal sanctions against foreign operations by the Chinese government. Furthermore, by specifying socioeconomic circumstances, financial institutions contribute to the approval and financing of projects with enterprises and management actors. China has been trying to establish a green banking system. China’s major regulation rules on sustainable banking are the Green Credit Guidelines for 2012. The guidelines encourage banks to promote green lending and effectively identify environmental and social risk measurement, monitoring and controlling their lending operations. Credit projects in the country where the project is located shall comply with applicable environmental protection laws and regulations and follow relevant international norms or standards. The 2016 “Guidelines for Establishing a Green Financial System” marks China’s commitment to green finance. For example, Chinese policy banks have formed the major primary lender to BRI Projects (e.g., 5.2.4). The Asian Investment and Infrastructure Bank, the new development bank, and the multilateral development banking institutions, which accepted the Environmental and Social Framework in 2016, are other significant BRI financial organizations.47 All environmental rules are legally binding, and all BRI and BRIrelated rules have been specified. Gallagher and Qi (2018) stated that while the overseas investment management system has elapsed, China’s overseas investment policy continues to be relatively weak, primarily voluntary, and incompatible with national policy.

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The BRI featured green plans in the Chinese government but aspired only till now. The BRI standards are increasing in China, but critical implementation, monitoring, and enforcement specifics are lacking. A report by the Asia Society Policy Institute pointed to China’s proclamation that a “green BRI” was introduced.48 Civil society and government agencies can make businesses responsible for voluntary promises by “naming and shaming” if no financial or legal penalty has been imposed for noncompliance.49 This approach is increasingly employed in China to shame corporations and report violations promoted by polluting industries.50 However, citizens’ awareness of and interest in ecologically and socially destructive behaviors to shame corporations and report are likely less than their inter. There are significant players in BRI host countries, including transnational lobbying networks and solid civic organizations.

2.2.5 BRI’s International and Transnational Environmental Bodies China develops an international and transnational governance framework in the Green BRI, distinct from formal regulations and guidelines. The Chinese administration takes a twofold position in this regard. China, on the other hand, aims to establish environmental cooperation networks and use the current bilateral and multilateral mechanisms of international cooperation, such as Chinese ASEAN, Euromedical Forums, Shanghai, Lankang-Mekong Cooperation, and 17 2017a Road Portals, as well as the 17 countries that require an extensive and comprehensive network to support them.

2.2.6 Framework for Cooperation between China and 17 Countries of Central and Eastern Europe First, China is pursuing BRI recognition by international institutions and the United Nations, in particular, to obtain some external legitimacy for its megaproject. The cooperation agreements with 24 UN agencies and the second United Nations Environment Programme (UNEP) were inked in 2019. About 20 UN top officials, including the United Nations Secretary-General, participated in the Belt and Road Forum in Rio.51 According to the Chinese Minister of Ecology and the Environment, China has strengthened many bilateral and multilateral environmental cooperation structures under the auspices of BRI. In recent years, the Lancang-Mekong Center for Environmental Cooperation has been constructed; the Center for Environmental Cooperation China–Cambodia and the Chinese-Laos Environment Center have been designed. The Green Seed Road Envoys Training program is a perfect example of how China’s Government develops the Green Seed Road Envoy on existing environmental authority—a training program for ecological officials. This flagship initiative, inaugurated in 2011, trained more than 1,000 ecological authorities, technical staff, and academia in over 20 nations in green economic politics and environmental law enforcement and was launched by the Ministry of Ecology and the Environment. China continues to pursue the “green BRI” program and will strive to train 500 environmental officials in the next three years. To encourage research and cooperation, the Chinese Scientific Academy established research institutes. Another BRI-related research and training program has been started by the Alliance of International

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Scientific Organizations. The Alliance of International Scientific Organizations has created further BRI-related research and training programs, especially in BRI regions. Second, the Chinese government is launching new “Green BRI” cooperation platforms in coordination with international government or non-governmental organizations. The Belt and Road Green International Coalition (BRIGC), which the Mediterranean and international partners, especially the UNEP,52 developed collaboratively, is a notable example—a special case. At the beginning of the first Road and Belt Forum in 2017, President Xi himself stated that the highest political levels should back Coalition. As of 26 August  2019, the coalition would comprise eight international bodies, 68 NGOs, and 30 companies. This consists of 132 members and 132 members in total. The BRIGC aims to provide the SDGs and the Paris agreement alongside its partners with guidance, counsel, and financial assistance. The Coalition has established ten topics, including renewable energy, sustainable transport, and biodiversity, encompassing many areas and biodiversity. The BRIGC, the new institutional framework, indicates that it might be an orchestra of different public and private governance activities and, therefore, a meta-governmental form.53 Several environmental initiatives have been launched at the international and transnational levels of BRI. The Sustainable Cities Belt and Road Coalition, the BRI Green Lighting Initiative, and the BRI Green Going Out Initiative were launched in 2019 alone. The BRI Green Cooling Initiative, the BRI Big Data Environment Platform, and the BRI Green Lighting Initiative were all involved. Apart from launching global efforts by signing an Under-Status Memoranda with international partners, the Chinese Government was also involved in the bilateral environment governance. Those acts underscore China’s use of classic environmental governance mechanisms such as intergovernmental memoranda of understanding and novel governance structures, such as transnational cooperation unit initiatives Chinese Government sees the Green BRI as a platform for active participation in global environmental governance, whether the green BRI fits into an existing global environmental governance landscape or whether it constructs whole new structures of governance power. Strong indicators have shown that China does not plan to replace the green BRI with existing global environmental governance structures. Instead, China employs a regional and multilateral cooperation structure to develop new ecological governance projects under Chinese leadership, such as BRIGC, in close coordination with foreign partners, including UN agencies. A combination of regulations and rules features the current Chinese approach to the green BRI.54 Since new projects’ aims and organizational structures remain unclear, it is too soon to determine whether they complement, weaken, or shift environmental leadership to the East.

2.2.7 BRI Partner Countries’ Environmental Governance As China has endeavored to develop and expand the institutional green BRI architecture, efficient environmental governance is essential to achieving true green BRIs in partner nations. As Chinese authorities are urging Chinese companies to comply with environmental legislation challenging regions in their host states, their will to develop, implement, and enforce strict environmental rules significantly impact BRI’s ecological sustainability. However, low-income countries can prioritize domestic economic development over environmental protection and set low environmental criteria

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to attract FDI. Especially for nations with weak records, the BRI is facing substantial environmental concerns.55 Even if ecological law is present, it cannot be implemented. Brombal (2018) warns of implementing multiple BRI projects in nations where public participation and environmental rights have been curtailed. They can modify infrastructure designs to prevent or reduce consequences to determine direct and indirect effects, for example, solid and practical EIAs and Strategic Environmental Assessments (SEAs).56 BRI projects may entail extensive agreements with stakeholders, including investors, financial firms, consultants, building contractors, operators, and regulating organizations. EIAs may be impacted by EIAs from contracts with BRI in those nations. However, certain host countries cannot monitor and assess such assessments. Comprehensive EIAs and SEAs take time to revise the initial plan, leading to project delays. Often, Chinese and BRI partners do nothing to hinder the progress of projects. Increased BRI trade and investment flows can affect various public and private environmental requirements. Potential effects of trade and investment on public and private environmental standards, the standards of BRI, can speed up the “pollution haven effect” by transferring environmental sectors to less regulated jurisdictions within the BRI. China is improving environmental protection and protecting industries and technologies that use many resources. This makes it more appealing for Chinese businesses to move to BRI countries. The “pollution harm effect” can result in the “race to base” if governments undercut environmental standards to attract FDI. Gamso (2018) indicates that commerce with China in Latin America and Sub-Saharan Africa leads to the bottom of environmental policies. This is moderated by the competence of management, particularly bureaucratic ability. This is what happens. Today, no proof of pollution changes and the use of the resources from China to other BRI countries can be found by Tian et al. (2019). Manufacturing analyses are not exclusive. Morris finds a need for efficient coordination of law and regulatory affairs among the BRI nations to guarantee that companies do not participate in l shopping. Regarding environmental performance and the risk of becoming a pollution paradise, several BRI partners, including top investors in BRI, such as Pakistan, Bangladesh, and Cambodia. Instead, environmental standards and regulations might be enhanced in the BRI countries. If BRI increases trade links with environmentally friendly consumer markets, it can boost the market’s growth upward by allowing exporters to meet or maintain higher requirements for market access. According to Liu (2018), the Chinese government aims to export the BRI to the developing countries for export to China of environmental norms. The Green BRI Guideline, for example, indicates that China is committed to incorporating ecological protection in free trade deals. China will recommend more eco-labeling items in BRI partner nations in public contracts. This shows that China ostensibly refrains from interfering in host countries’ domestic problems, at least about environmental issues. China has progressively substituted its rigorous “non-intervention” approach by ensuring popular support through external help in non-economic sectors such as the environment. In the host countries, corporate players can support environmental sustainability in addition to the public sector actors. However, no empirical research on how the BRI affects the environmental governance of the host country has yet to be carried out to our knowledge. As the BRI covers more and more European countries, it increasingly engages with environmental

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governance institutions of the European Union (EU). A good illustration of this is the Peljesac Bridge project in Croatia, the first BRI project for which EU funding was built by a Chinese consortium. The Chinese consortium has established a Department of Safety and Environmental Protection, which has deployed noise cancellation technology to preserve the marine environment to comply with the stringent EU environmental laws. This example shows that EU Member States involved in BRI projects are more likely to deal with a downward trend than other EU countries. They are obligated to respect EU supranational environmental law. Where BRI projects are implemented and funded from outside the EU by other financial institutions, international organizations like the EU or the World Bank can have a limited but not insignificant impact on the environment as part of their loan criteria or draw on their57 regulatory powers toward BRI host countries. The EU or the World Bank is not a global financial institution. The ecological implications of the Monterey BRI road project have, for example, been expressed by the European and international actors.58 Engagement with third parties can help to examine contractual relations and to push the host countries to negotiate better agreements, as in the instance of the Myanmar Special Economic Zone, where a US task force encouraged renegotiations with China to protect the rights of local people.

2.2.8 Challenges of the Green BRI Governance In the years when the BRI was founded, the Greens BRI environmental governance architecture emerged as a fragmentary patchwork of various national, regional, transnational, and international entities—initiatives, guidelines, agreements, and programs. For BRI ecological governance, the Chinese Government has played a vital role in establishing voluntary and cooperative programs and networks of public, commercial, and civil society actors and institutions. The Chinese government officially takes a “command and control” strategy but offers a stimulus to firms and banks to self-regulate them. Environmental governance is widely shared among numerous government bodies that expressly require firms to play an important role. The institutional landscape of the “Green BRI” exhibits central tendencies toward greater reliance on transnational cross-cutting governing and the use of soft law in global environmental governance. Although projects under the “green BRI” are proliferating rapidly, there are still severe hurdles to environmental oversight. First, BRI-specific and related policy is not strict but relies on voluntary and business self-regulatory instruments. Without stricter laws that define precise measures, it is unlikely that China will achieve its view of the “green BRI.” An accurate set of “green bridging” principles have been outlined in China. Still, if not further exploited, it is likely criticized as simple window dressing to enhance China’s worldwide image rather than safeguard its environment. Second, the environmental management of the BRI is confronting additional issue issues in dealing with telecouplements. The linked and interdependent effects of faster movements across distances of capital, jobs, energy, materials, and economic activities arise from different locally remote human/environmental systems.59 The ecological repercussions in other regions and the broader Earth system are being more recognized in operations in each global region. The telecoupled BRI analysis enables us to understand and tackle the interconnected environmental and economic concerns inside the BRI countries.60

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Teloupling illustrates that distant, unrelated human-environmental systems can be intertwined closely and shows that (un)sustainability in one place is closely linked to (un)sustainability in another. The policy leakage is a clear example. The leak happens when the environmental policy of the BRI-affected countries like those of China is indirect to the policy objectives and, as a result, reduces the total benefit of the intervention. The environmental leadership of BRI must minimize the possibility of leaks from increasingly stringent Chinese environmental policies in BRI countries. More energy and resources will likely be needed if China wants to achieve its dual goal of supporting economic growth while preserving its natural environment. A case in point is the leak of land use. China would strengthen its forestry and conservation regulations by prohibiting the commercial logging of domestic natural woodland by providing additional imports from participating countries to enable the BRI to address the growing demand in the Chinese wood industry. Since 1998, logging regulations have resulted in rising timber imports outside China, mainly from Russia and South-East Asia.61 The Chinese–Mongolian–Russian BRI Economic Corridor, Simonov (2018), says that it will likely be contributing to deforestation on Russia’s borders through the reopening of the Chinese–Russian border crossing to facilitate Roundwood exports from Russia. Russian forest products’ exports to China increased the risk of pollution havens by 11% between 2013 and 2018. There are several significant environmental governance research issues. The BRI will enhance interdependencies across areas of the various BRI countries through material and intangible fluxes. This illustrates the inadequate capacity of the territorially restricted national government in remote places to deal with the effects of policy changes, consumer trends, or procurement practices. In contrast to worldwide experimental requirements such as climate change that can be managed in all places due to the equal dissemination of pollutant concentrations, environmental management of telecommunication components must focus on particular fluids and locations.62 Third, the nationally influential Green BRI is what we’re talking about. However, it does not necessarily mean that the actions are adjusted accordingly by regional governing organizations, local governments, and private companies. Local Chinese administrations tend not to properly motivate and implement national environmental law laws. The BRI projects involve many business and public actors, such as contractors, developers, consultants, funders, and regulating authorities from Chinese and international and host states. Consequently, the Chinese Government must combine its pro-ambient storey with many high-level initiatives recently launched across spaces and jurisdictions to implement local projects. As the BRI is controlled by multiplicity of interaction arrangements in the governance sector, it must bridge the social and institutional distance between China and the partner nations and institutions of BRI. Even if countries can be close geographically, they may be institutionally far away if they have little or no governing social framework, if social networks, values, and expertise are limited. As far as the social gap between China and a few BRI nations is concerned, substantial communication obstacles and long-term confidence deficits lead to high environmental transactional governance costs. Countries throughout the BRI’s legal and regulatory systems range from religious precepts to traditional common law or civil legislation. China companies should show their awareness and concern for the socio-political environment and local legislation on the environment and the host country.

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The Chinese government is taking an active yet gentle approach to the environmental government of the BRI. Based on national, international, and transnational aspirational statements and voluntary mechanisms, China develops an institutional framework for the Green BRI actively and fast. This underlines China’s objectives to play a more influential role in global environmental governance. China has continuously worked to develop multi-actor authority by including several private and foreign actors as part of the government-led institution-building project for the Green BRI. Implementing the “green-BRI” vision of government is expected to play an explicit role for companies. China is attempting to bring its Ecological Civilization model into the BRI, but it remains to be seen if it is able to translate its objectives from speech to action. China employs BRI as a regulator and rulemaking in world environmental governance, mobilizing existing environmental ecological management institutions and building new ones. But the BRI’s environmentally and ecologically sound technology depends not only on the efforts of Chinese actors to govern but also on how well environmental laws and regulations are implemented, monitored, and enforced in the BRI’s host countries. Given that China heavily pushes compliance with BRI laws by its firms and financial institutions, BRI host nations have a substantial impact on the viability of the BRI. BRI’s governance capacity and its political commitment to protect the natural environment are highly influenced by BRI host countries. The BRI is more important in countries that don’t care for the environment, like Pakistan, Bangladesh, or Cambodia. BRI is especially important for places like Pakistan, Bangladesh, and Cambodia that don’t care for the environment well. The scientific community faces significant methodological hurdles in conducting thorough studies of identifying potential environmental and ecological effects of BRI over the following years, given the ambiguous and expanding sized BRIs and the associated substantial data needs. Empirical research also plays a vital part in future research to see if and how the Green BRI in China influences environmental governance in BRI countries. Will the BRI push partnerships down, or will the BRI export stricter standards and provisions to China? Is BRI favorable to environmental policy convergence? Will it be environmental regulations for Shanghai or the effects on California? In addition, a deeper understanding of how the sustainability of BRI might be affected by non-formally participating countries or groups of countries such as the EU or the United States. The United States and the EU are responsive to 30% consumption of carbon emissions from 65 BRI nations by embodied carbon flows63 (Han et  al., 2018). Researchers should study how newly created BRI institutes can control the environmental effect of telecoupled products and resource streams and their connection with existing global governance systems. If a framework for BRI-related trade and investments is adopted, an approach to tackling sustainability concerns and possibilities across national borders may be helpful. Our work on BRI’s architecture for environmental governance also provides a platform for studying the responsibilities and efficacy of specific stakeholders. Finally, a significant matter for politicians is how the evolving environmental governance architecture intersects with inter-and intra-state interactions and domestic interests. Since China is not a unitarian participant but rather a meeting of provinces, autonomous territories, and municipalities, future research can study the role of sub-national governance bodies in the “Green BRI.” The BRI’s sustainability is the biggest challenge for various environmental,

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geographical, and legal difficulties involving many organizations, actors, and industries. Organizing the numerous environmental management activities detailed in this study and guaranteeing its success will become a significant long-term responsibility.

2.3 Potential Impacts of Education for Sustainable Development in the Belt and Road Initiative 2.3.1 Cooperation in the Development of Education Among the Countries along the BRI Route During his trips to Central and South-East Asian countries in September/October 2013, President Xi Jinping sequentially proposed proposals to construct the Silk Road Economic Gürtel and 21st-century Sea Silk Road (hereafter referred to as the Belt and Road). The projects received the utmost attention from the international community. In an attempt to speed up the development of the 21st-century Belt and Road to promote economic prosperity, regional cooperation, commerce, and mutual education among peoples for peace and global joint development, on 8 March 2015, three State Department Ministries jointly issued visions and actions on the Silk Road and 21stcentury Maritime Silk Road. The part of public education, and in particular higher education in China, is part of this systemic project of the century: actively promoting cooperation and education development between the Belt and Street countries, cultivating a vast range of talent, fitting and directing the belt and road building, and improving and transforming into a higher education facility. These issues require serious thinking, rigorous research, bold research, and lasting practice.64

2.3.2 Road and Belt Building Is an Essential National Strategy The BRI represents a powerful vision for MSC for mutual profit and shared prosperity. It concentrates on business, trade, and networking. It inherits and enhances the old Silk Road through a combination of 64 Central Asia, South-East Asia, Southeast Asia, East Asia, and Western Europe, connecting the Asian-Pacific Economic Circle to Europe. There is an open, inclusive, and balanced initiative on economic cooperation; no country is excluded.65 All the countries and economies are invited to unite in developing and cooperating, not as an organization, nor operating on a closed system. The strategy Belt and Road breaks the traditional, dispersed regional development style, providing a new model. Alongside the Belt-and-Street countries, the primarily emerging economies and developing countries have a population of 4.4 billion. They comprise 63% and 29% of the global population and economy and combined economic size of 21  billion. Most have a rising economy and a plethora of resources, which allows a lot of collaboration and potential. The Belt and Road Building comprises three aspects: economics and trade, regional order, and cultural interaction, with specific emphasis on the following areas on policy connections, infrastructure, business, finance, and people. Politics: Encouragement and mutual support for practical collaboration and broad-based programs; political cooperation; Infrastructure: Transport, energy, communication, and creation of standard technical infrastructures; infrastructure; Trade zones: Free trade zones, customs cooperation, standard measurement and

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certification, statistics, e-commerce across frontiers, modern trade in services, agriculture, the forestry industry, husbandry, and fishing; Financial: Bilateral exchange and settlement rate; Asian Bond Market; BRICS, BRD; Shanghai Cooperation Fund; Silk Road Fund; Financial Regulation; Individual: Cultural and academic exchanges, staff exchanges and cooperative activities, cooperation with the media, collaborative schools, vocational education, cultural holdings, cooperation on tourism, medical services, sales of sports, collaboration in science and technology, professional training, management of social security systems, government management, and legislation. The building of the Belt and Road offers a broad area for cooperation in agriculture, textiles, chemicals, energy, transport, communication, finance, research and technology, medical, and other matters. Vision and action also suggest that the belt and road construction will make a great effort to accomplish these globalization-friendly projects with a further opening—one strategic base, two centers, seven cooperative zones, nine interior highlands, 15 coastal ports, and two international hub infrastructure infrastructure-building airports. The implementation will indeed have a significant, profound, and lasting influence on China in terms of sustainable development, social solidarity and stability, and periods of technical and cultural exchanges. The Belt and Road are designed for shared growth and prosperity in the spirit of partnership and win–win. It is a path to peace, friendship, and understanding that leads to a more significant debate. This long-term, high-level, and omnipresent strategy includes big goals and lofty duties necessary; the ubiquitous plan includes big dreams and high responsibilities, such as transparency, national development coordination, and rejuvenation. It requires considerable time and space to reach these goals. To set goals and priorities at different stages and then carry out our plans with great logic and order, our focus needs to be on several time-specific concerns like 2020 and 2030 throughout the historical process of fulfilling the Chinese country’s great dream of renewing the country. There should always be consideration of these activities’ chronicity, challenge, and complexity. Either indifference or impatience will gain us nothing. In the last 20  years, emerging economies with BRICS representatives have expanded more than twice as fast as the industrialized nations. This tendency has revolutionized world politics and the economy, just as the Belt and Road.

2.3.3 The Belt and Road Building Raises Further Missions and Demands for China’s Educational Opening The Chinese Government has consistently highlighted human growth as a “shared destiny for mankind.” “A common destiny community for the human race,” first suggested by the 18th NCCPC, is appropriate to enhance awareness of those who share a shared fate community. A country should address the legitimate concerns of others in pursuit of its interests and should foster a common development of its own in all countries. On almost 60 separate occasions, President Xi Jinping often mentioned a “community with a common human destiny,” in particular diplomacy. In April 2013, the Schwarzman Study Program launched in honor of President Jinping himself of Tsinghua University, who wrote a letter explaining the idea of “a common human destiny.” He said in his letter that “Today’s world is an ensemble of common objectives consisting of every country. All peoples must join and work together to address human development difficulties.” BRI focuses on building a community of shared interest,

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destiny, and responsibilities through a practical and comprehensive collaboration.66 In short, China’s Road and Belt Initiative delivers on the undertaking to build a common destiny community for the human race.

2.3.4 Unique Education Mission One must preserve one’s integrity and aid the world amid poverty and prosperity. This has been the sense of responsibility in Chinese culture since ancient times. And the BRI and establishment of the Asian Infrastructure Investment Bank (AIIB) today reflect the same conviction that China is advancing toward a prosperous society in every aspect and a moderately wealthy society in the future. Most countries on the belt and road had been touched by the exploitation and suppression of the colonial period. Many countries still face poverty, famine, and upheaval, restricted by historical circumstances and their own. And the globe has been based on the law of the jungle and has political and economic frameworks since World War II in its journey toward modernization. Strategically speaking, they cannot go the route of rich countries and sorely need an international system that is more equitable and fair as they pursue progress in a world that leads to global economics, cultural diversity, and multi-polarization of social information. Three stages have historically shaped the contemporary international system. In 1648, the Western Peace was concluded, and the foundations were laid in global concerns for the lawful status of nation-states and the principles of sovereignty, territory, and autonomy created. The second phase saw the creation of alliances among sovereign states, represented by the 1815 Vienna Congress. The conflict lasted more than 20 years, and European powers finalized the continent’s division. There have been significant international actions in alliances, such as NATO, ASEAN, or SCO, made up of many nations. Third, the system of the United States and other powerful countries created by the United Nations after World War II has grown. In international peace and economic and social development, organizations such as the United Nations, the World Bank, and the IMF have played an essential role since World War II. However, it is necessary to remember that these multinational organizations reflect the world’s political and economic strength. Organizations have been established on Western principles and concepts and have decisive powers, never based on fairness and justice, with historical implications and, in a way, limited. Any important decision by the IMF, for example, requires that at least 85% of all votes be cast, whereas the United States is entitled to veto 17.65% of votes. It is routinely advised to direct these organizations, just Europeans and Americans. Since the recent international financial crisis, China, Russia, and India have repeatedly demanded increasing votes from the World Bank and the IMF and have all been denied by the US Congress. As a result, China ought to be increasingly responsive as a significant development power from the objective view of human development and world imbalance. This is the duty for peaceful growth, attempts to establish a harmonious world, plays a positive role, preserves its image as a leading authority, takes part in the current global system, and makes the system fairer and more sensitive. The planned AIIB proposal promotes Eurasia and the ideals of common interest and destiny to foster mutually beneficial integration, including the establishment of the AIIB.

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Jinping emphasizes, in particular, that education as a “common destiny community” should take the trend of education and foster a sense of awareness and recognition of struggles and visions of all nations through frequent interaction and exchange to facilitate mutual understanding among students in all communities. The admission of the “trend” is the condition to acknowledge and promote the trend in education. Since the People’s Republic was established, the Chinese education system has followed this trend, particularly after reform and opening. It has gradually developed a multi-faceted, broad-spectrum opening pattern that makes China the world’s largest source of overseas schoolchildren and the number one destination for study in Asia. With the accession to the WTO, China has, among other significant nations, developed a significantly higher degree of commitment to education. In other areas, China’s level of openness goes beyond those advanced and leading countries which have not committed themselves to education opening. In the new circumstances, our immediate goal is to meet the latest trend in the development of the Girdle and Road by using the chance to take up new responsibilities and requirements.

2.3.5 Top Education Priority, Notably Higher Education The vast number of projects under the initiative can be divided into these categories: transport infrastructure, information and energy infrastructure, trade and investment, energy resources, connectivity currency, and financial resources, and two regional environmental protection, maritime cooperation, and connectivity policy, including facilities, technologies, capital, foreign currency, trade, culture, politics, ethnicity, religion, and so on. This includes strategies. They each require abilities, notably higher education, gained through education. Construction of infrastructures involves expert engineering, project design, and administration in various areas. As assessed by the Asian Development Bank, total infrastructure building investments, including 989 transport projects and 88 cross-border projects for energy projects, in 2011–2014 amount to USD 7.97 trillion. It also calls for cooperation with the engine, political, economic, and managerial professionals. Many organizations with offices located in foreign countries have significant expectations, especially those with a grasp of countries in South-East Asia, South-East Asia, South-East Europe, and other regions in the political, economic, and local practice. Sixty-four countries and many more have joined the roads of Belt and Road. On the contrary, there is a grave lack of talent in minority languages, and it is almost a crisis. For these languages, talent training and training are required. Furthermore, the Chinese population considers English the only helpful foreign language, and industrialized nations are the only foreign countries. Those ideals are incompatible with China promoting its people’s diversity, openness, and international possibilities. A significant number of foreign trade professionals are needed for regional trade and the building of orders. The Belt and Road, apart from the Atlantic and the Pacific, is the world’s third commercial axis. Belt and Road nations combine USD 20 billion in GDP with the region’s economic development, primarily dependent on cross-border trade, of around one-third of the world total. The average level of dependence on foreign traffic among the Member States of 2000 was 32.6%, much higher than the global average of 24.3% in 2010, reaching 33.9% in 2010 and 34.5% in 2012. Direct international trade investment has increased by 7.8% and 9.7% per year between 1990

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and 2013, compared with Belt and Road countries, up 13.1% and 16.5%. After the financial crisis, the foreign trade and foreign net capital flow in Belt and Road countries rose by 13.9% and 6.2%, respectively, in 2010–13, up 4.6% and 3.4% over the world average. Over the next ten years, the overall exports of the nations on the Belt and Road are expected to increase to about 1/3 of the global 3. First, after the founding of the AIIB, the creation of the Silk Road Economic Belt required a wide range of skills to grasp capital activities, currency circulation, trade norms, and international legislation.

2.3.6 Enhance Understanding and Education for Nations and Cultures and Promote the Bond between Individuals It is, above all, a variety of cultures that binds people. Culture is a universal spiritual product for the entire human species. The reciprocal benefit is guaranteed to successfully implement the roads and belt strategy while the society is tied to the people. Overall, all roadside countries have intricate, unpredictable, and vast variations in geopolitics, geopolitics, and public opinion between areas, classes, and religious groupings. Cooperation is only possible if people’s wants and will are thoroughly understood and if misunderstandings and misjudgments are eliminated. Only researchers, business people, governments, non-governmental organizations, and the public who understand their backgrounds and viewpoints entirely on history and culture can more effectively apply this strategy. Today’s shortage is why the education of nations and cultures needs to be improved and continued. Policy connection is necessary to provide decisions and ambassadors of the belt and the road and governmental officials as entrepreneurs and civilians with comprehensive and in-depth knowledge training in geography, of standards, language, culture, religion, and politics to link policymakers effectively. We need to nurture many civilians, and cultural messengers who have good diplomatic qualifications, positive influence, and reputation owing to voluntary work, studies, and cultural exchanges by non-governmental organizations, and often travel between nations that fit within society.

2.3.7 Education, Notably Higher Education, Should Strive to Provide Intellectual Support to Contribute to Existing Wisdom As has been seen in history, a country’s economic and political status in the world arena is not unchangeable. The world constantly changes. As Asia’s Pacific, countries must meet regional and global cooperation trends in the latest shift in the world to take on new positions. Stavros Stavrianos, the distinguished historian and author of the A global history, once stated that the approach between peoples, given the same geographical variables, is essential to human advancement. Nations with the most incredible opportunity to influence others will most likely prosper. It is because it faces not only development opportunities but also the pressure to be eliminated. They are indeed growing in the environment. The BRI considers the developmental characteristics of each country and establishes a shared development system with the center and source countries at the same time. This shared development system decides that vital topics must be studied more closely and that answers must be offered to

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the common destiny of the human race. First of all, wisdom has to be dedicated to building a unified system of managing regions. Countries around the Gulf and roads have an increasingly global effect, especially on rising economies. However, there continue to be unfair and unreasonable political and economic international order and imbalances between countries and regions. All these difficulties make road management challenging for the nations. A shared development system needs to deal with obstacles and issues connected to the belt and road. Second, a shared development system needs to deal with obstacles and problems in contact with the belt and road, and education should contribute to sustainable regional and worldwide development, facing severe global climate change, energy shortages, water crises, forest protection, desertification, biodiversity problems, and environmental pollution. Cooperation must address and overcome these difficulties cooperatively. It is unreal to expect them to equitably defend the world’s advantages, not to mention the rising economies, that the current international regulations in developed western countries are overtly or quietly dominant. Belt and Road countries understand how developing countries may benefit from global governance and how they can deal with and resolve the aforementioned concerns. To play a more significant part in higher education in China, we should combine forces to develop, adapt, and counter methods for sustainable development in the area and globally. Third, education must assist in providing concrete solutions to real realistic issues. During the Gulf and Road Construction, there will be various practical challenges, from macro to micro, from cultural to social, engineering policies, human resources, technology bottlenecks, and so on. The countries concerned must research social growth, scientific evaluation of differences and circumstances, economic and cultural interchange, international commercial cooperation research, research into study, and culture and talent demand. In the coming 5, 15, and 50  years, we will carry out a scientific appraisal, strategic reflections, and planning on the future road and belt development. We will also look for prospective, relevant, and thoughtful policies. We will enhance cooperation between states, ministries, departments, regional governments, higher education institutions, and industry-related organizations, providing professional, constructive, and workable policy suggestions based on decision-making demands.

2.3.8 Enhanced Education and Development Cooperation between Countries along the Routes Implementing road and belt plan means that we are actively involved in economic growth, regional cooperation, road testing schemes, and examining higher education at home to fit into the road and belt strategy development. Meanwhile, we will learn from the global higher education system, the desk provides strategic layouts and participates in constructing the Belt and Road in the Chinese higher education system. We will also achieve win–win collaboration by providing talent and intellectual support for the joint effort of countries along the road of street and road construction, particularly by sharing the benefits of the Belt and Road activities to encourage cooperation and exchange of economic, cultural, and educational activities between on-road countries. These are the duties of China as the reliable power and essential activities of the Chinese higher education system.

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2.3.9 Increase the Number and the Cultivation of International Students in China Abroad International student programs have become crucial instruments for a country to increase its worldwide impact and develop its education market. Since its reform and opening, China has granted international student recruiting a new premium. The size and quality of international student programs have steadily improved. According to the Chinese International Student Program Research Report 2014, 377,000 students from 203 nations and regions have studied in a comprehensive of 775 universities, research institutes, and other institutions in 31 provinces and municipalities. China is, to several students, the third-largest study destination globally, accounting for 8% of the world. But China is still significantly below the worldwide educational market of big beneficiaries such as the United States, Australia, and the United Kingdom. Student sources are those from Asian countries, the largest group of international students in China. In 2014, 2,254,000 were students, accounting for over 60% of all Chinese abroad students. There has been a rapid increase in students from South-East Asia in recent years, making them the largest group. The countries of the Girdle River are eight of the ten countries which have several students, with countries that are on the roads including South Korea, Thailand, Russia, Japan, Indonesia, India, Pakistan, and Kazakhstan. Study demands in China will undoubtedly continue to expand with the advancement of the Belt and Road efforts for students from nations along the roads. China has been working on foreign student programs with a few developed countries for a long time. Some colleges believe that only recruiting students from Western nations can demonstrate the amount and quality of the internationalization of their education. However, the Chinese education system should work on building a shared destiny for humanity and benefiting the entire human society to promote the road and road strategy and the long-term educational goals. Therefore, we must enable China’s international students in China under the guidance of the Chinese strategy system, optimize our global student program structure, continue to admit students from developed countries, and continue to work toward increasing the number of students on Belt and Road. China will boost the number of candidates for government bursaries to favor countries along the road. Increased candidacy will primarily be given to students from their respective countries, and we must help them promptly. Another critical topic for our contributions is how each student can satisfy their needs while highlighting support for building belts and roads and enhancing the education framework of foreign student programs. Students from all around the world currently favor language studies, while students from less-developed nations like medical and technical degrees. In particular, China’s overseas student programs, which are of enormous importance in conjunction with belt and roads, do not contain issues or improvements connected to the links between infrastructure, trade, and money. To address this, we must plan for Belt and Road students and employ beneficial resources to develop distinctive disciplines and graduates relevant to Belt and Road strategies to attract students who have completed their studies in China. The key to enhancing the quality of education is outstanding and sufficient education in China’s international student programs. Higher education establishments should use current information technology to the fullest extent and develop online and offline services to promote belt and road building by developing curriculums and diploma classes in several

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languages. We should aim for high-quality courses and major courses for overseas students in China to satisfy the demands of road and belt endeavors, with help and assistance from high-quality resources and education services. The cultivation and integration in education and industry of highly trained professionals in schools and companies. The creation and construction of the belt and road is a sizeable systemic enterprise that requires energetically, organized and practical support for higher education. In terms of talent training, the classification system must be emphasized. We train elites, young talent, and future leaders who fully appreciate international law and can take on national responsibilities and numerous highly qualified professionals with expertise in belt building. We must identify the order of priority when constructing the belt and road. For example, the construction of main roads, roads, lines, key points, and links should be assigned or trained by professionals. By merging both sectors by supporting collaborative learning between universities and companies in “global industries” such as rail and telecom, we should expand education and the industry from higher to higher education. More than 10,000 Chinese enterprises are currently active in nations along the Great Belt and Road, with a few incidents of cooperative training. Meanwhile, we must have flexible training programs to make them a practical choice. The purpose of these programs is to monitor the projects everywhere. Moreover, if not ahead, the agenda should equal the big infrastructure projects for roads and belt systems. Locally, it is necessary to execute programs and train highly skilled individuals in projects underway. There are still aging societies in countries along the path of human resources. In 2013, the average population on the roads was 67.5%, and in 21 such countries, more than sufficient labor resources accounted for over 70% of the population. Simultaneously, infrastructure in these countries was medium-low internationally. Based on World Bank logistical performance index infrastructure statistics, the 2013 average global score of 2.7 points compared with 2.91 points was reported. Chinese robust high-end manufacturing industry’s enormous education and service market and rich experiences over nearly ten years of international cooperation, particularly in higher education, provide a wide array of resources and construction infrastructure for nations along the Belt and Roads. Ningbo Polytechnic has established a Benin International Training Center to teach local workers from Chinese enterprises to stimulate economic development in African countries. Tourist professionals have been trained in ASEAN nations like Indonesia and Brunei Guilin University.67 The Belt and Road Strategy must draw on this successful experience. Lastly, the coordination of “inviting” and “out” practices must be an integral approach to talent belt and road work.

2.3.10 Setting Up Overseas Universities and Education Centers in Countries along the Route In recent years, China has recognized the quality of higher education globally. Over more than ten years, the aim to build world-class universities has grown to cultivate many high-ranking inventive talents and disciplines and numerous global premium products that play a vital role. The introduction of a worldwide, valid, and comparable professional certification system, particularly until 2006, emphasized training one of

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three crucial-level education disciplines. The plan was applied in June 2013, and the Washington Agreement was allowed to conclude, proving that the China engineering education system’s quality assurance system was accepted worldwide. A  total of 15,733 technical supervisors are graduates, covering all the critical belt and road development projects. Therefore, China’s higher education has an excellent basis throughout the countries along the routes of “departure” and construction of international institutions and education. Several referential experiences have meanwhile been developed. Currently, Chinese universities are already quite important worldwide. The Chinese universities overseas that the Ministry of Education has established are XiaamenXiamen University Malaysia, Laos Soochow University, Bangkok College of Economics, Finance and Tokyo College, and Peking Language and Cultures University. In the meantime, 14 nations and areas are part of over 90 programs, mainly in south-east Asia. We have entered into bilateral and multi-lateral training exchanges and cooperation with over 180 states and regions. We sign agreements with 41 countries and territories to recognize degrees and diplomas jointly. More than ten countries have also invited China to set up programs in their own countries outside the world, including Pakistan, Kazakhstan, and Jordan. Therefore, by increasing investment in education, road, and developing countries’ programs and supporting the growth of universities overseas and other education establishments, we can build talent for economic and social development in those countries. We can also support the growth of universities overseas and further education establishments; we can make skills for economic and social development in those countries and create broad links in the world’s evolution. In the meantime, this would be a significant step in the globalization of China’s education and in the development of cordial relations with its neighbors by China as a self-assigned mission to benefit countries along the route.

2.3.11 Enhancing Chinese Higher Education’s International Vision We must improve the weak connections between disciplines and significance to meet the requirements of establishing a belt and road initiative. For example, training should be expedited for non-university students, and speaking and linguistic requirements should be examined before developing a belt and road. Meanwhile, we will design unique language development plans and enhance the talent pool in strategic foreign languages while speeding up the formation of high-end talents that speak languages in other nations and still also comprehend national language circumstances and cultures. Chinese institutions speak more than 40 official languages in Belt and Road countries, and 20 of those countries are permitted to provide instructions. Most colleges in developing countries give hundreds of language courses if they list fewer than 70 graduates from the Chinese education authority. Problem areas, such as a lack of sufficient numbers of nonuniversal language programs, inadequate arrangements, and lack of language skills for key countries and territories, are now hindering the execution of the projects on the Belt and Road. Consequently, it is essential to consider and make every effort to ensure that language skills are trained in our national strategy. We need to develop current and well-established universities specialized in foreign languages and offer non-universal language courses, transforming them into language study centers and cultural studies and countries while nurturing fresh talent for language and culture BRIs.

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Implementing the Road and Belt Strategy encourages us from a broader international perspective to look at and improve the entire quality of higher education in China. Chinese higher education cannot emerge from countries worldwide unless core factors such as jumping, courses, teaching, practice, and schools have attained the highest standards by international standards and Chinese. Chinese trained pupils with the same expertise and expertise can match their counterparts in developed countries. If some universities in China run schools abroad, international rivalry for the quality of education is more direct. Therefore, we should stress the importance of improving the quality of education significantly and improving the quality of education, broadening the global vision for higher education in China, and building up all kinds of institutions. We need to adjust the talent training pattern and adapt to the program structure and make changes in the learning methods to meet the requirements of Belt and Road projects. By creating the Belt and Road, we should also take the opportunity to revisit the structures of Chinese higher education systems, strengthen support for government higher education in central and western China, and address the problem of higher education disparity between Eastern and Western China. These initiatives will also help create the Belt and Road to facilitate the coordinated development of higher education in the many regions across the country. For China to play a more significant role in the world government of the education system by standing in unison with common challenges such as political studies, business, culture, and security, we must expand cooperation between universities across countries along the routes. Xi’an Jiaotong University formally launched in January  2015 the Collaborative Innovation Center for the Silk Street Economic Belt and introduced the Silk Road Academy idea. In the context of collaboration in research into innovation, elite farming, policy advice, professional services, and dispute resolution, the University Collaboration of the New Silk Road was set up to promote the growth of the Belt and Road. This has substantially boosted the university’s academic talents and global influence, which is a fantastic example. The ambitious concept of the Road Belt and Street promises to unite Asia, Europe, and Africa in a community of mutual interest, advantage, common destiny, and shared prosperity. People look forward to a better life that is based on high education. Through the execution and promotion of the Belt and Road Strategy, new tasks were given to Chinese higher education systems. This will undoubtedly make our significant cause a fresh and historical beginning point for transforming the quantity into high school quality and our proper contribution toward world peace and development and the growth of human civilization.

NOTES





1 “GDP Growth (Annual %).” World Bank Data. Accessed 24 February 2019. https:// data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2017&locations=CN&s tart=1961&view=chart 2 “Going Green Is Just Good Business for China’s Belt and Road Initiative.” HSBC Business. March  29, 2018. Accessed 2 February  2019. www.business.hsbc.com/ belt-and-road/going-green-is-good-business-for-chinas-bri. 3 Xiang, Bo. “Inspections Find 70 Percent of Firms Violated Environmental Rules.” Xinhua Net. June 11, 2017. Accessed 29 January 2019. www.xinhuanet.com//english/ 2017-06/11/c_136356860.htm.

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4 Wong, Edward. “Nearly 14,000 Companies in China Violate Pollution Rules.” The New York Times. June  14, 2017. Accessed 2 April  2019. www.nytimes. com/2017/06/13/world/asia/china-companies-air-pollution-paris-agreement.html; Kuo, Lily. “China ‘Environment Census’ Reveals 50% Rise in Pollution Sources.” The Guardian. 31 March 2018. Accessed 14 February 2019. www.theguardian.com/ world/2018/mar/31/china-environment-census-reveals-50-rise-in-pollution-sources. 5 McCarthy, Niall. “Air Pollution Contributed to More Than 6 Million Deaths in 2016 [Infographic].” Forbes. 18 April 2018. Accessed 29 April 2019. www.forbes.com/ sites/niallmccarthy/2018/04/18/air-pollution-contributed-to-more-than-6-milliondeaths-in-2016-infographic/#12300edd13b4. 6 Woetzel, Jonathan, and Jiang Kejun. “China’s Renewable Energy Revolution.” McKinsey & Company. August 2017. Accessed 29 April 2019. www.mckinsey.com/ mgi/overview/in-the-news/china-renewable-energy-revolution. 7 “China Is Rapidly Developing Its Clean-Energy Technology.” The Economist. 15 March 2018. Accessed 29 April 2019. www.economist.com/special-report/2018/03/15/ china-is-rapidly-developing-its-clean-energy-technology. 8 “WWF and Greening the Belt and Road Initiative.” WWF Hong Kong. 2 November 2017. Accessed 29 April 2019. www.wwf.org.hk/en/?19680/Feature-Story-WWFand-Greening-the-Belt-and-Road-Initiative. 9 “Guidance on Promoting Green Belt and Road.” Belt and Road Portal. 18 May 2018. Accessed 29 April 2019. https://eng.yidaiyilu.gov.cn/zchj/qwfb/12479.htm. 10 “WWF and Greening the Belt and Road Initiative.” WWF Hong Kong. 2 November 2017. Accessed 29 April  2019. www.wwf.org.hk/en/?19680/Feature-Story-WWF-andGreening-the-Belt-and-Road-Initiative. 11 ibid. 12 Pike, Lili. “Are China’s Energy Investments in Africa Green Enough?” 中外对话 China Dialogue. 9 March  2018. Accessed 1 April  2019. www.chinadialogue.net/article/ show/single/en/10799-Are-China-s-energy-investments-in-Africa-green-enough. 13 Assume $4 trillion total cost, for 40 year lifetime of BRI. 14 “WWF and Greening the Belt and Road Initiative.” WWF Hong Kong. 2 November 2017. Accessed 29 April 2019. www.wwf.org.hk/en/?19680/Feature-Story-WWFand-Greening-the-Belt-and-Road-Initiative. 15 ibid. 16 “Going Green Is Just Good Business for China’s Belt and Road Initiative.” HSBC Business. 29 March  2018. Accessed 2 February  2019. www.business.hsbc.com/ belt-and-road/going-green-is-good-business-for-chinas-bri. 17 “WWF and Greening the Belt and Road Initiative.” WWF Hong Kong. 2 November 2017. Accessed 29 April 2019. www.wwf.org.hk/en/?19680/Feature-Story-WWFand-Greening-the-Belt-and-Road-Initiative. 18 “China Is Rapidly Developing Its Clean-Energy Technology.” The Economist. 15 March 2018. Accessed 29 April 2019. www.economist.com/special-report/2018/03/15/ china-is-rapidly-developing-its-clean-energy-technology. 19 “Going Green Is Just Good Business for China’s Belt and Road Initiative.” HSBC Business. 29 March  2018. Accessed 2 February  2019. www.business.hsbc.com/ belt-and-road/going-green-is-good-business-for-chinas-bri. 20 “GDP Growth (Annual %).” World Bank Data. Accessed 24 February 2019. https:// data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2017&locations=CN&s tart=1961&view=chart. 21 “Guidance on Promoting Green Belt and Road.” Belt and Road Portal. 18 May 2018. Accessed 29 April 2019. https://eng.yidaiyilu.gov.cn/zchj/qwfb/12479.htm.

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22 McCarthy, Niall. “Air Pollution Contributed to More Than 6 Million Deaths in 2016 [Infographic].” Forbes. 18 April 2018. Accessed 29 April 2019. www.forbes.com/ sites/niallmccarthy/2018/04/18/air-pollution-contributed-to-more-than-6-milliondeaths-in-2016-infographic/#12300edd13b4. 23 Pike, Lili. “Are China’s Energy Investments in Africa Green Enough?” 中外对话 China Dialogue. 9 March  2018. Accessed 1 April  2019. www.chinadialogue.net/article/ show/single/en/10799-Are-China-s-energy-investments-in-Africa-green-enough-. 24 Woetzel, Jonathan, and Jiang Kejun. “China’s Renewable Energy Revolution.” McKinsey & Company. August 2017. Accessed 29 April 2019. www.mckinsey.com/ mgi/overview/in-the-news/china-renewable-energy-revolution. 25 Wong, Edward. “Nearly 14,000 Companies in China Violate Pollution Rules.” The New York Times. 14 June  2017. Accessed 2 April  2019. www.nytimes. com/2017/06/13/world/asia/china-companies-air-pollution-paris-agreement.html. 26 “WWF and Greening the Belt and Road Initiative.” WWF Hong Kong. 2 November 2017. Accessed 29 April 2019. www.wwf.org.hk/en/?19680/Feature-Story-WWFand-Greening-the-Belt-and-Road-Initiative. 27 Xiang, Bo. “Inspections Find 70 Percent of Firms Violated Environmental Rules.” Xinhua Net. 11 June 2017. Accessed 29 January 2019. www.xinhuanet.com//english/ 2017-06/11/c_136356860.htm. 28 European Union Chamber of Commerce in China. (2020). “The Road Less Travelled: European Involvement in China’s Belt and Road Initiative.” www.europeancham ber.com.cn/en/publications-archive/762/The_Road_Less_Travelled_European_ Involvement_in_China_s_Belt_and_Road_Initiative. 29 Tai, Wanbo, Lei He, Xiujuan Zhang, Jing Pu, Denis Voronin, Shibo Jiang, Yusen Zhou, and Lanying Du. “Characterization of the Receptor-Binding Domain (RBD) of 2019 Novel Coronavirus: Implication for Development of RBD Protein as a Viral Attachment Inhibitor and Vaccine.”  Cellular  & Molecular Immunology  17, no. 6 (2020): 613–620. 30 Xinhua. (2017a). “Full Text of President Xi’s Speech at Opening of Belt and Road Forum.” www.xinhuanet.com/english/2017-05/14/c_136282982.htm. 31 Ascensão, Fernando, Lenore Fahrig, Anthony P. Clevenger, Richard T. Corlett, Jochen A. G. Jaeger, William F. Laurance, and Henrique M. Pereira. “Environmental Challenges for the Belt and Road Initiative.” Nature Sustainability 1, no. 5 (2018): 206–209. 32 Gao, May Hongmei. “Globalization 5.0 led by China: Powered by Positive Frames for BRI.” In  China’s Belt and Road Initiative, pp.  321–335. Palgrave Macmillan, Cham, 2018. 33 Beeson, Mark. “Geoeconomics with Chinese Characteristics: The BRI and China’s Evolving Grand Strategy.” Economic and Political Studies 6, no. 3 (2018): 240–256. 34 Hughes, Alice C. “Understanding and Minimizing Environmental Impacts of the Belt and Road Initiative.” Conservation Biology 33, no. 4 (2019): 883–894. 35 Biermann, Frank, Philipp Pattberg, Harro Van Asselt, and Fariborz Zelli. “The Fragmentation of Global Governance Architectures: A  Framework for Analysis.” Global Environmental Politics 9, no. 4 (2009): 14–40. 36 Dong, Liang, Xiaohua Yang, and Hongtao Li. “The Belt and Road Initiative and the 2030 Agenda for Sustainable Development: Seeking Linkages for Global Environmental Governance.”  Chinese Journal of Population Resources and Environment 16, no. 3 (2018): 203–210. 37 Zhou, Lihuan, Sean Gilbert, Ye Wang, Miquel Muñoz Cabré, and Kevin P. Gallagher. “Moving the Green Belt and Road Initiative: From Words to Actions.” (2018).

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38 Andrews-Speed, Philip, and Sufang Zhang. “China as a Low-Carbon Energy Leader: Successes and Limitations.” Journal of Asian Energy Studies 2, no. 1 (2018): 1–9. 39 Eyler, Brian. “Can Solar Diplomacy Green the Belt and Road?” China Dialogue (2019). 40 Guo, Huadong, Jie Liu, Yubao Qiu, Massimo Menenti, Fang Chen, Paul F. Uhlir, Li Zhang et  al. “The Digital Belt and Road Program Supporting Regional Sustainability.” International Journal of Digital Earth 11, no. 7 (2018): 657–669. 41 Li, Peiyue, Hui Qian, and Wanfang Zhou. “Finding Harmony Between the Environment and Humanity: An Introduction to the Thematic Issue of the Silk Road.” Environmental Earth Sciences 76, no. 3 (2017): 105. 42 Eder, T. S., and J. Mardell. “Powering the Belt and Road-China Supports Its Energy Companies’ Global Expansion and Prepares the Ground for Potential New Supply Chains [Internet].” Mercator Institute for China Studies (2019). 43 Andrews-Speed, Philip, and Sufang Zhang. “China as a Low-Carbon Energy Leader: Successes and Limitations.” Journal of Asian Energy Studies 2, no. 1 (2018): 1–9. 44 Keohane, Robert O.  International Institutions and State Power: Essays in International Relations Theory. Routledge, Spain, 2020. 45 Gallagher, Kelly Sims, and Qi Qi. “Policies Govern China’s Overseas Development Finance Implications for Climate Change.”  Center for International Environment and Resource Policy, The Fletcher School, Tufts University, 16 March 2018. 46 MOFCOM  & MEP. (2013). “Guideline on Environmental Protection in Foreign Investment and Cooperation.” www.geichina.org/upload/file/201303_MOPMOC guideline/Translation_of_the_ Guideline.pdf. 47 Brombal, Daniele. “Planning for a Sustainable Belt and Road Initiative (BRI): An Appraisal of the Asian Infrastructure Investment Bank (AIIB) Environmental and Social Safeguards.” In Normative Readings of the Belt and Road Initiative, pp. 129– 145. Springer, Cham, 2018. 48 Losos, Elizabeth Claire, Alexander Pfaff, Lydia Pauline Olander, Sara Mason, and Seth Morgan.  Reducing Environmental Risks From Belt and Road Initiative Investments in Transportation Infrastructure. The World Bank, USA, 2019. 49 Russel, Daniel R., and Blake Berger. “Navigating the Belt and Road Initiative.” Policy File (2019). 50 Schreurs, Miranda. “Multi‐Level Climate Governance in China.”  Environmental Policy and Governance 27, no. 2 (2017): 163–174. 51 Rosellini, N. “Remarks at the Plenary Session of the BRI International Green Development Coalition (BRIGC) by Mr. Nicholas Rosellini, UN Resident Coordinator.” (2019). http://ww.un.org.cn/info/7/966.html. 52 Nakano, Jane. “Greening or Greenwashing the Belt and Road Initiative?” Center for Strategic & International Studies (2019). 53 Abbott, Kenneth W. “Orchestration: Strategic Ordering in Polycentric Climate Governance.” SSRN 2983512 (2017). 54 Hamel, Gary. Strategy as Revolution. Harvard Business Review, Nova York, 1996. 55 Tracy, Elena F., Evgeny Shvarts, Eugene Simonov, and Mikhail Babenko. “China’s New Eurasian Ambitions: The Environmental Risks of the Silk Road Economic Belt.” Eurasian Geography and Economics 58, no. 1 (2017): 56–88. 56 Masood, Ehsan. “How China Is Redrawing the Map of World Science.” Nature 569, no. 7754 (2019): 20–24. 57 Lee, Norman, and Clive George, eds.  Environmental Assessment in Developing and Transitional Countries: Principles, Methods and Practice. John Wiley & Sons, USA, 2013.

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58 Hughes, Alice C. “Understanding and Minimizing Environmental Impacts of the Belt and Road Initiative.” Conservation Biology 33, no. 4 (2019): 883–894. 59 Eakin, Hallie, Ximena Rueda, and Ashwina Mahanti. “Transforming Governance in Telecoupled Food Systems.” Ecology and Society 22, no. 4 (2017). 60 Yang, Dewei, Jingjing Cai, Vanessa Hull, Kaiyong Wang, Yin‐Phan Tsang, and Jianguo Liu. “New Road for Telecoupling Global Prosperity and Ecological Sustainability.” Ecosystem Health and Sustainability 2, no. 10 (2016): e01242. 61 Laurance, William F., Guangyu Wang, John L. Innes, Sara W. Wu, Shuanyou Dai, and Jiafu Lei. “The Need to Cut China’s Illegal Timber Imports.” Science (2008). 62 Newig, Jens, Edward Challies, Benedetta Cotta, Andrea Lenschow, and Almut Schilling-Vacaflor. “Governing Global Telecoupling Toward Environmental Sustainability.” Ecology and Society 25, no. 4 (2020). 63 Han, Mengyao, Qiuhui Yao, Weidong Liu, and Michael Dunford. “Tracking Embodied Carbon Flows in the Belt and Road Regions.” Journal of Geographical Sciences 28, no. 9 (2018): 1263–1274. 64 Qu, Zhenyuan. “On Further Promoting Cooperation and Development of Education Among Countries Along the Belt and Road.” In China’s Belt and Road Initiatives, pp. 141–155. Springer, Singapore, 2018. 65 According to up-to-date statistics, there are totally 64 countries along the routes, which include 43 in Asia, 16 in Eastern Europe, four in Commonwealth of Independent States, and one in Africa. Source: China Social Sciences Network. Accessed 8 April 2015. www.cssn.cn/gj/gj_gwshkx/gjjj/20150408_ 1578096.shtml. 66 Higher Education in China Must Set a New Course in Response to the Belt and Road Strategy, Source: www.gmw.cn Guangming Daily, 12 May 2015. 67 The Belt and Road Leads the Way in China’s Future Opening-Up, Shanghai Securities News, 14 January 2015.

2.4 REFERENCES Brombal, Daniele. “Planning for a sustainable belt and road initiative (BRI): An appraisal of the Asian Infrastructure Investment Bank (AIIB) environmental and social safeguards.” Normative Readings of the Belt and Road Initiative: Road to New Paradigms (2018): 129–145. Dauvergne, Peter, and Jennifer Clapp. “Researching global environmental politics in the 21st century.” Global Environmental Politics 16, no. 1 (2016): 1–12. Gallagher, Kelly Sims, and Qi Qi. “Policies governing China’s overseas development finance implications for climate change.” Center for International Environment and Resource Policy, The Fletcher School, Tufts University, March 16 (2018). Gamso, Jonas. “Environmental policy impacts of trade with China and the moderating effect of governance.” Environmental Policy and Governance 28, no. 6 (2018): 395–405. Han, Lei, Botang Han, Xunpeng Shi, Bin Su, Xin Lv, and Xiao Lei. “Energy efficiency convergence across countries in the context of China’s Belt and Road initiative.” Applied Energy 213 (2018): 112–122. Kooiman, Jan, ed. Modern governance: new government-society interactions. Sage, 1993. Laurance, W. F. (2008). The need to cut China’s illegal timber imports. Science, 319(5867), 1184–1185. Liu, Yunyang, and Yu Hao. “The dynamic links between CO2 emissions, energy consumption and economic development in the countries along “the Belt and Road”.” Science of the total Environment 645 (2018): 674–683.

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Simonov, Eugene, and Eugene Egidarev. “Intergovernmental cooperation on the Amur River basin management in the twenty-first century.” International journal of water resources development 34, no. 5 (2018): 771–791. Tian, Chao, Juan-juan Peng, Shuai Zhang, Wen-yu Zhang, and Jian-qiang Wang. “Weighted picture fuzzy aggregation operators and their applications to multi-criteria decisionmaking problems.” Computers & Industrial Engineering 137 (2019): 106037.

3 China’s Belt and Road Initiative and Its Impact on the European Union Zuzana Kittová* and Barbora Družbacká University of Economics in Bratislava Slovakia

CONTENTS 3.1 Introduction�������������������������������������������������������������������������������������������������������57 3.2 Germany������������������������������������������������������������������������������������������������������������59 3.3 France��������������������������������������������������������������������������������������������������������������� 65 3.4 Italy������������������������������������������������������������������������������������������������������������������ 68 3.5 The Netherlands������������������������������������������������������������������������������������������������73 3.6 Greece���������������������������������������������������������������������������������������������������������������77 3.7 Hungary�������������������������������������������������������������������������������������������������������������81 3.8 Czech Republic�������������������������������������������������������������������������������������������������85 3.9 Trade Intensity������������������������������������������������������������������������������������������������� 88 3.10 Summary���������������������������������������������������������������������������������������������������������� 90 3.11 Acknowledgment���������������������������������������������������������������������������������������������� 92 3.12 References�������������������������������������������������������������������������������������������������������� 93

3.1 Introduction Since 1978, the Chinese economic system has been transforming itself toward a dynamic internationalization of its economic activities. China has implemented reforms that led to the creation of special economic zones in 1980 and the country’s joining the WTO in 2001. Over the last 40 years, China has achieved the position of being the world’s second-largest economy. This led to a shift in the global balance of economic power eastwards, moving toward the same status existing at the time of the ancient Silk Road. Also, the European Union (EU) has enlarged its membership base since the 1970s. It has integrated deeply into global markets and it has gained its economic power as one of the largest players on the world trade scene. During this period, the mutual relationship between these two economic superpowers has also been developing, marked by ups and downs. The second decade of the 21st century returned a dynamism to the fragile relationships of these economies, mainly thanks to DOI: 10.1201/9781003198147-3

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China implementing its development strategies, especially the Belt and Road Initiative (BRI), currently the largest (in terms of expected investments), and geographically the widest initiative. In 2013, Chinese President Xi Jinping presented the BRI as a vision in order to revive the ancient Silk Road. One of the principal goals of the BRI is to improve connectivity between Europe and Asia. The BRI can be seen as an initiative to improve interconnectivity between the countries and economies of the Eurasian continent by a range of projects and investments aimed primarily at infrastructure development and coordination of national and regional development plans. The initiative has gained popularity in many countries around the world as well as their support for the Chinese idea of the New Silk Road. For China, the EU—as the final destination of the BRI and a key target export market—has critical strategic importance for the success of this ambitious project. However, promoting Chinese so-called win–win cooperation is more challenging in the EU than it might seem. Since March 2014, when the initiative was officially unveiled in the EU, the Chinese government has repeatedly stated that European countries can gain major investment opportunities by supporting new “BRI” projects, not least thanks to a new infrastructure that would facilitate trade flows between the European and Chinese markets. It is also apparent that Xi Jinping’s administration has put the BRI at the center of Chinese foreign policy. The EU does not participate in this initiative as a unified integration grouping and the EU lacks a common strategy toward BRI. This poses an actual test on Europe’s cohesion. On the one hand, representatives of the EU institutions and of the strongest European economies consider China to be an economic competitor and a systemic rival promoting alternative models of governance. The initiative may be perceived by them as unclear and difficult to fully understand in its scope and objectives. This also raises mistrust in the fragile EU–China relations and suspicion regarding China’s broader objectives and the ultimate motives behind its BRI initiative. Countries like Germany and France expressed concern about the influx of Chinese investments and the anticipated negative consequences in terms of political influence, control of key transport hubs, and access to sensitive technologies. On the other hand, there are countries within the EU perceiving the BRI positively, however, at the same time being aware of the pros and cons of cooperation with China. They are grouped within the framework of the CEE 16 + 1 cooperation that includes Bulgaria, Croatia, the Czech Republic, Hungary, Latvia, Poland, Romania, Greece, and Slovakia. Moreover, the CEE 16+ 1 framework also includes the countries of the Western Balkans. Cooperation with China by the CEE countries is motivated primarily by economic factors. Many European countries, while facing economic challenges, are turning to China as a source of investment, however maybe not as their first option. Some of these countries, including the V4 group, have signed the Memoranda of Understanding (MoUs) within the BRI already in 2015, being the first EU member states to do so. These MoUs do not only promise cooperation within the framework of the BRI, but they also substantiate the legitimacy of the initiative which differs significantly from the opinion of the EU authorities. Furthermore, improving relations with China enables these smaller and weaker EU member states, which had historically been influenced by Russia and Germany, to have greater strategic and economic flexibility.

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The examples set by these countries were followed by those economies with key European ports such as Greece, the Netherlands, and particularly Italy, which was the only G7 country to sign such an intergovernmental MoU. As an example, let us mention Greece. Even though European creditors introduced austerity measures in Greece in 2010, China has continued investing in the port of Piraeus. It has, as a result, become the busiest port in the Mediterranean as well as being one of the key hubs of the BRI. The lack of a common EU strategy toward China’s BRI is partly reflected in China’s diverse approach to its negotiations and cooperation with EU member states. At present, we can observe that the impact of the BRI varies depending on the country’s approach to the initiative. Mapping its expansion provides an interesting overview of the current presence of the initiative in relation to a key BRI hub. Within this chapter, the impact of the BRI on the EU will be reviewed in the form of case studies of selected countries. This chapter will focus on seven EU countries, namely, Germany, France, the Netherlands, Italy, Greece, Hungary, and the Czech Republic. First, the cases of Germany and France will be presented. These, the two largest economies of the EU do not, at the government level, welcome the BRI; however, because of their importance, they cannot be excluded from the initiative. China is therefore looking for alternative ways to implement the BRI in these countries. Next, Italy and Greece will be dealt with, representing indebted EU countries that welcome the BRI, as they expect that China could help them relieve their debts. That is why they actively participate in the BRI despite the potential risks associated with such a participation. In addition, this chapter will turn to the Netherlands, a nation having a specific position as an important European re-export hub. It sees an opportunity to improve its position by the BRI. Of course, the BRI is also present in other EU countries, for example, in the EU member countries participating in the 16 + 1 initiative. From within this group of countries, this chapter focuses on Hungary which was the first EU country to officially join the BRI and the Czech Republic. In this way, we introduce the perspective of the BRI as an influence on smaller EU economies as well. Well-known projects are being implemented also in other EU countries, such as the construction of the Pelješac bridge in Croatia, or a high-speed railway operating from Chengdu in Southwest China to Łódź in Poland. However, the value of BRI-related investments is much lower in these countries when compared to the seven EU countries presented in this chapter. For each of these seven countries, the development of bilateral foreign trade with China in the last decade, 2010–2020, will be evaluated. The attitudes to the BRI at both the government and corporate levels will be highlighted, and the most important projects, considered to be a part of the BRI, will be mentioned. This chapter is supported by a quantitative analysis based on calculating the Trade Intensity Index that is used to evaluate the impact of the BRI on trade in goods. We are aware, however, that using this index is just one of the possible ways for evaluating the BRI impact on trade.

3.2 Germany In the long run, Germany is China’s largest trading partner among the EU countries. For this European industrial power, China has been the most important import

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partner since 2015 and the second most important export market after the United States. Despite the global pandemic outbreak in 2020, the foreign trade turnover of Germany with China increased by about 4% compared to the previous year and it exceeded $240 billion. Figure 3.1 further confirms the expanding value of this mutual trade. It shows the development of mutual foreign trade and China’s share of Germany’s exports and imports from 2010 to 2020. The period of the global financial crisis in the years 2007 and 2008 was followed by an increase in mutual trade. In 2014, the trade balance deficit with China was only $8 billion for Germany, which is not typical for European countries. Because of the overall slow recession in the world economy in 2015, trade fell slightly again; however, the value of mutual trade after this year increased again and the German deficit began to deepen, reaching more than $23  billion in 2020. China’s share of German imports averaged at 9.5% during the last 10 years, with a more apparent change between 2019 and 2020 when this share increased by about 1.3 percentage points, mainly because of the worldwide pandemic. China’s share of German exports had a growing trend (except for the aforementioned 2015) averaging 6.5%. Germany exported to China mostly vehicles other than railway stock, parts and accessories thereof, machinery, electrical machinery, and pharmaceutical products. However, the share of cars and machinery, within which Germany is a dominant industrial and export power, decreased during the decade 2010–2020. One of the main reasons is that China has been implementing many of its own development strategies such as BRI, Made in China 2025, and Internet + where the common denominator is China’s drive to become the strongest economy in the world and also to get away from its image as the “factory” for cheap products status. Thanks to enormous investments,

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Figure 3.1  Development of foreign trade between Germany and China and the development of China’s share of Germany’s foreign trade during the years 2010–2020 (data from ITC trademap 2021).

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mergers, and acquisitions (M&A), China has gained access to more sophisticated technologies in the 21st century and has improved its competitiveness. This means that China has been partially reducing its imports in these commodity groups. German imports from China consisted mainly of electrical machinery, machinery, and furniture. Articles of apparel followed as a result of the pandemic, as this commodity group includes also single-use drapes used during surgical procedures made up of nonwoven materials, and protective face masks. The development of shares of the five most imported and exported commodity groups between China and Germany in 2010–2020 is detailed in Annexes 3.1 and 3.2. Germany is not only an important trading partner but also an important target market for Chinese investments. Germany belongs to the so-called “Big Three” economies (together with the U.K. and France) as the top Chinese FDI destinations in Europe, largely because of several large M&A deals, for example (Rhodium Group, 2020). If we take a closer look at the data from the China Global Investment Tracker—CGIT

in % of total Germas exports to China

35.00 30.00 HS '87 Vehicles other than railway and their parts and accessories

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HS '84 Machinery

20.00 HS '85 Electrical machinery

15.00 HS '90 Optical instruments

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HS '30 Pharmaceutical products

5.00 0.00

20102011201220132014201520162017201820192020

Annex 3.1  Development of shares of the five most exported commodity groups in 2020 from Germany to China between 2010 and 2020 (data from ITC trademap 2021, www.trademap.org).

HS '85 Electrical machinery HS '84 Machinery HS '63 Other made-up textile articles HS '94 Furniture HS '62 Articles of apparel and clothing accessories

in % of total German imports from China

35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00

Annex 3.2  Development of shares of the five most imported commodity groups in 2020 from China to Germany between 2010 and 2020 (data from ITC trademap 2021, www.trademap.org).

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Other 9.4%

Health 3.7%

Energy 7.3%

Technology 12.2% Finance 7.5%

Transport 49.3%

Real estate 10.7% Figure 3.2  Breakdown of the value of Chinese construction contracts and investments in Germany by sectors between 2013 and 2020 (data from CGIT 2021).

