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BC: 8831 - Probability and Statistical Theory
PST˙ws
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Library of Congress Cataloging-in-Publication Data

Names: Lim, Tai-Wei, author.
Title: China's One Belt One Road Initiative / Tai Wei Lim (East Asian Institute, NUS, Singapore),
Henry Chan (Singapore Management University, Singapore), Katherine Tseng
(East Asian Institute, NUS, Singapore) & Wen Xin Lim (East Asian Institute, NUS, Singapore).
Description: New Jersey : Imperial College Press, [2016]

Identifiers: LCCN 2016000976 | ISBN 9781783269297 (hc : alk. paper)
Subjects: LCSH: China--Foreign economic relations--Eurasia. |
Eurasia--Foreign economic relations--China. | China--Commerce--Eurasia. |
Eurasia--Commerce--China. | Trade routes--Eurasia. | China--Commercial policy. |
China--Economic policy.
Classification: LCC HF1604.Z4 E8355 2016 | DDC 337.5105--dc23
LC record available at http://lccn.loc.gov/2016000976
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Chandrima - China's One Belt One Road Initiative.indd 1 10-06-16 2:08:07 PM

“9x6” b2432 China’s One Belt One Road Initiative
Contents
Foreword ix
About the Contributors xi
Section A: Introduction 1
Chapter 1 Introduction 3
LIM Tai Wei
Section B: The History of Zheng He (Cheng Ho) and the
Maritime Silk Road 19
Chapter 2 Introduction of the Overland Silk Road
and Maritime Silk Road 21
TAN Ta Sen
Chapter 3 The Official Capital Ship of Yuan Dynasty
and Yang Shu: Chinese Navigation in the Indian
Ocean Before Zheng He 31
TAI Yew Seng
Chapter 4 Cheng Ho’s Legacy: Business Opportunities
and World Dream 39
TAN Ta Sen
Chapter 5 Cheng Ho and His Voyages 49
TAN Ta Sen
Chapter 6 Cheng Ho Spirit and World Dream 57
TAN Ta Sen
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b2432 China’s One Belt One Road Initiative “9x6”
vi Contents
Section C: The Maritime Silk Road 61

Chapter 7 Narratives Related to Zheng He: Explaining
the Emergence of Ethnic Chinese Communities

Overseas and the Rise of a Regional Trading Network 63
LIM Tai Wei
Chapter 8 China’s One Belt One Road Initiative: A Literature Review 113
LIM Wen Xin
Chapter 9 The South China Sea and the Maritime Silk Road Proposal:
Conflicts can be Transformed 133
Katherine TSENG Hui-Yi
Section D: The Overland Silk Road 149

Chapter 10 The One Belt One Road Narratives 151

LIM Tai Wei
Chapter 11 The One Belt One Road Initiative — Who’s Going
to Pay For It? 169
Henry CHAN Hing Lee
Chapter 12 Prospect of Chinese Rail Export Under “One Belt,
One Road” 197
Henry CHAN Hing Lee
Chapter 13 Rethinking the Outputs of Chinese High-Speed Railways 237
ZHANG Huang and LI Jie
Section E: Region Specific Section — Country Case Studies 243

Chapter 14 One Belt One Road, China and Europe: Economic
Strategy and Pragmatic Economies 245
Winglok HUNG
Chapter 15 China’s Pivot to Central and South Asia 269
LIM Tai Wei
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Contents vii
Chapter 16 Strategic Partnership: The China–Pakistan Relations 283

LIM Tai Wei
Chapter 17 China’s 21st Century Maritime Silk Road: Malaysian

Perspectives 289
KONG Tuan Yuen
Chapter 18 Japan and its Outreach to Central Asia and Southeast
Asia: An Update 307
LIM Tai Wei
Section F: Conclusion 313

Chapter 19 Conclusion 315
LIM Tai Wei
Index 337
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Foreword
In 2013, the Chinese government announced that it has the intention to

revive the ancient trade routes famously known as the Silk Road. The world
later learns that the intention, which came to be known as the Silk Road
Economic Belt and the 21st Century Maritime Silk Road or One Belt One
Road initiative, is actually an ambitious development strategy aiming to
allow China to build stronger relationships with its neighbors, and vice versa,
through sharing of resources.
Nevertheless, the professed scale of the One Belt One Road initiative is
so impressive to the extent of making it a project unprecedented in history.
This could be the reason which makes the initiative instead be greeted with
caution, by the intended stakeholders.
Will the One Belt One Road initiative ultimately create a coprosperity
sphere never before experienced by China and its neighbors in Southeast Asia
and the Eurasian landmass? It remains to be seen. But one would agree that
for a project of this scale, it requires collective wisdoms and efforts of all
stakeholders to manage the risks and to meet the challenges that will come
along. The Confucius Institute of the NANYANG TECHNOLOGICAL
UNIVERSITY (CI-NTU) hopes that it could make a humble contribution
in this direction. Thus, on 19 December 2015, CI-NTU jointly organized a
seminar entitled: “One Belt One Road: Prospects and Possibilities” with the
International Zheng He Society. The two organizations are extremely privi-
leged to have Dr Tan Ta Sen as opening guest speaker and Mr Henry Chan
Hing Lee, Dr Kong Tuan Yuen, Dr Lim Tai Wei, Miss Lim Wen Xin, Dr Tai
Yew Seng, and Dr Katherine Tseng Hui-Yi, to present their analyses on the
dynamics of the One Belt One Road initiative, from a Southeast Asian
perspective.
ix
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x Foreword
It is extremely encouraging to see that the insights which the scholars

had shared with the participants of the seminar are now published as this
volume. This would enable their research to go beyond the physical space of
a lecture room through readership.

I would like to congratulate Henry, Tuan Yuen, Tai Wei, Wen Xin, Yew
Seng and Katherine, for their accomplishments.
Dr Peng-fu NEO
Director, Confucius Institute
NANYANG TECHNOLOGICAL UNIVERSITY
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About the Contributors
Henry CHAN Hing Lee 䲣㠸࡙ is a PhD candidate (General Management),

Singapore Management University. He has extensive working experience in
business prior to taking the PhD program after retirement in 2012. He occu-
pied senior management positions in agriculture, banking, flour milling,

hotel, power generation, real estate business of La Filipina Uygongco
Corporation, a mini-conglomerate based in Manila, Philippines. Chinese
economic growth is his favourite research topic and he feels the traditional
growth theory is not explaining it well. He is looking into aspects of political
economy, strategy, innovation, industry policy and culture aside from tradi-
tional growth theory to better explain the Chinese growth phenomenon. He
is also curious at the emerging post-Bretton Woods world economic order
with the rise of China. He can be contacted at henry.chan.2012@phdgm.
smu.edu.sg. His articles include: “Noble Peace Price for 2012”, published by
Economics Club of SMU in 2012; “What Happened to Indian Economy?”
published by Economics Club of SMU in 2012; “ᯠ࣐එ㋮㤡᭯⋫Ⲵഠተ”,
unpublished paper “䱯䟼ᐤᐤкᐲ䇃ц⭼ⴻࡠѝ഻Ⲵ䆺ॆ” published by
Lianhe Zaobao in October, 2014.
Winglok HUNG is now studying his PhD in International Relations at

Tsinghua University, China. He started his PhD at the City University of
Hong Kong in August 2014 before moving to Tsinghua University in August
2015. He graduated from the Chinese University of Hong Kong in
Government and Public Administration in 2009 and completed his MPhil
in African Studies at the University of Cambridge in 2012. Previously he
worked for Hong Kong Institute of Asia-Pacific Studies, the Chinese
xi
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xii About the Contributors
University of Hong Kong as a research assistant. He has been writing

commentaries for a local newspaper Takungpao since 2014.
KONG Tuan Yuen (ᓧㄟѕ) is Visiting Research Fellow at East Asian

Institute (EAI), National University of Singapore (NUS). He received his
PhD in Industrial Economics from the National Central University, Taiwan.
He had taken part in Taiwan’s economic research projects during his postdoc-
toral fellowship at the Research Centre for Taiwan Economic Development,
and joined Epson in turn, a Japanese multinational enterprise in Malaysia, to
conduct business management as well as financial and planning analysis.
During his service with Epson, he was sent to Japan to investigate on Toyota’s
production system and manufacturing automation. His current research
interests include China’s industry development, especially strategic emerging
industries, corporate strategy and China–Malaysia relations. He can be

reached at [email protected].
LIM Tai Wei is a Senior Lecturer at SIM University of Singapore and

Research Fellow Adjunct at the East Asian Institute (EAI) National University
of Singapore (NUS). His teaching interests include East Asian History,
World History and Japanese popular culture-related courses. His research
interests include energy and environmental histories of contemporary Japan
and China. He is an area study specialist (on contemporary China and Japan)
and a historian by training.
LIM Wen Xin is a Research Assistant at East Asian Institute, National

University of Singapore. She obtained her Bachelor’s Degree of Social Science
(Hons) in Economics and Chinese Studies from National University of
Singapore. She was a reporter in Sin Chew Daily (2011) and has been actively
involved in translation work. Her research interests include China–ASEAN
relations, Chinese foreign policy and China’s industrial development.
TAI Yew Seng (DAI Rouxing ᡤḄᱏ) holds a Bachelor’s (Honours) and
Master’s degrees in Chinese Studies from the National University of Singapore.
He graduated in 2012 with a PhD in Ceramic Archaeology from Peking
University. Tai has published several articles on Chinese ceramic and coau-
thored two books on ancient maritime trade road. Tai has published several
articles including “Ming Gap and the Revival of Commercial Production of
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About the Contributors xiii
Blue and White Porcelain in China” (journals.lib.washington.edu/index.php/

BIPPA/article/viewFile/9437/11882) and “The Ceramic Interregnum and the
Ming Gap of the Ming Dynasty” (“Proceedings of the International Symposium:
Chinese Export Ceramics in the 16th and 17th Centuries and the Spread of
Material Civilisation” edited by Cheng Pei-kai, pp. 345–352, City University
of Hong Kong, 2012). He has participated in archaeological excavations
including in the Old Malindi City site in Kenya; the Xing kiln site in
Lincheng, Hebei; Ge Type kiln site in Longquan, Zhejiang; Jingdezhen
Imperial Kiln Site, Jiangxi; and, the Empress Place site Singapore. In the
Empress Place excavation, Chinese porcelain expert Tai Yew Seng, who had
been digging nearby that area, recognized the fragments as imperial-grade
ceramics produced between 1368 and 1398. See more at: http://news.asiaone.
com/news/singapore/racing-against-time-salvage-old-singapore#sthash.
DZCCZVGv.dpuf. Tai Yew Seng is presently a part-time lecturer at the

Confucius Institute, Nanyang Technological University, Singapore.
TAN Ta Sen is President, International Zheng He Society and Owner of

Cheng Ho Cultural Museum, Melaka. Dr Tan Ta Sen was born in Singapore
in 1936 and is basically a Chinese educated, graduated from Nanyang
University in 1960 in History and Geography. Upon graduation he was
offered an Indonesian scholarship to pursue Malay and Indonesian Studies
in the University of Indonesia in Jakarta. He graduated with BA, Drs in
Indonesian Studies and PhD in History. He is multilingual, proficient in
Malay, Indonesian, Chinese and English. He has many publications in the
above languages.
Katherine TSENG Hui-Yi is a Research Associate in East Asian Institute.

After her Master’s degree in Cambridge and New York University (NYU), she
attended the World Trade Organization (WTO) negotiation team for Taiwan
Government. After obtaining her doctorate degree with UW-Wisconsin,
Madison, she went to Beijing, China, and spent some time with The Beijing
Arbitration Committee (2010, Spring), studying arbitration issues in current
China. She then joined the Singapore International Arbitration Centre
(2010, Autumn), and had a good chance of looking at how states and private
sectors worked to resolve their disputes. Subsequently, she joined the East
Asian Institute around the end of 2010. She eyes the thriving events that
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xiv About the Contributors
rapidly change the political landscapes in the world map. She can be
contacted at [email protected].
ZHANG Huang is a Lecturer at NUDT of China. His research interests

include national security and technology strategy. LI Jie is a research assistant
in NUS of Singapore. Her research interests include relationships between
China and Japan.
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b2432_Ch-01.indd 1
“9x6”
Section A
Introduction
b2432 China’s One Belt One Road Initiative
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Chapter 1
Introduction
LIM Tai Wei
The One Belt One Road (OBOR) is an ambitious economic diplomacy ini-
tiative from China with two components, one via the overland route from
Asia to Europe and the other through the maritime route between Asia and
Europe. President Xi Jinping declared that OBOR will be his one and only
major foreign policy initiative during his administration. The initiative serves
a number of functions for Chinese diplomacy. First, it consumes the overpro-
duction, overcapacity and excess products and commodities from China,
especially with the specter of an economic slowdown in the Chinese econ-
omy. OBOR is supported by newfound Chinese economic muscles, includ-
ing the Asian Infrastructure Investment Bank (AIIB) which is initially funded
at US$40 billion dollars and eventually raised to US$450 billion (in the
future it may go up to US$100 billion). The BRICS Bank is also initially
funded with US$50 billion and major contributors include India and China.
The Silk Road Fund is provided with US$40 billion dollars for its coffers.
Second, it is seen as a foreign policy initiative to extend China’s influence
into other regions. The de-Sovietization of Central Asia offers an opportunity
for China to link up with the Central Asian region economically. Moreover,
Western sanctions on Russia mean that the latter is more receptive to the idea
of looking eastwards for trade and business with China and other East Asian
states to lower their economic dependence on Europe. Third, the OBOR is
also seen as an opportunity to create alternative funding agencies that reflect
China’s growing economic strengths. Institutions that are going to fund
OBOR’s initiatives like AIIB, Silk Road Fund, BRICS Bank are seen as vehi-
cles to address China’s lower voting rights in World Bank (WB), International
Monetary Fund (IMF) and Asian Development Bank (ADB).
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4 Lim Tai Wei
If the Chinese national interests are clear (as detailed earlier), then what are
those of the other states? Many developing economies are keen to apply for
funding their infrastructure developmental needs. The current financial insti-
tutions added together are unable to fund those needs. With the advent of the
AIIB and other OBOR-related funding agencies, economies in need of infra-
structure construction have alternative sources of funding. They also have
access to funding agencies that may have different sets of prerequisites or lower
standards/criteria for infrastructure projects. Huang Yukon, former Country
Director and current advisor for China at the WB and advisor to the ADB,
provided some points related to possible operational philosophies behind AIIB:
“Certain projects have higher environmental risks, others do not. So the right
standard is developing what you need to do in line with the real risk of the
project, rather than just having standards that you legally apply in everything”.1
According to the ADB, Asia will need US$8.22 trillion of infrastructure

investments for this decade.2 In yearly terms, ADB calculates that Asia needs
US$750 billion annually until 2020.3 In addition, lower and middle-income
countries in the developed regions of the world like parts of Central and
Eastern Europe can also benefit from AIIB’s funding facilities. Infrastructure
developmental funding can also help to stimulate economic development in
underperforming economies. Central Asia which has fallen into the backwa-
ters of the global economy and is highly dependent on commodities trading
is trying to develop its manufacturing sector. It is a good example of a
regional economy that is trying to industrialize and avoid falling into the
commodity supplies trap.
The conceptual idea of OBOR is based on a historical narrative.
A German traveler in the 1800s coined the phrase “Silk Road” to describe the
route through which camels plied to bring goods from China to Europe
through a series of intermediaries along the route (including the Persians,
1 Huang, Yukon, Demystifying the Asian Infrastructure Investment Bank, dated 21 April 2015
in the Carnegie Endowment website [downloaded on 15 December 2015] available at http://
carnegieendowment.org/2015/04/21/demystifying-asian-infrastructure-investment-bank.
2 Tan, Christine and See Kit Tang, Is AIIB the Answer to Asia’s Infrastructure Needs? dated 25
June 2015 in CNBC.com [downloaded on 26 June 2015], available at http://www.cnbc.

com/2015/06/25/is-aiib-the-answer-to-asias-infrastructure-needs.html.
3 Orlik, Tom and Fielding Chen, One Belt, One Road — China’s Modern Marco Polos Bring
No Novelties Westward, dated 2 July 2015 in Bloomberg Brief, 2015, 2.
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Introduction 5
Arabs, Central Asians, etc.). Replacing the camels with high-speed rails
(HSRs), the contemporary Silk Route is modernized and brought up to date.
(In this publication, one of our contributors and editor, Henry Chan Hing
Lee, will be detailing the development of these HSRs in OBOR.) Eventually,

the railway lines may be followed by pipeline projects. Even the Maritime Silk
Road (MSR) that was plied by Zheng He (Cheng Ho)’s ships and followed up
by Vasco Da Gama’s Portuguese ships is updated in the OBOR as well.
According to sources from Xinhua and United Nations Educational, Scientific
and Cultural Organization (UNESCO), the farthest sources of the overland
route end in Germany, Netherlands and Italy while the maritime route is
almost identical with Zheng He’s seven maritime voyages. Since 2011, exper-
imental trains have been initiated to bring goods and products from China to
Europe, ending its journeys in Germany and Spain. The starting points of such
journeys in the current and future contexts are likely to be trading centers like
Yiwu and also cities in the western regions of China like Chongqing. The
comparative advantage of using an overland route is that travel time is shorter
although ships appear to be able to carry more cargo. The fact that ships were
able to carry more cargo was a contributing reason why the overland route was
historically declined in the first place. The idea therefore is to fill up the rail
cargo with higher value-added items like luxury cars and time-sensitive prod-
ucts that need just-in-time delivery like smartphones so that feasibility is
dependent on value-addedness of products rather than volume.
Operationally, China appears to be keen on initiating the Overland Silk
Road (OSR) first, supplying aid to Pakistan to develop its infrastructure and
also seems ready to build the infrastructure in Central Asia. (When President
Xi announced the OBOR plan, he made a public address in Indonesia for
the MSR and gave the public announcement for the OSR at Kazakhstan.
The switch to economic diplomacy is an evolution of the charm offensive
designed to manage the rise of China in the world. Initially dispensing loans
that have no preconditions like environmental conditions and human rights,
China began to realize that those loans and aids were easily brushed aside,
reneged or ignored when national interests change or when ruling regimes
are replaced. Therefore, the AIIB provides Chinese funding and dispenses
aids and loans with some market-friendly mechanisms and meeting some
environmental preconditions although not as onerous as those offered by
Western institutions.
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6 Lim Tai Wei
Huang Yukon, former Country Director and current advisor for China
at the WB and advisor to the ADB, argued that AIIB “will focus on specific
projects, building a road, a bridge or a power plant. It will not get into pro-
gram loans or balance of payment loans, which are designed to support

certain policy changes”.4 This feature appears to distinguish AIIB from the
activities of the existing international funding agencies like WB, IMF and
ADB. Huang goes on to state that “The weight of the shares of the AIIB will
be determined by the size of the economy, so China will have a large share,
but not a veto share. Asian countries as a whole will have majority voting
rights”.5 This argument is used as a defense and justification against the
possibility of Chinese dominance. Huang also hinted at the management
structure of the AIIB: “the AIIB is trying to go for a structure where the
board meets periodically, like in most corporations…, the board usually
establishes the rules, the policies that give the president guidance. But after-
wards they let the management run the organization. The AIIB is looking
for a similar structure where the board is less active and less intrusive on a
daily basis.”6
But the OBOR has its inherent challenges, the most important of which
are geopolitical challenges. Central Asia which is a focal point for the OBOR
is the traditional backyard of Russian geopolitical influence. China must
therefore be careful not to antagonize Russian national interests. China there-
fore is trying to concentrate mostly on economic cooperation and not forge
political ties with Central Asian states while embracing Russia as a close
partner geopolitically. This is especially important since Russia has a compet-
ing economic union with the Central Asian states, one that China is not
involved in. Currently, the Chinese OBOR and AIIB are in a much stronger
economic position than Russian regionalism initiatives, particularly at the
time of this writing when oil prices stay low, hovering at around US$50 per
barrel. European Union (EU) and Brussels are also watching Chinese forays
into Eastern and Central European states carefully.
Many states in the Asian region are also wary of having to pick sides
between Beijing and its initiative vs. Washington and its institutions. Some
4 Ibid.
5 Ibid.
6 Ibid.
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Introduction 7
countries are trying to hedge Beijing’s economic strength against Washington’s

strong geopolitical influence. Even high-speed train projects become politi-
cized as East Asian states pick the competing proposals offered by the two
countries as their system of preference. Another theater for picking choices

occurred in the formative stage of AIIB when countries carefully considered
joining the AIIB only after they were convinced they would not hurt rela-
tions with the West. The tipping point came when UK and other close
American allies became members of AIIB.
Other countries are also worried about the influx of cheap Chinese prod-
ucts and labor that will follow Chinese infrastructure development. The
African experience with some Chinese state companies accentuate this fear
although Chinese competitiveness is not universally feared. There are also
worries of neo-colonialism of resources, afraid that the Chinese are going for
raw materials as the main purpose of the infrastructure construction. Then

there are worries about the future that as Chinese commercial and business
intertwines with those of the OBOR region, China will meddle in local and
regional politics. These worries and fears are not usually shared to the same
degree, but they remain as challenges for China as it embarks on this major
economic diplomacy initiative.
In the realm of maritime disputes, the major challenge is again
geopolitics. China is experiencing maritime disputes with many of its
neighboring coastal states. In the East China Sea, it is experiencing disputes
with Japan over the Senkaku/Diaoyu islands. In South China Sea, it is fac-
ing disputes with claimants of the disputed islands in that region. China
claims much of the maritime territories of South China Sea through a nine-
dash line map that marks out those territories and have completed three
airstrips in the Nansha islands that are decried by other major powers and
claimants. Of all the claimants, the Philippines and Vietnam have courted
the help of other big powers like the US and Japan which are traditionally
active in the East Asian region. The maritime situation appears to be more
complicated than the OSR, given that China has better relations with the
traditional power in OSR with Russia. In other words, a major challenge for
China remains national interests that are defined by geopolitical priorities.
If OBOR and AIIB matures, it is possible that there are significant
opportunities for these institutions to cooperate with existing international
financial institutions like the WB. Platforms for coordination may develop
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8 Lim Tai Wei
to manage and handle such projects. Some aspects of convergence may even
happen in the distant future. This edited volume covers the different perspec-
tives of OBOR by including different aspects of the complex and compli-
cated entity that is OBOR. It does not pretend to be comprehensive but tries
to include as many different components of OBOR as possible.
The Belt and Road Initiative is comparable to the analogy of choice
offering based on individual assessment of national interests at this moment.
The ultimate adjudicating factor is in the details, how each individual econ-
omy or state will assess the national interests according to conditionalities,
geopolitical priorities, domestic political situations, external factors and
national resources and how the Belt and Road initiative + AIIB + BRICS
Bank vis-à-vis current existing established institutions like ADB best serve
their needs. The equilibrium or balance between overland and maritime
trade routes in Chinese initiatives has already been highlighted in the inter-
national media narratives. They argued that such a prospect if not properly
explained or managed may put maritime trading nations on their toes.
Organization of this edited review volume

This multidisciplinary publication brought together a large number of stake-
holders interested in the historical Silk Road, the MSR and the OBOR ini-
tiative. These stakeholders include academics, businessmen, curators,
graduate students, economists and researchers from China, Hong Kong,
Malaysia, the Philippines, Singapore and Taiwan. Our volume covers three
major aspects of the OBOR — the historical perspective, a business angle to
railway technologies crucial to the central OBOR concept of connectivity
and the maritime perspective on disputes, prospects and dangers.
Chronologically, we began with the historical narrative. This publication is
divided into six sections: A–F. Section A which contains this introduction is
an overview of the publication’s contents. It provides a brief background
behind the OBOR initiative but does not pretend to be comprehensive.
It also orientates the reader with regard to the organization of topics in the
complex OBOR initiative. Section B is written by a world-renowned scholar
Dr Tan Ta Sen on Admiral Zheng He (Cheng Ho) and the establishment of
the historical MSR. It also discusses the origins of the OSR. Using his deep
knowledge on the subject matter and his practitioner’s experience as the
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Introduction 9
curator of the Silk Road artefacts, this section sets the context for Section C
which brings the discussion up to date to the contemporary MSR compo-
nent of the OBOR initiative proposed by the Chinese President Xi Jinping
and the Chinese leadership.

Historically, Dr Tan also pointed out that, apart from silk and tea, the
most important Chinese export was ceramics which was traded in large quan-
tities. The elegant porcelains have long been China’s major export commodity.
By the Ming dynasty, due to the development of the private kilns, the quantity
and quality of ceramic production were enhanced remarkably, where large
quantities of cheap and good export ceramics were shipped to the world
including the European, African, East Asian, Southeast Asian, South Asian and
Central Asian markets. The global demand for Chinese ceramics then became
huge. The elegant ceramics became a social status symbol and ceramics were
also items to be buried together with the deceased. In the 12th century, China
exported through Southeast Asia a great deal of celadon wares to Central Asia
and India. Before the 17th century, Asia was Chinese ceramics’ biggest market.
Before Dr Tan’s discussion on Zheng He and his activities related to
maritime trade and tributary system, archaeologist Dr Tai Yew Seng will
discuss the Yuan dynasty system of Official Capital Ship and how the impe-
rial authorities tried to regulate trade before the advent of Zheng He’s
attempts to establish the tributary system and maritime trade during the
Ming dynasty. This discussion sets the context for discussing Ming maritime
trade and Zheng He’s role in this maritime system. Dr Tai basically argues
that there was already a precedent for official trade immediately before the
establishment of the Yuan dynasty but also highlights the differences between
the two. This then leads on to Dr Tan’s in-depth discussion of Zheng He’s
activities and their significance.
In Section C, Lim Tai Wei examines media narratives on OBOR as it
progresses through different stages of maturity. Some of these narratives may
be perceptions, but perceptions are sometimes equally as important as
concrete developments in issues related to international relations, geopolitics
and economic competition. For most countries, the Chinese vision and more
established developmental paths of the developed economies are not mutu-
ally exclusive, there are overlaps between these two choices. It provides more
diversity of choices for funding and infrastructure development. For the
critics, the problems they see with this range from challenging the status quo
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10 Lim Tai Wei
of the prevailing world order of trade and politics to accusations of

neo-Colonialism in resource extraction.
A major question arose as to how China will disperse its funds. The key
word that is mentioned in the international media, top leaders and policy
makers’ statements as well as the scholarly conference and seminars that I
attended was “connectivity” — how to link up the entire belt of countries
along both OSR and MSR so that trade can be stimulated. Up till December
2014, details were not forthcoming from Chinese sources on how their Silk
Road-related budget will be utilized. Along with observers and the interna-
tional media, this began to cause some countries located along both the OSR
as well as the MSR to seek more details about the initiative.
In seeking this reaction from the Chinese government, the immediate
response can be divided into three ways: (1) to use official and track II chan-
nels to ask for more details so that states in the designated regions of the Silk
Road initiative can react accordingly to maximize their economic benefits
from the scheme; (2) to preempt any issues incompatible with national inter-
ests by first opposing the institutions associated (or perceived to be associ-
ated) with the scheme such as opposition to the AIIB; (3) regardless of the
shape and form of the Silk Road initiative which is expected to be organic
and dynamic both in implementation and development, to persuade Beijing
to be more transparent and conform to international norms by integrating
with the international community, e.g. early persuasion by various countries
to Beijing to locate the headquarters of the AIIB in their own capitals like
Seoul, Singapore, Jakarta and perhaps even the semi-autonomous Hong
Kong rather than Shanghai or Beijing.
These questions are pondered internally within China as well, between
an internationalist faction keen to see the Silk Road initiatives as part of
China’s opening up with greater transparency and harmonization with inter-
national norms vs. those keen to construct an international trade and com-
merce system with firmer Beijing control. Lim, a historian, examines
contemporary media narratives related to the OBOR initiative. Through
these narratives, his research objective is to find out how contemporary com-
mentators appropriate narratives about historical events related to the MSR
to interpret current policy agendas and legitimize diplomatic or economic
exchanges. In Section C on the MSR, Lim Tai Wei’s chapter focuses on the
historical background of the MSR.
b2432_Ch-01.indd 10 15/7/2016 7:02:49 PM

Introduction 11
Admiral Zheng He (Cheng Ho in Wades Giles spelling) made seven voy-

ages to the known maritime trading world on behalf of the Chinese Ming
dynasty during the reign of Emperor Yongle. His accomplishments in navi-
gational history is universally recognized by many scholars. The tangible and

intangible legacies that he left behind are shaped by various interpretations
to fit different historical narratives. Historically, imageries of Ma took multi-
ple forms, from fearsome gigantic explorer to a testicle-less eunuch. Added to
these sets of images, in Southeast Asia, he was deified and became a Taoist
God with his own following of worshippers.
In the revived talk on a contemporary “Maritime Silk Road (MSR)”,
narratives of Zheng He may become part of the current discourse on Chinese
plans to revive the MSR which covers the span of trading cities from Fuzhou
to Italy (the “one road” component of the “one belt one road” concept
known as Belt and Roads initiative in official Chinese terminology). Other

interpretations see the MSR ending in Antwerp, Belgium, at the European
end of the MSR. Regardless of the shape of the contemporary and future
MSR, Zheng He’s legend will be continually molded and shaped by the
Chinese government and other stakeholders to support the OBOR initiative.
Following the chapter on Lim’s historical background on the MSR, to
reflect the diversity and spectrum of opinions, Lim Wen Xin surveyed
secondary sources of textual materials related to the OBOR policy.
W. X. Lim’s literature review chapter gathers, consolidates and reviews the
current level of information, presenting the readers with different interpreta-
tions of the OBOR, the economic and political implications of the plan, and
possible challenges that it would encounter including the internal challenges
and external factors. It is an important survey of existing literatures and
debates on the OBOR initiative. In her literature review, Wen Xin Lim
argues that the ultimate adjudicating factor for the success of OBOR is in the
details of the initiative itself and the viability of the newly-established institu-
tions such as the AIIB and the Silk Road Fund. It also depends on how China
is able to overcome the deficit of trust and suspicions among countries, con-
vincing each individual countries that the OBOR is genuinely a sincere plan
for joint economic development and a win–win approach for all sovereign
states. Therefore, to address a spectrum of opinions in this aspect, Lim’s lit-
erature review gathers, consolidates and reviews the current level of informa-
tion, presenting the readers with different interpretations of the OBOR, the
b2432_Ch-01.indd 11 15/7/2016 7:02:49 PM

12 Lim Tai Wei
economic and political implications of the plan, and possible challenges that
it would encounter including the internal challenges and external factors.
In the maritime arena, one such challenge to OBOR is discussed in
Katherine Tseng Hui-Yi’s chapter which details the revival of Beijing’s

interest in the MSR that problematizes any overly optimistic and uncritical
ideas and narratives of the implementation of a revived MSR. Nearer to
China, adopting a Taiwanese perspective, Tseng argues that contesting legal
developments combined with tensed geopolitical events in the South China
Sea since 1973 have increased to certain levels such that territorial quarrels
among China and ASEAN claimants are in fact interrupting, or at least,
hindering the amicability necessary for inter-state cooperation in many
aspects. The lack of effective cooperation mechanisms in a variety of issues,
such as fishing regulation and maritime environmental administration, is
unfortunately one direct outcome of these territorial disagreements. All

claimant parties need to start tackling the ongoing urgent issues of depletion
of fishing resources, increasing costs of maritime traffic and loss of lives on
the sea. Tseng’s chapter ends Section C on the MSR.
In Section D, the fourth major section of this publication zooms in on
the OSR. Lim Tai Wei’s chapter samples different media narratives about the
OBOR policy. In terms of implementation priorities, some argue that
China’s main target is Central Asia and eventually proliferate to other regions
that will not only include train infrastructure but also ports and at some
point energy pipelines.7 Connectivity in the OSR will be dependent on high-
speed and medium-speed railways. Infrastructure connectivity is a priority in
the implementation of the OBOR initiative. Observers are focused on the
rail connectivity in the OBOR Initiative. The unprecedented speed and scale
that China has set up its passenger HSR system, from virtually 0 to 19,000
km in less than a decade’s time at a significantly lower cost that even a
lower middle income country with per capita of US$3,000 can afford, has
attracted many neighboring countries to take a second look at using rail as a
viable land transport backbone for moving passengers. Such attention
7 Escobar, Pepe, China is Building a New Silk Road to Europe, and it’s Leaving America Behind,
dated 16 December 2014 in Mother Jones website [downloaded on 18 December 2014], avail-
able at http://www.motherjones.com/politics/2014/12/chinas-new-silk-road-europe-will-leave-
america-behind.
b2432_Ch-01.indd 12 18/7/2016 1:09:07 PM

Introduction 13
focused on railway tracks may be visualized as going against the general

developmental trend of post-WWII transport networks which typically con-
sists of highways and airports.
To fund these projects, Henry Chan Hing Lee examines the issue of
multilateral funding agencies like AIIB. Given that funding is an important
aspect of OBOR, complementing China’s effort to develop the Silk Road
economic belt, it initiated the setting up of AIIB to finance the infrastructure
projects of member countries. This is China’s second major initiative after
BRICS Bank to set up an alternative multilateral development funding insti-
tutions different from the traditional post-war Bretton Woods setup of the
WB and its associated institution in 1966, the ADB. This move is perceived
by some observers as an expression of Chinese response to the shareholding,
voting and operations of the existing institutions.
China faces several important roadblocks in making AIIB a viable mul-

tilateral infrastructure development institution, foremost of which is the
shareholding structure of the bank. In both WB and ADB, the most impor-
tant shareholder holds less than 16% of the bank, control of US and Japan
in the two institutions were exercised through soft management control and
the joint unwritten voting bloc arrangements of US, European countries and
Japan. China’s initial shareholding of 50% in AIIB negated the multilateral
nature of the institutions. There are many other issues facing the smooth
start up and operations of a multilateral development bank, and China must
work out these issues one by one. China had not worked on these problems
before and there will be a steep learning curve.
Aside from the symbolic ideological and geopolitical victory, if China
can make this alternative developmental model in the form of a China-
centric South–South Bank work, it will free China from the burden of bilat-
eral financing to push its cost-effective infrastructure technology abroad. The
enjoyment of “privileged lender” legal status of AIIB means China’s overseas
infrastructure loan push is credit-wise safe. The section on multilateral
funding agencies will examine the issues facing AIIB and the approaches that
China can take to make AIIB work.
In terms of railway infrastructure construction (one of the important
recipients of OBOR funding), Henry Chan Hing Lee studies the issue of the
HSR in the section on transportation and logistics. Senior Chinese govern-
ment officials led by President Xi Jinping and Premier Li Keqiang have been
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14 Lim Tai Wei
actively promoting the export of railway technologies since the third quarter
of 2013 in what observers called “rail diplomacy”. Chinese press had dubbed
Premier Li as the super salesman of Chinese rail technology and China had
placed rail system export as one of the priority Silk Road infrastructure
projects. Chinese leaders’ confidence in pushing “rail diplomacy” lies in the
success of its recently-developed HSR and upgraded combo cargo/passenger
conventional rail network that had contributed meaningfully to its economic
development. China had built the world’s most extensive and cost-effective
rail-based land transport system.
At the same time, China skilfully leveraged its economies of scale and
commanding cost advantage in the construction of rail system. Many devel-
oping countries had taken note of it and they expressed interest to acquire
the Chinese system. China had indicated its willingness to offer generous
bilateral financing to the export of rail system. Chinese offers are often the
best on the table. However, China’s efforts to export rail system had not been
successful in many cases. Domestic politics and geopolitical factors often
derail China’s efforts. Henry’s chapters will analyze the strengths and weak-
nesses of the Chinese rail industry at present, contextualize them in terms of
current opportunities and threats facing China’s rail export, and analyze the
prospects of China’s rail diplomacy.
Also, on the railway topic but looking at it from the perspective of mar-
keting technologies and managing complex international relations, Zhang
Huang and Li Jie’s important chapter is written from the Chinese perspec-
tive. He highlighted that Chinese high-speed railway system’s selling points
include mature technology, high performance price ratio and abundant
operation experience. However, he argues that these advantages may not be
enough to offset the importance of unimpeded access to the sale of high-
speed railways to overseas customers. Two setbacks Chinese companies
encountered in the Mexico market reflects the strategic nature of Chinese
high-speed railways from the perspective of its destination countries’
national interests. These case studies become the subject of his analysis in
his chapter on marketing railways to other countries.
Section E in the volume includes several country-specific chapters, it is
the comparative studies segment of this publication project. Winglok Hung’s
chapter aims to explain OBOR with the use of Professor Yan Xuetong’s ana-
lytical framework of international order system. The central question of this
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Introduction 15
chapter is, “Why is Europe more important than other regions in China’s
OBOR economic strategy?” In this first part, Hung explains his conception
and understanding of OBOR. OBOR is a new economic strategy. In the
remaining three parts, Hung continues to examine China’s economic strate-

gies and relations with Europe under the framework of OBOR. As OBOR is
fundamentally different from an American-led private investment and trade
liberalization since the Second World War, China’s OBOR attempts to con-
struct a new international system after the global financial crisis in 2008.
In the conclusion, Hung returns to the same puzzle of why Europe is impor-
tant in China’s OBOR strategy to establish a new international order.
After looking at railway systems, maritime networks and funding agen-
cies, Section E of the publication updates the readership in region-specific
development. Lim Tai Wei’s chapters on Central and South Asian regions are
discussed as case studies in the third section of the publication. Both Central
Asia and South Asia are important regions for China’s OSR outreach. Lim
looks at South and Central Asian regions as important components of the
OBOR, which is the latest major policy initiative by Chinese President Xi
Jinping to tap into the Eurasian region and beyond. To lend economic
resources to the OBOR initiative, the Chinese government has started to
fund institutions like the Silk Road Fund, AIIB and the BRICS Bank.
Central Asia is one of the most important regions for Chinese OBOR initia-
tive. The region wants to industrialize and depend less on commodities
export for its economic development. To modernize, the region needs to
encourage the growth of mass education, infrastructure investments, indus-
trialization, skills and management training, etc. These are items that China
can offer. Steel and coal resources are also important for the industrialization
process. The intention to industrialize occurs at an opportune time when
China is facing overcapacity in these two commodities.
Lim Tai Wei also noted that China has singled out Pakistan, an old and
reliable ironclad ally, for extending assistance. It has promised to pump
US$46 billion to aid Pakistan’s economic development. China wants to
increase the number of coal-fired power plants in Pakistan and increase elec-
tricity supply to its people. Even India, at times a geopolitical rival to China,
is interested in applying for AIIB funding to build coal-fired power plants as
it has difficulties securing such loans from the WB which rejects funding of
such projects unless under very exceptional circumstances. Like the European
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16 Lim Tai Wei
Coal and Steel Community, Beijing’s OBOR initiative to provide such com-
modities for Central and South Asian development may eventually become
regional energy grids that not only provide conduits for steel and coal but
also oil, gas and hydropower. The caveat is China must tread carefully in
Central and South Asia as there are existing dominant powers in these two
regions, including Russia in Central Asia and India in South Asia. Beijing
would do well to avoid a head-on clash with the other major powers’ tradi-
tional national interests in these regions.
Besides the traditional Soviet backyard of Central Asia, one of the major
targets for railway connectivity and OBOR funding in South Asia is China’s
ally, Pakistan, with whom it has a special relationship. In South Asia, China
reached out to Pakistan with developmental funds of US$46 billion, the
single largest sum of funding for China’s youhao friendship partners. The
projects that China was building and funding in Pakistan were mainly infra-
structure. The guiding philosophy was also declared to be market friendly, a
targeted economic initiative. The Chinese–Pakistani cooperation can help to
contain or mitigate religious extremism originating either from or passing
through Pakistan. China’s strategic partnership is aimed at promoting bilat-
eral relations or solving common problems between or among states. For
China, there is no true alliance as the very term implies a working relation-
ship between a senior and junior partner. To the Chinese, an alliance is often
targeted at the third party and it has to have a common enemy. With an eye
for egalitarianism and non-alignment, China is sensitive to entering a rela-
tionship where it becomes a senior partner. Chinese-style strategic partner-
ship focuses on inclusiveness, while an alliance is exclusive. On the other
hand, Chinese major power status in the future is likely to exhibit inclusive-
ness, development-focused orientation, friend and not enemy-seeking, mili-
tary-free content in partnership and emphasis on common-goods approach.
Away from the OSR, developments are also taking place in Southeast
and East Asia. In maritime Southeast Asia, Kong Tuan Yuen argues that
Malaysia could benefit from China’s OBOR initiatives. First, through the
OBOR, China could provide infrastructure investment fund for developing
industrial park such as Malaysia–China Kuantan Industrial Park (MCKIP)
and reconstructing seaports like Port Klang and Port Malacca. Second, the
process of technology transfer will occur from China to Malaysia, especially
in the field of infrastructure construction. Third, Malaysia can easily access
b2432_Ch-01.indd 16 15/7/2016 7:02:49 PM

Introduction 17
Chinese market and bring Chinese halal food and Muslims commodities in
Muslim world to Chinese consumers.
However, Malaysia will also meet challenges including the instability of
Malaysia’s political and economic situations and a festering ethnic issue in

domestic politics. There are also other external factors affecting Malaysia like
the impact of the economic slowdown of China, geopolitics in the South
China Sea and US perception of Malaysia. These factors may impede or
redirect attention away from developing China–Malaysia economic coopera-
tion in terms of OBOR initiatives. Malaysia will keep a two-pronged strategy
to maximize its economic interests which are in turn subjected to political
impact from domestic affairs to international events. In terms of economic
perspectives, Malaysia will fully support China’s OBOR initiatives by offer-
ing more bilateral collaborative project opportunities and deepening their
trade partnership. But in political terms, Malaysia will continue to pay atten-
tion to concerns from the domestic ethnic Malays majority and external
perceptions of this relationship by other ASEAN countries and the US.
Another important neighboring East Asian country to China is Japan.
Both countries have a long historical exchange, and are simultaneously long-
time economic partners as well as strategic rivals. Lim Tai Wei provided an
update to Japan’s own outreach into Central Asia and Southeast Asia in
end 2015. As the other major economy in Northeast Asia, Japan is also
tapping into the economic potential of the region with Prime Minister Shinzo
Abe’s one-week official tour of the region in late October 2015 that took him
through Mongolia, Turkmenistan, Tajikistan, Uzbekistan, Kyrgyzstan and
Kazakhstan (in that order). Japan is playing catch-up with Russia and China
that have been present in the region for much longer durations. Distinguishing
its approach from others, Japan’s marketing tack focuses on good quality infra-
structure and high value-added industrial processing technologies (e.g. gas,
oil, uranium processing plants and chemical fertilizer plants). In other words,
Central Asian leaders are keen to process their raw materials in addition to
obtaining funding for infrastructure and logistical equipment that transport
them. For the purpose of providing high quality equipment, Mr Abe brought
50 leading business sector leaders with him. Besides the OSR, Japan is
also active in the MSR. In fact the term “Maritime Silk Road” was coined
by a Japanese researcher to describe the maritime ceramics trade from
Jingdezhen. Given that Japan is an island nation, it is active in keeping up
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18 Lim Tai Wei
relationship-building in Southeast Asia. 2015 marks an end to a year experi-

encing a flurry of ASEAN diplomacy for all major powers in the East Asian
region, including Japan.
Finally, the publication will end off by summarizing the main points of
the volume and discussing the prospects for the implementation of the
OBOR initiative.
Bibliography
Orlik, Tom and Fielding Chen, One Belt, One Road — China’s Modern Marco
Polos Bring No Novelties Westward, dated 2 July 2015 in Bloomberg Brief, 2015.
Tan, Christine and See Kit Tang, Is AIIB the Answer to Asia’s Infrastructure Needs?
dated 25 June 2015 in CNBC.com [downloaded on 26 June 2015], available at
http://www.cnbc.com/2015/06/25/is-aiib-the-answer-to-asias-infrastructure-
needs.html.
The Economist Intelligence Unit, Prospects and Challenges on China’s “One Belt,
One Road”: A Risk Assessment Report in The Economist [downloaded on 15
December 2015], available at http://www.eiu.com/Handlers/WhitepaperHandler.
ashx?fi=One-Belt-One-Road-report-EngVersion.pdf&mode=wp&campaignid=
OneBeltOneRoad.
b2432_Ch-01.indd 18 15/7/2016 7:02:49 PM

b2432_Ch-02.indd 19
“9x6”
Section B
Maritime Silk Road

The History of Zheng
He (Cheng Ho) and the
15/7/2016 7:46:20 PM
May 2, 2013
14:6

PST˙ws
Chapter 2
Introduction of the Overland Silk

Road and Maritime Silk Road
TAN Ta Sen
In September and October of 2013, the President of China, Xi Jinping, spelt

out his vision of rebuilding economic belts along two ancient Silk Roads, the
Northern Silk Road and the Southern Maritime Silk Road. In the context of
the Maritime Silk Road, President Xi also mentioned the legendary voyages
made by Cheng Ho (Zheng He in Hanyu Pinyin pronunciation) from China
to East Africa in the 15th century. This prologue to the edited volume first
brings you through an interesting historical journey of the two Silk Roads
setting a stage for the appearance of the Ming dynasty Admiral Cheng Ho.
His historic seven voyages fill the pages of the last part of this prologue giving
the readers insights into the man himself, his voyages and its historical and
contemporary significance in relation to today’s business opportunities and
international relations.
Zhang Qian’s expeditions to Central Asia

Zhang Qian, who was credited for opening up the Silk Road, was an
official during the reign of Emperor Wu of the China’s Han Dynasty
(206 BC–AD 220).
During the Han dynasty, the Inner Asian steppe in Central Asia to the
west of China known as the Western Regions by the Chinese, was dominated
by nomadic Xiongnu tribes. In the late 3rd century, Xiongnu formed the first
great confederation of nomadic tribes along China’s north and northwest
borders. The Great Wall was built by Emperor Qin (Qinshi Huang) as a
21
b2432_Ch-02.indd 21 15/7/2016 7:46:20 PM

22 Tan Ta Sen
defense measure against them. However, Xiongnu continued to be a major

threat to early Han emperors and prevented Han China from establishing
economic relations with the Western Regions.

In 138 BC, Emperor Wudi sent a mission led by Zhang Qian to the
Yuezhi in modern-day Tajikistan with an aim to form an alliance against the
Xiongnu. While traveling south of the Kunlun Mountains and crossing
Qinghai, the group was captured by the Xiongnu and was put to hard labor.
The courageous and devoted diplomat Zhang Qian married a native wife
who bore him a son just to gain the trust of the Xiongnu king. Taking advan-
tage of the internal power struggle within the Xiongnu tribe when the old
king died in 126 BC, Zhang Qian and his men escaped but only three
(Zhang Qian, his Xiongnu wife and the Xiongnu member of the mission)
made it to the capital Changan (now Xian, Shaanxi province). During these
13 years abroad, he held on to his imperial insignia.

In 115 BC, Zhang Qian was ordered to lead another mission to the
Western regions. After he reached Wusun at the southeastern part of Issyk
Kul Lake in southeast Uzbekistan, he dispatched his deputies to forge ties
with Dayueshi, Afghanistan, Iran, India and other native states which led to
trade between Han China and Persia.
Caravan traders
The Silk Route started from China’s Changan to Istanbul, the capital of the
Eastern Roman Empire linking up along the way with the trade routes of
Central Asia, South Asia and Western Asia to reach Europe and North Africa.
The Silk Route served as the principal highway for trade and cultural
exchange between the East and the West till the 13th century AD.
The Silk Road was roughly divided into three major sections: (1) Eastern
section beginning in Changan, and running along the northern and southern
borders of the Taklamakan Desert to the Pamir Mountains; (2) Central Asian
section crossing the Pamirs and the Central Asian region of Samarkand and
(3) Western section that runs through Persia to the Mediterranean.
Trade between Changan and the Mediterranean was through a chain
with each trader and segment of the above three trade sections representing
a crucial link in the trade. Goods passed from one trade section to another
in short segments.
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Introduction of the Overland Silk Road and Maritime Silk Road 23
To illustrate, along the eastern section of the Silk Road, the Chinese
produced silk to trade or sell to the Central Asian traders and merchants in
exchange for their herbal medicines and pieces of jade from Khotan. These
Central Asian traders would then transport the silk by caravan through the
oasis towns of Central Asia.
In the oasis town markets, the traders would exchange their silk for other
goods from traders from the other side of the Pamir Mountains, who would
then transport the silk through the region of Samarkand. Other Persian,
Armenian and Jewish traders handled the silk trade through Persia to the
Mediterranean regions, where the silks were finally purchased with gold
from Rome.
The caravan traders often traveled in group in a caravan with a line of
camels to trade goods moving from one trading center to another, from mar-
ket to market. The caravan would usually make stopover at two popular trade
centers, Bactria and Samarkand, which were filled with bustling bazaars.
Traders from many different regions would barter and sell their goods there.
Local merchants would exchange goods with the caravan traders, who would
buy goods to sell further along the Silk Road. At the trade centers, Caravan
traders would put up at the caravanserai where they would eat, drink and
socialize with one another.
Cultural Cross-fertilization
Syncretism: Buddhism, Confucianism and Daoism
Buddhism spread to China through the Silk Route around the 1st century
during the reign of Eastern or Later Han Emperor Mingdi (57–75). The
advent of Buddhism to China imparted a tremendous impact and influence
on Chinese religion, philosophy and arts. But the most marvelous achieve-
ment is its transformation from an alien religion in China into Chinese
Buddhism. An Shigao, Dharmaranya and Kumarajiva came from India to
China between the 2nd and 4th centuries. These three important pioneer
foreign Buddhist scholars and priests translated Buddhist sacred texts into
Chinese. On the other hand, pioneer Chinese monks like Faxian and
Xuanzhang traveled to India via the Silk Road to collect more Buddhist
scripts in the 5th and 7th centuries, respectively. To facilitate preaching in
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24 Tan Ta Sen
China, Buddhist monks borrowed Daoist (Taoist) and Confucian words and
terms to express Buddhist doctrines in translating Buddhist scriptures. As a
consequence, Buddhism became fully Sinicized and an integral part of
Chinese culture.
A dialogue between Islam and Confucianism

The contact between China with the Islamic Arab world could be traced back
as early as the 7th century during the Tang dynasty soon after Islam was
founded by Prophet Muhammad in the Middle East. In contrast to the proac-
tive and assertive approach in the Arab world and in Central Asia, Islam’s
coming to China was a byproduct of trade and diplomatic ties between China
and Arab during the Tang and Song dynasties (618–1279). There were no
concerted efforts on the part of the missionaries and Arab rulers like Caliphates.
Islamic scholars and Chinese Muslim scholars seem to accept arbitrarily
the year 651 when Caliph Uthman sent an envoy to Changan as the begin-
ning of Islam’s spread to China. The Annals of the Old Tang Dynasty
recorded that the state of Da Si (the name of Arab Kingdom in Chinese
dynastic history) dispatched a tributary mission to the court in the second
year during the reign of Tang Emperor Gaozong (651).
Islam spread to China as early as the Tang dynasty in the 7th century by
Arab and Persian Muslim traders following the Overland Silk Road and
Maritime Silk Road. From the Tang to Song dynasties, they were sojourners
doing businesses in a foreign lands.
Some of them settled down in China. They were known as hushang
(foreign Merchants like the Central Asian Hu people), fanke (foreigners or
sojourners) and they were restricted to live in fanfang (living quarters or set-
tlements) in coastal port cities of Guangzhou, Yangzhou, Quanzhou,
Hangzhou, Mingzhou and Changan. Intermarriage with locals was not
allowed and interaction with locals not encouraged. They lived in their own
ethnic enclaves and preserved their own social and religious life. There was
no preaching activity and few Chinese were converted to Islam. The spread
of Islam in China was slow during the Tang to Song dynasties.
Islam expanded rapidly during the Mongol rule in China from 1271 to
1368. The influx of Muslims from Central and Western Asia to China had
brought changes to the political and social landscapes in China as well as the
b2432_Ch-02.indd 24 15/7/2016 7:46:20 PM

outlook of the closed and inward-looking Muslim minority group. Under the
Mongolian rulers’ political patronage, Muslims’ social status was enhanced to
become the ally of the ruling Mongols. Muslims were acknowledged as sub-
jects of China, paving the way for the evolution of the Hui communities in
China. In addition to Quanzhou, Guangzhou, Yangzhou, Hangzhou,
Mingzhou (Ningbo) and Xian (Changan), new Muslim settlements were
formed in the north-western and south-western provinces of China such as
Shaanxi, Gansu, Ningxia, Xinjiang, Shanxi, Henan, Qinghai, Shandong,
Hebei, Yunnan and Beijing during the Yuan Dynasty. They were no longer
foreigners but subjects of Yuan China. Many Muslims from Central and
Western Asia held senior posts in government’s military and civil administra-
tion. The Hui communities began to take shape. During the Yuan Dynasty,
mosques were built in Guangzhou, Quanzhou, Hangzhou, Kunming,
Changan, Beijing, Yangzhou, Ningbo, Ningxia, Dali, Dingzhou and else-

where. These Islamic icons became the landmarks of the Hui communities
which established and cultivated strong ties between Muslims in China and
the lands of Islam in Central and Western Asia. Mosques were also the focal
points where Muslims organized their religious and social life. The ethnicity
of the Hui Huis was generally preserved during the Yuan dynasty. The
Figure 1: The Huay Shang Mosque of tiered roof built in Tang Dynasty in Guangzhou
b2432_Ch-02.indd 25 15/7/2016 7:46:20 PM

26 Tan Ta Sen
enhanced social status and localized subjects identity given to the Hui Hui
Muslims began to change the outlook of the Muslims. Towards the end of
the Yuan Dynasty, they became more self-confident and outward-looking.
There was also increased interaction with the Han Chinese in cultural, social,
economic and political activities. They began to re-orientate themselves to fit
into the larger Chinese society.
The Mongols and Hui Hui from Central and Western Asia also intro-
duced advanced Islamic science and technology to China. Kublai Khan
formed an Institute of Muslim Astronomy in 1271. Muslim medicine
became popular in China during the Yuan Dynasty. Sayid Ajall Shamsuddin
used Islamic hydraulic engineering technology to build the irrigation system
in Yunnan. In addition, the Islamic calendar, mathematics, architecture, etc.
were also imported to China. These advanced Islamic science and technology
had greatly enriched Chinese culture.

In the 16th and 17th centuries during the Ming Dynasty (1368–1644),
significant changes took place in the Muslim Hui Hui community. The
Madrasa educational system using the mosque as an educational center was
institutionalized. Madrasa schools provided Muslims children with a formal
religious education based on the orthodox doctrines of the Sunni school of
Islam and trained potential imams for mosques which were growing in num-
ber at a fast pace.
In addition, the Islamic revival movement which commenced in the
17th century also focused on translating and writing Islamic scriptures in
Chinese to meet the increasing demand of such publications by the Sinicized
Hui Hui Muslims, and to introduce Islamic doctrines to the Chinese masses
and literati. These learned Islamic writers and translators were also well
versed in Confucianism, Buddhism and Daoism. They made an enterprising
attempt to strike a dialogue between Islam and Chinese traditional culture,
particularly, Confucianism. They tried in their works to make a systematic
reconciliation between Islam and Confucianism by interpreting Islamic
doctrines in the light of neo-Confucian teachings. As such, they hoped to
introduce and promote Islam to the Chinese gentry and literati in their own
Confucian language. The movement of annotating and translating Islamic
texts into Chinese with Confucian terminology reflected two characteristics:
Confucianized Islamic values and Islamized Confucian ideas. The Confucian
b2432_Ch-02.indd 26 15/7/2016 7:46:21 PM

Muslim scholars primarily used Confucian ideas to expound and disseminate

Islam in order to advance Islam’s cause. On the other hand, sometimes they
reinterpreted some Confucian concepts with Islamic ideas. For example, the
Confucian Five Constant Regulations (wuchang) were likened to Five Islamic

Pillars (wugong). In so doing, they Islamized certain Confucian ideology to
put forward their arguments.
In short, the ancient Chinese mosques with traditional Chinese pagoda
design and architectural layout reflect the physical Chineseness of Chinese
Islam. Following Cheng Ho’s historic voyages to the Western Ocean in the
15th century, these Chinese style mosques were common in Southeast Asia.
Maritime Silk Road

China also has a long history of maritime trade. The Maritime Silk Road was
another East–West ancient trade route which can be traced to the period of
the Three Kingdoms in the 3rd Century when Sun Quan dispatched Zhu
Ying and Kang Tai to sail to Southeast Asia. By the Tang Dynasty (618–907),
Chinese maritime trade was already well established involving large numbers
of Arab traders who came to trade, and some to settle, in Guangzhou and
Quanzhou. Chinese maritime traders also showed up in the Persian Gulf.
The Maritime Silk Road stretched from Guangzhou and Quanzhou across
the Malay Archipelago to the Persian Gulf and was flourishing during the
Tang and Song dynasties (618–1279). Fleet of ships carrying Southeast Asian
tributary missions, Chinese, Indian and Arab traders were shuttling along the
Maritime Silk Road.
Arab traders in Tang China

The Arab and Persian Muslim traders first came to China approximately in
the 7th century via the Overland Silk Route in northern China and the
Maritime Silk Road in the south. Since the 6th century, the Arab and Persian
traders monopolized the East–West international trade in silks, pepper,
spices, which were highly in demand in the West, as they controlled all
movement of ships in the Persian Gulf and the Red Sea. The geopolitics
along the Silk Route from China via Central Asia to Persia dictated the
b2432_Ch-02.indd 27 15/7/2016 7:46:21 PM

28 Tan Ta Sen
specific role played by each stakeholder in the profitable East–West trade.

Sassanid Persia as middleman merchants and Tang China as producer were
the two great political and economic powers at either end of the Silk Road.
China exported silk, tea, spices like pepper and Chinese medicinal herbs to
the consumer markets in the West such as the Byzantine Empire in Europe
through Indian and Arab traders. Persian merchants controlled the ports
where the Indian traders made their stopover and virtually bought all ship-
ments of the goods brought by them. In addition, Arab and Persian mer-
chants and ships traveled everywhere from India to China. Consumers and
traders of the Western countries had no choice but to buy these goods from
the Arab middlemen. It gradually expanded to absorb half of the Turkish
kingdoms in Central Asia. It effectively blocked the Byzantine Empire to deal
directly with the sources of supply including India, and China and the West
remained a mere customer of the Arabs.

Tang and Song governments adopted an open foreign trade policy to
attract foreign traders to trade with China. To facilitate and promote foreign
trade, a special department, Office of Foreign Trade, was set up at Guangzhou
to administer foreign trade as well as the affairs of tributary missions in 714.
The Foreign Trade official enforced shipping and foreign trade rules and
regulations and collected customs duties. The organization of the Foreign
Trade Office was strengthened and expanded into the Office of the
Commissioner of Foreign Trade during the Song dynasty. Besides Guangzhou,
the Office of the Commissioner of Foreign Trade was also established in
Quanzhou, Mingzhou and Hangzhou. It provided management and services
for the outgoing and incoming cargo ships such as issuing of exit permits for
Chinese cargo ships, port and customs clearance, import duties, reception of
envoys and foreign traders, etc.
Initially, Arab Muslim traders came to the capital Changan through the
Silk Route. However, after the mid-Tang period, the Overland Silk Road was
disrupted by the Turks and as a consequence, the Arab traders arrived in
increasing numbers via the maritime Ceramic Road to major southern
Chinese ports like Guangzhou, Yangzhou, Mingzhou, Quanzhou and so on.
Guangzhou and Yangzhou were the two most important entrepot centers dur-
ing the Tang Dynasty. But following the Song government shifting its
political powerbase and economic centers to the south, Quanzhou overtook
Guangzhou as the number one sea port.
b2432_Ch-02.indd 28 15/7/2016 7:46:21 PM

Maritime Silk Road: A case for renaming

Apart from silk and tea, the most important Chinese export was ceramics
which was traded in large quantities. The elegant porcelains have long been
China’s major export commodity. By the Ming dynasty, due to the develop-
ment of the private kilns, the quantity and quality of ceramic production
were enhanced remarkably, where large quantities of cheap and good export
ceramics were shipped to the world including the European, African, East
Asian, Southeast Asian, South Asian and Central Asian markets. The global
demand for Chinese ceramics then became huge. The elegant ceramics
became a social status symbol and ceramics were also items to be buried
together with the deceased. In the 12th century, China exported through
Southeast Asia a great deal of celadon wares to Central Asia and India. Before
the 17th century, Asia was Chinese ceramics biggest market. In the next
chapter, Dr Tai Yew Seng will discuss the Yuan dynasty system of Official
Capital Ship and how the imperial authorities tried to regulate trade before
the advent of Zheng He’s attempts to establish the tributary system and
maritime trade during the Ming dynasty.
However, by the 17th century, European traders began to ship large
quantities of celadon wares to Europe enabling it to overtake Asia as the
Chinese ceramics largest market. From 1602 to 1682, China exported
through the Dutch East India Company a total of 16 million pieces of por-
celains over a span of 80 years. Besides the Dutch East India Company,
China also exported ceramics via Chinese, Arab, British, Japanese, Indian,
Portuguese and Southeast Asian trading groups.
b2432_Ch-02.indd 29 15/7/2016 7:46:21 PM

May 2, 2013
14:6

PST˙ws
Chapter 3
The Official Capital Ship of Yuan

Dynasty and Yang Shu: Chinese
Navigation in the Indian Ocean
Before Zheng He
TAI Yew Seng
The Mongolians from northern China defeated the Song Dynasty (960–
1278) of southern China in 1279. According to the History of Yuan Dynasty,
Kublai Khan (ᘭᗵ⛸1215–1294) implemented the “Official Capital Ship”
(ᇈᵜ㡩) policy in 1284:
(㠣‫ )ݳ‬Ҽॱаᒤ, 䇮ᐲ㡦䜭䖜䘀ਨҾᶝǃ⋹Ҽᐎ, ᇈ㠚ާ㡩ǃ㔉ᵜ,
䘹Ӫ‫ޕ‬㭳, 䍨᱃䈨䍗Ǆަᡰ㧧ѻ᚟, ԕॱ࠶Ѫ⦷, ᇈਆަг, ᡰ᱃Ӫ
ᗇަйǄ…. ᔦ⾀‫ݳ‬ᒤ (1314), ༽・ᐲ㡦ᨀѮਨ, ӽ⾱Ӫл㭳, ᇈ㠚ਁ
㡩䍨᱃, എᐶѻᰕ, 㓶⢙ॱ࠶ᣭҼ, ㋇⢙ॱӄ࠶ᣭҼǄгᒤ (1320),
ԕл㭳ѻӪሶэ䬦㓶⢙᱃Ҿཆഭ, ৸ᒦᨀѮਨ㖒ѻǄǉ‫ݳ‬ਢ ( · 伏䍗
ᘇǊধҍॱഋ“ᐲ㡦”)
In the 21st year of Zhiyuan reign (1284), the Shipping Superintendent
Offices in Hangzhou and Quanzhou were set up. Officials build the ships,
provide capital, and select people to sail to foreign countries to barter trade.
The officials have 70% of the profit and the traders have 30%.… In the
first year of Yanyou reign (1314), re-established the Shipping Superintendent
Offices, but still banned the seafaring, only send official ships for trading.…
In the 7th year of Yanyou reign (1320).… banned the official ships and
removed the Shipping Superintendent Offices.1
1 Lian Song, The Yuan Dynasty History, Vol. 94. Beijing: Zhonghua Publishing, 1976, 2402.
ǉ‫ݳ‬ਢǊ
( )
31
b2432_Ch-03.indd 31 15/7/2016 7:47:04 PM

32 Tai Yew Seng
One thing to take note, the records of Yuan Dynasty History did not
mention the policy was terminated shortly 6 months after in 1285. Instead,
the source mentioned sending the Official Capital Ship again in 1314. It
looks like the Official Capital Ship policy was abolished only in 1320, that
is over 36 years of implementation. In fact, it was implemented for only a
very short period of time in early Yuan Dynasty, and lasted 14 years in total.
This policy was proposed by a Han Chinese Lu Shirong (঒ц㦓 ?–1285)
who was advisor to the Mongolian emperor in 1284:
(㠣‫ݳ‬Ҽॱаᒤॱаᴸ, ঒ц㦓) ৸ཿ: “Ҿ⋹ǃᶝҼᐎ・ᐲ㡦䜭䖜䘀

ਨ, 䙐㡩㔉ᵜ, ԔӪ୶䍙, ᇈᴹަ࡙г, ୶ᴹަйǄ⾱⿱⌋⎧㘵, ᤈަ‫ݸ‬
ᡰ㫴ᇍ䍗, ᇈҠѻ; ९㘵, 䇨੺, ⋑ަ䍒, ॺ㔉੺㘵Ǆ
” ǉ‫ݳ‬ਢ·঒ц㦓ՐǊ
( )
Appoint a Shipping Superintendent at the ports of Quanzhou and Hangzhou,

build the ships and provide the capital needed, and appoint merchants to trade.
Official takes 70% of the profit and the merchants have 30%. Prohibits private
trading, arrest the offenders, confiscate their cargoes and sell the cargoes offi-
cially. Those who hide, their properties will be confiscated. Informer will get
half of the confiscated property.2
It is a form of state monopolization of trade. But we need to take into

consideration that during Yuan Dynasty, craftsmen worked for the country
and the status of craftsmen passed on from father to son. It is natural that
merchants work for the country too. The fact that merchants who traded on
ships were not liable to perform labor service as a form of duty indicated that
they were “public servants” like craftsmen.
Lu Shirong’s proposal was accepted by the Kublai Khan (ᘭᗵ⛸ 1215–
1294), but Lu was executed a few months later due to political struggle and
his policy was terminated in 1285:
(㠣‫ݳ‬ҼॱҼᒤ‫ޝ‬ᴸҼॱҍᰕ) “ᇈਨ‫ڊ‬ҠআⲴ㖒Ҷ, Ⲯဃ‫ڊ‬ҠআⲴ⇿

ᐲ㡦Ⲵमᖃ‫ڊ‬㘵, ‫⵰׍‬൘‫ݸ‬փֻ䟼㾱䈮〻ᣭ࠶㘵Ǆ ” ǉ‫ިݳ‬ㄐ·ᡧ
(
䜘Ǌ“ᐲ㡦”)
2 Lian Song, The Yuan Dynasty History, Vol. 205. Beijing: Zhonghua Publishing, 1976, 4566.
ǉ‫ݳ‬ਢǊ
( )
b2432_Ch-03.indd 32 15/7/2016 7:47:04 PM

The Official Capital Ship of Yuan Dynasty and Yang Shu 33
(6th month 22nd year of Reign of Zhiyuan) Terminate official trading,

Superintendents collect the customs duties from the people who traded according
to law. 3
After the Official Capital Ship policy was terminated, the collection of
the customs duties of cargoes on board was as before. In 1293, Kublai Khan
once again tried to improve the management of ports and trading activities.
He issued a decree titled “The 23 Customs Regulations” that detailed the
duties of Superintendents, customs duties, customs procedures and manage-
ment on ships. It allowed private trading until the succeeding Emperor
Chengzong (ᡀᇇ 1265–1307) partially terminated it in 1296:
(‫ݳ‬䍎) Ҽᒤ, ⾱⎧୶ԕ㓶䍗Ҿ傜‫ނޛ‬ǃઇளǃụㆄࡼӖ㓣й㭳ഭӔ

᱃, ࡛ࠪ䫎ӄз䭝, Ԕ⋉нбㅹ䇞㿴䘀ѻ⌅Ǆǉ‫ݳ‬ਢ·伏䍗ᘇǊধҍॱ
(
ഋ“ᐲ㡦”)
Second year (of the Yuanzhen reign, 1296), ban maritime merchants trading
fine goods with Malabar, Kollam and Calicut. Issued 50,000 tales of cash (as
capital) and ordered Shahbuddin to discuss and plan for shipping.…This year
(1298), re-established the Zhiyong Department. On the 7th year (of Dade
reign, 1303), closed the department because of sea ban.4
After the new emperor banned the trade of fine goods with the Indian
Ocean kingdoms in 1296, he ordered to find a new way to trade. He
re-established the Zhiyong Department in 1298, but imposed sea ban and
abolished the department 6 years later. There is no mention of Official
Capital Ship in this record, but the epitaph of the Sea Transport Battalion
Commander Yang Shu (ᶘ᷒ 1283–1331) stated that:
བྷᗧӄᒤ(1301), ੋᒤ⭛ॱҍ, 㠤⭘䲒‫خ‬ԕᇈᵜ㡩⎞⎧㠣㾯⌻, 䙷Ӣ

⦻ਸ䎎䚓֯㠓䛓ᘰㅹྲӜᐸ, 䙲䖭ѻԕᶕǄ(哴Ⓗǉᶮ⊏హᇊㅹ༴⎧
䘀ॳᡧᶘੋໃᘇ䬝Ǌ)
3 Anon Compendium of Statutes and Sub-statutes of the Yuan Dynasty, Vol. 22. Beijing: China
Radio and Television Publishing House, 1998, 943. ǉབྷ‫ݳ‬൓᭯ഭᵍިㄐǊ

( )
4 Song Lian, The Yuan Dynasty History, Vol. 94. Beijing: Zhonghua Publishing, 1976, 1593.
b2432_Ch-03.indd 33 15/7/2016 7:47:04 PM

34 Tai Yew Seng
In the 5th year of the reign of Dade (1301 A.D.), at the age of 19, he sailed to
the Indian Ocean in the Official Capital Ship allocated by the Zhiyong
Department. He met the envoy of Sultan Ghazan on the way to the capital (of
China).5
According to the epitaph, Yang Shu sailed to the Persian Gulf in 1301 at
the age of 19 using the Official Capital Ship issued by the Zhiyong
Department. It means that during the reign of Chengzong Emperor, the
policy of Official Capital Ship was re-implemented with the re-establishment
of Zhiyong Department. The epitaph of Yang Shu is significant as it also
proved that Chinese officials sailed to the Persian Gulf directly from China
in 1301. When Yang Shu set sail again in the eighth year of Dade reign
(1304) to send the envoy back to his homeland, a sea ban on maritime trad-
ing was imposed the year before and the Official Capital Ship was scraped.
But, it did not bring about the end of the Official Capital Ship as yet.
ᔦ⾀‫ݳ‬ᒤ (1314), ༽・ᐲ㡦ᨀѮਨ, ӽ⾱Ӫл㭳, ᇈ㠚ਁ㡩䍨᱃, എᐶѻ

ᰕ, 㓶⢙ॱ࠶ᣭҼ, ㋇⢙ॱӄ࠶ᣭҼǄгᒤ(1320), ԕл㭳ѻӪሶэ䬦
㓶⢙᱃Ҿཆഭ, ৸ᒦᨀѮਨ㖒ѻǄ ǉ‫ݳ‬ਢ·伏䍗ᘇǊধҍॱഋ“ᐲ㡦”)
(
In the first year of Yanyou reign (1314), reinstatement of the Superintendent

offices, but still imposes the sea ban on the people. The official will sent ships for
trading. When they return, impose 20% tax on the fine goods and 13.33% on
the coarse goods. In the 7th year (1320), abolished it together with the
Superintendent offices due to the traders traded the fine goods likes silk and
silver wares with the foreign countries.6
The emperor Renzong (ӱᇇ 1285–1320) re-established the Official

Capital Ship system in 1314, but eventually abolished it together with the
Superintendent Offices 7 years later. This was formally the end of the Official
Capital Ship policy in Yuan Dynasty.
5 Huang Jin, The Epitaph of Songjiang, Jiading and etc. areas’ sea transport battalion com-
mander Yang Shu ǉᶮ⊏హᇊㅹ༴⎧䘀ॳᡧᶘੋໃᘇ䬝Ǌ
( ), in Selected Works of Huang Jin
ǉ䠁ॾ哴‫⭏ݸ‬᮷䳶Ǌ
( ), Vol. 35, 15–17, in Continuation Series of the Complete Collection of the
Imperial Library ǉ㔝‫؞‬ഋᓃ‫ޘ‬ҖǊ
( ), Vol. 1323,. Shanghai: Shanghai Guji Publishing, 2002,
452–453.
6 Ibid., 2403.
b2432_Ch-03.indd 34 15/7/2016 7:47:04 PM

In short, the Official Capital Ship policy was implemented from 1284 to
1285 (6 months), 1298 to 1303 (6 years) and 1314 to 1320 (7 years). It
lasted 14 years in total over three periods with intervals in between. The next
section will discuss briefly the man behind the Official Capital Ship.
Yang Shu (1283–1331)

Yang Shu came from a family involved in maritime trade. His grandfather
Yang Fa surrendered to Yuan Dynasty and become a high-ranking official in
Yuan Dynasty.
Ҿᱟ㠣‫ॱݳ‬ഋᒤ….・ᐲ㡦ਨйҾᒶ‫ݳ‬ǃк⎧ǃ▹⎖, Ԕ⾿ᔪᆹᣊ֯
ᶘਁⶓѻǄ⇿኱ᤋ䳶㡦୶, Ҿ㭳䛖ঊ᱃⨐㘐俉䍗ㅹ⢙Ǆ৺⅑ᒤഎᐶ,
‫ֻ׍‬ᣭ䀓, ❦ਾੜަ䍗আǄ
ǉ‫ݳ‬ਢ·伏䍗ᘇǊধҍॱഋ“ᐲ㡦”)
(
Therefore, in 14th year of Zhiyuan reign (1277)…. established three

Shipping Superintendent Offices at Qingyaun (Ningbo, Zhejiang), Shanghai
and Ganpu (Haiyan, Zhejiang), and ordered Pacification Commissioner of
Fujian, Yang Fa, to be the person in-charge. (The Shipping Superintendents)
recruit merchants to barter trade for pearls, gem stones, incense and etc.
goods from foreign countries. (The merchants) return the next year, (the
cargoes will be) taxed accordingly and permitted to be sold.7
Yang Fa was the Pacification Commissioner of Fujian, therefore he was

put in charge of running the three ports in early Yuan dynasty. His family
members probably started to get involved in the shipping business from this
time onwards.
His son Yang Zi was the Pacification Commissioner of Java, he was
involved in the campaigns against Java in 1292.
㠣‫ݳ‬ҼॱҍᒤҼᴸ, 䇿⾿ᔪ㹼ⴱ䲔ਢᕬǃӖ唁䘧ཡǃ儈‫ޤ‬ᒣㄐ᭯һ,
ᖱ⡚૷Ǆ…. йॱᒤ↓ᴸ, 㠣ᶴḿኡ䇞ᯩ⮕ǄҼᴸ, Ӗ唁䘧ཡǃᆉ৲
᭯‫ݸ‬亶ᵜⴱᒅᇈᒦᤋ䉅⡚૷ㅹ༴ᇓហਨᇈᴢࠪ⎧⢉ǃᶘểǃ‫ޘ‬ᘐ
⾆, зᡧᕐຄࡼ䎔ㅹӄⲮ։Ӫ, 㡩ॱ㢈, ‫ݸ‬ᖰᤋ䉅ѻǄ ǉ‫ݳ‬ਢ·⡚૷
(
ՐǊধҼⲮаॱ)
7 Ibid., 2401.
b2432_Ch-03.indd 35 15/7/2016 7:47:05 PM

36 Tai Yew Seng
The 2nd month in 29th year of Zheyuan reign, (the Mongolian

emperor) ordered Fujian’s Manager of Governmental Affairs Shi Bi, Yi Hei
Mi Shi, Gao Xing to conquer Java8.… In the first month in 30th year (of
Zhiyuan reign), (the navy fleets) called at Pulau Gelasa to plan for a strategy.
In the second month, Yi Hei Mi Shi and Assistant Grand Councilor Sun
led their Ancillaries and Pacification Commissioners of Java and other
regions, Qu Chu Hai Ya, Yang Zi, Quan Zhongzu and Brigade Commander
Zhang Talachi, totalling about 500 people in ten ships as the advance party
to declare war (on Java).9
After the Java campaign, Yang Zi was promoted to Pacification

Commissioner-in-chief. However, in another persona of this Pacific
Commissioner, he was actually an artist more than an officer. He invented
the Haiyan Opera (⎧ⴀ㞄) and trained hundreds of servants under his
charge to perform this art form at home.
Yang Shu is the second son of Yang Zi. He sailed to the Persian Gulf at
the age of 18 in 1301. According to his epitaph:
བྷᗧӄᒤˈੋᒤ⭛ॱҍ, 㠤⭘䲒‫خ‬ԕᇈᵜ㡩⎞⎧㠣㾯⌻, 䙷Ӣ⦻ਸ䎎

䚓֯㠓䛓ᘰㅹྲӜᐸ, 䙲䖭ѻԕᶕǄ䛓ᘰㅹᵍ䍑һ∅, 䈧ӽԕੋᣔ䘱
㾯䘈Ǆю⴨૸ࡼ૸ᆉㆄࡼ㖅ྲަ䈧, ཿᦸੋᘐᱮṑሹǃ⎧䘀࢟ॳᡧ,
֙䠁ㅖ, о‫ء‬㹼Ǆԕ‫ޛ‬ᒤਁӜᐸ, ॱаᒤѳ㠣Ǆަⲫ䱶༴, ᴠᘭ励⁑
ᙍǄᱟᖩҏ, ੋᖰᶕ䮯仾ᐘ⎚ѝ, শӄᱏ䵌Ǆࠑ㡏ᾛ㌇㋞⢙ಘѻ享,
аࠪҾੋ, нԕ✖ᴹਨǄᰒ৸⭘⿱䫡ᐲަ൏⢙ⲭ傜ǃ唁⣜ǃ⩕⧰ǃ
㫢㨴䞂ǃ㭳ⴀѻ኎ԕ䘋, ᒣㄐ᭯һሏ䛓ㅹᕅ㿱ᇨᒶ⇯㘼䘰Ǆᯩ䇞᯼
ᬒ, ԕ䞜ަࣣ, 㘼ੋԕࡽ൘⎧кᝏⱤ∂, ⯮֌㘼ᖂ, 㠣བྷҼᒤҏǄ(哴Ⓗ
ǉᶮ⊏హᇊㅹ༴⎧䘀ॳᡧᶘੋໃᘇ䬝Ǌ,ǉ‫ݳޘ‬᮷Ǌধҍгഋ
In the 5th year of the reign of Dade (1301 A.D.), at the age of 19, he sailed
to the Indian Ocean with the Official Capital Ship allocated by the Zhiyong
Department. He met the envoy of Sultan Ghazan on the way to the capital
(of China). After paying tribute, the envoy requested to be sent back by Yang
8 The Javanese disrespected the Chinese envoy to Java, therefore the Mongolian emperor ordered
the attack.
9 Song Lian, The Yuan Dynasty History, Vol. 94. Beijing: Zhonghua Publishing, 1976, Vol. 210,
4665.
b2432_Ch-03.indd 36 15/7/2016 7:47:05 PM

Shu. The Prime Minister agreed. Yang Shu was promoted to Deputy Sea
Transport Battalion Commander to escort the envoy. They left the capital in
1304, and reached the destination in 1307. The port called is Ormuz
(Hormuz). In this voyage, Yang Shu sailed for 5 years on the sea. All supplies
were provided by Yang Shu’s offices, without troubling the central authori-
ties. On the other hand, he bought white horses, black fur dogs, amber, grape
wine and foreign salt with his own money to pay tribute. The Manager of
Governmental Affairs Cha Han received him in the Hall of Chenqing.
There was discussion of promoting him for his hard work, but he became sick
on the sea and return home in 1309.10
He met the envoy of Ilkhanate (1256–1335) and escorted him back to the
capital of China. He cultivated good relationship with the envoy. When the
envoy returned to the Ilkhanate, Yang was specially requested to be the escort
of choice. According to Yuan dynasty law, the escort of foreign mission must be
at least rank five and above. But Yang Shu was not senior enough (he was just
18 year-old!) at that time. And so the imperial court promoted him to Transport
Battalion Deputy Commander (Rank 5b) to qualify him for the mission. The
voyage took him 5 years. This was his second trip to the Persian Gulf, and his
final. He did not sail after this voyage, not only because he was sick, but Yuan
Dynasty banned all seafaring from 1303 to 1314, including the deployment of
the Official Capital Ship. He was out of work for the next 20 years before he
was recalled to be the Sea Transport Battalion Deputy Commander of the
Changshu, Jiangyin and other regions in 1327, in charge of transporting grains
to the imperial capital. He was later promoted to the Sea Transport Battalion
Commander of Songjiang, Jiading and other regions but he passed away on 16
September 1331, at the age of 48, before receiving his promotion.
Conclusion
In the Yuan Dynasty, private trading in overseas was allowed from 1323.
Private maritime trading flourished until the late 14th century in the early
10 Huang Jin, “The Epitaph of Songjiang, Jiading and etc. areas’ sea transport battalion commander
Yang Shu ǉᶮ⊏హᇊㅹ༴⎧䘀ॳᡧᶘੋໃᘇ䬝Ǌ

( )” in Selected Works of Huang Jinǉ䠁ॾ哴‫ݸ‬
⭏᮷䳶Ǌ), Vol. 35, 15–17, in Continuation Series of the Complete Collection of the Imperial Library
ǉ㔝‫؞‬ഋᓃ‫ޘ‬ҖǊ
( ), Shanghai: Shanghai Guji Publishing, 1323, 2002, 452–453.
b2432_Ch-03.indd 37 15/7/2016 7:47:05 PM

38 Tai Yew Seng
Ming Dynasty when the famous Ming Ban stopped all private maritime
trading again. The difference between the sea bans of the Yuan and Ming
dynasties is: the Yuan dynasty emperors used the sea ban and Official Capital
Ships to monopolize maritime trade and maximize profits for the imperial
coffers, but Ming dynasty emperors used the sea ban on maritime trading
and the tributary system to manage and fend off neighboring countries
involved in piracy. During the Ming Ban, Zheng He’s (䜁઼ 1371–1433)
expeditions to East Africa can be considered as the natural progression of
Yang Shu’s voyages to Persian Gulf.
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Chapter 4
Cheng Ho’s Legacy: Business

Opportunities and World Dream
TAN Ta Sen
The magnitude and duration of the state-organized expeditions led by Cheng

Ho from 1405 to 1433 are unprecedented. Cheng Ho has left a lasting

impact on cross-continental cultural exchange between the East and the
West. The expeditions had widened and deepened inter- as well as intra-
regional culture contact in the Afro-Asian world.
Under normal circumstances, events are unfolding recently which may
suggest that history sometimes does repeat itself. Nearly 2,000 years after the
opening up of the Land Silk Road, 1,400 years after the Maritime Silk Road
and over 600 years from Cheng Ho’s voyages from China to East Africa, the
Silk Roads and Cheng Ho stole the limelight again lately in world media in
September and October 2013. It highlights the economic and political impli-
cations of the ancient trade routes as well as Cheng Ho’s legacy in the Age of
Globalization.
On 3 October 2013, referring to the Maritime Silk Road and Cheng
Ho’s voyages, President of China Xi Jinping in his speech to the Indonesian
Parliament in Jakarta said, “Over the centuries, the vast oceans have served
as the bond of friendship connecting the two peoples, not a barrier between
them.... Vessels (of Cheng Ho) full of goods and passengers traveled across
the sea, exchanging products and fostering friendship.” He proposed to join
efforts with countries in the region to build a new “Maritime Silk Road” to
promote trade and military ties. He added that to build the new “Maritime
Silk Road”, China will have to strengthen maritime cooperation with
ASEAN countries “to make good use of the China–ASEAN Maritime
Cooperation Fund set up by the Chinese government”.
39
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40 Tan Ta Sen
Two days later, as if to respond to President Xi’s proposal, Malaysia’s

former Prime Minister Dr Mahathir announced the formation of the Cheng
Ho Multicultural, Friendship and Business Association in Kuala Lumpur
after a meeting with President Xi earlier.

