With an unfathomable price tag, an uncharted route, unknown environmental consequences, unidentified financial backers, unclear ties to the Chinese government, and an unproven company headed by an unfamiliar man of undetermined experience, Nicaragua’s private Chinese canal project has more than a few people asking 什麼赫克？
A month after the Sandinista legislature passed a sweetheart concession law that gives recently formed Chinese company HKND exclusive rights to build, operate and own Nicaragua’s Great Canal megaproject for the next 50 to 100 years, there are still far more questions than answers. When the concession law was finally printed in the official daily La Gaceta last month, Nicaraguans were surprised to learn it was published in a foreign language (English), which only added more confusion to the issue.
HKND Group, which is based in Hong Kong and registered on Grand Cayman Island, has hired several big-gun consulting firms in an effort to bring some early legitimacy to the megaproject. But the company’s initial attempts to ease international suspicions about the ambitious endeavor have come up short.
In one of his first media interviews, HKND spokesman Ronald MacLean-Abaroa told The Nicaragua Dispatch last month that the (currently) estimated $40 billion project would be privately funded and won’t involve the participation of any government—including China’s. He said the initial feasibility and environmental impact studies, which are estimated to cost hundreds of millions of dollars, could take two years to complete and will be financed entirely by company owner Wang Jing. But even MacLean-Abaroa had a hard time offering any details about his enigmatic Chinese boss, who is now one of the most powerful men in Nicaragua—a country he’s visited twice, for a combined 48 hours.
Even in China, not much is known about Wang Jing, whose 37% stake in Xinwei telecommunications makes him a “bona fide billionaire,” according to Bloomberg news. Indeed even Wang Jing himself appears to be a loss for words when asked about his background.
In his first press conference in Hong Kong, Wang Jing’s answers left reporters scratching their heads. The 40-year-old mystery man told journalists that he has no connection to the Chinese government, is not a member of the Communist party, and is just a “normal Chinese citizen” who lives with his mother. “I couldn’t be more normal,” said the man who claims to be the chairman of 20 businesses operating in 35 countries.
Wang Jing stressed that he wants to be transparent about his canal business, but wouldn’t identify any of the investors who are allegedly backing the project. He wouldn’t even tell reporters where he went to university.
“I always hoped people would pay attention to the project and not to me personally,” Wang Jing said, according to media that covered his Hong Kong press conference. He said he doesn’t want the canal project to “become a joke or an example of a failed overseas Chinese enterprise.”
Back in Nicaragua, however, the daily La Prensa questioned whether Wang Jing was indeed joking when he presented reporters in Hong Kong with a virtually unrecognizable map of Nicaragua. In addition to being inverted, Wang’s map of Nicaragua appeared to trace an imaginary canal route that goes from Lake Nicaragua up into Lake Managua, which would be totally bananas.
Whatever route Wang Jing is planning for his canal, the Chinese businessman estimates it will take 10 years to build.
The government’s argument for a canal
The Sandinista government promises the canal will revolutionize Nicaragua, converting the country into the third-fastest growing economy in the world over the next five years.
With remarkable statistical precision, the Sandinista government projects the canal will lift exactly 403,583 Nicaraguans out of poverty by 2018, and an additional 353,935 people will be pulled from the grasps of extreme poverty. The country’s overall poverty rate would drop from 42% to exactly 31.35% over the next five years, according to the government’s projections.
The canal will immediately push Nicaragua’s economic growth into the double digits, peaking at an astronomical 15% growth rate in 2015, according to the government.
Overall, Nicaragua’s economy will double over the next five years, reaching $24.8 billion by 2018. Employment will triple.
The canal will also change global trade, the government claims.
Presidential advisor Paul Oquist, who has been huffing around the capital with a PowerPoint presentation to give the government’s case for the canal, claims world maritime shipping traffic will increase by more than 42% by 2025. The problem, he says, is that the new generation of “Triple E” containerships are entirely too big to fit through the Panama Canal. As a result, the Nicaragua Canal, which promises to be much wider and deeper than its Panamanian counterpart, will mostly play a “complimentary” role to Central America’s other canal, Oquist says.
