Last October, China’s then-new leaders, President Xi Jinping and Premier Li Keqiang, spent several days visiting five Southeast Asian nations between them in what was regarded as a diplomatic triumph. They also signed a series of agreements broadening economic and trade cooperation that was mostly written off as the usual diplomatic bafflegab by much of the international press and the investment community.
However, the agreements were anything but bafflegab. In fact, they represented a continuing and dramatic look outward by Beijing with an eye to turning much of Asia into China’s hinterland, as Rome’s development of roads tied much of Europe to the imperial capital and its ships made North Africa its granary, spurring the aphorism that all roads lead to Rome. If the plans in Asia go as forecast, and there is every reason to believe they will, Beijing will bind much of Asia into a growing economic mosaic tied to China.
More than ever, regional trade is expected to skyrocket over the next decades as China’s industrial plant sucks in a wide variety of energy, raw materials, food, intermediate products and other imports, providing a significant economic jolt upwards for Southeast Asia but also spurring concerns over China’s growing hegemony over the region.
Those concerns are real, as exemplified by Beijing’s bullying Malaysia over the mysterious loss of Malaysian Airlines flight MH370, which disappeared on March 8 with 259 passengers and crew aboard. The unrelenting criticism of Kuala Lumpur’s handling of the disappearance has actually has produced a nationalist backlash. There was also an incident in October of 2011, when eight gunmen stormed two Chinese cargo ships in an attempt to hijack about 900,000 amphetamine pills worth more than US$3 million, murdering the Chinese crew of the two vessels. The Chinese reaction was immediate. First they suspended all shipping on the Mekong, then sent more than 200 border police to join patrols looking for the culprits. It was the first such joint deployment into Southeast Asia, and was regarded as a troubling expansion of China's growing role in regional security.
However, the economic activity for now far outweighs those concerns. For a decade, China has been pursuing economic “corridors” that deliver raw materials to China and facilitate movement across Asia of the low-cost industries that China is shedding to areas of lower labor costs to Bangladesh, Myanmar and Sri Lanka. These corridors include a Bangladesh-China-India-Myanmar Economic Corridor as well as another uniting the Greater Mekong Region to integrate Southeast Asia into China’s sphere.
Xi also speaks of a “maritime silk road of port facilities and other infrastructure that would tie in island archipelagoes such as Indonesia, although pointedly not the Philippines, which is locked in a dispute over islands in the South China Sea which both countries claim.
Over recent months, Beijing’s leaders have been formulating a new “Silk Road” across northern Asia, reaching the destinations put in place by traders 10 centuries ago extending 6,500 kilometers and connecting China to the west, linking traders, merchants, pilgrims, monks, soldiers, nomads and urban dwellers from China to the Mediterranean Sea across Kazakhstan, Uzbekistan, Tajikistan and Kyrgistan. The leadership’s Central Economic Work Conference held in mid-December made it an official part of the agenda to promote construction of the economic belt.
In this case, it isn’t horses and carts but multi-billion dollar pipelines, concrete highways, rail lines, airports and seaports. As early as 2007, with partial funding from the Asian Development Bank, agencies and countries began to pour as much as US$18.7 billion into the infrastructure, much of it left by a contracting Soviet Union. Xi, during his Southeast Asia swing, also announced the possible formulation of an infrastructure development bank that would facilitate even further the links to China.
Xi’s “Maritime Silk Road” is designed to deepen trade and cooperation between Asean, particularly resource-rich countries like Indonesia. Xi in recent months spoke of expanding the reason to India and Sri Lanka, according to foreign ministry spokesperson Hua Chunying in an exchange with reporters late last year, describing it as an open ended platform to integrate cooperation on connectivity.
China’s takeover from Singapore last year of the Pakistani port of Gwadar not only is designed to facilitate trade among more than 12 states of these regions but also to become an integral part of China’s international trade that would make Pakistan its hub. The port reduces China’s distance from the Persian Gulf, from which China sources 60 percent of its energy needs, by several thousand kilometers.
Gwadar provides China with a land-based crude supply that is controlled by an ally, with China set to develop a China-Uzbekistan-Kyrgyzstan railroad link and another line linking Kashgar to the port, eventually linking into China through Xinjiang.
The Bangladesh–China-India-Myanmar economic corridor, known as the BCIM, would run from Kunming to Kolkata, linking Mandalay in Myanmar as well as Dhaka and Chittagong in Bangladesh. The plan would “advance multi-modal connectivity, harness the economic complementarities, promote investment and trade and facilitate people-to-people contacts”, the four nations said in an agreement signed last year.
The Chinese regard the corridor as a platform to not only boost strategic ties with India, but also as a means to inject vitality into its landlocked southwestern provinces, which have the highest poverty rates in China.
Natural gas pipelines, built at a cost of US$1.04 billon, already snake across the entirety of Myanmar to connect the country’s offshore fields in the Bay of Bengal to the city of Ruili in Yunnan, eventually running a total of 2,800 km into China.
Greater Mekong Sub-Region
As Asia Sentinel reported in October 2013, China’s effort to engage Southeast Asia is revitalizing many local cities and towns across the greater Mekong sub-region, with trade with the sub-region’s countries skyrocketing upwards and pushing Yunnan’s GDP from US$31 billion in 2000 to US$165 billion in 2012. These new economic and trade ties are expected to double that to US$329 billion by 2017 and make the capital of Kunming a comprehensive center of trade, transportation, tourism, education, and R&D that reaches Laos, Myanmar, Vietnam and beyond.
Meshing with these plans are one currently endangered by political chaos in Bangkok in which Thailand would spend Bt2 trn ($64 billion) by 2020 to upgrade the country’s infrastructure and make the country the keystone of mainland South-East Asia. The plan has been put on hold by a constitutional court ruling last month that said legislation creating it was illegal. Nonetheless, some form of the plan is expected to survive and restart because of Thailand’s need to revitalize its rail, road, port and other facilities.
The “Future 2020” plan, as it is known, revolves around a network of high-speed railway lines that would connect the country’s four main regions with Bangkok, although critics point out that high-speed rail is expensive and unnecessary when the country simply needs a reliable and defect-free conventional system. The system, high-speed or conventional, would link Yunnan province with Singapore.
The economic rationale is to cut transport costs everywhere, bearing in mind that almost twice as many Thais live in the countryside as in the cities; Thailand is still among the least urbanized countries in Asia. Another objective of the beefed-up rail network is to keep migrant workers in the cities connected to their roots.
Given the five-month political crisis in Bangkok, which shows no sign of abating, China is growing increasingly concerned that the plan will move forward and is going ahead with its own plans to connect Yunnan to Vientiane via a $6.2 billion passenger and freight railway that would run from Kunming to Vientiane, tunneling through 196km of mountains to do so. If Thailand gets its act together, China’s system would connect to it, giving the Chinese access all the way down through Malaysia to Singapore and opening an efficient transport network. All roads indeed are going to lead to Beijing.