May 10, 2017 5:35 pm JST
Michael Vatikiotis

Riding Xi's 'Belt and Road' bonanza

China's grand infrastructure plan comes with strings attached for the region

Superpowers emerge in similar ways. The United States was the most powerful element in a victorious allied coalition that defeated fascist Germany and Imperial Japan. After the war ended in 1945, the U.S. used billions of dollars to help rebuild war-torn Europe in a bid to check the advance of the Soviet Union.

China's debut as a global superpower takes a leaf out of Washington's book. By spending billions of dollars on developing infrastructure across the entire Asian landmass, Beijing hopes to check the influence of the West, especially the U.S., in what has been characterized as a profound challenge to the existing global order.

When Chinese President Xi Jinping first mooted the Belt and Road Initiative while visiting Central Asia in 2013, many observers were skeptical. Not any more: The gathering of 28 or so national leaders in Beijing on May 14 and 15 could be seen as a "coming out" party of sorts. The assembled leaders will undoubtedly cheer China's success in stringing the land belt and forging the maritime Silk Road linking Europe with Asia. Among them will be the president of distant Greece, for instance, who has praised China's decision to invest in the country's main port of Piraeus.

Looking beyond the trans-Asian train routes, the improved desert highways, and the strategically positioned far-flung ports, the question is how China really sees itself in the world. Is the BRI, as Chinese officials characterize it, a way to pool resources to face the challenges of globalization, or does it signal an intention to secure a sizable economic hinterland? More importantly, how does a country that is still regarded as developing, and which imposes strict controls on society, navigate constructively beyond its borders?

Interventionism on the rise

For decades, China has resolutely resisted overseas intervention citing the principle of mutual non-interference agreed to with India in 1954. But today there is little doubt that intervention is becoming a significant element of China's foreign policy. These interventions vary in quality and effect.

On the more constructive side, Chinese diplomats are deeply involved in facilitating peace talks between the government of Myanmar and ethnic armed groups that hold territory along the Chinese border. But China has also increasingly asserted its right to apprehend its citizens in third countries, as seen with the refoulement of around 100 Uighur refugees from Thailand in 2015.

This creeping assertion of extraterritoriality worries non-mainland ethnic Chinese outside China. "Singaporeans are more like the Chinese in China than any other Chinese in Southeast Asia, and so that can give the China-born Chinese the impression that they're exactly the same as in China," commented Singaporean China scholar Wang Gungwu in a recent interview.

Belt and Road economic investment initiatives are usually accompanied by offers of bilateral military aid and cooperation in Southeast Asia. In the Philippines, China has offered help to combat piracy in the Sulu Sea, a long way away from China's claims in the South China Sea. In Cambodia, where the relationship with China has been close for some years, analysts see the Cambodian government's recent decision to terminate joint exercises with the U.S. military as a byproduct of increasing military aid and cooperation from China. All this makes the BRI look like a delivery vehicle for China's strategic interests.

There are those who argue that the overriding logic of the BRI is economic. "China wants to consolidate its position at the center of the global supply and manufacturing networks which will be the key to the global economy over the coming decades," Australian academic Hugh White wrote recently. The initiative's emphasis on connectivity and the prospect of lucrative infrastructure deals across Asia has certainly drawn praise. But critics warn that much of the estimated $500 billion earmarked for investment may end up being wasted on idle, underused capacity.

In economic terms, the BRI is no magic bullet. Chinese investors and developers are subject to the same constraints as others -- the policy uncertainty of Indonesia's mining and energy sector, or the racial quotas of Malaysia's New Economic Policy. China's bid for railway projects in Thailand has floundered over the terms of financial investment and restrictions on land ownership.

Regional concerns

All the same, the speed and insistence of China's drive for connectivity makes many in the region nervous. The official BRI website offers a breathless list of opportunities and benefits from tapping market potential, promoting investment, creating demand for jobs to enhancing people-to-people exchanges that generates peace and prosperity. Many will wonder, though, to what extent they want their development strategies to be aligned and coordinated with China.

To some extent this is happening already. Take the case of e-commerce. Both Malaysia and Thailand have been courting Jack Ma Yun, who runs the online marketing conglomerate Alibaba Group Holding with a customer base of more than 2 billion people. Recently Ma bought a controlling stake in Lazada Group, the sizable Singapore-based online shopping platform, and has announced plans to build a regional distribution hub in Kuala Lumpur.

It is also hard to detect any countervailing force. The EU is overall perhaps Asia largest trading partner, but it lacks the coordinated, focused vision of development that China is now articulating through the BRI. Japan may be more focused, but lacks the financial firepower. Similarly, while the U.S. has by far the largest capacity to project military power in the region, its corporations lack the deep pockets or credit lines to extend across Asia.

Resistance may therefore be futile. Far better for regional partners to work closely with China to maximize the advantages and minimize the risks. The advantages lie mainly in China's willingness to invest in much-needed infrastructure -- upgrading roads, railways and adding power generation capacity in Indonesia, for example.

The risks are that these projects come with strings -- imported Chinese labor that is socially and economically intrusive. Or, as with Thailand's recent decision to buy Chinese submarines, allegations of a lack of transparency. Managing these risks will require BRI partner governments to insist on more equitable, transparent terms and conditions, which is hard if they do not have alternative options.

China's response to these concerns is to croon that BRI aims to be "harmonious and inclusive." However, just as the U.S. used its aid program to spread influence and engineer political outcomes in mainland Southeast Asia half a century ago, there are concerns that China is using the BRI to promote President Xi's bold desire to be a builder of global order, establishing new rules and facts on the ground that principally benefit China.

Michael Vatikiotis is Asia director of the Centre for Humanitarian Dialogue. His new book 'Blood and Silk: Power and Conflict in Modern Southeast Asia' is published by Weidenfeld and Nicolson in June.

Asia300

Alibaba Group Holding Ltd.

China

Market(Ticker): NYS(BABA)
Sector:
Industry:
Retail Trade
Internet Retail
Market cap(USD): 473,172.25M
Shares: 2,555.89M

Get Insights on Asia In Your Inbox

To read the full story, Subscribe or Log in

Get your first month for $0.99

Redeemable only through the Subscribe button below

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

Resubscribe now to continue reading.
BEST OFFER:
Only US$ 9.99 per month for a full-year subscription

To read the full story, Subscribe or Log in

Once subscribed, you can…

  • Read all stories with unlimited access
  • Use our smartphone and tablet apps

To read the full story, Subscribe or Log in

3 months for $9
SUBSCRIBE TODAY

Take advantage of this limited offer.
Subscribe now to get unlimited access to all articles.

To read the full story, Update your account

We could not renew your subscription.
You need to update your payment information.