The Star Online dated 5 October 2013 reports:
“A body called the Cheng Ho Multicultural, Friendship and Business
Association will be set up for Malaysian and Chinese businessmen to enhance
cooperation between the two nations”, said Tun Dr Mahathir Mohamad.
“The former Prime Minister announced this following a private meeting
with China’s President Xi Jinping, whose maiden state visit ends Saturday”.
“The name of the association is in remembrance of the contributions of the
Admiral Cheng Ho,” he said, referring to the famous Ming Dynasty Muslim
admiral who docked at Malacca at least five times during his seven voyages
and established the first link between China and Malaysia.
“Dr Mahathir said Xi had expressed support for the association’s inception”.
“He added that he would like to see more Chinese investments here, noting
that at the moment, Malaysian investments in China far outweighed the
former”.
“Xi, in his keynote address Friday, encouraged Chinese companies to
actively participate in Malaysian development projects”.
A month earlier on 7 September 2013, President Xi Jinping while
making a speech titled “Promote People-to-People Friendship and Create a
Better Future” at Kazakhstan’s Nazarbayev University, expressed that more
than 2,100 years ago, during China’s Western Han Dynasty (206 BC–AD
24), imperial envoy Zhang Qian was sent to Central Asia twice to open the
door to friendly contacts between China and Central Asian countries as well
as the transcontinental Silk Road linking East and West, Asia and Europe.
Thus, he proposed to build a Silk Road economic belt with Central Asian
countries to boost trade and transport links and strengthen regional policy
coordination from the Pacific to the Baltic Sea.
Simon Denyer in The Washington Post of 1 November 2013 observed,
“Armed with tens of billions of dollars in investment deals and romantic
tales of ancient explorers, Chinese President Xi Jinping spent much of
September and October promoting his vision of two new “Silk Roads” to
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Cheng Ho’s Legacy 41
connect his country to the West and secure its energy supplies — one by
land and another by sea”.
All these developments signify the dawn of new business opportunities
brought about by the Legacy of the Silk Roads and Cheng Ho’s voyages,
especially in the tourism and leisure industry as well as maritime trade.
Implications of new Maritime Silk Road
To explore the opportunities (especially business opportunities) brought about by

these developments, we propose to focus on four platforms: cultural exchange,
maritime trade, tourism and international relations.
Cultural exchange
There is room for development in the Cheng Ho studies. Cheng Ho left distinct
footprints from Nanjing to Malindi, for example, legends, relics (heritage sites,
artefacts, shipwrecks), navigation and boat budding, architectural style, traditional
Chinese medicine, trade (ceramics, spices), and art and culture. These are fertile
untapped sources for the study of Cheng Ho’s legacy and it provides good opportu-
nity for international cooperation among research institutes and researchers in joint
inter-disciplinary research projects. In 2010, the National Museum of China, School
of Archeology of the Peking University and the Kenyan National Museum embarked
on joint terrestrial and underwater archeological exploration to find the shipwreck
in and around Lamu islands, where one of the Chinese navigators Cheng Ho’s ships
is believed to have sunk in the 15th century.
In addition, the value and application of Cheng Ho’s Art of Collaboration
in contemporary international politics, business management and practice as
well as human relationship are worthy topics for serious research.
For the study of Cheng Ho’s legacy, we would like to see more interna-
tional conferences, joint research projects, joint exhibitions and exchange
program for scholars taking place in the future.
Maritime trade
The establishment of new land and sea Silk Road economic belts will bring
closer economic ties between China and Central Asian countries in the north
and Afro-Asian countries especially the developing countries in the south.
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42 Tan Ta Sen
The Maritime Silk Road formed the basis of the plans to enhance trade
between China and developing countries, including the ASEAN countries in
the south. The Maritime Silk Road formed the basis of the plans to enhance
trade between China and ASEAN countries during the current visit of
Chinese President Xi Jinping to Indonesia and Malaysia where he stated that
the Maritime Silk Road would help turn the “Golden Decade” between
China and the region into “Diamond Decade”. Currently, China is ASEAN’s
largest trading partner, with the two-way trade exceeding US$400 billion last
year in 2012, a six-fold increase since a decade ago. In 2010, China and
ASEAN commenced free trade area. The Maritime Silk Road economic belt
will build a free trade zone in the Asia-Pacific and Indian Ocean regions
covering countries from China to East Africa.
Unique Cheng Ho branding tourism

From Nanjing to Malindi, Cheng Ho left distinct footprints which are fertile
untapped resources for Cheng Ho theme tour routes. Along the Maritime
Silk Road, there are plenty of legends, relics (heritage sites, artefacts, ship-
wrecks), navigation and boat building, traditional Chinese medicine, trade
(ceramics, spices), and art and culture in connection with Cheng Ho’s
expeditions.
Traces of Cheng Ho’s legacy are still visible in most of the places visited
by Cheng Ho. Fishermen in Cochin, Calicut and Quilon are still using
Chinese fishing nets which the locals call “cheenavala” (China net) for fish-
ing. Chinese cooking utensils like Chinese “wok”, which they called “cheen-
achatti” and urns for storing food are common in Kerala state. In Kenya
(Malindi) Siyu village on Pete Island, a journalist of Beijing-based People’s
Daily found a native Kenyan man practicing Chinese medicine to treat
patients. Legend has it that one of Cheng Ho’s ships, shipwrecked off in
Lamu Island. Some surviving crew members were rescued by the locals and
they settled down and married native women. Since 2010, archeologists from
China and Kenya conducted both terrestrial and underwater archeology to
find the shipwreck. Chinese-style wooden doors and a fort in Chinese archi-
tectural style, and ancient Chinese tombs and the graves inlaid with Chinese
porcelain were also found. The wall at the entrance of the graveyard of Wali
Bonang in Surabaya is embedded with Ming porcelain plates. Apart from
b2432_Ch-04.indd 42 15/7/2016 7:47:41 PM

embedding antique porcelain plates on walls, numerous big and small Ming
jars and urns are used by mosques as holy-water containers.
Sam Poo Kong temples, which revered Cheng Ho are found in Semarang,
Surabaya, Ancor, Ayutthaya, Bangkok, Penang, Malacca, Kuala Lumpur and

Trengganu. A mosque (Masjid Muhammad Cheng Ho) in Surabaya was
named after Cheng Ho in 2003. In Malacca, there is Sam Poo Kong Hill
(Bukit Cina) where the Sam Poo Kong Temple and Perigi Raja (related to
Ming princess Hang Li Po legend) are located. A Cheng Ho Cultural
Museum was also built in 2005 on the original site where Cheng Ho built
his guanchang (official warehouse complex). Other Cheng Ho heritage sites
and relics include Sanbao Pagoda and Sanbao Harbor in Bangkok, temple
and tomb of one of Cheng Ho’s commanders Poontaokong in Sulu; Ong Sum
Ping Road in Burma’s capital named after Wang Jinghong, Cheng Ho’s tri-
lingual stone inscription in Sri Lanka. There are legends associated with
Cheng Ho, such as the legend of Hang Li Po where a Ming princess married
Sultan Mansor Shah of Malacca as recorded in the Sejarah Melayu. The
Semarang Chronicle documents the development of the Chinese Muslim
community in Java in the 15th and 16th centuries. Loan vocabulary in
Indonesian and Malay showing Chinese origin include, for example, Tofu,
Tokua, top, tohui, toki, teh, tekoh, etc.
According to Kwan Hwie Liong, one of Cheng Ho’s captains by the
name of Bi Nang Un migrated from Champa to Lasem, Java, in 1413,
together with his wife Na Li Ni, son Bi Nang Na, daughter Bi Nang Ti and
other relatives. His wife and daughter were said to be pioneers in making
batik cloth in Lasem as they were good batik cloth makers. Until today, spe-
cial Chinese auspicious motifs such as phoenix, dragon, qilin, butterfly, fish
and flora and fauna like chrysanthemum, peony, etc. are still popular in batik
production in Java. Lasem’s architecture shows a dynamic cross-cultural
interaction, with traditional Chinese-style house roof with a crown at its
gable top, Paladian windows, as well as 17th century Mediterranean balcony.
Its complex house plan also evolves from the Sino-Javanese traditional house
concept.
The Malay Annals of Semarang and Cirebon stated that Cheng Ho had
built mosques in Java’s Semarang, Sembung, Sarindil, Talang, Ancol, Lasem,
Tuban, Gresik and Jiaotung. Though these ancient mosques built by Cheng
Ho in Java might have been destroyed or renovated, his pioneering works
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44 Tan Ta Sen
Figure 1: Chinese PM Mr Li Keqiang and his wife, Dr Tan Ta Sen and Chief Minister of
Melaka, Mr Idris Hj. Haron looking at Cheng Ho Fleet diorama at Cheng Ho Cultural
Museum on 22 November 2015
would certainly have influenced subsequent designers and builders. Hence,

marks of Chinese architectural influence, such as multitiered roof, pagoda-
shaped minaret, curved roof edges and woodcarving, in local religious
buildings in places visited by Cheng Ho are still visible.
Theme tour routes

Lu Tianyun, formerly the head of the Kunming Municipal Office, in a paper
“Conceptualizing International Zheng He’s Journey of Peace Tour Routes”
gives an in-depth analysis of the subject. Based on the history of the voyages
as well as Cheng Ho spirit, he argues that Cheng Ho being a prominent
historical figure, like celebrity, is a good resource for cultural tourism and a
valuable product of tourism. He uses the method of value analysis to make
qualitative and quantitative analytical evaluations of the value of Cheng
Ho’s tourism resources. Supported by theoretical and statistical analysis as
well as the development theory of theme park property development, he
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concludes that through the joint efforts of the regional tourism authorities
and corporations, the international Cheng Ho’s Journey of Peace Tour
Routes will be ideal “golden” tour routes. However, local authorities and
tourism sectors have to play their part in taking good care and preservation
of the heritage sites.
To begin with, there are basically two types of Cheng Ho tour routes,
general and specific, as outlined:
1. General Cultural Tour Route: Kunyang (Cheng Ho’s home village in

Yunnan), Nanjing, Quanzhou, Changle, Qui Nhon (Champa), Ayuthaya
(Thailand), Melaka, Palembang, Semarang, Gale (Sri Lanka), Cochin
and Calicut, Hormuz, Muscat, Aden, Mogadishu, Brava, Malindi and
Lamu.
2. Spice Trade Route: Palembang, Samudra, Majapahit, Tuban, Gresik,

Surabaya, Semarang, Ceribon, Demak and Moluccas.
Well defined and diverse tour routes will be designed for various tour
groups. For instance, tourists can opt for general cultural tour route which
can be further broken up into a few shorter sub-routes to suit individual
needs. One can also join specific theme tour routes like spice trade route
and so on.
Multilingual informative tour guide materials have to be made available.
For serious tourists and school groups, educational guidebook is a must to
assist students to explore commerce, navigation, communication, cultural
exchange, handicraft and culture when traveling the Maritime Ceramic Road.
Theme resorts and attractions

Cheng Ho’s legacy has opened up another window for big-ticket investment
in developing Cheng Ho theme parks, resorts and attractions along the
Maritime Silk Road. For the time being, Melaka seems to be taking a lead in
this direction.
A multifunction mega commercial project to build a seaside resort
(Cheng Ho City) in Melaka is in the planning stage by a private business
group Cheng Ho City Sdn Bhd.
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46 Tan Ta Sen
Figure 2: Woodcarving showing Cheng Ho’s fleet and Mazu and other deities protecting the
voyages (relics found in Cheng Ho Cultural Museum)
Termed as the Jewel of the East, Cheng Ho City sits on 900 acres of
reclaimed land in Melaka’s Klebang. It is a mixed development blending
tourism, commercial and residential projects with prime seafront vantages.
Apart from international convention center, shopping plaza, luxury hotels,
food court and recreation center, there will also be a Cheng Ho Treasure
Museum, Cheng Ho monument, Cheng Ho Treasure Fleet and world
cultural village and world cultural theme park and so on.
In the meantime, The Star Online dated 3 September 2013 reported
that Melaka will become the first city outside China to stage the 10th pro-
duction in a series of outdoor musical shows titled “Impressions” produced
by acclaimed Chinese filmmaker Zhang Yimou. The “Impression Melaka”
show has been endorsed as the latest entry point project within Malaysia’s
Tourism National Key Economic Area. “Impression Melaka” is a project
between PTS Impression Sdn Bhd and China Impression Wonders Art
Development Co. Ltd. The stage for “Impression Melaka” will be performed
on a gigantic stage built to resemble Admiral Cheng Ho’s Treasure Ship with
a revolving seating area in the middle. The story will reflect Melaka’s vibrant
cosmopolitan history and heritage.
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Cheng Ho’s legacy and world dream

World Order Now and Then Unilateral Power Diplomacy
From the 16th century to the modern age, in an age of colonialism and
imperialism, Western powers armed with excellent and advanced weapons
began to show their mighty hard power in harnessing natural resources in
Asia and Africa. In the Cold War, Soviet Union and the United States of
America became superpowers due to the possession of nuclear weapon. They
dominated the world and divided the world into two camps, communist
and democratic nations. Since the end of the Cold War, as a result of the
disintegration of the Soviet Union, the US has since become the world’s sole
superpower. Thus, the US pursued global justice and promoted western
democracy, capitalist economic development and individualistic western

lifestyle. The last decade of the 20th century and the first decade of the 21st
century have enjoyed peace and yet the world has been full of smoke from
gunpowder, conflicts and endless suicidal bomb explosions due to the ideo-
logical differences, struggles between major powers and clash of interests.
Nowadays, international relations are still dominated by realist power poli-
tics and diplomacy.
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May 2, 2013
14:6

PST˙ws
Chapter 5
Cheng Ho and His Voyages

TAN Ta Sen
Cheng Ho
Cheng Ho was a great navigator, a global explorer, a diplomat, a warrior, an
East–West trading network builder, a cultural disseminator, an adventurer

and a Muslim eunuch in the Ming court. From 1405 to 1433, he led a huge
fleet of ships to venture into the Western Ocean seven times, across the South
China Sea, Indian Ocean and Persian Gulf. He visited more than 30 coun-
tries. The seven historic voyages were unprecedented.
Cheng Ho was born in a respectable Muslim family in 1371 at He Dai
village in Kunyang province, Yunnan. The family name was Ma. His ances-
tors, who were noblemen in Uzbek bordering Xinjiang, migrated to China
in 1070 during the Song dynasty. One of his great-great-grandfathers became
a high-ranking official during the Yuan dynasty and was a member of a
Mongol garrison situated in Yunnan. Both his grandfather and father had
made pilgrimages to Mecca.
Cheng Ho’s childhood was a memorable one, with love and happiness.
When the Ming forces invaded Yunnan, he was only 10 years old. The war
had destroyed his dream and ruined his family. His father died in the war
and he was captured and castrated. He became a captive. It was the greatest
tragedy in his life and the first turning point in his life too.
Cheng Ho was brought to Beijing. He was hardworking, courteous, alert
and quick-witted. He stood out among all the young slaves. He was soon
given basic military training and fought in several battles at a very young age.
He grew up in the army and became a tough, strong and tall young man with
a loud voice. When he was about 20 years of age, he was transferred to serve
Prince Yan Zhu Di, as a result of the restructuring of the Ming armed forces.
49
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50 Tan Ta Sen
The transfer was another defining moment in his life. He soon caught the
attention of Prince Yan who made him his trusted bodyguard.
After Emperor Zhu Yuanzhang passed away in 1398, a court revolt broke
out in the following year. Cheng Ho fought fiercely beside Zhu Di and gave
him critical support. Zhu Di came out a victor in the court revolt and
ascended to the throne and became Emperor Yongle. For Cheng Ho’s meri-
torious service, Emperor Yongle rewarded him by promoting him to be the
Principal Eunuch of the interior department and conferred on him a family
name Cheng. Ma Ho’s name was hence changed to Cheng Ho since then.
Cheng Ho’s fleet

In 1405, Emperor Yongle sent Cheng Ho to visit native states in the South
China Sea, Indian Ocean and Persian Gulf to expand Ming’s political and
economic influence in the region, and to spearhead Ming’s foreign trade
with these native states. From 1405 to 1433, he led a huge fleet of ships to
venture into the Western Ocean seven times and visited more than 30
countries.
The fleet led by Cheng Ho was the largest in the world in the 15th cen-
tury. The well-organized fleet comprised more than 200 ocean-going ships,
big and small. According to their specification and use, there were six types
of ships:
(1) Treasure ship: Being the flagship of the fleet, it was the largest vessel.
Each treasure ship usually had nine masts with nine sails.
(2) Horse ship was also called speed ship. It functioned as a supplies ship.
(3) Grain carrier ship had seven masts, 302 ft. by 130 ft. for storing food
supplies.
(4) Water storage ship’s function was to store fresh water. This was the first
in maritime history that a water tanker was specially provided for storing
fresh water throughout the journey. It had the same measurements as the
grain carrier ship.
(5) The Command ship also called battleship had six masts and measured
259 ft. by 102 ft. Military personnel, e.g. soldiers and commanders, occu-
pied it, very much like an army camp on land. It was also the operation
center during crises.
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Cheng Ho and His Voyages 51
(6) The War ship with five masts measured 194 ft. by 73 ft, was light and
handy being fully equipped with advanced arms and weapons such as
gun powder, iron canons, cannon balls, flaming arrows, pikes, brass,
exploding shells, etc. to protect the fleet.
Cheng Ho’s fleet was the world’s largest ocean-going fleet at that time.
For every expedition, Cheng Ho mobilized more than a 100 types of ships,
with 62 or 63 large and medium treasure ships forming the main body of the
fleet. The first expedition in 1405 was the grandest. Cheng Ho mobilized
more than 200 ships and 25,700 men.
Cheng Ho’s crew was organized into four major functional groups:
1. Command Center comprising chief envoys, deputy envoys, lesser

eunuchs and eunuchs. This was the nerve center of the fleet responsible
for policy matters and decision making on foreign affairs, trade, naviga-
tion and war.
2. Navigation Affairs Department comprising navigators, compass-men,
ship captains, meteorological officers, technicians, etc. was responsible
for the safety of the voyage.
3. Foreign Affairs and Supplies Department comprising foreign affairs
officers, foreign trade officers, protocol officers, interpreters, financial
officers and supplies officers and medical officers responsible for food
and water supply, diplomacy and foreign trade, tributary affairs,
health, etc.
4. Military and Defence Department comprising brigadiers, captains,
soldiers and other military officers responsible for the armada’s safe pas-
sage and security.
Navigational technology
The fleet was also guided by contemporary navigational manual which traced
the routes followed by Chinese ships and convoys. The most cited manual of
the time was a series of Cheng Ho’s nautical maps showing the Indian Ocean
with the openings of the Persian Gulf and the Red Sea. The notes include
indications of half-tide rocks and shoals as well as all ports and havens.
Routes are given for inner and outer passages of islands, sometimes with
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52 Tan Ta Sen
preferences if outward- or homeward-bound. In addition to Cheng Ho’s

nautical maps, there are two or three more typical rutters or navigational
compendia, for example, the Shunfeng Xiangsong (Fair Winds for Escort),
Hanghai Zhinan, (Navigational manual) and Zhinan Zhengfa (The naviga-

tional guidebook).
Cheng Ho also used compasses and navigational diagrams to determine
the course to steer. The Chinese compass has 24 directional points and uses
the magnetic needle to show the direction accurately.
The four navigational diagrams as shown in the nautical charts were
based on a navigational method known as Kamal, first invented by the Arabs
to calculate the ship’s longitude by studying the stars. The so-called star
observation across oceans technique was to use an ivory-made square block
of 6 cm, together with 12 square wooden blocks of various sizes, ranging
from 24 cm to 2 cm, every block being smaller by 2 cm than the earlier one.
The four corners of the ivory-made block were cut off. The method was fairly
complicated. Cheng Ho’s crew also measured the distance traveled using
hour-glasses of sand. One hour-glass equaled two and a half hours, the length
of one watch for the seamen on duty.
The movement of Cheng Ho’s armada was dictated by the monsoons.
He sailed westward between October and March (northeast monsoon) and
eastward between April and September (southwest monsoon). Due to the
monsoons, each expedition took between 1½ and 2 years.
The seven expeditions could be divided into three phases. The first three
expeditions from 1405 to 1411 were confined to nearby Southeast Asia and
South Asia. The fleet did not go beyond Calicut in India. At Calicut,
Cheng Ho learned of Hormuz being the international trading center for
West Asia, Europe and Africa. Therefore, he made an effort to call at Hormuz
in his fourth expedition from 1412 to 1415. At the age of 60, he was ordered
by Emperor Xuanzhou to make the seventh voyage from 1431 to 1433 which
brought the fleet further to East Africa. However, he never returned because
he fell sick and passed away in Calicut.
Provisions supply of the fleet

Provisions were fundamental and critical for sustaining the long voyages at
sea. Cheng Ho built trading bases at Malacca, Samudra, Calicut and Hormuz
b2432_Ch-05.indd 52 15/7/2016 7:48:20 PM

and these bases were also used as provisions supply stations along the long
journeys. The staple foods — grain, rice, oat and wheat, millet and rice —
were carried in separate supply ships, enabling a fleet to stay at sea for several
months without replenishing supplies. Supply ships were used for storing
food supplies. The water ship’s function was to store fresh water. An imperial
edict issued by Emperor Yongle, in 1421, orders that the accompanying
eunuchs be given salt, sauce, tea leaves, wine, cooking oil, candles and so
forth in accordance with the crew ration. These were drinks and ingredients
for food seasoning. A famous Arab traveler Ibn Battuta boarded a Chinese
large vessel in Calicut in the 1330s. He wrote in his book The Travels of Ibn
Battuta that the sailors cultivated green stuffs, vegetables and ginger in
wooden tanks. Cheng Ho’s fleet also raised chickens and goats and cultivated
vegetables, bean, onions, gingers, carrots, etc. on board. They also bought
fresh meats, vegetables and fruits in each port of call during the voyages. In
addition, they brought along preserved or salted fish, vegetables, fruits and
salted and century eggs, salted crabs and prawns, preserved meats such as
waxed ducks and sausage, bean-curd, spices like peppers, nutmegs, cloves,
etc. These preserved and salted foods were stored in barrels, and often had to
last for months on the sea that were spent out of sight of land.
Art of collaboration
The magnitude and duration of the state-organized expeditions led by
Cheng Ho from 1405 to 1433 is unprecedented. Cheng Ho has left a lasting
impact on cross-continental cultural exchange between the East and the
West. The expeditions had widened and deepened inter- as well as intra-
regional culture contact in the Afro-Asian world.
Cheng Ho’s overseas missions were carried out with an art of collabora-
tion which was characterized by a set of strategy and code of conduct aimed
to implement the policy set out by the Ming founding emperor Zhu
Yuanzhang to promote national prestige and cherish relations with native
states from afar. Zhu Yuanzhang after ascending to the throne adopted a
diplomacy of peace. He advocated a foreign policy of non-intervention,
peace and friendliness. He instructed his descendants not to invade
neighboring states and designated 15 states including Japan, Korea, Ryukyu,
Annam, Champa, Zhenla, Siam, Srivijaya, Java, Pahang, Samudra and
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54 Tan Ta Sen
Brunei as countries not to be invaded. Subsequently, Emperor Yongle con-

tinued the diplomacy of peace and ordered Cheng Ho to sail to the Western
Ocean on a mission of peace. Throughout his seven voyages, Cheng Ho
acted as an envoy of peace, a patron of international trade and promoter of

Chinese culture to create a harmonious and collaborative atmosphere or
environment in international relations.
As envoy of peace
Cheng Ho fostered good relationships with foreign states, emphasized peace-
ful coexistence and provided dignified protocol etiquette accorded to visiting
missions. As a supreme maritime power, Ming China sent out mighty fleets
but it harbored no ambition to occupy native states visited by the fleet but to
maintain regional peace and safeguard security of maritime trade routes.

Cheng Ho upheld the principle of harmonious world order and valued
peace and harmony in international relations amid diverse political systems.
He warned Siam not to invade Melaka. Whenever Siam was about to take
military action against Melaka, a timely warning was given to Siam by the
Ming court. Ming China helped Melaka maintain its sovereignty. Con-
sequently, without the threat of foreign invasion, Melaka eventually grew to
become a powerful regional political, economic and religious center in the
Strait of Malacca.
Patron of international trade

To play an effective role of a patron of international trade, Cheng Ho’s first
task was to be a law and order enforcer to maintain regional peace and safe-
guard the security of maritime trade routes. After Majapahit’s invasion in the
14th century, Palembang was transformed into a Chinese pirate haven.
Notorious Chinese pirates like Chen Zuyi and Liang Daoming from China’s
Guangdong province controlled Palembang and ruled over the Straits of
Malacca and the Spice Road in the Malay Archipelago to prey on traders and
trading ships. The rebellious pirate activities in Palembang posed threat to
Ming state-run trading activities under the tributary system. Foreign tribute
missions and traders were at times attacked and robbed of their goods by
them. In 1407, Chen Zuyi pretended to surrender but plotted to rob Cheng
b2432_Ch-05.indd 54 15/7/2016 7:48:20 PM

Ho’s ships. Consequently, Zuyi was captured and brought to the court and
executed. After Chen Zuyi’s pirate-style operation was crushed by Cheng Ho,
the sea-routes in the Malay Archipelago had become safe and secure.
Along this wide and long maritime trade routes spreading from the
Malay Archipelago to East Africa, Cheng Ho’s fleets called at major ports to
trade Chinese silk, tea and porcelain for local produce such as spices, medic-
inal herbs, etc. with traders from all over the world. As each overseas opera-
tion was a major one involving more than 200 ships and 25,700 men and
with large stock of provisions, water, imperial gifts, tributes, arms and weap-
ons, gold and silver, silk, tea and porcelain for export and local produce and
products a board, Cheng Ho had to set up strategic bases along the long
journey ranging from months and even years to serve as mid-way houses
while awaiting fair monsoon winds for home-bound voyages. Apparently,
Cheng Ho divided his overseas business operation into four zones: Malay
Peninsula, Indonesia Archipelago, South Asia and Arabia. He had also iden-
tified four key ports of call within each zone as his administrative centers:
Malacca, Samudra, Calicut and Hormuz. These administrative centers were
selected for their being regional commercial hubs which could facilitate car-
rying out his two vital diplomatic and foreign trade missions. Cheng Ho
engaged in trade with international traders at these bases selling Chinese silk,
porcelain and tea and buying local products. Meanwhile, his staff also col-
lected in these market places useful political and economic information like
trade methods, local products, local currency, knowledge of local political
systems and market demand for Chinese goods and the like. He built heavily
guarded official warehouses (Guanchang) in Malacca, Samudra, Calicut and
Hormuz to store treasures and goods.
Promoter of cultural exchange

Cheng Ho promoted Chinese culture abroad. Wherever he visited, he intro-
duced Chinese culture, technology and skills of production as well as Chinese
lifestyles to the native ruler and people. These included gifts like Chinese
calendar, almanac, books, costumes, customs, food culture, tea, silk,
porcelain, architectural designs and construction methods, medicine, tea
planting, agriculture, fishery, ceramic manufacturing, shipbuilding, metal-
lurgy and weaving techniques. Through cultural exchange and transfer of
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56 Tan Ta Sen
technology Cheng Ho had enriched local culture and raised the standard of
living of the native people.
On the other hand, trade conducted under the state-organized foreign
trade as well as under the tribute mission framework saw local products and
produce of Middle East, East Africa, South and Southeast Asia exported to
China. These local products and produce consisted mainly of medicinal
herbs, spices, jewellery and exotic animals, as follows:
1. Medicinal herbs: aloes, myrrh, dragon’s blood, nutmegs, cardamoms,

sappan wood, putchuck (radix dulcis), cubebs, asafoetida, liquid storax, etc.
2. Spices: pepper, camphor, frankincense, lakawood, dammar, benzoin,
rose water, garu wood, Huang-shou-xiang gharu wood, sandal wood,
cloves, musk wood, ambergris, bees wax, sweet benzoin, gardenia
flowers, wugu tree, cherry apple, etc.

3. Jewellery: coral, opaque glass, cat’s eye, pearls, ivory, rhinoceros horns,
kingfishers’ feathers, tortoiseshell, etc.
4. Animals: parrots, giraffe, zebra, tiger, ostrich, camel, elephant, flamingo,
turkey, etc.
These local products greatly enriched Chinese lifestyle and broadened

Chinese horizons. Many foreign herbs, plants and animals have enriched
Chinese classification of herbs, animals and plants. Cheng Ho’s seven grand
voyages brought about an era of political stability, economic prosperity and
cultural harmony from China to East Africa. It gives a stark contrast to the
war-torn region under the rules of Western colonial powers from the 16th to
20th centuries.
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Chapter 6
Cheng Ho Spirit and World Dream

TAN Ta Sen
Ming China in the 15th century was arguably the major naval power in the
world. Despite Cheng Ho being instructed clearly by Emperor Zhu Di to
promote national prestige and cherishing native states, he did not use bully-
ing tactics in conducting international relations. Cheng Ho, in pursuing

peaceful diplomacy based on Confucian humanism, aimed to establish a
harmonious international order. Cheng Ho’s voyages to the Western Ocean
showed such features of Confucian ethics as humanism, benevolence, right-
eousness, forgiveness, morality, harmonious interpersonal relationships, as
well as a stable social order. He incorporated Confucian ethics into his
foreign policy as a form of the “Art of Collaboration”. The spirit of Cheng
Ho as demonstrated by his “Art of Collaboration” is the most appropriate
illustration of his diplomacy of peace implemented during his voyages with
the following salient features:
1. Good neighborliness, friendliness and coexistence (diplomacy) — Ming

China’s foreign relations with Afro-Asian states were based on non-
intervention and aimed to establish a harmonious world. Whenever
Cheng Ho visited a native state, he would call on the ruler first and
present him with valuable gifts and perhaps a Mandarin royal hat, seal
and robe to acknowledge and respect his high position. Ming China’s
foreign relations with Afro-Asian states were based on non-intervention
and aimed to establish a harmonious world.
2. Valuing peace and harmony in international relations amid diverse
political systems (politics) — Cheng Ho provided assistance to the weak,
upheld justice, and maintained harmonious world order, peace and
stability. He actively assisted weaker native states against foreign invasion,
57
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58 Tan Ta Sen
for instance, intervening to protect the Malacca kingdom from Siam’s

attacks. In addition, Ming government took steps to remove undesirable
forces threatening stable world order, harmonious society and safe
passage of trade routes such as notorious Overseas Chinese pirates in

Palembang.
3. Bestowing valuable gifts worth more than what is received and valuing
righteousness above material gain (economy) — In carrying out diplo-
matic activities and foreign trade within the tributary system, the Ming
court was altruistic. It was obligatory for vassal states to send regular
tribute of local produce to the Ming court. Likewise, Ming emperors
would return them with generous and more valuable gifts. Foreign
envoys or rulers made their tributary trips to the Ming court with such
local produce and rare and exotic animals like peacock and crane from
Brunei, elephant and ivory from Champa, elephant, coral and pepper
from Siam, and giraffe, lion and pearls from Hormuz and Malindi.
In return, the Ming court bestowed them with gifts including tens of
bales of silk, thousands of porcelain, silver and gold.
4. Benevolence and conciliation to win the hearts of native peoples (as a
form of culture) — Humanism is the essence of Chinese culture.
Confucian teachings aimed to build an orderly society and a government
ruled by virtue. In the international stage, Cheng Ho fostered tolerant
international relations with humanistic spirit of benevolence and racial
equality so as to pacify the world. He was merciful towards friends but
strict with self. For instance, the pirate Chen Zuyi was severely dealt with
but the Javanese West king who killed his crew by mistake and the
Sri Lankan king who attacked his fleet were leniently handed over to the
Ming court for judgment.
World dream of universal harmony, peace and prosperity

Cheng He’s Art of Collaboration is certainly relevant and practical in today’s
international relations and politics. Confucian teachings aimed to build an
orderly society, a government ruled by virtue and a harmonious world order.
In the international stage, Cheng Ho fostered tolerant international rela-
tions with humanistic spirit of benevolence and racial equality so as to
achieve a great unity among nations on win–win footing. Therefore, this
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Cheng Ho Spirit and World Dream 59
Cheng Ho spirit could be a model for contemporary international relations

and foreign relations. Reliving Cheng Ho’s spirit in international relations
based on mutual respect, non-invasion, non-intervention and fostering good
relationships with foreign states will result in the creation of a world order
where multipolar powers are in a partnership to achieve world peace, uni-
versal harmony and equality.
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May 2, 2013
14:6

PST˙ws
b2432_Ch-07.indd 61
“9x6”
Section C
The Maritime Silk Road
15/7/2016 7:50:30 PM
May 2, 2013
14:6

PST˙ws
Chapter 7
Narratives Related to Zheng

He: Explaining the Emergence
of Ethnic Chinese Communities
Overseas and the Rise
of a Regional Trading Network
LIM Tai Wei
Admiral Zheng He (Cheng Ho in Wades–Giles spelling system) made

seven voyages to the known maritime trading world on behalf of the
Chinese Ming dynasty during the reign of Emperor Yongle. His accom-
plishments in navigational history are universally recognized by many
scholars. The tangible and intangible legacies that he left behind are
shaped by various interpretations to fit different historical narratives. This
writing is interested in these narratives related to Zheng He and his legacy
in Southeast Asia and Greater China. It pays special attention to how
Zheng He’s voyages are often narrated as the origins of bustling overseas
Chinese trading communities in Southeast Asia and “Greater China” (a
term sometimes referring to Hong Kong, Taiwan and Macau). It does not
pretend to be comprehensive but rather offers a sampling of the various
ways in which Zheng’s voyages are interpreted today in Southeast Asia. In
this writing, I am not interested in the authenticity or accuracy of Zheng
He’s account (which forms important research work for archaeologists and
historians) but how his voyages are interpreted in contemporary narratives
and representations.
Methodology. Related to the subject matter, I collected digital materials on
the internet, collected printed articles related to Zheng He and, as part of my
fieldwork, took photos in Indonesia’s Batam Island in the Riau Archipelago as
63
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64 Lim Tai Wei
well as Singapore for my analysis. For my analysis, I carried out interpretive

work on printed, photographed and narrated materials. I collected and uti-
lized an eclectic variety of materials including monographs, media reports/
commentaries, online materials in order to select and analyze representative

examples of Zheng He-related materials published in various mediums. Many
of these materials including contemporary physical artefacts reconstruct
Zheng He and/or his voyages according to local imaginations, sentiments and
nativist interpretations. I also spent time to comprehensively search for sec-
ondary literature related to this topic in the contemporary China section of
the National University of Singapore (NUS) library. I am utilizing mainly
English language materials because English is a major working language in
much of the regions covered in this writing, they reach a wider audience glob-
ally compared to the many local languages found in East Asia and due to the
author’s familiarity with these materials. The intention is not to privilege these
materials as the author recognizes the importance of analyzing non-English
native language materials as the subject of a separate study.
It is also important to note that Zheng He’s voyages as well as Chinese
voyages before and after him were not only about trade. There were cultural
and religious elements to the journeys. These are equally important narratives
but for this writing due to word length, personal interests as well as the nar-
ratives that I have collected, I will focus on trade historical issues more closely.
For Zheng He/Cheng Ho’s impact on Islamic proselytization aspects, please
refer to the important literature written by Tan Ta Sen (Cheng Ho and Islam),
who established the linkage between the two in his comprehensive account
which traces Chinese cultural, religious and trade exchanges between China
and Southeast Asia from the Stone Age/Neolithic period through the Ming
period and beyond.1 I have visited some of the sites that Tan mentioned in
his writing and found his arguments to be persuasive narratives2 in some
aspects. For example, Tan pointed out that Southeast Asian scholars high-
lighted the presence of Chinese cultural influence even before Ming, sup-
porting John Wong’s narrative discussed later. In terms of materials artefacts,
1 Tan,Ta Sen, Cheng Ho and Islam in Southeast Asia. Singapore: Institute of Southeast Asian
Studies, 2009.
2 As mentioned before, I am more concerned with narratives than archaeological/documentary
evidence and will leave the latter to their field experts.
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Narratives Related to Zheng He 65

Figure 1: Photo of Liu Rong Shi that the author took in Guangzhou during fieldwork visit
on 1 April 2013
for example, Tan also pointed out that Liu Rong Shi (Shrine) in Guangzhou
constructed in AD 573 showed stupa-like shapes and forms that showed
commonalities with Southeast Asian buildings like the Kampung Kling
Mosque in Malacca (location of Zheng He’s warehousing facility in Malacca)
and Javanese architecture.3
Literature review. In trade commercial publications, semi-mythical
imageries of Zheng He can be located. Sterling Seagraves’ trade commercial
book success Lords of the Rim dedicated Chapter 7 to discussing the
individual known as “Sanbao the Sailor”:
Of all the children of Yueh, one of the most extraordinary and one of the
most influential in opening up the doors of the world to the Chinese, was
the man known as Ma Sanbao. To start with, this Ming Dynasty admiral
3 Tan,Ta Sen, Cheng Ho and Islam in Southeast Asia. Singapore: Institute of Southeast Asian
Studies, 2009, 198–199.
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66 Lim Tai Wei
was over eight feet tall, and said to be five feet around the middle ... Most
likely, he is also the real source of the legend of Sindbad the Sailor.4
This narrative may contain semi-mythical exaggerations but was indica-

tive of half-fictional portrayal of the man himself. Beyond the man and his
size itself, Ma’s eunuch status is also discussed in the same publication:
… Ma of the ‘Three Jewels’. The title was a wordgame of the sort Chinese
love … In vulgar circles, it referred to Ma’s being a superb warrior despite
having no testicles and penis (‘Three Jewels’ or Thrice Precious’). By giving
him this title, the emperor figuratively made him whole again.5
Therefore, imageries of Ma took multiple forms, from fearsome gigantic

explorer to a testicle-less eunuch. Added to these sets of images, in Southeast

Asia, he was deified and became a Taoist God (see the following text) with
his own following of worshippers. Regardless of his physical appearance, his
exploits, however, tend to be more well-known as someone who navigated
his ships to much of the known world at that point of history. While Zheng
He’s feats are well discussed, historians have continually revised or re-evalu-
ated Zheng He’s trips based on uncovered new findings and new under-
standing of evidence, materials and artefacts related to Zheng’s trips. Geoff
Wade’s reassessment of Zheng He’s voyages noted that eunuch-led voyages
were made to the “Western Ocean” (the part of maritime Southeast Asia
west of Borneo reaching out to the Indian Ocean) and other less prominent
trips to the “Eastern Ocean (today’s Philippines, Borneo and Eastern
Indonesia)” as the third of the three-pronged southern expansion promul-
gated during Emperor Yongle’s reign (1402–1424) in Ming dynasty.6 There
are a number of narratives and explanations related to Yongle’s purpose in
sending Zheng He to visit other countries. One possible explanation was his
4 Seagrave,Sterling, Lords of the Rim. Great Britain: Bantam Press, 1995, 75.
5 Ibid.,
78.
6 Wade, Geoff, The Zheng He Voyages: A Reassessment dated October 2004 in the Asia
Research Institute Working Paper Series No. 31. Singapore: National University of Singapore
Asia Research Institute, 2004, 10.
b2432_Ch-07.indd 66 15/7/2016 7:50:30 PM

desire to legitimize his succession to the throne7 since he was not the first
choice and deposed his nephew to rule China and one possible way to do
this is to send impressive naval ships to other countries to pay tribute to the
Chinese state. His military background was also narrated as another reason
for military and naval swaggering to awe overseas states, despite his father’s
reservation about such overseas ventures.8 The reasons behind the end of
Zheng He’s voyages are also analyzed by scholars. Wang’s publication prob-
ably provided one of the most dominant explanations for stopping the voy-
ages: tax burdens on the state for financing the voyages, attention needed to
manage Mongols in northern China and other competing expensive projects
like establishing the new capital city in Beijing.9 There are others who see
the geopolitical value of Ming expansion. Weng Eang Cheong’s writing
indicated that “For the early Ming rulers, the sea was the medium to launch
a diplomatic offensive to spread the pacific word of an evenhanded Chinese

world order”.10
While some parts of his journeys were considered less prominent and far
removed from Beijing’s worldview, Zheng He’s presence left important lega-
cies in formerly peripheral areas of the Sino-centric universe. In this writing,
due to limited word length, the nature of materials collected as well as loca-
tion in which the research is carried out, I will restrict the scope mainly to
maritime Southeast Asia (in particular, Indonesia and the Malay Peninsula)
and parts of Greater China (especially with regard to post-Zheng He narra-
tives on the formation of trading communities). I will explain my findings
related to these two regions in the following section.
Tan Ta Sen quoted Fairbank’s classification of Chinese foreign relations
during the dynastic periods and, within this classification, narratives related
to the “outer zone” that includes Southeast Asia11 is the one that I am most
interested in this writing. Because of my research location in Singapore,
7 Wang, Gungwu, China and the Chinese Overseas. Singapore: Times Academic/Eastern
Universities Press/Marshall Cavendish, 2007, 60 and 66.
8 Ibid., 66.
9 Ibid., 65.
10 Cheong, Weng Eang, The Hong Merchants of Canton Chinese Merchants in Sino-Western Trade.
Richmond Surrey Great Britain: Nordic Institute of Asian Studies, 1997, 4.

11 Tan, Ta Sen, Cheng Ho and Islam in Southeast Asia. Singapore: Institute of Southeast Asian
Studies, 2009, 167.
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68 Lim Tai Wei
compared with other world regions, I can access materials found in this zone
more easily. In addition, because Southeast Asia is located in the periphery
(along with Europe, Japan and South Asia in the Sino-centric world), its
location farthest away from the Chinese empire and civilization provides the
freest possible narrative space for ideas to develop, away from the orbit of the
Chinese Confucian civilization. Therefore, narratives in this zone (Southeast
Asia which is the focus of this writing) have the greatest potential to develop
independently away from Sino-centric official histories and historical writ-
ings. Besides this zone, I am also interested in narratives related to a con-
structed sphere known as “Greater China”, a term that emerged much later
in the late Qing and early Republican period onwards.
The narrative of Zheng He’s voyage is also evident in overseas Chinese
or Chinese diasporic literatures. Lynn Pan included a brief mention of
Zheng’s voyages in her edited volume Encyclopedia of the Chinese Overseas

where she mentioned about archaeological evidence found in a Nanjing ship-
yard related to Zheng’s ships and offered explanations of how the Chinese
capitol’s shift from Nanjing to Beijing signified priorities shifting to conti-
nental matters.12 In fact, from the Ming dynasty onwards, China’s attention
decisively shifted to maintaining border integrity with non-Han people from
north of China and, in Qing dynasty, energies were focused on Western
overland territorial expansion.
Not all historical narratives acknowledge Zheng He’s voyages as the
major catalyst in developing the maritime trade route. In fact, veteran con-
temporary China economist John Wong argued that trading communities
had started even before Zheng’s trips.
The Maritime Silk Road also originated in China. It started as the Chinese
people ventured out to South-east Asia, traditionally called Nanyang (or South
Seas) by the Chinese. By the Song Dynasty (960–1280), Imperial China had
established tributary relations with many states in Nanyang. The tribute-
bearing missions were, as observed by eminent Harvard historian John K.
Fairbank, actually a convenient “cloak for trade”. In fact, China already
operated a lot of maritime activities along the China coast and in Nanyang
12 Pan,Lynn (ed.), The Encyclopedia of the Chinese Overseas. Singapore: Chinese Heritage
Center/Archipelago Press/Landmark Books, 1998, 69.
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well before Admiral Zheng He’s expeditions (1405–1433). Subsequently,

China’s burgeoning relations with Nanyang were further boosted by successive
waves of Chinese emigration, particularly in the 19th century.13
This quotation establishes the narrative that trading activities had begun
even before Ming dynasty and that Chinese trading communities in the
Southeast Asia (“Nanyang”) were constantly reinforced by generations of
traders coming out of China. Besides intellectuals, contemporary seasoned
diplomats also observed the pre-Ming migration and trade presence of the
Chinese people. According to Singapore’s Ambassador to Indonesia Lee
Khoon Choy, Chinese migration to Thailand started as early as the Northern
Sung dynasty (960–1127, the Thai royalty also borrowed their institutional
setups from the Chinese) and they built up Sino-Thai trade connections and
by 1350, the population had grown to 1.5 million Chinese with Chinese
junks parked in the river up to Sawangkalok (nearly 120 leagues from the
river mouth).14
All these narratives indicated that Zheng He’s voyages or the impact of
those voyages was only one of the successive arrivals. This narrative acknowl-
edges the importance of Zheng He’s voyages but seeks not to privilege it as
the dominant explanation for the emergence of an ethnic Chinese trading
network in Southeast Asia or the Greater China interactions that emerged
later. Tan Ta Sen’s important scholarship on Admiral Cheng Ho agrees with
this interpretation. He argues:
From the tenth to fourteenth centuries during the Song and Yuan dynasties,
China’s maritime trade saw a period of boom. Tribute missions from
Southeast Asian native states and Chinese and foreign traders were seen
playing the Southeast maritime route ceaselessly.15
13 Wong, John, Reviving the Ancient Silk Road: China’s New Economic Diplomacy, dated
9 July 2014 in the Straits Times [downloaded on 26 November 2014], available at http://www.
straitstimes.com/news/opinion/invitation/story/reviving-the-ancient-silk-road-chinas-new-
economic-diplomacy-20140709.
14 Lee, Khoon Choy, Golden Dragon and Purple Phoenix. Singapore: World Scientific, 2013, 1.
Studies, 2009, 51.
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70 Lim Tai Wei
Like Wong, Tan Ta Sen also emphasized the presence of an existing

trading network before the arrival of Zheng He. He even emphasized that a
hierarchical Sino-centric order was set up through the tributary missions to
regulate this trade. In order words, Zheng He inherited Chinese traditions of

regulating trade and recognizing favored nation statuses and innovated and
expanded them instead of re-inventing new systems of trade relations. Some
writers like Lo Jung-pang (grandson of Kang Youwei) would even go as far as
to argue the following:
Indeed, during the three centuries from the Southern Song to the early
Ming period, the maritime and overseas activities of the Chinese people
were so great in extent and consequence that China then was more of a sea
power than a land power. The China Seas were Chinese in fact as well as in
name. They were a mare clausum over which the Chinese navy ranged
unchallenged. Under the aegis of their naval power, the Chinese extended
their political influence from Japan in the east to Ceylon in the west, from
the Yellow Sea in the north to the Java Sea in the south.16
This narrative was probably the most extreme reading of Chinese mari-
time power in the Sung to Ming period. Many would argue about the limita-
tions of Chinese maritime supremacy, for example, Mongol rule in Yuan
dynasty and its failure to capture Japan through naval power, distractions
from non-Han tribes from the north, the emphasis on trade and tributary
missions rather than naval expansionism. On the last point, in many narra-
tives related to Zheng He including Tan’s, the imagery of the voyages is said
to be relatively peaceful with little direct intervention in local affairs.
For example, to wipe out pirate leader Chen Zuyi in the Straits of Malacca
was for the sake of maritime traders as the move had kept the East–West
maritime trade route safe. Although Javanese Western king killed his 170
crew members, Cheng Ho took no military action but settled the matter
amicably.17
16 Lo, Jung-pang, China as a Sea Power 1127–1368. Singapore: National University of Singapore
and Hong Kong University Press, 2012, xiv–xv.

17 Tan,Ta Sen, Cheng Ho Spirit and China’s Soft Power in the International Zheng He Society
website [downloaded on 7 December 2014], available at http://www.chengho.org/downloads/
CH_spirit_China_soft_power_1.pdf, 5.
b2432_Ch-07.indd 70 15/7/2016 7:50:31 PM

This narrative and other versions with some similarities to it have been
appropriated by some scholars/observers/policy makers to argue that the rise
of China follows past historical traditions of behaving as a non-intervention-
ist peaceful large power. This narrative is controversial, contentious and still
the subject of an intense ongoing debate.
Supporting the idea that trade between China and Southeast Asia pre-
dated Ming, one of the most authoritative texts on early South China Seas
Nanhai trade is written by Wang Gungwu whose classic The Nanhai Trade
talks about this subject matter in detail. I refer readers who are interested in
pre-Zheng He trade in the South China Sea to this publication, and will only
briefly introduce this important book here by selecting materials most
directly relevant to the subject matter. The publication began with coastal
trade in China (Shang Dynasty to 5th century BC), before economically
expanding southwards into the Nan Yueh territories (221–111 BC) and by
AD 220–440, trade and missions were established with most Southeast Asian
kingdoms.18 The growth in Southern Chinese population, widening contact
with South India and its domination of maritime Southeast Asia, rise in
Buddhist artefacts trade alongside the spread of that religion characterized
the period between 420 and 589 and in the next few decades (589–618), the
port of Fuzhou became important as the Chinese started sending silk down
to Southeast Asia with naval escorts and in turn received reciprocation of
gifts and envoys from the native rulers.19 The rise (increased consumption
demand in new Southern Chinese markets and political stability offered by
a strong China) and fall (trouble with Arab/Persian traders) saw the corre-
sponding rise and decline in the Nanhai trade during the Tang dynasty
(618–960) and this period slowly transited to a post-Tang middlemen-
mediated trade conducted by the Arabs, Persians, Ceylonese and Indian
ships.20 And this was the situation before the rise of the Sung, Yuan and
Ming trades described by Wong and Tan. A travel feature article (originally
printed in China Daily and also appeared in Singapore’s My Paper on 15
October 2014) that I spotted in The Straits Times on Quanzhou published
on 23 December 2014 also mentioned the Maritime Silk Road during Tang,
Song and Yuan dynasties:
18 Wang, Gungwu, The Nanhai Trade. Singapore: Times Academic Press, 1998, 1–42.
19 Ibid., 43–68.
20 Ibid., 69–115.
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72 Lim Tai Wei
Radiating lovely historical charm, it [Quanzhou] is famous as the starting

point for the Maritime Silk Road and as the largest port in Asia during the
Song (960–1279) and Yuan (1271–1368) dynasties … One important
group of foreigners who came to Quanzhou via the Maritime Silk Road
during the Tang Dynasty (618–907) were Muslim merchants.21
Like the narratives from the following mentioned Indonesian tourism

authorities, historical stories about Quanzhou served the practical purpose of
romantic and nostalgic recollections of its past roles, colored by testimonials
of legendary travelers who recorded their diachronic observations of the trad-
ing city. This narrative also supported the earlier-stated points and arguments
that maritime trade routes did not start with Zheng He since there was
already an existing robust trading network starting from Tang dynasty. Just
as maritime trade did not really begin with Zheng He’s voyages, it also did
not end when his ships were withdrawn by the court. Wang Gungwu’s pub-
lication again is useful in highlighting the continuity of trade even in the
absence of official support:
But the fleets were withdrawn after 1435 and the ban on private foreign
trade remained in force. For the 200 years from the late fourteenth to the
second half of the sixteenth century, private trade overseas was forbidden.
This ban did not, of course, stop private trade, it merely made it more
dangerous.22
This passage indicated that, even in the most adverse situations com-
pounded by an official isolationist policy and lack of state support, private
trade with overseas nations continued by evading the authorities’ attention.
In contrast to the emergence of trading communities in post-Zheng He
Southeast Asia, waves of overseas Chinese migrations to Greater China
occurred during the decline of the late Qing dynasty with the ceding of
21 China Daily/Asia News Network, Discover Historic Gems Galore in Fujian’s Cities, dated 23
December 2014 in The Straits Times Classified. 2014, C1.
22 Wang, Gungwu, China and the Chinese Overseas. Singapore: Times Academic/Eastern
Universities Press/Marshall Cavendish, 2007, 212.
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Hong Kong to the British, Macau to the Portuguese and Taiwan to the
Japanese. Hong Kong is a prominent example of a recipient of successive
overseas Chinese migrations during this period. Between the founding of
Hong Kong as a British colony and the start of World War II in 1939 with
the fall of Poland, more than six million Chinese transited through Hong
Kong to reach other countries.23 Throughout the historical periods of declin-
ing late Qing dynasty, the warlordism of Republican China, the communist
takeover of mainland China, Hong Kong received many traders, business-
men, entrepreneurial refugees, similar to Southeast Asia. In the immediate
post-WWII period, overseas Chinese in Hong Kong remitted US$500–600
million annually back to their families on the mainland.24 Most academic
narratives conceptualize ethnic Chinese migrations as a cyclical rather than a
deterministic process. They reflect events in mainland China and the con-
testing priorities of imperial regimes in maintaining the integrity of landed

borders, secure maritime trade and political impulses of opening up or
isolationism.
Chinese preoccupations with maritime and overland territorial issues. One
reason for the cyclical nature of Chinese attention to maritime matters
alternating with overland territorial issues is because of its semi-continental
and semi-maritime (East and South China Seas) geographical make-up.
A number of maps that I obtained digitally from university websites and
databases indicate selectively Chinese attention paid to continental matters.
Therefore, through interpretive work and extrapolation, it was possible to
understand Chinese dilemma in dividing its time between continental and
maritime affairs. Late pre-modern Chinese had its own idiosyncratic inter-
pretive features in map designs. Map designs reflected the fluidity in which
pre-modern Chinese conceptualized their territorial boundaries. PhD can-
didate Eric Vanden Bussche explained this in a Stanford Report when he
examined how the Chinese negotiated with the British over the boundaries
for Burma:
23 Skeldon, Ronald, “The case of Hong Kong” in The Encyclopedia of the Chinese Overseas
edited by Lynn Pan. Singapore: Chinese Heritage Center/Archipelago Press/Landmark Books,
1998, 67.
24 Yahuda, Michael, Hong Kong China’s Challenge. London and NY: Routledge, 1996, 23.
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74 Lim Tai Wei
A typical 19th century Chinese map shows regional hierarchies and

landmarks, such as the prefecture seats depicted as walled compounds, the
trade routes marked by passes, and the areas controlled by various chief-
tains. And unlike western maps, the Chinese maps themselves rarely con-
tained distance measurements. Textual descriptions indicated distances
between various landmarks. “The Chinese believed that maps could not
adequately convey the geographical knowledge found in written sources.”25
Given that distances are not accurately calibrated in two-dimensional

terms proportionately and represented textually, this provides leeway to
stretch, extend or minimize distances graphically on the maps. Therefore, it
is not possible to gauge with precise measurements the extent and exact
routes of Zheng He’s voyages. But material artefacts like temples in Indonesia
as well as stories of the communities that his followers left behind help in the
process of tracing his journey. Throughout the Ming-Qing historical periods,
like the westward expansion of China’s boundaries, its maritime borders were
also never really secured. J.A.C. Mackie described Ming maritime trade in
the following:
Outside the framework of tributary trade, Chinese and Japanese were

fellow-freebooters in the endemically piratical, smuggler-ridden character
of East Asian maritime commerce in the Ming dynasty (1368–1644).
Relations between many of these extra-tributary traders were close, so close
that the mid-16th century raids on the Chinese coasts were joint Chinese–
Japanese endeavours. Chinese merchants had also to ally themselves with
the Portuguese (who had established a base in Macao) to conduct trade in
the teeth of Chinese imperial proscription.26
25 Smith, Rachel, Stanford Historian Sees New Perspectives on Chinese Border Disputes in
Declassified Qing Dynasty Maps, dated 29 May 2014 in Stanford Report [downloaded on 27
November 2014], available at http://news.stanford.edu/news/2014/may/declassified-chinese-
maps-052914.html.
26 Mackie, J.A.C., “Business relations with non-Chinese” in The Encyclopedia of the Chinese
Overseas edited by Lynn Pan. Singapore: Chinese Heritage Center/Archipelago Press/Landmark

Books, 1998, 126.
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This narrative indicated unstable territorial markers in the periphery of

Chinese trading maritime network. Trade was unregulated and sometimes
depended on the protection of non-Chinese entities in some areas. In fact,
even its coastal territories faced threats from maritime incursions from time
to time. With constant threats and security issues, Chinese officialdom
would have struggled between allocating budget, manpower, time and
resources to cope with foreign intrusions at its maritime and landed borders.
From this perspective, it may be possible that Zheng’s voyages was a victim
to such changing priorities in border defenses. In the Republican modern
period of Chinese history, boundaries were eventually drawn more accu-
rately and with greater consciousness of peripheral limits to the reach of
Chinese sovereignty, effective control, power and influence vis-à-vis other
states in the region.
Regardless of the reasons behind the end of Zheng He’s voyages, and
China’s alternating priorities of maritime and overland trade reach, his his-
torical exploits have become subjects of worship today. Sterling Seagraves’s
publication Lords of the Rim narrated how Admiral Zheng He is remembered
today in Asia:
Six images of the admiral are preserved in temples in the region. There is a
Sanbao Harbor, a Sanbao Pagoda, a Sanbao Town. In Indonesia, Chinese
go every year to Tajue Temple to pay homage on the anniversary of Cheng
Ho’s first visit. In Malacca the oldest well is called Sam Bao Kung.
In Thailand incense is burned for him at San Pao Temple.27
Some of these temples are discussed is the following sections as case stud-
ies of how Zheng He is remembered today in Southeast Asia. Interestingly,
one of the countries where I was able to locate information about Cheng Ho
or Admiral Zheng He is in Indonesia. When I did a search online of the
Admiral, I found number of sites mentioning Chinese restaurants in
Indonesia with the name “Cheng Ho”. In a blog, for example, I came across
a discussion on a “Cheng Ho Restaurant” and how it served Southeast Asian
and localized Islamic Chinese food with a critique of service quality at the
27 Seagrave, Sterling, Lords of the Rim. US: Putnam’s Sons, 1995, 90.
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76 Lim Tai Wei
restaurant.28 From these narratives, there seems to be a stereotypical associa-

tion of Muslim Chinese food with the Admiral. Such imagined popular
association with Zheng He is not only found in Indonesia but are also appli-
cable to organizations like the military that want to appropriate the Zheng
He symbolism for portraying certain images. For example, the Taiwanese
military named one of their frigates after Cheng Ho, the ROCS Cheng Ho
FFG-1103 (formerly the Oliver Hazard Perry class frigate in the US navy).
This frigate is part of the December 2014 sale (approved by HR3470 house
resolution) of four advanced frigates by the US to Taiwan under the Taiwan
Relations Act (35th anniversary in 2014) which states that the US remains
committed to the defense of Taiwan, a development that attracted strong
criticisms from Beijing.29 The exact historical background and decision-
making process of utilizing the name “Cheng Ho” however is not as well-
known and would be interesting research to uncover the origins of this name
and the narrative behind it.
Online research also revealed that the Admiral’s name can also be found in
the official Indonesian tourism websites. For example, Palembang’s ancient
name Srivijaya was described in the following manner in an officially-authorized
site for the Indonesian tourism industry:
Monks from China, India and Java used to congregate here to learn and
teach the lessons of Buddha. In AD 671 Chinese chronicles wrote that the
famous Chinese Buddhist monk, I Ching sojourned in Palembang for six
months on his way to India. I Ching wrote that there were more than
1,000 Buddhist monks in the city and advised Chinese monks to study
Sanskrit in Palembang before proceeding to India. While the Srivijaya
kings lived inland on shore, his subjects lived along the wide Musi river,
manning the powerful fleet and busily trading in gold, spices, silks, ivories
and ceramics with foreign merchants who sailed in from China, India and
28 Vogue Mum, Restoran CHENG HO (AMY SEARCH) Will it be my Last Trip? dated 14
March 2009 in Voguemom Blog [downloaded on 23 December 2014], available at http://
voguemom.blogspot.sg/2009/03/restoran-cheng-ho-amy-search-will-it-be.html.
29 Panda, Ankit, US Finalizes Sale of Perry-class Frigates to Taiwan, dated 20 December 2014 in
The Diplomat [downloaded on 8 January 2015], available at http://thediplomat.com/2014/12/

us-finalizes-sale-of-perry-class-frigates-to-taiwan/.
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Java ... Later, Chinese admiral Cheng Ho, emissary of the Chinese
emperor visited Palembang in the 15th century.30
Three points are important from this narrative: (1) It indicated clearly
that China was not the only source of visitors nor the first visitors to
Indonesia. Others from India and kingdoms from within Indonesia traveled
to Srivijaya; (2) Ming Chinese were also not the first to chronicle travels to
Srivijaya. According to this narrative, Buddhist monks studied Sanskrit in
Palembang enroute to India and traders were also active in the region before
the appearance of Zheng He; (3) Zheng visited in 15th century, he was a
relative latecomer when compared to Southern Indian empires’ representa-
tives and early Chinese monks and traders. Another official tourism site
introduced the Zheng He temple at Semarang. I will discuss this website later
in the section dedicated to this Semarang temple.

