China Subdues the US with Strategy and Diplomacy


I said in my post “China’s Space Era Strategy Overwhelmingly Superior to US Air-Sea Battle” on June 22:

There is no denial that the US regards China as its top potential enemy. Obama made it very clear that his Trans-Pacific Partnership (TPP) was directed at China.

Obama’s pivot to Asia, in spite of his claim that it was not directed at China, was directed at China. That was clear to everybody.

The US is obsessed with military solution. That is why it maintains an excessive military budget in spite of its shortage of funds for its people’s welfare and its essential but dilapidated infrastructures. Obama’s major approach for his pivot to Asia was to deploy 60% of US military in Asia.

China follows its gifted strategist Sun Tzu’s teachings: Subdue the enemy with strategy is the best of best, with diplomacy the next best, with fighting the third option while with attacking enemy cities the last choice. Its approaches have been strategy and diplomacy.

I have mentioned China’s strategy to enhance its geographical advantages by its construction of artificial islands with three airstrips in the South China Sea and its weapon strategy to develop integrated space and air capabilities for both attack and defense. In addition China has subdued the US with diplomacy.

First, there is the question: Has China really achieved that?

Recently, we have well-known US media’s articles on US losing to China. They, though perhaps do not follow Sun Tzu’s instructions, know well in the conflicts between the US and China, diplomacy is preferred to war.

With such a perspective, they publish articles on US losing to China.

First, Foreign Affair published an article titled “The United States Is Losing Asia to China” by Ely Ratner and Samir Kumar on May 12.

As a senior fellow in China studies at the Council on Foreign Relations, Ely Ratner is quite an expert on U.S.-China relations, regional security in East Asia, and U.S. national security policy.

There has been no opposition to the article’s views from any heavy-weight experts.

That article was followed by WSJ article “The U.S. Is Losing the Pacific to China” by Ben Bohane on June 7, 2017. US loss is now much larger: not only Asia but the entire Pacific.

Ben Bohane is a photojournalist, author and television producer who has covered Asia and the Pacific islands for the past 25 years. His article shall be taken seriously.

However, the losses referred to in the articles means diplomatic losses not physical losses. Neither the US nor China have Asia or the Pacific as their own.

Mr. Bohane says in his article, “For more than 100 years, the US has viewed the Pacific Ocean as an ‘American lake’”. It is but US view instead of any US claim to the Pacific. China can regard a large area of the South China Sea as its lake as it has drawn a nine-dash line to encircle the area it claims and no one had opposed the line for more than two decades after it has been included in China’s map since 1947.

The US has never drawn any line whether nine-dash or ninety-dash to encircle the Pacific Ocean to support its claim to the Pacific. If it had drawn such a line, it would have encountered fierce opposition from lots of countries.

What Mr. Bohane means is in fact that China is establishing good relations with Pacific island nations while the US has neglected those nations. The island nations have not been US allies or spheres of influence. Nor are they China’s allies or spheres of influence; therefore, the actual situation there is that China has been making efforts to make friends there while the US has done nothing.

In Asia, what Mr. Ratner means in his article is but US loss of Southeast Asia to China. The US has kept Japan and South Korea as its allies. As for South and Central Asia, they have long been Russia’s spheres of influence. China has not substituted its influence for Russia’s. Even if it has, the areas have been lost by Russia instead of US to China.

As for the Middle East in Asia, the US does seem to have been losing it but not to China as China’s influence there remains very much limited.

What we have to discuss is how the US has lost its influence in Asia, especially Russia, Southeast Asia and Pakistan and how China has been gaining influence in Pacific island nations.

What is Sun Tzu’s teachings?

Sun Tzu says, “In the past, those who were skilled in war made themselves invincible first and then waited for the time when the enemy could be defeated. One relies on one’s own for invincibility, but whether one’s enemy can be defeated is determined by the enemy. Therefore, those who are skilled in war are able to make themselves invincible, but unable to make the enemy surely defeatable.

Therefore, those who are skilled in war put themselves in an invincible position and lose no chance of their enemies’ possible loss. Hence, a winning army fights after it has got the opportunity to win while a losing army fights first and then seek victory.

Let’s see what China has done to put itself in an invincible position. China had been improving its relations with Russia, its long-term enemy in history, For quite a long time since it began its reform and opening up it had been making efforts to improve its relations with Russia as it needed a peaceful environment for economic growth. At the same time, Russia had been trying hard to improve its relations with the West. In fact, at that time Russia adopted a political and economic system quite similar to the West. There was hope that Russia might be accepted by the West.

However, the West always has an intention to contain Russia in order to prevent it from becoming a superpower similar to the Soviet Union. After all, Russia is the major part of the Soviet Union.

China’s improvement in its relations with Russia put it in an invincible diplomatic position to prevent the West from sowing discord between Russia and China. However, though both of them felt the pressure from the US to contain them, there has been no breakthrough to establish mutual trust for closer relations, especially an alliance for that.

Then there was Obama’s pivot to Asia and later the West’s street coup that overthrew a pro-Russia Ukrainian government. China exploited the chances for the establishment of an anti-US alliance between China and Russia.

EU and US mistake in their street revolution to bring about regime change in Ukraine gave China the opportunity to entirely win over Russia and made Russia China’s close ally.

In East and Southeast Asia, China has developed economic relations with ASEAN, South Korea, Australia and New Zealand quietly till the relations become so close as to enable China to set up free trade areas with them. Moreover, China has made efforts to grow its market much larger and even larger that no other market can replace China’s.

