Perspectives of China’s BRI in South East Asia
In this chapter, I will discuss the positive and negative opinions regarding whether China can successfully promote its Maritime Silk Road Initiative in SEA. In the first, research holding a positive standpoint on the launching of BRI believes that launching such project will serve their national interest and therefore support this massive project.
On the other hand, in section two, those holding a pessimistic viewpoint regard BRI as a risky and dangerous act that harms the development of a country in the process of accepting aid from BRI. Subsequently, in sections 3 and 4, I will discuss whether a relationship of competition exists between China and USA in SEA, and answers the above two questions to demonstrate the possibility and potential of BRI in SEA.
2.1. Positive Perceptions of BRI in South East Asia
China’s BRI investment towards South East Asia could be briefly categorized by its nature, history and economy. First, we could briefly assume that there’s no such thing as Chinese colonialism compared to western civilization. Second, Chine has few records to have actively posed a military threat to nearby sates. Thirdly, that is to say, China's rise as a giant economic entity, instead, proffers numerous trading opportunities in South East Asia.
First of all, China and South East Asian countries are of geographic vicinity, which makes socialization of the two lucrative in order to achieve regional prosperity. Dittmer and Bing indicate that tactically, the key issues including the national identity discourse of China as a Great Power, and China’s civil-military interactions in the South China Sea dispute illuminates China’s eagerness to initiate trajectories of economic ties
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between China and Southeast Asian countries saliently via a political implication of China’s 21st Century Maritime Silk Road initiative (Dittmer & Ngeow, 2017). As mentioned previously, China’s foreign relationship with South East Asia was stagnated due to occupation by western powers in the 19th and 20th centuries. Given the international society of this day and age, China, from an isolated, contained1 international actor to now a state to actively participate in myriads of international affairs, no matter economically, politically or culturally. Nonetheless, some forces remained in one form or another, by FDI and multinational conglomerates. According to Gong’s research, the total FDI inflows to each SEA country from China from 2010 to 2016 suggests that FDI from China does not relate stronger support from SEA countries and many Chinese FDIs into SEA countries are routed through Singapore (Gong, 2018).
Judging from a historical context, China was regarded as a less belligerent empire and there was no such thing as Chinese Colonialism. The diaspora of Chinese people and the forming of sub-ethnic abroad ought not to be rendered as the colonialism interpreted in the west, though some of the consequences overlap and misunderstandings occur over time. Aside from western powers, Imperial Japan was the only non-western country to practice colonialism. Following the success of Meiji reformations in favor of a bigger scale in market trade, the spreading of Japanese settlers functioned as the very nutrition to sustain empires’ lifespan. The Japanese mirrored the western approach by invading the neighboring countries. However, rather than commerce, the Japanese attempted to convert the people in their colonies by
1 Here, containment refers to the containment policy practiced by President Harry S. Truman after World War II in the face of the threat from the communist regimes. China containment policy was a foreign policy conducted by U.S. in order to curtail the development of the People’s Republic of China during Cold War.
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conforming to the locals. For instance, in Taiwan, they implemented “Japanization” to transform the local residents into pure Japanese who use Japanese surnames and were ready to be enlisted to the imperial army (Collins Dictionary of Sociology, 2000).
Japan’s “Greater East Asia Co-Prosperity Sphere,” claiming to turn Asia into the extension of the glorification of Imperial Japan, was no less than an excuse to exploit resources to support their tight budget due to deteriorating situation in the Pacific War against the United States (Central Intelligence Agency, 1945). As history has proven, the Japanese then never knew their conquest in China, eventually superior to them in population, territories and cultural “dragged” them to a bitter end. The Japanese colonization could even be rendered as a reckless move and a futile imitation of the west. Patriotism was at the peak then, and it was used as a driving force to enlarge the empire and glorify the existence of Imperial Japan per se. However, on the contrary, the driving force for the emigration of Chinese and Chinese merchants has less to do with patriotism, which gives China an innocent historical past compared with Western Imperialism.