Background of Zheng He temples in Indonesia. In these maps and the nar-
ratives I collected, Indonesia located in the far periphery of the Sino-centric
world had often briefer mention compared to Ming–Malacca relations in the
historical narratives. The materials that I collected tended to emphasize
Malacca’s Parameswara’s foresight in asking for the protection of Ming China
symbolized Zheng He’s ships in contesting the strength of the Majapahit
Empire and the Kingdom of Siam. Eventually, after Zheng He’s voyages
stopped, Malacca grew into a great regional power. Viewed from the periph-
ery’s perspective, narratives related to Zheng He can still be found in local
interpretations of his journeys.
Singapore Ambassador to Indonesia Lee Khoon Choy’s important publi-
cation on overseas Chinese and their descendants also mentioned about
Admiral Zheng He traveling to Southeast Asia with 63 treasure ships and left
behind crews in the stopover ports.31 According to Lee, during his tenure as
Singapore’s ambassador to Indonesia, he found out that half a millennium
ago, most Chinese Peranakans were converted to Islam due to the arrival of
Zheng He and nine religious figures Wali Songo (eight of them were Chinese)
30 Tourism of Indonesia i Norsk, Tourism of Indonesia i Norsk, dated 29 December 2011 in the
Tourism of Indonesia i Norsk website [downloaded on 23 December 2014], available at http://
tourism-n.jazz.or.id/category/sumatra/page/3/.
31 Lee, Khoon Choy, Golden Dragon and Purple Phoenix. Singapore: World Scientific, 2013, vii.
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78 Lim Tai Wei
associated with his travels assisted in resisting and eventually overthrowing the
Hindu kingdom of Majapahit.32 Paralleling Lee’s account, Robert W. Hefner,
an expert on the subject matter of politics of multiculturalism, noted the
significance of Chinese traders in conducting trade between the 15th and

17th centuries and an important legacy is that several of the Muslim “saints”
(wali) were Chinese or half-Chinese.33 In terms of material artefacts in
Indonesia to support Zheng He and his followers’ presence in the archipelago,
there are temples dedicated to commemorate Admiral Zheng He. The Jakarta
Post ran an article on 17 November 2000 highlighting the Klenteng Sampo
constructed for Admiral Zheng He (1371–1435) in the following narrative:
The people of Semarang believe that Zheng He and his fleet landed on the
30th day of the sixth month of the lunar year but in which year that
actually was is unclear. The event is commemorated every year with a big
procession — complete with dragon and lion dances accompanied by
deafening music — from Tay Kak Sie, Semarang’s other main temple, to
Gedung Batu.34
The article noted the political nature of these celebrations, pointing out
that Suharto’s regime did not permit the festivities to go on and it was only in
the year 2000 that the celebrations returned after the fall of the Suharto
regime.35 (An Asian financial crisis that occurred 3 years before this article,35
contributed to the downfall of a strongman regime in Indonesia that ruled for
decades.) The origins of the temple is attributed to Zheng He’s followers.
According to The Jakarta Post’s narrative, Zheng He’s helmsman Wan
Jin-Hong was sick and Zheng He let one of his ships remain in Indonesia
32 Lee, Khoon Choy, Golden Dragon and Purple Phoenix. Singapore: World Scientific, 2013,
xii–xiii.
33 Hefner, Robert W, “Introduction: Multiculturalism and Citizenship in Malaysia, Singapore,
and Indonesia” in The Politics of Multiculturalism edited by Robert W. Hefner. Honolulu:

University of Hawaii Press, 2001, 18.
34 The Jakarta Post, Semarang’s Temple, A Tribute to Adm. Zheng He, dated 17 November 2000
in The Jakarta Post [downloaded on 26 November 2014], available at http://www.thejakarta-

post.com/news/2000/11/17/semarang039s-temple-a-tribute-adm-zheng-he.html.
35 Ibid.
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and allocated 10 crew members to tend to Wan.36 Known locally as Kyai

Juru Mudi, Wan resided in Semarang where he was healed, grew crops and
used a marine vessel to meander coastal areas for trade.37 His followers mar-
ried locals and this was the start of a community that expanded as the
Muslim follower Wan spread the religion to the community in honor of
Admiral Zheng He and even built a mosque at the cave where he was located
before passing away at 87.38 The mosque was rebuilt as a temple and became
Klenteng Sampo.
The Jakarta Post’s information on the Semarang temple corroborated
with the information that I located in the official Indonesian tourism site.
The following narrative from the official Indonesian tourism website
explained how the temple was restored a number of times, eventually becom-
ing a fixture for Indonesian heritage tourism:
The first and second restorations took place in 1879, financed by the wealthy
Oei Tjie Sien, who took over possession from Yam Hoo Loo, and made the
complex open to the public. The temple underwent further restorations in
1937 and new additions were added to the structure such as the gate, the
sacred garden and the main lobby. In March 2011, a bronze statue of Admiral
Cheng Ho was erected within the temple. The statue stands over 10 meters
high and weighs nearly 4 tons, and is an icon of Semarang Tourism.39
The tourism caption is interesting as it mentioned how upkeep of the

temple passed on from religious villagers and community-based leadership to
wealthy Chinese merchants. Access to the site was then opened to the public
realm and a gap in development of the temple grounds occurred during the
long-reigning autocratic Suharto regime weary of Chinese cultural influence.
After the collapse of this regime, with the introduction of democracy to
Indonesia, ethnic Chinese once again installed large Cheng Ho statues and
36 Ibid.
37 Ibid.
38 Ibid.
39 Ministryof Tourism, Republic of Indonesia, The Sam Poo Kong Temple of Semarang: dedi-
cated to Chinese Admiral Cheng Ho, dated 2013 in the Wonderful Indonesia website [down-
loaded on 23 December 2013], available at http://www.indonesia.travel/en/destination/560/
the-sam-poo-kong-temple-of-semarang.
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80 Lim Tai Wei

Figure 2: The local marketplace at Semarang. (Photo included here with the permission of
Chia Lin Sien)
fixtures to the temple grounds. It is a story of multiple identities for a site that
is nominally associated with Zheng He (built by his followers40) and then
developed a hybridized identity with its mixed heritage of Chinese–Malay
Muslim origins. It was eventually integrated into an ethnic Chinese Taoist facil-
ity funded by ethnic Chinese merchants. The same website also mentioned
that a festival is held on the temple grounds to celebrate Zheng He’s birthday
on the 29th of Lak Gwee in the Chinese lunar calendar.41 I am including some
photos of the temple with the permission of their photographer, Chia Lin Sien.
Other than Jakarta, there are Zheng He-related intangible representa-
tions and physical heritage that I located in other parts of Indonesia, e.g. in
40 The Ministry of Tourism’s website mentioned that the foundations of the temple were built
by Admiral Zheng He himself: “The temple foundations were first built by Admiral Cheng Ho,
elsewhere better known as Admiral Zheng He — a Muslim explorer from Mainland China. He
arrived in Java sometime between the years 1400 and 1416, although the exact year is disputed.
Finding a small cave in a rocky hillside, Cheng Ho used the site for prayer and later built a small
temple in its place.” (Source: Ministry of Tourism, Republic of Indonesia, The Sam Poo Kong
Temple of Semarang: Dedicated to Chinese Admiral Cheng Ho, dated 2013 in the Wonderful
Indonesia website [downloaded on 23 December 2013], available at http://www.indonesia.
travel/en/destination/560/the-sam-poo-kong-temple-of-semarang).
41 Ministry of Tourism, Republic of Indonesia, The Sam Poo Kong Temple of Semarang:
Dedicated to Chinese Admiral Cheng Ho, dated 2013 in the Wonderful Indonesia website
[downloaded on 23 December 2013], available at http://www.indonesia.travel/en/destina-
tion/560/the-sam-poo-kong-temple-of-semarang.
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Figure 3: Here, the large Zheng He statue is visible peering down on visitors to the entrance
of the temple. (Photo included here with the permission of Chia Lin Sien)
Figure 4: A close-up of the Admiral Zheng He statue standing outside the temple. (Photo
included here with the permission of Chia Lin Sien)
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82 Lim Tai Wei

Figure 5: An Indonesian interpretation of a traditional Chinese gate with the name “Sam
Poo Kong (The Three Treasures Admiral)” referring to Zheng He embossed on the gate-plate.
(Photo included here with the permission of Chia Lin Sien)
Figure 6: A large sign with the words “Sam Poo Kong” installed above an open-air car park
at the temple grounds. (Photo included here with the permission of Chia Lin Sien)
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Figure 7: An imperial palace-like structure in the temple which seems to have been
renovated relatively recently. (Photo included here with the permission of Chia Lin Sien)
the Riau Archipelago. Some of the photos that I captured are discussed in the
following sections.
These temples may be part of what Tan Ta Sen described as the “… cult
of Cheng Ho, which is a purely Overseas Chinese invention, very popular
and widespread among the Chinese communities in Southeast Asia”.42 In
addition, for fans to worship Zheng in a cult-like manner, it also requires the
religion of Taoism to be flexible in accommodating the spirituality as well as
theological grounds to deify the mortal admiral. Besides static display in a
local temple, in 2012, the city of Batam organized the Chinese Peranakan
Festival at Kepri Mall from 2 to 4 November 2012. The narrative of Admiral
Zheng was weaved into the event:
However, after the arrival of Admiral Zheng He (or better known in

Indonesia as Admiral Cheng Ho), Chinese influence became more wide-
spread and more immigrants came in Indonesia. Today, large communities
of Chinese can be found in Singkawang in West Kalimantan, on the islands
Studies, 2009, 252.
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84 Lim Tai Wei

Figure 8: In my fieldwork in Batam (September 2014), I came across large figurine representa-
tions of Zheng He, his followers and ship in a Tua Pek Kong and Confucius (The Klenteng Nabi
Khong Hu Cu located at Block VI Lubuk Baja Batam) temples in Batam
Figure 9: This picture shows a comprehensive side view of the ship found in my fieldwork
in Batam (September 2014)
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of Bangka and Belitung, Palembang in South Sumatra, Medan, North

Sumatra, in Jakarta, and along the north coast of Java.43
Like other materials that I found, a commonality amongst Zheng He

narratives is that they appear to assume an ahistorical approach to his voy-
ages, casting the journeys as a symbolic start to massive Chinese migration to
a particular region (in this case, Indonesia). Experts lend historicity to their
accounts in this area. Senior Curator of the Asian Civilisations Museum
Singapore, Ms Heidi Tan pointed out the following:
The Chinese were very keen on importing exotic products such as

Kingfisher feathers, resin, bees wax and Kemenyang (aromatics such as
benzoin or camphor) which they used for incense. So the Chinese com-
munities settled early on, particularly after the voyages of Zheng He, the
imperial eunuch, during 14th century. Zheng He had established tributary
trading connections between local rulers and Chinese emperors. Peranakan
origin can be traced to these early Chinese settlers.44
In this account, traded items as well as dates are added into the narrative.
Outside museum and curatorial narratives, consciousness of the linkage
between Zheng He and the Peranakan community in Southeast Asia is not
strong although the latter’s cultural heritage remains visible publicly, espe-
cially in Singapore, Malacca and Penang. In my fieldwork in Singapore,
I visited locations and collected relics related to the Joo Chiat (an area where
the Peranakan community in Singapore used to reside) heritage trail.
Heritage related to Peranakan culture is rich, textured and colorful, playing
an important part of the cherished multicultural narrative in Singapore.
43 Wonderful Indonesia Indonesia’s Official Tourism Website, The Chinese “Peranakan”
Cultural Festival in Batam, dated 4 November 2012 in the Wonderful Indonesia website [down-
loaded on 26 November 2014], available at http://www.indonesia.travel/en/event/detail/566/
the-chinese-peranakan-cultural-festival-in-batam.
44 Lalwani, Bharti, Cross-cultural Influences Shape the Island of Sumatra, dated 2 November 2010
in Focus, Magazine Culture360.org website [downloaded on 26 November 2014], available at

http://culture360.asef.org/magazine/cross-cultural-influences-shape-the-island-of-sumatra/
#sthash.JbQiXkIY.dpuf.
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86 Lim Tai Wei

Figure 10: This handcrafted mooncake mould was purchased in a shop in Joo Chiat that is
listed as an outlet that still sell Peranakan traditional utensils and kitchenware (collected
during author’s fieldwork in November 2014)
Figure 11: Left photo: this is a picture of Peranakan houses that the author took during his
fieldwork in Singapore’s Koon Seng Road in November 2014. The photo on the right shows
the Baba House, a former Peranakan residence that has been converted into a private museum
owned by the NUS
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Figure 12: These are some traditional Peranakan kueh pastries that the author acquired
during his fieldwork in Singapore’s Orchard Road in November 2014
Figure 13: Peranakan tiles on heritage buildings (from author’s fieldwork in November 2014)
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88 Lim Tai Wei
Another interesting indirect link between Peranakans and the Cheng Ho

narrative can be found in Cheu Hock Tong’s interesting thesis on Malay kera-
mats. This thesis is made available online by the Faculty of Arts of the NUS.
Cheu cited the character Sam Poh Neo Neo (known as Sanbao Niang-niang
in Chinese, Datuk Puloh Besar in Malay, and the Granny of Pulau Besar in
English) as evidence of this indirect connection (Note: Puloh Besar is an island
off Malacca).45 An artistic interpretation of this character is found in Sam Poh
Neo Neo Keramat which features a basket prop on display in Sam Poh Neo
Neo Temple that belonged Datuk Bakul (Basket Granny), a character possibly
based on a Malay-Muslim consort of Sam Poh Kong.46 The word Sanbao
refers to Cheng Ho whose deified form is immortalized as Sam Poh Kong
(Sanbao Gong) in Singapore, Malacca, Penang and Trengganu.47 According to
Cheu, the Ming-era (1368–1644) textual documents of Dongxiyang Kao
(Explorations of the Eastern and Western Oceans) and the Qiongzhoufu Zhi
(Hainanese Records, Vol. 8) support the idea of Chinese worshipping the Malay
keramat with the Straits Chinese taking a lead in this aspect.48 Cheu argues
that Chinese worship of Malay keramats eventually gave rise to a Datuk Kong
cult which was hybridization of traditional Chinese locality deities with Malay
keramat culture and a balance between Chinese and Malay spiritual worlds.49
Outside some selected narratives that connect Peranakan history with
Zheng He’s voyages, most other Zheng He-related narratives are commercial
in nature. Unrelated to the Peranakan heritage, in other parts of Singapore,
there are some historical representations of Zheng He located in sites that
reconstruct images or symbols of his voyages.
It is important to note that the Straits Settlements during the colonial
period (Penang, Melaka and Singapore) should not be construed as the only
nucleus of Peranakan traditions. Peranakan heritage and tradition is also very
strong in Java — including Soerabaya, Semanang, Bintang and elsewhere in
45 Cheu, Hock Tong, Malay Keramat, Chinese Worshippers: The Sinicization of Malay
Keramats in Malaysia Academic Session 1996/97 [downloaded on 8 December 2014] in the
Faculty of Arts National University of Singapore website. Singapore: Department of Malay
Studies National University of Singapore, 1997, 17.
46 Ibid., 16.
47 Ibid., 17.
48 Ibid., 16.
49 Ibid., 15–16.
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Figure 14: I took this photo of a Datuk Kong shrine located in Tiong Bahru in front of its
reconstructed market complex on 8 December 2014
Java. Local conditions shaping the emergence of Peranakan cultures in these

areas need to be studied here as well.
Zheng He or Cheng Ho’s symbols, signifiers and representations appear
to be closely related with commercial concerns. In Singapore’s leisure indus-
tries, a private enterprise Singapore Tours borrows the name “Cheng Ho” for
their cruise services. Unintended to be historically accurate, the program of
the cruise read: “You will board on a duplicate of the ancient ship of Chengho
which sailed from China to Europe.”50 The commercial flavor of this Zheng
He/Cheng Ho narrative is visible. The statue donation arose from the com-
mercial success of an entrepreneur while the tour narrative for the cruise
promises an experience retracing Zheng’s journey through an imagined
recreation of that experience. Other tour operators affiliated with this tour
were more conservative in their narration of the commercial tour:
Sail through the Straits of Singapore on Chinese junks just as the original
settlers did in the early days. Take your pick of the ‘Morning Glory’,
50 Singapore Tours,Admiral Cheng Ho Cruise, dated 2010 in the Tours in Singapore.com web-
site [downloaded on 30 November 2014], available at http://www.toursinsingapore.com/singa-
pore-sightseeing/admiral-cheng-ho-cruise.html.
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90 Lim Tai Wei

Figure 15: A Datuk Kong shrine found at Beo Crescent Singapore. I took this picture on 14
December 2014
‘Dragon’, ‘High Tea’ or ‘Imperial Dinner’ cruise on authentic replicas of

original China vessels for two and a half hours either in the morning,
afternoon or evening.51
In this quotation, the promise of an authentic historical journey and recre-

ated vessel cannot be found. Instead, it relates the journey to the pioneering
ethnic Chinese sojourners who came to Singapore although the “early days”
phrase is not well-defined historically. It is probably referring to the late
51 ComeSingapore.com, Cheng Ho Cruise, dated 2010–2011 in the ComeSingapore.com

website [downloaded on 30 November 2014], available at http://comesingapore.com/tourist-
directory/review/278/cheng-ho-cruise.
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Figure 16: The statue of Zheng He stands in the Chinese garden in Singapore, donated
by an entrepreneur who derived his wealth from manufacturing and selling popiah skin
(a popular rolled product in Singapore). From author’s fieldwork collection in Singapore in
October 2014
Qing period. In other words, the experience is probably related to a traditional

Chinese junk rather than a reconstructed Ming-era vessel belonging to Zheng
He’s expedition. I called the Cheng Ho cruise agents to book a ride on 30
November 2014 but was informed that the company had stopped operations
three months prior to my phone call. The cause of the shutdown was unknown.
Besides private donations and commercial ventures, commemorative
events are also held in Singapore. For example, Singapore celebrated the
600th anniversary of Zheng He’s maiden voyage in 2005 by installing the
Dragon’s Teeth Gate replica display near Labrador Park. For my fieldwork,
I visited the park on 12 October 2014. There is a meaningful and important
reason for the commemoration event.
“Singapore’s port is very well known but there is nothing to showcase our
maritime achievements, both to the locals as well as tourists,” said STB’s
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92 Lim Tai Wei
assistant director for culture and heritage, Ms Goh Kershing. “Cheng Ho’s
anniversary gave us an opportunity to highlight this heritage.”
This was an interesting use of narratives about Zheng He for a multitude

of purposes. Interestingly, Longyamen (Dragon’s Teeth Gate) itself is not
primarily associated with Zheng He but with a trader. Here is how the
National Heritage Board of Singapore narrated the presence of Longyamen
in Chinese historical consciousness:
During the 14th century, the ancient mariner and trader Wang Da Yuan is
said to have sailed through this passageway. In this travel tales, he recorded
that the Fujian mariners knew these two rock outcrops as “Lung ya men”
or “Dragon’s Teeth Gate” because they reminded the mariners’ of the two
pegs at the bow of their ships, between which passed the ropes of the ships’
anchor. These two pegs were known to the mariner’s as “Dragon’s Teeth”.
(Copied from site inscription by the author during his fieldwork trip to the
former Dragon’s Teeth Gate on 12 October 2014)
This example indicated that commemoration was independent of the

historical narrative that indirectly linked Zheng with the rock. The Singapore
National Library Board (NLB)’s collection has several books related to Wang
Da Yuan’s study of Singapore. Its own write-up considers Wheatley’s work to
be an influential English-language source.
Wang’s account of Singapore has been translated several times; the most
commonly available translation is by Wheatley [6]. Wang mentions three
place names in conjunction with Singapore. The first is Temasek, which
refers to the general area of Singapore and the nearby islands. The second
is Longyamen, which means “Dragon’s Tooth Strait” in Chinese. The third
is Banzu, which is named after the Malay word pancur (“spring of water”).52
52 NationalLibrary Board (NLB), Wang Dayuan 1349, dated 2014 in the NLB eresources
website [downloaded on 8 December 2014], available at http://eresources.nlb.gov.sg/history/
events/61d49d33-d5cd-48fc-b91b-652ca64e87c4. This article also quoted: Wheatley, P. The
Golden Khersonese: Studies in the Historical Geography of the Malay Peninsula before A.D. 1500.
Kuala Lumpur: University of Malaya Press, 1961, 301.
b2432_Ch-07.indd 92 15/7/2016 7:50:36 PM

While Longyamen was not directly discovered by Zheng He, its

naming by Wang in the late Yuan dynasty was linked to the 600th anni-
versary of Zheng He’s voyages through Chinese navigational traditions and
histories. Longyamen was in fact known as Batu Berlayer (“Sailing Rock”)

to the local Malays. At the same time, however, the link between Admiral
Zheng He and the rock, according to a Straits Times narrative, was Zheng’s
possible use of the rock for navigational purpose.53 Other than heritage
and tourism establishments, there is a group of Zheng He enthusiasts in
Singapore.
The admiral’s records of his epic travels show that Singapore has always
been one of the greatest ports in the world, said the secretary of the Friends
of Admiral Zheng He Society, Mr Chung Chee Kit.54
According to the same report, the Society, founded in 2003 by fans of

Zheng, had around 40 members in 2005.55
Singapore’s initiative to commemorate the 600th anniversary of
Longyamen was also reported by the Xinhua News agency that quoted the
tourism chief of Singapore in the following passage:
“In the Zheng He celebrations, we celebrate a mariner who was larger than
life. He transcended boundaries in his voyages,” Lim [Neo Chian, Chief
Executive of Singapore Tourism Board] added. “These celebrations demon-
strate the strong influences that Zheng He left in the region”.56
This example indicated the convergence of tourism initiatives, historical

narratives and media interests. In Singapore, besides institutional narratives,
public intellectuals and local history fans also engaged in Zheng He-related
53 Sim, Glenys, ‘Dragon’s tooth’ Replica to Mark Anniversary of Chinese Explorer dated 23
March 2005 in The Straits Times [downloaded on 30 November 2014], available at http://www.
wildsingapore.com/news/20050304/050323-2.htm.
54 Ibid.
55 Ibid.
56 Xinhua News Agency, Singapore Recreates Longyamen to Commemorate Zheng He’s Epic
Voyages, dated 7 September 2005 in Zhongguowang website [downloaded on 8 December

2014], available at http://www.china.org.cn/english/culture/141058.htm.
b2432_Ch-07.indd 93 15/7/2016 7:50:36 PM

94 Lim Tai Wei

Figure 17: Left photo of the signboard pointing towards Longyamen taken by the author
during fieldwork on 12 October 2014. Right photo shows the view towards the Singapore
Straits at the Longyamen site, taken during author’s fieldwork on 12 October 2014
conversations. My survey of online materials also indicated the presence of

some narratives linking Zheng He to Mazu worship. I decided to see if it is
possible to find out any such links in some of Singapore’s oldest Taoist tem-
ples. I visited four of Singapore’s oldest Taoist temples for clues on 7
December 2014 Sunday morning. Some of these temples were also associated
with the Hokkien Huay Kuan which runs the Thian Hock Keng temple
where a Mazu idol is located. I started fieldwork, not with an archaeologist
perspective but a historian of narratives, it did not matter if there were no
documentation or artefacts showing a link between Zheng He and Mazu rel-
ics, but rather, I was interested to find out if there were consciousness amongst
devotees or temple guardians of such a link either through hearsay or legends.
I started the research with Jinlan Miao at the Tiong Bahru area, then pro-
ceeded to the Taiyang Gong and Chia Leng Kong. At Jinlan Miao, I was
advised to go to Thian Hock Keng if I wanted to see a Mazu idol. It was at
Taiyang Gong that I was told they had a Sam Poh Buddha but was given the
explanation that this was a Buddhist god and had little to do with Sam Poh
Kong which was the deified personification of Zheng He. I was unable to
detect further links related to Zheng He or Mazu when speaking to devotees
and temple guardians in casual, random and unstructured oral conversations.
I also spoke to shopkeepers who sold traditional Chinese offerings if they had
heard of anyone buying offerings for praying to Cheng Ho and the reply was
b2432_Ch-07.indd 94 15/7/2016 7:50:36 PM


Figure 18: In the modern period, a light house beacon used to stand near Longyamen to
guide ships towards Singapore through the straits channel, indicating the possible importance
of the Longyamen landmark as a navigational tool (picture taken by author during fieldwork
on 12 October 2014)
in the negative. The brief fieldwork finding was different from an online
source related to the Thian Hock Keng temple where a user indicated such a
link. The context in which the connection between Zheng He and Mazu was
raised is detailed in the following text. In 2007, the Taoism Singapore Forum
engaged in online debates, amongst which included the question of whether
the Thian Hock Keng Temple intended to revive Taoist cultural practices
through practicing rites associated with this religion.57 Some selected texts of
57 Taoism Singapore Forum User Javewu, Title Thian Hock Keng Temple, dated 12 June 2006
in the Taoism Singapore Forum website [downloaded on 7 December 2014], available at http://
z14.invisionfree.com/taoism_singapore/ar/t513.htm.
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96 Lim Tai Wei

Figure 19: A reconstruction of Longyamen (Dragon’s Tooth Gate) in Labrador Park with
Keppel Harbor and Sentosa Island in the background (photo taken by Chia Lin Sien). [Both
photo and caption are reproduced here with Dr Chia Lin Sien’s permission.] Photo and text
were also previously published here: International Zheng He Society, “605th Anniversary
Conference — Zheng He and the Afro-Asian World: An Update” dated 1 July 2009 in the
International Zheng He Society Newsletter [downloaded on 12 December 2014], available at
http://www.chengho.org/newsletter/2009-Jul-01.php
the online discussion from a user by the nickname of “javewu” are highlighted
as follows:
… The temple building resonated with the rhythm of the drums, gongs,
cymbals and na (Chinese version of the oboe, or something like that),
giving us the atmosphere of the temple events that must have witnessed
such gathering in the past hundreds of years. Through this ancient
music, we were linked to our ancestors, bound together in appreciating
the wonders of Mazu as she guided so many Chinese coming to Nanyang.
The famous Cheng-Ho (Zheng He) is said to have Mazu in his wooden
ships and whenever they encountered fierce storms, they would pray to
her for guidance, and it was said that the sea would then calm down
again.58
58 Ibid.
b2432_Ch-07.indd 96 15/7/2016 7:50:37 PM


Figure 20: The author ascended the Henderson Waves Bridge which is located at over 70
meters above sea-level at its highest point and glanced down upon the stretch of sea which
Zheng He may have traversed near the Longyamen that is located behind the cluster of sky-
scrapers (fieldwork done on 6 December 2014)
While I could not find links between Mazu and Zheng He in my search,
I was able to locate a golden Mazu idol in my fieldwork in my last stop which
was the Kai San Temple. There is, however, no association with Zheng He,
from my understanding after speaking with devotees and temple guardians.
On 12 December 2014, I tried to follow leads of possible Cheng
Ho-related temples in Singapore after I got to know of an online source that
revealed the old name of the current Hong Sun Tan Temple [Address: 17
Woodlands Ind Pk E4 S(757750)], which was formerly known as the Sam
Poh Keong Temple.59 I investigated further to see if the “Sam Poh Keong”
designation had any relationship with Cheng Ho but to no avail. The Hong
Sun Tan Temple is a Taoist facility that worships the Cult of Guangze
59 Timothy,Chinese Temples in Singapore, dated 13 April 2009 [downloaded on 12 December

2014] in the Timothy website [downloaded on 12 December 2014], available at https://oattao.
netfirms.com/slowloris9/taoism/temples.htm.
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98 Lim Tai Wei

Figure 21: The Golden Mazu idol at Kai San Temple from author’s photos taken on 7
December 2014
Junwang and researchers interested in this topic should read Jack Chia Meng
Tat’s detailed thesis.60 Even this detailed thesis did not explain the signifi-
cance of the online source of the original name of Hong Sun Tan Temple.
I therefore concluded that this lead did not constitute any significance for the
subject matter in this writing.
Therefore, it appears any reference to Zheng He in Singapore is probably
based on historical texts, commercial marketing efforts or state-linked com-
memorative initiatives (e.g. the Longyamen narratives) rather than hearsay,
legend or religious narratives.
60 Chia,Meng Tat Jack, Sacred Ties Across the Seas: The Cult of Guangze Zunwang and its
Religious Network in the Chinese Diaspora, 19th Century 2009. A Thesis Submitted for the
Degree of Master of Arts. Singapore: Department of History National University of Singapore,
2009.
b2432_Ch-07.indd 98 15/7/2016 7:50:38 PM

Malaysia. In Malaysia, fans of the deity and historical figure, Zheng He,
organized themselves into an International Zheng He Society. They raised
funds, restored shophouses, preserved Ming relics and established a museum.
The following passage is extracted from the Society’s website:
Today, the eight shophouses have been completed rebuilt and modeled
after historical accounts of what the guanchang looked like. The Cheng Ho
Cultural Museum now occupies the premises and a soft opening took place
on 28 Sept 2005. Dr Tan’s inspiration has become reality in the shape of a
first-rate museum (details can be viewed in the pdf files in this website).
The Museum has sections that traces the life of Zheng He, the historical
background from which he emerged as a high ranking official in the Ming
Court; the ships in his mighty fleet; navigational and communications
tools and techniques; the cargo carried including ceramics, urns for storing
food, traded products and items carried as gifts and tributes; a collection of
highly-valuable ceramic pieces; voyages of well-known western pioneering
maritime explorers including Vasco Da Gama, Christopher Columbus,
Capt James Cook, and other exhibits.61
From this passage, it appears Zheng He-related history buffs are more
institutionalized in Malaysia compared with Indonesia where the subject of
the Admiral is more closely related to religious and community identities and
compared with Singapore where narratives are generated mostly by heritage/
tourism-related personnel and commercial outfits.
Besides institutional entities, geographical features related to Zheng He
can also be located. According to Cheu Hock Tong’s thesis, there is a cave in
the periphery of Ipoh (Perak) known as Sanbao Dong named after Zheng He
with similarly named caves located in Semarang (Java) off Acheh (Sumatra)
and Bangkok.62 Similarly, in cyberspace, I was able to locate Malaysian
accounts of local legends in other rural areas of Malaysia. Narratives about
61 International Zheng He Society, About Our Society, undated in the International Zheng He
Society [downloaded on 7 December 2014], available at http://www.chengho.org/aboutus.php.
62 Cheu, Hock Tong, Malay Keramat, Chinese Worshippers: The Sinicization of Malay
Keramats in Malaysia Academic Session 1996/97 [downloaded on 8 December 2014] in the

Faculty of Arts National University of Singapore website. Singapore: Department of Malay Studies
National University of Singapore, 1997, 17.
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100 Lim Tai Wei

Figure 22: These are the Malaysian Musang King (Civet Cat King in English; Mao Shan
Wang in Hanyu Pinyin) one of the priciest durians in the open market
Zheng He can also be found in commercial websites, including the one writ-
ten by an individual named Kelvin Liew Peng Chuan from Tanjong Tokong,
Penang, Malaysia who described how local fishermen in Batu Maung were
able to recall Sam Poh Kong’s life in detail without realizing this was the dei-
fied name of Zheng He.63 Liew wrote about farfetched local old wives’ tales
related to Zheng He, including one about the origins of a popular Southeast
Asian fruit, the durian:
… being a newcomer to the island, he wanted so much to explore ... They

went on foot, as the local narration goes, and half way through, he had to
answer nature’s call. A refined man as he, he defecated on a cloth and hung
it high above a tree so that it will not soil any passing man or animal ... That
tree later bore fruits ... The fruits turned out to be durians ... Due to that
too, until today, Penang Chinese would use any fruits but durians for
prayer offerings.64
Local legends like these add color to Zheng He narratives that are other-
wise limited to mostly historical and heritage accounts. The following picture
shows the shape and form of a Malaysian durian fruit.
63 Liew, Peng Chuan Kelvin, Admiral Cheng Ho: Man in the Past, Divinity in the Present dated
2009 in the Penang Heritage City website [downloaded on 9 December 2014], available at
http://www.penangheritagecity.com/admiral-cheng-ho-man-in-the-pastdivinity-in-the-present.
html.
64 Ibid.
b2432_Ch-07.indd 100 15/7/2016 7:50:38 PM

The International Zheng He Society newsletter dated 1 October 2009

also talks about Zheng He’s heritage representation in a temple in Batu
Maung on the southeastern end of Penang Island near the Fishing Port,
including a painting of Zheng He and his treasure ships on a cliff, an imprint

representing his footprint on the ground with coins strewn onto it.65 Some
photographs of the Batu Maung site are as follows:
Interestingly, a New York Times article appeared on 18 December 2014
which appears to imply that some Malaysian intellectuals and private sector
businessmen in Malaysia and Singapore are claiming ownership over Zheng
He’s existence and associating him with the Straits of Malacca as much as he
is linked symbolically with China.66 These initiatives by Southeast Asians
also attracted the attention of the Chinese leadership. In 2013, an elite
Chinese Communist Party (CCP) political figure Jia Qinglin visited the
Cheng Ho Cultural Museum in Malacca which is run by an eminent

Singaporean scholar and public figure in Zheng He-related history.67 The
fact that Chinese leadership officials have shown interest in Zheng He and
Malacca is not surprising, given repeated statements by Beijing that China
intends to become a maritime nation, an ambition that is greeted with fear,
caution and welcome by different quarters in East Asia. The article contained
interesting narratives by stakeholders in Malaccan history. It featured narra-
tives by Zheng Yijun (historian at the Institute of Oceanology Chinese
Academy of Sciences) who said that Zheng He started to influence local
lifestyles like introducing Chinese clothes and backed the Malacca kingdom
against a much stronger Thai kingdom and also David Khor (museum guide)
who provided his own perspective that Zheng He’s patronage of Malacca and
his presence helped to put Malacca on the navigational map of the known
world of trading nations at that point of time.
These two individuals represented different kinds of interest in the nar-
rative of Zheng He. One is located in a circle related to tourism, heritage and
65 InternationalZheng He Society, Zheng He Temple in Batu Maung, Penang Island, dated 1

October 2009 in the International Zheng He Society Newsletter [downloaded on 10 December
2014], available at http://www.chengho.org/newsletter/2009-Oct-01.php.
66 Wong, Edward, Celebrating the Legacy of a Chinese Explorer, dated 18 December 2014 in
The New York Times [downloaded on 24 December 2014], available at http://www.nytimes.

com/2014/12/19/world/asia/celebrating-the-legacy-of-a-chinese-explorer.html?_r=0.
67 Ibid.
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102 Lim Tai Wei

Figure 23: Painting of Zheng He on the cliff side with his treasure ship (photo taken by
Dr Chia Lin Sien, used with permission). The photos are also published here: International
Zheng He Society, Zheng He Temple in Batu Maung, Penang Island dated 1 October 2009
in the International Zheng He Society Newsletter [downloaded on 10 December 2014], avail-
able at http://www.chengho.org/newsletter/2009-Oct-01.php
Figure 24: Traditional Chinese arched gateway to the Cheng Ho Sam Poh Kong (Zheng He
Temple). (Photo taken by Dr Chia Lin Sien used with permission here.) The photo is also
published in: International Zheng He Society, Zheng He Temple in Batu Maung, Penang
Island, dated 1 October 2009 in the International Zheng He Society Newsletter [downloaded
on 10 December 2014], available at http://www.chengho.org/newsletter/2009-Oct-01.php
b2432_Ch-07.indd 102 15/7/2016 7:50:38 PM


Figure 25: Shrine that deifies Cheng Ho, guarded by two Chinese stone lions with red
lanterns hung at the top of the entrance. At the side of the shrine, green porcelain bamboo-
shaped architectural accessory is visible. The roof of the temple is covered with Shiwan-like
porcelain tiles. (Photo taken by Dr Chia Lin Sien used with permission here.) The photo is
also published in: International Zheng He Society, “Zheng He Temple in Batu Maung, Penang
Island” dated 1 October 2009 in the International Zheng He Society Newsletter [downloaded
on 10 December 2014], available at http://www.chengho.org/newsletter/2009-Oct-01.php
historical interest groups and the other is a professional academic from a state
research institution. The former represent interests that commensurate with
the leisure, tourism and entertainment industries in other Southeast Asian
countries featured in the writing, which are appropriating Zheng He’s
biographical and navigational histories for profit-making, arousing visitor
interest and cultural awareness. The latter is interpreting Zheng He through
research and documentation that may or may not be eventually weaved into
official histories and perspectives of history. Given the Academy is a ministe-
rial-level organ in China, narrated histories may sometimes become possible
references or views about a certain topical area. Both represent narratives that
contribute to a grand narrative about Zheng He forwarded by international
stakeholders in the subject area.
There are a number of important and interesting directions for
near-future Zheng He-related research. In the arena of arts and culture, for
example, utilizing aesthetics observations studies, interpretive art historical
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104 Lim Tai Wei

Figure 26: Cheng Ho deity inside the temple, flanked by two sides of circular windows with
green bamboo-shaped porcelain grills. The author could not locate a similar Cheng Ho shrine
in Singapore’s coastal areas. (Photo taken by Dr Chia Lin Sien used with permission here.)
The photo is also published here: International Zheng He Society, Zheng He Temple in Batu
Maung, Penang Island, dated 1 October 2009 in the International Zheng He Society
Newsletter [downloaded on 10 December 2014], available at http://www.chengho.org/
newsletter/2009-Oct-01.php
ideas as well as preliminary scoping work, there are narratives of the impact
of Zheng He’s journeys on Southeast Asian culture. One candidate (currently
a conjecture) named in this area is the Saman dance. However, a check with
the official interpretation of this art form with Wonderful Indonesia which is
the government’s official tourism website reveals that the current interpreta-
tion of this art form is an indigenously-developed Acehnese traditional dance
created by the religious leader Sheikh Saman in the 16th century,68 therefore
more work needs to be done to translate, interpret and research on the cul-
tural and historical backgrounds and influences received by the dance’s
originator. It is important to state the limitation that traditional and popular
68 Discover Indonesia, Aceh’s Best: The Saman Dance, dated 2013 in Discover Indonesia
Ministry of Tourism, Republic of Indonesia [downloaded on 8 January 2015], available at
http://indonesia.travel/en/destination/494/banda-aceh/article/42/aceh-s-best-the-saman-dance.
b2432_Ch-07.indd 104 15/7/2016 7:50:39 PM


Figure 27: The mythical “footprint” of Cheng Ho with some coins thrown into it for
heralding luck and prosperity. (Photo taken by Dr Chia Lin Sien used with permission here.)
The photo is also published here: International Zheng He Society, Zheng He Temple in
Batu Maung, Penang Island, dated 1 October 2009 in the International Zheng He Society
Newsletter [downloaded on 10 December 2014], available at http://www.chengho.org/
newsletter/2009-Oct-01.php
cultures are subjected to intense cultural cross-pollination and influences and

it is difficult to unambiguously define the precise source of influence for each
dance move. But, discussions remain important for contributing to the grand
narrative of this important and fascinating art form. For readers interested in
this area, a recommended work is the current snippets of information pro-
vided by Lilianne Fan, an anthropologist working on Aceh since 1999, and
writing a book on history and memory in Aceh, slated for release in 2015.
Another area is to collect YouTube video links of popular narratives of
historical interpretations of Zheng He (Cheng Ho). One example is the
Indonesia Tourism Youtube Video, Cheng Ho Great Mosque — Surabaya
dated 10 July 201269 that feature a mosque with Chinese-looking decorative
designs (based on this video, mostly Qing dynastic architectural features
69 Indonesia Tourism Video, Cheng Ho Great Mosque — Surabaya, dated 10 July 2012 in
Youtube.com [viewed on 8 January 2015], available at https://www.youtube.com/watch?v=

VoEDyp-4Xvg.
b2432_Ch-07.indd 105 15/7/2016 7:50:39 PM

106 Lim Tai Wei
inside the mosque) and the façade model of an imagined Zheng He treasure
ship in the place of worship. The advantage of collecting such videos is that
they provide a moving visual image of the tangible and material artefacts
under examination but the disadvantage remains the inability to download

these videos from the host for archival purposes for research and also insuf-
ficiency of background information of the producers of these videos.
Concluding section
Academic and historical studies are more circumspect with their comments
about Zheng He’s voyages, indicating Zheng’s voyages as mainly an important
trade catalyst for the region. Lynn Pan associated Zheng He’s voyages with
regional trade stimulus. Her edited volume featured renowned Southeast
Asian scholar Anthony Reid who highlighted the following passage:
The Zheng He expeditions marked the starting point of Southeast Asia’s

‘age of commerce’. His fleets stimulated the production of pepper, clove,
nutmeg and sappanwood, and the distribution networks that brought these
items to the major entrepots and took cloth, rice and manufactured goods
in exchange to the production centres. Demand for Southeast Asian prod-
ucts in China leapt, with pepper and sappanwood becoming for the first
time items of mass consumption in the 15th century.70
There are points of commonalities between these narratives on trade

related to Zheng He’s voyages. First, they offer center-periphery perspectives.
In Tan and Pan’s narratives, the periphery of Southeast Asia (in the Sino-
centric world view) or overseas Chinese benefited from Zheng’s role in open-
ing up maritime routes and facilitating trade with China. Second, this
exchange of goods is an incentive for Chinese traders to settle in Southeast
Asia and become intermediaries between the Ming regime and the local rul-
ers of kingdoms in the region. These Chinese traders became the seeds of
settler communities throughout the region, including the Peranakans. Third,
70 Reid, Anthony, “Chinese and Southeast Asian interactions” in The Encyclopedia of the Chinese

Books, 1998, 50.
b2432_Ch-07.indd 106 15/7/2016 7:50:40 PM

it supports the idea of a vassal system, whereby local rulers can maintain these
vigorous trade links by partaking in a tributary system where China is
acknowledged (at least in the symbolic manner) as the center of the Sino-
centric world order.

On the other hand, it is possible not to exceptionalize Zheng He’s voy-
ages. Wang’s seminal work on the Nanhai trade reminds us that regional trade
had been alive well before Zheng He’s voyages, starting from coastal trade and
eventually expanding to regional and then inter-regional trade. Seen in this
context, with the participation of the Arab, Malay, Southeast Asian and
Persian traders before the onset of Yuan or Ming dynasties, the seas around
Southeast Asia had already become a regional trading lake. The regional order
therefore is predicated over reciprocal trade between willing kingdoms rather
than conceptualizing it as a hegemonic center with a distant reactive periph-
ery. As merchants from large trading units reach out for trade, they need to
find willing partners in the recipient smaller kingdoms for reciprocity, regard-
less of motivations (religious, profit-making or diplomatic reasons).
The “Maritime Silk Road (MSR)” narratives of Zheng He may become
part of the updated discourse on Chinese plans to revive the Maritime Silk
Road which covers the span of trading cities from Fuzhou to Italy (the “one
road” component of the “one belt one road” concept (known as Belt and
Roads initiative in official Chinese terminology). Other interpretations see
the Maritime Silk Road ending in Antwerp, Belgium, at the European end
of the Maritime Silk Road.
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May 2, 2013
14:6

PST˙ws
Chapter 8
China’s One Belt One Road

Initiative: A Literature Review
LIM Wen Xin
The massive and ambitious One Belt One Road (OBOR) initiative spanning
over 60 countries was unveiled by President Xi Jinping in 2013. This strategy,

to be pursued in the next decade, not only serves as the main instrumental
economic, political and foreign policies of the Xi’s government, but also a
significant hallmark of China’s rise as a global economic power. Since the
announcement, the discourse of the OBOR has dynamically evolved and
eclectically incorporated the non-hegemony promise, vision of a multipolar
world, peaceful rise of China and the idea of doing what is necessary for
China’s national interest without infringing upon others. Many media, con-
sultancy, think tank and academic literatures have studied the plan in detail,
analyzing and discussing the economic implications and impacts on develop-
ment brought about by the strategic initiative. Nevertheless, some interna-
tional critics and skeptics tend to associate the Chinese scheme with a
political agenda, refuting the Chinese claim that it is merely an economic
initiative.
Apparently, the OBOR initiative for many states is an individual assess-
ment of national interests and how they can benefit from it or encounter
detriments. An important part of the strategy is strengthening Beijing’s eco-
nomic influence and dominance in the South China Sea and Central Asia,
the latter used to be part of the Soviet Union’s traditional sphere of influence.
With the presence of other geopolitical powers and when domestic politics
in each affected states come into play, China is likely to face multiple hurdles
and challenges which might complicate the implementation of its grand
strategy. It is thus not difficult to anticipate major efforts in persuading these
113
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114 Lim Wen Xin
countries of the benefits of massive investments in railway infrastructure and

industrial modernization.
The ultimate adjudicating factor is in the details of the OBOR and the
newly established institutions such as the Asian Infrastructure Investment

Bank (AIIB) and the Silk Road Fund. It also depends on how China is able
to overcome the deficit of trust and suspicions among countries, convincing
each individual country that the OBOR is genuinely a sincere plan for joint
economic development and a win–win approach for all sovereign states.
To address a spectrum of opinions in this aspect, this writing gathers,
consolidates and reviews the current level of information, presenting the read-
ers with different interpretations of the OBOR, the economic and political
implications of the plan, and possible challenges that it would encounter
including the internal challenges and external factors.
The OBOR initiative from different angles

The newly-mooted OBOR proposal can be regarded as President Xi Jinping’s
move to redefine China’s foreign policy to commensurate with China’s rise.
Chinese officials reiterate that the OBOR initiative is based on open multi-
lateral cooperation, a useful complement to the existing international order
and a catalyst to rejuvenate the global economy. Given the scope and sig-
nificance of the OBOR initiative, Chinese Foreign Minister Wang Yi stated
during the 2015 National People’s Congress that in 2015, “making all-round
progress in the Belt and Road initiative” constitutes the “key focus” for
Chinese diplomacy.1 Apart from that, official sources highlight the idea that
OBOR will uphold the Five Principles of Peaceful Coexistence: mutual
respect for each other’s sovereignty and territorial integrity, mutual non-
aggression, mutual non-interference in each other’s internal affairs, equality
and mutual benefit, and peaceful coexistence.2 It is said that the plan will
1 Foreign Minister Wang Yi Meets the Press. Ministry of Foreign Affairs of the People’s Republic
of China, dated 8 March 2015 [downloaded on 13 November 2015], available at http://www.

fmprc.gov.cn/mfa_eng/zxxx_662805/t1243662.shtml; Sheng Zhong, Much Expected of ‘One
Focus and Two Main Themes’. People’s Daily, 10 March 2015.
2 Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime
Silk Road. National Development and Reform Commission of the People’s Republic of China,
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China’s One Belt One Road Initiative: A Literature Review 115
espouse economic globalization, open market economy and cultural diversity

in the spirit of open regional cooperation.
The Chinese Ministry of Foreign Affairs (MFA) identifies three major
geoeconomics and geopolitical purposes of the OBOR. First, internally, it

will accelerate the development and growth of the western interior and turn
it into the “frontier in opening up to the world”. Second, by enhancing con-
nection and the productivity of the developing Asian countries, it elevates the
status of Asia in the world industrial chain. Third, it intends to form a com-
munity of destiny for China’s relations with the region.3 The OBOR initia-
tive is sometimes referred to as a new kind of “strategy” designed to support
the larger effort enunciated by Xi Jinping, to strengthen Beijing’s periphery
diplomacy and create a “new type of major country relations”, both of which
are based on intensive cooperation and a win–win approach to international
politics and economics.4 Jin Yongming claimed that the OBOR could be
seen as “an important step to ensure safe navigation, improving relations with
relevant countries and maintaining security”.5 Zhong Sheng describes the
OBOR initiative as “a masterstroke of deepening China’s reform and opening
up and furthering peripheral diplomacy”.6
dated 28 March 2015 [downloaded on 10 November 2015], available at http://en.ndrc.gov.cn/

newsrelease/201503/t20150330_669367.html.
3 Comments of Li Ziguo, deputy director of One Belt and One Road Studies Center of Ministry
of Foreign Affairs Institute for International Studies, in Huangfu Pingli and Wang Jianjun,
“How to Play Well the One Belt and One Road Symphony.”
4 Xue Li and Xu Yanzhuo stress the importance in developing the One Belt One Road strategy
of relations with four major powers within the Eurasian area: Kazakhstan (“undoubtedly the
strongest country in Central Asia”), Indonesia (“the world’s largest Muslim country”), Japan (“as
a global economic heavyweight”), and India (“with unrivaled cultural confidence and high
political ambitions”). They argue that Beijing should consider working with these powers to
found a “‘G5-Asia’ to strengthen economic ties among this group, thereby promoting overall
Asian economic cooperation.” See Xue and Xu, “China Needs Great Power Diplomacy in Asia.”
Also see “Make Concerted Efforts to Promote the Strategy of ‘One Belt, One Road’.”
5 Coltrane, Mason, China’s Former Glory to be Found in the “One Belt, One Road” Initiatives,
Yibada, dated 30 January 2015 [download on 2 November 2015], available at http://en.yibada.

com/articles/11258/20150130/china-s-former-glory-to-be-found-in-the-one-belt-one-road-
initiatives.htm.
6 Zhong Sheng, Epoch-Making Significance of “Silk Road Economic Belt and 21st century
Maritime Silk Road” Proposal. People’s Daily, 25 February 2014.
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116 Lim Wen Xin
Not mentioned in the authoritative Chinese sources is that the 21st

Century Maritime Silk Road constitutes “the crucial strategic direction of
China’s rise ... indicating a belief that developing the route will be critical to
the country’s entire development program.”7 National Defense University

professor and strategist Liang Fang claimed that “the security of the sea lanes
involved in the One Belt, One Road undertaking will ultimately require very
significant capabilities, including carrier battle groups on station”.8 In other
words, “the One Belt, One Road concept is linked, in the views of some
Chinese military and naval analysts, with robust blue water naval capability
dedicated to sea lines of communication (SLOC) defense.”9 William Yale
wrote in The Diplomat that “the Maritime Silk Road, and especially Chinese
infrastructure investment, is implicitly intended to facilitate more frequent
People’s Liberation Army Navy (PLAN) deployments in the Indian Ocean
and beyond to secure the reliable logistics chains across SLOCs throughout
Southeast and South Asia.”10 This could also be regarded as a strategic move
for China to equip itself with stronger logistical maritime links in view of the
preponderance of the United States navy force and influence in the region.
According to the non-Chinese commentators, Nadege Rolland (2015)
suggests that “the proposed new Silk Road is a tool for promoting national
economic development by boosting exports, enhancing access to natural
resources, and providing support to important domestic industries”. He sug-
gests the new Silk Road can be identified as China’s “infrastructure diplo-
macy” and “strategic motivation” to reinforce “relations along the country’s
continental periphery and a way to reduce dependency on the Southeast
7 Clemens, Morgan, The Maritime Silk Road and the PLA: Part One; and Clemens Morgan,
The Maritime Silk Road and the PLA: Part Two. China Brief 15, No. 7, dated 8 April 2015
[downloaded 16 November 2015], available at http://bit.ly/1G5NVzn.
8 Liang, Fang, How Risky is the Maritime Silk Road? National Defense Reference, dated 11
February 2015 [downloaded on 20 November 2015], available at http://www.81.cn/jwgd/2015-

02/11/content_6351319.htm.
9 Swaine, Michael D, Chinese Views and Commentary on the “One Belt, One Road” Initiative.
Hoovers [downloaded 25 November 2015], available at http://www.hoover.org/sites/default/

files/research/docs/clm47ms.pdf.
10 Yale, William, China’s Maritime Silk Road Gamble. The Diplomat, dated 22 April 2015
[downloaded on 10 November 2015], available at http://thediplomat.com/2015/04/chinas-

maritime-silk-road-gamble/.
b2432_Ch-08.indd 116 15/7/2016 7:51:16 PM

Asian Straits of Malacca through which 80% of China’s energy supplies from
the Middle East and West Africa due to a fear of maritime blockade imposed
by the United States in the event of a conflict in east Asia” (Nadege, 2015).11
Li Mingjiang, an Associate Professor at S. Rajaratnam School of Inter-

national Studies (RSIS), Singapore Nanyang Technological University
regards this grand strategy as China’s “new round of opening up” as it dove-
tails with China’s aspirations in various aspects. First, it helps to accelerate
China’s economic restructuring; second, it provides lucrative opportunities
for Chinese companies in overseas market; third, China can export its over-
produced steel and construction materials through OBOR’s infrastructure
projects; lastly, it helps to develop China’s western region as Xinjiang is the
core of the Silk Road Economic Belt.12 On the other hand, David Dollar
suggested that against the backdrop of China’s economic slowdown, “domes-
tic reform is a much more promising road to deal with China’s surplus prob-
lem and to rebalance its economy away from such a heavy reliance on
investment”. He provided four areas of rebalancing including the household
registration system (hukou), the inter-governmental fiscal reform, financial
reform and the opening up of service sectors for more market competition
(David Dollar, 2015).13
Most scholars insist that the OBOR initiative does not target the United
States. As early as October 2012, Professor Wang Jisi (2015) from the Peking
University talked about the need for China to carry out a geopolitical rebal-
ance but refused to consider this concept as to target the United Sates rebal-
ancing strategy.14 Li Ziguo also said in a roundtable organized by Liaowang,
“the OBOR is not a response to America’s rebalancing in Asia-Pacific or to
11 Nadege, Rolland, China’s New Silk Road [downloaded on 22 April 2016], Available at http://
nbr.org/research/activity.aspx?id=531.
12 Li Ming Jiang, China’s “One Belt, One Road” Initiative: New Round of Opening Up?
S. Rajaratnam School of International Studies, dated 15 April 2015 [downloaded on 9 November
2015], available at http://www.rsis.edu.sg/wp-content/uploads/2015/04/CMS_Bulletin0015.pdf.
13 Dollar, David, China’s rise as a regional and global power: The AIIB and the ‘one belt, one
road’, Brookings, dated 2015 [downloaded on 22 April 2016], available at http://www.brook-

ings.edu/research/papers/2015/07/china-regional-global-power-dollar.
14 Wang Jisi, ‘March West’. The Rebalancing of China’s Geopolitics. Global Times, dated 17
October 2012 [downloaded on 14 November 2015], available at http://opinion.huanqiu.com/

opinion_world/2012-10/3193760.html.
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118 Lim Wen Xin
the Russia’s Eurasian Union (EEU), but a new model of economic

cooperation”.15 Sun Hao argues that the OBOR is not a response to US
pressure and suggests that the plan should be utilized “as a tool in the rap-
prochement between Asian and European economies”.16 Most Chinese

sources, characteristically, reject the comparison of the OBOR with the
Marshall Plan, which the Chinese media tend to characterize as an American
political tool to gain geopolitical preeminence in the Western Europe nations
and to contain the Soviet Union. Zheng Xie from the Global Times wrote
“China’s OBOR is not an alliance and comes with no political strings
attached” to rebut the claims of Western outlets, which have described the
program as China’s Marshall Plan”.17 Sheng Dingli from Fudan University
clarified that the Chinese OBOR is vastly different from the Marshall Plan
which was a short-term strategy to help rejuvenate only the European econ-
omy. He argues that the “OBOR is a very ambitious program entailing a vast
amount of resources through multilateral collaboration with no single country
dominating the process”.18 The Sino-centric perspective clearly rejects the idea
of OBOR as an instrumental tool for extending China’s economic influence.
Zheng Wang19 looks into the problem of regionalism and put forward a
positive outlook of China’s greater leadership and its role in institutional
building and regional integration. While Asian countries are immensely dis-
parate in size, culture and wealth, Wang asserted that China initiatives
such as the OBOR and AIIB would be imperative “to reduce tensions,
restore confidence and provide integration and connection for regional
15 Godement, Francois, One Belt, One Road: China’s Great Leap Outward. European Council
on Foreign Relations [downloaded on 25 November 2015], available at http://www.ecfr.eu/
page/-/China_analysis_belt_road.pdf.
16 New Type of Major Power Relations as the Global Foundation. Shenzhen Shangbao, dated 8
June 2015 [downloaded on 14 November 2015], available at http://szsb.sznews.com/

html/2015-04/08/content_3189311.htm.
17 Zheng Xie, “One Belt, One Road” is not Chinese Marshall Plan. Huanqiu, dated 16
November 2014 [downloaded on 14 November 2015], available at http://opinion.huanqiu.

com/opinion_world/2014-11/5204124.html.
18 Shen Dingli, China’s “One Belt, One Road” Strategy Is Not Another Marshall Plan. China–
US Focus, dated 16 March 2015 [downloaded on 16 November 2015], available at http://www.

chinausfocus.com/finance-economy/china-advances-its-one-belt-one-road-strategy/.
19 Wang Zheng, China’s Institution Building, Leading the way to Asian Integration. Georgetown
Journal of Asian Affairs [downloaded on 25 November 2015], available at https://asianstudies.

georgetown.edu/sites/asianstudies/files/GJAA%202.1%20Wang,%20Zheng_0.pdf.
b2432_Ch-08.indd 118 15/7/2016 7:51:16 PM

development” He also proposed “the United States to work with China in

shaping this process, and to push regional institution-building and integra-
tion in a positive direction” as this is also in interest of the United States.
OBOR’s vast scale has created a new economic paradigm for China and
the world, but funding and financial support remains a crucial factor to real-
ize this long-term strategy. With the proposed plan, how fundamentally
important are the financial institutions that provide funding and loan — the
AIIB, Silk Road Fund and the New Development Bank BRICS (NDB
BRICS). More importantly, AIIB successfully attracted 57 founding mem-
bers, including America’s closest allies — the United Kingdom (UK),
Australia and South Korea. Leading economic news journal Caijing’s journal-
ists wrote that “by creating the AIIB, China is putting pressure on the West
to further the reform of the existing institutions as well as offering developing
countries an alternative: a multilateral cooperative banking organization led

by emerging powers”.20 She Jianguang and Shui Shangnan called the AIIB “a
multilateral development bank for a new age”.21 Shui Shangnan says that “the
AIIB is the subject of global interest” because it is a “new type of institution
which unlike the World Bank, is eager to promote liberal Western values”.22
Economic and political implications

With the Silk Road Economic Belt focusing on enhancing economic engage-
ment and the Maritime Silk Road eyeing to bring together China’s coastal
hubs and Europe, scholars suggest that economic implications generated
could be conspicuous. Tom Orlik and Fielding Chen (2015) put forward the
idea that the OBOR “has the potential to make a long-lasting economic
impact as the potential demand is enormous” (Tom & Chen, 2015).23
21 Ibid.
22 Shui Shangnan, If the OBOR only Focuses on Mutual Benefit, it Won’t Succeed, Gongshiwang,
dated 13 April 2015 [downloaded on 12 November 2015], available at http://www.21ccom.net/

articles/economics/dongjian/20150413123546_all.html.
23 One Belt, One Road Assessing the Economic Impact of China’s New Silk Road, Bloomberg
Briefs, dated 2 July, 2015, [downloaded on 12 November 2015], Available at http://www.bloomb-

ergbriefs.com/content/uploads/sites/2/2015/07/SC_062615-OBOR.pdf
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120 Lim Wen Xin
Scott Kennedy opined in an interview that the OBOR has become an inte-
gral part of China’s economic policy to cushion the effect of the domestic
economic doldrums and “to help make use of China’s enormous industrial
overcapacity and ease the entry of Chinese goods into regional markets”.24 Yi
Zhu (2015)25 notes that “the large-scale investments needed to build the One
Belt, One Road plan will boost demand for steel” and helps to redirect the
steel surpluses at home to countries along the new trade link. John Mathai
(2015) wrote that the OBOR could “boost shipping and cargo demand as
planned infrastructure investments improve ports that dot the silk route”
which previously have difficulties in handling increasing ship size and freight
traffic due to “depth restrictions and lack equipment capacity” (Mathai,
2015). According to Scott Kennedy, the OBOR is not a regional free trade
area agreement and it “reflects China’s preference to avoid formal treaties with
measurable compliance requirements in favor of less formal arrangements that

give it flexibility and allow it to maximize its economic and political skills”.26
Apart from the economic perspectives, the multifaceted OBOR initiative
will inevitably create a political impact within and beyond the region.
Interestingly, Willy Lam (2015) argues that domestically, the OBOR initia-
tive will enhance Xi Jinping’s control over the economy, empowering his
leadership in the Chinese bureaucratic system. It is said that “the infrastruc-
ture, based scheme fits hand-in-glove with President Xi’s insistence on the
“top-level design” of economic development, leads to the revival of central
planning as well as boosting the pivotal role of state-owned enterprise (SOE)
conglomerates, and enables Beijing to enforce more effective control over its
domestic regions”. As a result, President Xi Jinping’s mammoth OBOR strat-
egy has gained him more power, “as well as his cronies and advisors in the
Party-state apparatus”. Finally, he remarked that “Premier Li Keqiang and his
24 Kennedy, Scott, Building China’s “One Belt, One Road”. Center for Strategic and
International Studies, dated 3 April 2015 [downloaded on 12 November 2015], available at
http://csis.org/publication/building-chinas-one-belt-one-road.
Briefs, dated 2 July 2015 [downloaded on 12 November 2015], available at http://www.

bloombergbriefs.com/content/uploads/sites/2/2015/07/SC_062615-OBOR.pdf
26 Kennedy, Scott, Building China’s “One Belt, One Road”. Center for Strategic and
International Studies, dated 3 April 2015 [downloaded on 1 November 2015], available at

http://csis.org/publication/building-chinas-one-belt-one-road.
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relatively liberal ministers in the State Council, or central government, have

been increasingly sidelined”.27
The OBOR has also recently become a buzzword among politicians and
diplomats, dominating the agenda of various conferences, summits and

meetings. While China’s immediate neighbors are likely to benefit from the
substantial infrastructure investment and industrial modernization generated
by the OBOR, regional politicians have positively articulated their will to
work with China, hoping that the lofty plan of OBOR could help deepen
the political and economic ties with China. Specifically, the OBOR echoed
ASEAN’s master plan on connectivity to spur regional economic develop-
ment. Magdalene Teo, Brunei Ambassador to China stated that the plan
“augurs very well with ASEAN’s masterplan on connectivity” and both sides
are working towards enhancing greater connectivity between China and
ASEAN.28 Ivan Frank Olea, Minister and consul from the Philippines
embassy said that the OBOR could help share China’s prosperity around the
region.29 Malaysia’s Transport Minister Datuk Seri Liow Tiong Lai said at the
opening ceremony of the One Belt and One Road, China–Malaysia Business
Dialogue that “Malaysia can play the role of a coordinator for China to
expand into the markets of other ASEAN and neighboring countries”.
He observes that the improved transport network will allow Malaysian busi-
nessmen to explore the “vast opportunities in tourism, trade, ports, educa-
tion and industrial development brought about by this belt-road
cooperation”.30
Singapore which enjoys a deep and broad relationship with China due
to the camaraderie forged by the past leaderships of both countries — Deng
27 Lam, Willy, One Belt, One Road Enhances Xi Jinping’s Control Over the Economy. The
Jamestown Foundation, dated 15 May 2015 [downloaded on 12 November 2015], available at
http://www.jamestown.org/programs/chinabrief/single/?tx_ttnews%5Btt_news%5D=43914&
cHash=859e508bc4e133a688b4ca5bd57bf1c2#.VkmfgdIrLcs.
28 Koh, Jeremy, ASEAN Diplomats Welcome China’s One Belt, One Road Initiative. Channel
News Asia, dated 16 November 2015 [downloaded on 12 November 2015], available at http://
www.channelnewsasia.com/news/asiapacific/asean-diplomats-welcome/2265422.html.
29 Ibid.
30 Ho Wah Foon, Belt-Road to Benefit Businesses in Malaysia. Asiaone Business, dated 2 August
2015 [downloaded on 9 November 2015], available at http://business.asiaone.com/news/

belt-road-benefit-businesses-malaysia.
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122 Lim Wen Xin
Xiaoping and Lee Kuan Yew — has been following the development of the
Belt and Road initiative with an open mindset. Senior Minister of State for
Transport Josephine Teo at a forum on the 21st Century Maritime Silk Road
said that “countries in the region, including Singapore, would benefit from
participating in the cocreation of this initiative and given Singapore’s roots as
a regional trading hub, it should adopt a more active role in key areas of con-
nectivity, namely transport, finance and trade.” She also subtlelty pointed out
that China should share ownership of the OBOR with countries along the
route so that “participating countries could see themselves as being able to
influence the outcome and retain a sense of ownership over the pace and
texture of collaboration”.31
Marching into Central, South and West Asia

It is expected that the Silk Road Economic Belt will reduce the traveling time
from China to Europe via Central and Western Asia through the construc-
tion of high-speed railway to promote greater trade, financial, economic and
cultural activities. Leung Kin Pong listed a slew of economic benefits which
the European Union could obtain from the grand proposal. The alternative
land route improves the logistical matter to maximize cost-efficiency as “rail-
ways linking China and Europe have already diminished the number of days
of shipment to around average 15 days, compared with 30–40 days required
by sea”. Also, as Chinese SOEs and companies are encouraged to explore and
“invest in the overseas markets and ideally along the cities of the Silk Road,
Chinese investment in European companies has been increasing tremen-
dously since 2009 to reach US$18 billion in 2014”.32 He stated in his report
that according to the European Commission President Jean Claude Junker,
31 Patrick,John Lim, China’s One Belt, One Road Initiative Could Usher in New Growth:
Josephine Teo. Channel News Asia, dated 27 July 2015 [downloaded on 11 November 2015],
available at http://www.channelnewsasia.com/news/business/singapore/china-s-one-belt-one-
road/2010212.html.
32 ‘One Belt One Road’ — Implications for the European Union. European Union Academic
Programme Hong Kong, dated 2 June 2015 [downloaded on 11 November 2015], available at
http://euap.hkbu.edu.hk/main/wp-content/uploads/2015/06/EU-Business-News-Insights_
Issue-15_One-Belt-One-Road-implications-for-the-EU.pdf.
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the Chinese OBOR also complements with the EU Investment Plan33 by

bringing in additional funding.34
As the Silk Road Economic Belt spans across Central Asia to reach
Europe, Chinese economic involvement in Central Asia is likely to increase.

China and Central Asia trade has skyrocketed from US$1 billion in 2000 to
US$50 billion in 2013. China is currently the largest trading partner of all
the countries in the region, except for Uzbekistan. Michelle Leung (2015)
opined that China’s cement companies alone will reap long-term benefits
from the mammoth cement demand that is set to be generated by the
OBOR initiative. She claims that “average cement output per capita in
Central Asian nations is 300 kilograms which is less than the global average
of 600 kilograms and China’s 1,800 kilograms, implying large potential
demand” (Leung, 2015).35 Tao Wang and Rachel Yampolsky note that
China has poured in US$30.5 billion investment in the region between

2005 and the first half of 2014. 36 Most of the ongoing projects are related
to the resources and power sector which include “extensive network of oil
and gas pipelines, oil and gas exploration, power plant financing, and even
electric grid construction in Tajikistan”.37 The emblem of China National
Petroleum Corporation (CNPC) is also visible everywhere at the gas and oil
stations in Kazakhstan. Adopting the angle of resource trade, Qishloq Ovozi
highlighted that Beijing’s major interest in Central Asia is natural resources.
“China imports oil from Kazakhstan; natural gas from Turkmenistan,
Kazakhstan, and Uzbekistan; uranium from Kazakhstan; operates gold
mines in Kyrgyzstan and Tajikistan; and is searching for rare earths in
33 The EU scheme will unlock public and private investment of at least €315 billion from 2015
to 2017. The initial investment provided by the EU and the European Investment Bank will be
€21 billion and it will require additional funding from other investors to reach a multiplier
effect of 1:15 in real investment in the economy.
34 opcit.
Briefs, dated 2 July 2015 [downloaded on 12 November 2015], available at http://www.

bloombergbriefs.com/content/uploads/sites/2/2015/07/SC_062615-OBOR.pdf
36 Tao Wang and Rachel Yampolsky, Will China and Russia’s Partnership in Central Asia Last?
The Diplomat, dated 21 September, 2015 [downloaded on 13 November 2015], available at

http://thediplomat.com/2015/09/will-china-and-russias-partnership-in-central-asia-last/.
37 Ibid.
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124 Lim Wen Xin
Tajikistan”.38 With China’s growing economic and political prowess,

Alexander Cooley (2015) suggests that “China’s role in the region is shifting
from external commercial partner to a more comprehensive regional pro-
vider of collective goods including economic mediation and governance,

development financing and even emergency lending”.39
Singular economic focus is however insufficient for China to pave its way
in Central Asia. Zhang Hongzhou suggests that China may face multiple
hurdles while building its Silk Road Economic Belt in Central Asia. Deeply
rooted and complicated internal conflicts as well as the presence of other
major powers in Central Asia can lead to political skirmishes in the region.
He thus proposed China to drive “a gradual and incremental process, to
adopt a bilateral approach, to explore on agricultural cooperation and to
integrate Central Asia into the Pan Asia Production Network to build a
regional supply chain and minimize direct competition”.40

Another major argument in Chinese OBOR initiative is that China is
vying for geopolitical power and influence in Central Asia. The OBOR pro-
posal is deemed to deplete Russia’s influence in the Central Asia region as it
was once under Russia’s traditional sphere influence. Russia’s mounting sus-
picion and uncertainty is in tandem with China’s frequent interference and
encroachment in the Central Asia region. Specifically, when the China Silk
Road Economic Belt was announced, the Russian officials regarded it as
likely to compete with Vladimir Putin’s pet project, the EEU.41 Alexander
Gabuev (2015) suggests that “the only way Russia can preserve its influence,
then, is to recalibrate its role in the region to accommodate its own ambitions
38 Pannier, Bruce, How Far Will China Go In Central Asia? Radio Free Europe Radio Liberty,
dated 8 June 2015 [downloaded on 13 November 2015], available at http://www.rferl.org/
content/qishloq-ovozi-chinese-influence-growing-roundtable/27060377.html.
39 Cooley, Alexander, China’s Changing Role in Central Asia and Implications for US
Policy: From Trading Partner to Collective Goods Provider. Prepared Remarks for “Looking
West: China and Central Asia” US–China Economic and Security Review Commission, dated
18 March 2015 [downloaded on 5 November 2015], available at http://www.uscc.gov/sites/
default/files/Cooley%20Testimony_3.18.15.pdf.
40 Zhang Hongzhou, Building the Silk Road Economic Belt: Problems and Priorities in Central
Asia. May 2015, S. Rajatratnam School of International Studies Policy Report.

41 Michel, Casey, Putin’s Eurasian Union Doomed to Irrelevance by China’s Silk Road, dated 5
October 2015 [downloaded on 30 November 2015], available at http://www.worldpoliticsreview.

com/articles/16858/putin-s-eurasian-union-doomed-to-irrelevance-by-china-s-silk-road.
b2432_Ch-08.indd 124 15/7/2016 7:51:16 PM

and Beijing’s quest for raw materials” (Gabuev, 2015).42 Tao Wang and
Rachel Yampolsky on the other hand argue that Beijing and Moscow might
not share a similar vision for Central Asia. While “Russian sees Central Asia
as its own backyard, to be defended against Western expansion in favor of

keeping the existing order, China, by contrast, sees Central Asia as a strategic
corridor of its OBOR initiative linking the Europe, sharing prosperity and
conveying inclusiveness in a changing international order.” This would then
impede a valuable and productive partnership and cooperation between the
two giants in the Central Asia region.43
Some arguments are made that Central Asian countries could possibly
embrace a strategic move by hedging against China while befriending Russia
or the United States to survive the tussle between big powers. Among all
Central Asian countries, Kazakhstan play an imperative role as three of the
planned Silk Road routes are passing through the country. Kishore
Mahbubani (2015)44 claimed that “China’s decision to launch the OBOR
initiative could not be more timely for Kazakhstan, but it would also be wise
for Kazakhstan to hedge its bets and work with Russia, India, Japan and the
European Union to enhance connectivity in the region” (Mahbubani, 2015).
Finally, unlike the mainstream argument, Garret Mitchell (2014) put
forward the idea that China’s continuing economic forays into Central Asia
are not at the expense of Russia’s privileged position in the region. He argues
that Russia’s longstanding status and substantial role in Central Asia, through
“a combination of energy, culture, and military bonds that run much too
deep” will not be easily exhausted by China’s economic engagement in the
short to medium term.45
42 Gabuev, Alexander, Post-Soviet States Jostle For Role in One Belt One Road Initiative [down-
loaded on 22 March 2016], available at http://economists-pick-research.hktdc.com/

business-news/article/International-Market-News/Post-Soviet-States-Jostle-For-Role-in-One-
Belt-One-Road-Initiative/imn/en/1/1X000000/1X0A3A8Y.htm.
43 Tao Wang and Rachel Yampolsky, Will China and Russia’s Partnership in Central Asia Last?
The Diplomat, dated 21 September 2015 [downloaded on 19 November 2015], available at

http://thediplomat.com/2015/09/will-china-and-russias-partnership-in-central-asia-last/.
44 Mahbubani, Kishore, How Kazakhstan can make geopolitical waves, World Economic
Forum, dated 7 August 2015 [downloaded on 7 January 2016], Available at https://www.

weforum.org/agenda/2.
45 Mitchell Garret, China in Central Asia: The Beginning of the End for Russia? SLOVO 26,
2014, 18–31.
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126 Lim Wen Xin
From the Southeast Asian perspective, Beijing is leveraging on its neigh-

boring countries’ common need for development and China’s capacity in
fulfilling its regional role in Asia as the basis to construct the Chinese archi-
tecture and order. Cheng Chwee Kuik notes that the AIIB is likely to boost
ASEAN’s internal integration and prompt “other powers to compete with
China to reduce Beijing’s growing political clout”. He also cautioned that “if
Beijing preferred institutional goals contradict those of ASEAN”, it might
undermine ASEAN centrality and cohesion.46
Other commentators and scholars are focusing their attention closer to
South Asia. Interestingly, Laurence Vandewalle perceived China’s OBOR
initiative as “China pivots to Central, South and West Asia”, which is similar
to the US pivoted towards East Asia. Specifically, he highlighted that China
and Pakistan are “all-weather friends” which their relation is on firm footing.
The China–Pakistan Economic Corridor (CPEC) is the first project that taps
on the Silk Road Fund and is a project “for a network of railways, roads and
pipelines connecting Pakistan’s port city of Gwadar in the province of
Balochistan with the Chinese city of Kashgar in the landlocked Xinjiang
province”. In particular, the strategic location of the Gwadar port rendered
China with maritime safety and military advantage as it “offers a direct access
route to the Indian Ocean and the possibility to bypass the Malacca Straits …
even a foothold for the Chinese People’s Liberation Army”.47
Apart from the Central, South and West Asia, OBOR also add momen-
tum to Africa which China has active engagement with. Africa which is
blessed with abundant of natural resources has maintained a vibrant eco-
nomic cooperation with China. Yun Sun (2015) mentioned two important
implications of OBOR on Africa which are the development of infrastruc-
ture facilities and the “transfer of labor-intensive industries”. However, he
cautioned the sporadic political risks and volatile investment environment in
Africa, nudging China to formulate “more systematic, well-coordinated and
46 Cheng-Chwee, Kuik, An Emerging 3rd Pillar in Asian Architecture? AIIB and Other China-
led Initiatives. Asia Pacific Bulletin, dated 26 March 2015 [downloaded on 19 November 2015],
available at http://www.eastwestcenter.org/system/tdf/private/apb305.pdf?file=1&type=node&
id=35025.
47 Vandewalle, Laurence, Pakistan and China: Iron Brothers Forever? Directorate-General For
External Policies Policy Department, June 2015 [downloaded on 19 November 2015], available
at http://www.europarl.europa.eu/RegData/etudes/IDAN/2015/549052/EXPO_IDA(2015)
549052_EN.pdf.
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industry-specific plans to convince Africa and the world” that it will bring
real benefits and job opportunities to the region.48 Mark Bohlund and Tom
Orlik (2015) also opined that while the inclusion of Africa in the OBOR
strategy helps to bridge facilities gaps in Africa, “the misuse of increased fiscal
space by some African states means China’s investment adds to debt risks”.49
Challenges and risks

Some opine that the OBOR initiative is a speculative bubble as it involves
three continents and 65 nations with diverging interests, motives, priorities
and agendas. If China is going to be the sole proposer, builder and main-
tainer of this grand strategy, it could encounter a hard time with many chal-
lenges and impediments ahead.
Relatively few authoritative Chinese sources genuinely examine what

would be required to complete such an endeavor in a profitable beneficial
manner.50 Skeptics and critics however suggested different ideas that are
worth consideration. Francois Godement called the OBOR a “grandiose”
plan with little concrete details.51 Jia Qingguo opined that, great as the pro-
ject’s potential may be, China should not be over enthusiastic and succumb
to “wishful thinking” by neglecting the management of multilateral ties with
countries along the route.52
48 Yun Sun, Inserting Africa into China’s One Belt, One Road strategy: A New Opportunity for
Jobs and Infrastructure? Brookings, dated 2 March 2015 [downloaded on 12 November 2015],
available at http://www.brookings.edu/blogs/africa-in-focus/posts/2015/03/02-africa-china-
jobs-infrastructure-sun.
49 One Belt, One Road Assessing the Economic Impact of China’s New Silk Road. Bloomberg
Briefs, dated 2 July 2015 [downloaded on 12 November 2015], available at http://www.bloomb-

ergbriefs.com/content/uploads/sites/2/2015/07/SC_062615-OBOR.pdf.
50 Swaine, Michael D, Chinese Views and Commentary on the One Belt, One Road”
Initiative,Hoovers,[Downloaded 25 November 2015], Available at http://www.hoover.org/sites/

default/files/research/docs/clm47ms.pdf

52 Jia, Qingguo, One Belt, One Road: Urgent Clarifications and Discussions of a Few Major
Questions. Renmin Luntan, dated 19 March 2015 [downloaded on 25 November 2015], available
at http://theory.rmlt.com.cn/2015/0319/377863.shtml.
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128 Lim Wen Xin
While the grand proposal promises more connectivity and exchanges that
China covets, report from The Economist published a risk assessment report,
outlining some possible prospects and challenges in the OBOR. Specifically,
it underlined the risks across ten different categories including security, legal
and regulatory, government effectiveness, political instability and infrastruc-
ture. Through rigorous risk assessments in different countries, the report
highlights some possible scenarios in countries like Kazakhstan, Vietnam and
Malaysia. It concluded that “the strong policy support behind OBOR may
prove a weakness if Chinese actors, be they government planners, SOEs or
private companies, fall into a false sense of security that government support
will guarantee their success”. Thus, careful planning is needed to avoid heavy
price paid in the process of realizing this grand strategy.
While the OBOR involves the Middle East and Arabian states, it is very
likely that China will need to deal with the devastated political turmoil,
social unrest and transnational terrorism in the region, as well as ethnic
tension within China. Hu Zhiyong said terrorism is the “destabilizing force”
and could have a “knock-on effect” in the South and Central Asia.53 Siqi
Gao (2015) argued that “one of the biggest roadblocks on China’s Silk Road
Economic Belt is the Islamic Caliphate (ISIS), which has occupied large areas
in the Middle East and threatened to include China’s Xinjiang as part of its
territory”. With Xinjiang being envisioned as “a major component and ben-
eficiary of the Silk Road Economic Belt”, the increased railway transporta-
tion will connect Xinjiang to Central Asia, facilitating the movement of
terrorists from the other parts of the Muslim world. Xinjiang could be a
recruiting station or breeding ground for terrorism with improved connectivity
in the region. Internally, the sensitive issue of identity, cultural differences
and religion could be resuscitated and evoke tension and violence.54 It will
then depend on how Chinese government is determined to deal with external
challenges, to resolve ethnic complexity in domestic China, to expand its
influence in the Arab World, and to take more responsibility globally.
53 Hu Zhiyong, How to Understand the Political Risks of ‘One Belt One Road’. Aisixiang,
dated 2 March 2015 [downloaded on 13 November 2015], available at http://www.aisixiang.
com/data/84494.html.
54 Gao Siqi, China’s Soft Power in the Arab World through Higher Educational Exchange.
Honors Thesis Collection, Paper 290, 2015 [downloaded on 13 November 2015], available at
http://repository.wellesley.edu/cgi/viewcontent.cgi?article=1334&context=thesiscollection.
b2432_Ch-08.indd 128 15/7/2016 7:51:16 PM

As China’s soft power follows its hard power to permeate the territory of
the beneficiaries, challenges loom bigger. Huang Yiping and Chu Yin discuss
“the limits of China’s capabilities, warning that the project could be derailed
by ham-fisted great power diplomacy, insensitive to political risk, or excessive

central planning.55 Zhang Yunling highlights the presence of a few challenges
in the process of constructing OBOR. These include suspicions between
China and the involving countries along the route, China’s existing disputes
with its neighbors, investment and financial risks in the developing countries
and China to expect quick results from OBOR.56 In particular, the heated
South China Sea disputes and many territorial issues could sour relations
between China and the respective countries, leading to unintended conse-
quences and stagnation.
There is also a deficit of trust between China and the regional and
peripheral powers. At the current moment, it remains unsure whether indi-

vidual states will conform and respond to China’s seemingly great vision of
building connectivity for the common interest and better future of all.
Linda Jakobson and Rory Medcalf (2015) suggested a “sharp divergences
in perceptions regarding China’s maritime strategy strategic objectives”.
While China perceived its own move in the India Ocean an effort to “safe-
guarding energy and economic lifelines to the Middle East and Africa”,
India could comprehend such action as China “thwarting India’s regional
pre-eminence … including through military power projection and influ-
ence over third parties such as Sri Lanka and Pakistan”.57 As China pur-
ports to uphold the concept of “community of common destiny”, lack of
trust and the perception gap could be the main impediment to baffle
China’s regional ambition.
55 Huang Yiping, Don’t Let ‘One Belt, One Road’ Fall into the Trap of Japan’s Overseas
Investments. Zhongguo Gaige Wang, dated 10 February 2015 [downloaded on 10 November
2015], available at http://opinion.caixin.com/2015-02-09/100782544.html.
56 Zhang Yunling, Analysis says One Belt One Road Faces Five Challenges. Xiaotang Caizhi,
dated 23 March 2015 [downloaded on 20 November 2015], available at http://finance.sina.

com.cn/china/20150323/152821784549.shtml.
57 Jakobson, Linda and Rory Medcalf, The Perception Gap: Reading China’s Maritime Strategic
Objectives in IndoPacific Asia. The Lowy Institute for International Policy, June 2015 [down-
loaded on 1 November 2015], available at http://www.lowyinstitute.org/files/the-perception-
gap-reading-chinas-maritime-strategic-objectives-in-indo-pacific-asia.pdf.
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130 Lim Wen Xin
Professor Tommy Koh, Ambassador-at-Large at the Singapore Ministry

of Foreign Affairs opined that China should adopt an open and inclusive
policy to evolve the Chinese OBOR project to being a regional project so
that it can gain the trust of its neighbors.58 Ben Simpfendorfer (2015)
advised the Chinese SOEs to collaborate and work closely with foreign com-
panies to gain local knowledge in order to maneuver smoothly in the overseas
market. He commented that “history shows that the old Silk Road only
flourished during periods of stability along the route”, and so the success of
Chinese OBOR will highly depend on political will and regional security.59
Concluding remarks
The past glory and prosperity of the Chinese empire revolve around the Silk
Road which promotes immense merchandizing, trading and cultural exchanges.

