Thursday 10 October 2013

Obama turns to local strife while China promises to expand Trade and Investment with Asia-Pacific neighbors

Last week, Obama, locked in his fight with the Republican Party, canceled a much-anticipated trip to Asia. This is the region to which he had announced he would "pivoted" his foreign policy, trying to contain the regional growth of China. At the same time, Obama's competitor, Chinese President Xi Jinping, took center stage. He triumphed in Malaysia and Indonesia by promising China's neighbors expanded trade and investment. 

In move typical of the game the Chinese call weiqi and the Japanese go, with America supporting Vietnam and the Philippines to surround China, Xi decided to support Indonesia and Malaysia to surround Vietnam and the Philippines. Moreover, if the US, constrained by growing budget difficulties and by an impending financial crisis that could lead to a default on the US debt, is apparently willing to leave Asia now, will it leave again in a few months or years? Conversely, despite all its internal problems, China has a tradition of not going back on its international commitments, and despite possible domestic economic difficulties, it will not go back on its word to increase regional commerce. 

Moreover, China is not simply moving eastward, to the sea. Beijing has grand plans and deep pockets to create a huge continental railway network that would link Asia to the European economic powerhouses, bypassing all sea routes. There are talks with Kazakhstan to build a new line that would boost transport and communication in the country and restart a new version of the old Silk Road. Talks are occurring with Thailand to build a line going through Laos or Myanmar, and there are projects to extend the Tibetan railway through India. Meanwhile, another railway could stretch from India to Vietnam via Myanmar and Thailand. In other words, a cobweb of railways pivoting around China could be built in the coming decades, transforming the economic and political dynamic of the region. 

This could objectively decrease China's focus on the eastern and southern seas, which is currently causing tension with Japan and the Philippines. So far, the only difficulty in this grand plan is that too much power was given to the often inefficient and corrupt railway companies. If Beijing decides to take on a more central and strategic role, things could move faster and more efficiently. 

Source: Asia Times

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