China Easily Outpaced Japan and Europe’s Years of Efforts in ASEAN
The term “Southeast Asia” actually emerged quite recently. It was not until the end of World War Two that this vast region had a standardized name. Before that, this part of the Asia-Pacific region was referred to as “Farther India” because it was heavily influenced by Indian civilization. As the French scholar George Coedès put it, the area was “Indianized.”
You might wonder: Why did India get there first although China is closer? This is mainly due to geographical factors. Coedès wrote in his work:
An excerpt from George Coedès’s The Indianized States of Southeast Asia
Due to the isolation created by mountains and rivers, Chinese civilization arrived relatively late, while India, riding the monsoon winds, spread its systems, customs, religions, languages, and scripts eastward. As a result, elements of Indian culture—such as the Buddha, Shiva, curry, and yoga—are ubiquitous in today’s Southeast Asia.
However, the relationship between China and Southeast Asia has evolved significantly. Southeast Asian countries now have close trade ties with China and play a crucial role in its supply chain. Since 2009, China has been the largest trading partner of ASEAN, and since 2020, ASEAN has been China’s largest trading partner.
Even geographical factors are no longer obstacles: Southeast Asian countries are key partners in the Belt and Road Initiative (BRI), with extensive cooperation in investment and infrastructure development. China’s massive infrastructure projects have already begun and will continue, to reshape the rugged landscapes that once hindered the southward spread of Chinese civilization. Brick by brick, these efforts are constructing a closer China-ASEAN community with a shared future.
Nobody Knows Infrastructure Construction Better Than China
Most Southeast Asian countries lack the capacity to undertake large-scale infrastructure projects, leading to a significant infrastructure gap in the region. China’s investments, including those under the BRI, have thus become the driving force of Southeast Asia’s economic development.
In fact, few economies can rival Chinese companies when it comes to advancing infrastructure projects, especially those capital and technology-intensive ones requiring a long time to get returns. Unlike Western countries, China is more willing and prepared to make long-term investments and offers greater flexibility in financing. Not to mention other advantages, such as not attaching political conditions to its investments.
Chinese investments often align more closely with the needs of Southeast Asian countries. While it’s undeniable that in areas of “soft infrastructure” such as digital technology, information and communication, public health, and energy, the U.S., Japan, and other Western countries have certain advantages, the current priority for ASEAN nations is “hard infrastructure” like railways, highways, ports, and bridges. This is precisely where China’s strengths lie.
After all, China possesses the most comprehensive industrial infrastructure chain in the world, unmatched by any other country or region. While other players, such as the EU with its “Global Gateway” initiative and Japan with its “Partnership for Quality Infrastructure,” are attempting to promote infrastructure development and other forms of cooperation in Southeast Asia, they still have a long way to go.
In contrast, Chinese companies have already successfully completed some of the region’s most challenging projects, with the China-Laos Railway being one of the most iconic examples.
The project began construction in 2016 and officially opened in 2021, costing approximately $6 billion. Spanning 1,000 kilometers, the railway runs from Kunming in China to Vientiane, the capital of Laos, with the fastest journey taking only 10 hours. As of March 2024, the China-Laos Railway had transported 30.2 million passengers and 34.24 million tons of cargo, including over 7.8 million tons of cross-border goods. The variety of cross-border goods has expanded from around 10 types at the beginning, such as rubber, fertilizers, and general merchandise, to over 2,900 types, including electronics, photovoltaics, communications, and automobiles. The railway’s cargo network now covers 12 countries involved in the BRI, including Laos, Thailand, Vietnam, and Myanmar, as well as major cities in 31 provinces and regions within China. The logistics costs between Vientiane and Kunming have decreased by 40% to 50% compared to before the China-Laos Railway began operation.
The China-Laos Railway has transformed Laos from a landlocked country into a land transportation hub connecting Thailand, Cambodia, Malaysia, and Singapore. It has expanded the international logistics network, significantly reducing transportation costs and time. This has not only brought direct and indirect benefits to both China and Laos but also to the surrounding countries.
The Map of the China-Laos Railway | Source: China Train Booking
The China-Laos Railway’s extension, the China-Thailand Railway, is under construction and is expected to open by 2027. The section from Khon Kaen to Nong Khai and Vientiane is being designed, with the entire route projected to be operational between 2029 and 2032. This will allow travel from Kunming directly to Bangkok, with future plans to extend to Singapore. The 3,000-kilometer “Pan-Asia Railway” will enhance economic connections between Thailand and China and reinforce Thailand’s position as a regional hub.
Further south in Indonesia, the Jakarta-Bandung High-Speed Railway is particularly noteworthy as Southeast Asia’s first high-speed rail line. Indonesia chose China over Japan for the construction of this railway, reducing travel time between the two cities from over three hours to just 40 minutes. Despite some controversy, it stands as a significant showcase of Chinese rail technology’s prominence across Southeast Asia.
