China’s investment in Asia often has great risks due to political instability in the countries it invests in. Myanmar’s suspension of the Myitsone dam project and Malaysia’s scrapping of the east Malaysia railway project are typical examples. However, in spite of the political instability, China has been successful in carrying out its Belt and Road initiative in Asia.
The Myitsone dam project started long before the beginning of Chinese President Xi Jinping’s Belt and Road initiative. It was planned to sell 90% of the electricity the project generates to China’s Yunan Province, but now Yunan has more than enough supply of electricity due to China’s rapid development of infrastructures.
However, the project has now become a Belt and Road one as it will provide power for Myanmar’s industrial development and thus facilitate removal of China’s labor-intensive industries to Myanmar where labor cost is very low.
Anyway, it is not a key project for Belt and Road that mainly aims at providing connection to the outside world for China.
For connection to the areas to the west of China, there may be three routes in which the railway link to Malaysia’s west coast to bypass the Malacca Strait is the last choice due to its long land route across three countries.
The best choice is a canal through Kra Isthmus to bypass Malocca Strait but with the greatest risk. The canal will benefit not only China but also other nations that use Malacca Strait as their major trade route to the west. If China funds the construction of the canal, it has to own the canal to obtain return to its investment but Thailand’s political instability make such huge investment very risky. Moreover, the canal may be nationalized like Panama Canal and Suez Canal.
The best choice seems to be a railway through Myanmar to the port at Kyaukpyu at the Bay of Bengal. China has already built oil and gas pipelines from Kyaukpyu to China’s Ruili and according to The Medi Telegraph’s report “China to develop deep sea port in Myanmar”, China has signed an agreement with Myanmar on the construction of a deep sea port at Kyaukphu with two deep berths.
It is obvious that the port will not be fully useful if it is only used for oil and gas freight to the pipelines. There must be a railway between Ruili and Kyaukpyu, which will not be such a huge investment as Kra Canal but will greatly benefit China and Myanmar. Politically, it is simple as it goes through only one country.
The railway and the port will make the port of Hambantota China is building in Sri Lanka an important transport hub for Chinese shipping to the Middle East, Europe and Africa. From that we see Chinese leaders’ vision in developing the port of Hambantota.
The ports in Sri Lanka and Myanmar under construction, the pipelines completed and the railway if built will be China’s successful 21st maritime Silk Road.
Western media simply ignored the pipelines and port at Kyaukpyu and spread the lies that China’s purchase of 80% shares in the company that has the lease of the port of Hambantota was forced asset-loan swap. They believe by such cover-up and lies they can convince readers that China’s Belt and Road is a failure.
Western and Japanese statesmen are not so stupid as to be deceived by the cover-up and lies. They now are interested in joining China’s Belt and Road or have other ways to invest in infrastructures in Asia and Africa that will ultimately benefit China in providing infrastructures and expanding market for China.
Even the United States has initiated a “Prosper Africa” strategy to contend with China in building infrastructures in Africa. But the United States is hard up. The dispute between President Trump and Congress over a small sum of $5 billion for the construction of a border wall should result in government shutdown! Poor America! Where will it obtain funds to build infrastructures in Africa? It even lacks funds to fix and rebuild its 50,000 bridges in poor conditions!
Comment by Chan Kai Yee on The Medi Telegraph’s report, full text of which can be viewed at http://www.themeditelegraph.com/en/shipping/2018/11/12/china-develop-deep-sea-port-myanmar-ebet6fyKi9LXtA6q16KIXO/index.html.
According to The Diplomat’s article “Thailand’s Kra Canal: China’s Way Around the Malacca Strait” on April 6, the 200-year-old dream about the canal might finally become a reality under China’s Belt and Road.
The article says, “Most recently, the Thai-Chinese Cultural and Economic Association and the European Association for Business and Commerce participated in a conference on the Kra Canal in Bangkok on September 2017 and a follow-up event on February 1, 2018, signaling a greater interest in executing the project.”
China is reportedly willing to provide the approximately $28 billion fund and technological support to Thailand for the canal and Thai government is trying to attract other international funding from Japan, South Korea, India, and ASEAN countries.
As according to the article, China regards the canal as its Belt and Road project in its 21st century maritime Silk Road for connection to the Middle East and Europe through the ports it is investing in Sri Lanka and Pakistan, it is very likely that the canal may become reality. In fact, the canal will also benefit Japan, South Korea, India, and ASEAN countries so that the project may become quite popular.
Comment by Chan Kai Yee on The Diplomat’s article, full text of which can be viewed at https://thediplomat.com/2018/04/thailands-kra-canal-chinas-way-around-the-malacca-strait/.
Thailand is not along China’s ancient Silk Road so that it is certainly not within China’s Silk Road economic belt.
