Bypass Malacca Strait–China’s BRI Strategic Connections to the West


Stratfor’s article “Casting an Eye on the Belt and Road Initiative” on August 28 describes China’s BRI as China’s worldwide ambitious initiative. If China were able to satisfy the needs for construction of infrastructures all over the world, it would certainly be an ambitious initiative to make China world leader. However, China is not rich enough to do so; therefore, it invites other countries to join it in the construction.

As the infrastructures may facilitate other countries’ investment and expansion of market in receiving countries, Japan and EU are interested but still have doubt whether joining China will help China become a world hegemon. Therefore, most of them would rather join the US to demonize China by description of China’s efforts as setting up “debt traps” to hurt receiving countries.

Stratfor’s article however, points out China’s efforts to avoid its BRI projects from becoming debt traps through renegotiation to reduce the debt burdens on receiving countries. However, it fails to see the strategic importance of BRI for China.

First, bypass the Malacca Strait. BRI first of all is aimed at China’s connections to its markets and sources of resources to its West. The old Silk Road is not so important as it’s on land while most trade now is carried out by shipping, which is much less expansive and has much greater volume.

Through development of infrastructures of roads, railways and pipelines, the freight costs have reduced but are still much higher than marine shipping. The freight volume is limited. China has developed rail links with Europe through Central Asia and Russia and would keep such links even if the rail freight is not cost effective enough as they may provide alternatives if marine shipping is cut off by powerful US navy.

Even if China has a relatively strong navy to protect its shipping through the Indian Ocean, the Malacca Strait will be a bottleneck difficult to pass if it is blocked by US military stationed in Singapore.

That is why Hambantota Port is so important. If China can bypass the strait, the port will become the major transport hub as important as Singapore for China’s shipping to its west now.

That is why China is building a railway through Laos to Thailand while Thailand is building a railway linking the railway in Laos to Malaysia. Malaysia has to build its East Coast Rail Link to its port on its western coast. Such a pan-Asia railway will enable not only China but also quite a few Indochinese countries to bypass the Malacca Strait.

The article mentioned the reduction of cost by China for the construction of the East Coast Rail Link though I have mentioned that as China is building a port at Kyaukpyu, Myanmar and the establishment of China-Myanmar Economic Corridor will make the construction of a railway linking Kyaukpyu and China possible. That will give China a much better shortcut to the Indian Ocean without going through the Malacca.

A pipeline from Pyaukpyu to China has already been built and in operation for more than 3 years as a shortcut for shipping of oil to China.

Comment by Chan Kai Yee on Stratfor’s article, full text of which can be viewed at https://worldview.stratfor.com/article/casting-eye-belt-and-road-initiative-china-infrastructure.


Malaysia Wants BRI’s ECRL Project More Earnestly than China


Malay Mail says in its report “Daim: Govt to finalise ECRL project in early April” yesterday that Tun Daim Zainuddin, Malaysian official in charge of ECRL negotiation with China, said that Malaysian government was expected to finalize the East Coast Rail Link (ECRL) project in early April with cost savings of more than RM10 billion.

Why so fast to resume the railway project?

A memorandum of understanding on China-Myanmar Economic Corridor was signed between Myanmar and China. One of the two parts of the corridor goes from Ruili China to the port of Kyaukpyu, Myanmar China has already been building. There will certainly a railway from Ruili to Kyaukpyu through Mandalay to make the port useful for Myanmar and China. That will provide China with a shortcut to bypass the Malacca Strait.

As a result, China does not need so earnestly the rail link to bypass the Malacca Strait from China to Malaysia’s Port Klang through Laos and Thailand, of which ECRL is the final section. However, that rail link is the essential part of Malaysian Prime Minister Mahathir’s dream of Pan-Asian Railway that will benefit Malaysia. It will provide Indochinese countries a route to bypass the Malacca Strait. Given China’s huge volume of shipping through the strait, it will also provide China with a major supplementary route to bypass the strait.

Now, ECRL will mainly benefit Malaysia, especially the development of its less developed parts.

China has already been building China-Laos Railway with more than half of the construction completed. In July 2017 Thailand signed contracts with China on the construction of the Thai section of the rail link from Bangkok to Nong Khai on Thai border with Laos for connection to China-Laos Railway. The section between Bankok and Thai northeastern city of Nakhon Ratchasima passed environmental assessment and began construction in November 2017.

Now, Mahathir regrets his decision to suspend ECRL, the last section of his dream of the Pan-Asian Railway he suggested 2 decades ago. China agrees to reduce ECRL cost by more than 10 billion yuan, but the railway remains a heavy financial burden for Malaysia, However, the return to the investment makes the project worthwhile especially for Malaysia as the return will be much greater to Malaysia than China. ECRL is now Malaysia’s own BRI project rather than China’s as China can do without it. The China-Laos and China-Thailand railways will greatly benefit China in its trade with Indochina including Malaysia even without ECRL. On the other hand China-Pakistan and China-Myanmar Economic Corridors will be quite enough for China to bypass the Malacca Strait.

Comment by Chan Kai Yee on Malay Mail’s report, full text of which can be viewed at https://www.malaymail.com/news/malaysia/2019/03/22/daim-govt-to-finalise-ecrl-project-in-early-april/1735549.


China Begins Building Strategically Important Kra Canal in Thailand


Kra Isthmus Canal

Kra Isthmus Canal

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)


China to Bypass Malacca Straight by a Canal at Kra Isthmus, Thailand


Map of Kra Isthmus Canal  to be guilt

Map of Kra Isthmus Canal to be guilt

The trade route to the IndiaOcean through the MalaccaStrait has the problems of pirates, shipwrecks, haze, sediment and shoals. Its rate of accidents is twice higher than the Suez Canal and four times higher than the Panama Canal.

An alternative shorter route is to build a canal at Kra Isthmus, Thailand. It will save shipment costs and time as the route is shortened by 1,000 km.

Due to close trade relations between China and ASEAN for years, their bilateral trade rose from $54.8 billion in 2002 to $443.6 billion in 2013. In the same period, mutual investment grew four times to an accumulated total of $100 billion.

The close relations and accumulated wealth due to economic and trade growth make people believe that the construction of Kra Isthmus is affordable now.

China’s huge state-owned LiuGong Machinery Co., Ltd. and XCMG, and private Sany Heavy Industry Co., Ltd. have taken the lead to set up a preparations group for the construction of KraIsthmusCanal.

The 100 km artificial link to the Indian Ocean will benefit not only China and ASEAN, but also Japan and other countries’ world trade.

Source: huanqiu.com “Commencement of the Kra Isthmus Canal project: China takes the lead in building a route shorter than Malacca Strait” (summary by Chan Kai Yee based on the report in Chinese) and Wikipedia “Strait of Malacca”