The 'Belt And Road' Projects China Doesn't Want Anyone Talking About

Trade & Policy

The 'Belt And Road' Projects China Doesn't Want Anyone Talking About

Kunming, Yunnan's provincial capital, occupies a key place in China's economic diplomacy efforts as the terminus of oil and gas pipelines from the Bay of Bengal and the starting point of a planned railway network winding through Indo-China to Singapore.

But the provincial authorities have obscured the location of a brand new, 29.2 billion yuan (US$ 4.27 billion) oil refinery that sits at the end of the 2,500 km pipeline and made talk about the rail network taboo. The refinery is not marked on online maps, but its outline is visible in satellite images of the area.

The new China National Petroleum Corporation (CNPC) refinery, in Anning, on the western outskirts of Kunming, began trial operations this month and will be capable of processing 13 million tonnes of crude oil a year. It sits at the end of a pipeline running through Myanmar which slices 1,200 km off transportation distances from the Middle East and Africa and avoids the need to have tankers pass through the Malacca Strait, a potential choke point for China's energy supplies, through which about 80 per cent of its oil imports now pass. A parallel gas pipeline has delivered 13.5 billion cubic metres of natural gas to China since 2013, Xinhua reported.

Construction of the crude oil pipeline started in 2007 and was completed in 2014, but it only started operation in May last year. Xinhua reported that a Suezmax-sized tanker, capable of holding 140,000 tonnes of crude, began offloading oil for the pipeline at Myanmar's Made Island in April.

The two pipelines could bring 22 million metric tonnes of crude oil and 12 billion cubic metres of natural gas into China each year, Xinhua reported. In return, Myanmar would receive US$ 13.81 million a year in a royalties and an oil transit fee of US$ 1 a tonne. As part of a 30-year agreement it would also get 2 million tonnes of crude oil and up to 2.4 billion cubic metres of natural gas a year, Xinhua said.

The refinery, and an associated paraxylene plant that would produce 500,000 tonnes of the chemical each year, had led to protests in the area.

Paraxylene, which is used in making plastic bottles and polyester, can be dangerous if inhaled or ingested and the city's mayor at the time, Li Wenrong, promised the government would not hesitate to cancel the paraxylene project if most people opposed it. But the public have not been told whether the new refinery includes a paraxylene plant.

Chen said the other taboo topic was the "Trans-Asian Railway", which had been given a high profile at various official forums until two years ago, when the propaganda department ordered local media to stop using the term. "It's because the term sounded so aggressive about expanding into other countries," he said, adding it could have made neighbouring countries fear rather than welcome being drawn into China's economic orbit.

The proposed single-gauge railway network, starting in Kunming and running through Vietnam, Cambodia, Laos, Thailand and Malaysia before terminating in Singapore, is an important part of Beijing's plan for greater regional connectivity and would turn Kunming into a transportation hub.

Most of the countries involved have existing railways but they operate on different gauge tracks, meaning goods have to be unloaded and transferred onto another train to continue their journey. Two years ago, China Railway Tunnel Group deputy chief engineer Wang Mengshu said the existing railways would be changed to adopt Chinese technology and China's standard gauge, the guancha.cn news portal reported.

Xinhua has reported that 13 railway lines spanning more than 2,300 km are being built in Yunnan this year at a cost of more than 244 billion yuan, but progress has been less smooth on proposed Southeast Asian lines due to local resistance. On July 11, Thailand approved US$ 5.2 billion for the construction of the first stretch of a long-delayed high-speed railway that will form part of the trans-Asian railway.

A China Railway Group railway project in Laos has also been delayed by fundraising, land requisition and village resettlement issues, and construction of a high-speed line in Indonesia, linking Jakarta and Bandung, was delayed for a year due to local opposition to the route. China Railway and its Indonesian partners received permits to start construction of that line in March.