China Communications Construction Company: A Doorway to Expand Economic Zones of China in the Modern World

The China Communications Construction Company (CCCC) is a state-owned multinational engineering and construction firm. The company primarily designs, builds, and operates infrastructure assets such as highways, bridges, tunnels, railways, airports, oil platforms, and marine ports.[1] Being engaged in related businesses for more than 100 years, CCCC is the birthplace as well as a pioneer of many industry fields in China.[2] It is currently a major contractor for several Belt and Road Initiative (BRI) projects all over the world. At present, CCCC has more than 60 subsidiaries and controlled affiliates, all serving the goal of expanding the BRI agenda.[3] They’ve served in over 150 countries, most notably in underdeveloped and poorer nations of Africa, Latin America and Asia.

State-owned enterprises like the CCCC are heavily engaged in ‘donations and scholarships’ programs in addition to their work in areas like bidding, procurement, hospitality and payments among other legal arrangements. Such donations, sponsorships and loans have earned China the title of ‘global creditor’ for debt-ridden lower-income countries. While China has portrayed itself in the image of a “modern-day Good Samaritan”, the situation is not all sunshine and roses. The pattern is clear in how the CCCC chooses to do business, which is akin to vetting countries that are already in financial distress and pitching projects in the name of development. Once the countries are unable to repay the hefty interest, they are allegedly compelled to make strategic concessions to China, a practice known as ‘debt-trap diplomacy’.[4]

A similar trend was observed in Sri Lanka, which is currently neck-deep in debt to China, amounting to approximately $6.8 billion.[5] The Chinese bank Exim provided funding for the construction of the “Hambantota International Port” and the “Mattala Rajapaksa International Airport” in Sri Lanka. Under the growing financial crisis, the Sri Lankan government’s budget was unable to cover the project’s maintenance costs and interest despite the loan, and the country declared bankruptcy, defaulting on its sovereign debt.

Despite the obvious risks involved, not all governments are opposed to the idea of having China as a ‘development partner’. In an attempt to celebrate Pakistan-China relations, the CCCC organized a fishing net distribution ceremony for Gwadar’s local fishermen in collaboration with the Pakistan Army.[6] Gwadar Port is located on the Arabian Sea in Pakistan’s Baluchistan province and holds an important place in the BRI and Maritime Silk Road projects, featuring prominently in the China-Pakistan Economic Corridor (CPEC) plan.[7] The port is administratively controlled by Pakistan’s Maritime Secretary and operationally controlled by China Overseas Port Holding, a subsidiary of CCCC. This alignment strategy is based on the “Special Economic Zones of China”, which have free-market oriented economic policies, with 91% of the Gwadar Port’s revenue going to China and 9% to Pakistan.[8]

In the Latin American region, as in Pakistan, there is growing support for BRI projects. Notably, Chinese firms such as CCCC have increased their investment in Public-Private Partnerships (PPPs) in Columbia. The consolidation of PPPs has made it possible for CCCC to jointly fund, construct, and manage sizable infrastructure projects with the government through a concession and later, to undertake the operations of these projects.[9] The state’s reduced capacity to invest in infrastructure due to fiscal deficit, mismanagement of public resources and numerous tax reforms implemented over the years have led to the public’s overwhelmingly positive support for ‘China Harbour Engineering Company’ (CHEC), a subsidiary of CCCC, to intervene to uplift the state’s infrastructure worth billions of pesos.

In Argentina, one of CCCC’s subsidiaries, the Shanghai Dredging Company, submitted a bid in 2019 to take over the dredging of the Paraná River. The Paraná holds an important strategic location as it transports approximately 80% of Argentina’s agricultural exports including soymilk livestock feed, corn and wheat. As China is the main buyer of Argentina’s soybeans, it becomes evident why dredging is an essential component of BRI expansion in Argentina.[10] Dredging is the removal of sediments and debris from the bottom of lakes, rivers and other water bodies where natural sedimentation could gradually fill and clog the waterways. With the Chinese state-owned conglomerate ‘Cofco’ being the country’s largest commodities export broker, Beijing’s efforts to invest across international agricultural supply chains demonstrate its dark desire to control commodity supply and pricing.

