ASEAN Connectivity and China’s ‘One Belt, One Road’

 

Could there be a convergence of interests between these two grand projects?

The ASEAN Master Plan for Connectivity (AMPC) and China’s “One Belt, One Road” initiative share striking similarities and parallels. Both envisage transport connectivity as a way to bring member or participating countries closer to one another, facilitating better access for trade, investment, tourism and people-to-people exchanges. Like the “One Belt, One Road” project, AMPC calls for a system of roads and railways to link contiguous Southeast Asian countries with one another, as well as a system of ports for RoRo (roll-on roll-off) vessels and short sea shipping to link insular Southeast Asian countries with one another as well as with mainland Southeast Asia. Given this shared vision, it is interesting to consider how the two could complement one another and what issues could stand in the way.

China has since 2009 been ASEAN’s biggest trading partner and ASEAN has been China’s third largest trading partner since 2011. Trends indicate that two-way trade will only increase further in the coming years. In 2015 alone, it is expected to hit $500 billion. And since seamless transportation infrastructure can better spur trade, plans to enhance connectivity between the two sides is mutually beneficial. China also puts great emphasis on neighborhood diplomacy, and extending investments and official development assistance (ODA) to finance infrastructure projects is one way of winning the support and goodwill of neighboring developing countries. From this perspective, then, the convergence of interests is very apparent. However, while ASEAN and China shared an aspiration of enhancing transport connectivity, it remains to be seen how compatible AMPC and China’s Silk Road project really are.

AMPC is apparently more mature and is at a relatively advanced stage, having been the product of several high-level discussions and technical working group meetings since 2009. In contrast, the Maritime Silk Road (MSR) was only officially announced in 2013. As such, while many of the key pieces of AMPC had already been laid out, much of MSR’s details remain sketchy and China still has to engage potential partners. China had recently stepped up its efforts to provide assistance in executing ASEAN’s connectivity plan and this is a positive sign. Given the high costs involved in executing AMPC, donors and financial assistance should be welcomed. The Asian Development Bank and Japanese ODA are already engaged in AMPC, but there is still ample scope for the Asian Infrastructure Investment Bank (AIIB), the Silk Road Fund, as well as Chinese ODA. China has developed an impressive reputation in infrastructure projects such as ports, terminals and high-speed trains, and can offer such technology and expertise to support ASEAN’s plan. AMPC may also present opportunities for Chinese companies engaged in infrastructure work to partner with their local ASEAN counterparts in public-private partnership undertakings, an emerging mode for attracting private sector investment in public infrastructure projects.

Indeed, it can be said that momentum for China-ASEAN cooperation in realizing the AMPC is growing. On mainland Southeast Asia, for instance, the convergence of the 7,000 km-Singapore-Kunming Rail Link (SKRL) with ASEAN’s railway connectivity plans is becoming apparent; the recent deal between Thailand and China to construct the Thai section of the route may give this a big boost. If completed, the SKRL will link Kunming, the capital of China’s southwest Yunnan province, with all the capitals of mainland ASEAN countries (except Malaysia, since the line will bypass Kuala Lumpur on its way to Singapore). However, while cooperation on mainland Southeast Asia is picking up steam, Chinese support for the other component of the plan – maritime connectivity – is not yet in evidence. A March 2013 report identified several routes for the ASEAN RO-RO network (ARN), three of which were designated as priority routes for implementation in 2015: 1) Dumai (Indonesia)-Malacca (Malaysia); 2) Belawan (Indonesia)- Penang (Malaysia)-Phuket (Thailand) and; 3) Davao/General Santos (Philippines)-Bitung (Indonesia). Other routes were also identified, such as Muara (Brunei)-Labuan(Malaysia)-Brooke’s Point (Palawan) and Muara-Zamboanga (Philippines), but these secondary routes were hampered by such constraints as infrastructure and institutional arrangements. The report cited the unavailability of capable RoRo terminals and the need for a good road system to link ports with hinterland areas as among the issues that need to be addressed. This presents a new frontier for Chinese ODA or investments by Chinese enterprises. In addition, China also has an extensive experience in RoRo and short sea shipping with neighbors Japan and Korea and these lessons and best practices could be shared with appreciative maritime ASEAN states.

The Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA) will benefit from the completion of the ARN. It will spur intra-regional seaborne trade and commerce in a sub-region with much potential that has long remained a backwater, given its distance from their respective national metropolises. The presence of infrastructure can open these areas to further investment and bring economic opportunities to restive and less-developed areas such as southern Mindanao and the Sulu Islands. Regional cooperation to address maritime piracy, terrorism, smuggling, and seaborne transnational crime could also be established to secure investments in maritime infrastructure and safeguard the identified sea routes.

In recent years, China had upped the ante in its investments in ASEAN’s infrastructure sector. State-owned COSCO, one of the world’s largest shipping and logistics company, has a 49 percent stake in the COSCO-PSA terminal in Singapore. Beibu Gulf Holding (Hong Kong) Co. Ltd has a 38 percent equity share in a consortium that received a 30-year concession to manage, operate and develop Kuantan Port in Malaysia. This Port is poised to serve as a catalyst for the Malaysia-China Kuantan Industrial Park. China has also been investing in Indonesian infrastructure to facilitate access to the latter’s natural resources, such as oil and gas, coal, and mines. However, unlike in peninsular ASEAN, the pattern of Chinese infrastructure investments in maritime ASEAN states do not suggest convergence with the ARN.

Several factors can explain this. One is the absence of a direct link between China and the ARN. Unlike the rail connection in mainland ASEAN that could provide a landlocked Kunming direct access to an ASEAN port through SKRL, the ARN is too distant from most Chinese ports to facilitate a link. However, while the ARN may have marginal importance to China from an economic standpoint, being part and parcel of AMPC turns it into an opportunity for China to showcase its neighborhood diplomacy. Likewise, from an energy security vantage point, very large crude carriers from Africa and the Middle East bound for Northeast Asia (including China) may pass by BIMP-EAGA waters (through Lombok or Makassar Straits proceeding to the Sulu Sea and Mindoro Strait out to South China Sea) as an alternative to Malacca Strait.

Moreover, maritime ASEAN states are already according greater significance to their maritime economies and national interests. The Philippines had been promoting its Strong Republic Nautical Highway to enhance inter-island connectivity. Indonesia recently unveiled its Maritime Axis/Maritime Fulcrum doctrine which stresses, among other things, the importance of port connectivity not only within the country but also with other major ASEAN harbors. Thus, for China, support for the ARN could win it recognition from individual maritime ASEAN states as well as from ASEAN generally. In fact, the Philippines is one of the staunchest advocates of the ARN and some may entertain the thought that lack of Chinese enthusiasm towards this aspect of AMPC is part of the fallout from the tensions between the two. (It should also be noted that the sub-regional organization BIMP-EAGA, which would benefit tremendously from the ARN, is also headquartered in Davao, the biggest city in the Philippines’ second biggest island of Mindanao.) China can choose to allay this suspicion.

Despite unresolved territorial and maritime disputes, China seems to attach great importance to its neighborhood diplomacy with ASEAN. In fact, the idea of the Maritime Silk Road, as well as the AIIB, was first announced by President Xi Jinping in a speech to Indonesian parliament in October 2013. The fact that Indonesia is ASEAN’s biggest economy, one of ASEAN’s founding members, and widely seen as a regional leader demonstrates the importance of ASEAN is in China’s calculus. Support for AMPAC as a whole and the ARN in particular will enable China to win not only investments, but also the goodwill of its neighbors. It may even show that principled disagreement on political issues do not constitute a hurdle to pursuing practical cooperation in infrastructure development.

Lucio Blanco Pitlo III is a member of the Philippine Association for China Studies (PACS) and is presently a Masters of Law student from Peking University. He is a former Research Assistant at the University of the Philippines Asian Center and a former Technical Assistant at the Philippine National Coast Watch Council Secretariat.