Patriot and G25 Malaysia welcome China’s role, along with a moral leadership in an eventual Asian Century, but China has to address certain concerns.
A recent report (Wall Street Journal, 7 January 2018) regarding senior Chinese officials offering to bail out 1MDB and derail investigations into alleged corruption in the fund in exchange for stakes in the East Coast Rail Link in Malaysia has raised serious concerns.
Being linked to the wider web of China’s Belt and Road Initiative (BRI), the manner of execution of such a project in Malaysia and in other different countries now raises questions if the initiative is a noble win-win for global trade connectedness or something more sinister.
Viewed together with some questions on human rights, its adamant nine-dash-line claim of the South China Sea and military installations on artificial islands in total disregard for the law of the sea, the situation has also raised questions about China’s moral leadership in a widely anticipated Asian Century.
The hallmark of an impending Asian Century is indicated in a number of factors. Asian countries as a whole have seen robust growth the past decade, surpassing the US and the European Union.
IMF’s report for real GDP growth in 2017 – East Asia 5.6%, South East Asia 5.3%, and South Asia 6.5%; while the US 2.3%, the EU 2.7% and the UK 1.8%.
The interest rate in the EU is 0% and the US 2.5%, while that in most Asian countries ranges from 3 to 5%.
The debt to GDP ratio for the EU and the US is dangerously high, with many countries above 100%. Most Asian countries (with the exception of Japan), have their debt to GDP within a manageable 30-60%.
The implications are that the developed countries have little room to manipulate via monetary or fiscal policies. With the current world economic contraction, Asian countries have a better chance of weathering the storm.
China’s double-digit growth for more than a decade has provided impetus for growth to other Asian countries. Even with its current 6.6% growth, it is still the highest compared to any developed or emerging economies. China’s leadership role is recognised and much in need for the impending Asian Century.
According to a report by PricewaterhouseCoopers in 2017, the World’s 10 most powerful economies in 2030 ranked by their projected global GDP by purchasing power parity are :
- China – US$38.008 trillion
- United States – US$23.475 trillion
- India – US$19.511 trillion
- Japan – US$5.606 trillion
- Indonesia – US$5.424 trillion
- Russia – US$4.736 trillion
- Germany – US$4.707 trillion
- Brazil – US$4.439 trillion
- Mexico – US$3.661 trillion
- United Kingdom – US$3.638 trillion
Four out of the top five economies will be Asian countries and six of the top 10 economies will be non-Western countries .
Patriot and G25 Malaysia believe that China’s economic and political leadership has to also bond with moral leadership. The latest WSJ report on the minutes of previously undisclosed meetings suggests shadowy deals between China’s government officials and Najib Razak’s Barisan National government.
Previous revelations by the finance minister involved only contractual parties – the Exim Bank, China Communications Construction Company Ltd (CCCC), and 1MDB.
The price tag of ECRL project was inflated by RM20bn, with payment terms in accordance to time scale and not on work done. In addition, there was the issue of two pipeline projects where 88% of the contract sum was paid for while only 13% of the work was done.
Malaysia and other Asean countries welcome China’s BRI investments and projects, but there has to be transparency, accountability and good governance. In this regard, it is in the best interest of all that these projects should be included in the Asean Agenda and the Asean Dialogue process.
Criticism from Western observers that the BRI projects in certain countries may not be economically and financially viable and may be a debt trap has merits. The IMF warned of excessive debt in a number of countries where the debt to GDP ratio had become burdensome.
The countries at risk are Maldives, Kyrgyz Republic, Laos, Tajikistan and Pakistan. Tajikistan in 2011 had to give up thousands of square kilometres of territory in exchange for a debt write-off. In 2017 Sri Lanka had to hand over the Hambantota port on a 99-year lease for failure to settle its debt.
Patriot and G25 Malaysia believe that BRI projects by China should indeed be a win-win for all, taking into consideration the welfare of the local people and the economic wellbeing of the participating developing countries.
In the case of the oil and gas pipelines constructed in the Rakhine state of Myanmar, where China owns 51%, compensation for land acquirement allegedly had not been fair, and in numerous cases owners of land were not compensated. The two largest corporations, Union of Myanmar Economic Holding Ltd and Myanmar Economic Corporation, owned by the Myanmar military, have stakes in the pipelines projects.
It was in the interest of the Myanmar military to declare a state of emergency so that the National Security Council, dominated by the military generals, could rule. A certain religious sect among the Buddhist monks was allegedly sponsored to create chaos to enable the military to take action, which resulted in an exodus of 700,000 Rohingya refugees. China’s unholy relationship with the Myanmar military today is a major part of the constitutional problem in the country, causing the civilian government to be severely handicapped.
Within China, the plight of the ethnic Uyghurs has raised international concern. China should allow a UN human rights team to make an independent visit and ascertain the conditions with regard to the conditions of the Uyghurs including reports about the internment camps. Chinese officials cannot merely deny such accusations but must show proof beyond reasonable doubt that such accusations are not true. Clearly, China is under a moral obligation to cooperate within the UN system and civil society organisations in addressing this alarming situation.
China must respect the relevant provisions of the UN Convention on the Law of the Sea. Each of the much smaller Asean states has rights to its 200 nautical miles exclusive economic zone, and China must respect that. Anything less and China be seen as a big bully thrashing any remaining bit of moral leadership.
The demilitarisation of the South China Sea and respect for the Zone of Peace, Freedom and Neutrality (Zopfan), the Treaty of Amity and Cooperation in South East Asia and an early agreement on a code of conduct on the South China Sea would go a long way for China to gain respect.
Patriot and G25 Malaysia welcome China’s role, along with a moral leadership in an eventual Asian Century.