Recent high-level diplomatic visits between China and three ASEAN countries—Indonesia, Vietnam and Cambodia—and discussions on the Belt and Road Initiative (BRI) projects at these meetings indicate that the BRI will continue to play an important role towards regional infrastructure development. The ASEAN region remains a source of minerals critical to China’s sustained economic growth. Geo-political and geo-economic factors are propelling Beijing to renew its investment commitments in the ASEAN region and ensure the long-term viability of the BRI.
On 1 April 2024, Chinese President Xi Jinping hosted Indonesian President-elect Prabowo Subianto. On 8 April, he welcomed Vietnamese National Assembly Chairman Vuong Dinh Hue in Beijing. During these two meetings, discussions were held on the possibility of integration of the BRI into existing initiatives of the respective countries.1 President Xi praised the Jakarta-Bandung high-speed railway project as one of the most successful projects under the BRI. On 23 April, Chinese Foreign Minister Wang Yi visited Cambodia for the seventh meeting of the China–Cambodia Intergovernmental Coordination Committee.2 Both sides agreed to accelerate the alignment of the BRI with the ‘Pentagon Strategy’ and the ‘Fish and Rice Corridor’.
Indonesia, Vietnam and Cambodia have seen the most high-level engagement and discussion on the BRI compared to the other ASEAN countries. These countries have been responding positively to the BRI for a decade and have a strong demand for infrastructure development, especially after the pandemic. These countries have been largely positive about the impact of BRI projects. Officials in these countries had previously welcomed and praised the BRI for its great potential to deliver public goods and increase local revenues, and expressed their desire to engage with the Belt and Road Forum.3 Concerns though remain about the debt trap, implementation delays, cost overruns, worker safety issues, unsustainable lending and environmental degradation for both the BRI and new development initiatives such as the Global Development Initiative (GDI).4
Post COVID-19 BRI Revival
In 2020, the Chinese Ministry of Foreign Affairs stated that 20 per cent of BRI projects were ‘severely affected’ by COVID-19.5 In 2021, the figures showed an 18 per cent decrease in the disbursements for projects compared to 2020. While the pandemic was one reason for the decrease in investment, factors such as political instability, local communication gaps, the energy transition and delays were also the reasons for a slowdown in the project implementation. Despite that, the implementation rate of BRI projects in ASEAN was 35 per cent in 2023, which is higher than that of Japan (19 per cent) and Korea’s (18 per cent) development projects in the region.6 In 2020, ASEAN countries received US$ 16.06327 billion from China which accounted for 71.27 per cent of the total BRI investments. About 85 per cent of these investments were for ongoing BRI projects signed between 2015 and 2023.7
In 2023, Indonesia emerged as the largest recipient of BRI investment, receiving around US$ 7.3 billion, a 14 per cent increase for its infrastructure projects.8 Two Indonesian projects—the Java 7 Power Station and the Bangko Tengah Sumsel-8 coal-fired power station—said to have been delayed due to COVID-19 restrictions, have now been successfully completed. The Jakarta–Bandung high-speed railway, hailed as one of the BRI’s most successful projects, also faced several challenges. These included poor implementation, construction delays, rising material prices and high land acquisition costs. The cost overrun for this project was around US$ 1.2 billion and it only started commercial operation in October 2023.9
Several projects, including Phnom Pehn Airport in Cambodia and the Indonesian park under ‘Two Countries, Twin Parks’, the BRI’s flagship project to establish industrial parks and facilitate development in Indonesia and China,10 are expected to be operational by 2024.11 The three-airport high-speed railway project in Thailand, the Mandalay-Kyaukphyu railway project in Myanmar and the Vinh Tan 3 coal-fired power plant in Vietnam are likely to be completed soon. Some projects such as the Nam Ou Hydropower Project Phase II in Laos and the Kyaukphyu Special Economic Zone Deep-Sea Port Project in Myanmar have been relabelled as BRI key projects, although the original agreement was signed before the BRI.12 The relabelling, restructuring and integration of projects has become part of Beijing’s new strategy as regards regional infrastructure development assistance.
There are also projects which have become a cause of concern for some ASEAN countries while some have been suspended. The announcement of a US$ 1.7 billion waterway project, the Funan Techo Canal in Cambodia in 2023, has raised serious ecological, economic and security concerns in Vietnam. The Philippines government has cancelled the construction of US$ 5 billion worth of BRI projects, including the Panay-Guimaras-Negros Inter-Island Bridge, the Mindanao Railway and the South Long-Haul Railway (Bicol Line), without giving clear reasons.