Secondly, regarding China’s peaceful rise in the 21st century, Chang discusses China’s naval projection that extends to issues pertaining to maritime zone delimitation and divarication of explanation regarding United Nations Convention on the Law of the Sea (UNCLOS). The author claims that the Maritime Silk Road Initiative indicates China’s intention to create a “peaceful and harmonious environment,” to cooperate with neighboring states (Chang, 2018). The statement is quite similar to “China’s peaceful rise” or further referred to as “China’s peaceful development” which was proposed by former president Hu Jintao in refuting the “China Threat Theory.” According to Broomfield, The China Threat Theory interpreted as the emergence of an economic and aspiring military superpower, poses a potential threat to the national interests of the United States and Asian-Pacific security. This ideology has set China in a trajectory of
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an intentionally designated enemy, mostly framed by western countries (Broomfield, 2003). In Yung’s article he states that according to the constructivist view, the relationship between China and the countries along the line is confronted with three aspects: the launching phase, the development phase, and the recession phase. The proposal and implementation of the “Belt and Road” development initiative provided a good environment for China to create a beneficial environment for all countries involved. What China should consider when confronting these countries involved in BRI is that it should establish ties with them respectively according to their features, which reflects China’s appeal for a peaceful regional governance (Yang, 2015). There is little intent for China a deliberately build a parallel international economic system to challenge that of the US. “China has been a key beneficiary of globalization in the past several decades and has a great stake in continuing that open and integrated international system. But, as widely recognized, the existing system needs to be reformed to reflect the new economic weights and policy briefs of the emerging market economies. Advanced and emerging economies should work together to build a better system. And China and other major emerging market economies should have greater voices in the decision-making process. In this sense, the intentional exclusion of China from the TPP negotiation was an unfortunate development (Huang, 2016).”
Thirdly, in terms of trade, BRI eliminates investment and trade barriers and reduces customs clearance costs, which improves customs clearance capacity as well as promotes trade balance on the basis of expanding mutual investment between China and SEA that emerging industries could gain profits. For China, its domestic enterprises are encouraged to participate in infrastructure construction and industrial investment along the route. As of financial resources, by expanding the scope and scale of bilateral currency fluidity, it also serves as a promotional catalyst for the establishment of Asian
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Infrastructure Investment Banks and BRICS2 Development Banks. By accelerating the formation and operation of Silk Road Funds and supporting government, enterprises and financial institutions along the BRI, Chinese financial institutions and enterprises can issue RMB bonds and foreign currency bonds abroad. In other words, the Chinese government could encourage the use of funds raised in countries along the route and strengthen the fluidity of RMB (Zhuang, 2017).
As Qiu discusses in her article, “Six major industries will benefit from the construction of the Belt and Road. The first industry is the oil and gas industry chain.
Second, tourism. Third, grid equipment companies can take the opportunity to expand outward. Fourth, the transportation and logistics industry, such as the development of railways, ports, and shipping. Fifth, the infrastructure industry and equipment industry, namely steel, cement, construction machinery, power equipment, communications equipment, etc. Finally, the financial sector will definitely benefit by utilizing the Silk Road Fund, which is an open-ended fund, and investors from Asia are welcome to participate actively. As of the Maritime Silk Road Bank, members along the route could participate using private capital (Qiu, 2015). ” In other words, the main focus of BRI lies in a heavy utilization of funds to build long term cooperation with the recipient countries, encouraging businesses from the private sector to channel their target to the south.
The Belt and Road Initiative has other benefits for China, such as exporting China’s excessive economic capacity. According to estimates by the International Monetary Fund (IMF), China’s current utilization rate of industrial capacity is below 65% and it continues to decline. It is believed that by expanding the export from the Belt and Road, the thorny problem of over-capacity could be solved (Qiu, 2015). On the ladder of world
2 BRICS signifies five major emerging national economies: Brazil, Russia, India, China and South Africa.
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economically advanced countries with higher incomes; the second level is the average middle-income country; the third level is the low-income countries whose economy is still developing and are in need to be developed. Over the past 20 years, the five BRICS countries that have emerged from economic development belong to the third layer.Among the BRICS countries, China’s economy has shown outstanding enhancement.
