RCEP trade deal can take effect without India, Thailand confirms

China, Japan, ASEAN and others to write up treaty for ratification by June

MASAYUKI YUDA, Nikkei staff writer

November 08, 2019 18:09 JST

Photo Thai, Indian PMs

Thai Prime Minister Prayuth Chan-ocha, left, with Indian counterpart Narendra Modi. It is unclear whether India will return to the RCEP talks. © AP

BANGKOK — A historic Asia-Pacific trade pact may come into force without one of the biggest participants — a hesitant India — a top Thai official indicated on Friday.

“The Regional Comprehensive Economic Partnership can take effect after at least six countries from the Association of Southeast Asian Nations and four other participating nations ratify it,” said Auramon Supthaweethum, director-general of the Department of Trade Negotiations in Thailand’s Ministry of Commerce.

She said she expects RCEP to launch in 2021.

Sixteen nations — the 10 ASEAN states plus China, Japan, South Korea, Australia, New Zealand and India — had been aiming to conclude the pact at an RCEP Summit held this past Monday.

India, however, put up a last-minute fight for safeguards, in view of its large trade deficits with other members — especially China. New Delhi’s resistance stalled the process, but Auramon confirmed there is still a way forward with or without India.

The Indian government has sent mixed signals since the contentious summit, hinting it intends to completely drop out but also suggesting it is open to further negotiations. The Thai director-general emphasized that India is still an RCEP member, but also said “RCEP members do not have a timeline to resume talks with India.”

The 15 other nations, having concluded talks on all 20 chapters of the agreement during the summit period, have decided to go ahead and introduce legislation toward ratification. This process is expected to take until next June, according to Auramon.

The participants plan to review the RCEP agreement every five years, she revealed.

Even without India, Auramon said RCEP would still be the largest trade pact in history.

But the new bloc would be much smaller than envisioned, covering 2.2 billion people rather than 3.6 billion. Its gross domestic product, which would have accounted for about one-third of global GDP, would be down to 29% of the worldwide figure.

Source: Nikkei Asian Review “RCEP trade deal can take effect without India, Thailand confirms”

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

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.

China-led RCEP deal likely signed by mid-2020

published : 5 Aug 2019 at 06:20

newspaper section: News

writer: Phusadee Arunmas

The Regional Comprehensive Economic Partnership is likely to be signed by the middle of next year, Commerce Minister Jurin Laksanawisit said. Bangkok Post photo

The Asia-Pacific trade agreement known as the Regional Comprehensive Economic Partnership (RCEP) is likely to be signed by the middle of next year, said Deputy Prime Minister and Commerce Minister Jurin Laksanawisit.

“The latest round of talks have yielded many results, because the trade ministers from 16 countries were able to iron out most of their differences and continue the negotiations, ahead of the final meeting which will be held in Bangkok in November,” Mr Jurin said.

He was talking to the media after the 8th RCEP Intersessional Ministerial Meeting in Beijing, which ended on Sunday.

“If the negotiations can be finalised in the meeting in Bangkok, then the deal is likely to be signed by mid-2020,” he said.

Once signed, each signatory to the deal will have to make sure their domestic laws are in line with the terms of the RCEP, said Mr Jurin, who added the process will likely take between 1.5-2 years.

Mr Jurin said the next meetings will focus on foreign investment, e-commerce, and the list of services and goods which will be included in the zero-tariff list.

“Our progress right now stands at about 60%, as we have finished negotiations on seven out of 20 main issues on the RCEP,” he said.

By joining the RCEP, Mr Jurin said Thailand will benefit from the cheap export of electronic equipment, heavy machines, plastic and chemical products, automobile engines, rubber tyres, textile, tapioca products, as well as pulp and paper.

The RCEP was launched in November 2012, with the goal of deeper economic cooperation between Asean and China, Japan, South Korea, Australia, India and New Zealand.

Once the RCEP is finalised, the group will form a major trading bloc that accounts for one-third of the world’s gross domestic product.

Source: Note: This is Bangkok Post’s report I post here for readers’ information. It does not mean that I agree or disagree with the report’ views.

China to Build Kra Canal to Bypass Malacca Strait

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/.