Negotiations on these began in January 2024 but were unsuccessful as the government stated that China had not disbursed the requested funds. Analysts have cited the change of government in the Philippines and tensions in the South China Sea as the main reasons for this move. The evolving geo-political, geo-economic as well as ecological factors will increasingly impact the implementation of new BRI projects. Loan conditions, concerns over sovereignty, debt repayment, downsizing of projects, deforestation, displacement of communities, potential destruction of historical sites and overdependence serve as critical discussion points for the new BRI projects.13
At the 2021 G7 summit, US President Joe Biden announced the Build Back Better (B3W) initiative as a competitor to the BRI, which, unlike China, offers unconditional aid.14 The Global Gateway (GG) project announced by the European Union in the same year promised investments of 300 billion euros between 2021 and 2027 in the areas of digitalisation, climate and energy, transport, health, education and research in the partner countries, similar to the BRI.15
With initiatives such as Global Gateway and Build Back Better, ASEAN countries are in a unique position to reap the benefits of these initiatives and offset risks. Beijing therefore is making renewed efforts to demonstrate the benefits of its new BRI strategy. Therefore, high-level diplomatic visits are an attempt to reaffirm its infrastructure and development commitment to the region by integrating ongoing and new projects under the BRI. On 18 October 2023, the Third Belt and Road Forum for International Cooperation published a list of 32 practical deliverables out of which 12 were for ASEAN countries.16 Beijing also intends to engage ASEAN in high-level thematic forums, and international conferences to be held this year.17
It is evident that the Belt and Road Forum will be used to institutionalise and promote the BRI on a larger scale. Vice Premier Ding Xuexiang, head of the Belt and Road Leadership Group and member of the Politburo Standing Committee, said that Beijing is working to fully implement the Science, Technology and Innovation Cooperation Action Plan to accelerate the innovative Silk Road. He also emphasised the deepening of scientific and technological innovation with BRI countries.18 On 25 April 2024, he spoke at the opening ceremony of the Zhongguancun Forum in Beijing, mentioning the acceleration of the construction of world-class science and technology parks with BRI countries.19 Beijing is learning from its mistakes and shifting the focus from mega projects to smaller projects. However, the transition to the Global Development Initiative (GDI) could slow down efforts to revitalise the BRI in the region.
GDI vs BRI
The Global Development Initiative was proposed at the 76th session of the United Nations General Assembly (UNGA) in 2021. The announcement of the GDI at the UNGA emphasises Beijing’s attempt to make it a multilateral initiative, in contrast to its BRI. Of the 130 countries, seven ASEAN countries, including Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, have joined the Group of Friends of the GDI.20
Despite the focus on newer forms of cooperation, knowledge transfer, capacity building, development assistance and sustainable development, ASEAN countries, especially Indonesia, fear that the GDI could end up favouring China’s interests and push the countries into the debt trap. Beijing’s GDI offers no guarantee that the social and environmental problems associated with the Belt and Road projects will not recur under the GDI.21 With the changing geo-political situation in the region, Beijing’s GDI came at a time when there was a major power competition with the US in the Indo-Pacific region and when the US was introducing counter-initiatives such as Build Back Better and Global Gateway with other countries.
While the motive, nature, scope and incentives are different for both initiatives and the GDI cannot replace the BRI in the near future, analysts note that it has definitely slowed down the implementation of the BRI projects.22 The China International Development Cooperation Agency, which was established with the aim of promoting the BRI, is now working on GDI-related projects with a focus on poverty reduction, climate action and the digital economy. These issues are of growing importance to the ASEAN region, and countries have been working to address the problems caused by climate change and focus on the transition to a digital economy.
The areas of cooperation under the GDI and the BRI are different, with the BRI focusing on infrastructure financing and development, while the GDI is focused on achieving sustainable development goals through support and assistance to various countries. While the GDI is gaining momentum, Beijing is ensuring that the BRI is driven forward through high-level diplomatic engagement and is actively rebranding the initiative to incentivise ASEAN countries.
Assessment
An assessment of the BRI investment pattern in ASEAN countries between 2014 and 2023 shows a significant change in energy-related engagements. In the first half of 2023, the energy-related engagements were the greenest since the BRI’s inception in 2014.23 China currently has 24 megaproject commitments in ASEAN countries with a completion rate of 33 per cent.24 Projects worth US$ 35 billion are on track, and are expected to be completed soon. Despite China’s pledge to invest more than US$ 50 billion in infrastructure, it has struggled to fully deliver on its commitments. While Japan is also an important player, it still lags behind China in terms of infrastructure investment. Even with downsizing and partially completed projects, China remains the top investor in ASEAN countries, providing more than any other international partners involved in the region.
Views expressed are of the author and do not necessarily reflect the views of the Manohar Parrikar IDSA or of the Government of India.
