Geopolitics and Maritime Security:

Implications of Chinas One Belt, One Road and

Maritime Silk Road
Carlyle A. Thayer

Background Briefing Paper

HASS-CASS Roundtable on
One Belt, One Road Initiative and Australia-China Relations
School of Humanities and Social Sciences and
Chinese Academy of Social Sciences
The University of New South Wales at the
Australian Defence Force Academy,
Canberra, November 28, 2016
 2

Geopolitics and Maritime Security:

Implications of Chinas One Belt, One Road and Maritime Silk Road
Carlyle A. Thayer1

Introduction
This presentation discusses a major initiative by China that will impact on the security of the
maritime domain: President Xi Jinpings 21st Century Maritime Silk Road. This presentation
begins by summarising the key elements of this initiative and its a strong domestic economic
focus. The presentation then considers four questions: (1) what are the motivating factors
behind this initiative? (2) what is the scope of this initiative? (3) what are the security
benefits of this initiative? and (4) what are the potential security risks and pitfalls of this
initiative? This presentation concludes by offering a broad net assessment of these
initiatives on the geo-politics of the maritime region centred on the Straits of Malacca. If
successful, China will enhance its political and strategic influence; but Southeast Asias
maritime states will resist the superimposition of Chinas grand strategy on their autonomy.2

1. Overview
According to the Asian Development Bank (ADB), Asias demand for new investments in
infrastructure estimated at $8 trillion for the period 2010-2020 (or $800 billion per year) -
far exceeds the capacity of existing multilateral lending agencies. The ADB itself can provide
only about $10 billion in loans per year for infrastructure. In 2014, the ADB provided nearly
$14 billion on new projects in Southeast Asia. The ASEAN Infrastructure Fund, a joint
arrangement between the ADB and ASEAN, only had $485 million to invest.3
During the 2010-2020 time frame Indonesia is estimated to require $230 billion for
infrastructure development, while the countries comprising the Greater Mekong Sub-region
(Thailand, Laos, Cambodia and Vietnam) are estimated to need $50 billion. In the period
from 2015 to 2030 countries in Southeast Asia plan to spend an estimated $7 trillion to
upgrade infrastructure.4
Where are the investment funds going to come from?
Maritime Silk Road. The Maritime Silk Road initiative is part of Chinas broader strategic
thrust. In September-October 2013, President Xi Jinping proposed two initiatives on his
visits to Kazakhstan and Indonesia a Silk Road Economic Belt and a 21st Century Maritime

1
Excerpted from Carlyle A. Thayer, Geopolitics and Maritime Security in the Straits of Malacca: Implications of
Chinas Maritime Silk Road and Indonesias Global Maritime Fulcrum Presentation to the Resolving Regional
Issues and Their Impact on the Straits of Malacca, Malaysian Institute for Maritime Affairs, Kuala Lumpur,
Malaysia, April 25, 2016.
2
C.P.F. Luhulima, Superimposition of Chinas silk road and Indonesias maritime fulcrum, Jakarta Post, 13
December 2014.
3
Gerald Chan, Chinas New Silk Road: A New Global Financial Order in the Making?, Paper presented to the
Inaugural International Conference on China-US Relations in Global Perspective sponsored by the New Zealand
Contemporary China Research Centre, Victoria University of Wellington, Wellington, New Zealand, 8-9 October
2015.
4
Chan, Chinas New Silk Road: A New Global Financial Order in the Making?.
 3

Silk Road. These two initiatives have been grouped under the expression One Belt, One
Road (OBOR). A major aim of the OBOR initiative is to fund a broad range of infrastructure in
order to promote greater connectivity by air, land and sea between China, Eurasia, Europe,
South Asia, Southeast Asia and the South Pacific.
President Xi formally announced Chinas OBOR initiative at the Boao Forum for Asia annual
conference on Hainan Island on 28 March 2015. At the same time, Chinas National
Development and Reform Commission released a comprehensive overview in a document
entitled Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century
Maritime Silk Road.5
After President Xis visit to Indonesia in October 2013, Premier Li Keqiang addressed the
China-ASEAN Expo and tabled the proposal to build a Maritime Silk Road orientated towards
the Association of South East Asian Nations (ASEAN) to be jointly funded by China and the
individual members of ASEAN. In March 2016, Premier Li offered five Southeast Asian
countries $10 billion in credits and $1.54 billion in preferential loans for infrastructure
development along the Mekong River.6
According to the HSBC, Chinas proposed New Silk Road Initiative is estimated to cost $232
billion. China has identified the Asian Infrastructure Investment Bank (AIIB), the New
Development Bank (formerly BRICs Bank), and the Silk Road Fund as the prime lending
agencies.7 The AIIB has now been established with fifty-seven founding members (not
including Japan and the United States). China will provide the lions share of the $100 billion
proposed initial capital. The China also has agreed to cooperate with the ADB.
The Silk Road Fund is a limited liability company set up in China with a registered capital of
$10 billion. Its shareholders include the China Investment Corporation (sovereign wealth
fund under the Ministry of Finance), China Development Bank, Export Import Bank of China
and the State Administration of Foreign Exchange. The Silk Road Fund, under the control of
the Peoples Bank of China, is expected to attain $40 billion in investment capital.8 Its first
project was a $4 billion investment to upgrade Pakistans railway network. 9

