BRINGING POWER TO ASEAN’S VISION

By Zhao Hong

BRINGING POWER TO ASEAN’S VISION

By Zhao Hong

Consensus among ASEAN countries on how best to engage with the Belt and Road Initiative could greatly enhance regional growth

The Belt and Road Initiative has evolved from infrastructure connectivity to policy coordination, facilities connectivity, unimpeded trade... and people-to-people ties.

ABOUT THE AUTHOR

Zhao Hong is a professor at Xiamen University’s Center for Southeast Asian Studies.

More needs to be done to enhance Chinese ties with ASEAN collectively, not just bilaterally between Beijing and individual ASEAN countries.

ASEAN members face a number of challenges, including internal divisions and the fact that good infrastructure is desperately needed for smaller and poorer members to attract foreign direct investment.

A key problem, though, is the need for ASEAN to enhance its centrality in regional economic cooperation. According to the ASEAN Economic Community (AEC) Blueprint 2025 — endorsed at the 27th ASEAN Summit in Kuala Lumpur last year — ASEAN needs to go beyond focusing on reducing barriers and building infrastructure connectivity.

Member countries need to foster regional economic integration by focusing not only on freer movement of goods and capital, but also on better policy coordination and improved mechanisms for cooperation, the blueprint says.

The AEC Blueprint 2025 envisions a deeply integrated and highly cohesive ASEAN economy. It seeks to increase ASEAN's competitive edge by moving the region up the global value chain, and to enhance ASEAN's role globally.

In this regard, ASEAN should become more integrated with the Chinese economy and other big powers through China's Belt and Road Initiative and other cooperation frameworks such as the Regional Comprehensive Economic Partnership, allowing itself to further participate in developing regional and global economic governance. Their interactions may then indeed aid the emergence of ASEAN as a world economic power, and enhance its role and voice in global economic forums.

When Unity Was Stronger

A lack of centrality was not always an issue. In fact, ASEAN started taking the lead on regional issues in the early 1990's. And by proposing the ASEAN+3 cooperation after the Asian financial crisis in 1997, it created a functional platform for East Asian cooperation.

This functional centrality was strengthened further when a series of ASEAN+1 free trade agreements (FTAs) were signed and enforced. These FTAs laid the foundation for ASEAN's centrality in global and regional engagement.

But the momentum began to decline in the late 1990s, and especially after 2010 when China shifted towards being an active driver of the regional and global economy.

By the time the Trans-Pacific Partnership and China's Belt and Road Initiative were being discussed, ASEAN centrality in regional cooperation had weakened. Hence, the AEC Blueprint 2025 stresses the need to "reinforce ASEAN centrality in the emerging regional economic architecture, by maintaining ASEAN's role as the center and facilitator of economic integration in the East Asian region".

Role of 'Belt and Road'

China and ASEAN have great potential for cooperation. But in order to realize strategic synergy between China's Belt and Road Initiative and the ASEAN Economic Community vision, it is important for China to have policy consultation, coordination and collaboration with ASEAN.

In China's official documents, "synergy" sees China taking the initiative to approach other countries or country groups, which then respond to and evaluate the opportunities that arise. This is meant to be an interactive process and Southeast Asian scholars have noted that ASEAN member states would need to adjust theirpolicies to reflect those potential interests in a realistic manner without being too dependent on China.

Concretely speaking, the Belt and Road Initiative and the AEC Blueprint 2025 can be synergized and connected at two levels.

At the national level, China hopes to strengthen policy coordination with individual ASEAN countries in relation to production capacity. China has the potential to transfer some of its high-quality production capacity to Southeast Asian countries, especially Cambodia, Laos, Myanmar and Vietnam. China sees this as a way of dealing with its surplus production capacity, while also meeting the demand for more investment and technology in Southeast Asia.

Some synergies at the national level have been very evident. These include the construction of the Sino-Laos and Sino-Thai railway projects, and several industrial parks jointly developed by China and Malaysia, China and Thailand and China and Cambodia, which have been effectively linked up with local development projects and plans.

Now, China needs to digest these countries' growing industrial production capacity by importing more of their products, since only when these countries participate in China's big consumption market can the Belt and Road Initiative be sustainable.

ASEAN has come up with several initiatives in an attempt to close its development gaps, including the Initiative for ASEAN Integration Work Plan and the Master Plan on ASEAN Connectivity. The Belt and Road Initiative and the Lancang-Mekong Cooperation framework will also help address the gaps by improving connectivity for lagging countries.

Key infrastructure projects

Chinese enterprises have taken on a vital role in infrastructure projects along the Belt and Road. So far, 32 Chinese companies have launched such projects.

Trade booms

Increased cooperation between China and countries along the Belt and Road has led to sizeable increases in bilateral trade volume.

Chinese enterprises ‘go global’

An increasing number of Chinese companies are investing and operating in countries along the Belt & Road.

China and ASEAN believe that the Asian Infrastructure Investment Bank and Maritime Silk Road Fund under the Belt and Road framework will play a big role in developing ASEAN connectivity.

China, in this regard, hopes that ASEAN can arrive at a regional consensus on engaging with the Belt and Road and playing a more proactive role as a group — although the consensus might be difficult to achieve, due to the various conditions of the 10 ASEAN countries.

‘Belt and Road’ and ASEAN Centrality

At present, synergy between the Belt and Road Initiative and Southeast Asian development plans at the national level seems to be developing well. Many railway construction projects and jointly run industrial parks appear within a bilateral cooperative framework. The Belt and Road Initiative has evolved from infrastructure connectivity to policy coordination, facilities connectivity, unimpeded trade, financial integration and peopleto-people ties. It has also shifted from inviting related countries to join the initiative to stressing strategic synergy and connection with local development plans.

China and ASEAN have great potential for cooperation. But in order to realize strategic synergy between the Belt and Road Initiative and the AEC vision, it is important for China to have policy consultation, coordination and collaboration with ASEAN, in addition to bilateral policy cooperation for infrastructure construction and production capacity cooperation.

Moving in that direction can bring new momentum to realizing the goals of the AEC Blueprint 2025 and strategically improve China-ASEAN relations.