Today, the Chinese action plan to revive the historical Silk Road due to its
growing economic and political clout, to a certain extent, reflects its magnifi-
cence and effluence in the past. The OBOR is an outcome of domestic need
and external pressure.
Given the broad scope of the OBOR plan, there is no unilateral interpre-
tation on the OBOR initiative. Most of the writings associate the OBOR with
the economic, political and military outreach of China against the backdrop
of globalization and regional integration and connection. Chinese sources
routinely deny and reject the criticisms about China’s clandestine agenda to
influence, confine, dominate, intimidate, or generally leverage or manipulate
other states involved in the undertaking. Chinese nearly altruistic goals in the
OBOR are likely to be questioned by various parties and face multifarious
challenges including regional instability, investment and credit risks, geopo-
litical influence of major powers and suspicion and mistrust from other states.
Countries will assess their national interests according to conditions for using
58 Chong Koh Ping, The S’pore Connect In ‘One Belt, One Road’ Initiative. Straits Time, dated
28 July 2015 [downloaded on 13 November 2015], available at http://www.straitstimes.com/
business/the-spore-connect-in-one-belt-one-road-initiative.
Briefs, dated 2 July 2015 [downloaded on 7 November 2015], available at http://www.bloomb-

ergbriefs.com/content/uploads/sites/2/2015/07/SC_062615-OBOR.pdf.
b2432_Ch-08.indd 130 15/7/2016 7:51:16 PM

the OBOR funding facilities, geopolitical priorities, domestic political situa-

tions, external factors and national resources and how the Belt and Road
Initiative + AIIB + BRICS Bank vis-à-vis current existing established institu-
tions like Asian Development Bank (ADB) best serve their needs.
The success or failure of the One Belt One Road concept will depend on
the resources that Beijing is willing and able to devote to it, the adroitness of
China’s leaders and entrepreneurs in maneuvering in the international mar-
ket and system, and the ability of China in shaping the regional preference.
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May 2, 2013
14:6

PST˙ws
Chapter 9
The South China Sea and the

Maritime Silk Road Proposal:
Conflicts can be Transformed
Katherine TSENG Hui-Yi
Development of the South China Sea dispute:

A conflicting trend?
The trend of territorialization: The Dash-Line claim
as a maritime boundary
Ever since the submission of the dash-line map as an integral part to China
(PRC)’s claim on the South China Sea to the Commission on the Limits of
the Continental Shelf (CLCS) in 2009,1 there is a developing trend that
China (PRC) has intended to evolve this dash-line claim into a marker that
serves as a maritime boundary. Several incidents help reify this observation.
For one thing, China (PRC) has reiterated on several occasions two
critical elements in its claim. China (PRC) contends that it has had sover-
eignty over all land features lying within the dash line. Subsequently, its claim
of “sovereign rights in the waters and sea bed” within the dash-line boundary
limits is justified and asserted rigorously in the regional arena. Accordingly,
patrols and law-enforcement actions conducted by the Chinese Marine
1 Commission on the Limits of the Continental Shelf (CLCS) Outer limits of the continental
shelf beyond 200 nautical miles from the baselines: Submissions to the Commission: Joint
submission by Malaysia and the Socialist Republic of Viet Nam. United Nations, Divisions for
Ocean Affairs and The Law of The Sea, submitted on 06 May 2009 (updated on 03 May 2011)
[downloaded on 20 November 2015], available at http://www.un.org/Depts/los/clcs_new/
submissions_files/submission_mysvnm_33_2009.htm.
133
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134 Katherine Tseng Hui-Yi
Police are justified as an exercise of its rights and interests in the said area.
These contentions have implied the Chinese have aspirations to the dash-line
claim, however implicit, that this dash line serves as a boundary line includ-
ing all land features lying inside it, and also functions as a maritime boundary
by which all waters inside it belong to the sovereign right of China (PRC).
Moreover, the ongoing arbitration initiated by the Republic of the
Philippines against the PRC in January 2013, on certain issues in the South
China Sea,2 further places these issues in contention, to which the Chinese
approach shows a clear intention to use the dash line as maritime delimitation.
In this ongoing arbitration, the complex distinction between “maritime
delimitation” and “maritime limits” leads to two totally different interpreta-
tions by the respective disputants. For China (PRC), the essence of the
subject-matter of the arbitration is territorial sovereignty over several mari-
time features in the South China Sea.3 China (PRC) opines, accordingly, that
the tribunal does not have jurisdiction, since an issue of territorial sover-
eignty over maritime features falls beyond the scope of interpretation or
application of the Convention.4 For the Philippines, it seeks from the tribu-
nal explanations of what a submerged feature, low-tide elevation entails in
terms of maritime interests, and clarifications of China (PRC) dash-line
claim’s effect on maritime interest and limits.5 In a word, China has regarded
this dash-line claim as a form of maritime delimitation, while for the
Philippines, clarification of maritime zoning standard is already clearly pre-
scribed in the Law of Sea Convention.
In this context, the dash line serves dual functions, as it denotes a way to
confirm a maritime boundary, so that Chinese sovereignty covered any
structural feature, and arguably, water situated within them and therefore
2 The arbitration is registered with the Permanent Court of Arbitration. More information
can be found in the website of Permanent Court of Arbitration, “The Republic of the
Philippines vs. The People’s Republic of China” [downloaded on 20 November 2015],
available at http://www.pca-cpa.org/showpage.asp?pag_id=1529.
3 See the Chinese position paper, The Position Paper of the Government of the People’s Republic
of China on the Matter of Jurisdiction in the South China Sea Arbitration Initiated by the
Republic of the Philippines, para. 3.
4 Ibid.
5 The Republic of the Philippines, Notification and Statement of Claim, 22 January 2013. See
also, International Tribunal for the Law of the Sea, Press Release, 25 April 2013.
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The South China Sea and the Maritime Silk Road Proposal 135
sovereignty over them should not be questioned. This dash line also can be
regarded, along with its function in delimiting a maritime boundary in the
South China Sea, as a Chinese methodology of generating “maritime limits”.
This dash-line claim serving dual functions has provoked criticism

among claimants and stakeholder countries. For one thing, this dash-line
claim may blur the distinction between the concept of “maritime delimita-
tion” and “maritime limits”. Further, this dual function would increase/
deepen the suspicions of other claimants that China (PRC) does not intend,
with any possibility, to resolve the dispute under the aegis of the Convention
and general international law. This possibility, however perceived, would
further fester deep-seated hostility among other claimants against China
(PRC), which may easily spoil inter- and intra-state relations in this region.
In this regard, it is a challenging, while not totally impossible, mission for
China (PRC) to unilaterally declare a modern attestation of the dash-line

claim, in defiance of the established law of the sea regime and general inter-
national law.
Implications
Contesting legal developments combined with tensed geopolitical events in
the South China Sea since 1973 have increased to certain levels such that
territorial quarrels among China and Association of Southeast Asian Nations
(ASEAN) claimants are in fact interrupting, or at least, hindering the amica-
bility necessary for inter-state cooperation in many aspects. The lack of
effective cooperation mechanisms in a variety of issues, such as fishing regu-
lation and maritime environmental administration, is unfortunately one
direct outcome of these territorial disagreements. All claimant parties need to
start tackling the ongoing urgent issues of depletion of fishing resources,
increasing costs of maritime traffic and loss of lives on the sea.
Beyond territorial claims

Briefly put, the real issue in South China Sea is about agenda-setting and
shaping the regional maritime order in coming decades, in both political and
legal terms. The wrestling match is between the regional great power, China
and the only hegemonic power since the end of World War II, the US.
b2432_Ch-09.indd 135 15/7/2016 7:51:58 PM

Leaving aside strategic maneuvering and power politics, the real menace
is the immediate realization and application of the dash-line claim. To some
extent, the essence of the South China Sea issue is actually related to the
agenda-setting and rule-making power contestation between regional power

of China and global hegemony, of the US. Accordingly, a corollary issue is
how should ASEAN claimants’ South China Sea positions be interpreted by
observers?
Several ASEAN claimants have been involved in a race for maritime
resource development and occupation of land areas in the South China Sea.6
Their willful occupation over islands and rocks, and predation of maritime
resources, can hardly be justified under the name of “efforts of asserting sov-
ereign rights and territorial claims”. Any exercise of one’s right at the cost of
others’ expenses, beyond reasonable limit, can be deemed as an abusive and
harmful development, which should be condemnable and punishable. Yet,

the Law of the Sea has not addressed this issue of “the reasonableness of sov-
ereignty claim contestation”.7 This would require relevant international legal
principles to fill in this vacuum.
6 This is the “push envelope” approach, relied on by ASEAN claimants to test the bottom line
of China regarding unregulated and uncoordinated maritime resource development activities.
ASEAN claimants hold the view that they have to grab the chance to develop and exploit
maritime resources as much as possible, before China gets stronger and powerful enough to
prevent their activities.
7 UNCLOS in several provisions stipulate that before final maritime delimitation agreements
are reached, states make every effort to enter into provision arrangements, while being
restrained from activities that may jeopardize and impair the reaching of an ultimate delimita-
tion. These obligations may be inherently conflicting. One dilemma is that, when states’ sover-
eignty claims overlap, a duplication of such entitlement which enables states’ exercises of
exclusive right in the said areas may lead to unilateral acts by the states involved. This dilemma
seems to be more contentious in the Exclusive Economic Zones (EEZ) zoning instead of zoning
of territorial waters which takes place only after the decision of sovereignty attribution of land
features. To some extent, the EEZ zoning is thornier, as it contains not only a decision on the
calibration of the “zoning”, but also a decision by the adjudicator between rival claims which
are duly proved, more justified and more “reasonable”. Two provisions in the Convention
touched on this issue, Articles 74(3) and 83(3), in which states are obliged to spare no efforts
in not engaging in activities that would prejudice the final settlement of the dispute. Yet, this
latter requirement imposes realistic difficulties in an area where territorial and EEZ claims have
overlapped, and may have conflicted against each other. See, Note 10, Law of Sea Convention,
Articles 74(3) and 83(3).
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Further, in South China Sea, tensions fluctuate and have become one
flashpoint that easily topples over efforts for regional developments in various
aspects. While sentiments remain boiling in certain claimant countries, it is
a totally different picture in the other. This cleavage demonstrates that, with
disputed subjects remote in the sea, where no civilian could easily reach and
land, the very “emptiness” of these islands (as in people’s cognition and
memory) makes them the ultimate patriotic symbols, or “logos of nation-
hood in a global media age”.8 Southeast Asian politicians have much freedom
to define what these territorial conflicts mean to their respective populations.
In recent round of tensions, Vietnam has served a good example, exemplify-
ing how the government could lead and shape public opinions in an event
that easily sparkles up national sentiments.9
It is in this sense that even when holding high the banner of international
law, overtures and behaviors of ASEAN claimants are still controversial. By

relying heavily on legal discourses, flexibility and rooms for maneuvering, at
times in extra- and non-legal scenarios, are quickly shrinking. Further, to
resort to judicial means for dispute resolution at international level, is time
consuming and financially costly.
It is under this context that the recently proposed initiatives of build-
ing a Silk Road Economic Belt and a 21st century Maritime Silk Road
(MSR) by China should be brought into discussions. The pragmatic mind-
set and substantial benefits entailed in these initiatives should not be easily
shrugged off.
8 Kaplan, Robert D., ASIA’S CAULDRON — The South China Sea and the End of a Stable
Pacific (London: Random House, 2014); Pollmann, Mina, Government Narratives in Maritime
Disputes. The Diplomat, 10 July 2014.
9 As a common tactic for the government to shape public and lead opinions, Vietnam’s
approaches serve one example. The Vietnamese government is believed to have resorted to
diverting domestic attention from its domestic mal-governance by winning sympathy from
international public opinion and recognition. Hanoi has apparently shifted the emphasis of its
propaganda machine to promoting Vietnam’s image as a victim of China’s growing national
prowess and malicious intents on the South China Sea. For example, on January 2014,
Vietnamese state-run media was marking for the first time the anniversary of a 1974 naval bat-
tle with China in which 74 soldiers from US-backed South Vietnam were killed. The move
appeared to be aimed at boosting the legitimacy of the government in regard to its tricky deal-
ings with China, which was the subject of popular, nationalist anger. Source: Pham, Nga Shift
as Vietnam Marks South China Sea Battle, BBC, 15 January 2014.
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Situating the South China Sea issue in the MSR initiative

The MSR in the One-Belt-One-Road initiative
The “One Belt, One Road” initiative (OBOR) starts with the idea that
nearby countries in Central Asia — spread along the traditional Silk
Road — could benefit from more transport infrastructure, some of which
China could finance bilaterally.10 Further, the idea of a maritime road — that
is, the expansion of infrastructure along the seagoing routes from the Chinese
coast through Southeast Asia to the Indian Ocean and all the way to Europe
further embellishes this ambitious proposal.
Yet, as grand as the slogan may sound, in English the name is misleading,
although confusions could be most effectively be dismissed through actual
implementation efforts. In other words, this initially vague initiative has been
fleshed out in detail after March, 2015.11

Succinctly put, looking in more depth at these details, two points that
highlight the intended purpose and the pattern of implementation merit reit-
erations. For one thing, it is not targeting only a single trading route, be it on
the northwest part of the Chinese mainland or the southeast maritime area of
the Indo-China Peninsula. Rather, it is about building networks of connec-
tivity. The geographical linkages envisaged by the “belt” (in the northwest)
and the maritime “road” (in the southeast) cover multiple locations. Second,
physical infrastructure to promote connectivity points is a critical, but not the
entire main content of OBOR. Rather, connectivity can be elaborated in
multiple connections in trade, investment, finance, and flows of tourists and
students.12
10 China’s Initiatives on Building Silk Road Economic Belt and 21st century Maritime Silk
Road. Xinhua News [download on 20 November 2015], available at http://www.xinhuanet.
com/english/special/silkroad/index.htm, Summers, Tim, What Exactly is ‘One Belt, One Road’?
September 2015, 71(5); Hornby, Lucy, China’s ‘One Belt One Road’ plan greeted with caution.
Financial Times, 20 November, 2015.
11 China Unveils Action Plan on Belt and Road Initiative. Xinhua News, 28 March 2015.
12 Infrastructure Connectivity a Priority in Belt and Road Initiative. Xinhua News, 28 March,
2015; Xi on “Belt and Road”: Not China’s solo but inspiring chorus. Xinhua News, 28 March
2015.
b2432_Ch-09.indd 138 15/7/2016 7:51:58 PM

A 21st century MSR: The déjà vu wears well

In OBOR, a 21st century MSR is believed to be inspired by historical mari-
time trading routes from southeast coastal China through the South China
Sea and beyond, by extending these routes to continents and countries where
trade volumes are currently small, but hold future growth potential, such as
East African and the Mediterranean areas. Besides this historical legacy,
China’s rapidly deteriorating neighborly relations with other states in the
South China Sea also hint at how this modern maritime trade route unfolds.
Briefly put, the South China Sea issue is now enmeshed in a malicious
cyclical pattern, of involving not only claimant states, but also other extra-
regional stakeholder countries. Proliferation of actors have, to a considerable
degree, rendered the dispute even more intractable, as any single compromise
between two parties may have spillover effects to a third country. The Sino-
Filipino arbitration initiated in January 2013 and still ongoing at this point
of writing, continues to highlight such uncertainties in the South China Sea
scenario. Inter alia, a trend of territorialization in China’s interpretation and
contestation of the South China Sea claim is triggering alarm bells.
In short, with a territorializing dash-line claim, would the OBOR initia-
tive be overshadowed, and be deprived of required momentum for its further
implementation? To answer this inquiry, a retrospective approach is necessary
and justified, traceable back to the time before the arrival of European colo-
nialism and the regional order that facilitated the growth of the MSR.
Before European dominance in East and Southeast Asian

maritime order
The world system before the rise of European hegemony was, not in a strict
sense, segmented, or sectoral, in terms of the unit used to gauge involving
participants. In this pre-European era, it was not the nation state, or com-
panies established as its proxies that endeavored to advance national policies
in newly-colonized overseas territories, but local principalities and polities in
Southeast Asia already had their own versions and interpretations of state,
territory, governance and world order. While it was by no means sharing a
developed system of transcontinental communication links and networks
like present day, a system of world trade which facilitated not only
b2432_Ch-09.indd 139 15/7/2016 7:51:58 PM

trans-continental trades, but even cultural exchanges, was integrating a large

number of advanced societies stretching between the extremes of north-
western Europe and China.
That said, two characteristics underpin the understanding of this pre-

European world system. For one thing, it was observed that transition of this
world system to a new one might result in changes in different regions and
states, some of which might not be prepared for such changes, or lack the
capabilities to address challenges brought about by the changes.
Another characteristic is that the periodic modifications to the world
system that makes economies obsolete and bring about state failures, some-
times development and progress are accomplished at the price of economic
decline or economic underdevelopment of large world regions. Flourishing
societies and their visible and intangible cultural influences mutually coun-
terbalance each other’s extent of influence in a complex world system. In fact,

transitions in the world system like the rise of western predominance in the
16th century vividly demonstrate the internalized equilibrium in the world
system.
Control over the South China Sea was operated quite differently in the
era before the arrival of European colonialism and imperialism.
First, the South China Sea was situated en route trade links connecting
politically and culturally diverse subsystems in the Near and Far East. Scholar
contended that these trading routes could be grouped into three larger
circuits, in which the South China Sea constituted one critical sea lane of
communication in the Far Eastern circuit extended from Constantinople to
China.13 However, the Straits of Malacca and of Sunda, between Southern
Sumatra and Java appeared to be more crucial than the great swaths of waters
in the South China Sea. The latter was deemed as a dangerous waterway that
can cause great mortalities and loss of wealth.14
13 Abu-Lughod, Janet L., Before European Hegemony: The World System A.D. 1250–1350. New
York: Oxford University Press, 1989; Abu-Lughod, Janet, The Shape of the World System in the
Thirteenth Century. Studies in Comparative International Development, 22(4) 1987, 3–25;
Tansen, Sen, The Phases and The Wider Implications of the Re-configuration of The India–
China Trade, Buddhism, Diplomacy, and Trade: The Realignment of India–China Relations,
600–1400. Rowman & Littlefield, 2015, 212–247.
14 Tønnesson, Stein, The South China Sea in the Age of European Decline. Modern Asian Studies,
40(1), 2006, 1–57; Womack, Brantly, The Spratlys: From Dangerous Ground to Apple of
b2432_Ch-09.indd 140 15/7/2016 7:51:58 PM

Second, maritime order in the South China Sea at that time was relatively
calm. It was observed that through China, the overland subsystem that had
connected it westward to the Black Sea and the eastern sea subsystem that
connected it to the Straits region and beyond were joined together in an

all-important loop.15 The entire world system functioned smoothly when the
connection through China operated well. Actually, this was the original appa-
ratus upon which the 21st century OBOR initiative was sketched out.
At that time, Chinese and the Southeast Asian polities conducted tribu-
tary and merchant trade. By far the leading technological and naval power
until the 14th century, China actually had no need to invoke its naval power.
With the Chinese having no ambitions on overseas expansion of territories
and resource predation, maritime order in South China Sea remained calm
and, for most of the time, a good breeding ground for inter-regional trades.
Local principalities in maritime Southeast Asia viewed the ocean as free and
open, and a resource for wealth and opportunities.16 This also echoed the
observation that in this region, trade created countries, or state entities, albeit
in many different manifestations.17
In this sense, lessons from this pre-European world system in the South
China Sea are cogent, that a confrontational approach in maritime space
Discord. Contemporary Southeast Asia, 33(3), December 2011, 370–387; Tønnesson, Stein, The
Paracels: The “Other” South China Sea Dispute. Asian Perspective, 26(4), 2002, 145–169;
Schofield, Clive H. (ed.) A Geographical Description of the Spratly Islands and an Account of
Hydrographic Surveys Amongst Those Islands. Durham, U.K.: IBRU, 1995. Also, see the IBRU-
Centre for Border Research website, https://www.dur.ac.uk/ibru/.
15 See, Note 13.
16 A consensus was reached among scholars that in pre-colonial Southeast Asia, the inter-
principalities system could be termed as the mandala system. Several characteristics featured its
operation, such as overlapping sovereignty, patrimonial authority and vaguely definable and
continuously shifting territorial boundaries. See further, Acharya, Amitav, “Imaging Southeast
Asia”, in The Making of Southeast Asia: International Relations of a Region. Ithaca: Cornell
University Press, 2013, 51–104; Dieter-Evers, Hans, Understanding The South China Sea: An
Explorative Cultural Analysis. International Journal of Asia Pacific Studies, 10(1), 2014, 77–93.
17 See, Note 16. Generally speaking, trades made states in Southeast Asia. Nevertheless, there
were different types of states, for instance, city-state ports (Malacca and later, Singapore), ancient
kingdoms in main continent (Angkor, Siam and Bagan), and principalities with a more diverse
pattern of sovereign projection and confrontational connection with neighboring polities
(Srivijaya and Majapahit).
b2432_Ch-09.indd 141 15/7/2016 7:51:58 PM

partitioning and resources utilization may not help dispute resolution and
conflict management. Further, this historical retrospect also sheds light on
how a 21st century MSR plan unfolds, and its implementation carried
through.
Crisscrossing the South China Sea in the 21st

century MSR
Situating the South China Sea dispute in the MSR initiative
Recent tensions in the South China Sea have drawn considerable attentions
within and outside the region.
Situations in the South China Sea are infused with a rising consciousness
of self-interest and realist strategic expediency. Protecting self-interest is dem-

onstrated in significant developments in improving maritime capabilities
among certain ASEAN claimants in these past months (second half of 2015
at the point of writing). Realism and strategic expediency are largely seen
through the engagement of some extra-regional, non-claimant countries in
the South China Sea, such as the US. Their stakes in the South China Sea
vary, so do their involvements and prospects.
In recent rounds of tensions, several ASEAN claimant countries are
engaged in defensive diplomacy, and a race in military capability building.18
However, amid this region-wide military capability racing, China directs its
efforts in island-reclamation and enlargement in the South China Sea, which
18 The Philippines announced in December 2014 that a sum of US$885 million will be used for
force modernization program. Several countries, including France and Korea, have submitted
bids for procurement deals. This is opined by Rear Admiral Caesar Taccad, head of the
Philippine Navy’s weapon systems, on 17 December 2014. Malaysia has adopted similar meas-
ures, when Prime Minister Najib Razak announced that Malaysia’s defense budget would
increase in 2015, with a hike of another 10% as compared to the 2014 expenditures. This
increase includes defense procurement and research budget, which will rise up by 6%. Huan,
Eric, Tight Budgets Hamper Malaysia’s Naval Ambitions. Marine Link, 19 March 2015; By
Parameswaran, Prashanth, Malaysia as ASEAN Chair in 2015: What to Expect? The Diplomat,
22 November 2014. Vietnam was also involved in an intense round of defense diplomacy in end
2014 and early 2015, involving naval port visits, dialogues in a miscellaneous defense-related
issues and exchanges of high-level delegations. Inter alia, a trend to upgrade defense dialogues,
and to broaden the scope of cooperation merits attentions.
b2432_Ch-09.indd 142 15/7/2016 7:51:58 PM

raise keen concerns among ASEAN countries. These worries mainly question
if these artificial island constructions would be dedicated for military usage.19
On 9 April 2015, the spokesperson of China’s Foreign Affairs Ministry
explained in length and detail about the rationale of China’s land reclamation
efforts.20 The spokesperson raised many dimensions, including providing
public goods of maritime search and rescue, disaster prevention and mitiga-
tion, environmental protection and safeguarding China’s sovereignty over
land features in the South China Sea.
This episode vividly reflects a most disturbing concern of ASEAN
claimants to China’s South China Sea policies, namely, island reclamation
and construction work. Have these island reclamation works portended
China’s next step, that of making the dash-line claim as a maritime
boundary in which territorial rights are to be exercised in an exclusive
manner?
It is with these worries that ASEAN claimants had started the race-up of
maritime resource development, regardless of the pending territorial disputes
and possible encroachment upon the right and interest of other parties. With
the initiative of establishing a 21st century MSR, a window of opportunity
is open to ASEAN to address these fears, and for China, to re-adjust its over-
ture in more sustainable and mutually-beneficial engagement in interna-
tional affairs.
The key will be, how the Road plan, with the essence of cooperation
and coprosperity, helps transform and refine China’s South China Sea
claim, not treating the sea as an obstacle, but an aid to the realization of the
Road plan. If China fails to reconcile between its South China Sea claim
and the Road plan and ensure that the Road plan was able to attract
ASEAN claimants’ participation despite the South China Sea dispute,
19 The increasing Chinese military presence is likely to unsettle the region with a growing sense
of unease and rivalry.
20 Quoting the spokesperson’s words, According to Hua, China’s “maintenance and construction
work” on garrisons located in the Spratlys has the following purposes: [O]ptimizing their func-
tions, improving the living and working conditions of personnel stationed there, better safeguarding
territorial sovereignty and maritime rights and interests, as well as better performing China’s interna-
tional responsibility and obligation in maritime search and rescue, disaster prevention and mitiga-
tion, marine science and research, meteorological observation, environmental protection, navigation
safety, fishery production service and other areas.
b2432_Ch-09.indd 143 15/7/2016 7:51:58 PM

implications can be problematic. China may lose the credentials needed in

its transition of its role as a regional great power, with great development
potential and an outlook of promoting coprosperity among neighboring
countries via the Road plan. With this fact turning into a reality, would
China’s further development at both regional and international level be
overshadowed and compromised?
It is these issues, all bundled-up, that lead to the observation of faltering
peaceful resolutions of the South China Sea issue, the Road plan would be,
highly likely, attenuated to mere policy propaganda or diplomatic dis-
courses. Under such a context, not only the Road plan is likely to be
aborted, but also China’s greater ambitions of establishing a new type of
great-power relations with the US and other international subjects may be
shattered.
Some proposals
The connection between the South China Sea and the Road plan has been
established. Yet, these inquiries should not be counted as a total rejection of
the Road plan and OBOR initiative. Rather, they are to shed light on how
China’s South China Sea claims can be adjusted to render constructive assis-
tance to the implementation of the Road plan.
Of primary importance is that the dash-line claim as a maritime bound-
ary is maintained in an open manner. In other words, sovereign rights and
the management of maritime spaces defined by this dash-line maritime
boundary should be conducted in a flexible, yet effective manner.
In order for the dash-line claim — deemed as a maritime boundary —
not to be a political burden and a legal hazard, it should be operated with an
open manner. The underlying logic is that operation of the dash-line mari-
time boundary should be related to the concept of “border control”, and not
“border security”.21 Border control is a broader concept, and border security,
a narrower one.
21 Robert, J. R. John, Victor Prescott, Gillian Gillian and Doreen Triggs, International Frontiers
and Boundaries: Law, Politics and Geography. Leiden: Martinus Nijhoff Publishers, 2008, 23–90;
Prescott, J.R.V., The Geography of Frontiers and Boundaries. London: Routledge, 2015, 33–55;
Kristof, Ladis K.D., The Nature of Frontiers and Boundaries. Annals of the Association of
b2432_Ch-09.indd 144 15/7/2016 7:51:58 PM

In practice, border control covers an array of measures, ranging from

border security maintenance to negotiations and conversations in local com-
munities and national capitals. In short, border controls concerns both
effectiveness and efficiency in terms of management measures to alleviate

disputes and transform rivalries into coprosperity. Unlike border security
measures, border controls frame a symbiotic relationship with all involving
parties, and transform confrontations into mutual prosperity. Two arguments
can be elaborated here to support this idea.
For one thing, China (PRC) has, for generations, been a dominating
power in South China Sea, which was then a peripheral border land that
marks the farthest reach of its cultural, commercial and political impacts.
Even with intrinsic limitations that comes with a maritime domain, the
Han Chinese civilization, as compared to the Nusantara/Malay culture, by
and large, appeared more likely to have a concept of bounded territorial

domain, which had been laid upon the great swathes of waters in the South
China Sea. Yet, its concept and management of this territory-like maritime
space was not exclusive in nature. Instead, Chinese governance appeared to
be fluctuating, contextual and dependent upon the wax and wane of its
own national prowess.
Second, implementation of the dash-line claim to create an open-end
territorial water could only be successful in a multilateral forum when its
promulgation and implementation had generated common interests benefi-
cial to all regional countries. In other words, a multilateral approach, with
the goal of the provision of public goods, is the most preferred option. Public
goods can be of a wide range.
In this aspect, to keep this regional cooperation mechanism in full
function requires fulfillment in the following areas: technology, finance, will
to cooperate and conflict management in a non-forceful way.
American Geographers, 49(3), 1959, 269–282. Regarding the evolution of boundary in

Southeast Asia, see Solomon, Robert L., Boundary Concepts and Practices in Southeast Asia.
World Politics, 23(1), 1970, 1–23; Leng, Lee Yong, Southeast Asia: Essays in Political Geography.
Singapore: National University Press, 1982, 9–16; Leng, Lee Yong, The Colonial Legacy in
Southeast Asia: Maritime Boundary Problems. Contemporary Southeast Asia, 8(2), 1986, 119–
130; Acharya, Amitav, “Imaging Southeast Asia”, in The Making of Southeast Asia: International
Relations of a Region. Ithaca: Cornell University Press, 2013, 51–104; Lamb, Alastair, Asian
Frontiers. New York: Frederick A. Praeger Inc., 1968, 39.
b2432_Ch-09.indd 145 15/7/2016 7:51:58 PM

Yet, the South China Sea dispute clearly has shown a picture of diversi-
fied interests with sometimes conflicting considerations. Also, how the
public perceives this issue depends heavily on the parochial interests of the
agents that have the power to mediate access to these sites. Yet, the immedi-
ate underlying interests are economic, geopolitical and strategic. The Road
plan, which emphasizes common interests of coprospect and coexistence,
helps provide an alternative resolution. It advocates that disputes in South
China Sea should not be escalated frenetically and should be dealt in a more
pragmatic and beneficial manner.
Conclusion
In March 2015, an action plan was published to flesh out implementation of
the 21st MSR (the Road plan hereafter) plan.22 Fujian province and the
southeast coast of China are the core area from which the Road is extended.
South China Sea is sitting at the throat of the Road, as the route proceeds
southward to Southeast Asia and moves westward via the Malacca Straits into
the Indian Ocean. Several countries, including ASEAN claimants, along the
Road have expressed keen interests of their participation in the plan.23
Recursively, a fair observation is that the South China Sea issue serves one
key event to determine how the Road plan is perceived at regional and inter-
national societies.
The OBOR is a Chinese initiative promoted by President Xi Jinping and
sometimes known as China’s answer to the Marshall Plan (although Beijing
rejects that analogy). It is certainly designed to serve a variety of national
goals. Inter alia, connections between the MSR and South China Sea dispute
22 China Unveils Action Plan on Belt and Road Initiative. Xinhua News, 28 March 2015.
23 ASEAN countries are generally interested in this Road initiative, because of their dire needs
for financial aids and technological assistance of infrastructure construction. Vietnam, the
Philippines, Cambodia, Indonesia and Thailand all hold esteems regarding this Road initiative.
For more detailed of the development of the “One Belt One Road” initiative, see China’s
Initiatives on Building Silk Road Economic Belt and 21st century Maritime Silk Road. Xinhua
News [downloaded on 20 November 2015], available at http://www.xinhuanet.com/english/
special/silkroad/index.htm.
b2432_Ch-09.indd 146 15/7/2016 7:51:58 PM

are, while implicit on the surface, having great potentials for conflict
management and alleviation of mutual rivalry. Yet, it depends on first, how
China’s South China Sea claim, in particular the dash line, is to be developed,
and second, if these efforts could be termed in a way sensible to both the
need of China and ASEAN claimants.
b2432_Ch-09.indd 147 15/7/2016 7:51:58 PM

May 2, 2013
14:6

PST˙ws
“9x6”
b2432_Ch-10.indd 149
Section D
The Overland Silk Road
15/7/2016 7:52:33 PM
May 2, 2013
14:6

PST˙ws
Chapter 10
The One Belt One Road Narratives

LIM Tai Wei
Origins of the One Belt One Road (OBOR) plan

According to international media sources, the OBOR became operational in
2011 when the first direct train from Chongqing to Duisburg Germany
started its journey and shipping within the OBOR maritime route began
from Chinese port locations on a journey to Antwerp, Belgium.1 Others date
the genesis of this reinterpreted Silk Road on 18 November 2014 when a
train carrying 82 freight containers of 1,000 tons of export-made items
departed from a large warehousing facility in Yiwu (Zhejiang 300 km south
of Shanghai) to Madrid where it arrived on 9 December 2014.2 The far end
of this railway system may eventually be Rotterdam, Duisburg and Berlin3 in
the near future. The Economist is even more explicit in its economic analysis
(as opposed to media observers keen on discussing geopolitical implications)
of the Chinese Belt and Road Initiative:
1 Goh, Brenda, China Pays Big to Expand its Clout Along the New Silk Road, dated 10
November 2014 in the Reuters website [downloaded on 18 December 2014], available at http://
www.reuters.com/article/2014/11/10/us-china-silkroad-idUSKCN0IU27R20141110.
2 Escobar, Pepe, China Is Building a New Silk Road to Europe, And It’s Leaving America
Behind, dated 16 December 2014 in Mother Jones website [downloaded on 18 December 2014],
available at http://www.motherjones.com/politics/2014/12/chinas-new-silk-road-europe-will-
leave-america-behind.
3 Ibid.
151
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152 Lim Tai Wei
As Chinese manufacturers move inland, getting their products to European

markets has become more complicated. The journey back to the coast and
halfway around the world by sea takes up to 60 days — an eternity for the
latest iPads and other “fast fashion” products. Kazakhstan offers a backdoor
route. Trains from Chongqing in south-west China to Duisburg in
Germany, 10,800 kilometres (6,700 miles) via Kazakhstan, Russia, Belarus
and Poland, supposedly take just 14 days.4
This narrative may be amongst the first in the international media to

highlight the connection between the Silk Road and China’s Go-West policy,
relocating manufacturers from expensive first-tier Eastern coastal cities
inland to the West where labor costs are cheaper. It also highlights the narra-
tive that European markets (and, along the way, Middle Eastern, Central
Asian and South Asian markets) will become increasingly important for
Chinese exports. Thus, the rationale for the Belt and Road Initiative, con-
forming to Escobar and Goh’s diachronic analyses. At the start of 2015, more
articles started appearing, analyzing the impact of the OBOR initiative on
Central and Eastern Europe (CEE). Geographically-oriented, Dragan
Pavlicevic’s article in the Jamestown Foundation published on 9 January
2015 was a relatively detailed article on the initial phase of the OBOR ini-
tiative in CEE. He noted the possibility of Central and Eastern European
benefiting from the overland route between China and Europe and specified
the two points of connections between the two regions: the Greek Port of
Piraeus and railway between Belgrade and Budapest as well as a southern
China–Europe land–sea express line.5
As Escobar’s sensational article became circulated through the interna-
tional syndicated media on the first day of 2015, another Silk Road-related
article written by a Sri Lankan student leader Akshan deAlwis was circulated
by Huffington Post, an influential left-leaning liberal online media outlet.
4 The Economist, The New Silk Road Hardly an Oasis, dated 15 November 2014 in The
Economist [downloaded on 18 December 2014], available at http://www.economist.com/news/
asia/21632595-kazakhstan-turns-geography-advantage-china-builds-new-silk-road-hardly-oasis.
5 Pavlicevic, Dragan, China’s New Silk Road Takes Shape in Central and Eastern Europe, dated 9
January 2015 in Jamestown Foundation China Brief Volume: 15 Issue: 1 [downloaded on 15 January
2015], available at http://www.jamestown.org/single/?tx_ttnews%5Btt_news%5D=43374&tx_ttne
ws%5BbackPid%5D=7&cHash=dcf45d3bf99b47d32fcb982a34e81371.
b2432_Ch-10.indd 152 15/7/2016 7:52:33 PM

The One Belt One Road Narratives 153
The tone of this article was alarmist and its author also stated openly his
hope that Sri Lankans would democratically vote against Chinese influence
in the military infrastructure of his country.6 The article offers some insights
into local reactions and responses in South Asia towards the OBOR perspec-
tive from an individual public intellectual and activist, who represent one
sliver of many different perspectives held by the vast spectrum of political
views related to the Chinese initiative.
There are at least four differences between this narrative and Escobar or
Goh’s views: (1) part of the article highlights Thailand as the main recipient
and beneficiary of Chinese outreach, therefore putting the focus of his nar-
rative closer to the Chinese periphery (unlike Escobar who mentioned a
possible German–Russian–Chinese triumvirate at one point in his article);
(2) it argues that the Maritime Silk Road (MSR) is larger in scale than the
Overland Silk Road where more than US$1.4 billion were spent in the
author’s home country of Sri Lanka to service Chinese maritime vessels
(as opposed to Escobar who argued that the overland route was designed to
take away trade from the MSR) [Note: It is quite likely that some of these
facilities were built before OBOR was announced, and was conceptualized
as part of the military strategy of “String of Pearls” reported in the interna-
tional media and may not officially be construed as part of the current
Chinese initiative, at this point, the linkage is unclear]; (3) the author used
the word “patron” to describe the Chinese Silk Road initiative but did not
clearly define or elaborate on what he meant. Popular rendition of this
phrase tend to associate it with the ideas of Zheng He’s vassal state diplo-
macy or it could refer to a more a-historical usage of the term to mean a
patron–client relationship, both of which connote the meaning of Chinese
dominance (a stronger word would be “protection” as was the case in Zheng
He forces’ role in Malacca that was facing a stronger Thai kingdom), non-
territorial aggrandizement and indirect forms of Chinese economic hegem-
ony; (4) deAlwis also mentioned an interesting statement without further
details on how the Chinese initiative can be an economic catch-up opportu-
nity for the rest of Asia to reach the standards of the four tiger economies of
6 deAlwis, Akshan, The New Silk Road: A True “Win–Win” or a Perilous Future?, dated 31 December
2014 in the Huffingtonpost.com The World Post website [downloaded on 2 January 2015], available
at http://www.huffingtonpost.com/akshan-dealwis/the-new-silk-road-a-true-_b_6400992.html.
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154 Lim Tai Wei
Hong Kong, Singapore, South Korea, Taiwan, suggesting readings of uneven

economic development in Asia and also the possibility of an alternative
model that had made the four dynamic economies successful [the four tiger
economies are often associated with Japan’s fast growth model that was once
lauded by the World Bank as a “miracle” and reinforced by Western notions
of capitalism, political and corporate governance as well as democratization
pulses].7
deAlwis’ narrative presented the scenario of the OBOR as an additional
(although it was not clear whether he also meant “alternative”) developmen-
tal system for Asian countries that are not the four tiger economies or Japan
(which is presented as an “alternative” modernization but deAlwis was
ambiguous if he also meant “rival” to OBOR). He centered his attention on
the more immediate periphery of China, especially South Asia where he
comes from and Southeast Asia (particularly Thailand). And he wanted to

convey the possibility of a possible patron–client relationship although the
shape and form is not elaborated upon. Taking his narrative and combining
it with Escobar’s, a global picture emerges that is complex, ambitious and
deeply nuanced. The world system tapestry presented by deAlwis and
Escobar are more contentious and ambiguous rather than settled and clearly
defined when it comes to Chinese intentions for gaining geopolitical eco-
nomic advantage. It indicates that observers, activists and analysts are not
quite decided on whether the MSR or the Overland Silk Road (dubbed
High-Speed Railway or HSR diplomacy) takes precedence in Chinese plans.
The Chinese leadership themselves may be testing the waters on this prag-
matically without dogmatically following a policy paradigm with options to
modify the plans as they go along. The Zhongnanhai or Beijing leadership
may also be exercising strategic ambiguity, not deciding or formulating a
definite concept on this which may also be an object of internal political
tussle. Whatever the reason that accounts for this ambiguity, Escobar and
deAlwis’ narratives of the MSR vis-à-vis HSR may occupy chatter and
speculations about the OBOR initiative for some time to come.
On 8 November 2014, the Chinese promised to dispense funds amounting
to a US$40 billion Silk Road fund with the broad objective of improving
transport and trade links, in addition to the US$50 billion already allocated
7 Ibid.
b2432_Ch-10.indd 154 15/7/2016 7:52:33 PM

to the Beijing-initiated Asian Infrastructure Investment Bank (AIIB) and the

BRICS Bank. The BRICS Development Bank funds energy, telecommunica-
tions and transportation infrastructure with a starting capital of US$50 billion
and China/India as its major shareholder.8 A major question arose as to how

China will disperse its funds. The key word that is mentioned in the interna-
tional media, top leaders and policy makers’ statements as well as the schol-
arly conference and seminars that I attended was “connectivity” — how to
link up the entire belt of countries along both Overland and MSR so that
trade can be stimulated. Up till December 2014, details were not forthcom-
ing from Chinese sources on how their Silk Road-related budget will be
utilized. Along with observers and the international media, this began to
cause some countries located along both the overland as well as the MSR to
seek more details about the initiative.

response can be divided into three ways: (1) to use official and track II chan-
nels to ask for more details so that states in the designated regions of the Silk
Road initiative can react accordingly to maximize their economic benefits
from the scheme; (2) to pre-empt any issues incompatible with national
interests by first opposing the institutions associated (or perceived to be asso-
ciated) with the scheme such as opposition to the AIIB; (3) regardless of the
shape and form of the Silk Road initiative which is expected to be organic
and dynamic both in implementation and development, to persuade Beijing
to be more transparent and conform to international norms by integrating
with the international community, e.g. the early persuasion to Beijing to
locate the headquarters of the AIIB in Seoul, Singapore, Jakarta and perhaps
even the semi-autonomous Hong Kong rather than Shanghai or Beijing.
These questions are pondered internally within China as well, between an
internationalist faction keen to see the Silk Road initiatives as part of China’s
opening up with greater transparency and harmonization with international
norms vs. those keen to construct an international trade and commerce
system with firmer Beijing control.
8 Escobar, Pepe, China is Building a New Silk Road to Europe, And it’s Leaving America Behind,
dated 16 December 2014 in Mother Jones website [downloaded on 18 December 2014],

b2432_Ch-10.indd 155 15/7/2016 7:52:33 PM

156 Lim Tai Wei
The Chinese Track II and academic institutions held major conferences in

Istanbul and Hong Kong to discuss plans about the Beijing-led Belt and Road
Initiatives in mid-December 2014. These conferences reveal several nuggets of
information. First, there is some emphasis on lifting the living standards of

countries (including those with per capita gross national income that is 46.4%
of the international average standards) in the Eurasian Zone-Road sections of
the Silk Road.9 Xinhuanet featured support from government ministers for the
scheme from Balkan states like Montenegro and Serbia.10 Maritime countries
like Malaysia have also stated more concrete intentions to construct infrastruc-
ture for tapping into the MSR. “We are in the process of developing port cities
collaboration between Qinzhou Port (of China) and the Kuantan Port (of
Malaysia),” former Malaysian ambassador to China Abdul Majid Ahmad
Khan said at a forum on ASEAN development on 13 December 2014,
reported by China’s Xinhua news agency.11 These revelations indicated that

the MSR fund could possibly target underperforming economies, help them
construct infrastructure, and also enhance connectivity with middle-income
economies like Malaysia through cooperation in port facilities.
The manner or operating philosophy in which these funds would be
managed and dispensed were also revealed by Chinese President Xi Jinping
on 7 September 2013 at the Nazarbayev University in Astana, Kazakhstan.
He mentioned that China and other countries like those in Central Asia can
first compare their plans on economic development while infrastructure links
can be enhanced with the guiding philosophy that China “respects the
development paths and policies chosen by the peoples of regional countries,
and will never interfere in the domestic affairs of Central Asian nations”.12
9 Xinhuanet, Silk Roads Initiatives Enters New Phase: Think Tank, dated 15 December 2014 in
Xinhuanet website [downloaded on 18 December 2014], available at http://news.xinhuanet.
com/english/china/2014-12/15/c_133856803.htm.
10 Ibid.
11 Xinhuanet, Malaysia Ready for Greater Cooperation with China in Maritime Silk Road:
Former Ambassador, dated 13 December 2014 in the Xinhuanet website [downloaded on 13

December 2014], available at http://news.xinhuanet.com/english/china/2014-12/13/c_
133852521.htm.
12 Xinhuanet, Xi suggests China, C. Asia Build Silk Road Economic Belt, dated 7 September
2013 in the Xinhuanet website [downloaded on 18 December 2014], available at http://news.

xinhuanet.com/english/china/2013-09/07/c_132700695.htm.
b2432_Ch-10.indd 156 15/7/2016 7:52:33 PM

This pronouncement resembled Chinese past practices in which they dis-

pensed aid without strict pre-conditions that both led to praise amongst
African leaders for the Chinese role in uplifting the continent economically
and also criticisms from human rights groups for dispensing aid to brutal
regimes or economies unprepared for economic take-off without proper
accounting oversight and procedures. In other words, there are mixed reac-
tions to the Chinese model of infrastructure investment strategies. Further
details were provided on 31 December 2014 by the US version of China
Daily. According to Cheng Jun, general manager of Bank of China’s (BoC)
global trade services department, the criteria for dispensing the fund is based
on the following factors: (1) “economic and trade relations with China”; (2)
“their [recipient countries’] goods for export and import”; (3) “related
Chinese import and export companies … to find how we [China] can help
our companies further open the overseas market”.13

“China will never seek a dominant role in regional affairs, nor try to
nurture a sphere of influence”, he added.14 This is again a familiar format
that has dynamically evolved and eclectically incorporated the non-hegem-
ony promise, vision of a multipolar world, peaceful rise of China and the
in-vogue idea of doing what is necessary for China’s national interest without
infringing upon others. There are those who support and oppose this world-
view. Those who support this worldview see the consensus as one that opens
up an alternative developmental path for those who choose to place growth
above political liberalization and competitive politics or system that have
been time-tested by developed economies. With regard to the BRICS Bank,
both India and China declared broad and ambiguous terms of “justice,
equity and transparency” as conditions for their loan dispensing.15 For most
13 Jiang,Xueqing, Pledge Made to Support ‘One Belt One Road’, dated 31 December 2014 in
China Daily USA website [downloaded on 1 January 2015], available at http://usa.chinadaily.
com.cn/epaper/2014-12/31/content_19210598.htm.
14 Xinhuanet, Xi suggests China, C. Asia Build Silk Road Economic Belt, dated 7 September

15 Escobar, Pepe, China is Building a New Silk Road to Europe, And It’s Leaving America
b2432_Ch-10.indd 157 15/7/2016 7:52:33 PM

158 Lim Tai Wei
countries, the Chinese vision and more established developmental paths of

the developed economies are not mutually exclusive, there are overlaps
between these two choices. It provides more diversity of choices for funding
and infrastructure development. For the critics, the problems they see with
this institutional structure range from challenging the status quo of the pre-
vailing world order of trade and politics to the charge of neo-Colonialism in
resource extraction.
In terms of implementation priorities, some argue that China’s main
target is Central Asia and projects covered in the OBOR will eventually pro-
liferate to other regions and will not only include train infrastructure but also
ports and eventually energy pipelines.16 The evidence for this, according to
this school of thought, is the direction of Chinese capital flow. China’s capi-
tal flow to Central Asia: US$30 billion in contracts with Kazakhstan; US$15
billion with Uzbekistan; US$8 billion for Turkmenistan and US$1 billion to
Tajikistan.17 The Chinese authorities’ close relations with Putin’s Russia is
another evidence: the trans-Siberian high-speed rail reduces transit time
between Beijing and Moscow from 6 1/2 days to only 33 hours.18 These
evidences further point to the narrative that the landed routes will eventually
pare down the volumes transported on the maritime routes.
The contestations and processes of achieving equilibrium and constant
negotiations between the different views of constructing and setting up an
economic world or regional geopolitical orders are natural for ambitious
schemes as similar ambivalent attitudes were present in grand schemes for-
mulated in the past. Witness the debates over Fortress Europe when a pan-
European economy was establishing, the production networks set up by
Japan in East Asia, Soviet bloc of collectivized economies, the Organization
of the Petroleum Exporting Countries (OPEC) unity in the face of geopo-
litical crises. All of them were seen as challengers to prevailing world orders
at one point of time and were eventually harmonized or integrated into the
world order. There are no indications thus far that the Chinese have inten-
tions to overturn or replace the current international economic system. Also
there are signs of outreach from perceived or imagined rival institutions.
16 Ibid.
17 Ibid.
18 Ibid.
b2432_Ch-10.indd 158 15/7/2016 7:52:33 PM

The Asian Development Bank (ADB) President may not agree with the AIIB
idea, for example, but have belatedly welcomed cooperation between the
two. Thus far, the OBOR also does not seem to have any hostile features
incompatible with Asia-Pacific Economic Cooperation (APEC), World Trade

Organization (WTO), Trans-Pacific Partnership (TPP), Free Trade Area of
the Asia Pacific (FTAAP), Regional Comprehensive Economic Partnership
(RCEP) organizations. In fact, the Chinese appear to harmonize or comple-
ment some of these institutions.
A more detailed micro-mechanism of managing the funds slated for the
OBOR initiative was expected around mid- or late-December 2014 but
details were not forthcoming by that time. Instead, on the very last day of
2014, small slivers of information with regard to the financial and funding
mechanism for the OBOR were released in the English language edition of
China Daily circulated in the US. Up till that point of time, it represented the
most detailed announcement of the OBOR funding mechanism, stating that
the BoC Ltd. has scheduled a planned US$20 billion credit infusion into the
initiative’s projects in 2015 and will dispense over US$100 billion from 2015–
2018, therefore, de facto and de jure making it the main financial bankrolling
institution for the initiative in the immediate future.19 US$100 billion is not
a small sum for the bank because up till 30 September 2014, the BoC had
supported 1,332 overseas projects operated by Chinese firms with loan offers
of US$115.2 billion,20 which means the money allocated for 2015–2018 is
equivalent to all of the global loan offers made by BoC prior to the OBOR
initiative pledge. It represents a major source of support for a state initiative
formulated at the highest levels of Chinese elite leadership in Zhongnanhai.
It is necessary to mention some concerns about the Silk Road by other
stakeholders before discussing some of the positive features and concrete
measures of the initiative at this early stage. Only a few are briefly discussed
here and the intention is not to be reductionist but to mention some
formidable obstacles. Some of these narratives may be perceptions but
perceptions are sometimes as important as concrete developments in issues
19 Jiang,Xueqing, Pledge Made to Support ‘One Belt One Road’, dated 31 December 2014 in
China Daily USA website [downloaded on 1 January 2015], available at http://usa.chinadaily.
com.cn/epaper/2014-12/31/content_19210598.htm.
20 Ibid.
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160 Lim Tai Wei
related to international relations, geopolitics and economic competition.

According to some journalistic writings, Beijing intends to pare down the
90% of world trade that still travels by maritime routes by increasing freight
transportation overland through HSRs.21 The Economist lend possible indi-

rect support for this argument:
Most containers still travel by sea, which is considerably cheaper — about

$4,000 each rather than $9,000. But the gap is narrowing as European
manufacturers start filling the empty carriages going back to China with
high-priced products such as luxury cars.22
The equilibrium or balance between overland and maritime trade routes

in Chinese initiatives has already been highlighted in the international
media. Such a prospect if not properly explained or managed may put

maritime trading nations on their toes. Some observers see the AIIB institu-
tion as a challenge to the ADB. ADB is a US and Japan institution with a
combined 31% contribution of the bank’s capital and 25% of its voting
power.23 Veteran contemporary China sinologist and economist John Wong
highlighted the smart features of the Belt and Road Initiative and provided a
balanced analysis with some concerns as well:
China is essentially leveraging its geo-economic power in order to achieve

larger geo-political objectives … In the case of the Overland Silk Road,
China’s efforts run the risk of creating suspicion and conflict with Russia.
Many Central Asian states fall into Russia’s traditional sphere of influence.

23 Escobar, Pepe, China Is Building a New Silk Road to Europe, And It’s Leaving America
b2432_Ch-10.indd 160 15/7/2016 7:52:33 PM

As for the Maritime Silk Road, China’s immediate diplomatic challenge is

obviously how to untangle its deep-rooted territorial disputes with neigh-
bours such as Japan, Vietnam and the Philippines.24
This is a very succinct, timely, well couched, balanced and important

reminder of China’s vulnerabilities and weak points when it comes to the
geopolitical feature of the Belt and Road Initiative. Bloomberg’s report on the
Belt and Road Initiative also expressed similar concerns by some experts from
Russia:
“So far, China has understood Russia’s sensitivities and has not challenged
Moscow on political and security issues … China, for the first time in 200
years or so, has become a more powerful and dynamic country than
Russia … I expect the Chinese to be smart and clever when dealing with
Russia, without provoking it unnecessarily … Should they, however, sud-
denly become abrasive and aggressive instead, a rupture in relations will
follow,” said Mr Dmitri Trenin, director of the Moscow Centre at Carnegie
Endowment for International Peace, he said.25
Essentially, it is quite well understood that Beijing is yielding the

dividends from Russia’s fallout with Washington and European majors,
particularly after the Crimea issue. Beijing will have to deepen the bilateral
relationship further to prevent any flip-flops or frictions in the future which
are bound to occur between neighbors and also institute measures that will
bring the bilateral relations into the post-Putin era. Beijing’s collective leader-
ship will have to cope with political elite power structures in the Kremlin.
Beijing also understands that the Kremlin was a pioneer and forerunner in
Eurasian regionalism. As The Economist pointed out, in 2011, Kazakhstan,
24 Wong, John, Reviving the Ancient Silk Road: China’s New Economic Diplomacy, dated 9
July 2014 in the Straits Times [downloaded on 18 December 2014], available at http://www.
straitstimes.com/news/opinion/invitation/story/reviving-the-ancient-silk-road-chinas-new-
economic-diplomacy-20140709.
25 Bloomberg, Chinese Premier’s Silk Road Trip Marks Advance on Russia’s Patch, dated 16
December 2014 in Todayonline website [downloaded on 18 December 2014], available at

http://www.todayonline.com/chinaindia/china/chinese-premiers-silk-road-trip-marks-advance-
russias-patch.
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162 Lim Tai Wei
along with Russia and Belarus, formed a customs union, and the Treaty on
the Eurasian Economic Union became effective on 1 January 2015.26
Besides Russian presence, The Economist also pointed out other chal-
lenges in the Eurasian region. They include Russian swaggering (Ukraine,

recent mobilization of troops near its border with Kazakhstan), European
reluctance to trade with Russia, Russian obstacles to goods traveling to
Europe at times of bad relations, domestic problems like corruption in
Central Asia, elitist dominance of wealth creation, susceptibility to com-
modity fluctuations, criminal groups, etc.27 While Central Asia remains
Russia’s traditional sphere of influence, stronger Sino-Serbian and China–
CEE ties run into a traditional sphere of influence for the EU as the latter
worry whether Sino-CEE cooperation may be used as a vehicle by Beijing
to split the EU.28 To this, China answered that it would make sure
infrastructure projects observe EU legal benchmarks as Brussels has political

influence in the CEE region and will make its voice known on Sino-CEE
collaborations.29
Besides Central Asia and Russian influence as well as the presence of the
EU in Central and Eastern European, deAlwis’s article in Huffington Post
covered a few more challenges summarized here, including: (1) local nation-
alism, including the author deAlwis’ home country of Sri Lanka, which has
traditionally railed against Western imperialism and dominance but remain
friendly to China’s funding opportunities, according to deAlwis; (2) the case
of Thailand which has accepted Chinese railway projects in two areas but
simultaneously asking Japan to modernize its entire railway system (same
case for South Asians, playing one Asian power against another, in their case,
a hedge against India); (3) poor existing infrastructure, including Thailand’s
asia/21632595-kazakhstan-turns-geography-advantage-china-builds-new-silk-road-hardly-
oasis.
27 Ibid.
28 Pavlicevic, Dragan, China’s New Silk Road Takes Shape in Central and Eastern Europe, dated
9 January 2015 in Jamestown Foundation China Brief, Volume: 15 Issue: 1 [downloaded on 15

January 2015], available at http://www.jamestown.org/single/?tx_ttnews%5Btt_news%5D=
43374&tx_ttnews%5BbackPid%5D=7&cHash=dcf45d3bf99b47d32fcb982a34e81371.
29 Ibid.
b2432_Ch-10.indd 162 15/7/2016 7:52:33 PM

own railway system and, while the Chinese have mastered the technology of
HSR, according to deAlwis, it is still “nascent” [deAlwis’ benchmarks are
unknown but he may be comparing Chinese railway experience with the
French, German or the Japanese]; (4) fear of Chinese export potential, per-
haps referring to being overwhelmed by more affordable Chinese products
and skilled Chinese laborers, something mentioned before in other writings
on Chinese presence in Africa, for example, and in Southeast Asia in earlier
media reports.30
Escobar’s (correspondent for Asia Times) attention-grabbing article
cited before appeared in several sites/versions. In the 2015 New Year Day
version, Escobar stated that there are a large number of challenges facing the
OBOR Chinese initiative. China which is emerging as a major (not the
only one but the main player) funder of the Silk Road initiative is facing
tremendous economic challenges as it mitigates having 43% of its overall

investments in infrastructure construction,31 in other words an overreliance
of economic activity on construction work. From the points mentioned
earlier, there are several external and internal factors that may impede devel-
opment of the OBOR initiative, including external geopolitical issues of
mutual accommodation of China’s rising strength and Russia’s traditional
stronghold in Central Asia and internal factors like China’s ability to have
sustainable economic development in order to bankroll these ambitious
initiatives.
Not all correspondents from the West are alarmist about the OBOR
initiative. Some like Henny Sender argue that China is “best placed to fix
the region’s infrastructure” through a “new generation of financial institu-
tions” like the AIIB, the BRICS New Development Bank, and the Silk Road
30 deAlwis, Akshan, The New Silk Road: A True “Win–Win” or a Perilous Future?, dated 31
December 2014 in the Huffingtonpost.com The World Post website [downloaded on 2 January
2015], available at http://www.huffingtonpost.com/akshan-dealwis/the-new-silk-road-a-true-_
b_6400992.html.
31 Escobar, Pepe, Go West, Young Han: How China and the New Silk Road Threaten American
Imperialism, dated 1 January 2015 in Salon.com website [downloaded on 1 January 2015],

available at http://www.salon.com/2014/12/31/go_west_young_han_how_chinas_new_silk_
road_threatens_american_imperialism_partner/.
b2432_Ch-10.indd 163 15/7/2016 7:52:33 PM

164 Lim Tai Wei
Plan with a combined US$100 billion funding.32 Sender believes that the
main motivation for China lending is to encourage the growth of new mar-
kets for Chinese export products, benefiting its construction firms such as
China State Construction and Engineering as well as meeting Asian infra-

structure requirements that come up to US$8 trillion before the year
2020.33 Along the same lines, other narratives claim that the OBOR is part
of a massive stimulus package to inject funds into an investment-dependent
economy like China. According to Shannon Tiezzi’s article in The Diplomat,
unnamed reports mentioned that China would allocate US$16.3 billion for
infrastructure development in central and western China (Xinjiang, for
example, is the planned gateway to the West) so that they can be better
prepared as part of the OBOR initiative while outward bound investments
are also planned for other countries in the region covered by the OBOR
initiative (Beijing is in railway talks with 28 different countries in a bid to

sell their railway technologies).34
Another article in the Western media related to OBOR written with
optimism is David Gossett’s post in The Huffington Post. Interestingly, when
David Gosset (Director of Academia Sinica Europaea at China Europe
International Business School) wrote a media commentary on China’s
OBOR initiative, he preferred to compare it with the Tang dynasty’s overland
version instead of the Ming dynasty route traveled by Zheng He.35 This
hinted that the bulk of his analysis was focused mainly on the overland “belt”
rather than the maritime “road”. Many points are mentioned in this piece
but three interesting but highly controversial arguments were forwarded that
hitherto were not recorded yet in other narratives: (1) it proposed the option
of Japan choosing to “reconnect with the depth of its Eurasianness and
become a constructive force in the making of a cooperative Eurasia” but
32 Sender, Henny, China’s Lenders are Best Placed to Fix the Region’s Infrastructure, dated 24
December 2014 in the Financial Times, 2014, 12.
33 Ibid., 12.
34 Tiezzi, Shannon, China’s $1 Trillion Investment Plan: Stimulus or Not?, dated 8 Jan 2015 in
The Diplomat website [downloaded on 13 January 2015], available at http://thediplomat.

com/2015/01/chinas-1-trillion-investment-plan-stimulus-or-not/.
35 Gosset, David, China’s Grand Strategy: The New Silk Road, dated 8 January 2015 in The
Huffington Post [downloaded on 12 Jan 2015], available at http://www.huffingtonpost.com/

david-gosset/chinas-grand-strategy-the_b_6433434.html.
b2432_Ch-10.indd 164 15/7/2016 7:52:33 PM

further details were not elaborated; (2) Gossett proposes that the OBOR is
“offering Taipei an opportunity to benefit from his [Xi Jinping] grand
strategy and a space, besides APEC, for more international visibility”; (3) the
article claims that “Fully embraced by the European Union and other
Eurasian actors, the New Silk Road will take 65 percent of the world popula-
tion toward an unprecedented level of cohesiveness and prosperity”.36
Point 1 is a particularly sensitive topic given that 2015 is the 70th anni-
versary of the end of WWII and preparations are underway for Russia and
China to organize conspicuous commemoration ceremonies at a time when
Sino-Japanese ties are only beginning to thaw slightly. Point 2 is just as con-
troversial because, at the time of Gossett’s writing, Taiwanese voters had just
voted for the opposition party overwhelmingly in an indication to the
Nationalist Party (Kuomintang) in Taiwan as well as Beijing that they do
not view incumbent President Ma’s reconciliatory policies towards China

positively. At the point of this writing, it remains to be seen what the opposi-
tion party Democratic Progressive Party (DPP)’s intentions are (given that
the party has followers belonging to a spectrum of political colors from
light to dark green, i.e. mild to strong independence advocates). Point 3 is
equally controversial since the EU and Central Asian actors have to thread
between Beijing, Russian and also US interests carefully. Therefore, the sup-
port or responses are not entirely unqualified and without caveats. Given the
three points above, I would argue that Gossett’s narrative is probably the
most interesting and controversial as well as politically contentious that
I have come across thus far.
Besides media narratives, I also referred to think tank reports and bul-
letins for information on the OBOR policy. One of the comparatively bal-
anced reports that I came across was authored by Lye Liang Fook (Assistant
Director of the East Asian Institute) and his intern coauthor Loh Yi Chin.
They argued that China’s “Silk Road” Strategy (the OBOR initiative)
has benefits and opportunities but also face hurdles when implementing
it.37 Summarizing this narrative, the hurdles mentioned in the article can
be divided into several points: (1) the initiative involves the “long-term
36 Ibid.
37 Lye,
Liang Fook and Loh Yi Chin, Xi Jinping’s “Silk Road” Strategy, dated October 2014 in
EAI Bulletin, 16(2). Singapore: East Asian Institute, 2014, 5.
b2432_Ch-10.indd 165 15/7/2016 7:52:33 PM

166 Lim Tai Wei
commitment and political will” of the agencies and states involved; (2) the
importance of managing expectations as the process will be slow, dependent
on collaboration and require sustained momentum; (3) the third point men-
tioned by many observers is Russia’s traditional influence in the Central

Asian region; (4) neighboring states’ perceptions of Beijing’s robust and
“assertive” foreign policy and the anxieties about overdependence on China;
(5) the potentialities of the OBOR initiative being an indirect challenge to
the US trying to rebalance to Asia.38 To cope with these challenges, the
authors see the need for Beijing to demonstrate the ability to work out joint
projects, convince others of its goodwill, display the qualities of patience,
political determination and diplomatic skills.39
Ultimately, the Belt and Road initiative offers a choice of developmen-
tal funding based on each individual country’s assessment of their national
interests at this moment. The ultimate adjudicating factor is in the details,

each individual economy or state will assess the national interests according
to conditionalities, geopolitical priorities, domestic political situations,
external factors and national resources and how the Belt and Road
Initiative + AIIB + BRICS Bank vis-à-vis current existing established insti-
tutions like ADB best serve their needs. Kazakhstan’s position is reflective
of such sentiments. Bloomberg reported on 16 December 2014 that
Kazakhstan says it wants “to be on good terms with all the major powers
like China, the United States and the European Union, as well as Russia, a
nation with which it has long-standing historical, economic and political
ties”.40 The same message appeared to emanate from Sri Lanka on 9
January 2015 as pro-Beijing Mahinda Rajapaksa conceded electoral defeat
to Maithripala Sirisena, who announced he was keen on a more balanced
relationship between Pakistan, India, Japan and China. This electoral event
affected Beijing’s MSR plans as Sri Lanka is a major node in the MSR’s
Indian Ocean component. Under the Rajapaksa administration, the
Chinese navy had previously sent two submarines to berth in Sri Lanka and
38 Ibid.,5.
39 Ibid.,5.
40 Bloomberg, Chinese Premier’s Silk Road Trip Marks Advance on Russia’s patch, dated 16

russias-patch.
b2432_Ch-10.indd 166 15/7/2016 7:52:33 PM

construction firms to build a Monaco-sized city on land reclaimed near

Colombo whose fate is unclear under the incoming Sirisena administra-
tion. Like Kazakhstan, Sri Lanka does not want to be caught in the position
of having to choose sides in big power rivalry in the region. The Kazak and
Sri Lankan reactions serve as natural limitations to China’s OBOR policy
and are instructive in predicting responses to the policy by major states in
the Asian region.
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May 2, 2013
14:6

PST˙ws
Chapter 11
The One Belt One Road

Initiative — Who’s Going
to Pay For It?
Henry CHAN Hing Lee
“One Belt One Road” or OBOR has evolved as the latest buzzword in China
studies of late. A lurking issue on people’s mind is how China is ever going
to pay for such an ambitious undertaking and ensure its ultimate collection
of the loans associated with OBOR initiative. Will the endeavor, resembling
the traditional 10-year-project associated with each leader turnover, be for-
gotten after next leader comes in at 2022?
This Chapter will look briefly at the birth of the ambitious OBOR, then
analyze the economic rationale behind OBOR, the funding institutions of
the OBOR initiative, including existing mechanisms that China has devel-
oped in its overseas investment and loan programs, which can easily be
adopted and scaled up for OBOR-related activities, and will end with the
outlook for OBOR.
The birth of an ambitious plan

In contrast to public perception, the idea of the “Silk Road Economic Belt”
concept was not first raised by President Xi Jinping, in September 2013, in
an address to Kazakhstan’s Nazarbayev University. Simeon Djankov, an
acknowledged early thinker on the Silk Road initiative and currently a visit-
ing senior fellow at the Peterson Institute for International Economics,
revealed that he first heard the idea, in October 2011, in Warsaw at an
impromptu summit of 22 heads of government from Central and Eastern
Europe (CEE), which included some of the former Commonwealth of
169
b2432_Ch-11.indd 169 15/7/2016 7:53:12 PM

170 Henry Chan Hing Lee
Independent States (CIS) republics, such as Georgia and Armenia, with then
visiting Chinese Prime Minister Wen Jiabao. Simeon Djankov was the
Finance Minister and Deputy Prime Minister of Bulgaria from 2009 to 2013
and was representing Prime Minister Boyko Borisov in that summit. The
impromptu meeting was called with just a few days notice by Polish Prime
Minister Donald Tusk upon the request of Prime Minister Wen.
In the Warsaw meeting, Premier Wen revealed that the Chinese govern-
ment had worked with academics since 2010 on the idea of bringing different
countries along the old Silk Road economically closer through the proposed
new initiative of “New Silk Road”. The impromptu meeting was to solicit the
attending countries’ perspective on this unilateral initiative. In the subsequent
one-on-one private meetings, Premier Wen further revealed that China wanted
to know more about the Silk Road countries in order to explore investment and
infrastructure business exchange with these countries. He acknowledged that

Chinese companies have not been successful in the many European Union-
funded (EU) infrastructure projects in new EU countries, like Bulgaria,
Romania and Poland, in the past despite Chinese companies submitting the
lowest bid. Somehow objectively or subjectively, Chinese companies proposals
were consistently rejected for quality reasons. He admitted that China had no
experience as contractors and investors in the CEE countries and it must learn
more about these countries to break into the market. The Chinese hopes that
the “New Silk Road” initiative will help the Chinese companies overcome the
latecomer disadvantage and break into the CEE market.1
The impromptu summit in October 2011 subsequently laid the ground-
work of annual China–CEE summit, which started in 2012 at Warsaw,
followed by subsequent summits at Bucharest, Belgrade and Suzhou. Chinese
government has set up the “Secretariat for Cooperation between China and
CEE Countries” to deal with communication, coordination and implemen-
tation of cooperation work between China and CEE countries. The secre-
tariat is headed by a foreign vice minister with members from 18 Chinese
government ministries and 16 national coordinators from 16 CEE countries.
A China–CEE Investment Cooperation Fund of USD$500 million was set
up with China’s Export–Import Bank (Exim Bank) holding 94% shares and
1 Djankov,Simeon, Multilateral Development Banks & Asian Investment: Room for More?
Lecture. Washington, September 30, 2015.
b2432_Ch-11.indd 170 15/7/2016 7:53:12 PM

The One Belt One Road Initiative — Who's Going to Pay For It? 171
Hungarian Exim Bank holding the rest 6%. The fund has a standby credit
line facility of USD$10 billion from Chinese commercial banks.
The account of Simeon Djankov puts 2010 as the genesis of the idea “Silk
Road Economic Belt” and the basic economic rationale of the Chinese initia-
tive is clear. President Xi’s proposal of the new “21st Century Maritime Silk
Road” in his address to the Indonesian parliament at Jakarta in October 2013
is just a simple extension of the same idea to a different geographical area.
“Silk Road Economic Belt” and “21st Century Maritime Silk Road”
ideas were subsequently combined into the “One Belt, One Road” (OBOR)
initiative. The plan is to enhance China’s trade and financial linkage with
countries along OBOR through the creation of an unbroken transport and
infrastructure network made up of “Silk Road Economic Belt” countries
across Western and Central Asia to Europe and the “21st Century Maritime
Silk Road” extending from China to Southeast Asia and passing Middle East
to Europe. OBOR countries cover 2/3 of the global population and more
than 1/3 of the global GDP; it is the most ambitious infrastructure program
to be ever placed on the table of world economic history.
The fact that the OBOR initiative was launched in 2013, almost 3 years
after its 2010 academic genesis and 2 years after its first unofficial debut in
Warsaw means that China would have gained some operational experience
on OBOR projects by now. In fact, China had scrapped the sticky sovereign
guarantee provision in many of the infrastructure projects at CEE in the past
2½ years and replaced the funding method from sovereign guarantee loan to
project finance. The change has facilitated many infrastructure projects in
many CEE countries.2 China has developed some operational expertise in
handling overseas infrastructure loans or investment and is enjoying some
good initial success. The challenge now is to replicate the earlier success when
it scales up the program and try to minimize the natural pitfalls associated
with long-term investment.
Economic rationale behind OBOR

The narrative of Simeon Djankov places the economic rationales at the
center of OBOR initiative, the rising importance of China in the global
2 Ibid.
b2432_Ch-11.indd 171 15/7/2016 7:53:12 PM

economy rightfully places it in a position to look for ways to seek a higher

profile and secure its new gains on global economy. We will look at the
economic rationales of China to initiate OBOR.
Becoming more influential

It is generally agreed that a closer economic relationship through trade and
investment is one of the best ways to forge alliances with strategically impor-
tant countries. Since the 1997 Asian financial crisis until present date, China
has adopted infrastructure investments as an economic counter-cyclical
measure. As a result, China has built up cost-effective expertise in many areas
of basic infrastructure such as power, port, highway, railway and telecom
from the extensive infrastructure development. Multilateral development
banks (MDBs) such as International Monetary Fund (IMF), World Bank

(WB) and Asian Development Bank (ADB) have noted the success of infra-
structure investment to underpin economic growth and they are recom-
mending their member states to significantly increase infrastructure
investment. ADB estimates that, between 2010 and 2020, Asia requires
US$8 trillion on infrastructure investment and a significant portion of which
can be met provided sound financing methods are used.3 McKinsey cited
that US$57 trillion is needed to be spent on building and maintaining infra-
structure worldwide between 2013 and 2030 just to keep up with global
growth.4 The ability of many developing countries to embark on necessary
infrastructure investments is hampered by their poor domestic savings and
available expertise, as well as poor current account status that hurts their
ability to import the required technology. We have noted that most of
the countries under OBOR initiative are either unrated or rated below
investment grade.5
China’s ability to offer cost-effective infrastructure solution and provi-
sion of necessary financing fits well to the needs for many of these countries.
3 Rathbone, Mark and Oliver Redrup, Developing Infrastructure in Asia Pacific: Outlook,
Challenges and Solutions. PricewaterhouseCoopers Service LLP, 2014.
4 Palter, Robert and Herbert Pohl, Money Isn’t Everything (but We Need $57 Trillion for
Infrastructure). Infrastructure Journal & Project Finance Magazine, 1 March, 2013.

