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Figure 3.3 Trend of China’s Direct Investment Balance in the GMS
Source: drawn by data in above Table
The Greater Mekong Subregion is on the “China-Indochina Peninsula Economic Cooperation Corridor” of the six economic corridors of OBOR.
Because of the adjacent location and high economic complementarity, this corridor has strong economic and trade cooperation potential. With operation of OBOR, the GMS development could be expected to continue to move forward.
“China-Indochina Peninsula Economic Cooperation Corridor” is based on Nanning of Guangxi and Kunming of Yunnan in China, going through the Indochina Peninsula and arriving in Singapore. It is the route connecting land with maritime silk road(as shown below).
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Figure 3.4 China-Indochina Peninsula Economic Corridor
Source：香港文匯報
7OBOR has been promoted for more than three years. Investment, economic and trade cooperation, institutional construction, and so on have achieved results among China and the Indochina Peninsula countries. The
“Sino-Thai Railway” of the Trans-Asian Railway has been started and the other part of the middle line “Sino-Lao Railway” has experienced commencement of works at the end of 2016 and will enter into the construction phase. About the road part, the highway from Phnom Penh to Sihanoukville will start construction in the near future. 230-kilovolt power grid project in northern Laos was put into operation. 500-kilovolt power transmission project of Lao
7 香港文匯報(2016 年 5 月)。中國-中南半島經濟走廊。2017 年 1 月 16 日參照：
http://paper.wenweipo.com/2016/05/27/CH1605270009.htm
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domestic section of Sino-Lao network project has fallen into EPC framework agreement. Some Chinese cement, iron and steel enterprises have invested in the construction of steel plants, cement plants and glass production lines in the Indochina Peninsula countries.8
In recent years, e-commerce has played an important role in the promotion of international trade. With the OBOR strategy actively promoting e-commerce, cross-border e-commerce has further moved toward. At present, China is working to open up cross-border e-business in ASEAN and Yunnan and Guangxi possess superior geographical locations, adjacent to Southeast Asia. In 2013, the Chinese government designated Yunnan and Guangxi as border comprehensive reform pilot areas, aiming at promoting trade and investment activities in the two provinces, as well as the use of the RMB in the China-Indochina Peninsula Economic Corridor.
The 7th Mekong Subregion Economic Corridor Forum was held in June 2015. Ministers of member states accepted the framework for cross-border e-commerce cooperation proposed by China, which aims to promote cross-border trade and the flow of goods and commodities. The field covers e-commerce business cooperation, cross-border e-commerce customs facilitation, cross-border e-commerce infrastructure investment, improvement of e-commerce supportive services system and the establishment of e-commerce capabilities.9
The degree of trade liberalization in China and the Indochina Peninsula has been increasing. “China-ASEAN Free Trade Area (CAFTA)” launched comprehensively in January, 2010, to eliminate trade barriers and reduce the average tariffs. Then, ASEAN members established ASEAN Economic Community(AEC), which owns the population of 630 million, only secondary to China and India. Over 50% of the population are young labor force, and
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increasing 30% belong to emerging middle class. In AEC, all tariffs among countries and non-tariff barriers (such as visa, customs clearance, customs restrictions, etc.) will be removed. Professional diploma and services, like air transport, catering and tourism will be opened among member states. The past individual 10 countries can therefore become a complete and single market.10
In the broader economic exchange level, in November 2011, the 19th ASEAN Summit passed the “ASEAN regional comprehensive economic partnership structure”, aiming to deepen regional economic integration by taking ASEAN as the core. China, Japan, South Korea, New Zealand, Australia and India were invited to collaboratively promote the Regional Comprehensive Economic Partnership, RCEP.
Members in RCEP held a number of conferences to discuss the issues of tariff reduction, customs procedures, trade facilitation, non-tariff barriers, trade of goods, trade of service, investment liberalization and other related economic and trade issues. China’s attitude about promoting the agreement is very positive. It is widely perceived that China pushes RCEP, while the United States leads TPP. Both agreements are involved in a wide range of regional and extensive free trade activities. They are competitive but complementary.
OBOR has brought substantial investment and construction. Under the efforts of strengthening interconnection of facilities, the free trade agreements in each region have become pragmatic. And the fruitful consultation basis in the major regional free trade agreements also made the OBOR’s concept of smooth trade and circulation of funds work. Therefore, OBOR and the regional free trade agreements complement each other to enhance the overall efficiency.
OBOR is also China’s weapon to break through the US blockade and enhance its regional political and strategic influence in the name of economy.
10 天下雜誌(2015 年 12 月)。今天 最「吸金」的東協經濟共同體誕生。2017 年 1 月 16 日參照：
http://www.cw.com.tw/article/article.action?id=5073562
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3.2 The discussion of China’s Ambition
“China is a sleeping giant. Let her sleep, for when she wakes she will move the world.”— Napoleon
In the atmosphere of today’s situation, the world is facing the challenges of politics, economic structure, climate, resources, homeland security, flow of information and talents, network use and other issues. The countries need to develop appropriate policies to meet the changes in modern times in order to keep countries status. It is undeniable that China has explored the path which suits its own development, and stood stable, making it the most dazzling one of the newly developed countries in the early 21st century, especially in the economic and military aspects. The “China’s threat” argument has never stopped because of the rise of China.
At the end of 2012, Xi Jinping took over the leadership of the Chinese Communist Party. China has a very rich economic foundation. The country recalls the ancient Han and Tang dynasties and the prosperity of the Silk Road, and hopes to return to the international arena. In 2013, Chinese leader proposed OBOR with the vision, ambition and adventurous attitude. Although this initiative was in the name of shared economic prosperity, its big strategic thinking has let other powers have to be prepared. Despite the alert on China, OBOR will be advancing because the Asian countries just need the construction. Being linked to China’s initiative could obtain the benefit and China is also constantly putting capital and technology into other countries.
Many substantial works have been started. It is proper to describe the current situation by one sentence: “Whether you are ready or not, China is coming.”11
In May, 2017, Chinese government held “Belt and Road forum” in Beijing to appeal for openness and cooperation among countries and major institutions.
Xi Jinping stressed the importance of rejecting protectionism and endeavoring
11 The Economist (2016, July 2). Our bulldozers, our rules - China’s foreign policy could reshape a good part of the world economy. Retrieved from:
http://www.economist.com/news/china/21701505-chinas-foreign-policy-could-reshape-good-part-worl d-economy-our-bulldozers-our-rules
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to seek global economic growth. Leaders from 29 countries attended the forum but some western diplomats have expressed unease about both the summit and the plan, seeing it as an attempt to promote Chinese influence globally.
In this section, we will explore the ambitions of China’s OBOR initiative, and especially the possible thinking of doing construction and investment in the GMS. The discussion is as follows: