What China’s Belt and Road has to learn from 1920s America


May 17, 2017

What China’s Belt and Road has to learn from 1920s America

Chinese President Xi Jinping’s plan to resurrect the Silk Road must heed the lessons of a bygone era

By  Sourabh Gupta

Image result for china's one belt one road

Perceptive China-watchers have observed that President Xi Jinping ( 習近平 ) has modelled his political mission on Deng Xiaoping ( 鄧小平 ) – even if his methods bear a whiff of Maoism.

Deng put an end to the turmoil of the Cultural Revolution and engineered China’s transformation towards socialist modernisation. Xi’s sweeping reforms and anti-corruption crackdown aim to engineer an analogous transformation that will deliver China to the cusp of a “moderately prosperous” society by the time of the Chinese Communist Party’s centennial founding in 2021.

In one notable respect though, Xi has broken with the Paramount Leader. Deng had counseled a 24-character strategy on his countrymen: “observe calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership.” By contrast, Xi has not been shy to employ assertive diplomacy in support of an ambitious, long-term and strategic foreign policy.

No single political project personifies this more than the “Belt and Road Initiative”, which aims to resurrect the ancient Silk Road through infrastructure projects that will link Eurasian economies into a China-centred trading network. When two dozen or so heads of state assemble in Beijing for the Belt and Road Summit on Sunday and Monday, the magnitude of the imposing soft-power dimension of this “win-win” project that aspires to embed Xi’s “China Dream” within a “neighbourhood community of common destiny” will be on ample display. The BRICS Summit in Xiamen (廈門) this September will be a sideshow by comparison.

A variety of malignant motives, mainly economic, have been ascribed to the Belt and Road plan. It aims to channel Beijing’s allegedly manipulated reserve surpluses abroad, prop up the internationalisation of the yuan, unload China’s industrial overcapacity on neighbours, ensnare the recipient country in a cycle of debt, exploit the host country’s strategic resources and purchase their political affiliation along the way.

Steel pipes are loaded for export at Lianyungang port, Jiangsu province, China. Some critics see the Belt and Road as a way to unload China’s industrial overcapacity on neighbours. Photo: Reuters

While these claims contain merit, the redeeming arguments are more compelling. China’s hard currency reserves are better put to use in hard infrastructure projects in developing countries than deposited passively in New York’s financial market. At a time of volatility in liquidity provision in the international monetary system, yuan internationalisation and the rise of another issuer of safe, short-term and liquid instruments is to be welcomed. Moreover, the bilateral yuan swap lines and dedicated trade payments and securities settlement infrastructure that Beijing has rolled out over the past half-decade will enable recipient countries to denominate their borrowings in local currency, thereby limiting costs and exposures.

Transferring industrial capacity, improving infrastructure and reducing transaction costs on the other hand will enable developing countries to jump-start a dynamic upward spiral of growth and development in sectors where they enjoy latent comparative advantages – on lines similar to China’s own industrial jump-start in the 1980s. A comparison of China’s and the US’ Eximbank (Export-Import bank) loans to Africa, meanwhile, belie the oft-repeated claim that the former is directed solely at natural resources. China Eximbank has contributed to almost all 54 countries in Africa – resource rich or poor – and displays no perceptible pattern of favoured client state lending. US Eximbank loans, by contrast, are concentrated in energy and mining and confined to a favoured few.

Finally, with developing and emerging economies forecast to account for 59 per cent of world GDP in 2018 (neatly reversing the average 59 per cent accounted for by advanced economies from 1980 to 2007), as per the IMF, the rise of an alternate model of development financing that is leaner, cheaper, quicker and more flexibly attuned to host country systems and requirements should be welcomed, not stigmatised.

Development economics aside, the most consequential effects of the Belt and Road will be in international relations.

The Belt and Road’s storied predecessor, the Silk Road, two thousand years ago ushered in an age of commerce and civilizational exchange and afforded a set of loose principles of order and self-restraint. The Belt and Road’s ‘open regionalism’, likewise, will showcase Xi’s determination to practice a “new type of international relations” that binds China’s extended periphery as far out as Africa in a win-win embrace. Purposeful translation of his optimistic assessment for peace and development will realise the long-delayed promise of south-south cooperation in the post-colonial age. With luck, it will also confine the fascination with Great Power transition ‘traps’ – particularly the ‘Thucydides Trap’ (in which an established power’s fear of a rising power leads them into a vicious cycle of competition and eventually war) – to the armchairs of zero-sum-minded historians and think tank specialists.

Banners advertise the Belt and Road Forum in Beijing. Photo: AP

China’s re-emergence at the turn of, and the first few decades of, the 21st century bears remarkable parallels to America’s rise a century ago. Between 1890 and the early-1900s, the proportion of US manufacturers engaged in exports rose from less than a quarter to more than two-thirds, as the burgeoning surpluses of farms and factories were absorbed overseas. By the late-1910s and through the 1920s, the US became a prodigious exporter of capital as more than US$1 billion a year in loans surged out of New York. Nearly one-third as many foreign bonds floated on Wall Street as bonds of US companies.

As the Belt and Road becomes a conduit for the export of Chinese capital on as prodigious a scale as the US a century ago, its design and roll-out must also be informed by the cautionary lessons of that era. When boom had periodically turned to bust in the US economy and subjected many of her poorer hemispheric trade partners and raw material suppliers to simultaneous capital and commodity market shocks, Washington failed to provide the public goods (international development financing; recycling of capital flight; inter-governmental institutionalisation, and stabilisation loans, and so on) that could have placed a floor under the crash – and misery – overseas. China’s capital exports must avoid such boom-bust patterns and instead marry hard physical capital with soft technical know-how, managerial skills and local project ownership with purpose and patience.

During the next decade, China will replace the US as the world’s largest economic power. As it grows richer, it must assume the mantle of collaborative leadership and provider of global public goods. The Belt and Road is an appetising start but the proof of the pudding will be in its eating, as well as its ability to draw sceptical bystanders in the West and in Asia to the banquet

ASEAN Limps to a Filipino Gala


May 1, 2017

ASEAN Limps to a Filipino Gala

by Philip Bowring@www.asiasentinel.com

Image result for asean april summit meeting

Anybody wondering what useful came out of the 2017 Association of Southeast Asian Nations leaders’ summit in Manila over the weekend may read this brief communique. The answer is clear: very little besides what appears to have been quite a party.

  1. We, the Heads of State/Government of ASEAN Member States, gathered for the 30th ASEAN Summit in Manila on 29 April 2017 under the Chairmanship of the Republic of the Philippines with the theme “Partnering for Change, Engaging the World,” which envisions an integrated, peaceful, stable and resilient ASEAN Community that actively takes a leading role as a regional and global player in advancing political-security cooperation, sustainable economic growth and socio-cultural development in Southeast Asia and in the world.
  2.   We engaged in productive and fruitful deliberations reflective of our commitment to renew the aspirations and the enduring values of the ASEAN Founding Fathers, in adherence to the purposes and principles enshrined in the Bangkok Declaration which launched ASEAN in 1967 and the ASEAN Charter and to realize the six thematic priorities selected by the Philippines as ASEAN’s main deliverables for 2017, the 50th Anniversary of the establishment of ASEAN, namely: (a) A people-oriented and people-centered ASEAN; (b) Peace and stability in the region; (c) Maritime security and cooperation; (d) Inclusive, innovation-led growth; (e) ASEAN’s resiliency; and (f) ASEAN: a model of regionalism, a global player.

Or they could read the 124 paragraphs of additional waffle about lofty goals and such as ending smuggling, piracy and other evils and fears about situation, such as North Korea about which ASEAN has no role to play. Or they could cheer the acknowledgement of the “Role of the Civil Service as Catalyst for Change,” a document oozing with the self-congratulatory spirit of so much of the group’s pronouncements.

A more entertaining and doubtless more accurate flavor of the meeting was the priority given in the Philippines media to congenial aspects of the events. President Duterte managed to be on his best behavior, dressing in a manner his fellow leaders would regard as appropriate and not delivering swear words or gratuitous insults. Even his kowtow to China was delivered in phrases which did not especially offend the Vietnamese and others wanting a stand against China’s annexation of the South China Sea rather than pitiful retreat in the face of promises of Chinese riches.

The main theme as far as the local media was concerned was it showed the Philippines was the best big party organizer in the 10-nation group. The highlight was the “ASEAN Fiesta” attended by 800 guests and featuring ethnic dances, folk and chart-topping music, and with the ASEAN leaders all attired in newly-designed barongs based on Mindanao tribal patterns and receiving Philippine mahogany trays designed with folk dancers or colorful birds.

But the brutal facts underlying ASEAN in the year it turns 50 are that such political cohesion as it had at times continues to fray. Inertia and indecision on the part of Indonesia, the region’s biggest nation, must carry much of the blame despite President Joko Widodo’s international standing and interest in the maritime and archipelagic issues. Indonesian wavering makes it easier for China to keep ASEAN divided on the sea issue, again retreating into pious statements about a Code of Conduct.

Image result for Dubious Characters Prayut, Najib Razak

Blame for ASEAN’s lack of standing too resides with the dubious reputations of some current regional leaders, notably Duterte himself, Malaysia’s Najib Razak and Thailand’s Prayuth Chan-ocha. Contrast this with the days of Lee Kuan Yew, Suharto and Mahathir Mohamad.

Regional cooperation on the economic and social fronts has not been set back by political divisions so far. However, it is hard to see any new initiatives or much progress in making a reality of existing free trade agreements despite minor improvements in some areas of cooperation. A more forthright approach to real fears about protectionist threats by the new US President Donald Trump, who stunned the association by inviting Duterte to the White House at some future time, would also have been appropriate at a time when Trump is apparently entering the dangerous territory of mixing trade with security issues.

Trump has wrecked Asian unity by cancelling US participation in the TransPacific Partnership, the 12-nation trade pact negotiated by his predecessor, whose main if unspoken aim was to keep China out of it.

ASEAN Leaders are concerned about rising tension over North Korea


April 30, 2017

ASEAN Leaders are concerned about the rising tension over North Korea

by Mergawati Zulfakar@www.thestar.com.my

Image result for ASEAN  April Summit Meeting

ASEAN leaders are worried that the rest of Asia will be the first to be hit and suffer from the fallout from a potential nuclear war if the current tension in the Korean peninsula is not contained.

Philippines President Rodrigo Duterte painted a bleak picture of what would happen in South-East Asia if there is war in the Peninsula.

Image result for Duterte at ASEAN April Summit Meeting

“ASEAN leaders are extremely worried that there seems to be two countries playing with their toys. And they are playing with dangerous toys.The United States must be prudent and patient. We know you are playing with somebody who relishes letting go its missiles. I would not want to go into his mind because I don’t know what is inside but this is putting Mother Earth on edge. One miscalculation of any missile, one that hits somebody will cause a catastrophe,” he told a press conference after chairing the 30th ASEAN Summit.

Prime Minister Datuk Seri Najib Tun Razak was among the leaders who attended the summit.

Duterte also revealed that he would be talking to US President Donald Trump on the phone and he would convey ASEAN’s fear on war potentially breaking out.

“Am expecting a call from President Trump tonight. Who am I to say you should stop it. But I would say ‘Mr President, please see to it that there is no war because my region will suffer immensely’. The first fallout would be Asia and ASEAN. Very near, very dangerous,” he said when asked if ASEAN leaders discussed the Korean Peninsula situation at the summit.

Region’s leaders: (From left) Najib, Myanmar’s State Counsellor and Foreign Minister Aung San Suu Kyi, Thailand’s Prime Minister Prayut Chan-O-Cha, Nguyen, Duterte, Singapore’s Prime Minister Lee Hsien Loong, Brunei Sultan Hassanal Bolkiah, Cambodia’s Prime Minister Hun Sen, Indonesia’s President Joko Widodo and Laos Prime Minister Thongloun Sisoulith taking a photo together at the 30th Asean Summit in Manila. — AFP

ÄSEANs ‘Leaders: (From left) Malaysia’s Prime Minister Najib Razak, Myanmar’s State Counsellor and Foreign Minister Aung San Suu Kyi, Thailand’s Prime Minister Prayut Chan-O-Cha,  Vietnam’s Nguyen,  President Duterte (host), Singapore’s Prime Minister Lee Hsien Loong, Brunei Sultan Hassanal Bolkiah, Cambodia’s Prime Minister Samdech Techo Hun Sen, Indonesia’s President Joko Widodo and Laos Prime Minister Thongloun Sisoulith at the 30th ASEAN Summit in Manila. — AFP.

