Politics and Environment

China’s two silk road initiatives directly benefit Thailand

05 March 2015

Two Silk Raods

Human Capital Alliance’s Edwin Sim looks at a recent article on China’s Silk Road initiatives.

China’s proposed dual silk-road initiatives connecting it to Europe and South East Asia will have significant economic and political ramifications, especially for Thailand .

Recently, I had the pleasure of reading David Arase’s paper “China’a Two Silk Roads: Implications for Southeast Asia.

Arase, the Resident Professor of International Politics at The Hopkins-Nanjing Center at Nanjing University, The John Hopkins University of Advanced International Studies explains how China and its President Xi Jinping’s plan to restructure the Eurasian economy and geo-politics by building two new silk roads.

These trans-Eurasian networks of economic connectivity will not only help China sustain its growth momentum for decades but will also draw Eurasian countries into China’s economic and gravitational field.

The two silk roads

In December 2014, Premier Li Keqiang traveled to Serbia and met 16 government heads at the third China-Central and Eastern European Leaders Meeting where he announced that China would provide a $US10 billion credit line for infrastructure development, a $US3 billon Chinese equity investment fund, a project to build a new railway from Budapest and Skopje to the Greek Port of Pireaus on the Mediterranean Sea.

Soon thereafter, Li went to Thailand and signed a $10.6 billion financing of the Thai segment of a railway connecting Bangkok to China;

The connection between these far-flung destinations, Arase said is part of China’s two Silk Road initiatives that Xi Jinping announced during his tour of Central Asia in September 2013.

Chinese-style economic integration

China isn’t following the West’s NAFTA and EU economic liberalization approach in regional integration.

Arase said the West uses multilateral treaties to remove legal and institutional barriers to trade and investment, and to create legally binding rules, standards, and dispute resolution mechanism to create a flat open space for private sectors.

In contrast, China’s approach, he said centers on economic facilitation. “This means boosting trade and investment by improving connectivity between markets by, for example, building more efficient transportation linkages, providing more trade and investment finance, and multiplying human exchange opportunities.”

China’s aim, he said is to create transcontinental economic corridors that radiate across the Eurasian landmass (the Silk Road Economic Belt) and along the maritime rim of Eurasia (the 21st Century Maritime Silk Raod).

“The result will be to channel economic flows to or from China.”

Hard and soft infrastructure

The two new silk road will include hard and soft infrastructures.

“Hard infrastructure is the steel, concrete and machinery that goes into building railways, highways, ports, energy pipelines, industrial parks, border customs facilities and special trade zones.”

Soft infrastructure will include help to develop development finance institutions, international trade and investment agreements, multilateral corporate forums, academic research, cultural exchange and tourism, that he said constitute the social foundation for trade and investment flows.

Direct effect on Thailand

China’s Silk Road initiatives will directly affect Thailand.

According to Arase, landlocked Yunnan, long a backward and remote border province has now been turned into China’s Silk Road Economic Belt “strategic beachhead” into Indochina.

Yunnan, which is a Greater Mekong Subregion (GMS) Economic Cooperation Program member currently manages a variety of Mekong Rivers watershed issues.

Kunming is the hub of land transport corridors into China.

“ An all-weather highway leads to Bangkok, and another leads to Hanoi. Planned electrified railways will link Kunming to Vientiane, Bangkok, Hanoi, Ho Chi Minh, Kuala Lumpur and Singapore.”

China’s South-South Cooperation

The new Silk Road initiatives Arase said fosters a new era of China “South-South cooperation” which means it gives economic aid to meet China’s own development needs while also serving the development needs of recipients.

“This win-win” economic cooperation formula fits the two Silk Roads because countries along the routes tend to be developing countries that lack good infrastructure.”

“Economic infrastructure is not high priority among Western aid donors, and so China has found a special role to play in shaping the economic integration of Eurasia.”

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