Sur­vey­ing Asian Busi­ness Trends: How will the One Belt, One Road pol­icy af­fect mar­itime trade?

Norway-Asia Business Review - - Contents -

“The goal is to re­vive flag­ging eco­nomic growth in China, find new mar­kets for ca­pac­ity in its in­dus­tries, and re­in­force the coun­try’s ex­pan­sion­ist am­bi­tions across Asia,” he told the Nor­way-Asia Busi­ness Sum­mit 2016.

The belt refers to a land-based new “Silk Road” while the road is a mar­itime route through the In­dian Ocean, with both aim­ing to fo­cus on Eurasian co­op­er­a­tion and con­nec­tiv­ity. A bud­get as high as USD 225 bil­lion has been floated for the long-term suc­cess of the strategy, said Mr Bray.

While One Belt, One Road at­tempts to im­pose a reg­i­men from an ex­ter­nal source, this year also saw the im­ple­men­ta­tion of the ASEAN Eco­nomic Com­mu­nity (AEC), noted Mary Boyd, director of the Econ­o­mist Cor­po­rate Net­work in Shang­hai. There is a “noo­dle bowl” of trade agree­ments al­ready in place for ASEAN mem­bers, but the AEC hasn’t made a large im­pact yet as the process has been bu­reau­cra­tised for the most part, she said.

“It’s im­por­tant to note what the AEC isn’t when com­par­ing it to other re­gional eco­nomic blocs: it doesn’t have a cus­toms union, labour mar­ket stan­dards, a sin­gle cur­rency or pro­fes­sional ac­cred­i­ta­tion,” said Ms Boyd.

One trend The Econ­o­mist spot­ted in South­east Asia through sur­veys is an in­te­gra­tion of cor­po­rate ap­proaches to urban mar­kets across the re­gion. Another 90 mil­lion peo­ple are ex­pected to trans­fer to cities in ASEAN by 2030.

A sec­ond trend is sup­ply chain man­u­fac­tur­ing has shifted from North Asia to ASEAN, with Ja­pan, Korea and China out­sourc­ing their in­vest­ment to this re­gion, which will af­fect mar­itime routes, she said. This means more short-haul ship­ping ser­vices.

China com­prised 19.1% of ASEAN’s total trade in 2014, and has been the re­gion’s largest trad­ing part­ner since 2009. China’s over­ca­pac­ity and de­fla­tion are then a sig­nif­i­cant con­cern for South­east Asia, as my pub­li­ca­tion puts that coun­try’s risk of a hard land­ing at 40%, said Ms Boyd.

The Trans-Pa­cific Part­ner­ship has led to much spec­u­la­tion about its ef­fect on global trade, and Viet­nam has used its mem­ber­ship in much the same way China did in the 1990s as it pre­pared to join the World Trade Or­ga­ni­za­tion: to push through do­mes­tic reforms that had been dif­fi­cult, she said. For Viet­nam, that means higher pro­tec­tion of in­tel­lec­tual prop­erty, up­grad­ing labour stan­dards and im­prov­ing the busi­ness en­vi­ron­ment.

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