Duterte, who made his debut as ASEAN chair this year, also sent a clear message to other ASEAN countries that the Philippines will be a “much friendlier” neighbour to China, especially in the contested South China Sea.

In the Chairman Statement issued at the end of the ASEAN Summit here yesterday, a proposed reference to full respect for legal and diplomatic processes has been taken out from the South China Sea section, a move seen by some senior ASEAN officials as silencing an international arbitral court backing Manila’s claims in the area.

The move has puzzled some diplomats as the Philippines under former President Benigno Aquino III had lobbied hard at ASEAN meetings to voice strong opposition to Chinese expansion in the South China Sea.

“After strong criticism against China, the Philippines now sounds like it is pandering to China,” said a diplomat.

An ASEAN official said the draft of the statement with the changes was only issued late Friday night and member states have given their input yesterday.

“But as chair, the Philippines can include what they want in the final statement, but as in past statements it must reflect the views of all ASEAN leaders,” said the official.

Duterte, in a recent interview, had said there was no point pressing China to comply with the arbitral ruling and it was not an issue at the summit.

The Chairman’s Statement also said the leaders reaffirmed the importance of enhancing mutual trust and confidence, exercising self-restraint in the conduct of activities such as land reclamation and militarisation that may complicate the situation.

Book Review: ASEAN, Sovereignty and Intervention in Southeast Asia


April 17, 2017

ASEAN, Sovereignty and Intervention in Southeast Asia

Book Review by Malcolm Cook

ASEAN, Sovereignty and Intervention in Southeast Asia. By Lee Jones. Basingstoke: Palgrave MacMillan, 2012. Hardcover: 262pp.

Lee Jones’ new book on ASEAN and the states of Southeast Asia is refreshingly iconoclastic. It tackles one of the core tenets of ASEANology that has been intellectually reinforced by the Constructivist turn in the analysis of this regional organization. The icon that Jones’ book takes aim at is the scholarly near consensus “on the absolute centrality of the non-interference principle for ASEAN states” (p. 2). A consensus that Jones’ correctly notes echoes the official rhetoric of ASEAN and its member states.

Image result for ASEAN, Sovereignty and Intervention in Southeast Asia. By Lee Jones

There are three steps to Jones’ argument that this consensus is misplaced. First, he establishes that a range of Constructivist, Realist and English School scholars of ASEAN uphold this consensus despite their intellectual differences and debates over other aspects of the organization.

Second, he establishes the case that ASEAN member states have repeatedly intervened in Southeast Asia both in the Cold War and post-Cold War periods in apparent contradiction to ASEAN’s commitment to non-interference. Where he sees other scholars of ASEAN as downplaying or ignoring these interventions, he makes them the empirical core of his argument.

Third, Jones posits a theoretical explanation for when member states uphold ASEAN’s “cherished norm” of non-interference and when they violate it. He adopts the multi-variable critical political economy approach that Jones argues, for Southeast Asia, “was pioneered by scholars based at or linked with the Asia Research Centre at Murdoch University, Perth” (p. x). Befitting this social conflict approach’s Marxist roots, Jones focuses on state-capital relations in the different member states of ASEAN and the role of the state and state institutions in supporting powerful owners and managers of capital in their domestic conflicts and transnational expansion.

This approach sees “state managers” in the ASEAN member states invoking the non-interference norm and its purported centrality to ASEAN as a “technology of power” to hinder external interventions in favour of domestic marginalized groups such as the people of East Timor (Timor Leste) when it was under Indonesian control and communist rebels and their sympathizers in the Philippines [End Page 303] and Thailand.