(that are recorded/categorized as either China’s investments including M&A or construction activities including mostly public investment contracts financed by Chinese banks valued at least at $100  million) we find that since 2013, China has invested more than $42 billion in Germany, representing about 3% of global investments and construction activities by China. The majority of these projects are connected to investments (including M&A). Germany recorded only one public investment contract financed by a Chinese bank (i.e., construction activity). As seen in Figure 3.2, half of the total investments and projected construction costs are budgeted for the transport sector (49.3%). Almost all investments (48%) in this sector concern the automotive industry, as it is Germany’s number one component of the transport sector. As mentioned earlier, the automobile products of this sector are Germany’s most important export article to China. Investments and construction projects in sectors like transport, technology, or energy are typically key targets of the BRI. It is therefore interesting that none of the more than 50 Chinese transactions in Germany recorded by the CGIT is referred to as being a part of the BRI in this database. According to several authors (e.g., Chen & Mardeusz, 2015; Kuo & Kommenda, 2018), Germany was one of the essential transport hubs in Europe in the first BRI trajectories. In April 2015, Germany joined the Asian Infrastructure Investment Bank (AIIB). It is a multilateral development bank whose initiation is linked to the BRI and its funding. It has been operating since 2016, with its headquarters in Beijing. Germany was one of the first EU countries (along with the United Kingdom, Italy, and France) that applied for membership. Although this act could have envisaged a closer cooperation between Germany and China on the BRI, according to Stanzel (2017), Germany expressed concerns “that AIIB serves Chinese economic and geopolitical interests” and “it saw an opportunity for European involvement to shape the AIIB into a true international financial institution, instead of a bank with ‘Chinese

China’s Belt and Road Initiative and Its Impact on the EU

63

characteristics.’ ” This means greater transparency of AIIB activities, representation of all countries on the board of governors, equal participation in decision-making, and reciprocity. Many of these issues are often called for by the EU institutions in relation to China. For example, in 2016, the EU adopted a new strategy for China (European Commission, 2016) that emphasized the need to promote reciprocity, a level playing field, and fair competition in all areas of cooperation with China. Within this strategy, the cooperation of the EU in the project of the BRI was conditioned by China’s behavior, as the EU emphasized the declared aim of the BRI project was to become an open platform respecting market rules and international standards in order to bring benefits to all. Another reason for German skepticism about joining the BRI is the need to maintain its own competitiveness and comparative advantages. In 2019, Chancellor A. Merkel said (Barkin, 2019): “Germans could work day and night to be the best, but we would still come up short against the Americans, with their massive economy and all-powerful dollar, and the rising Chinese, with a population more than 16 times the size of Germany’s.” She added that Germany’s chances of keeping up with these countries were poor. The efforts made by China to cooperate with countries with the most advanced technologies complicate the German situation in many ways. China has developed another strategy in the background of the BRI, that is, the Made in China 2025 strategy (State Council of the People’s Republic of China, 2015), which was presented in May 2015 by Chinese Prime Minister Li Keqiang. This 10-year comprehensive strategy for the period 2015–2025 focuses largely on R&D or production in strategic sectors and aims at achieving the position of a global power in technologically advanced industries. Thanks to these development strategies, there is a notable increase in state aid to industries by low-interest loans to Chinese companies and for investments in foreign targets, especially semiconductor companies, in order to gain access to advanced technologies (McBride & Chatzky, 2019). As already mentioned, China has made 58 acquisitions in Germany since 2013. Most of them are in the automotive, technology, and industrial sectors. Assumedly they serve as the means of achieving the goals of the Chinese development strategy. China uses its available investment resources to acquire external technologies spanning from high-speed railways to batteries for electric vehicles, taking advantage of its own comparative advantages. This strategy helps China to create its own successful companies. Germany therefore sees a reason to fear growing Chinese influence, but given the scope of the BRI, the involvement of Germany as a leading European economy is essential. This was confirmed by German Chancellor A. Merkel herself who expressed readiness to play an active role in the BRI if it leads to a certain level of reciprocity (Reuters, 2019a). The expansion of cooperation at the government level through an MoU is not yet planned. The German Economic Minister P. Altmaier announced at the Beijing BRI Summit in April 2019 that Germany, France, Spain, and the United Kingdom (a former member of the EU) will cooperate to implement BRI only in unison (Daly, 2019). Germany is important for China also thanks to five German-Chinese railway connections (Li  & Taube, 2020): Leipzig—Shenyang, Duisburg—Chongqing, Hamburg—Zhengzhou, Hamburg—Harbin, and Nuremberg—Chengdu. Perhaps the most remarkable railway within the BRI is Duisburg—Chongqing opened in 2012. Several times a week, a train departs from Chongqing in southwest China to Duisburg

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Management and Sustainability in the Belt and Road

in western Germany, passing through five countries in 16 days. That is about half the number of days needed for the usual sea container transport traveling through the United States. It is one of the longest journeys in the world (11,179 kilometers). The goods transported from China include mainly electrical engineering products from multinational companies such as Foxconn, supplying such companies as Acer, Apple, or HP. These railway routes also proved to be extremely important during the corona crisis when they were used for the rapid transport of various medical supplies. From January to May 2020, a total of 12,524 tons of anti-pandemic materials were sent by train from China to European countries. China Ocean Shipping Corporation Limited (COSCO, the Chinese state-owned multinational company based in Shanghai operating in the field of transportation, logistics, and real estate) transported 35 containers with these materials which were manufactured in the Central Chinese province of Hubei to Duisburg in just over 10 days (Xinhua, 2020). Duisburg’s share of the total European–Chinese trade is, however, relatively small. According to HSBC.com (2019), China to Europe freight trains account for only 1% of the total trade between the two regions by weight and 2% by value. The railway connection between Duisburg and Chongqing has a positive effect on local employment. Around 300 logistics-oriented companies are based in the port of Duisburg. In total, over 20,000 jobs in Duisburg depend on the port (Li et  al., 2018). We expect that in the future, Duisburg and its local region should attract more and more Chinese companies and also an increasing number of Chinese tourists (Družbacká & Kittová, 2021). Moreover, in October 2021, Cosco Shipping struck a deal to own a 35% stake in Hamburg’s Tollerort terminal which is capable of handling the largest container vessels. Subject to final approvals, Tollerort will become a “preferred hub” in Europe for the Chinese container carrier to concentrate its cargo shipments (Crawford, 2021). The Chinese party has not yet declared this deal as a part of the BRI implementation; however, it can be assumed to be part of a continuation of a series of similar acquisitions in strategic European ports, such as Piraeus or Rotterdam, which we will look at later and which are considered important parts or hubs of the initiative. The perception of the BRI by German companies and their associations differs from the one viewed by the German government that takes a cautious approach to the initiative, as has already been mentioned. According to a representative of the Federal Association of the German Silk Road Initiative, the BRI represents an opportunity to penetrate new markets, for example, in Asia, Africa, as well as in Eastern and Southern Europe. Improving the connection with these markets within the BRI framework creates opportunities also for German companies (Chinadaily, 2019). The Federal Association of the German Silk Road Initiative is a platform representing German small- and medium-sized enterprises (SMEs) and competent partners from the fields of politics and industry representing the national economies of the nations along the BRI, in order to quickly and competently establish project-related contacts in German and European political circles. This New Silk Road Partnership— Entrepreneur network is another German association that aims to raise awareness of the Silk Road’s potential among German small and medium enterprises. With this aim in mind, it founded the Small and Medium Enterprises New Silk Road Futures Award. In addition, a non-profit organization BRI-GERMANY was established in Germany, aiming to facilitate interpersonal, interdisciplinary, and intercultural synergies between individuals, companies, organizations, academia, and associations by

65

China’s Belt and Road Initiative and Its Impact on the EU

achieving a positive impact related to mutual exchange and cooperation along the BRI (BRI GERMANY, 2020). The most significant step taken by a German company in connection with its participation in the BRI is, in our opinion, the signing of an MoU within the BRI in 2018 by Siemens and the Chinese National Development and Reform Commission (Siemens, 2018). Siemens has therefore become the first international company to form a comprehensive partnership with the Chinese government, which highlights the flexibility in approach as to how the Chinese government implements the BRI when penetrating various countries.

3.3 France

80

12.0

60

10.0

40

8.0

20 6.0 0

in %

in $ billion

France is the EU’s second-largest economy since the United Kingdom’s withdrawal in 2020. At the same time, it is China’s third-largest trading partner among all of the EU countries. For France, China is the second-largest import partner and the seventh-largest export partner. The development of mutual trade between France and China during the years 2010–2020 is shown in Figure 3.3. During the decade under review, France exported to China goods worth $20 billion a year on average, increasing China’s share of French exports from 2.8% in 2010 to 4.2% in 2020. On the other hand, France imported goods from China worth $55 billion on average, and the share of Chinese imports rose from 8.6% to 11.35%, with the largest increase of over 2% between 2019 and 2020. The reason for this is obvious. While the Chinese economy recovered from the COVID pandemic relatively quickly, Europe has been coping with this situation for a longer period of time and with greater difficulties. The trade balance continues to be in deficit for France. The lowest deficit was recorded in 2015 when it exceeded $32.6 billion, and the highest deficit was in 2020 when it reached almost $44.5 billion.

4.0

-20

2.0

-40

0.0

-60 2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

French exports to China

French imports from China

French trade balacne

China's share of French imports

China's share of French exports

Figure 3.3  Development of foreign trade between France and China and development of China’s share of French foreign trade during the decade 2010–2020 (data from ITC trademap 2021).

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Management and Sustainability in the Belt and Road

As for traded commodities, in the long run, the largest share of French exports to China was formed by the commodity group of French aircraft, spacecraft, and subsidiary industries. France is the world’s second-largest exporter of the products in this group after the United States. It was followed by other important trade commodities, machinery, electrical machinery, pharmaceutical products, and essential oils. The commodity groups comprising most imports from China were electrical machinery, machinery, articles of apparel, clothing accessories, and furniture. Developments in shares of the five most imported and exported commodity groups between China and France in the time period 2010–2020 are detailed in Annexes 3.3 and 3.4.

HS '84 Machinery HS '88 Aircraft, spacecraft, and parts thereof HS '33 Essential oils, perfumery, cosmetic, or toilet preparations HS '30 Pharmaceutical products HS '85 Electrical machinery

in % of total French exports to China

40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Annex 3.3  Development of shares of the five most exported commodity groups in 2020 from France to China between 2010 and 2020 (data from ITC trademap 2021, www.trademap.org).

in % of total French imports from China

30.0

25.0 HS '85 Electrical machinery 20.0 HS '84 Machinery 15.0

HS '63 Other made-up textile articles HS '62 Articles of apparel and clothing accessories

10.0

HS '94 Furniture 5.0

0.0

20102011201220132014201520162017201820192020 Annex 3.4  Development of shares of the five most imported commodity groups in 2020 from China to France between 2010 and 2020 (data from ITC trademap 2021, www.trademap.org).

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China’s Belt and Road Initiative and Its Impact on the EU

As already mentioned, France is one of the three most important markets for Chinese investment in Europe. A significant increase can be recognized in the volume of Chinese investments since 2013. In the years from 2006 to 2012, only seven large investments over $100 million were recorded in CGIT (2021). From 2013 to 2020, this number increased to 34. A detailed breakdown is presented in Figure 3.4. Over 30% of these investments were in the entertainment sector. They include a large stepwise acquisition of Universal Music, one of the world’s largest record labels, by the Chinese technology giant Tencent. In 2019, Tencent bought a 10% stake in Universal Music for more than $3 billion (Pfeiffer, 2019). In 2021, Vivendi, a French media conglomerate, announced the sale of an additional 10% of Universal Music to Tencent for more than $3 billion. Vivendi stated that the sale would not only expand the company’s operations in Asia but also help reduce the company’s financial debt (Vivendi.com, 2021). Apart from this, the tourism sector is attractive for Chinese investors, driven mainly by acquisitions in the hotel industry that absorb 20% of investments. No construction contract was recorded in France. As in the case of Germany, none of the investments is referred to as being a part of the BRI in the CGIT database. When China launched the BRI, France was not considered by China as a potential country of interest and no separate project was envisaged on its territory (Nicolas, 2019) although France became a member of the AIIB. With the expansion of the BRI, the city of Lyon became the first French BRI hub. Lyon is historically nicknamed the “City of Silk” and several research centers are located there, mostly in the field of textiles. In 2016, the Chongqing—Duisburg railway line was extended to Lyon. Later, freight trains began to run on the Wuhan—Lyon route. It takes around 15 days for freight trains from China to reach France, right between the transit time of maritime freight (around 40 days) and air freight (a few days), but the cost is only a fraction of that of air shipping and similar to maritime transport costs. One-and-half years later, a “tailor-made” route from Wuhan to Dourges in France was launched in response to a demand from Decathlon, a French retail, and sports distribution group (Chinadaily, 2019).

Real estate 4.8% Transport 10.5%

Logistics 3.6% Entertainment 30.9%

Technology 12.9% Other 17.3%

Tourism 20.0%

Figure 3.4  Breakdown of value of Chinese construction contracts and investments in France by sectors between 2013 and 2020 (data from CGIT 2021).

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Management and Sustainability in the Belt and Road

The BRI potential in France is shown not only by the expanding railway connections but also by the fact that in June 2015 a Silk Road partnership agreement was signed between the French shipping company CMA CGM and China Merchants Holdings International. CMA CGM received a credit line of $1 billion from the Export-Import Bank of China in order to purchase Chinese container ships (CMA CGM, 2015). Also, Nicolas (2019) remarked, A number of companies share a positive stance towards BRI; such is the case in particular of logistic companies such as CMA CGM LOG, the logistic arm of the CMA CGM Group, which aims to become a key player in the international supply chain management market and a real reference point for Silk Road services between China and France.

Other companies also expressed a positive view of the initiative. For example, the CEO of French technology company Thales stated (Liu, 2018b): “We see China not only as a huge market, but a great space to innovate, to tackle not just China’s needs but also third countries’ opportunities along the Belt and Road.” But skepticism by the French government can be a hindrance to deepening cooperation, as its support for the BRI is not unconditional. During his visit to China in early 2018, President E. Macron, in a similar statement to German chancellor Angela Merkel, emphasized reciprocity and stated that “cooperation on the Silk Road must go in both directions” (Rose, 2018). As well as Germany, the French government has not signed any MoU on BRI and does not plan to do so in the near future. Instead, France still prefers to work with China on other projects to increase the growth potential in both countries. An example is in signing contracts of more than 15 billion in 2019 in the field of aviation, energy, and agriculture, including the approval for French exports of poultry, beef, and pork to China (Reuters, 2019b).

3.4 Italy Italy belongs to the group of major EU economies that trade heavily with China. China is Italy’s second largest import partner after Germany. China is the ninth most important market for Italian goods. The development of mutual trade and Chinese shares in Italian foreign trade between the years 2010–2020 is documented in Figure 3.5. At the beginning of this decade, huge amounts of goods imported from China to Italy were recorded (about $40 billion). The decrease in imports in the following years was linked to Italy’s internal problems. Italy slipped into a recession three times during the period (2012–2014) and the country was hit hard by the COVID pandemic in 2020. However, between the years 2018 and 2020, imports increased again to above $35 billion. China’s share of Italian imports exceeded 7% (except for the year of recession in 2013 mentioned earlier). During the pandemic, the share increased to 8.7%. From the point of view of Italian exports, we can see stable but relatively small volumes of exports to China, amounting to $13.5  billion on average in the given decade 2010–2020. China’s share of Italian exports was at around 2.7% in the decade under review. This trade imbalance was also reflected in the huge trade balance deficit of Italy in comparison to China. This also threatens the Italian economy, which,

69

50

10.0

40

9.0

30

8.0 7.0

20

6.0

10

5.0

0

in %

in $ billion

China’s Belt and Road Initiative and Its Impact on the EU

4.0

-10

3.0

-20

2.0

-30

1.0 0.0

-40 2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Italian exports to China

Italian imports from China

Italian trade balacne

China's share of Italian imports

2020

China's share of Italian exports

Figure 3.5  Development of foreign trade between Italy and China and development of China’s share of Italy’s foreign trade during the decade 2010–2020 (data from ITC trademap 2021).

according to the European Commission (2021), is also one of the most indebted countries in the EU. In the case of Italy, the most frequently exported commodities include pharmaceuticals, machinery, vehicles as well as electrical machinery, clothing, and accessories. Italians, on the other hand, imported mainly machinery, electrical machinery, clothing and textiles and organic chemicals from China. Development in shares of the 5 most imported and exported product groups between China and Italy in the decade 2010–2020 is detailed in Annexes 3.5 and 3.6. Italy has been a member of the AIIB since 2016. In March 2019, Italy became the first country of the G7 group that signed an MoU on cooperation within the BRI. According to the official MoU text, the aim of this cooperation is (Italian Government, 2019): to translate mutual complementary strengths into advantages for practical cooperation and sustainable growth, supporting synergies between the Belt and Road Initiative and priorities identified in the Investment Plan for Europe and the Trans-European Networks, bearing in mind discussions in the EU China Connectivity Platform. This will also enable the Parties to enhance their political relations, economic ties, and people-to-people exchanges. Italy’s major goal is to enhance exports of “Made in Italy” products. The intention of this goal is to reduce the trade deficit with China which was more than $20 billion in 2020 and to attract Chinese investments. This should help Italy to overcome its economic recession which has also been deepened by the global pandemic. Within the framework of this memorandum, a total of 29 trade agreements worth $2.8 billion were signed. President Xi Jinping and the Italian government signed deals on energy, finance, and agricultural production, followed by the heads of large Italian gas, energy, and engineering firms—which should be allowed entry into the Chinese market (BBC, 2019). Special notice should be given within the BRI to modernization and reconstruction of ports in the Mediterranean. Chinese goods are shipped through the Suez Canal,

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Management and Sustainability in the Belt and Road

HS '84 Machinery HS '30 Pharmaceutical products HS '87 Vehicles other than railway and their parts and accessories HS '85 Electrical machinery HS '62 Articles of apparel and clothing accessories

in % of total Italian exports to China

60.0 50.0 40.0 30.0 20.0 10.0 0.0

Annex 3.5  Development of shares of the five most exported commodity groups in 2020 from Italy to China between 2010 and 2020 (data from ITC trademap 2021, www.trademap.org).

in % of total Italian imports from China

30.0

25.0

20.0

HS '85 Electrical machinery HS '84 Machinery

15.0 HS '63 Other made-up textile articles

10.0

HS '62 Articles of apparel and clothing accessories HS '29 Organic chemicals

5.0

0.0

Annex 3.6  Development of shares of the five most imported commodity groups in 2020 from China to Italy between 2010 and 2020 (data from ITC trademap 2021, www.trademap.org).

then in a wide loop through the Mediterranean, the Bay of Biscay, and the English Channel to ports on Europe’s north-western coast, including Rotterdam, Antwerp, and Hamburg, and they are dispatched from there by road and rail to inland cities. As part of the BRI, China has been funding and building a network of ports and other coastal infrastructure projects from South and Southeast Asia to East Africa and the Mediterranean. China has also been investing enormous sums of money in the renovation, and upgrade of rail systems in Southern and Eastern Europe. Once these projects are completed, Chinese products will be transported from the Suez Canal—which in 2014 doubled its capacity—directly to Piraeus to be loaded onto trains, reaching the markets in Central and Northern Europe through the Balkan high-speed rail link, cutting transit times from roughly 30 to 20 days (van der Putten et al., 2016). Similarly, the Italian route will include both sea-based and land-based connections. Chinese

71

China’s Belt and Road Initiative and Its Impact on the EU

shipping companies have a well-established presence in Italian ports (Družbacká & Kittová, 2021). In this context, the China Communication Construction Company (CCCC) should prepare agreements on cooperation in the joint development of port projects in Italy, for example, the modernization and reconstruction of Genoa and Trieste ports (Si, 2019). The CCCC is a state-owned multinational engineering and construction company that was founded in 2005. The CCCC, together with its subsidiaries, is primarily involved in the planning and construction of transport infrastructure (especially motorways, bridges, tunnels, and high-speed railways) and machines. The CCCC is one of the main contractors and constructors in many BRI projects. Since 2013, 24 Chinese investments and construction contracts have been recorded in Italy. As shown in Figure  3.6, out of the total investments and projected construction costs, one-third was budgeted for transport (33.8%) and slightly less for the energy sector (25.6%). However, unlike in Germany and France, the majority of investments and construction contracts in Italy (23 out of 24) is recorded by the CGIT as being a part of the BRI. We show those with the largest value in Table 3.1. The largest BRI investment in Italy was announced in 2015 when Pirelli shareholders accepted a $7.8  billion bid from the China National Chemical Corporation (ChemChina) for approximately a 65% stake. Following the investment notice, the Silk Road Fund—a $40  billion investment fund—permitted ChemChina to cofinance the transaction. The Silk Road Fund is one of the most important financial institutions for financing BRI projects besides the AIIB. In this way, this investment became a project connected to the BRI (Chinadaily, 2015). In 2017, Pirelli as one of the largest tire manufacturers in the world placed 40% of its share capital on to the

Health 2.94% Energy 25.63%

Transport 33.84%

Finance 11.47%

Technology 17.10%

Other 9.02%

Figure 3.6  Breakdown of value of Chinese construction contracts and investments in Italy by sectors between 2013 and 2020 (data from CGIT 2021).

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Management and Sustainability in the Belt and Road

TABLE 3.1 List of the Largest Chinese Investments and Contracts in Italy That Are Part of the BRI (Data From CGIT 2021) Year 2014 2014 2015 2015 2015 2016 2019

Month

Chinese Entity

Mill. $

Transaction Party

Sector

March November June June June December July

SAFE State Grid ChemChina, SAFE SAFE SAFE ZTE Huawei

2 760 2 760 7 860 1 220 820 1 010 1 250

Eni, Enel CDP Reti Pirelli Intesa Sanpaolo Unicredit – –

Energy Energy Transport Finance Finance Technology Technology

markets by an initial public offering. After the sale, the Chinese corporation retained about 45–46.7% of the shares (exact data are not available) in Pirelli. In 2014, the Chinese State Administration of Foreign Exchange (SAFE) acquired stakes of around 2% in Italian state-owned energy companies, Eni and Enel. These companies are the two largest ones in Italy and belong to the 100 world’s largest companies in terms of annual revenue, according to Fortune Global 500 (2019). In 2019, an enormous investment came from the technology giant Huawei. In recent years, this company has often been criticized by EU institutions. According to the European Parliament (2019): There has been little public awareness in the EU of how close the ties are between the Chinese public and private firms and the Chinese Communist Party, in order to thrive in the Chinese eco-system, may expose liberal democracies to cyber-attacks, cyber-espionage, digital authoritarianism, and information warfare in the context of 5G.

Although several European economies (most notably Germany) have considered banning the Chinese giant Huawei from entering their markets, the EU has a limited competency to do so. Any decisions to ban companies for reasons of national security are decided by the Member States, and many operators in various European countries have already concluded agreements with Huawei on 5G (Fouquet & Drozdiak, 2020). Similar concerns have led to a ban on Huawei’s operations in the United States. The market lost in the United States had to be replaced, which meant the need to strengthen operations in Europe. Italy welcomed the plan of China’s technology giant to invest here a total of $3.1 billion over three years, of which $1.9 billion were intended for acquisition of supplies, $1.2 billion for marketing, and $52 million for research and development (Kawakami, 2019). This investment should create 1,000 jobs directly as well as 2,000 subcontracted positions. This can certainly help the Italian economy, but it also increases its dependence on China. Italy has therefore been publicly criticized by other EU member states for its deepening cooperation within the BRI. German Foreign Minister Heiko Maas said (London Post, 2019): “I view with concern that, in Italy and other European countries, strategically important infrastructure projects— power grids, high-speed train lines or ports—are no longer in European hands but in Chinese hands.” The United States also expressed concern by the US National

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China’s Belt and Road Initiative and Its Impact on the EU

Security Council statement (Freymann, 2021): “Italy is a major global economy and a great investment destination. Endorsing BRI lends legitimacy to China’s predatory approach to investment and will bring no benefits to the Italian people.” The major threat is that many of the projects financed by China are loans, which can lead to the increased indebtedness of Italy and consequently its growing economic dependence on China. Vulnerability to China’s political influence is also increasing. China uses the so-called debt-trap diplomacy, in order to consolidate its strategic interests. The term “debt-trap diplomacy” was first used in 2017 as a criticism of China’s foreign policy in relation to the BRI funding of fiscally unsound infrastructure projects and offering loans to countries, confining them in a debt trap that leaves them vulnerable to Chinese influence (Chellaney, 2017). This term is associated with countries like Pakistan and Sri Lanka, but as we can see, one of the largest so-called advanced economies is also at risk.

3.5 The Netherlands

12.0

60 50 40 30 20 10 0 -10 -20 -30 -40 -50

10.0 8.0 6.0

in %

in $ billion

The Netherlands is a very important and interesting trade partner for China. Thanks to its geographical location, Rotterdam port—one of Europe’s largest ports, as well as airports such as Schiphol, the Netherlands is an important transit logistics hub for Chinese goods which are further distributed throughout the EU. This is also proved by Figure 3.7 illustrating the foreign trade between China and the Netherlands. It shows the enormous value of Chinese exports to this country during the decade under review, 2010–2020, averaging up to about $40  billion yearly. The slight decline below this threshold that occurred in 2015–2016 was a result of a slowdown in the Chinese economy, as we noted in the case of France. In contrast, Dutch exports to China are relatively small but growing. The trade balance deficit oscillated around the value of $30 billion. China’s share of Dutch imports was on average 8.8%. Since 2017, an increase in this

4.0 2.0 0.0 2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Dutch exports to China

Dutch imports from China

Dutch trade balacne

China's share of Dutch imports

2020

China's share of Dutch exports

Figure 3.7  Development of foreign trade between the Netherlands and China and development of China’s share of the Netherland’s foreign trade during the decade 2010–2020 (data from ITC trademap 2021).

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Management and Sustainability in the Belt and Road

HS '84 Machinery HS '19 Preparations of cereals, flour, starch, or milk HS '90 Optical instruments HS '02 Meat and edible meat offal HS '85 Electrical machinery

in % of total Dutch exports to China

share may be observed. China’s share of Dutch exports has been increasing by 1.5 percentage points during the decade presented in the figure. In 2020, it reached 2.9%. The largest product group exported by the Netherlands was machinery, mainly machinery and apparatus used to manufacture semiconductor boules or wafers that are very important to Chinese industry. There are several large companies in the Netherlands, such as ASML Holding and NXP Semiconductors that are focused on this production. Some of their production facilities are also located in China. Machinery exports were followed by exports in the preparations of cereals, flour, milk and meat, and optical instruments. From China, mainly machinery and electrical machinery were exported to the Netherlands, followed by exports of furniture and toys. Development in shares of the five most imported and exported product groups between China and the Netherlands in the decade 2010–2020 is detailed in Annexes 3.7 and 3.8.

35.0 30.0 25.0 20.0 15.0

10.0 5.0 0.0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Annex 3.7  Development of shares of the five most exported commodity groups in 2020 from Netherlands to China between 2010 and 2020 (data from ITC trademap 2021, www.trademap.org).

in % of total Dutch imports from China

40.0 35.0 HS '85 Electrical machinery

30.0 25.0

HS '84 Machinery

20.0

HS '94 Furniture

15.0

HS '95 Toys, games, and sports requisites

10.0

HS '29 Organic chemicals

5.0 0.0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Annex 3.8  Development of shares of the five most imported commodity groups in 2020 from China to Netherlands between 2010 and 2020 (data from ITC trademap 2021, www.trademap.org).

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China’s Belt and Road Initiative and Its Impact on the EU

Real estate 3.69% Agriculture 26.50% Technology 44.10% Other 14.70%

Finance 11.01%

Figure 3.8  Breakdown of the value of Chinese construction contracts and investments in the Netherlands by sectors between 2013 and 2020 (data from CGIT 2021).

Figure 3.8 shows a breakdown of Chinese investments in the Netherlands by sectors between 2013 and 2020 according to CGIT (2021). During this period, no construction project was recorded in the Netherlands. Over 44% of total investments flowed into the technology sector. The largest investment was related to the semiconductor sector. There are several large companies in the Netherlands, such as ASML Holding and NXP Semiconductors focusing on this production. Some of their production facilities are also located in China. In 2016, NXP Semiconductors sold its standard product line to a group of Chinese investors priced at $2.75 billion, reflecting China’s efforts to acquire chip manufacturing assets and reduce this type of import. As King and van Groningen (2016) stated: “The world’s most populous nation is seeking to buy up semiconductor capabilities to strengthen its domestic industry and replace its imports.” This again confirms the interest of Chinese companies in strategic sectors in Europe. The second most important sector for Chinese investments in the Netherlands is the agricultural sector with an overall 26% share of total investments. The acquisition of the company Nidera by the Chinese holding company China Oil and Foodstuffs Corporation (COFCO) has become particularly significant. COFCO is China’s stateowned largest food processor and Nidera is a major international agribusiness and trading company based in the Netherlands. COFCO bought a 51% stake in Nidera in 2014, and then it announced in August  2016 that it would acquire the remaining minority stake in Nidera Capital B.V., bringing its ownership of Nidera to 100% (Schroeder, 2017). Altogether, this investment amounted to more than $3.4 billion. According to CGIT (2021), again, none of the investments are considered to be part of the BRI. The Netherlands has been a member of the AIIB since 2015. In 2018, the Netherlands signed an MoU with China on strengthening cooperation in third markets. According to the MoU, both parties should establish a working group to support and promote enterprises of both parties to cooperate together in a third-party market (MOFCOM, 2018). It should be noted that, in this case, it is not a memorandum on cooperation within the BRI. This is interesting, as the cooperation of these countries on projects and investments that have been made had “BRI characteristics” for

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several years. For example, in 2016, COSCO acquired a 35% stake in the Rotterdam Euromax Terminal for $47.3  million (ChinaDaily, 2016). This investment has not been recorded by the CGIT as it has not exceeded $100 million. Rotterdam could also become a major transport hub on the emerging Arctic or Polar Silk Road which aims to boost shipping across the north of the Eurasian continent. In 2013, COSCO transported 16,740 tons of cargo (steel and heavy equipment) from Dalian to Rotterdam (Gudjonsson & Nielsson, 2015). China has also set itself the goal of building these routes in its 14th five-year plan (Lanteigne, 2021). Schiphol Airport became a very important part of the BRI when it offered direct flights to several Chinese cities in December 2016. With the growing popularity of e-commerce in Europe, deliveries of goods from China have also been increasing. Air transport is ensured by eight airlines with more than 100 flights per week. Currently, Amsterdam Schiphol Airport is Europe’s leading air freight hub for products, mainly electronic products, ordered from China. The largest amount of exported goods via Amsterdam Schiphol Airport to China is products for children and fashion accessories (Li & Taube, 2020). In addition to Schiphol Airport, Tilburg is another important freight hub. In 2016, a freight train line from Tilburg to Chengdu was opened, transporting products three times a week. The rail line is almost 11,000 kilometers long, and the train covers this distance in 15 days which is about 30 days shorter than transporting by sea. Rotterdam could also become a hub for rail transport for shipments distributed further to the UK as well as locally. The first direct train from China arrived here in 2015, but after then, due to a “lack of demand,” this service did not continue. It was renewed in 2020. Wang Xu Dong, General Manager of BTE, the operator of the trains explains (van Leijen, 2020): “At this moment, we have a client with a demand for textiles in Rotterdam.” Dong also noted that other companies would be interested in using rail links. Cooperation between Dutch and Chinese companies is expected to increase, especially in the field of innovative and digital technologies. For example, the Dutch company Philips has extensive cooperation with Chinese companies in the field of medical devices, medical informatics, artificial intelligence, and in the field of big data. The vice president of the company said (Cong & Xuanmin, 2019): “China is now a fastgrowing market for the company, and we believe there is still room for growth as the cooperation under the BRI moves into innovative and digital technologies.” Frans van Houten, chief executive officer of this technology giant said: “We are enthusiastic about the BRI, as this vision will foster better healthcare for people in all the countries along this trade route, and that is coherent with Philips’ vision.” DSM is another Dutch company involved in cooperation with Chinese companies, using its position in the field of life sciences and materials sciences to help encourage environmentally sustainable infrastructure. “We want to help to make the BRI green,” said Dimitri de Vreeze, a member of DSM’s managing board of directors (Liu, 2018a). He added that DSM would focus on supplying its clean coating material for the containers used for trade in Belt and Road countries and supply crucial technology to improve the efficiency of electric cars and solar panels that should be sold in countries involved in the BRI. The Dutch government is also positive about the BRI. Prime Minister Mark Rutte declared (Kinling, 2018): The Netherlands has grown more interested in Chinese investment but remains cautious about the openness and transparency of the new Silk Road.

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Government support for the BRI is also evidenced by the fact that the Dutch government refused to condemn Italy for signing the MoU with China. According to the Dutch government, bilateral MoUs between EU member states and China do not necessarily undermine EU unity, as long as member states remain committed to the EU agreements (Okano-Heijmans  & Kamo, 2019). It is therefore possible that the Netherlands will play a greater role in the BRI in the future.

3.6 Greece

5

9.0

4

8.0

3

7.0

2

6.0

1

5.0

0

4.0

-1

3.0

-2

2.0

-3

1.0

-4

in %

in $ billion

The southern European economy of Greece has long been the most indebted country in the euro zone area, indicating the country’s high vulnerability to the influence of huge economies such as China, which have sufficient capital for investment or M&A. When we look at the development of trade between Greece and China (Figure 3.9), we can see a surplus of Greek imports from China over Greek exports to China. A notable decrease in Chinese imports between 2010 and 2012 may be attributed to the debt crisis in Greece and the resulting economic recession. The amount of Chinese imports has started to increase again since 2018 when Greece managed to recover from the economic recession. Greece has a very favorable geographical position and, like the Netherlands, it has served China as an important transport hub for transporting goods further into Europe in recent years. This is mainly due to the very significant cooperation with the port of Piraeus, which we will explain in the following sections of this subchapter. The dynamics of Greek exports to China was similar to that of its imports from China. China’s share of Greek exports has increased, with some fluctuations, by more than 1.2 percentage points since 2010, reaching almost 2.8% in 2020. The deficit of Greece’s trade with China exceeded $3 billion in 2020.

0.0 2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Greek exports to China

Greek imports from China

Greek trade balacne

China's share of Greek imports

2020

China's share of Greek exports

Figure 3.9  Development of foreign trade between Greece and China and the development of China’s share of Greek foreign trade during the decade 2010–2020 (data from ITC trademap 2021).

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HS '27 Mineral fuels, mineral oils HS '25 Salt; sulfur; earths and stone; HS '84 Machinery HS '26 Ores, slag, and ash HS '30 Pharmaceutical products

in % of total Greek exports to China

Greece exported mostly mineral fuels, mineral oils, and the products of their distillation, salt, stones, ores, and machinery to China during this period. On the other hand, Greece imported machinery, electrical machinery, clothing, and footwear from China. The development in shares of the five most imported and exported commodity groups between China and Greece in the decade 2010–2020 is detailed in Annexes 3.9 and 3.10. According to the CGIT (2021), Greece, as a weaker European economy, recorded only three investments worth more than $100 million during the period 2008–2011. However, the BRI has opened a new chapter in Chinese investment. Since 2013, there have been five investments and three construction projects worth $4.5 billion. When we look at their distribution (Figure 3.10), we can see that more than half of them were

60.0 50.0 40.0

30.0 20.0 10.0 0.0

Annex 3.9  Development of shares of the five most exported commodity groups in 2020 from Greece to China between 2010 and 2020 (data from ITC trademap 2021, www.trademap.org).

in % of total Greek imports from China

30.0 HS '84 Machinery

25.0 20.0

HS '85 Electrical machinery

15.0 HS '94 Furniture 10.0 5.0 0.0

HS '61 Articles of apparel and clothing accessories, knitted, or crocheted HS '64 Footwear

Annex 3.10  Development of shares of the five most imported commodity groups in 2020 from China to Greece between 2010 and 2020 (data from ITC trademap 2021, www.trademap.org).

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Technology 12.44%

Transport 28.67%

Energy 51.33%

Metals 7.56% Figure 3.10  Breakdown of value of Chinese construction contracts and investments in Greece by sectors between 2013 and 2020 (data from CGIT 2021).

TABLE 3.2 List of the Chinese Investments and Contracts in Greece That Are Part of the BRI (Data From CGIT 2021) Year

Month

Chinese Entity

Mill. $

Transaction Party

Sector

2016 2016 2016 2017 2017 2018 2019

August October December May November November February

$420 $350 $200 $560 $1 640 $340 $320

– Public Power Lamda Forthnet Copelouzos Mytilineous MINOS

Transport Energy Transport Technology Energy Metals Energy

2019

September

China Ocean Shipping State Grid Fosun Shanghai Gongbao, KaiXinRong State Energy Investment China Nonferrous China Energy Engineering, Zhejiang Supcon China Ocean Shipping

–

Transport

$670

in the energy sector followed by the transport sector (28.7%), technology (12.4%), and metals (7.6%). According to the database, all these investments and projects are considered to be part of the BRI. We offer a complete list of them in Table 3.2. We have selected the most significant investments, discussed below the table. The most famous transport hub and BRI investment in Europe and the EU is the port of Piraeus. It is the largest Greek port and one of the largest ports in Europe, located near the capital city of Athens. Chinese activities in this port date back to 2009, long before the BRI was launched. Despite the ongoing debt crisis in the Eurozone, Chinese giant COSCO began investing in Piraeus. In 2009, COSCO obtained a concession from the Greek government to operate a part of the container terminal of Piraeus for a period of 35 years (van der Putten, 2014). We think that China therefore took advantage of the Greek privatization program that was aimed at saving the declining economy, while

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Management and Sustainability in the Belt and Road

other European creditors in Greece introduced austerity measures. In 2016, the Share Purchase Agreement (SPA) was signed under which COSCO was to acquire a 67% stake in the Piraeus Port Authority (PPA) for €368.5 million, in two stages (Hellenic Republic Asset Development Fund—HRADF, 2016). The first stage was completed in 2016 when COSCO paid the amount of €280.5 million to HRADF, thus becoming a 51% shareholder of PPA. In the second stage, that is, after five years, COSCO was to acquire an additional 16% stake in PPA for €88 million, thus increasing its PPA share by 16%, that is, to 67%. This was, however, made conditional upon meeting the commitments of COSCO under the SPA, including the successful completion of the mandatory investments of up to €300 million. In 2019, China and Greece agreed to go ahead with an additional $660 million in investments by COSCO into Piraeus, as part of the efforts to boost its role as a hub in the rapidly growing trade between Asia and Europe (Reuters, 2019c). However, in 2021, there are delays in planned investments. According to COSCO, the Greek authorities are accused of not issuing the necessary permits and approvals such as environmental studies (Bellos, 2020). But according to Koutantou (2021), both sides are willing to find a constructive solution regarding one of the biggest foreign investments in Greece. Given that China had already invested in Piraeus before the BRI was launched, it is logical that this hub, like the German Duisburg, for example, has been considered an important part of the BRI since 2013. Piraeus is strategically located in the Mediterranean Sea, at the western end of the Maritime Silk Road that originates in the major ports of China such as Shanghai, Shenzhen, or Dalian. Along with the further development of ports in Southeastern Asia, Southern Asia, and the east coast of Africa, Piraeus improves China’s maritime connection with the Mediterranean and Europe. China’s presence in this port is successful. Piraeus has become the leader among the largest ports in the Mediterranean in terms of container handling. According to Glass (2021), 5.44 million TEU were handled by Piraeus port in 2020, while 5.4 million TEU were transported through Spanish Valencia as the second largest port in the Mediterranean. For comparison, in 2009, container handling was about 1 million TEU in Piraeus. The Greek government welcomes China’s presence in Piraeus (Glass, 2020) and, in cooperation with China, has forecast even greater goals here, as the Greek deputy minister for foreign affairs Kostas Fragogiannis said (Amaro, 2019): “The objective is to transform it into the biggest transit hub between Europe and Asia and, potentially, the biggest port in Europe.” That is why both parties often call this cooperation the flagship of BRI cooperation. The largest Chinese investment in Greece is, however, the acquisition of a 75% stake in four Greek wind farms developed by Copelouzos for more than $1 billion in 2017 (Nicholas, 2018). This deal was the first Chinese investment in wind power in Greece and includes an agreement with Copelouzos to develop solar projects in Greece. The energy sector is very important for the implementation of the BRI. In general, China has been criticized because many of the energy projects under this initiative involve fossil-fueled power plants, which is at odds with the “green” strategy of the EU. Therefore cooperation on renewable resources is beneficial for both China and Greece. The official MoU on the BRI between China and Greece was signed in 2018. This Mediterranean country was the first developed Western nation to ink such a deal with China (State Council of the People’s Republic of China, 2018). A year later, Greece

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China’s Belt and Road Initiative and Its Impact on the EU

also joined the AIIB. Greek Foreign Minister Nikos Dendias commented on these events (Silk Road Briefing, 2019): “Relations with Greece are a priority for China. They came and invested in Greece when others stayed away.” Greek and Chinese delegations signed over a dozen agreements, including an extradition accord, agricultural export deals, and an agreement to open the first Bank of China branch in Athens. In 2019, Greece joined the 16 + 1 platform (during the period 2019–2021 known as 17 + 1, in 2021, Lithuania left the platform and the framework has become 16 + 1 again).

3.7 Hungary

10

9.0

8

8.0

6

7.0

4

6.0

2

5.0

0

4.0

-2

3.0

-4

2.0

-6

1.0

in %

in $ billion

Hungary is a country that has been associated with the BRI since the beginning of the initiative. Increased interest of China in this country can be observed by the development of mutual trade between 2010 and 2020, which is shown in Figure  3.11. The original Chinese share of more than 7% of Hungarian imports since the beginning of the period under review, similarly to other countries, decreased around 2015, but since then it has grown significantly again. We can see the most significant growth during the pandemic period—between 2019 and 2020 when China’s share of Hungarian imports increased by more than 1.5 percentage points. The main reason was an almost fivefold increase in the value of imports of the HS 90 commodity group (Optical, photographic, cinematographic, measuring, checking, precision, medical, or surgical) which also includes ventilators, which serve as an important medical device during a pandemic. According to the Zöldi (2020) survey, Hungary paid much more for these ventilators than other EU countries, with the State Secretary of the Ministry of Foreign Affairs and Trade of Hungary Péter András Sztáray commenting: “large quantities of imports did not bring lower prices; on the contrary, if someone wanted to buy more, they had to pay more.” For example, between March and July 2020, Hungary bought approximately 567.5 tonnes of equipment for almost $500  billion, while Germany purchased almost two times more equipment from China than Hungary (1,014.3 tons)

0.0

-8 2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Hungarian exports to China

Hungarian imports from China

Hungarian trade balacne

China's share of Hungarian imports

2020

China's share of Hungarian exports

Figure 3.11  Development of Hungary– China’s foreign trade and development of China’s share of Hungarian foreign trade between 2010 and 2020 (data from ITC trademap 2021).

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Management and Sustainability in the Belt and Road

for less than a tenth of the Hungarian price (over $30 million). This was also reflected in the highest trade deficit (−$6.7 billion) that Hungary recorded in trade with China during the period under review. On the other hand, Hungarian exports to China were relatively stable at an average of $2 billion, representing an average share of 1.8% of Hungarian exports. Hungary exported to China mainly electrical machinery, machinery, vehicles, and their components. Imports from China to Hungary also consisted of electrical machinery, machinery, and optical instruments. The development in shares of the five most imported and exported commodity groups between China and Hungary in the decade 2010–2020 is detailed in Annexes 3.11 and 3.12. As we can see in Figure 3.12, Chinese investment went to only three sectors: the transport sector with more than 75% of investments followed by the technology sector with a share of 15%, and the energy sector 8%.

Annex 3.11  Development of shares of the five most exported commodity groups in 2020 from Hungary to China between 2010 and 2020 (data from ITC trademap 2021, www.trademap.org).

Annex 3.12  Development of shares of the five most imported commodity groups in 2020 from China to Hungary between 2010 and 2020 (data from ITC trademap 2021, www.trademap.org).

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China’s Belt and Road Initiative and Its Impact on the EU

Technology 15.4% Energy 8.1% Transport 76.5%

Figure 3.12  Breakdown of Chinese construction contracts, costs, and investments in Hungary by sectors between 2013 and 2020 (data from China investment tracker 2021).

TABLE 3.3 List of the Chinese Investments and Contracts in Hungary That Are Part of the BRI (Data From CGIT 2021) Year 2017 2019 2019 2020

Month January June June April

Chinese Entity Ex-Im Bank China General Technology (Genertec) China Railway Engineering China Railway Engineering

Mill. $

Transaction Party

Sector

$210 $110 $1040 $1040

Invitel Group

Technology Energy Transport Transport

Opus Global

In Hungary, there are two Chinese investments and two construction projects, all of which are considered part of the BRI, valued at more than $2  billion. This value is related to one of the most important Chinese railway projects in the EU—the Budapest–Belgrade railway. We offer a more detailed overview of BRI transactions in Hungary in Table 3.3. Smaller investments mentioned in the table include the special case of the Hungarian telecom firm Invitel which was acquired in 2017 by ChinaCentral and Eastern Europe Investment Cooperation Fund (established under the BRI), financed by Ex-Im Bank China General (Völgyi & Lukács, 2021). This major investment of 2019 concerned the construction of the Kaposvar 100 MW Photovoltaic (PV) Power Station, the largest of its kind in Hungary by the China National Machinery Import and Export Corporation (CMC), a key subsidiary of Genertec in the sector of engineering services. Hungary should save tons of coal thanks to this photovoltaic power plant and thus prevent thousands of tons of dioxide emissions. In May 2021, the power plant officially began operating (Genertec, 2021). While we consider the project connected with the Greek port of Piraeus to be a model of the successful cooperation between an EU country and China, Hungary,

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on the other hand, is a symbol of a failed model of successful cooperation. The Budapest–Belgrade railway was meant to be another BRI flagship project in Europe. In December 2014, China, Serbia, and Hungary signed a MoU for the reconstruction of the Belgrade–Budapest 350-kilometer-long railway, one of the major BRI projects in the CEE region. The railway was to be reconstructed by a consortium of Chinese and Hungarian corporations and it was deadlined for completion by the end of 2017. A major problem emerged as the agreement violated EU laws, requiring large transport projects to be subject to tender. Given that the consortium was based on an intergovernmental agreement but not on tender procedures, the European Commission initiated preliminary infringement proceedings against Hungary (Wang et al., 2017). It was later agreed that the consortium would launch a tender and sign new contracts with suppliers. This, of course, caused delays in the work and implementation of the project. The tender processes were not completed until 2020 when China and Hungary signed a loan agreement to finance the construction of a rail link totaling over $2  billion which, in this context, raised concerns about the rising Hungarian debt and related problems such as corruption or China’s growing influence. This is not surprising, as during the state of emergency that was declared due to the COVID19 pandemic, the Hungarian Prime Minister and his cabinet announced their plan to classify the details of the project (Brînză, 2020), just days before the agreement was signed. It should also be added, for example, that the company participating in constructing the Hungarian part of the railway was controlled by Lőrinc Mészáros, an associate of Prime Minister Viktor Orbán (Brînză, 2020). Fitch Solutions (2020) also stated in its study that the project posed diplomatic and practical difficulties for the EU that lacked a substantive response to China’s growing interest in infrastructure investments in CEE, competing with the EU’s infrastructural ambitions in this region. According to Rencz (2019), the strategic importance of the railway link for China was based on the following four main factors:

1. It connects the Balkans to the EU, hence providing direct access to the common market. 2. It is part of a longer railway line connecting Piraeus to Budapest, thus constituting a salient channel for Chinese goods arriving in Europe. 3. The project functions as a supporting pillar to the 16 + 1 Cooperation. 4. It serves as a reference point for Chinese railway construction capability which could pave the way for future Chinese projects within the borders of the EU. Hungarian Finance Minister Mihaly Varga said the new rail link, to be completed by 2025, would allow Hungary to become a center for European logistical networks as Chinese goods are transported from Greece to Western Europe (Than & Komuves, 2020). This serves as a reminder that this project is part of creating a much larger infrastructure corridor under the BRI, which should connect the aforementioned Piraeus port and Budapest via Belgrade (Serbia) and Skopje (North Macedonia). However, there are also rail links directly between Hungary and China. The first freight train from the Chinese city of Changsha via Russia and Ukraine arrived in

China’s Belt and Road Initiative and Its Impact on the EU

85

Budapest in 18 days and carried 41 containers (the State Council of the People’s Republic of China, 2017). In addition to the Changsha–Europe freight service, the China Railway Express operates non-stop freight trains from other major Chinese cities, such as Xi’an, Chengdu, Xiamen, and Jinan, to Budapest. Although Hungary became a member of the AIIB in 2017, which is later than the other countries surveyed, it was the first European country to sign the BRI MoU (Chan, 2017). In 2019, Prime Minister Viktor Orbán stated that China’s BRI coincides entirely with Hungarian national interest and asked Chinese businesses to maintain an influx of capital investments to Hungary in the future (Cabinet Office of the Prime Minister, 2019). The positive relationship between Hungary and China was also highlighted by the Hungarian Ambassador to China, H.E. Mr. Máté Pesti (Xin et  al., 2021), who noted that Hungary was not only the first country to sign a BRI MoU but also the first country that set up an RMB clearing bank in the CEE (author’s note: in Hungary, the regional headquarters of the Bank of China is located), and furthermore, it was the first country to issue on- and off-shore bonds, as well as green bonds on the Chinese market. Also, Hungary was the first European country to open a bilingual primary and secondary school in Budapest as well as Fudan University and it was also the first EU member state that officially recognized the use of the Chinese vaccine during the pandemic emergency situation. In addition, according to Chan (2017), Hungary’s active participation in the BRI was welcomed by investors. In 2017, the leading Chinese carmaker BYD opened its first fully-owned bus plant in Europe in Komárom. The Hungarian company Graphisoft, the world’s leading developer of Building Information Modeling software, chose Hong Kong as a partner in order to develop their businesses along the Belt and Road.

3.8 Czech Republic The Czech Republic is the second country we have selected from the CEE region and the 16 + 1 platform. In connection with the BRI, it is mentioned less frequently than Hungary, however, even in the case of the Czech Republic, China is a very important trading partner, especially with respect to imports. China is the Czech Republic’s second-largest import partner after Germany, as shown in Figure 3.13, documenting developments in mutual foreign trade from 2010 to 2020. Imports from China were increasing since the second half of the time period under review when the value of goods imported from China to the Czech Republic amounted on average to almost $25 billion. This is also reflected in the increase in China’s share of Czech imports which in 2020 was up to 18% of total imports. On the other hand, as most Czech exports went to its neighboring countries, China’s share of Czech exports was small— on average only 1.2%. However, during the period under review, the value of exports increased by almost 1 billion and reached $2.7 billion in 2020. The Czech trade deficit reached −$28.43 billion in 2020. Almost half of the Czech exports to China consisted of electrical machinery, machinery, and optical instruments, followed by only a small share of commodity groups, wood, articles made of wood and wood pulp. On the other hand, up to 80% of imports from China were electrical machinery and machinery, followed by toys and textiles. The development in shares of the five most imported and exported product

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Management and Sustainability in the Belt and Road

40

20.0

30

18.0 16.0 14.0

10

12.0

0

10.0

in %

in $ billion

20

8.0

-10

6.0

-20

4.0

-30

2.0

-40

0.0 2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Czech exports to China

Czech imports from China

Czech trade balacne

China's share of Czech imports

2020

China's share of Czech exports

Figure 3.13  Development of Czech Republic– China’s foreign trade and the development of China’s share of Czech foreign trade between 2010 and 2020 (data from ITC trademap 2021).

groups between China and the Czech Republic in the decade 2010–2020 is detailed in Annexes 3.13 and 3.14. In the Czech Republic, we recorded the least amount of Chinese investments amounting to over $100 million among the examined countries, and we also noticed that they are the least diversified, as shown in Figure  3.14. Investments were not directed into sectors that we have identified as key ones vital to the BRI as in the other countries examined, such as the sectors of technology and transport. China directed almost two-thirds of its investments into the financial sector and the rest into the real estate sector. However, according to the chosen methodology, all investments are considered part of the BRI. Further details on investments are given in Table 3.4. Investments since 2015 relate to the sale of shares in J&T Finance that were transferred to the Chinese company CEFC China Energy. J&T Finance is the parent company of the financial part of the J&T Group, which operates in the Czech Republic, Slovakia, and Cyprus and has been owned by two Slovak entrepreneurs for a long time. At that time, CEFC China Energy Company Limited was the sixth-largest private company in China. In May 2015, CEFC became a 5% shareholder of J&T Finance (JTGF, 2015a), and in September, it increased its share to 9.9% (JTGF, 2015b). In addition, this company bought the Prague office complex from Penta, a football club, and a brewery. However, in 2018, Ye Jianming, the company’s founder and chairman of CEFC, was arrested for economic crimes, and in 2020, the company was declared bankrupt. What is important to mention in this regard is that in 2015, Ye Jianming even worked as an adviser to the President of the Czech Republic M. Zeman (Hála, 2015). After the fall of the “Belt and Road billionaire” as Marsh (2018) called Jianming, due to huge investments in the initiative, J&T reached a deal with the Chinese conglomerate CITIC in 2018 to settle the debts owed by the troubled CEFC (Reuters, 2018). Since then, Rainbow Wisdom Investment Limited, a subsidiary of CITIC, has owned a 9.9% stake in J&T Finance.

87

in % of total Czech exports to China

China’s Belt and Road Initiative and Its Impact on the EU

HS '84 Machinery

HS '85 Electrical machinery

HS '90 Optical instruments

HS '44 Wood and articles of wood; wood charcoal HS '47 Pulp of wood or of other fibrous cellulosic material; recovered (waste and scrap) paper

35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Annex 3.13  Development of shares of the five most exported commodity groups in 2020 from the Czech Republic to China between 2010 and 2020 (data from ITC trademap 2021, www.trade map.org).

in % of total Czech imports from China

60.00 HS '85 Electrical machinery

50.00 HS '84 Machinery

40.00 30.00

HS '95 Toys, games and sports requisites; parts, and accessories thereof

20.00

HS '63 Other made-up textile articles

10.00 HS '39 Plastics and articles thereof

0.00 1

2

3

4

5

6

7

8

9 10 11

Annex 3.14  Development of shares of the five most imported commodity groups in 2020 from China to the Czech Republic between 2010 and 2020 (data from ITC trademap 2021, www.trademap. org).

The Czech Republic is the only country under our review that is not a member of the AIIB. The Czech Republic signed the MoU on the BRI in 2015, during the 16 + 1 summit in Suzhou, China. The BRI has great political support in the Czech Republic. Turcsanyi (2015) stated that under President Zeman (president since 2013) and the government of the Social Democratic Party led by Bohuslav Sobotka (in position from 2014 to 2017), the Czech Republic became one of the most active countries from Central and Eastern Europe within the 16 + 1 platform in relation to the BRI. The Czech and Chinese presidents have been meeting regularly. In 2019, Xi said China was willing to work with the Czech Republic to take their partnership to a “new level” and he hoped Prague would play a constructive role in promoting relations between China and the rest of Europe (Ng,

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Management and Sustainability in the Belt and Road

Finance 26.67%

Real estate 73.33%

Figure 3.14  Breakdown of Chinese construction contracts, costs, and investments in the Czech Republic by sectors between 2013 and 2020 (data from China investment tracker 2021).

TABLE 3.4 List of Chinese Investments and Contracts in the Czech Republic That Are Part of the BRI (Data From CGIT 2021) Year

Month

Chinese Entity

Mill. $

Transaction Party

2015 2015 2016 2018

May September November May

CEFC China Energy CEFC China Energy CEFC China Energy China International Trust and Investment (CITIC)

$ 100 $ 100 $ 310 $ 350

J&T Finance J&T Finance Penta J&T

Sector Finance Finance Real estate Finance

2019). Similar or even the same statements were made during a telephone conversation in 2021. No typical BRI project was recorded in the Czech Republic, for example, in the field of infrastructure (railways) or energy, as we have seen in other EU countries.

3.9 Trade Intensity It is fair to assume that the BRI, if it really is primarily a logistical and infrastructure project, should improve mutual trade between partnering countries, at a rate exceeding the growth of world trade. We used the Trade Intensity Index (TII) to determine whether the value of trade between two countries is greater or smaller than would be expected based on the importance of both in world trade. It is defined as the share of one country’s exports going to a partner, divided by the share of world exports going to the partner (World Bank, 2010). TII is calculated as follows: TII = (xij/Xit)/(xwj/Xwt)

(3.1)

where —xij represents the value of exports of the first country (i) to the second country (j), —xwj represents the value of total world exports to the second country (j),

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China’s Belt and Road Initiative and Its Impact on the EU —Xit represents the value of country i’s total exports, and —Xwt is the total value of world exports.

The values of the given index can range from 0 to + ∞. A value greater than 1 indicates a relationship more intense than the partner’s world average (World Bank, 2013). It means that trade between the countries studied is more intensive than would be expected, given the position of the economies in the world economy. If the index is less than 1, it indicates lower trade between the countries studied than would be expected. Figure 3.15 shows the development of the TII for exports by China to selected EU countries between 2010 and 2020, as described earlier in this chapter. As we can see, only one country recorded an index value greater than 1 during the period under review. It was the Czech Republic, but only at the beginning of the period under review. Other countries and, after 2011, the Czech Republic are below this index value, and we can state that trade between the examined countries is smaller than would be expected given the position of partners in the world economy. Germany is China’s largest trading partner among all EU countries, but the intensity of activity of Chinese exporters has not increased during the period under review. The index reached its highest value in 2010 (0.94). In 2019, it was 0.78, which according to the World Bank methodology indicates a low trade intensity. Our analysis showed a relatively high activity of Chinese exporters in France, the Czech Republic, and the Netherlands. The lowest trade intensities were recorded in Greece and Hungary. Overall, it can be stated that the activity of Chinese 1.20

1.00

0.80

0.60

0.40

0.20

0.00 TII China - Germany TII China - France TII China - Italy TII China - Netherlands TII China - Greece TII China - Hungary TII China - Czech Republic

2010 0.94 0.79 0.76 0.91 0.55 0.69 1.04

2011 0.85 0.78 0.71 0.82 0.50 0.58 1.00

2012 0.79 0.72 0.59 0.74 0.43 0.52 0.98

2013 0.72 0.69 0.55 0.70 0.41 0.46 0.88

2014 0.71 0.69 0.57 0.75 0.43 0.40 0.70

2015 0.70 0.68 0.56 0.64 0.44 0.38 0.77

2016 0.74 0.71 0.57 0.67 0.51 0.40 0.66

2017 0.77 0.73 0.56 0.70 0.44 0.40 0.73

2018 0.76 0.72 0.58 0.71 0.52 0.43 0.68

2019 0.75 0.70 0.57 0.71 0.56 0.46 0.67

2020 0.76 0.76 0.58 0.70 0.51 0.52 0.84

Figure 3.15  Development of TII of China and the examined EU countries between 2010 and 2020 (own calculations based on data from ITC trademap 2021).

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3.00 2.50 2.00 1.50 1.00 0.50 0.00 TII Germany - China TII France - China TII Italy - China TII Netherlands - China TII Greece - China TII Hungary - China TII Czech Republic - China

2010 0.62 0.31 0.28 0.16 2.87 0.18 0.11

2011 0.64 0.34 0.28 0.17 2.09 0.16 0.12

2012 0.62 0.35 0.23 0.18 1.57 0.18 0.15

2013 0.60 0.33 0.24 0.17 1.34 0.18 0.19

2014 0.64 0.36 0.25 0.18 1.38 0.18 0.19

2015 0.59 0.40 0.25 0.20 1.44 0.18 0.15

2016 0.64 0.37 0.27 0.23 1.57 0.22 0.16

2017 0.66 0.40 0.29 0.24 1.40 0.23 0.20

2018 0.65 0.40 0.26 0.22 1.26 0.18 0.17

2019 0.66 0.39 0.25 0.23 1.27 0.13 0.11

2020 0.67 0.35 0.25 0.25 1.15 0.14 0.13

Figure 3.16  Development of TII of the examined countries among the EU member states and China between 2010 and 2020 (own calculations based on data from ITC trademap 2021).

exporters to the surveyed countries has been growing slightly over the last five years, which may also be due to the implementation of Chinese strategies, including the BRI. On the other hand, as we can see in Figure 3.16, TII did not increase significantly in any of the examined countries. Greece was the only country to achieve a TII of more than 1 t in the decade under review. j. the business activity of Greek exporters was higher than would be expected given Greece’s position in the world economy. However, the value of the index fell from 2.9 to 1.15 during the observed decade. In the case of Germany, the largest exporter from the EU to China, the index averaged 0.64. All other countries examined show index values below 1, while remaining relatively stable. Thus, we can state that in the last five years, when the BRI was more intensively implemented in the EU, there has not been a significant increase in export activity to China for the examined EU countries. As TII is just one of the possible ways to assess the impact of the BRI on mutual trade between China and the monitored EU countries, we are aware of the possible limitations of our results.

3.10 Summary China has been actively pursuing its interests on the European continent which is largely represented by the EU. The EU, as well as the EU member states that have been analyzed more closely in this chapter, has a negative trade balance with China. Increasing the speed of transit routes or increasing the activity of European exporters

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through modern infrastructure interconnections, which are the cornerstone of China’s BRI, could help to reduce discrepancies in foreign trade between the partners. However, since 2013, when the BRI was announced, the intensity of European countries’ exports to China has not increased significantly. On the contrary, the intensity of Chinese exports to the examined countries has been growing slightly in the last five years. China is constantly promoting the BRI as an attractive opportunity for the participating countries to gain investments and lending, improve mutual relations, and establish the so-called “win-win” partnerships. Since the beginning of the BRI implementation, different perceptions of the BRI by the so-called “strong” EU economies and “weaker” or “post-communist” countries in the CEE region were expected. The CEE countries perceive the BRI as an opportunity to find other economically significant partners besides Germany or France. It turns out that there is no consensus on the BRI within the “stronger” EU economies either. Table 3.5 shows a comparison of the countries examined in this chapter by indicators demonstrating the level of their BRI participation. All examined countries except the Czech Republic are members of the AIIB, whose origin and activities are directly related to the BRI. Italy, Greece, Hungary, and the Czech Republic are countries that have already signed intergovernmental MoUs and, as a result, have seen investments that, according to CGIT, are part of the BRI. Greece and Italy are also countries with important ports in the Mediterranean. One of the most well-known investments under the BRI banner is the Greek port of Piraeus, which has become the largest Chineseowned Mediterranean port in the Mediterranean, expanding its capacity and creating jobs. This allows China to simplify its shipping, which now flows to larger and more distant ports in northwestern Europe. Hamburg should also join the port network along the 21st-century Naval Silk Road, although the German government strongly opposes participation in the initiative.

TABLE 3.5 Overview of BRI-Related Features of Examined Countries (Own Research) Countries

AIIB Governmental BRI- BRI-Related BRI-Related BRI Support Membership MoU on BRI Related Railway Investments by Domestic Port Connections According Companies Projects to CGIT

Germany France Italy Netherlands Greece Hungary Czech Republic

✓ ✓ ✓ ✓ ✓ ✓ –

Note:

– –

✓* –

✓ –

✓ ✓ ✓ – –

✓ ✓ ✓

✓ ✓ – ✓ – ✓ –

– – ✓ ✓ ✓ ✓

✓** ✓ ✓ ✓ ✓ – –

The acquisition of the stake in the port of Hamburg has not yet been completed and has not been identified by the Chinese side as part of the BRI. Given the fact that this is a port in a major country for the BRI, we assume that it is a deal related to BRI; ** In Germany, several associations of SMEs have even been set up to support the BRI. *

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Rotterdam, in the Netherlands, is also an important port for the BRI. In addition, there are rail links between the Netherlands and several Chinese cities. The Netherlands has a specific role to play among the countries studied. On the one hand, the BRI that the government supports has not yet officially signed an MoU confirming Dutch participation in the initiative. The main railways, which are an element of the BRI, also connect China with Germany and France. France and Germany, as the strongest EU economies, are skeptical about the implementation of the BRI, especially at the government level. They emphasize in particular the need to improve access to the Chinese market and to promote fair competition for foreign companies there. However, this does not prevent China from implementing some elements of the BRI in these countries as well. In almost every one of the examined countries (except the Czech Republic), we found companies that support the idea of BRI participation. In Germany, associations of small and medium-sized enterprises have been set up primarily to support the BRI, as many local businesses see the initiative as an opportunity to penetrate new markets along its routes. While China seems to have a particular interest in Germany and France in terms of technology and know-how, Italy, Greece, and Hungary are becoming “typical BRI participants,” allowing China to increase its influence. The main threat is that many Chinese-funded projects are in the form of loans, which may increase these countries’ indebtedness and economic dependence on China. Vulnerability to China’s political influence is also increasing. The Netherlands has a special position among the surveyed EU countries, especially due to its geographical location and long-term good relations with China. It is interesting that the Czech Republic is still actively expressing its support for the BRI. The presence of most of the selected indicators is absent. Greece, the Netherlands, and Italy seem to have gained economically through cooperation with China. But these countries should, like Germany and France, demand reciprocity in relations with China and rationally consider the sustainability of all investments and construction projects. Montenegro serves as an exemplary case of the Chinese “debt trap diplomacy” in Europe. Montenegro has borrowed more than $1 billion from China to build a highway under the BRI and cannot repay that debt by 2021. The EU is trying to help its candidate state and has turned to the banks of France and Germany to spearhead the necessary financial aid for Montenegro. As a result, again, we can expect criticism of the BRI from the strongest EU economies. As the BRI is a long-term initiative, constantly generating projects with an unspecified time framework, this study provides an interim assessment of its impact. However, the presence of the BRI in the EU is growing, and it is necessary to be aware of which countries and in what way its presence is affecting the EU. Therefore, we suggest further research be made concerning the BRI presence in Europe and its impact on EU countries.

3.11 Acknowledgment This chapter is part of a research project of the Ministry of Education, Science and Sports of the Slovak Republic VEGA (in the period 2020–2022), No. 1/0777/20: “Belt and Road initiative—opportunity or threat to the EU and Slovak export

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competitiveness?” and an internal grant PMVP no. I-21–110–00 University of Economics in Bratislava for young teachers, researchers, and doctoral students entitled “The impact of geopolitical changes on the EU’s foreign trade relations with selected countries in the 21st century.”

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Vivendi.com. (2021). Vivendi: The tencent-led consortium has completed the exercise of its call option and now owns 20% of UMG’s share capital—Vivendi. www.vivendi. com/en/press-release/vivendi-the-tencent-led-consortium-has-completed-the-exercise-of-its-call-option-and-now-owns-20-of-umgs-shareVölgyi, K.,  & Lukács, E. (2021). Chinese and Indian FDI in Hungary and the role of Eastern Opening policy. Asia Europe Journal, 19, 167–187. Wang, X., Ruet, J.,  & Richet, X. (2017). One belt one road and the reconfiguration of China-EU relations. CEPN Working Papers. Retrieved November  18, 2020, from https://hal.archives-ouvertes.fr/hal-01499020/document World Bank. (2010). Trade indicators. Wits.worldbank.org. Retrieved June 8, 2021, from https://wits.worldbank.org/wits/wits/witshelp/Content/Utilities/e1.trade_indicators. htm World Bank. (2013). Online trade outcomes indicators—user’s manual. Wits.worldbank.org. Retrieved June 8, 2021, from http://wits.worldbank.org/WITS/docs/TradeOutcomesUserManual.pdf Xin, L., Lingzhi, F.,  & Weilan, Z. (2021). Hungary eyes a result-oriented approach to China, hopes EU-China investment deal a success story for all: Ambassador. Global times.com. Retrieved February  23, 2022, from https://www.globaltimes.cn/page/ 202112/1243600.shtml Xinhuanet.com. (2021). Xinhua headlines: Railway freight express puts China-EU cooperation amid pandemic on fast track—Xinhua | English.news.cn. Retrieved May 6, 2021, from www.xinhuanet.com/english/2020-06/27/c_139170811.htm Zöldi, B. (2020). The government boasted about ventilator purchases, yet Hungary made the worst deals across the EU. Direkt36.hu. Retrieved May 20, 2021, from https:// www.direkt36.hu/en/a-kormany-dicsekedett-a-lelegeztetogepek-vasarlasaval-megisok-kotottek-a-legrosszabb-uzletet-kinaval-az-egesz-eu-bol/

4 A Case Study Comparing Two Different Environmental Education Approaches and Its Implications on Youth Education Policies Lianne K. W. Lam Department of Management and Marketing, The Hong Kong Polytechnic University, Hong Kong SAR CONTENTS 4.1 Introduction�����������������������������������������������������������������������������������������������������100 4.2 Literature Review��������������������������������������������������������������������������������������������101 4.2.1 Contention in Sustainable Development��������������������������������������������101 4.2.2 Environmental Education and Education for Sustainable Development���������������������������������������������������������������������������������������102 4.2.3 Design of the Informal EE and ESD Interventions in This Research���������������������������������������������������������������������������������������������104 4.3 The Project������������������������������������������������������������������������������������������������������104 4.3.1 Collaborative Partners������������������������������������������������������������������������104 4.3.2 China as the Research Context�����������������������������������������������������������106 4.3.3 Recipients�������������������������������������������������������������������������������������������106 4.3.4 Program Content��������������������������������������������������������������������������������107 4.4 Summary of the Project Impact in 2012���������������������������������������������������������108 4.4.1 Year 2012��������������������������������������������������������������������������������������������109 4.4.2 Year 2013��������������������������������������������������������������������������������������������110 4.5 Implications for Different Stakeholders���������������������������������������������������������� 111 4.5.1 Government����������������������������������������������������������������������������������������112 4.5.2 NGOs��������������������������������������������������������������������������������������������������112 4.5.3 Educators��������������������������������������������������������������������������������������������113 4.5.4 Media�������������������������������������������������������������������������������������������������� 114 4.5.5 Parents������������������������������������������������������������������������������������������������ 114 4.6 Conclusion������������������������������������������������������������������������������������������������������� 114 4.7 Bibliography���������������������������������������������������������������������������������������������������� 114

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4.1 Introduction Rapid population growth and economic development have become major catalysts for the depletion and destruction of Earth’s natural resources. Although environmental degradation serves as one of the major global issues of the century, public participation and social movements have presented challenges related to the making and implementation of environmental public policy across the world. Many public policies and developmental infrastructure projects are often questioned or blocked by local residents with diverse opinions. Moreover, different strategies of environmental issue framing are increasingly used by online media and NGOs, which target and influence youths in particular. Thus, consensus building regarding protecting the environment has been a major challenge for both the government and society. Hence, it has become an important issue to examine how genuine civic engagement and collaborative governance are feasible in order to promote societies that can collectively work toward sustainable development. To build a consensus to increase the public’s commitment toward environmental protection, education approaches can be employed as a means to nurture societal mindsets that value sustainability for future generations. The two educational approaches that environmentalists and NGOs typically adopt to improve attitudes toward the environment are Environmental Education (EE) and Education for Sustainable Development (ESD). EE is currently the predominant approach with a focus on providing scientific education to raise environmental awareness. In comparison, ESD is an emerging approach that integrates the concepts of sustainable development with EE to incorporate economic, social, and environmental factors when finding solutions for sustainability. Nevertheless, there has been an ongoing debate regarding which approach produces better educational outcomes among the students. In this chapter, two environmental education programs based on the concepts of EE and ESD were designed and implemented in the rural village of Foping in China for two consecutive years, years 2012 and 2013 specifically. The research was conducted in a typical Chinese rural village with both a conservational and a developmental focus. This experimental setting was particularly relevant as it is a common phenomenon for people in rural areas and developing countries to make environmental sacrifices for instant economic benefits. Due to scarce resources and limited funds, developing countries often need to prioritize economic development over environmental conservation because they cannot afford to fulfill both. Consequently, the ruthless pursuit of economic gains has manifested in materialistic tendencies and a disregard for sustainability across many countries around the world. China’s One Belt One Road (OBOR) initiative involves developing countries that are likely to be suffering from the same phenomenon—prioritizing development over conservation. Although economic development is essential to counteracting poverty and maintaining the stability of a country, the literature in various other specialties including conservation, agriculture, tourism, and climate change clearly illustrates a tension between economic development and environmental conservation, especially in poverty-stricken areas. Therefore, this study sets forth to understand the effectiveness of two different types of environmental education programs among Chinese students in an experimental setting, focusing on Giant Panda protection as a mechanism to stimulate the attitudinal changes toward (1) environmental conservation, (2) economic development,

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(3) the contention within sustainability development, and (4) understanding how the socio-demographic factors affect the students’ perception. Overall, the findings of this paper look into the ways in which the information recipients are influenced by the knowledge learned from two environmental education programs. This is to alert the government of the need to plan and implement their future education policy with caution, informing both the rural areas and developing countries in the OBOR on how to approach environmental education to collectively achieve sustainable development.