Recent high-level diplomatic visits between China and three ASEAN countries—Indonesia, Vietnam and Cambodia—and discussions on the Belt and Road Initiative (BRI) projects at these meetings indicate that the BRI will continue to play an important role towards regional infrastructure development. The ASEAN region remains a source of minerals critical to China’s sustained economic growth. Geo-political and geo-economic factors are propelling Beijing to renew its investment commitments in the ASEAN region and ensure the long-term viability of the BRI.
On 1 April 2024, Chinese President Xi Jinping hosted Indonesian President-elect Prabowo Subianto. On 8 April, he welcomed Vietnamese National Assembly Chairman Vuong Dinh Hue in Beijing. During these two meetings, discussions were held on the possibility of integration of the BRI into existing initiatives of the respective countries.1 President Xi praised the Jakarta-Bandung high-speed railway project as one of the most successful projects under the BRI. On 23 April, Chinese Foreign Minister Wang Yi visited Cambodia for the seventh meeting of the China–Cambodia Intergovernmental Coordination Committee.2 Both sides agreed to accelerate the alignment of the BRI with the ‘Pentagon Strategy’ and the ‘Fish and Rice Corridor’.
Indonesia, Vietnam and Cambodia have seen the most high-level engagement and discussion on the BRI compared to the other ASEAN countries. These countries have been responding positively to the BRI for a decade and have a strong demand for infrastructure development, especially after the pandemic. These countries have been largely positive about the impact of BRI projects. Officials in these countries had previously welcomed and praised the BRI for its great potential to deliver public goods and increase local revenues, and expressed their desire to engage with the Belt and Road Forum.3 Concerns though remain about the debt trap, implementation delays, cost overruns, worker safety issues, unsustainable lending and environmental degradation for both the BRI and new development initiatives such as the Global Development Initiative (GDI).4
Post COVID-19 BRI Revival
In 2020, the Chinese Ministry of Foreign Affairs stated that 20 per cent of BRI projects were ‘severely affected’ by COVID-19.5 In 2021, the figures showed an 18 per cent decrease in the disbursements for projects compared to 2020. While the pandemic was one reason for the decrease in investment, factors such as political instability, local communication gaps, the energy transition and delays were also the reasons for a slowdown in the project implementation. Despite that, the implementation rate of BRI projects in ASEAN was 35 per cent in 2023, which is higher than that of Japan (19 per cent) and Korea’s (18 per cent) development projects in the region.6 In 2020, ASEAN countries received US$ 16.06327 billion from China which accounted for 71.27 per cent of the total BRI investments. About 85 per cent of these investments were for ongoing BRI projects signed between 2015 and 2023.7
In 2023, Indonesia emerged as the largest recipient of BRI investment, receiving around US$ 7.3 billion, a 14 per cent increase for its infrastructure projects.8 Two Indonesian projects—the Java 7 Power Station and the Bangko Tengah Sumsel-8 coal-fired power station—said to have been delayed due to COVID-19 restrictions, have now been successfully completed. The Jakarta–Bandung high-speed railway, hailed as one of the BRI’s most successful projects, also faced several challenges. These included poor implementation, construction delays, rising material prices and high land acquisition costs. The cost overrun for this project was around US$ 1.2 billion and it only started commercial operation in October 2023.9
Several projects, including Phnom Pehn Airport in Cambodia and the Indonesian park under ‘Two Countries, Twin Parks’, the BRI’s flagship project to establish industrial parks and facilitate development in Indonesia and China,10 are expected to be operational by 2024.11 The three-airport high-speed railway project in Thailand, the Mandalay-Kyaukphyu railway project in Myanmar and the Vinh Tan 3 coal-fired power plant in Vietnam are likely to be completed soon. Some projects such as the Nam Ou Hydropower Project Phase II in Laos and the Kyaukphyu Special Economic Zone Deep-Sea Port Project in Myanmar have been relabelled as BRI key projects, although the original agreement was signed before the BRI.12 The relabelling, restructuring and integration of projects has become part of Beijing’s new strategy as regards regional infrastructure development assistance.
There are also projects which have become a cause of concern for some ASEAN countries while some have been suspended. The announcement of a US$ 1.7 billion waterway project, the Funan Techo Canal in Cambodia in 2023, has raised serious ecological, economic and security concerns in Vietnam. The Philippines government has cancelled the construction of US$ 5 billion worth of BRI projects, including the Panay-Guimaras-Negros Inter-Island Bridge, the Mindanao Railway and the South Long-Haul Railway (Bicol Line), without giving clear reasons.
