China Turns the East Red

China Turns the East Red

A country determined to use its wealth and economic influence to decisively dominate the region

At the height of the Cultural Revolution, “The East is Red became the de facto national anthem of the People’s Republic of China. The composer, reportedly a farmer from Shaanxi province, had, of course, no way of knowing that his song was in fact a harbinger of things to come. 

Some 50-something years later, “The East is Red” is more than an old song. It has become a disquieting political and economic reality.

China has certainly come a long way from the days of the Cultural Revolution. Today, it is a massive economic and political behemoth with equally massive regional and global ambitions. Its new leaders have long since abandoned the veneer of modesty and respect for diplomatic niceties it adopted when it was seeking to gain acceptance in the region.

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New star on China’s flag

China’s new rulers are now focused on the single-minded pursuit of regional hegemony as the first step in their quest for global supremacy.

Giant economic footprint

Nothing better illustrates China’s ambitions than its frenzied regional investment strategy. When viewed as a whole, the investment projects scattered across the region paint a picture of a country determined to use its wealth and economic influence to decisively dominate the region.

Consider, for example, the ambitious “One Belt, One Road” or New Silk Road initiative, which, among other goals, aims to position China as the hub of the entire region.

Stripped of all the rhubarb, it’s really a neo-mercantilist strategy of opening markets for China’s excess industrial capacity, making the yuan Asia’s international currency of choice, and cementing China’s economic dominance of the region.

In pursuit of its ambitions, Chinese state corporations are currently engaged in a staggering array of infrastructure projects, especially rail projects, in Myanmar, Laos, Cambodia, Thailand, Malaysia and Indonesia.

China is also building a deep-sea port in Myanmar which will give it direct access to the Indian Ocean. The project involves the construction of an oil pipeline as well that will allow Middle East crude to be offloaded in Myanmar and then transported overland to China, bypassing the Straits of Malacca. A third of all Myanmar’s foreign investments already come from China.

In Laos, Chinese investments already exceed US$S31 billion, a sum larger than the country’s GDP. China also built, financed and launched Laos’s only communications satellite. In neighboring Cambodia, Chinese companies completely dominate the country’s special economic zone.

Singapore, for its part, plays host to more than 7,500 Chinese companies. Its status as a banking and financial center in Southeast Asia is increasingly dependent on China’s regional economic plans.

In Indonesia, China may already be the largest foreign investor if investments through subsidiaries based in other countries are taken into account. Indonesia’s Investment Coordinating Board expects to secure Chinese investments worth USD30 billion in 2016, doubling to USD60 billion the following year.

Bandar Malaysia – China’s new regional capital

Malaysia, vulnerable, exposed and ripe for exploitation as a consequence of the massive 1MDB scandal, is set to be the jewel in the crown of China’s ambitious regional agenda. In exchange for a Chinese bailout, significant national assets and lucrative contracts are being handed over to China in a series of murky deals.

China Railway has been awarded both the RM7.13 billion (USD1.71 billion) Gemas-Johor Baru electrified double-tracking rail project and the RM55 billion East Coast Railway project and is a shoo-in for the RM60 billion Kuala Lumpur-Singapore High Speed Railway project as well.

And this comes after China was awarded the RM43 billion Malacca Gateway Project (deep-sea port and ocean park) and the main contract for the first package of the second Penang Bridge project (the longest bridge in Southeast Asia).

One has to wonder whether someone somewhere is dreaming up these projects just for China’s benefit? Is there some secret agreement giving China a lock on all mega-infrastructure projects in Malaysia?

The biggest catch of all, however, is expected to be the Bandar Malaysia project, a colossal monument to avarice and arrogance. With an expected gross development value of RM160 billion, it will feature the world’s largest underground city, shopping malls, indoor theme parks, a financial center as well as the RM8.3 billion regional headquarters of China Railway. When completed, it will turn the Malaysian capital into the most impressive Chinese railway station along the so-called Iron Silk Route linking Beijing with Singapore.

Malaysians haven’t as yet woken up to the monstrosity that is being foisted upon them.

Bandar Malaysia, which will cost almost four times the reported cost of Putrajaya, the nation’s administrative capital, will distort the property market, add to the city’s already intolerable traffic congestion, reduce the city’s livability and see the introduction of thousands of PRC workers, contractors and staff.

No doubt much of the residential and office space at Bandar Malaysia will also be taken up by PRC nationals, already a growing presence in the local property market.

All in all, it is an outrageous project designed to benefit cronies, both local and foreign, at the expense of ordinary Malaysians. It serves China’s interest far more than it serves Malaysia’s.

And it would be naïve to believe that such massive investments will not translate into significant political and economic control especially given the almost total lack of transparency on most of these projects. At this rate, Malaysia may well find itself reduced to satrapy status within the emerging Chinese order with Bandar Malaysia the new Chinese regional capital.

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