The state of regional connectivity between China and Southeast Asia - Transcript

| 00:00:02 Duncan McCargo | This is the Nordic Asia Podcast.

| 00:00:09 Andreas Bøje Forsby | Welcome to the Nordic Asia Podcast, a collaboration sharing expertise on Asia across the Nordic region. I'm Andreas Bøje Forsby, post-doc researcher at the Nordic Institute of Asian Studies, NIAS, where I primarily focus on China's foreign and security policy. I'm delighted to be joined today by Xiangmin Chen, who is a Paul E. Raether Distinguished Professor at the Centre for Urban and Global Studies at the Trinity College in Hartford, Connecticut. From 2007 to 2019, Professor Chen served as the founding Dean and Director of the Centre for Urban and Global Studies, and he's also a visiting Professor at Fudan University in Shanghai. He has co-authored several books, including a recently published one on the Belt and Road Initiative as Epochal Regionalisation. Professor Chen is actually a well-known guest speaker at NIAS, where he has given a couple of lectures, most recently in January, where he talked about his new book. Today, we have invited Professor Chen to talk about regionalisation, infrastructural developments and borderland spaces in relations between China and its Southeast Asian neighbours within the broader context of the Belt and Road initiative, China's Global Infrastructure Development and Connectivity Strategy, which was launched back in 2013. I think it's fair to start out by saying that the Belt and Road Initiative has recently experienced some headwinds, not only because Washington, as part of its deep and strategic rivalry with Beijing, has openly criticised the BRI, and urged its allies and partners not to take part in it, but also because local populations and political elites and designated BRI partner countries have voiced growing concerns about various aspects of BRI-related projects. Since South East Asian countries are among the closest of China's Belt and Road Initiative partners, one could argue that the region constitutes sort of a litmus test for the Belt and Road Initiative. It's definitely very interesting to zoom in on Southeast Asian countries, especially those in China's immediate backyard, such as Myanmar, Laos, Cambodia, Thailand and Vietnam, to take a closer look at some of the BRI related projects in the region, as well as wider political and economic dynamics in relations between these countries and China. But let me start by asking you, Professor Chen - and thank you very much for joining us today - which one of the Southeast Asian countries has become China's closest BRI partner from your perspective?

| 00:02:39 Xiangmin Chen | Good afternoon, everybody. Yeah Andreas thanks for inviting me to be on this wonderful podcast, and it's so nice to be back with NIAS for another opportunity to sharing my research. I think the questions, the background information you have just provided is very timely because we've been seeing the increasing efforts from China, from the national level, from the provincial level, from the local level to really extend the BRI in a big way into Southeast Asia, particularly in mainland Southeast Asia. In other words, the countries of Myanmar, Laos and Vietnam, that border or shared long border line with China. And I would say Myanmar and Laos and to a slightly lesser extent Vietnam, are the three countries that have engaged with an increasing number of cross-border infrastructure trade related initiatives. For example, I'll mention one particular large scale transport infrastructure project. That's the China-Laos Railway that originates from the city of Kunming, the provincial capital of Yunnan Province. By the way, Yunnan is a landlocked province, so it makes sense for China to thinking about to open up a long access to the sea or Yunnan province. And Laos also happens to be a small, landlocked country. So the China-Laos Railway, which covers over four hundred kilometers that originates from Kunming, comes down south, goes through the border city of Mohan on the Chinese side of the border, and also Boten, the Lao counterpart opposite town, on the Laos side. And then we'll run past Luang Prabang, Vang Vieng and arrive in Vientiane, the capital city of Laos. So this project started in 2015, even though the idea goes back a little earlier and the project has been going on even through the pandemic of 2020, and I think the project is now on time or on schedule, it will be completed by the end of 2021. I think this will be a pretty significant project that will allow Laos to obviously extend the railway to Bangkok and have an access to sea, at the Port of Bangkok and it will help Northern Laos which is less developed, and then the capital city region to develop some limited manufacturing, exporting more agricultural products. For example, more recently, Laos has been able to use the connected highway that's been built in the upgrading the border towns between China and Laos to export our bananas into Vietnam. So I would mention that is a very significant example that illustrates the kind of projects that have brought China and its neighbouring countries in Southeast Asia closer together.