China has thus established its invincible position in East and Southeast Asia. Its invincible position in Southeast Asia has been strengthened by its willingness to conduct win-win cooperation with other claimants in exploiting the fish and energy resources in the disputed sea areas. Still it could not defeat the US diplomatically there until the US made the mistake to give China the opportunity to win.

In fact, the US must have been very clear that due to ASEAN’s close economic relations with China, it is impossible for the US to make ASEAN join it in containing China.

Still the US made the mistake in instigating the Philippines to file an arbitration and helping it to win the arbitration without military support to impose the arbitration award. That gave China the opportunity to subdue the US with firm posture to defend its sovereignty and interests militarily while making efforts to win over the Philippines with the diplomacy by allowing the Philippines to fish in the area around Scarborough Shoal and promising win-win cooperation in exploiting the resources in the disputed waters.

China’s diplomatic victory in dealing with the Philippines has caused the US to lose the entire Southeast Asia.

The diplomatic victory in Southeast Asia has made the US unable to use any ASEAN member as its base to attack China. Together with the military control of the South China Sea has removed the threat of US attack at China from the South China Sea.

There remains the threat of the US cutting China’s trade lifelines through the Indian and Pacific Oceans.

For the west route, China has launched its Silk Road economic belt and 21st century maritime Silk Road initiative. It has set up land connections with Europe through Russia and Central Asia through the initiative and is now busy building the China-Pakistan Economic Corridor for connection with the Middle East, which is vital for China’s energy imports.

However, in spite of China’s efforts to develop close economic relations with EU, China’s growing influence in eastern Europe has given rise to EU’s concerns as a result, China’s position though quite strong, cannot be regarded as invincible. However, US mistake in dealing with its relations with EU provides China with opportunity for closer times with EU. China owes its diplomatic victory in Europe to US mistake.

Now, China’s trade lifeline through the Pacific remains unsafe. China’s trade with Americas is much smaller than that with EU but American markets especially those in Latin America have great growth potential.

What shall China do?

According to Wall Street Journal’s article “US Is Losing the Pacific to China” on June 23, China has made multibillion-dollar investments throughout the islands of Melanesia, Micronesia and Polynesia is offering critical infrastructure projects, sending lots of tourists there and providing access to financial inclusion, but the US “continues to neglect its treaty allies in Micronesia and ignore the rest of the region.”

The article says, “Palau is still waiting on US$216 million in funds promised in 2011 as part of its agreement to provide the US with exclusive military access. Similar frustrations may lead the Federated States of Micronesia to terminate its own treaty with the US next year, well ahead of its expected 2023 expiration.”

Again China is establishing invincible position while the US is making mistakes to provide China with the opportunity to win with diplomacy.

If such diplomacy is combined with the construction of artificial islands on some reefs or floating artificial islands, each of which is supported with two aircraft carrier battle groups, China’s trade lifelines across the Pacific will thus be secure.

Comment by Chan Kai Yee on Foreign Policy and Wall Street Journal’s articles, full text of which can respectively be viewed at http://foreignpolicy.com/2017/05/12/the-united-states-is-losing-asia-to-china/ and https://www.wsj.com/articles/the-u-s-is-losing-the-pacific-to-china-1496853380


China’s Islands Building Wins in South China Sea and Then in Pacific


Modules of China’s planned super large floating island

On May 12, Ely Ratner, the Maurice R. Greenberg senior fellow in China studies at the Council on Foreign Relations, published an article along with Samir Kumar titled “The United States Is Losing Asia to China” .

I posted my comment on the article on June 14 titled “Why the United States Is Losing Asia to China?” to make my analysis of the reasons why the US has been losing Asia. I point out that the US has lost due to its own problems and that China has done nothing to grab Asian leadership from the US.

Unhappy with US loss, Mr. Ratner published another article on Foreign Affairs on June 13 titled “Course Correction: How to Stop China’s Maritime Advance” to give US government his advices on the measures that the US shall adopt to stop China’s advance in exerting full control of the South China Sea, including revival of Obama’s Trans-Pacific Partnership (TPP) or the adoption of some other measures with similar effects to TTP to put an end to ASEAN countries economic dependence on China and providing weapons and military support for them to stand up against China in the South China Sea.

Such measures will certainly be economic burdens too heavy for a hard-up US to bear. In the final analysis, however, Mr. Ratner does not want such US efforts to result in a war with China. He believes that such measures will force China to retreat as China fears a war with the US.

He simply does not understand the Chinese dream that Chinese President Xi Jinping has used to overcome the serious split between conservatives and reformists and make China a united nation.

Chinese people cherish the Chinese dream due to their memory of China’s misery of being bullied by foreign powers for nearly a century. They want the great rejuvenation of the Chinese nation to make China strong to be able to resist foreign bully, which now comes from the US, the only hegemon in the world now.

In 1947, China published its map with an 11-dash line (9-dash now) encircling most of the South China Sea to show its historical claim. The map in fact means that the South China Sea is China’s lake. The US did not oppose as at that time China was very weak and depended on US support for its claim. At that time, China’s lake means America’s lake for US politicians and military.

Unfortunately, there has been regime change and China’s unexpected rise. Now China has grown so strong that it can claim the lake on its own strength. The US can no longer dominate Southeast Asia and the South China Sea. Ratner believes that such loss means US loss of Asia.

In fact, in spite of its ambition, the US has never had Asia. North and Central Asia was parts of the Soviet Union and now Russia and areas under Russian influence. South Asia especially India is under Russian influence. US influence in Pakistan has long been replaced by China. Pakistan now regards itself as China’s closes brother.