After much improvement in infrastructure, China is seeking economic transformation into high-end production operations and is preparing to enter middle-income countries.
The Asian financial turmoil in 1998 severely hit many countries in Southeast Asia. With help from China, many countries were able to withstand the impact and their economic situation has stabilized. Besides, most of their goals in economic policies in recent years are in infrastructure construction, land resource development, construction of labor-intensive industries and development of efficient fisheries and agricultural food industries. The path they want to embark on is precisely the one that China accomplished earlier. China’s mature technology and high-yield industrial equipment are arranged or sold at a friendly price to ASEAN, which has created a win-win situation.
Therefore, the complementarity between China and ASEAN in the process of economic transformation is quite obvious, and such a relationship of mutual benefit appears to be reasonable (Chen, 2018). In an interview by Xinhuanet, Japan’s former Prime Minister Yukio Hatoyama has said that China’s rapid development today is enviable. In the past 20 years, Japan’s GDP stagnated due to the collapse of the bubble economy, while China has developed rapidly in a short period of time. China’s GDP has recently reached approximately three times that of Japan. In the future, both Japan and China confront the age of an aging society and a shortage of labor. The Prime Minister hopes that the two countries can strengthen cooperation in related fields. He also believes that the free flow of people, goods, money, and information across borders is an irresistible
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solutions to these problems (Hu, Zhang, &Shen, 2019).Cheng points out that “the Belt and Road regions do offer great potential for economic cooperation, as they offer benefits to be derived from complementary economic structures as well as specialization and division of labor.” In other words, BRI not only creates a platform for business opportunities but a linkage and integration of industries horizontally. Chen also mentions that public goods offered by China along the development of BRI could be a critical factor of creating a policy framework to make economic development of the country with which China cooperates more sustainable (Cheng, 2016). Compared with its western predecessors, China, with its enormous economic strength it has the capability to lay a foundation for future regional development, especially during the juncture of present US conservatism under President Trump. “While the US wants China to play a larger role as a responsible stakeholder, China appears to have become not only a more influential stakeholder but also a potential rule-maker (Pu, 2016).”
Overall, there are three positive facets regarding China’s BRI investment towards South East Asia. First, China has never been a pro-actor to invade any countries and there hasn’t been any assertion of Chinese colonialism. Second, unlike Japan in the early half of the 20th century, Chine has no direct military threat and promote regional peace. Last, China provides cash-poor countries in SEA with funds and experience for economic development.
2.2. Criticisms on Maritime Silk Road Initiative in South East Asia
Criticisms revolving China’s BRI towards SEA contain briefly three aspects. First, China’s BRI project in South East Asia is not unpredictable as CCP still maintains in
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power, serving as a major force behind to propel its practice. Second, There is no doubt that China is planning something other than economic development, which is highly implicated in its efforts to step into infrastructural projects. Thirdly, although the infrastructure is extremely crucial to most countries in SEA, as far as countries in SEA are concerned, receiving financial aid from China unilaterally could be a precarious act.
In this section, I’ll further review the negative impact this project brings to SEA region.
The BRI is a highly political and infiltrative plan imposing challenges to the existing powers, usually foreign powers, in SEA region with China’s growing ambition to form a Sino-centric regional order. Chinese funding means Chinese rules but suspected on the issue of transparency. Wrage (2017) specifies, “while we have seen China crackdown on corruption under Xi, efforts have been focused within China, reaching across borders only to nab Chinese citizens who have fled with their corrupt bounty.
The Chinese enforcement agencies have never brought an action against a Chinese entity for bribery abroad in spite of rampant anecdotal evidence that many Chinese companies use bribery as a business strategy across Asia and Africa. That track record shows no signs of changing (Wrage, 2017).” There is no denying that sometimes the effectiveness and efficiency comes with a price, and oftentimes the prosperity is sugarcoated with the deficiency of institutionalized mechanism of supervision and law.