| 00:05:49 Andreas Bøje Forsby | I agree this is a very good example to start off with, but I was wondering if you could perhaps mention some other of the prominent projects that have taken place in the Chinese immediate backyard, among these five countries that I just mentioned. I mean, apart from the last China railway project, would you sort of emphasise any other particular projects that have been successful from your perspective, enhancing this regionalisation process that you also discuss in your book?

| 00:06:18 Xiangmin Chen | Well, in fact, I would go a little further beyond the immediate border region to bring in a similar and yet different example, that's another train project, a high speed train project, that China is building between the capital city of Indonesia, Jakarta, and its tourist city of Bandung. So two train projects, very similar in terms of their starting time of around 2015. Both are projected to finish by the end of 2021. Yet their uses, their planned access, connections are quite different. And the Jakarta-Bandung high speed project, even though it's in an island nation, brings the countries' two most important cities together and it's the first high speed train export project from China to Southeast Asia, it's very symbolically and functionally important for China to show off its completed bungled system of high speed train design, production, service, management and maintenance. So in that sense, it's a very significant project for China to execute and when the high speed train project is connected and it's going to be able to shorten the travel distance between these cities from three plus hours to 40 minutes and come back to the China-Laos Railway, once it is put into use, it will also shorten the two day travel between this capital city of Vientiane to the border with China to three hours. So I mentioned this pair of projects to give the listener a broader comparative sense of the kind of large scale projects that really represent and project the kind of building engineering capacity that has come through with the large scale, infrastructure oriented approach of the BRI.

| 00:08:30 Andreas Bøje Forsby | And I do think that these examples that you have brought up so far are very interesting and they are very much reflective of what's going on with the Belt and Road Initiative in relation to Southeast Asia. And, of course, connectivity being very much one of the key words. And the Chinese government has seemed to be very keen on regaining its historic role as the key economic and, some would even say, a key geopolitical actor in the region. So I was also wondering, in your view, to what extent are countries like Myanmar and Laos and perhaps also Cambodia, Thailand and Vietnam becoming more closely integrated with or even one might add, dependent on China because of these BRI related infrastructural projects in the region? Or how do you see this playing out?
| 00:09:19 Xiangmin Chen | I think this question follows logically and sort of naturally from the previous point of discussion. I think if you place these large scale transport infrastructure projects in the larger context of China-ASEAN trade relationships, this can be traced back to the China-ASEAN free trade area, which was signed, established in 2020 operational. And I think that large scale trade agreement brought down the tariffs between the two sets of trading partners from 9.8 percent to 0.1 percent. So that was a very big deal to strengthen the overall commercial relationship between China and ASEAN. Now, if you look at much more recent data to trace forward between 2010 to 2020, it's a decade, and you see at the end ASEAN, Southeast Asia has maintained its largest trading relationship with China. In other words, ASEAN has been China's largest trading partner for the last 10 years. And within that larger context, I would also single out Vietnam, as you also mentioned, Vietnam last year, actually, Vietnam rose to be number six largest trading partner with China, with the registered value of bilateral trade of 730 billion US dollars, seven percent growth annually from the previous year. So the macro data also confirm a growing and closer economic relationship between China and Southeast Asia. I think the other part of your question also makes a lot of sense. What does this mean in terms of interdependency, in terms of our relationships? And I would say on that question, within ASEAN, all the ten ASEAN countries, there's a quite a bit of a variation among the countries in terms of how they view China. Now, if you look at the poorest countries, Laos, Myanmar, Cambodia, I think there's greater interest on the part of the three governments to work with China, on BRI related projects. I think the Philippines and Vietnam are a little more cautious, even though their larger economies and the economic relationships have been very strong, particularly Vietnam. So there's a little bit of competition as well between Vietnam and China for labor intensive manufacture products, particularly the pandemic last year that have also pushed a little bit more of the relocation of companies, manufacturing companies, investments and factories to move from China, particularly the Pearl River Delta in southern China to Cambodia, to Vietnam and a little bit to Myanmar as well. Another part of my research focuses on some of these factory movements, relocation from southern China to Cambodia. So you can look at all of these across a variety of spatial skills, all the way from the large trading bloc relationship with China and down to specific cities and places where there's also growing private Chinese investment. They may be small scale, they're entrepreneurs, but they are also making a difference to extending and strengthening China's business connections with Southeast Asia. They may not be directly and strongly connected to the BRI initiative from the state centric point of view, but they also bring both opportunities and risks to Southeast Asia in terms of their mixed effects on local employment, on the environment, on competition and other kinds of intended unintended consequences.