5 Van Praagh, Anna, Multilateral Development Banks & Asian Investment: Room for More?
Lecture. Washington, 30 September 2015.
b2432_Ch-11.indd 172 15/7/2016 7:53:12 PM

Figure 1: China annual outward investment inside and outside OBOR regions (US$ billion)
Source: Ministry of Commerce, China Global Investment Tracker complied by the American Enterprise
institute and The Heritage Foundation, USB estimates
Figure 1 shows the increasing share of OBOR countries in the overseas direct
investment (ODI) of China.
Increasing Chinese goods and services export

Some sectors facing overcapacity problems in the domestic market are in
demand overseas, e.g. railway equipment, construction, building materials
and capital. We should note that exporting capital, importing foreign
demand and addressing overcapacity issues are just different aspects of the
same issue — China’s excessive savings need an outlet. Chinese government
used to be a happy passive investor in low-yielding US Treasury bonds
before, now the government evidently wants to shift part of the savings to
higher risk but real commercially-related direct lending and/or investment
to OBOR countries. Such a transition, if executed properly, will benefit the
real economy of China much more than the passive US Treasury holdings.
In 2014, Chinese companies’ ODI had surpassed foreign direct investment
(FDI) to China and the trend is likely to continue.6 Figure 2 highlights the
change of China’s role from an investment destination to an investment
source.
6 David, Cui, Tian Tracy and Tai Katherine, One Belt & One Road, Great Expectation. Lecture.
China, 16 March 2015.
b2432_Ch-11.indd 173 15/7/2016 7:53:12 PM

150
US$ bn
100
50
(50)
2006 2007 2008 2009 2010 2011 2012 2013 2014
(100)
FDI ODI Net

Figure 2: China FDI vs. ODI in value

Source: CEIC, BofA Mermill Lynch Global Research
A greater say in global financial architecture

China’s economic size is not in tune with its representation in the existing
global financial architecture essentially formed around 1944 Bretton Woods
agreement, especially IMF, WB and the ADB. China’s nominal GDP share
in 2014 was almost 14% of the world, but its outstanding voting share
assignment in the three institutions were only 4%, 4.42% and 5.5%, respec-
tively. The implicit voting bloc arrangement among European countries, the
US and Japan also meant that management of these institutions is always
skewed towards the vested interest of the Europeans in IMF, the Americans
in WB and the Japanese in ADB. Different approaches in dealing with the
Asian financial crisis in 1998 and Euro crisis post-2008 have raised the issue
of discrimination among members in IMF. Budget constraints of developed
members of WB and ADB had forced them to shift focus from asset-heavy
model of development loan granting to asset-light model of soft technical
advisory assistance and cofinancing arrangements, leaving a huge funding
gap in developing countries’ infrastructure requirements.
Reform efforts at these institutions to reflect China’s rising economic sta-
tus as the biggest trading country and holder of largest foreign exchange
reserves with over 30% of total global official reserves are not always successful.
b2432_Ch-11.indd 174 15/7/2016 7:53:13 PM

Figure 3: Chain trade (% of world trade)

US Congress withheld the 14th general quota increase plan of IMF that was
approved in 2010 and that would have increased China’s share in IMF from
4% to 6.4%. What US Congress will do to the 15th general quota increase
slate to be approved by IMF in the immediate future is even more question-
able, the new round will further increase China’s share to 10.5% and cut US
share to 14.9%. It will be the first time that US share will fall below 15% in
IMF history and deprive US of the effective veto power. IMF charter stipulates
that certain major decisions require 85% approval. Figure 3 highlights the
spectacular rise of Chinese share of global trade in recent years.
China’s launch of Asian Infrastructure Investment Bank (AIIB) holds the
potential to significantly affect the global landscape of MDB financing.
Though the bank will only start its operation from 2016 and the first
loan release is targeted at 2Q 2016. The designated AIIB President, Jin
Liqun’s promise of a clean, lean and green bank that will uphold the high-
est social and environmental standard, minimize undue loan conditionality
and work on faster loan processing speed than its rival highlighted the exist-
ing MDBs’ deficiency in meeting its member’s need.7 AIIB had generated
incredible public attention of any new multilateral financial institution.
7 Donnan, Shawn, and Demetri Sevastopulo, AIIB Head Vows to Be Clean, Lean & Green-and
Fast. Dated 25 October 2015 in FT.com. [downloaded 28 October 2015], available at http://www.
ft.com/intl/cms/s/0/b6f95846-7b0d-11e5-a1fe-567b37f80b64.html?ftcamp=crm/email/
20151025/nbe/AsiaMorningHeadlines/product#axzz3przV48Pp.
b2432_Ch-11.indd 175 15/7/2016 7:53:13 PM

Former US treasury secretary Larry Summers even remarked that the setup
of AIIB reflects the loss of US in its role as the underwriter of the global
economic system.8
Moving up the value chain and internationalization

of the Renminbi (RMB)
OBOR may open doors in destination countries for China to establish a
foothold in important service sectors, including banking, power and telecom.
A wider usage of RMB that comes with OBOR globally will serve as impor-
tant impetus to expand the influence of China’s financial sector overseas.
There is market speculation that IMF approved the RMB inclusion in the
Special Drawing Right (SDR) on November 2015 after taking into account
the potential of a wider and more free use of RMB under OBOR. With bet-
ter connectivity, in the long term, China may be able to relocate some of the
low-end manufacturing capacities to these countries and thus, focus on the
more value-added parts of the value chain.
Development of inland provinces

The main force behind regional rebalancing in China today focuses on
relocation of manufacturing facilities from affluent coastal region to inland
provinces in order to take advantage of cheap land, labor and more lenient
environment regulation. The inland migration has been successful in miti-
gating the outward migration loss of many low-value manufacturing to
other countries and also helps to uplift the economies of many inland
provinces. However, inland provinces suffer from exports via seaborne
route, OBOR will not only open the Central Asia market to the inland
provinces manufacturing goods, it will also lower logistic costs significantly
for inland provinces in the export market once initial logistic bottleneck is
worked out.
8 Summers,Larry, Time US Leadership Woke up to New Economic Era, dated 5 April 2014 in
Larry Summers’ blog [downloaded on 11 December 2015], available at http://larrysummers.
com/2015/04/05/time-us-leadership-woke-up-to-new-economic-era/.
b2432_Ch-11.indd 176 15/7/2016 7:53:13 PM

Enhancing economic security

When President Obama launched Trans Pacific Partnership (TPP) negotia-
tion that excluded China in 2009, his declared intention of US retaking

global leadership in trade negotiation from China caused much chagrin
among the Chinese leaders. Many observers attributed the 2010 genesis of
OBOR as a pushback against the TPP which was perceived as an attempt to
hurt the economic security of China.
European Union is the single biggest trading bloc of China and develop-
ing multiple transit routes to Europe through OBOR will enhance the eco-
nomic security of China. Central Asian countries along OBOR routes also
provide some diversification of China’s energy import requirement and
enhance the Chinese energy security.
Funding institutions involved with OBOR

The following table provides the list of funding institutions of potential OBOR
projects. One should note that many of these institutions have been working
on Chinese infrastructure export funding for some time and their involvement
in OBOR is not a new business area for them. There are misunderstandings in
many quarters that OBOR is a new political initiative camouflaged under eco-
nomic connectivity and decides on political basis rather than economic merit,
hence the project risk involved is significant. In actual fact, essentially all of the
OBOR projects being signed, worked on and in the few cases finalized under
the OBOR initiative in Europe are projects in which the project preparation
and evaluation was started with a different entity — either development agency
or commercial bank. Many of these projects were basically shelved for one
reason or another and did not get to the end. In most cases, the reasons to these
projects being blocked are not economic but problems in other areas. The
Chinese investors/partners would often return and work out some solutions to
the blocking issues and proceed to fund the projects under OBOR. The famous
770 km US$15 billion Moscow–Kazan high-speed rail project is a typical
example of such project. The economic merit of the OBOR projects thus far is
better than commonly perceived and risk is more manageable as well.9
9 Djankov, Simeon, Multilateral Development Banks & Asian Investment: Room for More?
b2432_Ch-11.indd 177 15/7/2016 7:53:13 PM

Resources Size
Name Year (US$ — Billion) Partners
AIIB 2015 100 57 member state

BRICS Development Bank 2015 100 Brazil, Russia, India,
South Africa
Silk Road Fund 2015 40
China Policy Banks — China Development 1993
Bank and China Exim Bank
Major Chinese Banks — Bank of China,
Industrial and Commercial Bank of
Chinas (ICBC), China Construction
Bank (CCB) … etc.
AIIB — An Origin against all odds

No MDB, in memory, had generated that much controversy on its formation
as compared to the AIIB. AIIB is regarded by some as a rival to the domi-
nance of Bretton Woods institutions like IMF, WB and the Bretton Woods
system associated ADB. These institutions are perceived by many developing
countries as proxies of developed countries like the United States and are not
performing a good job in serving its developing country members. Many
Americans also see AIIB as a significant challenger to America’s decades-old
leadership in Asia.10 The United Nations took a more positive stance toward
AIIB and describe it as “scaling up financing for sustainable development for
the concern of Global Economic Governance”.11
When the UK became the first major Western country to apply to join
AIIB in early March 2015, US National Security Council released a state-
ment to The Guardian in London: “Our position on the AIIB remains clear
and consistent. The United States and many major global economies all
10 Support for China-led Development Bank Grows despite US Opposition, dated 13 March 2015
in The Guardian [downloaded on 15 December 2015], available at http://www.theguardian.com/

world/2015/mar/13/support-china-led-development-bank-grows-despite-us-opposition-
australia-uk-new-zealand-asia.
11 World Economic Situation and Prospects 2015-Chapter III International Finance for. UN,
2015 [downloaded on 12 December 2015], available at http://www.un.org/en/development/

desa/policy/wesp/wesp_archive/2015wesp-ch3-en.pdf.
b2432_Ch-11.indd 178 15/7/2016 7:53:13 PM

agree there is a pressing need to enhance infrastructure investment around

the world. We believe any new multilateral institution should incorporate
the high standards of WB & other regional MDB… Based on many discus-
sions, we have concerns about whether the AIIB will meet these high stand-
ards, particularly related to governance, and environmental and social
safeguards… The international community has a stake in seeing the AIIB
complement the existing architecture, and to work effectively alongside the
WB and ADB.”
In addition, UK’s decision to join AIIB was criticized by the US govern-
ment. A US government official told Financial Times, “We are wary about a
trend toward constant accommodation of China, which is not the best way
to engage a rising power.”12 Though the opposition to AIIB has significantly
subsided after its founding members’ ratification of Article of Agreement in
late June 2015, US, Japan and Canada remain out of AIIB. US and Japan
have not indicated any interest to join the bank anytime soon, however,
many observers expect Canada to join as a non-founding member in 2016.
Working relationship between AIIB and IMF, WB and ADB have been
smooth and the existing MDBs are in active working meetings with the
secretarial of AIIB organizing committee to work out joint infrastructure
cofinancing program once AIIB is officially set up in 2016.
AIIB will complete its Article of Agreement stipulating legal formalities
by the end of 2015 and will officially be set up in 2016 with 57 founding
members composed of 37 regional members and 20 non-regional mem-
bers.13 The initial authorized capital is US$100 billion will be headquartered
in Beijing. Former Vice Minister of Finance of China, ADB and WB veteran,
Jin Liqun will be the inaugural president. President Jin revealed that there are
more than 30 countries indicating interest to join AIIB after its official
setup.14 If all of the applicants are accepted by AIIB, its membership will
12 Washington Rebukes Britain’s Decision to Join China-backed Asian Infrastructure Bank,

dated 13 March 2015 in The Standard [downloaded on 12 December 2015], available at http://
www.thestandard.com.hk/breaking_news_detail.asp?id=58463&icid=2&d_str=20150313.
13 List of AIIB founding members and their respective capital shares and voting rights are
provided in Appendix 1.
14 Over 20 Countries on ‘waiting List’ to Join AIIB: China, dated 19 September 2015 in
Channel News Asia [downloaded on 12 December 2015], available at http://www.channel

newsasia.com/news/business/over-20-countries-on/2137808.html.
b2432_Ch-11.indd 179 15/7/2016 7:53:13 PM

swell to more than 87 and it will have more members than ADB, which
at the moment has 67 members made up of 48 regional members and
19 non-regional members.
AIIB — Operational principles

President Jin has stated some operating principles of the bank to address the
market concern on issues of governance and transparency of AIIB as well as
the unusual large share holding of China in AIIB. It is noted that the US is
the largest shareholder of IMF and WB and it holds 16.5% and 16.3% of the
voting rights, respectively, of these two organizations at the moment. In the
case of ADB, Japan as the largest shareholder holds 13% of voting share. For
AIIB, China holds 26.06% and the supermajority provision of major AIIB
decision making is approved by 75% voting share. China thus holds an effec-
tive veto power on major decisions of AIIB and there are worries that AIIB
will become a policy tool of China in its push for OBOR financing. One
should note that US also yields effective veto power in IMF and WB as their
supermajority provision stipulation is higher at 85%, so a lower shareholding
still yields some sense of privileged position for the US at IMF and WB.
However, holding effective veto power on major decisions does not mean that
the country gets the control of the multilateral agencies. Historically, formal
votes are rarely taken at these entities and the executive board strives for con-
sensus on decision making. All these institutions’ professional management
team yields effective operational control on the business of the bank.15
Apparently with the blessing of the Chinese authority, President designate
Jin Liqun has put forward the following operational philosophy for AIIB:16
First, AIIB is not a policy tool of Chinese government in its OBOR initiative.
AIIB is an MDB that must serve the interests of all of its members. In case
15 Posner, Eric and Alan Posner, Voting Rules in International Organizations, Public Law and
Legal Theory Working Papers, 2014 [downloaded on 12 December 2015], available at http://
chicagounbound.uchicago.edu/cgi/viewcontent.cgi?article=1448&context=public_law_and_
legal_theory
16 President-designate Talks about Plans for the Bank, dated 11 December 2015 in CCTV.com
website [downloaded on 12 December 2015], available at http://english.cntv.cn/2015/12/11/

VIDE1449826919588145.shtml.
b2432_Ch-11.indd 180 15/7/2016 7:53:13 PM

of meritorious OBOR projects that AIIB will offer support, the bank will
invest based on policies and loan conditions set by the Board of Governors
of the Bank. The bank will pay equal attention to other non-OBOR Asian
nations’ projects as well.

Second, AIIB is not a challenger to global financial order, it is to complement
the existing MDB and will concentrate on infrastructure investment. It will
invest in five major areas during its initial stages — energy, transportation,
rural development, urban development and logistics. WB and ADB supports
AIIB and they are working for areas of cooperation.
Third, AIIB will uphold the highest social and environmental standard among
MDBs. It will codify employee conduct, social and environmental standard
after public consultation.17 The bank will strive to be a clean, lean and green
bank with faster loan processing speed to meet the needs of its members. It will
minimize undue loan conditionality that hampers project implementation.18
Fourth, AIIB’s management will be professional as well as international.
English will be the operational language and USD is the operational cur-
rency. Staff are recruited on international basis by merits and compensation
is similar to existing MDB standard.19
AIIB — The game changer in development banking

AIIB can provide a very helpful role in the success of OBOR infrastructure
financing. Infrastructure financing is mostly long term and credit risks run
high on people’s mind when China embarks on such a large scale project.
Though China is successful so far in cherry-picking good projects that failed
17 Consultations on Draft Environmental and Social Framework, dated 1 August 2015 in AIIB
website [downloaded on 12 December 2015], available at http://www.aiib.org/html/theme/
Consultations_Draft/.
18 Donnan, Shawn and Demetri Sevastopulo. AIIB Head Vows to Be Clean, Lean & Green-and
Fast, dated 25 October 2015 in FT.com [downloaded on 28 October 2015], available at http://
www.ft.com/intl/cms/s/0/b6f95846-7b0d-11e5-a1fe-567b37f80b64.html?ftcamp=crm/
email/20151025/nbe/AsiaMorningHeadlines/product#axzz3przV48Pp.
19 For the five vice president post openings, AIIB have received more than 140 international
applicants and the position will be based on merit rather than nationality.
b2432_Ch-11.indd 181 15/7/2016 7:53:13 PM

to get off the ground before and thus, minimizing the associated credit risk,
such projects will run out soon and new projects with increasingly compli-
cated backgrounds requiring more extensive expert evaluations will be
the business norm going forward. A good MDB definitely possesses some
advantage in this regard.
A rising power often gets embroiled in geopolitical disputes with neighbors.
Neutral MDB like AIIB provides a forum for sound economic projects to con-
tinue amid troubled relations between China and the project recipient country.
An often overlooked issue on MDB credit extension to member coun-
tries is that there is never a default in MDB debt to its member. Also the
capital increase around the time of global financial crisis indicates strong
government shareholder support to MDB. On average, MDB debts are more
highly rated than its member’s individual sovereign debt. This can signifi-
cantly lower the funding cost of MDB infrastructure loan. The number of
MDB that have become active in capital markets has grown significantly in
the past decade and the market is increasingly willing to participate in sound
MDB initiated infrastructure loans.20 This is probably the most important
benefit to China from a successful AIIB. AIIB can source funds cheaper than
China and mobilize a larger pool of fund on OBOR or other projects if it is
successfully ran. Figure 4 highlights the advantage enjoyed by MDB.
AIIB has already introduced a competitive dynamic to the global finan-
cial system that was not there before. Both the WB and ADB are reviewing
its ratio of operating cost in relation to loan. It is interesting to note that WB
gets around 10,000 staff costing US$2.4 billion annually to run a new
approved loan volume of US$40 billion, while ADB has around 3,000 staff
to run an annual new loan of around US$15 billion. The idea of President
Jin Liqun to run the bank with a staff level of 500–600 and an annual new
loan approval volume of up to US$15 billion highlights the potential cost-
saving measures the existing MDB can implement. The idea of a non-
resident board, smaller staff, flatter organization, speedier loan approval
procedures are now the topics of the day in many MDBs.21
20 Hess, Steven, Multilateral Banks Playing Growing Role in Funding Global Development.
Lecture, 30 September 2015.
21 Industry observer often use 7–9 years as the time frame of a typical WB/ADB medium-size
infrastructure from initiation to completion. AIIB had stated they will try to cut the time frame
to less than 5 years.
b2432_Ch-11.indd 182 15/7/2016 7:53:13 PM

Sovereign Ratings Supranational Ratings

45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Aaa Aa1 Aa2 Aa3 A1 A2 A3 Baa1 Baa2 Baa3 Baa1 Ba2 or
lower
Figure 4: Aaa and Aa rating dominate

Source: Moody’s
AIIB has prompted other actors to accelerate their own steps in filling
the infrastructure gap. The G20 launched a global infrastructure initiative
with a hub in Australia. WB increased its funding and plans to increase more
in the future. It also launched a global infrastructure facility that will hope-
fully serve as a platform to bringing various actors to fund infrastructure
development. There are also various new regional programs being set up or
under planning by regional MDBs.
AIIB could also contribute or change the existing pattern of infrastruc-
ture financing by adopting certain kinds of new financing methods that
China had used successfully in recent years in the international infrastructure
market. A resource financed infrastructure approach which has been actively
practiced by China in recent years is now a serious subject of study by WB
staff to verify how the new model can be adopted.
An interesting area to watch is how China’s emphasis on infrastructure
loans that suit local development needs and de-emphasizing the need of the
recipient country to adopt traditional free-market principles of privatization
and deregulation might be watched by the existing MDBs.22 A lot of social
issues such as poverty alleviation, democracy, freedom, human rights,
religion, women’s advancement, climate change, health issues, education
22Wang, Hongying, Multilateral Development Banks & Asian Investment: Room for More?
b2432_Ch-11.indd 183 15/7/2016 7:53:13 PM

were added in recent years in many MDB’s loan evaluation criteria. These
issues are laudable but they often unnecessarily delay project implementa-
tion and divert MDB’s attention from their main role of fund mediation
from international capital market to developing countries, and overstretch

its financial, human and logistic resources.
The secretariat of AIIB has recruited a good number of veteran ADB and
WB to jumpstart the operation. Initial operational hiccups are not expected
from the experienced core staff recruited. However, an international multi-
lateral organization will not be expected to run smoothly from day 1, in
particular, AIIB which is the first MDB that China will run and a good
number of policy issues must be set. There are two looming issues that AIIB
will face almost immediately. One is the loan policy on coal fire power plant.
WB and ADB had refrained from coal fire power plant financing in the past
few years and yet coal fire power plant is the cheapest baseload electricity
source for developing countries. Should AIIB finance coal fire power plant
and if so, what kind of pollutant emission standard and carbon emission
standard should it mandate without unduly raising too much electricity cost
will be an acid test on the operational skill of the management. Second is the
credit rating of AIIB. China is apparently looking at AAA rating in Moody’s
rating scale and a lower scale will hurt its international funding effort down
the road. Will AIIB seek an early credit rating after its setup or will it rely on
Chinese financial market funding in the early stage of operation is interesting
to watch. President Jin had indicated that in case AIIB does not get a top
rating, it will turn to Chinese market to fund its initial operation.23
AIIB will surely face a steep learning curve ahead; how long will the
management take to overcome hurdles and become a leading MDB will serve
as an acid test of China’s soft power. In a certain sense, the success or failure
of AIIB will also determine the fate of OBOR.
BRICS Development Bank (New Development Bank — NDB)

The bank was set up in 2015 by the five BRICS member countries — Brazil,
Russia, India, China and South Africa. Each participant country holds an
equal number of shares and equal voting rights, as such, none of the coun-
23 Ibid.
b2432_Ch-11.indd 184 15/7/2016 7:53:14 PM

tries will have veto power. The bank’s headquarters will be in Shanghai with
major officials such as president, chairman of the board and chairman of the
board of governors serving on a rotating basis. Indian banker K.V. Kamath
was appointed as the inaugural president, the inaugural chairman of the

Board of Directors is from Brazil and the inaugural chairman of the Board of
Governors will be a Russian. The authorized capital is US$100 billion and
the goal of the bank is to “mobilize resources for infrastructure and sustain-
able development projects in BRICS and other emerging economies and
developing countries”.
NDB has an authorized capital of US$100 billion and it has set an ambi-
tious lending target of up to US$34 billion annually. The bank can be perceived
as a sort of pushback against recent MDB’s philosophy of social priorities such
as education, healthcare, women’s right over physical infrastructure.24 In terms
of founding philosophy, NDB share a lot of similarity with AIIB.

NDB’s fortune rise and fall with that of its founding stockholders. The
taper scare in 2013 summer expose the economic weakness of three of the
five founding members: Brazil, India and South Africa. These three countries
are among the fragile five mentioned in the business press. The commodity
collapse of 2015 also places another member country, Russia, to economic
tailspin. The only economically strong member country, China, is going
through its internal economic restructuring and it has launched a similar
MDB, AIIB. It is becoming increasingly apparent that China is concentrat-
ing its resources on AIIB and NDB is suffering from the absence of an
anchor investor.
NDB has made few public statements in relation to its forthcoming
debut in 2016. In contrast to the active management style of AIIB’s Jin, K.V.
Kamath gave few interviews and the public only knew recently that NDB is
trying to release its first loan by the second quarter of 2016 and will work
with AIIB and other MDB on projects cooperation.
An immediate challenge to NDB is the credit rating it can get from
international rating agencies. Based on the current credit rating of Moody’s,
China’s sovereign rating is AA3 while India is BAA3 (the lowest investment
24 Khanna, Parag. New BRICS Bank a Building Block of Alternative World Order, dated 18
June 2014 in Huffington Post [downloaded on 12 December 2015], available at http://www.
huffingtonpost.com/parag-khanna/new-brics-bank_b_5600027.html.
b2432_Ch-11.indd 185 15/7/2016 7:53:14 PM

grade assignment). Brazil’s current rating is also BAA3 but are facing reviews
and there is a very high likelihood of a downgrade in the immediate future,
any downgrade will move Brazil to speculative grade assignment. South
Africa’s current rating is BAA2 and Russia’s current rating is BA1, which are
both speculative grade. Even MDB usually enjoys a higher credit rating than
individual member states, and NDB’s equal stockholding structure means
the absence of an anchor player. Initial rating on NDB might not be high
and it cannot afford the luxury of AIIB to forego international bond market
and turn to domestic market for funding.
The prospect of NDB as a major conduit of OBOR projects is not
expected to be significant in the initial stage. Most of its activities will prob-
ably be concentrated within its five members.
Silk Road Fund

The US$40 billion fund was set up in 2015 with an impressive shareholder
slate. China foreign exchange reserve (SAFE) holds 65% share, China Exim
bank 15%, China sovereign country fund China Investment Corporation
(CIC) 15%, China Development Bank (CDB) 5%. The combined assets of
these four stockholders run an impressive US$7 trillion. The fund will run
on a long-term view private equity fund model similar to International
Finance Corporation (IFC) of WB. It will also provide investment and
financing support for infrastructure, resources, industrial, financial coopera-
tion and other projects involved in the Belt and Road initiative. First presi-
dent is Madame Jin Qi, who had served as deputy director of People’s Bank
of China’s foreign financial institution department and assistant governor.
The fund’s first investment is the US$1.65 billion 720 MW (4 × 183
MW Francis turbine unit) Karot hydroelectric project. The project will gen-
erate an annual power output of 3.2 billion Kwh. This Silk Road fund joins
China Three Gorges South Asia Investment Ltd. (CTGC) to put up 20% of
the equity in the Karot project.
IFC is one of the more successful WB subsidiaries and its leading strategic
investor role in Public–Private Partnership (PPP) is well known. Silk Road
Fund will probably take on a leading public investor role with China’s State-
Owned Enterprises (SOEs) taking on the private role in future OBOR-related
projects.
b2432_Ch-11.indd 186 15/7/2016 7:53:14 PM

China policy banks — CDB & EXIM Bank

China is the biggest overseas contractor today. Chinese Ministry of Commerce
data has shown that Chinese contractors’ estimated 2015 overseas revenue
and new contract win will hit US$160 billion and US$190 billion, respec-
tively. That is a significant increase from US$30 billion and US$70 billion in
2006. CDB and Exim Bank play an indispensable role in China’s successful
overseas construction market.25
CDB was set up in 1994 with an assigned mandate of assisting national
government’s development policies. One of the mission statements of CDB is
“facilitating China’s cross-border investment & global business cooperation”.
CDB raises funds through domestic bond issuance and its bonds are assigned
risk-free assets status by the Chinese banking authority. The bank is the sec-
ond biggest bond issuer of the country, just behind the Ministry of Finance.
In 2014, CDB raised RMB 1,175 billion in domestic bond market.

CDB is the biggest development bank in the world. At the end of 2014,
its asset is RMB 10.32 trillion, with a loan portfolio of RMB 7.942 trillion,
equity standing at RMB 681 billion, profits for 2014 are 97.7 billion and
non-performing loan at 0.65%. CDB did not break down its overseas loan
portfolio, however, its foreign loan stands at RMB 1.56 trillion at the end of
2014, and this amount most likely reflects a significant portion of its overseas
loan support to Chinese contractors. It should be noted that CDB is the big-
gest foreign currency loan provider in China.26 CDB extended more than
RMB 2 trillion new loan in 2014, a much higher figure than WB’s fiscal
commitment of US$60 billion (RMB 380 billion) in loans, grants, equity
investment and guarantees to partner country and private business.
China Exim Bank is another policy bank set up in 1994 to promote
foreign trade and investment as well as development assistance in conces-
sional funding. At the end of 2014, bank assets were at RMB 2.37 trillion,
with outstanding loans at RMB 1.74 trillion and profit for the year was RMB
4 billion. It has committed various financial facilities of RMB 995 billion
and disbursed RMB 921 billion in 2014. The bank provides fund support to
expedite RMB 292.5 billion exports and RMB 140 billion imports. Though
25 Ibid.
26 “Annual Report 2014. China Development Bank, 2015 [download on 12 December 2015],
available at http://www.cdb.com.cn/english/Column.asp?ColumnId=91.
b2432_Ch-11.indd 187 15/7/2016 7:53:14 PM

the bank is smaller in scale than CDB, its imprint in overseas markets are just
as important as CDB. Most of the CDB resources are devoted to the domestic
market and its overseas exposure is not much larger than Exim Bank. The
fact that Exim Bank is the only policy bank allowed to provide concessionary
loans make it a preferred lender in many cases.
CDB and Exim Bank recently received a capital infusion from the
government of US$48 billion and US$45 billion, respectively on July
2015. The move will significantly strengthen their lending capacity in the
forthcoming OBOR infrastructure financing. These two institutions are
expected to retain their role as dominant player of Chinese infrastructure
export in the near to medium term. They have developed certain expertise
in handling foreign development funding and overseas concessionary loan
granting.
Major Chinese state commercial banks — ICBC, CCB,

Agricultural Bank of China (ABC), BOC
A high domestic savings rate that approaches half of GDP and the concentra-
tion of financial asset system in the banking sector allows China to build a huge
banking system. Figure 5 shows the relative size of China’s banking system as
30,000
25,000
20,000
15,000
10,000
5,000
0
China
Japan
HK
Korea
Singapore
Taiwan
Malaysia
Thailand
Indonesia
Philippines
Figure 5: Relative size of different Asian banking markers, US$ billion at YE14E
Source: Central Banks, CEIC, UBS Banks team
b2432_Ch-11.indd 188 15/7/2016 7:53:14 PM

compared to its Asian neighbors. We have just highlighted Asian countries as

their financial system are much more bank-centric than other regions.
Chinese commercial banks overseas businesses used to concentrate on
trade financing. However, OBOR initiative and RMB internationalization

have opened many new business areas for these institutions. The burgeoning
expansion of banking assets, risk diversification and seeking higher returns all
provide justifiable incentives for the commercial banks to venture overseas.
BOC is the biggest Chinese bank overseas, and it recently announced
that the bank had lent out US$10 billion to OBOR-related loans in the first
half of 2015 and was on the way to reach US$20 billion OBOR-related new
lending in 2015. OBOR-related loan will be 16% of its new lending in 2015.
For 2016–2018, the bank has committed US$100 billion or 22% of its fore-
casted new loans to OBOR-related loans. Even at such elevated level of new
loan commitment, OBOR-related loans will just be 6% of its loan portfolio

by the end of 2018, BOC’s assets were at US$2.458 trillion at the end of
2014 and it is the fifth largest bank according to Forbes.
The biggest bank of the world, ICBC revealed that it has pledged
US$10.9 billion to 73 overseas project along OBOR countries at the end
of 2014.
CCB emerged later than BOC and ICBC, it is increasing its overseas
branch network to 30 by the end of 2015 to look for opportunities arising
from OBOR-related business.
ABC is a newcomer in overseas banking among the four major Chinese
commercial bank and is not expected to be a major player in OBOR-related
funding activities in the near future.
Chinese banking system assets are heavily concentrated in the domestic
market as the following Figure 6 shows. The current overseas loans make up
less than 3% of Chinese banking system total loans, a very low level in the
global banking scene for a major trading country and a major economy.
BOC is the most experienced in overseas banking business and its plan of
US$100 billion in the next 3 years will constitute the bulk of major com-
mercial bank loan commitment to OBOR initiative.
Other players — SOE & SCO Bank

Jakarta–Bandung high-speed rail project is a private commercial partnership
with China SOE and Indonesia SOE. This novel approach avoid the sticky
b2432_Ch-11.indd 189 15/7/2016 7:53:14 PM


Figure 6: Overseas loans currently make up a fraction of China banking system total loans
Source: PBOC, UBS Banks team
issue of sovereign guarantee for the US$5.5 billion project. We should note
the role played by SOE in the initiation, planning, negotiation and execution
of the OBOR projects. Their ability to screen out economically sound pro-
jects will ultimately decide the success of OBOR initiatives.
Shanghai Cooperation Organization (SCO) is proposing to set up an
SCO Bank to expedite OBOR-related project financing. Currently, the mar-
ket is not looking at the idea too seriously. Out of the eight members of
SCO: China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Uzbekistan, India
and Pakistan, Russia and India already has BRICS Bank to serve its need,
Pakistan already received the US$46 billion OBOR funding commitment in
April 2015 and Kazakhstan is an important energy partner in Central Asia to
China. There seems to be no pressing need for such a new MDB. Institutional
build up of a MDB takes time and the proposed SCO Bank is not expected
to make material difference to OBOR projects in the immediate future.
Outlook for OBOR

Analysis on the funding source for OBOR indicates that China does possess
sufficient financial resources, at the moment, to support its OBOR initiative.
China already gained certain level of expertise in the infrastructure export
through the SOEs such as China Communication Construction Corporation
(CCC), China Railway Group (CRG), China Railway Rolling Stock
b2432_Ch-11.indd 190 15/7/2016 7:53:14 PM

Corporation (CRRC), etc. They have obtained good overseas contract

opportunities and the policy bank support have brought many of these
opportunities to actual project implementation.
China is running an annual current account surplus of around US$300

billion, and committing such amounts of funding to OBOR financing is not
going to hurt China’s credit standing and financial system stability. Of course,
we should note that OBOR is probably the most ambitious cross-border
infrastructure initiative ever launched, scaling up earlier bilateral working
model between China and the recipient country might not be a simple exten-
sion of modeling. The issue of country affordability, loan credit worthiness,
long-term political stability and many more risk factors will be coming into
the picture.
The Chinese government had set a deadline of 30 October 2015 in its
solicitation of provincial inputs on the finalization of OBOR plan, how the

plan is laid out will allow a more detailed analysis and lookout for its future
prospect. Even in the absence of an integrated plan, Chinese overseas con-
tract wins and execution is already at a high note, whether there is a need to
overhaul the system or keep the existing system with a small twist are topics
that observers are keenly looking into.
McKinsey estimated that the world needs an annual investment of
US$2 trillion on infrastructure spending to keep the current pace of GDP
growth. If China can indeed free up its annual current account surplus of
US$300 billion for infrastructure investment around the world, particularly
OBOR-related developing countries, the impact on global growth and
poverty alleviation will be meaningful.
b2432_Ch-11.indd 191 15/7/2016 7:53:14 PM

Appendix 1
Initial subscriptions to the authorized capital stock for countries which may
become members in accordance with Article 58
Part A — Regional Members % of Share % of Vote

Australia 3.76 3.46
Azerbaijan 0.26 0.48
Bangladesh 0.67 0.83
Brunei Darussalam 0.05 0.31
Cambodia 0.06 0.32
China 30.34 26.06
Georgia 0.05 0.31

India 8.52 7.51
Indonesia 3.42 3.17
Iran 1.61 1.63
Israel 0.76 0.91
Jordan 0.12 0.37
Kazakhstan 0.74 0.89
Korea, South 3.81 3.50
Kuwait 0.55 0.73
Kyrgyz Republic 0.03 0.29
Lao People’s Democratic Republic 0.04 0.30
Malaysia 0.11 0.36
Maldives 0.01 0.27
Mongolia 0.04 0.30
Myanmar 0.27 0.49
Nepal 0.08 0.33
New Zealand 0.47 0.66
Oman 0.26 0.49
Pakistan 1.05 1.16
Philippines 1.00 1.11
Qatar 0.62 0.79
(Continued )
b2432_Ch-11.indd 192 15/7/2016 7:53:14 PM

Russia 6.66 5.93

Saudi Arabia 2.59 2.47
Singapore 0.25 0.48

Sri Lanka 0.27 0.50
Tajikistan 0.03 0.29
Thailand 1.45 1.50
Turkey 2.66 2.52
United Arab Emirates 1.21 1.29
Uzbekistan 0.22 0.45
Vietnam 0.68 0.84
Part B — Non-Regional Members % of Share % of Vote

Austria 0.51 0.70

Brazil 3.24 3.02
Denmark 0.38 0.58
Egypt 0.66 0.83
Finland 0.32 0.53
France 3.44 3.19
Germany 4.57 4.15
Iceland 0.02 0.28
Italy 2.62 2.49
Luxembourg 0.07 0.32
Malta 0.01 0.27
Netherlands 1.05 1.16
Norway 0.56 0.74
Poland 0.85 0.98
Portugal 0.07 0.32
South Africa 0.60 0.77
Spain 1.79 1.79
Sweden 0.27 0.50
Switzerland 0.72 0.87
United Kingdom 3.11 2.91
UNALLOCATED REST of REST of
100% 100%
b2432_Ch-11.indd 193 15/7/2016 7:53:14 PM

Appendix 2
MDBs rated by Moody’s as of September 2015 MDB
Founding Moody’s Initial Current

Year Rating Rating
Africa Finance Corporation (AFC) 2007 2014 A3/Stable
African Development Bank (AfDB) 1963 1984 Aaa/Stable
African Export-Import Bank (AFREXIM) 1993 2010 Baa2/Stable
Arab Petroleum Investments Corp 1974 2010 Aa3/Stable
(APICORP)
Asian Development Bank 1966 1975 Aaa/Stable
Black Sea Trade & Development Bank 1997 2004 A2/Negative
(BSTDB)
Caribbean Development Bank (CDB) 1969 1992 Aa1/Stable
Central American Bank for Economic 1960 2002 A1/Stable
Integration (CABEI)
Corporacion Andina de Fomento (CAF) 1968 1993 Aa3/Stable
Council of Europe Development Bank (CEB) 1956 1988 Aa1/Stable
East African Development Bank (EADB) 1967 2013 Baa3/Stable
European Financial Stability Facility (EFSF) 2010 2010 Aa1/Stable
Eurasian Development Bank (EDB) 2006 2007 Baa1/Stable
Eurofina 1956 1984 Aa1/Stable
European Bank for Reconstruction & 1991 1991 Aaa/Stable
Development (EBRD)
European Investment Bank (EIB) 1958 1976 Aaa/Stable
European Investment Fund (EIF) 1994 2003 Aaa/Stable
European Stability Mechanism (ESM) 2012 2012 Aa1/Stable
European Union (EU) 1993 1997 Aaa/Stable
Fondo Latinoamericano de Reservas (FLAR) 1978 2002 Aa2/Stable
GuarantCo 2006 2014 A1/Stable
Gulf Investment Corporation G.S.C. (GIC) 1983 2002 A2/Stable
International Bank of Reconstruction & 1944 1962 Aaa/Stable
Development (IBRD)
(Continued )
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Appendix 2 (Continued )
Founding Moody’s Initial Current

Year Rating Rating

Inter-American Development Bank (IADB) 1959 1975 Aaa/Stable
Inter-American Investment Corporation (IIC) 1985 2001 Aa2/Stable
International Finance Corporation (IFC) 1956 1989 Aaa/Stable
International Investment Bank (IIB) 1970 2014 Baa1/Stable
Islamic Corporation for the Development of 1999 2015 Aa3/Stable
the Private Sector (ICD)
Islamic Development Bank (IsDB) 1975 2006 Aaa/Stable
Nordic Investment Bank (NIB) 1976 1980 Aaa/Stable
North America Development Bank (NADB) 1994 2010 Aa1/Stable
PTA Bank 1985 2010 Ba1/Stable
Shelter Afrique 1982 2011 Ba1/Stable

The West African Development Bank (BOAD) 1973 2015 Baa1/Stable
Source: Moody’s , Issuers Article of Agreement
b2432_Ch-11.indd 195 15/7/2016 7:53:14 PM

May 2, 2013
14:6

PST˙ws
Chapter 12
Prospect of Chinese Rail Export

Under “One Belt, One Road”
Henry CHAN Hing Lee
Background concept on “One Belt, One Road” (OBOR)

and economic corridors

The “Silk Road Economic Belt” concept was first raised by President
Xi Jinping, in September 2013, in an address to Kazakhstan’s Nazarbayev
University. A month later, he proposed the new “21st Century Maritime Silk
Road” in his address to the Indonesian parliament at Jakarta. These two ini-
tiatives were subsequently combined into the OBOR initiatives. The
announced objectives of OBOR are to enhance mutual trust, promote con-
nectivity and share economic prosperity with the aim of reaching a “com-
munity of common destiny” for countries in OBOR.
OBOR aims to connect Asia, Europe and Africa along five routes. The
first three routes are under “Silk Road Economic Belt”: (1) link China to
Europe through Central Asia and Russia; (2) link China with the Persian Gulf
through Central Asia; (3) link China with Southeast Asia, South Asia and the
Indian Ocean. The last two routes fall under “The 21st Century Maritime
Silk Road”, they are: (4) link China coastal ports to Europe through the
South China Sea and Indian Ocean; and (5) link China coastal ports with
the South Pacific Ocean through the South China Sea. Appendix 1 shows the
conceptual map of OBOR.
197
b2432_Ch-12.indd 197 15/7/2016 8:00:38 PM


Figure 1: The Belt and Road initiative: Six economic corridors spanning Asia, Europe and
Africa
Based on the five routes under OBOR,1 China has identified six interna-
tional economic cooperation corridors as shown in Figure 1: (1) China–
Mongolia–Russia; (2) New Eurasia Land Bridge; (3) China–Central
Asia–West Asia; (4) China–Pakistan; (5) Bangladesh–China–India–Myanmar;
(6) China–Indochina Peninsula.
(1) China–Mongolia–Russia economic corridor — There is extensive border

trade between the three countries at the moment. In September 2014,
the three countries’ heads agreed to forge tripartite cooperation on the
basis of China–Russia, China–Mongolia and Russia–Mongolia bilateral
ties. The three countries agreed to bring together the building of China’s
Silk Road Economic Belt, the renovation of Russia’s Eurasia Land Bridge
and the proposed development of Mongolia’s Prairie Road. This
1 The Belt and Road Initiative. HKTDC (Research), dated 19 August, 2015 [downloaded on 17
October 2015], available at http://china-trade-research.hktdc.com/business-news/article/One-

Belt-One-Road/The-Belt-and-Road-Initiative/obor/en/1/1X000000/1X0A36B7.htm.
b2432_Ch-12.indd 198 15/7/2016 8:00:39 PM

Prospect of Chinese Rail Export Under “One Belt, One Road” 199
commitment will strengthen rail and highway connectivity and

construction, advance customs clearance and transport facilitation,
promote cross-national cooperation in transportation, and help establish
the China–Russia–Mongolia Economic Corridor. In July 2015, the three

leaders held a second meeting in the Russian city of Ufa and agreed to
adopt the Mid-term Roadmap for Development of Trilateral Cooperation
between China, Russia and Mongolia. The countries will formulate an
outline of China–Russia–Mongolia Economic Corridor Cooperation
that will align the Silk Road Economic Belt with the establishment of the
Eurasia Economic Union and the Steppe Road Initiative. At the same
time, the three countries will coordinate their respective economic and
trade departments to promote trilateral trade that include the expansion
of local currency in reciprocal trading, coordinate customs procedures to
facilitate trade and explore the possibility of establishing a joint company

for China–Russia–Mongolia rail transport and logistics, as well as invest-
ing in infrastructure construction projects. The US$50 billion projects
under discussions include a network of 997 km new expressway linking
China and Russia, 1,100 km electrified railway, expansion of the pan-
Mongolia railway system, new oil and gas pipelines linking Russia and
China. Some proposed projects under the China–Russia–Mongolia cor-
ridor are shown in Figure 2.
(2) New Eurasian continental economic corridor — The New Eurasia Land
Bridge, also known as the Second Eurasia Land Bridge, is a group of
railway routes originating from various parts of China running through
Xinjiang to various parts of Europe. So far, China has opened eight
international freight rail route offering cargo service under “one declara-
tion, one inspection, one cargo release” in the eight routes. Please refer
to Appendix 2 for the eight routes.
(3) China–Central Asia–Western Asia economic corridor — This corridor
runs from Xinjiang in China and exits the country via Alashankou to
join the railway networks of Central Asia and West Asia before reaching
the Persian Gulf, the Mediterranean coast and the Arabian Peninsula.
The corridor mainly covers five countries in Central Asia (Kazakhstan,
Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan) as well as Iran
and Turkey in West Asia. The third China–Central Asia Cooperation
Forum in June 2015 committed to jointly build the Silk Road
b2432_Ch-12.indd 199 15/7/2016 8:00:40 PM


Figure 2: Proposed projects for China–Russia–Mongolia economic route
Economic Belt. Prior to that, China has signed bilateral agreements on

the building of the Silk Road Economic Belt with Tajikistan, Kazakhstan,
Uzbekistan and Kyrgyzstan. The national development strategies of the
five Central Asian countries — including Kazakhstan’s “Road to
Brightness”, Tajikistan’s “Energy, Transport and Food”, and Turkmenistan’s
“Strong and Happy Era” — all share common ground with the establish-
ment of the Silk Road Economic Belt and the countries concerned will
coordinate their national plans to the regional OBOR plans.
(4) China–Pakistan Economic Corridor — The idea is to build a 3,000 km
economic corridor running from Kashgar, Xinjiang, in the north, to
Pakistan’s Gwadar Port in the south. In April 2015, China made a com-
mitment to invest in projects and lend a total of US$46 billion to jump-
start the program. So far, this is the biggest overseas investment project
announced by China. The two governments have mapped out a provi-
sional long-term plan for building highways, railways, oil and natural gas
pipelines and optical fiber networks stretching from Kashgar to Gwadar
Port. The whole program will take 10–12 years to complete. As of
September 2015, more than 20 projects have been approved and the
corridor is expected to be operational within 3 years.
b2432_Ch-12.indd 200 15/7/2016 8:00:40 PM

(5) Bangladesh–China–India–Myanmar Economic Corridor — In Decem-

ber 2013, the official representatives from the four countries formed
the Bangladesh–China–India–Myanmar Economic Corridor Joint
Working Group and discussed the development prospects, high prior-

ity areas for cooperation and cooperation mechanisms for the eco-
nomic corridor. Eventually, they reached consensus on cooperation in
areas such as transportation infrastructure, investment and commercial
circulation and people-to-people connectivity. They have also estab-
lished the Bangladesh–China–India–Myanmar Economic Corridor
joint study program.
(6) China–Indochina Peninsula Economic Corridor — Chinese Premier
Li Keqiang put forward three suggestions to enhance economic coop-
eration of the six countries (Cambodia, China, Laos, Myanmar,
Thailand and Vietnam) in the fifth Leaders Meeting on Greater

Mekong Sub-regional Economic Cooperation in December 2014 at
Bangkok: (1) to jointly plan and build an extensive transportation net-
work, as well as industrial cooperation projects; (2) creating a new
mode of cooperation for fundraising; and (3) promoting sustainable
and coordinated socio-economic development. Currently, the coun-
tries along the Greater Mekong River are engaged in building nine
cross-national highways, connecting east and west and linking north to
south. A number of these construction projects have been completed.
Guangxi, for example, has already finished work on an expressway
leading to the Friendship Gate and the port of Dongxing at the China–
Vietnam border. The province has also opened an international rail
line, running from Nanning to Hanoi, as well as introducing air routes
to several major Southeast Asian cities.
Initial action plan on OBOR

In March 2015, the Chinese government released an action plan regarding
the principles, framework, cooperation priorities and mechanisms in the
Belt and Road Initiative. The plan states that “Countries along the Belt and
Road should improve the connectivity of their infrastructure construction
plans and technical standard systems, jointly push forward the construction
b2432_Ch-12.indd 201 15/7/2016 8:00:40 PM

of international trunk passageways, and form an infrastructure network

connecting all sub-regions in Asia, and between Asia, Europe and Africa
step by step”.
China has put up US$40 billion Silk Road Fund and initiated the
establishment of US$100 billion Asian Infrastructure Investment Bank
(AIIB) to complement its existing export funding agency China
Development Bank (CDB) and China Export-Import Bank (Ex-Im Bank)
to provide funding for physical infrastructure in developing countries along
the OBOR route. The list of 64 countries identified by China in the
OBOR program is in Appendix 2. We should note that the concept of
OBOR reflects the Chinese desire to promote mutual beneficial develop-
mental economics with friendly neighbors. The OBOR boundaries are
fluid and dynamic. China’s role as the architect, financier and builder of the
OBOR community requires the active cooperation of the partner countries

and China is still in the process of soliciting the participation of many of
the identified countries at the moment. Countries will be added to OBOR
as well as taken away from the list depending on the availability of sound
projects and interest of the countries concerned. OBOR is a new concept
and is only 2 years old, and most of the economic corridor projects
are stuck at discussion stage sans the China–Pakistan economic corridor
projects.
Infrastructure connectivity is a priority in the implementation of the
OBOR initiative. Observers are focused on the rail connectivity in the
OBOR Initiative. The unprecedented speed and scale that China has set up
its passenger High-Speed Rail (HSR) system, from virtually zero to 19,000
km in less than a decade’s time, at a significantly lower cost that even a lower
middle-income country with per capita of US$3,000 can afford has turned
many neighboring countries to take a second look at using rail as a viable
land transport backbone for passengers in lieu of the post WWII transport
network norm of highways and airports.
During the six nationwide railway “Speed Up” campaigns which China
embarked on, the experience the Chinese gained in upgrading conventional
track to run trains at sub-high speed of up to 180 km/h at a fraction of the
cost of building a new line has also captured the attention of many develop-
ing countries interested at using rail system. Until the first Chinese standard
Jakarta–Bandung HSR contract was awarded on 16 October 2015, the
b2432_Ch-12.indd 202 15/7/2016 8:00:40 PM

conventional rolling stock up to 180 km/h combo passenger–cargo rail

system is the main export product and technology of China.
This chapter will look at the recent history of Chinese railway develop-
ments, in particular the HSR technology. Analyzing its strength and weak-
ness as the means of connectivity in the OBOR on the economic corridor
framework, in particular, we will highlight the economic and geopolitical
challenges that these projects are likely to face and lay down conditions that
will determine the outcome of these projects.
Chinese development of HSR

In early 1990s, Chinese commercial train service ran at an average speed of
only 48 km/h under a congested railway network and it was steadily losing
its market share to air transportation and the expanding highway network.
Ministry of Railway (MOR) proposed to build a high-speed railway between
Beijing and Shanghai in early 1990. This proposal was accepted by the cen-
tral government, however, raging debates ensued inside China on whether
the country should adopt conventional high-speed wheel technology or
maglev technology at that time. This has caused significant delays in the
project and construction did not start until the 2000s. In 2004, the State
Council in its Mid-to-Long Term Railway Development Plan, adopted conven-
tional track HSR technology over maglev for the Beijing–Shanghai HSR and
three other north–south HSR lines. This decision ended the debate and
cleared the way for rapid construction of standard gauge (1,435 mm), pas-
senger dedicated HSR lines in China. While the discussion on HSR was
going on, MOR embarked on a series of nationwide “Speed Up” campaign
to increase the service speed and capacity on existing lines. Measures
employed include double-tracking, electrification, improvements in grade
(through tunnels and bridges), reductions in turn curvature, installation of
continuous welded rail, development of new locomotives and modernizing
of signaling systems. Appendix 3 provides the summary of the six nationwide
rail speed upgrades. What is more astonishing is that the new technologies
employed during the “Speed Up” projects were almost all developed indige-
nously. This experience not only made China the world technology leader
in the upgrading of conventional track to either sub-high speed passenger
lines (top speed below 200 km/h in the route) or combo cargo–passenger
b2432_Ch-12.indd 203 15/7/2016 8:00:40 PM

line, it has also laid the foundation for the subsequent speedy absorption of
HSR technologies from foreign joint venture partners after 2004. Upgrading
existing tracks to run sub-high speed train is a technological area often
neglected by major developed countries’ rolling stock companies but this

know-how offers significant economic benefits to developing countries
where old rail network can be rehabilitated to provide cheaper alternatives.
HSR Technology import through joint venture

China is a latecomer to the HSR industry. Japan ran the world’s first HSR
Shinkansen in 1964, France TGV in 1981 and that of Germany ICE in 1991,
whereas China only started building the Beijing–Shanghai HSR in 2004.
China’s early high-speed trains were imported or built under technology
transfer agreements with foreign train-makers including Alstom, Siemens,

Bombardier and Kawasaki Heavy Industries.2 In 2004, Railway Ministry
tasked its two rolling stock manufacturing arms, China South Rail (CSR)
and China North Rail (CNR) to work with foreign technical partner to pro-
duce rolling stock for HSR project under technical transfer agreement,3 the
electric multiple unit (train sets) produced were given the designations
CRH-1 through CRH-5:
(1) CRH-1 series are produced by Bombardier’s joint venture CSR Sifang
(Qingdao) Transportation (BST);
• CRH-1A: an eight-car version; maximum operating speed of
250 km/h, derived from Bombadier Regina design.
• CRH-1B: a modified 16-car version; maximum operating speed of
250 km/h, derived from Bombadier Regina design.
• CRH-1E: a 16-car high-speed sleeper version; maximum operating
speed of 250 km/h, derived from Bombadier Zefiro 250 design.
(2) CRH-2 series are produced by CSR Sifang under license from Kawasaki
with designs derived from Shinkansen E2-1000 series.
2 Railway Ministry practically owned all railways in China before March 2013 and it likewise
manufactured all rolling stocks and rail related equipment. China Railway Corporation (CRC)
took over all assets of Railway Ministry in March 2013.
3 CSR and CNR were merged at mid-2015 to form China Railway Rolling Corporation
(CRRC).
b2432_Ch-12.indd 204 15/7/2016 8:00:40 PM

• CRH-2A: an 8-car version; maximum operating speed 250 km/h.

• CRH-2B: a modified 16-car version of CRH-2; maximum operating
speed of 250 km/h.

• CRH-2C (Stage one): an 8-car version; maximum operating speed of
300 km/h.
• CRH-2C (Stage two): an 8-car model; maximum operating speed of
350 km/h.
• CRH-2E: a 16-car version of CRH-2 with sleeping cars, maximum
speed of 250km/h.
(3) CRH-3 is produced by CNR under license from Siemens ICE-3 (class 403)
• CRH-3: an 8-car model, maximum operating speed of 350 km/h.
(4) CRH-5A is produced by CNR under license from Alstom, derived from
Alstom Pendolino ETR 600.

• CRH-5A: an 8-car model, maximum operating speed of 250 km/h.
The Chinese Railway Ministry had set the target of achieving indigenous
HSR technology at the top priority when they licensed the imported technol-
ogy in mid-2000s. Chinese train-makers, after receiving transferred foreign
technology, have been able to achieve a considerable degree of self-sufficiency
in making the next generation of high-speed trains by developing indigenous
capability to produce key parts and improvising upon foreign designs. China
currently holds many new patents related to the internal components of these
train sets since they have re-designed major components so the trains can run
at a much higher speed than the original foreign train designs. China has
developed indigenous technology in the 380 km/h category and the models
CRH 380-A, CRH 380-AL, CRH 380-B, CRH 380-BL, CRH 380-CL were
all locally designed and built. The only foreign participation in the rolling
stock industry is the Bombadier Sifang Transportation (BST) with its produc-
tion of CRH 380-D (known as Zefiro 380 internationally) and CRH 380-DL
models for the Chinese market. The most popular model today in the Chinese
380 km/h market is the CRH 380-A.
China has established its unique Chinese HSR technical specification.
The rolling stock industry claimed a local content ratio of more than 80%
and many observers put it as the most successful absorption of foreign tech-
nology in Chinese economy.
b2432_Ch-12.indd 205 15/7/2016 8:00:40 PM

State of Chinese railway industry

Since HSR service was introduced on 18 April 2007, China has built the
world’s most extensive HSR network with operating length more than 55%
of the world’s total. Average daily ridership has grown from 237,000 in 2007
to 2.49 million in 2014, making the Chinese HSR network the most heavily
used in the world. Cumulative ridership has reached 3.25 billion by end of
2014. China’s nationwide HSR network covers 28 of the country’s 33
regions.4 HSR in China can be broken down into four sub-groups: The first
is the newly built passenger designated lines (PDLs) that just run HSR pas-
senger service; the second is newly built conventional rail lines, mostly in
western China, that can carry high-speed passenger and freight trains; the
third is certain regional “intercity” HSR lines that are also dedicated to pas-
senger service alone; the fourth is the conventional track railways that were
upgraded to run mixed passenger and freight lines. Most of the rail lines now
under construction belong to one of the first three categories. Nearly all HSR
lines and rolling stock in China are owned and operated by the CRC.
Spillover effect in the Chinese HSR development

The spectacular growth of the HSR in China significantly improved the land
transport efficiency of China. The system runs more than 58% of passenger
train routes and carry close to 40% of train passenger number in December
2014.5 Aside from the convenience of shorter travel times, the key to the
successful migration of ordinary train passenger to HSR lies in affordability.6
From the perspective of absolute fare to relative fare, Chinese HSR is very
affordable to the riding public as the following Figure 3 and Table 1 show.
The spillover effects of HSR to the efficiency of the economy are very
positive. Railway has overall cost advantages vs. other means of transportation.
4 All33 regions in the country is expected to be covered by HSR by 2018.

5 December 2014 New Train Schedule (2014ᒤ12ᴸᯠࡇ䓺䙻㹼െ), dated 11 November
2014 [downloaded on 28 December 2014], available at www.huoche.net/show_312560.
6 During 2008–2013, total rail passenger volume continued to grow at 7.6% annually, but with
a change in traffic composition. While conventional rail traffic grew 1.5% annually, HSR traffic
has increased 39% per annum since 2008. The introduction of CRH services has not caused a
reduction in ridership on the conventional network, but has instead fueled accelerated growth,
which the previous network, close to its full capacity, was unable to serve.
b2432_Ch-12.indd 206 15/7/2016 8:00:40 PM

Figure 3: China HSR train passenger ticket prices compared with global prices and China
airline tickets (US$/km)
Source : UBS
Table 1: HSR fare as percentage of monthly income per 100 km
Nominal HSR Average Monthly Percentage (%) of Monthly

Fare-euro/km Salary (Euro/Month) Income per 100 km HSR
China 0.04 500 0.80
Spain 0.19 1800 1.05
France 0.22 2210 0.81
Germany 0.27 2080 1.29
Italy 0.25 1870 1.33
Japan 0.22 1930 1.14
Author’s calculation based on 2013/1/15 Takungpao
Just measuring in terms of energy efficiency, it compares well with other

modes as well. Figure 4 and Table 2 highlight these two points.7
Traditional economic evaluations of major transport infrastructure
investment focus on the direct costs and benefits arising from travel, includ-
ing user time savings, operator cost savings and reduction of externalities
7 Table on energy consumption use Standard Coal Equivalent (SCE) as energy measurement
unit, 1 SCE = 8.14 kWh.
b2432_Ch-12.indd 207 15/7/2016 8:00:40 PM

Airway
Road
Railway
Waterway
0.00 0.50 1.00 1.50
Passenger Freight
Figure 4: Railway has cost advantage vs. other transportation means

Source : MOR, MOC, Xinhua Net
Table 2: Energy consumption comparison of the different modes of transportation
Cargo kg SCE/kt.km Passenger kg SCE/person.km

Ordinary Railway (diesel) 3.6 0.018
Ordinary Railway (electrified) 1.4 0.007
High-speed Railway (electrified) na 0.01
Large vehicle 18.2 0.015
Cars na 0.043
Shipping 3.1 na
Civil Aviation 91 0.068
Note : 1 standard coal unit = 8.141 kWh

Source : Logistic companies, shipping campanies, airline campanies, B of A Merrill Lynch Global Research
estimates
that include air pollution, noise and accidents. The wider economic impacts
are too tenuous to be reliably quantified and therefore often neglected.
However, China has surprisingly shown strong economic agglomeration
benefits in just a few years after adoption of HSR .8 This significant economic
8 In economies, agglomeration are the benefits that firms obtain by locating near each other. This
concept relates to the idea of economies of scale and network effects. As more firms in related
b2432_Ch-12.indd 208 15/7/2016 8:00:41 PM

growth effect from agglomeration in favor of city cluster encourages the

formation of three mega growth areas in China: Beijing–Tianjin–Hebei;
Yangtze River Delta; and Pearl River Delta. China’s drive to build intercity
HSR in the last 2 years is quite unique in the world HSR construction his-
tory. This reflects the trend that the economic agglomeration effects are
becoming more and more apparent.
A World Bank (WB) study noted the unusually strong contribution of
HSR to China’s regional economic development, urbanization and industrial
upgrading.9 Although benefits from these three areas are too early to be
quantifiable, Chinese experience does show a dynamic interaction of prop-
erly executed transportation infrastructure and economic growth in both
short and long terms. Chinese successes in HSR have drawn the attention of
many developing countries and the term “Rail Diplomacy” was a buzzword
in 2013 and 2014 until its replacement by OBOR.

An interesting technology spillover area from China’s development in HSR
is in the area of urban rail transport. Urban rail transport includes subway and
light rail, with tram and maglev being an insignificant player. China has intensi-
fied urban rail transport infrastructure investments to improve the city traffic
conditions. Cost estimates based on approved lines show that China in general
spent around RMB 500–700 million/km (US$80–110 million/km) on city
subway construction. This figure is very low by international standards and
most observers believe that the Chinese civil work and rolling stock contractors
achieved such efficiency through the learning curve from the HSR construction.
By the end of 2015, 23 Chinese cities were running their urban subway rail
networks and China will expand its urban rail networks significantly in the next
few years.10 Figures 5 and 6 show the Unit investment of urban rail transit and
operating length of urban rail transit system in China.
fields of business cluster together, their costs of production may decline significantly (firms have
competing multiple suppliers, greater specialization and division of labor result). Even when
there are competing firms in the same sector cluster, there may be advantages because the cluster
attracts more suppliers and customers than a single firm could achieve alone.
9 Salzberg, Andrew, Richard Bullock, Ying Jin and Wanli Fang, High-Speed Rail, Regional
Economics and Urban Development in China. World Bank Office (Beijing), China Transport
Topics, No. 08, January 2013.
10 Twenty-three cities running subway are Beijing, Changsha, Chongqing, Chengdu, Dalian,
Guangzhou/Foshan, Hangzhou, Harbin, Hong Kong, Kunming, Nanjing, Nanchang, Ningbo,

Qingdao, Shanghai, Shenyang, Shenzhen, Suzhou, Tianjin, Wuhan, Wuxi, Xian and Zhengzhou.
b2432_Ch-12.indd 209 15/7/2016 8:00:41 PM


Figure 5: Unit investment in RMB/km for Urban Rail Transit

Note : Magiev includes vehicle equipment purchase
Source : UBS estimates
Figure 6: Operating length of the urban rail transit system in China

Sources : China Associate of Metros, UBS estimates
b2432_Ch-12.indd 210 15/7/2016 8:00:41 PM

China is investing heavily in HSR as well as conventional rail system to

improve its land transportation network. The proportion of HSR will
increase in the composition of the rail network as shown in Figures 7 and 8.
Appendix 4 shows the China rail track length and Appendix 5 shows annual
HSR annual ridership.
100%
90% HSR
17% HSR
80%
29%
70%
60%
50%
40%
30%
20%
10%
0%
2014 2020E
Normal Railway Passenger HSR

Inter-city HSR Passenger/carco HSR
Figure 7: Breakdown of different lines in operating rail length in China

Sources : China Railway Corporation, Ministry of Railways, UBS estimates
‘000 km
250 12%
10%
200
8%
150
6%
100
4%
50 2%
- 0%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2020E
LT
Railway operating length YoY
Figure 8: Railway operating length in China

Sources : China Railway Corporation, Ministry of Railways, UBS estimates
b2432_Ch-12.indd 211 15/7/2016 8:00:42 PM

Comparative advantage of Chinese rail system in global

export market
The strongest comparative advantage of Chinese rail system is its cost effi-
ciency. WB provided the earlier financing to some of the HSR projects and
it probably has the best cost factor data aside from Chinese government. WB
pointed out that China has a commanding cost advantage in turnkey HSR
system, unit cost of passenger dedicated line (PDL) in Chinese HSR is about
1/3 to 2/3 to those of other countries as shown in Figure 9.11
WB had identified two main reasons behind the Chinese cost advan-
tage : (1) The standardization of design of various construction elements
12
which significantly enhances construction efficiency and (2) development of

innovative and competitive capacity for manufacturing of equipment.
WB cost analysis shows that construction cost is the most significant cost
component in HSR project as shown in Table 3. China has used its scale
200
180 183
169
Unit Cost (RMB million)
160
140
120
100
94
80
70
60
40
20
250km/h 350km/h
Unit Cost of PDL (Based on Estimated cost at

the time of Project Approval)
Figure 9: Unit cost of HSR (RMB/km) based on estimated cost at the time of project approval
Source : Year books of China Transportation and Communication 2007–2013/China Railway Yearbooks
11 Olivier,
Gerald, Jitendra Sondhi and Nanyan Zhou, High-Speed Railways in China: A Look
at Construction Costs. World Bank office (Beijing), China Transport Topics, No. 09, July 2014.
12 Ibid.
b2432_Ch-12.indd 212 15/7/2016 8:00:42 PM

Table 3: Percentage of total project cost based on WB-financed HSR lines
Element 350 km/h 250 km/h 200 km/h

Land acquistion and resettlement 4 4–8 6–9

Civil works 48 50–54 44–51
Embariment 6 7–12 13–15
Bridges/viaducts12 41* 13–25 25–27
Tunnels 0* 16–29 2–13
Track 9 9–11 6–7
Signaling and communications 4 3 4
Electrification 5 4–5 4–5
Rolling stock 15 3–4 5–7
Buildings including stations 2 2–4 3–5
Other costs Balance Balance Balance
∗An exception is Shizheng Railway that has 69% of track on viaduct accounting for 41% of cost
and no tunnels
Beam Carrier Beam Launching Equipment
Figure 10: Specialized beam carrier and launching equipment used in HRS viaduct construction
advantage and developed a standardized design for various construction

elements that significantly lowers costs. Figure 10 is an example of such
standardization of two specialized equipment developed on viaduct construc-
tion. Table 4 shows the typical track civil work cost and the relatively small
premium of viaduct over embankment cost as well as the low price of track.
China HSR with a maximum speed of 350 km/h has a typical infrastruc-
ture cost of about US$17–21 million/km, with a high ratio of viaducts and
b2432_Ch-12.indd 213 15/7/2016 8:00:42 PM

Table 4: Range of average unit construction costs of HSR lines financed by WB

(RMB in million per km of double track)
Element 350 km/h 250 km/h 200 km/h

Land acquisition and resettlement 4 5–9 5–8
Civil Works 57 56–62 42–43
Embankment 24 31–42 23–28
Bridges/viaducts 71 57–73 59–62
Tunnels — 60–95 51–68
Track
Track (ballast-less)∗ 10 10–13
Track (ballasted )∗ 5–7
signaling and Communications 5 3 3–4
Electrification 6 4–5 4
∗Ballast-less slab track is used for 350 and 250 km/h PDLs while ballasted track is
employed for 200 km/h railways
Source : PSR/PAD for projects
tunnels. Similar construction in Europe, having design speed of 300 km/h is

in the order of US$25–39 million/km and the figure is estimated to be as
high as US$52 million/km for California. Chinese contractors have delivered
projects within budget and construction time frames under most difficult
terrain conditions as shown in Table 5.13 Budget overruns and delays are
extremely rare.14 For instance, the WB-financed 857 km Guiyang–
Guangzhou line, which traverses 270 tunnels and 510 valleys across the
geographically challenging landscapes in Guizhou, took only 6 years to com-
plete with the final budget amended to RMB 94.6 billion on completion
from the initial projected budget of RMB 85.8 billion estimated 7 years
earlier. Its completion is considered an outstanding engineering achievement.
13 The Guiyang–Guangzhou line is 1,856 km long with 83% of the tracks in tunnels and
bridges, its maximum design speed is 250 km/h. The project completed in 5 years with the cost
capped at RMB 147 m/km.
14 There is a delay of several months on project completion post July 2011 Wenzhou train acci-
dent, the government ordered a review of all projects under construction. However, all lines are
finished on budget.
b2432_Ch-12.indd 214 15/7/2016 8:00:43 PM

Table 5: Railway Projects Supported by the WB in China
Total Unit Cost Bridges + viaduct

Max. Speed Length Estimated RMB m/ + Tunnels (% of Period of

Project kph/Type km Cost RMB b km route km) Construction
Shijiazhuang– 360 PDL 366 43.9 123 69 2008–2012
Zhengzhou
Guiyang– 250 PDL 867 94.6 110 80 2008–2014
Guangzhou
Jilin–Hunchun 250 PDL 360 39.6 110 66 2010–2014
Zhangjiakou– 250 PDL 286 34.6 121 67 2013–2017
Hohhot
Nanning– 200 Mixed 463 41.0 89 53 2008–2014
Guangzhou
Harbin–Jiamusi 200 Mixed 343 33.9 99 48 2014–2017
Notes : 1. Total project cost includes the cost of project preparation, land acquisition, construction of the
railway and regular stations contingencies rolling stock and interest during construction. The cost of
railway excluding cost of project preparation, rolling stock and interest during construction is estimated
at about 82% of the total cost
2. Cost Reference: GG-Revised FSR December. 2010, NG-PAD May 2009, Shi-Zheng PAD May 2008,
Jilin-PAD 2011, Zhang-Hu-FSR, Halla-Revised Feasibility study October. 2010/PAD
The extensive HSR construction in China provides valuable construction

knowledge for the Chinese railway builder: the 904-km Harbin–Dalian HSR
line and 3607-km Lanzhou–Xinjiang HSR are all considered engineering
wonders.15,16 Many observers put the civil work expertise of China in railway
construction, particularly in HSR construction, as the most significant com-
parative advantage it enjoys in global railway construction market. It is inter-
esting to note that in the aborted 210 km Mexico–Queretaro HSR project,
China was the sole bidder as the construction period of 2.5–3 years will not
be met by all other international competitors. Interest accumulated during
construction is a major cost component for major infrastructure projects and
15 Harbin–Dalian is the world’s first alpine high-speed railway operating at high latitude and low
temperature. The train has to operate in the same trip under a minimum of –40°C to maximum
40°C temperature conditions at a maximum speed of 350 km/h.
16 The line is the first desert running HSR that goes through desert wind zone. It passes through
3,607 altitude tunnel along the way and it is the highest operating HSR.
b2432_Ch-12.indd 215 15/7/2016 8:00:43 PM

2009–2011 global (including China) 2013 China railway FAI breakdown

average rail market by segment
Railway
Integrated parts control system Rolling stock

0.5% 8.3% product
16%
Related Infrastructure Renovation

service 20.7% 4%
37.8%
Rolling stock Infrastructure

product 80%
32.7%
Source: Association of the European Railway Industry Source: CRC
Figure 11: Breakdown of cost segments in HSR construction

the Chinese ability to materially shorten construction periods are a major

source of competitive advantage.
The second important cost advantage of China lies on its development
of innovative and competitive capacity manufacturing of equipment.17
Chinese rolling stock generally cost around one-half to two-third to that of
international competitors.18 Comparisons based on Figure 11 on global sys-
tem cost between 2009 and that of China in 2011. China’s design fee and
rolling stock cost is much lower than the comparative global standard.
Apparently, the scale effect plus the innovation skills of the designers and
equipment manufacturers are the main reasons behind the cost savings.
China has managed to develop innovative and competitive capacity for
manufacture of equipment.19
China has just released a complete set of China Technical Standards on
HSR in 1Q 2015. Technical standard setting puts China’s HSR on equal
footing with ICE of Germany, TGV of France and Shinkansen of Japan as
the fourth international HSR standard. It is worthwhile to note that Chinese
standard has a high degree of compatibility with TGV and ICE in the area
17 ᕐ⪌, “儈䫱ࠪ⎧◰⎚⧟⨳བྷ▞ ഭӗॆ᧘䘋◰ਁ 6 㛑ᐘབྷオ䰤”, ѝഭ䇱ࡨᣕ, 19

December 2014, www.yicai.com/news/2014/12/4054254.html.
18 Li, Jacqueline LT Outlook Positive; Buy CSR, New Neutral CNR. Rail Equipment — China,
Bank of America Merrill Lynch, 21 October 2014.

