Swan geese are able to fly far and safely through winds and storms because they move in flocks and help each other as a team.

May 2017 Highlights &
Commentary

By Maria Townsend 30/5/2017
  
This month saw China’s inaugural “Belt And Road Forum” (BARF).  The event, held in Beijing, was a huge diplomatic effort, bringing together a number of world leaders.  Was this just the start of what could be China’s world domination?
  
Image sourced from Macau Daily Times
  
  
What is the “One Belt One Road” Initiative?

The One Belt One Road Initiative, commonly known as OBOR, is the biggest global investment of modern times.  Led by the Chinese Communist Party, a lot of propaganda markets its proposed economic value for the world, however it also undeniably has great strategic, political and security implications.

The initiative, involving 68 countries and 70% of the world’s population makes big promises of eradicating poverty and benefiting all involved with its trade deals and infrastructure projects throughout Europe, Asia and the Pacific.  The initiative covers two major parts; the Silk Road economic belt (a road from China to Europe), and also the 21st century maritime Silk Road (a sea based network of shipping routes and port development).
According to Chinese state media, China has already invested $1 trillion and intends to pump in a lot more capital.

The benefits of OBOR to China are two fold; political and economical.  The economic benefits have long been touted by the Chinese state media; China’s expansion overseas, an avenue for China to ship its domestic overproduction overseas, and of course, as per the propaganda, promoting globalisation in a way that enables member countries to help one another in mutual cooperation.  “Swan geese are able to fly far and safely through winds and storms because they move in flocks and help each other as a team,” said the Communist party chief, President Xi Jinping.

Xi said the project has "no political agenda." Although marketed for its economic advantage, OBOR is arguably primarily a political project. The Chinese government tries to dispel any comparison with the Marshall Plan for the USA (where following WWII, the USA was instrumental in rebuilding Western Europe propelling it to the super power status it became and still is today), but some view OBOR as China’s attempt to restore its historical status as Asia’s dominant power.  

There are also concerns for investors as a number of the targeted countries for OBOR are unstable, for example Laos, posing great economical risk.  There are also security risks in the increase of troops being deployed to tribal areas of Pakistan and riots in Burma as reported by international media.  Where labour is cheaper in countries like Myanmar, Laos and Cambodia, China has shown a poor record of environmental protection and labour practices.  How much of the local economy will be improved when a lot of the Chinese corporations opt to bring workers in from China instead of hiring locally?

  
What does OBOR mean for Malaysia?

Malaysia is now China’s largest trading partner in ASEAN and the third largest in Asia. Last year, the total two-way trade was recorded at USD 102 billion, according to Chinese data. Both countries have a trade goal of USD 160 billion by 2017.

As the recipient of more than USD 200 billion worth of Chinese infrastructure and real estate investment, Malaysia is fast becoming the principal ASEAN partner in China’s One Belt One Road (OBOR) initiative.  China’s “One Belt, One Road” initiative also shares striking similarities to the ASEAN Master Plan for Connectivity which Malaysia has already subscribed to.  Both envisage transport connectivity as a way to bring member countries closer to one another, facilitating better access for trade, investment, tourism and people-to-people exchanges.  OBOR promises massive investment and trade opportunities for Malaysia and is expected to create opportunities in transport, tourism, trade and education sectors.

China is the biggest trading partner for all of its Asian neighbours and a growing investor. But other Asian governments are uneasy about Beijing's strategic ambitions, particularly following its increased military presence and military bases in the South China Sea. 

Against the current trend of anti-globalisation, at the BARF, Chinese President Xi urged world leaders to reject protectionism and embrace globalisation, pulling together like airborne swan geese.  With the USA pulling out of the TPPA, the vacuum left by the withdrawal of the super power away from South East Asia may quickly be replaced by China.  Interestingly, OBOR has certainly had the attention of some strong man leaders of the world including Presidents Vladimir Putin of Russia and Recep Tayyip Erdogan of Turkey who attended BARF, whilst most western leaders, including Trump, Angela Merkel and Theresa May were absent, and India publically voicing its opposition referring to the initiative as “little more than a colonial enterprise”. 

Trade deals are continuing to be made between China and Malaysia, and the enthusiasm for OBOR here is gaining momentum.  During BARF, Malaysia signed nine memorandums of understanding and agreements totalling more than USD 7.22 billion.  We raise the question of how these projects will be funded.  How much of the investment will be equity, and how much will be in the form of a loan that will naturally have to be repaid - but at what terms?  The premise is that the increase in business will result in an increase in revenue which will help loan repayment.  We will indeed have to wait and see exactly how inclusive these projects will be, and how much benefit OBOR can really bring to the everyday man.