Partners join forces in 'belt and road' project

File photo of a desert in Tongliao, Inner Mongolia autonomous region. [Photo/CFP]

The Association of Southeast Asian Nation’s engagement with China runs deep. The two sides signed the China-ASEAN Free Trade Agreement (CAFTA) in 2002, which helped increase Sino-ASEAN trade from $78 billion in 2003 to $480 billion in 2014. Also, China is a major investor in and aid donor to several ASEAN member states, particularly Laos and Cambodia.

For ASEAN, therefore, China is an old, familiar economic partner. And China can use this base to engage ASEAN as a partner in the Silk Road Economic Belt and 21st Century Maritime Silk Road initiatives.

China’s “Belt and Road Initiatives” can be of great interest to the ASEAN members, because they have the potential to reshape the geo-economic landscape of the Asia-Pacific region. Over the coming months and years, ASEAN will watch closely how the initiatives progress.

There is a simple economic logic behind China’s plans and Southeast Asian economies’ needs. ASEAN economies are seeking sources of capital, and China is looking to use the capital at its disposal to build the new Silk Roads.

China has a deep pool of capital that it can invest in ASEAN economies, and Southeast Asian countries have been looking for new sources of investment to boost their economic growth. For example, Indonesia, the economic giant of Southeast Asia, is looking for $6 billion in investments to expand its ports, and China can provide the bulk of its need. Besides, Malaysia is cooperating with China over a $3.4-billion industrial park in the port town of Kuantan.

ASEAN also hopes to establish the ASEAN Economic Community by the end of this year, which is aimed at turning ASEAN into a single market and production base. But for that, ASEAN will have to upgrade its connectivity and infrastructure, and China will be able to use its Silk Road fund to help the Southeast Asian bloc realize this goal.