China’s 21st century maritime Silk Road mainly go through the South China Sea and the Indian Ocean and seems to have nothing to do with Thailand.
However, China plans to build a high-speed rail linking China with Bangkok through Laos. Construction of the section of the rail in Laos with a cost of $5.95 billion has already begun, but according to SCMP’s report “China seeks green light to get rolling on Thai ‘train to nowhere’” yesterday, the section in Thailand “has been dogged by delays and mistrust on the Thai side”.
Discrimination against overseas Chinese in Thailand is quite serious. The Chinese there was called Jews in the East by Thai King Rama VI (1910-1926). But in spite of the discrimination, overseas Chinese have been prosperous in Thailand. They account for 14% of Thai population but control 80% of Thai listed companies.
They seem assimilated by Thai people but in fact remain Chinese patriots as proved by their enthusiastic investment in China to help China’s reform and opening-up. Since China began reform and opening-up, overseas Chinese investment has accounted for 80% of foreign investment in China, in which Thai overseas Chinese has made the largest contribution. Therefore, it is only natural for China to invest in Thai infrastructures to help develop Thai economy and thus facilitate the growth of overseas Chinese business there. Return kindness with kindness is Chinese tradition.
However, that is not the major goal of China’s efforts there.
I had a post titled “China to Bypass Malacca Straight by a Canal at Kra Isthmus, Thailand” on March 15, 2014 on the benefits to China, Japan and ASEAN if a canal is build across Kra Isthmus, Thailand as an alternative route to that through the Malacca Strait.
It will shorten China and Japan’s trade route to Europe by 1,200km.
The problem is Thailand’s political instability. However, as mentioned above, overseas Chinese accounts for 14% Thai population but controls Thai economy and in addition, 70% Tai people have Chinese blood. When China was poor and weak those who have Chinese blood would not admit their Chinese kinship for fear of discrimination, but when China has grown rich and strong and able to protect overseas Chinese now, those people would be proud to admit their relationship with China. As a result, overseas Chinese and Thai people with Chinese blood will dominate and bring stability to Thai politics. They will make Kra Canal a viable project.
For that purpose, China shall make lots of investment in Tai infrastructures to facilitate development of Thai economy and enable Chinese people to set up and develop their enterprises there. With Chinese support, Thai Chinese will be certain to be the dominant force in Thailand. In fact, 80% of Tai prime ministers in the past were partially Chinese.
The plan so far for the high speed rail in Thailand is for connection between China and Singapore to provide a shortcut for export of goods from Southwest China, but if Kra Canal is built, the rail will link China with the canal to provide an even shorter trade route.
Taking into consideration of the long term benefit of the rail and canal, the $5.2 billion for the first Thai section, $5.95 billion for the section in Laos and the estimated $28 billion for the canal will be very cost-effective long-term investment. There will certainly be difficulties in conducting such large projects in other countries, but for China’s long-term interests, Chinese officials shall make great efforts to overcome the difficulties.
As the projects will also bring much benefit to Thailand, I believe it is certainly possible to overcome the difficulties.
Comment by Chan Kai Yee on SCMP’s report, full text of which can be found at http://www.scmp.com/news/china/diplomacy-defence/article/2121540/china-hopes-controversial-thai-railway-will-get-green.
By David Brewster 14 August 2017 07:22 AEDT
Recent reports that Thailand, with Chinese money, is planning to build a new canal between the Pacific and Indian Oceans have set off a new wave of alarm bells over China’s plans to dominate the region. If – and it is a big if – the project goes ahead, it will create some big winners and losers.
The project would involve carving a US$28 billion, 135km canal through the Thai isthmus between the Gulf of Thailand and the Andaman Sea, cutting some 1200km (or two to three days) off journeys between the Indian and Pacific Ocean. It would be the Asian equivalent of the Suez Canal or the Panama Canal, and would be substantially more difficult to build.
The idea has been around for a long time. A really long time. The British and French looked at it in the nineteenth century. They decided it was too hard, but the British still extracted a promise from the King of Siam that no-one else would be allowed to do it. In the 1930s, there was a scare about Japanese plans to build it, which would have allowed the Japanese fleet to bypass the British base at Singapore. Here’s a classic 1940 British newsreel that explains everything you need to know on the subject (including a real Samurai).
Video of Kra! A Pathetone Special (1940) (The video can be viewed at https://www.lowyinstitute.org/the-interpreter/kra-canal-double-bypass)
New plans to build the canal have been kicking around since the turn of this century, but no-one has been able to make the project economic. Maybe this time it will go ahead with Chinese Belt and Road funding.
Some security analysts worry that the Canal would solve China’s famous ‘Malacca Dilemma’ by allowing its oil tankers to avoid the narrow, crowded and vulnerable Malacca Strait and even give the Chinese navy a new route into the Indian Ocean. The Chinese navy is certainly going to get a lot more active in the Indian Ocean in coming years, as was well demonstrated last month when China opened its first overseas naval base in Djibouti.