In terms of diplomatic strategy, it is an indispensable part of Chinese foreign policy in the promotion of maritime relations with its most adjacent countries in South East Asia (Wang, 2016).
According to Klemensits, there are two main reasons why South East Asia becomes a key potential partner in China. First is that China is seeking a passage out into Indian Ocean as well as the Pacific Ocean, making Strait of Malacca and South China Sea extremely crucial for the expansion of naval forces. Second is that China has detected the possible energy sources that are capable of sustaining its military and economic
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presence in this region (Klemensits, 2018, p.12-13). Thinking and behaving as a new-rising sea power, the geopolitical position surrounded by ASEAN countries triggers China to conduct necessary measures to closely tie-up with countries within the strategical vicinity in SEA. The economy could be the first phase to enlarge future blueprints to promote Chinese naval expansion, literally military scheme and a potential increasing presence for PLA covered with an ambitious economic plot. For western powers that wielded their colonial influence across SEA, China’s militarily strategic threat is certainly not to be ignored.
While global capitalism was invented in the west, the Belt and Road Initiative is attempting to re-shape the very definition of it. An Asia that is manipulated via a Sinocentric order is likely to be portrayed by megalopolises funded and politically supported by the Chinese Communist Party whereas those who are not on board of this initiative will be excluded from the profit it generates. As President Donald Trump is directing the United States to a path of protectionism and isolationism, the country is likely to withdraw from free trade pacts, such as Trans-Pacific Partnership, and numerous bilateral trade agreements with ASEAN countries respectively (Nordin
&Weissmann, 2018). This again proves that joining China’s side would not necessarily signify a win-win situation when losing support from those previously cooperated. Up until now, if we count the number of projects in Southeast Asia, 240 infrastructure ventures have Japanese backing, and China only has 210 in all 10 Southeast Asian economies (Bloomberg, 2019). While there are countries willing to open doors to China, Japan, as a country having closer relations with western countries, has shown more achievements in infrastructure building. The Asian Infrastructure Investment Bank (AIIB) played a crucial part in China’s BRI project in SEA. Especially for less developed countries, such as Laos. The most convenient way to set up ties with these countries is though large amount of loans. However, on the other side of that means
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debt. Another reason for Laos to receive loan from the Chinese government, as we could think of, would be the lack of transparency and supervision. In the short run, fast-growing results could be in sight, but as heavily indebted as they can be, people still need to realize where these foreign investments in the dark is going (Knox, 2017). In the long run, over-lending funds without considering the consequences could lead to serious domestic economic regression, and China is the first to taste the bitter end.
According to Kikuchi and Masutomo, “The Chinese authorities have begun to undo decades of financial repression, by reducing entry barriers and liberalizing interest and exchange rates. The situation in China now resembles the Japanese economy in the late 1980s, when following similar reforms Japan witnessed a sharp drop in asset prices.
Japan then struggled with accumulated non-performing loans for a decade, followed by the ongoing battle with persistent deflationary pressures (Kikuchi &Masutomo, 2015).”
As far as idling loans are in no way to be remunerated, it could be possible that China would utilize this debt and transform it into political leverage over its receiver, which makes the country vulnerable to uncredited capitals and foreign intervention inevitable.
Fears of the infiltration of Chinese enterprise could be seen in BRI’s development in South Asian region, which is similarly vital along the development of China’s maritime blueprint. Chung also points out that “politically, reactions of South Asian states to the MSR are explained as: fear of expanding Chinese influence in the Indian Ocean for India; and attempts by which Pakistan, Sri Lanka, Maldives and Bangladesh use China to counteract possible domination by India. Economically, two MSR (Maritime Silk Raod) pathways for South Asian states are analyzed: increases in Chinese infrastructure investments; and expansion in South Asia-China trade; both of which are reducible by loans owed to China, or “strings”/conditions attached (Chung, 2018).”
How BRI is financed has become the most blurry that causes heated debates. “Thus
How BRI is financed has become the most blurry that causes heated debates. “Thus