China’s Promises to Southeast Asia: A $50 Billion Shortfall
In a revealing study by the Lowy Institute, a prominent Australian think tank, it has come to light that China’s financial commitments to bolstering infrastructure development in Southeast Asia have not fully materialized. Since 2015, there appears to be a staggering shortfall of over US$50 billion in funds that were promised but not allocated to various projects across the region. This revelation has raised questions about the effectiveness and reliability of China’s Belt and Road Initiative (BRI) in promoting sustainable economic growth in Southeast Asia.
The analysis highlights a concerning trend where more than half of the promised projects were either outright cancelled, underwent significant downscaling, or are currently in limbo. Notable examples include the ambitious Mindanao Railway Project and the South Long-Haul Project in the Philippines, which were expected to benefit greatly from Chinese financing but have since seen these funds withdrawn.
Initiated by President Xi Jinping, the BRI was envisioned as a monumental project to extend China’s economic and geopolitical influence through infrastructural development and investments around the globe. President Xi has assured that the initiative would serve as a catalyst for global economic prosperity and support the modernization efforts of partner countries. However, the study’s findings suggest that this vision is yet to be fully realized in Southeast Asia.
Authors Alexandre Dayant and Grace Stanhope from the Lowy Institute point to various factors impeding the initiative’s success in the region. Political instability, insufficient engagement with local stakeholders, and a dwindling interest in fossil fuel projects have all played a part in the underdelivery of promised investments. The report also notes a pivot in China’s strategy towards endorsing smaller-scale projects, potentially indicating a recalibration of its approach towards infrastructure investment in Southeast Asia.
Despite these setbacks, China continues to hold the title as the most significant infrastructure partner in the region, with involvement in 24 of the region’s 34 megaprojects. Yet, the completion rate of these projects stands at a modest 33 percent, underlining the vast gap between commitment and execution. This is in stark contrast to the investments made by other countries such as Japan and Korea, which, while substantial, still do not match China’s promised investments.
The shift in China’s focus towards smaller projects raises questions about the future trajectory of the BRI in Southeast Asia, especially in the face of allegations of “debt trap diplomacy”. This term refers to concerns that China might be leveraging high-interest loans or capital-intensive projects to gain undue influence over the domestic politics of partner countries. Beijing has vehemently refuted such accusations, framing them as unfounded and malicious assertions aimed at tarnishing its diplomatic efforts.
Despite the criticisms, the impact of Chinese investments in some Southeast Asian countries cannot be wholly negated. For instance, Cambodia has seen a surge in economic activities thanks to several major infrastructural projects funded by China. These include a pivotal $2-billion expressway linking the capital, Phnom Penh, with the coastal town of Sihanoukville, and the recently opened $1.1-billion Siem Reap Angkor International Airport. According to Vasim Sorya, a spokesperson for Cambodia’s Ministry of Public Works and Transport, these developments have substantially bolstered the national economy.
Furthermore, the Lowy Institute study acknowledges China’s continued ambitions to sustain and adapt the Belt and Road Initiative in response to evolving global dynamics. Despite the setbacks documented, the initiative still stands as a testament to China’s enduring commitment to expanding its economic footprint and fostering global connections through infrastructure development.
As Southeast Asia continues to navigate the complexities of regional development and international partnerships, the effective realization of China’s pledged investments remains a critical factor in shaping the economic landscape of the region. The extent to which these promises are fulfilled will undoubtedly influence future relations between China and its Southeast Asian partners, as well as the overall impact of the Belt and Road Initiative on global economic development.
