China’s Rise Takes Centre Stage at ADB Annual Meeting

By Steve Gilmore

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China’s Rise Takes Centre Stage at ADB Annual Meeting

By Steve Gilmore

China’s growing economic infl uence through the Belt and Road Initiative and the newly operational Asian Infrastructure Investment Bank were key topics of discussion at the Asian Development Bank’s annual conference in Frankfurt this year.

The Chinese-led AIIB has 57 founding members with others expected to join. The Belt and Road （B&R） Initiative aims to strengthen infrastructure on the land and sea routes from China through Central Asia and Southeast Asia respectively -- incorporating some 60 separate states.

Both initiatives affect Myanmar， as a member country of the AIIB and as a host to Chinese B&R infrastructure projects -- including a recently approved US$ 3 billion refinery near the southern city of Dawei.

Countries like Myanmar that lie along the B&R routes are likely to receive fresh flows of foreign direct investment as China steps up its efforts to put capital to work outside the country. But China’s growing infl uence also raises concerns in those same countries.

The B&R Initiative is the economic foundation for Chinese President Xi Jinping’s “China dream agenda，which envisions China becoming the paramount nation of Asia and perhaps Eurasia by 2049”， said David Arase， professor of international politics at Johns Hopkins University’s Hopkins-Nanjing Center in China， during a panel discussion on B&R.

As part of that initiative China wants trade connections with countries and regions across Eurasia， but with this will come infl uence.

“B&R gives China tremendous ability to set agendas and advance ［its］ own interests，” said Mr. Arase. “In the security dimension it will open up to China access to the rest of the region， because wherever China’s trade and investment goes ［the country］ will have an interest in securing its interests.”

But AIIB president Jin Liqun， speaking at a separate panel discussion on Asia-European trade， said that the B&R initiative is no longer just China’s project.

“China cannot reach out and impose all those ［prospective］ projects in those countries，” he said.

Countries along the B&R route will only participate if they see benefits， he added， and therefore the B&R’s success hinges on cooperation.

The AIIB and the ADB announced this month they intend to jointly finance Pakistan’s M4 highway project -- a 64-kilometre stretch of highway in the east of Pakistan. This will be one of the fi rst projects undertaken by the Beijing-based AIIB.

Conference delegates raised concerns that China could use the AIIB and B&R Initiative to “export overcapacity” in certain sectors of its economy -- for example using excess steel for projects in foreign countries.

But although overcapacity in industries like steel and cement is a serious issue in China， the idea that China would seek to export that through the AIIB or B&R Initiative is misplaced， said Ligang Song， director of the China Economy Program at Australian National University， on the OBOR panel debate.

“The reason is simple，” he said. “First of all the

overcapacity ［problem］ has to be solved in the short to medium term and the B&R is a long-term strategy. Second， president Jin has mentioned ［that the］ AIIB has a very transparent way of running the bank.”

Overcapacity is most evident in Chinese firms that are ineffi cient and badly run， and such companies are unlikely to meet the high standards that the AIIB has promised for its tenders， Mr. Song said.

China’s neighbour India recognizes the potential benefits of the B&R Initiative， and bilateral trade between China and India has increased， said M M Pallam Raju， former minister of state in India’s Ministry of Defence. But India is not sanguine about the implications of the B&R Initiative.

“There’s a strong case for creating better infrastructure across the region … and if the B&R Initiative is

［providing this］， from an economic perspective India defi nitely welcomes it，” he said. “But at the same time we have certain concerns.”

China is also investing heavily in another of its neighbours， Kazakhstan - particularly in the oil and gas industry， where Chinese projects control more than 25 percent of the country’s oil and gas production，according to Olzhas Khudaibergenov， director at the Center for Macroeconomic Research， Kazakhstan.

“Kazakhstan warmly welcomes the B&R Initiative， as Kazakhstan is a land-locked country and the initiative helps us use our transit potential，” he said. A World Bank-funded project to improve the Kazakh highway along the Western Europe-Western China road corridor will be fi nished this year， he added.

Resource： www.mmtimes.com