| 00:13:19 Andreas Bøje Forsby | All right, and so now you've already talked a lot about these growing interdependencies between Southeast Asia and China, and we all know that the coronavirus pandemic has had a disruptive effect on collaborative projects around the world, of course, including the Belt and Road Initiative, where, for instance, the construction of the last China railway line that you brought up earlier has been temporarily brought to a halt, as far as I have learned. Some would argue that the heydays of the Belt and Road Initiative were already behind us before the pandemic emerged early last year. Do you share this view and to what extent do Southeast Asian countries like Myanmar, Laos, Cambodia and Thailand compete with one another to attract Chinese BRI-related investments today, from your perspective?
| 00:14:04 Xiangmin Chen | Again, that's a really nice follow up question. I forgot to mention another much more recent momentum that is going to further strengthen the China-ASEAN relationship, and that's the RECP, the Regional Economic Comprehensive Partnership that was agreed by 15 countries. ASEAN, China, plus the other four, Japan, Australia, New Zealand and South Korea. So that's already created the world's largest trading bloc. And so that's an interesting example, because this really reflects from the macro perspective on your question. And some scholars will say: "well, you know, it is sort of a China land, China driven initiative", but most would agree, I think that's much more of a ASEAN initiative. Some have called it the ASEAN middle power diplomacy, but it will be very interesting to see what RECP will do on top of what we already have talked about. Now, getting back to your specific question about BRI, I would say that BRI has gone through a kind of evolution and I would say since maybe the second form in 2019, BRI kind of has entered what I or some others would call a BRI 2.0. There were lessons that were learned, I think from the Chinese side, from a government perspective, with regard to sensitivities that matches with national and local conditions, some of these projects may or may not work very well or fit very well with the local, ecological, environmental environments of the host countries. And also some of the projects may be too big, the demand may or may not be there to justify some of these projects. I think China has to learn to implement the new face of BRI in a more cautious manner. And I see also a corresponding response from the host countries within Southeast Asia to deal with China on new BRI projects in a more selective and cautious way. And here I would give you another example again, related to cross-border transport train connection. Obviously, China has been advancing this bigger idea of China-Myanmar economic corridor, which was a mutually agreed to in 2017, and a key component of that economic corridor is a cross-border large scale railway. Again, starting from Kunming comes into Myanmar through the border, connects to the central Myanmar city, Mandalay, and then continues on in two different directions. One goes straight south to Yangon, the port city, and the other pivots west to the port city of Kyaukphyu on Myanmar's west coast, on the Bay of Bengal or the eastern part of the Indian Ocean. Recently, even though both sides have agreed to have a Chinese company launch a feasibility study for that railroad. But so far, the feasibility study has been confined only from the border town of Muse on the Myanmar side to Mandalay without including the western line going to Kyaukphyu. So that's a sign of caution on their part, a memoir, of not jumping all at once into this very large, expensive and potentially risky project, in the sense of becoming maybe indebted to a higher degree and then just fine. And I think China-Laos railway also potentially has a risk because it is so costly. In fact, the overall construction cost accounts for almost half of lost GDP. So what does that mean? If you borrowed too much money for such a huge project that may or may not be justified in terms of what capacity passenger freight that he can bring across the border.