China targets export market with latest submarine designs

The 1100T is a multirole diesel-electric submarine design that will be capable of performing a diverse range of missions, from anti-ship and submarine attack to patrol and reconnaissance. Source: Jane’s sources

Kelvin Wong – Jane’s International Defence Review

12 December 2017

Key Points
•Buoyed by recent successes with the Pakistan and Thai navies, Chinese naval shipbuilder China Shipbuilding Industry Corporation has recently unveiled a slew of new submarine concepts targeted at the export market
•New export concepts include 200-, 600-, and 1,100-tonne diesel-electric submarines

With decades of experience from submarine design and construction for the People’s Liberation Army Navy (PLAN), Chinese naval developers – led by the state-owned China Shipbuilding Industry Corporation (CSIC) – are looking to expand their presence on the world stage with indigenous export submarine designs having secured recent successes in Pakistan and Thailand.

Pakistan is acquiring eight S20 diesel-electric submarines based on the Yuan-class (Type 039A-series) design, with the first four boats to be built in China and deliveries commencing to the Pakistani Navy (PN) from 2022. The remainder will be built in Pakistan by the Karachi Shipbuilding and Engineering Works (KSEW).

Meanwhile, the Royal Thai Navy (RTN) signed a contract worth THB13.5 billion (USD390 million) with China Shipbuilding and Offshore International Corporation (CSOC), the international trading arm of CSIC, for the delivery of a S26T diesel-electric submarine, an export variant derived from “the most advanced version” of the Yuan-class platform – the Type 039B/041 – in 2023. The service is expected to order two more S26T submarines in the next few years with the aim of operationalising all three boats by 2026. The entire programme would be worth THB36 billion if the follow-on order materialises.

“Drawing upon 60 years of submarine design and construction beginning with the Romeo-, Ming-, Song-, and the Yuan-class, China is capable of independent submarine research and development, including design and construction of submarine platforms and a full range of associated equipment, sensors, and weapons,” a spokesperson of CSOC told Jane’s .

Export submarines

According to CSIC, the S20 and S26T platforms are fully indigenous designs that leverage the company’s experience from developing the Yuan-class submarines, which were first launched at its Wuchang Shipyard in Wuhan in May 2004.

Source: Jane’s “China targets export market with latest submarine designs”

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

Thai High-Speed Rail Refutes Tillerson’s Lie about China’s Belt and Road

SCMP says in its report “Thailand pushes for high-speed rail link with China to be used for freight” that China’s Belt and Road project of high-speed rail in Thailand has passed environmental assessment and can begin construction, but SCMP stresses the problem to decide whether the railway will be used for passenger service or freight.

SCMP says, “Thailand will own the project and be responsible for financing its construction, while China will design it and provide engineers, track systems and equipment.”

On October 18, US Secretary of State Rex Tillerson accused China’s Belt and Road initiative, alleging that China’s financing mechanisms “result in saddling them with enormous levels of debt.”

The Thai rail project proves that China does not force its financing mechanisms on others in order to control them. China is happy if others can finance the project and willing to make the project profitable according to the host countries’ decisions.

SCMP makes clear in the report that the debates about the use of the high-speed rail for passengers or freight are Thailand’s. China is requested to minimize the cost and maximize the profit of the project. It will certainly do its best to achieve that. Otherwise it will set a poor example and cause the failure of its Belt and Road initiative.

Obviously, countries accept China’s Belt and Road projects are not so stupid to accept any financing mechanisms that “result in saddling them with enormous levels of debt.”

Nor is China so stupid to provide loans to others knowing well that the loans obviously cannot be repaid. China pursues win-win cooperation that will benefit both China and its cooperation partners. It will not provide loans obviously unrecoverable unless the projects are vital to its national security.

However, China still will make great efforts to be benefited by such financially risky projects. For example, its projects in China-Pakistan Economic Corridor cost billions of dollars. Financing those projects is risky whether by China or Pakistan, but they are vital to China’s national security as they will provide China with vital alternative connection to the Middle East and Africa. China will utilize the projects to enable China to move its labor-intensive industries to Pakistan to make the country prosperous so as to ensure that the projects are profitable in the long run.

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/2123006/thailand-pushes-high-speed-rail-link-china-be-used.

Thailand, a Vital Part of China’s Belt and Road Initiative

Red line is the planned route from China to Indian Ocean through Kra Canal while the black line is the existing route through 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.