Asia’s Competing Visions

Volume VI, Issue 9, September 2017

Earlier this month, the leaders of Japan and India paused to lay the foundation stone for a high-speed railway. Shinzo Abe was visiting Narendra Modi’s home state, where a 500-kilometer bullet train using Japanese financing and technology will link Mumbai and the industrial city of Ahmedabad. Modi called Japan “a true friend” and the train a “symbol of new India.” Abe agreed, saying, “The project symbolizes India-Japan friendship.” It also illustrates the high-stakes competition underway to connect the Eurasian supercontinent.
Hovering over the ceremony was a specter driving Japan and India closer together: China’s Belt and Road Initiative (BRI). Xi Jinping’s signature foreign policy vision aims to forge new connections across the region and beyond. It promises over $1 trillion in new infrastructure projects, trade agreements, people-to-people ties, and coordination of policy in areas from health to agriculture. China says 68 countries and organizations have signed on to the effort, including the World Health Organization and programs within the United Nations.
China has stolen the spotlight, but other regional powers are not standing still. Japan, India, and the European Union are central to the region’s future, and they are advancing their own visions for connectivity. Even some of the countries most active in China’s BRI are still hedging their bets. If the region remains the world’s “decisive geopolitical chessboard,” as the late Zbigniew Brzezinski wrote, it is a match with many players and no pawns.
For decades, Japan has been heavily involved in Asia’s infrastructure efforts, especially in Southeast Asia, where many roads and ports service the needs of Japanese corporate supply chains. The Japanese-led Asian Development Bank (ADB) quietly celebrated its 50th anniversary this year. Though China’s Asian Infrastructure Investment Bank (AIIB) now has more members than the ADB, in financial and operational terms the AIIB is still an infant, lending a total of $1.7 billion last year, roughly a tenth of the ADB’s spending on infrastructure during the same period.
In 2015, Abe unveiled the Partnership for Quality Infrastructure, now a $200 billion effort to persuade countries to pay more up-front for projects that advance sustainability goals and cost less over their lifetime. Japan’s Foreign Ministry is requesting a 10 percent increase in development assistance in next year’s budget, a large portion of which would go to infrastructure financing. In the CSIS Reconnecting Asia database, Japan is outspending China on transport projects in six of nine Southeast Asian countries. But the margins are slim, and China has pulled ahead in Cambodia, Laos, and Malaysia.
India, meanwhile, is focused on improving its internal connectivity, but its infrastructure activities are growing in scope and intensity. With its economy expanding 7.1 percent last year, Delhi aims to build 40 kilometers of new road and 15 kilometers of new railway each day. Strategic concerns reinforce these economic drivers. After decades of leaving its border areas with China relatively undeveloped, India has built 27 of what it calls “strategic roads” in these areas since 2006, and it aims to develop 46 more by 2022. Chinese road construction on the Doklam plateau—where India, Bhutan, and China meet—sparked a military standoff with India earlier this year. The situation deescalated in late August, but for some Indian officials, it underscored the need to expedite these border roads.
India is also pursuing several efforts beyond its borders. Modi’s “Act East” policy aims to strengthen ties with the Association of Southeast Asian Nations (ASEAN), through new projects that will provide India’s landlocked northeast with better access to southern ports and connect India to Thailand via Myanmar. In June, Modi and President Vladimir Putin of Russia reiterated their support for the North-South Transport Corridor, a multimodal effort that stretches from St. Petersburg to Mumbai via Tehran. India hopes the corridor will complement its investment in Iran’s Chabahar Port, which is located just over a hundred miles from Gwadar Port, the southern terminus of the China-Pakistan Economic Corridor (CPEC).
Chabahar may even become part of a broader India-Japan partnership. Indian officials have been courting Japanese funding for the port. Another example of deeper cooperation is the Asia-Africa Growth Corridor, which explicitly seeks to link Modi’s “Act East” policy and Abe’s Partnership for Quality Infrastructure. India’s appetite for investing beyond its borders is limited, but it can provide prime access to the Indian Ocean, where Chinese military activities are on the rise. Japan lives on the periphery of that maritime competition but could offer financial firepower and technical knowhow.
On the supercontinent’s western flank, the European Union aims to extend its well-developed transport network. Its Trans-European Transport Network (TEN-T) includes nine corridors, five of which extend into the Eurasian landmass and its maritime periphery. Two corridors extend into Ukraine, which has been isolated from east-west trade since conflict in its Donbass region ignited in 2014. One corridor extends into Turkey, historically a key land bridge between east and west, and one connects with Russia. The network could be extended in the coming years to include the Arctic, reflecting the European Union’s key role in developing the region. The EU-China Connectivity platform was established in 2015 to help coordinate TEN-T and BRI.
As China’s biggest trading partner and the natural terminus for many BRI routes, the European Union could make or break China’s overland ambitions. Officials in Brussels have expressed qualified support for BRI. In May, an EU delegation reminded China of the need to ensure that BRI “adheres to market rules, EU and international requirements and standards, and complements EU policies and projects.” The European Investment Bank has proposed eight principles for connecting Asia and Europe, including open, rules-based tenders, environmental standards, and reciprocal benefits for all. As Chinese investment in Central and Eastern Europe has risen, so has Brussels’ focus on these concerns.
Other powers are playing the game as well. ASEAN’s Master Plan on Connectivity 2025 aims to strengthen physical, institutional, and people-to-people linkages among its 10 member countries. South Korea’s ambitions encompass railways to Europe, Arctic shipping, and fiber-optic networks. Turkey’s Vision 2023 Initiative marks a century of independence with thousands of kilometers of new roads and railways. With sanctions lifting, Iran is rekindling its ancient roots as a trade hub and plans to add nearly 2,000 kilometers of railway each year. Russia is pursuing several high-profile projects—a bridge into Crimea, new pipelines around Ukraine into Europe, and Arctic ports—and is a critical gatekeeper for Asia-Europe land routes, many of which must pass through its Eurasian Economic Union.
For now, the United States is mainly a spectator in all this. In May, the White House took a positive step toward greater engagement by sending a delegation to the BRI Forum in Beijing. But overall, U.S. policymakers have yet to shift from awareness to coordinated action. Vice President Mike Pence and Deputy Prime Minister Taro Aso are leading an economic dialogue that includes a working group on infrastructure, but the process has been slow. Though physically separated from Eurasia, the United States has significant interests at stake, from preventing the rise of a Eurasian hegemon to ensuring commercial opportunities for U.S. infrastructure-related companies.
The United States can still advance its interests without committing large sums of money. With Japan, India, the European Union, and other partners such as Australia expressing similar concerns about the BRI, interests are aligning. Working through multilateral development banks and other international organizations like the G20, Washington could build consensus around key issues such as open procurement processes, sound environmental and social safeguards, and debt sustainability. It could help prepare the ground for more bankable projects in the region, unleashing trillions of dollars of long-term U.S. assets looking for reliable returns.
Today, there is no shortage of ambitious visions for reconnecting Asia. What’s needed is greater coordination and agreement on common principles. Only then is this competition likely to produce an outcome greater than the sum of its parts.
Photo Credit: SAM PANTHAKY/AFP/Getty Images

Matthew P. Goodman

Matthew P. Goodman

Former Senior Vice President for Economics

Jonathan E. Hillman