Beijing looks to cooperate with Asian nations for mutual gains

Want China Times, Staff Reporter 2013-10-21

Buses on the first Sino-Vietnam highway, which links southwest China's
Yunnan province and Vietnam. (Photo/Xinhua)

China is pushing for cooperation with Southeast Asian nations in infrastructural investments to foster closer links with the regional economy, reports Beijing's Economic Observer.

During a meeting with Indonesian president Susilo Bambang Yudhoyono in Jakarta in early October, China's president Xi Jinping proposed the establishment of an "Asian infrastructural investment bank," aiming to fund infrastructural projects between Association of Southeast Asian Nations (ASEAN) member nations and other countries in the region.

China's premier Li Keqiang, meanwhile, expressed China's willingness to deepen relations and cooperate with countries in the region during his Oct. 9-15 trip to Brunei, Thailand, and Vietnam. He also announced plans to build a high-speed rail reaching Southeast Asia.

"Once the projected China-South Asia hi-speed rail is built, all the way to Singapore, trading activities and logistics operations will emerge along the route," said Wang Yigui, a professor from the School of International Studies at Beijing's Renmin University of China. Wang added that Southeast Asia has a great need for infrastructural investments, which can be a powerful driver for their economies amid the global economic slowdown.

Indonesian president Susilo Bambang Yudhoyono responded enthusiastically to the Chinese overture, saying during the recent Asian Pacific Economic Cooperation (APEC) summit on Oct. 6, that heavy infrastructural investments are needed to improve a low-efficiency supply chain and facilitate cross-border trade and services, which would not only stimulate the economy but also create jobs.

James Gagne, CEO of Agility Logistics, said the company has scored a 10% growth in emerging markets in recent years, much higher than the industry average, attributing the exceptional performance to marked improvement in infrastructural facilities in Southeast Asia.

Many economists and entrepreneurs believe infrastructural facilities will be a major growth driver for emerging markets in coming years. Hemant Kanoria, managing director of the India-based SREI Infrastructure Finance, said that India has a great need for investment in such infrastructural facilities as highways, power, and water supply. He added that there is a funding shortfall of US$18 billion this year, an opportunity which has caught the eyes of private equity funds worldwide.

Meanwhile, other East Asian nations, such as Cambodia, are also in dire need of infrastructural investments, forming a favorable setting for the establishment of the Asian infrastructural investment bank, according to Li Wei, also a Renmin University of China professor.

Observers are upbeat over cooperation between China and Asian nations in infrastructure project, as the former has a need for overseas investments due to its huge forex reserves and overcapacities, while the latter are actively seeking foreign investment in infrastructural facilities in a bid to invigorate the economy, create jobs, and create an improved setting for external trade, the paper said.

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