These managers violate the same norm when they perceive external threats to their states such as during the invasion of Cambodia by communist Vietnam during the Cold War or threats to foreign market access such as Western pressure on ASEAN over Myanmar’s membership.  In the case of Cambodia, both in the Cold War and post-Cold War periods and Myanmar in the post-Cold War period, it has not only been ASEAN member states that Jones argues have violated this “cherished norm” of ASEAN but ASEAN itself.

Jones links Myanmar’s decision to seek ASEAN membership, ASEAN’s acceptance of Myanmar and ASEAN’s subsequent pressure on the junta to reform politically all to dominant state and capital interests. The junta was interested in joining ASEAN to benefit from the protection of ASEAN’s non-interference norm while providing more economic opportunities for state-linked firms. Myanmar’s membership benefited dominant capital interests in ASEAN states as shown by the rapid increase in Thai and Malaysian foreign investment in Myanmar. However, Western disdain at ASEAN’s acceptance of Myanmar and the importance for ASEAN member states and dominant capital interests of continued good relations with Western powers, particularly after the Asian financial crisis, strongly underpinned ASEAN pressure on Myanmar to reform politically.

ASEAN, Sovereignty and Intervention in Southeast Asia is most effective at establishing the existence of this near consensus in favour of the ASEAN commitment to non-interference and this consensus’ empirical and analytical shortcomings. This definitely is a worthwhile independent contribution to the literature and our understanding of ASEAN’s development.

The author repeatedly shows how the most quoted scholars of ASEAN, particularly those of a Constructivist bent, downplay examples of interventions as isolated or, counter-intuitively, as supporting the general principle of non-intervention. In the second half of the book that looks at the post-Cold War period, Jones insightfully analyses how ASEAN’s rhetorical embrace of good governance, democratization, human rights and ASEAN community building all.


Timor Leste–The Easy to Forget 11th ASEAN Member


April 6, 2017

Timor Leste–The Easy to Forget 11th ASEAN Member

by Khoo Ying Hooi@www.newmandala.org

The longer Timor-Leste’s membership is delayed,it will only reflect negatively on ASEAN’s decision-making process, writes Khoo Ying Hooi.

Image result for Timor Leste

2017 is a pivotal year for the Association of Southeast Asia Nations (ASEAN) as it celebrates its 50 years since its founding in 1967. Among the puzzles that need to be solved is whether Timor Leste will be formally accepted as the regional bloc’s 11th member.

As the newest country in Southeast Asia, Timor Leste and its place in the region is often overlooked. Timor-Leste is vulnerable not only as a small and relatively young state. The fact that it has suffered an Indonesian occupation that destroyed its economy and infrastructure prior to the restoration of independence in May 2002, means it faces various post-conflict challenges, including having its voice heard in regional and international forums.

Image result for cristo rei of dili

Cristo Rei of Dili

Timor-Leste expressed its desire to be part of ASEAN right after the restoration of independence in 2002. In July 2005, it became a member of the ASEAN Regional Forum (ARF) and it signed the ASEAN Treaty on Amity and Cooperation in 2007. As outlined in its Strategic Development Plan 2011-2030, Timor-Leste’s aspiration to join ASEAN is based on geographical location, the wishes of the country’s leaders and people, and its cultural affinity with its neighbours.

Timor-Leste officially applied for ASEAN membership in March 2011 during Indonesia’s chairmanship after a number of years as an ASEAN observer. An ASEAN Coordinating Council Working Group (ACCWG) was then set up and tasked to assess Timor-Leste’s readiness to be part of the regional grouping, and the implications for ASEAN if it did join. It has been almost six years now since its official application in 2011.

With its domestic challenges, some questioned Timor-Leste’s aspiration for ASEAN membership, as well as the benefits and costs of membership.  For Timor-Leste’s part, ASEAN membership is hoped to provide access to an established forum where important issues such as security, economic development and integration, and socio-cultural matters can be pursued.

Timor-Leste has indeed come a long way. The nation’s independence came at a high price. Now, the country is gradually moving from fragility to a country that is consolidating and strengthening the necessary foundations of a state. But that is not without obstacles.