4.2 Literature Review 4.2.1 Contention in Sustainable Development As the leader of the Belt and Road initiative, China has been continuously accused by the West of its infrastructures and expansion plan causing degradation and environmental problems in the countries involved. The initial strategy designed by the Chinese government in 2013 was to formalize a close cooperation between the 70 partnering countries to synergize their resources and know-how for a better connectivity for mutually benefited future development and to alleviate poverty at the same time. However, undeveloped countries like those in Southeast Asia are observed as sacrificing their environment for the ambitious infrastructure projects such as roads, ports and railways development, which are highly damaging to the natural environment, endangering the biodiversity locally. As the priority in the Belt and Road Initiatives is weighted much higher toward the economic part under the sustainable development strategy, China is then the target of environmental advocates, and even by certain academic researchers, alleging that China only seems to care about its financial advantages in the mining of natural minerals, timber, and obtaining commodities from all these partner countries. Western media has elaborated on these issues and further coined the Belt and Road Initiatives as China’s aggression when expanding its economic and political power. Although it is believed that the need for economic development outweighs the demand for cultural and ecological conservation, there are examples that illustrate that different governments have applied different strategies to efficiently utilize the available resources without creating environmental damage. To mitigate the conflict between economic development and environmental conservation, we can review the Brundtland Report in the United Nations in 1987 as it clearly provoked world leaders to look into a better equilibrium between the economy-society-environment triangle, proposing future developmental initiatives to accommodate different cultural and educational backgrounds (Yang et  al., 2010). Researchers in the fields of sustainable development, corporate social responsibility (CSR), developmental economy, and world ecology have also examined ways to slow down the urge for economic development and control the negative environmental impact caused by developmental growth. Measures include standardization when measuring the environmental quality including promoting regulations on environmental degradation, pollution, litter, and waste problems, as well as the over-consumption of natural resources, and the endangerment of natural habitats (Tisdell & Wilson, 2005). On the academic side, Behavioral Change Theory posited by Hungerford and Volk (1990) suggests a linear relationship between how knowledge can affect attitudinal changes and further alter future actions. It is applied wildly in the field of

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environmental conservation in many studies that influence environmental NGOs to use this framework in their campaign to environmental behaviors (Kollmuss  & Agyeman, 2002). However, in recent decades, these efforts did not guarantee the desired outcome. Researchers specializing in ecological conservation, poverty alleviation, and tourism observed a continuous stress between conservation and development, especially in poor countries (Ko & Stewart, 2002; Tallis et al., 2008; Tang & Tang, 2009). Tallis et al. (2008) illustrate the different projects that were implemented in different countries seeking to balance the need for economic development and environmental protection by showcasing win-win, lose-lose, and trade-off cases. Some successful cases even suggest that sustainability, professional planning, and monitoring are necessary to ensure a sustainable result in the long run (Saterson et al., 2004). also suggest using collaborative governance strategies to set forth common goals to foster collective benefits for the different stakeholders. To summarize, projects that are carefully planned with attention paid to addressing the local needs will produce more desirable results, while projects without a proper design will be devastating to the communities’ socio-economic foundations, resulting in increased tension between the government and the residents.

4.2.2 Environmental Education and Education for Sustainable Development Education has long been respected as an effective tool for encouraging environmental behavior. Dating back to 1987 in the UN Brundtland Report, it is clearly identified as being the key to fostering sustainable development. Furthermore, it is specified in Chapter 36 at the United Nations General Assembly as an intervention to “Promote Education, Public Awareness, and Training.” Ever since then, educators have been working closely to research how education can improve the concept of sustainability to strengthen the know-how and skill sets needed to control the abuse of natural resources for future environmental, economic, and social developments. Education is of prime importance for promoting sustainable development and helping people to develop competencies in order to solve environmental and development problems. Chapter 36.3 UNCED, 1993

Environmental Education (EE) was officially acknowledged as an effective way to promote sustainable development in Agenda 21 in 1992 at the Earth Summit held in Rio de Janeiro. A year afterward, Education for Sustainable Development (ESD) evolved based on the goal to engage public awareness and actions. The essence of the concept is “to improve the quality of life without sacrificing environmental quality, and to retain sustainable resources for future generations”. The development of ESD is based on the idea that EE mainly prepares students with scientific knowledge such as geography, biology, and pathology. The objective of EE is to use “environment” as a keyword to cultivate humans to minimize their impact and footprint as part of natural conservation. Moreover, academics also proposed a “content-based or subject-based curriculum” subject that is associated with critical solutions to solve the current environmental situation and problems.

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As such, ESD can materialize its goal to provide constructive education apart from the traditional learning methods to bring about a balance of need related to both the socio-economic and interests (Anderberg et  al., 2009; McKeown  & Hopkins, 2007). ESD was also incorporated via the 1993 Kyoto Declaration in the higher education policy. In 2002, it was defined as a “new direction of education for responsible citizenship behavior towards a sustainable future” in UNESCO 2002. Soon after it was developed and officially recognized, more and more countries incorporated this approach into their conventional education system with the objective to foster schoolchildren’s environmental awareness. For instance, China has worked hand in hand with UNESCO since 1988 to incorporate the ESD syllabus in many of its cities/provinces such as Beijing, Shanghai, Jiangsu, Shandong, Guangdong, Hubei, Hunan, and Inner Mongolia. It further developed the program in their mainstream secondary curriculum in 1996. A collaboration between the Chinese National Working Committee and UNESCO, the CNWCESD, was formed to handle the development of ESD in China, including the curriculum and experimental school projects. The pedagogical guidelines and road maps were clearly designed and published. Today, many primary and secondary schools, especially those in the rural villages in Western China, have engaged with the curriculum through both formal and informal teaching activities with textbooks sharing the concepts and its application in China (Zhang, 2010). The solution-based approaches also play an important role in rural economic development, such as working together on technological advancements to increase agricultural productivity to ensure sustainable natural resource consumption (McKeown & Hopkins, 2007; Toili, 1996). Given the focus on sustainability for future development, youths can be equipped with knowledge to enhance positive environmental attitudes. According to McKeown and Hopkins (2007), Agenda 21 of Chapter 36 is developed to achieve the following:

1. Improving access to quality basic education 2. Reorienting the existing education to address sustainability 3. Increasing the public understanding and awareness of sustainability 4. Providing training for all sectors of the economy

Yet with these two different environmental approaches available, evaluating which one is more appropriate has become a controversial topic among environmental scholars. Some consider ESD to be already covered in EE; therefore, there is no need to separate and expand to another curriculum. Other suggest that EE has a much too narrow spectrum that focuses too much on the endangerment of natural resource management and the problem of the human-earth relationship without covering the solution-based concept practice and technique. Yang et al. (2010) also argue that EE is a scientific focus environmental program that can only address superficial environmental issues whereas ESD on the other hand is more people and prosperity focused. Other researchers also acknowledge that ESD is a more helpful tool than EE when it comes to fostering harmony between human and non-human lives. Some academics suggest that a holistic program to foster responsible environmental citizenship behavior has to pay attention to considerations within the socio-economic, political, and cultural dimensions (Yang et  al., 2010). On the other hand, taking the Netherlands

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and Canada as an example, a consideration of the parallel development of EE and ESD may benefit different target audiences and dimensions in society under different government objectives and policies. Based on the belief that pro-environmental attitudes may recruit more followers to make a commitment to sustainability development, it is compelling to understand how the co-existence of ecological and economical knowledge can be applied by both EE and ESD in an informal setting in such a way to stimulate a pro-sustainable result—a balance between economic growth, social welfare, and environmental conservation objectives.

4.2.3 Design of the Informal EE and ESD Interventions in This Research In this project, we have modified the two education interventions based on the concept discussed in the previous section. Compared to a structured education curriculum, the content in these one-and-a-half-hour workshops had to be simple and direct. Therefore, the EE was designed as a one-way environmental education approach, purely focused on three main elements: (1) what is causing the environmental issue, (2) what could be the consequence if the environment is not being protected, and (3) how we can protect the environment. Similar to the problem-focused education approach, it is more direct and logical (Mahlberg & Sjoblom, 2005). As for ESD, the concept of sustainability is delivered as a solution-focused approach (Mahlberg & Sjoblom, 2005). First, the three elements incorporated in EE are included. In addition, the sustainability development concept was illustrated as an example to investigate what can be done to balance the needs of environmental conservation, social welfare, and economic development.

4.3 The Project 4.3.1 Collaborative Partners The projects were conducted in a rural village in China in 2012 and 2013 with six local schools covering around a total of 1,500 students as part of an informal education program to compare the impact of two environmental education approaches. To facilitate the project, a partnership was formed between the different stakeholders including the principal researcher, a Hong Kong-based environmental NGO, education officials, and forestry officials in the research location, and 20 volunteers selected from two universities in Hong Kong. The partnership represents cooperation under a collaborative governance setting with stakeholders involved with different perspectives. Both education approaches were designed based on the conceptual framework illustrated in the previous section. The environmental NGO involved in this project, the Ocean Park Conservation Foundation Hong Kong (OPCFHK), has been established in Hong Kong since 2005. They have expanded their conservation and education networks into many developing and under-developed countries in Asia like Laos, Nepal, India, Sri Lanka, and so on. Their service includes funding research projects, the promotion of conservation awareness, and providing education and scholarship schemes. They work with

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other NGO organizations across different conservation locations. Their programs offer youth opportunities to allow them to learn from field projects with scientists and researchers locally, tackling many environmental issues to protect local habitats. OPCFHK took on the role of major organizer in this project by managing the collaboration between the HK team (principal researcher and volunteers) and the Chinese team (Shaanxi Forestry Department, the local governmental authorities, and the local City Education Bureau), thus ensuring the execution of the field arrangement. The Shaanxi Education Bureau coordinated with six different primary and secondary schools in Foping. Besides obtaining the headmaster’s approval for project implementation, schoolteachers were being contacted for class re-scheduling as schools in China always have a very tight academic schedule with tests and examinations arranged almost on a daily basis. Adhering to the budget and timeframe of the HK working team, all informal teaching sessions needed to be completed within seven days to cover the schoolchildren from the six selected schools in both years. Prior re-scheduling of the tests and exams offered the students a free window to participate in the informal class setting without there being too much concern about the students missing classes or having to catch up with schoolwork afterward. In addition, the informal teaching approaches were relatively new to the schools, therefore consent had to be granted in advance both by the headmaster and by the academic staff. The local teachers were also invited to sit in to share their opinions and suggestions with the principal researcher. The volunteers consisted of students from the Education University of Hong Kong (EdUHK), which was then called the Hong Kong Institute of Education, and Hong Kong Baptist University (BU). Ten students from each of the two schools were selected from the pool of students who applied for volunteer positions on the project in 2012 and 2013, respectively. As the applicants from the EdUHK were all studying education, they were asked to form the teacher group. The teacher group developed the content and activities of the education intervention under the principal researcher’s guidance in 2012. Both of the different approaches adopted from the EE’s and ESD’s concept consisted of activities including drama, lectures, songs, and interactive games that lasted for one-and-a-half hours each. The course was conducted in Chinese and tailored to focus on panda conservation under a site-specific model (Saterson et al., 2004) designed for the local Chinese students. To ensure the consistency of the educational message and the learning outcomes, each year all teachers worked as a team to deliver the workshops together. The principal researcher and the teacher volunteers from the first cohort shared their teaching experiences and course design concepts with the second cohort during a brainstorming session that took place at the time of recruitment. A  total of 18 workshops involving 903 students and 16 workshops involving 640 students were presented to 903 and 620 students, respectively, as part of a four-day school visit each year. Based on the grade level, the school students were randomly assigned to either the EE or ESD workshops according to the requirements of the quasi-experimental design. On the other hand, the applicants from BU were all majoring in communications, therefore they formed the event management team to report the events on the selected Chines and Hong Kong media platforms. They were also involved in coordinating all public activities that supported the promotion of the project in both China and Hong Kong.

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4.3.2 China as the Research Context China was chosen as the research context because as the leader of the Belt and Road initiative, China has encountered rapid economic growth in the past century. Numerous challenges, especially the widened wealth gap and the environmental degradation, have evoked the central government’s attention when it comes to making policies and regulatory amendments to evolve from an economy (GDP) driven country to a sustainable one. In the 11th Meeting of the Standing Committee of the 5th National People’s Congress meeting in 1979, the Chinese government advocated policy implementation for sustainable development to protect rural areas (Tang & Zhan, 2008). As the largest population in the world, the exploitation of natural resources to cope with the huge human demand in the past was unavoidable, thus the policy launch was closely monitored. Over the past 20 years, China has been using the “Green GDP” to mitigate environmental destruction and the results are convincing. Toward this end, the mass exploitation of natural resources in the past set a good teaching example to educate the residents to take action to protect their own environment. Second, China exhibits another challenge for other countries in the Belt and Road to watch out for—the fundraising policies applied to the NGOs. The incidence of the mismanagement of donations, and unrealistic distribution in terms of salary and personal use by the Chinese Red Cross as in the financial incident in 2011 gave rise to a public mistrust of NGOs. This triggered the Chinese government to tighten its funding and governing policies accordingly. The reputation of NGOs became questionable and sometimes they were even framed as collusive and contaminated entities. In the developing countries where the governing policy is relatively new, it is no surprise that the NGOs’ integrity will be challenged after the accountability crisis of the Red Cross incident. As such, NGOs will find it difficult to secure financial support which will consequently affect their collaborative power and their participation in the charity activities on the ground. However, the partnership between OPCFHK and Shaanxi has been established earlier as part of the panda conservation project. Together with a financially transparent system, many Chinese authorities would rather collaborate with Hong Kong-based NGOs. Using this project as a reference, working partnership can be inaugurated with other local NGOs in the future under a similar setting and budget. In addition, Foping village is located in the Qinling Mountains in Shannxi Provence, China. It was selected as the study site as it hosts the most populated grouping of biodiverse species in China. Established in 1978, due to its inconvenience in terms of accessibility, most of the residents are middle- to lower-class agrarian families with a total population of 30,000. The Foping Nature Reserve, situated in the mountain regions, is home to many First-Class State Protection animals, like the wild Giant Panda, the Golden Monkey, the Takin, the Golden Pheasant, and the Giant Salamander. All in all, the location offers a unique setting mirroring many other locations in other countries under the Belt and Road alliance.

4.3.3 Recipients In this project, the two education approaches mentioned in Section 2.4 were delivered to schoolchildren between ages 6 and 20 as they will be more receptive to the environmental education content and they are willing to reflect on the direct impact, not from

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any other factors, and from their acquired knowledge (Jickling, 1992; Vukovic, 2010). Toward the end, studying the impacts of EE and ESD may shed a light on the local education bureau to consider the different designs of informal EE and ESD interventions in relation to the regular school system (Zhang, 2010).

4.3.4 Program Content The Giant Panda is one of the most popular and beloved icons included in Chinese national activities that serve to promote an emotional attachment between citizens and their environment. Since the research location is situated next to the wild Giant Panda reserve, and wild pandas have visited the village occasionally in the past, the residents in Foping always show care and concern for this particular animal species. Hence, a theme of Panda protection as the subject of the education intervention project was intended to reinforce the audience’s conservation awareness both toward the Giant Panda and their local living habitat (Torkar et  al., 2010) as a site-specific program (Saterson et al., 2004). As this was only a one-and-a-half-hour workshop, the teaching content had to be easy and straightforward to understand. As such, the message was directly related to panda protection based on the concept of Cacioppo’s elaboration likelihood model nd McGuire’s persuasion matrix. The two tailor-made programs were designed using the format of educational intervention literature that was best suited to the local Chinese students involving strategies based on drama settings to encourage empathy toward the ecological perspectives. According to the definition of environmental education posited by McKeown and Hopkins, the keys elements included in the EE’s lecture were as follows: • • • • • •

The World population (general knowledge) Degradation and depletion (conservation knowledge) Shaanxi’s environmental condition (geographical knowledge) Giant Panda habitat, distribution, and classification (ecological knowledge) Threat to the Giant Panda’s habitat (ecological knowledge) The methods of protecting the habitat (conservation)

As for the development of ESD, additional features to embrace the concept of the co-existence of the three elements in sustainable development are to be incorporated (economic, social, and environmental). As such, we selected Jiuzhaigou, China, as an example of the ecotourism paradigm to be added to the EE program to demonstrate how income sources can generate a positive outcome from a socio-economic angle (Wunder, 2000). Under the Chinese government’s policy, all business operators in Jiuzhaigou need to comply with the conservation regulations and the number of visitors allowed into the reserve is also restricted to limit the human impact on the reserve area. The hotel, tourism, and entertainment establishments allowed to be established in the region attract monetary investors that create job opportunities and encourage the installation of social and public facilities such as infrastructure and medical facilities. At the same time, the green regulations that apply to both the visitors and business sectors control the pollution and degradation of the area. This

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example follows the proposition of Ballantyne and Packer (2005) in which they stated that a limited investment in the reserve areas can provide financial prosperity to be utilized in government conservation initiatives. Moreover, the flip-side potential of the rural area development, such as the changes to crime rates and traffic accidents, could be mitigated by increasing the police surveillance system which can outrate the negative impact of the economic development. Regarding the conservation perspective, the issues raised from the tourism project, such as waste control, water contamination, and air pollution, can be controlled by technological advancements such as green vehicles and a green sewage system. As such, Jiuzhaigou embraces prosperity and sustainability development growth. The education content was delivered to students through an informal workshop through interactive lectures, drama, games, songs, vows, and reflection (Chan et al., 2009). The students were asked to pledge to be ambassadors to protect the Giant Pandas in the reserve at the end of the workshop. Souvenirs were distributed to the children and their reflections were collected for analysis purposes. In addition, notes on how they will take care of the Giant Panda were written down and posted on the classroom wall. These application-based (Shayo & Olfman, 2000) exercises serve as a vehicle to engage the students’ participation. Post-event activities, such as knowledge sharing at home, participating in school animal protection events, and applying for volunteering positions with the Forestry Department for conservation action in the reserve areas were suggested and connections were created. The students wrote letters and made connections with the teaching team after the program and followed their aspirations regarding the conservation initiatives. These opportunities call for action and can enhance the students’ endurance against the gradual weakening of proenvironmental attitude span after the education intervention (Shayo & Olfman, 2000).

4.4 Summary of the Project Impact in 2012 A quantitative analysis based on the first attempt of the education program in 2012 was completed, and the results from the analysis indicate that both the EE and ESD programs instigated a pro-environmental attitude. However, the problem-focused education approach, EE, can be considered a radical intervention because the onesided message may have triggered a feeling of guilt (Halpenny, 2010) due to the damage resulting from different human activities. Therefore, EE in this project generated a flip side effect of anti-development attitude formation. This was mainly observed among the male participants, the non-native participants, and the participants with a higher household economic pressure. Another negative finding from EE was the widening of the contention gap between conservation and development. ESD, on the other hand, increased the students’ attitude toward conservation significantly, and this suggests that the solution-based approach enhances the students’ learning outcomes (Ramsden, 1991). Further investigation was applied to analyze the impact of the two education interventions based on the students’ gender, social economic status, and their emotional attachment to Foping. As indicated in other academic research, children’s emotional attachment is a key indicator of their environmental behaviors (Halpenny, 2010). Moreover, household income is associated with the parents’ education level which may also affect the child’s critical thinking abilities (Rosalino & Rosalino, 2012).

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Another negative finding from EE was the widening of the contention gap between conservation and development. To summarize the quantitative analysis, the “rich-native girls” and the “poor-non-native boys” seemed to be more easily manipulated. The education content instigated a more severe response and potential reaction from them.

4.4.1 Year 2012 To understand the factors that provoke the quantitative results, the principal researchers conducted a focus group discussion three months after the first intervention in June  2012. A  total of three sessions with six students each were held in the three different schools who had joined the event. An observer from the NGO was also invited to join the meeting to ascertain the proper delivery of the triangulation analysis method. To ensure that the students who were invited to the discussion still had a fresh memory of the workshops, songs from the program were sung and the drama content was recalled. These ice-breaking activities were employed as a reminder to examine the educational effectiveness of the intervention. During the focus group meeting, open-ended questions were asked: “What was your major takeaway message from the education program?”; “What was your personal opinion on sustainability development?”; “Do you have any suggestions to close the gap between environmental conservation and economic development?”; “Please tell us your experience of sharing what you have learnt from the workshop with your friends and family, and what is their opinion?”; “Did you enroll yourself in any conservation/animal activities in the past three months? Please describe your experience”; “Will you enroll yourself in any conservation/animal activities in the near future? Please share your expectation”; and “Any suggestions on how the program can be conducted?” The discussion was conducted in Chinese and was recorded for qualitative analysis purposes. Observations from the three sessions indicate that all students were able to recall the learning experience and activities from the interventions. For the major take-home message, the ESD participants were focused on how they could contribute to making Foping a better place for the Giant Panda habitats. As for the EE group, the responses were not as enthusiastic as the ESD group and their answers were less focused on the Giant Panda or Foping’s conservation projects. Some talked about how they enjoyed the informal lectures and others mentioned their love for the environment but these answers were not conclusive. As for the part about sustainability development and closing the gap of environmental conservation and economic development, the ESD students were able to recall Jiuzhaigou as an example. On the other hand, the EE students, without being taught this example, showed an interest in learning more about how they can turn Foping into another ecotourism site. They also approached both the principal researchers and the ESD students regarding the elaboration of ecotourism. For the younger grades, they did not grasp the concept of contention between conservation and development well enough to give suggestions, therefore Jiuzhaigou seemed to be the only answer they could manage to provide. In terms of the knowledge-sharing experience, both the EE and ESD students indicated that they were sharing the informal learning experience with other school students who did not have the chance to join the classes, and also with their family members. In terms of the content of their sharing, the EE group mainly shared their

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experience through informal education. For the ESD students, they not only shared the activities within the workshop in a much more detailed manner, but most of them also shared the Jiuzhaigou examples and asked their family to take them to Jiuzhaigou for a visit. Regarding their conservation actions, most of the students demonstrated an interest in engaging in conservation but only during the summer holidays due to the heavy workload from school. That being said, some of the primary schools incorporated mini projects organized by their own school to cultivate care for plants and small animal behavior. From the focus group discussion, there was no big difference found in the answers received between younger and the senior years, except that the younger ones needed a bit more ice-breaking time. Regarding the difference between girls and boys, the girls in general showed more enthusiasm for conservation and the boys showed more concern for sustainable development. The same applied to the local and non-locals as those who had lived in Foping for over ten years were more focused on the Giant Panda habitat while the non-locals were more focused on the sustainable development in Foping.

4.4.2 Year 2013 The same project was repeated once again with a similar structure in 2013. We invited 20 students who joined the EE class in 2012 to attend the ESD class in 2013. Another round of focus discussion was organized months after the education intervention to investigate the short-term impact and to follow up with the students in the 2012 cohort to evaluate the longitudinal impact. The same set of open-ended questions was asked during the focus group discussion. Instead of hosting the discussion only with the 2013 cohort, another three EE students and three ESD students from the 2012 cohort were invited to join the discussion. Consequently, this made a total of six students from EE and six students from ESD mixing the different cohorts in each session, respectively. Echoing the qualitative analysis from 2012, the students from the ESD class appeared more enthusiastic when discussing the course structure and content they received. They were also able to recall the class content in a better way by centering the focus on the ecotourism paradigm. Statistics from the 2012 ESD cohort exhibited a higher percentage of involvement in local conservation activities than the EE cohort. A few of them even visited Jiuzhaigou in the summer and took photos to show their schoolmates with excitement as they learned about the ecotourism strategies being applied there. This action demonstrated how their knowledge sharing with intention became actual behavior. For the EE group, both the 2012 and 2013 cohort responses were focused on their experiences when interacting with the teachers and the NGO from Hong Kong and how both engaged them positively as part of the informal learning experience. Most of their answers were regarding conservation, sustainable development, and how the gap between the two perspectives was explicit. Nonetheless, an increased attitude toward Giant Panda conservation was clear in the focus group discussion. Students from the 2012 EE cohort, who joined ESD in 2013, recommended having ESD delivered to them instead of two different programs as they found the solution-focused approach to be more interesting.

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4.5 Implications for Different Stakeholders The differences between the problem-focused and solution-focused approaches identified in this project together with their impacts on different socio-demographic groups have been compared and recalled in Figure 4.1. It is observed that the “Poor,” “Nonnative,” and “Male” participants share a common anti-development change attitude. On the other hand, the attitudinal changes of the “Rich,” “Native,” and “Female” participants under the two education approaches are similar. Overall, the result indicates that both EE and ESD can be effective at stimulating attitudinal change toward ecological conservation among the participants. However, extra caution must be taken when applying the problem-focused approach, EE, especially to the “Non-native,” “Poor,” and “Poor Non-native” groups as it is highly probable that they will consider development restrictions as the only means to protect the environment. In turn, their internal tension may cause destructive decision-making when consensus is needed among different stakeholders to balance the different

EE A relatively radical education approach with a single-minded message, casting a double edged effect that diverges conflict.

"Poor" Easily influenced by double edged effect and resulting in divergence of contention gap

"Non-native" Development-sensitive. They are willing to sacrifice economic development for conservation initiatives.

"Male" Development-sensitive. They are willing to sacrifice economic development for conservation initiates. Figure 4.1  Summary of the quantitative results of EE and ESD in 2012.

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dimensions of sustainable development. Although a widening contention gap among numerous subgroups was found in EE, EE may not be an appropriate educational approach to deliver the concept of sustainable development to students. However, under certain circumstances, the flip-side effect of EE may serve as a control for slowing down rapid development in some countries, giving the natural habitats in grave danger of extinction a chance to recuperate. On the other hand, the solution-focused approach, ESD, can be considered as a more balanced education approach and it can be a stronger tool when advocating for a conservation concept than EE. The strengths and weaknesses of EE and ESD among particular socio-demographic groups examined in the project provides valuable insights for those who intend to use similar programs to change people’s attitude in China or in other developing countries along the Belt and Road. On the other hand, under the theory of collaborative governance (Ansell & Gash, 2008), the following different stakeholders should join forces to monitor the impacts on learners when environmental education is delivered to other countries along the Belt and Road in the future.

4.5.1 Government Governments have the power and authority to exercise control over and approve the education curriculum, therefore it is important for them to devise well-defined guidelines to evaluate the educational content and message and to determine whether it is a problem-focused or a solution-focused education approach. Taking this research as a reference, the quantitative measurement of the participants’ attitudinal change may help to identify if the framing effect exists in the educational content design. At the forefront of the education system are teachers, educators, and volunteers. These key facilitators of learning inevitably use their personal interpretation to deliver the educational messages. The way they deliver the messages has an influential impact on the recipients, especially those in developing countries where the local environmental conservation projects are implemented. The teaching practitioners should avoid spoon-feeding the students and encourage them to develop critical and analytical skills where they can form their own judgment and apply their knowledge practically (Jickling, 1992). Given the significant government spending on education, transparent governance is crucial to safeguard the educational messages being delivered so then they are in line with the curriculum design. To ensure that the teachers and educators are on the right track, we need an effective assessment method. The conventional measurement of educational effectiveness often over-emphasizes the level of knowledge increase without monitoring the attitudinal change among recipients. This research provides a practical way to measure the effectiveness of the educational approaches in terms of attitudinal change after the educational intervention. In this regard, it is suggested that the governments along the Belt and Road can deploy different instruments to measure their student’s attitudinal change on a regular basis to assess whether the teaching staff are using appropriate interpretations to deliver the educational content.

4.5.2 NGOs As indicated in the Introduction, NGOs are facing unprecedented challenges to prove their true value and contributions to the communities they impact. Despite their

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devoted efforts to improve the welfare of society, many NGO initiatives have produced undesirable results. Referring to the Red Cross crisis indicated in Section 3.2, their activities are limited and reputation is in question, Therefore, it is vital that NGOs can establish sound project credentials to live up to their reputation. Taking the co-organizer, OPCFHK, as an example, the NGO is able to establish trust between different stakeholders—the Forestry Department, the Education Bureau in China, and local schools, which could strongly benefit future collaborative governance initiatives (Ansell & Gash, 208). As funding is always a key challenge that affects the environmental NGOs’ nonprofit campaigns (Haigh, 2006), learning from this project, NGOs can utilize an effective measurement that is aligned with their donors’ objectives that helps them solicit repeated funding more efficiently. The quantitative and qualitative measures in this project provide an insight for the NGOs to compile a project report to highlight their contribution to the local society. In addition, the knowledge-sharing exercise by the students in this project encourages a student ambassador network to be formed with the NGO that may also strengthen the long-term volunteering workforce for the NGO. This is especially important to the developing countries along the Belt and Road. Sponsors: Organizations engage in CSR activities to meet the expectations of their stakeholders and of the public. However, most of the charity projects with a green initiative only highlight the monetary contribution without showing the real impact. Hence, the form of cash donation merely provides a superficial measure while lacking a thorough assessment of the conservation success. Furthermore, the result of the two education approaches examined in this research suggests that some projects may even create anti-developmental attitudes and increased conflicts which may result in unintentional hostility toward the company sponsoring the charity campaigns. As a developing country along the Belt and Road, a corporate sponsor would definitely help local development. As for the company, image building is also of essential importance for future local network establishment and customer relationship building. As such, this research provides a systematized evaluation with full cost-and-benefit references as future project guidelines (Saterson et al., 2004). Corporations engaged in CSR activities may identify a suitable project that is aligned with their stakeholder’s objective so then the finite CSR funding can be allocated optimally. By understanding the dynamics of the education programs in this research, this project allows adaptive management to replicate its success in the future. Corporations will be able to tailor their charity programs to benefit their target groups according to their corporate mission.

4.5.3 Educators In this project, two education interventions were being designed and delivered by amateurs and a further modification of the program with a local focus catered to the target audience could make this program more effective. On a broader basis, monitoring changes in attitude from the learner’s perspective may provide information for enhancement in terms of program development. Hence, the research may materialize a win–win education program that best fits the students and eventually benefits the environment and the ecosystem that can be applied to other Belt and Road countries.

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4.5.4 Media The media plays two pivotal roles in the arena of education—first by disseminating knowledge and credible information to the public and secondly by acting as a watchdog to monitor prevailing problems in the education process. To our dismay, when under pressure, the media has sometimes used framing to serve their self-interest, making the public particularly vulnerable to media message manipulation. When the education approaches are being utilized in the Belt and Road countries, undertaking an analysis to evaluate and compare the attitudinal changes of the audiences could be an effective defense against media manipulation. By the same token, vigilant media could use the same methodology to monitor and report entities that are trying to use different framing to influence and manipulate public opinion.

4.5.5 Parents The rapid development of technology and science has radically transformed the educational landscape. To acquire knowledge, children nowadays are no longer restricted to formal education but are exposed to a new realm of choices such as the Internet and social media. However, the content, message, and the quality of education from these mediums are not yet systematically monitored and regulated. As children’s beliefs may affect their cognitive development, it is important for parents to understand the impact of the school curriculum on their children under different socio-demographic conditions. Based on the understanding of this research, parents can identify the better educational approach for them and the most appropriate educator for their children to avoid detrimental effects on the developing mind.

4.6 Conclusion China, being the leader of the Belt and Road initiative, has been targeted by the Western media with claims of China taking advantage of the other Belt and Road countries, claims include offloading pollution or abusing the cheap labor force available. However, looking back in history, these issues are exactly what has taken place in China for decades with developed countries treating China as a world manufacturing hub. Therefore, effective policies and education plans were implemented in China to mitigate these issues to successful degrees. Using this project as a reference, problem-focused or solution-focused environmental education, when applied with caution, can align with the “Education Action Plan” proposed by China in July 2016 to connect people and nations together to cultivate talent. As a result, environmental education can help raise environmental awareness and thus, action. Concurrently, a successful “Education Action Plan” can reduce the friction between economic development and environmental conservation and refute the negative image imposed by the Western media on China.

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Vukovic, M. V. (2010). Modern toys—way to Neverland. Journal Plus Education, VI(2), 159–168. Wright, B. E., & Grant, A. M. (2010). Unanswered questions about public service motivation: Designing research to address key issues of emergence and effects. Public Administration Review, 70(5), 691–700. Wunder, S. (2000). Ecotourism and economic incentives—an empirical approach. Ecological Economics, 32, 465–479. Yang, G., Lam, C.-C.,  & Wong, N.-Y. (2010). Developing an instrument for identifying secondary teachers’ beliefs about education for sustainable development in China. The Journal of Environmental Education, 41(4), 195–207. Yim, M.-S., & Vaganov, P. A. (2003). Effects of education on nuclear risk perception and attitude: Theory. Progress in Nuclear Energy, 42(2). Yoo, K.-H., Gretzel, U., & Zanker, M. (2013). Receiver and context factors. In Persuasive recommender systems. New York: Springer, pp. 27–33. Zhang, T. (2010). From environment to sustainable development: China’s strategies for ESD in basic education. International Review of Education, 56(2–3), 329–341.

5 Applying Project Management Techniques in Service Learning Courses to Promote Sustainability Awareness Lianne K. W. Lam Department of Management and Marketing, The Hong Kong Polytechnic University, Hong Kong SAR Jessica Poon Princeton University, USA Andrew W. H. Ip The Hong Kong Polytechnic University, Hong Kong SAR CONTENTS 5.1 Introduction�����������������������������������������������������������������������������������������������������122 5.2 Background�����������������������������������������������������������������������������������������������������123 5.2.1 Service Learning��������������������������������������������������������������������������������123 5.2.2 Challenges Caused by Urban Development���������������������������������������123 5.2.3 Service Learning in Hong Kong������������������������������������������������������� 124 5.2.4 Course Overview������������������������������������������������������������������������������� 124 5.2.5 Teaching Approach�����������������������������������������������������������������������������126 5.2.6 Assessment�����������������������������������������������������������������������������������������128 5.2.7 Follow-Up�������������������������������������������������������������������������������������������129 5.3 Conceptual Frameworks���������������������������������������������������������������������������������129 5.4 Research Analysis�������������������������������������������������������������������������������������������130 5.4.1 Survey�������������������������������������������������������������������������������������������������130 5.4.2 Reliability Test������������������������������������������������������������������������������������131 5.4.3 Quantitative Results����������������������������������������������������������������������������131 5.4.4 Qualitative Results�����������������������������������������������������������������������������131 5.5 Insights������������������������������������������������������������������������������������������������������������133 5.6 Academic Debate and Limitation�������������������������������������������������������������������135 5.7 Conclusion�������������������������������������������������������������������������������������������������������137 5.8 Bibliography����������������������������������������������������������������������������������������������������139 DOI: 10.1201/9781003198147-5

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5.1 Introduction In 1987, the United Nations defined sustainability as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” Today, around 140 developing countries around the world are struggling to meet their development needs while taking into consideration the prevailing environmental concerns alongside economic development. To address economic development specifically, the Chinese government introduced the One Belt One Road Initiative (OBOR) as a development strategy to promote collaboration and connectivity between African and Eurasian countries, investing primarily in developing countries. China’s OBOR has since helped these countries improve their transportation, trade, and energy production. However, due to the increasing threat of climate change and the persistent prevalence of societal issues, further efforts must be undertaken to ensure that the developments do not negatively affect future generations. How can developing countries integrate measures to improve the sustainability within their development frameworks? What can these countries do to develop skill sets that allow the current generation to positively contribute to their communities? To address these areas, service learning has been introduced in numerous school curriculums as a growing pedagogical intervention that provides first-hand experience, allowing the students to get in touch with their community directly while helping them to understand the importance of service when tackling social and environmental issues. This is achieved through collaborations with non-government organizations (NGOs) in which the students can further strengthen their relationships with local organizations to address these sustainability challenges. In recent years, many countries have been trying to incorporate service learning in school curriculums to nurture eco-literacy and the knowledge of sustainability among youths. Instead of a formal subject, many high schools are adding service learning as extracurricular activities. Nowadays, some universities in Hong Kong requires their students to graduate with a passing credit from one of the service learning subjects offered. This offers the opportunity to introduce project management techniques to these subjects. Applying a project management approach to these subjects can provide a venue for students to deploy the theory learned from school into real-life contexts that require problem-solving and management skills. These project-based service learning courses can potentially be applied in the education systems of the OBOR’s connected developing countries. Since sustainability issues are particularly prevalent in developing countries, service learning will be able to bridge the gap between OBOR countries and foster students that are passionate about local societal issues, instilling in them mindsets that prioritize practical thinking and solutions. By promoting service learning in the developing countries themselves, students can learn to bridge theory with practice and contribute to their own communities directly—thus creating a self-sustaining system since students are arguably more familiar with their local NGOs and communities. They will be better suited to support the social issues within their own country as a result. This chapter will use both a quantitative and qualitative analysis to review the attitudinal change of 502 students who enrolled in a university-wide Sustainability Service Learning course, “Service-Learning Building Community with Environmental NGOs,” between the years 2014 and 2022 at a Hong Kong university. Based on the

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results of how Project Management Techniques in the Service Learning Course can effectively change the students’ attitudes toward serving their own community, suggestions will be made on how these courses can be applied in a global context to equip the current generation with critical thinking and leadership skills to support their communities and developing countries all around the world. However, it is important to acknowledge that service learning has faced criticism by some scholars regarding its effectiveness. Some suggest that the course is purely for students to get credit to obtain higher grades. Other researchers have also expressed concern that this subject, if offered to Belt and Road countries, may be utilized by the Chinese Communist party as a platform to manipulate the students’ attitudes toward social values. To tackle these issues, an analysis will be conducted to investigate potential solutions based on observations of the subject.

5.2 Background 5.2.1 Service Learning Service learning (SL) is a holistic pedagogical approach that grants students the opportunity to reflect on the social issues taught in school and to apply them in practice. This sets an educational foundation by preparing the students to reflect on their own role in the learning process and to transform themselves as agents and workers within their communities (McMillan, 2011). According to Macías Gomex-Estern et al. (2021), through the “real learning” process, students build their psychological character and their respective personal trajectories to define their future identity. The learning process includes not only academic conceptual knowledge and project management skills but also real interactions with the community, individuals in need, and professional organizations who work with students as a team, allowing them to interact with different stakeholders and understand their viewpoints. These practical skills further strengthen the students’ ability to cope with people from different cultures and different backgrounds and to solve conflicts between different parties. Unlike ordinary teaching courses, service learning offers unique experiential learning opportunities for students. Without textbooks and formal instruction, the course structure is new to all students since the learning is primarily focused on the ability to gain first-hand experience in the real world to help the students understand the fundamental root of the problems encountered. Courses are designed for students to utilize knowledge from their own expertise to provide solutions for communities, thus applying conceptual knowledge to real-world contexts.

5.2.2 Challenges Caused by Urban Development In past decades, China has risen from a world manufacturing plant to the secondlargest economic entity in the world. However, throughout this process, many developmental challenges such as balancing economic development with environmental protection have been encountered. This has generated attention from different stakeholders. In the Belt and Road initiative, China, being the leader, has been targeted by Western society. It is facing accusations that its main objective is to take advantage of these developing countries by utilizing its resources with little regard for the local

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community and their welfare. To help mitigate these concerns, sustainability policies should be included when the economic development projects are implemented. Governments, business organizations, and NGOs need to work together to ensure that future development will not take advantage of developing countries from a social and environmental perspective. Social and environmental issues, such as the wealth gap, poverty, welfare, education, air pollution, garbage recycling, renewable energy, solid waste management, and so on, need to be safeguarded through policies and actions. Although citizens are aware of these issues and are willing to address them by taking action, most of them do not have a concrete idea of community needs or a direct access to these communities. For example, the SL approach in Hong Kong focuses on environmental issues under an urban setting to provide students with a good opportunity to understand the green needs of communities and the difficulties encountered when providing green solutions that can be agreed on by different stakeholders. A course based on the stakeholders’ perspectives to help the students understand environmental protection and sustainable development at the community level in Hong Kong would encourage other cities in the Belt and Road to implement SL among schools to raise sustainability awareness and mitigate the conflict between conservation and urban development.

5.2.3 Service Learning in Hong Kong In Hong Kong, some of the universities introduced SL in the school curriculum as a mandatory course graduation requirement. Based on the previous research indicating that SL positively nurtures personal student development regarding their moral, civic, and social responsibilities, numerous courses have been conducted by different faculties to offer a diverse range of university-wide programs for the students to choose from. By featuring different community needs, the students were able to sign up for courses based on their own interests. Getting involved in subjects separate from their own disciplines helped the students broaden their horizons and gain more knowledge before they leave the school environment, equipping them for their working life. Most of these courses collaborate with community organizations to create interesting, innovative, and challenging tasks. Students are required to work at the community level, which refers to a specific residential area, and with a specific group of people in terms of age, education, income level, ethnicity, and so on. Some universities even offer extended services delivered not only within Hong Kong but also including the Belt and Road countries, such as China, Taiwan, Cambodia, Indonesia, Myanmar, Vietnam, Kyrgyzstan, and Rwanda. To accommodate the Belt and Road initiatives launched by the Chinese Government in 2013, establishing networks in Belt and Road countries will enable the SL experiences and knowledge to be shared in a sustainable manner.

5.2.4 Course Overview “Service-Learning: Building Community with Environmental NGOs” was offered by one of the universities in Hong Kong between the years 2014 and 2022. The subject worked with local environmental NGOs (eNGOs) to address local environmental issues. With extensive network and working histories, these NGOs have spent years taking up significant roles in environmental civil societies, providing help to environmental victims, and sharing suggestions on environmental policy with the local government.

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In essence, the NGO partners offer a specific target audience, theme, and objectives as part of an ideal organizational setting for students to get connected directly with problematic aspects. Most of the projects result in maintaining the environmental vision and missions of the civil society organizations. In addition, the organizations allow the students to obtain credentials for future career development opportunities if they aspire to seek employment in government, business, or NGOs, as well as strengthen the students’ understanding of the obstacles that the NGOs are facing. Project management consists of essential skill sets that are needed when delivering a task project on the ground. The major components include identifying the project scope, time management, budgeting, risk measuring and planning, leadership skills, organization skills, and communication skills. Commonly observed complaints from the many different SL courses are that the students are lacking effective project management knowledge and therefore are not able to handle the project professionally (Chiang, 2008). Project Management techniques are helpful in this subject to address the stated challenges. As SL is a compulsory subject in this university, the students were encouraged to enroll in different departments, hence there were no registration prerequisites for most of the SL subjects. In this particular course, there were two instructors assigned to 100 students each year for the first three years. Later on, the class size was reduced to 50 students with one instructor and a few teaching assistants to ensure better attention was given to the students. The participants in the subject were mainly Hong Kong residents with a very low percentage of students coming from over 12 different countries including Europe, Mainland China, Korea, and Southeast Asia. The majority of students registered in the course were students from the Faculty of Business (36%), yet the course still has a good mix of majors from different disciplines as shown in Table 5.1. TABLE 5.1 Participants’ Demographics Faculty Business School

School of Construction Engineering School

Health and Social Science School Faculty of Humanities

Department

Enrollment %

Students from a Finance and Accounting major Students from a Marketing and Management major Students from a Logistic & Maritime Studies major Students from a Civil and Environmental Engineering major Students from Aeronautical and Aviation Engineering major Students from a Mechanical Engineering major Students from an Industrial and System Engineering major Students from a Computing major Students from an Applied Social Science major Students from a Rehabilitation Science major Students from a Nursing major Department of English and Communication School of Applied Science and Textiles School of Hotel and Tourism Management School of Design

23 18 5 10 2 3 5 4

2 5 2 5 6 6 4

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5.2.5 Teaching Approach The student’s backgrounds, including school year, major, gender, languages, and their interests, were recorded and analyzed. The instructor then carefully created student groups composed of five students to ensure that there was a diverse mix of members in each group so then they could complement each other with their different skills. This organizational group setting also reflects real-world working situations since people usually need to work with different departments in organizations without a choice in colleague. In this course, the service component provided a channel for the students to address environmental issues by offering green solutions. Under the guidance of the instructors, the students were able to integrate their disciplinary background with the policy and management knowledge learned from the lectures to address the environmental needs of different communities. The 13-week courses started with three teaching lectures for three hours each to learn about the conceptual and practical issues related to building green communities, such as policy and management, sustainable development, civil society and NGOs, business environmental responsibility, collaborative environmental governance, and so on. Basic project management terminology and techniques, including basic project life cycles, advertising and promotion skills, social media and other software technology, timeline management, budgeting, basic analysis to produce quantitative reports, sponsorship letters, and proposal preparation were covered in seminar-based classes between week 4 and week 12. These fundamental techniques help students to focus on their interests and strengths to design project objectives that align with the NGOs’ initiatives. Group discussions and one-on-one consultation sessions were held by the teaching team with the students on a weekly basis to help the students identify all potential obstacles. These meetings allowed the instructors to ensure students were on track with their schedules and deliverables. During the lectures and seminars, the students were motivated to critically compare successful green practices in different societies to get a better understanding of how other green societies tackle their challenges in different political and economic contexts. A three-hour brainstorming session with the NGOs was established in the third week after an add/drop period for the students to understand their respective NGO’s vision and mission as well as their yearly initiatives. At the end of the brainstorming session, the students elected their team project manager as a contact point with the NGO. According to the students’ strengths, interests, and skill set, a preliminary project outline, including the estimated budget, tangible result, and the execution procedure with a schedule, was presented at the end of the meeting to obtain approval from the NGOs and instructors. The expected outcome of the student project was to provide a green solution to problematic areas by engaging in voluntary environmental education, environmental policy advocacy, or green program design using the student’s technological, policy and management skills. Moreover, the environmental education, advocacy, or research conducted by the student groups may also benefit the communities they serve. By working with civil society organizations, the students will have a chance to reflect on their role and responsibilities both as a professional and as a citizen, allowing the students to demonstrate empathy for people who are troubled by environmental degradation and to develop a stronger sense of civic responsibility.

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Once the project group identified the project tasks and the respective target audiences, a series of field trips was organized to deliver their services through education, advocacy, or research programs such as the organization of green campaigns on specific issues like energy saving or garbage recycling. Some of the projects address the challenges faced by the NGOs, including the recruitment of a volunteering workforce, or marketing and promoting events in the community, universities, and secondary schools. Students interacted with the key stakeholders, such as the government agencies, businesses, and community residents, and they explored ways to balance the needs of the different stakeholders. To enhance their awareness of their civic duty, the course cultivated the enthusiasm by promoting civic engagement (Table 5.2). TABLE 5.2 Summary of the 102 Projects Handled in This Subject Over the Past Five Academic Years With Different NGO Partners Environmental Issues

eNGO

Water pollution Electricity consumption Green fashion

WWF WWF WWF

Green building initiatives Environment Education Program in schools Oyster farm conservation

WWF TNC

Horseshoes crab conservation

OPCFHK

Plastic straw reduction

OPCFHK

Ocean pollution

OPCFHK

Public resting facilities

Designing HK

Wet market recycling facilities

Designing HK

TNC

Type of Function Research analysis Research analysis School event Product design and research Washing and preserving instruction Joint event with Fashion department stores Research analysis Research analysis School event Cooking event School event Market research Online promotion School event Market research Joint event with the restaurant Seabed cleaning event Public promotion Sustainable seafood event Market research Online promotion Sponsorship program Waste collection Video production Proposal to the city council

No. of Projects Implemented 3 4 3 3 2

3 10 4 2 4 3 2 3 3 4 3 2 2 3 3 2 2 2 2 (Continued )

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TABLE 5.2 (Continued) Environmental Issues Child environmental awareness Ocean pollution Waste reduction Reduce purchases Energy consumption Food waste

eNGO Wessen Foundation Nature Conservancy Friends of Earth Greenpeace World Green Organization Food Angel

Type of Function School event

No. of Projects Implemented 13

Video production

3

Video production Consumer behavior research Market research

2 2

Cooking event Proposal to City Council

2 3

3

To ensure that the project outcome aligned with the NGOs’ initiatives, the teaching team collaborated with the stakeholders to provide strong guidance and supervision for the students during the entire course. The teaching team also needed to manage the expectations of both the students and the NGOs, respectively. There were incidents in which the NGOs’ demands were outside of the students’ capability, and there were due functions that were outside of the course completion date. From the students’ perspective, asking NGO for product sponsorship, financial support, and even human resources to help with the project implementation was observed. Supervision from the teaching team was important in this aspect to limit the demands from both the NGOs and the students. Ultimately, the students applied the knowledge learned in this course and other relevant courses to build green communities by engaging with the community residents along with the other stakeholders. At the end of the school term, the students effectively implemented tangible results for each NGO in a three-month semester. The project results were presented as part of a three-hour poster presentation session with each participant serving as presenter and evaluator.

5.2.6 Assessment To facilitate a fair evaluation system of the students’ performance, task-based assignments were conducted on both an individual and a group basis to report the actual activities from time to time. One simple quiz was individually assigned to ensure the students’ understanding of the nature of service learning concept, while a journal at the beginning of the course was used to set expectations regarding the challenges that could be encountered. A pre-survey was used to measure the student’s baseline attitude toward environmental conservation, commitment to community service, knowledge sharing, and self-efficacy. At the end of the course, a post-survey was answered to compare their changes, and a reflection was collected to understand their connection with social justice and their civic engagement experiences. Group projects, such as the project scope, budget, Gantt chart, progress presentation, and the final poster presentation, were the tools used to safeguard the continued project progression, ensuring that the deliverables could be achieved by the end of the term. All material

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produced during the implementation period was presented to the NGOs for future use. Some of the groups even went beyond the course requirements to produce extra reports, videos, and proposals for the NGO’s consideration.

5.2.7 Follow-Up The university also set up scholarships to recognize the students who had achieved an outstanding performance in the subject. The awardees were asked to participate, as a student leader, in the subject subsequently offered the next year. Each year, there were three to five students that joined the teaching team for the subject. The focus group discussions were conducted with these student leaders to examine the quality of the learning experience of the course. The intention and behavior changes on the conservation and community involvement of the student leaders were also observed and recorded.

5.3 Conceptual Frameworks The theoretical framework of the analysis is based on Hovland’s attitude of persuasion theory nd learning theory. These theories posit that the recipients’ attitude changes are instigated by formal or informal learning. Scholars such as Fishbien and Ajzen further elaborated on the concept through their research and contributed thereafter to many different models between knowledge and attitude (Figure 5.1). Another conceptual framework being utilized in the field of environmental conservation is the Theory of Planned Behavior, suggested by Ajzen in 1985, which indicates that education helps people understand how scarce our resources have become and that it is important to preserve environmental habitats to help maintain a balanced system. The Theory of Planned Behavior (Figure 5.2) model suggests that an individual’s behavior is driven by their intention to get involved in the action, whereas the antecedents of such intention are based on the attitude toward the behavior, the Social Norms of how other people approve of such an action, and Perceived Behavioral Control, which refers to how easy or difficult one’s belief is in terms of the ability to carry out the action. Some of the literature illustrates that increasing people’s environmental

Figure 5.1  Behavioral change system in Hungerford and Volk.

Figure 5.2  Theory of planned behavior.

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awareness and their knowledge of the importance of natural resources and habitats, the ways human beings have been abusing them, as well as their understanding of how to protect them are important when designing education approaches. Hypothesis: This SL subject positively influences an individual’s attitudes, social norms, perceived behavior control, and intention toward environmental conservation. One of the major purposes of the SL subject development was to nurture the students’ sense of social responsibility and empathy for others built through their actions in this course. The Theory of Planned Behavior was deployed to evaluate the impact of this subject in terms of how it affects the students’ intention to participate in volunteering and community service in the future and to measure their willingness to become a responsible citizen.

5.4 Research Analysis 5.4.1 Survey The quantitative part of the analysis was based on a pre- and post-survey to measure the participants’ change in attitude. The answer options were designed based on a 5-point scale with anchors of +1 (least in favor of) to +5 (most in favor of). According to Hinds and Sparks’s research in 2008, two to three questions were asked about the attitudinal aspect such as “For me, engaging in environmental protection is . . . Bad (1)—good (5),” “For me, engaging in community service is . . . Unpleasant (1)—pleasant (5),” and so on. In terms of the social norms, the questions were “My friends and schoolmates think environmental protection is Not useful (1)—Very useful (5),” and so on. The questions on perceived behavioral control were “I have the skill and experience to care for the environment—Not true (1)—Definitely (5),” and so on. For Intention, “I plan to join volunteer work in the future Not likely (1)—very likely (5)” was added. Results from other research conducted by the teaching team indicated that some students, after learning how human footprints negatively impact nature, ended up developing anti-economic development attitudes. To better understand if the university students involved in environmental protection activities may produce such attitudinal changes, questionnaires comparing the students’ views on urban development were also included in the quantitative analysis. Questionnaires on self-efficacy play an important role in measuring the ability to achieve goals in difficult situations. Since the students were asked to design projects with newly met teammates and to deliver results for an organization they were unfamiliar with, unaccustomed complications were expected. For this reason, the students needed to encounter challenges with problem solving, as well as the need to exercise good communication skills. Self-efficacy will be required to strengthen their own leadership skills and resilience when facing these tough situations (Paglis, 2010). A set of 53 questions pre- and post-survey were distributed to the students when they attended the first lecture and last lecture, respectively. As this is part of their coursework, all students answered all questions on the survey. A total number of 502 sets of pre- and post-surveys were then analyzed.

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5.4.2 Reliability Test The validity of the instrument scales was calculated by the reliability test using SPSS to measure Cronbach’s alpha coefficients. The measurement model was then examined by factor analysis to statistically differentiate the key constructs, namely, the attitude toward conservation before education and the attitude toward conservation after education.

5.4.3 Quantitative Results In this study, the objective was to examine the student’s change in attitude before and after they attended the subject. The attitude change refers to the individuals’ positive or negative valuation where the scale that consists of the items is adapted from the previous evaluation by Hinds and Sparks. A paired t-test was conducted to examine the differences in attitude changes obtained from the pre-and post-surveys. Regarding the changes toward environmental protection, the results demonstrate a significant increase (p=0.00) in the overall attitude, a significant increase (p=0.01) in the overall perceived behavior control, a significant increase (p=0.00) in the overall social norm, and a significant increase (p=0.00) in the overall intention for action. In terms of their involvement in the community service, there was also a significant increase (p=0.00) in the overall attitude, a significant increase (p=0.01) in the overall perceived behavior control, a significant increase (p=0.00) in the overall social norm, and a significant increase (p=0.01) in the overall intention for action. There is no significant difference between the attitude changes between male and female students, and there is no significant change when it comes to the year level of the students or their years of participation in the subject. Furthermore, there was no significant change in the students’ attitude toward economic development in Hong Kong.

5.4.4 Qualitative Results The qualitative analysis was drawn from the 502 sets of pre-course journals that were distributed to students in the third week of the class, as well as the post-course reflection collected at the end of the semester. Both the journal and reflection were part of the students’ assignment and were weighted to represent 10% and 15% of their coursework, respectively. Interviews were also conducted with a select group of four to five students each year. Most of them were the project managers in their group who had achieved outstanding grades. In addition, the awardees of the scholarship scheme from the service learning department were invited to be student leaders of the subject while ongoing discussions were conducted to verify their behavioral changes as a result of their service learning experience following this course. Open-ended questions included in the journal were “what is your expectation from this course”; “What are the foreseeable obstacles?”; “What is your impression from the NGOs?”; and “What is your impression/expectation from your teammates?” These questions were designed to prepare the students to anticipate in advance more challenging areas. On the other hand, the post-course reflection consisted of openended questions “Describe the most impactful experience from this course.”; “Explain how the course affects/impacts you.”; “Explain what insights you have learned from

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this course.”; and “Explain how you can continue to connect the service to your personal/professional life by contributing to the community through actions.” A photograph was also collected from the students to convey their feelings of self-reflection regarding the course. The reflection linked the student activities and what they have learned from the taught lectures. It helped the students recall and think critically about any incidents during the implementation which may have affected their project management experience, their crisis management skills, their leadership style, and their empathy for people and communities affected by environmental degradation. Reflection can also serve as a tool to let the students look inside of themselves to understand their strengths and weakness (Eyler et al., 1996). On the submission date of the journal, the students also handed in their Project Scope and Gantt Chart which implied that they had already gotten in touch with their teammates, that they understood their collective strengths, and had agreed on the workload distribution. To this end, the journal was able to detect their concerns about the project. The most common worries collected are shown in Table 5.3. Most of them were expecting to learn about environmental protection, project management knowledge, social responsibility, civil responsibility concepts, and other viewpoints from the course (Table 5.4). TABLE 5.3 Summary of Students’ Reflection at the Beginning of the Course Student’s concerns at the beginning of the course External factors

About the NGO partner About the course

About the teammates

“The community in Hong Kong is lacking environmental awareness and it would be difficult to get their involvement in their activities” “It is not easy to book the right venue for their marketing event” “The objective and requirement from the NGO is not clear” “There are many foreseeable heavy workloads” “13 week is too short for completion of the project” “I don’t have prior project execution experience” “I am worry about how to communicate between my groupmates” “My teammates are too shy and they didn’t express their ideas” “I couldn’t feel the commitment from my teammates” “It is not easy to reach consensus with my group mates as there are too many different views”

TABLE 5.4 Summary of Students’ Reflection at the End of the Course Feedback collected from the end of the course About the teamwork

About project implementation

“Group work, communication, understanding and trust with teammates was important” “Team from different background complement each other” “Preparation, Crisis management, backup plan and problem solving skill was the key to success”

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Feedback collected from the end of the course

About the community

Future action

Individual improvement

About this course

“Presentation, communication and interpersonal skill was important” “Innovation and creative ideas was important to arose environmental awareness” “Time management was important” “Individual action counts” “Action is important” “Parents and children interaction creates ripple effect on conservation behaviour” “Different age group have different reaction towards environmental issue” “I will continue my project even after graduation” “I will sign up with the NGO to become their volunteer” “I will prepare my summary report to submit to the local government” “I will apply my own skill in environmental protection” “I can collaborate with people I don’t know” “I have learnt event planning and action skill” “I have personal satisfaction from this course” “I feel good and have more confident in myself” “I see my contribution and people appreciate it” “I have increase my problem solving skill” “I have learn to respect people, animal and biodiversity” “I am able to solve complex issues themselves” “I feel empathy and care for others during the course” “The course motivate me and my teammates to become a responsible global citizen” “Task autonomy allows me to be able to solve complex issues by ourselves” “Task autonomy allows us to base on our own strength to design our own project” “I have good teammates and we motivated each other” “This course offer opportunities to step out from my comfort zone” “I treasure the working relationship with my teammates and we become good friends now” “Our service was appreciated by the community, our classmates and our school”

5.5 Insights This program has identified interesting findings on the effect of SL education programs which may provide valuable experience and insights for people who want to use similar programs to engage citizenship behavior in China or in other countries along the Belt and Road. The student mix and the project management element of this course structure allowed the students from different disciplines to join forces and work together to tackle local environmental issues. Their diverse understanding of the environmental and political issues helped to initiate many opportunities for dialogue even where there were opposing positions. Their academic knowledge and skill set

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also upgraded their collective ability. The students grouped across different year levels and different majors also benefited by complementing each other’s school schedules, as well as leveraging the experience and knowledge from different perspectives. Comparing the end result of the project, it is observed that the more innovative the project was, the more engaged the students were. The key here was to cultivate the creative ideas within a limited timeframe (Timberlake, 1982). As such, a good project manager who is enthusiastic and willing to go the extra mile usually generates a better team spirit and a more enjoyable working relationship. Additionally, ice-breaking skills from their project leader were crucial when it came to helping the team build rapport soon after the team was formed (Rogers & Brignull, 2002). Teaching teams, in this capacity, will need to work closely with the team manager to motivate him or her on a regular basis or even to observe if a replacement is needed and to make timely suggestions. Another key factor that leads to a comparatively more successful outcome relies on when the actions were taken. In this project, time management was essential, and pulling the team together was a skillful task for the project manager (Goodwin, 1993). Cases from this course reveal that the earlier the students get started, the more they will have an earlier understanding of the community’s needs. Being able to see the obstacles ahead offers them more time to plan for alternative actions. Early completion also leads to a higher level of satisfaction, especially when they are aware that they still have time to fine-tune their end-of-project presentation. A number of technological tools and social media platforms (e.g., Facebook, Instagram, Trello, and WhatsApp) were deployed by the students during the course to constantly keep all members updated on any progress made. The SL projects that were carried out between 2021 and 2022 in Hong Kong were heavily impacted by the COVID-19 pandemic which limited the students’ interactions with each other and also with the community. Social media platforms were the alternative approach to project delivery no matter if it involved collecting data, obtaining feedback, or communicating with the community. Project managers, as well as the teaching team, were able to monitor the project’s progress through updates. Innovative ideas, photo sharing, and regular comments from both peers and reviewers also kept the students committed to their projects, reducing the free-rider problem. The opportunities to work with the NGO and to interact with the communities, governmental agencies, and business organizations offered chances for reflection to help them understand their civic duty. Awareness of the community needs and the need to present their project in relation to the aspect of social responsibilities may effectively get the attention and appreciation of their target audience in the public. Yet, collaboration with the NGO could be tricky, therefore expectation management is a fundamental tool to ensure that the course provides a win-win situation for both the NGO and the students. Balancing the demands by bridging between the NGOs and the students relied on the teacher’s own relationship and credentials with the NGOs. Sometimes, the teachers needed to react on behalf of the NGOs and prior consent must be obtained in advance. In this subject, the NGOs were restricted from setting a fixed project outcome due to the fact that this was a student-led project course. Therefore, the outcome could, in fact, only be “good to have” for the NGO. From time to time, both the students and the NGO partners had to be reminded that the NGOs are not part of the grade assessment team. The students needed to focus on the course outcome, getting the project completed, and being able to present their findings at the

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end of the semester. Sometimes, both the NGO and the students needed to understand each other’s capabilities and not hold to too high expectations regarding either the project outcome or the support possible from the other. This special collaboration encounter offers a good chance for the students to understand consensus building in a real-world setting and the limitations of one-sided thinking. Autonomy was given to the students when it came to their project tasks, their schedule, and their own presentation style. As mentioned earlier in Section 2.2, there was no restriction on how the students organized and carried out their service. Unlike ordinary formal classes, this course encourages tacit knowledge and urges the students to learn from their mistakes to foster their problem-solving skills in a real-life setting (Wood & Rust, 2003). Learning from their own experiences strengthens their memory of their own know-how and helps the students build up their resilience by themselves (Carson et al., 2011). According to the students’ self-reflection, their self-confidence was boosted due to the fact that they were encouraged to step out of their comfort zones through proactively reaching out to the community (Janson & McQueen, 2007). Overcoming the challenge of recruiting enough participants in their events, obtaining enough questionnaire answers, collecting feedback from their target audiences, and securing the venue booking allowed them to earn valuable life experience to make alternative plans and to manage crises (Ti et al., 2006). All in all, this process helped to foster essential skills for their future career development. That being said, the close monitoring of the progress and the confirmation of the service alignment with the NGOs’ initiatives was necessary. Weekly meetings were set up to keep the teaching teams well informed of the project development. A midterm presentation encouraged the whole class to review their plan by comparing the milestones between the different groups. The students learned from each other regarding their own difficulties and ways of solving problems during their project implementation. The 10–20 projects with different objectives each year exhibit a diverse green initiative that allows the students to benefit from learning from each other. Despite the relatively heavy workload of this course, assigning group homework at the beginning of the course allows the students to build a rapport early on in the course, allowing for improved communication and efficiency between the groupmates throughout the time spent brainstorming. The assignment also helped to keep the students on track when they refer to the budget and milestones that they submitted earlier on in the course. Even though students can change their project direction during the course, they can always recollect what they have planned initially so as to reflect on how they grow during their own project implementation.

5.6 Academic Debate and Limitation Recently, some concerns have been raised regarding issues when offering service learning at the school level. One of the major concerns is the principal-agent problem and the community-based organization issue. The argument questions whether the project is beneficial to the community-based partner (the NGOs) and the students in different circumstances. In this research, the principal teaching staff had extensive past working experience as donors (representing the corporations) and also served as a senior executive in the non-profit organizations. With this background, the principal teaching staff ensured

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that the NGOs would be able to use the project outcomes and results in their report to the donors to address expectations. Therefore the NGO partners who participated in the project received inspiration and were motivated to continue collaborating in the future. At the same time, the NGO partners did not need to spend their already limited manpower and other resources to aid in the completion of the project because the students had a pre-assigned limit as to the amount of interaction they could have with the NGOs. Therefore, the project outcomes were beneficial to the communitybased partners and addressed the problems proposed by Blouin that instructors need to have a clear sense of how communication between the NGO and the students is handled. On the other hand, financial aid and staff time from the NGO partner were not requested. A clear message was shared between the school and the NGO that all project outcomes would be “good to have” to supplement the NGO’s own initiatives. With such an understanding, the NGO will not require the students to do anything out of their interest nor out of the students’ capability—no volunteering recruitment was performed, no funding was raised, and no deadlines were imposed. The students, on the other hand, were not asked to fill the volunteer slots from the NGO and therefore treasured the working opportunity provided by the NGO for a chance at realizing their own strengths and values. A  continuous working relationship with the NGOs partners was established. In addition, the NGO partners expressed their appreciation for all of the events, promotions, and reports carried out by the students. Therefore, the problems suggested by some of the reseachers are addressed as the instructor was able to establish a non-demanding working relationship between the school and the community-based organization. There is skepticism about students using this subject just to obtain credit for graduation or to boost their overall grading. As the setup of this subject is unlike any ordinary formal teaching course, high grades are only offered to those who pay extra attention to the details and who are able to overcome the challenges resembling realworld scenarios. In addition, without prior knowledge about the NGO, their annual initiatives, and the team they will work with, there is no way for them to predict their grading before the actual project implementation. As for obtaining credit for graduation without really being interested in interacting with the community to attend to the social issues in question, we refer to the quantitative and qualitative analysis results and the positive change in attitude toward conservation and commitment to volunteering. We can consider that the SL course can alter the students’ attitude and drive community action in the end (Kolenko et al., 1996). In response to the obstacle based on student behavior suggested by Vernon and Foster (2002), the lack of motivation and commitment may be derived from the lack of autonomy in other service-learning subjects. Based on the students’ self-reflections and the observations, some were willing to work extra and keep engaged with the project beyond the semester, indicating that student-led projects may foster a greater sense of ownership (Theobald et al., 2018). Bushouse (2005) suggests that service learning offers a “win–win–win” orientation to the university, students, and community—benefiting students not only when it comes to achieving grades and portfolio building but also by enhancing their job skills and civic engagement with the community. According to the reflections from the students, the alumni, and the follow-up discussions with the NGO partners, this subject,

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under this very unique setup, seems to fulfill this mission. The details described in this chapter serve as a good example for future SL subjects to be offered to university students in other cities that are part of the Belt and Road initiative in an urban context. Despite the contributions discussed earlier, the research is subject to some limitations. First of all, since this course was conducted in an urban setting, most of the students do not directly encounter environmental threats. Therefore, the impact of the subject may yield different results if it were to be applied to participants living in emerging countries. Second, the course featured in this research was offered as a mandatory subject, therefore there was no way to validate the effect if it were to be offered elsewhere to participants with a different mode of delivery, such as outside systematic setting. Since this is a compulsory subject for graduation, it may be hard to distinguish whether the intention of taking this subject is out of citizenship behavior or to upgrade the student’s portfolio. From the students’ reflections, even the students who were initially taking the subject to fulfill their graduation requirements ultimately experienced increased self-confidence and were able to gain a better understanding of their own strengths and weaknesses.

5.7 Conclusion Following the completion of this study, the quantitative and qualitative findings demonstrate a significantly positive attitudinal change among the students enrolled in the university-wide Sustainability Service Learning course. Based on both analyses, the students described themselves as having a better attitude toward protecting the environment and an increase in the willingness to become a volunteer. They expressed a greater interest toward environmental protection and said that the course was able to effectively strengthen their care toward the local community. These results indicate that the project management techniques employed in this course were able to foster mindsets that value problem-based learning (Drăghicescu et al., 2014) and societal awareness among students. Nurturing students that are more willing to volunteer and contribute to their local community can potentially trigger a ripple effect, encouraging other students, teachers, and community members to learn from each other and adopt a more like-minded attitude toward improving sustainability. In addition to promoting sustainability awareness, the students communicated that the course was able to improve their confidence in their own abilities, demonstrating higher levels of self-efficacy. The students strengthened their individual belief toward their capacity to execute the behaviors necessary to control one’s own motivation, behavior, and social involvment. These characteristics are essential when developing leadership skills and resilience in the face of challenges. The students demonstrated self-efficacy by taking it upon themselves to produce videos and social media pages that exceeded the course expectations, exemplifying the skills needed to become change agents in society. By maintaining greater levels of confidence toward oneself, the students can feel more confident when presenting solutions, interacting with NGOs and key stakeholders, and engaging with the community. Another beneficial outcome of this course was the teamwork skills instilled in students due to the structuring and formation of the groups. Since this was a universitywide course, students from various different majors and disciplines were involved in

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the same projects. This provided a unique experience for the students who have been conditioned to work with teammates from the same major, presenting them with a more realistic scenario—as oftentimes companies require individuals from different professions to work together to solve problems. By assigning students to each group, this course was able to effectively promote teamwork skills and encourage adaptability among the students when working with unfamiliar people from different disciplines. These circumstances also prompted the teammates to play to each other’s strengths, delegating the workload appropriately to ensure productivity and the production of high-quality work. It was also essential for the students to apply these teamwork skills when interacting with the NGOs, effectively listening to their needs, and creating projects and solutions that addressed the specific issues and challenged their skill sets. Overall, the observed attitudinal changes of the students from this course reveal the positive potential and applicability of service learning in other contexts. Students with greater societal awareness and sustainability literacy are capable of promoting various positive changes in their communities, and therefore they can serve as a valuable resource in other developing countries. A potential application of this could be China’s involvement in the education systems of OBOR developing countries, granting them the educational resources they need to promote service learning in their own local school curriculums and communities. Service learning could also be accessible for vocational schools, allowing China to source more local labor which would effectively increase the employment opportunities for the citizens of the developing country, addressing related sustainability issues. Hopefully, by introducing these educational strategies to the youths and workforce of developing countries, the OBOR can become an initiative that strengthens countries through education and service initiatives, creating a long-lasting impact that can be self-sustained by the generations that follow. Ultimately, by applying project management techniques to service learning and sharing these strategies with developing countries along the OBOR and around the world, countries and societies can collaboratively work together to achieve a future built by change agents and sustainable thinkers. A few enthusiastic student members, after graduating from the university, were still carrying on their green initiatives as observed from their social media pages. Some students even mentioned that the experience gained from the SL subject helped them to impress interviewers during job applications. A few of the graduated students also joined the community service team in their own company, focusing on environmental protection and ESG initiatives. All in all, even though the subject was given to university students, it may also apply to a company’s CSR program. The graduates from this course could become an ambassador for an NGO. Based on the perspective of encouraging education exchange programs in the partnering countries that utilize schools and NGOs, China can utilize the SL example in this research to establish inter-school collaborations. As indicated in this research, the partnership with local NGOs offers opportunities for the students to understand and get in touch with the community. This kind of first-hand experience can enhance the students’ understanding of the local needs instead of gaining information purely from a governmental perspective. Such an SL exchange program would allow students from China to work with local students to offer valuable learning experiences, enhance relationships, and thus reinforce positive mindsets directly to the people in need. In this case, China can gain support from the local government, its NGO partners, and the citizens who are the beneficiaries. So long as the program is able to address a balance

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between conservation and development, the media and researchers can highlight the evidence and impact on different mediums to get more supporters. A long-term relationship between the schools can also strengthen the level of knowledge sharing and cultural exchange to create a much stronger bond between the countries involved in the Belt and Road initiative. Furthermore, the SL program can also be incorporated into overseas organizations as part of their corporate social responsibility campaign. As the leader of the Belt and Road initiative, China has faced criticism with Western media questioning their real intentions. One of the problems that arose is from the idea of transferring the technological know-how to promote infrastructure to the neighboring countries. The media is trying to frame this as shifting the low-technology and high-pollution industries, such as steel and cement production, so then China can harvest the end product and move its pollution issue to the partnering countries in the Belt and Road. The US government is also trying to align with its allies to challenge China’s strategy by targeting the negative social factors, such as forced labor and the negative environmental impact. China is being criticized as putting too much emphasis on the economic interests without considering the long-term sustainable development from different stakeholders, such as the civil society organizations and the local communities. China is even being framed as using the Belt and Road initiative to build its own quasi-colonial network. The fact is that China has been launching different green funding programs, as well as implementing different compliances on some of the industrial projects, such as the 四國五園 initiative, to control its carbon emissions. In addition, the benefit of creating more job opportunities and uplifting the standard living conditions is actually welcomed by the locals along the Belt and Road countries. Similar to the existing strategy to deal with the media, these actions are relatively reactive. What has to be done to refute the negative media’s framing effect is to utilize some of the evidencebased projects to support a proactive media campaign. By utilizing solution-based projects, the accusation that the Chinese Communist party is trying to manipulate the students’ attitudes toward social values can be rebutted by showcasing the positive influence and impact of their initiatives by partnering locally with the support of the local government, schools, and NGOs. Ultimately, these service learning-based initiatives and subjects applied in global contexts will be mutually beneficial to the local communities, NGOs, and partnering countries.

