Japan Institute for National Fundamentals

Speaking out

Hiroshi Yuasa

【#518(Special)】Belt and Road Initiative Starts Backspin

Hiroshi Yuasa / 2018.06.07 (Thu)

June 4, 2018

     China’s Belt and Road Initiative (BRI), a modern silk road economic zone ambition, has started a backspin at last. In Malaysia that had attempted to join the BRI, a new administration led by Mahathir Mohamad has cancelled a Malay Peninsula high-speed rail project. Corruptions, religious disputes and economic disturbance in developing countries provide expansionist China with an opportunity to impose the BRI. Malaysia under the previous Najib Razak administration had been exactly plagued with a public fund misuse scandal, with government debt being equivalent to 54% of gross domestic product.

Malaysia cancels high-speed rail project
     Mahathir, who had retired from politics, might have felt a sense of crisis in the face of the embattled administration and decided to come back to politics. He might have thought that the Najib administration’s plan to borrow as much as 55 billion ringgits (about $13.8 billion) from China for the high-speed rail project would be incommensurate with Malaysia and plunge the country into a debt trap. Despite his high age of 92 years, Mahathir dared to run in May’s parliamentary election, demonstrating his distrust in China.
     “China comes with a lot of money and says you can borrow this money,” Mahathir said. “But you must think, ‘How do I repay?’ Some countries see only the project and not the payment part of it. That’s how they lose chunks of their country.”
     A marine silk road under the BRI extends from the South China Sea to the Indian Ocean via the Malacca Straits. Mahathir saw Sri Lanka, Maldives and Djibouti along the marine silk road failing to repay loans from China under the BRI. Particularly, Sri Lanka was forced to lease the strategic port of Hambantota to China for 99 years in payment for debt. It is speculated that China would use Malaysian ports for its submarines. Mahathir might have felt that the Chinese BRI amounts to the 19th century European colonialism.

Asian countries revising China policies
     Under the BRI, railways, ports and power plants have been being built in countries such as Pakistan, Laos, Myanmar and Indonesia. China’s aggressive approach on port construction in the South China Sea and the Indian Ocean has faced local opposition.
     Philippine president Rodrigo Duterte, who had reiterated his liking for Chinese President Xi Jinping, has modified his pro-China policy and deepened confrontation with China due to a new maritime territorial dispute. China has not only constructed an artificial island within the Philippines’ exclusive economic zone but also tried to take effective control of waters around the Benham Rise east of Luzon Island, angering the Philippines. Vietnam and Indonesia have opposed the expansion of the Chinese world involving the BRI, trying to identify what the BRI really is.
     The Mahathir administration’s China policy change might have provided developing countries attracted to the BRI with opportunities to reconsider their acceptance of the Chinese initiative. In line with such trend, Vietnam has deepened an approach to Japan that has come up with the Indo-Pacific strategy that Vietnam thinks is to counter the BRI. If Japan’s government of Prime Minister Shinzo Abe easily gets on the BRI in consideration of domestic politics, it may betray developing countries’ expectations.

Hiroshi Yuasa is a Planning Committee Member at the Japan Institute for National Fundamentals.