19 ᕐ⪌, “儈䫱ࠪ⎧◰⎚⧟⨳བྷ▞ഭӗॆ᧘䘋◰ਁ6 㛑ᐘབྷオ䰤”, ѝഭ䇱ࡨᣕ, 19
December 2014.
b2432_Ch-12.indd 216 15/7/2016 8:00:43 PM

of electrical system, in contrast to the Shinkansen system. It is generally

acknowledged that TGV and ICE system is superior in the electrical system
area and adopting their standard significantly improved the Chinese HSR
system reliability.
Cost competitiveness in construction and rolling stock means that even
China is a latecomer in the HSR industry and its technology will not be
acknowledged as the leading one.20,21 However, it can still compete on a
commercial basis in global HSR projects. Since the with regard to Wenzhou
accident in 2011, statistics prove that Chinese has shaken off doubts on the
two critical areas of reliability and safety.22 In fact, Chinese HSR had carried
more than three billion passengers without any issue since then. Average
daily passenger volume of three million attest to the reliability and safety of
the system. Chinese HSR construction consortium is probably the only
entity that can offer turnkey HSR Engineering, Procurement and Construction
(EPC) rail project in any country under short construction time frame.
Aside from the above-mentioned advantages in the HSR area cited by
WB, China enjoyed some significant comparative advantage in the ordinary
rail area: (1) the experience that China gained in the six “Speed Up” exercises
makes it the only country in the world with extensive operating experience
on rail speed-up using conventional track upgrade, most of the complete
turnkey rail project that China won in recent years is in this area.23 (2) China
20 With 55% of the world’s running line and the longest line under construction, China will end
up running 60% of the world’s HSR for some time. This huge installed base could mean future
improvement on line technology and will most likely come from China.
21 CRRC, the merged entity of CSR and CNR and de facto single manufacturer of rolling stock
in China, is estimated to get an annual sales of RMB 230 billion in 2015 and a research budget
of RMB 9 billion. Its research budget is bigger than its four former technical partners combined.
22 July 2011 Wenzhou accident in which a stationary train was hit at the track by another 100
km/h running train in stormy weather, resulting derailment of a few cars falling off the viaduct
had caused 40 mortalities and over a 100 injured. HSR accident does happen as Germany had
an accident in 1998 with 101 fatalities. Spain had an accident in 2013 with 71 fatalities. Japan
is the only country that never had any fatalities in its 50 years of HSR operation.
23 Kenya is building the world’s first Chinese standard modern railway in Nairobi–Mombasa line
(485 km long, design speed maximum of 120 km/h, costs at US$3.804 billion to be completed
in 2017). Thailand agreed to use Chinese standard to build Nongkai–Mapta Phut (734 km
long, design speed maximum of 180 km/h and upgradable to 250 km/h, line completion in
2022) and Kaeng Khoi–Bangkok (133 km long, design speed maximum of 180 km/h and
b2432_Ch-12.indd 217 15/7/2016 8:00:43 PM

often sets up training institutes in the recipient country to share latest

management and technical innovations that the huge network of China has
generated. This is quite a unique offering among rail equipment exporting
companies and certainly very attractive to the recipient country.24
Prospects of Chinese rail export under OBOR

(1) China–Mongolia–Russia Economic Corridor
The Mid-term Roadmap for Development of Trilateral Cooperation among
China, Russia and Mongolia is in the preliminary planning phase and plans
are not expected to take shape for some time. Trilateral rail linkage coopera-
tion under discussion is not expected in the immediate future.
Bilateral rail cooperation between Russia and China is proceeding in a
meaningful way, the most notable recent development is the contract win of
a Chinese-led consortium with Russian companies on the RUB 20.8 billion
contract to design the 770 km Moscow–Kazan HSR that is expected to cost
RUB 1.06 trillion. Chinese companies are expected to win the contract of the
design if it can offer an acceptable financing term to Russia. Moscow–Kazan
HSR will be part of the 7,000 km RMB 1.5 trillion Beijing–Moscow HSR
passing through Kazakhstan line if the project were to go ahead.
China has proposed to build the 7,000 km Beijing–Moscow HSR and
extend the HSR line from border town Hunchun in Jilin to Vladivostok, 138
km away, on May 2015. Both offers did not solicit enthusiastic responses
from Russia. We should note that Russia’s rail gauge is 1,520 mm and the
Chinese standard gauge is 1,435 mm, improving rail connectivity between
China and Russia will face this important constraints of break of gauge.
While Siberian Russia has a land area of 13.1 million sq. km and accounts
for 77% of Russian territory, it only has 40 million or 27% of national
population. The area is historically not on the top of economic development
upgradable to 250 km/h, line completion in 2022). Hungary–Serbia railway will use Chinese
technology to build the Budapest–Belgrade line (400 km at US$4 and will probably follow
European standard).
24 CRC is developing rail base express service on small volume less than rail container goods.
Chinese experience in this area is keenly watched by many overseas train operator as China is a
major player in e-commerce.
b2432_Ch-12.indd 218 15/7/2016 8:00:43 PM

agenda of Russia. Rail connection on Russia’s Far East which calls for huge
resources commitment is not likely to happen in the immediate future. We
should also note that Russia has a historical concern on its sparse population
base in Siberia and always looks at a foreign offer of Siberian investment with
hesitation. A case in point is the project to build the Russian section of the
bridge across the Amur River in Heilongjiang. The bridge will connect
Tongjiang in Heilongjiang Province with Nizhneleninskoye, a village in
Russia’s Jewish Autonomous Oblast and will facilitate the development of a
new rail link between China and Russia. An intergovernmental agreement on
building the new bridge was signed back in 2008. China undertook the bulk
of the work (1.9 out of the total 2.2 km) and plans to complete its section
by the end of 2016. Whereas the relevant Russian agencies did not start
building their section of the bridge until President Putin interceded person-
ally on September 2015.

Bilateral rail cooperation between China and Mongolia face similar
problems as the China–Russia cooperation. Mongolian railway gauge is the
same the Russian railway gauge at 1,520 mm whereas the Chinese railway
gauge is 1,435 mm. The break of gauge prevents smooth cross border train
travel. Mongolian territory has 1.57 million sq. km but its sparse population
base of three million make new long distance passenger rail service econom-
ically hard to justify.
On the cargo rail side, Mongolia has shown flexibility on the issue. In
October 2014, Mongolian parliament has given special authority to allow a
260 km Ukhaa Khudag (part of the Tavan Tolgoi coal field) and Oyu Tolgoi
(copper/gold mine) to connect to Chinese border town of Gashuun Sukhait
using 1,435 mm standard gauge for a seamless connection with China’s railway
network, rather than on the 1,520 mm Russian gauge used elsewhere in
Mongolia. Another special authority was given to construct a standard gauge
cargo line to run from central Mongolia to Bichigt in Sükhbaatar Province and
cross into China at Zhuengadabuqi of East Ujimqin Banner, under Inner
Mongolia’s Xilingol League. Railway cooperation between China and Mongolia
in the future will probably concentrate more on cargo line and border passen-
ger linkage. The most important cargo between China and Mongolia is the
coal export from Mongolia to China, in which China is curtailing coal con-
sumption and switching to cleaner energy such as natural gas. Immediate
prospects for new cargo line construction in Mongolia are not bright.
b2432_Ch-12.indd 219 15/7/2016 8:00:43 PM

Long-term prospects of new cargo rail project between China and

Mongolia depend on the cargo movement between China and Europe. Out
of three land routes between China and Europe: (1) China–Kazakhstan–
Europe; (2) China–Russia–Europe; (3) China–Mongolia–Russia–Europe,

the Mongolian route offers significantly shorter distance.
(2) New Eurasia Land Bridge Economic Corridor–Asian Europe Cargo

Link — What Really Impedes It?
China started Chongqing–Duisburg cargo service in 2011. By September
2014, there were eight major cargo routes connecting China to Europe as
shown in Table 6.
In 2014, the trains made 30825 trips along the route, carrying 26,070
containers and 700,000 tons of goods. The number of trips are a significant
increase from just 80 trips in 2013. However, these railway connections still
face many hurdles and long-term commercial problems, which must be
worked out: (1) Generally, the west-bound cargo volumes are not a problem,
however, Europe–China east-bound goods are often minimal. Hence, cargo
schedules for China to Europe are well scheduled but schedules from Europe
back to China are often irregular; (2) Figure 12 highlights the most impor-
tant complicating technical factor toward train linkage in OBOR — the
differences of rail gauge at national border. As mentioned, the break of gauge
Table 6: The eight cargo lines running from China to Europe
Date Route Time Taken Distance

2011 Chongqing–Duisberg 15 Days 11,179 km
2012 Wuhan–Prague 15 Days 11,000 km
2013/4 Chengdu–Lodz 14 Days 9,826 km
2013/7 Zhengzhou–Hamburg 15 Days 10,214 km
2013/9 Suzhou–Warsaw 15 Days 11,200 km
2014/12 Yiwu–Madrid 18 Days 13,053 km
2015 Changsha–Duisberg 13 Days 11,808 km
2015 Hefei–Poland 18 Days 9,820 km
25 ѝഭࡦ䙐ᥪ䘋⅗⍢˖8ᶑѝ⅗䍗䘀⨝ࡇ亶䐁“аᑖа䐟. ࠔࠠ䍒㓿. 19 April 2015.

[downloaded on 16 October 2015], available at http://finance.ifeng.com/a/20150419/13645
326_0.shtml?wratingModule=1_15_103.
b2432_Ch-12.indd 220 15/7/2016 8:00:43 PM

Figure 12: Different gauge in Trans-Asian railway network
problem requires mechanized facilities to move shipping containers from

train to train. Former Commonwealth of Independent States (CIS) countries
all use a 1,520 mm wide rail, while China and European countries use the
standard 1,435 mm rail gauge. A China–Europe cargo train must move its
containers from standard gauge to 1,520 gauge in one border crossing, con-
tinue the journey and change back to standard gauge in the next border
crossing. For a 64 standard container train, the process takes 1.5–2 hour and
significantly adds cost; (3) Train transit and operating fees in Europe are
much higher as compared to China, it is estimated that while China charges
around US$0.39/km-container, corresponding charges in European section
is around US$0.80–0.97/km-container. It is estimated that Chinese local
government sponsors the cargo linkage by providing US$1,000–$2,000 per
container subsidies despite the fact that rail line is charging a 20–30% freight
premium over ocean voyage.
In spite of all these problems, China is working on various solutions to
improve the operation of the Europe–Asia cargo link: (1) CRC is developing
more feeder routes to feed higher valuable cargo to the eight main routes, the
plan is to add 45 feeder routes in 2015. Higher value cargo can justify
increasing higher cargo freight rate; (2) China is working with countries
b2432_Ch-12.indd 221 15/7/2016 8:00:43 PM

along the route to expedite transit to cut the travel time, the move will widen
the time advantage of rail of approximately 15–20 days over sea voyage
which requires an estimated 40 days. Additionally, narrowing rail cargo tran-
sit time to a consistent 15 days or lesser will close the gap to air freight travel
time of approximately 2–3 days. The estimated benchmark is that rail travel
cost of one container is US$6,000, sea voyage is US$4,000 and air travel is
US$16,000 for a container originated from central or western China going
to Europe; (3) Increasing affluent Chinese consumers in central and western
China can afford to buy European high-end consumer goods as east-bound
cargo of the rail line. CRC is actively promoting east-bound cargo and that
could meaningfully boost the economics of the line.
There is an annual cargo volume of 200 million tons between Europe
and China. Current land transport routes handle less than 1% of cargo vol-
ume, and there are plans to increase it to 5–7% by 2020. Though a highly
unlikely target at the moment, however, a well-devised logistic plan to divert
a few million tons to the land rail line is highly probable in the next few years.
These lines too can easily turn profitable under such a plan in a few years.
Building new lines in the near future is probably not economically justifiable.
(3) China–Central Asia–West Asia Economic Corridor

The most significant rail project with Chinese contractors in West Asia is the
US$1.2 billion, 530-km section of the Ankara–Istanbul HSR line between
Eskişehir and İnönü in western Turkey. However, the line is built with
European Union (EU) standard with significant European content.
Uzbekistan is building a 129-km Pap–Angren railway line and using
Chinese contractors on a 19 km tunnel through the Kamchik Pass that con-
nects the Fergana Valley with the rest of Uzbekistan. The countries in Central
Asia: Kyrgyzstan, Kazakhstan, Tajikistan, Uzbekistan use 1,520 mm Russian
rail gauge which creates a break of gauge issue with rail connectivity to
China. The unfavorable terrain and sparse population density of these coun-
tries also make rail economics doubtful. No major rail projects are currently
on the table.
(4) China–Pakistan Economic Corridor

Pakistan is the first major beneficiary in the OBOR initiative of China. The
US$46 billion Chinese investment and loan package agreement reached in
April 2015 placed the implementation of railway projects almost to a certainty.
b2432_Ch-12.indd 222 15/7/2016 8:00:44 PM

Figure 13: Sketch of the China–Pakistan Railway
The Havelian–Khunjerab railway construction is starting soon. This line

runs 750 km in Pakistan and links Havelian through the 4,730 m high
Khunjerab Pass to connect to Kashgar through 350 km of Xinjiang. The line
will use standard 1,435 mm gauge, a departure from the legacy railway gauge
of 1,676 mm in most of Pakistan today. Two other railway projects currently
under evaluation are the Karachi–Peshawar mainline and Khunjerab railway.
Once the two projects are implemented, China will be able to connect
directly to Arab Sea through the Gwadar port and the railroad linking
Xinjiang and Gwadar as shown in Figure 13.
A successful implementation of the Havelian–Khunjerab railway linkage
will not only demonstrate the engineering skills of the Chinese contractors,
but will also shows their social skills in convincing the local Muslim tribal
groups of the merit of transport development. This potentially holds signifi-
cance in view of recent radicalization of Islam in the Middle East.
(5) Bangladesh–China–India–Myanmar Economic Corridor on India

Rail Project
India Rail (IR) runs one of the world’s largest railway networks comprising
115,000 km of track over a route of 65,808 km. In 2014–2015, IR carried
b2432_Ch-12.indd 223 15/7/2016 8:00:44 PM

8.397 billion passengers annually or more than 23 million passengers a day

with half of them as suburban passengers and 1,058.81 million tons of
freight in the year.
IR has formulated a HSR network plan connecting four metro cities

in India: Delhi, Mumbai, Chennai and Kolkata in a Diamond Quadrilateral
network of HSR. For the five HSR lines under study: Delhi–Mumbai
(1,200 km), Delhi–Chennai (1,745 km), Mumbai–Chennai (1,281 km),
Delhi–Kolkata (1,446 km) and Mumbai–Ahmedabad (650 km). China
Railway Group (CRG)’s Eryuan Survey & Design Group won the feasibil-
ity study contract on Delhi–Mumbai HSR line. China Railway
Construction Corporation (CRCC)’s Siyuan Survey & Design Group won
the feasibility study contract on the Delhi–Chennai line. French company
Systra won the feasibility study contract on Mumbai–Chennai line.
Spanish company Iveco won the feasibility study contract on Delhi–

Kolkata line and the Japanese government provided the Mumbai–
Ahmedabad feasibility study.
China is expected to dominate in the Indian HSR market: (1) India is
proposing HSR to be a Public–Private Partnership (PPP) initiative. It has
been historically seen that PPP railway projects in India depend on China for
manufactured train sets. Private sector Metro projects in Mumbai and
Gurgaon which are built in PPP are depending on train sets manufactured
in China, as cost is the main factor. This is in contrast to government funded
Metro projects in India that also look at other criteria such as manufacturing
within India, technology transfer, etc.; (2) China has already built a personal
relationship with many of the senior employees of the Indian Railways with
sponsored visits to China and training programs conducted in China under
“Sino-Indian Memorandum of Understanding & Implementation Plan on
Cooperation in Railways”. India Railway is interested in using the Chinese
heavy haul technology to improve the cargo line as well as learning Chinese
experience to increase the speed of passenger train to 160–200 km/h on
dedicated conventional line — an area of technology that China possess as a
result of its six “Speed Up” exercise. IR has awarded the speed raising project
study on the Chennai–Bangalore–Mysore conventional line to CRG; (3)
Government indicated budget for the line is around US$20 million per km
for a 350 km/h top speed track, a figure that favors the low cost producers.
In the Japan-funded study on 505 km Mumbai–Ahmedabad HSR line, the
b2432_Ch-12.indd 224 15/7/2016 8:00:44 PM

indicated budget is US$15.44 billion and the unit cost is over US$30 mil-
lion/km and it will take 6 years to finish; (4) Indian train passenger volume
averages 12 million daily ridership (excluding city metro) and yet the fare is
among the lowest in the world, the cheapest fare on a 100 km trip is less the
US$1.00 and even air-conditioned 100 km first-class sitting trip is less than
US$7.00. Huge passenger volumes and low fares will make cost efficiency
one of the primary concerns to IR, and this favors China.
Cross border rail connection between China and India is not viable as
the Himalayas serve as a natural barrier and territorial disputes also make
direct China–India train link not possible. China has announced that by
2020, Qinghai–Tibet railway line will extend 253 km from Shigatse to
Gyirong on the border of Nepal and China. There is a talk for extending the
Shigatse–Gyirong to Kathmandu by 2022, however, scant information is
available and Indian opposition is expected. The press has also reported that
the less than 200 km rail link between Shigatse and Yadong, a Chinese border
town with Bhutan and India, will be completed before 2020.
In March 2011, Indian and Chinese rail authorities expressed interest to
build a HSR link that would link New Delhi with Kunming, China via
Myanmar. The rail link would use the railway under construction from
Manipur, India to Myanmar and the Yunnan–Myanmar railway being dis-
cussed then, however, the discussion stopped after Myanmar stopped its
railway program with China.
The main impediment between China–India collaboration lies in geopo-
litical concerns which are beyond the realm of economics.
(6) China–Indochina Peninsula

There are currently three rail connection proposals to connect Kunming, the
capital of Yunnan Province in southwest China with Singapore. The eastern
route via Vietnam, central route via Laos and the western route via Myanmar
would eventually converge in Bangkok, Thailand which forms a single line,
would be extended to Singapore via Malaysia.
The eastern route construction was stopped by Vietnam in 2010 after
the chilling of relations between China and Vietnam. China continues to
build the 466 km connecting Kunming to the border town of Hekou using
standard gauge, the line runs along the historical Yunnan–Vietnam line
built by the French and it is completed in 2014. There are intense market
b2432_Ch-12.indd 225 15/7/2016 8:00:44 PM

speculations that Vietnam will proceed with the construction of the 389 km
Hekou–Haiphong line, the Vietnam section of Yunnan–Vietnam rail, using
1,435 mm standard gauge. Bilateral trade between China and Vietnam will
reach US$65 billion in 2015 with China as the biggest trading partner of
Vietnam and Vietnam as the second biggest trading partner of China in
ASEAN. Economic incentives are strong enough to build the rail connection
between the two countries.
As for the central route through Laos, China commenced construction of
its section to the Laos border of Xishuangbanna on August 2015 and there is
speculation that construction on the 530 km Laos section to Vientiane, the
capital of Laos, will commence shortly after repeated delays since 2010. The
Laos section will cost US$6.8 billion and the project is not economical on a
stand-alone basis. Laos is a country of 6.8 million population with nominal
GDP less than US$12 billion in 2014, and a Chinese construction company
had pulled out of Laos rail project in 2013 on account of the poor economics.
Laos rail project is not feasible on a stand-alone basis, however, if the line
is connected to Bangkok as part of the Pan Asian network then it could be
economically justifiable. Construction on US$8.4 billion, 867 km Nong
Khai–Bangkok–Rayong line running at 180 km/h started in November 2015
after an agreement was reached in August 2015, the project will be com-
pleted in just 3 years. Nong Khai is the border town of Thailand around 25
km from Vientiane.
Economic linkage between China and Thailand is increasing very fast
with the export of Thai fruit to China as shown in Figure 14. Passenger
potential between China and Thailand is also encouraging, annual Chinese
tourist to Thailand is expected to exceed 7 million in 2015. Laos’ inclusion
in the China–Thai railway connection can ameliorate the poor economics of
Laos railway construction in a stand-alone basis.
As for the western route, construction is underway on the 690 km
Yunnan Dali–Yunnan Ruili route, and it extends the Chinese railway net-
work to the Yunnan–Myanmar border. The work on the Myanmar section
was interrupted in 2011 and no news on the resumption is reported.
The Pan-Asian rail connection section running from Kunming to
Vientiane to Bangkok will be completed before 2020 if all plans proceed as
announced. Malaysia–Singapore HSR connection had reached the design
phase and the tentative running schedule is 2023. The Pan-Asian rail connec-
tion is seen in Figure 15.
b2432_Ch-12.indd 226 15/7/2016 8:00:45 PM

US$ billion
2.0
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
2007 2008 2009 2010 2011 2012 2013 2014
Figure 14: Exports of fresh fruits to China from Thailand have boomed post-2008
Sources: UBS, UN Comtrade
Figure 15: Map of the proposed routes for the Kunming–Singapore Railway
b2432_Ch-12.indd 227 15/7/2016 8:00:45 PM

Jakarta–Bandung HSR — A game changer for Chinese

HSR export?
The joint venture agreement to build Jakarta–Bandung HSR line, as shown

in Figure 15, was signed on 16 October 2015 at Jakarta. A consortium com-
posed of China Railway International (40%), a subsidiary of CRC, and an
Indonesian consortium (60%) consisting of state construction company PT
Wijaya Karya, railway operator PT Kereta Api Indonesia, toll road builder
PT Jasa Marga and plantation company Perkebunan Nusantara VIII will
build and operate the Jakarta–Bandung railway. The project is a commercial
B2B venture between state-owned enterprises (SOEs) of the two countries.
The HSR project does not require an Indonesian state guarantee nor any
budgetary outlay from the Indonesian government. The schedule for the
construction of HRS running up to a maximum speed of 300 km/h is from

2015 to 2018. The line will cut travel time between the two cities from more
than 3 hours at the moment to 40 minutes. Commercial operation will com-
mence in 1H 2019.
Jakarta–Bandung line is a groundbreaker for Chinese HSR export, it is
the first complete HSR export using Chinese standards and it holds the
potential to be a game changer as well.
First, the line probably does not require any outlay from either the
Indonesian government or Indonesian state companies involved in the pro-
ject. Sahala Lumban Gaol, Chairman of the JV and head of Wijaya Karya,
told the media that 75% of the funding will come from CDB, and the pro-
ject loan will not carry any Indonesian state guarantee. The Indonesian
consortium is planning to finance the remaining 25% via a global bond
issue. A project of US$5.5 billion without government exposure is a game
changer not only for Indonesian infrastructure project, it also serves as a new
model of global infrastructure development. The project setup is more
advantageous to the host country than the much-touted PPP approach pro-
moted by current multilateral financial development agencies. The first ten-
der win in the global market for Chinese HSR projects, the 210-km US$3.75
billion Mexico–Queretaro line was not awarded to China after the tender as
a result of last minute Mexico budget cut. This novel B2B government SOE
partnership sans government funding support can alleviate similar problem
down the road.
b2432_Ch-12.indd 228 15/7/2016 8:00:45 PM

Second, most developing countries either face budgetary hard

constraints in their development of infrastructure projects or high funding
risk premium issues that significantly raise project cost and render many
projects financially infeasible. The novel way of structuring the deal essen-
tially means shifting a portion of Chinese foreign exchange in US treasury
to a developing country through direct investments and debts. This can
significantly reduce the funding requirements and costs and turn the pro-
ject to become a commercially viable one. Jakarta–Bandung project dem-
onstrates that a commercially viable project can proceed with minimal state
funding, provided that it can secure a reliable, cost-efficient technology
partner and cheap financing option. These two critical gaps are the strength
of Chinese EPC provider who double as project investors. Indonesia has an
ambitious five year infrastructure development of US$400 billion for the
next five years. Government budgetary support can fill only US$80 billion
and the gap of US$320 billion must be filled through multiple channels.
The B2B model used in Jakarta–Bandung line can free valuable resources
for Indonesia to complete its infrastructure plans. The favorable condition
provided by China also allows it to cherry pick the most commercially
stand-alone infrastructure project on the table and minimize its project
macro risk.
Third, all project feasibility studies points to average daily passenger
volume of at least 45,000 in the coming Jakarta–Bandung line, with a
potential of higher daily passenger volumes. At the announced fare of Rp
200,000 (US$15.00) and minimum annual revenue of US$250 million, the
project can turn a profit in the fifth to sixth year, an outstanding achieve-
ment for HSR lines.26 Conventional wisdom prior to Chinese investments
on HSR is that a country must be a high income country with per capita
annual income of over US$12,000 for HSR to be commercially feasible.
Even China started planning its HSR at a per capita level of US$1,000 plus
in the 1990s and it demonstrated that a high middle income country with
per capita of US$6,000 can profitably run a well–planned line. There are
26 The 275-km Xiamen–Fuzhou and 1318-km Beijing–Shanghai turned a profit in the third &
fourth year of operation, these two lines are probably the record holder for HSR profitability in
HSR history.
b2432_Ch-12.indd 229 15/7/2016 8:00:45 PM

lingering doubts on whether the experiences will hold true in other

countries. A successful Jakarta–Bandung HSR will entice many developing
countries with twin major cities population distribution pattern and a
distance of 100–200 km upward between the cities to seriously look at the

feasibility of HSR as their transportation backbone. A good number of cities
will fall into this category.
Fourth, the elevation profile of the Jakarta–Bandung route indicates a
steep elevation of 600 m over a 20 km stretch between 80 and 100 km of
the line. Construction of such a line in 3 years is an engineering feat to
many countries, while China had built the 1,318 km Beijing–Shanghai line
in a record 31 months and operated the line in 38 months. There are per-
sistent questions on whether such a civil engineering performance can be
achieved outside China. An on-schedule performance of the Jakarta–
Bandung line can demonstrate China’s leading civil engineering technology

in HSR. China’s HSR has demonstrated that railways are enhancing pro-
ductivity, GDP-boosting, and wealth-creating. Jakarta–Bandung can well
show that effect and entice many developing countries to follow the HSR
bandwagon. China is the only country with full set of products that can
cater to different operational environment, from the tropical heat of Hainan
to frigid cold of Heilongjiang to arid Xinjiang, from earthquake prone
Szechuan to muddy coastal Guangdong to the 1,900 m elevation of
Kunming. Figure 16 shows the challenging elevation profile of the Jakarta–
Bandung HSR.
Fifth, Jakarta–Bandung will build on Chinese technical standards as
Indonesia is a well-known earthquake zone. Its successful operation will lay
all concerns on Chinese technical ability, safety and intellectual property
issues to rest, a similar prejudice faced by Japanese manufacturers in the
1960s and the Korean manufacturers in 1990s. HSR is a highly visible
symbol of technological capability and reliability of a country, a successful
HSR line can well be the coming-out party for Chinese high technology
exports.
Sixth, the Indonesian–Chinese joint venture has stated that it will work
on HSR project elsewhere in ASEAN and Indonesia is the anchor member
of ASEAN. The Jakarta–Bandung line is part of 750-km Jakarta–Bandung–
Cirebon–Surabaya, the JV enjoys the firstcomer advantage for the rest of
b2432_Ch-12.indd 230 15/7/2016 8:00:45 PM

Figure 16: Jakarta–Bandung HSR route extend to Gedebage, Cirebon (part of Jakarta-
Surabaya HSR line)
Jakarta–Surabaya line as well as other rail projects in ASEAN. The ability of

Chinese EPC contractor to offer a favorable 60% local content in the project
is very favorable to the host country.
Seventh, China’s ability to complete the project in 3 years reflect its
unique construction expertise in HSR, the competing offer from Japan takes
1–2 more years to finish the project. In the aborted 210-km Mexico–
Queretaro HSR contract, Chinese contractor came out as the sole bidder,
many observers pointed out that the short construction period of 2.5–3 years
is the main reason behind other international companies’ withdrawal from
the project. The shortened construction period means significant savings on
interest under construction.
Conclusions
China possesses significant comparative advantages in the export of both rail
construction know-how or rolling stock in either conventional cargo or pas-
senger sub-high speed segment and HSR segment. First, it can offer a full set
b2432_Ch-12.indd 231 15/7/2016 8:00:45 PM

of products that cater to different operating environment, no other com-

petitor can rival China in this aspect. In fact, the export of Chinese rail
technology is driven by conventional sub-high speed rail and not the cutting-
edge HSR. Second, it possesses significant cost advantage, a very important

consideration to the developing countries in the OBOR area. Third, its
renowned short construction period and quick response time means signifi-
cant savings in a mega project. Fourth, it can leverage OBOR policy and get
significant funding support from the Chinese government and generate
significant saving to the project. Fifth, concerns over Chinese system reliabil-
ity and safety have dissipated after accident-free ridership of over three billion
from 2011 to 3Q 2015. In addition, the announcement of Los Angeles
(LA)–Las Vegas HSR line using Chinese standard technology demonstrates
that Chinese owns the intellectual property it is offering overseas. However,
OBOR railway export potential hype comes mainly from the academic cir-
cles and the Chinese local governments. Economic justifications and geopo-
litical realities are often neglected. As the business sector gets more and more
involved in the implementation phase of OBOR in both China and other
OBOR countries, reality on the ground will creep in. In any case, Chinese
connectivity to the OBOR world will definitely improve with the rail export
and the convenience of speedy travel will definitely benefit more and more
people.
b2432_Ch-12.indd 232 15/7/2016 8:00:46 PM

Appendix 1: Conceptual map of Silk Road Economic Belt and 21st Century Maritime
Silk Road
Appendix 2: 64 Counties along the “One Belt, One Road”
China, Mongolia, Russia;

Southeast Asian countries (11): Brunei, Cambodia, East Timor, Indonesia, Laos,
Malaysia, Myanmar, Singapore, Philippines,
Thailand, Vietnam.
Asian countries (8): Afghanistan, Bhutan, Bangladesh, India, Maldives,
Nepal, Pakistan, Sri Lanka.
Middle East & North Africa (16): Bahrain, Egypt, Iran, Iraq, Israel, Lebanon, Jordan,
countries Kuwait, Oman, Palestine, Qatar, Saudi Arabia,
Syria, Turkey, UAE, Yemen.
Central and Eastern European Albania, Bosnia and Herzegovina, Bulgaria, Croatia,
countries (16): Czech Republic, Estonia, Hungary, Latvia,
Lithuania, Macedonia, Montenegro, Poland,
Romania, Serbia, Slovakia, Slovenia.
Central Asian countries (5): Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan,
Uzbekistan.
The other six CIS countries (6): Armenia, Azerbaijan, Belarus, Crewe Georgia,
Moldova, Ukraine.
b2432_Ch-12.indd 233 15/7/2016 8:00:46 PM

Appendix 3: Six Rail Speed upgrade in 1997–2007
Length of Track Upgraded

Date Major Improvements (Maximum Speed)

1997/4 Major North – South corridors train speed up 120 km/h – 140 km/h: 1,398 km
and conventional track upgrade (Maximum 140 km/h – 160 km/h: 588 km
running speed track). More than 160 km/h: 752 km
1998/10 Major NS corridors train speed up and con 120 km/h – 140 km/h: 6,449 km
ventional track upgrade (Maximum running 140 km/h – 160 km/h: 3,522 km
speed track). More than 160 km/h: 1,104 km
2000/10 Major NS and EW corridors train speed up 120 km/h – 140 km/h: 9,581 km
and conventional track upgrade (Maximum 140 km/h – 160 km/h: 6,458 km
running speed track). More than 160 km/h: 1,104 km
2001/11 National train speed up and conventional track 120 km/h – 140 km/h: 13,166 km
upgrade (Maximum running speed track). 140 km/h – 160 km/h: 9,779 km
Indigenously developed high-speed train More than 160 km/h: 1,104 km

running at maximum 200 km/h put in
service. National ticket sales online in one
single network.
2004/4 National train speed up and major corridor
conventional track all upgraded to >160
km/h. Some major corridor lines run at
maximum speed of 200 km/h
2007/4 National train speed up and all major corridor
lines run at maximum speed of 200 km/h.
Indigenously developed 250 km/h trains
put into service.
Source : [downloaded on 31 December 2014], available at http://news.sina.com.cn/z/chinarailwayts/
Appendix 4: China rail track length
Year Km ± % p.a.
1949 21,800 —
1955 25,600 + 2.71
1960 33,900 + 5.78
1965 36,400 + 1.43
1970 41,000 + 2.41
1975 46,000 + 2.33
(Continued)
b2432_Ch-12.indd 234 16/7/2016 1:25:57 PM

Appendix 4: (Continued)
Year Km ± % p.a.
1980 53,300 + 2.99

1985 55,000 + 0.63
1990 57,800 + 1.00
1995 62,400 + 1.54
2000 68,700 + 1.94
2005 75,400 +1.88
2010 90,504 + 3.65
2014 112,000 + 5.33
Appendix 5: China HSR annual ridership
HSR Million Ridership ± % p.a.

2007 61.21 —
2008 127.73 + 108.68
2009 179.58 + 40.59
2010 290.54 + 61.79
2011 440.00 + 51.44
2012 486.00 + 10.45
2013 672.00 + 38.27
2014 893.20 + 32.92
b2432_Ch-12.indd 235 15/7/2016 8:00:46 PM

May 2, 2013
14:6

PST˙ws
Chapter 13
Rethinking the Outputs

of Chinese High-Speed Railways
ZHANG Huang and LI Jie
Introduction
On 30 January 2015, affected by the decline of international oil prices, the

government of Mexico announced an indefinite postponement of the high-
speed railway project that runs from Mexico City to Queretaro. This is the
second time that China encountered setbacks in exporting its high-speed
railway projects in this country. On 4 November 2014, a high-speed railway
contract between China and Mexico was abruptly canceled. Equipped with
cutting-edge technology, the export of Chinese high-speed railway plays an
important role in politics, economy and culture in China itself and abroad as
part of railway diplomacy. However, as a new initiative, this process also faces
inevitable challenges and obstacles, which requires the Chinese government’s
rational and in-depth analysis. Chinese high-speed railway transportation
technology serves the functions of economic and social development. The
profound benefits of exporting Chinese rail technologies overseas are appli-
cable to national politics, economy and culture. However, as a new develop-
ment in terms of technological exports, challenges and setbacks are inevitable
in the process of marketing the new product and product implementation in
overseas market. How does one treat and cope with the challenges on high-
speed railway overseas output? It is an important issue worthy of attention by
the Chinese government.
From the Chinese perspective, the Chinese system’s selling points
include mature technology, high performance price ratio and abundant
operation experience. However, these advantages may not be enough to
237
b2432_Ch-13.indd 237 15/7/2016 8:01:22 PM

238 Zhang Huang and Li Jie
offset the importance of unimpeded access to the sale of high-speed railways

to overseas customers. Two setbacks Chinese companies encountered in the
Mexico market reflect the strategic nature of Chinese high-speed railways
from the perspective of its destination countries’ national interests.

In November 2014, the Mexican government canceled a US$3.7 billion
contract to build the bullet train that was awarded earlier to a Chinese-led
consortium, in spite of the legal validity of the entire bidding process. The
news garnered international attention, as it had been touted in the media as
the “No. 1 Overseas Order” for China’s high-speed railway for a significant
period of time. The stated reason for this abrupt withdrawal is because there
was only one bidder in the bidding process, which drew the skepticism from
the public about the transparency of the competitive tender system. As indi-
cated in the government announcement, Mexico expected a fair bidding
result without any skepticism from both society and its Congress.
The Chinese model

The deeper reason lies in a prevailing systemic defect in China’s overseas
project model. For a long time, Chinese enterprises have been relying too
much on networking with the host countries’ government when trying to
expand their business abroad, as they believe, above all, that a close relation-
ship with local authorities and elite class is essential to the success of their
overseas projects. Another fundamental reason is a chronic disease in Chinese
overseas engineering industrial practices for a long time. When expanding
overseas markets, Chinese enterprises always implement the so-called ‘the
upper-level line’, which was highly dependent on the receptivity of the local
host government. In this concept, the development of large-scale infrastruc-
ture project is based on cultivating close contact with the local government
and local elites. This strategy has yielded great successes in Africa and some
South American countries for Chinese economic diplomacy in the past.
Its advantage lies in the provision of official support and protection by the
state for effective high administrative access and material resources, however,
the drawback is the lack of communication and contact with the local public
and the mass media (and other stakeholders in the project).
Indeed, by following this pattern, Chinese enterprises achieved great suc-
cess in the overseas projects in Africa and some South American countries.
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Rethinking the Outputs of Chinese High-Speed Railways 239
This model efficiently takes advantage of local administrative access to

decision making at the highest levels of government, therefore Chinese enter-
prises acquire decisive advantage over overseas businesses. However, on the
other hand, the downside to this model is that a communication channel

linking to the opinions of local people and media is missing, which is con-
sidered to be an inherent defect in this economic diplomacy model. It is
exactly because of this flaw in the economic diplomacy model that China
encountered unprecedented resistance from Mexico, given constantly-
fluctuating political conditions in this country. Especially against the back-
ground of “Iguana mass kidnapping” incident, the absence of both bidding
competitors and transparency easily resulted in critical voices from the
media, thus instigating skeptical sentiment amongst the population at large.
With the presence of a highly developed mass media industry and a formi-
dable political opposition in Mexico, “the upper-level line” has encountered

unprecedented resistance, especially against the background of the “Iguala
incident”. The twin absence of both bidding competitors and the public’s
right to information about the bidding process resulted in public opinion
backlash and provoked probing questions from the public.
The second setback that happened in 2015 exposed the lack of knowl-
edge about the international investment environment for China. Chinese
enterprises are unfamiliar with latent risks in making international invest-
ments, such as international political and financial risks, operational and
technological innovation challenges and so forth. Intertwined with each
other, these factors often result in a large gap between expectations and actual
investment returns. This second setback in Mexico exposed Chinese deficien-
cies in knowledge and experience when it comes to Chinese enterprises
navigating through the international investment environment. Compared to
the domestic investment environment, the international investment environ-
ment is more unfamiliar territory for Chinese companies. The risks from
international geopolitics and domestic politics, finance, operational and
technological innovation interact with each other in a complex manner, lead-
ing to a large difference between the actual income obtainable and the
expected returns from the investment project. As early as 2013, the unrest
and economic recession in Thailand resulted in the interruption of “inter-
changing high-speed railway with rice” plan which was preliminarily reached
between China and Thailand. From the perspective of overseas expansion of
b2432_Ch-13.indd 239 15/7/2016 8:01:22 PM

national interests, a slight error in judgment for the international investment

environment may also cause the serious reduction of investment benefits,
because China currently lacks enough power and specialized agencies to
protect overseas investment. It is one of the errors contributing to the cancel-

lation of the Chinese high-speed railway project in Mexico.
Mexican perceptions
In addition to the impact of investment pattern and investment environment,
there is also a factor that cannot be ignored, that is, the Mexican government
decision-making body has a cautious and skeptical attitude with regard to the
economic output of Chinese high-speed railway. The former Mexican ambas-
sador to China, Guajardo said on Twitter: “before the visit to China, the
president canceled the contract to send out a strong signal: we are not turning
to China for grace.” (࠷Ṭ⬖ᯟ,໘㾯କࡽ傫ॾབྷ֯䈸儈䫱⇱㓖: нੁѝ
ഭ≲ᚙᜐhttp://news.hexun.com/2014-11-08/170190240.html.
The former Mexican ambassador to China talked about high-speed rail-
way project, by indicating that Mexico is not turning to China for “grace”
(the same word implies “favor” or “kindness”.) (Source: ࠷Ṭ⬖ᯟ, ໘㾯କ
ࡽ傫ॾབྷ֯䈸儈䫱⇱㓖: нੁѝഭ≲ᚙᜐhttp://news.hexun.com/2014-
11-08/170190240.html.˅This speech is thought provoking. From a his-
torical perspective, it often conveyed a strong colonial flavor when one
country built railways in the territory of other countries. For example, at the
beginning of the 20th century, western powers carved China up like a pie. As
a Chinese history article points out: “where there were railways built by big
powers, there were their orbit.” (㜑┘ ॱҍц㓚ᵛᑍഭѫѹ⬌࠶ѝഭ䫱
䐟࡙ᵳⲴ䱤䈻⍫ࣘ(а‫ޛ‬ҍ‫—ޛ‬а‫ޛ‬ҍҍ)ǉশਢ⹄ウǊ1956 ᒤ ㅜ
5 ᵏ| 89–104 亥; [in English] Bin, Hu, The Conspiracy Which Imperialism
Divided up the Rights of Chinese Railway Rights by the End of Nineteenth
Century (1898–1899), history research, 1956 (5), 89–104.)
After World War II, technical assistance from developed countries to
developing countries often attached harsh political conditions or economic
conditions. Because the Chinese companies obtained construction rights to
large projects at a low bid price, it may lead to a new wave of “China threat
theory” from opponents of deals made with China. The opponent may ask
some questions like: Whether building high-speed railway will result in
b2432_Ch-13.indd 240 15/7/2016 8:01:22 PM

Rethinking the Outputs of Chinese High-Speed Railways 241
Chinese economic penetration? Once dependence on Chinese economic

reaches a “dangerous” level, it prompts some observers to ask whether Mexico
will play a passive economic role in its economic relationship with China.
This may be the important factors influencing the decision-making process

of the Mexican government in procuring high-speed railways.
Understanding local markets

The contrast between advantages of Chinese high-speed railway and predica-
ment of high risks in overseas output testify to the fact that there are factors
which influence technology transfer that are not solely related to the level of
sophistication of technology and market demand. According to the theory of
technological sociology, the growth of technology is a process and outcome
of social construction. There are many other factors that also affect the devel-
opment of technology, such as national culture, social psychology, political
parties, aspirations of the general public and other subjective factors. Thus,
the output of Chinese high-speed railway not only need to meet market
demands, but also the connection between culture and psychology of the
masses and all other stakeholders. The Chinese government or state-owned
enterprises (SOEs) should acknowledge the diversity of social cultures,
understand historical traditions, regime features, media influence, consump-
tion propensities, the diversity of customs and habits of consumers in coun-
tries, which want to import Chinese high-speed railways. For example, in
societies where the “auto culture” is highly developed, such as Western
Europe and the US, high-speed railway can carry the implication of
weakening the freedom to travel. Therefore, Chinese companies should
achieve a seamless link between high-speed railways and other public vehi-
cles, and provide one-stop public service to meet transportation needs
instead of a stand-alone project. This may be a crucial factor when it comes
to selling Chinese high-speed railway systems to Western Europe and the US.
Policy recommendation
For neighboring countries, in order to build networks of high-speed railway
starting from China, Chinese companies and the state should not only avoid
the traditional “tributary system” and civilization mentality, but also avoid
b2432_Ch-13.indd 241 15/7/2016 8:01:22 PM

cross-cultural barriers faced in exporting high-speed railway systems by

maintaining an inclusive and open attitude, and carry out cooperation in
high-speed railway construction under equal terms and conditions with an
understanding of the cultural identity of destination markets. Marketing

Chinese High-Speed Rail to the world may also trigger a new round of the
“China threat theory”. In line with deliberate interpretations by some foreign
media, Chinese internationalization attempt in the field of building railway
traffic through constructing a high-speed railway network, which radiates
outwards to surrounding countries, and building traffic arteries across the
South American continent, is directly related to its intentions and national
interests in politics, economy, strategy and so on. For countries that are suspi-
cious about the Chinese high-speed railway, especially neighboring countries
around China, China should be more proactive and patiently explain its
peaceful development intention. In essence, the sale and exportation of

Chinese high-speed railway systems is a normative economic activity regu-
lated by the market mechanism against the backdrop of globalization, just
like other products and commodities made in China. China should express
its cooperative, win–win intentions clearly, at the same time, attract a wide
range of local technical elites, administrative elites and labor force in carrying
out high-speed railway design projects, operation and maintenance. China
and others countries can work together to share the bigger economic cake of
exporting high-speed railway, while the presence of high-speed railway
benefits local communities and people.
b2432_Ch-13.indd 242 15/7/2016 8:01:22 PM

“9x6”
b2432_Ch-14.indd 243
Section E
Country Case Studies

Region Specific Section —
15/7/2016 8:01:57 PM
May 2, 2013
14:6

PST˙ws
Chapter 14
One Belt One Road,

China and Europe: Economic
Strategy and Pragmatic Economies
Winglok HUNG
Introduction
This chapter aims to explain “One Belt One Road” (OBOR) with the use of
Professor Yan Xuetong’s analytical framework of international system. The
central question of this chapter is “Why is Europe more important than other
regions in China’s OBOR economic strategy?” In this first part I explain my
conception and understanding of OBOR. OBOR is a new economic strategy.
In the remaining parts, I continue to examine China’s economic strategies
and relations with Europe under the framework of OBOR. As OBOR is
fundamentally different from an American-led private investment and trade
liberalization since the Second World War, China’s OBOR attempts to
construct a new international system after the global financial crisis in 2008.
In the conclusion, I return to the same puzzle of why Europe is important in
China’s OBOR strategy to establish a new international order.
On 7 September 2013, China’s President Xi Jinping first proposed the
idea to build a Silk Road Economic Belt between China and Central Asia at
the Nazarbayev University in Astana, Kazakhstan.1 A month later, the idea of
the 21st century Maritime Silk Road was advocated during China’s President
Xi Jinping’s visit to Indonesia. In the Third Plenary Session of the 18th
1 Chinese President Delivers Speech at Nazarbayev University. China Daily, 8 September 2013
http://news.xinhuanet.com/english/photo/2013-09/08/c_132701546.htm.
245
b2432_Ch-14.indd 245 15/7/2016 8:01:58 PM

246 Winglok Hung
Central Committee of the Communist Party of China, the strategies of the

Silk Road Economic Belt and the 21st century Maritime Silk Road were
confirmed.2 In December 2013, the Chinese Foreign Minister, Wang Yi,
mentioned that the Silk Road Economic Belt and the 21st century Maritime
Silk Road aimed to develop long-term strategic objectives, directions and
framework with China’s periphery neighbors in the next 5–10 years in an
interview with the Chinese official newspaper People’s Daily.3
“One Belt One Road” is still an ongoing project. It is possible that this
strategy will evolve because of changing international political and eco-
nomic circumstances. Meanwhile, it seems that different people perceive
this strategy very differently. For example, some academicians may perceive
OBOR as China’s new economic paradigm that focuses on connectivity
and cooperation among different countries in the world. Some foreign
government officials may perceive OBOR as China’s strategy to start a

discriminatory trade and investment system exclusively with emerging
countries.4 It was even found that Chinese media reports contradicted each
other. For instance, China Review News (ѝഭ䇴䇪) articulated that China
should first enlarge its influence in the Southeast Asia region under OBOR
while Xinhua News (ᯠॾ⽮) suggested that China should focus more on
One Belt rather than One Road as it is expected to face opposition from
Association of southeast Asian Nations (ASEAN) countries.5 However, I do
not agree with the view that China’s OBOR attempts to exclude developed
countries, such as countries in Europe. This chapter aims to argue that
2 Sun Jiuwen, Gao Zhigang zhu bian, ᆉѵ᮷, 儈ᘇࡊѫ㕆, Si chou zhi lu jing ji dai yu qu yu
jing ji fa zhan yan jiu э㔨ѻ䐟㓿⍾ᑖо४ฏ㓿⍾ਁኅ⹄ウ [Research on Silk Road Economic

Belt and Regional Economic Development]. Beijing: Jing ji guan li chu ban she. (ेӜ: 㓿⍾㇑⨶
ࠪ⡸⽮, 2015). All the Chinese reference sources were translated by the author.
3 ‘Zhong guo te se da guo wai jiao de cheng gong shi jian (2013 niandu tebie baodao) — Wai
jiao bu zhang Wan Yi tan er ling yi san nian zhong guo wai jiao’ ‘ѝഭ⢩㢢བྷഭཆӔⲴᡀ࣏
ᇎ䐥(2013ᒤᓖ⢩࡛ᣕሬ)—ཆӔ䜘䮯⦻⇵䈸Ҽ噘айᒤѝഭཆӔ’ [Successful imple-
mentations of great power diplomacy with Chinese characteristics (Special reports of 2013) —
Minister of Foreign Affairs Wang Yi highlighted China’s diplomacy in 2013], Ren Min Ri Bao
Ӫ≁ᰕᣕ [People’s Daily], 19 December 2013, 3.
4 Personal experience. One Belt One Road International Forum. Hong Kong Convention and
Exhibition Centre, 24 July 2015, Hong Kong.

5 Chinese Media on the “One Belt, One Road” Strategy. Chinascope (73), 2015, 38.
b2432_Ch-14.indd 246 15/7/2016 8:01:58 PM

One Belt One Road, China and Europe 247
Europe is vital in China’s OBOR strategic plan. More details will be

discussed in the following section.
Literature review of OBOR

Since the “One Belt One Road” was confirmed in late 2013, there has been
a dearth of academic reports, especially in the English language on the topic
of “One Belt One Road”. When the term “One Belt One Road” was searched
in the document title box with the term “China” via ProQuest search engine,
only two scholarly works were found.6 However, when the term “New Silk
Road” was used for searching, 1,857 results of scholarly publications were
found. Apparently, English literature preferred the name “New Silk Road”
rather than “One Belt One Road” for discussion. For example, Chris
Devonshire-Ellis recently published a book titled China’s New Economic Silk

Road: The Great Eurasian Game & The String of Pearls. In addition, there are
other journal articles with the title of “New Silk Road”.7
6 Chinese Media on the “One Belt, One Road” Strategy. Chinascope (73), 2015, 38.; Yan,
Mengzhao and Shumin Li., Chinese Firms’ International Market Entry to Main Participating
Countries of “One Belt One Road.” The Institute of Electrical and Electronics Engineers, Inc.(IEEE)
Conference Proceedings, June 2015, 1–6. ProQuest search result [downloaded on 12 November
2015] available at http://search.proquest.com/results/13533FEBCC654250PQ/1/$7b$22limiters
$22:$5b$5d,$22mqlversion$22:$221.1$22,$22v$22:$221$22,$22sort$22:$22relevance$22,$22
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d110$2f0$2f*,sort$3dname$2fascending$29,yearnav$28filter$3d1100$2f0$2f*,sort$3dname$2f
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7 Devonshire-Ellis, Chris, China’ New Economic Silk Road. The Great Eurasian Game and the
String of Pearls (Hong Kong: Asia Briefing Ltd., 2015).
b2432_Ch-14.indd 247 15/7/2016 8:01:58 PM

248 Winglok Hung
There is a further challenge in conducting this literature review. “One

Belt One Road” actually refers to two concepts “The Silk Road Economic
Belt” (One Belt) and “The 21st Century Maritime Silk Road” (One Road).
Theoretically, it is possible for China to perform well in One Belt but fail in
One Road. Therefore, the general description on the topic of “China’s New
Silk Road” used in the literature might not always be discussing the two
concepts separately.8 Without detailed clarification, it will be difficult for us
to review and explain arguments from the English literature. By contrast,
China’s scholarly work has relatively clearer classification of two separate
subjects. There are books and journal articles on “The Silk Road Economic
Belt”,9 “The 21st century Maritime Silk Road”10 and the whole OBOR
project.11 To facilitate discussion, I will review the literature regarding
8 This point will be discussed in the next part.

9 For example, Liu Huaqin, ࡈॾ㣩, Si chou zhi lu jing ji dai: Ou ya da lu xin qi ju э㔨ѻ䐟㓿
⍾ᑖ: ⅗ӊབྷ䱶ᯠỻተ [Silk Road Economic Belt: The New Eurasia Opportunity], (Beijing:
Zhongguo shangwu chu ban she (ेӜ: ѝഭ୶࣑ࠪ⡸⽮, 2015); Sun Jiuwen, Gao Zhigang
zhu bian, ᆉѵ᮷, 儈ᘇࡊѫ㕆, Si chou zhi lu jing ji dai yu qu yu jing ji fa zhan yan jiu э㔨ѻ
䐟㓿⍾ᑖо४ฏ㓿⍾ਁኅ⹄ウ[Research on Silk Road Economic Belt and Regional Economic
Development]. (Beijing: Jing ji guan li chu ban she, 2015 (ेӜ: 㓿⍾㇑⨶ࠪ⡸⽮, 2015).
10 For example, Zhao jiang lin zhu bian 䎥⊏᷇ѫ㕆, 21 Shi ji hai shang si chou zhi lu: Mu biao,
shi shi ji chu yu dui ce yan jiu 21 ц㓚⎧кэ㔨ѻ䐟: ⴞḷᶴᜣǃᇎᯭส⹰оሩㆆ⹄ウ

[The 21st Century Maritime Silk Road: Target, Implementation and Policy Suggestions. Beijing: She
hui ke xue wen xian chu ban she, 2015) (ेӜ: ⽮Պ、ᆖ᮷⥞ࠪ⡸⽮, 2015); Shiyu, Zhang,
Zhang Yong bian zhu ᕐ䈇䴘, ᕐࣷ㕆⵰, Hai shang xin si lu: 21 shi ji hai shang si chou zhi lu
fa zhan si lu yu gou xiang ⎧кᯠэ䐟: 21 ц㓚⎧кэ㔨ѻ䐟ਁኅᙍ䐟оᶴᜣ [New
Maritime Silk Road: The 21st Century Silk Road: Ideas and Implementation. Beijing: Zhong guo
fa zhang chu ban she, 2014 (ेӜ: ѝഭਁኅࠪ⡸⽮, 2014).
11 For example, Zhangjie zhu bian ᕐ⌱ѫ㕆, Zhongguo zhou bian an quan xing shi ping gu:
Yi dai yi lu yu wai wei zhan lüe ѝഭઘ䗩ᆹ‫ޘ‬ᖒ࣯䇴ՠ: “аᑖа䐟”оઘ䗩ᡈ⮕ [China’s

Regional Security Environment Review 2015: “One Belt One Road” and Its Regional Strategy.
Beijing: She hui ke xue wen xian chu ban she, 2015 (ेӜ: ⽮Պ、ᆖ᮷⥞ࠪ⡸⽮, 2015);
Xiangyang, Li, ᵾੁ䱣, Yi dai yi lu: Ding wei, nei han ji xu yao you xian chu li de guan xi аᑖа
䐟: ᇊսǃ޵⏥৺䴰㾱Ո‫ݸ‬༴⨶Ⲵ‫ޣ‬㌫ [“One Belt One Road ” Orientations, Contents and
Challenges] (Beijing: She hui ke xue wen xian chu ban she, 2015) (ेӜ: ⽮Պ、ᆖ᮷⥞ࠪ⡸
⽮, 2015).; Wang, Yiwei ⦻ѹṵ, Yi dai yi lu: Ji yu yu tiao zhan аᑖа䐟: ᵪ䙷о᥁ᡈ [“One
Belt One Road ”: Opportunities and Challenges]. Beijing: Ren min chu ban she, 2015 (ेӜ: Ӫ
≁ࠪ⡸⽮, 2015).
b2432_Ch-14.indd 248 15/7/2016 8:01:58 PM

themes and arguments on OBOR rather than focus on the written language
of the publication.
First, some papers generally lack a clear definition of “One Belt One
Road”. These papers might be considered good research articles in their sub-
fields but possibly did not have a substantial connection with China’s
OBOR. For example, one academic journal had recently published two
special issues on the topic “New Silk Road Project” in mid-2015.12 A few
papers were based on the conference presentation held in Macau in June
2013.13 Serious readers may be uncertain of whether the ‘new’ OBOR
strategy is similar to the “old” China’s foreign policy in the different explana-
tions and interpretations of the Silk Road. For example, the “New Silk Road”
project is regarded as “massive trade and infrastructure networks which
would foster closer economic ties between East Asia and Europe, and pro-
mote economic cooperation among most of the countries in the two

continents”.14 What is the meaning of “economic cooperation”? Are there
any similarities between the existing bilateral trade agreements and OBOR?
Also, shall we include Japan, Russia or Mongolia in the discussion of “East
Asia”? If so, why did Japan appear to distance itself from OBOR while
Russia, South Korea and Mongolia joined Asian Infrastructure Investment
Bank (AIIB) as founding members? This tendency to discuss OBOR may
cause further confusion to both academic and non-academic scholars.
Furthermore, how OBOR will affect China’s current economic relations
with other countries is uncertain. This approach critically examined China’s
foreign relations and its domestic tension. For example, China’s bilateral rela-
tions with its neighboring countries such as India and Turkey have been
comprehensively studied.15 Scholars analyzed the domestic ethnic tension
12 Shen, Simon, Special Issue: New Silk Road Project. East Asia: An International Quarterly,
32(1), 2015, 1–5.; New Silk Road Project (Part 2). East Asia: An International Quarterly, 32(2),
2015, 101–205.
13 For example, Mackerras Colin, Xinjiang in China’s Foreign Relations: Part of a New Silk Road
or Central Asian Zone of Conflict? East Asia: An International Quarterly, 32(1), 2015, 40,
acknowledgments.
14 Bill Chou, Xuejie Ding, A Comparative Analysis of Shenzhen and Kashgarin Development as
Special Economic Zones. East Asia: An International Quarterly, 32(2), 2015, 118.
15 For example, Mackerras, Colin, Xinjiang in China’s Foreign Relations: Part of a New Silk
Road or Central Asian Zone of Conflict?. East Asia: An International Quarterly, 32(1), 2015,
b2432_Ch-14.indd 249 15/7/2016 8:01:58 PM

250 Winglok Hung
and social development in Xinjiang. Research on the social development in

Xinjiang Uyghur Autonomous Region, studied from 1999 to 2009, also
showed that Uyghurs are not necessary involved in the policy-making pro-
cess.16 Nevertheless, the papers did not explicitly present a clear correlation
between China’s foreign relations and domestic conflicts with the exact plans
or practices of OBOR. It seems unclear how China’s Xinjiang ethnic riots in
2009 will affect China’s economic strategy in 2015 and how China’s OBOR
will also affect its economic strategy with India, Russia or Turkey.
Second, most researchers focus on China’s attempt to enforce a greater
political (or geopolitical) relationship with emerging countries in OBOR.
This branch of literature often links up with China’s political and military
power in the world. In the Blue Book of Asia-Pacific, published by the
Chinese Academy of Social Sciences, it was suggested that China’s growing
emphasis to build a good relationship with Central Asian and South Asian
countries is in order to balance the US’s and possibly Russia’s influence in
Central Asia or Asia.17 OBOR is regarded to be a part of China’s assertive
foreign policy under the leadership of President Xi Jinping.18 Some papers
have argued that China should strengthen its relations with Russia and
Central Asian countries to counterbalance American hegemony.19 China
25–42; Colakoglu, Selcuk, “Dynamics of Sino-Turkish Relations: A Turkish Perspective. East

Asia: An International Quarterly, 32(1), 2015, 7–23; Mukherjee, Kunal, Comparing China and
India’s Disputed Borderland Regions: Xinjiang, Tibet, Kashmir, and the Indian Northeast. East
Asia: An International Quarterly, 32(2), 2015, 173–205; Shichor, Y, Pawns in Central Asia’s
Playground: Uyghurs Between Moscow and Beijing. East Asia: An International Quarterly,
32(2), 2015, 101–116.
16 Cappelletti, Alessandra, Developing the Land and the People: Social Development Issues in
Xinjiang Uyghur Autonomous Region (1999–2009). East Asia: An International Quarterly,

32(2), 2015, 137–171.
17 Li Xiangyang zhu bian, Ya tai lan pi shu: Ya tai di qu fa zhan bao gao 2015 Yi dai yi lu ᵾੁ
䱣ѫ㕆, ӊཚ㬍ⳞҖ: ӊཚൠ४ਁኅᣕ੺(2015) аᑖа䐟 [Blue Book of Asia Pacific:

Annual Report on Development of Asia-Pacific (2015) One Belt One Road]. Beijing: She hui ke
xue wen xian chu ban she, 2015. (ेӜ: ⽮Պ、ᆖ᮷⥞ࠪ⡸⽮, 2015), BI Zong baogao ᙫᣕ
੺[General Report], 1–10.
18 Tiezzi, Shannon, Where is China’s Silk Road Actually Going? The Diplomat, 30 March 2015
[downloaded on 19 November 2015], available at http://thediplomat.com/2015/03/where-is-

chinas-silk-road-actually-going/
19 Zhangjie zhu bian ᕐ⌱ѫ㕆, Zhongguo zhou bian an quan xing shi ping gu: “Yi dai yi lu”
yu wai wei zhan lüe ѝഭઘ䗩ᆹ‫ޘ‬ᖒ࣯䇴ՠ: “аᑖа䐟”оઘ䗩ᡈ⮕ [China’s Regional
b2432_Ch-14.indd 250 15/7/2016 8:01:58 PM

intends to strengthen its maritime routes to facilitate economic trading.

However, China has yet to build political and strategic trust with various
countries.20 In brief, political relationships are important for economic coop-
eration. This argument can be found in the discussions of One Belt or One
Road. If China can dominate the sea route and the South China Sea or the
route in Central Asian regions, China will be more likely to rise as a domi-
nant power in the 21st century.
It is worth mentioning that Kazakhstan competed with Beijing in the
bid to host the 2022 Winter Olympics in 2014. If China’s ultimate aim
was to build a friendly political relationship with Kazakhstan, then why did
the Beijing authority choose not to give up the bidding so that Kazakhstan
would have a higher chance to win the bid and be thankful to the Chinese
government? If economic and political aspects are completely separate for
discussion, it seems that focusing too much on the possible political

dimension of OBOR does not highly correlate with OBOR as an eco-
nomic strategy.
Third, cultural and geographical factors are critical in OBOR. The
ancient Silk Road contributed to the spread of Buddhism and Chinese por-
celains. China’s Silk Road Economic Belt starts from Yunnan, Tibet, Xinjiang
and other western regions rather than China’s coastal areas or urbanized cities
such as Beijing or Nanjing. The geographical locations, religions, human
activities and resources are not similar to those in the eastern part of China.
For instance, China has more grassland in its western regions.21 The percent-
age of grassland is geographically similar to five Central Asian countries:
Kazakhstan, Kyrgyzstan, Uzbekistan, Turkmenistan and Tajikistan. In the
Security Environment Review 2015: “One Belt One Road” and Its Regional Strategy]. Beijing: She
hui ke xue wen xian chu ban she, 2015 (ेӜ: ⽮Պ、ᆖ᮷⥞ࠪ⡸⽮, 2015), 16.
20 Chaturvedy Rajeev Ranjan, New Maritime Silk Road: Converging Interests and Regional
Responses. Institute of South Asian Studies (ISAS) Working Paper, National University of
Singapore, No. 197, October 2014, 1–20.
21 Lin Ma, Liu Dazhi and Teng Fei, 傜᷇ ࡈབྷᘇ, ┅伎, Si chou zhi lu jing ji dai yu wo guo
cao yuan ke chi xu fa zhan zhan lue yan jiu, э㔨ѻ䐟㓿⍾ᑖоᡁഭ㥹ഝਟᤱ㔝ਁኅᡈ⮕

⹄ウ [Silk Road Economic Belt and Study on China’s Grassland Sustainable Development
Strategy], Zhang Lijun zhu bian ᕐѭੋѫ㕆, Si chou zhi lu jing ji dai: Gou jian yu fa zhan yan
jiuэ㔨ѻ䐟㓿⍾ᑖ: ᶴᔪоਁኅ⹄ウ [Silk Road Economic Belt: Ideas and Development
Study]. Beijing: Zhong guo jing ji chu ban she (ेӜ: ѝഭ㓿⍾ࠪ⡸⽮, 2015), 251–262.
b2432_Ch-14.indd 251 15/7/2016 8:01:58 PM

252 Winglok Hung
plan of OBOR, tourism, cultural and religious exchanges are emphasized to

promote economic cooperation.22
Physical and human geography will reshape methods for economic
transaction. For example, people rely on donkeys rather than automobile cars
for transporting goods to climb over mountains in China’s western regions.
Religions, culture and local unique products such as silk, tea, china porcelain
wares were highlighted in the ancient history of China’s Silk Road.23 From a
geographical perspective, the economic strategy in China’s western regions
might be different from the urbanized plan which China started and gradu-
ally implemented from the 1980s. Cultural stakeholders hope that the
unique Chinese art products and Chinese ancient philosophy of arts can be
promoted to other regions through One Belt and One Road routes.24 These
cultural products are greatly different from McDonald’s hamburger restau-
rants, Starbucks coffee shops or Coca-Cola soft drink cans that exist in most
globalized cities. They offer an alternative.
Forth, this approach focuses on economic and investment activities.
Studies have focused more on infrastructure projects, increased investment in
both Asia and Europe.25 There are relatively few papers substantially con-
cerned with the China — European Union (EU) relationship in the discus-
sion of One Belt or One Road. However, Europe is the final destination in
China’s One Belt strategy26 with Africa expected to be a strategic point in
22 Zhao Kejin, 䎥ਟ䠁, Yi dai yi lu de Zhong guo fang lue yan jiu аᑖа䐟”Ⲵѝഭᯩ⮕⹄
ウ, Xin jiang shi fan de xue xue bao ᯠ⮶ᐸ㤳བྷᆖᆖᣕ [Journal of Xinjiang Normal University
(Philosophy and Social Sciences)], (1), 2016, 22–23.
23 Sun Jiuwen, Gao Zhigang zhu bian, ᆉѵ᮷, 儈ᘇࡊѫ㕆, Si chou zhi lu jing ji dai yu qu yu
jing ji fa zhan yan jiu э㔨ѻ䐟㓿⍾ᑖо४ฏ㓿⍾ਁኅ⹄ウ [Research on Silk Road Economic

Belt and Regional Economic Development]. Beijing: Jing ji guan li chu ban she, 2015 (ेӜ: 㓿
⍾㇑⨶ࠪ⡸⽮, 2015), Chapter 5.
24 Pan Tianbo, and Hu Yukang, █ཙ⌒, 㜑⦹ᓧ, Si lu qi yi yu zhong guo mei xue si xiang de
chuan bo э䐟┶㢪оѝഭ㖾ᆖᙍᜣⲴՐ᫝, Xin jiang shi fan de xue xue bao ᯠ⮶ᐸ㤳བྷᆖ
ᆖᣕ[Journal of Xinjiang Normal University (Philosophy and Social Sciences)], 35 (2), 2014
89–95.
25 For example, Scott Kennedy, David A. Parker, “Building China’s ‘One Belt, One Road’”,
publication. Center for Strategic and International Studies, Washington, DC [downloaded on

22 November 2015], available http://csis.org/publication/building-chinas-one-belt-one-road.
26 Hu Angang, Ma Wei and Wan Yilong 㜑䶽䫒, 傜Տ, 䝒а嗉, ‘“Si chou zhi lu jing ji dai”:
Zhan lue, ding wei he shi xian lu jing’, ‘“э㔨ѻ䐟㓿⍾ᑖ”:ᡈ⮕޵⏥ǃᇊս઼ᇎ⧠䐟ᖴ’

[Connotation, Definition, and Passage of “Silk Road Economic Belt”], Xin jiang shi fan de xue
b2432_Ch-14.indd 252 15/7/2016 8:01:58 PM

OBOR.27 It was suggested that Rotterdam, the Netherlands will be the final
stop in the One Belt route from Shenzhen, China via Myanmar, India,
Pakistan, Iran, Turkey and Bulgaria.28 There are advantages for establishing
an economic network with Europe. Most European countries recorded a

high GDP per capita, have an advance level of economy and technology,
scientific technology and cultural activities. As a result, China may focus
more on trading, education and cultural exchanges in Europe while focusing
on energy resources in the Central Asia region in OBOR.29
Overall, it seems that most of the details of OBOR are not completely
publicised. Particularly, the exact practices or policies of OBOR are still not
very clear. Furthermore, how long their plans will last remains unknown. It
is unclear whether OBOR will last for 5 or 10 years or for as long as 20 or
30 years. Nevertheless, it is still possible for China to implement the One
Belt and One Road project despite not many people understanding clearly
the idea. Similarly, I believe that few scholars and even Chinese government
officials thoroughly understood China’s open-door policy in former Chinese
leader Deng Xiaoping’s economic blueprint in late 1970s, even though the
market reform has been implementing and evolving in the last few decades
in China.
Defining OBOR
One Belt One Road emphasizes its “newness” and it is neither an American-led
globalization nor European-type free trade economic zone. In an exclusive
report published by the Chinese Academy of Social Sciences, it summarized that
the current regional economic cooperation mechanism can be conceptualized
xue bao ᯠ⮶ᐸ㤳བྷᆖᆖᣕ [Journal of Xinjiang Normal University (Philosophy and Social
Sciences)], 35(2), 2014, 1–10.
27 Lin Yifu, ᷇⇵ཛ, ‘“ Yi dai yi lu”’ xu yao jia shang “yi zhou”’, ‘“аᑖа䐟”䴰㾱࣐к“а⍢”’,
Dang zheng lun tan (Gan bu wen zhai) ‫ފ‬᭯䇪උ(ᒢ䜘᮷᪈), (4), 2015, 32.
28 Dumitresu George Cornel, Central and Eastern European Countries Focus on the Silk Road
Economic Belt. Global Economic Observer, 3(1), 2015, 144–153.

29 Hu Angang, Ma Wei and Wan Yilong 㜑䶽䫒, 傜Տ, 䝒а嗉, Si chou zhi lu jing ji dai: Zhan
lue, ding wei he shi xian lu jing’, э㔨ѻ䐟㓿⍾ᑖ: ᡈ⮕޵⏥ǃᇊս઼ᇎ⧠䐟ᖴ’

[Connotation, Definition, and Passage of “Silk Road Economic Belt”], Xin jiang shi fan de xue
xue bao ᯠ⮶ᐸ㤳བྷᆖᆖᣕ. Journal of Xinjiang Normal University (Philosophy and Social
Sciences), 35(2), 2014, 2–4.
b2432_Ch-14.indd 253 15/7/2016 8:01:58 PM

254 Winglok Hung
into five major categories: (1) Economic Free Zone, (2) Tariff Alliance,
(3) Common Economic Market, (4) Economic Integration, (5) Political and
Economic Integration. Nowadays, only Europe has the above five categories at
the same time.30 OBOR does not aim to reproduce the European model. By
contrast, it is defined as a new strategy.
This short chapter defines OBOR mostly based on a special report pub-
lished by the Chinese Academy of Social Sciences.31 First, OBOR is an
economic strategy that aims to target the world market and not the domestic
market. Second, OBOR helps to promote economic integration between
China and strategic countries or partners. Third, OROB is an economic
strategy with the assistance of diplomatic practices. In the past, Chinese
companies, especially small and medium Chinese enterprises, explored their
business opportunities abroad by mostly relying on their own networks and
resources. Now, China’s official diplomacy helps domestic companies to

develop overseas business networks under the OBOR strategy. Forth, OBOR
attempts to promote economic integration beyond existing mechanisms such
as the World Trade Organization (WTO), Free Trade Area of the Asia Pacific
(FTAPP), the Trans-Pacific Partnership (TPP) and the Transatlantic Trade
and Investment Partnership (TTIP).32
The historical background of the ancient Silk Road is worth noting.
It was popular from the Han Dynasty (206 BC–AD 220) to the Ming
Dynasty (AD 18th century) before the emergence of western imperialism
and colonialism started from the 19th century. Before the age of imperialism,
China explored the “West” including India, Iraq, Iran rather than the United
States or Japan for trading goods or cultural exchanges.33 The ancient Silk
Road passed through Central Asia, the Persian Gulf and the Arab region to
30 Li Xiangyang, ᵾੁ䱣, Yi dai yi lu: Ding wei, nei han ji xu yao you xian chu li de guan xi а
ᑖа䐟: ᇊսǃ޵⏥৺䴰㾱Ո‫ݸ‬༴⨶Ⲵ‫ޣ‬㌫ [“One Belt One Road” Orientations, Contents
and Challenges]. Beijing: She hui ke xue wen xian chu ban she, 2015 (ेӜ: ⽮Պ、ᆖ᮷⥞ࠪ
⡸⽮, 2015), 21.
31 Ibid., 15–19.
32 Ibid., 15–19, with minor addition and explanation by the author.
33 The author acknowledges Professor Chang Chak-yan on this point.
b2432_Ch-14.indd 254 15/7/2016 8:01:58 PM

reach Europe and Africa.34 In roughly 600 BC, the tradition of Persian state-
craft was well established. Both the Roman Empire and the Parthian Empire
dominated the majority of the Middle East region.35 The region experienced
a sophisticated culture of commerce, which attracted Chinese in Han

Dynasty to explore. Fundamentally, OBOR might be inspired by the period
of the Ancient Silk Road under the age of globalization.
Assumptions, hypothesis, method and limitations

Great powers are assumed to be rational powers. China and two European
countries namely Britain and Germany are considered to be great powers,
while France, Italy and Spain are considered to be middle powers. Great pow-
ers are assumed to have state capability to adjust and decide international
norms, however, states are never certain about the intentions of other states
before the implementation of economic or diplomatic practices. Middle
powers are less likely to decide or set international norms. Power is defined
as a combination of three elements: the number of people who can work and
fight; economic productivity and the effectiveness of the political system.36
Nations are no longer the only actors in the international system or the
international order. This chapter does not share the liberalist assumption that
economic cooperation must bring harmony between nations or even world
peace. Furthermore, there are now some extreme non-state actors or networks
such as Islamic State (ISIS), Al-Qaeda that can greatly disturb the social order.
This is not the main purpose of this chapter to discuss whether economic
integration must achieve peace or harmony in the international system. The
current international configuration is assumed to be unipolar and the United
States is the only dominant power after the Cold War period. I assume that
34 Heng li Ji xin ge Ә࡙. ส䗋Ṭ [Henry Kissenger], Hu li ping deng yi 㜑࡙ᒣㅹ䈁

[Translated by Hu Liping et al.], Shi jie zhi xuц⭼〙ᒿ [World Order]. Beijing: Zhong xin chu
ban she ेӜ: ѝؑࠪ⡸⽮, 2015), 116–118.
35 Zheng chi yan 䜁䎔⩠, Cong san ge jiao du kan ‘yi dai yi, Ӿйњ䀂ᓖⴻ‘аᑖа䐟,
[Examining “One Belt One Road” from three perspective] Yin ni jian dian ঠቬ❖⛩ [Indonesia
Focus], (4), 2015.
36 To facilitate our discussions, ‘the international system’ and ‘the international order’ are used
interchangeably in this chapter.
b2432_Ch-14.indd 255 15/7/2016 8:01:58 PM

256 Winglok Hung

The dominant power
Great powers
Middle powers
Small powers
Figure 1: Class power pyramid37
there is no second dominant power in the system. In a classic power pyramid,

the world consists of one dominant power, great powers, middle powers and
small powers as showed in Figure 1:
The following hypotheses can be proposed:
Hypothesis 1: One Belt One Road is a new economic strategy to China

and the world. Since it is an economic strategic plan,
OBOR stresses economic benefits rather than political
benefits to China and/or other countries.
Hypothesis 2: Company but not country is an important actor to gener-
ate profits.
Hypothesis 3: Existing economic norms are no longer feasible and new
economic norms should be built.
Scholarly work, online materials and Chinese media reports on OBOR

and Europe from December 2013 to October 2015 will be analyzed. Some
37 With
reference to Tammen Ronald L, et al., Power Transitions: Strategies for the 21st Century.
New York: Chatham House Publishers, 2000, 7, Figure 1.1.
b2432_Ch-14.indd 256 15/7/2016 8:01:59 PM

arguments will also be based on the author’s personal observations, conversa-

tions with scholars and public lectures attended on the topic of the OBOR
economic strategy. There are limitations in this chapter. The OBOR strategy
is examined entirely based on open sources such as media reports, books,

journals and public lectures. The author has no connection with any Chinese
government officials or entrepreneurs. It is possible that the exact motivation
or practices of OBOR may not be the same as what can be found in public
and open sources. It is also possible that entrepreneurs and business compa-
nies understand and practise the OBOR economic strategy differently from
what has been published.
Analytical framework: Yan Xuetong’s analysis

of international system
As discussed earlier, OBOR is a new economic strategy. This section borrows
the framework of international system to illustrate how this new economic
strategy will transform the system.38 In Professor Yan Xuetong’s study about
transformation of the international system, the international system is gener-
ally composed of three elements, namely international actors, international
configuration and international norms.39 In ancient times, Europe consisted
of Kingdoms and China consisted of various vassal states such as the states of
Qin, Chu, Qi and so on as inter-state actors. The international configuration
is present in the form of unipolar, bipolar or multipolar. International norms
usually refer to the common standard in international affairs and include the
norm of sovereignty, the norm of annexation, the norm of occupation or the
norm of non-interference and non-annexation.40
The international system will be only transformed when at least two
components are changed in the system. Table 1 sums up the components in
38 Yan Xuetong,䰾ᆖ䙊, She jie quan li de zhuan yi: Zheng zhi ling dao yu zhan lue jing zheng
ц⭼ᵳ࣋Ⲵ䖜〫: ᭯⋫亶ሬоᡈ⮕ㄎҹ [The Shift of World Power: Political Leadership
and Strategic Competition]. Beijing: Beijing da xue chu ban she, 2015 (ेӜ: ेӜབྷᆖࠪ
⡸⽮, 2015).
39 Ibid.
40 Ibid., 76–78.
b2432_Ch-14.indd 257 15/7/2016 8:01:59 PM

258 Winglok Hung
Table 1: Three components in the international system
International International
International Actors Configuration Norms

The Middle Ages The pope and kingdoms Multipolar Norms of
System (5th–15th annexation
century)
The Westphalian Nations-states Multipolar Norms of
System (AD 1648– sovereignty
1792)
The Vienna System Nations-states Multipolar Norms of
(AD 1814–1913) interference
The Yalta System Nations-states Bipolar Norms of non-
(AD 1945–1991) interference and
non-annexation
The Yalta System Nations-states, International Unipolar Norms of non-

(The Post-Cold Era, organizations (e.g. WTO, interference
AD 1991–2014) IMF) non-annexation
One Belt One Nations-states, Business Multipolar Pragmatic
Road System corporations economy norms
(AD 2015–)
Note: This table is an edited version with reference to Professor Yan Xuetong’s “The Shift of the World
Centre and its Impact on the Change of the International System”.41 The post-cold war era and OBOR
system were added by the author
the international system during different periods. The last row shows that
three components are expected to change in the OBOR economic strategy.
Why focus on “Europe”?