To further west, the US lost Iran long ago and now has Iran as its dead enemy. The US is losing the Middle East possibly to Islamic extremists but not to China.

Therefore, Mr. Ratner’s statement that the US is losing Asia to China merely reflects US impudence and fear of a rising China. China cannot have Asia even if the US does not exist in the world. How can China take Russia, India or Japan? China simply shall not have the ambition to take them. China shall take care of its own people and have no ambition for world hegemony.

However, due to Chinese people’s dream for the great rejuvenation of the Chinese nation, they will fight to resist foreign bully no matter how strong the bully is.

China’s posture to fight was shown very clear in Chinese navy chief Adm. Wu Shengli’s meeting with his US counterpart. We have a photo of Wu pointing his finger at his US counterpart when he was told to respect Hague arbitration award that entirely denies China’s historical rights and interests. China conducted large-scale military drill around the time when the award was declared and began combat patrol of the South China Sea immediately after that.

What was US response at that time? It simply dare not respond militarily but only declared that it would maintain its naval presence in the South China Sea.

I said repeatedly in my posts that with geographical advantages, especially the seven large artificial islands with three airports, China has full control of the South China Sea and made it China’s lake as it has claimed long ago.

China can deploy at least 600 fighter jets on the three airports of the artificial islands. There are in addition land-based fighter jets on Chinese coast that may join the fight through refueling as China’s J-20s will have air supremacy. The US only has 10 aircraft carriers but cannot send all of them to fight as they are so sophisticated as to need long-term overhaul periodically so that only two third of them can be in service. As a result, the US can only send a maximum of 7 carriers with at most 560 fighter jets to deal with more than 1,000 land- and island-based Chinese fighter jets.

Chinese fighter jets are now as good as US ones.

They say Chinese pilots lack the experience in fighting modern war. So are US pilots. They have never had any air battles with advanced air force. They have defeated Iraqi air force much inferior to them and can have gained no experience they need in fighting China’s air force.

In an emergency, land based fighter jets can land on Chinese expressways when Chinese airports are damaged but carrier-based fighter jets in the South China Sea can only fall into the sea or land on Chinese airports to be captured by China.

Moreover, artificial islands are large and can deploy the best air defense and anti-ship missiles and rocket artillery to destroy entire US attacking navy. China has built islands to not only defeat US aircraft carrier battle groups but also prevent US submarines from attacking China with submarine-launched missiles.

China’s strategy of island building is much better than US strategy of carrier building.

Artificial islands can be used as fishing and mining bases and can even generate income as tourist resorts. US navy has conducted a research and proved that one floating island and two aircraft carriers have the capabilities of five carriers.

I can safely predict that China can dominate the Pacific if it has built three floating islands and six aircraft carriers and deploy them in the Pacific. China’s Silk Road economic belt initiatives have enabled it to have land routes to Europe and the Middle East through Russia, Central Asia and Pakistan so that it has no need to deploy its navy in the Indian Ocean. Its three floating islands and six carriers with capabilities of 15 carriers are more than enough to protect its trade lifelines in the Pacific against US navy that can deploy at most only 7 carriers.

Moreover, China is able to build nuclear submarines better than US ones and have built a plant able to build four nuclear submarines simultaneously. The US only has the capacity to build two. Even so, it has funding problem to maintain such scale of construction.

The US is not capable to stop China’s control of the South China Sea. Mr. Ratner had better worry about the Pacific than the South China Sea.

Comment by Chan Kai Yee on Foreign Affairs’ article, full text of which can be viewed at https://www.foreignaffairs.com/articles/2017-06-13/course-correction.


One Belt One Road Development of China’s Backyard


People wave Chinese and Union flags as they pose for photographs during departure of a freight train transporting containers laden with goods from the UK en route to Yiwu in the eastern Chinese province of Zhejiang. Photo: AFP

Like Latin America for the US, Central and Southeast Asia can be regarded as China’s backyard. Chinese President Xi Jinping has the vision to see the importance in developing those areas. China has already had great influence in Southeast Asia through trade and its rich overseas Chinese there. The collapse of Obama’s pivot to Asia has now left China as the only dominant power there.

US long-term close ally the Philippines’ switch to China’s side is a clear indication.

To strengthen China’s dominance there, Xi invented his 21st century maritime Silk Road to include in his One Belt, One Road (OBOR) initiative Southeast Asia that has never had anything to do with China’s Silk Road. Chinese investment in the infrastructures there will benefit both China and the overseas Chinese there.

What about Central Asia, the traditional part of Silk Road that links China with the Middle East and Europe?

Reuters says in its report “China’s COSCO to invest in Kazakhstan border project as part of Silk Road drive” yesterday that Chinese state-owned shipping giant COSCO “will sign a deal on Monday with Kazakhstan’s national railway company to take a 24 percent stake in a dry port in the Khorgos Eastern Gates special economic zone (SEZ)”.

Khorgos exchange is an important transport hub for change in railway gauges for the railway link between China and Europe. Through the railway network 27 Chinese cities have already connected with 11 European cities including London and Duisburg.

On April 24, SCMP published Tom Holland’s article “Puffing across the ‘One Belt, One Road’ rail route to nowhere” stating, “Compared to sea or air, the Europe-China freight service just makes no economic or environmental sense, either coming or going”

Mr. Holland simply regards the railway link between China and Europe as stupid as it is not cost effective and has no market.

However, it is of great strategic importance for China’s national security as it provides an alternative land route for transport of important goods between China and Europe in case China’s sea route is cut by enemy navy.