5.8 BIBLIOGRAPHY Alexander, A. W., Vogelgesang, L. J., Ikeda, E. K.,  & Yee, J. A. (2000). How servicelearning affects students. Los Angeles, CA: Higher Education Research Institute, UCLA. Bringle, R. G., & Hatcher, J. A. (1996). Implementing service learning in higher education. The Journal of Higher Education, 67(2), 221–239. Bushouse, B. K. (2005). Community non-profit organizations and service-learning: Resource constraints to building partnerships with universities. Michigan Journal of Community Service Learning, 12, 32–40. Butin, D. W. (2006). The limits of service-learning in higher education.  The review of Higher Education, 29(4), 473–498. Carson, E., King, S., & Papatraianou, L. H. (2011). Resilience among social workers: The role of informal learning in the workplace. Practice, 23(5), 267–278.

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Chiang, B. E. A. (2008). Integrating a service-learning project into management accounting coursework—a sharing of implementation experience and lessons learned. Accounting Education: An International Journal, 17(4), 431–445. Chung, S. S.,  & Lo, C. W. H. (2007). The roles of grassroots local government in sustainable waste management in China.  The International Journal of Sustainable Development & World Ecology, 14(2), 133–144. Chung, S. S., & Lo, C. W. H. (2012). Marketisation of public services in China: Reforming the provision of solid waste services in Guangzhou’s environmental sector. World Review of Science, Technology and Sustainable Development, 9(1), 34–55. Cruz, N. I., & Giles, D. E. Jr. (2000). Where’s the community in service-learning research? Michigan Journal of Community Service Learning, 7, 28–34. Drăghicescu, L. M., Petrescu, A. M., Cristea, G. C., Gorghiu, L. M., & Gorghiu, G. (2014). Application of problem-based learning strategy in science lessons–Examples of good practice. Procedia-Social and Behavioral Sciences, 149, 297–301. Driscoll, A., Holland, B. A., Gelmon, S. B., & Kerrigan, S. (1996). An assessment model for service-learning: Comprehensive case studies of impact on faculty, students, community and institutions. Michigan Journal of Community Service Learning, 3, 66–67. Eyler, J. (2002). Reflection: Linking service and learning—linking students and communities. Journal of Social Issues, 58(3), 517–534. Eyler, J., Giles, D., & Schmiede, A. (1996). A practitioner’s guide to reflection in servicelearning: Student voices and reflections. Nashville: Vanderbilt University Press. Ferrari, J. R., & Worrall, L. (2000). Assessments by community agencies: How ‘the other side’ sees service-learning. Michigan Journal of Community Service Learning, 7, 35–40. Furco, A. (1996). Service-learning: A balanced approach to experiential education. Furco, A. (1999). Self-assessment rubric for the institutionalization of service-learning in higher education. Gelmon, S. B., Holland, B. A., Seifer, S. D., Shinnamon, A.,  & Connors, K. (1998). Community-university partnerships for mutual learning. Michigan Journal of Community Service Learning, 5, 97–107. Goodwin, R. S. (1993). Skills required of effective project managers.  Journal of Management in Engineering, 9(3), 217–226. Hopkins, C. (2012). Twenty years of education for sustainable development.  Journal of Education for Sustainable Development, 6(1), 1–4. Hopkins, C.,  & McKeown, R. (2001). Education for sustainable development: Past experience., present action and future prospects.  Educational Philosophy and Theory, 33(2), 231–244. Janson, A., & McQueen, R. J. (2007). Capturing leadership tacit knowledge in conversations with leaders. Leadership & Organization Development Journal. Kaiser, M. G., El Arbi, F., & Ahlemann, F. (2015). Successful project portfolio management beyond project selection techniques: Understanding the role of structural alignment. International Journal of Project Management, 33(1), 126–139. Kezar, A., & Rhoads, R. A. (2001). The dynamic tensions of service learning in higher education: A  philosophical perspective.  The Journal of Higher Education,  72(2), 148–171. Kolenko, T. A., Porter, G., Wheatley, W., & Colby, M. (1996). A critique of service learning projects in management education: Pedagogical foundations, barriers, and guidelines. Journal of Business Ethics, 15(1), 133–142.

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6 Overcoming Future Challenges for the Belt and Road Initiative through Building Resilience: Regional Lessons from the Tourism and Retail Industry in Hong Kong Aureliu Sindila Faculty of Business, Department of Management and Marketing, The Hong Kong Polytechnic University, Hong Kong SAR Ayden Nicholas Lam EHL Hospitality Business School, Switzerland Lianne K. W. Lam Faculty of Business, Department of Management and Marketing, The Hong Kong Polytechnic University, Hong Kong SAR

CONTENTS 6.1 Introduction�����������������������������������������������������������������������������������������������������144 6.2 Theoretical Underpinning�������������������������������������������������������������������������������146 6.2.1 The Importance of the Two Crises�����������������������������������������������������146 6.2.2 Crisis Management�����������������������������������������������������������������������������148 6.2.3 Addressing the “Uniqueness” Controversy����������������������������������������150 6.2.4 Models of Crisis Management������������������������������������������������������������151 6.2.5 Conceivable Consolidation of the Crisis Models�������������������������������152 6.2.5.1 Prodromal Crisis Stage and Issue Management������153 6.2.5.2 Chronic (Maturity) Crisis Stage������������������������������154 6.2.5.3 Resolution (Decline) Crisis Stage����������������������������154 6.2.6 Crisis Management, Resilience, and Entrepreneurship Theories������156 6.3 Methods�����������������������������������������������������������������������������������������������������������157 6.3.1 Primary Data/Delphi Technique and In-Depth Interviews����������������158 6.3.2 Secondary Data/Various Resources���������������������������������������������������158

DOI: 10.1201/9781003198147-6

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6.4 Cases and Findings�����������������������������������������������������������������������������������������160 6.4.1 The Lifecycle and Impacts of Severe Acute Respiratory Syndrome in Hong Kong��������������������������������������������������������������������160 6.4.2 The Impacts of and Responses to COVID-19 in Hong Kong������������162 6.5 Discussion and Conclusion�����������������������������������������������������������������������������165 6.6 References�������������������������������������������������������������������������������������������������������169

6.1 Introduction The Belt and Road Initiative (BRI) represents an ambitious plan to develop two new trade routes oriented toward connecting China with the rest of the world. It serves as the most updated term for the project, which was previously referred to as two separate blueprints as the “One Belt, One Road” initiative (Jie & Wallace, 2021). The “Belt” speaks of the Silk Road Economic element that refers to a determined plan for the revitalization of a series of ancient trading routes connecting Europe and Asia to be developed largely with Chinese expertise. The initial idea was introduced by Chinese President Xi Jinping during his visit to Kazakhstan in 2013. In addition, in 2014, the president outlined a plan for a new sea trade infrastructure connecting China, Southeast Asia, Africa, and Europe. Since the announcement, China has developed a coherent strategy built on bilateral agreements on different terms with more than 60 countries and 170 international organizations, creating connections in infrastructure, trade, finance, policy, and people-to-people bonds. About 15 different Chinese ministries in the Mainland and other governmental structures of the special administrative regions are involved to some extent in this extensive project. Its success hinges on the concerted efforts of all parties involved. As an integral part of the Mainland and a key link to the BRI, the Hong Kong’s Special Administrative Region is also set to capitalize on its exclusive advantages to connect to the Mainland and other participants. Hong Kong’s unique advantages offered by the “One Country, Two Systems” framework offer the necessary legal, financial, human resources, market infrastructure, and network requirements to contribute to the Belt and Road project successfully and sustainably. Considered to be among the most developed financial centers in the world, Hong Kong’s financial sector can contribute to the BRI by providing the participating countries with the necessary funds for the operation at a reasonable cost. With the BRI primarily operating through the Chinese currency where Hong Kong is the world’s largest offshore RMB center, the city can further thrive as a leading global offshore RMB business center. As a multicultural hub, Hong Kong can also help the Mainland to overcome the cultural and institutional differences among the countries along the BRI as well as help to strategize opportunities and build greater resilience for the project. Since the Hong Kong Government signed the “Arrangement between the National Development and Reform Commission and the Government of the Hong Kong Special Administrative Region for Advancing Hong Kong’s Full Participation in and Contribution to the Belt and Road Initiative” in December 2017, the city has extensively contributed by enhancing collaboration in six key areas: finance, investment, infrastructure, maritime services, the economy, and trade facilitation (2022). Regardless of the project’s prestigious achievements, the COVID-19 pandemic has brought various challenges to the Belt and Road project. For example, Hong Kong’s

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economy grew at a slower pace compared to the pre-pandemic stage. The economic momentum is weakened with the gross domestic product rising by only 0.1% on a quarter-on-quarter basis. Further economic growth is set to slow due to being constantly challenged by the COVID zero strategy without an opening up of travel and tourism (Lam & Liu, 2021). Likewise, the Chinese state banks have directed more attention and support to projects at home rather than outside. Chinese officials also announced new CO2 emission majors which could hamper the development of the project. Some of the crucial sectors of the economy have suffered considerable losses which makes the project more difficult to implement. The current pandemic crisis has generated a steep wave of global economic and social recession with unprecedented consequences. At the time of economic and social crises, businesses and other economic actors face major threats to their financial performance and subsequently to their prospective survival. Despite Hong Kong having suffered an economic blow from January 2020 onward as a result of the COVID-19 pandemic, the city has recently been awarded the title of the most resilient economy in Asia, ranking 19th worldwide out of 130 countries according to the FM Global Resilience Index. The index is based on an overall indicator comprised of three factors. Primarily, it encompasses the Economic aspect which represents the political and macroeconomic influences on resilience. Four drivers are combined to form the economic variable: productivity, political risk, oil intensity, and urbanization rate. The second aspect is the Risk Quality which measures the relative commercial and industrial property risk across the involved countries. It comprises three central drivers: exposure to natural hazards, natural hazard risk quality, and fire risk quality, and there is an additional fourth driver that captures the inherent cyber-risk of a country. Lastly, the Supply Chain indicator relates to attributes of the supply chain itself and consists of four drivers: control of corruption, quality of infrastructure, corporate governance, and supply chain visibility (FM Global Resilience Index, 2020). Simultaneously, Hong Kong has been ranked 13 in Bloomberg’s COVID Resilience Ranking, a ranking system that denotes where the virus has been handled most effectively with the least social and economic disruption (Chang et al., 2020). Although the COVID-19 pandemic has placed significant pressures on the city’s aviation, tourism, hotel, hospitality, and retail sectors amidst stringent border controls and government-mandated social distancing measures, Hong Kong remains one of the perfect benchmarks in terms of grasping opportunities and overcoming challenges during the crisis. A recent global report, conducted by HSBC, compiled 200 Hong Kong Businesses’ views of future opportunities and challenges for growth. Diversification, greater digitization, and more transparency in their supply chain are the top priorities for their business as part of building greater resilience (O’Byrne, 2021). While 98% of businesses have felt the different impacts of the crisis, 65% have been agile and able enough to be resilient, and many see the crisis as a catalyst for change and long-term growth. Some of the key questions are, as a result, as follows: How can Hong Kong organizations succeed in responding to the biggest global crisis? and What are the techniques and instruments utilized by organizations to increase their chance of survival and to achieve long-term growth? Answering the above will pave the road to investigating the fundamental question: What are the lessons and how can their application benefit Hong Kong, Mainland China, and other participants in the Belt and Road Initiative (BRI) project?

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In this respect, we aim to understand the potential challenges to the BRI project by drawing attention to a specific tourism and retail sector in a regional setting. We turn our attention to this specific sector because (1) the inbound nature of pre-COVID-19 tourism contributed roughly 4% to Hong Kong’s GDP, (2) it is the hardest hit sector amidst the COVID-19 pandemic with monthly arrivals dropping by 96–99% in terms of year-on-year growth since February 2020 (Statista, 2022), and (3) it was heavily impacted by the previous severe acute respiratory syndrome (SARS) crisis. All of the above indicate that a thorough investigation of the case of the tourism and retail industry in Hong Kong might improve the understanding of theoretical and practical aspects of crisis management from the strategic and entrepreneurial perspectives. To investigate the aforementioned questions, we engaged with crisis management research to seek a better explanation of what is known about crisis and organizational interactions in the context of Hong Kong firms and COVID-19. We further exploit the paradigm of crisis management to review to what extent firms have applied accumulated crisis management experience and learned to diminish the impact of the COVID-19 crisis. This was done by considering the behavioral antecedents by approaching another pandemic—SARS. Using the Hong Kong tourism and retail sample of studies, we employed a phenomenological research approach to build cases by conducting in-depth interviews with different level shareholders from the industry. Our theorizing and model are built on the integration between organizational, cognitive, and entrepreneurship-related theories. We illustrate the usefulness of this crisis management model by testing it in a resilience context. The insights from this small study can be further utilized by both theoreticians and practitioners to anticipate, prepare, and cope with various crises while implementing the BRI project. While this study operates using data from two morphologically similar crises, the observations might be further applied to smaller or larger degree crises of a diverse nature as well. Since the suggested model addresses crisis anatomy at a grassroots level, the level of generalizability of potential strategies is comparatively high.

6.2 Theoretical Underpinning 6.2.1 The Importance of the Two Crises The role of crisis in the contemporary world has been a subject that has received intensive attention from theoreticians and practitioners over the past 40 years. A crisis is fundamentally exemplified as any unplanned event that can cause a severe impact on the public, completely or partially disrupt operations, and cause diverse types of damages while threatening financial standing or public image (Clark, 1995/1996). Similarly, Pearson and Clair (1998) described a crisis as “a low probability, high impact event that threatens the viability of the organization and is characterized by ambiguity of cause, effect, and means of resolution, as well as by a belief that decisions must be made quickly” (Pearson & Clair, 1998: 60). Studying this phenomenon falls under an area of interdisciplinary research that includes subjects ranging from the investigation of natural disasters, economic disruptions, strikes, and social movements to terrorism that systematically occurs all around the world. Unfortunately, the case of Hong Kong is not an exception in this lamentable context.

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In November 2002, doctors in the Guangdong province of southeastern China started to notice the first cases of what would become known as a severe acute respiratory syndrome (SARS). The patient zero of the virus was considered to be Liu Jianlun, a medical professor from Guangdong who unknowingly had SARS. By checking into Room 911 at Hong Kong’s Metropole Hotel in February  2003, the medical professor brought SARS from Mainland China to Hong Kong. Shortly after, the 64-yearold professor manifested the virus’ symptoms and went to the hospital where he passed away within two weeks. Unfortunately, during his short stay at the hotel, he unwittingly infected several other guests. Those people then took SARS with them to Singapore, Toronto, and Hanoi. Over the next several months, 8,096 people in 26 countries contracted the new viral illness, leading to 774 deaths (Little, 2020). In the studied context, besides the social costs, the virus brought with it a series of severe disruptions and losses to the local businesses which translated into substantial socioeconomic costs for Hong Kong. In December  2019, a new coronavirus emerged in China. According to  China’s Health Commission, by 2 February 2020, the death toll from the new virus in Mainland China exceeded that of the 2002–2003 SARS epidemic. This disease caused 12,864 confirmed cases and 213 deaths in Hong Kong only, a region that, despite encountering two waves of the pandemic, is still considered to be one of the role models of pandemic crisis management (Little, 2020). The immediate response to this challenge allowed the government to help those afflicted and save many lives. However, the cost regarding the economic and commercial dimensions was extremely high. Although different in many aspects, the two proposed crisis cases have morphological similarities in the way they (1) occurred (concerning each crisis paradigm), (2) developed (socio-economic effects), and (3) were approached (diverse organization responses). This allows for an investigation of a certain degree of comparability in terms of the disruptions they caused to diverse business organizations, economic actors, and other stakeholders. In this respect, the firms’ responses can be analyzed through the lenses of several models. A primarily and widely spread approach to analyzing and dealing with a potential crisis is by utilizing crisis typologies. It is conspicuous that, conceptually, every crisis has an anatomy that is constructed using diverse stages based on distinct symptoms. One of the most fundamental models interprets the crisis anatomy through its life cycle while making analogies that include the crisis’ birth and death (González-Herrero & Pratt, 1996). Simultaneously, another line of research put forward by Coombs (1999) argues that the most influential models in crisis analysis are Fink’s (1986) anatomy of crisis lifecycle based on four stages, Mitroff’s (1994) fivestage model, and the elemental model based on three stages. Despite a large body of existing theoretical literature focusing on responses to crises and macro socioeconomic effects including impacts on governments, businesses, media, and members of the public (Dietch  & Corey, 2011), the majority omits the importance of utilizing learning from previous crises experience and oftentimes fail to acknowledge the degree of the positive effect of these experiences. This article, uniquely seeks to provide a better understanding of the different crisis management frameworks. On the one hand, it builds on the Shrivastava et al. (1988) argument which emphasizes the importance of learning from failures and the implications for organizational learning. Shrivastava et al. (1988) argue that a sequence of crises can shift organizations from being crisis-prone to being crisis-prepared, which in turn might alter the previous recent crisis’ negative perception and adjust the crisis anatomy paradigm.

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To elucidate the aforementioned puzzles, this article proposes to combine two fundamental models put forward by Fink (1986) and González-Herrero and Pratt (1996). Correspondingly, we employ another line of traditional research that focuses on organizational learning through experiential wisdom and a cognitive search (Gavetti  & Levinthal, 2000) that is extensively applied to adverse situations. In a similar vein, this study proposes a thorough analysis of the micro-foundations of strategic decision-making oriented toward enhancing resilience through entrepreneurialism. In this context, a conventional research stream is formulated based on Knight’s perception of entrepreneurship as judgmental decision-making under uncertainty (Foss et al., 2007). This is typically related to the capabilities that organizations use to respond to external and unforeseen changes that may also help them to proactively create an opportunity for profit and growth for the future, especially when there is an irrevocable change to the world of a “New Normal.” The impact of crises on businesses resembles distinct paths as the level of preparedness and resources heavily depend on the executive managers and/or owners. As a consequence, this study employs an inductive, phenomenological approach to construct cases by (1) utilizing the Delphi technique to address a panel of experts, (2) interviewing executives and/or business owners from the city’s four key industries, and (3) using publicly available information. The preeminent contributions of this study feature the documentation of the executive and/or owner’s crisis management experiences from the two relatively recent consecutive crises in Hong Kong. Addressing these exemplifies the extent that businesses have utilized their accumulated learning and experience from the previous recent crises to diminish the impact of the recent one. Ultimately, from a holistic standpoint, this article seeks to examine how the unique context of Hong Kong can be incorporated into scholarly frameworks on crisis anatomy and management.

6.2.2 Crisis Management Crisis, its anatomy, and crisis management have been long analyzed in a plethora of specialized and interdisciplinary literature including management, economics, psychology, and sociology fields (Waugh, 1999). While crisis has been defined by scholars in multiple ways, much of the literature still concentrates on crisis at the organizational level. Shrivastava et  al. (1988) presented an in-depth definition of a crisis as follows: An organizationally-based disaster, which causes extensive damage and social disruption, involves multiple stakeholders and unfolds through complex technological, organizational, and social processes. (1988: 285)

Sapriel (2003) construed a crisis as “an event, revelation, allegation or set of circumstances which threatens the integrity, reputation, or survival of an individual or organization” (p.  348). Conversely, Pauchant and Mitroff (1992) introduced a more holistic definition of crisis that goes beyond the organizational level and defined it as “a disruption that physically affects a system as a whole and threatens its basic assumptions, its subjective sense of self, its existential core” (1992: 15). This type of

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definition includes non-organization crises concerning emergencies that are usually triggered when various types of hazards (natural or industrial) interact with vulnerabilities (social, economic, or environmental conditions) which subsequently make communities susceptible to those hazards (McEntire, 2001; Paton & Johnston, 2001). Oftentimes, crises and emergencies cause a colossal social and economic impact that is beyond a community’s capacity to keep it under control. These kinds of problematic crises demand various contingency plans and procedures to enhance the problem and hazard mitigation while reducing the vulnerability and coping with the impacts. While the subject of crisis has received a vast amount of attention from both theoreticians and practitioners, many organizations do not put enough effort into preventing and addressing crises. Business and other organizations’ leaders often agree that the probability of an economic actor facing a crisis is very high, yet only a minor percentage of those leaders take the necessary actions toward anticipating and preparing a crisis plan (Augustine, 1995). Intuitively, organizations tend to focus on their growth and expansion while often paying less attention to acknowledge and prepare for possible jeopardy failures. The tendency often diagnosed among executives of various types of organizations is to ignore the probabilities of a disaster occurring and to not anticipate its occurrence. The central reason why a myriad of companies decline is due to the failure to take steps to prevent the occurrence of a disaster. Elaborating on this context, in their study, Grunig et al. noted, “Regardless of the model of public relations practiced or the expertise of the communicator, crises inevitably befall organizations” (2002: 473). Therefore, crisis occurrence is not a novel phenomenon, but its catastrophic consequences continue to generate uncertainty for various organizations at different levels. Often the governments or lawmakers are in charge of developing nation-wide crisis management and contingency plans that include four areas: preparedness, mitigation, response, and recovery (Waugh, 1999: 2). In this context, preparedness policies and plans represent a blend of measures that are designed to increase the organization’s capabilities to anticipate and respond effectively and in a timely manner to crises. Following this, mitigation policies are oriented toward reducing the disruptive impacts of crises on the community, economy, region, and so on. Along with similar structures, response plans are utilized to enforce the capability of absorbing the shock after the crisis as well as diminishing its impact. Ultimately, recovery blueprints are meant to support the rehabilitation of the natural and business environments after the crisis occurs. Despite the public and private sectors often varying in their operations, tactics, and strategies, crisis management appears to be an area where a plethora of conceptual similarities are observed (Schneider, 1995). For example, a cohort of scholars has generated more basic approaches to linking crisis definitions with organization orientation. Coombs (1999) presented a description of crisis as a concept that can challenge an organization’s character. Building upon this, Coombs and Holladay (2001) defined a crisis as “one event or interaction within a larger relationship between an organization and its stakeholders . . . [that can] damage or be a threat to a quality relationship” (2001: 324). The similarity axis between the aforementioned definitions is employed by the principle that a crisis can dramatically influence an organization’s ability to sustain itself. In a business environment, some signs indicate the early symptoms that could lead to a subsequent crisis. Acknowledging and paying appropriate attention to these symptoms could prevent or at least diminish the impacts of the upcoming crisis event.

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Similarly, one of the most advanced practitioner’s citations on preparedness put forward by Howard and Mathews states “you cannot control the elements, human nature, or the outside world” (2000: 217). Though a surfeit of factors contribute to the crisis after effect, Smits and Ezzat (2003) presuppose that timely preparation is one of the imperative steps in crisis avoidance: “Effective crisis management depends upon planning and people” (2003: 2). Along the same lines, Penrose (2000) mentioned, “Researchers tend to agree that organizations that practice proactive crisis management will lessen the damage of a crisis” (2000: 155). In their later work, GonzálezHerrero and Pratt (1996) augmented the idea that crises manifest preliminary clues and signs while stating that “sensing potential problems is the first step toward avoiding or resolving them or minimizing their impact” (1996: 82). Ultimately, a different contour of the literature suggests that crises may be generated by various events, hence every crisis is somewhat “unique” (Elliott et al., 2000). This approach adds some vulnerabilities to the existing and proposed integration of models as organizations might not be able to rely on the previously accumulated knowledge from a crisis with distinct features to take preemptive measures against a crisis with dissimilar features. Subsequently, organizations should be able to anticipate what kind of crisis they might face and prepare contingency plans presumably for every kind of such event. This controversial approach, if accepted per se, appears to be lacking viability and requires supplementary attention. In this regard, we propose to address this controversy by decomposing the “uniqueness” aspect via theories of “learning in crisis” and “learning from crisis.”

6.2.3 Addressing the “Uniqueness” Controversy Organizations dealing with a crisis often address their past experiences and generally examine every crisis as being “unique.” Even though the experiences might seem “unique,” most executives will seek clues about what to do and what to avoid by looking back. To dilute the “uniqueness” of every crisis and to solidify a slightly more universal approach to crisis management, scholars in crisis management and political governance literature focus on two aspects. The primary aspect concerns the so-called “learning in crises” which is based on utilizing the historical analogies during crisis decision-making (May, 1973; Bennett, 1999; Houghton, 2001). It involves learning from the past while mobilizing support for the “correct” decision they have previously made and utilizing it to diminish the impact of the current crisis (Levitt & March, 1988). Contextually, scholars emphasize the importance of “cognitive interpretations.” This often presents an opportunistic view of the past crisis experience to help invoke history as a way of discovering analogies between past and current crises (Neustadt & May, 1986). The other aspect deals with “learning from crises.” This method is grounded in the opportunities provided by crises that motivate organizations to learn from incidents and to develop self-monitoring, contingency plans, and a resilient safety culture (Pidgeon, 1997). This aspect also frequently portrays a crisis as a learning opportunity. A study by Sabatier and Jenkins-Smith (1993) propelled the idea that crises exert a profound shake that impacts the organizations that experience them, while, simultaneously, such shocks send warning signals to other organizations that find themselves in similar situations. In this sense, organizations can resemble a “self-denying propensity” which will motivate them to take measures to prevent the shock’s recurrence

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(Mannarelli et  al., 1996). Conversely, if organizations are more pessimistic about learning from the past, they will try to exaggerate their present success and explain their failures in other contexts (Hacker, 2001). To a degree, by employing historical analogies, organizations can be analyzed through the “learning in crises” or “learning from crises” lenses. Despite divergence in the attributes of the two selected Hong Kong crises examples, pieces of evidence suggest that based on their morphological similarities, they can be analyzed under the same theoretical umbrella of models of crisis management.

6.2.4 Models of Crisis Management The majority of crises undergo a development “life” cycle as they do not occur suddenly and out of nowhere. This development cycle usually represents a few stages that are labeled using particular symptoms. Circumstantially, the cycle offers the possibility to the executives of organizations to realize the degree of the upcoming challenge and to determine the issues that should subsequently be addressed. As pointed out by scholars, it is imperative not only to recognize the symptoms and the challenges but also to respond to them in a timely manner (Darling et al., 1996). Other models interpret crisis as a life cycle while making analogies that include the crisis’ birth and death (Fink, 1986; González-Herrero & Pratt, 1996). In this connection, GonzálezHerrero and Pratt (1996) recommend a lifecycle analogy to crisis interpretation that includes birth, growth, maturity, and decline (please see Figure  6.1). Although the model might appear to be simplistic at first sight, it is an extremely effective way to illustrate how a crisis changes over time. The authors argue that by employing issue management before the initial stage of the crisis (birth), organizations might be able to shift the outcomes. In comparison with the initial model where after reaching maturity a crisis declines, by adopting issue management in the extended model, a certain degree of crisis prevention occurs. Another line of research put forward by Coombs (1999) argues that the most influential models in crisis analysis are Fink’s (1986) anatomy of a crisis lifecycle model based on four stages, Mitroff’s (1994) five-stage model, and the elemental model

Figure 6.1  Development of issues with or without management intervention (adapted from González-Herrero and Pratt, 1996).

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based on three stages. It is generally considered that the three stages model has no official author as stated by Seeger et  al. (2003: 97): “The three-stage model is not associated with any particular theorists, but it appears to have emerged from several research efforts as a general analytical framework.” Coombs (1999) envisages the three stages of the model through the macro stage lenses which include pre-crisis, crisis, and post-crisis. The primary macro stage of crisis prevention includes a variety of aspects that are oriented toward prevention such as issue management, planning, and proactive steps. The crisis stage is comprised of steps that support organizations in coping and responding to the crisis such as recognition, information distribution, reputation management, and so on. Lastly, the post-crisis stage includes confirmatory steps that the crisis is over as well as accumulating the knowledge learned from the crisis event. In support of this generalizable model, Coombs (1999) argues that Fink’s (1986) and Mitroff’s (1994) models fit into the basic framework and parameters of the three-stage model. He also mentions that the three-stage model can often be expanded by incorporating various sub-stages based on the nature, size, and environment of the crisis. At the same time, Seeger et al. (2003) argue that Fink’s (1986) four-stage model provides one of the most comprehensive models of crisis analysis that is capable of analyzing all influential factors (please see Figure 6.2).

6.2.5 Conceivable Consolidation of the Crisis Models To address the aforementioned issues, Fink (1986) proposed a model that segregates a crisis into four distinct stages: the prodromal crisis stage, acute crisis stage, chronic crisis stage, and crisis resolution. Since contemporary organizations tend to have similarities with living organisms that are not immune to their surrounding environments, the stages are often labeled “organic.” Environments might bring to organizations positive and negative impacts in the short and long term. The ability to adapt to these surroundings and to evaluate, prevent, and/or diminish threats is what defines a successful organization. Simultaneously, González-Herrero and Pratt (1996) introduce their model’s logic by presupposing that a crisis is a sudden occurrence which suggests that it has identifiable stages that resemble how a crisis changes over time. An additional intriguing aspect of this model is the consideration of issue management and its effects in a crisis. The authors propose that the intensive and timely practice of issue management before or during the early stages of a crisis can shift the outcome. The adaptation model in their study hypothesizes that issue management is capable of showing effectiveness in the prevention of crises or in terms of diminishing the impact of said crises. Contextually, it is imperative to mention that there is a thin line between issue management and crisis management as a process. The concept of issue management is often regarded as a complex process that alerts stakeholders to emerging economic, social, or political tendencies, thus offering the management the possibility of concentrating their resources to cope with these trends. Crisis management is regarded as a holistic framework (Brown, 1979). Under the aforementioned circumstances, the consolidation of Fink’s (1986) and González-Herrero and Prat’s (1996) models is capable of ensuring the coverage of the micro and macro stages, thus enriching the understanding of how and to what extent previously accumulated crisis knowledge might influence the strategies used when dealing with the current crisis.

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Figure 6.2  Crisis cycle flow chart (adapted from Fink’s 1986).

6.2.5.1 Prodromal Crisis Stage and Issue Management The notion of prodrome is borrowed from the field of medicine, and it symbolizes a symptom of the onset of a disease. In economic and management terms, a prodrome is a set of warning signals that the organization has to pay attention to in order to keep up with the trends that might concern the business environment. Actions that might be taken during the prodromal crisis stage can be integrated into the three-stage model. Fink (1986) conceptualizes that, in every crisis, there is a trigger. If timely attention is paid and is handled successfully, a crisis might find its end in this early stage and save a vast number of resources. Simultaneously, González-Herrero and Pratt (1996) conceptualized that issue management has shown efficiency in the planning and prevention (equivalent to prodromal) stages. In this context, it is imperative to analyze whether a previous recent crisis experience can positively contribute to implementing accumulated knowledge through issue management toward a more rapid detection of crisis in the prodromal stage. Since the prodromal stage is often difficult to detect if no appropriate measures are taken, the acute crisis stage will inevitably occur (Fink, 1986). However, acute stages might not necessarily occur as a continuation of the prodromal stages. Instead,

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they might occur directly and independently. This stage requires immediate attention simply because it often causes disequilibrium and disrupts the entire value chain of the economic organization. This stage is similarly referred to in the work of GonzálezHerrero and Pratt (1996) as the growth stage. In this stage, the executives can only take measures to elucidate the consequences and control and/or diminish the damage as prediction is already impossible. The acute stage also plays an important role in emphasizing the importance of the earlier stage where problems are easier to predict and manage. The acute stage is also characterized by the presence of damage. The successful and proactive identification of the crisis in the prodromal stage might considerably reduce the impact of the crisis in the acute and following stages. Conversely, a failure to recognize the magnitude of a crisis while taking corresponding measures might generate a reactive situation. Taking into consideration that the successful identification of the crisis might resemble considerable positive outcomes including saving lives and resources, a previous recent crisis experience might contribute by delivering exceptional expertise and knowledge which, in turn, could shrink the acute stage crisis curve.

6.2.5.2 Chronic (Maturity) Crisis Stage In Fink’s (1986) model, this stage examines the lasting effect. Oftentimes the length of the crisis is distinct from its occurrence time. Hence, crisis events might occur unexpectedly and quickly while the effects might last for much longer and spin around the crisis circle. Similarly, this stage can be divided into sub-stages that allow the organizations to take more precise actions, especially if the length of the crisis is extended. During this stage, it is critical to take immediate action as the crisis symptoms are becoming evident and the antecedents of these are impactful. For some organizations, this period is considered to be crucial and might determine the future survival probability of the organization. Amid the chronic stage, it is imperative to consider the sources of the problems that occurred during the prodromal and acute stages. Here, the company is not too accustomed to it as they are to a normal situation, but they adjust by increasing the level of tolerance. Likewise, in González-Herrero and Pratt’s (1996) work, during the maturity stage, previous recent crisis experience might contribute toward limiting the length of the present crisis. Organizations can utilize their accumulated learning and expertise to anticipate and prevent a certain phenomenon that can trigger a lengthier chronic crisis period. The following proposition was able to be addressed as a result.

6.2.5.3 Resolution (Decline) Crisis Stage The final stage in Fink’s (1986) model identifies the end of the length of the crisis. Since the author mentions that an organization’s recovery capabilities vary, a systematic rush toward reaching the goal of a crisis ending might also make them vulnerable to the resurgence of the crisis—be it the same or another. It is imperative to perform due diligence based on the previous three stages of the crisis to assure that such a regression does not occur. In this context, the major differences between the three-stage model, and Coombs’ (1999), González-Herrero and Pratt’s (1996), Mitroff’s (1994), and Fink’s (1986)

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models are located in the recovery and learning stages. Mitroff (1994) and the threestage model emphasize the learning and empowering opportunities, while the rest focus on the timeframe of recovery. Similarly, Shrivastava et al.’s (1988) argument emphasizes the importance of learning from failure and the implications for organizational learning. Following this research line, one might argue that a sequence of crises can shift organizations from being crisis-prone toward being crisis-prepared which, in turn, might alter the businesses’ previous recent negative perception and adjust the crisis anatomy paradigm. In an attempt to answer the proposed research questions, we have utilized and built upon a combination between Fink’s (1986) and GonzálezHerrero and Pratt’s (1996) models (please see Figure 6.3). The two models use a similar time scale and complement each other when it comes to describing the crisis and demonstrating the beneficial effect of timely implications for prevention in the different stages of the model. Concomitantly, the aforementioned consolidated model suggests seeking further and better explanations and understandings of crisis–organization interaction by aligning with the concept of organizational

Figure 6.3  Accelerating crisis detection during the prodromal stage (adapted and combined from Fink, 1986 and González-Herrero and Pratt, 1996).

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resilience (Van Der Vegt et  al., 2015; Williams  & Shepherd, 2016). In this regard, Williams and his colleagues echo that integrating research on crisis management (i.e., the ability to return organizations and systems to normal functioning after a disruption) and resilience (i.e., the ability to maintain reliable functioning despite adversity) would seem to be a natural way to strengthen the theory of organizational functioning more generally under adversity. (Williams et al., 2017)

The concept of resilience has been utilized in a plethora of fields including psychology (Bonanno, 2004), ecology (Holling, 1973; Walker et al., 2004), disaster management (Manyena, 2006), and management-related sciences (Sutcliffe & Vogus, 2003). Although several researchers have sought to integrate resilience with other related concepts such as adaptability, transformability, and vulnerability (Luthar et al., 2000; Walker et al., 2004), the linkages between the boundaries of these concepts remain considerably vague (Callo-Concha & Ewert, 2014). To elucidate the omittances, the theory proposes a thorough analysis of the micro-foundations of strategic decisionoriented actions toward enhancing resilience. In this context, a conventional research stream is formulated based on Knight’s perception of entrepreneurship as judgmental decision-making under uncertainty (Foss et al., 2007). This is typically related to the capabilities that organizations use to respond to external and unforeseen changes that may also help them to proactively create the opportunity for profit and growth for the future, especially when there is an irrevocable change to the world in terms of a “New Normal.” Correspondingly, another line of traditional research focuses on organizational learning through experiential wisdom and cognitive searching (Gavetti & Levinthal, 2000) that is extensively applied to adverse situations. Despite the scope and congruence of these research streams, little has been done to link crisis management with organizational resilience and learning and entrepreneurial theories.

6.2.6 Crisis Management, Resilience, and Entrepreneurship Theories The resilience construct is bidirectionally relevant to crisis management and entrepreneurial activities for two reasons. First, scholars often use resilience synonymously with preparedness, hardiness, persistence, or self-efficacy to explain why some entrepreneurs and their firms perform better than their non-resilient peers. Second, cognitive and behavioral entrepreneurial traits and distinct forms of entrepreneurship such as social entrepreneurs are said to foster the ability of firms to adjust to new circumstances and to contribute to long-term sustainability through innovation (Biggs et al., 2010). The relevancy is solidified further through a focus on preparedness in the face of potential disruptions: resilience as an ex-ante, the inherent characteristics of entrepreneurial individuals and firms that arise from different adjacent factors, psychological resilience that reinforces entrepreneurial intentions, entrepreneurial behavior that fosters organizational resilience, and entrepreneurial firms (and individuals) enhancing the regional economic or community resilience. Additionally, the concept is relevant from the post-disruption perspective when it is perceived as resilience that enables individual entrepreneurs to bounce back from failure or to survive tough times

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(Hayward et al., 2010). Resilience is seen as a dynamic process involving the adjustments of individuals, firms, and macro-level entities to new contextual circumstances (Dewald & Bowen, 2010). Considering the circumstances, there is a rigorous need that entails a more dynamic conceptualization of resilience as well as exploring what role entrepreneurship plays in shaping the positive trajectory of recovering and adapting to a new normal. We argue that when facing crises, adversity, and extreme uncertainty, organizations employ entrepreneurialism manifested as a set of cognitions and judgments (Kaul et al., 2021) that can be treated as a function of the judgments as informed by past crisis experiences, reasoning through analogies and long-term orientation. These three elements may help to make intelligent choices in a novel context (Gavetti et al., 2005), as well as enrich our proposed model consolidation. We posit that organizations employ backward-looking experiential wisdom during the prodromal crisis stage to learn from their previous experiences while engaging in solution-seeking search processes during adversity (Gavetti  & Levinthal, 2000). Orienting toward learning is crucial for the prodromal crisis stage where planning and prevention peak in terms of their efficiency. “Learning in crises,” as part of organizational learning theory, utilizes historical analogies during crisis decision-making (Houghton, 2001). It involves learning from the past while mobilizing support for the “correct” decision they have previously made and utilizing them to diminish the impact of the current crisis (Roux-Dufort, 2007). Organizations can utilize their accumulated learning and expertise to anticipate and prevent a certain phenomenon that can trigger a lengthier crisis period. Making analogies in relation to the previous or other organizations’ experiences is imperative during the chronic stage of the crisis where the ability to employ correct judgments might decide the length of the crisis period. Furthermore, we also argue that organizations seek to resolve crises and enhance their resilience through cognitive searches (Gavetti & Levinthal, 2000) and long-term orientation. Utilizing the resolution crisis stage arguments, we employed a long-term orientation criterion defined as the tendency to prioritize the long-range implications and impact of decisions and actions that come to fruition after an extended amount of time (Yu et  al., 2012). This dimension is also influenced by entrepreneurialism through forecasting, planning, and evaluating the long-range consequences of the current actions’ utility. The ability to explore long-term orientation is essential in the resolution stage as it can transform an organization from being crisis-prone into being crisis-prepared.

6.3 Methods This study employed an inductive, phenomenological approach to construct a small number of cases to investigate the sui generis settings of crisis management in Hong Kong. The methodological background of the study is rooted in the case study approach that provides imperative advantages when elaborating on a theory in an area in which limited data or theories exist (Yin, 1984). Contextually, the study amplifies a small number of cases that are designed to build and test the theory through critical phenomenological-driven findings. This specific construct of qualitative case

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research is frequently utilized in management and other related disciplines to generate or extend the theory in comparatively new domains (Yin, 1984; Eisenhardt, 1989). This study utilizes a rich blend of primary and secondary qualitative data to build a small number of cases by triangulating (1) the information obtained utilizing the Delphi technique to address a panel of experts from the four key industries, (2) qualitative interviews with 15 executives and/or business owners from the tourism and retail industries, and (3) publicly available information. This qualitative research methodology offers the possibility of gathering a plethora of valuable information from individuals who possess exceptional practical or theoretical knowledge (Hennink et al., 2020).

6.3.1 Primary Data/Delphi Technique and In-Depth Interviews The technique allowed for the questions to be addressed to a panel of experts where the researchers posed supportive questions and arguments utilizing the primary evidence from the panel to elaborate on the topics. This process was a great method for structuring group communication (Turoff & Hiltz, 1996). This study was conducted over the course of the year 2021. The fieldwork consisted of conducting in-depth interviews and personal observations of three researchers that permanently communicated with each other during and after each interview. Following the Delphi technique, we utilized purposive sampling to conduct interviews with 15 top management team members and hotel owners from Hong Kong and Mainland China. The results were obtained without any financial remuneration. The interviewees were aged between 31 and 64 years old and are regarded as experts in their industry. The interviews were conducted in Hong Kong or Shenzhen with each interview lasting from 90 to 120 minutes. As a general interviewing framework, semi-structured interview guidelines were used including questions such as: “Did your business model suffer any drastic changes?”; “Did you employ any learning from the previous SARS epidemic crisis to cope with the current pandemic?”; “How did the 2002/2003 SARS epidemic affect or help prepare you to deal with the COVID-19 crisis?”; “Did you develop any new capabilities and how do you employ them during the pandemic?”; and “Do you think enhancing resilience levels will contribute to better survival and long term growth?” All interview results were recorded and supplemented by field notes by the researchers. After conducting each interview, two of the researchers cross-checked the themes and interview content by verifying the consistency. The qualitative data were collected in both Chinese and English and cross-translated independently to assure validity. The results from both researchers were also counter-validated to achieve the maximum level of consistency possible. Intermittent grammar errors were corrected without sacrificing any content. The data obtained from additional observations were utilized to enrich the content with complementary important details.

6.3.2 Secondary Data/Various Resources The secondary data was obtained by extrapolating information from newspaper outlets and publicly available sources, as well as from officially released company statements and consultancy company reports categorized as bearing a high degree of credibility. To avoid bias and to collect data that analyzed diverse perspectives, both local and international sources in English and Chinese languages were utilized.

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The collected data were compared by juxtaposing the information from the available data sources. To minimize the threat to validity, information on similar topics was triangulated using different data sources. Throughout the process of data collection, the study followed a constant comparative method. The responses were tracked to compare and reveal common patterns and justifications of their actions. The data from this study were presented according to three major themes (please see Table 6.1) that collectively empirically illustrate the response mechanisms of owners and top management teams in response to both crises. The results also indicate the positive role of entrepreneurialism when coping with the crises and orienting them toward long-term goals. TABLE 6.1 Representative Data for the Importance of Crisis Prevention, Organizational Learning, and Entrepreneurialism Themes and Subthemes

Representative Quotes From the Data

Response mechanism

Coping at different crisis stages

Organizational learning

Planning/ routinizing

Strategizing

“They will need their business partner to provide training on hygiene standards so that staff will be educated about COVID and how to avoid being attacked by COVID. Additional gloves, clothing, masks, and a face shield will be provided to all the staff. Safety and health standards will be more stringent. All staff can’t have close contact with the customers. Dirty zone, cleaning zone will be set up. So far none of the staff are being affected. Transparent communication is needed, the company cares about the employees’ benefit, staff training, hygiene procedure. . . . Overall operation is not too difficult.” (TMT of a Hong Kong hotel 1) “As long as the hotels are not consistently running at a loss, even if they are not making a lot of profit, or if they’re breaking even, then the hotel owners would still want to take care of the people and make sure that they have a job, they’re not being chopped off.” (TMT of a Hong Kong hotel 2) “SARS is different from COVID. Impact period is much shorter (3 months), smaller, and it’s regional. We learn from preparation. When the crisis hit Hong Kong, treated that similar to SARS, we have planned on stocking up on PPE (clothing/face masks) for 3 months while there were no stocks on the market, hence employees have confidence in dealing with the pandemic. Additional SOP and Procedure & Policy, personal hygiene is required and learnt from SARS, staff keep distance from the customer.” (Hotel owner, Hong Kong 1) “What we did learn was how to react fast and adapt. So in that aspect we did learn something from SARS.” (Hotel owner, Hong Kong 2) (Continued )

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TABLE 6.1 (Continued) Themes and Subthemes Entrepreneurialism

Representative Quotes From the Data Experiential wisdom

Reasoning by analogy

Long-term orientation

“The SARS taught us to be aware that the virus is serious, and everyone is willing to wear a face mask immediately. As for the industry, SARS let us realize that business can change from 90% to a single-digit occupancy rate. . . . How could we survive? So it gave us an idea and prompted us to think about our plan. However, SARS is a short period (3 months) pandemic.” (TMT of a Hong Kong hotel 3) “Therefore, the experience from SARS just alerts us, and helps us to think of the worst-case– to cut costs? Or to change the out-of-the-box strategy to survive. From my past 30 years of experience, I never face anything more challenging than COVID.” (TMT of a Hong Kong hotel 4) “Customers will be more concerned about hygiene standards. The new trends will focus more on Hygiene and safety. When customers make travel planning, hotels will focus more on technology and sustainable development—the industry, environment and social perspectives on how to survive by using automation/ AI/robot to avoid less contact with customers.” (TMT of a Hong Kong hotel 5)

6.4 Cases and Findings 6.4.1 The Lifecycle and Impacts of Severe Acute Respiratory Syndrome in Hong Kong Awareness about the subject of SARS gradually increased from the moment the World Health Organization (WHO) issued a global-level alert concerning the new infectious disease on 12 March 2003. In less than four months, the infection known as SARS had spread to 29 countries and three regions with a total number of cases amounting to 8,422 and a total number of registered deaths at 916 (Siu & Wong, 2004). It is considered that the first outbreak was registered in November 2002 in Foshan, near Guangzhou. Due to this, the most affected areas were considered to be Mainland China, Hong Kong, Taiwan, and Singapore. Patient 0 was identified as a medical doctor who had traveled from Guangzhou. Because, at that time, the authorities were not completely aware of the seriousness of the disease, no isolation measures were instantly adopted, hence Hong Kong was caught completely unprepared in the face of the outbreak. A few days later, when the severity of the virus was acknowledged, the Hong Kong Department of Health issued drastic quarantine measures to prevent the spread of the SARS virus in the community. These measures included closing schools, restaurants, shops, cinemas, and other entertainment venues. Simultaneously, the authorities were trying to identify travelers who might have what resembled SARS symptoms at the airport and other border checkpoints in a timely manner. Despite all

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measures, Hong Kong ultimately accounted for 20.8% of the world’s total registered cases (Siu & Wong, 2004). The SARS outbreak brought about unprecedented negative consequences for the Hong Kong economy, affecting all sectors, especially those on the demand side. Local consumption and export services were severely affected with the figures mirroring consistent falls. Additionally, tourism services and air travel were affected in the short run, which subsequently led to sales dropping by 10% in restaurants and retail outlets (Siu  & Wong, 2004). Primarily, there was a severe decline in the amount of local consumer spending, probably caused by fear of the disease spreading which, in turn, forms the intuitive instinct of saving more. As a result, people refrained from consuming products and activities outside their homes. This drop in consumer spending echoed what was taking place in other sectors of the economy which put further pressure on the price levels and unemployment rates. Because of a previous incomplete recovery from the 1997 Asian financial crisis, Hong Kong was still facing a weak labor market at that point. The SARS outbreak brought about further increases in the unemployment rate because many sectors had to lay off their employees. Following this negative trend, the number of tourist visitors in the city dropped in the second half of March 2003 by 10.4% compared to the same period in the previous year. Another contemporary study reported a drop of 850,000 visitors in April 2003. As a result, the occupancy rate in Hong Kong dropped drastically from about 78% in early March to 18% in early May. The impact of tourism spending on retail sales was also substantial. It is estimated that retail sales dropped by approximately HK $2.0  billion in April alone (Siu & Wong, 2004). This translates into a cut of HK $4.2 billion in spending in the domestic consumption market. These figures were followed by a decline of 15.2% in April compared to the previous year. The evidence suggests that the stock market did not suffer that many dramatic fluctuations due to the SARS outbreak. Within the stock market itself, the shares of companies from the airline, hotel, and retail industries worsened more compared to those of companies from export-oriented industries. On average, the Hong Kong Hang Seng Index only dropped by 1.78% between 12 March and 30 April (Siu & Wong, 2004). In an attempt to boost the economy weakened by SARS, the Hong Kong government allocated US$1.5 billion (Knowledge@Wharton, 2003). The experience of businesses with SARS resembles different patterns. However, the majority of firms from the tourism and retail sectors manifested similar responses and coping mechanisms. For example, a member of the TMT of a local retail center shared that “the experience from SARS just alerts us and helps us to think of the worst-case–to cut costs? Or to change the out-of-the-box strategy to survive” (TMT of a Hong Kong, retail 1). Similarly, a hotel owner shared that “we took immediate action to show our clients how we implemented the hygiene procedure to help build up confidence from them” (Hotel owner, Hong Kong, 3). Another hotel owner shared insights on the prodigious need to orient toward taking immediate drastic measures to assure survival: “SARS let us realize that business can change from 90% to a single-digit occupancy rate. . . . How could we survive? So, it gave us an idea and prompted us to think about our plan” (TMT of a Hong Kong hotel, 3). Ultimately, the outbreak of the SARS epidemic not only severely affected the economy, social life, tourism, international trade, and other business activities, but it has also pointed out some of the similar challenges Hong Kong might face in the near future due to environmental problems mainly related to air pollution, population

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density, another endemic, or a pandemic. Apart from business owners, this has encouraged the population to change and improve their lifestyle as well as to demand better crisis preparedness from the authorities. Correspondingly, the local authorities established a Centers for Disease Control and Prevention. It was directed toward undertaking research, the development of new vaccines, the training of personnel, and knowledge spillover on how to control the disease spreading. The pandemic also taught businesses to develop and frequently test contingency plans as well as to build a better connection with their local communities and various sectors of the population. Some companies went further and developed preventive measures to diminish the risk of mass contamination in a single area by splitting their departments into different locations (Health Economics, n.d.).

6.4.2 The Impacts of and Responses to COVID-19 in Hong Kong Amidst the crisis, countries around the world were forced to take various extreme measures to control the COVID-19 virus. These measures were generated, tested, and implemented by both the private and public sectors across different levels of the economy. Diverse organizations had to consolidate their crisis management and contingency plans. This implies a high degree of diversity as a response to severity, velocity, and uncertainty. The contingency plans were also directed toward distinct goals diverging from mild to extreme, where some of them were literally about survival or were optimal exit plans. On the other hand, Hong Kong was able to construct a set of response plans utilizing its previous experience of the SARS epidemic. These crisis steering instruments might be observed through the lenses of the two precedents. The 2003–2004 SARS outbreak remains deeply solidified in the local memory of Hong Kong. This epidemic caused 280 deaths and a shrink in the city economy of 0.5% in the second quarter (Berlinger, 2020). This phenomenon has played the role of a deep alert for the Hong Kong administration which has used a conservative approach since the first cases of COVID-19 in the central Chinese city of Wuhan in December 2019 (Gunia, 2020). The city used a blend of various social distancing measures since the first cases were reported in early January 2020 in Hong Kong itself. At this point, the city had reached slightly above 1,000 confirmed cases out of a population of 7.8 million residents. Notwithstanding, Hong Kong is considered to be one of the most densely populated places in the world, and the government has demonstrated the ability to keep the case numbers under strict control by utilizing social distancing, contact tracing, isolation, and travel restrictions (Gunia, 2020). Starting from early January, schools, universities, and some governmental agencies were shut, and the vast majority of the population was directed to study or work from home. Other business-profiled organizations followed similar patterns and advised their employees to work remotely where possible as well. Later in March, when a large number of residents and expats started returning from abroad, the authorities took into consideration that a second wave of infections might occur and decided to strengthen the measures. These included banning non-residents from entering Hong Kong, making a 14-day quarantine mandatory for those arriving in the city, and closing businesses such as gyms, bars, karaoke, and other service-providing institutions (Gunia, 2020).

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Despite the drastic measures and the authorities’ abilities to keep the infectious situation under control, months of violent protests and the uncertainty over the US– China trade deal plunged Hong Kong into a recession year for the first time in a decade (Berlinger, 2020). The economy shrank by 1.2% in 2019 due to the increasingly violent social movement that paralyzed the city, while the GDP shrank by 2.9% in the fourth quarter alone (Berlinger, 2020). The protest severely hit the hospitality, retail, and food industries. Additionally, Hong Kong’s economic three-headed carriage (export, consumption, and investment) has been seriously impacted. For example, Hong Kong’s Small and Medium Enterprises Association Honorary Chairman Liu Dabang noted that because of the embargo ban imposed by Europe and the United States to fight the epidemic, some Hong Kong businessmen have been reduced or suspended orders by local customers, especially for non-essential consumer goods such as toys, accessories, clothing and luxury goods. (Mingpao, 2020)

Taking into consideration all peculiarities of the crisis, the Hong Kong government projected high uncertainties for the entire year of 2020 (Gunia, 2020). In this respect, based on previous experience, the Hong Kong government unveiled on 8 April 2020 a new stimulus package to support local businesses and individuals in response to the coronavirus pandemic (Ng et al., 2020). The stimulus package amounts to approximately 5% of Hong Kong’s gross domestic product targeting a wide range of industries, sectors, and businesses to help them diminish some of the COVID-19 crisis impacts. These include a wide range of economic stimulus measures (loans, a moratorium on debt repayments on strategic sectors, etc.), proposals to ease the burden of businesses and individuals especially SMEs, various subsidy schemes, employment state compensation schemes, and so on (Ng et al., 2020). These stimuli were oriented toward supporting organizations during the acute and chronic stages of the crisis in the key industries. Various pieces of evidence demonstrate that organizations in Hong Kong were able to learn some valuable lessons from the SARS outbreak (KPMG, 2020). The majority have already generated contingency plans specifically designed for epidemics. Oftentimes, companies test their drilling plans every year to ensure that their response in a real-time situation will be efficient and adequate. For example, one of the hotel owners from the interviewed experts mentioned that we treated that (COVID-19) similar to SARS and had planned on stocking up on PPE (clothing/face masks) for 3 months while there were no stocks on the market, hence employees have confidence in dealing with the pandemic. Additional SOP and Procedure & Policy, personal hygiene is required and learned from SARS, staff keep distance from the customer. (Hotel owner, Hong Kong, 1)

The investigated firms had the opportunity to test their plans considering that “the most important learning is the importance of having a well-drilled crisis management plan in place” (Eagar et al., 2020: 7). Evidence from the interviewed firms underlines

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that the most imperative thing is to focus on two things during the initial phase—to secure safety and to maintain a viable level of operations. This is in line with the issue management or the prodromal stage logic in the consolidated models. “The first 72 hours are important to come up with an overall strategy and to use your contingency plans for infectious-disease scenarios” (Eagar et al., 2020: 8). Similarly, Yao Sirong, a member of the Legislative Council of the tourism industry, said that the epidemic has “frozen” the entire tourism industry. To save themselves, some travel agencies have developed new businesses and launched online shopping platforms. Some travel agencies have also introduced local hotel reservation discounts (Pao, 2020). To help maintain a lucrative level of operations, based on previous SARS experience, the government has introduced more than 70 measures under the first round of the Anti-Epidemic Fund targeting severely affected sectors by providing one-off grants, cash subsidies, rental waivers, and so on (KPMG, 2020). In addition to the support from the authorities, the vast majority of influential organizations have introduced recovery-planning activities in their crisis management actions and contingency plans which should ideally bust the initial response and keep the situation under control (KPMG, 2020). “Immediately take action and establish a crisis committee working on the worst scenario!” (Eagar et al., 2020: 10). Similarly, other firms have stressed the emphasis on intensive communication while maintaining their employees’ and customers’ safety. These are equally important during the acute and chronic stages according to Fink’s (1986) model. “All staff have been given a two-month supply of surgical masks for them and their families (around 2,000 staff)” (Eagar et  al., 2020: 10). This consideration means providing a wide range of sanitizing and protective equipment, having a clear agenda for the mid-level management, and promoting wellbeing for remote workers. The staff also played a crucial role in educating other stakeholders by providing valuable personal experience-based examples. At the same time, there is an ongoing metamorphosis in terms of the CEOs’ manner of conducting operations as more delegation and trust are observed. “A new kind of leadership is required—the CEO needs to be a servant of his employees and to maintain a certain level of focus on their projects” (Eagar et al., 2020: 11). Simultaneously, more pressure is exerted on the CEOs as they gradually became a kind of role model that has to maintain a high level of morale and positivism to alter the fear of job loss as well as provide other guarantees to motivate their employees. These new job professional characteristics were developed by many executives. Additionally, the government authorities have stepped in and introduced supportive measures such as wage subsidies to eligible employees, one-off lump-sum subsidy grants, temporarily relaxed taxes, and job creation investments to create around 30,000 new jobs (KPMG, 2020). Another imperative learning from the previous experience is related to the artificial separation of teams inside the company. To secure the continuity of operations as well as decision-making, the top management oftentimes had to create different smaller operations and executive teams to secure the continuity in case one of the team became infected. “Always have a second-team ready to substitute the first team in case quarantine is needed” (Eagar et al., 2020: 13). This leadership practice has been inherited and further developed from the previous SARS epidemic. In this sense, task and decision delegation becomes an important key function that emphasizes its role in safeguarding the operations’ continuity. These previous learnings have also oriented many firms toward consolidating their partner ecosystem and

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bringing in more support of each other through knowledge and safety equipment sharing, guidance, new arrangements for future supply, and so on. The organizations became more open toward communicating with a variety of stakeholders including the government and other local authorities or communities. Some companies redesigned their contingency plans to meet the government safety plans and regulations. “Critical services for government and other institutions are specially secured; anything critical to the community, government, and society is done in a matter of hours, not days” (Eagar et al., 2020: 14). From their side, the public sector also supported organizations by injecting a cash flow into their operations or creating safeguard nets for their existing credit in the banks by covering them with government guarantees. Other economic actors also built very strong cooperation ties with various communities and labor unions by bringing in donations and contributions to their employees and families. Company leaders have realized that during extreme crises, companies have a moral obligation to help society, which is more important than profit maximization. Similarly, we analyzed the results through the lenses of entrepreneurialism and organizational learning. Considering the available results, we are inclined to believe that hotel owners and other retailers in Hong Kong are extensively efficient at employing their entrepreneurial judgment when designing and making strategic decisions to enhance resilience. For example, some of the top-management team members shared that they had considerably revised their business models and learned how to survive with a reduced number of customers. Some hotels have switched to providing mandatory-self quarantine or hotel apartment services. In this regard, it is also imperative to consider their motivation, which from the provided information resembles a more socially responsible nuance than a profit-driven one. Others have designed very attractive vacation packages for young couples and families. This is a strategy to partially substitute for the drastic decrease in the number of Mainland Chinese tourists. Furthermore, the managerial teams (especially those who are part of larger chains) frequently employ analogical reasoning to solve current and medium-term problems by adopting successful strategies from their satellite organizations or other actors. There is also clear evidence that the majority of the interviewees employed their past learning from the SARS crisis to overcome the current issues related to the pandemic. The managers shared that the previous crises taught them how to make decisions quickly and how to avoid or diminish disruptions. For example, a four-star hotel top manager shared: “The SARS epidemic let us realize that business can change from 90% to a single-digit occupancy rate. . . . How could we survive? So, it gave us an idea and prompted us to think about our plan” (TMT of a Hong Kong hotel, 3). Lastly, the industry is dominated by a general sentiment that it will take three to five years to fully recover, hence the vast majority of the current strategies are long-term oriented. As another hotel chain top manager shared: “We are positive in the mid-long range. But it will depend on how we can recover. Hopefully, the China/HK border will be reopened by the end of this year and maybe before the 2nd half of next year for other Asian cities with better control of COVID” (TMT of a Hong Kong hotel, 11).

6.5 Discussion and Conclusion To answer the proposed research questions, this article proposes a consolidation between Fink’s (1986) and González-Herrero and Pratt’s (1996) models and to further

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elaborate on the role of organizational learning and entrepreneurialism in overcoming crises and building resilience. The two models use a similar time scale and complement each other in terms of describing the crisis and, more importantly, demonstrating the beneficial effect of timely implications for prevention in the different stages of the models. The emergent findings have exposed the validation that the previous crisis (SARS) has played a crucial yet beneficial role for businesses in preparing a timely response to COVID-19. Evidence extrapolated from the narrated cases suggests that organizations from the city’s tourism and retail industries have made exclusive use of the previously accumulated knowledge and expertise in timely anticipation, thus dealing with possible impacts of the new pandemic on their daily operations. As noted by the panel of experts, owners, and executives—a large body of organizations developed contingency plans that were tested on a monthly and yearly basis depending on the nature and peculiarities of their business. Some organizations created specific protocols that were deeply rooted in their organizational philosophy and spread throughout their networks. When incorporating these shreds of evidence in the proposed coagulated model, it is palpable that the previous recent crisis experience contributes toward accelerating crisis detection and prevention during the prodrome (issue management) stage. The field data from the study also suggests that organizational learning plays a crucial role in supplementing the existing knowledge during the prodrome crisis stage. In visual terms, this dynamism can be illustrated by a flattening curve during the prodrome stage. This positive amplification effect could diminish the negative impact during the following acute stage. The additional information indicates that organizations have utilized their learning and expertise from the previous recent crisis to focalize on maintaining a lucrative level of operations. These cognitive exercises were often performed with reasoning through analogies of a similar situation or by comparison with other organizations. Some businesses provided additional resources to avoid the considerable disruption of their logistic chains. Others considered it imperative to maintain their employees’ and customers’ safety by introducing severe working protocols and providing the necessary safety equipment. Despite the difference among the organizations, the top management teams focused on issues that required immediate attention to avoid disequilibrium and disruptions to the entire value chain. Evidence suggests that at this stage, proactive organizations successfully identified the best solutions which considerably reduced the impact of the crisis in the acute and following stages. The supplementary materials suggest that organizations have become more proficient at administrating the crisis cycles by incorporating the learning and expertise into the chronic stage from the previous prodromal and acute stages. The organizations thoroughly considered the sources of the problems that occurred during the prodromal and acute stages and made imperative decisions that ensured the continuity of their operations and liquidity flows. At this point, a large number of organizations were able to adjust themselves to the crisis duration in this way, contributing to flattening the crisis curve at the chronic stage. This also represents the stage where organizations start developing a long-term orientation by enhancing their resilience. In the proposed consolidated model, the aforementioned metamorphoses could be illustrated by a compression in the crisis curve from acute toward the chronic crisis stage. Amidst the ultimate resolution stage, the organizations received support from the government and local authorities. In addition to the financial cushion provided by the local authorities, a vast majority of key industry businesses have introduced

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recovery-planning activities in their crisis management actions and contingency plans which should ideally bolster the initial response and keep the situation under control until the crisis ends. Collectively, the aforementioned developmental coagulation of the proposed models induces a supplementary theoretical substance in the anatomy of the crisis paradigm while contributing to the crisis management literature. If further anecdotal pieces of evidence prove to be correct, each of the existing crisis management models might need to reconsider the transition between the crisis stages and the extent to which a former crisis might impact the current crisis in their respective frameworks. Utilizing the proposed combination between Fink’s (1986) and González-Herrero and Pratt’s (1996) models, this study demonstrates that some stages of the crisis could be limited to a minimum impact. For example, a well-prepared organization that utilizes previous learning and expertise from the SARS case might eliminate the prodromal stage and potentially avoid a great portion of the acute stage (please see Figure 6.4 for a suppositional dynamic scheme). Additionally, when considering successive or interceptive crises, the evidence suggests that a combination of the resolution stage of the primary crisis and the prodromal or acute stage of the more recent crises might occur. Although, in theory, this

Figure 6.4  SARS effect on the COVID-19 crisis anatomy model (adapted and combined from Fink 1986 and González-Herrero and Pratt 1996).

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combination might be considered an additional burden to organizations, in practice, the opposite could occur. Organizations that are already in the resolution stage of the primary crisis might use all available instruments to diminish and/or completely avoid the prodromal and acute stages of the more recent crises. The studied data also suggests a theorization that segregates the frameworks of organizational resilience, entrepreneurship, and economic theories to provide practical advice for BRI-participating organizations and structures amidst adversity. Drawing on the previous cohorts of the literature (Horne  & Orr,  1998; Sutcliffe  & Vogus, 2003; Lengnick-Hall et al., 2005; Teece, 2007; McManus et al., 2008; Lengnick-Hall et al., 2011; Limnios et al., 2014; Duchek, 2020), we integrate theories that enhance our understanding of resilience and its mechanisms. Furthermore, we bridge the literature on organizational resilience with the literature on entrepreneurship and the economic theory of the firm. While resilience, in general, is key to understanding coping in and after crises (Folkman & Moskowitz, 2000; Tedeschi & Calhoun, 2004), it has yet to be linked to entrepreneurial initiatives in adverse conditions. We follow the approach of Foss and Klein (2005) who demonstrated how the theory of entrepreneurship and the theory of the firm can be linked using the concept of entrepreneurship as judgment. In addition, these contributions are bidirectional as organizational resilience frameworks are enriched with business-related capabilities and vice versa, while entrepreneurial theories are inspected through the lenses of coping and adapting to adversity. The proposed theoretical mechanisms and the analyzed data lead to several conclusions that might be useful for both the private and public sectors. In the primary case, the organizations involved in the BRI might utilize the proposed consolidation of the crisis management frameworks to directly mitigate the uncertainties of the ongoing crisis by utilizing the suggested learning and associative mechanisms. These mechanisms could be implemented through strict planning for every crisis stage. Various organizations might also share their crisis knowledge and experience at the local and regional levels while diminishing the direct impact of the crisis. On the other hand, in the case of policymakers, the present study indicates some economic trends that should be further anticipated. For example, in a similar vein to the current crisis, external shocks like technological innovation, a major shift in the economic landscape, or another pandemic can occur. The presented frameworks might help policy- and decision-makers prepare for plausible further trends and anticipate them by reducing complexity in advance. They also signal a stringent need for decisionmakers in business and politics to prepare pathways to respond and strategize in the event of another crisis. The findings contribute to the extended body of interdisciplinary scholarship on crisis evolution, crisis management, and organizational resilience. Primarily, it coagulates a vast body of literature on crisis management and integrates the case of Hong Kong into the present frameworks and models. Furthermore, it combines and builds on two prominent models in crisis management anatomy by introducing new behavioral evidence based on organizations from the city’s tourism and retail industries. This study deciphers the ways that organizations and groups are coping with the current crisis while utilizing previously accumulated knowledge and learning. We also signal for a need to study the coping mechanisms from a strategic management perspective by highlighting the potential theoretical contributions of the micro-foundations of these mechanisms. A further investigation may enrich the

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body of practical knowledge that firms require to cope with adversity at the regional level. When strategized correctly, the proposed models can be beneficial for both Hong Kong and Mainland China firms, especially those involved in the Belt and Road Initiative. For example, firms can design certain anticipation and coping strategies while utilizing organizational learning and analogical reasoning. To anticipate further crises, firms could also employ forward-looking cognition. As a result, this might change organizations from being crisis-prone to being crisis-prepared which, in turn, might alter the previous recent crisis negative perceptions and adjust the crisis anatomy paradigm.