Negotiations on these began in January 2024 but were unsuccessful as the government stated that China had not disbursed the requested funds. Analysts have cited the change of government in the Philippines and tensions in the South China Sea as the main reasons for this move. The evolving geo-political, geo-economic as well as ecological factors will increasingly impact the implementation of new BRI projects. Loan conditions, concerns over sovereignty, debt repayment, downsizing of projects, deforestation, displacement of communities, potential destruction of historical sites and overdependence serve as critical discussion points for the new BRI projects.13
At the 2021 G7 summit, US President Joe Biden announced the Build Back Better (B3W) initiative as a competitor to the BRI, which, unlike China, offers unconditional aid.14 The Global Gateway (GG) project announced by the European Union in the same year promised investments of 300 billion euros between 2021 and 2027 in the areas of digitalisation, climate and energy, transport, health, education and research in the partner countries, similar to the BRI.15
With initiatives such as Global Gateway and Build Back Better, ASEAN countries are in a unique position to reap the benefits of these initiatives and offset risks. Beijing therefore is making renewed efforts to demonstrate the benefits of its new BRI strategy. Therefore, high-level diplomatic visits are an attempt to reaffirm its infrastructure and development commitment to the region by integrating ongoing and new projects under the BRI. On 18 October 2023, the Third Belt and Road Forum for International Cooperation published a list of 32 practical deliverables out of which 12 were for ASEAN countries.16 Beijing also intends to engage ASEAN in high-level thematic forums, and international conferences to be held this year.17
It is evident that the Belt and Road Forum will be used to institutionalise and promote the BRI on a larger scale. Vice Premier Ding Xuexiang, head of the Belt and Road Leadership Group and member of the Politburo Standing Committee, said that Beijing is working to fully implement the Science, Technology and Innovation Cooperation Action Plan to accelerate the innovative Silk Road. He also emphasised the deepening of scientific and technological innovation with BRI countries.18 On 25 April 2024, he spoke at the opening ceremony of the Zhongguancun Forum in Beijing, mentioning the acceleration of the construction of world-class science and technology parks with BRI countries.19 Beijing is learning from its mistakes and shifting the focus from mega projects to smaller projects. However, the transition to the Global Development Initiative (GDI) could slow down efforts to revitalise the BRI in the region.
GDI vs BRI
The Global Development Initiative was proposed at the 76th session of the United Nations General Assembly (UNGA) in 2021. The announcement of the GDI at the UNGA emphasises Beijing’s attempt to make it a multilateral initiative, in contrast to its BRI. Of the 130 countries, seven ASEAN countries, including Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam, have joined the Group of Friends of the GDI.20
Despite the focus on newer forms of cooperation, knowledge transfer, capacity building, development assistance and sustainable development, ASEAN countries, especially Indonesia, fear that the GDI could end up favouring China’s interests and push the countries into the debt trap. Beijing’s GDI offers no guarantee that the social and environmental problems associated with the Belt and Road projects will not recur under the GDI.21 With the changing geo-political situation in the region, Beijing’s GDI came at a time when there was a major power competition with the US in the Indo-Pacific region and when the US was introducing counter-initiatives such as Build Back Better and Global Gateway with other countries.
While the motive, nature, scope and incentives are different for both initiatives and the GDI cannot replace the BRI in the near future, analysts note that it has definitely slowed down the implementation of the BRI projects.22 The China International Development Cooperation Agency, which was established with the aim of promoting the BRI, is now working on GDI-related projects with a focus on poverty reduction, climate action and the digital economy. These issues are of growing importance to the ASEAN region, and countries have been working to address the problems caused by climate change and focus on the transition to a digital economy.
The areas of cooperation under the GDI and the BRI are different, with the BRI focusing on infrastructure financing and development, while the GDI is focused on achieving sustainable development goals through support and assistance to various countries. While the GDI is gaining momentum, Beijing is ensuring that the BRI is driven forward through high-level diplomatic engagement and is actively rebranding the initiative to incentivise ASEAN countries.
Assessment
An assessment of the BRI investment pattern in ASEAN countries between 2014 and 2023 shows a significant change in energy-related engagements. In the first half of 2023, the energy-related engagements were the greenest since the BRI’s inception in 2014.23 China currently has 24 megaproject commitments in ASEAN countries with a completion rate of 33 per cent.24 Projects worth US$ 35 billion are on track, and are expected to be completed soon. Despite China’s pledge to invest more than US$ 50 billion in infrastructure, it has struggled to fully deliver on its commitments. While Japan is also an important player, it still lags behind China in terms of infrastructure investment. Even with downsizing and partially completed projects, China remains the top investor in ASEAN countries, providing more than any other international partners involved in the region.
Views expressed are of the author and do not necessarily reflect the views of the Manohar Parrikar IDSA or of the Government of India.