It was argued that Europe has always been the center of the world since the
19th century.42 If China and Africa, the Middle East or Latin America
strengthen economic integration and set new economic norms, it is difficult
41 Yan Xuetong, The Shift of the World Centre and its Impact on the Change of the International
System. East Asia: An International Quarterly, 30(2), 2013, 227, Table 1.

42 Yan Xuetong, The Shift of the World Centre and its Impact on the Change of the International
System, East Asia: An International Quarterly, 32(2), 2015, 221–222.
b2432_Ch-14.indd 258 15/7/2016 8:01:59 PM

to argue whether the “international” order is transformed as these regions

have not been generally regarded as the center of the world economies in the
past few centuries. Africa has been even described as a “shadow” in the
present neo-liberal international order.43 As China is located in Asia, any

changes between China and other Asian countries are more likely to be
regarded as a transformation of the “regional” system rather than “interna-
tional” system. However, if any two of the three criteria namely interna-
tional actors, international configuration and international norms in Europe
are changed, it is more likely to argue that the international order may be
transformed.
Banks and geopolitics: Establishing the AIIB

There is a Chinese saying from Sun Tzu’s The Art of War, ‘Grain (army provi-
sion) comes first before moving three troops’ (йߋᵚࣘ, ㋞㥹‫ݸ‬㹼).
In modern period, people need to ensure that they have enough cash or
financial resources before implementing any strategy.44 As OBOR is a strat-
egy, China should first think of a feasible way to backup this economic
strategy. After the financial crisis in 2008, it resulted in the collapse of
Lehman Brothers and the merge of the global insurance and financial services
organization, American International Group (AIG). Other international
giant banks such as Citigroup, HSBC Holdings, Standard Chartered and
other financial institutes appeared to have certain problems in managing a
large sum of funding and therefore, it is important to establish a new inter-
national financial institute for funding OBOR.
Hence, the AIIB was established. AIIB, a Chinese-led initiative was pro-
posed in October 2013.45 This was announced just after a month when
Xi Jinping delivered the idea of One Belt in Kazakhstan, September 2013.
After proposing the establishment of AIIB, 21 Asian countries agreed to join
43 Ferguson, James, Global Shadows: Africa in the Neoliberal World Order. Durham: Duke
University Press, 2006.
44 McCredie, Karen, Sun Tzu’s The Art of War: A 52 Brilliant Ideas Interpretation. Oxford:
Infinite Ideas, 2008, 17–18.

45 About us, AIIB’s official website [downloaded on 23 November 2015], available at http://
www.aiib.org/html/aboutus/AIIB/.
b2432_Ch-14.indd 259 15/7/2016 8:01:59 PM

260 Winglok Hung
AIIB.46 In March 2015, the United Kingdom announced that the country
intended to join AIIB and other European countries including Austria,
Germany, Finland, France, Italy, the Netherlands, Portugal and Spain later
joined AIIB as founding members.47 According to an official document,

AIIB will finance projects that promote sustainable development and
regional cooperation.48
Although China did not explicitly explain the reasons for setting up the
AIIB, it is important to compare it with two other similar institutes namely
the World Bank and the Asian Development Bank. Media reported that the
World Bank is now led by the United States while the Asian Development
Bank is dominated by Japan, so China is now setting up a new financial
institute.49 Nevertheless, this media report did not articulate the fact that the
US has been recovering from the global financial crisis in 2008 and Japan’s
economy has been staggering for decades. America and Japan might plan to
reserve financial budget to deal with domestic economic crisis and the exist-
ing capital and financial resources may not be enough to fund large infra-
structure projects overseas. As a result, it is logical for China to establish AIIB
to back up the OBOR economic strategy. AIIB becomes a great financial
alterative especially with the involvement of European countries.
International actors of the international system will not be changed as
AIIB is similar to other international organizations such as the International
Monetary Fund (IMF) and the World Bank in the international system.
However, the international configuration may be changed. International
configuration is determined by two major factors: comparative strengths
and strategic relationships of major power.50 As China, Germany and the
United Kingdom are considered to be the great powers, the international
46 Zhong guo chou jian ya tou hang 21 guo you yi can jia ѝഭㆩᔪӊᣅ㹼 21 ഭᴹ᜿৲࣐’
[China planned to establish AIIB, 21 nations intended to join], Xiang gang shang bao 俉⑟୶
ᣕ Hong Kong Commercial Daily, 22 October 2014, A19.
47 50 guo qian ya tou hang xie ding 50 ഭㆮӊᣅ㹼ॿᇊ[50 nations signed AIIB aggrement],
Wen hui bao ᮷≷ᣕ. Wen Wei Po, 30 June 2015, A08.
48 Articles of Agreement, AIIB [downloaded on 23 November 2015], available at [http://www.
aiib.org/uploadfile/2015/0814/20150814022158430.pdf.
49 Why China is Creating a New “World Bank” for Asia. The Economist, 11 November 2014.
50 Yan Xuetong, A Bipolar World is More Likely Than a Unipolar or Multipolar One. China–
US Focus, Carnegie-Tsinghua Center for Global Policy, 20 April 2015.
b2432_Ch-14.indd 260 15/7/2016 8:01:59 PM

configuration will be changed from unipolar to multipolar as other great

powers have the authority to create and establish an international financial
institute. Also, it is expected that the economic power of China, Germany
and the United Kingdom will further increase due to these countries sharing
the economic profits from OBOR.
Chinese and European firms in OBOR

Firms are expected to be involved in OBOR. Without the involvement of
Chinese firms, OBOR would simply be regarded as another China’s foreign
assistance program.51 In the plan of OBOR, various Chinese actors such as
private companies, state-owned companies, non-government organizations,
cultural and educational institutes will explore overseas economic opportuni-
ties.52 Particularly, small and medium business firms and individual business
owners who were seldom informed by the Chinese authorities on how to
develop their overseas businesses.53 Although China has achieved an aston-
ishing economic growth since the 1970s, few people in Europe can name a
single Chinese company in the 2010s.54 In 2013, when China’s OBOR was
confirmed as a national grand strategy, China only had 23 companies listed
in the global top 500 compared to the 184 US firms on the same list.55
Furthermore, most of the top 10 companies are owned by the US such as
Apple, ExxonMobil, Berkshire Hathaway, WalMart, Microsoft, IBM, Nestle.
PetroChina company (ranked fourth in the world) was the only Chinese
company listed in top 10 in 2013.56
51 Li Xiangyang, ᵾੁ䱣, Yi dai yi lu: Ding wei, nei han ji xu yao you xian chu li de guan xi а
ᑖа䐟: ᇊսǃ޵⏥৺䴰㾱Ո‫ݸ‬༴⨶Ⲵ‫ޣ‬㌫ [One Belt One Road” Orientations, Contents
and Challenges], Beijing: shi hui ke xue wen xian chu ban she (ेӜ: ⽮Պ、ᆖ᮷⥞ࠪ⡸⽮,
2015), 27.
52 Ibid., p. 28.
53 Winglok Hung, The Travails of Chinese Businesses in Present-day Uganda. Saarbrücken,
Deutschland: LAP Lambert Academic Publishing, 2014.

54 Nolan, Peter, Chinese Firms, Global Firms: Industrial Policy in the Age of Globalization.
New York : Routledge, 2014, xvii.

55 FT 500, 2013 [downloaded on 6 December 2015], available at http://www.ft.com/indepth/
ft500.
56 Ibid.
b2432_Ch-14.indd 261 15/7/2016 8:01:59 PM

262 Winglok Hung
In fact, Chinese leaders highly regard overseas Chinese firms. For

example, in November 2012, former Chinese President Hu Jintao encour-
aged more Chinese companies to expand their overseas businesses in order to
enhance cooperation in an international environment and develop a number

of world class international companies.57 I believe that this is one of the main
reasons why OBOR has a strong emphasis on Chinese companies. China’s
OBOR engagement with European countries will have a large impact as
there are already well-established international firms in Europe. The coop-
eration between Chinese and European firms may help to expand their eco-
nomic influence in other regions under OBOR.
The involvement of Chinese companies will change the actors in the
international order system. It would be difficult to imagine Coca-Cola
Company’s CEO Muhtar Kent traveling with the American president to
various countries and signing significant business deals with respective gov-
ernments. However, a few Chinese companies accompanied China’s President
Xi Jinping during his official trip to America in September 2015.58 During
President Xi’s official visit to the United Kingdom in October 2015,
Mr Wang Chuanfu, CEO of BYD automobile company, was on the trip and
signed a contract with British companies worth RMB 6.5 billion RMB when
Chinese President Xi arrived in London on 21 October 2015.59 It seems that
Chinese company representatives have a role in China’s OBOR and compa-
nies may become a new actor in the international system.
International norms and pragmatic economies:

Monks and bankers
International norms are complicated and normally take more time for
changes to take place. In fact, the internationalization of a norm is a process
57 Nolan, Peter, Chinese Firms, Global Firms: Industrial Policy in the Age of Globalization.
New York: Routledge, 2014, xvii.

58 Zhong xing shou ji sui tuan dao fang xi ya tu ѝ‫ޤ‬᡻ᵪ䲿ഒࡠ䇯㾯䳵മ [ZTE tech com-
pany followed the trip to Seattle], Na fang du shi bao ইᯩ䜭ᐲᣕ. Southern Metropolitan Post,
25 September 2015, C07.
59 Bi ya di 65 yi jin jun ying xin neng yuan shi chang: he xin jing zheng li shi tie dian chi ∄ӊ
䘚65 ӯ䘋ߋ㤡ᯠ㜭Ⓚᐲ൪: Ṩᗳㄎҹ࣋ᱟ“䫱⭥⊐”’, 21 shi ji jing ji bao dao 21, ц㓚

㓿⍾ᣕ䚃21st Century Economic Review, 27 October 2015, 21.
b2432_Ch-14.indd 262 15/7/2016 8:01:59 PM

of socialization.60 Norms are defined as a set of values and collective beliefs

shared by a community.61 For example, we accept the result of “winner takes
it all” in classical liberal economics. Traders have no responsibility to respect
the values of religious and environmental groups unless those values affect
their market profit, or those values are enforced legally. In the field of inter-
national relations, “norms are standards of behaviour in terms of rights and
obligations”.62
If we regard that international norms are based upon people’s views of
national interests for their own benefits,63 it is possible that people in Europe
are looking forward to establishing new international norms to overcome
their economic adversities. European countries are desperate for any changes,
especially in economic norms to improve domestic economies and to help
those who lost their jobs during the prolonged economic recession. But how
do norms change exactly? It is important to note that OBOR starts from the
western regions of China, passes through Nepal, Iraq, Central Asian and the
Middle East regions and finally reaches Europe. In the aforementioned
regions, there are village farmers, monks and small-scale business people.
In these regions, few are educated with a bachelor degree in economics but
they can still manage their lives well.64 There seems to be no stock markets,
investment bankers and financial advisors in these regions.
Nowadays, the western liberal economic approach apparently widens
income gaps, creates environmental damage and increases unemployment.
By contrast, there are more monks than hedge fund bankers in Tibet. Nature,
religion and culture are well preserved, and their economies are “localized”
60 Yan Xuetong, International Leadership and Norm Evolution. The Chinese Journal of
International Politics, 4(3) 2011, 236.
61 With reference to Elster Jon, Explaining Social Behavior: More Nuts and Bolts for the Social
Sciences. Cambridge: Cambridge University Press, 2007, 353.

62 Krasner, Stephen, ‘Structural causes and regime consequences: Regimes as intervening varia-
bles’, in International Regimes, edited by Stephen Krasner. Ithaca and London: Cornell
University Press, 1983, 2.
63 Finnemore, Martha, ‘Constructing norms of humanitarian intervention’, in The Culture of
National Security: Norms and Identity in World Politics edited by peter J. Katzenstein New York:
Columbia University Press, 1996, 154.
64 Braham, Laurence J, Fusion Economics: How Pragmatism is Changing the World. New York:
Basingstoke Palgrave Macmillan, 2014.
b2432_Ch-14.indd 263 15/7/2016 8:01:59 PM

264 Winglok Hung
rather than “globalized”.65 The people in these regions face adverse conditions
of impoverishment and environmental degradation but they often seek solu-
tions with local wisdom. Money or profit may not be the most important
norm in their economy. It is equally important to mention that people in

Bhutan are often regarded as the happiest people in the world. Norms are
fundamentally intrinsically related to people’s interests and shape their social
and economic behavior.
Furthermore, norms of non-interference may be gradually adjusted as
some regions (e.g. Iraq and Syria) may need external peacekeeping forces to
maintain order for businesses. From this perspective, norms may change as
China further integrates their way of doing business under OBOR. At this
moment, I am not really certain how economic norms will be exactly changed.
But culture and religion are important factors. The new norms may not be the
same liberal norms that originated from Adam Smith’s ideas of market.
Conclusion
Why is Europe more important than other regions in China’s OBOR eco-
nomic strategy? This short chapter argues that OBOR is a new economic
strategy. The financial crisis in 2008 further exposed existing global eco-
nomic problems and still requires a new international order to maintain
peace. OBOR was established under this international context. There are
many papers focusing on China’s relations with emerging countries under the
framework of OBOR. I admit that China’s relations with emerging countries
are important but only China’s successful interactions with Europe will trans-
form the existing international system. Europe is important as it has always
been the center of the world, particularly since 19th century. Furthermore,
there are world leading business companies in Europe. As mentioned before,
three components of the world international system including international
actors, international configuration and international norms are expected to
change if OBOR is successfully practised.
After the global financial crisis in 2008, senior scholars, foreign policy
advisors and experts such as Henry Kissinger have been searching for a new
65 Ibid., especially Chapters 4 and 5.
b2432_Ch-14.indd 264 15/7/2016 8:01:59 PM

global order.66 I believe that China, Southeast Asian countries, the Middle
East regions and the African continent all have a role in OBOR and that
Europe is particularly crucial in this transformation.
Acknowledgments
The author would like to acknowledge the input from Professor Jan van der
Harst and Professor Chang Chak-yan at different stages of writing this chap-
ter. The author was also inspired by Laurence J Braham’s two lectures on the
current world’s economy at The Kee Club, Hong Kong and at Tsinghua
University, Beijing in 2015. Comments on my earlier draft by Patrik
Anderson are greatly appreciated. Last, the author would like to thank Serena
Chan for her patient and kind editing help. Needless to say, all the faults are
the author’s sole responsibility.
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photo/2013-09/08/c_132701546.htm.
Online sources
About Us, AIIB website [downloaded on 23 November 2015], available at http://

www.aiib.org/html/aboutus/AIIB/.
Articles of Agreement, AIIB website [downloaded on 23 November 2015], available
at http://www.aiib.org/uploadfile/2015/0814/20150814022158430.pdf.
FT 500, 2013, Financial Times website [downloaded on 6 December 2015],
available at http://www.ft.com/indepth/ft500.
Working papers
Kennedy, Scott and David A Parker. Building China’s “One Belt, One Road”.
Publication. Center for Strategic and International Studies, Washington, DC
[downloaded on 22 November 2015], available at http://csis.org/publication/
building-chinas-one-belt-one-road.
Rajeev, Ranjan Chaturvedy, New Maritime Silk Road: Converging Interests and
Regional Responses. Institute of South Asian Studies (ISAS) Working Paper,
National University of Singapore, No. 197, October 2014, 1–20.
Yan, Mengzhao and Shumin Li, Chinese Firms’ International Market Entry to Main
Participating Countries of ‘One Belt One Road. The Institute of Electrical and
Electronics Engineers, Inc. (IEEE) Conference Proceedings, June 2015, 1–6.
Yan, Xuetong, A Bipolar World is More Likely Than a Unipolar or Multipolar One.
China–US Focus, Carnegie-Tsinghua Center for Global Policy, 20 April 2015.
b2432_Ch-14.indd 268 15/7/2016 8:02:00 PM

Chapter 15
China’s Pivot to Central

and South Asia
LIM Tai Wei∗
Historical background
In its historical narrative, the Silk Road refers to contacts dating back to the
Han Dynasty in 200 BC when the Chinese emissary Zhang Qian was dis-
patched from the Chinese capital of Changan (now known as Xian) to
Central Asia to establish trade and commercial ties. He was also sent to
search for the famous “blood-sweating” horses in the Kingdom of Ferghana
(Tashkent) to bring them back for Chinese horse-riding regiments. His expe-
dition pioneered a caravan route that eventually saw China establishing trade
contact with kingdoms in Central Asia. The transportation tool of choice was
camels. Persian and Central Asian riders plied the Silk Road especially
through the dry and inhabitable Taklamakan desert (also known as the Gobi
desert) on their tough Bactrian camels. Images of these camels had been
immortalized in tri-color (sancai) pottery models fired in Tang China.
Non-Chinese products traded on the Silk Road included the dates,
grapes and melons from Kashgar, Arabian glassware, Persian carpets from
∗ This chapter was first published as a limited circulation background brief/working paper:
Lim Tai Wei, China’s Pivot to Central and South Asia dated 12 August 2015 in East Asian
Institute Background Brief 1050. Singapore: National University of Singapore East Asian
Institute, 2015. Dr Lim Tai Wei is an adjunct Research Fellow at the East Asian Institute (EAI),
National University of Singapore and Senior Lecturer at SIM University (UniSIM). He thanks
Prof Zheng Yongnian, Director of EAI and Ms Jessica Loon for their editorial guidance and
inputs. He is especially thankful to Prof John Wong for access to his articles published in The
Straits Times and an unpublished conference paper on Central Asia.
269
b2432_Ch-15.indd 269 15/7/2016 8:02:36 PM

270 Lim Tai Wei
Herat, African slaves, African ivory, Indian and East African spices from
Zanzibar, pearls from Arabic locations like modern day Kuwait, gold, cotton
from India, gemstones from Indochina and Ceylon, etc. Over time, great
cities that used to thrive along this Silk Road had disappeared into the sands
of the desert like the trading city of Samarkand and the great Islamic city of
Baghdad that was later sacked by the Mongol nomadic raiders. The overland
route was eventually supplanted by maritime trade networks.
One Belt One Road (OBOR)

Contemporary China under the Xi Jinping administration has plans to revive
this historical route through an initiative known as the OBOR. The Chinese
OBOR initiative is not a new concept; in the past, the Ottoman Empire had
similarly reached out to Central Asia while Turkey had a new Silk Road pro-
ject and Russia has its own outreach to ex-Soviet Republics in Central Asia.1
The OBOR is the latest major policy initiative by the Xi administration to
tap into this region. In fact, this initiative is so important to China that
President Xi declared that this would be his only major foreign policy initia-
tive for the entire period of his administration.
The OBOR initiative basically has two routes, one overland route reach-
ing outwards from trading hubs like Yiwu to locations as far away as Madrid
and Germany. In geographical term, “Central Asia extends from the Caspian
Sea in the west to the border of western China in the east. It is bounded on
the north by Russia and on the south by Iran, Afghanistan and China. The
region comprises five former Soviet republics of Kazakhstan, Uzbekistan,
Tajikistan, Kyrgyzstan and Turkmenistan”.2 The other route in the OBOR
initiative is a Maritime Silk Road (MSR) that resembles the current trade
sea-lanes from the Middle East through the Gulf, the Indian Ocean, down
the Straits of Malacca through the South China Sea and eventually to
Northeast Asia. The overland route will be the focus here.
To lend economic resources to the OBOR initiative, the Chinese gov-
ernment started funding institutions like the Silk Road Fund, Asian
1 Wong, John, From Silk Road to Economic Bridge, dated 17 June 2015 in The Straits Times
[downloaded on 1 July 2015], available at www.straitstimes.com.
2 Ibid.
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China’s Pivot to Central and South Asia 271
Infrastructure Investment Bank (AIIB) and the BRICS Bank. The financial
muscles of state-owned enterprises (SOEs) were deployed behind the OBOR
initiative: “The People’s Bank of China and the Ministry of Finance have
been heavily involved in drawing up its program, and they have also brought
in China’s two policy banks (China Development Bank China Imports and
Exports Bank), the State Administration for Foreign Exchange (SAFE),
China Investment Corporation (CIC) and some SOEs like the Three Gorges
Corporation”.3
Central Asia in focus

On 7 September 2013 at the Nazarbayev University in Astana, Kazakhstan,
Chinese President Xi Jinping mentioned that China and other countries
like those in Central Asia can first compare their plans on economic devel-
opment while infrastructure links can be enhanced with the guiding phi-
losophy that China “respects the development paths and policies chosen
by the peoples of regional countries, and will never interfere in the domes-
tic affairs of Central Asian nations”.4 Some argue that China’s main target
for the OBOR’s overland component is Central Asia, including not only
train infrastructure but also ports and eventually energy pipelines.5 The
evidence for this, according to this school of thought, is the direction of
Chinese capital flow. China’s capital flow to Central Asia amounted to
US$30 billion in contracts with Kazakhstan; US$15 billion with
Uzbekistan; US$8 billion for Turkmenistan and US$1 billion to Tajikistan.6
On the surface, the Nazarbayev University speech by President Xi resem-
bled past Chinese practices of conducting “no-strings attached” economic
diplomacy; in reality, Chinese OBOR and AIIB initiatives have become
3 Ibid.
4 Xinhuanet, Xi Suggests China, C. Asia Build Silk Road Economic belt, dated 7 September

6 Ibid.
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272 Lim Tai Wei
more sophisticated with the integration of market-driven practices and

some imposition of environmental conditions.
Possible developmental challenges facing Central

Asian economies
A big differentiating factor between East Asia and Central Asia is in their
population. The former is lightly populated and so it does not face the same
pressures as the heavily populated latter region in industrialization to develop
the economy.7 Economically, Central Asian economies faced a number of
geographical weaknesses such as not having access to the sea for trade and
overdependence on commodities trade (cotton, oil, gas and agricultural
produce).8 Overdependence on natural resources export brings along with it
the usual challenges of vulnerability to price volatility. If Central Asia wishes

to modernize (assuming there is social consensus to do so), then the region
would need to go through a similar process that East Asian development is
familiar with. These features would include the growth of mass education,
infrastructure investments, industrialization, skills and management train-
ing, etc. These are items that China can offer.
Steel and coal

For industrialization and modernization to take place, be they European,
American, Japanese, Chinese or most East Asian experiences, two of the most
important commodities are steel and coal (oil was a latecomer as a major source
of energy). There is almost no exception to this cardinal rule. The industrial
revolutions in Europe and America followed the same path for hundreds of
years, making steel magnates and coal barons extremely wealthy. Japan, a late-
comer to the modernization game and the first East Asian economy to develop,
also utilized its own domestic coal resources for the same purpose. The Yahata
iron ore plants or the Kyushu coal mines were pioneers in Japan’s moderniza-
7 Wong, John, China’s New Silk Road Initiatives and Central Asia Development, dated 28 June
2015–2 July 2015 in The Seminar on the Silk Road and Nazarbayev Theory of Peace. Astana,
Kazakhstan: Unpublished, 2015, 15.
8 Ibid.
b2432_Ch-15.indd 272 15/7/2016 8:02:36 PM

tion and, in the post-war years, coal was also the main power source for Japan.
China’s post-1949 modernization followed a Stalinist path to industrialization
with the Great Leap Forward that produced steel according to non-market
conditions; its post-1979 economic reform initiatives depended on cheap coal

and Daqing oil. The post-war European Community (later European Union)
was built upon a coal and steel community as well.
The steel and coal industries thus become items of attention in China’s
OBOR and AIIB initiatives when it comes to modernization and industri-
alization projects. Any intention for the industrialization of Central Asia
occurs at an opportune time because China is simultaneously facing overca-
pacity. The idle capacity of China’s steel industry is twice the size of the
United States’ steel production; amongst other heavy industries, the Chinese
coal industry is also facing decreasing demand and lower profits.9 The New York
Times reported that 60% of all train cargo traffic is concentrated on the
transportation of coal and this amount fell 11% in December 2014 and 9%
in January 2015 compared with the figures a year ago.10 A slowdown in the
steel industry also translated to lower use of coking coal and such slowdown
also affected the railway industry which had excess capacity and fell into
debt, e.g. China Railway Corporation, an offshoot of the Ministry of
Railways with an accumulated debt of 3.5 trillion yuan (US$567 billion), an
amount that has increased by 26% since the end of 2012.11
With its massive consumption of steel and coal, China can help Central
and South Asia create the demand for energy (including coal fuels) in power-
ing the industrialization of these two developing regions.12 With the coming
9 Zhou, Jiayi, Karl Hallding and Guoyi Han, The “One Belt, One Road” Strategy Risks
Exacerbating China’s Economic Imbalances, dated 26 June 2015 in The Diplomat [downloaded
on 1 July 2015], available at http://thediplomat.com/2015/06/the-trouble-with-the-chinese-
marshall-plan-strategy/.
10 Gough, Neil, For Chinese Economy, Strengths Are Now Weaknesses, dated 11 March 2015
in the New York Times [downloaded on 1 June 2015], available at http://www.nytimes.

com/2015/03/12/business/international/for-chinese-economy-steel-goes-from-strength-to-
weakness.html?_r=0.
11 Ibid.
12 Shah, Saeed (Islamabad) and Jeremy Page (Beijing), China Readies $46 Billion for Pakistan Trade
Route, dated 16 April 2015 in The Wall Street Journal [downloaded on 28 June 2015], available at
http://www.wsj.com/articles/china-to-unveil-billions-of-dollars-in-pakistan-investment-1429214705.
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274 Lim Tai Wei
into being of the AIIB, China now has the resources to fund the overland Silk
Road. On a longer term basis, the ultimate prize for enhancing China–
Central Asia cooperation as well as continued Chinese role in the Shanghai
Cooperation Organisation (SCO) is the eventual fruition of a Free Trade

Agreement (FTA) between China and Central Asia. This may be one reason
for Chinese membership in the SCO despite a dominant Chinese diplomatic
principle of not forming alliances (Pakistan is an exception) or joining any
regional security pacts (SCO is an exception). OBOR and AIIB are likely to
complement this cherished Chinese diplomatic dream of an FTA.
Enter Pakistan
The first country in South Asia that China is concentrating on with regard to
economic development is Pakistan, an old and reliable ironclad ally; China has
promised to pump US$46 billion into Pakistan’s development. Beijing has its
own self-interest as well, as with any other bilateral projects between the two
states. Beijing wants to develop the neighboring South Asian region so that the
threat of terrorism that feeds on underdevelopment can be nipped in the bud
and eradicated. Beijing is also initiating meetings with tribal chiefs in Pakistan
and Afghanistan to resolve disputes between them. This would have a longer-
term effect on insulating Xinjiang from Islamic extremism. This initiative is
important because US President Obama’s withdrawal of 10,000 US soldiers
from Afghanistan would create a power vacuum in that part of the world.
Moreover, if the Pakistani (and Afghanistan) sector can be developed,
then China would have access to Iran and the proximate Central Asian mar-
kets. There are thus economic benefits to developing the northern regions of
South Asia that are contiguous with Central Asia. In the field of energy
development which is something essential for industrialization, China is help-
ing to construct US$15.5 billion coal-fired power plants to resolve Pakistan’s
electricity shortage by increasing another 10,400-megawatt of electricity to
the country.13 Beyond 2018, Beijing will increase Pakistan’s electricity supply
by an additional 6,600 megawatts at a cost of US$18.3 billion, doubling
Pakistan’s electricity supply.14
13 Ibid.
14 Ibid.
b2432_Ch-15.indd 274 15/7/2016 8:02:36 PM

Sino-Pakistani exchanges are no ordinary strengthening of a youhao rela-

tionship; it was an ironclad relationship to Beijing as Pakistan would become
what the Chinese foreign minister described as the symphony of the OBOR
foreign policy initiative. The overall impact of the Chinese–Pakistani out-

reach is a potentially win–win situation for all if (1) the projects are transpar-
ent; (2) China negotiates successfully through the complex geopolitics and
domestic politics of the South and Central Asian regions and (3) the infra-
structural connectivity promotes trade and commerce for the region.
India and its coal industry

Pakistan is not the only South Asian country to want to benefit from China’s
OBOR initiative. Even India, China’s rival, is also interested in tapping into
Chinese initiatives to develop its coal industry. The unwillingness of the

World Bank to fund coal projects due to climate change reasons has pro-
mpted India to turn to AIIB for such funding, as revealed by an anonymous
Senior Indian bureaucrat: “When you have 1.3 billion people starved of
electricity access and the rest of the world has created a carbon space, at this
point denying funding is denying access to cheap energy.”15
India wishes to develop its domestic coal reserves (fifth largest in the
world) that currently produces power for 3/5th of the country’s electricity,
but the country still faces power shortage and is in need of 455 more coal
power plants.16 Approximately 300 million people in India still have no
access to electricity.17 Like Central Asia, India also has industrialization and
modernization on its agenda, particularly under current PM Modi’s dream of
an economically developed India on the world stage with foreign policy lead-
ership. For the short- to medium-term, India still needs to depend on
cheaper coal resources even as it gears up to tap into renewable energy sources
on a large scale in the near future, like China. India’s coal industry is also
15 Kumar, Manoj and Tony Munroe, For India, China-Backed Lender May be Answer to Coal
investment, dated 5 November 2014 in Reuters website [downloaded on 6 July 2015], available
at http://www.reuters.com/article/2014/11/06/us-india-aiib-insight-idUSKBN0IP2S020141106.
16 Ibid.
17 Subramanya, Rupa, Is the Asian Infrastructure Investment Bank Good for India?, dated 15
April 2015 in Foreign Policy (FP) [downloaded on 1 July 2015], available at http://foreignpolicy.
com/2015/04/15/is-the-asian-infrastructure-investment-bank-good-for-india-coal-china/.
b2432_Ch-15.indd 275 15/7/2016 8:02:36 PM

276 Lim Tai Wei
facing a renaissance due to policy issues like accelerated coal mine permits
and greater market flexibility in retailing coal and stricter rules for churning
out coal fuels.18 In fact, India and Pakistan in South Asia and Central Asia
are not the only regions facing coal shortages; Northeast and Southeast Asia
also need cheaper sources of coal energy.
Funding coal-fired power generation

Private sector consultancy sources indicate that the OBOR initiative has the
potential to benefit the Chinese coal industry. Liang Dunshi, deputy secre-
tary general of China coal Transport and Distribution Association, opined
that China’s coal export market is expected to benefit from the country’s
OBOR initiative by shipping more coal to meet Southeast Asian needs.19
Vietnam has been importing more coal and exporting less while Thailand
and Malaysia are projected to increase coal fuels import in 20 years’ time.20
Vietnam, Indonesia, South Korea, Japan and India as a group will be upping
their coal-fired electricity production capacity by as much as 60%, some-
thing AIIB can finance in the vacuum of World Bank’s refusal,21 leading to
some voices in the West asking for a review of World Bank restrictions.
Even though World Bank rejects coal-fired projects, the AIIB is not the
only funding institution; Japan and the United States-dominated Asian
Development Bank (ADB) is more flexible than World Bank and funds some
coal-fired electricity initiatives if green technologies are used; it permitted
US$900 million funds for a 600- megawatt coal power plant in Pakistan,22
18 Runde, Daniel, AIIB And US Development Leadership: A Path Forward, dated 30 April 2015
in Forbes [downloaded on 1 July 2015], available at http://www.forbes.com/sites/daniel-

runde/2015/04/30/aiib-us-development-leadership/2/.
19 Jia, Jessie (ed.), China Coal Export to Benefit From “One Belt and One Road”, dated 8 June
2015 in Shanxi Fenwei Energy Consulting Company [downloaded on 1 July 2015], available
at http://en.sxcoal.com/121553/NewsShow.html.
20 Ibid.
21 Runde, Daniel, AIIB And US Development Leadership: A Path Forward, dated 30 April 2015
in Forbes [downloaded on 1 July 2015], available at http://www.forbes.com/sites/daniel-

runde/2015/04/30/aiib-us-development-leadership/2/.
22 Kumar, Manoj and Tony Munroe, For India, China-Backed Lender May be Answer to Coal
Investment, dated 5 November 2014 in Reuters website [downloaded on 6 July 2015], available at
http://www.reuters.com/article/2014/11/06/us-india-aiib-insight-idUSKBN0IP2S020141106.
b2432_Ch-15.indd 276 15/7/2016 8:02:36 PM

the main beneficiary of China-dominated AIIB and OBOR initiatives. From

the Chinese perspective, reception towards the OBOR and AIIB had been
positively transformative in economic and perhaps political relations. A China
Daily commentary noted that “[m]ost countries in South Asia actively sup-
port China’s “Belt and Road” initiatives, and only India shows deep suspicion
and concern over the strategy’s transparency … The construction of the
China–Pakistan economic corridor sets an example for Nepal and Sri Lanka,
and will propel India to adjust its attitudes to China’s “Belt and Road” initia-
tives, and the economic corridor connecting Bangladesh, China, India and
Myanmar, in which China proposes to promote regional connectivity”.23
Critical voices
There are however criticisms towards the OBOR and AIIB. A Silk Road-related
article written by a Sri Lankan student leader Akshan deAlwis was circulated by
Huffington Post, an internationally influential liberal online media outlet.
The tone of this article was alarmist and its author also stated openly the
political stance of hoping that Sri Lankans would democratically vote against
Chinese influence in military infrastructure of his country.24 The election even-
tually voted against the retention of pro-Beijing PM Rajapaksa. The article
offers some insights into some aspects of critical local reactions and responses
in South Asia towards the OBOR from an individual public intellectual and
activist perspective, which represents one sliver of many different perspectives
held by the vast spectrum of political views related to the Chinese initiative.
Akshan deAlwis also mentioned that the Chinese initiative can be an
economic catch-up opportunity for the rest of Asia to the standards of the
four tiger economies of Hong Kong, Singapore, South Korea and Taiwan,
suggesting readings of uneven development in Asia and also the possibility of
an alternative model that had made the four dynamic economies successful
23 Li,Yang, “Islamabad a Pivot for China’s Involvement in Islamic world, dated 22 April 2015
in the China Daily website, chinadaily.com.cn [downloaded on 25 April 2015], available at
http://www.chinadaily.com.cn/opinion/2015-04/22/content_20507080.htm.
24 deAlwis, Akshan, The New Silk Road: A True “Win–Win” or a Perilous Future?, dated 31
December 2014 in the Huffingtonpost.com The World Post website [downloaded on 2 January
2015], available at http://www.huffingtonpost.com/akshan-dealwis/the-new-silk-road-a-true-_
b_6400992.html.
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278 Lim Tai Wei
(the four tiger economies are often associated with Japan’s fast growth model
that was once lauded by the World Bank as a “miracle” and reinforced by
Western notions of capitalism, political and corporate governance as well as
democratization pulses).25 Akshan deAlwis’ narrative presented the scenario

of the OBOR as an additional (although it was not clear whether he also
meant “alternative”) developmental system for Asian countries that is not
based on the model of the four tiger economies and Japan. He centered his
attention on the more immediate periphery of China, especially South Asia
where he comes from and Southeast Asia (particularly Thailand). Akshan
deAlwis wanted to convey the possibility of a possible patron–client relation-
ship, though the shape and form have not been elaborated upon.
Combining his narrative with positive assessment of the OBOR and
AIIB, a global picture emerges that is complex, ambitious and deeply
nuanced. The world system tapestry presented by deAlwis are more conten-
tious than settled when it comes to Chinese intentions of gaining geopolitical
economic advantage. It indicates that observers, activists and analysts are not
quite decided on whether the MSR or the overland Silk Road (dubbed High-
Speed Railway or HSR diplomacy) takes precedence in Chinese plans. The
Chinese leadership themselves may be testing the waters on this, pragmati-
cally implementing an economic policy for the region with options to
modify the plans as they go along. The Zhongnanhai or Beijing leadership
may also be exercising strategic ambiguity, not deciding or formulating a
definite concept for some aspects of the One Belt One Road initiative.
Whatever be the reason that accounts for this ambiguity, narratives and com-
mentaries similar to deAlwis’ ideas about the MSR vis-à-vis HSR may be a
subject of concern for some time to come.
Some operational details

Policy wise, however, things are more concrete in the textual form. In his
New Silk Road speech at Nazarbayev University, Chinese President Xi
outlined five sectors for future cooperation between China and Central Asia.
They include (1) more consultations and communications on economic
development; (2) increase connectivity between Pacific and Baltic Sea as well
25 Ibid.
b2432_Ch-15.indd 278 15/7/2016 8:02:36 PM

as the regions of East, West and South Asia; (3) increase trade and invest-
ment; (4) promote trade in local currencies and (5) more exchanges at the
non-state level and at the individual level.26 China’s initiatives with railway
lines running through the historical Silk Road region provides landlocked
Central Asian countries with the connectivity to import and export goods.
The Maritime and Overland Silk Roads may even link up in the future,
providing Central Asia with indirect access to maritime trade.27 Eventually,
there appears to be in the future a plan to build a mega energy grid involving
energy pipelines (probably in oil and natural gas) between China and Central
Asia; these pipelines have been planned to link up with the power grids and
hydropower facilities in Southeast Asian countries (Association of Southeast
Asian Nations (ASEAN) members), as suggested in a CCTV report.28
Some challenges and possible Chinese responses

While conformity to market-driven conditions is a demonstration of smart
Chinese economic diplomacy, it still needs to overcome geopolitical sensitivi-
ties in the Central Asian region. Smart economic diplomacy is not only
restricted to the area of economic exchange but also broader geopolitical impli-
cations: “China is essentially leveraging its geo-economic power in order to
achieve larger geo-political objectives ... In the case of the Overland Silk Road,
China’s efforts run the risk of creating suspicion and conflict with Russia.
Many Central Asian states fall into Russia’s traditional sphere of influence”.
The challenges in the Eurasian region for any multilateral economic initiative
include Russian swaggering (e.g. recent mobilization of troops near its border
with Kazakhstan), European reluctance to trade with Russia, Russian obstacles
to goods traveling to Europe at times of bad relations, domestic problems like
27 Wong, John, China’s New Silk Road Initiatives and Central Asia Development dated 28 June
28 Zhang, Mengyuan, Energy Cooperation in One Belt One Road Focused, dated 16 June 2015
in CCTV.com [downloaded on 2 July 2015], available at http://english.cntv.cn/2015/06/16/

VIDE1434444361462625.shtml.
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280 Lim Tai Wei
corruption in Central Asia, elitist dominance of wealth creation, susceptibility

to commodity fluctuations, criminal groups, etc.29
Therefore, Central Asian actors have to thread between Beijing, Russian
and also US interests carefully. The support or responses that they give
to Beijing’s OBOR initiatives are not entirely unqualified and without caveats.
Meanwhile, other than Russia, India also wants a role in the region.
P Stobdan, a former Indian ambassador to Central Asia, argued that the
Central Asian region is undergoing a process of “de-Europeanization”; trans-
national forces like the Islamic State is moving into the region and China has
challenged Russian regional monopoly to control trade in the region.30
From such narratives, it appears India is also interested in projecting its geo-
political influence to Central Asia. To avoid being embroiled in geopolitical
rivalries with Russia and India, China would do well to stick to the economic
agenda that is in common with those of Central Asian states. Kazakhstan and
Turkmenistan are relatively more developed than the other Central Asian
states but they have commonalities of poverty, unemployment, unindustrial-
ized economies and income gaps.31
Another way is to use a functionalist approach to utilizing China’s geo-
graphical advantage in linking India with Central Asia so that Beijing can
keep the trade and commercial agendas’ momentum on its turf. This is
because, ironically, a prescription for Indian re-engagement with Central
Asia is to link up with China through the northern corridor of the Ladakh–
Xinjiang axis where India can reach Central Asia or the Eurasian landmass;
the other way is to become more active in the SCO.32 Finally, the SCO can
also become an important platform for Beijing to have regular consultations
29 The Economist, The New Silk Road Hardly an Oasis, dated 15 November 2014 in The Economist
[downloaded on 18 December 2014], available at http://www.economist.com/news/asia/21632595-

kazakhstan-turns-geography-advantage-china-builds-new-silk-road-hardly-oasis.
30 Stobdan, P, IDSA COMMENT Modi’s Visit to Central Asia, dated 6 July 2015 in the
Institute for Defence Studies and Analyses (IDSA) [downloaded on 1 July 2015], available at
http://www.idsa.in/idsacomments/ModisVisittoCentralAsia_pstobdan_060715.html.
32 Stobdan, P, IDSA COMMENT Modi’s Visit to Central Asia, dated 6 July 2015 in the
Institute for Defence Studies and Analyses (IDSA) [downloaded on 1 July 2015], available at
http://www.idsa.in/idsacomments/ModisVisittoCentralAsia_pstobdan_060715.html.
b2432_Ch-15.indd 280 15/7/2016 8:02:37 PM

with Russia on Chinese intentions in the Central Asian region to reduce the
trust deficit. Moreover, Russian interests, hurt by Western sanctions, have
gravitated closer to Beijing’s priorities. It is quite likely that Beijing will
build upon the convergence of Chinese and Russian common interests in

Central Asia.
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May 2, 2013
14:6

PST˙ws
Chapter 16
Strategic Partnership:
The China–Pakistan Relations
LIM Tai Wei∗
Background to the alliances in the East Asian context

In the last two weeks of April 2015 and almost contiguous with each other,
two sets of relations were strengthened in South Asia and Pacific East Asia.
In South Asia, China extended developmental funds of US$46 billion, the
single largest sum of funding for China’s youhao friendship partners, to
Pakistan. This was however no ordinary strengthening of a youhao relation-
ship; it was an ironclad relationship to Beijing as Pakistan would become the
swansong of what the Chinese foreign minister described as the symphony
of the One Belt One Road (OBOR) foreign policy initiative.
The Chinese–Pakistani cooperation was based on developmental assis-
tance and economic mutualism as China was building and funding mainly
infrastructural projects in Pakistan. The guiding philosophy was also
declared to be market-friendly and basically a targeted economic initiative.
Building strategic partnerships with different countries is key to China’s
foreign relations. China avoids building any alliance that is akin to that of
US–Japan alliance. Its strategic partnerships aim to promote bilateral rela-
tions or solve common problems between or among states. The Chinese
∗ This writing was first published with limited circulation as a working paper/background brief
as: Lim Tai Wei, EAI Background Brief No. 1029 “Strategic Partnership versus Alliance: The
China–Pakistan Relations versus the US–Japan Alliance” (by Lim Tai Wei) circulated on 3 June
2015. Singapore: NUS EAI, 2015. Dr Lim Tai Wei thanks Prof Zheng Yongnian, director of
EAI and Ms Jessica Loon for their editorial guidance and inputs.
283
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284 Lim Tai Wei
believe that an alliance is often targeted at a third party and a common

enemy. Even if an enemy does not exist, the alliance has to create one out of
potential rivals. If the Chinese leadership follows suit to forge an alliance
along such lines, the world may once again become divided into bipolarities
and may invite dangerous proxy conflicts.
The Chinese–Pakistani model was consistent with China’s self-declared
non-interventionist and economically focused approach to bilateral and mul-
tilateral cooperation. This approach has not been static and has dynamically
evolved from the doctrine propounded by paramount leader Deng Xiaoping
of “lying low” and “biding one’s time” to the “Peaceful Rise” idea emphasized
in President Hu Jintao’s administration and finally to the OBOR initiative
by President Xi Jinping. All three doctrines shared some commonalities:
(1) they had little or no military-defense elements; (2) they were focused on
the idea of peaceful development and (3) economic interests were at the heart
of bilateral and multilateral cooperation. Chinese-style strategic partnership
focuses on inclusiveness, while the concept of an alliance is exclusive.
As it settles into its role as a big power in the international arena, China
may exhibit five main ideas of inclusiveness, development-focused orienta-
tion, friend and not enemy-seeking, military-free content in partnership and
emphasis on common-goods approach.
The Pakistani partnership: Three schools of interpretation

in the initial stage of the US$46 billion Chinese–Pakistani
outreach
The China–Pakistan Economic Corridor (CPEC) is a US$46 billion Chinese
initiative to fund infrastructure projects in Pakistan as a subsidiary part of
the OBOR foreign policy outreach. The international media has begun to
focus on the CPEC from mid-April 2015 due to the official visit of President
Xi Jinping to Pakistan. For the international media, the amount and magni-
tude of funding may appear startling, dwarfing Washington’s military aid to
the same countries. For the more seasoned observers, it conforms to Pakistan’s
tiegeermen (literally “iron-clad brotherly status or comrade” meaning
“a strong ally”) in Chinese diplomacy.
There were three interpretations of China’s latest initiative in Pakistan in
the international media, with the economic perspective possibly the most
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Strategic Partnership 285
dominant. The New York Times editorial on 23 April 2015 is probably the
most indicative of such economic analyses of Chinese expanded presence in
Pakistan. Three important points were made in the article: (1) infrastructure
construction for Pakistan’s energy and transportation needs; (2) economic

growth in Pakistan to discourage political extremism and (3) de-emphasizing
military aid in favor of construction and infrastructure assistance.1
The second school of thought is the so-called “big bang” theory. “Big
Bang” theory has generally been used to describe dramatic political–
economic policy changes that have transformative rather than gradual
impacts. Big bang approaches have been ascribed to Boris Yeltsin’s attempt to
democratize Russia, Hashimoto’s initiatives to reform Japan’s post-bubble
economy and China’s attempts to transform Pakistan’s economic develop-
ment and growth. The third school of thought conceptualizes this outreach
mostly in political terms. First, political readings of the Chinese–Pakistani

economic cooperation conceptualize it as a subsidiary of the OBOR policy.
A China Daily commentary noted that “[m]ost countries in South Asia
actively support China’s “Belt and Road” initiatives, and only India shows
deep suspicion and concern over the strategy’s transparency … The construc-
tion of the China–Pakistan economic corridor sets an example for Nepal and
Sri Lanka, and will propel India to adjust its attitudes to China’s “Belt and
Road” initiatives, and the economic corridor connecting Bangladesh, China,
India and Myanmar, in which China proposes to promote regional
connectivity”.2 This reading has three significances. First, it connects the
Pakistani outreach with the OBOR; second, it highlights the political pur-
pose of exerting pressure on India to conform to its reading of regional
trends; and third, it hints at outstanding work to persuade potential rivals to
become stakeholders to cooperate in the OBOR plan.
This international relations implication reading has found official reso-
nance with China’s Foreign Minister Wang Yi: “If ‘One Belt, One Road’ is
1 The Editorial Board, “China’s Big Plunge in Pakistan”, dated 23 April 2015 in The Opinion
Pages of The New York Times [downloaded on 25 April 2015], available at http://www.nytimes.
com/2015/04/23/opinion/chinas-big-plunge-in-pakistan.html?_r=0.
2 Yang, Li, Islamabad a Pivot for China’s Involvement in Islamic World, dated 22 April 2015 in
the China Daily website, chinadaily.com.cn [downloaded on 25 April 2015], available at http://
www.chinadaily.com.cn/opinion/2015-04/22/content_20507080.htm.
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286 Lim Tai Wei
like a symphony involving and benefiting every country, then construction of

the CPEC is the sweet melody of the symphony’s first movement”.3 While the
international media are critical, suspicious or puzzled by the Chinese–
Pakistani outreach in their analyses, most agree on three commonalities. First,

giving Pakistan economic aid is overall a positive development to stabilize
political uncertainties through economic development. Second, it can help to
contain or mitigate religious extremism either originating from or passing
through Pakistan. Such efforts are complemented by Western media reports
that China is brokering negotiations between Afghan Kabul and the Taliban
insurgents/tribal leaders4 (the Chinese call them zhanglao or elders). The
international media will watch carefully how China negotiates the path of
peace brokering without going down the slippery slope of interventionism.
Third, many media readings agree that China is also concerned about
religious extremism entering its Xinjiang border and political movements like
East Turkestan independence. Helping Pakistan conforms to its national
agenda of maintaining security stability in its Muslim autonomous region.
There is thus a number of strong expectations for positive outcomes from the
Chinese–Pakistani outreach. Despite realist interpretations, this bilateral
cooperation is widely acknowledged as providing functionalist and construc-
tivist benefits at a bilateral level with beneficial multilateral spillovers.
Pakistan may be bandwagoning with or hedging against China economically
while maintaining a good relationship with the United States at the state
level. It may also be balancing against re-energized bilateral relationship
between India and the United States. However the overall impact of the
Chinese–Pakistani outreach is a potentially win–win situation for all, if the
projects are transparent, if China negotiates successfully through the complex
geopolitics and domestic politics of the South and Central Asian regions and
if infrastructural connectivity promotes trade and commerce for the region.
3 Shah, Saeed (in Islamabad) and Jeremy Page (in Beijing), China Readies $46 Billion for
Pakistan Trade Route: Beijing Plans to Pour $46 Billion into Infrastructure Projects, Open New
Trade Routes, dated 16 April 2015 in The Wall Street Journal [downloaded on 25 April 2015], avail-
able at http://www.wsj.com/articles/china-to-unveil-billions-of-dollars-in-pakistan-investment-
1429214705.
4 Ibid.
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Strategic Partnership 287
Two different creatures

For China, there is no true alliance as the very term implies a working rela-
tionship between a senior and junior partner. With an eye for egalitarianism
and non-alignment, China is sensitive to entering any relationship where it
becomes a senior partner. It also does not want to be “kidnapped” by the
national interests of any potential allies. For much of the Cold War, China
became a second force within the socialist camp, isolated by the Soviet Union
and embargoed by the West. In the post-Cold War world, it remained a third
power that refuses to be embroiled in confrontations between the West and
Russia, Arab–Israeli conflicts and the Iranian nuclear issue.
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May 2, 2013
14:6

PST˙ws
Chapter 17
China’s 21st Century Maritime Silk

Road: Malaysian Perspectives
KONG Tuan Yuen
Chinese President Xi Jinping held a bilateral meeting with Malaysian Prime

Minister Datuk Seri Najib Tun Razak in Manila, Philippines at the Asia-
Pacific Economic Cooperation (APEC) meeting on 17 November 2015.
Xi said China gave top priority to relations with Malaysia, while Najib
believed China–Malaysia relations were at the highest level in history.1 The
ancient China–Malaysia relations is traceable back to 3rd century BC when
Malays sailed to coastal regions of China and, much later, Zheng He’s naval
expeditions during Ming dynasty established protectorate relations with the
Sultanate of Malacca. Moreover, Malaysia was the first Association of
Southeast Asian Nations (ASEAN) country to recognize China officially and
established diplomatic ties in 1974. It laid the groundwork for strong China–
Malaysia partnership afterwards.
China has become the largest trading partner of Malaysia for six consecu-
tive years since 2009. The trading amount went from US$12 billion in 2000
to US$108 billion in 2014, mainly in Machinery & Transport Equipment
(MT), Mineral Fuels (MF) and Manufactured Goods (MG), and both coun-
tries targeted to reach US$160 billion in trading volume by 2017. Nonetheless,
1 Can China Rebuild its ‘Special Relationship’ With Malaysia? The Diplomat [downloaded on
18 November 2015], available at http://thediplomat.com/2015/11/can-china-rebuild-its-

special-relationship-with-malaysia/; and Najib: China–Malaysia Bilateral Ties at its Best Now.
The Star Online [downloaded on 18 November 2015], available at http://www.thestar.com.my/
News/Nation/2015/11/17/Malaysia-China-bilateral-ties-at-its-best/.
289
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290 Kong Tuan Yuen
the China–Malaysia bilateral investments was not as large as trading volume,

despite a number of recent developments such as Memorandum of
Understanding (MoU) of Guangdong–Malacca seaport construction and
Malaysia–China Kuantan Industrial Park (MCKIP). In addition, Chinese

government agreed to give RMB 50 billion (US$7.8 billion) quota to
Malaysia under the Renminbi Qualified Foreign Institutional Investor pro-
gram (RQFII) to boost mutual investment, and to buy more Malaysian gov-
ernment bonds for financial stabilization.
The “One Belt One Road (OBOR)” which combined “the Silk Road
Economic Belt” (SREB) and “the 21st Maritime Silk Road” (MSR) was
addressed by Chinese President Xi Jinping in late 2013 and has played a
prominent role in the Chinese 13th Five-Year Plan. China’s OBOR initia-
tives aimed to strengthen the connectivity with about 60 countries along the
routes by measures such as policy coordination, infrastructure facility con-

struction, trade and investment collaboration, financial cooperation, as well
as exchanging people contact and communication.
Malaysia is designated as part of the sub-line of SREB which planned to
construct Kunming–Singapore railway across mainland Southeast Asia coun-
tries. But more importantly, Malaysia plays as a bridge in the MSR because
the Strait of Malacca is one of the busiest channels and most of the maritime
oil import of China passes through here. That is why China were very active
to launch the first joint military drill exercise with Malaysia in Malacca in
September 2015.
China is also expected to tighten her relationships with ASEAN coun-
tries through working with the chairmanship role of Malaysia in 2015, espe-
cially to develop Regional Comprehensive Economic Partnership (RCEP)
with ASEAN countries for Free Trade Agreement (FTA), as US had led
Trans-Pacific Partnership (TPP) into agreement this year. The halal food and
Muslim commodities were another maneuver by Chinese government to
cope with Malaysia to expand international market through OBOR initia-
tives. The China–Malaysia halal food industrial cooperation such as compa-
nies at MCKIP in Malaysia and at Wuzhong Halal Industrial Park in China
were established to push through the Halal Food and Muslim Commodities
Certification and trade with other Muslim countries. In addition, the issue
of industrial overcapacity has become one of the hardest problems to indus-
trial development and economic growth. The Chinese government believed
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China’s 21st Century Maritime Silk Road 291
that it can only be solved by shifting production facilities to potential foreign

countries. Through China–Malaysia industrial cooperation, it could not only
lower the cost of local infrastructure in Malaysia, but also assist Chinese
government to reduce stress from internal overcapacity.

In line with the OBOR initiatives, the China–Malaysia collaborative
projects were implemented in the form of seaport alliances, coastal cities’
cooperation and industrial park establishment. China–Malaysia signed a
MoU of seaport alliances on November 2015, which included 6 Malaysia
ports and 10 Chinese ports to enhance trade relations and information
exchange. Before this MoU, the Port Klang of Malaysia has established the
sister ports relationship with most of the 10 China ports in order to boost
the logistics, trade and tourism industries.
In terms of exchanges in urban infrastructure construction projects
between twinned regions, the province of Guangdong in China and Malacca

in Malaysia signed a MoU for establishing a Maritime Industrial Park,
Guangdong–Malacca electrical manufacturing industrial estate and Malacca’s
deep water seaport. Furthermore, Guangdong government was highly inter-
ested in building a man-made Malacca island for the development of tourism
and maritime industry on that island. Chinese construction companies are
also engaged in projects such as land reclamation and bridge construction in
Penang of Malaysia.
On the other hand, the MCKIP in Pahang of Malaysia has received RM
13.4 billion for working on investment projects till November 2015, and it
is the sister park of China–Malaysia Qinzhou Industrial Park (CMQIP) in
Guangxi of China. CMQIP which was established in April 2012, was the
third collaboration between China and a foreign country for jointly building
an industrial park, behind the China–Singapore Suzhou Industrial Park and
Sino-Singapore Eco-city. Under the OBOR initiative, MCKIP and CMQIP
both were essential to the Chinese government because they were the flagship
projects of China–Malaysia industrial cooperation and are the ideal demon-
strative case studies for other ASEAN countries.
Malaysia could benefit from China’s OBOR initiatives. Firstly, through
the OBOR, China could provide infrastructure investment fund for develop-
ing industrial park such as MCKIP and reconstructing seaports like Port
Klang and Port Malacca. Secondly, the process of technology transfer will
occur from China to Malaysia, especially in the field of infrastructure
b2432_Ch-17.indd 291 16/7/2016 9:55:32 AM

292 Kong Tuan Yuen
construction. Thirdly, Malaysia can easily access Chinese market and bring
Chinese halal food and Muslims commodities to Chinese consumers.
However, Malaysia will also meet challenges including the instability of
Malaysia’s political and economic situations and a festering ethnic issue in

domestic politics. There are also other external factors affecting Malaysia like
the impact of the economic slowdown of China, geopolitics in the South
China Sea and US perception of Malaysia. These factors may impede or
redirect attention away from developing China–Malaysia economic coopera-
tion in terms of OBOR initiatives. Malaysia will keep a two-pronged strategy
to maximize its economic interests which are in turn subjected to political
impact from domestic affairs to international events. In terms of economic
perspectives, Malaysia will fully support China’s OBOR initiatives by offer-
ing more bilateral collaborative project opportunities and deepening their
trade partnership. But in political terms, Malaysia will continue to pay atten-
tion to concerns from the domestic ethnic Malays majority and external
perceptions of this relationship by other ASEAN countries and the US.
Sino-Malaysia economic relations

Along with APEC held in Manila Philippines on 17 November 2015,
Chinese President Xi Jinping met Malaysian Prime Minister Najib Razak and
reiterated that China gave top priority to bilateral ties and upgraded compre-
hensive strategic relations with Malaysia. Najib also stated with high optimism
that Sino-Malaysia relations were at their highest level in history. Historically,
the provable relations between China and Malaysia goes back to the 3rd cen-
tury BC when Malays sailed to coastal region of China and expanded their
influence from the 14th century AD onwards. During Ming dynasty period,
which established protectorate relations with Sultanate of Malacca.
During the famous seven expeditions of Zheng He, his entourage visited
Malacca five times. The Chinese merchants traded silk and satins, cloths,
ceramic ware from China for rhinoceros horn, ivory, bird nest and spices
from Malaysia.2 Obviously, the trading commodities between both countries
2 Tong, Guang Rong 2010. Complementary Trade Relations between China and Malaysia,
dated 3 March 2014 in Center for Malaysian Chinese Studies [downloaded on 12 November
2015], available at http://www.malaysian-chinese.net/publication/articlesreports/articles/999.
html.
b2432_Ch-17.indd 292 16/7/2016 9:55:32 AM

were the elementary products, mainly the Chinese medicinal materials from
Malaysia and apparel materials from China were traded. The content of trad-
ing commodities became richer and richer after the 19th century with
Chinese migration to British Malaya (the former name for Malaysia during
the colonial era). China also sold the foods, traditional products and sundry
manufactures to Malaysia and brought back the woods, bamboo, rattan and
rubber.3 The rubber and textile goods have gradually become the main
export goods to China in the period from WWII to the formation of Sino-
Malaysian official diplomatic ties, even though some political considerations
remained such as the United Nation’s embargo on China in the 1950s and
anti-dumping legislation enacted against Chinese goods in the 1960s that
reduced the export figures coming out of China.
Among the Southeast Asian countries, Malaysia was the first one to offi-
cially recognize the People’s Republic of China (PRC) when Malaysia’s for-
mer Prime Minister Tun Abdul Razak visited Beijing and Shanghai in 1974.4
It was fundamental for Sino-Malaysia’s 40 years of diplomatic ties to con-
struct normal trading relations and led to the establishment of the
Comprehensive Strategic Partnerships in 2013. China was still not the main
trading partner of Malaysia in 2000 and the trading volume from China to
Malaysia was only under 4% of Malaysia’s total trade volume. However,
China has become the largest importer of Malaysian products for six con-
secutive years since 2009 (Figure 1). The trading amount increased from
about US$12 billion in 2000 to about US$108 billion in 2014, a nine-fold
increase. In the joint communique of 40th anniversary of diplomatic ties in
2015, both countries promised to make efforts to reach US$160 billion of
trading volume in 2017.5
The largest export trade category from Malaysia to China was MT, fol-
lowed by MF and MG in last 15 years (Figure 2). Even though the MT
exports decreased from over 60% in 2000 to below 50% in 2015, it was still
3 Wong, John, The Political Economy of Malaysia’s Trade Relations with China. ISEAS Occasional
Paper No. 20, 1974, 3.
4 Baginda, Abdul Razak, China–Malaysia Relations and Foreign Policy. New York: Routledge,
Chapter 7.
5 Zhao, Yinan, China, Malaysia Target $160b Trade Volume. China Daily [downloaded on 24
November 2015], available at http://www.chinadaily.com.cn/business/2014-06/01/

content_17556223.htm.
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294 Kong Tuan Yuen

Figure 1: Trade Percentage of Malaysia-Top Five Partners.

Source: CEIC
Figure 2: Malaysia top three trade category to China (By SITC)

Source: CEIC
the principal part of Malaysia’s trading volume. Actually, China has played an
important role in the MT trading with Malaysia. Figure 3 showed that China
become the top MT trading partner with Malaysia after 2009 while the trad-
ing percentage of US on Malaysia decreased about 10% within these 15 years.
The trading dependence of Malaysia on China has been growing stronger,
especially after 2009. Malaysia’s dependence on China in their bilateral
b2432_Ch-17.indd 294 16/7/2016 9:55:32 AM

China Japan Singapore US

30%
25%
20%
15%
10%
5%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
till Septemper
Figure 3: Malaysia: Trade percentage of machinery and transport equipment (by Country)
Source: CEIC
economic relationship is visible because the China economic slowdown has

deeply impacted on the Malaysian economy since late last year 2014.6
Sino-Malaysian bilateral investments are not as large as their bilateral
trading volume, but there are potentially a lot of developments which could
trigger rapid growth in the future. For instance, Guangdong signed a MoU
with Malacca on 21 September 2015 to enhance mutual cooperation rela-
tions, especially to upgrade the deep water seaport of Malacca as a nautical
hub.7 The MCKIP which was officially launched in 2013 has also received a
total of RM 13.4 billion worth of investments, mainly from the Guangxi
Beibu Gulf International Port Group (China) collaborating with IJM
Corporation Bhd (Malaysia), Alliance Steel (M) Sdn Bhd and MCKIP Sdn
Bhd. In addition, construction of the Kuala Lumpur–Singapore high-speed
rail (HSR) may be the next joint cooperation project for China and Malaysia.
6 IMF: Malaysia Economy Still Vibrant. Malaymail Online, 13 November 2015 [downloaded
on 24 November 2015], available at http://www.themalaymailonline.com/malaysia/article/imf-
malaysias-economy-still-vibrant.
7 Melaka Signs MoU with China Province Guangdong. Bernama, 21 September 2015 [down-
loaded on 16 November 2015], available at http://english.astroawani.com/business-news/

melaka-signs-mou-china-province-guangdong-74070.
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296 Kong Tuan Yuen
The Chinese government expressed their keen interest in this project in

several meetings between the two countries while the same project also
attracted interest from Japan and South Korea.
During the 27th ASEAN Summit, Chinese Premier Li Keqiang visited

Malaysia to attend the Sino-Malaysia high-level economic forum on 23
November 2015. Li said that China will provide RMB 50 billion (US$7.8
billion) of funding to Malaysia under the RQFII to boost mutual invest-
ment, and to buy more Malaysian government bonds to stabilize the current
Malaysian financial turmoil.8 The joint-declaration of China–Malaysia
High-Level Economic Forum in November 2015 also highlighted the pos-
sibility that both countries expected to sign the agreement of “Strengthening
the Industrial Capacity Investment and Cooperation” and the plan of
“Enhancing China–Malaysia Mutual Investment and Cooperation” in the
future.
China’s OBOR initiatives and the role of Malaysia

Chinese President Xi Jinping visited Central Asia and Southeast Asia in late
2013, and advocated to establish “the Silk Road Economic Belt” (SREB)
which linked up with the countries located in the original historical Silk
Road, and “the 21st Century Maritime Silk Road” (MSR) and included the
countries located in the South China Sea, South Pacific Ocean, India Ocean
and Europe. The OBOR Prospect and Action Plan” which integrated SREB
and MSR was later released by Chinese government in 2015 and featured
prominently in the Chinese 13th Five-Year Plan. The China’s OBOR initia-
tive is aimed to strengthen the connectivity with about 60 countries along
the routes, in terms of policy coordination, infrastructure construction, trade
and investment collaboration, financial cooperation, as well as people contact
and communication.
The SREB has three main routes which start from inland cities of China.
The first route is across Central Asia and Russia to European (Baltic Sea).
8 Li,
Keqiang, Take China–Malaysia Cooperation to A New High. Keynote Speech at the
Malaysia–China High-Level Economic Forum, dated 23 November 2015 [downloaded on 24
November 2015], available at http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1318199.
shtml.
b2432_Ch-17.indd 296 16/7/2016 9:55:33 AM

The second route is across Central and Western Asia to Persian Gulf and
Mediterranean Sea. The third route is across Southeast and South Asia to the
Indian Ocean. In contrast, the MSR has two main routes which originate
from the coastal port cities of China, including the route across the South
China Sea to the Indian Ocean then Europe and another route across the
South China Sea to the South Pacific Ocean. Malaysia is located in in third
route of SREB which planned to construct Kunming–Singapore railway
across mainland Southeast Asia countries. More importantly, Malaysia acts as
a bridge in the second route of MSR between the various countries surround-
ing South China Sea and the countries along with the Indian Ocean. In
particular, China–Malaysia has prolonged maritime relations since Zheng
He’s expedition to Malacca in 14th century and the Strait of Malacca itself
located in an irreplaceable position.
By geographical location, Malaysia is an important hub for China to

connect with Southeast, South and Western Asian countries. The Straits of
Malacca is one of the busiest shipping lines in the world, over 79,000 vessels
transited in 2014 compared to just 14,000 in Panama Canal in the same
year.9 In terms of transported volume of crude oil and petroleum products,
the Strait of Malacca is the second only after the Strait of Hozmuz (Table 1).
The oil import of China through this region makes up at least 51% of total
oil imported and it comes primarily from the Middle East and 82% of this
Middle Eastern oil passes through the Straits of Malacca.10 This is one of the
reasons why the Chinese government was keen to strengthen connectivity
with Malaysia through the OBOR initiatives in order to guarantee the acces-
sibility of the Straits of Malacca.
The importance of the Strait of Malacca led China to launch its first
joint military drill exercise with Malaysia in Malacca in September 2015,
where more than 1,000 Chinese troops participated and it was the largest one
9 Canal to Bypass Straits of Malacca and Singapore Hard to Justify. Ship&Bunker, 22 May 2015
[downloaded on 12 November 2015], available at http://shipandbunker.com/news/

apac/387914-canal-to-bypass-straits-of-malacca-and-singapore-hard-to-justify.
10 Bender, Jeremy, This Pentagon Map Shows How China’s Energy Needs Are Driving Beijing’s
Military and Diplomatic Strategy. Business Insider, 14 May 2015 [downloaded on 12 November
2015], available at http://www.businessinsider.sg/this-map-shows-chinas-global-energy-ties-
2015-5/?r=US&IR=T#.VlVJfnYrKUk.
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298 Kong Tuan Yuen
Table 1: Volume of crude oil and petroleum products transported

Unit: million barrels per day
Location 2009 2010 2011 2012 2013

Strait of Hormuz 15.7 15.9 17.0 16.9 17.0
Strait of Malacca 13.5 14.5 14.6 15.1 15.2
Suez Canal and SUMED Pipeline 3.0 3.1 3.8 4.5 4.6
Bab el-Mandeb 2.9 2.7 3.4 3.7 3.8
Danish Straits 3.0 3.2 3.3 3.1 3.3
Turkish Straits 2.8 2.8 3.0 2.9 2.9
Panama Canal 0.8 0.7 0.8 0.8 0.8
World Maritime Oil Trade 53.9 55.5 55.6 56.7 56.5
Source: US Energy Information Administration (EIA), World Oil Transit Chokepoints, dated
11 November 2014, available at http://www.eia.gov/beta/international/analysis_includes/

special_topics/World_Oil_Transit_Chokepoints/wotc.pdf. (Accessed on 18 November
2015)
of its kind between Beijing and ASEAN countries.11 The drill exercise not
only included disaster relief, but also search and rescue simulation of hijacked
vessel rescue. It implied that the Straits of Malacca was a strategically impor-
tant channel of China oil imports.
On the other hand, strengthening China–Malaysia relations could
tighten up Chinese relations with Southeast Asian countries through
Malaysia’s current role in the ASEAN. Malaysia was the chair of ASEAN for
2015 and represented ASEAN countries to announce the launch of the
ASEAN Community in 27th ASEAN Summit on 21 November 2015.12
Meanwhile, China was very eager to develop RCEP with ASEAN countries
for FTA, particularly since the TPP, another FTA led by US including four
ASEAN countries, had reached an agreement in 2015.
11 China, Malaysia Start Joint Military Exercise. The Straits Times, 19 September 2015 [down-
loaded on 20 November 2015], available at http://www.straitstimes.com/asia/east-asia/china-
malaysia-start-joint-military-exercise.
12 The ASEAN Community means that it became a full-fledged politically cohesive, economi-
cally integrated, socially responsible Community, in which all ASEAN members will benefit
from the comprehensive integration. To Launch the ASEAN Community, Leaders Gather in
Malaysia for the 27th ASEAN Summit. ASEAN Secretariat News, 21 November 2015.
b2432_Ch-17.indd 298 16/7/2016 9:55:33 AM

Business opportunities in halal food and Muslim commodities were

another interest by Chinese government to cope with Malaysia through
OBOR initiatives. China has 23 million Muslims, just a small portion of 1.6
billion Muslims in the world and they are scattered in many parts of China.13
Most of the halal food and Muslim commodities companies were small-and
medium-sized enterprises (SMEs) and only exported their products to local
Muslim consumers due to the limited market. Moreover, China’s Muslim
community was geographically isolated from the other countries’ Muslims
for a long time. Other Muslim countries still cannot accept the halal food
and Muslim commodities made in China due to ritual differences. In this
circumstance, “the China–Malaysia Halal Food and Muslim Commodities
Certification and Industry Cooperation” seminar was held in July 2015 in
order to assist China to expand halal trade export business with other
Muslim countries. Several Halal Food Industrial Parks were also built up to
accelerate cooperation by both countries such as the Kuantan Industrial Park
in Malaysia and the Wuzhong Halal Industrial Park in China.14
Another reason for China’s active outreach to Malaysia was to overcome
its problem of overcapacity generated through industrial cooperation. The
production overcapacity rate of some industries in China, including iron and
steel, glass, cement, aluminum, solar panel and power generation equipment,
is over 30% that may have led those companies to borrow more to make up
for profits.15 In the short term, the overcapacity causes less fixed investments
and directly slows down the economic growth of China. In the long term,
there would be more factories going bankrupt if the overcapacity condition
continues to deteriorate. The Chinese government was firmly convinced that
the industrial overcapacity problems can only be solved by shifting production
13 China’sHalal Food Exporters Struggle with Ideological, Trade Barriers. Global Times, 26
November 2014 [downloaded on 25 November 2015], available at http://www.globaltimes.cn/
content/893789.shtml.
14 Why China Wants a Bite of the Booming Halal Food Market. CNBC, 24 August 2015
[downloaded on 24 November 2015], available at http://www.cnbc.com/2015/08/24/china-

wants-a-bite-of-the-booming-halal-food-market.html.
15 Cheng, Shuahua Wallace, Overcapacity a Time Bomb for China’s Economy. South China
Morning Post, 28 September 2015 [downloaded on 15 November 2015], available at http://

www.scmp.com/comment/insight-opinion/article/1862024/overcapacity-time-bomb-chinas-
economy.
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300 Kong Tuan Yuen
facilities to potential foreign countries that needed these Chinese products.16

Thus, Chinese Premier Li Keqiang has highlighted in the Malaysia–China
High-Level Economic Forum that China achieved advanced and cost-effective
productivity in several areas such as irons and steels, as well as building mate-
rials, which can assist in the infrastructure development of Malaysia.17
Through both countries’ bilateral industrial cooperation, it will not only lower
the cost of building local infrastructure in Malaysia, but also reduce the
Chinese government’s stress arising from internal overcapacity.
Collaborative projects: Seaports, cities

and industrial parks
In line with the OBOR initiatives, the China–Malaysia collaborative projects
are implemented in terms of seaport alliances, coastal cities’ cooperation and

industrial park establishment such as MCKIP. Malaysia has signed a MoU
with China in November 2015 for the establishment of port alliances to
enhance trade relations and information exchange. The alliances involved six
Malaysian ports located at Bintulu, Johor, Kuantan, Malacca, Penang and
Klang and 10 China ports at Beibuwan, Fujian Fuzhou, Guangzhou, Jiangsu
Taicang, Ningbo, Dalian, Shenzhen, Haikou, Shanghai and Xiamen.18 Port
Klang is the busiest port in Malaysia and is the second largest container port
behind the Singapore amongst ASEAN countries and ranked 13th in the
world in 2013.19 Before the MoU of port alliance, Port Klang had already
established the sister ports relationship with most of the 10 Chinese ports
16 Solution to China’s Industrial Overcapacity Setting Up More Factories Overseas, Says Official.
South China Morning Post, 22 July 2015 [downloaded on 24 November 2015], available at
http://www.scmp.com/news/china/economy/article/1842793/solution-chinas-industrial-over
apacity-setting-more-factories.
17 Li, Keqiang, Take China–Malaysia Cooperation to A New High. Keynote Speech at the
Malaysia–China High-Level Economic Forum, 23 November 2015 [downloaded on 24 November

2015], available at http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/t1318199.shtml.
18 Msia Signs Eight Govt-to-Govt MoU with China. New Straits Times, 26 November 2015
[downloaded on 26 November 2015], available at http://www.nst.com.my/news/2015/11/

113395/msia-signs-eight-govt-govt-mou-china.
19 World Shipping Council, Top 5 World Container Ports http://www.worldshipping.org/
about-the-industry/global-trade/top-50-world-container-ports [downloaded on 26 November

2015].
b2432_Ch-17.indd 300 16/7/2016 9:55:33 AM

named above in order to boost logistics, trade and tourism exchanges. For
instance, Haikou became Port Klang’s sister port on 11 November 2015, to
cooperate in the fields of sharing shipping lanes, logistics, information
exchange and talent training.20 In addition, Kuantan port has progressively

expanded in the Malaysia–China cooperation project, to handle ships over
150,000 deadweight tonnage and became a petrochemical hub in Malaysia
and the logistic hub for the East Coastal Economic Special Zone.21
Recently, Guangdong of China and Malacca of Malaysia also signed a
MoU to establish the Maritime Industrial Park, the Guangdong–Melaka
Industrial Estate for electronics manufacturing and investing in the deep
seaport of Malacca. Guangdong governor Zhu Xiaodan also expressed his
interest in collaborating with Malacca in the construction of man-made
Malacca islands for managing the tourist port project and the maritime
industry.22 Seven MoUs were signed from the companies of both sides. The
investment projects found in the seven MoUs included Zhuhai International
Racing Circuit reconstruction, halal food certification cooperation, clinic
care, education and research collaboration, intelligent city and infrastructure
development at Malacca Gateway, as well as building high technology pro-
curement projects.23
In the Penang state of Malaysia, China Communications Construction
Company (M) Sdn Bhd (CCCC Malaysia), a wholly-owned Malaysian sub-
sidiary of China Communications Construction Company Ltd. (CCCC), has
a land reclamation contract worth RM 2.3 billion for building Seri Tanjung
Pinang Phase 2 (STP2).24 The CCCC group is the largest infrastructure con-
struction and dredging company in China. Before this contract, Beijing-based
20 Haikou Port Sets Up Sister Port Relationship with Malaysia’s Port Klang [downloaded on 26
November 2015], available at http://www.whatsonsanya.com/news-32345.html.