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7 Challenges and Opportunities for SMEs beyond Singapore through the Belt and Road Initiative: Industry 4.0 Mok Hon Yong The Hong Kong Polytechnic University, Hong Kong SAR

CONTENTS 7.1 SMEs Braving the Pandemic with Industry 4.0����������������������������������������������175 7.1.1 SMEs Responding to the Belt and Road Initiative�����������������������������177 7.2 Industry 4.0: Entrepreneurial Orientation, Strategy, and Moderators������������178 7.2.1 Entrepreneurial Orientation Constructs���������������������������������������������178 7.2.2 Resources��������������������������������������������������������������������������������������������180 7.2.3 Strategy�����������������������������������������������������������������������������������������������181 7.2.4 Government Intervention and Corporate Governance�����������������������182 7.2.5 Customer Stratification and Internationalization�������������������������������182 7.2.6 Humans, Assets, and the Organization����������������������������������������������183 7.3 SME Case Study and Discussions: Digital Transformational Journey�����������184 7.3.1 Onn Wah’s Exploration and Exploitation Strategy�����������������������������185 7.3.2 Project Experimentation���������������������������������������������������������������������186 7.3.3 Managerial Evaluation of Organizational Ambidexterity������������������188 7.3.4 Onn Wah Experience��������������������������������������������������������������������������189 7.4 Data Integration Application for Industry 4.0: Sustainable Business�������������191 7.4.1 Data Connectivity: Respond with Alerts��������������������������������������������192 7.4.2 Data Integration����������������������������������������������������������������������������������193 7.4.3 Understanding Industry 4.0����������������������������������������������������������������194 7.5 References�������������������������������������������������������������������������������������������������������196

7.1 SMEs Braving the Pandemic with Industry 4.0 The COVID-19 pandemic has had a sweeping effect on the world and has brought immediate attention to the greater need for connectivity that coincides with the emergence of the importance of Industry 4.0. The race toward Industry 4.0 readiness has opened up enormous opportunities and challenges for enterprises, especially Small Medium Enterprises (SMEs). They can benefit from the Belt and Road Initiative DOI: 10.1201/9781003198147-7

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(BRI) agreement and achieve the required connectivity and integration between China, Singapore, and any relevant stakeholders. SMEs are critical to the world economy, especially in Singapore, where SMEs constitute 99% of the enterprises present, employ 67% of the workforce, and contribute close to 50% of total enterprise value. Most SMEs fall under the class of “Defenders” according to the Strategy Typology and Orientation Framework developed by Miles et al. (1978). As typical “Defenders,” SMEs tend to operate and thrive in a stable environment and have less desire to explore new opportunities outside their comfort zone. The three main challenges that SMEs face include challenging global environments due to internationalization, depressed profit levels due to the increasing operations costs in Singapore, and the rising urgency to transition from the third to the fourth industrial revolution (Industry 4.0) amid the raging pandemic since 2020. With the growing importance of the BRI between China and Singapore, it is time for the local “Defenders” to renew their strategies to tap into the expanded network of opportunities made available by the increased and improved connectivity of the member countries of the BRI. At the same time, SMEs can explore their previously learned cost-efficiency activities to attain forward-looking flexibility and open-mindedness when it comes to embracing innovation and technology through exploration activities to gain the necessary competitive advantages (Ireland et al., 2003). Over the recent decades, SMEs have predominantly focused on making informed investments in proven technology and automation. The main deliverables for the investment are to increase their productivity and profitability through exploitation activities within their expertise to compete primarily based on price and speed of delivery. Industry 4.0 was introduced to the German government by a specialized group in 2012. It started with many doubts by the SMEs. However, since the start of the COVID-19 pandemic, Industry 4.0 has become attractive and necessary to invest in to prepare the world for the new normal of connectivity and sustainability related to future unknowns. One of the most significant transformations that the world has experienced and accepted is the new normal of working and learning from home that was unimaginable before the pandemic. The fundamental changes to prepare the world to embrace the new model have accelerated the infrastructure needs for 5G enhanced connectivity, data center storage, and many demands for new hardware and software integrations to become Industry 4.0 ready. SMEs are now facing another steep learning curve to transition from the current computer/internet digital manufacturing condition toward the convergence of information technology/operational autonomous machines with cognitive computing. This chapter examines how the SME’s owners can better cope with the challenges even with limited resources and use the Entrepreneurial Orientation (EO) constructs to review their entrepreneurial characteristics. This is in addition to investigating the decision-making of appropriate Industry 4.0 strategies in different conditions. Manufacturers face a shorter product development life cycle with significant technology breakthroughs and demanding consumer needs. Therefore, it is risky for SMEs to build their capability and capacity from scratch where high-risk investments may result in a declining return rate on their investments.

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7.1.1 SMEs Responding to the Belt and Road Initiative With BRI connecting many countries, SMEs in particular can undertake collaborative hunting as a pack as an alternative to mitigating the risk by pooling their human resources and spare manufacturing capacities together in a strategic partnership, for example. The expanded resources can provide the partnering SMEs serving the same customers or industries with vertical exploitative strategies or for SMEs to work together with their customers to access horizontal exploring strategies. The common objective for small businesses here is to exploit and improve their production processes and manufacturing yield to obtain a financial gain for the firm that is within its means (resources). However, it is sometimes more economical to explore and venture together with interested partners who already possess the desired skill sets but who do not have the required sales network. Schumpeter (1934) stated that entrepreneurs are driven mainly by profit and are sociologically distinct and creative innovators. When entering the market, entrepreneurs tend to disrupt the existing equilibrium of incumbents by potentially making irrational, chaotic, and unpredictable moves. When SMEs become incumbents, they will face similar disruptions due to new entries. Therefore, it will benefit the SMEs to stay relevant and innovate to provide themselves with the necessary differentiation from their competitors. Investing and exploring new capabilities through innovation exploration will be the driving edge in the era of Industry 4.0 to continue to fulfill (supply) the core customer value propositions (demand) based on the speed of delivery (faster), competitive pricing (cheaper), and the quality of the work (zero defects) compared to simply investing in boosting their capacities. Since the early 2000s, the Singapore government has aggressively revised its pro-business policies to adapt to the fast-changing and competitive global environment. In January 2016, the Committee on the Future Economy was called together to review and take a fresh look at Singapore’s economic strategies to address the new challenges faced by Singapore’s enterprises. In November 2017, the Singapore Economic Development Board partnered with TÜV SÜD to launch a world-first tool, the Singapore Smart Industry Readiness Index, to assess an individual enterprise’s readiness level based on the three pillars of Organization, Technology, and Process. Internationalization, innovation, and deep skilling are the three main areas for SMEs, as proposed by the policies framed by the Singapore government, to use to encourage and grow. In particular, the pro-business policies supported by the Singapore government and its supporting agencies have assisted the SMEs (“Defenders”) and encouraged many enterprises to embark on automation projects and much promoted the digital transformation journey to Industry 4.0. It is essential to find the intent to create a favorable win-win situation for all relevant stakeholders and the appropriate strategies for SMEs to use to mitigate and co-share investment risks. This chapter will review a thesis and case study focused on a local SME established in 1961 and its subsidiary. The latter section will provide examples and discuss the effects of the various moderators regarding the strategy adopted by the SMEs shared in the case study. These moderators display different influences on the firm’s adoption of exploration and exploitation strategies related to the firm performance (Mok, 2019). The moderators identified are corporate governance, customer stratifications, government intervention, and internationalization.

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7.2 Industry 4.0: Entrepreneurial Orientation, Strategy, and Moderators With the emergence of Industry 4.0, several vital technologies have led the way when it comes to transforming industries including big data analytics, augmented reality, additive manufacturing, Cloud platforms, cybersecurity, and the Internet of Things, allowing for an efficient and effective integration between horizontal and vertical supply chains. This may confuse SMEs that are often overwhelmed by the variety. Therefore, it is advisable to focus on specific areas of new technology to bring in immediate and medium-term returns relevant to their specific industry. Technological turbulence (TT) is the rate of technological change. Studies by Kohli and Jaworski (1990) both indicate that the results will vary and depend on the rate of change and conditions. Firms can obtain a competitive advantage by adapting to changes for high TT conditions, whereas firms will not necessarily benefit from low TT conditions. Therefore, this chapter will bring in a level of awareness and provide insights suggesting that the same Industry 4.0 tools and techniques will bring economic benefits to some but not all. There are varying effects when using different strategies. Even with some degree of uncertainty, established firms, including SMEs, can no longer ignore the coming disruptive forces of Industry 4.0. The founder or founding team of the SME is the key to success and continuity for the firm. Therefore, it is exciting to find out the characteristics of successful entrepreneurs and whether SMEs can replicate past successes in the emerging era of Industry 4.0. EO has been shown to have a positive influence on firm performance by Wang (2008). This chapter will discuss this effect with examples.

7.2.1 Entrepreneurial Orientation Constructs EO is a multidimensional latent construct that characterizes the firm’s level strategymaking process that determines the strategic direction of its entrepreneurial activities (Lumpkin  & Dess, 1996). An SME’s organizational structure is typically centralized at the top with usually just one or few decision-makers who can be nimble and flexible. It can relearn and reinvent itself by adopting innovation with an appropriate risk-taking appetite. The following section will review the significance of the five EO constructs. Autonomy: Managing centralizes control while providing the freedom in de-centralized functions to exercise creativity. It is not an easy decision to empower and allow full autonomy for SMEs to invest in and research projects without a clear return on investment. SMEs need to prioritize managing their day-to-day activities to generate positive cash flow while also providing a calculated budget to drive new project activities simultaneously. A  later section will review ambidextrous exploration and exploitation strategies to discuss how SMEs can overcome Industry 4.0 with autonomy by carefully selecting the right individual or team to drive innovation. Innovativeness: This is the motivation to explore and depart from the comfort zone and being able to move away from proven successful working models to explore the unknown beyond to improve. Sometimes exploring the unknown does not necessarily cost more than the SMEs. However, the existing team will require dedication and effort to embrace the new tools and solutions introduced to their job scope to make

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the innovative exercise successful. This transition means that the users will often have to experience some short-term discomfort while learning new ways to perform their daily tasks. The primary considerations for innovativeness will also need to consider effective communication. Users need to understand the importance and appreciate that the transformation journey will ultimately bring in long-term benefits both individually and to the firm. Proactiveness: Before the pandemic, most SMEs have no urgency as it is still difficult to justify the cost to invest and experiment with digitizing. Moreover, thinking ahead of data integrating vertically and horizontally within the supply chain with data utilization. Two years later, many local SMEs are unprepared with minimal or no automation and a lack of data transparency while suffering huge inconveniences and disruptions during the physical lockdown. Restricted travel has started to prompt them to realize the benefits of Industry 4.0 solutions. The pandemic continues, and it is still not too late for any latecomers to begin their journey to overcome the challenging and changing landscape to avoid more disruptions. The SMEs who have started their digital journey early continue to explore and invest in more sophisticated automated solutions supported by the Singapore government. These are valuable visions and foresight for proactive SMEs to use to gain a competitive advantage over their competitors over time regardless of whether they are in good or bad times. Competitive Aggressiveness: SMEs often begin their entry into the market by offering competitive pricing and outperforming their competitors at a calculated cost. This strategy is to differentiate themselves from their larger competitors, and they will often sell low or provide services that others have ignored due to low profitability. With vast financing options available to the startup market, new startups are disrupting many industries with innovative solutions at a cost that often remain unprofitable for a while and unsustainable for long. SMEs may not be able to finance such risky ventures. However, suppose that price sensitivity continues to dominate the operating market. How can SMEs stay competitive? In that case, there are a few options. One is by producing more with less waste using the same workforce and automation in the era of Industry 4.0. This will be a viable option for the SMEs covered in the case study later. Risk-taking: The debate here is regarding conventional investments in traditional capital expenditure for tangible results versus risky investments into new tools or techniques with little or no benchmark referring to investment returns. SMEs are looking realistically and specifically at a risk-return trade-off when faced with limited resources before deciding on their Industry 4.0 strategy adoption. This case study will address the level and appropriate risks that SMEs can take by taking an explorative approach to finding suitable partners for riskier ventures. Autonomy, innovativeness, proactiveness, competitive aggressiveness, and risktaking may both independently and collectively influence and shape the firm’s orientation and decision-making for SMEs in Industry 4.0. Another critical aspect of the SME’s firm growth will be careful management to effectively allocate and deploy appropriate resources to align with any investments. Working within the company means is critical for SMEs. Careful planning can be considered by investing in small and simple projects to obtain reasonable gain and returns and building confidence within the team before seeking out new budgets to continue the learning to embrace new and complicated solutions while involving more members through human capital development.

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7.2.2 Resources Resources are critical to SMEs. This section will review product innovation in terms of the firm’s accessible intangible and tangible resources. The modern resource-based view of a firm can be traced back to the work of Penrose (1959) who scrutinized the principles governing the growth of firms. The theory has been further developed by Wernerfelt (1984) and Barney (1991). Wernerfelt (1984) studied the model from the dimension of resources and stated that the requirement of the firm to identify what types of resources can lead to higher profit margins. This is associated with the resource position barriers being analogous to the entry barriers, which are related to new entrants seeking strategic options to maintain the advantages over the incumbents. This chapter has adopted the primary concepts and classified the firm tangible resources under physical capital resources, human capital resources, and organizational resources according to the work of Barney (1991). For SMEs, human capital is the fundamental of the firm, providing the necessary coordination and operations needed to fulfill and build relationship bonds to meet the customers’ demands using their intimate knowledge and understanding, sustaining the firm with their insights. Singapore’s unemployment rate continues to stay low and manageable. With a small pool of local talent, SMEs find it challenging to maintain a delicate balance regarding their operational and development needs. On the one hand, SMEs are encouraged to invest in automation to increase productivity with less dependence on foreign workers. On the other hand, the local employees are encouraged to stay longer with the retirement age increasing to 65 in July 2022. How can SMEs retrain and retain existing members (especially the senior) or attract new and younger talents to manage these transformations? The physical capital usually requires a significant capital equipment investment to provide the manufacturing capacity needed to produce the required components or products. The organizational resources are present as supporting tools providing the connectivity to process information and the activities that monitor provide feedback with different internal and external techniques for effective communication. The SMEs’ primary intangible resources typically are their customers, agent, or sales network. These are valuable relationships established by related stakeholders over time. These resources, within the customer stratifications, can provide the correct priorities to develop a primary revenue channel. It requires substantial tangible resources to support and sustain a healthy profit level for the firm. The other potential intangible resources for the SMEs include needing the right channel to receive timely policy directions from government agencies or Trade Associations and Chambers (TACs). The information from these resources will allow the SMEs to apply for grants or subsidies from the pro-business directives provided by the government to clarify the industry’s technology needs. The inter-exchange of information also provides insights regarding new tools and techniques to support the Industry 4.0 journey. In a competitive and technological progressive market, it is necessary to invest continually to maintain the SME’s market share and positioning. It is therefore vital for SMEs to upkeep their resources to keep pace. This includes providing training for the human capital, providing good maintenance, introducing new physical capital to increase and maintain the quality of the outputs, investing in new and better organizational tools to digitize, and allowing data exchange and transparency with alerts for a faster response to abnormalities.

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7.2.3 Strategy After identifying and understanding the SME’s core resources, it will now be appropriate to consider the correct strategy to adopt for both the short and long terms. This section further investigates the fundamentals of the exploring and exploiting strategies. Exploration requires a firm to search and experiment to develop new or better solutions with several variations. On the other hand, exploitation coincides with the Quality Management System principles which aim to enhance the productivity and efficiency of the firm with clear choices and less variation (Lavie et al., 2010). Adopting both exploration and exploitation activities simultaneously can stretch the SMEs’ resources. So how can SMEs strike a balance to minimize potential tradeoffs? Will overemphasizing either strategy negatively affect the firm’s performance over time? Organizational ambidexterity offers more growth opportunities and at the same time allows the firm to maintain stability and simultaneously benefit and gain from experience according to the two contrasting strategies (Birkinshaw et al., 2009). Several modes overcome the challenges through contextual ambidexterity, organizational separation, temporal separation, and domain separation (Lavie et al., 2010). This section will discuss domain separation as the primary mode suitable for SMEs to consider, which is similar to divestment or a strategic joint venture alliance exercise. Striking an optimum balance of the two approaches will be of significant interest to firms with limited resources under different environmental conditions (Uotila et al., 2009). This mode will allow the participating firms to minimize the inherent tradeoffs of constraint when balancing its resources between the two activities with more parties contributing to the exercise. SMEs can look into three areas for potential collaborations: (1) different skills sets within the same market, working with partners within their supply chain, (2) same skills sets with different markets, co-developing and cross-selling to one another’s markets, and (3) same skills sets within the same market, consolidating among direct competitors. The different modes will be discussed in detail in the case study. The SME and its joint venture partner have experienced all three domain separations, allowing the firm to learn about new technology and innovations while keeping control of its core business. Larson and Brahmakulam (2002) explored and described “Innovation” as either a tangible output or a process gained from the knowledge that can be transferred to industry (Randall et al., 2017). A firm’s product innovation strategies are beneficial when it comes to shaping organizational objectives and supply chain actions. The following section will discuss the impact of the various moderators that can influence innovation in both exploration and exploitation activities. Internally, SMEs will often face substantial obstacles and resistance while adopting new and innovative ideas partly due to past successes and experience. Two scenarios where the innovation activities are developed with existing members and forming a new team with complete dedication are explored. The former will experience conflicts and the need to fulfill their daily operations duties. The effective way of working is to relieve the members of their original duties and to encourage them to deliver a new job scope. However, this requires a reciprocating effort and the motivation to take up new creative roles.

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The latter will be bringing in new members who are explicitly recruited to the firm to focus on the intended research deliverables at a higher cost.

7.2.4 Government Intervention and Corporate Governance With the government’s decisive intervention, SMEs can now apply for various government grant support targeting applicants with different competencies. These grants range from simple pre-approved solutions for specific industries to specific customized projects for SMEs. The applicants will need to work with the potential solutions providers to justify their application with innovative outcomes or automation, as well as improve productivity and engage in dedicated research and development (R&D) activities to reduce the cost limitation of setting up a new project team. The other activities through the empowerment and initiatives from the government to the TACs connect the SMEs to both local and international partners for collaboration and to schools who are responsible for educating and creating awareness of Industry 4.0 among both the students and all industries aligning with the national initiative of a Smart Nation. Innovation comes with change, and this change needs to be empowering to people with clear rules and purposes to allow the individual or team to perform within the defined boundaries. Information is essential, and clarity regarding the business continuity and strategy needs to be addressed for the SMEs to impact their transformation positively. Therefore, the SME’s organizational structure is crucial to the transformation journey for both internal and external-driven projects. In this section, the interest is in finding how SMEs can understand and equip themselves to make possible changes to their organizational structures through calculated risk since risk is unavoidable (Mintzberg & Waters, 1982). For SMEs, they should prioritize risk and knowledge management using timely information updates during their transformation. Revamping and introducing new risk assessments for business continuity and succession is where the key appointments align with the SME’s transformation objective and obtain sufficient resources to drive the firm’s innovation. The appointments manage any conflicts of interest for the necessary business and the new developing project functions. The other contingency aspect of the risk will be a continued knowledge management exercise which is critical to limiting business disruptions when key members leave the firm. The exercise includes proper documentation to ensure that any standard operating procedures (SOPs) are followed and executed. In-place monitoring tools and recording can allow for self-checks, improvements, and updates on the SOPs when appropriate.

7.2.5 Customer Stratification and Internationalization Although SMEs may not have vast resources, they play an essential role within the supply chain. SMEs can provide strategic options to their multinational corporation (MNC) customers by providing alternative solutions that their competitors or larger suppliers may not prioritize or are too rigid to change. Therefore, SMEs need to understand where they stand among their competitors and at the same time use

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internationalization as an opportunity to consider venturing out to expand beyond their home market. The management of customer relationship is the most delicate and critical function of the business. Business relationships can be influenced by the following market conditions: (1) perfect market, (2) seller’s market, (3) buyer’s market, (4) domesticated market, (5) captive market, and subcontracted market (Campbell, 1985). Traditionally, suppliers support the demand and profit of this relationship connection when there is demand for a buyer’s market. The SME owner or management team typically closely controls and manages any direct customer relationships. More resources and attention paid to the significant customers who provide a constant revenue source depend on their profit size. First, it is still logical and cost-effective for SMEs to continue exploiting their capabilities in their own home country to stay productive by maximizing the know-how built and accumulated over the years. The investment in proven manufacturing tools and techniques to obtain reasonable profits can generate a surplus budget to support other exploration activities. Second, the SMEs can explore beyond supporting their local customers to capture new overseas customers when they can do so. At the same time, the internationalization option will reduce any dependencies on existing major customers and diversify the sources of income for SMEs. Diversifying into other regions is especially important to other industries, and it is evident in the current pandemic where some sectors like aviation are badly affected while the semi-conductor sector prospers. Due to the diversity in their revenue channels, SMEs can react positively even during unfavorable business situations. The earlier section identifies human capital as one of the vital resources for the SME. It is sometimes difficult to recruit and retain performing young talent. Given its Industry 4.0 and the opportunities of the BRI, SMEs will need to strategize to strengthen inhouse training and potentially pool and outsource the resources as part of internationalization efforts. Externally, the potential collaboration of human capital can be between a marketing agent and a manufacturing firm or between manufacturers. The main aim is to exploit the strength and maximize the marketing activities of the agent to sell more when they are more products offered. At the same time, the manufacturers can focus on their critical competencies without recruiting marketing members.

7.2.6 Humans, Assets, and the Organization Internally, the key measures will be creating collaborations among the existing members and recruits. The suggestion is to involve the existing members (especially senior workers) who can provide the necessary knowledge and experience to exploit the existing know-how of the firm. The first group will provide the user’s perspectives and the issues for the innovation team members to address. The second group involves existing or new members (retrain or recruit new but experienced workers) who can provide leadership and become the future project account leaders who can operate the new tools and techniques. The last group will be new hires and young talents. This group may be inexperienced in terms of the actual manufacturing of the firm’s product. However, given the proper orientation and direction, this group can provide the catalyst and creativity to work with their seniors to obtain the right balance of operational discipline and innovation exploration.

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Automation can improve the company assets, including physical equipment and software, by automating their processes with add-on solutions. For the physical ones, adding robots will help to reduce the rate of human interventions. For the software, users can use new techniques like robotic process automation (RPA) to replace repetitive manual tasks with ease. These automation initiatives will be a good start for SMEs to consider picking the relevant knowledge and experience to develop their innovation activities. Lastly, the organizational resources that provide the data connectivity come at a cost. The main hurdle will be connecting to old machines and equipment that will not be economical in the interim and to justify doing so. This chapter prioritizes the need for incremental over radical innovation to allow SMEs with limited resources to manage their expectations early when they embark on their transformation journey and sustain the innovations. Adopting the correct strategies from the start is essential for overall success. If necessary, the SMEs may need to change and adapt when supporting innovation suppliers who cannot deliver the intended solutions, including new or changing key members, newer affordable technology, and financial limitations. The innovation journey will require several iterations, multiple failures, and overcoming uncertainty. Therefore, it is ideal to start working on critical modules or equipment that is worthwhile, differentiating the company immediately from the competitors and providing solutions that the customers will appreciate. For example, providing data for the forecasting of the machine availability to take up ad hoc or projected future activities. If the resources are available, they can continue to upgrade earlier projects to realize the long-term benefits further and integrate with future investments to create an integrated pool of resources that can connect their human capital and assets with the organization. With Industry 4.0, SMEs may be confused and hesitant to invest due to the challenging global conditions where sentiments of trade protectionism continue to gain traction and undermine free trade. The next section of this case study will address the experience and practical solutions that SMEs are developing.

7.3 SME Case Study and Discussions: Digital Transformational Journey The following section presents the case study of two SMEs from Singapore who have won three Enterprise 50 awards from 2015 to 2017. The section will share the SMEs’ exploitation and exploration strategies as part of building their capabilities and upgrading their manufacturing capacity in different conditions and considerations that have allowed them to diversify into other sectors. Onn Wah Precision Engineering Pte Ltd. (OWPE), established in 1961, is a “make to print” manufacturing firm focusing on the precision computer numeric control machining of components used in the oil and gas, aerospace, and semi-conductor sectors. The OWPE group has four entities located in Singapore, China, and Kaohsiung. Over six decades, it has proactively diversified into other industries requiring similar manufacturing capabilities and it has exported its products to the United States, Europe, China, Taiwan, Thailand, Vietnam, Indonesia, Malaysia, and the Philippines. The typical demand is for SMEs to supply a high-mix, low-volume production. Suppliers/subcontractors like OWPE must fulfill small batches of orders with high

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conversion needs. OWPE has been focusing on exploiting its manufacturing capacities and exploring new capabilities to meet the rising demand for a competitive price, quality, and an increased speed of delivery expectations. With emerging overseas and local competitors entering the market and progressing quickly, OWPE realized that investing solely in Singapore is no longer desired long term.

7.3.1 Onn Wah’s Exploration and Exploitation Strategy This case study discusses Onn Wah’s ability to deploy both product exploration strategies with external partnership and exploitation strategies by duplicating its successful local manufacturing know-how to set up new overseas subsidiaries following internationalization. Onn Wah uses two models for its external expansion strategies: (1) setting up new overseas manufacturing plants to duplicate its existing know-how, (2) joint ventures, and (3) agents. These strategic alliances help to build and consolidate its capacity to support overseas and local customer demands and to provide growth opportunities beyond the home market. For overseas expansion, OWPE benefitted from this early internationalization initiative with some risk-taking. However, as the economy of China grows, more local suppliers emerge and with rising operations expenses, the once competitive price advantage of manufacturing in China is no longer as attractive as before. However, overseas operations continue to stay relevant in the context of the pandemic lockdowns where this diversity has helped to relocate the manufacturing needs to alternate sites if required. Regarding the joint venture (JV) model, in 2008, Onn Wah Tech (OWT) was established between OWPE and Evergrowth Precision (EG), who were once competitors. The JV company took over the semiconductor micro-machining business from OWPE. This collaboration allows the OWPE to recalibrate its internal manufacturing strategies and to consolidate its attention and focus on its core aerospace and oil and gas businesses. In the earlier section, three models of collaboration based on different skill sets are shared and illustrated. (1) Different skills-sets-same market. Here OWT enters into alliances to cross-sell its products to the same customers through their partner. This partnership creates increased revenue for both parties, and OWT can add a new product offer to their customer. (2) Same skills-set-different market. In 2011, OWT entered a joint venture deal with one of its key component suppliers by sending its similar equipment to the new setup. The partner company continues its operations in their parent entity without any disruptions and conflict during the joint venture to specifically provide support regarding the OWT needs. (3) Same skills-sets-same market. OWT is an example that merges the partners’ manufacturing expertise and sales networks to increase the size and scale of their solutions overnight. In 2014, OWT established its overseas subsidiary in Kaohsiung to cater to its major customers in Taiwan. OWT also works closely with marketing agents to open up new overseas markets in other parts of Asia and the United States. This arrangement allows OWT to venture into markets once avoided due to inaccessibility and limited resources. OWPE provides precision engineering solutions to a broad spectrum of industries, while OWT only services the semiconductor industry. Both OWPE and OWT have a wide customer diversity and less of a dependency on a few major customers. However,

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both acknowledge the significant critical role of customers when it comes to defining their future investments to fulfill their current needs. It is also valuable to work and supply MNC customers who are world leaders, allowing the SMEs to perfect their best practices to anticipate future technology demands. OWPE started to evaluate improving their channels for information exchange and communication between their suppliers and customers to add to the top of their existing Enterprise Resource Planning software. The investment in data connectivity was to capture live manufacturing data and engage in advanced planning scheduling. This tool provides the long-term advantage of data transparency in the supply chain, especially given the current volatile environment where supply chain management is increasingly critical and needs to react to potential uncertainties that the manufacturing industries face. OWT started its digital journey by investing in a Manufacturing Execution System (MES). This tool allows data transparency on the shop floor which the MES tracks and feedback regarding the process status of each project. The information available in digital form can be remotely accessed, which is valuable and vital, especially during the pandemic when there are quota limits and control over the number of employees returning to the office/workshop. As an SME, any form of financial assistance will be helpful to the firm, and local Singapore SMEs are on the receiving end of a lot of pro-business support. Both OWPE and OWT benefit from the grants awarded by Enterprise Singapore (ESG) which greatly help to accelerate many of the automation and innovation activities used to improve productivity. In 2021 alone, ESG helped 12,600 enterprises access financing and approved an $8.6 billion loan to cope with the business challenges. Separately, ESG supports 1600 enterprises with their internationalization projects. SMEs can also apply for support to attend local and overseas trade shows to explore international marketing activities. Many available programs benefit both employers and employees through the Job Credit program and other workforce skills qualification programs that Singapore’s Workforce Development Agency administers. The program funds the salary and training costs of the employees selected to lower the overhead costs. The public–private partnership enhances the business capabilities and focuses on training that OWPE and OWT value. Other agencies, like the Infocomm Media Development Authority, provide various forms of support from pre-approved digital and related technology solutions that SMEs can invest in with attractive support levels of up to 80%. At the same time, SkillsFuture Singapore (SSG) promotes training and life-long learning for individuals by working closely with training institutes.

7.3.2 Project Experimentation While OWPE started as a family business, the company is keen to explore and the JV for OWT is a good initiative that has brought good returns to both entities. The directors believe in meritocracy and are open to nurturing both new talent and existing employees who have demonstrated their capabilities, the right attitude, and values that align with Onn Wah to undertake leadership and ownership of the company. Hence, OWPE actively identifies suitable candidates with the same vision as the company and the good qualities and abilities to assume leadership appointments. Through mentorship by the current core management personnel and proper planning involving the

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progressive delegation of authority and power to the identified group of senior managers, OWPE has been grooming and nurturing its human resources. As SMEs, it will always be challenging to compete with MNCs and larger firms for the limited pool of talent available. OWT in 2021 started a new project team and granted them the autonomy to collaborate with schools to share and co-develop new Industry 4.0 tools and techniques through final-year projects with students. The purpose was to excite future engineers and their peers in the hope that some of the graduates will eventually join OWT shortly to speed up the scaling up of the developing solutions. To name a few, the Industry 4.0 development for OWT includes using RPA techniques to allow users to generate the required manufacturing drawings using a digital form to reduce more than 90% of the work carried out manually. Given the competitive nature of the trade that OWT operates in, it cannot afford to be complacent and continues to innovate to excel. Further exploring the techniques can expand the potential of integrating different software and additional programming tools that can connect hardware to software and vice versa. OWT is looking into an ambitious plan to create a new eCommerce business model to create an online marketplace utilizing mobile technologies to fulfill real-time demands and the customer requirements. The system will be linked to design automation with a centralized product data management feature that manages the design data and engineering processes in one central location. The roadmap will allow customers and overseas sales members to input their requests online to check the relevant details like a 3D preview of the components, get a live quotation, and estimate the delivery before initiating the project with the required information to proceed. The new solutions offer a better user experience with almost immediate information. These activities are made possible by a deep understanding of the trade. The earlier examples are known tools that are already available on the market but have yet been exploited and introduced to the manufacturer’s ecosystem. Innovative solutions are not limited to larger firms with better access to new technology. Although limited by resources, SMEs, especially their human capital, can also transform and be disrupted by working with like-minded partners. The exploration strategy does not limit the activities or exercises within the firm. It can come in multiple combinations using partnerships and collaborations among customers, industry players, competitors, and external party venture capitalists to invest and co-develop to mitigate the risk of the SMEs compared to going at it alone. In the case of OWT, working with the school is another good alternative. By using newer techniques on the same tool, SMEs can afford to do so at a small scale with a dedicated team to innovate while allowing the rest to continue to perform their daily tasks, exploiting their routine activities. Onn Wah is always on the lookout to better understand existing and potential upcoming digital technologies that can complement their existing business models. To Onn Wah, digital transformation replaces the manual, traditional, and old business models with the latest digital alternatives. This transformation aims to improve the data accessibility to allow users to make the right decisions confidently. The investment in digital technologies prioritizes achieving two other objectives. First, it improves the process bottlenecks and overcomes the manufacturing line imbalance through advanced dynamic planning schedules that are often superior to the current production monitoring tools. Second, it uses sensorization by installing suitable sensors to

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machines to monitor and prevent potential machines failures and breakdowns and to collect data using data analytics to recognize and predict unfavorable conditions that will affect the manufacturing quality. However, it is not straightforward to expect immediate results by introducing new technology and expecting the solutions to work independently. This reshaping process takes time and involves the total commitment of the team to be successful. Besides exploring the potential of Industry 4.0, Onn Wah continues to spend much of its effort in exploiting their core competency of manufacturing. Human capital training and adding process automation to the existing assets will always be the main driving exploitation activities used to complement Onn Wah’s lean manufacturing programs and its Industry 4.0 projects. The goal it wants to achieve is to become a smart factory shortly.

7.3.3 Managerial Evaluation of Organizational Ambidexterity In the earlier case study of Onn Wah, both OWPE and OWT demonstrate some degree of Organizational Ambidexterity. This approach may be helpful for fellow SMEs where merging different entities can leverage the existing and prior knowledge to complement the strengths and weaknesses. Exploitation has been defined as “refinement, choice, efficiency, production, selection, implementation and execution.” This is a direct contrast to exploration, which was defined as “search, risk-taking, experimentation, play, discovery, flexibility and innovation” by March (1991). OWT started the joint venture as a company experimenting with two teams of members, two different manufacturing approaches, two different cultures, and different machines and equipment. It took some effort and time to iron out the differences and to standardize the working procedures and machine operating systems. OWT started its first automation project in 2014. It learned the basics and took the initiative to be independent of its overseas supplier. Its team can modify certain areas of the machines independently. The team benefits from the automation as they work faster, produce more with less waste, build confidence, and have gained more appetite for more productive solutions before evaluating the Industry 4.0 solutions from 2016. The empirical assessments undertaken by Mok (2019) contribute to a better understanding of how SMEs can still benefit by (1) not concentrating their resources to serve their significant customers and (2) investing in exploratory innovation together with exploitation activities. The study further integrates Barney’s (1991) primary concepts of the small firm’s physical, human, and organizational resources to present a preliminary design for a data integration framework. The work illustrates the basic requirements needed to provide the critical linkages to coordinate and deploy adequate resources to address the supply (SMEs) and demand (customers). This will be the suggested focus and understanding for the SMEs to help them aim for sustainable competitive advantages in the context of Industry 4.0 with the following objectives:

1. How to adapt and react by making the correct decision in terms of both internal and external changes (leadership, government policies, and customer demands).

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2. How to handle current orders and future changes (customer buying behavior and potential disruption by new technology to the current manufacturing approaches, especially data sharing in the supply chain). 3. How to overcome the distance demand with small and flexible plants or overseas agents when the transport time and costs are not practical to support from the focal country. This also addresses the requirement for pre- and post-sales support for overseas customers.

7.3.4 Onn Wah Experience This section will share the theories, concepts, and summaries of Onn Wah’s strategies in different conditions and put them into a condensed figure for the benefit of the SMEs to begin their Industry 4.0 journey from a different perspective (Figure 7.1). The intention and purpose of introducing the concept of the data integration framework for the future factories do not mean replacing or reprioritizing the existing production approaches. Rather, it complements them and allows the users to appreciate the importance of digitizing data in their processes. When applied, these new tools and techniques further simplify the tedious documenting of the firm’s knowledge and experience. The concept looks into satisfying the relationships of demand and supply with data integration through a combination of exploration and exploitation strategies. The primary aim is to illustrate the data connection between the human and the machine internally with the organizational tools that provide adequate data transparency externally to the customers to narrow the information asymmetry and build trust in the relationship. The specific focus and guidelines for the SMEs will be to invest their critical resources in human capital resource training, specifically retaining and recruiting both existing and new hires. Investing or retrofitting their existing physical capital resources with sensory and other automation upgrades will add to the new or improving organizational resources used to manage, explore, and exploit through data connectivity and management. Data are king in the digital era. There are three levels of digital competency for comparison. Level 1 is the entry level where the firm can start digitizing by replacing hardcopy data with a digital format. Level 2 is where the users can utilize the collected data to perform other tasks simultaneously. A  level 3 expert learns from historical data and independently performs artificial intelligence tasks. Those who can collect (level 1), interpret (level 2), and automate (level 3) using the data will be advantageous if the demands require this intelligence to be in place. It may be too farfetched for the SMEs to reach the autonomous level. However, the recommendation is for SMEs to at least invest in tools for data collection. Data in a digital format can be helpful. It may become an essential requirement even for small businesses in the future as the world economy is pushing ahead for more responsible business approaches. The manufacturers’ data can provide understanding and integration in the supply chain to allow traceability to better fulfill the future need for a green and sustainable business model.

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Figure 7.1  Concept of a data integration framework.

The digital transformation journey toward Industry 4.0 readiness with data integration is where the primary aims will be to achieve the means to respond intelligently with intuitive alerts to minimize wastage and to close the gap of uncertainty with information in both directions for both suppliers and buyers. The last section will discuss why data are critical in Industry 4.0 and application examples for reference.

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7.4 Data Integration Application for Industry 4.0: Sustainable Business This section will discuss the data connectivity and decisions made between humans and machines according to the earlier data integration concept. How does the same data set connect the supply and demand side and how does it close the gap? How can SMEs continue to exploit yet allow explorative activities through the careful management of their resources? Figure 7.2 illustrates three pairs of opposite through (1) Demand versus Supply, (2) Alerts versus Responses, and (3) Human versus Machine. The horizontal row for demand and supply will focus on conveying any changes in demand and supply, accepting the changes with minimal disruptions. The responses and alerts are either through humans relaying the messages or through machines performing the task. How can users improve on the current information exchanges? Humans and machines are in the middle of all actions. How can they coexist to perform as an integrated unit? The primary objective is to address the changes to minimize waste to improve firm performance. The following example explains the scenarios both externally and internally in typical buyer and seller market conditions in the recent pandemic. The pandemic has resulted in a nationwide lockdown in many countries, and this has affected both buyers and sellers. Many suppliers in the supply chain are affected and cannot deliver on time. How can buyers and sellers react adequately to supply changes through alerts to respond to a potential failure in deliverables and other relevant information that affects the supply chain? Buyers not digitally connected to suppliers will often rely on e-mail and calls to verify the individual suppliers’ status and commitment. These can be improved and overcome through data sharing, allowing the buyers and sellers to build a network of information exchanges to build confidence and trust and to provide capacity feedback and alerts.

Figure 7.2  Data integration application for industry 4.0.

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How can buyers immediately divert their demands to other suppliers for stop-gap measures to be implemented so as to not fail in their delivery to their end customers? Buyers relying on local suppliers are badly affected when their nations are affected, therefore there is the much-debated option of diversifying supplies with internationalization post-pandemic versus the pre-pandemic preference for localization due to protectionism. On the other hand, if they can collaborate with local or overseas partners, the sellers can continue to supply at other sites that are unaffected. They may have spare capacity to assist the focal partner who is in need of support. As discussed in the last section, data connectivity can transfer the technical know-how for these collaborations through remote aid using augmented reality (AR) and Cloud Manufacturing (CM). Internally, SMEs, particularly sellers, need to understand how their humans and machines can collaborate and work together effectively. The purpose is to meet the increasing or decreasing user demands with less product wastage and a controlled inventory through the correct data forecast. How can humans interact with machines to reduce the quality defects through preemptive alerts? How can machines help humans automate and relay messages to other workstations or external parties to provide relevant information to allow the decision-makers to respond to abnormalities efficiently? Sensors fitted to machines can monitor and detect potential accidents that can cause damage to the surroundings. Once applied with compatible electronic devices, these messages can alert humans so then they can prevent and minimize losses. Once trained to operate and interpret the received data, humans can work more safely and effectively with this connectivity. Depending on the relevance, the data can be monitored in real time if it is critical to react to changes. Users can extract the stored information, learn from specific incidents and perform post-analysis for future improvements. With introducing the data integration concept to the SMEs, the aim is to allow the SMEs to understand the rationale behind it and to introduce changes and improvements systemically according to the three critical aspects highlighted in Figures 7.1 and 7.2. A quick summary is that there is where the human and machine are the core manipulators operating at the pivot center of all collaborations with data exchanges using the right technology tools and techniques between them. The importance of introducing data transparency where users can access the data among themselves aids in the achievement of strong linkages with connectivity to allow for a seamless response to alerts.

7.4.1 Data Connectivity: Respond with Alerts This section will discuss alerts and how improving this aspect can help SMEs react and respond effectively. There are many instances where the alerts are passive rather than reactive, where things go awry and there is too little time to respond appropriately to stop and limit the damage. Is it possible to allow both humans and machines to receive the alert to enable them to act in real time? Alternatively, having alerts that can predict potential future failures allows the user to act now rather than regret not doing so later. First, it is no longer valuable and helpful to have passive alerts that are only informative but not responsible enough to stop the activities to keep the situation from

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worsening. Looking ahead and ideally for application needs, it will be more helpful if preemptive alerts notify the users in advance. This section identifies the former as a negative alert and the latter as a positive alert. An illustration of a negative alert after an accident happens is when a cutting tool slams into the clamping vice of the manufacturing machine. These are instances that may go unreported and unattended. The continuance of operations will cause unplanned downtime due to the damaged spindle head of the machine. Responsible employees can raise an incident report but this is still a typical example of a negative alert dependent on individual discretion and discipline. Positive alerts can be embedded or installed in the machine to monitor excessive vibration. Voltage sensors can be used to alert the users of abnormalities immediately. Updating to schedule machine downtime can resolve issues early where early positive alerts are used to detect vibrations deviating from the normal operating conditions. The manufacturing system is typically broken down into the discrete steps of the manufacturing process where there are specializations amidst the work that is distributed to the assigned machines or operators (Rosenberg & Nathan, 1982). The solution is to set up a manufacturing black box within the system similar to the aerospace black box that records events. The significant difference and benefits will be recording and monitoring each step of the manufacturing process with real-time data and adding to the useful sensory devices to enable the users to have different levels of surveillance. The software system, combined with the right tools and techniques, will provide the necessary alerts for the SME to respond responsibly, quickly, and accurately to changes related to both humans and machines.

7.4.2 Data Integration For data connectivity and integration to occur, communication channels are essential linkages that provide the means for the organizational tools to work according to the firm’s needs. Communication channels have improved significantly from a fixed line to a mobile, and from walkie-talkies and emails to live messages for the intended recipients connected in a network. These investments come at a price. Even if the SMEs can obtain monetary support or grants from the government, the firm needs to look for help with the long-term recurring expenses, typically through software as a service for existing and upcoming models from the service providers versus a perpetual license, which may not be upgradeable. It is crucial to choose suitable suppliers, especially for emerging startups, as it is these investments in organizational resources that will lay the foundation for the firm’s data integration needs. The next option is adopting CM solutions by paying only for the consumption of the users. Usage based on demand is where the suppliers need not invest in a lump sum of capital expense and instead enjoy the required solutions through the operating expense approach. This provides an opportunity for local and overseas stakeholders to adopt Industry 4.0 solutions fast. CM can interact among businesses between the Cloud users related to supply and demand, providing elasticity, flexibility, and adaptability through real-time interactions (Wang et al., 2012). The tools involved can improve data visibility by matching live demands with available supplies. With a greater interest in a circular economy

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that aims at reducing, reusing, and recycling, these modes of open collaboration can minimize the risk of over-manufacturing and wastage within the ecosystems by:



1. Paying to use what is needed and eliminating physical inventory concerns. This benefits the diversity of the risk by using different suppliers in the supply chain (both local and overseas). 2. Achieving size and scale with an enlarged pool of resources through the collaborations where smaller firms work together to compete. 3. Digitizing the data so then the users can apply through real-time visualization aids connected to the network of supply and demand. This is to develop trust in the ecosystems that can match ad-hoc requirements with suppliers with the capacity to meet the demand.

The next focus will be on human capital. Besides investing in training, there is a need to strengthen the human resource management and improve the connections among the existing members with new hires. Singapore and many other nations have faced similar issues in terms of the shortage of local talent and managing incoming foreign talents with an aging workforce. These suggestions will enhance the transition from Industry 3.0 to 4.0 and limit the disruption through strategic planning. The new appointment of project and account managers within the existing team or recruits will help the team focus on their current operational needs and at the same time have dedicated members to explore and develop new tools. Senior members rotated to assist and provide leadership and guidance to the project team can help them to understand and develop solutions to operational issues. These collaborations are essential where the senior members need to provide the necessary knowledge and expertise to sustain the capacity yield and at the same time build their capabilities. The firm can invest in more automation or robots to replace humans. However, it still requires the right human resources to be adequately trained to reach a level of independence when operating and maintaining the enhanced physical capital asset resources. Therefore, with limited valuable human capital resources, the company must put in good human resource practices to balance and manage the varying expectations of the different age groups of members to attract, retrain, and retain talents.

7.4.3 Understanding Industry 4.0 This chapter provides an alternative to the understanding and awareness of Industry 4.0 by sharing some industrial examples of practical solutions. The emphasis and suggestions are on how smaller firms with limited resources can adopt ambidextrous exploration and exploitation strategies. The purpose is to gain a competitive advantage when moving toward better manufacturing capabilities and to prepare SMEs for the next wave of global disruptions and competition in the race toward Industry 4.0. Most importantly, to succeed in Industry 4.0, SMEs need to be aware of technology changes, select suitable solution suppliers to grow together, and plan their execution with the right human resources. Industry 4.0 will bring about changes which is often followed by anxiety, stretching the existing financial commitments, and the need to be flexible to finetune their strategies over time to achieve their goals. The top management needs to provide the leadership and clarity when embarking on this

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transformation journey to reduce the anxiety and uncertainty of its employees. These investments require an adequate budget, and SMEs need to accept and learn from their failures to progress. Every firm is different, and the SMEs are unique in their domain where their identity, survival, and sustainability often depend on only one or a few leaders in the company. In the early phase, SMEs typically started with only a few members. The leaders must multi-task and react to every issue from sales inquiries to operational needs. New members can join when the firm grows with more resources and the leaders will start to empower and delegate to secure new revenue streams. Leaders grow with experience and build confidence when their firm performance increases over time. Therefore, the knowledge accumulated is essential and should be documented correctly in digital form for future improvements and training. The desire for success will push the leaders to continue striving to shape and make difficult decisions for the firm’s strategic renewal concerning their past successes, current behavior, and future deliberation for the best interests of the firm. How can the local SMEs continue to stay relevant and benefit from undergoing digital transformation to stay competitive in the Global Economy? The pandemic has brought about massive changes and highlighted the importance of connectivity. The BRI strategy also emphasizes technology-related projects and attention to the green sustainable business model, thus requiring more planning and collaboration. The shift of responsible trade has amplified the need for data visibility to monitor and track the progress of partners to be more responsive. Responsible suppliers in the supply chain do their part with proper governance and reporting. It may not be too far from now when the demand for data for use in discrete manufacturing processes becomes the new normal and it is a requisite for businesses in the supply chain to track the process from the source to the end. The information can enable the comparison of suppliers, matching partners with better energy management, and a low-carbon footprint with responsible sourcing. All of these initiatives will require data to see how the ecosystems can bring data together and integrate it to work toward a sustainable economy. There are no clear winners in the current race toward being Industry 4.0 ready where so many existing and emerging suppliers are coming on board. Infrastructures and developments are still aplenty, ongoing, and sometimes costly. Take the example of OWT. There have been project failures in their journey for various reasons but they have learned from their mistakes and moved on with new sophisticated projects once they are able to manage and do more. Sometimes, the firm needs to embark on the journey before understanding and realizing the benefits of digitizing their data. The investment can only bring returns when the data are ready and integrated with other systems. For OWT, the most significant benefit due to this transformation journey is the increase in revenue per employee by almost three times over seven years, doing more with the exact headcount. OWT has maintained its energy consumption even during the growth period by increasing its floor space to accommodate new machines. Financial and operational discipline, engineering principles, and innovation exploration are the key to success for OWT. The operating procedures adhere strictly to the SOPs, exploiting the accumulated experience and knowledge where the messages are conveyed in simple terms while continuing to explore beyond their comfort zone with urgency. This is done by applying common sense where the members understand why and what the firm is trying to achieve by producing products of a consistent quality and

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instilling the principles of not deviating away from the rules and boundaries set forth. This encourages integrity when performing the task with pride and responsibility. This study recommends that SMEs address the fundamental issues by standardizing their operating procedures and applying the best practices before adopting ambidextrous strategies for Industry 4.0. Solution suppliers can provide SMEs with the tool and design techniques that they can use. However, the most significant responsibility lies with the SMEs to make the investment worthwhile by enforcing what is right, correcting the wrongs, and seeing what its members can do so without much supervision to do what is the norm with integrity. As Mok (2019) suggested, there is no proven singular approach where the exploration and exploitation in technology innovations alone can immediately increase firm performance. It requires a collective effort and multidisciplinary approach to grow and strengthen the ecosystems to connect the right supplies to the demands. Increasing the awareness of the benefits of new technology tools and techniques can benefit users by providing a good benchmark of successful stories and standards for adoption to shorten the learning curve of the adopters. The world needs enterprising and innovative leaders who can lead enterprises with new technology, create new market opportunities, make a difference, and contribute to the environment by deviating from the current linear economy approaches that are not environmentally friendly. To summarize, the adoption of Industry 4.0 aims to use innovative tools and flexible techniques that can provide critical alerts to allow SMEs to react and respond accurately and in a timely manner to create a differentiation value for their products in the ecosystem. Most significantly, using data can help them gain a better understanding of what they need to use and produce within a sustainable business model of continued growth to compete in the global market expanded by the BRI economic connections, collaborations, and integrations with innovation.

7.5 REFERENCES Barney, J. (1991). Firm resources and sustained competitive advantage.  Journal of Management, 17(1), 99–120. Birkinshaw, J., Probst, G., & Tushman, M. (2009). Organizational ambidexterity: Balancing exploration and exploitation for sustained corporate performance.  Organization Science, 20(4), 685–695. Campbell, N. C. (1985). An interaction approach to organizational buying behavior. Journal of Business Research, 13(1), 35–48. Ireland, R. D., Hitt, M. A., & Sirmon, D. G. (2003). A model of strategic entrepreneurship: The construct and its dimensions. Journal of Management, 29(6), 963–989. Kohli, A. K., & Jaworski, B. J. (1990). Market orientation: The construct, research propositions, and managerial implications. Journal of Marketing, 54(2), 1–18. Larson, E. V., & Brahmakulam, I. T. (2002). Building a new foundation for innovation. Results of a workshop for the national science foundation. Santa Monica, CA: Rand Corp. Lavie, D. S., Stettner, U., & Tushman, M. L. (2010). Exploration and exploitation within and across organizations. Academy of Management Annals, 4(1), 109–155. Lumpkin, G. T., & Dess, G. G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1), 135–172. March, J. G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87.

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Miles, R. E., Snow, C. C., Meyer, A. D., & Coleman Jr, H. J. (1978). Organizational strategy, structure, and process. Academy of Management Review, 3(3), 546–562. Mintzberg, H.,  & Waters, J. A. (1982). Tracking strategy in an entrepreneurial firm. Academy of Management Journal, 25(3), 465–499. Mok, H. Y. (2019). Entrepreneurial orientation and technology exploration of SMEs in Singapore: Ambidextrous strategy for industrial 4.0. (Doctoral Dissertation), The Hong Kong Polytechnic University, Hong Kong SAR. Retrieved from https://theses. lib.polyu.edu.hk/handle/200/10927 Penrose, E. (1959). Theory of the growth of the firm. New York: John Wiley & Sons. Randall, C., Edelman, L.,  & Galliers, R. (2017). Ambidexterity lost? Compromising innovation and the exploration/exploitation plan. The Journal of High Technology Management Research, 28(1), 1–16. Rosenberg, N.,  & Nathan, R. (1982).  Inside the black box: Technology and economics. Cambridge: Cambridge University Press. Schumpeter, J. A. (1934). The theory of economic development, tr.  By Redvers Opie. Harvard Economic Studies, 40, 20. Uotila, J., Maula, M., Keil, T.,  & Zahra, S. A. (2009). Exploration, exploitation, and financial performance: Analysis of S&P 500 corporations. Strategic Management Journal, 30(2), 221–231. Wang, C. L. (2008). Entrepreneurial orientation, learning orientation, and firm performance. Entrepreneurship Theory and Practice, 32(4), 635–657. Wang, M., Zhou, J.,  & Jing, S. (2012, May). Cloud manufacturing: Needs, concept and architecture. In  Proceedings of the 2012 IEEE 16th international conference on computer supported cooperative work in design (CSCWD). IEEE, pp. 321–327. Wernerfelt, B. (1984). A  resource‐based view of the firm.  Strategic Management Journal, 5(2), 171–180.

8 Would China Become the Next Natural Wine Hub? Wu Hei Ming Amy Hong Kong Sustainable Society Hong Kong SAR Lianne K. W. Lam Department of Management and Marketing, The Hong Kong Polytechnic University, Hong Kong SAR Chun Kwok Faculty of Business, City University of Macau China CONTENTS 8.1 Natural Wine Is the Future of the Wine Industry������������������������������������������ 200 8.2 Literature Review��������������������������������������������������������������������������������������������201 8.3 What Is Natural Wine?����������������������������������������������������������������������������������� 202 8.3.1 Natural Wine—A Brief History�������������������������������������������������������� 203 8.3.2 Natural Wine, Organic Wine, Biodynamic Wine, and Conventional Wine���������������������������������������������������������������������������� 204 8.3.2.1 Conventional Wine������������������������������������������������� 204 8.3.2.2 Organic Wine��������������������������������������������������������� 205 8.3.2.3 Biodynamic Wine��������������������������������������������������� 205 8.3.2.4 Natural Wine���������������������������������������������������������� 206 8.3.2.5 Natural, Organic, Biodynamic, and Conventional Wines—A Summary������������������������ 207 8.4 Natural Wine in the Old Wine Countries along the One Belt One Road: Case Studies��������������������������������������������������������������������������������������������������� 207 8.4.1 Austria: The Land of Biodynamic Farming; the Heart of Central and Eastern Europe; Immense Trade Support���������������������������������� 207 8.4.1.1 The 1985 “Wine Scandal” and the Austrian Wine Marketing Board������������������������������������������� 208 8.4.1.2 Time, Grapes, and Love: Natural Wine Growers in Austria���������������������������������������������������������������� 209 8.4.1.3 Reception of Austrian Natural Wine on a Domestic Level��������������������������������������������������������210 8.4.2 Croatia: The Land of Sun and Sea; Gastronomic Tourism����������������210 DOI: 10.1201/9781003198147-8

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8.4.2.1 The Wine Landscape of Croatia������������������������������210 8.4.2.2 Indigenous Grape Varieties in Croatia��������������������211 8.4.2.3 Croatian Wine-Making Projects�����������������������������211 8.4.2.4 Wine Tourism in Croatia�����������������������������������������212 8.4.3 Slovakia: Award-Winning Wines; Discouragement from Authorities������������������������������������������������������������������������������������������212 8.4.3.1 A Long History of Wine-Making in Slovakia��������213 8.4.3.2 Tokaj and Others������������������������������������������������������213 8.4.3.3 Most Prominent Slovakian Natural Winemakers���214 8.4.3.4 Obstacles Faced by Slovakia’s Natural Winemakers�������������������������������������������������������������215 8.5 China: The Newcomer to Natural Wine���������������������������������������������������������215 8.5.1 The Wine Terrain of China����������������������������������������������������������������216 8.5.2 China’s Aspiring Winemakers�����������������������������������������������������������216 8.5.3 Outlook of Natural Wine in China�����������������������������������������������������217 8.6 How Do We See China as the Next Natural Wine Market? Does China Have the Potential to Become the Next Natural Wine Hub?��������������������������219 8.7 Bibliography����������������������������������������������������������������������������������������������������221

8.1 Natural Wine Is the Future of the Wine Industry “Natural wine is the future of the wine industry.” The renowned Oenologist, Li Hua, Lifetime Honorary Dean of the College of Enology of Northwest A&F University declares this at the 17th Annual Meeting of the Chinese Society of Food Science and Technology in Xian, China, in October 2020. He spoke on the theme of “Sustainable and High-Quality Development of Chinese Wine Industry” (Economic Daily, 2020). His speech is an extension of the “Healthy China 2030” plan, announced by President Xi Jinping in October 2016, with a blueprint to promote the construction of a healthy China, which is an essential foundation for building a moderately prosperous society (中共中央国务院印发《“健康中国2030”规划纲要》, 2016). Making people eat and drink healthily has become an indispensable subject for the country’s food industry. Especially in the post-epidemic era, what opportunities and challenges will the food industry face, and what transformation is necessary? As China’s leading oenologist, Li Hua deduced that wine is not manufactured in the cellar but cultivated in the vineyard. A wine is like a person, shaped by its experiences. The “terroir,” on which the vines are grown, is an imprint and a “fingerprint” of the grapes that are being expressed in the wine (Economic Daily, 2020). Terroir means the aggregate of soil, climate, vineyard health, and human choices. The wine is the liquid representation of the terroir’s transformation, memory, or interpretation (Goode, 2011). According to Wikipedia, wine is an alcoholic drink typically made from fermented grapes. What is natural wine, then? Natural wine is wine made with minimum technological intervention (Quinn, 2017). Nothing unnecessary is added and nothing is taken away during the process to form its characteristic flavor, which is particular on its own. While natural wine became “trendy” in the past decade, it is how wine was made in ancient times.

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We revisit the ancient wine-making tradition and explore the differences between natural, organic, and conventional wines in both the vineyard and wine-making process. In this chapter, we begin by defining what natural wine is, and its comparison with conventional, organic, and biodynamic wines. Next, we observe case studies of some of the old wine-producing countries along the One Belt One Road, including Austria, Croatia, and Slovakia. After that, we associate this new natural wine concept with China and conclude by exploring the potential of China as the next natural wine hotspot.

8.2 Literature Review Natural wine is an element of sustainable development. The three components of sustainable development are economical, ecological, and human. In any form of development, economic development is essential to any society as the ultimate goal of economic activity is to fulfill human needs or desires. In sustainable development, growth does not only measure by gross domestic product (GDP); it is a correlation between economic growth and the medium to long-term advantages resulting from environmental protection (Duran et  al., 2015). Economic growth also bears a close relationship with the human aspect with the objectives of promoting education and public support for the environment, protecting human health, especially in rural areas, and controlling pollution and ecological risks (Frant, 2008). The main focus of a sustainable business is to preserve the environment so as to guarantee the welfare of future generations. Environmental issues affect the quality of wine production and the impact on ecosystems (Ouvrard et al., 2020). The constituents of natural wine embrace a sustainable business in that it enhances economic growth by promoting clean agriculture and creating a newer product or concept with a relatively higher margin in the market. This concept not only supports the ecosystem by its organic or biodynamic farming practices which in essence contribute to human health without harmful agents to the terroir (Provost & Pedneault, 2016). Natural wine is a terroir-driven wine. Terroir is the environmental conditions in which the grapes are grown and can be “defined as an interactive cultivated ecosystem, within a given place, including climate, soil, and the vine.” The characteristics of a terroir-driven wine are that the grape varieties should be suited to the local climatic conditions. Full fruit ripeness is spontaneously reached by the end of the growing season. At the same time experiences factors limiting yield and vigor, such as water deficit stress or low nitrogen availability (Van Leeuwen, 2006). Since there are many uncertain attributes to natural wine or rather, it is generally recognized as a confusing product (Balestrini & Gamble, 2006). Factors such as grape variety, the surrounding vegetation, the climate, the wine-making process, or the storage and bottling methods may affect the quality of the wine. How would a consumer choose a particular wine? Or rather, how would a Chinese consumer choose a bottle of natural wine? We will explore this variable by employing value management

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and generalization mode theory to study consumer behavior and whether there is any brand loyalty.

8.3 What Is Natural Wine? Natural wine is a small but rapidly growing sector within the wine industry (González & Parga-Dans, 2020). While there is expertise in the field made up of wine experts and professionals, publications or methodological developments for a further understanding of the topic are still behind (González  & Parga-Dans, 2020). Let us hear what the industry experts have to say about this: “Natural wine is wine without crap in it.” Alice Feiring, columnist for Time Magazine and The New York Times, opens her book “Natural Wine for the People” with this simple remark. In order to make natural wine, Feiring indicated that the process should first start with organic viticulture of some sort. Once the grapes are harvested, then the wine-making process will start. Nothing is added or removed from the wine, nor shaped with machines. Sometimes, a sulfur derivative may be added, as a preservative, and in a minimal amount. The ideal, however, is that there is none. “Natural wine is not new; it is what wine always was, and yet, somehow today it has become a rarity. It is a tiny drop in a big ocean, but, oh my, what a drop” pronounced Isabelle Legeron MW, France’s first female Master of Wine (Legeron MW). Isabelle further states that natural wine is farmed organically and/or biodynamically; hand harvested and fermented with ambient yeasts only. It has not been fined (meaning that the wines are suitable for vegans) and not been filtered. It should not have any additives or processing aids used during wine-making, with the possible exception of sulfites, in which case, their levels do not exceed 50 mg/L for white wines and 30 mg/L for red wines. The result is a living wine, wholesome and full of naturally occurring microbiology, with “intervention” kept to a minimum. In other words, natural wine is tied to its terroir (Legeron MW). According to “The Oxford Companion to Wine” by Jancis Robinson, a wine writer, critic, and advisor to the wine cellar of Queen Elizabeth II, natural wine is defined as grapes typically grown by small-scale, independent producers; hand-picked from sustainable, organic, or biodynamic vineyards. The wine is fermented with no added yeast (native yeasts), no additives are included in fermentation, and little or no sulfites are added (Robinson & Harding, 2015). There is no official or legal definition of natural wine (González  & Parga-Dans, 2020 No legislation has been passed to date by any regional or national authority, and there are no organizations that can certify that a wine is natural. However, the lack of an absolute definition of natural wine is a strength as there are no boundaries. As soon as there is any stringent legal definition, this will narrow the freedom for creativity (González & Parga-Dans, 2020). Although there is no standardized definition of natural wine, it is always produced without pesticides or herbicides and with few or no additives. Typically, natural wine is produced in small-scale, perhaps family-owned vineyards using traditional techniques and is fermented with native yeast. Natural wine is simply unadulterated fermented

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grapes with no additives in the wine-making process in its purest form. Generally, natural wine refers to a generalized movement among winemakers to produce wine using traditional methods. Other terms for the product include low-intervention wine, raw wine, and naked wine (Cogliati, 2016).

8.3.1 Natural Wine—A Brief History The most critical modern natural wine movement started in the 1970s with Marcel Lapierre when he took over his family’s vineyard in Beaujolais, France. At that time, farming in Europe was about chemicals. It was the remnants of World War II, where farms needed to become more productive, and the wide use of chemicals was their answer. Chemical fertilizers increase the output of crops while pesticides protect them. Mechanization was employed to cultivate the soil, handle the vines, and harvest the grapes. Incentives were made where low-yielding vines were replaced with the more economical higher yields and younger vines. Production increased, and yields became higher. However, with machine harvests, it could not sort out the rotten grapes as effectively as humans do. The chemical treatments in the vineyard would reduce the vines’ natural potency and lack essential nutrients (Cohen, 2020.). As a result, chaptalization of adding sugar to extend fermentation was employed to increase the body of the vines together with the excess addition of sulfur dioxide. In addition, cultured yeasts were developed to ensure consistency of tastes and flavor. Finally, to stabilize the whole procedure, fining and filtration with heavy additives thus resulted in homogenous wine flavors. Against such a chemical farming environment and unsatisfied with wines bearing no character, Marcel went under the tutelage of Jules Chauvet, the Godfather of Natural Wine. The latter was an advocate of the old practices of viticulture and vinification and started to experiment with making wine without using the anti-oxidant and preservative, sulfur dioxide. Together with some other enthusiastic young winemakers in the region, Guy Breton, Jean-Paul Thévenet, and Jean Foillard created the “bande des cinq.” This pact is dedicated to working with old vines, abandoning synthetic herbicides and pesticides, harvesting late, manually sorting grapes, adding minimal or no sulfur dioxide, and eliminating the common practice of adding sugar to the fermentation process (Feiring, 2019). In 1989, the first natural wine bar, Café de la Nouvelle Mairie, opened its doors in Paris, and its expansive wine list still remains the living history of natural wine in France. Ten years later in 1999, Saumur, in western France, launched the first natural wine fair La Dive Bouteille with approximately 20 French winemakers and 100 attendees only. Now it is the world’s largest annual natural wine exposition. In the following years, natural wine spread to become popular worldwide. With Noma opening in Copenhagen in 2003, natural wine takes on an entirely different light. A three-starred Michelin and ranked number one for five years at The World’s 50 Best Restaurants, Noma takes on an “anti-label” approach on its wine list and focuses predominantly on small family-owned European producers, many of them organic, biodynamic, or natural. Coincidentally, the four-time Asia’s 50 Best Restaurants and

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two-starred Michelin, Gaggan, Bangkok (2010–2019) is also a disciple of natural wine, whereby his wine list consists of a vast choice of Central and Eastern European natural wines.

8.3.2 Natural Wine, Organic Wine, Biodynamic Wine, and Conventional Wine To the general public, there has always been a confusion between natural and organic wines, which is further complicated by biodynamic wine. While natural wine does not have any regulatory bodies to administrate, organic and biodynamic wines do have accreditation bodies. How do these wines differ from conventional wines that we are familiar with? To understand natural wine, one must begin with the viticulture and the popular categories of farming: conventional, organic, biodynamic, and natural.

8.3.2.1 Conventional Wine The most common form of farming that has existed for decades is conventional farming. Conventional agriculture is developed by using artificial fertilizers and synthetic chemical pesticides to achieve big and reliable harvests. Herbicides are sprayed to remove weeds instead of mowing; pesticides are used instead of smashing the insects by hand; machines are used to pick the grapes. Usually, vineyards are planted to accommodate these vehicles rather than the spontaneous growth of the vine such that the earth may be harmed. Chemicals such as herbicides, fungicides, and other additives can be used in both the vineyards and wine-making process. Basically, farming is done by synthetic addition. According to the labeling legislation, such as the  Alcohol and Tobacco Tax and Trade Bureau in the United States, a wine label only needs to consist of eight items including the producer identification, the bottler’s name and address, the varietal designation, the country of origin, the alcohol content percentage, the vintage date, the net volume, sulfite declaration, and a health warning statement, only one of which has anything to do with additives. Therefore, consistency is the key to conventional wine with over 72 legal and permissible additives and various machines. The wine must be uncompromisingly stable with consistency in color, flavor, and texture. To achieve the so-called standard, sulfur dioxide is added immediately after crushing the grapes, and yeast is used based on the selective choice of flavor, other additives are added, such as oak chips to improve flavor and color, tannins to adjust texture, more sulfur dioxide is added when fermentation is finished (Karlsson, 2014). To conventional winemakers, a clear wine is essential because this is what consumers would expect. It is essential for fining and filtering to adjust the wine to the desired level of clarity. There are many popular fining agents, such as bentonite, gelatin, fish bladder, egg whites and enzymes (to break down the skins), and polyvinylpolypyrrolidone PVPP (a resinous polymer to adjust color). After fining, the wine is filtered. Filtering, usually attained by sieving the wine through a choice of membranes, is the process of removing leftover particles to ensure the wine is crystal clear. In the market, if you pay for a bottle of expensive wine, you would always anticipate the taste, color, and tannins to be the same (Feiring, 2017).

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8.3.2.2 Organic Wine Contrary to conventional wines, there is natural wine or organic wine. Many people think organic and natural wines are the same. While all natural wines are organic wines, organic wines are not necessarily natural wines. The term “organic” got popular in the 1970s. Organic relates primarily to how the grapes are grown rather than how the wines are made in the cellar. Fertilizers are composts or additives derived from animals, vegetables, or minerals. Some organic farmers co-plant beneficial plants such as leeks and clover to bring nutrients to the soil in addition to their antibacterial properties. While it is possible to grow grapes organically without the use of artificial fertilizers, weed killers, fungicides, or pesticides, organic wines are allowed to use additives in the cellar including commercial yeasts, egg whites, and animal enzymes. In addition, being organic does not mean that the treatment is nontoxic; being organic does not necessarily mean a wine is vegan. For example, copper is organically approved for treating mildew, but even a tiny amount of copper is toxic to the soil when it gets built up over time (Karlsson, 2014). There are various worldwide certifying bodies for organic farming. It is a certification process for organic food producers and other organic agricultural products. In general, any  business  directly involved in food production can be certified, including seed suppliers, farmers, food processors, retailers, and restaurants. The most common certifying bodies include USDA Organic, EU Organic, NASS Certified Organic, and Ecocert.

8.3.2.3 Biodynamic Wine Preceding the creation of organic farming is biodynamic farming. The biodynamic farming principles were developed in the 1920s by Rudolph Steiner, an Austrian philosopher (Joly, 2001). He promoted the use of natural preparations to help their plants develop healthy immune systems. His idea had a lot in common with organic farming—using livestock manure to support plant growth, using cover crops and crop rotation to revitalize soils, and the encouragement of polyculture and biodiversity. According to Castellini et  al. (2017), “The concept behind biodynamics is that everything in the universe is interconnected,” or what Steiner referred to as “cosmic rhythm.” This interconnectivity of everything includes celestial bodies like the moon, planets, and stars. Biodynamics is the practice of balancing this resonance between vine and man and earth and stars. (Larson, n.d.) Being the oldest anti-chemical agricultural movement, it is also a holistic, homeopathic approach to farming that includes viticulture (Cravero, 2019). Biodynamics takes place primarily in the vineyard before wine-making even occurs. All other tasks, from planting to pruning to harvesting, are regulated by a special biodynamic calendar, better known as the Maria Thun Biodynamic Calendar (Larson, n.d.). This Calendar shows the positions of the stars and planets in relation to the fixed constellations and indicates the best days for a particular task in the vineyard. The days are divided into four categories: fruit days (best for harvesting grapes), root days (ideal for pruning), flower days (rest days for the vineyard), and leaf days (most acceptable for best watering plants). Each biodynamic calendar day concurs

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with one of the four classical cosmic elements of Earth, Fire, Air, and Water used even before Plato’s era (Larson, n.d.). Vineyard treatments are organized according to the season, location of the constellations, and phases of the moon. The objective is to heal and not harm the earth (Karlsson, 2014). Some examples of the certifications worldwide are Demeter International, RespcktBIODYN (Austria), Biodyvin (France), and Certified Biodynamic (Australia).

8.3.2.4 Natural Wine Natural farming takes a step further in harmony with nature to a “do-nothing agriculture.” This is the essence of Masanobu Fukuoka, farmer and philosopher, and author of One-Straw Revolution. Decomposition of organic material by microbes and earthworms is nurtured right on the soil surface itself, which gradually adds nutrition to the soil. In contrast, organic farming still requires basic practices like plowing, tilting, mixing manure, weeding, and so forth (Niti, 2021). By using beneficial plants to bring nutrients to the soil, plants and herbs will aerate and open up the soil instead of using invasive plowing (Ikeda et al., 2013). Taking a natural approach to the vine, understanding that the vine is in balance with itself and that the wild ecosystem heals all, Fukuoka perfected his so-called “do-nothing” technique: commonsense, sustainable practices but eliminating the use of pesticides, fertilizers, tillage, and perhaps most significantly, the wasteful effort! It is the presence of honest soil which shapes natural wine. In the cellar, instead of trying to shape the wine to a particular flavor, color, and texture, using laboratory-selected yeasts, it is the vignerons’ decision whether to leave stems or destem, whether to crush, and whether there be skin maceration or not. The cellar’s temperature, the vessel’s nature for fermentation, how to enable fermentation and aging, chemical reaction and yeast, malolactic fermentation, lees management, racking, bottling, closures, and aging without much intervention are all decision items. Each decision would become an attribute of the wine’s character. A full expression of the terroir bearing the communication among nature, the winemakers, and people who drink their wines, and perhaps, the vignerons’ story would be the essence of natural wine (Legeron MW). TABLE 8.1 The Differences in Conventional, Organic, Biodynamic, and Natural Wines Grapes Yeasts (types) Additives (types) Sulfur dioxide—Red Sulfur dioxide—White Appearance Nose Palate

Conventional

Organic

Biodynamic

Yes 300 49 150 mg/L 200 mg/L Clear Aromatic Palatable and consistent

Yes Organic 38 100 mg/L 150 mg/L – – –

Yes X 5 70 mg/L 90 mg/L – – –

Natural Yes X X 30 mg/L 50 mg/L May be cloudy Terroir Grapes and terroir

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8.3.2.5 Natural, Organic, Biodynamic, and Conventional Wines—A Summary It is often understood that wine is made from one ingredient—grapes. However, this may not be the case. Table 8.1 illustrates all additives contributing to the wine in your bottle and explains the differences in conventional, organic, biodynamic, and natural wines.