In addition, Xi wants to make those poor sparsely populated Central Asian countries rich by helping them exploiting their natural resources and providing jobs for their cheap labor. When those countries have become rich and filled with lots of Chinese immigrants, China will be better able to prevent illegal immigration and drug traffic from there.

The railway link between China and Central Asia and between Central Asia and Europe will greatly facilitate the trade of those inland Central Asian countries.

Those countries were formerly members of the Soviet Union so that Russia has great influence there. Xi’s efforts in establishing de facto alliance with Russia enable China to invest in infrastructures in and have close economic relations with them smoothly. The economic development in those countries will, in fact, also benefit Russia. Why shall Russia hinder China’s efforts?

China is even investing in infrastructures in Russia and lots of Chinese have moved into Russia now.

China now almost has the entire Asia as its backyard, allies or friends except India, Japan and South Korea.

India should regard Pakistan, Sri Lanka and Bangladesh as its backyard, but has failed to do so. It lacks the strategic flexibility to turn its most important neighbor Pakistan into its backyard or at least a friendly neighbor. India’s enmity has turned Pakistan into China’s close ally.

It is interesting that the US regards Latin America as its backyard. It has set up a free trade area with Canada and Mexico that draw its neighbors close to it. However, it now wants to scrap the free trade area or revise the terms of the area and thus push its neighbors away.

Perhaps the US is too rich and strong to need friends. It is happy to provide protection to all its allies without any consideration that it needs real allies that may help it when it is in trouble.

China, perhaps, is too poor and weak and has to build up its backyard and seek alliance and friendship.

Comments by Chan Kai Yee on Reuters and SCMP’s articles, full text of which can be viewed at http://www.reuters.com/article/us-china-silkroad-cosco-idUSKCN18A0KP and http://www.scmp.com/week-asia/business/article/2089507/puffing-across-one-belt-one-road-rail-route-nowhere.


China-Pakistan Economic Corridor, China’s Vital Success in Its OBOR


Pakistani Prime Minister Nawaz Sharif meets Chinese President Xi Jinping ahead of the Belt and Road Forum in Beijing, China May 13, 2017. REUTERS/Jason Lee

In its report “Pakistan signs nearly $500 million in China deals at Silk Road summit” yesterday, Reuters quotes Pakistani Prime Minister Sharif as saying to Chinese President, “China-Pakistan Economic Corridor is a core component of your visionary initiative of the ‘One Belt-One Road'”.

In my post “The Conundrum of China’s New Silk Road Plan” on April 20, I said that China’s One Belt-One Road (OBOR) aims at establishing alternate land routes for its national security and expanding its trade with other countries. China is not rich enough to share the bounty of its economic development and to fund infrastructure gaps irrelevant to its national security or economic growth.

Sharif is wise to see the vital strategic importance of the China-Pakistan Economic Corridor (CPEC) in China’s OBOR so that he describes it as the core of Xi Jinping’s OBOR initiative.

The Corridor will facilitate Pakistan’s and Western China’s economic development and strengthen China’s and Pakistan’s defense in their border with India. Moreover, China will have a shortcut in its trade with the Middle East through the corridor.

Due to the strategic importance, Xi and Sharif signed $500 million deals for CPEC in addition to the $57 billion already pledged for its projects. Pakistani troops are active in ensuring the safety of those projects due to their importance to Pakistan’s and China’s national security.

In fact, the core projects for OBOR are but those in Pakistan, Central Asia and Russia for China’s trade to the Middle East and Europe, especially the access to oil and gas resources there.

It is Xi’s wise idea to describe OBOR as a global initiative involving lots of countries that in fact are not along China’s Silk Road in order to attract other countries’ investment and construction industries to the projects that benefit China. Japan and South Korea are interested in the infrastructures in Southeast Asia, which though is included in China’s OBOR initiative, is really not along China’s Silk Road as China’s trade routes to the Middle East, Europe and Africa through Southeast Asia have yet to go through the Indian Ocean with the risk of being cut by not only US but also Indian navy.

However, the infrastructure developed by whatever countries China, Japan, South Korea or others will facilitate rich overseas Chinese’ business in the region and thus expands China’s influence there.

As for the US, Japan and South Korea’s competition with China in developing infrastructures in Central Asia, China certainly welcomes such competition as the infrastructures will first of all be exploited by China in its trade and investment there. I do not see the wisdom in such competition as the infrastructures are in countries under Russian military dominance.

Comment by Chan Kai Yee on Reuters’ report, full text of which can be viewed at http://www.reuters.com/article/us-china-silkroad-pakistan-idUSKBN1890KD.


The Conundrum of China’s New Silk Road Plan


Italian Prime Minister Paolo Gentiloni (who will attend New Silk Road summit) talks to the media at Chigi Palace in Rome, Italy April 7, 2017. REUTERS/Remo Casilli

In its report yesterday titled “China to gather friends for biggest summit of year on New Silk Road”, Reuters says, “While China has portrayed the New Silk Road as a genuine effort to share the bounty of China’s economic development and to fund infrastructure gaps, many Western countries are concerned about a lack of detail and transparency in the project and are suspicious about China’s broader political intents.”

China certainly is not so generous as to contribute billions of dollars to its New Silk Road projects for nothing in return. The sharing of bounty is but propaganda. China is simply not rich enough to do so. It has to first eliminate poverty at home and raise its own people’s living standards to a level similar to Western developed countries. To achieve those goals, China still has a long way to go.

Therefore, it helps other countries build infrastructures first of all for its own benefits, i.e. to provide alternative routes for import and export, which will facilitate not only its trade but also national security.

