Can China’s OBOR Outlive ASEAN’s Complexities?

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CCTV's representation of China's One Belt One Road

When the Chinese President, Xi Jinping, first articulated the ‘One Belt, One Road’ (OBOR) initiative in 2013, international media were slow to discover its significance.

It was only several months later that world media began to recognise the initiative’s potential and reports started to emerge on a grander scale.

As of now, media reports on the recent Chinese initiative have been flooded with the assessments of potential and strategic outlook of OBOR to the Asia-Pacific region and the world at large.

For a neighboring region like ASEAN, there is no doubt that it is and will be part of Beijing’s OBOR initiative.

The major issue is that given the complexities in the ASEAN region, it is misleading to focus on the potential and strategic outlook of the initiative without paying equal attention to the challenges and risks surrounding the OBOR initiative.

Hence, the main question remained: Can the OBOR initiative outlive the challenges and risks in the ASEAN region to become a sustainable initiative for years to come?

One would be able to imagine that the immediate challenge is the question of OBOR’s complementarity with the existing cooperation initiatives in the region.

Based on the recent map by the Hong Kong Trade Development Council (HKTDC), the China-Indochina Peninsula Economic Corridor and the Bangladesh-China-India-Myanmar Economic Corridor are two of the six economic corridors set by the Chinese government to implement the ambitious initiative.

Notably, these are the two economic corridors that ASEAN countries are directly involved in.

Considering the two economic corridors, it is understood that the OBOR initiative is founded upon the existing sub-regional cooperation initiatives proposed and implemented by the Chinese provinces during the previous Hu-Wen administration.

What is new, however, is that the grand initiative strives to integrate the two existing sub-regional cooperation initiatives—Pan-Beibu Gulf (PBG) Cooperation Initiative and the Gateway Initiative—via land and sea, into a trans-continental network of economic corridors.

The problem now lies on the complementarity of OBOR initiative with those cooperation plan and initiatives promoted by ASEAN countries, namely, ASEAN Master Plan for Connectivity (AMPC), ASEAN Roll-On Roll-Off Network (ARN) and Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA).

Ideally, these ASEAN-mooted plan and initiatives are compatible with the concept of OBOR initiative as they all seek to integrate the diverse region through networks of ports, information technology, railways and so forth.

But in terms of implementation, it will be a daunting task as there are diverse priorities and national interests among ASEAN nations on which projects should be prioritized for implementation.

It is expected that interested ASEAN countries will clamour for the Chinese funding through bilateral assistance or the multilateral Silk Road Fund and Asian Infrastructure Investment Bank (AIIB), to finance their infrastructure needs.

On the other hand, there are still scepticism and distrust among certain ASEAN states that are wary of heightened Chinese influence in the region.

The recent moves by the Thai government as well as the Indonesian House of Representatives to scrutinise the Chinese investments in railway construction and banking sector respectively are indicators that not all ASEAN countries welcome the OBOR initiative with open hands.

Their concerns may derive from the fear that they will become the dumping sites for China’s excessive manufacturing goods and equipment, the problem of over-extraction of national resources, the foreign monopoly of important industries, environmental impacts and job competition between imported Chinese workers and the locals.

It is due to these potential repercussions that countries such as Indonesia are still wary about the OBOR initiative despite being the site which President Xi announced his ‘21st Century Maritime Silk Road’ initiative back in October 2013.

Challenges aside, there are also corruption and political risks associated with the implementation of development projects in ASEAN countries.

With many ASEAN countries having immature institutional oversight of public projects, there is the risk that the Chinese investments in the region may repeat the same mistake made by the Japanese companies fifty years ago.

The 1974 Malari Incident is a demonstration that foreign investments, in this case, the Japanese FDI can be the source of rent-seeking practices by the military, political and business elites who stirred up violence against the Japanese goods, companies, and citizens among the Indonesian protesters.

Thus, the ‘common practice’ of partnering with the state or business elites for project development is a double-edged sword that needs to be managed against unwanted corruption practices.

Finally, despite being authoritarian or semi-authoritarian democracies, most ASEAN countries (except Vietnam) have embraced the Western democratic system with periodic national elections.

Certain countries such as Thailand even have functional check-and-balance systems that allow the masses or the opposition parties to scrutinize any foreign cooperation agenda or projects decided by the government.

It is unrealistic for any foreign country, such as China, to push any OBOR-related projects through without considering the sustainability of them within the national contexts of ASEAN countries.

Whether in the form of massive demonstration, China-bashing or regime change, these are the political risks that Beijing must consider if it wants the OBOR initiative to endure these ‘uncharted territories’.

To date, the Chinese side has been actively organising forums and conferences on OBOR (such as the First Belt and Road Summit) to elicit opinions from participating countries on potential cooperation areas and projects while promoting the initiative as China’s contribution to the world’s economic development at the same time.

As for the ASEAN side, there has yet to be any coordinated attempt among the member states to deliberate this initiative.

Therefore, it is timely for ASEAN states to start organizing high-level and Track II discussions to debate their positioning within the OBOR initiative and if possible, agree on a common stance on this matter.

The regional bloc should make its voice heard in Beijing to make sure that the initiative brings tangible benefits to all layers of society and is implemented with strict assessment, monitoring, and safeguarding measures.

Without these criteria, China’s OBOR initiative is unlikely to outlive ASEAN’s complexities to become a sustainable cooperation initiative in the near future.

As one of the first parties to highlight and assess China’s OBOR initiative in Southeast Asia, Anbound Malaysia has been articulating its views on this issue in numerous media platforms.

The Malaysian private think tank is part of Anbound Consulting headquartered in Beijing. For any feedback, please contact: lcleong@anbound.com.