The Jakarta-Bandung High-Speed Railway addresses a long-standing challenge for Indonesian policymakers: connecting Jakarta with the less-developed eastern regions of the country. Without the cost-effective and speedy work of Chinese construction teams, it is hard to imagine achieving this goal so rapidly. The Indonesian government is clearly satisfied with the project’s results and hopes to continue collaborating with China Railway Group to extend the high-speed rail to Surabaya, Indonesia’s second-largest city.
Passengers of the Jakarta-Bandung High-Speed Railway take selfies in front of the train | Photo: CFP
The East Coast Rail Link (ECRL) project in Malaysia is currently the largest single transportation infrastructure project undertaken by Chinese companies abroad. Expected to begin operations in early 2027, it will fill the gap in railway connectivity between the east and west coasts of the Malaysian Peninsula. The ECRL is anticipated to drive economic development in the East Coast region of Malaysia and significantly enhance connectivity along the route.
China is not only skilled in building railways but also in constructing highways. Cambodia is one of the biggest beneficiaries of this expertise.
Over the past decade, highways, roads, and bridges have proliferated in Cambodia, with one of the most notable projects being the Phnom Penh-Sihanoukville Expressway. This highway has reduced travel time from five to six hours to just two hours. It has also boosted local tourism, allowing people from the capital to enjoy short trips to Sihanoukville and other coastal cities, leaving in the morning and returning home by evening. This day trip has attracted thousands of visitors to Sihanoukville province. Additionally, Sihanoukville itself has transformed into a major manufacturing and logistics center, fueled by enthusiastic Chinese investment.
The Benefits of the Phnom Penh-Sihanoukville Expressway | Source: IPS Cambodia
China’s investments in ports extend beyond Sihanoukville. By the end of 2023, China and Myanmar signed a supplementary agreement to restart the Kyaukpyu deep-water port project. This project, with CITIC Group holding a 70% stake, will provide China with an alternative route for importing oil and gas via the Bay of Bengal. It will also facilitate the connection of the “China-Myanmar Economic Corridor” to Yunnan.
In addition to transportation, China has also assisted Laos, Cambodia, and Myanmar with hydropower projects on the Mekong River. Among these, the Nam Ou River cascade hydropower project in Laos is particularly noteworthy. The Nam Ou River, the largest tributary of the Mekong in northern Laos, is the site of PowerChina’s first overseas project with a comprehensive basin-wide planning and BOT (Build-Operate-Transfer) investment development. This project is a key initiative under the BRI and the Lancang-Mekong Cooperation framework. Completed and operational in 2021, the project now provides 12% of Laos’ national electricity supply, making a significant contribution.
The Nam Ou River Cascade Hydropower Station | Photo: Xinhua News Agency
In 2014, China also built the Song Bung 4 Hydropower Station in Vietnam. In 2016, this hydropower station received the Vietnam National Quality Construction Award, the highest honor in Vietnam’s construction industry.
Despite the complex relationship, China and Vietnam maintain generally friendly ties. The Vietnamese government has expressed support for the BRI, with high-level Vietnamese leaders emphasizing its potential. In June of this year, Vietnamese Prime Minister Phạm Minh Chính highlighted the need to jointly promote high-quality BRI cooperation to enhance connectivity between the two countries. Vietnam’s Minister of Planning and Investment, Nguyễn Chí Dũng, also referred to the BRI as a “catalyst” for regional development. Currently, Vietnam and China are exploring ways to strengthen infrastructure and connectivity between Yunnan and Vietnam, including Hanoi and the port city of Haiphong, through the BRI.
The Philippines is no exception. The country formally joined the BRI during President Benigno Aquino III’s tenure, and under President Rodrigo Duterte, BRI projects expanded significantly across Luzon. Chinese concessional loans provided development funds for the Chico River Irrigation Project and the New Centennial Water Source—Kaliwa Dam Project. Additionally, direct investments were made by Chinese companies, such as Ant Financial’s investment in Mynt, the Philippines’ first unicorn, and China Telecom’s involvement in Dito Telecommunity. China had also planned to build railways in Luzon and Mindanao, but these projects were canceled after Marcos Jr. took office in 2022.
China’s actions in Southeast Asia have taught the West a lesson
The perception of BRI among Southeast Asian societies and elites is generally positive. According to the 2024 State of Southeast Asia survey by ISEAS-Yusof Ishak Institute in Singapore, respondents from all ten ASEAN countries largely believe that the initiative provides much-needed infrastructure development. They are also optimistic that the BRI will benefit ASEAN-China relations.
The Excerpt from the State of Southeast Asia Survey Report | Source: ISEAS-Yusof Ishak Institute
In March 2013, Chinese President Xi Jinping proposed the concept of building a Community of Shared Future for Mankind. Today, this grand vision encompasses initiatives such as the Global Development Initiative (GDI), the Global Security Initiative (GSI), the Global Civilization Initiative (GCI), and the Belt and Road Initiative (BRI). To date, seven of the ten ASEAN countries have publicly expressed support for the Community of Shared Future, with Vietnam being the most recent in December 2023. Although Brunei and Singapore have yet to openly endorse this concept, they have already engaged in substantive cooperation with China across several related areas.
