Chinese President Xi Jinping pledged at least US$113 billion in additional funds for his US$1.3 trillion One Belt, One Road (Obor) initiative, also known as the new Silk Road, at a recently concluded summit held in Beijing. But how much of those pledged Chinese funds will actually be delivered to neighboring Southeast Asia?
Asia confronts an astounding US$8 trillion infrastructure-spending gap over the next decade, according to Asia Development Bank projections. Despite fast economic growth, most Southeast Asian nations lack the resources to meet those needs and are eagerly seeking external assistance for meet the financial shortfall.
Top regional leaders, including Indonesian President Joko Widodo, Malaysian Prime Minister Najib Razak and Philippine President Rodrigo Dutetre, were among those in attendance at Xi’s ballyhooed summit. All three are known to be seeking large-scale Chinese investments, with Najib and Duterte making closer economic linkages to China a centerpiece of their foreign policies.
Over the past decade, Cambodia, Malaysia, and Myanmar have benefited from large-scale Chinese infrastructure projects ranging from roads, pipelines and ports. More recently, China has extended its reach to Indonesia and the Philippines, both of which are grappling with massive infrastructure shortfalls amid booming economic growth.
Under Duterte, Manila views Beijing as an indispensable partner for national development. The Philippines recently launched the “Dutertenomics” initiative, which ambitiously aims to usher in a “golden age of infrastructure” development by allocating US$167 billion over the next five years. China will likely serve as a key source of financing for at least 12 of the planned big-ticket projects.
While shouldering much of the cost, Obor makes good economic sense for China. The massive initiative will help to dampen industrial overcapacity at home while simultaneously allowing it to divest from low-interest carrying US treasury bills into potentially higher-yielding and productive infrastructure investments.
Major Chinese state-owned enterprises, which employ tens of millions of employees, are rapidly running out of lucrative projects at home. Analysts say those enterprises, a driving force behind Obor, desperately need new markets particularly for their excess cement and steel production. Enhanced connectivity will also allow China to reduce logistical and transactional costs on its exports.
The initiative will also allow China to not only gain improved access to precious mineral resources overseas, especially in resource-rich Southeast Asia, but also strengthen its influence over debtor nations. As one perspicacious analyst recently opined, China is deploying what increasingly resembles “debt-trap diplomacy”, as poorer nations amass huge debts to China to finance Chinese-led infrastructure projects.
International credit rating agency Fitch recently warned that China’s new Silk Road project is “driven primarily by China’s efforts to extend its global influence,” where “genuine infrastructure needs and commercial logic might be secondary to political motivations.”
Duterte’s open embrace of Chinese economic assistance has raised certain sovereignty-related concerns at home. In the past, major Chinese-led infrastructure projects in the Philippines, particularly the NBN-ZTE national broadband and the Northrail railway projects, were mired in corruption scandals and bidding anomalies, the former nearly toppling Gloria Arroyo’s government.
Critics say that Duterte’s increased reliance on China’s higher than market rate interest loans may drive the country into ‘debt bondage’, similar to Sri Lanka, Venezuela and Laos, and weaken the Philippines’ delicate position in the South China Sea, where it faces continued threats to its territorial claims and maritime interests.
To win Beijing’s goodwill, the Filipino president, as the rotational chairman of the Association of Southeast Asian Nations (Asean), has actively guarded China against any criticism over its massive reclamation activities in the South China Sea. Meanwhile, to China’s delight, Duterte has also downgraded security cooperation with the US, the Philippines’ sole treaty ally.
Duterte has made it clear that he won’t raise sensitive bilateral issues, namely territorial disputes, during his meeting with the Chinese president on the sidelines of the summit.
“To date, I have nothing to say except [my profuse] thanks to China for helping us,” the Filipino president said shortly before flying to Beijing after a stopover in Hong Kong. “One thing is very certain actually: China, in all good faith, wants to help us.”
While China has pledged as much as US$26 billion in aid and assistance to Manila since Duterte rose to power last July, nearly none of those funds have as yet been delivered.
In a reflection of the tight nexus between geopolitical and economic considerations, Duterte secured a US$500 million loan for arms purchases from China during his visit to Beijing. While China has pledged as much as US$26 billion in aid and assistance to Manila since Duterte rose to power last July, nearly none of those funds have as yet been delivered.
It’s a leit motif across the region. China’s pledged infrastructure projects in other neighboring countries, including high-speed rail lines in Indonesia and Thailand, have been hobbled by project delays, tussles over costs and environmental sustainability, and Beijing’s tendency to rely entirely on Chinese engineering, technology and labor to the exclusion of local sources.
Despite profound reservations over Beijing’s intentions, however, developing nations such as the Philippines will likely deepen their dependence on Chinese infrastructure assistance due to limited other options. Indeed, regional leaders such as Duterte seem determined to make the most out of the region’s emerging Sino-centric economic order.
Relations between Pakistan and China are based on historical and cultural linkages and the deep-rooted connections between the two nations which have grown stronger with the passage of time. Prime Minister Nawaz Sharif’s recent visit to China for the One Belt, One Road (OBOR) Summit, which is aimed at regional development through cooperation, is another hallmark in the bilateral relations. In 2013, Chinese President Xi Jinping launched the ‘Silk Road Economic Belt and the 21st Century Maritime Silk Road’ initiative; the Belt and Road Forum (BRF) is its key component.