The most important are pipelines for import of oil and gas from Russia, Central Asia and the Middle East. The shipping route to the Middle East and Europe through Indian Ocean can easily be cut by powerful US navy. Russia and Central Asia offer alternative land routes, but the China-Pakistan Economic Corridor will be even better.

The roads, railways and pipelines to be built and expanded through the corridor will provide China with connections to the Middle East, Europe and Africa as there is military protection by Iran and Russia of the sea route from Pakistan’s Gwadar Port that China has been building. That trade route will facilitate the economic development not only in Pakistan but also China’s vast west.

In addition, China may move its labor-intensive industries to Pakistan to exploit the cheap labor there.

The New Silk Road projects are first of all for China’s own security and economic growth while enabling other countries along the road to become rich through win-win cooperation. Leaders of Western developed countries will not attend the New Silk Road summit as they do not think that their countries will be much benefited by the road. Only Italian Prime Minister will attend the summit as the sea route from Gwadar Port may connect to land route through Italy to Europe.

However, can China’s good relations with those small and poor nations along the New Silk Road in Asia enable China to replace the US as world leader? I don’t think Western leaders have such rich imagination as Reuters points out in its report.

Comment by Chan Kai Yee on Reuters’ report, full text of which can be viewed at http://www.reuters.com/article/us-china-silkroad-summit-idUSKBN17K0FL.


China’s Huge ‘One Belt, One Road’ Initiative Is Sweeping Central Asia


By William T. Wilson, Ph.D.

Having overbuilt in many domestic industries—such as coal, cement and even solar panels—the Chinese government is redirecting its capital abroad. The aim is to reduce excessive industrial capacity at home while increasing financial returns. U.S. policymakers ought to be watching this very closely.

One of Beijing’s most ambitious foreign economic development initiatives aims to recreate the legendary Silk Road. Nicknamed One Belt One Road (OBOR), the project wields plenty of financial muscle. It launched in February 2014 with $40 billion—mostly drawn from Beijing’s bountiful foreign exchange reserves.

Since then, OBOR has begun attracting other foreign investors. Singapore’s state-owned development board has agreed to partner with China Construction Bank, committing about $22 billion to finance OBOR projects. International pension funds, insurance companies, sovereign wealth funds and private equity funds have also thrown in on OBOR projects in search of higher financial returns. Chinese infrastructure investment projects now span the globe.

Chinese companies have funded and built roads, bridges and tunnels across Central Asia, increasing trade and making China the dominant economic power in the region. In 2013, trade between China and the five Central Asian states (Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan) totaled $50 billion, while the five states’ trade with Russia—previously the region’s top economic player—amounted to only $30 billion.

China has also redrawn Central Asia’s energy economics. Chinese companies now own close to a quarter of Kazakhstan’s oil production and account for well over half of Turkmenistan’s gas exports. Recently they signed $15 billion in gas and uranium deals with Uzbekistan.

China is also going global with its expertise in high-speed rail (HSR) construction. With more than twelve thousand miles of track laid, China has more HSR than the rest of the world combined. Now Beijing plans to build HSR networks connecting China with all of Southeast Asia.

South America will receive Chinese funding, as well. President Xi has pledged $250 billion over the next decade. This includes an HSR system spanning the Brazilian rain forest and traversing the Andean mountains. If that was not ambitious enough, Chinese business tycoon Wang Jing has announced his intent (though plans are currently stalled) to challenge the Panama Canal by building a $50 billion, 170-mile canal crossing Nicaragua. Last year, the Chinese news agency Xinhua announced that Beijing had already completed over one thousand projects in Africa, including 2,233 kilometers of rail construction and 3,350 kilometers of highway paving. In January of this year, China announced that it would help build a series of transportation grids (railroad, bridges and roads) linking fifty-four African countries.

To penetrate the struggling but affluent European market (China’s largest trading partner), China is financing the upgrade of the Greek port of Piraeus and a $3 billion bullet train from Belgrade to Budapest. Another network of rails, roads and pipelines, starting in the Chinese central city of Xian, will stretch westward as far as Belgium. Beijing has already started building an eight-thousand-mile cargo rail route between the Chinese city of Yiwu and Madrid. China is also in the lead for building a proposed HSR in California. Equally important, are the other financial institutions, either Chinese-based or initiated by China. The Asian Infrastructure Investment Bank (to finance infrastructure construction throughout Asia) has fifty-seven member countries. China plans to provide much of the $100 billion in initial capital.

Then there is the Export-Import Bank of China, which lent more than $80 billion in 2015. This dwarfs the Asia Development Bank, which lent $27 billion over the same period.

China also plans to build a $46 billion economic corridor—pipeline, rail, roads, bridges and more—through Pakistan. The goal is to establish a trade route connecting Gwadar, a port on the Arabian Sea, to northwest China. This enormous project is driven in part by Beijing’s desire to build additional routes for its energy imports from the Middle East—to lessen its dependence on sea routes.

Tehran has been most receptive to Chinese infrastructure projects, hoping it will help make Iran a key trading hub between Europe and China. Earlier this year, the first freight train from eastern China—traveling through Kazakhstan and Turkmenistan—completed the journey in just fourteen days, compared to forty-five days by sea. Sino-Iranian trade increased from $4 billion in 2003 to $52 billion in 2014, and Tehran hopes to boost that figure to $600 billion over the next decade. Naturally, the global infusion of Chinese capital has fostered some geopolitical tension as well. Moscow, for one, is far from pleased about losing preeminence in Central Asia, a region it had dominated for two centuries. China has built an oil pipeline from Kazakhstan and a gas pipeline that has allowed Turkmenistan to break its dependence on Russia.

