Sunday, May 13, 2018

Doig, High-Speed Empire

A couple of weeks ago 27 EU ambassadors to Beijing (with the exception of the ambassador from Hungary) signed an internal report criticizing China’s belt and road program, saying it creates an unfair global trade environment. China is trying to expand its freight railway services in Europe, normally providing countries with both the contractor and the money, in the form of a long-term loan, to build the tracks. And then there’s the Maritime Silk Road, which represents 10% of China’s GDP. In 2016 maritime shipping carried 94% of trade between China and Europe by weight and 64% by value. A more profitable part of the Maritime Silk Road, and potentially even more worrisome for Europe, is port management. China now controls about one-tenth of all European port capacity.

I have been following some of these infrastructure developments in Europe, so I was delighted to come across Will Doig’s High-Speed Empire: Chinese Expansion and the Future of Southeast Asia (Columbia Global Reports, 2018). It’s a short book, about 100 pages, that reads more like a series of long magazine articles. And I mean this as a compliment. It gives color to what could otherwise have been a dry politico-economic analysis.

I have never understood China’s “One Belt One Road” name for its massive infrastructure initiative and am forever slipping up. Why the “belt” refers to the overland infrastructure network and the “road” describes its web of shipping lanes is beyond me. But, however it got its name, it has, in the five years since it was officially launched, come to encompass more than 60 countries in Asia, Africa, and Europe and over a trillion dollars in spending.

Doig writes about a single project, “more an idea than a cohesive plan”: China’s desire to create a Pan-Asia Railway running from Kunming, the capital of Yunnan, through Laos, Thailand, and Malaysia, and terminating in Singapore.

He begins his account in the tiny city of Boten, Laos, just over the Chinese border. It was meant to be China’s gateway into Southeast Asia, with plans including a trading center, manufacturing complex, and storage facilities. But instead, for some years, it was simply a “gaudy little kingdom of clubs, drugs, casinos, hookers, and crime both petty and organized” that serviced, and was serviced by, mostly Chinese nationals. In time it became not only unsavory but dangerous, with gunshot-riddled corpses turning up in alleys. Eventually, in 2011, China shut it down, cutting the city’s power and cell phone signal.

China was, however, undeterred in its dream to build a railroad through Laos. Despite many political setbacks, work has finally begun on the $6+ billion project. The initial investment will be just over $2 billion, “of which China will contribute about $1.6 billion. Laos will cover the rest.” But since Laos doesn’t have that kind of money, it will borrow most of its share from China.

And what is happening in Boten today? It is “reincarnating, bit by bit, as a commercial hub…. You can see offshoots of the city’s new relevance in the wilderness just beyond its borders, where flashes of alien modernity have materialized: PetroLao gas stations, stucco guesthouses, and the weirdest: a palatial furniture showroom fully stocked with flashy bedroom sets.” Nearly everyone working in Boten is on the payroll of the Boten Economic Zone Development and Construction Group, a Chinese company. The company runs all of the city’s services.

In his book Doig traverses the railroad’s proposed route, writing about China’s relations with Thailand and Malaysia as well as Laos. And he issues some warnings, based on China’s earlier infrastructure deals. For instance, China lent the Sri Lankan government money for a seaport and built a new airport nearby. “The deal and others like it left Sri Lanka owing China $8 billion it couldn’t repay.” Sri Lanka ended up giving Beijing control of “one of the most strategically placed deep-sea ports in the world.” The airport, it seems, was not such a great deal. It is “so underutilized that guards were reportedly hired to prevent local wildlife from turning the empty concourse into an indoor habitat.”

China is using its financial muscle to reap economic and geostrategic benefits from its “partnerships” with other countries. High-Speed Empire illustrates some of the challenges it faces and how it ultimately manages to overcome them.

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