China’s Belt and Road Initiative Financing in Southeast Asia

Summary

As an infrastructure financier in many parts of the developing world, China has built hydroelectric plants, railroads, roads, airports and telecommunication networks on a global scale. Southeast Asia occupies a significant place in China's Belt and Road Initiative (BRI). Situated at the very centre of the Indo-Pacific region, Southeast Asia has long been a strategically important region for China's foreign relations and security. A stable and positive relationship with the region will serve several of China's interests, such as the development of its maritime economy, energy security, and maritime claims in the South China Sea. Moreover, the centrality of ASEAN in regional multilateralism and its stated neutrality in great power competition adds to the geostrategic importance for China.

To incentivize Southeast Asian states to participate in the BRI, China highlighted the long-term economic benefits of the BRI that could be gained through cooperation on policy coordination, trade facilitation, financial integration, infrastructure development and societal-level exchanges. To counter anti-globalization sentiments, the BRI can be used to sustain and revitalize globalization, to improve infrastructure connectivity, and to promote regional and global trade as part of Chinese efforts to provide public goods. Two corridors pass through Southeast Asia: the China-Indochina Peninsular Economic Corridor and the Sino-Myanmar Economic Corridor (originally Bangladesh-China-India- Myanmar Economic Corridor). In addition, China's proposed Maritime Silk Road includes marine industry cooperation, port alliances and logistics. China has also proposed the Lancang-Mekong Cooperation (LMC) in Southeast Asia. The LMC has supported some projects that reduce poverty and others that promote small and medium-sized enterprises, agriculture, training in water resource management, and education.

It is undeniable that the vision of infrastructure connectivity is targeted at economic growth and regional development. According to the World Bank, connectivity projects in the BRI will increase the trade of countries along the route by 4.1 per cent. The United Nations Development Programme also suggests that the initiative can help BRI-participating countries accelerate industrial diversification and economic growth to achieve the Sustainable Development Goals (SDG). With Chinese companies having set up more than fifty-six economic cooperation zones in more than twenty countries, generating US$1.1 billion in tax revenues and 180,000 jobs during the 2014–16 period, the hubs for capital and manufacturing investment may trigger broader market reforms and spur local employment, export earnings and growth.