21 Welcome to Kuantan Port Consortium [downloaded on 22 October 2015], available at
http://www.ijm.com/infrastructure/port/kuantanport/.
22 Guangdong Eyes Malacca. The Star Online, 22 September 2015 [downloaded on 26
November 2015], available at http://www.thestar.com.my/News/Nation/2015/09/22/

Guangdong-eyes-Malacca-Province-sees-potential-for-worldclass-port-in-state/.
23 Seven MOUs Involving Investments Between Malaysia’s Melaka, Guangdong Signed
Saturday. Bernama, 19 September 2015 [downloaded on 12 November 2015], available at

http://www.bernama.com/bernama/v8/bu/newsbusiness.php?id=1172767.
24 China Firm Wins RM 2.3 bil Penang Reclamation Contract. The Star 28 October 2015.
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302 Kong Tuan Yuen
China Harbour Engineering Co. Ltd. (CHEC), the main share-holder of

CCCC, had undertaken the main construction contract of the Sultan Abdul
Halim Muadzam Shah Bridge, also known as the Second Penang Bridge.
The MCKIP in the Pahang state of Malaysia is the sister park of CMQIP
in Guangxi China. CMQIP, which was established on 1 April 2012, is the
third China–foreign countries Industrial Park, behind the China–Singapore
Suzhou Industrial Park and Sino-Singapore Eco-city.25 Arising from the sug-
gestion of Malaysian Prime Minister Najib, China agreed to establish the
MCKIP simultaneously and officially launched the project in February
2013. The MCKIP and CMQIP are critical to Chinese government under
the OBOR initiatives because they are the flagship projects of China–
Malaysia industrial cooperation and would become the best demonstrative
examples of industrial park construction for other ASEAN countries. It will
not only attract other countries’ participation in the development of both

MCKIP and CMQIP, but also encourage them to establish industrial coop-
eration with China through the “two countries, twin parks” model.
MCKIP targeted making high-end manufacturing industrial items that
included stainless steel products, electric and electronics, information com-
munication technology and renewable energy.26 Until September 2015,
MCKIP has totally received RM 13.4 billion investment projects, including
RM 4.2 billion of steel production project, RM 3 billion of Kuantan Port
expansion project, RM 4 billion of infrastructure project, RM 2 billion of
light industry and clay porcelain/ceramic project, and RM 0.2 of renewable
energy project (Table 2).
The opportunities and challenges

As Vice Foreign Minister of China said, China will offer US$10 billion (RM
42 billion) as infrastructure loans to Southeast Asian countries through
OBOR initiatives.27 Malaysia would take advantage of China’s infrastructure
25 [downloaded on 26 November 2015], available at http://finance.sina.com.cn/

roll/20151027/045223585434.shtml.
26 Malaysia–China Kuantan Industrial Park (MCKIP) Development Achieves Significant
Progress. East Coastal Economic Region News, 4 April, 2015.

27 China Offers $10 Billion in Infrastructure Loans for Southeast Asia. Reuters, 22 November
2015 [downloaded on 23 November 2015], available at http://www.reuters.com/article/
b2432_Ch-17.indd 302 16/7/2016 9:55:33 AM

Table 2: The MCKIP investment projects (total amount RM 13.4 billion, until
September 2015)
Amounts
Year Involved Company Project (RM billion)
2014 Alliance Steel (M) Sdn Bhd, a Modern integrated steel plant, 4.2
subsidiary of Guangxi Beibu produce high carbon steel
Gulf Iron and Steel Co. Ltd. and H-shaped steel
(China)
2014 Guangxi Beibu Gulf International Kuantan Port expansion 3
Port Group (China) and IJM
Corporation Berhad (Malaysia)
2014 MCKIP Sdn Bhd Infrastructure 2.5
2015 Malaysia Federal Government Infrastructure 1.5
Funding
2015 Guangxi Zhongli Enterprise (1) Light industry (2) Manu- 2

Group Co. Ltd. (China) facturing of clay porcelain
and ceramic
2015 Zkenergy (Yiyang) New The development of an engi- 0.2
Resource Science & neering and production-
Technology Co. Ltd. (China) based center that will pro-
duce renewable energy
Source: Author integrated info from website of East Coastal Economic Region (ECER) and MCKIP
Attracts Two More Investments From China Worth RM2.2 Billion. Bernama News 19 September 2015,
http://www.bernama.com/bernama/v8/newsindex.php?id=1172780. (Accessed on 20 November 2015)
investment for developing industrial park such as MCKIP and reconstructing

seaports like Port Klang and Port Malacca. Apparently, Malaysia needs more
funds to comprehensively enhance infrastructure construction within a short
time, especially to catch up with the “2020 Vision” to become a developed
country.28 To a certain extent, bilateral cooperation has reinvigorated the
2015/11/22/us-asean-summit-china-aid-idUSKBN0TB0BA20151122#yF2KLPOzaI2Xt
bbr.97.
28 Vision 2020 of Malaysia was addressed by former Prime Minister of Malaysia, Mahathir bin
Mohamad, in 1991, during the drafting of the Sixth Malaysia Plan. The vision then was towards
making Malaysia in 2020 a fully-developed country in all dimensions, especially in the areas of
economic prosperity, social well-being and political stability.
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304 Kong Tuan Yuen
Malaysia Vision 2020 as the current level of Malaysian development still

seems far away from reaching the target.
The development of MCKIP will also have positive spillover effects for
other industrial parks in the East Coastal Economic Region in Malaysia. One
of the MCKIP projects to expand the Kuantan Port will facilitate the growth
of other surrounding industrial parks — the Petrochemical Industrial Park,
Integrated Biopark, Pekan Automotive Industrial Park and Gambang Halal
Park — and provide more logistic capacities and trading possibilities to
Kuantan.
Another significant benefit for Malaysia via OBOR initiatives is to
receive the technology transfer from China. For instance, University
Technology Malaysia signed the MoU with China to transfer the technology
of “Moving Bed Bio Reactor” to produce high quality treated water without
odor and minimum sludge output this year.29 The technology has been com-
monly applied in China on a commercial basis and it could lower the operat-
ing costs in Malaysian factories. Chinese companies also invested a
production-based center for collaborative efforts to develop renewable energy
technology in MCKIP.
From another point of view, China–Malaysia industrial cooperation via
OBOR initiatives provides Malaysia not only with an admission ticket to tap
into China’s potential consumer market, in the agricultural goods such as
durian and bird nest to halal food and Muslim commodities. This is particu-
larly targeted at the Muslim population in China (23 million) which is more
than the Muslim population in Malaysia (19 million), and both can also
collaborate to set up an exclusive agency to introduce Chinese halal food and
Muslim commodities to other Muslims countries.
Broadly speaking, Malaysian government echoes support for the OBOR
initiative and deeply believes that it will have positive influence on the eco-
nomic development of Malaysia. Apart from the Malaysian Prime Minister’s
supportive statement, Transport Minister Datuk Seri Liow Tiong Lai also
pointed out that every ASEAN country, company and individual should not
29 Najib Witnesses Signing of MoU on Transfer of AMBBR Technology from China to UTM.
Eco-Business, 3 June 2015 [downloaded on 30 November 2015], available at http://www.eco-

business.com/news/najib-witnesses-signing-of-mou-on-transfer-of-ambbr-technology-from-
china-to-utm/.
b2432_Ch-17.indd 304 16/7/2016 9:55:33 AM

miss out from this OBOR-given economic opportunities that amount to

US$2.5 trillion of annual trading volume.30
Other than the positive returns from capitalizing on these opportunities,
Malaysia will inevitably meet with some internal and external challenges that
could impede the development of OBOR initiatives. Internally, the instabil-
ity of Malaysia’s political economy and the politically-volatile ethnic issue
would adversely impact on the ability of Malaysia to gain from the OBOR
initiatives. Externally, the economic slowdown of China, the geopolitics of
the South China Sea as well as the strategic perceptions of US would interfere
with China–Malaysia cooperation.
The Malaysian economy was hampered by the slump in crude oil prices
and political unrests last year. The drop in oil prices negatively impacted on
Malaysia’s petroleum revenue which accounted for 40% of the total revenues
of Malaysia. It also hurt the Malaysian Ringgit, and falling primary commodity
export prices such as those of rubber and palm oil, further reduced Malaysia’s
commodity-dependent revenue. In addition, Prime Minister Najib faced
political crisis and mass anti-corruption campaign (Bersih 4.0) after the arti-
cle from the Wall Street Journal uncovered nearly US$700 million of unknown
source funds deposited into Najib’s personal account.
The shadowy opposition forces in Malaysia with strong views on race
and ethnicity often exaggerate the importance of their existence, when
political disputes do not conclude quickly. “Seditious” speeches can be easily
leveled as a charge against the government’s extreme supporters or opposition
parties in 2015. The ethnic Chinese will avoidably act in its important role
in the China–Malaysia economic cooperation. It will unconsciously trigger
the political sensitive of Malays ethnics to doubt whether this development
could impact their political position and erode their economic condition.
In the external circumstance, the economic slowdown of China not only
directly affect the Malaysian economy due to the largest trading partner rela-
tionship between the two of them, but it also raises uncertainties and risks
impacting on their collaborative projects with Malaysia. The Chinese eco-
nomic slowdown may lead to higher debt, including the local government
and enterprises. It will lower the projects’ achievement rate if Chinese
30 Liow: China’s Belt and Road Initiative Offers Vast Opportunities. The Star, 3 November
2015.
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306 Kong Tuan Yuen
government needs to reallocate economic resources for local development

and the enterprises want to collect funds to repay the loan.
Unlike economic highly positive cooperation with China, Malaysia
Deputy Prime Minister Zahid Hamidi had recently criticized the China’s
sovereignty claims and its artificial island construction in the South China
Sea. The criticisms from the Malaysian government was meat not only to
soothe the local Malays’ sense of nationalism but also assert the integrity of
sovereignty, and consider the perceptions of other Southeast Asian countries
towards Sino-Malaysian cooperation, especially in the context of ASEAN
unity. Besides, Malaysia’s alignment with the US also impacts on the develop-
ment of China–Malaysia economic cooperation, particularly in terms of the
TPP which China has not participated yet but will be established soon.
Malaysia also needs to consider the balance of power between China and the
US, particularly to avoid clashing with the US’s “Pivot to Asia” strategy.
In brief, Malaysia will consistently keep a two-handed strategy as the best
way to deal with China. In economic hand, Malaysia will make efforts to
establish deeper and broader partnership with China through the OBOR
initiatives, in order to avoid harming US interests in the Asia-Pacific. In the
political arena, Malaysia will echo the ASEAN countries’ sovereignty claims
in the South China Sea against China’s maritime expansion. Malaysia will
repeatedly try to maximize its economic interests subjected to comprehensive
political considerations and priorities (both domestic and international).
b2432_Ch-17.indd 306 16/7/2016 9:55:33 AM

Chapter 18
Japan and its Outreach

to Central Asia and Southeast
Asia: An Update
LIM Tai Wei
Keeping Central Asia busy: Japanese PM’s

visit to the region
Central Asia is the traditional backyard for the Soviet Union’s geopolitical
influence and since the disintegration of the USSR, the region is coming
increasingly under Chinese economic influence. This is especially pro-
nounced with the institution of the One Belt One Road economic diplo-
matic initiative (the overland route was officially announced in Kazakhstan)
and the establishment of the Asian Infrastructure Investment Bank (AIIB).
As the other major economy in Northeast Asia, Japan is also tapping into the
economic potential of the region with Prime Minister Shinzo Abe’s one-week
official tour of the region in late October 2015 that took him through
Mongolia, Turkmenistan, Tajikistan, Uzbekistan, Kyrgyzstan and Kazakhstan
(in that order). The last Japanese Prime Minister to visit the region was
almost a decade ago and it is also the first time that a Prime Minister from
Japan has actually set foot on Turkmenistan, Tajikistan and Kyrgyzstan.
And Central Asia is responding to Japanese overtures by hosting him with
traditional protocol and hospitality. He also received an honorary doctorate
from a university in Turkmenistan. Japan is playing catch-up with Russia and
China that have been present in the region for much longer durations. In the
post-war years, Russia has been active in the region since the Soviet era.
Historically, China has had a long history of engagement since the days of
the overland Silk Road from Qin to Ming dynasties.
307
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308 Lim Tai Wei
Compared to Japanese outreach, China has been investing in the region

for more than a decade. Economically, China has been successful with offer-
ing loans without conditionalities and its socialist system is also compatible
with other strongman political systems found in the Central Asian region.
In other words, there is compatibility between the two. Central Asia’s infra-
structure needs is large enough to accommodate all big players coming into
the region to work on large construction projects. It already secured afford-
able low-priced infrastructure construction projects cooperating with China.
It has also secured infrastructure equipment for transmitting raw materials
from Central Asia to China. Chinese bidding advantages lies in the strength
of its state-owned enterprises (SOEs), a model that fits the hybrid socialist
political system coexisting with a market economy. Chinese bidding takes the
form of one bidding party funded by state banks and guaranteed by the state.
Chinese loans and investments are also politically-neutral with a fierce adher-
ence to disinterest in local politics in what used to be called “no-strings
attached” loans. Because of these strategies, China is now the region’s largest
trading partner.
Distinguishing its approach from others, Japan’s marketing tack focuses
on good quality infrastructure and high value-added industrial processing
technologies (e.g. gas, oil, uranium processing plants and chemical fertilizer
plants). In other words, Central Asian leaders are keen to process their raw
materials in addition to infrastructure and logistical equipment that trans-
port them. In this area, Japan is coming in at the right time because Central
Asian economies are reeling from global weakness in commodity prices.
Japanese infrastructure, equipment and technologies can help transform their
economies based on primary materials to become high value-added industrial
processing economies. Japan which is also well-known for high quality agri-
cultural products is providing technologies to Tajikistan to improve its yields
in agricultural crop. Japan also hopes to improve lives in Central Asia by
providing medical equipment to Uzbekistan. For the purpose of providing
high quality equipment, Mr Abe brought 50 leading business sector leaders
with him. Along with manpower, Japan is also bringing along a pragmatic
mindset. In 1999, Japanese soft loans to Kyrgyzstan was cut because they
defaulted on payment, now the loans are resumed again.
Another example of pragmatism is Japan’s willingness to help Kazakhstan
tap into nuclear power. In the recent past, Japan had shied away from nuclear
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Japan and its outreach to Central Asia and Southeast Asia 309
power cooperation as nuclear energy is still a sensitive topic back home.

Japan is the only country in the world to have suffered atomic bombings
(Hiroshima and Nagasaki) and also suffered the second most serious nuclear
incident in the world in the Great East Japan earthquake with the Fukushima
nuclear meltdown. Japan is also sensitive to the fact that some areas within
Central Asia used to serve as nuclear weapon testing sites for the former
Soviet Union, including Kazakhstan. Politically, Japan has teamed up with
Kazakhstan to promote the implementation of the Comprehensive Nuclear
Test Ban Treaty (CTBT) as cochairs. The goal is to attain universal adherence
and ratification of the CTBT. Partnership between the two is apt because
Kazakhstan experienced nuclear tests in its area during the Soviet era while
Japan went through the atomic bombings. And now the two countries which
had unfortunate nuclear and atomic experiences in the past are collaborating
on peaceful and safe civilian nuclear energy uses.

What Japan ultimately offers is experience. Japan’s overseas development
assistance, loans, aids and investments contributed to the post-war industri-
alization of Southeast Asia and China and set up production networking in
these countries. It has accumulated a wealth of experience in this regard.
Japan therefore has the capacity to contribute its experience to developing
Central Asia, along with other large economies like China and Russia.
Political scientists may call the Japanese entrance into Central Asia “hedging”
against Russian and Chinese dominance while economists may consider it as
a latecomer catch-up economic decision. Regardless of perspective, the
Central Asian developmental pie will be big enough to accommodate all big
players, Japan, China and Russia.
Japan’s ASEAN diplomacy in end 2015

Besides the overland Silk Road, Japan is also active in the Maritime Silk Road.
In fact the term “Maritime Silk Road” was coined by a Japanese researcher on
the maritime ceramics trade from Jingdezhen. Given that Japan
is an island nation, it is active keeping up relationship-building in Southeast Asia.
End 2015, marks a flurry of Association of Southeast Asian Nations (ASEAN)
diplomacy for all major powers in the East Asian region and Japan is no excep-
tion. At Asia-Pacific Economic Cooperation (APEC) meeting in Manila, the
bilateral summit between the Japanese Prime Minister Mr Shinzo Abe and
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310 Lim Tai Wei
Filipino President Benigno Aquino III discussed security and defense matters.
After the Manila APEC round, the Japanese leader left for Kuala Lumpur
(KL) for the ASEAN summit, yet another flurry of diplomatic interactions.
In the economic realm, realizing the significance of a combined 600 million-

strong consumer market, a young workforce, increasing foreign direct invest-
ments, greater net connectivity and tourist arrivals, and the Asia’s third
largest economy, Japan which has production networks in the region for
decades is working with ASEAN partners to strengthen cooperation.
By the end of 2015, the ASEAN Economic Community was set up,
an important step that is the start of a long journey to forming a regional
economic community. Japanese investments and aid/loans can help the
ASEAN Economic Community harmonize its standards for a smoother tran-
sition to become a regional organization. The ASEAN Community has three
arms: ASEAN Economic Community, Political Security Community and the

Socio-Cultural Community. Japan, which is East Asia’s oldest democracy
with harmonious civil society–state relations, has much to offer in terms of
experience for the Socio-Cultural Community. The impetus for hastening
the Regional Cooperation for Economic Partnership (RCEP) comes from the
successfully-concluded Trans-Pacific Partnership (TPP) talks although chal-
lenges remaining for the ambitious regional plan, including harmonizing the
standards of a free trade agreement between ASEAN+6 countries, including
between economies that do not yet have a bilateral free trade agreement.
Japan is a stakeholder in both TPP and RCEP. Currently, the TPP seems to
be running faster as President Obama is pushing through a Trade Promotion
Bill that allows him to gain powers that can accelerate the process of inking
free trade agreements with minimal interference from the US Congress.
On the security front, one month before the ASEAN Summit and APEC
Manila on 1 October 2015, Japan led by Cabinet Minister Eriko Yamatani
who is the current chairperson of the National Public Safety Commission
held the ministerial meeting between Japan and ASEAN on the issues of ter-
rorism and cyber security. Both ASEAN and Japanese Ministers present at
the meeting vowed to have greater information exchanges and conversations
between them and the cornerstone of this conversation will be the ASEAN–
Japan Cybercrime Dialogue founded in 2014. Japan also asked for ASEAN
support in resolving the abduction issue whereby North Korean kidnapped
Japanese nationals three and four decades ago. KL will host the Japan–
ASEAN dialogue on terrorism and cybercrime early 2016. It is here that KL
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Japan and its outreach to Central Asia and Southeast Asia 311
hopes its information and data on extremists and terrorists can be offered in
exchange for help in Japanese tracking technologies for human trafficking
and cyber-security. KL information may be useful since Japanese citizens had
been held hostage and/or executed in the conflict zones in the Middle East.
In the maritime defense sector, Japan worked with the US to raise the
issue of South China Sea dispute at the ASEAN Summit meetings (for more
on this topic, please refer to Katherine Tseng Hui-Yi’s chapter in this edited
volume). Both countries are concerned about the freedom of navigation in
an area which see US$5 trillion worth of trade that goes through it annually.
The US has flown bombers and sent a warship into the disputed area. It is
calling for a rule-based maritime-order in the area. A variety of voices
emerged in the defense ministers’ meeting. Japanese Defense Minister Gen
Nakatani called for peaceful cooperation over the South China Sea. The
Malaysian Foreign Minister called for a relook at the Code of Conduct over
the South China Sea as ASEAN ministers worry over developments in that
region. China-friendly ASEAN states like Cambodia preferred to keep the
issue out of textual mention for the defense minsters’ meeting. Vietnam and
the Philippines were keen to have it in the final statement. In all, all parties,
regardless of political stance, are keen to see the dispute resolved peacefully
and for the waterways to remain free, open and peaceful for navigation.
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May 2, 2013
14:6

PST˙ws
“9x6”
b2432_Ch-19.indd 313
Section F
Conclusion
15/7/2016 8:06:17 PM
May 2, 2013
14:6

PST˙ws
Chapter 19
Conclusion
LIM Tai Wei
Positive reviews, cautionary suggestions and narratives

of complementarity
Historical narratives of the Maritime Silk Road were discussed in-depth by

Tan Ta Sen in Section B. He pointed out one early example of globalization
in maritime trading history. From 1602 to 1682, China exported through
the Dutch East India Company a total of 16 million pieces of porcelains over
a span of 80 years. Besides the Dutch East India Company, China also
exported ceramics via Chinese, Arab, British, Japanese, Indian, Portuguese
and Southeast Asian trading groups.
Complementing Dr Tan’s historical work on maritime trade during
Zheng He’s era, readers learnt from Dr Tai Yew Seng that there was a prec-
edent for official maritime trade in the period immediately preceding the
Ming dynasty. Dr Tai indicated that, in the Yuan Dynasty, private trading in
overseas was allowed from 1323. Private maritime trading flourished until
the late 14th century in the early Ming Dynasty when the famous Ming Ban
stopped all private maritime trading again. Importantly, Dr Tai pointed out
that the difference between the sea bans of the Yuan and Ming dynasties are:
the Yuan dynasty emperors used the sea ban and Official Capital Ships to
monopolize maritime trade and maximize profits for the imperial coffers, but
Ming dynasty emperors used the sea ban on maritime trading and the tribu-
tary system to manage and fend off neighboring countries involved in piracy.
During the Ming Ban, Zheng He’s (䜁઼ 1371–1433) expeditions to East
Africa can be considered as the natural progression of Yang Shu’s voyages to
Persian Gulf.
315
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316 Lim Tai Wei
Sticking to this chronological historical narrative, Tan argued that from

the 16th century to the modern age, in an age of colonialism and imperial-
ism, Western powers armed with excellent and advanced weapons began to
show their mighty hard power in harnessing natural resources in Asia and
Africa. In the Cold War, Soviet Union and the United States of America
became superpowers due to the possession of nuclear weapon. They domi-
nated the world and divided the world into two camps, communist and
democratic nations. Since the end of the Cold War, as a result of the disin-
tegration of the Soviet Union, the US has since become the world’s sole
superpower.
Thus, the US pursued global justice and promoted western democracy,
capitalist economic development and individualistic western lifestyle. The
last decade of the 20th century and the first decade of the 21st century have
enjoyed peace and yet the world has been full of smoke from gunpowder,
conflicts and endless suicidal bomb explosions due to the ideological differ-
ences, struggles between major powers and clash of interest. Nowadays,
international relations is still dominated by realist power politics and diplo-
macy. Contrasting with the age of colonialism, Tan argued that Cheng Ho’s
seven grand voyages brought about an era of political stability, economic
prosperity and cultural harmony from China to East Africa. It gives a stark
contrast to the war-torn region under the rules of Western colonial powers
from the 16th to 20th centuries.
He then concluded that Zheng He or Cheng Ho’s approach can be
considered as an “Art of Collaboration”. Tan then advocated that Cheng
Ho’s Art of Collaboration is certainly relevant and practical in today’s inter-
national relations and politics. Confucian teachings aimed to build an
orderly society, a government ruled by virtue and a harmonious world order.
In the international stage, Cheng Ho fostered tolerant international relations
with humanistic spirit of benevolence and racial equality so as to achieve a
great unity among nations on win–win footing. Therefore, this Cheng Ho
spirit could be a model for contemporary international relations and foreign
relations. Reliving Cheng Ho’s spirit in international relations based on
mutual-respect, non-invasion, non-intervention and fostering good relation-
ships with foreign states will result in the creation of a world order where
multipolar powers are in a partnership to achieve world peace, universal
harmony and equality.
b2432_Ch-19.indd 316 15/7/2016 8:06:18 PM

Conclusion 317
In Section C, Lim Tai Wei noted that narratives of Zheng He may

become part of the updated discourse on Chinese plans to revive the
Maritime Silk Road which covers the span of trading cities from Fuzhou
to Italy (the “one road” component of the “one belt one road” concept
(known as Belt and Roads initiative in official Chinese terminology).
Other interpretations see the Maritime Silk Road ending in Antwerp,
Belgium, at the European end of the Maritime Silk Road. Mitigating Tan’s
unproblematic and optimistic assessment of the Zheng He (Cheng Ho)
voyages, Lim argued that academic and historical studies are more circum-
spect with their comments about Zheng He’s voyages, indicating Zheng’s
voyages as mainly an important trade catalyst for the region. Lynn Pan
associated Zheng He’s voyages with regional trade stimulus. Her edited
volume featured renowned Southeast Asian scholar Anthony Reid who
highlighted the following passage:
The Zheng He expeditions marked the starting point of Southeast Asia’s

‘age of commerce’. His fleets stimulated the production of pepper, clove,
nutmeg and sappanwood, and the distribution networks that brought these
items to the major entrepots and took cloth, rice and manufactured goods
in exchange to the production centres. Demand for Southeast Asian prod-
ucts in China leapt, with pepper and sappanwood becoming for the first
time items of mass consumption in the 15th century.1
There are points of commonalities between these narratives on trade

related to Zheng He’s voyages. First, they offer center–periphery perspectives.
In Tan and Pan’s narratives, the periphery of Southeast Asia (in the Sino-
centric world view) or overseas Chinese benefited from Zheng’s role in
opening up maritime routes and facilitating trade with China. Second,
this exchange of goods is an incentive for Chinese traders to settle in
Southeast Asia and become intermediaries between the Ming regime and the
local rulers of kingdoms in the region. These Chinese traders became the
seeds of settler communities throughout the region, including the Peranakans.
1 Reid,Anthony, “Chinese and Southeast Asian interactions” in The Encyclopedia of the Chinese
Books, 1998, 50.
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318 Lim Tai Wei
Third, it supports the idea of a vassal system, whereby local rulers can main-
tain these vigorous trade links by partaking in a tributary system where
China is acknowledged (at least in the symbolic manner) as the center of the
Sino-centric world order.

On the other hand, it is possible not to exceptionalize Zheng He’s voy-
ages. Wang’s seminal work on the Nanhai trade reminds us that regional
trade had been alive well before Zheng He’s voyages, starting from coastal
trade and eventually expanding to regional and then inter-regional trade.
Seen in this context, with the participation of the Arab, Malay, Southeast
Asian and Persian traders before the onset of Yuan or Ming dynasties, the seas
around Southeast Asia had already become a regional trading lake. The
regional order therefore is predicated over reciprocal trade between willing
kingdoms rather than conceptualizing it as a hegemonic center with a distant
reactive periphery. As merchants from large trading units reach out for trade,
they need to find willing partners in the recipient smaller kingdoms for reci-
procity, regardless of motivations (religious, profit-making or diplomatic
reasons).
Along the same line of the amorphousness of interpretations of terms
like the One Belt One Road (OBOR) or Maritime Silk Road, Lim Wen Xin
noted that, given the broad scope of the OBOR plan, there is no unilateral
interpretation on the OBOR initiative. Most of the writings she examined
associated the OBOR with the economic, political and military outreach of
China against the backdrop of globalization and regional integration and
connection. Chinese sources routinely deny and reject the criticisms about
China’s clandestine agenda to influence, confine, dominate, intimidate, or
generally leverage or manipulate other states involved in the undertaking.
Chinese nearly altruistic goals in the OBOR are likely to be questioned by
various parties and face multifarious challenges including regional instability,
investment and credit risks, geopolitical influence of major powers and sus-
picion and mistrust from other states.
Countries will assess their national interests according to conditions
for using the OBOR funding facilities, geopolitical priorities, domestic
political situations, external factors and national resources and how the
Belt and Road Initiative + Asian Infrastructure Investment Bank (AIIB) +
Brazil, Russia, India, China and South Africa (BRICS) Bank vis-à-vis
b2432_Ch-19.indd 318 15/7/2016 8:06:18 PM

Conclusion 319
current existing established institutions like Asian Development Bank

(ADB) best serve their needs. The success or failure of the OBOR concept
will depend on the resources that Beijing is willing and able to devote to
it, the adroitness of China’s leaders and entrepreneurs in maneuvering in

the international market and system, and the ability of China in shaping
the regional preference.
Katherine Tseng Hui-Yi argues that China’s nine-dash line claim serves
dual functions, as it denotes a way to confirm a maritime boundary, so that
Chinese sovereignty covered any structural feature, and arguably, waters situ-
ated within and therefore sovereignty over them should not be questioned.
Tseng pointed out that protecting self-interest is demonstrated in significant
developments in improving maritime capabilities among certain ASEAN
claimants in the second half of 2015 at the point of writing. Realism and
strategic expediency are also largely seen through the engagement of some
extra-regional, non-claimant countries in the South China Sea, such as the
US. Their stakes in the South China Sea vary, so do their involvements and
prospects. The large number of players further complicates matters.
In her final analysis, Tseng pointed out that the key to China’s claims in
the Maritime Silk Road will be, how the Road plan, with the essence of
cooperation and coprosperity, help transform and refine China’s South China
Sea claim, not treating the sea as an obstacle, but an aid to the realization of
the Road plan. If China fails to reconcile between its South China Sea claim
and the Road plan and ensure that the Road plan was able to attract ASEAN
claimants’ participation despite the South China Sea dispute, implications
can be problematic. China may lose the credentials needed in its transition
of its role as a regional great power, with great development potential and an
outlook of promoting coprosperity among neighboring countries via the
Road plan.
Moving on to the Overland Silk Road in Section D, Lim Tai Wei then
wrapped up his studies of contemporary OBOR, Maritime Silk Road and
Silk Road narratives by contextualizing them in recent concrete develop-
ments. Lim noted that, aside from discussions about the Maritime Silk Road,
origins of the contemporary Overland Silk Road plan according to interna-
tional media sources arose in 2011 when the first direct train from Chongqing
to Duisburg Germany began and visions of the maritime route began from
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320 Lim Tai Wei
Chinese port locations to Antwerp, Belgium.2 Others consider the genesis of

this reinterpreted Silk Road to be on 18 November 2014 when a train carry-
ing 82 freight containers of 1,000 tons of export-made items departed from
a large warehousing facility in Yiwu (Zhejiang 300 km south of Shanghai) to

Madrid, when it arrived on 9 December 2014.3
The far end of this railway system may eventually be Rotterdam,
Duisburg and Berlin.4 The Economist is even more explicit in its economic
analysis (as opposed to media observers keen on discussing geopolitical impli-
cations) of the Chinese Belt and Road Initiative): “As Chinese manufacturers
move inland, getting their products to European markets has become more
complicated. The journey back to the coast and halfway around the world by
sea takes up to 60 days — an eternity for the latest iPads and other “fast
fashion” products. Kazakhstan offers a backdoor route. Trains from Chongqing
in south-west China to Duisburg in Germany, 10,800 km (6,700 miles) via

Kazakhstan, Russia, Belarus and Poland, supposedly take just 14 days.”5
To fund this ambitious overhaul of railway systems on a global scale,
Henry Chan Hing Lee’s analysis on the funding source for OBOR indicates
that China does possess sufficient financial resources, at the moment, to sup-
port its OBOR initiative. China already gained certain level of expertise in
the infrastructure export through the State-owoned enterprises (SOEs) such
as China Communication Construction Corporation (CCC), China Railway
Group (CRG), China Railway Rolling Stock Corporation (CRRC), etc.
They have obtained good overseas contract opportunities and the policy
bank support have brought many of these opportunities to actual project
implementation.
2 Goh, Brenda, China Pays Big to Expand its Clout Along the New Silk Road, dated 10
November 2014 in the Reuters website [downloaded on 18 December 2014], available at http://
www.reuters.com/article/2014/11/10/us-china-silkroad-idUSKCN0IU27R20141110.

4 Ibid.
5 The Economist, The New Silk Road Hardly an Oasis, dated 15 November 2014 in The Economist
[downloaded on 18 December 2014], available at http://www.economist.com/news/

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Conclusion 321
China is running an annual current account surplus of around US$300

billion, committing such amounts of funding to OBOR financing is not going
to hurt China’s credit standing and financial system stability. Of course, we
should note that OBOR is probably the most ambitious cross-border infra-
structure initiative ever launched, scaling up earlier bilateral working model
between China and the recipient country might not be a simple extension of
modeling. The issue of country affordability, loan credit worthiness, long-term
political stability and many more risk factors will be coming into the picture.
The Chinese government had set a deadline of 30 October 2015 in its
solicitation of provincial inputs on the finalization of OBOR plan, how the
plan is laid out will allow a more detailed analysis and lookout for its future
prospect. Even in the absence of an integrated plan, Chinese overseas
contract wins and execution are already at a high note, whether there is a
need to overhaul the system or keep the existing system with a small twist are
topics that observers are keenly looking into.
Going into technical details and cost-benefit analysis, Henry Chan
Hing Lee’s chapter on railway diplomacy highlights the centrality of rail con-
nectivity in the OBOR initiative. Chan argues that China is linking the
proposed Euro–China High-Speed Railway (HSR) and Central Asia–China
HSR to the Silk Road initiative. The proposed Pan-Asia HSR system is sup-
plementing the Maritime Silk Road linkage between Southeast Asia and
China. China’s Silk Road initiative is connected to the “Rail Diplomacy”.
Chinese leaders’ confidence in pushing “Rail Diplomacy” lies in its existing
HSR network which has demonstrated world leading cost efficiency, technol-
ogy and reliability. The safety of the system is also world class.
Many countries have noted the contribution of HSR to China’s regional
economic development, urbanization and industrial upgrading. Surprisingly
strong economic agglomeration benefits from a cost-effective HSR had con-
vinced many countries to consider railway investment as the preferred land
transport system backbone in lieu of the post WW II conventional highway
system. China is the only country building a HSR and rail base national
transportation backbone. Though a latecomer in HSR, it had successfully
build an indigenous industry after absorbing imported rolling stock and sign-
aling technology. It is the only country that can offer complete Engineering,
Procurement & Construction (EPC) solution under all weather & environ-
ment conditions in the world.
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322 Lim Tai Wei
Cost analysis done by World Bank shows that China HSR projects was
completed at cost which is at most 2/3 of that in the rest of the world. China
has a commanding cost advantage in HSR construction. Two of the main
reasons are (1) the standardization of design of various construction elements

which significantly enhances construction efficiency and (2) development of
innovative and competitive capacity for manufacture of equipment.
China embarked on six rounds of speed upgrade to its rail system
between 1997 and 2007. It has achieved maximum speed of 250 km/h on
upgraded conventional rail track prior to introduction of HSR in 2008. It is
the only country with working experience in rail speeding up through exist-
ing conventional rail line upgrade. This is an attractive proposition to many
developing countries with pre-WW II legacy rail system. HSR spillover tech-
nology in sub-high speed conventional railway and Rapid Transit Vehicle
spearheaded the export of Chinese railway equipment and construction.

New Greenfield projects approved under “Rail Diplomacy” in Kenya and
Thailand are sub-high speed line using Chinese rail standards.
Passenger dedicated line in the HSR system had released a lot of freight
capacity in the replaced traditional track. China Railway Corporation (CRC)
is utilizing those capacity and moving to supplement its freight cargo busi-
ness from traditional black (coal), bulk goods centric model with high value
express cargo of white goods from e-commerce. CRC’s success will enhance
the export attractiveness of the Chinese railway business model. Combo pas-
senger/freight model can meaningfully help the economic justification of a
high initial fixed cost rail investment over a passenger dedicated line.
China complements highest level “Rail Diplomacy” with attractive bilat-
eral financial support to developing countries interested in its HSR or rail
system. China’s offer is attractive and there are a good number of developing
countries negotiating. “Rail Diplomacy” holds significant economic as well as
geopolitical benefit to China. An efficient high technology transport back-
bone is a high profile project in enhancing the builder’s national image as well
as decades of future maintenance business relationship. Strength, Weakness,
Opportunities & Threat (SWOT) analysis indicated that China enjoyed sig-
nificant comparative advantage over its competitors on rail export contract.
However, prospect of “Rail Diplomacy” also depends on geopolitical factors
and domestic politics of the interested country. The just canceled Mexico
HSR is supposedly the first complete export HSR project of China in HSR.
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Conclusion 323
Besides railway development, another major theme in this publication

is highlighting the connection between the Silk Road and China’s Go-West
policy, relocating manufacturers from expensive first-tier Eastern coastal cit-
ies inwards to the West where labor costs are cheaper. It also highlights the
narrative that European markets (and, along the way, Middle Eastern,
Central Asian and South Asian markets) will become increasingly important
for Chinese exports. Thus, the rationale for the Belt and Road Initiative.
On 8 November 2014, the Chinese promised to dispense funds amounting
to a US$40 billion Silk Road fund with the broad objective of improving
transport and trade links, in addition to the US$50 billion already allocated
to the Beijing-initiated AIIB and the BRICS Bank. The BRICS Development
Bank funds energy, telecommunications and transportation infrastructure
with a starting capital of US$50 billion and China/India as its major share-
holder.6
Connected with the emergence of these funding institutions, a major
question discussed in this writing therefore is how China will disperse its
funds. The key word that is mentioned in the international media, top lead-
ers and policymakers’ statements as well as the scholarly conferences and
seminars that I attended was “connectivity” — how to link up the entire belt
of countries along both overland and Maritime Silk Road so that trade can
be stimulated. Up till December 2014, details were not forthcoming from
Chinese sources on how their Silk Road-related budget will be utilized.
Along with observers and the international media, this began to cause some
countries located along both the overland as well as the Maritime Silk Road
to seek more details about the initiative.
response can be divided into three ways:
(1) To use official and track II channels to ask for more details so that states
in the designated regions of the Silk Road initiative can react accordingly
to maximize their economic benefits from the scheme;
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324 Lim Tai Wei
(2) To preempt any issues incompatible with national interests by first oppos-
ing the institutions associated (or perceived to be associated) with the
scheme such as opposition to the AIIB;
(3) Regardless of the shape and form of the Silk Road initiative which is
expected to be organic and dynamic both in implementation and devel-
opment, to persuade Beijing to be more transparent and conform to
international norms by integrating with the international community,
e.g. the early persuasion to Beijing to locate the headquarters of the AIIB
in Seoul, Singapore, Jakarta and perhaps even the semi-autonomous
Hong Kong rather than Shanghai or Beijing. These questions are pon-
dered internally within China as well, between an internationalist faction
keen to see the Silk Road initiatives as part of China’s opening up with
greater transparency and harmonization with international norms vs.
those keen to construct an international trade and commerce system

with firmer Beijing control.
Utilizing an international political economic approach and viewing

the issue through a Chinese perspective, Zhang Huang and Li Jie dis-
penses policy recommendations for SOEs’ stakeholders in such projects.
He argued that, for neighboring countries of China, in order to build
networks of HSR starting from China, Chinese companies and the state
should not only avoid the traditional “tributary system” and civilization
mentality, but also avoid cross-cultural barriers faced in exporting HSR
systems by maintaining an inclusive and open attitude, and to carry out
cooperation in HSR construction under equal terms and conditions with
an understanding of the cultural identity of destination markets. Marketing
Chinese HSR to the world may also trigger a new round of the “China
threat theory”.
In line with deliberate interpretations by some foreign media, Chinese
internationalization attempt in the field of building railway traffic through
constructing a HSR network, which radiates outwards to surrounding
countries, and building traffic arteries across the South American continent,
is directly related to its intentions and national interests in politics, economy,
strategy and so on. For countries that are suspicious about the Chinese HSR,
especially neighboring countries around China, China should be more
proactive and patiently explain its peaceful development intention.
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Conclusion 325
In essence, Zhang points out that the sale and exportation of Chinese
HSR systems is a normative economic activity regulated by the market
mechanism against the backdrop of globalization, just like other products
and commodities made in China. China should express its cooperative, win–
win intentions clearly, at the same time, attract a wide range of local techni-
cal elites, administrative elites and labor force in carrying out HSR design
projects, operation and maintenance. China and others countries can work
together to share the bigger economic cake of exporting HSR, while the pres-
ence of HSR benefits local communities and peoples.
In Section E, Winglok Hung’s short chapter argues that OBOR is a new
economic strategy. The financial crisis in 2008 further exposed existing
global economic problems and still requires a new international order to
maintain peace. OBOR was established under this international context.
There are many papers focusing on China’s relations with emerging countries
under the framework of OBOR. Hung admits that China’s relations with
emerging countries are important, but only China’s successful interactions
with Europe will transform the existing international order. Europe is impor-
tant as it has always been the center of the world, particularly since 19th
century.
Meanwhile, there are world leading business companies in Europe.
As mentioned before, three components of the world international order
system including international actors, international configuration and inter-
national norms are expected to change if OBOR is successfully practised.
After the global financial crisis in 2008, senior scholars, foreign policy advi-
sors and experts such as Henry Kissinger have been searching for a new global
order. Hung believes that China, Southeast Asian countries, the Middle East
regions and the African continent all take a role in OBOR and Europe is
particularly crucial in this transformation.
Moving Eastwards from Europe to Central Asia, Lim Tai Wei argued
that Central Asian actors have to thread between Beijing, Russian and also
US interests carefully when interacting with China’s OBOR initiative.
The support or responses that they give to Beijing’s OBOR initiatives are not
entirely unqualified and without caveats. Meanwhile, other than Russia,
India also wants a role in the region. P Stobdan, a former Indian ambassador
to Central Asia, argued that the Central Asian region is undergoing a process
of “de-Europeanization”; transnational forces like the Islamic State is moving
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326 Lim Tai Wei
into the region and China has challenged Russian regional monopoly to
control trade in the region.7 From such narratives, it appears India is also
interested in projecting its geopolitical influence to Central Asia. To avoid
being embroiled in geopolitical rivalries with Russia and India, China would
do well to stick to the economic agenda that is in common with those of
Central Asian states. Kazakhstan and Turkmenistan are relatively more devel-
oped than the other Central Asian states but they have commonalities of
poverty, unemployment, unindustrialized economies and income gaps.8
Similarly in South Asia, Lim Tai Wei argues that Pakistan may be band-
wagoning with China economically, while maintaining a good relationship
with the United States at the state level. It may also be balancing against
re-energized bilateral relationship between India and the United States.
However the overall impact of the Chinese–Pakistani outreach is a poten-
tially win–win situation for all, if the projects are transparent, if China
negotiates successfully through the complex geopolitics and domestic politics
of the South and Central Asian regions and if infrastructural connectivity
promotes trade and commerce for the regions.
The balancing game seems to be applicable to Maritime Southeast Asian
states like Malaysia as well. Kong Tuan Yuen argues that Malaysia will con-
sistently keep a two-handed strategy as the best way to deal with China.
In economic hand, Malaysia will make efforts to establish deeper and broader
partnership with China through the OBOR initiatives, in order not to harm
US interests in the Asia Pacific. In the political arena, Malaysia will echo the
ASEAN countries’ sovereignty claims in the South China Sea against China’s
maritime expansion. Malaysia will repeatedly try to maximize its economic
interests subjected to comprehensive political considerations and priorities
(both domestic and international).
Other than Malaysia, President Xi Jinping’s November 2015 Vietnam
visit appears to be part of charm diplomacy to smoothen out OBOR out-
reaches to Southeast Asian states. Like Japan, China was at the same
7 Stobdan, P, IDSA COMMENT Modi’s Visit to Central Asia, dated 6 July 2015 in the Institute
for Defence Studies and Analyses (IDSA) [downloaded on 1 July 2015], available at http://www.
idsa.in/idsacomments/ModisVisittoCentralAsia_pstobdan_060715.html.
2015–2 July 2015 in The Seminar on the Silk Road and Nazarbayev Theory of Peace. (Astana,
Kazakhstan: Unpublished), 2015, 15.
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Conclusion 327
Association of Southeast Asian Nations (ASEAN) and Asia-Pacific Economic

Cooperation (APEC) meetings in end 2015. At the point of concluding this
writing, Chinese President Xi conducted some charm diplomacy on the back
of ASEAN and APEC meetings. Vietnam which the Chinese President Xi

Jinping visited in November 2015 saw a mildly cold summit destination
reception with a small anti-Chinese protest tolerated by the authorities tak-
ing place.
Xi is the first Chinese top leader to visit Vietnam in a decade. While
relations are sometimes couched in terms of Communist brotherhood and
fraternity especially due to Chinese help rendered during the Vietnam War
against the Americans, they are juxtaposed with some frostiness and chilly
encounters in reality. Relations reached a low point in May 2014 when
Beijing positioned an oil rig in the disputed South China Sea. On another
occasion, China also had to evacuate its citizens after anti-Chinese riots
broke out and three Chinese nationals were killed in the turmoil.
Xi wanted to bring temperatures down by meeting the Vietnamese tri-
umvirate of power brokers, the Communist Party Chief, President and Prime
Minister. Contentious issues were discussed in the meeting including mari-
time disputes but so was cooperation in the usual economic realm, including
trade and educational exchanges. For the Chinese side, perhaps infrastructure
development was the most important item discussed due to the OBOR
policy which emphasizes connectivity. Connectivity is not just about the
physical transportation networks of highways, railways, ports and shipping
lines. It is also more than the economic integration based on trade and
finance. In the long run, connectivity is also concerned with people-to-
people connection, social interaction and cultural exchange.
Ultimately, the end objective of any connectivity is not just for the part-
ner states to take advantage of China’s economic growth and its vast domes-
tic markets by becoming more integrated with the Chinese economy.
In addition, China is also trying to link up the Central Asian region with
East Asia as the long-term goal of the new OBOR initiative. Vietnam falls
within the Maritime Silk Road. Further down the road, if the OBOR is
taken to its logical next step, one can even visualize the eventual integration
of the Overland Silk Road with the Maritime Silk Road.
This will in turn bring Central Asia not just to China and East Asia but
also the territories beyond the Western Pacific, i.e. the possibility of integrating
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328 Lim Tai Wei
all the regions in Asia. China’s funding agencies like the AIIB, Silk Road Fund
and other funding agencies offer the prospects of much-needed infrastructure
loans and most importantly, Chinese investments and loans have compara-
tively less strings attached than their Western counterparts. In the case of
Vietnam, there is potential for the Chinese one-party authoritarian state to
speak in the same language as Vietnam’s authoritarian government.
In general, China’s charm offensive is historically associated with conti-
nental power and its maritime outreach is mainly commercial as in the
Southern Sung dynasty regional trade network. It only briefly displayed naval
ambitions during Admiral Zheng He’s voyages in Ming dynasty. Vietnam is
playing a game of caution in such outreach. Its Communist Party Secretary
General Nguyen Phu Trong visited the US in July 2015 to forge closer ties.
US has a strategy of pivoting back to East Asia. Vietnam is also a signatory
to the Trans-Pacific Partnership (TPP) agreement involving 12 countries but

not including China. Both US visit and TPP agreement are seen by some as
an attempt to hedge against Beijing. While Xi was touring Vietnam, Japanese
Defense Minister was concurrently touring an important military naval base
in Vietnam. Japan is engaged in a close alliance with the US. There are also
recent historical issues that affect bilateral ties such as the 1979 Chinese brief
invasion of Vietnam in retaliation for Vietnam’s own annexation of
Cambodia (a Chinese ally).
After a successful thawing visit to Vietnam, Xi is trying to heal another
wound in Manila during the 18–19 November 2015 APEC meeting. China
is laying the ground for the presidential meeting by sending out signals that
Beijing is unwilling to talk about the maritime island dispute in South China
Sea. (Presidents Xi and Aquino had not met since a brief encounter in APEC
Beijing 2014.) The mission of conveying this message fell upon Chinese
Foreign Minister Wang Yi who flew in earlier into Manila for the groundwork.
At the point of this writing, Manila’s bilateral chilly relations with
Beijing is also showing some thawing signs as Foreign Secretary Albert del
Rosario tries to separate the maritime disputes issues from overall relations so
that bilateral relations can move ahead. This is yet another example of recent
series of ice-thawing missions occurring throughout East Asia. And also pos-
sible indications of Filipino pragmatism in keeping the talks focused on
economic cooperation and avoiding political issues. The Filipino President
assured Beijing of their warm hospitality during Xi’s visit. President Aquino
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Conclusion 329
mentioned that it was in Filipino culture to do so. Overall, the APEC Manila
trip witnessed the successful wrap-up of an ice-thawing trip to Vietnam and
an all-smiles diplomacy in Manila.
Finally, Lim Tai Wei studies Japanese reactions to the OBOR develop-
ments. He observed that what Japan ultimately offers is experience. Japan’s
overseas development assistance, loans, aids and investments contributed to
the post-war industrialization of Southeast Asia and China and set up pro-
duction networking in these countries. It has accumulated a wealth of experi-
ence in this regard. Japan therefore has the capacity to contribute its
experience to developing Central Asia, along with other large economies
like China and Russia. Political scientists may call the Japanese entrance
into Central Asia “hedging” against Russian and Chinese dominance, while
economists may consider it as a latecomer catch-up economic decision.
Ultimately, regardless of perspective, Lim argues that the Central Asian

developmental pie will be big enough to accommodate all big players, Japan,
China and Russia.
Lim’s chapter also pointed out that, in the economic realm, realizing the
significance of a combined 600 million-strong consumer market, a young
workforce, increasing foreign direct investments, greater net connectivity and
tourist arrivals, and the Asia’s third largest economy, Japan which has produc-
tion networks in the region for decades is working with ASEAN partners to
strengthen cooperation. By the end of 2015, the ASEAN Economic
Community (AEC) will be set up, an important step that is the start of a long
journey to forming a regional economic community. Japanese investments
and aid/loans can help the AEC harmonize its standards for a smoother tran-
sition to become a regional organization. Likewise, China will also seize on
such opportunities to have closer economic ties with the AEC.
Epilogue: Conferences and discussions

The Chinese Track II and academic institutions held major conferences in
Istanbul and Hong Kong to discuss plans about the Beijing-led Belt and
Road Initiatives in mid-December 2014. These conferences reveal several
nuggets of information. First, there is some emphasis on lifting the living
standards of countries (including those with per capita gross national
income that is 46.4% of the international average standards) in the Eurasian
b2432_Ch-19.indd 329 15/7/2016 8:06:18 PM

330 Lim Tai Wei
Zone-Road sections of the Silk Road.9 Xinhuanet featured support from

government ministers for the scheme from Balkan states like Montenegro
and Serbia.10 Maritime countries like Malaysia have also stated more con-
crete intentions to construct infrastructure for tapping into the Maritime

Silk Road.
“We are in the process of developing port cities collaboration between

Qinzhou Port (of China) and the Kuantan Port (of Malaysia),” former
Malaysian ambassador to China Abdul Majid Ahamad Khan said at a
forum on ASEAN development on 13 December 2014, reported by
China’s Xinhua news agency.11
These revelations indicated that the Maritime Silk Road fund could pos-
sibly target underperforming economies, help them construct infrastructure,

and also enhance connectivity with middle-income economies like Malaysia
through cooperation in port facilities.
Operating philosophy
The manner or operating philosophy in which these funds would be man-
aged and dispensed were also revealed by Chinese President Xi Jinping on
7 September 2013 at the Nazarbayev University in Astana, Kazakhstan.
He mentioned that China and other countries like those in Central Asia
can first compare their plans on economic development while infrastruc-
ture links can be enhanced with the guiding philosophy that China
“respects the development paths and policies chosen by the peoples of
regional countries, and will never interfere in the domestic affairs of
9 Xinhuanet, Silk Roads Initiatives Enters New Phase: Think Tank, dated 15 December 2014 in
Xinhuanet.com website [downloaded on 18 December 2014], available at http://news.xinhua-

net.com/english/china/2014-12/15/c_133856803.htm.
10 Ibid.
11 Xinhuanet, Malaysia Ready for Greater Cooperation with China in Maritime Silk Road:
Former Ambassador, dated 13 December 2014 in the Xinhuanet website [downloaded on

13 December 2014], available at http://news.xinhuanet.com/english/china/2014-12/13/c_
133852521.htm.
b2432_Ch-19.indd 330 15/7/2016 8:06:18 PM

Conclusion 331
Central Asian nations”.12 This pronouncement resembled Chinese past

practices in which they dispensed aid without strict pre-conditions, that
both led to praise amongst African leaders for the Chinese role in uplifting
the continent economically and also criticisms from human rights groups
for dispensing aid to brutal regimes or economies unprepared for economic
take-off without proper accounting oversight and procedures. In other
words, there are mixed reactions to the Chinese model of infrastructure
investment strategies.
“China will never seek a dominant role in regional affairs, nor try to
nurture a sphere of influence”, he added.13 This is again a familiar format
that has dynamically evolved and eclectically incorporated the non-hegem-
ony promise, vision of a multipolar world, peaceful rise of China and the
in-vogue idea of doing what is necessary for China’s national interest without
infringing upon others. There are those who support and oppose this world-
view. Those who support see this consensus as one that opens up an alterna-
tive developmental path for those who choose to place growth above political
liberalization and competitive politics or system that have been time-tested
by developed economies.
With regard to the BRICS Bank, both India and China declared broad
and ambiguous terms of “justice, equity and transparency” to be conditions
for their loan dispensing.14 For most countries, the Chinese vision and
more established developmental paths of the developed economies are not
mutually exclusive, there are overlaps between these two choices. It provides
more diversity of choices for funding and infrastructure development. For
the critics, the problems they see with this range from challenging the status
quo of the prevailing world order of trade and politics to the shadow of
neo-Colonialism in resource extraction.
12 Xinhuanet, Xi Suggests China, C. Asia Build Silk Road Economic Belt, dated 7 September

13 Ibid.
14 Escobar, Pepe, China is Building a New Silk Road to Europe, And it’s Leaving America
b2432_Ch-19.indd 331 15/7/2016 8:06:18 PM

332 Lim Tai Wei
Implementation
In terms of implementation priorities, some argue that China’s main target is
Central Asia and eventually proliferate to other regions that will not only
include train infrastructure but also ports and eventually energy pipelines.15
The evidence for this, according to this school of thought, is the direction of
Chinese capital flow. China’s capital flow to Central Asia: US$30 billion in
contracts with Kazakhstan; US$15 billion with Uzbekistan; US$8 billion for
Turkmenistan and US$1 billion to Tajikistan.16 Chinese close relations with
Putin’s Russia is another evidence: the trans-Siberian high-speed rail remix
reduces transit time between Beijing and Moscow from 6 1/2 days to only
33 hours.17 These evidences further point to the narrative that the landed
routes will eventually pare down the volumes carried on the maritime routes.
The process of achieving equilibrium in constant negotiations between

the different views of constructing in setting an economic world or regional
orders is a natural outcome of any ambitious regional initiative and such
debates have taken place in the past for other initiatives as well. Witness the
past debates over Fortress Europe when a pan-European economy was estab-
lishing, the production networks set up by Japan in East Asia, Soviet bloc of
collectivization economies, Organization of the Petroleum Exporting
Countries (OPEC) unity in the face of geopolitical crises. All of them were
seen as challengers to prevailing world orders and were eventually harmonized
or integrated into the world order. There are no indications thus far that the
Chinese have intentions to overturn or replace the current international eco-
nomic system. And there are also signs of outreach from perceived or imag-
ined rival institutions. The ADB President may not agree with the AIIB idea,
for example, but have belatedly welcomed cooperation between the two.
Thus far, the Chinese Silk Road initiatives also does not seem to be
incompatible with APEC, WTO, TPP, Free Trade Area of the Asian-Pacific
(FTAAP), Regional Comprehensive Economic Partnership (RCEP) organi-
zations. In fact, the Chinese appear to harmonize or complement with at
least some of these institutions. It is necessary to mention some concerns
about these Silk Road initiatives by other stakeholders before discussing
15 Ibid.
16 Ibid.
17 Ibid.
b2432_Ch-19.indd 332 15/7/2016 8:06:18 PM

Conclusion 333
some of the positive features and concrete measures of the initiative at this
early stage. Some of these narratives may be perceptions but perceptions are
sometimes as important as concrete developments in issues related to inter-
national relations, geopolitics and economic competition. According to

some journalistic writings, Beijing intends to pare down the 90% of world
trade that still travels by maritime routes by increasing freight transportation
overland through HSRs.18
The Economist lend possible indirect support for this argument: “Most
containers still travel by sea, which is considerably cheaper — about $4,000
each rather than $9,000. But the gap is narrowing as European manufacturers
start filling the empty carriages going back to China with high-priced products
such as luxury cars.”19 The equilibrium or balance between overland and
maritime trade routes in Chinese initiatives has already been highlighted in the
international media. Such a prospect if not properly explained or managed may

put maritime trading nations on their toes. Some observers see the AIIB institu-
tion as a challenge to the ADB. ADB is an institution established by and tradi-
tionally associated with US–Japan initiatives with a combined 31% contribution
of the bank’s capital and 25% of its voting power.20 Rivalry with US–Japanese
institutions is extended to the geopolitical sphere, according other observers.
Veteran contemporary China sinologist and economist John Wong high-
lighted the smart features of the Belt and Road Initiative and provided a
balanced analysis with some concerns as well: “China is essentially leveraging
its geo-economic power in order to achieve larger geo-political objectives ...
In the case of the Overland Silk Road, China’s efforts run the risk of creating
suspicion and conflict with Russia. Many Central Asian states fall into
Russia’s traditional sphere of influence. As for the Maritime Silk Road,
China’s immediate diplomatic challenge is obviously how to untangle its
18 Ibid.
oasis.
20 Escobar, Pepe, China is Building a New Silk Road to Europe, And it’s Leaving America
b2432_Ch-19.indd 333 15/7/2016 8:06:18 PM

334 Lim Tai Wei
deep-rooted territorial disputes with neighbors such as Japan, Vietnam and

the Philippines.”21 This is a succinct, timely, well couched, balanced and
important reminder of China’s vulnerabilities and weak points when it comes
to the geopolitical feature of the Belt and Road Initiative.

Bloomberg’s report on the Belt and Road Initiative also expressed similar
concerns by some experts within Russia: “So far, China has understood Russia’s
sensitivities and has not challenged Moscow on political and security issues …
China, for the first time in 200 years or so, has become a more powerful and
dynamic country than Russia … I expect the Chinese to be smart and clever
when dealing with Russia, without provoking it unnecessarily … Should they,
however, suddenly become abrasive and aggressive instead, a rupture in rela-
tions will follow.” said Mr Dmitri Trenin, director of the Moscow Center at
Carnegie Endowment for International Peace, he said.22
Essentially, it is quite well understood that Beijing is yielding the

dividends from Russia’s fallout with Washington and European majors, par-
ticularly after the Crimea issue. Beijing will have to deepen the bilateral
relationship further to prevent any flip-flops or frictions in the future which
are bound to occur between neighbors and also institute measures that will
bring the bilateral relations into the post-Putin era. Beijing’s collective leader-
ship will have to cope with a political elite power structures in the Kremlin.
Beijing also understands that the Kremlin was a pioneer and forerunner in
Eurasian regionalism.
As The Economist pointed out, in 2011, Kazakhstan, along with Russia
and Belarus, formed a customs union, which is scheduled to become the
Eurasian Union in January 2015.23 Besides Russian presence, The Economist
21 Wong, John, Reviving the Ancient Silk Road: China’s New Economic Diplomacy, dated 9
July 2014 in the Straits Times [downloaded on 18 December 2014], available at http://www.
straitstimes.com/news/opinion/invitation/story/reviving-the-ancient-silk-road-chinas-new-eco-
nomic-diplomacy-20140709.
22 Bloomberg, Chinese Premier’s Silk Road Trip Marks Advance on Russia’s patch, dated 16

russias-patch.

oasis.
b2432_Ch-19.indd 334 15/7/2016 8:06:18 PM

Conclusion 335
also pointed out other challenges in the Eurasian region. They include
Russian swaggering (Ukraine, recent mobilization of troops near its border
with Kazakhstan, European reluctance to trade with Russia, Russian obsta-
cles to goods traveling to Europe at times of bad relations, domestic problems

like corruption in Central Asia, elitist dominance of wealth creation, suscep-
tibility to commodity fluctuations, criminal groups, etc.24
Self-interest
Ultimately, pragmatism may turn out to the deciding factor in the Belt and
Road Initiative’s shape, form and outcome. The Initiative is comparable to
the analogy of choice offering based on individual assessment of national
interests at this moment. The ultimate adjudicating factor is in the details,
how each individual economy or state will assess the national interests
according to conditionalities, geopolitical priorities, domestic political
situations, external factors and national resources and how the Belt and Road
Initiative + AIIB + BRICS Bank vis-à-vis current existing established insti-
tutions like ADB best serve their needs. Take for example the foreign policy
strategy of a central player and stakeholder in the Belt and Road Initiative,
Kazakhstan’s position is reflective of such sentiments. Bloomberg reported
on 16 December 2014 that Kazakhstan says it wants “to be on good terms
with all the major powers like China, the United States and the European
Union, as well as Russia, a nation with which it has long-standing
historical, economic and political ties”.25
24 Ibid.
25 Bloomberg, Chinese Premier’s Silk Road trip marks Advance on Russia’s Patch, dated 16
russias-patch.
b2432_Ch-19.indd 335 15/7/2016 8:06:18 PM

May 2, 2013
14:6

PST˙ws
Index
A Cold War, 287

alliance, 283–284, 287 communication, 238–239
Association of Southeast Asian Nations comprehensive political consideration,
(ASEAN), 12, 17–18, 126 306
ASEAN Economic Community, 310 connectivity, 8, 10, 12, 16, 121, 128
Asia, 245–246, 249–250, 252–254, Construction Capability, 240–242

259 cooperation, 242
Asian Development Bank (ADB), CRH-2, 204–205
131 CRH-380A, 205
Asian Infrastructure Investment Bank cross-cultural barriers, 242
(AIIB), 3, 114, 175, 249 culture, 252, 255
Culture Mentality, 237, 241
B
bilateral, 283–284, 286 D
bilateral collaborative project, 292 defense, 311
BRICS Bank, 131 deficit of trust, 129
business, 254, 257, 261–264 democracy, 316
Deng Xiaoping, 284
C
Central Asia, 3–6, 9, 12, 15–17, 123, E
245, 250, 253–254 East Coastal Economic Special Zone,
Cheng Ho, 316–317 301
China Development Bank (CDB), economic corridor, 284–285
186–187 energy, 117, 125, 129
China–Malaysia Qinzhou Industrial entrepreneurs, 257
Park (CMQIP), 291 Eurasia, 115, 118, 124
Chinese Navigation, 31 Europe, 245–247, 249, 252–259,
Chongqing, 319–320 262–265
coal, 15–16, 272–276 export, 237
337
b2432_Index.indd 337 15/7/2016 11:45:52 AM

338 Index
F J
financial crisis, 245, 259–260, 264 Japan, 307–311
firms, 247, 261–262 Java campaign, 36
G K
geopolitical power, 124 Kazakhstan, 115, 123, 125, 128, 245,
globalization, 253, 255, 261 251, 259
GO Out strategy, 238, 242 Kublai Khan, 31–33
H L
halal food and Muslims commodities, Lu Shirong, 32
292
Han, 269, 273
M
hedging, 309
High-Speed Railway (HSR), 232, Machinery & Transport Equipment
237–242 321–322, 324–325 (MT), 289
HSR Contract, 237–238, 240 Malaysia–China Kuantan Industrial
HSR Diplomacy, 237–239 Park (MCKIP), 290, 302
Manila, 328–329
I maritime, 309, 311
Maritime Silk Road (MSR), 5, 11, 17
Ilkhanate, 37
Memorandum of Understanding
India, 270, 275–277, 280
(MoU), 290
Indonesia, 63, 66–67, 69, 72, 74–80,
Mexico's HSR, 237–241
83, 85, 99, 104–105
Ming, 63–71, 74, 77, 79, 88, 91, 93,
industrialization, 272–275
99, 107
industrial overcapacity, 290, 299–300
Ming Ban, 38
infrastructure, 114, 116–117,
multilateral, 284, 286
120–121, 126–128
Multilateral Development Bank
infrastructure investment, 291, 302
(MDB), 170, 172, 177, 183
international actors, 257, 259–260,
264
international configuration, 255, 257, N
259–260, 264 Nanhai, 318
international investment, 239–240 Nanyang, 68–69, 96
International norms, 255, 257,259, narratives, 63–64, 66–70, 72–73,
262–264 76–77, 85, 88, 92–93, 98–101,
international system, 245, 255, 103–107
257–258, 260, 262, 264 network, 63, 69–70, 72, 75, 98, 106
b2432_Index.indd 338 15/7/2016 11:45:52 AM

Index 339
New Silk Road, 247–249 Social Mentality, 237, 241

new type of major country relations, Social Resources, 237, 238
115 South Asia, 269, 273–274, 276–279
non-alignment, 287 South China Sea, 71, 73, 292,

nuclear, 308–309 296–297, 305–306
Southeast Asia, 9, 11, 16–18
O standard gauge, 203, 218–219, 221,
official support, 238 225–226
One Belt One Road (OBOR), 3,11, steel, 15–16, 272–273
113, 169, 197, 290 strategy, 245–246, 248–252, 254,
overland, 270–271, 274, 278–279 256–261, 264
subway, 209
Sultan Ghazan, 34, 36
P
Pakistan, 5, 15–16 T
passenger dedicated line, 212
technology transfer, 241, 291, 304
pipeline, 123, 126
Temple Peranakan, 77, 83, 85
political intention, 239–241
The 23 Customs Regulations, 33
Strait of Malacca, 290, 297
Q The Trans-Pacific Partnership (TPP),
quality, 308 254, 310
Track Gauge, 202–204, 206, 211,
R 213–214, 217, 223–224
trade, 245–246, 249, 253–254
Rail Diplomacy, 321–322
train, 319–320, 332
railway, 5, 8, 12–16, 237
transformation, 257, 259, 265
realist, 286
Turkmenistan, 270–271, 280
Regional Comprehensive Economic
Partnership (RCEP), 290
Russia, 118, 123–125 U
upper-level line, 238–239
S United States, 316, 319, 325–326
US–Japan, 283
seaport alliances, 291, 300
Semarang, 77–80, 99
V
Shinzo Abe, 307, 309
Shipping Superintendent, 31–32, 35 Vietnam, 311
Silk Road Fund, 186
Sino-Malaysia economic relations, W
292 World Bank, 322
b2432_Index.indd 339 15/7/2016 11:45:52 AM

340 Index
X Z
Xi Jinping, 113–115, 120–121 Zhang Qian, 269
Xinjiang, 126 Zheng He, 31, 38, 63–72, 74–80,

83, 85, 88–89, 92–94, 96, 99–101,
Y 103–104, 106–107
Yang Shu, 31, 33–38 Zhiyong Department, 33–34, 36
youhao, 283
b2432_Index.indd 340 15/7/2016 11:45:52 AM

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Library of Congress Cataloging-in-Publication Data

Description: New Jersey : Imperial College Press, [2016]

British Library Cataloguing-in-Publication Data

Copyright © 2016 by Imperial College Press

Desk Editors: Chandrima Maitra/Lixi Dong

Typeset by Stallion Press

Chandrima - China's One Belt One Road Initiative.indd 1 10-06-16 2:08:07 PM

b2432_FM.indd v 16/7/2016 10:21:05 AM

Section C: The Maritime Silk Road 61

the Emergence of Ethnic Chinese Communities

Section D: The Overland Silk Road 149

Chapter 10 The One Belt One Road Narratives 151

Section E: Region Specific Section — Country Case Studies 243

b2432_FM.indd vi 16/7/2016 10:27:21 AM

Chapter 16 Strategic Partnership: The China–Pakistan Relations 283

Chapter 17 China’s 21st Century Maritime Silk Road: Malaysian

Section F: Conclusion 313

b2432_FM.indd vii 16/7/2016 10:21:05 AM

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In 2013, the Chinese government announced that it has the intention to

b2432_FM.indd ix 16/7/2016 4:27:47 PM

It is extremely encouraging to see that the insights which the scholars

a lecture room through readership.

b2432_FM.indd x 15/7/2016 11:25:38 AM

About the Contributors

Henry CHAN Hing Lee 䲣㠸࡙ is a PhD candidate (General Management),

pied senior management positions in agriculture, banking, flour milling,

Winglok HUNG is now studying his PhD in International Relations at

b2432_FM.indd xi 15/7/2016 11:25:38 AM

xii About the Contributors

University of Hong Kong as a research assistant. He has been writing

KONG Tuan Yuen (ᓧㄟѕ) is Visiting Research Fellow at East Asian

industries, corporate strategy and China–Malaysia relations. He can be

LIM Tai Wei is a Senior Lecturer at SIM University of Singapore and

LIM Wen Xin is a Research Assistant at East Asian Institute, National

b2432_FM.indd xii 15/7/2016 11:25:38 AM

About the Contributors xiii

Blue and White Porcelain in China” (journals.lib.washington.edu/index.php/

DZCCZVGv.dpuf. Tai Yew Seng is presently a part-time lecturer at the

TAN Ta Sen is President, International Zheng He Society and Owner of

Katherine TSENG Hui-Yi is a Research Associate in East Asian Institute.

b2432_FM.indd xiii 15/7/2016 11:25:38 AM

xiv About the Contributors

ZHANG Huang is a Lecturer at NUDT of China. His research interests

b2432_FM.indd xiv 15/7/2016 11:25:38 AM

This page intentionally left blank

b2432_Ch-01.indd 3 15/7/2016 7:02:48 PM

4 Lim Tai Wei

According to the ADB, Asia will need US$8.22 trillion of infrastructure

June 2015 in CNBC.com [downloaded on 26 June 2015], available at http://www.cnbc.

No Novelties Westward, dated 2 July 2015 in Bloomberg Brief, 2015, 2.

b2432_Ch-01.indd 4 15/7/2016 7:02:48 PM

Lee, will be detailing the development of these HSRs in OBOR.) Eventually,

b2432_Ch-01.indd 5 15/7/2016 7:02:48 PM

6 Lim Tai Wei

gram loans or balance of payment loans, which are designed to support

b2432_Ch-01.indd 6 15/7/2016 7:02:48 PM