SOUTH CHINA SEA STRATEGY
EXPANDING ENERGY INVESTMENT
EXACERBATING FRAGILITY IN AFRICA?
SOUTHEAST ASIA
ENERGY
AFRICA
SOUTH CHINA SEA STRATEGY
AFRICA
From worrying to weird
Southeast Asia ' s BRI projects include the China-Laos high-speed railway, hydropower plants in Cambodia, and Indonesia’ s first high-speed railway, connecting the cities of Jakarta and Bandung. This region’ s growing markets, numerous manufacturing hubs and abundant natural resources offer Beijing considerable economic opportunities.
China is particularly trying to forge maritime links southward and establish more secure connections through the critical waterways of the South China Sea and Strait of Malacca. These efforts include ambitious port projects in the countries involved- Indonesia, Malaysia, Singapore and the Philippines.
China uses its involvement in these countries to shape the contentious maritime sphere in its interests. This has raised the concern that China would use its clout over BRI to assert claims over disputed territories in the South China Sea. It is likely that certain ASEAN claimant states would be constrained in their reactions to Chinese assertive steps in the South China Sea if they become large beneficiaries of China’ s BRI investments.
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EXPANDING ENERGY INVESTMENT
China’ s general approach of hedging against over-dependence on maritime routes via the Strait of Malacca, or on any one supplier of oil and gas, has not changed. Chinese firms are everywhere globally and will continue to buy up assets to guarantee access to resources. Look for China’ s commodities traders to focus on deepening access and control of supplies in Russia and Central Asia while China’ s petroleum sector hopes to draw in Saudi investment.
It’ s also likely that China will begin seeking export opportunities for nuclear power projects, a move that would free up more oil for export in states like Saudi Arabia. At the edges, China Inc will also buy up downstream projects in Eastern Europe and the Balkans to establish beachheads in the EU.
China’ s hydrocarbons import dependence is large now – 65-66 % of needs are met by imports – and are set to rise to as much as 80 % by 2030 due to falling domestic production alongside continued economic growth. Energy investments are increasingly important to ensure access to supply as China slowly expands its international presence.
EXACERBATING FRAGILITY IN AFRICA?
China has invested in 293 FDI projects since 2005 to the value of some US $ 66.4 billion. In 2016, China became the largest source of foreign funds for African projects, due in no small part to Chinese attempts to wrest the east of the continent into the OBOR’ s embrace.
Despite the fanfare, 2018 presents very real challenges to Chinese attempts to secure alliances throughout the African continent. Local discontent with rising Chinese influence on the continent will need to be managed effectively; commodity prices and rising debt levels are a concern along the entirety of the OBOR, and Africa is no different. China’ s propensity to hire Chinese firms and Chinese workers on overseas infrastructure investments has not gone unnoticed; paired with a never-ending, and seemingly unquestioning, line of credit from Chinese banks to African governments, the question of repayment is less sexy than the overall OBOR hype- but no less important. Africa is weary of colonial-style inflows, and China must constantly manage domestic perceptions and ensure stability if OBOR projects are to succeed in the long-term.
Finally, it must be noted that a pervasive infrastructure deficit in Africa has not emerged simply out of a global blindspot; there are broader societal and political barriers at play that China’ s cash-heavy approach may be failing to address. China’ s disinterest in ensuring the transparency of local governance may ultimately backfire, exacerbating existing fragility instead of ensuring the stability China so desperately seeks.
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