Among these initiatives, the GDI had the most significant impact, with all ten ASEAN countries joining the “Group of Friends of the GDI.” According to the first list of projects from the GDI Project Pool released in September 2022, ASEAN and its member states accounted for 14 out of the 50 projects. At the third Belt and Road Forum for International Cooperation held in October 2023, Southeast Asia was featured in more than one-sixth of the 369 outcomes announced by China.
According to the 2024 State of Southeast Asia survey, one-third of Southeast Asian respondents believe that the Community of Shared Future for Mankind complements ASEAN’s efforts, while another third view the initiative as positively beneficial to the region. Most respondents think this vision has the potential to enhance regional development and connectivity, aligning with the aspirations of many ASEAN countries for growth and prosperity.
“From my perspective, it is important to recognize the significant infrastructural improvements and economic opportunities that engagement with China can bring. These investments can drive economic growth and reduce poverty. China’s assertiveness in regional matters can be seen as a commitment to stability and security. Its cultural and political influence can also foster deeper mutual understanding and collaboration.” said Souliya Mounnarath, head of the International Cooperation Division, International Relations Office, National University of Laos and former diplomat, in an interview with Fulcrum magazine by the Yusof Ishak Institute.
It’s undeniable that some have raised concerns about “over-reliance on China,” but rational voices have proven these fears to be unfounded. “At this point, I do not see any linkage between China’s rising global influence and Indonesia’s foreign policy.” Yohanes Sulaiman, associate professor in International Relations at Universitas Jenderal Achmad Yani of Indonesia told Fulcrum, “Even without Chinese investments, Indonesia has been pursuing an independent and active foreign policy, meaning that Indonesia does not want to be involved in military alliances or get dragged into international conflicts. It pursues friendly policies with China, the US, and other major powers. China is indeed a major investor in Indonesia but Singapore was actually the biggest investor in 2023. So, China’s rising global economic influence does not matter that much in influencing Indonesia’s foreign policy.”
Indeed, some efforts by Chinese companies overseas have not met initial expectations, due to factors such as political instability in host countries and overly optimistic financial forecasts. This has led to adjustments, including the coordinated advancement of both large-scale flagship projects and smaller-scale livelihood improvement initiatives, as well as the establishment of the China International Development Cooperation Agency (CIDCA). This agency represents an institutional innovation, aimed at coordinating efforts across multiple government departments to implement and develop aid projects more effectively. Although these changes are seldom highlighted in mainstream media, they underscore an important reality: genuine and significant changes often occur slowly and subtly, unfolding quietly behind the scenes.
Even Western institutions with biased perspectives, such as Australia’s Lowy Institute, had to acknowledge that despite the so-called “funding gaps,” China still “easily” remains the largest infrastructure financier in Southeast Asia. China has participated in 24 out of the 34 major infrastructure projects in the region, with these projects being defined as those costing $1 billion or more.
In a report published in March of this year, the Lowy Institute noted that if China maintains its current infrastructure project execution rate of 35%, it could potentially invest an additional $19 billion in Southeast Asia over the coming years. Combined with the $30 billion already invested in the region, the total would reach $49 billion, more than double the cumulative infrastructure investments of Japan ($22 billion) and the Asian Development Bank ($11 billion).
The Infrastructure Development Projects Signed and Implemented in Southeast Asia from 2015 to 2021 | Source: Lowy Institute
Hoàng Đỗ, a researcher at the East Sea Institute of the Diplomatic Academy of Vietnam, expressed his expectations for the expansion of the BRI in an interview with the Carnegie Endowment for International Peace. He noted that China has made efforts to overcome the limitations of the BRI, such as establishing channels to address local grievances and becoming greener. He also suggested that the BRI could be integrated with China’s other initiatives, including the Global Development Initiative (GDI) and the Global Security Initiative (GSI) in the future.
The Lowy report concludes: “Looking ahead, China’s ambitions are clear. Even some unrealized Chinese development plans will offer more than any other international partner involved in Southeast Asia. As the Belt and Road Initiative continues to play a prominent role in meeting Southeast Asia’s infrastructure needs, perhaps the more pressing question is whether, and how, China’s competitors, including Japan, the United States, and Australia, can keep pace.”
Major powers and their neighboring countries share common interests in promoting regional peace, prosperity, and political-economic stability. Through the Belt and Road Initiative (BRI), China has addressed Southeast Asia’s urgent need for infrastructure development, which in turn has brought political and economic dividends for China. Economic interdependence also helps mitigate potential conflicts, contributing to regional peace and stability. China’s approach to managing its relationships with Southeast Asia offers valuable lessons for the United States in Latin America, the European Union in North Africa, and other major powers in managing their relations with neighboring countries.
