China’s gold rush: Will ASEAN withstand Beijing’s grand plan for One Belt One Road?

Beijing’s decision not to invite the Singaporean Prime Minister to a key summit is part of a larger plan to undermine Southeast Asian regional politics.

By Francesca Ross

China’s decision not to invite Singaporean Prime Minister Lee Hsien Loong to the recent One Belt One Road (OBOR) summit was an obvious slap in the face for relations between the two countries.

Only three ASEAN region countries were not represented by their heads of government: Singapore, Thailand and Brunei. The story behind the snub is deeper, darker, and more worrying than a simple fail in diplomacy.

The Chinese leadership announced the plans for huge regional infrastructure development under OBOR in 2013. It is sometimes compared to the Marshall Plan which rebuilt Europe after the Second World War. It is far more than that; the plans for OBOR are 12-times larger than that American investment in its allies.

Singapore’s relationship with China is integral to OBOR participation

Singapore’s Foreign Affairs Minister Vivian Balakrishnan recently went to Beijing on an official visit to talk about improving trade relationships between his country and China. The messages that come from his meetings were as much political as economic. “We both need regional peace and stability. We both depend on free and open trade,” he told China Daily.

“We both support a fair and just international system that enables all countries, big or small, developed or developing, to fulfil the aspirations of our people in our own unique ways,” he added. He pointed to cooperation on the China-Singapore (Chongqing) Connectivity Initiative (CCI) and said “China and Singapore, as the champions of regional integration, need to work together to address challenges and uphold common interests.”

The Chinese-Singaporean relationship has regularly fluctuated

OBOR is actually a clever move to try and break Singapore’s stranglehold on Southeast Asian logistics. Singapore is a significant point of entry for goods and money into Asia. 60% of ASEAN of projects in the ASEAN region are financed by Singapore-based banks.

It is also the beginning of serious efforts to dissolve ASEAN government relationships. Beijing welcomes Singapore’s money, but not its political interests. The city-state will never truly be wanted at the OBOR table.

Chinese Foreign Minister Wang Yi puts it clearly. He said after the most recent meeting that “To advance the Belt and Road Initiative we need financing.” He added “We hope that cooperation with Singapore will draw upon Singapore’s strengths as a financial centre.”

China will always be the main winner in the OBOR initiative

The problem for Singapore, or any other investor, is China’s permanent focus on self-interest. The points of development in the initiative are based on military strategic expediency. There are few potential commercial advantages. This is the deal that China is offering; you can be in but the biggest benefit will always be ours.

“Singapore’s role as a trans-shipment hub could be enhanced by increased trade arising from the better connectivity brought about by the Belt and Road scheme,” explained China expert, Lim Tai Wei Lim.

“However, regional nations are also improving their infrastructure and competitiveness to better integrate themselves into the OBOR edifice, and this invariably means that they would become more competitive for a share of the regional economic pie,” he added.

Source: PwC

Singapore wants to maintain regional balance, China wants to create ASEAN disunity

Singapore cannot shy away from this deal. Their priority is to manage regional relations however they can. Soft power from economic partnerships can be a counterweight in the struggle to avoid militarization in the South China Sea. Singapore’s worst-case scenario sees relationships between China and local partners fail, an uptick in aggression in the disputed waters and Japan scaling up its military efforts.

China, on the other hand, has several objectives for the OBOR initiative. Beijing insists that OBOR comes without any political strings attached but it is likely Chinese help and money will come with conditions. This may include high interest payments, an insistence on Chinese labour or services being employed, and long-term access to natural resources, say business analysts, McKinsey.

The other, more subversive intention, is to dismantle ASEAN. The big story to come from the Beijing OBOR summit was Singapore being left on the sidelines. Malaysia was there, so was Vietnam. Both countries left with large deals for investment. The unity of ASEAN looks shaky when Chinese money is involved. This slow drip wears away the fraternal ties between partner nations while China looks on and smiles.

China’s policy undermines Singapore’s position in the region

This is a shift in policy from that used by Western nations. America has long been involved in the intricacies of the region’s politics; using Singapore’s regional influence to their advantage. Friendly relations with the city-state meant foreign governments could effectively run a regional headquarters which represented their interests. China’s approach is direct engagement with Singapore’s neighbours. This undermines Singapore at every turn as she becomes increasingly irrelevant.

China’s attack reaches further than just diplomatic snubs and poor deals. An editorial in the Chinese administration mouthpiece, the Global Times, roars “After a significant period of patience, Beijing has apparently had enough.” It adds “it is clear that the Chinese are designing the megaproject to bypass Singapore.”

“The designated Belt and Road ports in Southeast Asia are Malacca in Malaysia and Tanjong Priok near Jakarta, Indonesia’s capital. Such marginalisation of Singapore would mean a huge blow to its economic fortunes in the longer term,” it said.

These types of messages are shared often and pervasively. This is a coordinated effort online, on social media and in public forums. The psyops drive says Singapore has taken a wrong turn and must readjust its course. As the Global Times piece explains, China is unhappy with Singapore’s friendly approach to America and its push to build ASEAN as a regional power. “They know they must live with China forever, while America’s presence in the region will ebb and flow,” the piece suggested.

Singapore has no choice but participate

This brings us back to the core of the OBOR initiative. China’s plan is to use its financial weight to improve its situation under the guide of an infrastructure project with benefits for the whole region. “They are the only one around with extra money to make new investments in Southeast Asia,” said Oh Ei Sun, principal adviser to the Pacific Research Centre in Malaysia. “Strategically, they still have a long way to go before catching up the breadth and depth of American influence here which dates back decades.”

While China pushes forward in an initiative which strikes at the heart of Singaporean interests, the city-state can expect little more than invitations to invest in distant OBOR projects. These will be face-saving endeavours, or strategically lucrative to China, and will offer little return. Beijing will earn a comprehensive, robust and effective path to sweep through the region. Singapore will get nothing more than a mention and a bill. To add insult to injury, she will need to pay up with a smile.