The Chinese propensity to use their own labor on foreign projects has also prompted complaints in Africa and elsewhere that Chinese infrastructure investment primarily benefits Chinese contractors. Though there is a paucity of official data, it is estimated that at least one million private Chinese citizens have arrived in Africa since 2001. But with economic growth sharply slowing in most developing economies, Chinese capital investment seems welcomed—at least for now—in most countries.

Beijing’s desire to “go global” should not necessarily be viewed as a threat to American interests but more of a challenge to be managed. China’s size and trading status is quickly reshaping the economics and geopolitics of Asia. To maintain American economic influence, Washington must stay deeply engaged in the world as well.

William T. Wilson, Ph.D., is a senior research fellow in The Heritage Foundation’s Asian Studies Center.

Source: Heritage Foundation “China’s Huge ‘One Belt, One Road’ Initiative Is Sweeping Central Asia”

Note: This is Heritage Foundation’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.


Who Enables China’s Entry into Central Asia, Russia’s Backyard?


Map of China's Silk Road through Kazakhstan

Map of China’s Silk Road through Kazakhstan

The Washington Post publishes today a report titled “In Central Asia, Chinese inroads in Russia’s back yard” that describes Russia’s fear of China’s growing influence in Central Asia, its backyard. It quotes Alexander Gabuyev, head of the Russia in the Asia Pacific Program at the Carnegie Moscow Center, as saying,“When China announced its Silk Road plan in Kazakhstan, it was met with a lot of skepticism and even fear by the Russian leadership.”

Moreover, its says, “In 2014, Russia attempted to draw the region more closely into its embrace by establishing a Eurasian Economic Union, with Kazakhstan a founding member.” That was certainly aimed at balancing China’s growing influence in the region.

However, due to the Ukraine issue and China’s support for Russia in the UN on Syria issue, Russian-Chinese ties have become so close that “In May, Xi and Putin signed a treaty designed to balance the two nations’ interests in Central Asia and integrate the Eurasian Economic Union and the Silk Road.”

Then we know the answer to the question in the title of this article “Who Enables China’s Entry into Central Asia, Russia’s Backyard?”

The United States has pushed Russia to Chinese side by its attempt to remove pro-Russian Syrian leader and imposition of sanctions on Russia and at the same time pushed China to Russian side by its disputes with China over the South China Sea.

Siberia and Central Asia may be issues of confrontation between Russia and China, but compared with Ukraine and Middle East for Russia and South China Sea for China, they are minor issues. Instead of making the issues of confrontation grow to win over China or Russia or both to its side, the US believes it is strong enough to incur the enmity of both China and Russia, but now finds that it is not strong enough in the face of a de facto Russian-Chinese alliance.

Comments by Chan Kai Yee on The Washington Post’s report:

The following is the full text of the report:

In Central Asia, Chinese inroads in Russia’s back yard
By Simon Denyer December 27 at 9:41 PM

Slowly but surely, a four-lane highway is beginning to take shape on the sparsely populated Central Asian steppe. Soviet-era cars, trucks and aging long-distance buses weave past modern yellow bulldozers, cranes and towering construction drills, laboring under Chinese supervision to build a road that could one day stretch from eastern Asia to Western Europe.

This small stretch of blacktop, running past potato fields, bare dun-colored rolling hills and fields of grazing cattle, is a symbol of China’s march westward, an advance into Central Asia that is steadily wresting the region from Russia’s embrace.

Here the oil and gas pipelines, as well as the main roads and the railway lines, always pointed north to the heart of the old Soviet Union. Today, those links are beginning to point toward China.

“This used to be Russia’s back yard,” said Raffaello Pantucci, director of International Security Studies at the Royal United Services Institute in London, “but it is increasingly coming into China’s thrall.”

It is a shift that has shaken up the Russian leadership, which is watching China’s advance across the steppe with apprehension. Moscow and Beijing may speak the language of partnership these days, but Central Asia has emerged as a source of wariness and mistrust.

For China, the region offers rich natural resources, but Beijing’s grander commercial plans — to export its industrial overcapacity and find new markets for its goods — will struggle to find wings in these poor and sparsely populated lands.

In September 2013, Chinese President Xi Jinping chose Kazakhstan’s sparkling, modern new capital, Astana, to announce what has since become a cornerstone of his new, assertive foreign policy, a Silk Road Economic Belt that would revive ancient trading routes to bring new prosperity to a long-neglected but strategically important region at the heart of the Eurasian continent.

Bound together by 2,000 years of exchanges dating to the Western Han Dynasty and sharing a 1,100-mile border, the two nations, Xi said, now have a “golden opportunity” to develop their economies and deepen their friendship.

At the China-Kazakhstan border, at a place known as Horgos to the Chinese and Khorgos to the Kazakhs, a massive concrete immigration and customs building is being completed to mark that friendship, rising from the windswept valley floor like a mammoth Communist-style spaceship.

A short distance away, China is building an almost entirely new city, apartment block by apartment block, alongside a two-square-mile free-trade zone, where traders sit in new multi-story shopping malls hawking such items as iPhones and fur coats.

This is reputed to have been a 7th-century stop for Silk Road merchants. Today, the People’s Daily newspaper calls it “the pearl” on the Silk Road Economic Belt.

But this pearl is distinctly lopsided: On the Kazakh side of the zone, opposite all those gleaming malls, a single small building, in the shape of a nomad’s tent or yurt, sits on an expanse of wasteland where a trickle of people stop to buy biscuits, vodka and camel’s milk.

