China's Belt and Road Initiative and Its Implications for Southeast Asia

Abstract

China's Belt and Road Initiative and Its Implications for Southeast Asia Hong Yu (bio) During state visits to Kazakhstan and Indonesia in 2013, Xi Jinping announced the land-based Silk Road Economic Belt and the sea-based 21st Century Maritime Silk Road, respectively. Shortly after that, these two initiatives were combined to form one unified concept, known as the Belt and Road Initiative (BRI). This grand initiative, comprising various routes by sea and land, is intended to connect China with Southeast and South Asia, Central Asia, Pacific Oceania, Africa, and Europe. BRI is centered on both soft and hard infrastructure connectivity, aiming to forge an integrated and extensive network of regional infrastructure with China at its hub. BRI has gradually emerged as a top Chinese national strategy. Given China's emergence as a global power through industrial redeployment and outward investment, this initiative could reshape the geopolitical and geoeconomic landscape of Asia and beyond. BRI signals a shift in China's foreign policy and a departure from its long-held low-profile approach. Since Xi came to power in 2012, the Chinese government has adopted a far more proactive foreign policy stance, driven by global thinking.1 BRI serves as the key driver to advance China's interests overseas and demonstrates China's growing confidence and aspirations to be a rule-shaper in the economic governance of the region and beyond. Meanwhile, the demise of the Trans-Pacific Partnership (TPP), following the withdrawal of the United States, offers China further leeway to promote its New Silk Road agenda. The TPP's failure will increase the international momentum behind BRI to accelerate regional economic cooperation and integration through forging infrastructure, trade, and investment linkages. For the Southeast Asian countries, regional economic integration plays a very important role in mitigating external uncertainties and global economic vulnerabilities. The collapse of the TPP hit certain participating countries within Southeast Asia very hard, particularly Singapore. Being a tiny nation without an economic hinterland, Singapore has developed as the [End Page 117] most open and trade-dependent economy in the region. China's realization of BRI depends on the support and participation of other countries; in particular, the neighboring Southeast Asian countries are vital to the success of this grand initiative. The Southeast Asian countries, particularly developing countries like Indonesia and the Philippines, have largely welcomed BRI, which aims to promote close regional trade and investment linkage based on the improvement of interregional physical connectivity. Southeast Asia needs to focus consistently on constructing infrastructure in order to unleash the region's economic growth potential. The Southeast Asian countries consider that participating in BRI will help address their serious infrastructure deficits and accelerate industrial and economic growth. China has offered much-needed investment for connectivity-related infrastructure construction.2 This essay will first examine the opportunities for Southeast Asian countries to participate in BRI and then consider their perspectives on the challenges for the initiative. Opportunities for Southeast Asia Arising from BRI China's rise to become the world's second-largest economy and the largest trading nation has exerted a very powerful pull on the Southeast Asian economies. China has become the largest trading partner for all Southeast Asian countries except for the Philippines. The region, for its part, has benefited enormously from China's economic growth. It has taken advantage of the Sinocentric regional production network created since China's admission to the World Trade Organization in the early 2000s to export raw materials, intermediate goods, and mineral resources to China for final manufacturing into industrial goods before their export to the major consumption markets in the West. Setting aside for the moment the underlying geostrategic and geopolitical considerations, the potential benefits from BRI for Southeast Asia could be enormous. China has committed enormous financial resources to build a number of large-scale transportation projects aiming to improve interregional connectivity. For example, construction has already started on the Jakarta-Bandung high-speed railway in Indonesia and on a railway linking Mohan, on the Chinese border, with Vientiane, the capital of Laos. These two projects, both largely financed by Chinese banks and being [End Page 118] built by Chinese companies, mark Beijing's efforts to...