Pak-China cooperation strong at OBOR summit: What is India missing?
https://www.globalvillagespace.com/pak-china-cooperation-strong-obor-summit-india-missing/
The author seems to have a case of severe amnesia, it is China that is responsible for Asean’s relatively high growth rates since the signing of a free trade agreement between the regional group and China in 2010. China’s Belt & Road Initiative (BRI) would likely further enhance Asean’s economic prospects because it offers loans for infrastructure construction and investment in the region’s industries. Inadequate infrastructure and direct foreign investment are the two biggest reasons why most Asean countries remain impoverished and underdeveloped.
With regard to incurring a financial burden from borrowing from China, the country actually charges a lower interest rate than lenders from the West and Japan and without the latter’s harsh conditionality. Further, China only wants to share its experience with the countries participating in BRI: building infrastructure generates wealth.
A final note is BRI is a voluntary trade and investment platform, it is an individual country’s choice whether or not to join.
Take it or leave it is up to you. One man’s meat is another man’s poison; but, if the shoe fits, wear it.
They complain about Chinese involvement in building infrastructure in Philippines, but the country has been a virtual colony of the US for a century. How much infrastructure has the US built in the Philippines?
As an alternative to the US-led invasions, bombings, dronings and sanctions, China is offering loans and technology to more than 60 countries to build their infrastructures – roads, railways, power plants and digital communications. This offer may have some drawbacks, but it offers to these countries and to many other countries opportunities to develop their economies and to lift hundreds of millions people out of poverty. At the very least, it is a much better alternatives than the massacres perpetrated by the US-led western countries. China will not carry out Iraq-like invasion and will not kill more than a million Iraqis, not counting the half million Iraqi babies that Madeleine Allbright proudly claimed that were worth sacrificing.
A bit more :-
The author is probably also implying , " Hey, Duterte！ extremely careful before you accept anything from the Chinese. Their offers of interest on loans may be in line with the market or lower or in the case you really can’t aford to pay when due, they can be delayed or even forgiven ( which we western nations will never do because its against our principles as good capitalists, God forbid). Its better for your people to remain abjectly poor as they are, prostitute your girls and women to the sailors coming off the battleships and aircraft carriers in Olongapoo and other military bases and seaside resorts, AND preffeerably at the same time, have more and more of your people who harbor very little or no hope of the future, to blow their brains on drugs. Thats the way to go MAN!. Not getting into potentially serious debts by getting the Chinese to help in rebuilding your decrepit infrastructures, creating industries, and bettering the lives of your people. No man! Beware of the trap. Its better for you guys to remain as you are, "the POOR MAN OF ASIA". Yes, thats it. Its better to carry that label than to be beholden to Chinese offers and help, which again , I have to repeat and emphasize, we rich intelligent super smart capitalists will not do. We hope you will appreciate our good advices.
I suppose if an author wants to stoke attention, regardless of how good or positive a thing is, he/she has to highlight as much negatives as possible, and suppressed the good /truth.
If as he claimed that those nations are having such a raw deal dealing with the Chinese, surely China is not putting a gun to their heads to force them to go with China? He also implies that the leadership in those countries are a bunch of morons/ideots and are not capable of thinking whats good for themselves! And he simply quoted "As one perspicacious analyst recently opined, China is deploying what increasingly resembles “debt-trap diplomacy”, as poorer nations amass huge debts to China to finance Chinese-led infrastructure projects." This proves the last point I made above.
If the author is such "a bleeding heart" for these terribly poor nations, then he should get his country or any other rich western country to step forward, and, not lend, but give free of charge to those countries. But of course , none of those countries will be that generous. Obviously, being good capitalists, they want a good return preferably for things that are basically risk free on their investments. Such low risk high return investments are doled out through the "generosity" of the World Bank and the IMF which for those who still do not know are controlled by the US( and indirectly by their banks!).. Look what happened to the Greeks and the Spanish.To make sure that they will ante up on their regular payments, The IMF/World Bank forced their governments to impose punitive economic conditions on their people. Or alternatively they have to hock their national assets. As a result these countries are suffering from terrible low employment, and tremendous drop in their standard of living. Yes, Mr. "bleeding heart" author, why don’t you write something about these countries?
And the brilliant author went on to quote "Critics say that Duterte’s increased reliance on China’s higher than market rate interest loans may drive the country into ‘debt bondage’, similar to Sri Lanka, Venezuela and Laos, ….". Again what he implies here is that, "my country or any other rich western nation" will not lend to you beggars/scum! No we are not stupid like the Chinese. We are smart capitalists. When you beggars/scum cannot afford the basic good things in life, then just be happy with what you have. Be content with your monumentally clogged road systems, dilapidated bridges and infrastructures, prostitute your girls and women to our rich dollar loaded western men, be slaves and slog on a pittance to serving in our exploitative enterprises anywhere in the world, be happy to live a life in slum and filth and squalor to a ripe old age of 50, etc , etc.
But don’t expect us to give you anything free. We cannot compete with what the Chinese offer, but because it did not come from us, it does not mean what the Chinese give or offer on their crazy generous terms is good for you. No, no, you silly idiots/morons. You’ll be eternally indebted to them, CAN’T YOU SEE?
Another stealth hatchet job by scoundrelminded author. Great job by atimes, it’s able to attract so many scoundrels
People so afraid of Chinese investment.like Richard should at least spend some of their effort looking for alternative funding.dpes not make sense just talk and no action.
China is offering to finance the construction of infrastructures in many countries. It is up to these countries to accept or to refuse the Chinese offer. These offers are made without any political strings attached to them. As for the rate of interest, it is unlikely that China is taking a higher interest rate than the market rate. Most likely, it is slightly below the market rate. If these countries refuse the Chinese offers. China will not be the poorer.