One Belt to rule them all
Can China recreate a Silk Road?
Thailand and Asean should take the lead in connecting the “Yi Dai Yi Lu” (One Belt, One Road) multi-trillion-dollar initiative of Chinese leader Xi Jinping to turn a maritime dispute into an economic opportunity, say local analysts.
While much of Thailand is excited about a rail link with China, Sarasin Viraphol, Charoen Pokphand executive vice-president, said he was more enthused about the prospects of linking up with China via Mr Xi’s maritime route.
Thailand would gain more through the One Belt, One Road initiative, he said.
“We could gradually build up safety and confidence in the disputed areas of the South China Sea if Thailand could convince other Asean partners to implement a regional shipping route matching China’s maritime silk route,” said Mr Sarasin.
He was speaking at a forum last week on “40 Years of Thai-China Relations: Past, Present and Future” jointly organised by the Foreign Ministry, the Chinese embassy, Chulalongkorn University’s Institute of Security and International Studies, and the Saranrom Institute of Foreign Affairs Foundation.
Mr Sarasin said it was time for Asean to mature and for Thailand to reassert its leading role in the grouping, or else both risked becoming an afterthought.
The One Belt, One Road scheme features the two planks — a Silk Road Economic Belt and a new Maritime Silk Road — for an area that is home to two-thirds of humanity.
Mr Sarasin believes a shipping route from Map Ta Phut/Laem Chabang to Shanghai and another route from ports on the Andaman Sea to the South China Sea would turn conflicts into opportunities.
Beijing estimates its much-hyped initiative launched in 2013 will add US$2.5 trillion to Chinese trade in the next decade, more than the value of its exports in 2013, when it was the world’s top exporter.
But after two years only one part of the plan has been crafted. In April this year China announced a US$46 billion China-Pakistan Economic Corridor, stretching from Gwadar in Pakistan to Kashgar in the Chinese region of Xinjiang. The investment projects, to be segmented into phases of three to five years and five to 10 years depending on the plans, will include a combination of transport and energy projects and the development of a major deep-sea port offering direct access to the Indian Ocean.
China’s bold scheme to rebuild a Silk Road linking Europe and Asia received much media hype in the West, but Southeast Asia remained puzzled about how to benefit from China’s repackaging of its global influence through financing infrastructure projects in 65 nations, said David Murphy, head of China Reality Research, CLSA Beijing.
“Many in China see it as too big and too complicated, but Europe sees the impact. Consider it Mr Xi’s political weight,” said Mr Murphy at a seminar on “Reality Check on the Chinese Economy: Opportunities and Challenges for Thailand” organised by Thammasat University’s Institute of East Asian Studies and sponsored by the Foreign Ministry.
Though he had a dour outlook on the Chinese economy, Mr Murphy said there were a number of upcoming mega cross-province projects such as in Beijing-Hebei-Tianjin, as well as the development of a new Olympic city over the next 15 years.
Soraphol Tulayasathien, director of the bureau of economic stability analysis for macroeconomic policy in the Fiscal Policy Office, said One Belt, One Road is the widest scheme that has been proposed in terms of the global economy. He failed to see the direct benefit for Thailand.
“It connects China to Europe rather than Thailand. To join the initiative Thailand has to connect to that global loop, perhaps through certain mega-development projects in the region,” said Mr Soraphol.
“China’s slowdown has a major effect on Thai exports. The direct impact reduces Thai exports 11%, but as China is a key player in the global supply chain, the indirect impact on Thailand’s other trading partners is another 17.7%, making the total impact 28.7%.”
Waikei Raphael Lam, the Beijing resident representative for the IMF, believes One Belt, One Road would provide new financial and trade activities for China. The establishment of the Asian Infrastructure Investment Bank with US$100 billion in authorised capital could be a catalyst for the scheme, he said.
The main risks [in China] remain inadequate progress in reducing vulnerabilities and advancing reforms
“It takes time for China’s large bureaucracy to move, but now various ministries are considering and conceptualising projects that could tap into part of this global initiative,” said Mr Lam.
The IMF has adjusted its Chinese growth forecast from 7% to 6.5% this year, while estimating growth of 6-6.5% next year.
The main risks remain inadequate progress in reducing vulnerabilities and advancing reforms, which threaten a sharp slowdown, he said.
In a separate interview, Li Hong, China’s permanent representative to Escap, said he understood the obstacles to large cross-border One Belt, One Road projects because they involve differing geographical, social, economic and political terrains.
Members of the United Nations’ Economic and Social Commission for Asia and the Pacific have already discussed prospects and possibilities for a sectoral approach, but have yet to come up with any supportive policy endorsement, said Mr Li.
“Escap members are working to finalise a framework agreement with China so that UN mechanisms can play an important role in the initiative,” he said Mr Li.
Kobsak Chutikul, secretary-general of the Asian Peace and Reconciliation Council, said in light of all the discussion about the economic impact of China’s slowdown, he would like to urge the country’s leaders to be more assertive in shedding light on the social and cultural terrain of the regions.
“In the shadow of despair, we have to discern the contours of hope. Will China be able to offer any guiding light on ideological breakthroughs for its regional partners apart from its role in the global financial architecture?” said Mr Kobsak.
Zhang Lei, chief executive of Bank of China (Thai), believes Thailand has been a good partner for China and still provides a key link between Asean and China.
He called for a greater exchange of educational, political, and cultural entities between Thailand and China, emphasising it was the responsibility of all businesses and stakeholders to help shore up the sluggish global economy, not only China.