The Nicaragua canal will also be a timesaver, shaving nearly 11 days off shipping routes from New York to Japan, 11 days off shipping from Chile to Holland, and four days off containerships plying the seas from Brazil to California, according to Oquist’s PowerPoint.
Nicaraguan universities are already starting to adapt to anticipated changes in the economy. The National Council of Universities has announced new fields of study related to canal engineering, and there will be a strong focus on learning Mandarin as a second language (Lesson #1: 挖得更快 means “dig faster”).
While the government insists the canal will be a windfall for Nicaragua, Oquist chose to include a rather ominous quote in his presentation from vicious Spanish conquistador Hernán Cortés, who in 1524 wrote a letter to the king saying, “Whoever controls the passage between the two oceans could consider themselves the owner of the world.”
If that’s the case, it would be Wang Jing—not Nicaragua—who would benefit most from the canal megaproject, since the Chinese businessman will be the majority owner for the next 50 years.
Despite the fantastic promises of growth and glory, international doubt continues to hound the canal project. Many Latin America watchers still doubt the canal will ever get off the ground—or, in this case, into the ground.
But the fact that the project is suddenly moving forward so quickly after 500 years of being stuck in the dream phase has some analysts speculating that something is about to happen. They’re just not sure what.
“The fact that Wang Jing has indicated that he will fund the Phase I studies, and the fact that they have negotiated such a sovereignty-challenging deal says to me that Wang Jing plans to get his money out of this somehow,” says Evan Ellis, an expert on Chinese-Latin American relations at the U.S. National Defense University.
Ellis says he sees one of three potential outcomes for the Nicaragua Canal project: 1) Wang builds it up into a real project and then sells the rights; 2) Wang tries to bring in enough experienced firms to make it credible to investors; or 3) Wang plans to approach Chinese banks and construction companies when the Western investors don’t come through.
Though still “deeply skeptical that the project will go forward as currently structured,” Ellis says his thinking on the project is starting to change in recent weeks.
“I definitely do see a much higher chance that this will go forward—one way or another—than I did at first, simply because Wang Jing plans to get his money out one way or another,” Ellis told The Nicaragua Dispatch. “The question is, do you make it look legitimate then sell the rights and get out before the project collapses, or do you go forward with Chinese money?”
Though Wang Jing’s alleged connections to the Chinese government are only rumored, Ellis says it’s not unreasonable to assume there will be a stronger presence from the PRC if the project evolves. The state-owned China Railway Construction company has already been asked to do the initial feasibility studies.
“It is likely that when it is time to spend the ‘real money’ for the construction phase, the Chinese government will be one of the few in a position with the capital to spend on a project of this size,” he says. “Although ultimately unlikely, the strategic significance of a PRC-financed canal, whose governance would not necessarily resemble that of the ACP in Panama, in the new era of trans-Pacific commerce, would be enormous.”
Margaret Myers director of the China and Latin America program for the Inter-American Dialogue on Development, is also admittedly perplexed by what she calls “such an odd project” with “so little information.”
But Myers also thinks the Chinese government might eventually pony up.
“This project does not appear to be backed in any clear way by the Chinese government, although that doesn’t preclude eventual participation by government banks or other investors,” she says.
At the moment, she says, it would appear that Ortega is making a “political calculation” by betting on Wang Jing.
“Why Wang Jing? I really don’t know. But I would guess that no one else was willing to fund a project of this sort,” Myers told The Nicaragua Dispatch in an email.
The sudden hustle to get the project done is also a bit puzzling, she says.
“It is difficult to say why the project is being pushed forward at this point in time, and with such urgency,” Myers says. “Ortega is perhaps feeling his oats given his high approval ratings at home, a growing economy, and the recent maritime boundary ruling (with Colombia). It’s hard to say, though.”
In any event, the ball—and with it, Nicaragua’s centuries’ old dream of building a canal—seems to now be in Wang’s court.
“The challenge now for Wang Jing and HKND is to convince investors that this will indeed be a viable and profitable venture,” Myers said.
If Wang Jing can pull off the project that Cornelius Vanderbilt and so many others before him failed to accomplish, he certainly will no longer be any “ordinary Chinese citizen.” And he might just be able to move out of his mother’s house.