The Silk Road slogan may be new, but many of its goals are not. Beijing has long been working to secure a share of the region’s rich natural resources to fuel China’s industrial economy; it is building a network of security cooperation in Central Asia as a bulwark against Islamist extremism that could leak into China’s restive western province of Xinjiang, and it wants to create alternative trading routes to Europe that bypass Asia’s narrow, congested shipping lanes.

Under the Silk Road plan, China also is promising to spend hundreds of millions of dollars to build new infrastructure here, and it hopes to reap benefits of its own: to create new markets for Chinese goods, especially for heavy industries such as steel and cement that have suffered as the Chinese economy has slowed.

But the scene at Horgos underlines the fact that the economies of China’s Central Asian neighbors are simply too small to provide much of a stimulus to China’s giant financial system.

Russian opposition

China’s ambitious Central Asian plans did not go down well, at least initially, in Moscow.

“When China announced its Silk Road plan in Kazakhstan, it was met with a lot of skepticism and even fear by the Russian leadership,” said Alexander Gabuyev, head of the Russia in the Asia Pacific Program at the Carnegie Moscow Center. “The feeling was, ‘It’s a project to steal Central Asia from us; they want to exploit our economic difficulties to be really present in the region.’ ”

Russia had long blocked China’s attempts to create an infrastructure development bank under the auspices of the Shanghai Cooperation Organization, a regional body, fearing it would become a tool for Chinese economic expansion. Beijing responded by sidestepping Moscow, establishing an Asian Infrastructure Investment Bank in June with a $100 billion capital base.

China has overtaken Russia to become Central Asia’s biggest trade partner and lender. Pipelines transport increasing amounts of Kazakh oil to China and vast quantities of Turkmen gas east through Horgos. That has served to undermine Russia’s negotiating position when it has tried to sell its own gas to China.

At the same time, however, Xi has worked overtime to calm Russian fears, reassuring his counterpart Vladimir Putin that Beijing has no plans to counter his country’s political and security dominance in Central Asia.

In 2014, Russia attempted to draw the region more closely into its embrace by establishing a Eurasian Economic Union, with Kazakhstan a founding member. But even as Moscow moved to protect its turf, the realization was dawning that Russia lacked the financial resources to provide Central Asia the economic support it needed.

After the breakdown of relations with the West over Ukraine in 2014, and the imposition of sanctions, the dogmatic view that Russia had to be the top economic dog in Central Asia was questioned and then finally, grudgingly abandoned.

It was impossible, Gabuyev said, so Russia’s leaders decided to divide the labor: Russia would provide security, while China would bring its financial muscle.

In May, Xi and Putin signed a treaty designed to balance the two nations’ interests in Central Asia and integrate the Eurasian Economic Union and the Silk Road.

China’s expanding influence has provoked mixed feelings in many Asian states, and it has used “velvet gloves” in its dealings with Central Asia, said Nargis Kassenova, an international relations expert at KIMEP University in Almaty.

About a quarter of Kazakhstan’s citizens are ethnic Russians, while Russian media dominate the airwaves. The Chinese language, by contrast, is nowhere to be seen or heard. Even India has more cultural resonance through Bollywood films, says political scientist Dossym Satpayev in Almaty.

What Beijing can offer is infrastructure loans and investment. It has been careful to frame its plans as more than just a “road” — where Kazakhstan’s natural resources are extracted, and Chinese goods waved through on their way to Europe — but as a “belt” of economic prosperity.

Nevertheless, a survey conducted by independent analyst Elena Sadovskaya found that Kazakh attitudes toward Chinese migrant workers reflect fears that China would one day dominate the country, swamp it with immigrants and cheap goods, grab land or simply suck out its natural resources while giving little in return. “In 2030, we’ll all wake up and find ourselves speaking Chinese,” is one common saying here.

In July, scores of people were injured when a mass brawl broke out between Chinese and local workers at a copper mine near the northern Kazakh city of ­Aktogay.

Kazakhstan’s foreign minister, Erlan Idrissov, plays down concerns. China may outnumber the 17 million Kazakh population by 80 to 1, but its progress and development represent good news, he says.

“Our philosophy is simple: We should get on board that train,” he said in an interview in Astana. “We want to benefit from the growth of China, and we don’t see any risks to us in that growth.”

China’s state-owned investment giant CITIC runs an oil field and an asphalt factory in Kazakhstan and says it has established a $110 billion fund to invest in Silk Road projects, much of the money aimed at Kazakhstan and Central Asia.

But private Chinese companies and ordinary Chinese traders say they have yet to reap the rewards, as the small Kazakh economy is shrinking under the weight of falling commodity prices and Russia’s economic decline.

Meanwhile, Russia is playing interference, they say, imposing new import restrictions under the Eurasian Economic Union in an apparent attempt to keep Chinese goods from flooding the region.

In Almaty, the Yema Group has been importing Chinese bulldozers, diggers and other heavy equipment for more than a decade. Business, once booming, has collapsed in the past two years, as many Chinese vehicles fail to meet tough Russian certification standards that now apply throughout the economic union.

Shi Hairu, a 52-year-old trader from Shanghai who sells Chinese gloves in a small shop in a market in Almaty, arrived two years ago when the economy at home started to slow. But sales have been halved this year — a sharp depreciation in the Kazakh currency, the tenge, has drastically reduced locals’ purchasing power, while customs clearance has become slower and costlier.

In the Horgos free-trade zone, Chinese traders also say business is poor. Many were lured here by tax breaks, cut-price deals to rent shops and enthusiastic cheerleading by state media about the opportunities on offer.

