China is convening from Sunday a large two-day summit in Beijing to tout its ambitious “One Belt, One Road” development strategy. The initiative proposed by China’s leadership seeks to promote massive infrastructure projects, spanning 65 countries in Asia and Europe and about 40 percent of global gross domestic product.
Many Asian countries, including populous Indonesia and Pakistan, desperately need more money for infrastructure building and are more eager than ever to solicit foreign funds as they simultaneously aim to boost their economies.
While these countries actively tout funds from competing investor nations, there are persistent views and concerns in Japan, the United States and elsewhere about China’s ambitions for political influence — which could grow as a result of the initiative. How will countries like Indonesia and Pakistan address the situation?
The Japan-led Asian Development Bank, which has just concluded its minister-level annual meeting in Yokohama, estimates that Asia’s developing countries need more than US$26 trillion in infrastructure investment by 2030.
One key element in the One Belt, One Road initiative is the China-Pakistan Economic Corridor project. The two countries plan to connect western China, bordering Pakistan’s northeast, to the south Asian nation’s southern coast on the Arabian Sea with highways and railways.
When Chinese President Xi Jinping visited Pakistan and met Prime Minister Nawaz Sharif in April 2015, Xi announced China’s involvement in the project with an astounding US$46 billion of investments.
Once the “corridor” has been completed, China will be able to transport goods to and from the Middle East, Africa and Europe on shorter routes instead of having cargo ships pass through the long, winding sea route via the Strait of Malacca.
In both economic and security terms, China sees merit in having an alternative to transporting its huge oil imports through the Strait of Malacca.
Guaranteeing energy supply would be far less of a challenge in a scenario involving a naval blockade in the South China Sea — a matter of serious concern for Beijing, as well as for Japan.
The corridor gives Pakistan a massive helping hand in constructing modern, efficient traffic routes connecting its north and south, a long-standing domestic challenge for the developing nation. Pakistani Finance Minister Ishaq Dar, who was in Japan to attend the ADB’s annual meeting, said in an interview with The Japan News, “There is a gap in infrastructure development in the region and most of the countries are lagging behind. What we need to do is focus fully on regional connectivity.” This is a claim he makes even while stressing that the next five decades will be the “Asia Pacific’s 50 years” thanks to the area’s rapid economic expansion and population growth.
A critical part of the corridor initiative is the US$8 billion upgrade and renovation of the Karachi-Peshawar Railway Line that stretches nearly 1,700 kilometres. Dar said his government is engaged in consultations with China to secure the investment needed to complete the project.
On the other hand, he did not forget to mention Japan, another traditional development partner. “We have many other [connecting railway lines]. The rail ministry is actively engaged with the ADB to consider [those lines].”
Not everyone in the region agrees that the “One Belt, One Road” initiative can be accepted at face value. Notably, India’s Finance and Defense Minister Arun Jaitley was cautious during the ADB meeting, saying, “We have some serious reservations about it, because of sovereignty issues.”
India, which has had a tense relationship with Pakistan over the Kashmir region, sees problematic elements in the project, not least because it could lead to de facto endorsement of Pakistani control over part of a Himalayan region that both India and Pakistan claim sovereignty over.
Dar countered by stressing the economic benefits, reaffirming that “Pakistan strongly supports the One Belt, One Road idea. It is going to be extended to all neighboring countries.”
In Southeast Asia, Indonesia has been earnestly canvassing support for its first high-speed railway project in the region. In 2015, Indonesia awarded China, rather than Japan, the contract to build a railway line between Jakarta and Bangdun in the West Java province.
“If the [One Belt, One Road] initiative [can build] not only infrastructure but also good policies, all the countries [involved will] enjoy the long-lasting benefit of development,” Finance Minister Sri Mulyani Indrawati told The Japan News during her visit to Japan, highlighting the dual benefits the project is expected to offer.
Such a remark might suggest attentiveness toward Japan’s position on procuring infrastructure investment projects. However, there is no guarantee that Japan will win bids for other railway projects in the region’s most populous nation.
Even though Japan and Indonesia have agreed to initiate consultations toward upgrading a railway line connecting Jakarta and Surabaya, the former managing director of the World Bank said, “Japan will continue to be a strong partner. But at the same time, China and all [nations] with economic power also want to strengthen [their relationships] with many countries, including Indonesia.”
There is no doubt Indonesia will require huge amounts of infrastructure spending in the years to come. “We don’t see this as a competition that will create a zero-sum game,” she stressed.
Some maintain that the ADB and the Asia Infrastructure Investment Bank, a China-led institution, can complement each other to finance huge proposals. “A new institution like the AIIB creates appositive pressure for the ADB to continue to innovate,” she said.
Former Vice Finance Minister Eisuke Sakakibara agrees. He told The Japan News that collaborations with China and South Korea will become more critical for Japan if it intends to play a major role in future investment planning in Asia.
The economist, who in the 1990s was known as “Mr. Yen,” is not opposed to the idea that Japan and the United States should join the AIIB. Sakakibara, who is now a professor at Aoyama Gakuin University, said, “If Japan and the United States joined the institution, China’s share of power would be smaller. That could create conditions to balance China’s excessive influence over decision making.”
“Japan should build a framework that allows the ADB to collaborate with the AIIB,” he said.
Source: Eleven Myanmar
