9 April 2015
PHNOM PENH (Khmer Times) – During visits to Central Asia and Southeast Asia in 2013, Chinese President Xi Jinping launched the “Silk Road Economic Belt” and “21st century Maritime Silk Road.” This is generally referred to as the “Belt and Road” initiative, aiming to boost intra-regional and inter-regional economic integration.
The “Belt and Road” initiative is the core foreign policy of China under Xi Jinping as China embarks on its global power projection. The initiative also helps build Chinese identity and their global image, realizing the “China Dream” and the “Rejuvenation of China”.
The action plan on framework and mechanisms was released last month at the Boa Asia Forum in Hainan. At the Forum, President Xi assured that the initiative is progressing forward.
“The ‘Belt and Road’ initiative is not meant as rhetoric,” he said. “It represents real work that could be seen to bring real benefits to the region.”
However, infrastructure development under “One Belt, One Road” requires huge financing. China alone is unable to support this. For the initial stage, China is ready to contribute $40 billion from its Silk Road Fund, as announced last November.
Chinese-Led Infrastructure Bank
China proposed to establish the Asian Infrastructure Investment Bank (AIIB) in October 2013 to mobilize multilateral sources, primarily to finance infrastructure development, intra-regional and inter-regional connectivity, and economic integration.
By January, 26 Asian countries joined the AIIB as founding members. If things go smoothly, the AIIB will be formally established by the end of this year. The AIIB will play a complementary role to such existing financial institutions as the Asian Development Bank and the World Bank.
For Southeast Asia, China is the core economic partner. China is Asean’s largest trading partner. Asean is China’s third largest trading partner. Bilateral trade volume between China and Asean is expected to reach $500 billion this year and $1 trillion by 2020.
The “Belt and Road” initiative further connects and integrates the economies and peoples of the two regions. But the main challenges to overcome are strategic trust and confidence-building between China and its Southeast Asian neighbors, in particular the Philippines and Vietnam.
Cambodia and the Bank
Cambodia is a founding member of AIIB. The “Belt and Road” initiative will greatly benefit Cambodia in infrastructure development and regional connections. The Asean Economic Community will reach a significant milestone by the end of this year, pushing Cambodia to strengthen its economic competitiveness.
Human resources and infrastructure development – especially roads, rails, sea ports, telecommunication and electricity power grids – are the two most important instruments to help Cambodia to concretize its economic reform agenda and grasp benefits from regional economic integration.
“Lack of capital is a main obstacle for countries in the development of infrastructure, so China’s initiatives for the AIIB and the Silk Road Fund are very useful,” Prime Minister Hun Sen said in January at the inauguration of the hydroelectric dam in Koh Kong province.
“We will surely explore the opportunity to capitalize on these latest developments to support our reform and development agenda in the priority areas,” the Prime Minister said later in March at the Cambodia Outlook Conference.
Clearly, the AIIB will fill the infrastructure finance gap. Cambodia will greatly benefit from the “Belt and Road” initiative. But, the government must pay closer attention to the quality and inclusiveness of the infrastructure development projects.
Transparency and social and environmental accountability need to be taken into consideration as well in the development projects. Otherwise, the fruits of development will not be fairly shared.