Will the Indo-Pacific Strategy become the antithesis of Belt and Road Initiative

During the just-concluded Asean meeting and the East Asia Summit in Singapore, US Vice President Pence ardently pitched his Indo-Pacific strategy. Unlike the previous "Pivot to Asia" strategy adopted by the Obama administration, the new China-containing intrigue has much substance or biting power to it with two central planks at its core, one is the Quad, the other is OPIC.

US Vice-President Mike Pence and Chinese President Xi Jinping were equally critical in their speeches at the Apec summit on Saturday in Port Moresby. Photo: AP

The Quad

Senior officials from Australia, India, Japan and the US – the regional allies known as “the Quad” has concurrently held a meeting on the sidelines of the East Asia Summit in Singapore. It was the third time the group has met since its inception last year as a counterweight to China’s growing economic and military might.

The Quad was originally conceived more than a decade ago during the Bush administration when the four countries held joint naval exercises and cooperated to provide humanitarian relief to the tsunami-devastated region in 2004. But after a brief stint of existence, the Quad was put in the backburner for fear of provoking protests from Beijing.

Its revival reflects growing unease over China’s more assertive foreign policy. By aligning themselves with the Indo-Pacific strategy, the four countries aim to counter China’s increasing influence by providing business-led, demand-driven alternative model to China’s state-planned, politically-oriented lending for infrastructure projects, which has, the US and its allies believe, in some cases saddled poorer nations with excessive debt beyond their means, entailing potential influence from Beijing.

By presenting itself as a club of democracies who can balance China’s surging power and offer a development model that, in their opinion, respects the rule of law and encourages vibrant, private-sector led economic growths, the Quad seeks to dissipate regional countries’ suspicion about its strategic disposition to contain China. The Quad has not yet been formalized and maintained a low profile by only holding sub-ministerial level meetings as a gesture to dispel concerns that its hidden China-bashing agenda would polarize the region.

Apparently, the agenda of the Quad is not limited to economic issues. During a recent whistle-stop visit to Australia, Japan's Prime Minister Abe and his Australian counterpart Scott Morrison said they hope to conclude an agreement early next year on increased defense links, including more joint military exercises.

Therefore, Beijing has a good reason to view the group with strong suspicion, with Foreign Minister Wang Yi describing the bloc as a “headline-grabbing idea” that would dissipate “like the sea foam in the Pacific or Indian Ocean”. Wang said: “Nowadays, stoking a new cold war is out of sync with the times and inciting bloc confrontation will find no market.”

Such predictions may hold some truth. Actually, despite the increased push for the Quad, many obstacles are expected down the road. India in particular has been reluctant to elevate participation above senior bureaucrats. Prime Minister Narendra Modi has recently been seen focusing on mending ties with Chinese leader Xi, and earlier this year he said India “does not see the Indo-Pacific region as a strategy or as a club of limited members”.

OPIC

In a dramatic about-face, the US Overseas Private Investment Corporation (OPIC) – America’s little-known state-run development finance institution, which was financially moribund on President Trump’s bucket list to be eliminated along with 61 other agencies, has just got a shot in the arm with a federal budget of US$60 billion. OPIC – soon to be renamed – is set to be front and center of the US push to finance infrastructure projects in the region.

The institution now can take on equity in the projects that it funds – just as Chinese state-linked development funds have tended to do. It will also bring the so-called American “halo effect” to the projects with which it is involved. This, in turn, will attract a blend of financing from allied nations and the private sector.

For example, Australia, Japan, New Zealand, South Korea and the US, are planning to fund multibillion-dollar electric-power and internet infrastructure program for Papua New Guinea. Earlier this month, Australia’s Morrison unveiled a A$2 billion (US$1.4 billion) infrastructure fund for the South Pacific, describing the region as “our patch”.

China's countermeasures

China’s Belt and Road Initiative has already proven “more effective” than various Asean-linked connectivity initiatives, it might be foolhardy for Asean nations to distance themselves from China. Nor do they want to come under China’s baton. Rather, they may want to figure out a way to strike a balance between the two powers without being dragged into their respective orbits.

Hopes are high the slumbering bloc will be prodded into more integration and even more independence from big power geopolitics. China should welcome Mahathir’s exhortation for the revival of the East Asian Economic Caucus (EAEC) – sometimes referred to as the “caucus without Caucasians”. He first floated the idea in the 1990s, citing a need for a regional body that excluded the West and Australia. Observers at the time said Mahathir’s staunch anti-West stance – some described it as outright racism – underpinned the idea.

China also faces a historic opportunity to draw the Philippines out of the Western orbit of influence. Throughout his first two years in office, Duterte has never missed a chance to express his “love” for the Chinese leadership. He has said as many positive things about Beijing’s support and goodwill as he has lashed out at the West for daring to question his record on human rights.

As Duterte has made it clear that engagement, rather than confrontation, is his preferred course of action in the disputed waters, the Philippines may help China by serving as the Asean-China country coordinator in the disputed South China Sea.

The South China Sea disputes between China and four members of the Asean are regional security flashpoints and viewed as the litmus test of China’s peaceful rise strategy. With negotiations on a Code of Conduct (CoC) for the South China Sea finally on a fast track and China-Asean management of this body of water under steadier control, the door to win-win strategic engagement has been cracked wide open.

China also felt obliged to urge Asean members to work together to counter US trade protectionism and complete negotiations on the Regional Comprehensive Economic Partnership (RCEP) – a free-trade deal between the 10 members of Asean and six other Asia-Pacific nations. It is necessary for China to convince Asean leaders that China remains a valuable market and trustworthy strategic partner. 


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