“After we came here, we realized it was all lies,” said one owner of a shop that sells women’s underwear who declined to be named for fear of trouble with the authorities.“We basically got deceived into coming here.”

The Kazakh government is building a “dry port” at Khorgos — with warehouses, an industrial park and rows of cranes to transfer containers across different railroad gauges — in what it hopes will become a major distribution and transshipment hub for goods bound between China and Western Europe, a “mini-Dubai” in the making. But the nearby free-trade zone still boasts just the one small supermarket, guarded by four lonely concrete camels, plastic flowers in their saddlebags. The nearest Kazakh city, Almaty, is a five-hour drive away along a bone-jarring road.

Yang Shu, director of the Institute of Central Asian Studies at Lanzhou University, calls Horgos “a mistake” because so few people are in its vicinity. Trade between the two nations declined 40 percent in the first six months of this year, to $5.4 billion, just a quarter of 1 percent of China’s global trade.

In Almaty, the Yema Group has been importing Chinese bulldozers, diggers and other heavy equipment for more than a decade. Business, once booming, has collapsed in the past two years, as many Chinese vehicles fail to meet tough Russian certification standards that now apply throughout the economic union.

Shi Hairu, a 52-year-old trader from Shanghai who sells Chinese gloves in a small shop in a market in Almaty, arrived two years ago when the economy at home started to slow. But sales have been halved this year — a sharp depreciation in the Kazakh currency, the tenge, has drastically reduced locals’ purchasing power, while customs clearance has become slower and costlier.

In the Horgos free-trade zone, Chinese traders also say business is poor. Many were lured here by tax breaks, cut-price deals to rent shops and enthusiastic cheerleading by state media about the opportunities on offer.

“After we came here, we realized it was all lies,” said one owner of a shop that sells women’s underwear who declined to be named for fear of trouble with the authorities.“We basically got deceived into coming here.”

The Kazakh government is building a “dry port” at Khorgos — with warehouses, an industrial park and rows of cranes to transfer containers across different railroad gauges — in what it hopes will become a major distribution and transshipment hub for goods bound between China and Western Europe, a “mini-Dubai” in the making. But the nearby free-trade zone still boasts just the one small supermarket, guarded by four lonely concrete camels, plastic flowers in their saddlebags. The nearest Kazakh city, Almaty, is a five-hour drive away along a bone-jarring road.

Yang Shu, director of the Institute of Central Asian Studies at Lanzhou University, calls Horgos “a mistake” because so few people are in its vicinity. Trade between the two nations declined 40 percent in the first six months of this year, to $5.4 billion, just a quarter of 1 percent of China’s global trade.

In Almaty, the Yema Group has been importing Chinese bulldozers, diggers and other heavy equipment for more than a decade. Business, once booming, has collapsed in the past two years, as many Chinese vehicles fail to meet tough Russian certification standards that now apply throughout the economic union.

Shi Hairu, a 52-year-old trader from Shanghai who sells Chinese gloves in a small shop in a market in Almaty, arrived two years ago when the economy at home started to slow. But sales have been halved this year — a sharp depreciation in the Kazakh currency, the tenge, has drastically reduced locals’ purchasing power, while customs clearance has become slower and costlier.

In the Horgos free-trade zone, Chinese traders also say business is poor. Many were lured here by tax breaks, cut-price deals to rent shops and enthusiastic cheerleading by state media about the opportunities on offer.

“After we came here, we realized it was all lies,” said one owner of a shop that sells women’s underwear who declined to be named for fear of trouble with the authorities.“We basically got deceived into coming here.”

The Kazakh government is building a “dry port” at Khorgos — with warehouses, an industrial park and rows of cranes to transfer containers across different railroad gauges — in what it hopes will become a major distribution and transshipment hub for goods bound between China and Western Europe, a “mini-Dubai” in the making. But the nearby free-trade zone still boasts just the one small supermarket, guarded by four lonely concrete camels, plastic flowers in their saddlebags. The nearest Kazakh city, Almaty, is a five-hour drive away along a bone-jarring road.

Yang Shu, director of the Institute of Central Asian Studies at Lanzhou University, calls Horgos “a mistake” because so few people are in its vicinity. Trade between the two nations declined 40 percent in the first six months of this year, to $5.4 billion, just a quarter of 1 percent of China’s global trade.

Nevertheless, experts agree that China’s Silk Road plan has immeasurably more clout than the American New Silk Road plan advanced by then-Secretary of State Hillary Clinton in 2011 that was meant to bind Afghanistan to Central Asia but that barely got off the ground, or Russia’s own pivot to Asia, mired in economic woes and bureaucratic inertia.

For now, Pantucci, at the Royal United Services Institute, said China and Russia have established some sort of “modus ­vivendi” here. “I used to believe Central Asia would become a bone of contention between the two countries, but the priority in Moscow and Beijing remains the broader strategic relationship,” he said. “Wrinkles like disagreements in Central Asia will get swept underfoot.”

But Tom Miller, at a consulting firm called Gavekal Dragonomics, argues that as Beijing’s investment and financial ties with Central Asia deepen, “its political influence will inevitably strengthen,” too. Harking back to the “Great Game,” the ­19th-century contest between the British and Russian empires’ influence in Central Asia, he says there is only one winner this time around.

“Beijing’s strategists studiously avoid any talk of playing a ‘New Great Game’ in the heart of Asia — but they look set to win it nonetheless,” Miller said.

Gu Jinglu and Adam Dean contributed to this report.

This is part of an occasional series examining China’s efforts to win friends and clients in Asia and to assert a more dominant role across the continent.