8.4 Natural Wine in the Old Wine Countries along the One Belt One Road: Case Studies Following the definition of natural wine, we will next explore some of the old wineproducing countries along the One Belt One Road that are well-versed in natural wine. We will begin with Austria, which invented biodynamic farming, and travel onto the ex-Austro-Hungarian empire neighbors, Croatia (ex-Yugoslavia) and Slovakia (ex-Czechoslovakia), to explore how the wine industry has evolved. We feature these countries in terms of their wine-making history, terroir, autochthonous grapes, and market environments. Would these ex-socialist vignerons become the forefathers of natural wine in China?

8.4.1 Austria: The Land of Biodynamic Farming; the Heart of Central and Eastern Europe; Immense Trade Support Austria’s wine-growing area comprises approximately 50,000 hectares in the Eastern part of the country and is divided into four regions: Lower Austria, Burgenland, Steiermark, and Vienna. The area gives rise to over 40 grape varieties. One of them is the most popular Gruner Veltliner. This domestic white variety accounts for one-third of Austria’s vineyards and other domestic red varieties such as Zweigelt, Blaufrankisch, and Sankt Laurent. Due to a favorable climate, Austria is also known for growing internationally known varieties such as Welschriesling, Chardonnay, Pinot Noir, and Merlot. The existence of preserved grape pips from the Bronze Age confirmed Austria’s wine-making tradition thousands of years ago in Weinviertel (Wine Quarter), bordering Slovakia in the East, the Bavarian Forest in the West, the Czech Republic in the North, and the Danube River in the South. The grape seeds found in this winegrowing area are recognized as a species of Vitis Vinifera and thus represent one of the oldest wine grape discoveries in Central Europe. Blessed with over 2,000 years of wine-making history, Austria is home to Rudolph Steiner, the Austrian philosopher, Father of Biodynamics, and one of the world’s first biodynamic wineries, Nikolaihof. Austria makes a good starting point for natural wine along the Belt and Road with its old wine-making tradition. It is the leader of natural wine in Central and Eastern Europe, a world leader in organic viticulture, and an increased number of the country’s winemakers have also embraced the  natural wine movement (Austrian Wine, n.d.).

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8.4.1.1 The 1985 “Wine Scandal” and the Austrian Wine Marketing Board The wine-making history of Austria is not complete without mentioning the so-called “wine scandal” in 1985. Some Austrian wineries illegally adulterated their wines by using the toxic substance diethylene glycol to make them appear sweeter and more full-bodied. This scandal caused a total loss of reputation of the entire Austrian wine industry and the complete collapse of Austrian wine exports (Skinner, 1993). As a remedy, new and stringent wine laws are introduced, which, among other aspects, demands a solid examination of wine inventory. Under such circumstances, the Austrian Wine Marketing Board (AWMB) was established in 1986 to promote the image of Austrian wine in a focused manner with the eventual aim of increasing sales. It is a national service body for the Austrian wine industry to support strategically, coordinate, and maintain quality and sales. Owned partly by the industry (50% shared between the Chamber of Agriculture and the Chambers of Commerce) and partly by local governments of the four wine regions: Lower Austria, Burgenland, Styria, and Vienna (50%), the AWMB mainly supports its sales partners including importers, retail merchants, hotels, food and beverage chains, and outlets. For support from the AWMB to be granted, Austria must benefit from the activities, and the image of Austrian wine regions must increase. In addition, the “Austrian Wine” logo must be integrated into the application of the promotional activities, and wine selection from Austria should form part of the permanent range of wines. Requirements for support are easy to meet, such as wines from at least three different winemakers from two different regions need to be visible in the promotions. It must involve qualitatswein (quality wines) but allows alternative wines such as orange wine, natural wine, and so on. The AWMB will contribute toward the marketing costs for the production of the catalog, tasting sheets, invitation materials, cost of a speaker, and cost of events such as venue rental and hiring of personnel. Other forms of financial support include an annual budget of advertising material and support for trips to the wine regions of Austria for industry customers (both outside and within Europe) such as wine merchants, restauranteurs, and sommeliers (Osterreich Wein Marketing GmbH, n.d.). For natural wine, apart from the above support, the AWMB annually plays host and has financially supported Karakterre since 2011. Karakterre is Central and Eastern Europe’s leading wine salon. It promotes wineries from the wider Central-Eastern European basin, focusing on Austria and its wine-growing regions. Over 800 growers from 30 countries and over 8000 international visitors in participating. This Fair helps visitors to understand and appreciate the commitment of growers. Since there is no governing body for natural wine, the criteria for participation at the Fair is that each grower has to verbally certify that they follow organic, biodynamic, or natural guidelines in vineyards and cellars. Their wines do not exceed 50 mg/L of total sulfur; they actively promote authentic grape varieties, sustainable farming, and living, and are family-owned and run. With the financial support of AWMB and supplementing Karakterre, selected trade customers worldwide can tour the wine regions, visit the vignerons and wineries exclusively, and understand the different terroir and the natural wines of Austria (Karakterre, n.d.).

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8.4.1.2 Time, Grapes, and Love: Natural Wine Growers in Austria Nowadays, Austria boasts itself to be one of the highest-certified biodynamic vineyards in the world in 2021, with 2.7% of the national vineyard area being biodynamic (Worldwide average: 0.3%). This is the effort and belief of many vignerons who converted their farming practices in the past few decades. Here are some of the most acclaimed Austrian natural wine figures worth introducing (Austrian Wine, n.d.). Nestled between the borders of Austria and Hungary lies the small village of Pamhagen, where Meinklang is located. The farm lies in the middle of the World Heritage Site of the National Park on eastern Lake Neusiedl. Owner Werner Michlits is a firm believer in the holistic approach to farming and the shaping forces of the cosmos. He believed that the farm was an organism. The vineyards are fertilized with the compost produced on the farm, using sheep, cow, horse manure, and green waste. Healthy vines can only grow in soil that is alive, producing completely individual wines full of character. Biodynamic agriculture is the only cultivation method that gives back more to the environment than it takes. The Meinklang farm is a “Wein-Garten” (wine garden), an authentic garden with fruit, vegetables, vines, and herbs to provide essential food sources for many insects. The “weeds” that many farmers tried to get rid of are precious habitats where butterflies and songbirds find their home in the summer. They make humus formation possible and restore harmony in the vines’ habitat. In the cellar, Werner believes in a golden ratio dimension. His wines are fermented in concrete eggs, and the egg’s shape is in perfect geometrical harmony. It is virtually ideal for storing wine because the young wine does not have to contend with any edges or obstacles when it circulates the vessel (Meinklang, n.d.). Bordering Slovenia, is Franz Strohmeier of Styria. Since 2003, he and his wife, Christine, have been working with great determination to produce natural wines without any additives or chemicals and are almost exclusively sulfur-free. He believes that the holistic system does not differentiate between vermin and valuable beings. All forms of life are encouraged. The aspect of “love” of all species is reflected in the range of wines “Trauben, Liebe und Zeit” (“Grapes, Love and Time”). This synonym is used for their natural wines without any additives, no sulfur, and no filtration. Franz and Christine believe in sustainability and deliberately relinquish part of the grapes crop to fungus, insects, small animals, bacteria, and other organisms. These grapes grown naturally have immense potential to develop into wine completely without sulfur. Strohmeier wines now graced the cellars of many Michelin-starred restaurants. This phenomenon began around 20 years ago with Noma, who shared the belief of living wine with raw energy (Franz Strohmeier, n.d.). In the warmest wine region of Austria is Weingut Judith Beck of Gols, east of Lake Neusiedl and close to Vienna. Judith’s parents founded the estate in 1975, and Judith started to convert from conventional cultivation to biodynamic cultivation in 2007. She was one of the founders of respect-BIODYN. Her philosophy is that: “Wine and the joy of living and pleasure all go hand in hand. We prefer wines which captivate all of our senses with each new bottle and each new sip.” Judith is an upcoming vigneron, and her wines are in specialist wine bistros and bars in Europe and Asia (Judith Beck GmbH, n.d.).

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8.4.1.3 Reception of Austrian Natural Wine on a Domestic Level Despite the vision and effort of the winemakers, the average Austrian wine drinker was trained to appreciate the specific profile of the wine. They are not used to hearing, seeing, or tasting natural wine, making it difficult to sell in the local market. Indeed, many producers say that their wines tend to be far more appreciated abroad, like in Paris, London, San Francisco, New York, and Tokyo. Although the majority of Austria’s natural wine is exported, there are still some illustrious food and beverage support in Vienna. One such is Konstantin Filippou, Chef and Owner of Konstantin Filippou and O’boufes; Gault Millau, Chef of the year 2016 and a Michelin two-starred. He devotes his wine list entirely to natural wine as he believes it is the honest soil that is what the customers are looking for in a wine. Nothing is added, and nothing is removed, as all natural winemakers advocate. The terroir of the wine is often more critical to combine with the chef’s exceptional cuisine (Wine—Konstantin Filippou, n.d.). In the off-trade, there are some significant retailers specializing in natural wine, such as Weinskandal and Vinifero, both carrying a wide variety of natural wine labels.

8.4.2 Croatia: The Land of Sun and Sea; Gastronomic Tourism Croatia’s wine history dates back some 2,500 years ago, mainly along the coastline. Under the Communism of Yugoslavia, wine production was centered in large cooperatives, and private ownership of vineyards was discouraged. Quantity rather than quality was the main focus. Since Croatian’s independence from the former Yugoslavia in 1991 and the country’s entrance into the European Union in 2013, the wine industry has become more organized, and exports are increasing.

8.4.2.1 The Wine Landscape of Croatia A land of beautiful landscape, there are over 300 geographically defined wine regions within the country and are divided into four major wine regions spanning from Croatia’s mountainous coastline to its continental inland: Slavonia and Danube, Croatian Uplands, Istria/Kvarner, and Dalmatia. The Eastern inland wine region includes Slavonia and the Croatian Danube. It is a relatively flat area bordering three rivers, and most vineyards are located on the low hills rising from the plain. This area has a continental climate with cold winters and hot summers. Production is concentrated in white wine varieties with the most widely planted grape Graševina, which yields light, crisp, refreshing, mildly aromatic wines. Croatian Uplands lie in the Western inland wine region and are characterized by rolling hills and a cool climate with frigid winters. The sloping terrain lends sufficient sunlight and wind during the growing season; therefore, the wines here are of intense aromas and high levels of acidity. Production is concentrated in white wine varieties. The coastal wine region spans from Istria in the north to Dalmatia in the South. There are vast differences in growing conditions, grape varietals, and characteristics of wines. Therefore, this coastal region is often divided into two areas: Istria/Kvarner and Dalmatia. Istria/Kvarner has a cooler climate than the southern part of the coastal region. This area is ideal for wine production with vibrant red soil, rich in iron oxides,

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and mild weather. The wines here are fruity reds and dry white from a wide range of grape varieties, mostly Malvazija. Further south, in Dalmatia, located along hillsides and slopes, wine regions along the coast receive many hours of sunlight, which is ideal for grape production. The islands and hillsides have an infinite variety of microclimates with their rocky landscapes, resulting in a wine-growing area where terroir is a crucially important factor. A wide range of indigenous grape varietals is grown here, primarily reds, with the best-known being Plavac Mali (Croatian Gastronomy and Enology, n.d.).

8.4.2.2 Indigenous Grape Varieties in Croatia Like other old-world wine-producing countries, many traditional grape varieties still survive in Croatia and are ideally suited to their local wine hills. However, early in the 20th century, like the rest of Europe, Croatia was hit with Phylloxera. The invasion of the vineyard pest led to the extinction of hundreds of indigenous grape varieties. Currently, around 130 varieties still remain. Despite the many international grape varieties grown in Croatian wine regions, over 50% of Croatian plantations are indigenous grapes that shaped the country’s oenological identity. Malvasja and Posip are among the most commonly known white grape varieties among the many grape varieties. In contrast, Plavac Mali, the parent grape of the internationally famous Zinfandel, is the most planted red grape variety. Malvasja is considered to be an indigenous Istrian wine variety. This local variety is grown extensively on the Istrian peninsula and in the neighboring countries of Slovenia and Italy. Pošip, another indigenous white grape variety, comes from the island of Korčula, In 1967, it became the first white wine in Croatia to be awarded the Protected Geographical Indication, and it still holds the value today. Croatia is also made famous for its Zinfandel origin. It is argued that the origin of Zinfandel is Plavac Mali, a predominant indigenous variety that originated in Central and Southern Dalmatia. This grape takes time to ripen, prefers rugged terrain, and is resistant to diseases. Plavac Mali can produce intense wines with high alcohol content and pungent flavors and light fruity ones available at a more affordable price range. Apart from the many grape varieties, Croatia is also home to the Slavonian oak forest, which provides oak for the casks favored by many European winemakers for aging their finest wines.

8.4.2.3 Croatian Wine-Making Projects One of the common characteristics of Croatian winemakers is that they were born into families with small vineyards but went overseas for studies and had prior careers before coming home to become winemakers. We will take a look at a few interesting ones. Every Istrian winemaker will agree that Giorgio Clai is the benchmark for Istrian natural wine. He moved from Croatia to Trieste to become a very successful restaurateur at a very young age. In the 1980s, Giorgio inherited some vineyards in Croatia’s Istrian Peninsula and became a full-time winemaker in 2001. He was mostly recognized for the organic focus, but it did not evolve because he was born into that way of thinking while living on a farm when he was a child. For Giorgio, biodynamic

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viticulture is the norm. He believes there is no “good” or “bad” year if you work in a natural way—the vintages are just different. Some are easier, and some are harder. They depend on seasonal climatic factors that determine the absolute value of the wine: It is quality. This is Giorgio Clai’s philosophy. He makes wine in the vineyard, not in the winery! (Clai Wines, n.d.) Anthony Bourdain also brought Croatian gastronomy to fame. “Why, oh why, is there so much amazing wine in this country?” exclaimed Anthony Bourdain after sipping the first drop of wine from Vina Bibich. Anthony Bourdain visited Croatia on his Travel Channel series “Anthony Bourdain: No Reservations,” in April 2012. Vina Bibich is a family-owned “boutique” winery that has been producing wine for generations with a focus on indigenous varieties. Its vineyards are about 500 years old, with family roots appearing in the 15th century. Throughout history, the family has always been involved with the production of wine, despite the interruptions of multiple difficulties relating to social and political struggles in the area. Today, Bibich wines can be found on the wine lists of some of the world’s finest restaurants in New York and Tokyo (Bibich Winery, n.d.). Another attractive winemaker/marketer or project worth mentioning is Vinas Mora, a new label of natural wines from the ancient stoney vineyards, some of which are hard-to-reach hinterland. It is a joint project by a small group of importers and distributors for the North and South American markets, Asian markets, and the organizer for the phenomenal natural wine festival, Karakterre in Vienna. At the heart of the joint effort is Neno Marinov, a local winemaker from Primošten. These wines are primarily intended for export precisely because of their recognizability and terroir, making them different from anything else

8.4.2.4 Wine Tourism in Croatia Although much of Croatia’s wine stays within the domestic market, Croatian wines have been enjoying more international recognition in recent years, aided by the nation’s inclusion in the EU in 2013 as well as the rising numbers of tourists who encounter Croatian wines. According to the Croatian Tourist Board, in 2018 alone, Croatia welcomed more than 20 million tourists and became one of Europe’s most popular vacation destinations (Tomljenović  & Getz, 2009). The island of Hvar is home to the world’s longest continually cultivated vineyard, the UNESCO World Heritage Site of Stari Grad Plain, where grapes have been grown since 400 BC (Business HTZ, n.d.). Trending nowadays is getting to know a country through food and wine. Local ingredients are often integrated into the cultural heritage. Native wine varieties that are drinkable and elegant have been created and are the keys to the success of Croatian gastronomy and wines.

8.4.3 Slovakia: Award-Winning Wines; Discouragement from Authorities Located in the heart of Central Europe, Slovakia borders Hungary in the South, Austria, and the Czech Republic in the West, Poland in the North, and Ukraine in the East; the wine-making tradition has always been a part of the cultural heritage of Slovakia.

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8.4.3.1 A Long History of Wine-Making in Slovakia The Celts’ cultivation of vines started around 2,500 years ago, as evidenced by archeological findings in Western Slovakia. Development of viticulture continued mainly with the church until the 13th century when most of the vineyards were destroyed by the Tatars’ invasion. After the arrival of colonizers in the 15th century, Germans in the West and Italians in the South, viticulture began to flourish. However, it faced a continual decline throughout the 18th and 19th centuries under the influence of Phylloxera, which wiped out many of the vineyards in Central Europe (Slámová & Belčáková, 2020). After World War I, the Communists controlled the lands and vineyards for over 40 years. During this time, viticulture has developed into collectivization. As a result, there is mass production of low-quality commodity wines. By 1989, cooperative largescale grape production in Slovakia and wine factories gradually disappeared and were privatized, resulting in a sharp decline in viticulture and wine-making. Meanwhile, centralized vineyards were born. Wine grapes became a commodity, sold to state-owned wineries at set prices, and these factories produced more than 80% of Slovakia’s wine. Wine became just another industrial product, like auto parts or machine tools. Quantity soared, and by 1989, Slovakia produced significantly more wine than it consumed, with the surplus sent to the Soviet Union or the Czech Republic. When Communism fell in 1989, the wine-making system came down with it. Postcommunist governments have attempted to return the collectivized lands to their former owners. The resulting substantial shortfall in wine output caused many wines imported to make up for most of the difference. These include neighboring wines from the Czech Republic’s Moravia region, low-priced Hungarian imports, and wines from France, Italy, or Spain (Slovak wine, n.d.). The government’s further confusing action is that stiff tariffs were imposed in the 1990s on imported wine. Under such conditions, Slovak wineries actually benefit because it allows them to sell most of their wine on a domestic level. Angela Muir, a writer for “The Oxford Companion to Wine” said in 2002 that Slovakia’s surplus in demand, along with protective tariffs, has “effectively made it unattractive for Slovak producers to try and compete on the world market. Why should they? They can sell all they make to the home market.”

8.4.3.2 Tokaj and Others Slovakia is divided into six wine regions: Little Carpathians, Nitra, South Slovakia, Central Slovakia, East Slovakia, and the famous Tokaj. The geological substrate of the Slovak wine-growing areas is very variable. There are crystalline rocks, limestone, volcanic rocks, and fluvial and aeolian sediments. This diversity, which is further emphasized by its topo-climatic variability, marks the typical interesting character of Slovak wines. The Little Carpathians is the most ancient area, spearheaded by Bratislava, with sandy-clay and slightly rocky soils. Nitra marks the most varied region with many different vineyards. South Slovakia is the warmest region; therefore, the sugar content of the grapes is higher, resulting in wines with a higher alcohol content or residual sugar. Central Slovakia produces varietal wines with an intense heat flow from coal

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deposits. East Slovakia has a more continental climate that guarantees more stable weather, favorable to late grape varieties. The wines produced in this region are rich in minerals. The smallest but most well-known wine region in Slovakia is Tokaj; it is one of the five regions in the world where grapes can produce naturally sweet wines. It is both a particular historical and a territorial part of the larger Tokaj region located in the territories of Hungary and Slovakia. It is a historically based territory that cannot be divided by the state border. There are a lot of traditional grape varieties in Slovakia which are common in other regions of Central Europe as well. The most famous varieties are Veltlin Zeleny (Grüner Veltliner) and Frankovka Modra (Blaufrankirsch). Apart from the traditional varieties, new grape varieties are emerging, and all are bred directly in Slovakia. The most popular ones include Devin (a Slovak white variety, cross-bred of Gewurztraminer, and Veltliner red and white grapes). Dunaj, named after the Danube River, is another popular grape. It is a Slovakian red variety, selected in 1958 at the Institute of Vine and Wine Research in Bratislava by crossing the grape varieties of Muscat Bouchet/Oporto and Saint Laurent. As with other Austro-Hungarian and ex-socialists neighbors, the Slovakians reclaimed their estates in the early 1990s. Some Slovakian wines are internationally acclaimed and are on the wine lists of Michelin-starred restaurants or win prestigious awards. Among such include Stekov 1075, Slobodne Vinarstov, and Vina Magula.

8.4.3.3 Most Prominent Slovakian Natural Winemakers Zsolt Suto of Strekov 1075 spearheads the natural wine movement in Slovakia. It is one of the benchmarks of Slovakia’s small but enthusiastic and expanding natural wine scene. Zsolt Sütő adopted the name of his local village for this estate and started to work on the land in 2002. Since 2013, his wines have become one of the most indemand natural wine brands globally, with 80% being exported, and are served in eight Michelin-star restaurants in Spain alone. Zsolt realizes that Slovakian wines cannot compete with the big wine-producing countries. However, he also realizes that they can compete with originality. This originality comes from the land and the communities. They communicate this originality through their wines. Zsolt cultivates his vines by hand and trains them mainly as bush vines to force their roots to go deeper, making them less sensitive to drought. This practice allows him to keep the yield extremely low naturally. In the cellar, the wines are fermented spontaneously without any intervention. Zsolt further believes the natural approach to wine-making could be a Slovakian signature. Therefore, he set up the winemakers’ group, Autentistas Slovakia, with members comprising Strekov 1075, Vino Magula, Slobodné Vinárstvo, and the likes (Strekov 1075, Ltd., n.d.). Slobodne Vinárstvo is a winery located in Majer Zemianske Sady. It is an independent family estate recovered in the early 1990s following the Velvet Revolution. It was the same historical winery that once belonged to their ancestors. The family spent the past 25 years rebuilding the farm’s ecosystem, replanting most vineyards, and reconstructing the historical cellar. In 2010, the first wine was produced under the name “Slobodne,” which means freedom. It is now jointly run by the fourth and fifth generations.

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Before World War II, their wines were sold under the trademark “K trom boxerom” (Three Boxers) and were appreciated by many aristocrats and artists in Europe. In their practices, Slobodne considers wine to be a living organism. They do not manipulate their wines in both the vineyards and cellar but focus on understanding all of the natural processes involved. They all ferment naturally, only with the yeast present in the vineyards. There are no modern additives that would enhance or purify the taste of the wines. The winery has won a gold medal at Danube Wine Challenge 2021 with their “LA ROSE ET LA VAMPIRE” and “CURTIS DEVINER” was selected as Decanter Magazine’s Top 30 Orange Wines in June 2020 (Slobodné vinárstvo— Majer Zemianske sady, n.d.). Vina Magula is a family winery that has been a continuation of an ancestorial since 1931. It is interrupted by socialism and the nationalization of the land, as with the other Slovakian wineries. The new generation had only very modest knowledge about viticulture and wine-making. Overall, the vineyards in Slovakia were in decay, people paid meager prices for the grapes, and viniculture, in general, required hard work all year round and an uncertain outcome. Therefore, Magula decided to switch to organic viticulture in 2012, completed the transition, and became a certified organic wine producer in 2015. Their goal is to produce healthy grapes with skins populated with bacteria and yeast-living micro-flora, free of chemical residues. The vines are grown in “living soil” rich in diverse soil organisms. Magula takes on a do not intervene in the cellar while doing it all right paradigm. All natural winemakers believe that wine is made in the vineyard and not in the cellar. The Magula collection is on the wine lists of top restaurants in Europe, the United States, and Asia (Vino Magula, n.d.).

8.4.3.4 Obstacles Faced by Slovakia’s Natural Winemakers Natural wines may be turbid due to the nature of the production process but are further complicated by a Slovak legislative decree which requires wines to be clear. Despite winning international competitions and being chosen by high-profile restaurants, all natural winemakers in Slovakia were working against a deterrent Slovak environment which levied all legislative obstacles against natural and skin-macerated wines intending to withdraw them from the market (Lieskovský, 2013), some of which include multiple analysis reports in order to issue a Certificate of Origin at a hefty cost. However, the Agriculture Ministry has decided to omit some problematic wording from the original decree that banned natural wines during mid-2020, which hopefully will improve the competitiveness of Slovakia’s natural wines abroad (Kapitanova, 2020).

8.5 China: The Newcomer to Natural Wine China has a long history of fermentation and making alcoholic beverages by fermentation. Baijiu (white wine) and Huangjiu (yellow wine) are the most familiar ones. The ingredients used include sorghum,  millet,  rice, glutinous rice, and fruits such as lychee. Although China is not seen as a grape wine-producing country, there are many references in Tang Dynasty on wine made with grapes. According to imperial records of the Tang Dynasty, grape seeds and grape wine-making methods were

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brought back from Xinjiang. The grape seeds were planted in the gardens of the imperial palace, and the wine-making process started. Emperors and ministers loved the taste of wine. It was a prosperous time then; therefore, wine drinking and making were also prevalent. These are reflected by the poets of the time, including Li Bai and Bai Juyi (Li, 2013).

8.5.1 The Wine Terrain of China Although China has never been considered a wine-growing country, several regions have favorable conditions. These include Shandong, Xinjiang, Ningxia, and Hebei. Shandong accounts for 40% of total wine production in China. It has a maritime climate and is located on a peninsula with sufficient sunlight. The terrain is relatively flat on the coast but sees a peak of 1500 m above sea level in the middle of the province. Located in the northwest China is Xinjiang, the largest wine-growing region in terms of total land area. The area is well-known for its agriculture and wines. The region lends its unique character to the desert or mountains with scarce rainfall, intense sunlight, extreme daytime temperature variation, and abundant water sources. The foothills of the Helan Mountain in Ningxia are another desirable wine-growing location. It boasts a continental climate with hot summers and severely cold winters. The high altitude of the vineyards, with some more than 1200  m above sea level, would attract intense sunlight during the day, succeeded by the much cooler night, making it favorable for retaining good acidity. An upcoming wine-growing region on the east coast of China is Hebei, with its wide range of landscapes, including the Yellow River’s floodplains in the South and mountains to the north. The most significant part of the vineyards is 200–300 m above sea level, but it has altitudes up to 1000 m with a much cooler climate and high levels of sunshine (Decanter China, n.d.).

8.5.2 China’s Aspiring Winemakers Amidst the vast piece of land, China’s “first modern winery” Changyu, was founded in 1892 in Yantai, Shandong, and became China’s largest winery (Godley, 1986). In 2013, the Chateau Changyu Moser XV launched a joint venture between Changyu and Lenz Moser in Yinchuan, Ningxia. Lenz Moser is a prominent Austrian wine-making family which started the business in 1610 and is one of the first winemakers to employ biodynamic viticulture in Austria in 1978. After the collaboration, Chateau Changyu Moser XV announced in 2019 that it was converting its entire 250 hectares of vineyards into biodynamic viticulture in a five-year time span. Chateau Changyu Moser XV’s potential impact on China’s future biodynamic wine scene should not be underestimated. The chateau has been exported to over 40 markets and was recognized by Jancis Robinson, a renowned wine critic, as a “superior” wine producer in 2019 (Chateau Changyu–Moser XV, n.d.). Often being referred to as the China Bordeaux, not only does Ningxia was the chosen site for these premium estates, this is the breeding ground for many young winemakers who embrace organic or biodynamic practices. The continental desert region of Ningxia receives more than 3000 hours of sunshine a year, even more so

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than Bordeaux, with annual rainfall averaging just 300 mm or less. Winter temperatures are incredibly severe, to −25°C. Summer is scorching and dry in Ningxia, and hence relatively cool cow manure is used to regulate soils, and sustaining soil fertility is critical. However, given Ningxia’s desert-style arid lands, they do not face problems such as fungus diseases seen in European vineyards. One devoted winemaker worth mentioning is Sun Miao. Upon returning to her hometown of Yinchuan, Ningxia, in 2013, together with her husband, Peng Shuai, they founded Domaine des Arômes. The couple decided to practice biodynamic viticulture and bought some cow horn manure from the daughter of Nicolas Joly, one of the biodynamic wine movement’s pioneers, and mixed them with acquired fresh cow horns and manure from neighboring organic farms Having tasted many domestic Chinese wines that use artificial additives and technologies to cater to the preferred tastes of Chinese consumers in an attempt to replicate those of Bordeaux wine, they are determined to create a wine that reflects the terroir of the region. Hence, they left their lucrative careers in the wine industry in Burgundy. “Perfection is not necessarily the be-all and end-all. For us, to adapt to the natural environment and allow wines to improve over time is enough,” said Sun Miao (Sun, Why China’s Winemakers Don’t Need to Be Perfect, 2017). She believes that the essence of wine is described in the climate, soil, and encircling fauna of the area in which it is produced. Viticulture is a philosophy that highlights a mutual relationship with the natural environment (Sun, Why China’s Winemakers Don’t Need to Be Perfect, 2017). Currently, the Domaine has a production capacity of in excess of 10,000 bottles annually (Decanter China, n.d.). Another prominent figure in wine-making in Ningxia is Ian Dai, currently a wine judge and writer (contributor to Decanter magazine). Having a career as a sommelier, wine buyer, and educator, Dai would like to go further with his ideas. In 2017, he started the Xiaopu project as he saw the homogeneous local wine industry with the same varieties and same recipes but no philosophy. After raising an angel fund, the sommelier started as a negociant, purchased grapes from Ningxia growers, and experimented with his beliefs. Xiaopu is a wine-making project and not a winery. The idea is to build up a brand, expand sales channels, and utilize the excess capacity of other wineries. Ian is the first Chinese to produce a pet-nat (sparkling wine using the ancestral method), and he will continue experimenting with his wine projects). As more wineries in Ningxia move into organic and biodynamic farming, natural wine will gain popularity in China; as the region matures, wineries will become more open to the public. There will be a potential for wine tourism to create a special connection between the consumer and the winery.

8.5.3 Outlook of Natural Wine in China The first natural wine bar, Vinism, was opened in Shanghai in 2016. This first move created a solid customer base and opened the door for natural wine to be introduced into China. Currently, there are numerous natural wine bars and bistros dedicated solely to natural wine; even some Chinese restaurants have started to try and add such categories to their wine lists. We see natural wine rapidly expanding in the first-tier cities, notably in large markets such as Beijing, Shanghai, Guangzhou, and Shenzhen.

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With increased interest, wine fairs appear in the market. The first and most prominent natural wine fair, Ziran, which translates to “natural” was inaugurated in Shanghai in 2017. After a few years, in 2020, around 20 wineries with over 100 wine labels were presented at the Fair. Despite the increased awareness of natural wine, the market is in its infant stage. Only a minute fraction of the drinking population is aware of what natural wine is about. These are mainly people involved in the niche food and beverage business, such as chefs, sommeliers, restaurant owners, trendsetters, key opinion leaders, and young wine lovers. An average Chinese customer is looking for sweetness, fruit, oak, and tannins and a feel for higher alcohol content. Nevertheless, as the market or consumer becomes more sophisticated, they will start looking for more refreshment, floral, and minerality, which is the essence of natural wine. Despite this, the market is so new that the notion of natural wine is unknown even to the experienced national wine distributors. Currently, the distribution of imported natural wine is concentrated in several specialized importers or a small branch of large distribution groups, mainly in Shanghai and surrounding provinces. French natural wine dominated the market just like conventional wine because the first importer who introduced natural wine to China was closely associated with the vineyards in France. However, natural wines from Italy and Australia were quickly brought into the vast market. The small population is eager to learn about wines from lesser-known regions. Such regions are Georgia, where wine was invented some 8,000  years old or other Central and Eastern European countries, such as Austria (where biodynamic principles were born), the Czech Republic, Slovakia, Slovenia, and Croatia organic or biodynamic farming has always been the farming norm. In the coming years, the market will definitely witness more distribution of natural wine because natural wine does yield a higher margin to the distributor than conventional wine. In addition, natural wine will help generate better cash flow for the importer. This wine segment often requires an advance deposit from customers since natural wines result from small production. In contrast, conventional wine is very competitive with low margins, and heavy credit is given to customers. Natural wine is associated with artisan growers rather than big companies. Purchase is by an allocation system from the winemaker and is sold out on release. It is rather difficult for an average new buyer to get into the allocation system of these winemakers who would not have any additional volume to supply to cope with a sudden increase in demand. As with other markets, natural wine is still in a “confused” trend in China. Consumers often conflate organic with natural. Some believe that only zero-sulfur wines are natural, while others think that natural wines would not give you a hangover—these are all myths. Based on value management, the consumption pattern of wine involves the consumer’s perceived value. Such perceived value is the positive influence on financial, functional, individual, and social desires (Wiedmann et al., 2014) in addition to situational determinants, consumer experiences, and needs (Wiedmann et al., 2014). As such, we can apply the generalization mode theory and brand loyalty to study the Generation Y Chinese consumers and deduce if natural wine will hold any potential. Under the generalization mode theory, different age groups and geographical factors can affect attitudes and beliefs. Different age groups that share comparable life experiences would cause them to develop similar consumption attitudes and beliefs (Lazarevic, 2012).

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Generation Y is regarded as one of the most promising wine segment consumers (Jacoby, Brand loyalty vs. repeat purchasing behavior, 1973) due to its high buying power (Nowak, 2006). This generation represents a more educated population with higher disposable income, not conforming to the norm with an adventurous mind. It seems that the Chinese Generation Y would readily accept natural wine, but would they develop any brand loyalty? Brand loyalty is a psychological function and is defined as the biased, non-random behavioral response, expressed over time, by some decision-making and evaluative processes with respect to one or more alternative brands out of a set of brands (Jacoby, Brand loyalty vs. repeat purchasing behavior, 1973). This is in conjunction with promotion by word-of-mouth which may tap into the emotional attachment to the brand over a period of time. However, Brand loyalty does not distinguish between purchases based on true brand loyalty and purchases based on inertia. Chinese Generation Y consumers do not seem to have inertia because they would like to try something new. Natural wine is a terroir-driven wine; it always surprises and always provides something unexpected. Having said that, drinking wine is an enjoyable activity; why concentrate so much on the technical know-how?

8.6 How Do We See China as the Next Natural Wine Market? Does China Have the Potential to Become the Next Natural Wine Hub? It is clear that Asian countries which possess a more sophisticated wine culture, such as Japan and Korea, are more receptive to natural wine. Customers are not satisfied with commercial wines which are homogeneous in taste. These customers expect something different or unique. For China to become an upcoming natural wine market, the following factors or characteristics are necessary for production and selling. One imperative attribute is the terroir. China is a new world wine country. It does not have indigenous grapes with vines counting back centuries ago or vines that have been deeply rooted for thousands of years. It relies mainly on plantings from Vitis Vinifera brought back from other countries. Nonetheless, China does have the terroir in various provinces such as Shandong, Xinjiang, Ningxia, and Hebei, each with its own unique terroir expression. Elements of the climate in some of these regions with a wide temperature range from day to night make it advantageous to grow grapes to allow the production of high-quality-bodied wines without using pesticides or herbicides. There are wholeheartedly devoted winemakers who are farmers who work in the vineyard instead of making considerable interventions in the cellar. They now start to have small but stable production. To cope with the rapidly expanding demand in domestic and potentially export markets, farmers need to adapt to a different mindset and have the patience to let nature guide their way. The farmers have to accept that the presence of wasps and insects is vital to the ecology of the vineyard. A respect for nature should be employed, so harmful chemical fertilizers and pesticides should be eliminated from the farming process. Perhaps there could be some incentives to move into organic and biodynamic farming or favorable legislation for the production and distribution of natural wine.

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A very positive trait in the Chinese market is that the wine generation grew up without the classical certainties; they ignore critics, medals, marks, and point system by industry experts. This generation travels and obtains information from social media. They are open-minded with a willingness to try different gastronomic flavors and accept something different or outside of the norm. They reject the notion of standardization and are constantly thriving to find something new with their growing disposable income coupled with an awareness of healthy eating and drinking. Their first contact would generally be wine bars and restaurants, then specialist retailers, and then the wine fairs, which would draw widespread attention from local customers and attract both local and international winemakers. Along the One Belt One Road, many old-world wine-making countries share similar political and social backgrounds as China, which are producers of good-quality natural wine at reasonable prices. We do hope they could be introduced into China to encourage more wine growers to respect nature in their agricultural practices. As an incentive to advocate natural wine, perhaps the Chinese government could reduce import tariffs for “certified” organic or biodynamic growers to allow these small family-owned vineyards to be introduced to China. It would not be long before we saw some good-quality natural wine produced in China and participated in international competitions. It would not be long before we see first-tier cities like Shanghai, Beijing, Guangzhou, and Shenzhen, where natural wine would become a must-add item to most food and beverage outlets and gradually expand to second- and third-tier cities. Chinese food, which has many flavors, does pair well with terroir-driven natural wines. They form a community with like-minded enthusiasts, and suddenly, you will have a small natural wine culture. One of the trends in China is the creation of food and beverage chains. These chains have been in the market for some time, such as coffee chains, tea chains, hotpot restaurants, and selective wine bistros. A recent trend is the emergence of a wine bar/ coffee shop hybrid concept—a coffee and bakery shop by day and turning into a wine bar with charcuterie and nibbles by night. One of the reasons is to build up brands to achieve economies of scale in terms of operation and purchasing or attract financial and strategic investors. The China market is very attractive and lucrative to institutional investors due to the vast population and growing disposable income. A stable government with plans to create prosperity and health for its people is crucial to the success of any venture operating in the market. Natural wine or biodynamic practices are emerging concepts, even in European countries. Coinciding with ancient Chinese philosophies, such as Taoism, emphasizes living in harmony with nature. This principle is easy for the Chinese consumers, who do not know about viticulture, to accept and understand. With “Health 2030,” where food safety is a serious matter, consumer pleas are simple: They are grateful if the producers are sincere and their products are natural. The ethics are to respect and try to produce an authentic wine to its terroir. Natural wine is a story of the terroir. It is a communication between nature and people (the vignerons) and communication from people (vignerons) to people (consumers). The wine you consume tells you the story of the winemaker, the weather, and the events that happened during the year. In Franz Strohmeier’s own words: It does one good to patiently observe what happens in the peace and tranquility of nature. And the best occurrences are those that take place without

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Would China Become the Next Natural Wine Hub? influence from outside sources. I willingly admit. I have such high respect for developments happening unseen—both in the vineyard and later in the wine itself—that I am afraid of disturbing and defacing the natural process through interference . . . With these thoughts, we want to encourage you to become more sensible and alert. Make us aware, what is good for us and our environment. Our living today is in most things technical, what is quite useful. But life is also playful. Love, simplicity, silence flowers, dancing or painting and art—these things include our inner world . . . to enjoy the perfect symphony of liveliness, salubriousness and sustainability. (Strohmeier, n.d.)

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Chateau Changyu–Moser XV. (n.d.). Retrieved from http://www.changyu-moser.de Clai Wine. (n.d.). Retrieved from https://www.claiwines.hr Croatian Gastronomy and Enology. (n.d.). Retrieved from https://croatia.hr/en-GB/ experiences/gastronomy-and-enology Decanter China. (n.d.). Retrieved from https://www.decanterchina.com/en/regions/china/ Judith Beck GmbH (n.d.). Retrieved from https://www.weingut-beck.at Karakterre. (n.d.). Retrieved from https://www.karakterre.com Meinklang. (n.d.). Retrieved from https://meinklang.at Osterreich Wein Marketing GmbH. (n.d.). Retrieved from https://osterreich wein.at Slobodné vinárstvo—Majer Zemianske sady. (n.d.). Retrieved from www.slobodnevinarstvo.sk Slovak Wine. (n.d.). Retrieved from https://salonvin.sk/en/slovak-wine/ Strekov 1075, Ltd. (n.d.). Retrieved from https://www.strekov1075.eu Vino Magula. (n.d.). Retrieved from http://www.vinomagula.sk

9 One Belt One Road: A Grand Strategy *Muhammad Fahim Khan, Nabila Aftab, and Shujahat Ali University of Peshawar, Pakistan Syed Shahab Uddin Department of International Relations, Federal Urdu University of Arts, Sciences & Technology, Pakistan CONTENTS 9.1 Overview of BRI�������������������������������������������������������������������������������������������� 226 9.1.1 A Leaderless World Order������������������������������������������������������������������227 9.1.2 China’s “Great Rejuvenation”������������������������������������������������������������227 9.1.3 BRI and Chinese Grand Strategy������������������������������������������������������ 228 9.2 Geoeconomics as the New Geopolitics��������������������������������������������������������� 230 9.3 The Global Strategic Environment of the BRI�����������������������������������������������231 9.4 Analyzing China’s BRI in a World of Deep and Complex Interdependence��� 232 9.4.1 Chinese Objectives�����������������������������������������������������������������������������232 9.5 One Belt, One Road, One World: Where Is US Business Connectivity?�������233 9.6 Belt, Road, and Circle: The Arctic and Northern Europe in China’s Belt and Road Initiative����������������������������������������������������������������������������������������� 234 9.7 Nordic Countries’ Perspective on and Engagement in the BRI����������������������235 9.8 China’s Strategy Toward Central and Eastern Europe within the Framework of 16 + 1 Group: The Case of Poland������������������������������������������237 9.9 The Impact of the Belt and Road��������������������������������������������������������������������239 9.9.1 Initiative on Central Asia: Building New Relations in a Reshaped Geopolitical Scenario��������������������������������������������������������239 9.9.1.1 The Belt and Road Initiative: Focus on Central Asia���������239 9.10 Live and Let Live: Africa’s Response Options to China’s BRI����������������������241 9.11 Small State, Smart Influence: China’s Belt and Road Extended to New Zealand����������������������������������������������������������������������������������������������������������� 242 9.12 Responses to the BRI: Contextualizing Power and Small States������������������ 242 9.13 New Zealand’s Power to Influence China’s BRI�������������������������������������������� 244

DOI: 10.1201/9781003198147-9

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9.14 Conclusion������������������������������������������������������������������������������������������������������ 247 Notes�������������������������������������������������������������������������������������������������������������� 250 9.15 References ...................................................................................................... 252

9.1 Overview of BRI As the second-largest economy and the world’s largest exporter, China has regularly sent shock waves across the globe. One of the primary efforts was the One Belt, One Road (OBOR) and Belt and Road Initiative (BRI). The Chinese top economic planning agency, the National Development and Reform Commission announced, on 28 March 2015, a further Action Plan outlining the core aspects of the OBOR program launched at the end of 2013 by Mr Xi Jinping. China has emerged in the global economy since 2001, and China has recently expanded its government-funded “Going Global” development plans and scope as part of its international goal of Chinese dreaming. The BRI, with the economic belt “Silk Road” and “Marine Silk Road,” is currently the most significant international cooperation platform, reflecting China’s new development model and diplomatic policy. International cooperation focuses mainly on the BRI. A broad network of Free Trade bilateral agreements (FTA) based on China’s pull of gravity and giant open-market accords is intended to be integrated into a multilateral context and enhanced by Belt and Road Initiative (BRI Fundamental). The BRI aims to link China with Europe, through central Asia with the United States, Central East, Central Asia, South-East Asia, South Asia, and the Indian Ocean. In the meantime, the “road” intends to reach China and Europe through the South China Sea, the Indian Ocean, and the South China Sea. The GDP BRI is one of the world economic states of the 21st century that comprises 65 nations. It affects more than 60% of the world’s population, accounting for almost a third of the world’s GDP-Global commerce in products and 75% of the world’s known energy reserves.1 China’s new status is essentially a new global BRI architecture as a global market leader. It is also an important project encompassing road, rail, oil and gas financing and building, fiber and communication infrastructure, ports, and airports. It includes a major project as well. However, the BRI is far broader since it covers cooperation from policy dialogue to trade to finance cooperation and individual exchanges. The expected expenses of the BRI of $800 billion will primarily be financed by China, which is backed by Asian Infrastructure Investment Bank (AIIB) and the New Development Bank.2 By May  2017, 22 nations had signed the BRI MoU, and 29 Heads of State attended the inaugural BRI Forum in Peking.3 Most participants were from minor developed countries in Asia, ASEAN, and Central Asia. China therefore appears to be an early major power. In contrast to the smaller and poorer countries, the BRI threatened the Western political climate and rejected the BRI, including the United States, EU, Japan, India, and Australia. Their key worry is the BRI’s strategic value and the political aim of infrastructure development. There have also been references to economic challenges, financial risk and debt, and environmental and social concerns.

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9.1.1 A Leaderless World Order Where a new economic model is not already evil enough and trade agreements are becoming more negative in the future, the added fact of the global US leadership issue just deepens anxiety about the character and dynamics of an international system of the 21st century. The domestic political, economic, and social issues from the G-7 to the G-20 have, in contrast, provided little time for coordinated attempts at addressing international and global challenges. The unavoidable result is a flagrant lack of global management if a sense of stability and assurance is most necessary. Given the increasing global leadership crisis in the United States and heated discussions about the US’ end—all of which will simultaneously undermine the hegemonic stability that the geopolitical order has maintained since 1945—questions about the world’s link with a transition from Pax Americana to Pax Sinica or whether it could be at the forefront of the G-Zero era in view of the unparalleled By May 2017 the BRI MoU had been signed by 22 nations and the opening BRI Forum was attended by 29 heads of state in Beijing. In Asia, ASEAN, and Central Asia, most of the participants were from small developed countries. China thus seems to be a big power at an early stage. The Western political atmosphere has been threatened or rejected by the BRI as opposed to the smaller and poorer countries, like the United States, the EU, Japan, India, and Australia. Their main concern is the strategic value of the BRI and the political objective of the development of infrastructure. Economic issues, financial risks and debt, and environmental and social concerns have all been mentioned. When a new economic model is not already terrible enough and trade agreements will be negative in the future, the additional fact of the US global leadership problem further raises concern about the nature and dynamics of the 21st-century international system. In contrast, the G-7 to G-20 have given domestic political, economic, and social difficulties little time for coordinated efforts to tackle global and international challenges. If a perception of stability and security is most required, a conspicuous absence of international management is the inevitable conclusion. With the increasing US crisis of global leadership, with heated discussions of the end of the United States—all undermining the hegemonic stability maintained by the geopolitical order since 1945, questions are being asked as to the connection between the world and a transition from Pax Americana to Pax Synica or whether it could be the leader in G-Zero in view of the unparalleled. Can and will China be transformed into a new level of international economic leadership as the leaders of the G20 to fit the retreat of America? How does China’s defense of the BRI play an important part in the changing dynamics of the 21st century’s global economic order?

9.1.2 China’s “Great Rejuvenation” On 21 September 2005, Deputy Secretary of State Robert B. Zoellick addressed the United States–China Relations Committee and called on China to be the main actor as “China is responsible for the strengthening and the success of the international system.”4 China’s willingness to take on increased commitments in the international system left relatively little dispute during the last decade in terms of its broader global involvement. To appreciate this tendency properly, we need to realize that much of

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the Chinese grand foreign policy agenda for the 21st century define the legacies of the “century of humiliation” above and beyond the injunction to be responsible actors. On 29 November 2012, at the Chinese National Museum, Xi Jinping talked about this historical heritage during the exhibition “Ways to Revival.” Everyone has for oneself an aim, an endeavor, and a dream. Everyone is talking about today’s Chinese Dream. In modern history, I think the national rebirth is China’s greatest hope. This dream includes many generations’ long-awaited Chinese dreams, reflects the interests of the whole Chinese people, and is aligned with the expectations and desires of all Chinese children. History teaches that via our personal future and destiny, we are deeply related to the country and nation. In the 21st century, it was then known as “China Dream” and presents a powerful image of Chinese aspirations and motives. Xi Jinping clearly tried to portray China Dream as a dream of China in a 21st-century global system by calling for national rejuvenation—a force that would never be under-animated.5 China’s foreign policy was reorganized to engage with the international community to ensure that the present system guarantees and maximizes China’s national interests, resources, and strength. Foreign Affairs of China “While China is able to maintain high rates of growth, its internal political instability and its political stability, it will at most be the regional authority bound by poor people, older infrastructure and restricted global calls,” Brzezinsky said (both are far from likely). But China, with the slow but deliberate re-drawing of foreign policies in order to reinforce its institutional involvement, stipulates a greater role for global leadership and high-impact policy instruments.

9.1.3 BRI and Chinese Grand Strategy But China, even though it struggled to accomplish “a strategy that combines power with confidence, reform, and acceptance, a balance that guarantees positive interactivity,” has expanded its influence and power on the world scene.6 In addition to increasing concern over possible revisionism in China, China has displayed great skepticism in its commitment to peaceful development. Indeed, Xi Jinping is likely China’s most open attempt to find status to date, for the “new power relationship” (Xînxing dàguó guānxì). The path to global domination that the word mostly obsolete can’t be accepted by China—it was not named in 2017. The internationally growing participation of China is hardly surprising to see an expanding debate about Chinese power’s aims, exercise, and limitations. “Never buy into the geopolitical settlement of the Cold War by China, Iran and Russia, Walter Russell Mead claims, and are attempting even more strongly to undermine it. The attempts are already shaken in the balance of power and changed international policy dynamics, whether or not the revisionists succeed.” It is also obvious, though not impossible, that China’s surprising rise must not be inevitable. Indeed, Peking’s determination to balance revolution and the status quo has made it highly difficult to accept and adapt to China’s emergence to an unanticipated growth in established provided powers (the United States).7 Xi Jinping said during the “Third Year of Peaceful Coexistence Meeting” in 2014. China is guided by the premise that mutual relations with its neighbors, nurturing friendliness, sincerity, reciprocal efficiency, and inclusiveness are encouraged. China’s external policies support relations with other emerging countries, notwithstanding China’s balanced approach to values and the pursuit of interest. China is an honest friend and trustworthy partner of other developing countries. China attaches great importance to the status and role of other major countries and is dedicated to forging full partnerships

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with them. A new, large-scale model is being formed, a comprehensive strategic cooperation is being developed with Russia, and partnerships for peace, growth, reform, and civilization are being developed across Europe. In short, we are willing to collaborate with everyone else to preserve world peace and foster shared growth. Indeed, under the leadership of Xi Jinping, China has continually emphasized that it will strive for a broad global commitment based on “friendliness, honesty, mutual benefit and inclusion.” The current pursuit of China’s scope and nature of the world economy is a good alternative to world hegemony.8 It would seem. In the meanwhile, it must be pointed out that in so far as the BRI has undeniably been the most ambitious demonstration so far, to the extent to which China is able, geopolitically or geopolitically, to offer economic power and major-country diplomacy, this is a similarly important feature, if not more, of the global US threat from the 21st century. From a geoeconomics point of view, China has clear evidence of an established multilateralism. The multipolar system of global inclusion is an embedded multilateralism, but China’s acceptance of multilateralism is marked by “realpolitik, foreign policies and national sovereignty.” At the same time, a practice of battling America’s (perceived or actual) efforts to impede China’s expansion, geopolitically, geo-economically, or geo-strategically, is the Chinese goal of rejuvenation. Since the 21st century, the Chinese and Arab Cooperation Forums (China-Africa Cooperation Forum, 2000),9 China has unceasingly established a truly global network of multi-lateral commercial and trade initiatives. The Chinese and Arab Cooperation Forums 2004 have been held. At the institutional level, Chinese action was no less ambitious and focused on boosting regional coordination. The establishment of the AIIB under the leadership of the BRICS not only demonstrates China’s commitment to a bigger contribution to global financial supervision. The Chinese disappointment is particularly clear because Western countries continue to control the World Bank, the IMF, and the leadership of Japan in the Asian Development Bank. The combined geopolitical and geoeconomics influence of the AIIB confers on and Road may be a Chinese initiative, but it is a global effort involving developed and developing countries, and international organizations. From 2015 to 2030, the worldwide middle-class contribution is projected to grow from 52% to 70% in Asia-Pacific, Middle East, and North Africa (see Table 9.1), with an overall share projected to rise by 61% by 2030, from 40% in 2015 (see Table 9.2 of this chapter). TABLE 9.1 Belt Number (Millions) and Share of the Global Middle Class by Region 2015

North America Europe Central and South America Asia-Pacific Sub-Saharan Africa Middle East and North Africa World

2020

2025

2030

#

%

#

%

#

%

#

%

335 724 285 1380 114 192 3030

11 24 9 46 4 6 100

344 736 303 2032 132 228 3766

9 20 8 54 4 6 100

350 738 321 2784 166 258 4617

8 16 7 60 4 6 100

354 733 335 3492 212 285 5412

7 14 6 65 4 5 100

Maliszewska, Maryla, and Dominique Van Der Mensbrugghe. “The Belt and Road Initiative: Economic, Poverty and Environmental Impacts.” World Bank Policy Research Working Paper 8814 (2019). Kharas, Homi. “The Unprecedented Expansion of the Global Middle Class: An Update.” (2017).

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TABLE 9.2 Spending by the Global Middle Class, Purchasing Power Parity (PPP) (Constant 2011 Billion US$ and Shares) 2015

North America Europe Central and South America Asia-Pacific Sub-Saharan Africa Middle East and North Africa World

2020

2025

2030

#

%

#

%

#

%

#

%

6174 10,920 2931 12,332 915 1541

18 31 8 36 3 4

6381 11,613 3137 18,174 1042 1933

15 27 8 43 2 5

6558 12,159 3397 26,519 1295 2306

13 23 8 51 2 4

6681 12,573 3630 36,631 1661 2679

10 20 6 57 3 4

34,814

100

42,279

100

52,234

100

63,854

100

In addition to its clear economic potential, BRI also offers the road to faster renminbi internationalization, following its formal addition to the basket of currencies that constitute the IMF’s specific drawing rights as of 1 October 2016. As commerce between China and the BRI countries increases, the RMB is anticipated to gain increased significance in external trade. This, on the other hand, strengthens China’s hope of reforms of the international currency system of the Bretton Woods (IMF and World Bank) and of the alternative “Beijing Woods” model. In order to produce economic products, the BRI can still be a favourable instrument to promote different paradigms such as political economics, development and governance.

In the meantime, Mackinder’s “Heartland Theory” coincides with the development of the new silk roads (the belt) from a strictly geographical perspective.10 The Belt Component in the ERI poses a clear question as to whether it can be used in China as a prelude to a Euro-century since it then sums up as “Who rules eastern Europe is in control of a Heartland; who governs a Heartland is in control of world Iceland; who rules the World Island in control of the world.” On the other hand, the road component is probably linked to concerns about China’s naval policy, specifically the flaring of the South China sea disputes, and (more recently) the opening by China of its first foreign army station in Djibouti in July 2017.11 Furthermore, Spykman’s “Rimland,” which he felt was more crucial than the “Heartland,” seems to be passing through to achieve a control of the surrounding areas of Eurasia. As he observed, “The Rimland’s controller is the Eurasian leader who controls the fate of Eurasia.” Regardless of its perspective, by targeted at both regions, China has secured its cars well and is set to maximize the influence and impact of BRI on the world economy.

9.2 Geoeconomics as the New Geopolitics President Obama declared on 5 October  2015 in Trans-Pacific Partnership (TPP) statement that “We are unable to enable countries, like China, to lay down the world

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economic rules if 95% of our potential customers live beyond the borders.”12 Such criteria should be set. New markets for American products should be opened up, and strong standards should be implemented to protect labor and the environment. But the United States has already surpassed the TPP and opened China’s door to further expand its world economic implications. Is the New Silk Roads of China an attempt to disguise its goals? China’s increasing global engagement has significantly improved competition and cooperation and presents new challenges in terms of domestic transformation and continuity. It is early enough to see if the Silk Roads of the 20th century would result in a new era of global cooperation or competition. After all, China has just begun rifling through the global political economy with its economic effect and with its adoption of a mantle of higher global economic leadership supported by an objective view of economic cooperation and sharing of progress. Though Chinese motives and the form of the eventual transition of power are widely speculated, prudent optimism about the intentions of China may be just as justifiable as unrestrained alarmism. It is possibly the 20th first century that will witness as many changes, if not more, as can ensure continuity if there is an indicator of the history of big power transitions. It should, however, be emphasized that changes alone do not result in increased competition or rivalry by default. China reinforces its exterior policy of economics and geo-economic disputes in the 21st century.13 But time is enough to say that the leadership in Beijing will succeed in launching—and sustaining—a new era of global economic leadership with its flagship economic plan based on economic cooperation and shared development. During an irrefutable change of power in the international system, the structure and dynamic of interactions of the global political economies of the 21st century have begun to be defined and discussed. Interesting times, actually.

9.3 The Global Strategic Environment of the BRI The increased instability of the global economy in recent years has brought together turbulence in the Asian regional system’s strategic, political, economic, and militant interconnections. Partly in response to China’s rapid decline, extraordinary strategic commitments occur between major powers and developing states. Perhaps the most striking is the Chinese initiative in building the BRI, which is designed to restructure economic and strategic links in various parts of Central Asia and Middle East.14 Without the latest studies on the BRI, the sufficient account has been taken of the role played by the global strategic environment that defines the objectives and results. The strategic considerations for the current prevailing dominant power are separated from prior power, mainly by the current dominant state, the United States, throughout the last 80  years. In a near-global context of liberal international order, based on complicated and globalized systems of capitalist production, traders and capital movement and exchanges of knowledge, set up by global institutions, regimes, and norms, a strategic environment defined by profound and interdependent policies and the importance of structural power was set up. This chapter describes this theoretical framework and uses it to understand the goals, strategies, and future findings of the BRI initiative in China. The strategic implications of a profound global system of interdependence will be used to understand the BRI strategy of China, namely, to advance regional Asian

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domination by creating structural power and foster further political and economic objectives. However, a smart, well-realized set of policies and activities on mutual gains, governance, and conflict management between the countries and the countries in the area must be undertaken to succeed in this effort. These proposals will be considered by discussing the BRI objectives in China; the strategic interactions in the closest analog of the BRI, the Marshall Plan for 1947 and 1950, overall capacity of the Chinese Government to formulate, manage, and deliver the BRI; development and management of the BRI institutional analogy of the AIIB15. An essential issue is whether or not the BRI Project will function within the liberal context or whether China’s emerging power is trying in the nature and connotation of its deep interdependence, as well as its structural might, to supplant part or all of this order.

9.4 Analyzing China’s BRI in a World of Deep and Complex Interdependence 9.4.1 Chinese Objectives The BRI represents an enormous project combining the financing and building of road, rail, oil, and gas pipeline, fiber optics and communications, and port and airport systems.16 This will build new connectivity types throughout Central Asia and Europe and enhance the interdependence and growth of the countries in these areas. Moreover, the Chinese economic model’s success will significantly enhance its global stature and soft power. Maybe the BRI can contribute to the refurbishment of its model infrastructure by regionalizing China’s surplus and overcapacity in the heavy sectors producing the infrastructure. Chinese initiatives with the BRI reflect and function in the liberal US world system. Indeed, in many ways, the BRI program confirms and shows China’s expected continued presence, perhaps even if it seeks to improve the world system’s favor. China’s capacity to build large-scale economic interdependency and geo-economic growth systems and create substantial structural forces reveals a thorough understanding of the character of the global strategic environment of deeper and more complex interdependency. In the foreseeable future, China clearly defines BRI as “win-win,” in particular by developing an economic structure to provide all participants reciprocal advantages. Indeed, in the “three noses,” China is not engaged in interfering in other countries’ internal affairs, nor in expanding its sphere of influence or in seeking domination or hegemony. While less visible, derivative BRI aims are clearly essential for Chinese people.17 In domestic terms, the BRI aims to encourage economic growth in China, notably for construction-related companies with significant overcapacity. The BRI also plays a role in developing alternative systems that increase Chinese structural power and capacities at the local and global levels. Structural power comes from public goods resources and capability for all or parts of a system. A  successful effort by China with the BRI will build a range of new and key public goods resources that many, if not all, countries in the region will take account of. New and upgraded broadband systems and other types of business-enabled infrastructural infrastructure will have a tremendous impact on national and corporate decision making. Nations and companies already hope that they will receive BRI projects and companies all over the

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world design their products and talents to obtain contracts for buildings. These are the effects of structural power. The Chinese behavior in many scenarios, in particular in creating the BRI, clearly indicates that its leadership understands the nature and value of structural power in a deep interdependent global system.18 This is reflected in their attempts to provide money and build and implement a system that offers mutual growth and that may provide rules, standards, and institutions to make it easier to operate and administer it. Global and regional actors will have to take the BRI project into account because the system will benefit the actors. Such systems are, of course, also intended to support China’s position against American structural power-rooted hegemony in the United States, not only in the Asian area but also in many regions of the world as well. Even if China’s BRI system succeeds in some measure, its regional and global status will be considerably strengthened. In a broader sense, the BRI will boost its share of success even for many States and companies that are heavily involved in the world order in the United States. So can a liberal, open world function and draw to this effort a broad spectrum of nations. China’s structural strength can be built. Even countries such as Israel and perhaps Japan are firmly connected with the United States would undoubtedly profit from the presence of BRI.

9.5 One Belt, One Road, One World: Where Is US Business Connectivity? While China emerges as one of the largest human endeavors in the globe, the BRI is aiming to include Eurasian countries adjoining the region through the Silk Road and the Ocean Silk Road into an economically coherent region (Mobile Sea Range). The BRI is one of the largest human endeavors in the world. The Chinese claimed $1.4 trillion in financial contributions to projects and continued to expand, as part of its market plan, which was 11 times in current dollars.19 In the history of the human race, it is the biggest and arguably most transformational technical achievement. The projects should be linked independently with Kolkata, from Kunming to Singapore. It’s Gwadar (also a big port) to Kashgar and Tashkent and Tehran independently. While it seems that the United States is not following the geographical BRI path, should the United States remain aloof? In recent years, the US government has sent out unclear signals; US commentators are just beginning to warm up to the BRI when the Pottinger delegation was dispatched by the Trump Administration to the BRI Summit in May 2019.20 The aim of this research is to answer the issues: How do the American companies relate to the massive BRI program in China in the 21st century? How do the United States and US companies profit from this connectedness, costs, and risks? International corporate theories argue that advanced multinationals are expanding internationally in order to profit from their business advantages. In the economic field, such businesses, including ICT, power (including clean energy), infrastructure and construction, engineering, logistics, electronic services, legal and accounting services, and other industries, we propose not to avoid a link between US businesses and BRI because of their superior technological advantages and other key capacities (including green and circular economy sectors). The vast economic integration activities already

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underway, covering all the nations involved with the BRI, are undoubtedly the advantage in US companies in BRI countries. In the following part, gains in the current geopolitical atmosphere are apparent but not without price and danger.

9.6 Belt, Road, and Circle: The Arctic and Northern Europe in China’s Belt and Road Initiative Initially, Northern Europe was not high in the BRI. In the months following the Beijing Belt and Road Summit in May 2017,21 however, China’s leaders stated intentions to boost “all-Dimensional and broad sea cooperation” in order to strengthen the maritime cooperation under the BRI, which will include the three blue economic routes. One of the blue economic paths is the link between China and Europe through the Arctic Ocean. Chinese scholars and professionals have already pondered whether Arctic seaways are to be included and have even urged that the appellation “One Belt, One Road” be extended to “One Belt, One Road, one Circle.” Peking fully incorporated the Arctic Seaway and brought the BRI via the three blue economic channels to northern Europe. The Five Nordic countries of Denmark, Norway, Sweden, Finland, and Iceland share a strong concern with the size of their population, economies, and military forces to maintain a rule-based international organization22 where their rights and interests are protected through strong, ideally liberal, values-based institutions, and so on. But it has become harder to preserve liberal norms and values, not least since the Nordic countries want to develop strong friendly relations with China more closely. The Nordic countries rely primarily on foreign commerce due to the comparatively modest open economies of their national economies with limited home markets. This is why the Nordic countries have worked hard in recent years to expand their relations with China since China plays an increasingly vital role in both bilateral trade and investment for the Nordic nations. The Nordic countries have a variety of shared elements based on geographical, historical, and cultural linkages and differ in key aspects, including composition and internal institutional associations, national policies, economics, industries, foreign, and security policy viewpoints. The Nordic countries’ complex evaluation of the rising potential and the growing difficulty regarding relations with China explains why China is mostly involved bilaterally in the Nordic countries rather than through a strong unified, north-western platform. In recent years, all of the Nordic nations have joined China’s AIIB and have shown interest in the BRI, providing and participating in a range of infrastructure projects in Third Countries, with a major focus on economic and commercial potential. As the Arctic has formally been integrated at the present time, the BRI’s potential to directly touch Nordic economies and to connect northern European countries with China is increasingly apparent and the efforts of the Scandinavian countries are expected to be further increased. This section discusses the views and implications of the Nordic states in the BRI and compares them. In the first instance, it reveals how China uses the BRI to further strengthen its diplomacy in the Arctic and establish connections with the Scandinavian

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countries. The second section indicates that, despite comparable favorable ideas and attitudes toward the BRI, Nordic countries differ from one another with respect to place and particular domestic problems and considerations. Third, the chapter examines the major obstacles facing China and, in particular, the BRI in the Nordic nations. This is the organization. The first chapter discusses the construction of the BRI in the Arctic and the development of the Chinese inter-Eastern regions in the Arctic. Second, the chapter briefly analyzes the links between the five Nordic states and China and uses this as a framework for analyzing their perspectives of and participation in the BRI. The chapter finishes with a debate that China has not cooperated much more in the Nordic nations despite greater efforts in recent years in establishing the 5 + 1 framework or mechanism for Chinese engagement. The research builds on a realistic examination of external policy specifically tailored to analyze theoretically and analytically the foreign and security policies of tiny countries. The structure of the international system, as small countries like Nordic one’s function in the expanding global system itself, cannot be affected. Rather, they are adapted in different ways to safeguard and promote their national interests. You have to open the Blackbox to analyze how and why small countries like the Nordic countries adjust and adapt. The Nordic countries face similar, systemically determined spaces for maneuver to comprehend and explain their disparities in strategies and reactions, therefore focusing on local circumstances and considerations.

9.7 Nordic Countries’ Perspective on and Engagement in the BRI The Scandinavian countries have Denmark and Iceland the broadest contacts with China. The free trade agreement of 2013 between Denmark and Iceland enhanced general relations with China between these nations, leading to increased visits, projects, and trade on a bilateral basis. Finland is joining forces and negotiating on a practical basis a “new sort of relationship” with China. In humanitarian matters, Sweden must not only reconcile business interests with stringent political dynamics, but it also urges stronger and more solid ties with China. Since diplomatic relations with China were restored in December 2016, Norway has made substantial efforts to repair relations and to meet economic and commercial concerns. Oslo is presently negotiating a free trade agreement with China. From the Nordic point of view, China is an increasingly important bilateral economic partner and source of investment. Trade between Nordic countries and China has consistently increased since China joined the WTO in 2001.23 In recent years, China’s investment in the north has increased with the acquisition of iconic Nordic brands, such as Volvo, Chinese firms, R&D facilities, and high-tech Nordic industry, for example, the acquisition, in 2008, of the Awilco Norwegian offshore technology organization. Moreover, with the expanding impact on the international economic institutional framework, China must deal with its relatively modest, open, and commercial economy. As the Nordic–China relations are based on commerce and capital investment, the BRI offers a new potential dimension. But Nordic media and government are not attractive to the BRI still, which is not very important in China’s official open-source

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approach. There is no clear viewpoint and consistent BRI policy for any of the Scandinavian countries. At best, the BRI is limited in the general public’s knowledge of the Nordic population. The small Nordic press coverage of the BRI focused on the fears and signals of China’s geopolitical ambitions and the BRI’s ability to erode EU trade and investment rules as a common political unity. The BRI was mainly negative. The interaction between China and EU regional cluster groups, such as the 16 + 1 arrangement with Central and Eastern European countries, is particularly noted. The Nordic nations closest to the open participation of the BRI favor the AIIB in the early stages. Nordic nations’ strong involvement with the AIIB might be considered as indirect in shaping BRI activities by trying to reach international standards in China’s AIIB and BRI-related projects (e.g., Forsby  & Jiang, 2016). Rappe and Weissmann (2016) are also aware that the Swedish BRI response was cautious and that the policy to wait and watch was usually best described.24 This means that in particular after the addition to the Arctic by identifying opportunities for China’s attraction of investment and promote local and regional economic degradation within the BRI. BRI has not been considered as extremely relevant to the overall goal of the Nordic governments to strengthen bilateral relations with China. At the beginning of October 2017, for instance, a Finnish Minister for Transport and Communications Anne Berner showed a good interest in a proposal by a group of business leaders for the “Arctical Corridor” Railway that refers especially to the Joint Plans for the “Ice Silk Road” from Russia. China has, so far, invested very little in developing a BRI in North Europe compared to other parts of Europe, in particular Central and Eastern Europe. Before the current BRI Arctic component the Baltic region, associated with the BRI in relation to the maritime route and the Eurasian State Bridge, may become vital to the Nordic countries. The Balkans have an ecosystem, a political and a cultural relationship with the Baltic states and are located within Denmark, Finland, Sweden, and in general the Nordic countries, with several Nordic businesses functioning in the region. In the Nordic countries, however, the Baltic region has not yet drawn considerable attention and debate over its likely impact on the BRI. In the northern region, the BRI will probably be given more attention in other countries and in the northern media, we have globally prominent corporations, such as Danish Maersk or Swedish ABB and Norwegian Statoil, Finnish Nokia, and Metso. For example, in Central Asia, these enterprises might apply in realistic terms to BRI projects. Maersk Line, in particular the world’s largest container transport company, might benefit from and work with Chinese BRI partners. This Maersk Group subsidiary, which is scheduled to be opened in 2018 and is one of the world’s largest port and terminal operators, also includes the APM terminals and has already signed with the Qingdao Port Group a Memorandum of Understanding. It seems, however, that these Nordic enterprises are not yet strategic for interacting with the BRI more actively, or for Northern Governments to make a systematic commitment to this type of participation. Normally, the Nordic industrial structure is not designed for the export of big systems. For example, Denmark has a vast sector of small- and medium-sized enterprises with no solid legacy for companies that work together to offer a BRI project. The Nordic industrial structure is a strong tradition. Nordic companies are invited by the Chinese, but it would be inappropriate if they had specific knowledge and abilities

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of corporate social obligations and environmental standards if they only certificated what Chinese companies already did.

