China’s Trade Grows in SE Asia Under BRI, as Do Concerns

Taipei, Taiwan — Since China’s launch of the Belt and Road Initiative 10 years ago, trade with Southeast Asian nations has more than doubled. Beijing has poured billions into helping build rails, airports, ports, and other infrastructure, but the push for more connectivity comes with unintended consequences observers said.

Some key concerns include rising debt, the environmental impact of projects, and an increase in crime said analysts in the region who spoke to VOA’s Mandarin Service.

According to the U.K.-based International Institute for Strategic Studies, between 2013 and 2021, Southeast Asia was the site of 131 Belt and Road projects, the most in the Asia-Pacific region.

Chen Shangmao, a professor at the Department of Public Affairs at Fo Guang University in Taiwan, said with such a wide scope, the BRI has had some positive benefits.

“For example, with respect to the entire economy, trade and investment, we can also see that, in recent years, the trade volume between China and Southeast Asian countries has continued to increase” Chen tells VOA.

China’s State Council Information Office reported that in 2022 the volume of trade between China and the ten members of the Association of Southeast Asian Nations or ASEAN reached $975.3 billion, up from $443.6 billion in 2013.

What China wants

One of the signature Belt and Road projects Beijing has completed in Southeast Asia is the China-Laos railway. The $6 billion-dollar 1,000 kilometer semi-high-speed rail line was finished in December of 2021. The project has cut the time of travel between Laos’ capital of Vientiane and China’s southern border.

Eventually, the rail is expected to connect Beijing with Bangkok and even Singapore.

Pollasak Ruongpanyaroj, Executive Director of Panyapiwat Institute of Management in Bangkok, said the China-Laos Railway has brought only limited potential benefits for one of Southeast Asia’s poorest countries.

“The high-speed rail between Laos and China has brought very little economic contribution to Laos. Do you see anything in Laos that can be sold to China? The repayment of loans is so high,” said Ruongpanyaroj.

Fo Guang University’s Chen said this railway is what China, not Laos, needs because before other transportation networks are in place, the railway is currently not of much help to Laos, but the huge debt it has assumed has made the outside world extremely worried.

“The debt that Laos owes to China accounts for about 60% of its GDP, that is scary” Chen said, adding that it raises other questions, such as: “How are you going to pay it back? What will you do when you can’t pay it back? And then, you may have to allow them to make whatever political demands as they please.”

Drugs, telecom fraud

With massive investments, an increase in the number of Chinese nationals in the region and connectivity that has come with the BRI, organized crime groups have also followed and grown their footprint in Southeast Asia, analysts said.

The port town of Sihanoukville in Cambodia, which became a special economic zone under China’s BRI is one place that has been linked to a range of problems from drug and human trafficking to telecom fraud, prostitution and gambling.

“In recent years, the Chinese people have engaged in telecom fraud and online gambling and (have) been cracked down by Myanmar, Cambodia and the Philippines,” said Ruongpanyaroj who described these criminal activities as gray industries.

“So, those people involved in the gray industries have come to Thailand to open casinos and bars, and they also deal drugs,” he said.

“Trafficking in persons for the purpose of forced criminality to commit online scams and financial fraud, particularly occurring in Special Economic Zones (SEZs) and other areas of Cambodia, Lao People’s Democratic Republic (PDR), and Myanmar, as well as other destination countries (including Malaysia, and the Philippines), has emerged as a new and growing trend.,” stated a report released last month by the United Nations Office on Drugs and Crime.

Beijing has been stepping up its efforts to crack down on the problem both in China and with authorities in the region. In 2022, China’s party-backed Global Times reported that authorities resolved 464,000 cases related to online gambling and telecom fraud.

“In recent years, online gambling and telecom fraud have caused social problems in China as well as in Southeast Asian countries such as Myanmar, Thailand and Sri Lanka, with some Chinese nationals falling victims to murder, kidnapping and human trafficking,” the report said

Environmental concerns

Environmental concerns also weigh heavily on the residents in the Southeast Asia because of the various industries involved in projects across the region, including mining,

In July, the Indonesian government suspended PT Dairi Prima Mineral’s (DPM) mining license in July to investigate the potential environmental damages the company may have caused, barring it from mining Zinc in Dairi Regency in North Sumatra. China Nonferrous Metal Industry’s Foreign Engineering & Construction Co. Ltd. owns a 51% stake in DPM.

Tongam Panggabean, executive director of Bakumsu, a legal advocacy group in North Sumatra representing local communities in Indonesia, told VOA, the company hasn’t released any public statements regarding the concerns.

“As a company that always said that they are system sustainable, they respect the community or something like that, there should be a positive response to the verdict,” Panggabean said. “I assume by not responding openly to the case or to the demand of the community, it indicates that the government of China doesn’t really care about the impact of their company in other countries.”

US-China competition

BRI has not only had an impact on the infrastructure of Southeast Asian countries, but also politics in the region, including the gradual challenge of Western values, analysts said.

Felix K. Chang, a senior fellow at the Foreign Policy Research Institute, wrote about the connection between the BRI, politics and economics in an article last month.

“Whatever the path China chooses for the BRI, the more tortuous its economic logic becomes, the more pronounced its political dimension will be. While the BRI’s economic aims may be continuously shifting, its political goals remain focused,” Chang wrote.

China’s soft power efforts in the region are having mixed results, observers found.

According to surveys about the state of Southeast Asia released in 2022 and 2023, China was considered to be the most influential country politically and strategically in the region in both years. In 2023, 68.5 % of ASEAN respondents said they were worried about China’s growing regional political and strategic influence, according to a report of the survey by Singapore-based ASEAN Studies Centre at the ISEAS Yusof Ishak Institute. That was down slightly from 76.4 % in 2022.

Siwage Dharma Negara, a senior fellow at the ISEAS Yusof Ishak Institute, does not believe China is using the BRI to forcibly promote communism or authoritarianism in Southeast Asia. People in the region are aware of the political influence that comes with the BRI but that doesn’t mean that they see it as bad.

“As long as it can continue to provide the necessary resources for countries or partner to develop their own economy, their infrastructure, then I think there will be room for collaboration,” he said.

Considering the intensifying competition between the U.S. and China, Negara said in the future, Beijing may change its approach to the BRI in Southeast Asia.

Adrianna Zhang contributed to this report.