But the likely impact of the Kra Canal is less about battleships and more about shipping containers.
The Canal is like building a new highway that will bypass a town, leaving the local service stations and cafés stranded while creating opportunities to build new service centres elsewhere. Kra would permit ships transiting between the Indian and Pacific Oceans to bypass Singapore, potentially damaging Singapore’s hold on shipping services and helping to open up that space for China and its friends.
Since Singapore was established as a way station for the Indo-Pacific opium trade it has relied on geography for its prosperity, helping it become one of the world’s biggest transhipment hubs and provider of shipping and all its related services, from banks to law firms. That is now under threat from Chinese-funded port projects being developed right across Southern Asia.
The biggest winner from the Canal could be Sri Lanka, which lies astride the busy sea lanes of the northern Indian Ocean, making it an obvious choice for a new shipping hub. Much of China’s investment on the island over the last few years has been aimed at building up that island’s shipping infrastructure. This has included building a new port at Hambantota, which China has recently taken control of. A much bigger project is the controversial Colombo Port City, which involves building a whole new business district to service the port, largely under Chinese control.
Colombo is already by far the biggest transhipment hub for India, while Singapore’s volume of Indian transhipment is falling. If Chinese-owned ships are able to take a short cut through Kra, then Sri Lanka’s competitive advantage only improves. India is responding with its own greenfield port projects, but there are significant doubts that it has the ability to bring all the necessary elements together.
Sri Lanka has long aspired to become an Asian trading hub like Singapore and successive governments have seen Singapore’s model for development as having special significance. Sri Lanka now hopes to break through the many problems left over from its 30-year civil war with the help of China’s Maritime Silk Road initiative. It may also be in a position to play off other big investors, such as Japan.
Sri Lanka is doing well in the transhipment market, assisted by the woeful state of most Indian ports, which can’t handle large capacity container ships. But a far bigger prize than the competitive and low-margin transhipment trade would involve ‘opening the boxes’ and moving up the value chain just as Singapore did, and potentially turning Colombo into a regional hub for logistics, maintenance, engineering and financial and legal services – sitting just off India’s coast. That is a lot of what the Colombo Port City project is about.
Singapore, always keenly aware of its own vulnerabilities, is already concerned about the potential for Sri Lanka to become a competitor, although it is also aware how many systemic problems Sri Lanka must overcome before it can compete in providing sophisticated, high value services.
For the moment, the Kra Canal may be just a dream. That’s what they once said about Panama before the US, then a rising regional power, decided that the canal was necessary to give it access to its second ocean.
Source: The Interpreter of Lowy Institute “The Kra Canal: Double bypass”
Note: This is Lowy Institute’s article I post here for readers’ information. It does not mean that I agree or disagree with the article’s views.
On May 17, 2015, I had a post on the signing of a memorandum of cooperation for the construction of Kra Canal to bypass the Malacca Straight based on Hong Kong media Sky News’ report in Chinese titled “Kra Canal with great strategic importance begins construction”.
There was no further news until now as Thai government must take part in the project, but as the political situation is not stable in Thai history, there is quite a lot of uncertainty in such a large project.
Now, blog.sina.com.cn says in its report yesterday that according to Kyodo News’ report on July 28, the huge canal project may have already commenced silently.
Kyodo says that an organization represented by a member of Thai government’s major agency the State Reform Committee published a document titled “Thai Canal Plan” in May.
According to the plan the construction costs of the canal including peripheral facilities will be $50 billion and the canal will be 135 km long, 350 to 400 meters wide and 30 meters deep.
The name of the organization that has published the plan is “Thai-China Industry Promotion Association” with some Chinese enterprises among its sponsors.
Some Southeast Asian diplomats believe that the canal is within China’s One Belt, One Road goal and will bring about tremendous economic and security benefits.
Source: blog.sina.com.cn “China and Thailand join hands in making Malacca obsolete, rewriting South Sea geopolitical rules!” (summary by Chan Kai Yee based on the report in Chinese)
A memorandum of cooperation among various enterprises on the construction of Kra Canal in Thailand has been signed in Guangzhou China.
The cannel located at Kra Isthmus will enable ships to bypass the Malacca Strait so as to shorten their voyage by 1,200 km.
It is an important project of China’s 21st century maritime Silk Road. The canal will be 102 km long, 400 meters wide and 25 meters deep. It will provide great economic gains for the countries that have to go through the Malacca Strait for their trade with the Middle East and Europe.
Strategically, it is very important for China to get an alternative route for its energy and trade security.
Source: Sky News “Kra Canal with great strategic importance begins construction” (summary by Chan Kai Yee based on the report in Chinese)