Belt and Road in Southeast Asia: Inevitable Storms

Perhaps one of the most ambitious foreign policy proposals ever made by China, the Belt and Road Initiative (BRI) is a clear indication of the transition in Chinese foreign policy from “low-profile” to growing proactivism in international affairs. Yet the US$1 trillion project has raised questions about China’s unspoken geopolitical intentions

Because of its scale and overwhelming publicity campaigns by the Chinese media, the BRI has sparked an enormous amount of interest and serious criticisms from both major powers and its participating countries. These criticisms focus mainly on whether China is practising a form of “neo-colonialism” and whether its financial terms enable developing nations to fall into debt traps.

Anxious about Beijing’s influence, major players such as the United States and Japan have sought to forge a Free and Open Indo-Pacific strategy (FOIP) and revive the Quadrilateral Security Dialogue (Quad). Hoping to pull regional states away from too much Chinese influence and to help them diversify their external economic relations, these players have thus proposed their own policy platforms to engage Southeast Asia.

For example, Japan launched its Partnership for Quality Infrastructure (PQI) scheme, increased lending by the Asian Development Bank (ADB), and co-launched the Asia Africa Growth Corridor with India to connect with the Indian subcontinent and the Mekong subregion. Tokyo’s effort has not only attracted a lot of interest from India, but also gained fairly strong support from Mekong countries, which have received many economic benefits from China under the Lancang-Mekong Cooperation (LMC) mechanism. In 2018, some Mekong countries even expressed their support for the Japanese FOIP strategy.

In August 2018 at the Association of Southeast Asian Nations (ASEAN) ministerial level meetings in Singapore, Washington announced an investment package of US$113 million for technology, energy and infrastructure initiatives. The US also pledged nearly US$300 million worth of new security funding for Southeast Asia. The consensus is that American geo-economic strategies are designed to contain China’s growing influence.

Coping with pushback

China realizes that these initiatives could drive up the costs of China’s implementation of the BRI in Southeast Asia. Some participating countries have already demanded renegotiation of loan terms with China, which means Chinese companies may be forced to make concessions. Hence, China has been reassessing the initiative since the Second Belt and Road Forum in April 2019, which was aimed at subduing concerns in other BRI countries, reasserting China’s goodwill in light of the trade war with the US, and reducing growing apprehensions about Beijing’s political and economic influence in BRI regions.

To ease geopolitical tensions, China also played down the BRI hype by redefining the commercial aspects of the initiative during the Second Belt and Road Forum. Criticisms by other major powers have led Beijing to also consider improving transparency, rules and standards in executing BRI projects. At this year’s forum, Chinese President Xi Jinping repeatedly called for “high-quality” projects and higher standards by encouraging other developed countries to participate in the BRI.

This stems from China’s realization that the proliferation of BRI projects has encountered regional pushback, as seen in the cancellation and renegotiation of projects in Malaysia, and complaints from Myanmar, Sri Lanka, and even long-term allies such as Pakistan. China has begun to recognize that poor governance and the lack of transparency in BRI projects will hurt its strategic interests in these regions.

On top of fulfilling the Indo-Pacific region’s desire to diversify their external economic and financial relations, alternative initiatives provided by other powers also undermine the attractiveness of the Chinese BRI. However, Beijing will continue to build economic cooperation networks in the region through the BRI by focusing on Southeast Asia.

This is because China is keenly aware that the absence of US leadership in current economic governance would likely create opportunities for the nation to build economic cooperation networks in the Asia-Pacific region. The Trump administration abandoned the Trans-Pacific Partnership (TPP), retreated from or disrupted multilateral institutions and even threatened to wage trade wars against its allies.

ASEAN states welcome such initiatives because they are interested in diversifying external economic ties and reaping benefits from external powers’ competition

Meanwhile, tensions and competition for regional infrastructure development between China and Japan in Southeast Asia appear to have decreased since Prime Minister Shinzo Abe visited China in 2018 – partially because Japan’s deep concerns about the uncertainties of US commitment to the regional economic order have forced its government to support China’s push for a free trade market.

Facing the same but increasing uncertainties, middle powers such as Australia have also been calling for the maintenance of economic order in the region by working on economic governance and infrastructure development in Southeast Asia. The questionable commitment and uncertain benefits and returns of FOIP have also driven regional states to adopt a “wait-and-see” attitude.

The road ahead for Southeast Asia

After Xi enshrined his political legacy of the BRI into the Chinese Communist Party’s Constitution in 2017, many believed that the BRI would continue to play a significant role in the country’s neighborhood diplomacy in Southeast Asia. Because of Xi’s personal ambition to “strive for achievements”, greater geopolitical competition between China and other major players can be expected.

What future order will the geopolitical competition project to the region? The trade war between China and the US and the assault of the latter on China’s technology companies will likely significantly limit the expansion of China’s political influence through the BRI in various regions.

China is still being questioned on whether it is capable of carrying out high-quality, sustainable, and transparent infrastructure developments, which Beijing claims to be doing. To make the BRI a catalyst for the reform of global governance, China would have to create a level playing field for both domestic and foreign companies in the BRI.

Meanwhile, the competing interests of major powers in the Asia-Pacific region will continue to be closely monitored by ASEAN member states. On one hand, ASEAN states welcome such initiatives because they are interested in diversifying their external economic ties and reaping benefits from external powers’ competition in the region. On the other hand, ASEAN states worry the tension would plague the region, not just in infrastructure, but also in the economic-technological arena: in Southeast Asia, the US has already started to assess and challenge China’s information and communication technology investments. For the region, the geopolitical storms they will have to weather are only just beginning.

Further reading

Arduino, Alessandro, and Gong, Xue, eds. (2018) Securing the Belt and Road Initiative: Risk Assessment, Private Security and Special Insurances Along the New Wave of Chinese Outbound Investments, Palgrave.

Cox, Michael; Yu, Jie; Yan, Jinny; et al. (October 2018) “China’s Belt and Road Initiative and Southeast Asia, LSE IDEAS and CIMB ASEAN Research Institute.

Gong, Xue. (April 13, 2019) “Will China Undermine its Own Influence in Southeast Asia Through the Belt and Road?”, The Diplomat.