In ASEAN’s 50th year, many are hoping that the Philippines will use its chairmanship to accelerate  Timor-Leste’s formal membership to  the regional bloc. Under the theme of “Partnering for Change, Engaging the World” as announced by President Rodrigo Duterte last September 2016 in Laos, it is hoped that ASEAN could live up to its inspiration as a model of greater regional integration when it comes to Timor-Leste.

The longer Timor-Leste’s membership is delayed, it will only reflect negatively on ASEAN’s decision-making process that has often being criticised. It is time to demonstrate ASEAN’s commitment to a region made prosperous through the spirit of cooperation and integration, and most importantly, as a people-centred organisation.

Khoo Ying Hooi (PhD) is Senior Lecturer at the Department of International and Strategic Studies, Faculty of Arts and Social Sciences, University of Malaya, Malaysia.

ASEAN Decision Making can be frustrating and self -defeating –Who is holding back Timor Leste’s Membership?


March 11, 2017

ASEAN Decision Making can be frustrating and self-defeating:Who is holding back Timor Leste’s Membership?

by Dr. Khoo Ying Hooi@www.newmandala.org

Image result for Dili

Delay in admitting Timor-Leste as 11 the member  will only reflect negatively on ASEAN’s decision-making process, writes Khoo Ying Hooi.

2017 is a pivotal year for the Association of Southeast Asia Nations (ASEAN) as it celebrates its 50 years since its founding. Among the puzzles that need to be solved is whether Timor Leste will be formally accepted as the regional bloc’s 11th member.

As the newest country in Southeast Asia, Timor Leste and its place in the region is often overlooked.

Timor-Leste is vulnerable not only as a small and relatively young state. The fact that it has suffered an Indonesian occupation that destroyed its economy and infrastructure prior to the restoration of independence in May 2002, means it faces various post-conflict challenges, including having its voice heard in regional and international forums.

Timor-Leste expressed its desire to be part of ASEAN right after the restoration of independence in 2002. In July 2005, it became a member of the ASEAN Regional Forum (ARF) and it signed the ASEAN Treaty on Amity and Cooperation in 2007. As outlined in its Strategic Development Plan 2011-2030, Timor-Leste’s aspiration to join ASEAN is based on geographical location, the wishes of the country’s leaders and people, and its cultural affinity with its neighbours.

Timor-Leste officially applied for ASEAN membership in March 2011 during Indonesia’s chairmanship after a number of years of ASEAN observer status. An ASEAN Coordinating Council Working Group (ACCWG) was then set up and tasked to assess Timor-Leste’s readiness to be part of the regional grouping, and the implications for ASEAN if it did join. It has been almost six years now since its official application in 2011.

With its domestic challenges, some questioned Timor-Leste’s aspiration for ASEAN membership, as well as the benefits and costs of joining.  For Timor-Leste’s part, ASEAN membership is hoped to provide access to an established forum where important issues such as security, economic development and integration, and socio-cultural matters can be pursued.

Timor-Leste has indeed come a long way. The nation’s independence came at a high price. Now, the country is gradually moving from fragility to a country that is consolidating and strengthening the necessary foundations of a state. But that is not without obstacles.

In ASEAN’s 50th year, many are hoping that the Philippines will use its chairmanship to accelerate  Timor-Leste’s formal membership to  the regional bloc. Under the theme of “Partnering for Change, Engaging the World” as announced by President Rodrigo Duterte last September 2016 in Laos, it is hope that ASEAN could live up to its inspiration as a model of greater regional integration when it comes to Timor-Leste.

Timor-Leste has done everything it can to be part of ASEAN. Now, the question is not what Timor-Leste will have to accomplish to be accepted formally as ASEAN’s 11th Member State. The test now lies with ASEAN leaders, and whether they can live up to the ASEAN aspiration as lauded in the ASEAN Community.

The longer Timor-Leste’s membership is delayed will only reflect negatively on ASEAN’s decision-making process that has often being criticised. It is time to demonstrate ASEAN’s commitment to a region made prosperous through the spirit of cooperation and integration and most importantly, a people-centred organisation.

Khoo Ying Hooi (PhD) is Senior Lecturer at the Department of International and Strategic Studies, Faculty of Arts and Social Sciences, University of Malaya, Malaysia.