| 00:18:10 Andreas Bøje Forsby | Further to that, I would like to bring up some of the recent surveys conducted by the Pew Research Centre, which suggests that negative views of China are on the rise in most countries around the world, including in Southeast Asia. Some would argue that the BRI constitutes one of the cornerstones in China's soft power push throughout that region. So I'm curious to know to what, if any, extent the rollout of the BRI projects have affected popular perceptions of China in Southeast Asia. And you've mentioned quite a few of those specific projects already. But I'm also curious as to what extent these specific projects actually affect the local population to an extent that they might contribute to this growing negative perceptions of China throughout also this region. And moreover, can the Chinese government take any specific measures to turn the tide, so to speak, of this growing negative perception? From your perspective.
| 00:19:05 Xiangmin Chen | Yes, I think there's always been a kind of a range of views of China in Southeast Asia. I think the Pew survey you referred to have consistently included countries like Indonesia, the Philippines and the Vietnam, but I'm not sure that it has included Laos, Myanmar and Cambodia, certainly not on a consistent basis. So if you look at the three larger countries, the three more developed countries, Indonesia, Philippines and Vietnam, I think the view among the populace is kind of a split, right? Roughly between, I would say, 50 and 50 in favourable versus unfavourable views of China. I think about economic ties with China, however, the views tend to be more favourable than China's military posture. It makes sense, right? There's greater interest in developing strong economic connections, but not really accepting China's powerful, impactful position militarily and also to the extent that the territorial implications of the military posture. But I think people in Cambodia, Laos and Myanmar tend to view China again in economic terms more favourably than Vietnam and the Philippines. Partially, I think that's a result of maybe not having these disputes with China. A little bit of land disputes go way back to the Yuan and the Ming Dynasty for Laos and Myanmar, I think China, you know in the past, occasionally claims a little bit of land going back to the Yuan. And I think for Cambodia, it goes back to the Ming Dynasty. But I don't think none of that land over land, border disputes matters at all. And in fact, it hasn't really shown up, at least in my region, only locally focused research. So I would draw a distinction between two different sets of Southeast Asian nations with regard to their geographic location vis à vis China. For example, if you look at Laos and Myanmar, China is a huge neighbour, right? It's bound by geography, by geopolitics, increasingly bound by very strong economic relationships. So I think they're more sensitive. They recognise they may have to live with a great neighbour. Well, I think for Vietnam, for the Philippines, for Indonesia, the surrounding conditions that they're on, how people view China, are quite different and I think logically so. We should keep that in mind as we try to better understand how China's position is solved vis à vis each of these countries. And the other point I would say in responding to your particular question, I think there's also a split between how government officials view China vis à vis the people on the ground, so to speak. For example, in Cambodia, the prime minister, Hun Sen, is very close to China and particularly with its close relation with Xi Jinping. But if you talk to people in Cambodia, work for the China investment factories, and I think you get a maybe less favourable, less optimistic, less glowing view. But at the same time, I think there's also practical economic benefits for some of these private investment from China in both Cambodia and Myanmar with regard to local job creation. I'll give you an example again. In northern Myanmar, central Myanmar, where China has been engaged in plantation agriculture, investing in watermelon growing production, and the wages that's offered to the local workers are three or four times more than they would otherwise earn in the villages. So there's interest among these places, villages, communities in country like Myanmar to develop this kind of microlevel entrepreneurial kinds of connections. So that's a little bit shielded from the larger geopolitical dynamics that often colour and influence how people view bilateral relationships. So I would draw, again, a bit of an analytical distinction in terms of how you approach the topics and to what scale.

| 00:23:34 Andreas Bøje Forsby | And now that you did mention Myanmar, I would like to finally turn to the recent military coup in that country, which has been met with strong condemnation from the international community. The Chinese government is taking a let's just call it a very cautious stance and together with Russia, prevented the United Nations Security Council from adopting any strong measures against the new military regime. How do you explain China's position? Is it principled opposition to international interference in other countries, internal affairs or rather as a pragmatic stance to protect its investments and interests in Myanmar that you just touched upon?

