China’s belt and road plans for Southeast Asia face uncertain ‘long-term prospects’ as social, environment concerns persist: study

Worries about the Belt and Road Initiative’s environmental and social costs ‘are likely to hinder progress’, according to the ISEAS-Yusof Ishak Institute report
Beijing ‘remains committed’ to the region’s projects, but has pivoted more towards ‘soft’ health and digital infrastructure amid the pandemic, it found

Belt and Road Initiative

Amy Chew

Published: 5:43pm, 2 Jun 2022

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Disputes over compensation, forced relocations and an influx of unskilled Chinese workers continue to plague belt and road projects in Southeast Asia, as the pandemic has sped up China’s pivot towards prioritising digital and health infrastructure, according to a new report.

Concerns about the social and environmental costs of the Belt and Road Initiative “will persist”, the study published last week by Singapore’s ISEAS-Yusof Ishak Institute said, influencing local perceptions on Beijing’s push to grow global trade and possibly jeopardising associated projects’ “long-term prospects” if left unaddressed.

In Indonesia, which hosts 40 active belt and road projects – the most of any Southeast Asian nation – fears that unskilled Chinese workers “have occupied jobs reserved for locals” is fuelling tensions, according to the study titled “Assessing the Belt and Road Initiative in Southeast Asia amid the Covid-19 Pandemic”. In 2020, students on Indonesia’s eastern island of Sulawesi held protests against what they said were “illegal” foreign workers stealing jobs from locals, even reportedly stopping cars leaving the airport at Kendari to hunt for Chinese nationals.

A China-backed dam under construction near Luang Prabang, Laos, in 2019. Chinese dams “are correlated to increasingly frequent droughts” on the Mekong River, the report found. Photo: Shutterstock

Meanwhile in Laos, with its 12 active belt and road projects, the report found that “many villagers” were still waiting on the compensation they had been promised after being displaced by “mega projects” such as China-backed dams across the Mekong River and a new high-speed railway. Chinese dams “are correlated to increasingly frequent droughts and loss of fish stocks and farmland in downstream countries,” the study said.

“Southeast Asia rose to become the top belt and road investment destination in 2020, despite a steep decline in China’s overall belt and road investments worldwide,” wrote Wang Zheng, a visiting fellow at the ISEAS-Yusof Ishak Institute and the study’s author. “Nevertheless … challenges stemming from the ongoing pandemic and local concerns about social and environmental costs are likely to hinder the progress of belt and road projects in the region.”

Health, digital pivot

Travel restrictions, lockdowns and other pandemic-era curbs have disrupted Beijing’s global belt and road push over the past two years. But Wang’s study, which analysed an original data set tracking major China-financed projects, found that Beijing “remains committed” to boosting the progress of its projects in Southeast Asia.

Most of these projects are currently clustered in the energy (29 per cent), transport (23 per cent) and metals (18 per cent) sectors, the study found. Yet it said the data also showed China’s efforts to diversify belt and road projects by expanding into healthcare services, telecommunications, and education in Southeast Asia.

“The pandemic has accelerated China’s pivot towards ‘soft’ infrastructure such as health services and the digital economy as new priorities in its economic engagement with the region,” Wang said in the report, pointing to the increased prominence of the “health silk road” and “digital silk road” on Beijing’s belt and road agenda.

China’s engagement with the global healthcare sector surged 246 per cent from US$130 million in 2020 to US$450 million last year, the report said, citing figures from the Green Finance and Development Centre’s China Belt and Road Initiative Investment Report 2021.

Examples include the recently opened Cambodia-China Friendship Preah Kossamak Hospital in Phnom Penh, which was funded by a Chinese government grant, and a new “5G smart hospital” in Thailand that was jointly launched in December by Bangkok’s Siriraj Hospital, the Thai division of Huawei Technologies Co. and state-run regulator the National Broadcasting and Telecommunications Commission.

These projects are but a few examples of China’s endeavour to participate in regional health governance via the health silk road

Wang Zheng, ISEAS-Yusof Ishak Institute visiting fellow

“These projects are but a few examples of China’s endeavour to participate in regional health governance via the health silk road – a dimension of the Belt and Road Initiative that has gained momentum in China’s foreign policy agenda amid the pandemic,” Wang said.

First proposed in 2017 by Chinese President Xi Jinping as a joint initiative with the World Health Organization, the health silk road gained renewed prominence amid the Covid-19 pandemic and was officially associated with Beijing’s belt and road plans in early 2020. China has provided around 600 million doses of Covid-19 vaccines to members of the Association of Southeast Asian Nations, and pledged some 150 million more, under the banner of health silk road diplomacy.

The digital silk road, meanwhile, has been a part of Beijing’s belt and road agenda since at least 2017, with the core aim of pushing leading Chinese tech firms “to gain the upper hand in the emerging global digital markets, especially against the backdrop of intensifying US-China strategic rivalry,” Wang said.

The pandemic served to emphasise the importance of digital infrastructure, not only in terms of enabling remote working solutions such as teleconferencing and antivirus measures such as mass contact tracing, but also because “it allows China to transcend physical barriers aggravated by lockdowns and social distancing measures”, he said.

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Huawei, one of the companies at the forefront of 5G development, “has been deepening its cooperation with Asean in the face of severe pushback from Western countries in recent years,” Wang said.

Since January 2021, the Chinese company has made “significant inroads” building digital infrastructure in the region, the study found, with its artificial intelligence-assisted solutions and 5G technology being used in Thailand and Indonesia to help government hospitals combat the pandemic, a Huawei Customer Solution Innovation Centre launched in Malaysia to “assist the nation in becoming the Asean digital hub”, and a partnership with the National University of Singapore’s Business Analytics Centre aimed at filling the city state’s “talent gap in the technology sector”.

Besides Huawei, ZTE is also a major provider of 5G network services in Indonesia, Malaysia and the Philippines, the study said, adding that “while private tech companies remain main drivers of the digital silk road in Southeast Asia, state-owned companies are key stakeholders, too”.