On the other hand, the African nation Uganda had issued a special audit examination of the upkeep of the Kampala-Entebbe Expressway in 2020 as suggested by the Committee on Commissions, Statutory Authorities, and State Enterprises (COSASE) of Uganda. According to a report by Uganda National Roads Authority (UNRA), the contractor EGIS, which is a link between CCCC and the government of Uganda, was paid Shs 918.47 million per month for the maintenance of the Expressway. However, lights were not installed from the time of commencement of use, which led to accidents and a degree of insecurity on the road at night. This fact was disputed by the EGIS, claiming that the operations and interest rate were impacted by UNRA’s failure to make maintenance payments on schedule. Following UNRA’s formal report and observation, the committee concluded that CCCC had engaged in wrongdoing and demanded that CCCC fixes the damages within a grace period of three months.[11]

The allegations of foul play and fraud on the part of CCCC are nothing new. In 2009, the World Bank Group blacklisted CCCC for eight years because of fraud on roadway projects in the Philippines. Later that year, CCCC dealt with numerous claims of fraud and corruption, including the claim that it sent $19 million to Teodorin Obiang, the president of Equatorial Guinea, as disclosed by a 2013 asset forfeiture action brought by the United States.[12] The CCCC has also been charged with gross financial malpractices, bribery and illegal employment over the past decades.[13] As questions about the legitimacy of the organization’s business methods have grown, the United States has gradually placed sanctions and penalties against it.[14]

While China has managed to control any narratives against it and suppressed any negative media reports, its pattern of managing risks by causing deliberate delays in the design, construction and implementation of projects has become strikingly clear. The delays have a significant influence on revenue creation, which subsequently burdens the country’s budget and makes the nation subject to pressure from Beijing. In addition, there have been growing concerns about the impact on the environment, the local communities and the region’s geopolitical dynamics due to massive investment by Chinese companies. Hence, it is pertinent that the governments realize the gravity of the situation and take measures to safeguard their sovereignty from the growing influence of China.

[1] “China Communications Construction Company”, https://en.wikipedia.org/wiki/China_Communications_Construction_Company

[2] “About CCCC”, http://en.ccccltd.cn/gyjj/ggjj/gsjs/

[3] “CCCC Compliance”, http://en.ccccltd.cn/gyjj/compliance/

[4] “Why Blame China for lending money to the needy”, https://www.aninews.in/news/world/europe/why-blame-china-for-lending-money-to-the-needy20220817151011/

[5] “Sri Lanka, Pakistan, Maldives among 97 countries under China’s debt”, https://www.nationthailand.com/world/asia-pacific/40020001

[6] “Army, Chinese co distribute fishing nets in Gwadar”, https://epaper.brecorder.com/2022/04/18/5-page/926540-news.html

[7] “What China’s One Belt and One Road Strategy Means for India, Asia and the World”, https://web.archive.org/web/20151118041734/http:/thewire.in/2015/10/09/what-chinas-one-belt-and-one-road-strategy-means-for-india-asia-and-the-world-12532/

[8] “Groundwork laid for China-Pakistan FTZ”, https://web.archive.org/web/20151118181818/http:/www.ecns.cn/business/2015/11-17/188916.shtml

[9] “New Horizons for Chinese Investment in Colombia: Public-Private Partnerships”, https://dialogochino.net/en/trade-investment/45831-new-horizons-for-chinese-investment-in-colombia-public-private-partnerships/

[10] “China Knows How Important Dredging Is. Do We?”, https://www.waterwaysjournal.net/2019/08/23/china-knows-how-important-dredging-is-do-we/

[11] “Parliament of Uganda: ‘Investigate management of Kampala-Entebbe Expressway’”, https://www.africa-newsroom.com/press/parliament-of-uganda-investigate-management-of-kampalaentebbe-expressway?lang=en

[12] “A Chinese Company Reshaping the World Leaves a Troubled Trail”, https://www.bloomberg.com/news/features/2018-09-19/a-chinese-company-reshaping-the-world-leaves-a-troubled-trail?leadSource=uverify%20wall

[13] “World Bank bans Chinese companies again for financial crimes”, https://economictimes.indiatimes.com/news/international/business/world-bank-bans-chinese-companies-again-for-financial-crimes/articleshow/70797062.cms

[14] “DOD Releases List of Additional Companies, in Accordance with Section 1237 of FY99 NDAA”, https://media.defense.gov/2020/Aug/28/2002486689/-1/-1/1/LINK_1_1237_TRANCHE-23_QUALIFYING_ENTITIES.PDF