| 00:24:11 Xiangmin Chen | Yeah, I think that's very timely, and the last question is really to sort of end the conversation. I think it's also very reflective of the broader challenges, I think, facing both sides in terms of the degree and the ways in which BRI-related projects from the top down and also private investment from the bottom up, right? So where do they meet in the middle? I think China again is trying to walk a very fine line between its promise, its principal of non-interference with other countries, domestic affairs, and also adopting a very practical and transactional strategy of doing business in other countries, especially in developing countries where you have either a very strong and authoritarian, maybe military backed state, and also competitive politics, democratic kind of a system that also has a longer history in connection to post-colonial the state is relatively weak. So China brings a very strong political backing behind its economic project. I think that's been pretty clear both in Asia and in Africa. But here there's also a dilemma facing China, because, again, I draw there two very different kinds of Chinese economic influence and investment in these countries. One is really the state capitalist state-owned enterprises, large scale investment. On the other hand, there's also the small scale, informal private investment. China has relatively little control over the latter in terms of how this investment is made and how aware or sensitive they are to local economic conditions. Recently, there's an example in Laos. China is trying to again working with the Lao government to set up a special economic zone in a tourist city which poses potential threats and risks to the ecology, to the tourist industry so there's a very mixed communal responses to that project. But I think for a project like that, the Chinese government has relatively little control over that kind of project. So that means that if you look at the overall picture of Chinese presence in Southeast Asia and in other parts of the developing world, and you have really a bifurcation. I think most of much of the research tends to focus on the large scale state capitalist investment, but not recognising that there's also a lot of the local level issues that sometimes falls below the radar screen. For Myanmar, how to respond to that? I think closer ties between the two countries - again, as I said earlier - brings forth both risks and opportunities. China has big plans in them, but yet Myanmar is much more cautious. Maybe it's learned the lessons not to be fully embraced by China. So in that sense, I think it takes both countries to recognise what are the ways of doing some of this more in a mutually beneficial manner, whether, for example, the military takeover of the government right now, how long is it going to last? I think will have a strong effect on the next stage of China. Proposed large scale projects, particularly the China-Myanmar economic corridor. It's always a little bit early to see how that will play out, but I would say in general, it's another example that proves China's cautious and methodical approach to strike a very fine balance between not getting involved and be seen as politically intrusive. At the same time, try to get the practical economic business strategies to work across from the government down to the local level. And I think particularly in the case of Myanmar, another layer of challenge. Another complication is the ethnic armed groups in the northern region of Myanmar bordering China. China also has to navigate with these groups, between them, the government and now maybe the military. So there's a triangular relationships, China, local ethnic groups that opposes the Myanmar government and what the Myanmar government officially is interested in doing for its own development purposes to be more closely engaged on these larger projects. But I would say the cross-border small scale trade, particularly trade routes that I have studied more recently, will go on because it's driven by a very different set of local people to people, maybe social capital, geographic proximity, financial markets, commodity exchanges. That has been going on much earlier for much longer period of time than the BRI projects, in fact, they have been going on long before BRI came on board so I would again draw another distinction and to illustrate how complex a kind of situation that's unfolding as we speak.

| 00:29:23 Andreas Bøje Forsby | Before we close the podcast, I would like to give you a chance to draw attention to something you are currently working on, if you would like to share something with us that we haven't already talked about in the conversation today. I don't know if you want to share something with us from your current projects?
| 00:29:40 Xiangmin Chen | Well, thank you for that opportunity. I would briefly draw attention to the new book that I have completed on the BRI really highlighting and stressing sort of the regional dimensions and the consequences of BRI. And most scholars have studied the BRI as China's state directed geopolitical, geo, economic and even geo-cultural strategy for balancing China's global interests. But I think there's really a greater need to take more of an urban and regional approach. But look at BRI from the ground up, and that's what I have tried to do in this book. So very briefly, the book discusses and explains how BRI affects three large macro processes of globalisation, urbanisation and development from this in-between middle regional level, and also bring in the particular position and role of key cities, particularly those cities that are located on the borders that bring these different territorial, economic, geopolitical dimensions together. And it has three case studies. I talk a little bit briefly from the China South Southeast Asia, a connection, but there's also a chapter that deals with China's overland freight train connection to Europe across Eurasia. And also there is, for comparative purposes, comparative implications. I've been called a chapter looking at similar dynamics of both a train connection between the capital city of Ethiopia and the port of Djibouti, where China almost invested a lot to operate the port capacity, but also building the industrial park special economic zone and also upgrading the older city of Djibouti city. So the book really has a kind of, I would say, integrated, coherent framework, looking at local and intra-local trans-border connections in both Europe-China, China-Southeast Asia and also within Africa. So I hope there will be interest in a book like that. And I would like to close on that note by drawing attention to a kind of alternative approach to the study of BRI. And also its increasingly important, broader implications.

| 00:32:08 Andreas Bøje Forsby | Thank you so much Professor Chen for sharing these insights with us today. You've been listening to the Nordic Asia podcast with me, Andreas Bøje Forsby and Professor Xiangmin Chen from the Centre for Urban and Global Studies at the Trinity College. So thank you so much for taking time today to talk to us. And I'm looking forward to doing other interviews on the Nordic Asia Podcast anytime soon. Bye bye.

| 00:32:31 Xiangmin Chen | Thank you for the invitation. Bye bye.

| 00:32:37 Duncan McCargo | You have been listening to the Nordic Asia Podcast.