9.8 China’s Strategy Toward Central and Eastern Europe within the Framework of 16 + 1 Group: The Case of Poland The four Nordic countries, Sweden, Denmark, Finland, and Norway, were one of the first Western nations to recognize and formalize diplomatic tons with the PRC in the 1950s. In the early 1970s, too, Iceland reacted rapidly when the PRC succeeded the ROC when there were hints of improved relations between China and the United States (Taiwan).25 Official publications and speeches therefore often emphasize that, from a Chinese and Nordic perspective, Nordic nations recognize the PRC early on, with substantial symbolic importance, as reflected by longstanding friendships between China and the Nordic countries. Generally, bilateral relations have been stable between China and each North, except for the six-year period (2011–2016). The effects of the Liu Xiaobo Nobel Prize for Peace have not led Norway to establish diplomatic relations with China. In the last decade, China’s policies in the Nordic countries have been characterized by a general compromise between, on the one hand, a desire to build a strong relationship and to maintain with the coming economic, political, and military power, and, on the other hand, support for a range of liberal values often centered on human rights. While concerns about liberal ideas and values linger, China’s change and increasing international economic, police, and military influence have led to pragmatic measures among the Nordic countries. Nordic China simply differs from a pragmatic relationship in general (Denmark, Iceland), marketable links (Finland) to a lighter and more normative one in supporting human rights; (Sweden, Norway). This is an increasingly rough classification, as described later. The Nordic countries have the widest interaction between Denmark and Iceland with China. The 2013 free trade agreement between Denmark and Iceland spurred a widening of bilateral visits, projects, and trade between the two states, with an impact on China. For Denmark in 2008, the deal was a huge success. Finland is catching up and is currently negotiating a “new sort of practical engagement” with China. In humanitarian matters, Sweden had to balance commercial interests and stern political dynamics, while simultaneously seeking more and more for stronger and more solid relations with China. Since Norway re-established diplomatic relations with China in December 2016, Oslo is currently negotiating a free trade agreement with China, it has made great attempts to reset the relationship and catch on to economic and trade issues. China is an increasingly important bilateral trading partner and investment source from a Nordic point of view. Trade between Nordic nations and China has been steadily increasing since China joined the WTO in 2001. In recent years, China’s capital expenditure in the Nordic region has increased with the acquisition of Nordic big brands like Volvo, for example, by acquiring Awilco in 2008. More than that, China is being made a country where the Nordic countries must deal with its relatively small, open, and business-oriented economy because of the increasing impact it has on the global economic institutional framework.

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BRI provides a potential new dimension, given the core of Nordic–China relations is commerce and investment.26 But the BRI still isn’t attractive to Nordic media and governments, which are not strong with the official open-source agenda of China (e.g., Forsby & Jiang, 2016). There appears to be no clear view and consistent BRI strategy from any one of the Scandinavian countries. At best, for the ordinary Nordic audience, the BRI consciousness is limited. The poor Nordic coverage of the BRI was usually hostile and highlighted China’s geopolitical objectives and indicators and the possibility of the BRI to undermine EU trade and capital rules and standards and erode the EU as a political unity. In particular, in the scope of the 16 + 1 framework to Central and Eastern Europe, Chinese linkages to regional clusters inside the EU were formed. By providing the founding members of the AIIB with an open commitment, the Nordic countries are closest to the BRI. In order to ensure international standards for China’s AIIB and BRI operations and projects, the Nordic nations’ role in the AIIB might be seen as indirect formulation actions connected to BRI (e.g., Forsby & Jiang, 2016). In accord with this, Rappe and Weissmann (2016) also found that the Swedish response to the BRI was previously cautious and best defined as a lookout. That means, with the major exceptions of Iceland and Finland, which are strong enough to identify opportunities in order to attract Chinese investment and promote local and regional economic decline within the BIR, especially following the Arctic Ad, the overall objective of the Nordic governments is to strengthen bilateral relations with China. Announcing a good interest in an arctic corridor plan from the Finnish group of business leaders, in particular in relation to the joint Chinese–Russian “Ice Silk Road,” in the early October, for example, Finland’s Transport and Communications Minister Anne Berner expressed his interest. China has invested very less on BRI support in northern Europe, compared to other parts of Europe, particularly in Central and Eastern Europe to date. In addition, BRI has played a role for Nordic nations prior to the current BRI component, connected to both the seaway and the Eurasian Land Bridge. The borders of Denmark, Finland, and Sweden on the Baltic and in general the Nordic countries are close economically, politically, and culturally with certain Norwegian companies operating in the area. However, because of potential future imports to the BRI, the Baltic region has not yet drawn much interest in the Nordic states. For example, Danish Maersk, Swedish ABB, Norway’s Statoil, Finnish Nokia, or Metso are leading multinational firms outside Northern governments and media in the Nordic region. These enterprises could make a realistic contribution to BRI projects, for example, in Central Asia. For instance, Maersk Line, the world’s largest container carrier, may make use of, and work with, Chinese BRI partners. In 2018, the Qingdao Port Group signed a memorandum of agreement to invest in a new terminal in Vado Ligure, Italy, comprising APM terminals and a leading port and terminal operator worldwide. However, it appears that these Nordic companies have not yet developed strategies to get involved in and more actively involve BRI and to seek systemic support from Nordic governments. Normally, the Nordic industrial structure is not designed for the export of big systems. For example, Denmark has a large, unstable SME sector for companies teaming up to provide BRI projects. Normal businesses may be invited by Chinese, but it would have little benefit if they had specific expertise and know-how of corporate social responsibility, environmental standards, and standards if they were just to certify what they have done previously.

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9.9 The Impact of the Belt and Road 9.9.1 Initiative on Central Asia: Building New Relations in a Reshaped Geopolitical Scenario 9.9.1.1 The Belt and Road Initiative: Focus on Central Asia An economic and trade corridor through Eurasia integrating China with Europe, Middle East, and South Asia will increase interconnectivity through a Global Geopolitical Stratum, which is being sponsored by China and through the BRI. In 2013, Chinese President Xi Jinping announced the previous Silk Road Economic Belt project at Nazarbayev University in Kazakhstan.27 China has invested millions of dollars in building new transport infrastructures—the routes, the railroads, the dry ports, and the pipelines—or upgrading existing ones in order to implement the strategy. Since the introduction of this Global Initiative, China has invested more than 50 billion dollars in countries along the Belt and Road. From 2014 to 2016, new building projects worth 304.9 billion dollars have been signed. In May 2017, Chinese President Xi Jinping, during a Belt and Road Forum in Beijing, confirmed the substantial financial commitment to support, loans, and investments of 124 billion US dollars in the BRI countries. Before the introduction of the AIIB in January 2016 and launched a USD 40 billion Silk Road Fund (SRF) in November 2014, bilateral loans were mostly issued by government commercial banks, especially China Exim Bank. During the Belt and Road Forum in May 2017, the Chinese President resolved that the SRF will receive an additional $14.7 trillion and $79.4 billion in extra investment. The AIIB is, however, predicted to be a vital source of BRI funding to attract and invest further financial assistance for transport, energy, and communications development projects in the region, with the members in the process of paying US$100  billion in the nominal capital. AIIB has provided $1.73 billion of loans on 13 projects in 8 countries, including the former Soviet countries of Azerbaijan and Tajikistan. BRI’s geopolitical projects, from a Chinese perspective, focus on two strategic objectives: to implement alternative continental routes for trade and energy exports to reduce dependency on maritime routes between Malacca and the Southern China Sea and to reinforce a safe haven among the Xinjiang provinces of Western and Central Asia, which would preserve western Chinese province. As a critical part of the BRI, Central Asia is linked to two of the BRI’s six main economic corridors (China–Central Asia–West Asia) that affect their economic development and the region’s geopolitical environment. The two corridors affect their economic development. It should be connected to Uzbekistan, Turkmenistan, and Iran by railway from Central Asia to Western Asia. Chinese–Kazakhstan is the main route. Geopolitically, this corridor is essential primarily because it will bypass Russia’s hegemony in Central Asia. In the new Eurasian land bridge, Russia will join Europe through Kazakhstan. In the case of major projects, some subcorridors or pathways are important: China–Kirghizstan–Uzbekistan Railway connects Kashagar/Kazhazi, West town of Xinjiang to the southern town of Osh in Kyraga and Andijan, East town of Uzbekistan, Khorgo–Aktau Railway linking a Kazakh port along the Caspian Sea with the primary trading gateway for Khorgos. Participation of Central Asian

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countries in the BRI is clearly very beneficial, ensuring economic and political advantages. A growing China’s presence in Central Asia will allow countries in this region to conduct a multi-factor foreign policy plan that incorporates Russia’s traditional influence and balances the pressure on the Moscow community to join or continue to build its project of economic integration: (EEU). The efforts of China are based on the inclusive side. The participation of the BRI is mainly because the five Central Asian countries have no strict membership in the future supranational organization, such as US loyalty, to support this initiative. The development and enhancement of national infrastructure will be of great benefit to Central Asian countries through the creation of a trans-regional transport network and the development of new markets for the countries that are locked on the ground by promoting interconnectedness and by strengthening regional trade cooperation. China has become the main economic strength in the region. Commerce between China and the five Central Asian Republics rose from 1.8 billion dollars in 2000 to 34 billion dollars in 2015, compared to a paltry 24 billion dollars in trade between the five countries. Furthermore, the region is largely credited by the Chinese government and the bank, which provided $8 trillion for Turkmenistan and $13 trillion for Kazakhstan to develop oil and gas resources and make eastern shipping pipelines for Turkmenistan, which have attracted huge investments, in addition to funding infrastructure projects. The collapse of oil prices, as well as the impact of Western sanctions, have impeded Russia from fulfilling its ecosystem responsibilities, and supplying the post-Soviet republic with military aid packages, to implement projects for hydropower plants in Kyrgyzstan. It should be analyzed how the BRI affects the polycyclical foreign ties between Central Asian countries and Russia. Indeed, China’s role in the country is evident, degrading and marginalizing Russia’s presence, while Beijing argues that BRI is only a global economic project and has policy objectives. The national political field will have an impact by strengthening a new framework for cooperation between China and the Central Asian countries. Despite reiterating China’s adherence to non-interference principles in the internal affairs of other countries, the size of its investment and implementation of large-scale infrastructure projects will mean that China will have a worsening impact in terms of foreign policy guidelines and decision-making in Central Asia. The analysis contained in this chapter will examine the BRI’s influence on the foreign policy directions of Uzbekistan, Kazakhstan, and Tajikistan as its impact is broad and varying within the geopolitical chessboard of the regions: The entrance of Tajikistan is assessed, whereas Uzbekistan has always refused to join the United States, preferring to take part in an international strategy. The founding member of the EU is Kazakhstan. Turkmenistan and Kyrgyzstan are members of the BRI and use the project: The crucial road links were created in Kyrgyzstan–Sarytash–Irkeshtam and Bishkek–Naryn–Torugart in China. While Turkmenistan is one of the largest natural gas supplies in Beijing after China and Central Asia have built a gas link. In comparison with the other three Central Asian countries, the Chinese effort is having less impact on its foreign policy: Kyrgyzstan’s accession to the United States boosts its pro-Russian foreign policy focus. In Turkmenistan, the BRI has nearly exclusivity in terms of energy sector, but it is to be carried out from east to south from Turkmenistan to China.

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9.10 Live and Let Live: Africa’s Response Options to China’s BRI China’s rising engagement in African development is consistent with the Road and Belt Initiative’s objectives (BRI). The 2015 Forum on China–Africa Cooperation (FOCAC) Ministerial Meeting closed by announcing that China–Africa relations have been improved to “status of cooperation and strategic cooperation.28” This is important because China prioritizes its relations with foreign countries on the basis of strong partnership and other criteria (strategic partner, cooperative partner, and friendly cooperative). The FOCAC declaration clearly shows that parties are interdependent and that the growth of Chinese investment in Africa can be seen in the foreseeable future. Chinese businesses also appear to have been growing in Africa as a result of a shorter institutional distance between China and Africa, which results in better risk assessments and more easily adaptable business practices to local conditions. However, increased commitments are also related to unexpected repercussions, such as competitive pressures, power imbalances, and diplomatic problems. The combination of competitive pressure and power imbalance in favor of China increases host-country companies’ survival risks. Consequently, the real foundation of competitive advantages in their home markets is vital for local enterprises in African countries with greater Chinese participation, which is why they are sufficiently compensated in the following exchange. A country in a weaker position, even if its industries are in a weaker situation, might be very beneficial to the world economic exchange. By supporting companies in local and international growth, China itself has made the survival of many industries a priority. The Haier Group is one of the companies that have played important roles in the transformation and support of the development of a new home appliances market. By entering the Chinese market—and this has survived—the Haier Group appears to react forcefully to rivalry between GE and Whirlpool. Haier has all analyzed the competitive answer in depth. Another example of industry reactivity to competitive FDI is Bajaj Auto in India. Bajaj focuses on competitive leverage throughout supply chains, distinctive local products, locally connected, and local distribution networks during Honda’s motorbike debut into the Indian markets. In the local African industry, the Haier and Bajaj Auto response principles may be applied, since the business climate in terms of FDI flows and small domestic capabilities has some similarities to the existing African situation. The shape of the response is driven by power dynamics and competitive pressures from China’s ties with numerous countries in Africa. As the country had previously held “pleasant dialogues” with China solely, for instance, it may have been the “pit stop” on China’s approach to European markets. However, by allowing worldwide access to Chinesedriven Ethiopic products and by enhancing safety on shipping lines around the Horn of Africa, Djibouti has radically changed relations. In January 2017, Djibouti launched the Chinese-funded Silkroad International Bank and in July  2017 the first Chinese international military facility—Military base in China. It seems that this country plays an important part in the growth of the BRI. Intensified involvement in a strategic partner could provide a comprehensive response to ensure mutually benign engagement. For example, Djibouti wants the local transport and logistics benefits to be identified since it gives the BRI benefits. In this chapter, the key question is how BRI components may recognize and use the benefits of these economic exchanges. Consequently, we agree with past studies that Africa should be looking for ways of using the spin-offs

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of development resulting from increased investment and trade. This chapter discusses the appropriate African nation strategy, with a larger flow of FDI from China based on the significance of the African countries to the BRI, based on the proclamation of the FOCAC. It examines industrial reaction dimensions and survival mechanisms in certain industries affected by Chinese investment. This chapter helps pave the way for further discussions about how the BRI in China might offer African countries real benefits by conceptualizing how African countries are able to react to the business involvement of China. This response view will enable business cluster managers to use meaningful exchanges as participants and not as victims in a proactive manner. We investigate in the rest of the chapter the engagement of China toward Latin America and South-East Asia in order to uncover patterns of impacts for the local industry which could predict likely economic consequences for African nations in a new BRI distribution. Our Framework for Impact and Reaction Analysis is theory of resource dependence (RDT) and the supply chain. Because of its economic impact on the East African area, Kenya’s importance as a port for business in Mombasa, and evidence of China’s investments in various sectors, we have chosen to study in depth the product-capital flows from and to Kenya to understand China-interdependence Kenya’s and power imbalances. We then explore how various sectors of industry and government can respond to the competition concerns of Chinese commercial engagement. The discussion with theoretical generalizations sums up this position for other African countries related to the BRI.

9.11 Small State, Smart Influence: China’s Belt and Road Extended to New Zealand The BRI has become a distinctive feature of Xi Jinping’s priority economic and foreign strategy, as revealed by itself at many international gatherings at the end of 2013. China on the West is linked to Mongolia, Central Asia, Russia, Iran, Ukraine, and the Balkans, by the Economic Belt of Silk Road. In order to unite South-East Asia, Bangladesh, India, and West Europe, the Maritime Soil Road of the 21st century aims to link China as well. The BRI intends to link the largest yet diversified landscape and maritime region in the world and eventually develop a “city of common fate” through building an infrastructural, cultural, and human connectivity. Xi invested an enormous amount of time in politics and media supporting BRI in his own series of theoretical innovations with Chinese elements, such as the “China Dream” and “Great Rejuvenation.” The reactions from BRI vary from large to small. As a somewhat liberal state, the free trade policies of China and the BRI play a distinct role in New Zealand. New Zealand was the first industrialized country to provide the BRI with social support after a number of milestones in accelerating China’s integration into the global commercial system. While most major countries passively refuse a bandwagon from the Chinese “Century Project” and smaller Asian countries, the BRI participates actively and defines a number of important elements in China.

9.12 Responses to the BRI: Contextualizing Power and Small States Despite the mood around the ‘Century Project, the BRI’s answers are different. The BRI is officially or hiddenly rejected by key forces, including the United States, the

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EU, Japan, India, and Australia. The United States paid little heed to the BRI as though its reaction could be stimulated by the first important international Chinese enterprise. The EU has not achieved a unanimous position. Australia has rejected the BRI accord unequivocally. First Japan criticized China’s BRI in particular with regard to financial and transparency issues,29 but it improved its position by the middle of 2017. India is by far the most explicit opponent of the China BRI Continent, with its border issue. Generally, the major powers with regard to BRI have shared concerns: Eco-nomism of debt and financial risk; strategic concerns about infrastructure policy; environmental issues; and social issues. These all refer to the discrepancy between China’s professed aims and the varied perspectives of other domestic players. While the BRI document attempts to improve the connectivity between the economy, many see it as a “spatial solution” to overcapacity, debt, and work dissatisfaction as essential symptoms of capitalism. The BRI is considered as “a fantastic chance to make financial observers pay their debt and use their extra wealth.” Strategic consideration is that the BRI is an intensified “Go West,” the US “Pivot to Asia” geopolitical counterresponse and the Pacific TPI. In contrast, most small states are working with China’s BRI. In fact, minor developing countries along the Belt and Road were planned from the start to target and attract in their orbit; 22 nations signed up to the BRI Environment Memorandum (MoU) in May 2017 and 29 Heads of State organized an initial BRI Forum. Most of the delegates were in Asia, particularly ASEAN and Central Asia, from developing small countries.30 It showed early on those little countries were submitted to the growing regional dominance of China. Among these different approaches to the BRI of China, the position of New Zealand is unusual. It is not just less dangerous than its normal Liberal friends but also more free of politics and influence than its other small countries. The traditional proactive pragmatism in New Zealand’s bilateral relations with China has been pursued and become the front lines for BRI cooperation in the area. The first developed country to sign the BRI Cooperation Agreement with China during Premier Li Keqiang’s visit in March 2017 was New Zealand. The protocol is incorporated. Themes include trade and policy partnership, cultural exchanges, and multilateral cooperation (for example, tourism and films). The MOU allows both sides to create a detailed collaboration over 18 months.31 How and why does a small liberal state, like New Zealand, deal with China? In contrast to other major allies and small growing nations, BRI? In IR, research on the major powers dominates the area, although analysis of minor states is largely disregarded in the literature. In particular, the worldwide impact of small liberal states has been expanding politics. The idea of a small state is not well established in IR; small states are not well established, as their shortcomings are generally “little.” Power and impact are reasonable based on material resources. They are often considered a “fragile, internationallyfriendly body” on crude waters; internally good for democratic regimes but externally impotent and continually threatened with extinction. The use of influence in global events is generally viewed as limited by smaller countries. The dilemma of Melian is referred to as classical realists as a timeless example of little nations that agree with huge powers with reactive attitudes. Baehr (1975) argued during the Cold War that a tiny country’s foreign policy was conflictual, concentrated on soft-power techniques, restricted to local areas, and emphasized business and diplomacy. Nye and Keohane

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(1977) are primarily subordained participants in the power hierarchy of national-state systems, especially when significant changes are taking place in international politics.32 Contemporary literature in IR considers small countries as system sensitive, as minimum agencies, and strongly influenced from a largely structural point of view by the International System and its institutional context. However, the study of the strength and influence of small states, particularly small liberal states, continues to grow because of the increasingly pluralistic strength and influence. Dahl defines power: “A  may get B to do something B couldn’t do else.” Although the phrase is usually used by realists, several characteristics such as institutional or agenda-setting have extended the concept to measure power. For instance, in the area Ghana and Oman have a bigger role to play than their size, smaller European countries are entitled to world trade and better multilateral skills in institutions such as the EU and Singa. A number of countries use these different concepts of power to show how smaller liberal countries have power and influence on international politics. Long (2016) analyzes the powers of little states by analyzing their distinct intrinsic (mate and ideational resources, equivalent benefits), derivatives (convincing large states to behave with interest), and collective strength (institutional, multilateral, and coalitional).33 While this theory is educational and important theoretically, many of these facets of power are interdimensional and interrelated and resist a coherent framework. However, New Zealand’s small size and low material resources do not always mean they are system compliant and do not influence the system significantly. Buchanan (2010) argues that a small liberal state could “system-reform” and “punch beyond its weight” on the world stage. Young (2017) believes that ideational facing plays a major role in the New Zealand case and is the “key to the agency” that helped make the country a successful transition to Asia as a “small trading country” and an “outstanding national population.”34 Following that theoretical emphasis, this chapter looks at New Zealand as a model of a small liberal country’s BRI collaboration discussions and their active impact on China, the world’s second-largest economy. Despite the notion of multi-dimensional and fluid power, it is feasible to trace New Zealand’s influence on bilateral trade relations with China. This section deals with the intelligent effect of New Zealand on China under the BRI, with a focus on agendasetting and regulatory impacts on its diplomacy. The emphasis is placed on power aspects such as milk production, liberal and free trade norms, long-term connections with China, multilateralism, and negotiations institutional skills. Elements of power are debated.

9.13 New Zealand’s Power to Influence China’s BRI New Zealand was well before the BRI participation in the negotiations on improved bilateral relations with China.35 This shows that the process of Chinese integration into the world economy and trade in New Zealand is quite important. China was keen to reform the 1989 political upheaval, becoming part of the traditionally advanced nations’ international system. Economic expansion in China has corresponded over decades with the socialization process into a globally liberal society. This strategy, which other States do not simply copy, was tremendously important to New Zealand. In 1997, New Zealand became the first Western country to reach a bilateral agreement

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on China’ s accession to the World Trade Organization (WTO) in its bilateral relations. New Zealand was the first advanced country in 2001 to recognize China as a market economy and the first developed country in 2004 and 2008 to sign a full FTA with China. The FTA talks came to a conclusion between 2004 and 2008. On the other hand, China offers a huge consumers’ market that corresponds primarily to New Zealand’s milk-export demands; significant New Zealand export corporations have greatly enjoyed closer economic links with China. When Sino-New Zealand first created links in 1972, the total export to New Zealand from New Zealand to China was NZ$6 million or 0.3%. Decades later, especially as a consequence of the FTA Pact, China exports rose rapidly, reaching roughly 20% of the overall exports of New Zealand, around NZ$20 billion in 2016. Milk powder, untreated logs, and meat are the best export commodities for China (beef and lamb). New Zealand lately had a significant impact on China’s main economic and commercial policies in other countries, including the AIIB and the BRI, in addition to its historical socialization into China’s Western free trade system. The institutional design of New Zealand throughout the negotiations phase of the AIIB was sufficiently developed. In 2009, when the AIIB was unofficially suggested at the Boao Forum, it was labeled “a new Asian development bank” to confront western dominating institutions. Most liberal nations worried about the AIIB being China’s way of attaining its own geopolitical interests, as opposed to a Western multilateralism with openness, strong governance, and loaning standards. When AIIB was launched in Beijing on 24 October 2014, delegations from 21 Asian countries, including India, Thailand, and Malaysia, participated. But significant powers in the region were missing, such as Australia, Indonesia, South Korea, Japan, the United States, and the European Union. In a conference conducted in November 2014 in which Governance was its emphasis during the summit between Asia and Pacific Economic Cooperation, Prime Minister John Key, distinguished other Western developed countries from their passive skeptics, affirmed New Zealand’s interest in AIIB.36 New Zealand became the 24th Founding Member of the AIIB on 5 January 2015.37 Former Prime Minister Jenny Shipley also openly backed the decision to join the AIIB and to help promote liberal norms into the institution. At the Boao Forum in March  2015, she said “New Zealand cannot merely take part in the negotiations and can have a beneficial effect on the governance structure of the Bank.” She said, in March  2015, the AIIB preparatory team disclosed that New Zealand provided its development banking knowledge to employees.38 Prime Minister Bill English’s engagement in the AIIB as Finance Minister indicated that: When we are ephemeral, we can alter ourselves when we are sensitive to opportunities. When I was finance minister, John Key and I opted to join the AIIB early. New Zealand suggested that it should not have the SOE Chinese government and a proper multinational institution, “We are concerned about this.” The AIIB is now regarded as a multilateral body. With China’s early support for boldness in creating the AIIB, New Zealand had a positive impact on China in two ways. First of all, by supporting discussions on the establishment of the AIIB, which makes the Chinese New Development Bank a multilateral international organization, with a clear organizational structure, open and transparent administration, and credible international leadership. Second, New Zealander was probably caused by a risk-taken practicality of reserving a place early at the AIIB table to subsequently generate broad support for the industrialized,

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originally apprehensive, nations. A few months after New Zealand, great powers such as Britain and France followed little liberal States such as Denmark, Finland, and Iceland. The United States and Japan maintained themselves apart. New Zealand’s efficient engagement in AIIB has given confidence to both sides immediately before the ambitious BRI partnership.39 After two years of pushing the agenda, Xi made personal efforts for the integration of Neo-Zealand into the BRI as his State visit in November 2014 highlighted. In order to boost their bilateral relations with China and New Zealand, Xi and Prime Minister John Key have committed to “comprehensive strategic collaboration.” Simultaneously, China formally expanded the scope of the BRI to refer to the South Pacific Region as “the natural extension of the 21st century sea-sea seed road.” New Zealand welcomed its joining and encouraged economic and commercial cooperation in order to further develop China and New Zealand. In other words, China introduced the BRI to New Zealand and saw it as a key place for South Pacific access. A week after Australia’s specifically disallowed cooperation by Australia, Prime Minister Li and Prime Minister Bill English were signed in March 2017 for the BRI MoU. This has contributed to the prior comprehensive breakthrough list for the two countries’ bilateral cooperation. “The possibilities for bilateral collaboration in numerous areas will be explored in order to increase interconnectivity between both nations China and New Zealand,” Li said during a Joint News Conference with English. Just after New Zealand signed its BRI MoU in March 2017, China officially extended the BRI to New Zealand and South Pacific, in addition to the funding document, on a joint document entitled “The vision for marital collaboration under the route initiative” issued by the National Development and Reform Commission, and the State Oceanic Administration on 20 June 2017.40 This document contains three blue economic crossings along a larger Sea Seal Road: the China–Indian Ocean–Africa–Mediterranean blue economic transit; the Chinese–South Pacific Blue Economy Way; the Arctic Ocean Blue transit route to Europe. As for New Zealand, there is a disagreement about the kind of power that is best suited for major powers and the foreign strategy. There are few who argue that New Zealand is a little liberal state approaching China, albeit with no precise definition. Following the structural and material analysis, New Zealand’s proactive responses to an aggressive power initiative are reasonable and predictable, because smaller countries do not have enough collaboration alternatives. This means that New Zealand collaborates economically, politically, or in security with China, with West friends. For example, some believe that the economic policy of a subordinate vassal state toward China is natural yet dangerous for New Zealand as a result of a vast market in selling its dairy goods. As a “negliding partner” to China, David Shambaugh portrays New Zealand to warn of multifaceted, healthy bilateral connections and of its vulnerability to the great powers. Economic blue from China to Oceania and the South Pacific has become an essential component of New Zealand and the South. China recommended five cooperation goals with slightly different objectives to the five BRI general, under the Blue Partnership on the Seaway. Green development, ocean prosperity, security at sea, innovative growth, and co-government are all aspects. These five subjects of maritime cooperation include a number of little projects and endeavors. China aims to enhance collaboration on green development in the areas of environmental preservation, marine pollution, and climate change. Important South Pacific projects, like

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the Small Island Climate Change Issues, the China-Small Island Ministerial Round Table, and the World Blue Economic Partnership Forum were highlighted. Projects in the South Pacific have been acknowledged. In this scenario, New Zealand has demonstrated its influence by considerably modifying the already massive China BRI and geographically expanding it to the south.41 The influence of the mixed use of material resources, connections, and agenda-setting, negotiating and regulating powers, is intelligent. By using participatory opportunities in some sectors where their traditional capabilities are needed, New Zealand may become a leader in the region.

9.14 Conclusion The success of China’s BRI project can certainly lead to significant changes in global power relations but will not endanger global stability. Although it enhances structural power other than the United States, it also has the overall effect of enhancing the liberal system of the world. The United States’ response to the AIIB and the BRI was very humorous, as China, who uses the most structural power, was as bumbling and tormented about its attempts. On an economic front, we propose not to avoid a connection between the US companies and BRI due to their superior technological advantages and other key capabilities in such businesses as ICTs, power (including clean energy), construction and infrastructure, technology, logistics, electronic services and legal and accounting services, and other industries (including green and circular economy sectors). In all BRI countries, US businesses are undoubtedly the advantage of the huge economic integration operations already underway which cover all the nations included in the BRI. The gains in the current geopolitical environment are evident in the next section, but not without price and risk. At the same hand, it is far from evident that China could execute such a great and difficult job such that the United States could do nothing to acquire what it wants. But a Chinese failure can be the occurrence that triggers the rejected order, the destabilizing result. The global liberal order demands that governments make far-reaching and advanced efforts to settle tensions and to take account of various interests. The intellectual, human, and diplomatic capacities of China are thoroughly evaluated in order to establish such a system. However, the successful construction of structural power often results in the creation of new forms of structural power. The BRI can easily form the basis for China’s expansion and deepening of its global role, as with the Marshell plan for the United States. This conclusion largely hinges on China’s ability to improve the current global system in China. Both the United States and its sustained US authority exert impact on the global system of interdependence. Although the US economic, political, military, and structural power combinations remain unrivaled, China has and continues to acquire immense capacity. The United States can even retreat from its reaction even if it will continue to encourage States to cooperate, construct structural power, and avoid wars between major powers underpinning interdependent incentives. The earliest AIIB evidence is that China continues to feel encouraged to follow norms, laws, and regimes of liberal order developed by the United States, hence increasing the possibility of successful BRI and its affiliated institutions. In contrast, the problems of China’s sea

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position and the soft balance between the United States, India, Japan, and Vietnam cast serious doubt on the credibility of China as a state capable of establishing relations of mutual benefit in a deeply interdependent world. Chinese ambitions to develop structural power would remain suffering unless China’s attitude on maritime relations could be reconciled with the global free order. It is not a strategy that functions on the one hand as a major power of the 19th century and on the other as a major power of the 21st century. Although the BRI may have geopolitical ramifications, putting US companies on the bid-side to put them on the table will not only provide US companies with a win–win benefit but also a significant milestone to keep the American voice heard in BRI circles. Due to America’s position on key technologies and the solid economic underpinning, US corporate connectivity and the necessity for BRI experiments and projects to fulfill common, yet evolutionary standards are needed. The best way of serving US interests is through exploiting the BRI and facilitating international economic transactions and cooperation between the two parties. Finally, China and the United States must ask each other whether they are ready to share the shared destiny of humanity. Are they willing to flourish together? Would you be willing to embrace each other? What do they do, while decreasing expenses and risk, to maximize their economic and business rewards? This chapter gives insights into the modest but developing BRI literature on resources and institutions. We know that the study is restricted to empirical data availability. However, we struggle to define the phenomenon of the BRI wilderness; we can study patterns, in particular of Cyber Silk Road, based on anecdotal evidence in the US connectivity with the BRI. As the BRI is a diversified and challenging subject for international academics, it now has to be identified in a future study in view of its impact on corporate behavior and specific research contexts, given the vast variances in more than 60 BRI countries. Researchers can concentrate on American companies’ collaborative behavior and on how networking with Chinese companies investing in the United States can help US companies receive bids for BRI projects, and on the way companies such as these engage bilaterally. The government’s policy changes affect business options. Specifically, the following questions need to be asked: What could increase the likelihood of US corporations taking part in BRI projects? Which factors are there? How are US companies involved in BRI projects promoting or dissuading them from taking part? How does the US government’s policy shift affect US business cooperation in BRI projects? How can US companies, by cooperation with Chinese enterprises in the United States, facilitate or allow US businesses to bid for BRI projects? How are the results of relations between the United States and China different across the country, on the sea and cyber paths? In the Nordic countries, the wait-and-watch features, and the practical low-profile engagement traits summarize the Nordic governments’ reactions. This is intolerable considering there are no major specific BRI projects in the Nordic countries or China’s concern with BRI activities. However, the Arctic just joined the BRI is likely to increase the focus of Scandinavian governments on the BRI. All Nordic countries seek new ways in their plans and programs to foster collaboration and contact with China, and hence Nordic governments are increasingly likely to want to directly harness the global BRI and AIIB frameworks. In addition, Chinese diplomats are increasingly

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working to promote the BRI during diplomatic engagements in the Nordic countries (e.g., Rappe & Weissmann, 2016: 61). The five Nordic countries already constitute, on many occasions, a wide sub-regional grouping of similar languages, strong historical erosions, comparable degrees of development, and common socio-political standards and liberal ideas and values. In general, they work together and cooperate in international situations through the establishment of the Copenhagen Secretariat intergovernmental institutions to coordinate Nordica policies via the Nordic Council Secretariat and the General Council of Ministers. There’s nothing else, though, but attempts are on, but China–Nordic research, education, and innovation networks dealing with substantial policy coordination and cooperation on China between the Scandinavian countries. The Nordic Council of Ministers voted in February 2016 to examine measures to enhance Nordic sub-regional cooperation with China. Finally, although the Nordic government has recently gone on to make growing efforts and openness, a northic platform for high-level relations with China remains a long way from being established. However, the framework for the international system has altered ever faster as the international standing of President Trump falls and declines, providing China with even more opportunities to strengthen its international role and its impact. For decades, the CEECs and in particular Poland have been a playground for major world powers. The trade profile between PRL and China between the years 1950 and the 1970s will only be examined to see how G-16 +1 members are now able to form part of the value and production chain without collectivized, centrally planned economies, if trade, regulatory, and political obstacles between the CEECs, China, and Russia/EEU are removed. BRI is providing Central Asian economies with an enticing notion and success with the economic advantages for access to new markets, transit charges, and modern amenities. However, the prosperity expected by the BRI will not be consistent. Some countries are able to take their stand as strategic pawns in the Chinese drive, while others may have greater problems. This will allow the Chinese Initiative to continue its multi-faceted foreign policy agenda in Kazakhstan and Uzbekistan. This section discusses how the competitive challenges of Chinese increased participation in the BRI dispensation from Africa should be tackled by African governments. As industrial output was vital to the growth path of many countries, the potential to marginalize African industrial production by Chinese commercial activities was of concern. Thus, notwithstanding the disparity of economic might on behalf of China, we explored the plausible construction of win–win interactions with African countries. The chapter focuses on adaptation to industry by enhancing the contribution African nations may make to the strategic value of the BRI. While little information on the subject was available, sufficient literature was available to show how trade between China and Africa could be established. We found that in line with China’s trading practices in other regions, African countries cannot rely on China for the creation of industry links promoting technology and knowledge transactions unless it does have unambiguous participation. However, China’s growing market dominance cannot enable African countries to be ambivalent. They might change power dynamics by aggressively expanding the degree of mutual dependence between their industries and emerging Chinese companies. African countries can promote mutual dependence by restructuring supply chain businesses based on counter process or regional priorities

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and creating integrated productive networks to enhance the value of their industries in economic commerce. In light of the aforementioned reasoning, New Zealand is one example of how the small liberal state can act in the face of an intellectual and effective power as a proactive player. New Zealand has proved its successful economic and commercial engagement with China, using intelligent influence such as material resources inherent in it, connection building, agenda shaping, and normative authority. A small liberal country has taken over not only to obtain economic advantages from FTA and BRI partnership with China but also to play a major role in China’s leading foreign policy efforts such as the institutional architecture of the AIIB and the BRI’ s development into the south Pacific. However, there are limitations and problems in the intelligent influence of New Zealand. Increased inequality and environmental destruction are direct consequences. Although New Zealand has a significant effect on the Chinese AIIB and BRI in terms of institutional design based on Liberal multilateralism, its effects are primarily early and transitory. In the longer period, the impact of New Zealand on AIIB management has declined by just 0.5%. New Zealand continues to face a range of capital control and foreign-exchange systems in China in relation to its BRI cooperation and will have to manage international projects on a case-by-case basis, including better multilateral processes. Moreover, the political influence of economic investment on local politics is eventually sought by China. The host nation should return early or later to provide access to its vast markets and cash invested behind the FTA, BRI, is a latent society compulsion that has made it “a favours.”

NOTES







1 Wang, Chao, Ming K. Lim, Xinyi Zhang, Longfeng Zhao, and Paul Tae-Woo Lee. “Railway and Road Infrastructure in the Belt and Road Initiative Countries: Estimating the Impact of Transport Infrastructure on Economic Growth.”  Transportation Research Part A: Policy and Practice 134 (2020): 288–307. 2 Barisitz, Stephan, and Alice Radzyner. “The New Silk Road, Part I: A Stocktaking and Economic Assessment.”  Focus on European Economic Integration  3, no. 17 (2017): 8–30. 3 Deng, Yong. “How China Builds the Credibility of the Belt and Road Initiative.” Journal of Contemporary China (2021): 1–17. 4 Zhengang, Ma. “China’s Responsibility and the China Responsibility Theory.” China International Studies 7 (2007): 5. 5 Poh, Angela, and Mingjiang Li. “A China in Transition: The Rhetoric and Substance of Chinese Foreign Policy Under Xi Jinping.” Asian Security 13, no. 2 (2017): 84–97. 6 Beeson, Mark. “Geoeconomics with Chinese Characteristics: The BRI and China’s Evolving Grand Strategy.” Economic and Political Studies 6, no. 3 (2018): 240–256. 7 Schweller, Randall L., and Xiaoyu Pu. “After Unipolarity: China’s Visions of International Order in an Era of US Decline.”  International Security  36, no. 1 (2011): 41–72. 8 Mearsheimer, John J. “The Gathering Storm: China’s Challenge to US Power in Asia.” The Chinese Journal of International Politics 3, no. 4 (2010): 381–396. 9 Aiping, Zeng, and Shu Zhan. “Origin, Achievements, and the Prospects of the Forum on China-Africa Cooperation.” China International Studies 72 (2018): 88.

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10 Pizzolo, Paolo.  Eurasianism: An Ideology for the Multipolar World. Lexington Books, Lanham, Maryland, 2020. 11 Cabestan, Jean-Pierre. “China’s Military Base in Djibouti: A Microcosm of China’s Growing Competition With the United States and New Bipolarity.”  Journal of Contemporary China 29, no. 125 (2020): 731–747. 12 Schortgen, Francis. “China and the Twenty-First-Century Silk Roads: A New Era of Global Economic Leadership?” In China’s Belt and Road Initiative, pp. 17–33. Palgrave Macmillan, Cham, 2018. 13 Yu, Hong. “Motivation Behind China’s ‘One Belt, One Road’ Initiatives and Establishment of the Asian Infrastructure Investment Bank.” Journal of Contemporary China 26, no. 105 (2017): 353–368. 14 Yu, Jie. “The Belt and Road Initiative: Domestic Interests, Bureaucratic Politics and the EU-China Relations.” Asia Europe Journal 16, no. 3 (2018): 223–236. 15 Skålnes, Lars S. “Layering and Displacement in Development Finance: The Asian Infrastructure Investment Bank and the Belt and Road Initiative.”  The Chinese Journal of International Politics 14, no. 2 (2021): 257–288. 16 Lairson, Thomas D. “The Global Strategic Environment of the BRI: Deep Interdependence and Structural Power.” In  China’s Belt and Road Initiative, pp. 35–53. Palgrave Macmillan, Cham, 2018. 17 Jaishi, Bijaya, and Wei-Xin Ren. “Finite Element Model Updating Based on Eigenvalue and Strain Energy Residuals Using Multiobjective Optimisation Technique.” Mechanical Systems and Signal Processing 21, no. 5 (2007): 2295–2317. 18 Buzan, Barry. “China in International Society: Is ‘Peaceful Rise’ Possible?”  The Chinese Journal of International Politics 3, no. 1 (2010): 5–36. 19 Morrison, Wayne M.  China’s Economic Rise: History, Trends, Challenges, and Implications for the United States. Congressional Research Service, Washington, DC, 2013. 20 Du Plessis, Carien. Woman in the Wings: Nkosazana Dlamini Zuma and the Race for the Presidency. Penguin Random House South Africa, South Africa, 2017. 21 Rolland, Nadège. “Beijing’s Response to the Belt and Road Initiative’s “Pushback”: A Story of Assessment and Adaptation.” Asian Affairs 50, no. 2 (2019): 216–235. 22 Hansson, Pia, and Audur Birna Stefansdottir. “Nordic Solidarity and COVID-19.” (2021). 23 Na, Lv, and William S. Lightfoot. “Determinants of Foreign Direct Investment at the Regional Level in China.” Journal of Technology Management in China (2006). 24 Elin, Rappe, and Mikael Weissmann. “ ‘One Belt, One Road’ in the Swedish Context.” Europe and China’s New Silk Roads | ETNC Report, (2016): 60–62. 25 Sørensen, Camilla T. N. “Belt, Road, and Circle: The Arctic and Northern Europe in China’s Belt and Road Initiative.” In China’s Belt and Road Initiative, pp. 95–113. Palgrave Macmillan, Cham, 2018. 26 ibid. 27 Pantucci, Raffaello, and Sarah Lain.  China’s Eurasian Pivot: The Silk Road Economic Belt. Routledge, Oxfordshire, England, UK, 2017. 28 Kragelund, Peter. “Towards Convergence and Cooperation in the Global Development Finance Regime: Closing Africa’s Policy Space?” Cambridge Review of International Affairs 28, no. 2 (2015): 246–262. 29 Ito, Asei. “China’s Belt and Road Initiative and Japan’s Response: From NonParticipation to Conditional Engagement.” East Asia 36, no. 2 (2019): 115–128.

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30 Wilson, Jeffrey D. “The Evolution of China’s Asian Infrastructure Investment Bank: From a Revisionist to Status-Seeking Agenda.” International Relations of the AsiaPacific 19, no. 1 (2019): 147–176. 31 Patanakul, Peerasit, and Aaron J. Shenhar. “What Project Strategy Really Is: The Fundamental Building Block in Strategic Project Management.”  Project Management Journal 43, no. 1 (2012): 4–20. 32 Jessop, Bob. “The Governance of Complexity and the Complexity of Governance: Preliminary Remarks on Some Problems and Limits of Economic Guidance.” Beyond Market and Hierarchy: Interactive Governance and Social Complexity  (1997): 95–128. 33 Norris, William J. Chinese Economic Statecraft. Cornell University Press, Ithaca, New York, USA, 2016. 34 Young, Jason. “Seeking Ontological Security Through the Rise of China: New Zealand as a Small Trading Nation.” The Pacific Review 30, no. 4 (2017): 513–530. 35 Jawara, Fatoumata, and Aileen Kwa.  Behind the Scenes at the WTO: The Real World of International Trade Negotiations. Zed Books, London, UK, 2004. 36 Foot, Rosemary. “Identity Politics and the US Rebalance to Asia.” Seoul: East Asia Institute (2016). 37 Tang, Siew Mun. “Membership: Who’s in, Who’s Out?” In The Politics of the Asian Infrastructure Investment Bank (AIIB), pp. 6–8. ISEAS Publishing, 30 Heng Mui Keng Terrace, Singapore, 2015. 38 De Jonge, Alice. “Perspectives on the Emerging Role of the Asian Infrastructure Investment Bank.” International Affairs 93, no. 5 (2017): 1061–1084. 39 Lin, Jake. “Small State, Smart Influence: China’s Belt and Road Extended to New Zealand.” In  China’s Belt and Road Initiative, pp.  179–197. Palgrave Macmillan, Cham, 2018. 40 Blaxekjær, Lau Øfjord, Marc Lanteigne, and Mingming Shi. “The Polar Silk Road & the West Nordic Region.” Arctic Yearbook 2018 (2018): 437–455. 41 Huang, Jikun, Ruifa Hu, Hans van Meijl, and Frank van Tongeren. “Biotechnology Boosts to Crop Productivity in China: Trade and Welfare Implications.” Journal of Development Economics 75, no. 1 (2004): 27–54.

9.15 REFERENCES Baehr, Peter R. “Small states: a tool for analysis?.” World Politics 27, no. 3 (1975): 456–466. Buchanan, James M. “The constitutionalization of money.” Cato J. 30 (2010): 251. Keohane, R., & Joseph Jr, S. (1977). Nye jr. J. The Club Model of Multilateral Cooperation and the World Trade Organization: Problems of Democratic Legitimacy. Long, Tom. “Small states, great power? Gaining influence through intrinsic, derivative, and collective power.” International Studies Review 19, no. 2 (2017): 185–205. Rappe, Elin, and Mikael Weissmann. “‘One Belt, One Road’ in the Swedish Context.” (2016): 60–62. Young, Jason. “Seeking ontological security through the rise of China: New Zealand as a small trading nation.” The Pacific Review 30, no. 4 (2017): 513–530.

10 Geo-Economic and Geo-Political Aspects of One Belt One Road (OBOR) Muhammad Fahim Khan University of Peshawar, Pakistan Aamer Raza Department of Political Science, University of Peshawar, Pakistan CONTENTS 10.1 China’s Belt and Road Initiative (BRI)/OBOR�����������������������������������������������255 10.1.1 Physical Infrastructure�����������������������������������������������������������������������258 10.2 Corridors in Belt and Road Initiative/OBOR��������������������������������������������������258 10.3 Container Port Traffic of European Union and South Asia����������������������������259 10.3.1 Silk Road Economic Belt (SREB)������������������������������������������������������259 10.3.2 Maritime Silk Road (MSR)��������������������������������������������������������������� 260 10.3.3 The New Eurasia Land Bridge (NELB)�������������������������������������������� 260 10.3.4 The China–Mongolia–Russia Economic Corridor (CMREC)�����������261 10.3.5 China–Central Asia–West Asia Economic Corridor (CCWAEC)�����261 10.3.6 China–Indo-China Peninsular Economic Corridor (CICPEC)����������261 10.3.7 China–Pakistan Economic Corridor (CPEC)������������������������������������261 10.3.8 Bangladesh–China–India–Myanmar Economic Corridor (BCIMEC)������������������������������������������������������������������������������������������262 10.4 Multiple Perceptions on Developing BRI�������������������������������������������������������262 10.5 CPEC: Forging a Common Destiny����������������������������������������������������������������263 10.5.1 Special Economic Zones (SEZs)������������������������������������������������������� 264 10.5.2 Roadway Projects������������������������������������������������������������������������������ 264 10.5.3 Eastern Alignment����������������������������������������������������������������������������� 265 10.5.4 The Central Route����������������������������������������������������������������������������� 266 10.6 Karakorum Highway�������������������������������������������������������������������������������������� 266 10.7 Railway Projects�������������������������������������������������������������������������������������������� 266 10.7.1 Main Line-1��������������������������������������������������������������������������������������� 266 10.7.2 Main Line-2����������������������������������������������������������������������������������������267 10.7.3 Main Line-3����������������������������������������������������������������������������������������267 10.8 Orange Line Train (OLT)��������������������������������������������������������������������������������267 10.9 Khunjerab Railway���������������������������������������������������������������������������������������� 268 10.10 CPEC Energy Sector Projects���������������������������������������������������������������������� 268 DOI: 10.1201/9781003198147-10

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10.10.1 Renewable Energy Projects������������������������������������������������������������ 268 10.10.2 Coal������������������������������������������������������������������������������������������������ 269 10.10.3 Liquefied Natural Gas (LNG) Projects������������������������������������������ 269 10.10.4 Early Harvest Energy Projects��������������������������������������������������������270 10.11 Gwadar Port: A Flagship Project of CPEC���������������������������������������������������270 10.11.1 Gwadar and Sea Politics�����������������������������������������������������������������270 10.11.2 Gwadar: The Crux of CPEC�����������������������������������������������������������271 10.11.3 Geographical Location of Gwadar Port������������������������������������������271 10.11.4 Significance of the Gwadar Port�����������������������������������������������������272 10.11.5 Construction of Gwadar Port����������������������������������������������������������273 10.11.6 Gwadar versus Chabahar����������������������������������������������������������������273 10.11.7 Operationalization of Gwadar���������������������������������������������������������274 10.12 Conclusion�����������������������������������������������������������������������������������������������������274 10.13 References�����������������������������������������������������������������������������������������������������275

List of Abbreviations ADB Asian Development Bank AIB Asian Infrastructure Investment Bank ASEAN Association of Southeast Asian Nations BCIMEC Bangladesh–China–India–Myanmar Economic Corridor BRI Belt and Road Initiative BRICS Brazil, Russia, India, China, and South Africa CARs Central Asian Republics COPHC China Overseas Port Holding Company CPEC China–Pakistan Economic Corridor EEU Eurasian Economic Union EHP Early Harvest Program EU European Union FDI Foreign Direct Investment FTA Free Trade Agreement FTZs Free Trade Zones FWO Frontier Works Organization GB Gilgit-Baltistan GDP Gross Domestic Product HDI Human Development Index IMF International Monetary Fund IOR Indian Ocean Region IP Pakistan–Iran Gas Pipeline KP Khyber Pakhtunkhawa LNGs Liquefied Natural Gas

Geo-Economic and Geo-Political Aspects of One Belt One Road (OBOR) MGDs MoUs MSR NDRC NSR OBOR OLT PRC PSA RCD SAARC SAFTA SAPTA SCO SEZs SLOCs SPA SREB SSD TAP TPP TRM UNO UNSC USA WTO

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Millennium Development Goals Memorandum of Understandings Maritime Silk Road National Development and Reform Commission New Silk Road One Belt One Road Orange Line Train People’s Republic of China Port Singapore Authority Regional Cooperation for Development South Asian Association of Regional Cooperation South Asian Free Trade Arrangement South Asian Preferential Trading Arrangement Shangai Cooperation Organization Special Economic Zones Sea Lines of Communications Singapore Port Authority Silk Road Economic Belt Special Security Division Trans Afghan Gas Pipeline Trans-Pacific Partnership Tariff Reduction Modalities United Nations Organizations United Nations Security Council United States of America World Trade Organization

10.1 China’s Belt and Road Initiative (BRI)/OBOR An old Chinese adage goes like this: “If you want to be rich, build roads.” Expanding the geographic infrastructure for a global economic boom requires more than just building roads, railroads, and communications networks or upgrading ports. China has some of the world’s greatest infrastructure. They have occupied entire neighborhoods, industrial zones, airports, and seaports as well as other areas. Aside from demonstrating its economic and political power, China also aims to help its neighboring countries become more economically stable. Economic ties with South Asia are expected to be strengthened as part of China’s Belt and Road Initiative (BRI). Chinese support for economic growth in its immediate South Asian neighborhood through infrastructure development has been ongoing since the beginning of China’s peaceful rise policy and the opening of its market reforms and modernization program (Raffaele, 2016). Chinese and Central Asian trade networks have been intertwined since Zhang Qian constructed the Silk Road more than 2,000 years ago

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(Jinchen, 2016). During the BRI project, historic Silk Road trade routes are being reconstructed to embody the ideals of peace and cooperation, openness and inclusiveness, mutual learning, and benefits. “Vision and Actions on the Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road,” China’s government’s white paper on the BRI, was issued in March 2015. Chinese President Xi Jinping’s “Belt and Road Initiative” (BRI), also known as “One Belt, One Road” (OBOR), consists of the “Silk Road Economic Belt” (SREB) and the “21st century Maritime Silk Road” (Ming, 2018 February  15). As well as its neighbors in the region, it hopes to establish connections and collaborations, trade, create infrastructure, and make investments throughout the world (Swaine, 2015). To the benefit of Chinese economic and soft power, this strategy will be implemented. According to the BRI, China’s plan to fund and build infrastructure across Eurasia is now known as the BRI. Chinese President Xi Jinping pledged $113  billion in the “Belt  & Road” summit, which he called an opportunity to further globalization and invited other countries to join him (Huang, 2017 May 15). To understand BRI, one must first understand that it is made up of several cultural subcultures. Both inclusive and harmonious endeavors are needed. All of this promotes the concept of finding common ground, minimizing differences, and depending on each other’s abilities. Everyone in the states enjoys peace and tranquilly as a result of their cooperation. In the eyes of the economist, CPEC represents an opportunity for China to take use of its large pool of industrial and human resources in order to boost bilateral commerce. Due to the fact that more than 85% of OBOR projects are carried out by Chinese businesses using almost exclusively Chinese-produced materials and staffed entirely by Chinese engineers and workers, this strategy allows Chinese production lines to retain their present pace (Hiro, 2018 February 6). Trade-centric growth is reflected in China’s B and R initiatives, according to Kennedy and Parker (2015). Trade-based development will fundamentally alter international politics. China’s expanding prominence in global commerce and investment will frighten the United States and Europe. This development puts China’s strategic interests in jeopardy. The BRI is one of the largest infrastructure and investment megaprojects ever undertaken by a country, including 68 countries and 65% of the world’s population and 40% of global GDP. A blueprint for China’s globalization program was described by Chinese President Xi Jinping as the “project of century” by President Trump’s “America First” policy as a model for China (Huang, 2017 May 15). “You know who’s America First policies!” “Community of shared destiny for mankind.” In 2016, Xi took on the role of globalist-in-chief. In an effort to link 65 nations across the world, the Chinese government is promoting BRI, a multibillion-dollar initiative. More than a dozen other countries are receiving funds from the Chinese government for Chinese language programs. Beijing’s economy will eventually surpass that of the United States (Hiro, 2018 February 6). Wu Jianmin observes three “togethers” in order to accomplish the BRI initiative. As a first step, Wu envisions the members of the project working together for mutual benefit. It emphasizes the need of working together to bring ideas to life. To emphasize that the harvest is evenly distributed, use the word ‘together’. At the “Belt and Road Forum for International Cooperation,” United Nations Secretary-General Antonio Guterres declared, “Building the road is the first step

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toward prosperity” (Guterres, 2017 May  14). As a result of the tremendous cost requirement, China is now footing the bill and bearing the burden. China is becoming a major source of Foreign Direct Investment (FDI) in other nations, as its economy and trade volume expand (ODI). Almost $1 trillion in FDI was received by China between 1979 and 2010, making it one of the world’s largest recipients of FDI. More and more Chinese enterprises, both state-owned and privately owned, are keen to invest and develop their operations abroad with $3.2 trillion in foreign reserves (Raffaele, 2016). Jiang Zemin first suggested China’s “going out” approach, laying the framework for global economic integration through the BRI project. Silk Road Fund, Asia Infrastructure and Investment Bank (AIIB), and the BRICS New Development Bank will all participate in this initiative. The China–SCO Interbank Association and the China–ASEAN Interbank Association will also contribute money to this project. Over the past three decades, China’s image as the “world’s factory” has developed substantially. Since China’s overcapacity is restoring economic growth in poor nations, Cai (the author) said in March 2017: A $100 billion “New Development Bank” led by China, India, Russia, Brazil, and South Africa, has been announced, as have other financial initiatives. 57 nations signed on as founding members of the Asian Infrastructure Investment Bank (AIIB), which was established to provide finance for infrastructure projects across Asia. BRI, which includes 68 countries, 66% of the world’s population, and 40% of the world’s GDP, is projected to be the biggest project ever undertaken. Because of its many advantages, millions of people might be pulled out of poverty (Griffiths, 2017 May 12). In 2013, Chinese President Xi gave a speech to an audience of more than 70 heads of state and representatives of international organizations in Beijing. In addition, he pledged $113 billion in extra cash and rallied the assistance of countries throughout the world. Chinese President Xi Jinping remarked, “We have no intention of building a tiny clique that is detrimental to stability.” The group’s goal is to create an extended family of “happy cohabitation” Hiro (2018 February  8): (Anonymous) Although China had asked the United States and India to join the meeting, both nations rejected it. There are already numerous belt and road projects throughout the world, and no single country can lead by offering OBOR, according to his response to queries regarding this year’s conference. Hiro (2018 February 6): The United States no longer has any beltways or roads. Three of China’s most important economic issues are the integration of the economy, growth, and the reduction of capacity, and the creation of OBOR will help it achieve all of these aims. Because of the country’s overproduction problem, OBOR is considered as a way to export excess industrial goods like steel and cement. Exporting China’s excess capacity is better than dumping China’s excess capabilities. As an export initiative at China’s commerce ministry in 2015, this desire for a “new Silk Road” took root. There is a lack of trust between China and several OBOR countries, including India, which is slowing the implementation and expansion of OBOR. Indian Foreign Secretary Subrahmanyam Jaishankar has remarked that the OBOR initiative is a unilateral project in which India would not commit to buy-in, in the absence of meaningful engagement. Many of the OBOR nations have sovereign credit ratings that are not

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deemed investable. In Pakistan, the security situation is tense, and Chinese companies and people are working there.

10.1.1 Physical Infrastructure “China-Mongolia-Russia Corridor,” which stretches from Northern China to Eastern Russia; “China-Central Asia-West Asia Corridor,” which stretches from Western China to Turkey; and “China-Indochina Peninsula Corridor,” which stretches from Southern China to Singapore; and “Chinese-Indian Ocean Corridor,” which stretches from Chongqing to Singapore. In addition, the geographical structure of BRI includes six corridors and the maritime silk road. In addition to industrial parks and export processing facilities, all proposed routes include energy-generating projects. In the future, all modes of transportation will be connected by a common information technology network. Because of this, the countries along the Silk Road will be more linked and productive, and friendships and cooperative connections will be strengthened and developed. The term “5 + 1” refers to China’s cooperation with Russia, Belarus, Kyrgyzstan, Kazakhstan, and Armenia, all members of the Eurasian Economic Union (EEU). With China’s links being strengthened, the EEU, which was formally established in 2015, will reap the benefits. Since 2003, Chinese investment in EEU nations has increased 235-fold, from 97 million dollars to 22.8 billion dollars in 2015. In the BRI, the China–Pakistan Economic Corridor (CPEC) is the most important initiative (CPEC). China has taken the lead in developing its worldwide commercial ties via common infrastructure, such as roads, rail networks, pipelines, and ports. China has seized the lead. In order to expedite commerce, the six OBOR corridors were constructed. More than 65 countries will be linked via rail, road, and marine corridors in China’s near future. Travelers from China to Europe must take the land route through Central Asia and Russia. A direct link to the Middle East and South Asia will also be established via the Indian Ocean. Ships will be able to go via the South China Sea to reach the South Pacific Ocean.

10.2 Corridors in Belt and Road Initiative/OBOR The OBOR concept relies heavily on the South Asian area. China–Myanmar– Bangladesh—There are two suggested routes: India Corridor (CPEC) and CPEC. Both corridors are considered essential undertakings in the context of the larger plan. Although CPEC’s quick deployment has been prioritized, negotiations for the first BCIM route are now underway. An important trade link between landlocked South Asian and Central Asian nations is expected to be established via the CPEC. Infrastructure in Central Asian countries allows for the export of oil and gas to South and Southeast Asia. CPEC will provide sufficient transportation and communication channels in order to promote trade in gas, oil, and other commodities. There is a lack of trade-related infrastructure in South Asia that is not comparable to other regions that are well-connected. On this map, you can see just how many different kinds of containerized cargo arrive at ports throughout Europe and Asia.

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10.3 Container Port Traffic of European Union and South Asia To facilitate the flow of commercial goods, a system had to be established. However, there is a shortage of regional trade infrastructure in South Asia. According to a recent World Bank study, trade between India and Brazil is 20% cheaper than trade between Pakistan and India (The Potential of Intra-regional Trade for South Asia, 24 May 2016: The World Bank). The BRI’s five key goals are as follows: The goal of the initiative is to promote international cooperation and cooperation among states. As a first step, it attempts to strengthen the bonds between people and enterprises, as well as to foster a better feeling of cultural unity. Financial and economic systems are to be better integrated. Cross-border trade and investment are made easier as a means of promoting economic integration. By modernizing ports, reducing obstacles, and so on, it helps nations along the “Belt and Road” connect with one another. Rail, highway, and fiber-optic line building are all part of the BRI’s connectivity strategy. The following are some of the benefits of constructing a BRI: Embracing the trend towards a multipolar world, economic globalization, cultural diversity and greater IT application, is designed to uphold the global free trade regime and open world economy in the spirit of open regional cooperation. . . . The Belt and Road Initiative aims to promote the connectivity of Asian, European and African continents and their adjacent seas, establish and strengthen partnerships among the countries along the Belt and Road, set up all- dimensional, multi-tiered and composite connectivity networks, and realize diversified, independent, balanced and sustainable development in these countries.

It also aims to link markets and increase investment opportunities as well as provide job openings and promote cultural understanding in order to help bring about economic development and world peace. The absence of trade-related infrastructure in South Asia is one of the most significant factors in the region’s lack of regional commerce. South Asian nations may expand intra-regional commerce and trade with other regional blocs, notably with Central Asian States, by enhancing their road and rail networks. Infrastructure development and connectivity are hindered by a number of political differences in South Asia. In order to carry out big-scale projects like this, South Asian countries must have a huge quantity of money and a high degree of mutual trust.

10.3.1 Silk Road Economic Belt (SREB) The president of China, Xi Jinping, suggested the Silk Road Economic Belt when he toured Kazakhstan and Southeast Asia in 2013. China’s eastern ports may be linked to Europe via Southeast Asia via the “21st century Maritime Silk Road,” as Xi proposed a month later in Indonesia. The old Silk Road links Central Asia, West Asia, the Middle East, and Europe, forming the belt. Additionally, we wish to strengthen the region’s economy and infrastructure as part of this effort. Several SREB member countries work closely with China’s AIIB. North-south and center-to-north belts have also been

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suggested. The North Belt extends from Central Asia all the way to Europe. In all, it extends from the Central Asian region to the Western Asian region, going through Iran and then the Mediterranean Sea. Along with Southeast Asia and South Asia, Pakistan’s Indian Ocean coastline includes both India and Pakistan. New Zealand, the United Kingdom, and even the Arctic have all participated in this endeavor. As part of the Silk Road Economic Belt, CPEC is one of a number of projects that will benefit South Asian countries. The CPEC will open up new trade routes for countries in South Asia and beyond the world. South Asia will be connected by a network of highways and railways.

10.3.2 Maritime Silk Road (MSR) The 21st-century Maritime Silk Road (MSR), which aims to connect these regions via a variety of sea bodies, includes Southeast Asia, Oceania, and North Africa. It is critical for China to protect its international maritime trade routes. Gwadar will offer a choice of maritime routes that circumvent the Strait of Malacca and the South China Sea from the Middle East and the Persian Gulf to China. There is a strong connection between these two regions of the world. It is CPEC’s goal to improve China’s diplomatic relations with neighboring nations and to better utilize economics as a political tool. With the help of this effort, the flow of trade and financial transactions between Eurasian nations as well as between Eurasian countries and other regions of the world is enhanced. With the construction of ports in the Arabian Sea and Indian Ocean region, including the Gwadar port project in Pakistan’s southwest region, Hambantota in Sri Lanka, Chittagong in Bangladesh, and the Kyayukpyu port in Myanmar, and the development of CPEC, China will enter a “two oceans” era, the Pacific and Indian Ocean regions (Xiguang, 2016). Combined with the BRI initiative, this “opening up to both East and West” will recast China as the central Asian state. During this program, we’ll be traveling from the Pacific coast of Shanghai, Hong Kong, and Shenzen to the Karakorum peaks of the Himalayas, Pamir, and Tianshan. Large civilizational zones surround this mountain range, which has long been inhabited by a wide spectrum of tribes. Growing Chinese naval might opens up new opportunities for the MSR to broaden Chinese global influence. An avenue for Beijing to exert influence in the region through the development of regional information technology infrastructure might be opened up by Chinese engagement. To accomplish economic integration, OBOR may not be a good fit for China, say Kennedy and Parker (2015). Due to the fact that the partner nations’ economies are incapable of repaying the Chinese loans on schedule. This has two unfavorable consequences for China’s strategy. It is detrimental to Chinese businesses to receive late payments. Lack of business will stifle the Chinese economy, even as the country is predicted to grow. Borrowers, on the other hand, may decide to join China’s enemy in order to repay Chinese loans collected from other sources. “Build it, and they will come” may be doomed in China since it has already failed in the nation.

10.3.3 The New Eurasia Land Bridge (NELB) Through Alashankou, Xinjiang, the New Eurasia Land Bridge Corridor links Lianyungang, China, with Rotterdam, the Netherlands. Two Chinese railways, Xinjiang

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Railway and Lanzhou-Lianyungang Railway, comprise China’s section of the line. This journey continues on to include stops in Kazakstan (Kazakhstan), Russia (Belarus), and Poland (Poland). The line will be 11,800 kilometers long and serve 30 countries, according to the blueprints. As part of this corridor, an international freight train route that connects Chongqing, Wuhan, Mlnk, and Pardubice in the Czech Republic, Chengdu, and Zhengzhou in China are all connected to Duisburg in Germany (Germany). One declaration, one inspection, and one cargo release for all cargoes are now available via these newly constructed railway lines.

10.3.4 The China–Mongolia–Russia Economic Corridor (CMREC) Frontier business between China, Russia, and Magnolia has been going on for a long time. Three nations’ presidents gathered in 2014 at the Shanghai Cooperation Organization (SCO) to discuss the development of trilateral cooperation based on reciprocal linkages between them. China and Russia have agreed to build Russia’s Eurasian Land Bridge and expand Mongolia’s Steppe Road. China, Russia, and Mongolia will have a new trade route for goods and services.

10.3.5 China–Central Asia–West Asia Economic Corridor (CCWAEC) There is an economic corridor stretching from Xinjiang in China to the Mediterranean and the Arabian Peninsula that connects Central Asia and West Asia’s railroad lines. More than three-quarters of this corridor is made up of five Central Asian nations and two Western Asian countries (Iran and Turkey).

10.3.6 China–Indo-China Peninsular Economic Corridor (CICPEC) When China’s President Li Keqiang made the proposal in 2014 at the Fifth Leaders Meeting on Greater Mekong Subregional Economic Cooperation in Bangkok, he said that China’s relationship with five countries in the Indo-China Peninsula should be strengthened by building massive transport connections, establishing new forms of collaboration, and endorsing sustainable development. From Vietnam and Laos to Cambodia and Thailand to Myanmar and even Malaysia are all engaged in its path of destruction.

10.3.7 China–Pakistan Economic Corridor (CPEC) A 3,000-kilometer route connects China’s Kashgar region to Pakistan’s Gwadar. An additional $62 billion will be invested in infrastructure development by China. It is part of China’s 13th five-year plan. CPEC is expected to speed up Pakistan’s infrastructure modernization and economic development by building new transportation linkages, implementing various energy programs, and creating special economic zones (SEZs). The CPEC package of communication tools includes infrastructure developments such as roads and pipelines. Pakistan is now undergoing a slew of construction projects, many of which will soon be distributed across the country.

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10.3.8 Bangladesh–China–India–Myanmar Economic Corridor (BCIMEC) A 3,000-kilometer route connects Kashgar in China to Gwadar in Pakistan. Rather than investing $46  billion, China has decided to spend $62  billion on infrastructure development. The 13th Five-Year Plan of China states that it will be developed. Modern transportation linkages, energy projects, and SEZs will all be part of the CPEC plan for Pakistan’s infrastructure and economy to be swiftly upgraded (SEZs). As part of the CPEC, infrastructure projects including roads and pipelines will be implemented. Pakistan’s whole landmass will soon be covered in projects that are now in development.

10.4 Multiple Perceptions on Developing BRI For China, OBOR is all about promoting economic growth in China’s western region of Xinjiang, which will then have a rippling effect throughout Eurasia. In addition, China’s worldwide geopolitical clout will be bolstered as a result of this. China’s BRI was also slammed in 2013 for being exposed at the time. The Chinese government, banks, and state-owned enterprises will provide the bulk of the funding for this transcontinental infrastructure, which might turn China into a “new imperial power” engaging in “debt-trap diplomacy” (Wu, 2018 March 4). It is possible that OBOR might be utilized to oppose the US “pivot to Asia,” according to some analysts. A Chinese State Council official highlighted that the United States places barriers in the way of new economic entrants and applies discriminatory rules. For new entrants, OBOR is the best option because the United States prefers TPP over other trade regimes (Cai, 2017 March). The United States believes that China is using BRI to increase its influence and surround smaller countries. It is said that China has the capability to turn its maritime infrastructure into military outposts in Hamilton’s ‘String of Pearl’ strategy To hold India in check while ensuring safe passage via the Strait of Malacca, China’s strategic location might expand its area of influence (Marantidou, 2014). The Strait of Malacca, which is critical for China’s energy supply, is reported to be under Chinese control via economic corridors. BRI and its economic corridors are being implemented in order to make nations in South Asia more economically and politically dependent on China (Garver, 2006). We need China to expand its “Sphere of Influence” throughout the world in order to protect Chinese national interests. As China’s business ties with its neighbors deepen, so does foreign investment. Other countries along the Indian Ocean’s coast claim that China is undermining international order by exerting its regional dominance and creating military outposts. As a counterargument to the United States’ shifting focus to Asia, China is pushing forward with its BRI. China’s growth may be shared with the rest of the world thanks to new models of regional cooperation. Through commerce, FDI, and development aid, the BRI enhances China’s influence in South Asia. Privatized investors could look at the BRI as a solid investment following President Trump’s decision to pull the United States out of the Trans-Pacific Partnership (TPP). To create a global trading network equivalent to the TPP, the BRI is gaining ground (TPP). In the absence of the United States, China is anticipated to fill in the void left behind. Leading Hong Kong economist Louis Kuijs argued that by investing in emerging areas, investors

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are building higher purchasing power and establishing the framework for effective techniques to fully use these new markets (The Belt and Road Initiative, 2017). In addition, rising countries throughout the world, as well as those that want to become more integrated into the global economy, will be included in this structure. Economic and strategic advantages will accrue to this area as a result of BRI’s establishment. As the Chinese chairman Deng Xiaoping in April 1974, in a special address to United Nations General Assembly clearly stated, China will never be a superpower, and she never will. If China becomes a superpower and begins to bully, attack, and exploit others throughout the world, the rest of the world should recognise China’s social imperialism, denounce it, and join forces with the Chinese people to topple their tyranny. (Wallis & Carr, 2016)

So that South Asia may be better connected, China is focusing on building new roads, trains, and sea lanes throughout the region. To facilitate “trade and people-to-people contact and the implicit proposal of strengthening both countries’ political and logistical control over the frontiers in order to deal with external and internal security threats,” China and Pakistan started their first infrastructure project by building the Karakorum Highway through the Karakorum Mountains (Haider, 2005). To create a BRI civilization, China does not want to establish a China-centric culture, which is not its purpose. It’s important to note that each of the countries bordering the BRI has its own particular history.

