This week's focal point of the Silk Road Headlines can be illustrated by the words of Shakespeare in Hamlet: "Listen to many, speak to a few."
The Asian (political) landscape is predominantly influenced by the dynamics between the United States, Russia and China. For example, the US missile system, slated to be operational in 2017 in South Korea, caused domestic and foreign protest. This additional military presence of the US does not benefit Russian or Chinese interests. Both countries focus on increasing their influence within the region via trade relations. However, asserting themselves against the aforementioned presence could have negative ramifications for their foreign policy and in the long-run for their economic ambitions. Currently, it can be considered that Russia and China stand closer to each other. This relationship can be explained historically. In the 19th century Russia leased the Chinese port of Lushun, while the western trade relations were restricted to outer port harbours, e.g. Macao and Hong Kong. Currently, the interests of Russia and China are aligned, which explains the warm relationship. It is understandable though that once the BRI enters into a different phase Russia and China might compete on dominance within the region. A minute future example is the railways within North-Korea (DPRK). Russia and China have arrangements regarding the usage of railways. There are several rail lines between Dalian and Xian, which could be considered the start of the New Silk Road, with a connection to the EU market. Russia has the same aim, but arranged that the railways at Rason might be connected to the Trans-Siberian railroad [Railways track China and Russia's interests in Korea].
Analysts are carefully foreseeing the influences in the relations between states (e.g. US and DPRK) and non-state actors (e.g. OPEC, ASEAN, AAFTZ), striving to spark discussion on the dynamics of future trade relations in light of recent events, e.g. the meetings between Trump and Kim Jong-Un. An op-ed even foresees that the membership of the G7 might look different in its entirety [After Trump, Putin and Xi - How the New World Trade Order Will Look in 2030].
The possible trade conflict between China and the US illustrates the significance of economic independence by both parties. The completion of the bridge between the Brunei capital with the neighbouring island 'Pulau Muara Besar' is considered the first BRI project that has been completed. China is also building a $15 billion refinery and petrochemical facility which is beneficial for the oil and gas-based economy of Brunei. This is of strategic significance for China, since the location is within the Brunei-Indonesian-Malaysian-Philippines East-Asian Growth Area. This participation could be a catalyst for Brunei, as well as China, in view of the huge growth potential in relation to global trade. Aside from economic benefits that might sprout forth out of the Brunei-Guangxi Economic Corridor (BGEC), e.g. halal-products, tourism and shipping. In my view, this facility could also have strategic importance in the ever-growing trade war between the US and China [BRI-Backed Refinery Set for Pivotal Role in Rebooted Brunei Economy].
The BRI is hard to fathom. Yet, by sharing several views the mist can be lifted. The interview with Gordon Orr is a nice read-through that provides useful insights in the BRI from a business perspective. In short, it is about how (Western) companies can tap into the BRI [Belt and Road interview Series: George Orr].
In my opinion the BRI must first be analyzed like a regular business. The Industrial Life-Cycle Analysis provides fundamentals for this assessment. Challenging though this might be, it becomes more apparent that the BRI is currently in the late stages of the pioneering phase. It has to deal with large upfront costs (founding the AIIB) and sales need to grow. The recent critique on the viability of the BRI affirms this notion. China is playing its cards close to its chest and has every right to do so. The Silk Road Headlines shall provide more insight as the BRI grows on.
A Cikmazkara
This week's Silk Road Headlines
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