China dismisses US investment ‘vision’ for Indo-Pacific as incidental to its own connectivity plan

Beijing says it would be good if the US, Japan and Australia invested ‘real money’ in the region, but gesture is not new

PUBLISHED : Tuesday, 31 July, 2018, 10:40pm
UPDATED : Wednesday, 01 August, 2018, 12:39am

China on Tuesday dismissed concerns that a new infrastructure investment initiative announced by the United States for the Indo-Pacific region will diminish its own international connectivity plan known as the “Belt and Road Initiative”.

“There is a Chinese proverb that it is better to take action than shout with a loud voice,” foreign ministry spokesman Geng Shuang said at a press conference when asked about the “Indo-Pacific Economic Vision” announced by US Secretary of State Mike Pompeo on Monday.

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Washington’s plan, which is seen as a response to the belt and boad strategy, includes US$113 million in direct government investment, and will increase the financial support that the US government provides to countries in the region through the US International Development Finance Corporation to US$60 billion.

Australia and Japan said they would join the US in a push to invest in infrastructure projects in the Indo-Pacific region.

Geng said it would be good if the US, Japan and Australia increased their investment in regional infrastructure, but this was not the first time they had made such a gesture.

“We hope these countries can offer some real money and real measures to improve regional connectivity and help with the development of countries in the region,” he said.

China was willing to work with all parties to promote regional connectivity and economic growth, and welcomed them to join belt and road projects, he said.

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Beijing’s initiative includes many multibillion dollar transport and power projects across Asia, Africa and Europe. The China-Pakistan Economic Corridor plan alone has a budget of US$62 billion.

China also led in the creation of the Asian Infrastructure Investment Bank, which has US$100 billion of capital, to help finance belt and road projects.

Despite Beijing’s apparent concerns, Teng Jianqun, a researcher at China Institute of International Studies, said Washington’s plan was more likely to be a “diplomatic gesture” than a direct competitor to the belt and road plan.

Although Pompeo made no reference to China when announcing the plan on Monday, the two countries remain locked in a trade dispute.

Teng said the size of the investment proposed by Pompeo was too small to have an impact on belt and road projects.

“If only it was US$2 trillion,” he said.

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Bai Ming, a researcher at the Chinese Academy of International Trade and Economic Cooperation under the commerce ministry, said Chinese capital alone was insufficient to fulfil the infrastructure needs of developing nations, and that the participation of more players was needed.

Shi Yinhong, head of International Relations at Renmin University in Beijing, said that Trump’s “America first” policy had made him “stingy” with his overseas spending, and the way the Indo-Pacific Economic Vision had been publicised was intended to highlight existing criticisms of the belt and road plan, such as its perceived lack of transparency and local engagement, and potential for creating debt traps.

“This initiative is a diplomatic tactic to attack some of the problems with China’s practices on foreign aid and investment,” he said.

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Although US Secretary of Commerce Wilbur Ross said the new initiative would focus on seeking private investment and regional partners, how interested private or foreign investors would be in such small and apparently less lucrative projects remained a big question, Shi said.

“Businesswise, infrastructure projects in underdeveloped countries are never attractive to investors. Large investment, slow return and high risk. Even some of China’s projects are not necessarily profitable,” he said.

Additional reporting by Wendy Wu and Laura Zhou