10.5 CPEC: Forging a Common Destiny Pakistan will be connected to the rest of the world by a multibillion-dollar infrastructure project called the CPEC. When it comes to the route from Gwadar to Kashgar in western China, the first stop will be through Baluchistan, which will be followed by Baluchistan (Sindh), Punjab (Pakistan), KP (Kashmir), and Gilgit-Baltistan in northern Pakistan. Xi Jinping released a joint statement declaring the All-Weather Strategic Partnership during his visit to Pakistan. There are more than three billion people in the CPEC’s target locations in the Middle East and Africa who would profit from it. If trade, investment, and financial flows in the Asiatic areas are increased and regional distinctions are reduced, greater Asian regions might be formed. CPEC is projected to be a game changer in the area in terms of increasing Pakistan’s wealth and power (2015 April  22). (The first post) Being at the crossroads of China, the Middle East, and South Asia, Pakistan is an ideal location for regional business. Many natural resources have yet to be properly utilized in the country, which has a large population. So Pakistan’s economy has a lot of potential for long-term growth. Energy-rich and energy-poor nations are located close to one other. India and China, as well as Afghanistan and Iran, are located in the midst of this strategically vital region, making it a major player in the global economy. Egypt’s envoy to Pakistan expressed interest in collaborating on the CPEC as late as February 2017 (Mahmood, 2016).

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There are three ways to convey freight. Sindh and Punjab, two of Pakistan’s most populous provinces, were chosen for the Eastern Alignment’s route because of their industrial strength and infrastructure. KP and Baluchistan, two sparsely populated provinces, will be linked by a second proposed freight transportation route. KP, Punjab, and Balochistan will soon have a third route across their road system. CPEC primarily relies on industrial parks. There will be a number of industrial parks and SEZs along the CPEC route. In these zones, local enterprises will employ local raw resources to produce export-oriented products. CPEC agreements may be used to set up a regional supply chain for exporting goods.

10.5.1 Special Economic Zones (SEZs) The inclusion of more than 40 SEZs in the proposal would stimulate and attract foreign investment (SEZ). Employment and industrialization are expected to benefit from the injection of capital. Some examples of SEZs are “specialised zones with specified kinds of enterprises operating in a well-defined geographic territory where particular economic activities are supported by a set of rules,” such as “Special Economic Zones.” Connecting the Eurasian continent is a major goal of the CPEC. Establishing SEZs in Pakistan’s most important financial and strategic areas will help the country’s industrial sector flourish, opening the door for greater regional connectivity. SEZ growth is aided by policies and measures that put the market first, such as those taken by the government. Free trade zones (FTZs), similar to those in Shanghai and Hong Kong, are scheduled to be established at the Gwadar port under market-oriented rules. Chinese economic planner NDRC has been enlisted to help transform Gwadar port into a center of market-oriented growth, once again highlighting the importance China places on CPEC’s financial aspects (Yan, 2015 November 17).

10.5.2 Roadway Projects Dispersed roads in Pakistan will be reconstructed and renovated as part of the CPEC project. According to the Chinese government’s budget, this gigantic undertaking is scheduled to cost approximately $10.63 billion. The “Early Harvest” projects will be completed with a $6.1 billion budget and a 1.6% interest rate. The highway will next cross the Indus River into the district of Mianwali, where it will enter the province of Khyber Pakhtunkhwa (KP). This section of road, which spans three rivers, will cost around $1.05 billion to build (the Indus River, Soan River, and Kurram River). There are 74 channels and 11 interchanges in this section. Besides Islamabad Turbat and Panjgur, the Western route would eventually connect Gwadar through Kalat and Quetta, Qila Saifullah and Zhob via Islamabad, as well as DI Khan, Mianwali, and Hasan Abdal along the way (http://cpec.gov.pk/projectdetails/29). Both the eastbound and westbound routes are substantially identical. The eastern route will connect Afghanistan with Iran and the Middle East via Chaman and the Kho-e-Taftan junction in Quetta (Sial, 2014). Karachi to Lahore highway while traveling from Karachi to Lahore, it would pass through Raheem Yar Khan and Multan in the southern Punjab and sections of central Sindh (mainly Hyderabad, Dadu, and Sukkur). After completion of the Brahma Bahtar–Yarik expressway in Balochistan province, the N50 National Highway will

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be renovated between DI Khan, KP, and Zhob, with further rebuilding between Zhob and Quetta planned. This is the southern terminus of the N50 National Highway. Four-lane, dual-carriageway roads linking the two cities will span 205 kilometers. The N50 between Zhob and Mughal Kot, a length of 81 miles that will be renovated first, began construction in January 2016. Currently estimated to cost 86 million dollars, completion of this phase of the project is expected in 2018. “Indeed, the Western Alignment of the CPEC will become the N25 Balochistan National Highway south of Quetta.” National Highway N85 stretches 470 miles from Surab to Hoshab in central Balochistan and links Turbat to the rest of the province. According to the schedule, construction on the line connecting these two cities was finished in December of this year. According to Meena, more than seven SEZs would be built along the Western Alignment (2017). Hoshab and Gwadar will be connected by the 193-kilometer-long M8 motorway as part of the Western Alignment. M8 was inaugurated in February 2016 by former Pakistani Prime Minister Nawaz Sharif.

10.5.3 Eastern Alignment It is more secure than the western alignment, hence China and Pakistan have agreed to build the eastern alignment of the corridor. This is because Chinese enterprises are willing to develop the eastern route on a Build-Operate-Transfer (BOT) basis (Sial, 2014). “Eastern Alignment” refers to the development of roads in Sindh and Punjab provinces. A 1,152-kilometer-long, four- to six-lane controlled-access highway is intended to go at 120 kilometer/hour through Gwadar, Basima, Khuzdar, Sukkur, Rahim Yar Khan, Bahawalpur, and Lahore to connect Karachi’s main urban and industrial centers. For Karachi to Lahore’s Eastern Alignment road link, the term is Eastern Alignment. This proposal includes roads in Hyderabad, Sukkur, Multan, and Abdul Hakeem. This strategy has four components. Between Karachi and Hyderabad, there is section 1 and between Hyderabad and Sukkur, there is section 2 and from Sukkur to Multan, there is section 3, and Lahore is section 4. There are four sections totaling 136, 345, 392, and 33 kilometers in total length in total. Pakistan’s Karachi port city is now easily accessible via the M9 Super Highway, which was completed on time. As a four-lane restricted access Motorway, it was completed on schedule (The Nation, 2015 March 11). Rerouting the Karachi–Lahore Motorway, known as the M9, to Sukkur through the M6 (six-lane) motorway near Hyderabad is the preferred option. The whole length of this highway is 345 miles long. A $1.7 billion investment would be made in Sind’s interior towns and cities, including Khairpur and the adjacent regions, to repair highways. Over five interchanges and 25 bridges are required because of the numerous rivers in the region. Crossroads contact between the operational National Highway, and the Indus Highway is being provided by a number of new highways. The Pakistani government has opted to sell the project to international investors on a BOT basis because of the project’s size and scope. In China and South Korea, businesses are eager to engage in this effort. According to current estimates, the six-lane highway between Sukkur and Multan will cost around $2.89 billion. The 392-mile-long highway will include 11 interchanges and 10 rest areas to limit access. The new road, which is planned to open in 2019, would intersect 492 highways and 54 interprovincial

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roads. In the first month of 2016, Pakistan’s government introduced new laws and financial constraints that created delays in the implementation of this project. The Chinese government has agreed to provide a low-interest loan to pay the remaining 90% of the project costs. The project is scheduled to be completed in 36 months. Multan–Lahore Motorway is divided into two sections. Abdul Hakeem: Khanewal to Abdul Hakeem. This section of the M4 Motorway was made possible thanks to a grant from the Asian Development Bank. The roadway from Abdul Hakeem to Lahore, which spans 231 kilometers, is currently under construction.

10.5.4 The Central Route Gwadar and Quetta are the two main cities on the projected route to DI Khan. Bhakkar and Muzaffargarh make up a few notable cities in the area.

10.6 Karakorum Highway Increasing commercial and economic links with other countries in the region and beyond is projected to help Pakistan satisfy its growing energy needs and encourage exports.

10.7 Railway Projects Rebuilding the whole Main Line-1 between Karachi and Peshawar, which carries 70% of Pakistan’s train traffic, is a top priority for the CPEC in order to upgrade Pakistan’s aging railway infrastructure by the year 2020. In addition to the ML-1 rail network, the ML-2 and ML-3 railroads were also developed and built. A 4,693-m-high Khunjerab Pass will also be completed as part of the CPEC proposal. Karachi and Gwadar would have direct rail connectivity to East Asian goods by 2030. In the first stage of the project, Pakistan Railways plans to upgrade a large number of stations and purchase 250 new passenger carriages. By the end of 2019, Pakistan’s railway system will receive a total investment of around $5 billion.

10.7.1 Main Line-1 The 1,687-mile-long ML-1 rail line between Karachi and Peshawar will be upgraded for $3.65  billion as part of the CPEC “Early Harvest” program. At this time, it’s estimated that the ML-1 restoration will cost $8.2 billion dollars. Between now and 2021, it’s going to be divided into two sections. Pakistan Railways will benefit from increased rail speed, which would reduce travel time between cities. From 105 kilometers/hour to 160 kilometers/hour, the train speed increased. The modernization of Pakistan Railways is estimated to increase revenue by $480 million. The ML-1 will be created in order to travel from Karachi to Peshawar in half the time. Currently, 4% of Pakistan’s freight traffic is handled by the country’s railroads. After construction is completed, an estimated 20% of Pakistan’s freight traffic will be transported by rail.

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There were three parts to phase one of the project: Multan–Peshawar portion, Hyderabad–Multan portion, and Karachi–Multan section. There are significant sections of single track along the ML-1 between Karachi and Lahore. Most of the route between Shahdara and Peshawar is a one-way stretch of asphalt. Dualization of the whole road from Karachi to Shahdara has finally been completed. Between Shahdara and Peshawar, a dual-track rail route will be constructed.

10.7.2 Main Line-2 The CPEC’s upgrading of ML-1 includes the development of 1254 kilometers of ML-II. Route 2 connects Kotri, Sindh province, with Attock, Punjab province, via Larkana and DG Khan. The town of Jacobabad, which is at the crossroads of the ML-2 and ML-3 railways, would also be linked to Gwadar as part of the CPEC project.

10.7.3 Main Line-3 Along with this line from Bostan in Quetta to Kotla Jam in the Bhakkar District near DI Khan is a 560-kilometer extension. The southern part of Afghanistan will have easy access to it. After passing via Quetta and Zhob, the train would arrive in Kotla Jam in 2025.

10.8 Orange Line Train (OLT) The $1  billion Orange Line of the Lahore Metro is currently being built under the CPEC deal of 1.6  trillion dollars in US currency. As part of a commercial initiative, the line was previously improved. An automated rapid transport system, “Orange Route” is a 27.1-kilometer-long elevated line, with the remaining 1.72 kilometers underground between Jain Mandir and Lakshmi Chowk. By 2025, it aims to be able to transport 500,000 passengers a day, or 250,000 passengers a day. When the Orange Line is finished, Pakistan will have its first metro rail line. As the first of three planned metro lines in Lahore, the Orange line is now under construction. In total, there will be 26 stops along the route. The Punjab government is funding the Orange Line, which is part of the CPEC project as a whole. To that end, CRRC Zhuzhou Locomotive delivered the first of 27 metro trains to the city on 16 May. There have been a number of successful studies in recent months. According to a report published on 17 March 2018 by All About Orange Line Metro Train Lahore: As part of a memorandum of understanding inked in May  2014, Beijing and Islamabad agreed to work together (MoU). In December 2015, China’s Exim Bank extended a soft credit of $1.55  billion to secure project finance. In October of that year, the project’s development began. The first phase of the project, which cost Rs. 21.49 billion (US$200 million), was awarded to Habib Construction Services. It was awarded to ZKB Engineers and Constructors in October 2016 for 11.39 billion rupees for the second phase of the project between Chauburji and Ali Town.

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10.9 Khunjerab Railway An extension from Havelian to China’s Khunjerab Pass on the border, along with a connection to China’s Lanxin Railway in Kashgar, is scheduled to be constructed as part of the long-term CPEC framework. In the 2030s, a $12  billion railway is expected to be constructed that would closely follow the Karakoram Highway. The final research for a 300  million rupee rail link between Havelian and the Chinese border is now ongoing. Austrian engineering firm TBAC conducted a feasibility study in 2008, which was released in 2009.

10.10 CPEC Energy Sector Projects A capacity of 24,830 megawatts (MW) is predicted for Pakistan’s current energy production (MW). Energy shortages of more than 4,500 MW, which cause daily power outages of up to five hours, have a negative impact on the country’s GDP by 2–2.5%. Over $33 billion is projected to be spent mostly on CPEC’s energy production capacity. By March  2018, the CPEC’s “Early Harvest Project” is expected to generate around 10,400 MW of electricity. Private Independent Power Producers will construct all of the projects rather than the governments of China and Pakistan. Export-Import Bank of China loans to private investors at a five to six percent markup. The Pakistani government would be allowed to buy power from private corporations at pre-agreed prices.

10.10.1 Renewable Energy Projects At the end of 2030, Pakistan aims to produce 25% of its energy from renewables. Bahawalpur will be home to the world’s largest solar power plant, the Quaid-eAzam Solar Park, with a capacity of 1000 MW. Xinjiang Sun Oasis has finished the first phase of the project. CPEC will see Zonergy install many more of these structures. In Turkey, Zorlu Enerji has been developing the Jhimpir Wind Power Plant, which has already provided 56.4 MW of electricity to the Pakistani government. CPEC will also allow the Chinese–Pakistan cooperation United Energy Pakistan and others to develop a 250-MW power plant for $659 million. As a result of the economic corridor between China and Pakistan, Pakistan has become a major player in the global economy. The wind farm owned by Dawood Ibrahim is worth $115 million. Construction on a wind power facility has commenced; 50 MW of electricity will be produced by China in the near future. As a result of finance from China’s EXIM bank, Pakistan’s $1.8 billion Suki Kinari Hydropower Project in the Kaghan Valley, located in the KP province, will be capable of producing 870 MW. A 720-MW Karol Dam now under construction has received $1.6  billion power investment from China’s Silk Road Fund. CPEC also includes the Diamer-Bhasha Dam, which is a $14 billion project. Work began on the Kohala Hydropower Project, a $2.4 billion, 1100-MW project, before CPEC was announced. As a result, the project’s funding will now come from CPEC.

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10.10.2 Coal The “Early Harvest Project” of the CPEC is dominated by coal-fired power plants. In the end, it is expected that the project would cost 5.8 billion dollars. Two 660-MW power plants will be built in China by Shanghai Electric Company. For the 2018 commercial use of Thar-I, a Sindh coalfields project, Thar-I will be fueled by indigenous coal. Engro and China Machinery Engineering Corporation are building two new 330-MW power plants in Thar-1 as part of the Thar-II Project, which includes the construction of a coal mine that can produce up to 3.8 million tonnes of coal per year. Beginning in the first quarter of 2019, the first phase, estimated to cost $1.95 billion, will be finished. Over the course of the next decade, an extra 3,960 MW of power will be generated. Additional transmission lines from Matiari to Lahore and Faisalabad will also be built, costing a total of $2.1 billion and $1 billion, respectively. The China Electric Power Equipment and Technology Company will build the Matiari–Lahore Transmission Line fast. In Pakistan’s Sindh province, Sinohydro Resources Limited, and Al-Mirqab, the capital of Qatar, are collaborating on a $2.08 billion project to build a 1,320-MW power plant.

10.10.3 Liquefied Natural Gas (LNG) Projects In 2016, China also promised to spend $8.5  billion on Pakistan’s infrastructure; $4 billion will go toward an LNG facility and transmission lines to address Pakistan’s energy problems, while $4.5  billion would go into Karachi-important Peshawar’s railway route. The Chinese government has suggested a 711-kilometer pipeline from Gwadar to Nawabshah, which would cost $2.5 billion. Iran–2,775-mile Gwadar and the Iranian border will be connected to Pakistan’s gas pipeline by an 80-mile segment after sanctions against Tehran are eased. It is Iran’s turn. They’ve completed the 900mile border section. The Chinese state-owned Petroleum Pipelines Bureau will carry one billion cubic feet of LNG each day, and an additional 500 million cubic feet has been finished. Chinese importers will have a more secure route to Pakistan’s market as a result of this endeavor. Gas producers, on the other hand, will have better access to Pakistani markets. It’s expected that the North–South LNG Pipeline between Karachi and Lahore would be finished in 2018 with Russian assistance. As part of a $7.5 billion TAPI Pipeline project, Afghanistan, Pakistan, and India are all anticipated to join Turkmenistan. Other Chinese-backed and financed LNG projects are not officially included in or funded by CPEC. China’s Harbin Electric Company is using EXIM bank finance to construct the 1,223-MW Balloki Power Plant. Harbin Electric of China and General Electric of the United States will construct the Bhikki Power Plant near Sheikhupura. This project, which is intended to be Pakistan’s most energy-efficient, is planned to supply power to about 6 million houses. In central Punjab, Shandong Ruyi Science  & Technology Group and Huaneng Shandong Company are working together to create the 1,320-MW Sahiwal Coal Power Project for $1.8 billion. In Punjab province, there are various coal-related projects, including a $589 million coal mine and a 3000-MW coal power plant. A $970 million coal-fired power plant with a capacity of 660 MW will be erected in the Baluchistan region. Zero-interest

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loans are being utilized in Pakistan to finance the construction of a 300-MW coalfired power station in Gwadar.

10.10.4 Early Harvest Energy Projects By 2020, as part of the “Early Harvest” phase of CPEC, an additional 10,000 MW of power production capacity will be built and added to Pakistan’s existing electric system. There will be an additional 10,000 MW added to Pakistan’s electric system by CPEC projects both official and unofficial, which include power plants of 1,223 MW each at Balloki and Bhakki as well as 969 MW each at Neelum–Jhelum and 1,410 MW each at Tarbela IV Extension. There will be another 1,000 MW of power generated by Kyrgyzstan and Tajikistan as part of the CASA-1000 project to be completed in 2018. All South Asian nations may gain from CPEC by participating in the SAARC free trade bloc. CPEC may have a huge influence on Afghanistan because of its central location in the region. The landlocked boundaries of China and the CARs might be advantageous. China has encouraged Afghanistan to join the CPEC network in order to support the country’s fast economic development. The CPEC’s direct link between China and the Middle East through Gwadar may help Afghanistan and the rest of the world. In South Asia, the port of Gwadar connects the land and water pathways of the OBOR initiative. Trade between South Asia and the Caribbean is not unusual because of a lack of infrastructure in both regions. Tensions in South Asia prevent the area from achieving economic success as a whole. South Asian countries may work together to achieve their own national development goals along the CPEC path.

10.11 Gwadar Port: A Flagship Project of CPEC 10.11.1 Gwadar and Sea Politics Human societies are shaped by geography, and the sea, which spans roughly threequarters of the planet’s surface, is considered to be the most vital environment. At the moment, acquiring transit routes for supplies is quite challenging. There is already a growing hostility in the Indian Ocean region’s choke points, ports, and connecting routes. Natural riches in the Indian Ocean region have made it a geopolitical battlefield. The coastal nations of the Indian Ocean have likewise seen a progressive growth in their authority. A gateway to various neighboring regions is provided by Gwadar’s strategic location. That the North Arabian Sea is where it has strategic implications. The Gulf region is easily accessible from nations in South Asia, Central Asia, China, and Russia due to its strategic location. 2015 was a good year (Khetran, 2015). There has been a growth in marine commerce, which has had an impact on the dynamics of maritime politics. A  vigilant watch on sea trade routes has become increasingly important in light of recent events. The seaports of Gwadar and Chahnew Bahar will have a significant influence on Pakistan, Iran, China, India, and Central Asia, according to geostrategic partners in the area. A  port is an essential transportation hub that enables goods to move quickly between local businesses and marketplaces throughout the world (Tanoli, 2016).

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To get from one country to another, most goods have to go through a port of entry at some point after being carried by road, air, or domestic or interior waterways. The transfer of goods from producers to consumers relies heavily on port infrastructure. It is also known as multimodal transportation since it utilizes several different ways to move its cargo from one area to another.

10.11.2 Gwadar: The Crux of CPEC Gwadar, Pakistan’s Arabian Sea-based deep-sea port, has warm water. CPEC’s principal purpose is to connect China’s BRI and MSR through Gwadar, which is located in Pakistan. By the end of 2017, Gwadar’s port area is estimated to have seen up to $1 billion in development. Pervaiz Musharraf, the former president of Pakistan, has used a funnel analogy to characterize the area. While Gwadar was seen by him as the lower entrance of a funnel that would eventually extend into the Arabian Sea, China’s western provinces and Afghanistan and Pakistan were seen as its “mouth.” A great instance of regional trade flows may be seen in this: Commodities and raw materials from all across Central Asia and western China may be transported to the rest of the globe through Gwadar. (Malik) remarked in 2012 that The functioning of Gwadar port is vital to the multibillion-dollar megaproject CPEC’s success. Transit trade fees have had a significant impact on commercial activity and economic growth in the United States. In recent years, Baluchistan has received a lot of attention due of its extensive infrastructural development. In terms of economic advancement, the Baluchs have no preceding history. Lack of infrastructure is a major problem there. In Pakistan, the construction of the Gwadar port is of immense geopolitical and economic importance. For obvious reasons, it is Pakistan’s third-largest port after Karachi and Qasim. In the region, Gwadar is referred to as “the crown gem.

Trade and cargo transportation in Pakistan are anticipated to be significantly impacted. Gwadar’s completion will shorten the distance from the Strait of Malacca to Shanghai to less than 5,000 kilometers, so cutting China’s oil imports by more than 80%.

10.11.3 Geographical Location of Gwadar Port Oman’s Cape al-Hadd is 320 miles distant, while Iran’s ports of Chabahar and Bander Abbas are just a short drive away. The Strait of Hormuz is about 390 nautical miles from the entrance of the Persian Gulf and 234 nautical miles west of Karachi (Zaheer, 2006). At the intersection of key shipping lanes and oil trade routes, Gwadar is Pakistan’s international trading center. Gwadar port, located in Pakistan, would link three areas. the CAR natural resources may be used when the port is developed in Pakistan. Pakistan’s economy and the rest of the region might be transformed by it. It is hoped that China’s economic zone would help to increase economic activity in the corridor by linking Gwadar and Kashgar Over 4,500 nautical miles will be shaved off the route between Shanghai and major ports in the Gulf area. The Gwadar-Kashgar relationship is an example of shared destiny. It is impossible to misunderstand China’s

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interest and involvement in Gwadar since China and Pakistan’s friendship cannot be measured in money and pounds.

10.11.4 Significance of the Gwadar Port Gwadar port plays a vital role in the Gulf region and the “Great Game” keeping a close eye on Indian territorial expansion efforts in the Arabian Sea and the Persian Gulf. A majority of the world’s oil reserves may be located here. Each day, around 13 million barrels of oil pass through. As far back as 1958, the Sultanate of Oman sold it to Pakistan. Until recently, the Port of Singapore Authority had oversight over Gwadar’s port (PSA). According to the 2002 agreement, Gwadar deep sea port would be built by China and Pakistan. After General Pervez Musharraf inaugurated the first phase in 2007, the port remained underutilized for a variety of reasons. Accordingly, China Overseas Port Holding Company was given control of the port in 2013 (COPHC). With China’s agreement to assist Pakistan to build the Gwadar Deep Sea Port, Pakistan’s geo-strategic links with China will be strengthened and the global village will grow as a result of this agreement. It has been a remarkable rise for Gwadar since then. These include the construction of Gwadar International Airport, the Gwadar power plant, and the expansion of Gwadar city. In preparation for the upcoming holiday season, the port has already begun receiving seasonal goods and conducting commercial transactions. Strategically and economically, Pakistan depends on the port of Gwadar; 60% of China’s oil needs are met by shipments sailing 16,000 kilometers (two to three months) across the Persian Gulf to Shanghai, China’s sole commercial port. Gwadar will cut the trip distance to 5,000 kilometers, allowing it to operate yearround. Gwadar is now under construction. If a country wants to sustain its political and military presence in a region, it must also expand the economy there, according to Chaturvedy (2017 January 6). As a result of the importance of maritime ports, China and Pakistan have maintained their strategic alliance in the Indian Ocean, which stretches to the Middle East and beyond. Economic growth in Pakistan might be boosted by Gwadar’s FTZs, foreign currency reserves, and SEZs. Gwadar’s strategic location in the Strait of Hormuz makes it a valuable asset for Pakistan’s maritime security efforts (SLOCs). It will be able to have a strategic impact on oil sea lanes and trade routes linking South Asia, Africa, the Middle East, the Gulf, and Central Asia because of its distance from India. Another benefit is that it would motivate Pakistan to cooperate with other nations in the oil and energy sector. Over 20 countries in the Middle East, Central Asia, South Asia, and China are projected to benefit from this vast endeavor. China, Iran, Iraq, and other Middle Eastern countries stand to gain economically from the port’s construction. Economic progress in each of these countries is largely dependent on the availability of cheap and dependable electricity. Pakistan’s location at the crossroads of South Asia, West Asia, and Central Asia makes it an ideal location for the transfer of energy. More than 90% of global trade is transported by water, while 95% of Pakistan’s trade is transported over the sea. Pakistan’s economy relies heavily on seaborne commerce, which accounts for 40% of the GDP (Khan, 2013). Asia’s consumer market would be housed at Gwadar, which is well-equipped to manage the complexity of international freight

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movement. The Gwadar port mega project will be realized, and its resources will be tapped for the benefit of Baluchistan province. Turkmenistan, a landlocked country whose natural riches can’t be exploited, holds a particular place in its heart for Gwadar. It has been a long-standing idea to sell Turkmen natural gas to Asian markets via the TAP (Trans Afghan Pipeline) from Turkmenistan to Gwadar. No pipelines connect Kazakhstan’s vast reserves of oil with the outside world. In the future, pipeline transportation to Gwadar and beyond may be contemplated. It’s no secret that Shell plans to build a big refinery in Gwadar, and commercial corporations from the United Arab Emirates are also interested in establishing operations there. At least an additional $30 billion will be poured into Gwadar’s hotels, resorts, and other tourist attractions over the course of the next decade. Also in the near future, other Arab countries are anticipated to make similar statements (Conrad, 2017 June 26). The eastern and western parts of China are separated by many thousands of kilometers. International trade may be easily done at Gwadar port in Pakistan as part of CPEC. Afghanistan and Central Asia are easily accessible from the port of Shanghai, which is located close to Kashgar and Gwadar. However, if India closes the Strait of Malacca, China has the option of using Gwadar as a backup.

10.11.5 Construction of Gwadar Port China is providing 80% of the project’s overall capital in the form of subsidies and low-interest loans. China stands to gain considerably from the effort, which is in its own interests. To ensure that the project is completed on schedule, more than 500 employees are putting in long hours. The port will be fully operational in no time. Work has already begun on the Frontier Works Organization contract, which has been awarded. The construction of a $2 billion SEZ in Gwadar has also commenced. Gwadar will also be linked to Karachi, Pasni, Ormara, and Turbat by a four-stage road network being developed.

10.11.6 Gwadar versus Chabahar Iran and Pakistan are constructing competing port, rail, and highway infrastructure. To deal with the financial and technical challenges they face, both countries have created partnerships with other governments. The Pakistani port of Chabahar, which borders China, has long attracted the attention of both China and India. China sees the Gwadar port as a gateway into China’s western region via an underground transit corridor, in addition to funding and developing the port. Xinjiang’s port has been mentioned as a source of crude oil for China’s energy security. US security experts believe Russia is employing the “String of Pearls” approach as a long-term strategy. As part of its “Harmony Oceans” program, China is aiming to create a foothold in the Middle Eastern and African markets by developing Gwadar as its base of operations. This meant that commerce supplies for the Middle East and North Africa region could be counted on. Chabahar port, which is located just 47 miles from Gwadar, is being built by India and Tehran. According to the concept, the port of Chabahar would be used to link Afghanistan, Russia, and the former Soviet Central Asian nations. Building “a multi-modal transport link” off the coast of Chabahar would be another possibility

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for bypassing Pakistan and gaining access to Iran and India via the seabed. India seeks to speed up the project because of its strategic location on a backdoor route into Afghanistan that avoids Pakistan. A new port in Afghanistan will be connected to a 218-kilometer highway built by India at a significant cost and great danger. With the objective of diminishing China’s influence in Afghanistan in mind, India is making a considerable investment in the nation. The Gwadar port is crucial to Pakistan’s economic development and marine security, as well as regional connectivity, while India has created road infrastructure from Afghanistan to connect the Zaranj–Delaram route to Iran’s Chabahar port. The increasing naval presence of Indian vessels in both the Indian Ocean and the Arabian Sea has China worried (Nixon, 1992). Iran’s assistance in reconstructing Afghanistan, along with India’s nuclear pact, has pushed Pakistan toward China. Pakistan has repeatedly refused to allow Indian humanitarian supplies to traverse its country, despite India’s repeated demands. Chabahar, Iran’s Chabahar port, could be used to ship Indian goods to Afghanistan and Central Asia. With the support of Indian Prime Minister Narendra Modi, Afghan and Iranian leaders met in 2016 to discuss an FTZ running from the Iran–Afghan border to Iran’s Chabahar port, which Modi promised to modernize and help build in the following few years. India and Iran have been negotiating the port’s development since 2003. The Project’s further development was placed on hold because of protracted negotiations between Iran and the United States, as well as international sanctions imposed on Tehran in 2012. When penalties are eased, both parties will move forward quickly.

10.11.7 Operationalization of Gwadar On 13 November 2016, 60 containers left Gwadar on their way to the Arabian Sea. The first shipment of CPEC containers departed Kashgar in October 2016 and was loaded onto the KKH. On 2 December  2016, a sea-bound container train carrying 500 tonnes of freight began its voyage from Yunnan province in southern China to Guangzhou port, inaugurating the rail and sea route for CPEC within China. The cargo will be delivered to Karachi, Pakistan’s port city, at the end of its journey. An extra rail and sea trade route will be available to China and Pakistan as a result of this. An estimated 50% in transportation savings may be expected by using this strategy.

10.12 Conclusion Multi-billion dollar mega project, OBOR/BRI is a group of infrastructural projects that are now under construction across Pakistan. An initial investment of $46 billion has now been revised to a total of $62 billion in CPEC projects targeted at improving Pakistan’s transportation and communication networks, many energy projects, and SEZs, all in order to strengthen the country’s economy (SEZ). Development projects between China and Pakistan are expected to reshape the geopolitics of the South Asian area with an ambitious $62 billion project called CPEC. China’s Kashgar and Gwadar ports would be linked by a huge network of rails, roadway, and pipeline infrastructure. If this happens, it would have a significant influence on Pakistan’s economy as well as regional and global economies and connections. Pakistan, China, and the

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rest of Eurasia will benefit from it. Gwadar’s proximity to the Arabian Sea allows China access to the Middle East, which is a strategic advantage for China’s trade interests. China and Pakistan, as well as the rest of the region, stand to benefit greatly from this project when it is completed, which is expected to be in 2030. While China would save millions of dollars a year by cutting its Middle Eastern energy import route by around 12,000 kilometers, it will also have better access to the Indian Ocean as a result of this project. Pakistan, on the other hand, hopes to get $34 billion in return for different hydro, solar, thermal, and wind-driven power projects, as well as a transit trade duty, in order to alleviate its chronic energy problem.

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Sial, S. (2014). The China-Pakistan economic corridor: An assessment of potential threats and constraints. Conflict and Peace Studies, 6(2). Strategic & International Studies (CSIS). www.csis.org/analysis/building-china%E2%80% 99s-%E2%80%9Cone-belt-one-road%E2%80%9D Swaine, M. D. (2015). “Chinese views and commentary on the ‘One Belt, One Road’ initiative.” China Leadership Monitor 47, no. 2 (2015): 3. Tanoli, J. R. (2016). Comparative analysis of Gwadar and Chabahar: The two rival ports. Centre for Strategic and Contemporary Research. https://cscr.pk/pdf/rb/RB%20_ GwadarvsChabahar.pdf Wallis, J., & Carr, A. (Eds.). (2016). Asia pacific security an introduction. Washington, DC: Georgetown University Press. Wu, F. (2018, March 4). China’s ‘Belt and Road initiative’ is no more imperial than Pax Americana—and the data shows it is more magnanimous. South China Morning Post. Xiguang, L. (2016). “Building a New Civilisation along the One Belt One Road Initiative.” China-Pakistan Economic Corridor: A Game Changer, 1–13. Islamabad, Pakistan. Yan, Shaohua. “Why the “One Belt One Road” Initiative Matters for the EU.” The Diplomat (2015). Zaheer, K. R. (2006). Development and operations of the port of Gwadar. International Federation of Shipmaster’s Associations. www.wjir.org/download_data/WJIR 0401003.pdf

Index Note: Page numbers in bold indicate a table. Page numbers in italics indicate a figure. 16 + 1 initiative, 59, 81, 84, 85, 87, 236, 249, see also CEE 16 + 1 framework of, China and Poland 237 – 238 17 + 1 framework, 81 21st-century Silk Road, 25, 26, 28 21st-century Maritime Silk Road (MSR), 34, 42, 256, 259, 260 21st-century Naval Silk Road, 91 21st-century sea-sea seed road, 246 21st-century Sea Silk Road, 42

A Aar wind farm, South Africa 28, 29 Acer company, 64 Administrative Center for China’s Agenda 21 (ACCA 21) 7, 9 ACCA 21, see Administrative Center for China’s Agenda 21 Afghanistan, i, ix China’s influence in, 274 CPEC and, 263 – 264, 267, 270, 271 India and, 274 Iran and, 274 Iran–Afghan border, 274 railway projects, 267 TAPI Pipeline Project, 269 Trans Afghan Gas Pipeline (TAP) 273 Africa Benin International Training Center, 49 BRI and, 5, 19, 24, 30, 31, 241 – 243, 249 China’s engagement with, 4, 15 China’s renewable energy projects in, 26, 28, 29 East Africa, 70 economic growth of, 2 Forum on China-Africa Cooperation 2018, 6, 241 German Silk Road Initiative in, 64 North Africa, 229, 260, 273 OBOR and, 122 response options to BRI, 241 – 242 Sub-Saharan, 38 Sustainable Energy for Africa Program, 8 see also South Africa African Development Bank, 8

Agenda 21, China, 10, 102, 103 Administrative Center for China’s Agenda 21 (ACCA 21) 7, 9 AIIB, see Asian Infrastructure Investment Bank (AIIB) Altmaier, [Peter], 63 Antwerp, 70 Apple, 64 Arabian Peninsula, 261 Arabian Sea, 260, 271 – 275 North, 270 see also Gwadar Arab States, 5 Chinese and Arab Cooperation Forums, 229 see also United Arab Emirates Armenia as “5 + 1” country, 258 ASEAN, see Association of Southeast Asian Nations Asian Infrastructure Investment Bank (AIIB), 62 – 63 Boao Forum and, 245 BRICS and, 229 BRI financing from, 71, 91, 226, 239 Czech Republic not a member of, 87, 91 France as member of, 67 Germany as member of, 62 Greece as member of, 80 – 81 Hungary as member of, 85 Italy as member of, 69 Netherlands as member of, 75 New Zealand as member of, 245 – 246, 250 Nordic nations members of, 234, 236, 238, 248 promotion of Eurasia by, 44 United States’ response to BRI and, 247 Asia Society Policy Institute, 36 Association of Southeast Asian Nations (ASEAN), 44 BRI MoU and, 226, 227, 243 China–ASEAN, 5, 36 China–ASEAN Interbank Association, 257 tourist professionals trained in ASEAN nations, 49

279

280 Austria 1985 wine scandal, 208 biodynamic wine farming in, 201, 205 – 210 natural wine growers, 209 Nikolaihof, 208 reception of wines of, 210 “Austrian Wine” logo, 208 Austrian Wine Marketing Board (AWMB), 208, 209 AWMB, see Austrian Wine Marketing Board

B Balkans, 58, 70, 84, 236, 242 Baltic region, 236, 238 Bangladesh BRI and low environmental performance of, 41 as beneficiary of BRI, 33 BRI pollution and, 38 China-Myanmar-Bangladesh and OBOR, 258 Chittagong, 260 Maritime Soil Road of the 21st Century and, 242 Bangladesh–China–India–Myanmar Economic Corridor (BCIMEC), 262 Basima, 265 BCIMEC, see Bangladesh–China–India– Myanmar Economic Corridor Beck, Judith (Weingut Judith Beck of Gols), 209 “Beijing Woods” model, 230 Bretton Woods, 230 Belarus, 33, 261 as “5 + 1” country, 258 Belt and Road Forum Beijing 2017, 239 “Belt and Road Forum for International Cooperation” (2017, UN Speech by Guterres), 256 Peking 2017 (inaugural forum), 37, 226, 227, 243 Rio, 36 Belt and Road Green International Coalition (BRIGC), 37 Belt and Road Initiative (BRI), see also Green Belt and Road, China; One Belt, One Road (OBOR) AIIB, financing from 71, 91, 226, 239 BRI Green Lighting Initiative, 37 BRI Green Going Out Initiative, 37 BRI Green Cooling Initiative, 37 BRI Big Data Environment Platform, 37 countries of, 29, 46

Index ecological and environmental cooperation plan, 27 education and sustainability of, 42 – 50 environmental governance of, 37 – 39 EU, impact on, 57 – 93 Green BRI governance, challenges of, 39 – 42 international and transnational environmental bodies, 36 launching of, 2 long-term viability of, 25 – 29 overcoming challenges by building resilience, 143 – 169 service-learning courses and sustainability, 121 – 139 SMEs and, 176 – 196 sustainability and, Sustainability Belt and Road Initiative, 28 triangular cooperation of, 1 – 20 biodynamic wines, 201 – 221 certifications, 206 Maria Thun Biodynamic Calendar, 205 see also Steiner Boao Forum, 245 Bourdain, Anthony, 212 Brahma Bahtar–Yarkik expressway, 264 Brazil, 4, 257, 259, see also BRICS countries BRICS countries, 4, 43, 229 New Development Bank, 257 BRI, see Belt and Road Initiative BRIGC, see Belt and Road Green International Coalition Burgenland Austrian wine-growing region of, 207 – 208

C Cambodia BRI and, 33, 38, 41, 124 Center for Environmental Cooperation China–Cambodia, 36 Chinese-Laos Environment Center, 36 CICPEC and, 261 low ecological performance of, 41 cars electric, 76 DSM and, 76 Germany’s dominance in industry, 60 CARs, see Central Asian Republics CCCC, see China Communication Construction Company CCWAEC, see China–Central Asia–West Asia Economic Corridor CDB, see China Development Bank CEE 16 +1, 58, 85

Index CEECs, 249 CEE region, 58, 84, 85, 91 Center for Environmental Cooperation China–Cambodia, 36 Central Asian Republics (CARs), 270 Chabar port, Iran, 271, 273 – 274 ChemChina, 71, 72 CICPEC, see China–Indo-China Peninsular Economic Corridor China Afghanistan, influence in, 274 Beijing, AIIB headquartered in, 62 Beijing, UNDP in, 9 “Beijing Woods” model, 230 BRI Summit 2019, 63 Center for Environmental Cooperation China–Cambodia, 36 Communist Party, 72, 123, 139 environmental performance, 24 – 25 Export–Import Bank of China, 68 global climate targets set by, 25, 26, 28 Harbin Electric, 269 Longyuan Power Group Corporation, 28, 29 Made in China 2025 Strategy, 60, 63 MOST, 7, 9, 10 PRC, 237 ROC, 237 United States, trade relations with, 20 as wine hub, 199 – 221 Wuhan and COVID-19, 162 see also BRI; MSR; OBOR; railway projects; Xi China–Africa, see Forum on China-Africa Cooperation China–ASEAN, 5 China–ASEAN Interbank Association, 257 China Bordeaux 216 – 217, see also Ningxia China–Central and Eastern Europe Investment Cooperation Fund, 83 China–Central Asia–West Asia Economic Corridor (CCWAEC), 239, 258, 261 China Communication Construction Company (CCCC), 71 China Development Bank (CDB), 29 – 30 China Dream Xi Jingping and, 228 – 229, 242 China Exim Bank see Exim Bank, China China–Indian Ocean–Africa–Mediterranean economic transit, 246 China–Indo-China Peninsular Economic Corridor (CICPEC), 258, 261 China–Kirghizstan–Uzbekistan Railway, 239 – 240 China Merchants Holding International, 68 China–Mongolia–Russia Economic Corridor (CMREC), 258, 261

281 China National Chemical Corporation (ChemChina), 71 China–Nordic research, 249 China Overseas Port Holding Company (COPHC), 272 China–Pakistan Economic Corridor (CPEC), 258, 261 Afghanistan and, 263 – 264, 267, 270, 271 Early Harvest Energy Projects, 264, 266, 268, 269, 270 Energy Sector projects, 268 – 270 Gwadar Port, 270 – 274 OBOR and, 263 – 266 SEZs and, 262, 264 – 265, 272 China Railway Engineering, 83, see also railway projects China Railway Express, 85 Chinese Red Cross public mistrust of, 106, 113 China–SCO Interbank Association, 257 China–Small Island Ministerial Round Table, 247 China–South Asia science and technology partnership, 5 China–Zambia Renewable Energy Technology Transfer (RETT) project case study, 2, 6 – 20 Chinese and Arab Cooperation Forums, 229 Chinese–Indian Ocean Corridor, 258 Chinese–Laos Environment Center, 36 Chinese National Working Committee ESD (CNWCESD), 103 Chinese New Development Bank 245 Clai, Giorgio, 211 – 212 CMREC, see China–Mongolia–Russia Economic Corridor CNWCESD, see Chinese National Working Committee ESD “common human destiny” Xi’s interest in promoting, 43, 45 container port traffic, OBOR, 259 – 262 COPHC, see China Overseas Port Holding Company COVID-19 BRI and, 20 China’s approach to fighting, i, ix China’s economy and, 65 global economy and, 19 global impact of, 175 Hungary state of emergency, 84 impact and response, HK, 145 – 146, 162 – 165, 166 Industry 4.0 in wake of, 176 Italy recession, 68 SARS effect on COVID-19 crisis, 167 SL projects in HK, impact of, 134

282 CPEC, see China–Pakistan Economic Corridor Croatia biodynamic farming in, 218 CEE 16 +1 and, 58 gastronomic tourism, 210 – 212 One Belt, One Road and, 201, 207 Pelješac Bridge project, 39, 59 wine-making and wine-tourism, 210 – 212 Czechoslovakia, see Slovakia Czech Republic AIIB and, 87, 91 BRI and, 58, 59, 85 – 88, 91, 92 Chinese investment in, 88 Moravia region, 213 Pardubice, 261 trade intensity with China, 89 winemaking in, 213, 217

D debt crisis, 5, 77, 79 debt-trap diplomacy, 73, 262 Dendias, Nikos, 81 Deng Xiaoping, 263 Denmark, 238 as AIIB member, 234, 246 BRI and 235 – 236, 238 China National Renewable Energy Center established by, 8 China-Zambia RETT, funding from, 16, 18 PRC, diplomatic relations with, 237 Domaine des Arômes, 217 See also wine DSM (Dutch company), 76

E Early Harvest Energy Projects, CPEC, 264, 266, 268, 269, 270 Eastern Alignment, 264, 265 Eastern China, 51 Eastern Europe, 5 16 + 1 framework for China and, 237 – 239 BRI and, 64 China upgrade of rail systems in, 70 Framework for Cooperation with China, 36 – 37 winemaking, 207 – 210, 218 see also Europe ecotourism, see Jiuzhaigou; tourism Education for Sustainable Development (ESD), 99 – 100, 102 – 105, 107 – 112 EE, see Environmental Education EG, see Evergrowth Precision English, Bill, 245, 246 entrepreneurialism, 159 – 160

Index organizational learning and, 165 – 166 entrepreneurial orientation (EO), 175, 176, 178 entrepreneurial orientation constructs 178 – 179 five constructs, 178 – 179 entrepreneurial partnerships RETT and, 19 entrepreneurs and entrepreneurship BRI and, 35 Knight’s perception/definition of, 148 New Silk Road Partnership–Entrepreneurship network, 64 Schumpeter’s characterization of, 177 entrepreneurship theories, 146, 156 – 157, 168 Environmental Education (EE), 100 – 114 EO, see entrepreneurial orientation (EO) ESD, see Education for Sustainable Development Ethiopia, 10, 241 Eurasia AIIB and, 44 BRI and, 58, 233, 239, 256 CPEC’s goals for, 264, 275 New Eurasia Land Bridge (NELB), 260 – 261 OBOR and, 122, 262 “Rimland” and, 230 Rotterdam as potential hub for, 76 Silk Road Economic Belt and, 31 Eurasian Economic Union (EEU), 240, 249, 258 Eurasian Land Bridge, 238 New Eurasia Land Bridge (NELB), 260 – 261 Eurasian State Bridge, 236 Euro-century, 230 Euromedical Forums, 36 Europe Asian-Pacific Circle and, 42 BRI and, ix, x, 24, 38 – 39, 51, 226, 232 – 233 Northern 233, 236 Southeast, 45 Vienna Congress and Western Peace, 44 vineyards and winemaking, 207 – 220 European Commission, 69, 84 European Union (EU), 17, 245 BRI, impact on, 57 – 93 BRI and environmental governance of, 39, 41 carbon emissions by, 41 container port traffic of, 259 Croatia as part of, 210 EU organic wine certification, 205 indebted countries of, 59, 69 new strategy for China 2016, 63 Eurozone, 79 Evergrowth Precision (EG) 185 Exim Bank, China, 239, 267, 268, 269 Ex-Im Bank China General, 83

Index F Finland, 234 – 238, 246 Fifth Leaders Meeting on Greater Mekong Economic Cooperation, Bangkok, 261 FOCAC, see Forum on China–Africa Cooperation Foping, China, 100, 105 Foping Nature Reserve, 106 – 110 Forum on China–Africa Cooperation (FOCAC) 2015, 241 Beijing 2018, 6 France AIIB and, 67, 246 Biodyvin, 206 BRI and, 58, 59, 62, 63, 65 – 68, 91, 91, 92 as China FDI destination, 61 Chinese exporters in, 89 Chinese investment in, 67, 71 CMA CGM shipping, Silk Road Partnership signed by, 68 female Master of Wine, 202 green bonds issued by, 30 foreign trade with China, 65, 66 Lyon, 67 Thales company, 68 trade intensity with China, 89, 90 winemaking in, 202, 203, 213, 218 Frankovka Modra, 214 Free Trade Agreements (FTA) China and various countries, 226, 250 China and New Zealand, 245, 250 Free Trade Zones (FTZ), 264, 272, 274 frontier business, 261 Frontier Works Organization, 273 FTA, see Free Trade Agreements FTZ, see Free Trade Zones Fukuoka, Masanobu 206

G G7 group, 59, 69 German Silk Road Initiative, 64 Germany AIIB, 62 BRI and, 59 – 65, 91, 92 EU–China investment, concerns regarding, 58 Siemens, 65 Ghana, 7, 26, 28, 29, 244 Giant Panda protection, see panda conservation, China Gilgit-Baltistan (GB), 263 Great Rejuvenation, 242 Greece AIIB, 80 – 81

283 Athens, 79, 81 BRI and,77 – 81, 91 Copelouzos, 79, 80 MINOS, 79 Piraeus, see Piraeus, port of Green Belt and Road, China, 24, 25 – 32 BRI Green Lighting Initiative, 37 BRI Green Going Out Initiative, 37 BRI Green Cooling Initiative, 37 in Chinese governance, challenges of, 39 – 42 Chinese Institutions and, 34 – 36 cooperation platforms, 37 DSM (Dutch company)’s support of, 76 Green BRI Guideline, 38 international and transnational governance framework for, 36 partner nations, 37 – 38 green bonds, Chinese market, 85 Green BRI, see Green Belt and Road, China green business behavior China, 35 green development, 6 China, 19, 246 green economy, 233, 247 green finance China, 29 – 30 “Guidelines for Establishing a Green Financial System,” China, 2016, 35 green funding, China, 139 Green GDP, China 106 greenhouse gas emissions, 33 green regulations, China 107 – 108 Green Seed Road Envoys Training program, China, 36 Green Silk Road Fund, 30 green solutions service learning (SL) approach to, 124, 126 – 128, 135, 138 green strategy, EU, 80 green sustainable business model BRI strategy for, 195 manufacturing data and, 189 green waste, 209 Guterres, Antonio, 256 Gwadar Arabian Sea, proximity to, 275 BCIMEC and, 262 CPEC and, 261, 263, 270 – 274 Free Trade Zones (FTZ), 264 liquefied natural gas projects, 269 Maritime Silk Road and, 260 “One Belt, One Road, One World” vision and, 233 roadway and rail projects, 264 – 267

284 H Hambantota port, 260 Hamburg, Germany, 63, 70 Naval Silk Road and, 91 Tollerort terminal, 64 Health Commission, China 147 “Healthy China 2030” plan, 200 “Heartland Theory” (Mackinder), 230 Hebei province, 216, 218 Hong Kong COVID-19 impact and response, 145 – 148, 162 – 165 crisis management in, 157 Education University of Hong Kong (EdUHK), 105 Graphisoft/Hungary and, 85 NGOs, 104, 106, 110 service learning in, 122, 124, 125, 131 – 132, 134 tourism and retail in response to SARS, 143 – 169 see also OPCFHK Hong Kong Baptist University, 105 HP corporation, 64 Huaneng Shandong Company, 269 Huawei corporation, China Hungary AIIB and, 85 BRI and, 81 – 85, 89, 90, 91

I Iceland AIIB and, 246 BRI and, 234, 235, 238 Denmark, Free Trade agreement with, 237 PRC and, 237 ICTs, 247 IMF, see International Monetary Fund India, i, ix Afghanistan and, 274 Bajaj Auto, 241 Bangladesh–China–India–Myanmar Economic Corridor (BCIMEC), 258, 262 BRI and, 48, 227, 257 BRICS, 4 China BRI Continent, opposition to, 243 Maritime Silk Road and, 242 OPCFHK in, 104 Strait of Malacca, 273 TAPI pipeline and, 269 World Bank and, 44 Indian Ocean, 226, 260 China and Pakistan, 272 China’s access to, 275

Index Chinese-Indian Ocean Corridor, 258 coastal nations of, 270 Indian Ocean Region (IOR), 260, 270 Indonesia, 33 AIIB and, 245 BRI initiatives in, 124 SMEs/OWPE in, 184 tourist professionals trained in, 49 Xi’s speech of 2013 in, 259 Industry 4.0 Covid-19 and, 176 data integration application 191 – 194 entrepreneurial orientation and 178 – 182 Onn Wah Tech and 185, 187 – 188, 195 Organizational Ambidexterity and 181, 188 – 189, 194 SMEs and 175 – 196 understanding Industry 4.0 194 – 195 International Monetary Fund (IMF), 44, 229, 230 Internet of Things (IoT), 178 Iran Afghanistan and, 274 Bander Abbas, 271 Chabar port, 271, 273 – 274 Iran–Afghan border, 274 Israel, 233 Istrian peninsula winemaking on, 211 Italy AIIB and, 69 BRI and, 59, 62, 68 – 73, 91, 92 China and, 69 MoUs signed by, 91 trade intensity with China, 89, 90 Vado Ligure terminal, 238 wines from, 213, 218

J Jaishankar, Subrahmanyam, 257 Japan AIIB and, 245 – 246 Asian Development Bank and, 229 BRI and, 226, 227, 233, 243, 248 natural wines, interest in, 219 Jhimpir Wind Power Plant, Turkey, 268 Jiang Zemin, 257 Jiangsu Province, 103, 118 Jiuzhaigou ecotourism in, 107 – 110

K Karachi, 264 – 265 Gwadar and, 271, 273 Peshewar railway route and, 269 as port, importance of, 271, 274

Index railways, 266 – 267 Karakorum Highway, 263, 266, 275 Khunjerab Railway and, 268 Karakorum peaks of Himalayas, 260, 263 Karakterre salon/festival, Austria, 208, 212 Kazahkstan, i, ix as “5 + 1” country, 258 Chinese government’s investments in, 240 Chinese Initiative (foreign policy) in, 249 Chinese universities and, 48, 50 as Girdle River country, 48 New Eurasia Land Bridge and, 261 oil reserves, 273 Xi’s 2013 visit to, 144, 239, 259, see also Silk Road Economic Belt Key, John, 245, 246 Khunjerab Pass, 266, 268 Khunjerab Railway, 268 Khyber Pakhtunkhwa (KP), 264 Kirghizstan, see Kyrgyzstan Korea, see South Korea KP, see Khyber Pakhtunkhwa Kuzdar, 265 Kyrgyzstan, i, ix, 124 as “5 + 1” country, 258 BRI and, 240 CASA-1000 project, 270 China-Kirghizstan-Uzbekistan Railway, 239 pro-Russia policy focus of, 240 Kyoto Declaration 1993, 103 Kyrgyzstan–Sarytash–Irkeshtam road, 240

L Laos, 104 Chinese–Laos Environment Center, 36 CICPEC and, 261 Soochow University, 50 Lapierre, Marcel 203 Latvia, 58 Legeron, Isabelle, 202 Li Hua, 200 Li Kequiang, 261 Liquefied Natural Gas (LNG), 269 – 270 Lithuania, 81 Liu Jianlun, 147 Liu Xiaobo Nobel Prize for Peace, 237 LNG, see Liquefied Natural Gas

M Macron, [Emmanuel] 68 Malacca, see Strait of Malacca Malaysia AIIB and, 245 CICPEC and, 261 rainforests, 31

285 OWPE Group and, 184 solar potential of, 26, 27, 29 XiaamenXiamen University, 50 maritime cooperation BRI and, 234, 246 maritime infrastructure, China, 262 maritime politics, China, 270 maritime relations China’s attitude regarding, 248 maritime routes BRI and, 236, 239 Maritime Silk Road (MSR) of the 21st Century 31, 34, 42, 80 BRI and, 256, 258 container port traffic of EU/South Asia and, 260 Silk Road Economic Belt and, 259 Maritime Soil Road of the 21st Century, 2421 Marshall Plan, United States, 232, 247 Memoranda of Understanding (MoU), 58, 59, 63 Beijing and Islamabad, 267 BRI and Siemens, 65 China, Serbia, and Hungary, Belgrade-Budapest railway, 84 Czech Republic and BRI, 87 EU countries and BRI, 91 French government and BRI, 68 G7 group and BRI, 69 Greece and BRI, 80 Hungary and BRI, 85 Italy and China, 69, 77 Netherlands and BRI, 92 Netherlands and China, 75 New Zealand and BRI, 256 Merkel, [Angela] 63, 68 Mészáros, LŐrinc, 84 MEWD, see Ministry of Mines Energy and Water Development, Zambia Ministry of Mines Energy and Water Development (MEWD), Zambia, 7, 9 – 11 Ministry of Science and Technology (MOST), China 7, 10 Modi, Narendra, 274 Montenegro, 92 Monterey BRI, 39 MOST, see Ministry of Science and Technology, China MOU, see Memoranda of Understanding MSR, see Maritime Silk Road of the 21st Century Muir, Angela, 213 Musharraf, Pervez, 272 multilateralism China, 229, 244 Liberal, 250 Western, 245

286 Myanmar, 124 Bangladesh–China–India–Myanmar Economic Corridor (BCIMEC), 258, 262 CIPEC Corridor and, 261 Kyayukpyu port, 260 Myanmar Special Economic Zone, 39

N National Development and Reform Commission (NDRC), China, 6, 10, 25, 28, 264 National Energy Commission (NEC), China, 10 NDRC, see National Development and Reform Commission NEC, see National Energy Commission, China NELB, see New Eurasia Land Bridge Netherlands BRI and, 59, 73 – 77, 91 China, foreign trade with, 73, 74 Chinese investment in, 75, 76 EE and ESD and, 103 NELB and, 260 Rotterdam, 73, 92, 260 Schiphol Airport, 73 trade intensity with China, 89, 89, 90 New Eurasia Land Bridge (NELB), 260 – 261 New Silk Road Partnership–Entrepreneurship network, 64 New Zealand AIIB membership and, 245 – 246, 250 BRI extended to, 242, 243, 244 power to influence BRI, 244 – 247, 250 Sino-New Zealand, 245 SREB and, 260 Ningxia, China, 216 – 219 non-governmental organizations (NGOs), 7, 10, 16, 37 Chinese Red Cross and public mistrust of, 106, 113 EEs and, 100, 104 – 106, 109 – 110, 112 – 113 Service Learning (SL) and, 122, 124 – 129, 132 – 139 Nordic nations AIIB membership and, 234, 236, 238, 248 BRI and, 234, 235 – 237 Nordic-China relations, 238, 248 – 249 wait and watch approach of, 248 Nordic Council Secretariat, 248 Norway, 234 – 235, 237 – 238 PRC, recognition of, 237 Statoil, 238

Index O Obama, Barack, 230 – 231 Ocean Park Conservation Foundation Hong Kong (OPCFHK), 104 – 106, 113, 127 ODI, see outbound direct investment OECD, see Organisation for Economic Cooperation and Development Oman, 244, 271 Sultanate of, 272 One Belt, One Road (OBOR), 226 Action Plan 2013 (China) and, 226 Africa and Eurasia, 122 container port traffic, 259 – 262 corridors, 258 CPEC, 263 – 266 CPEC Energy Sector, 268 – 270 education and SL systems connected by, 122, 138 geo-economic and geo-political aspects of, 253 – 275 Gwadar Port, 270 – 274 railway projects, 266 – 267 RICE and, x sustainability challenges to, 100 – 101 “One Belt, One Road, One World” vision, 233 – 234 Onn Wah Experience, 189 – 191 Onn Wah Precision Engineering Pte Ltd. (OWPE), 184 – 188 Onn Wah Tech (OWT) eCommerce business model explored by, 187 Evergrowth Precision and, 185 joint venture (JV) model explored by, 185 – 186 Industry 4.0 Singapore and 185, 187 – 188, 189 – 191, 195 Organizational Ambidexterity displayed by, 188 – 189 OPCFHK, see Ocean Park Conservation Foundation Hong Kong Orange Line Train (OLT), 267 – 268 Orbán, Viktor, 84, 85 Organizational Ambidexterity, 181, 188 – 189, 194 Organisation for Economic Cooperation and Development (OECD) China-Zambia RETT project and, 17 environmental directives by, 34 “STI (Science, Technology and Innovation) Policy Initiatives on International Cooperation for Addressing Grand Challenges,” proposed by, 7 triangular cooperation, research on, 19

Index outbound direct investment (ODI), China, 6, 8, 257 OWPE, see Onn Wah Precision Engineering Pte Ltd. OWT see Onn Wah Tech

P Pakistan, i, ix, x BRI and, 33, 38, 41 “debt-trap diplomacy” and, 73 China and, 50 as Girdle River country, 48 Indian Ocean coastline of, 260, 275 India, trade with, 259 low environmental performance of, 41 security situation of, 258 solar power plant (Quaid-e-Azam Solar Park), 268 see also CPEC; Gwadar Port panda conservation, China, 100, 105 – 110 Pesti, Máté, 85 Piraeus, port of, Greece, 77, 79 – 80 China’s investment in, 59, 64, 70, 91 COSCO (China)’s investment in, 79 – 80 as model of successful cooperation between EU and China, 84 Piraeus Port Authority (PPA) 80 Poland, 58, 249 BRI projects in, 59 China’s strategy towards, 16 + 1 framework and, 237 – 238 NELB and, 261 Port Singapore Authority (PSA), 272 Power China, 19 PSA, see Port Singapore Authority

Q Qinling Mountains, 106 Quaid-e-Azam Solar Park, Pakistan, 268 Quetta, 264 Qila Saifullah, 264

R railway projects, China, i, ix, 71, 267 “Arctical Corridor,” 236 BRI and, 31, 68, 92 BRI–Europe Investments, 91 Budapest–Belgrade, 83 – 84 CCCC, 71 Central Asia–China railways, 239 France-China railway connections, 67, 68, 92

287 German–Chinese railway connections, 63 – 64, 92 Khunjerab, 268 Lanxin, 268 Netherlands–China, 261 high-speed, 59 OBOR and, 261 – 269 Orange Line Train (OLT), 268 Pakistan–China 261 – 269 Russia–China, 261 in South Asia, 260 sustainability concerns and, 101 Wuhan–Dourges route, 67 Wuhan–Lyon route, 67 Red Cross, see Chinese Red Cross resilience and resilience strategies, x Bloomberg’s COVID Resilience Ranking, Hong Kong, 145 concept of, 156 crisis management and, 156 – 157 as dynamic process, 157 entrepreneurialism as enhancing, 148, 165 FM Global Resilience Index, 145 Hong Kong crises responses as example of, 143 – 169 organizational, 156 political and macroeconomic factors in, 145 in students, 130, 135, 137 RICE, Russia, x Rimland (Spykman), 230 Robinson, Jancis, 202, 216 Rotterdam, 64, 73 BRI and, 70, 92 Euromax Terminal, 76 NELB and, 260 RSC, x Russia as “5 + 1” country, 258 BRI and, 33, 48 BRICS, 4 Changsha–Europe freight train, 85 China’s comprehensive strategic plan with, 229 Chinese–Mongolian–Russian BRI Corridor (CMREC), 40, 261 Cold War and, 228 deforestation in, 40 hegemony in Central Asia, efforts to bypass, 239 – 240 “Ice Silk Road,” 236, 238 “New Development Bank” led by, 257 new Eurasian land bridge and, 239 RICE, x Silk Road and China, 242

288 smaller EU states historically influenced by, 58 war with Ukraine, I, ix World Bank and, 44 Rutte, Mark, 76

S SAARC, see South Asian Association of Regional Cooperation Sahiwal Coal Power Project, 269 SARS, see severe acute respiratory syndrome Schwarzman Study Program, Tsinghua University 43 Science, Technology, Innovation (STI), China, 7, 10 SCO, see Shanghai Cooperation Organization sea lines of communication (SLOCs), 272 SEAs, see Strategic Environmental Assessments service learning (SL) BRI sustainability awareness and, 121 – 139 severe acute respiratory syndrome (SARS) Hong Kong, 146 – 147 lifecycle and impacts of, 160 – 165 Liu Jianlun as patient zero in HK, 147 SEZ, see Special Economic Zones Shambaugh, David 226 Shandong, 103, 216, 218 Shandong Ruyi Science & Technology Group, 269 Shanghai Cooperation Organization (SCO), 261 Shipley, Jenny, 245 Silk Road Arctic Silk Road, 76 BRI and, 226 China’s education mission and, 43 – 51 China’s national strategy and, 42 – 43 Cyber Silk Road, 248 Digital Silk Road, 32 – 33 “Ice Silk Road,” 236, 238 German and French response to, 68 German Silk Road Initiative, 64 Green Silk Road Fund, 30 Naval Silk Road, 91 New Silk Road (s), 25 – 27, 230, 231 New Silk Road Partnership– Entrepreneurship network, 64 Ocean Silk Road, 233 original, i, ix, 42, 57 – 58 Polar Silk Road, 76 University Collaboration of New Silk Road, 51 see also 21st-century Silk Road; Maritime Silk Road (MSR) of the 21st Century Silk Road Academy, 51 Silk Road Economic Belt (SREB), 31, 34, 239, 242, 259 – 260 creation of, 46

Index Silk Road Fund, 43, 71, 257, 268 Silkroad International Bank, 241 Silk Street, 28 Silk Street Economic Belt, 51 Singapore BRI and SMEs beyond, 175 – 196 Enterprise Singapore, 186 Onn Wah Precision Engineering Pte Ltd. (OWPE), 184 – 188 Onn Wah Tech (OWT), 185, 187 – 188, 189 – 191, 195 SARS and, 147, 160 SL, see service learning Slobodne, 214 – 215 SLOCs, see sea lines of communication Slovakia CEE +16, 58 J&T Group, 86 six wine regions of, 213 winemaking in, 200, 201, 207, 212 – 215, 218 small- and medium-sized enterprises (SMEs) BRI and, 176 – 196 German, 64 Hong Kong, 163 pandemic’s impact on, 175 Sobotka, Bohuslav, 87 solar power/projects China, 11, 13, 14, 15, 19, 24 – 25 Ghana, 28 Greece, 80 Kalulushi solar plant, China, 19 Malaysia, 26 – 27, 29 Netherlands, 76 Pakistan, 268, 275 Zambia, 8, 15 South Africa, 4, 257 Longyuan Power Group Corporation, 26, 28 New Development Bank, 257 South America, 229, 230 South Asia container port traffic, 259 CPEC and, 260, 263 South Asian Association of Regional Cooperation (SAARC), 270 South Korea, 48, 125, 245, 265 interest in wine, 219 South Pacific, 246 South–South Cooperation (SSC), 2, 6 Special Economic Zones (SEZ) CPECs and, 261 – 262, 264 – 265 Gwadar, 272 – 273 SREB, see Silk Road Economic Belt Sri Lanka, 19, 22 debt-trap diplomacy and, 73 Hambantota port, 260 Ocean Park Conservation Foundation Hong Kong (OPCFHK) in, 104

289

Index Steiner, Rudolph, 205, 207 Steiermark Austrian wine-growing region of, 207 Strait of Malacca, 239, 260, 262, 271, 273 Strategic Environmental Assessments (SEAs), 38 Strohmeier, Franz 209, 220 – 221 Styria Austrian wine-growing region of, 208 see also Strohmeier Sub-Saharan Africa, 229, 230 Suez Canal, 69 – 70 Sustainable Development Agenda 2030, 32, 34 Sustainable Energy for Africa Program, 8 Sweden, 234 – 238 BRI response, 237, 238 ABB, 238 PRC recognized by, 237 Sztáray, Péter András, 81

T Tajikistan, i, ix Taoism, 220 TAP, see Trans Afghan Gas Pipeline TAPI Pipeline Project, 269 tariffs, 213, 220 technological turbulence (TT), 178 Thailand, 48, 184 AIIB and, 245 CICPEC AND, 261 Third [World] Countries 68, 234 Tokaj, 213 – 214 tourism China and, 43 economic development and environmental challenges, tensions with 100, 102 ecotourism, 107 – 110 gastronomic (Croatia), 210 – 212 lessons for BRI from, 143 – 169 New Zealand and China, 232 poverty alleviation and, 102 wine, 212, 217 tourism sector Chinese investment in, 67 TPP, see Trans-Pacific Partnership trade intensity BRI and, 59, 88 – 90 Trade Intensity Index (TII), 88 – 90, 89 – 9 0 Trans Afghan Gas Pipeline (TAP), 273 Trans-Pacific Partnership (TPP), 230 – 231, 262 triangular cooperation of Belt and Road, 1 – 20 Trump Administration, 233 Trump, Donald J. ix, 249 “America First” policy of, 256 TPP, decision to pull US out of, 262 Tsinghua University 43 TT, see technological turbulence

Turkey, 258, 261 Jhimpir Wind Power Plant, 268 Turkmenistan, i, ix BRI economic corridor and, 239 as BRI member and country, 31 China’s investment in developing oil and gas industry in, 240 Gwadar and, 273 TAPI Pipeline Project and, 269

U UAE, see United Arab Emirates United Arab Emirates (UAE), 273 UNPD, see United Nations Development Programme UNEP, see United Nations Environment Programme UNESCO, 103 World Heritage Site Stari Grad Plain, 212 United Kingdom, 48, 62, 260 BRI and, 63 withdrawal from EU, 65 United Nations BRI recognition by, China’s pursuit of, 36 Brundtland Report, 101 environmental directives, 34 post-WWII, 44 report on greening of Belt and Road, 28 “sustainability” defined by, 122 United Nations Development Programme (UNDP), 2 – 3, 8 – 12 UNDP China, 14 – 16 UNDP Zambia, 10, 17 see also China-Zambia RETT project United Nations Environment Programme (UNEP), 36 United Nations General Assembly, 102, 263 United Nations Office for South–South Cooperation (UNOSSC), 3 United Nations’ Sustainable Energy for All initiative, 7 United States, see also Obama; Trump AIIB and, 246 BRI and, 41, 64, 226, 233, 242 – 243, 247, 257, 262 China’s economy surpassing, 256 China, exports to, 60 China, trade relations with, 20 export of, 66 General Electric, 269 global leadership crisis in, 227 green bonds issued by, 30 Huawei ban in, 72 IMF and, 44 Kyrgyzstan and, 240 Marshall Plan, 232, 247

290 OWPE and, 184 OWT and, 185 renewable energy in, 24 response to BRI and, 247 ROC and, 237 Tax and Trade Bureau, 204 TPP and, 231, 262 UNOSSC, see United Nations Office for South–South Cooperation Uzbekistan, i, ix, 240, 249 China–Kirghizstan–Uzbekistan Railway, 239

V Varga, Mihaly, 84 Veltlin Zeleny, 207, 214 Vienna as Austrian wine-growing region, 207 – 209 food and wine supporters in, 210 Karakterre salon/festival, 208, 212 Vienna Congress, 1815, 44 Vietnam, 248 BRI and, 124 CICPEC and, 261 OWPE and, 184 wind energy, winder turbines, 26, 27 – 29 vineyards, 201 – 221, see also wine Vreeze, Dmitri de, 76

W Western Peace, the, 44 wind power/energy, 8 Africa/China funded, 28 China, 25 Greece/China funded, 80 Pakistan, 275 Turkey, 268 Vietnam, 26, 27, 29 Wong, Helen, 29 – 30 World Economic Forum, 25 World Blue Economic Partnership, 247 World Trade Organization (WTO) China as member of, 45, 57, 235, 237, 245 WTO, see World Trade Organization Wuhan–Dourges route, 67 Wuhan–Lyon route, 67 Wu Jianmin, 256

X Xi Jinping 5, 24, 32 Africa, financing of, 6 BRI announced by, i, ix, 5, 24, 31

Index BRI and Chinese foreign policy according to, 58 BRI idea introduced to, 144 BRI meeting 2017, 32 BRI route, cooperation along, 42 China Dream as understood by, 228 – 229 “common human destiny” highlighted by, 43, 45 “Healthy China” plan announced by, 200 Italian government deals signed by, 69 One Belt, One Road (OBOR), 226 Sustainable Development Agenda 2030, 32 Xinjiang BRI and, 239 crude oil and, 273 OBOR and, 262 port of, 273 railway and economic corridors of, 239 – 240, 261 Sun Oasis, 268 wine terrains of, 216, 219

Y Ye Jianming, 86 youth education policies, Belt and Road, 99, 100, 103, 105, 122 Yugoslavia, 210, see also Croatia

Z Zambia China–Zambia Renewable Energy Technology Transfer (RETT) project, case study, 2, 6 – 20 MEWD, 7, 9 – 11 Zambia Development Agency, 10 Zambia Electricity Supply Corporation (ZESCO) 10, 17, 19 Zambia Environmental Management Agency, 10 Zambia Industrial Development Corporation, 10 Zambia Off-grid Investor Forum, 17 Zambia Revenue Authority, 10 Zaranj-Delaram route, 274 Zeman, [Miloš] 86, 87 ZESCO, see Zambia Electricity Supply Corporation Zöldi survey, 81 Zorlu Enerji, 268