Over-re­liance on China

The Phnom Penh Post - - OPINION -

BEI­JING’S Belt and Road fund­ing comes with pun­ish­ing debts and back­ing for au­thor­i­tar­ian regimes. As China cel­e­brates the 5th an­niver­sary of its Belt and Road Ini­tia­tive (BRI) this year, coun­tries seek­ing to profit from the scheme should now be ask­ing whether it is in fact in their long-term in­ter­est.

In Septem­ber 2013, Chi­nese Pres­i­dent Xi Jin­ping said dur­ing his visit to Kazakhstan that China and Cen­tral Asia should join to build a new Silk Road, res­ur­rect­ing the an­cient trade route from China to Europe.

But this was no coy sugges­tion. Xi had in fact kick-started China’s grand vi­sion to fuse the world via a great trade high­way. A month later in In­done­sia, he pro­posed a 21st-cen­tury Mar­itime Silk Road that would span the dis­puted South China Sea to link China and Asean. The mar­itime route was later ex­tended be­yond the Strait of Malacca and into the In­dia Ocean to reach Africa.

Although many view the Belt and Road as an am­bi­tious ef­fort to boost re­gional co­op­er­a­tion and con­nec­tiv­ity, oth­ers are more scep­ti­cal. The lat­ter group says it serves China’s grand strat­egy to dom­i­nate the world and even­tu­ally over­take in­cum­bent su­per­power the US.

The ini­tia­tive aims to strengthen in­fra­struc­ture, trade and in­vest­ment links be­tween China and some 65 other coun­tries that ac­count col­lec­tively for over 30 per cent of global GDP, 62 per cent of pop­u­la­tion, and 75 per cent of known en­ergy re­serves, ac­cord­ing to the World Bank.

Bei­jing ini­tially called it One Belt One Road, but af­ter the project ex­panded to en­com­pass six other eco­nomic cor­ri­dors, the broader de­scrip­tion Belt and Road was adopted. The BRI links South­east Asia to China’s South and South­west re­gions via the Mekong River and by the ports and lanes of the South China Sea.

Bei­jing has so far poured nearly $700 bil­lion into coun­tries un­der BRI co­op­er­a­tion agree­ments, much of it spent on mega-in­fra­struc­ture projects, with rail- ways and roads a top pri­or­ity.

The im­pacts of Bei­jing boost­ing its trade, in­vest­ment and other as­sis­tance are be­ing felt strongly in main­land South­east Asia, which in­creas­ingly re­sem­bles an eco­nomic pe­riph­ery of China.

To guard its own eco­nomic in­ter­est, Bei­jing has of­fered en­thu­si­as­tic sup­port to au­thor­i­tar­ian regimes in Asean. The Thai junta was shielded by Bei­jing from crit­i­cism by West­ern coun­tries af­ter the mil­i­tary’s coup top­pled an elected civil­ian gov­ern­ment in 2014. Mean­while, Cam­bo­dia can af­ford to ig­nore crit­i­cism of its fal­ter­ing hu­man rights records for as long as it en­joys Chi­nese sup­port.

But that back­ing does not come for free. While Bei­jing may ini­tially of­fer grants for de­vel­op­ment, most BRI projects lever a heavy bur­den of debt onto the host coun­try. China often sets in­ter­est on its loans at above the mar­ket rate of­fered by other de­vel­op­ment lenders such as the World Bank and IMF.

Coun­tries in­clud­ing Sri Lanka and Pak­istan are al­ready groan­ing un­der the load and have ex­pressed wor­ries over whether they can re­pay Bei­jing.

Sri Lanka has even handed over a ma­jor port in lieu of money owed.

Closer to home, Malaysian Prime Min­is­ter Ma­hathir Mo­hamad has pulled back from the BRI, can­celling a $20-bil­lion rail­way and a $2.3-bil­lion nat­u­ral gas pipe­line ap­proved by his pre­de­ces­sor, Na­jib Razak, cit­ing his coun­try’s abil­ity to re­pay the debts.

Such a sig­nal – com­ing from the re­gion’s se­nior-most states­man and a man whose vi­sion for Asean in­te­gra­tion as clear as it is en­dur­ing – should serve as a warn­ing for oth­ers to re­con­sider their BRI com­mit­ments.

The Thai mil­i­tary gov­ern­ment, how­ever, ap­par­ently sees noth­ing wrong in stick­ing with China both eco­nom­i­cally and po­lit­i­cally. Thai eco­nomic tsar Somkid Ja­tus­rip­i­tak is push­ing for­ward eco­nomic, trade and in­vest­ment links with China with­out hes­i­ta­tion, act­ing as if Bei­jing were the only source of sup­port for his eco­nomic plans.

That might not be a good move for the coun­try in the long run. The Thai gov­ern­ing elite should learn from other coun­tries in the re­gion and be­gin con­sid­er­ing al­ter­na­tives.

AFP

Chi­nese Pres­i­dent Xi Jin­ping is seen on a big screen at an expo in Shang­hai on Mon­day.

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