2. What are the motivating factors behind this initiative?

Maritime Silk Road. Chinas OBOR initiative is the centrepiece of the economic, political and
strategic policy framework adopted by Chinas Fifth Generation Leadership under the

5
Peoples Republic of China, Ministry of Foreign Affairs and Ministry of Commerce, National Development and
Reform Commission, Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime
Silk Road (Beijing: Foreign Languages Press, March 2015).
6
Reuters, China offers $11.5 billion in loans, credit to Southeast Asia, Bangkok Post, 23 March 2016.
7
Dipankar Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, ISEAS Perspective, No. 14,
31 March 2016, 3; Christopher K. Johnson, President Xi Jinpings Belt and Road Initiative: A Practical
Assessment of the Chinese Communist Partys Roadmap for Chinas Global Resurgence. Report of the CSIS
Freeman Chair in China Studies. Washington, D.C.: Center for Strategic and International Studies, March 2016,
17-18 and Luhulima, Superimposition of Chinas silk road and Indonesias maritime fulcrum.
8
Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 19-20 and
Chan, Chinas New Silk Road: A New Global Financial Order in the Making?.
9
Chan, Chinas New Silk Road: A New Global Financial Order in the Making?.
 4

Chinese Communist Party (CCP) General Secretary Xi Jinping.10 It is the culmination of

Chinas earlier going out policy and it is part and parcel of Xis great rejuvenation of the
Chinese nation and his China Dream.11 According to Christopher Johnson, The purpose of
(Chinas) foreign relations remains first and foremost to secure good external conditions for
Chinas reform, development and stability12 He also observed that
In many ways, OBOR serves as the embodiment and executive agent of recent changes President Xi has
made to the ways China envisions itself interacting with the world. In particular, and as is the case in so
many other policy areas, Xis unique contribution appears to seek absolute alignment between Chinas
foreign economic diplomacy and the CCP-driven policy framework emerging as a hallmark of his
tenure.13

According to Johnson, there are three CCP foreign policy tenets and concepts that underpin
Xis OBOR initiative:
The period of strategic opportunity up to 2020 during which the external security
environment will be conducive for China to concentrate on internal development.
The concept of peaceful development that Chinas rise can only be achieved by
peaceful means and win-win outcomes for China and its neighbours and partners.
The stress on two important anniversaries: the hundredth anniversary of the founding of
the CCP (2021) and the centenary of the Peoples Republic of China (2049).14

3. What is the scope of this initiative?

Maritime Silk Road. Chinas Vision and Actions on Jointly Building Silk Road Economic Belt
and 21st-Century Maritime Silk Road sets out the overall framework of Xis OBOR initiative
under seven heading: background, principles, framework, cooperation priorities,
cooperation mechanisms, Chinas regions in pursuing opening up, and China in Action.15 Xis
OBOR is breath-taking in its scope:
The Belt and Road Initiative aims to promote the connectivity of Asian, European and African continents
and their adjacent seas, establish and strengthen partnerships among the countries along the Belt and
Road, set up all dimensional, multi-tiered and composite connectivity networks, and realize diversified,
independent, balanced and sustainable development in these countries. The connectivity projects of
the Initiative will help align and coordinate the development strategies of the countries along the Belt
and Road, tap market potential in this region, promote investment and consumption, create demands
and job opportunities, enhance people-to-people and cultural exchanges, and mutual learning among
the peoples of the relevant countries, and enable them to understand, trust and respect each other and
live in harmony, peace and prosperity. 16

10
Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, 2.
11
Johnson, President Xi Jinpings Belt and Road Initiative, 11.
12
Johnson, President Xi Jinpings Belt and Road Initiative, 11.
13
Johnson, President Xi Jinpings Belt and Road Initiative, 11.
14
Johnson, President Xi Jinpings Belt and Road Initiative, 3 and 13. The CCP has set the goal of being a
moderately well-off society by 2020 and by 2049 China will have built a modern socialist country that is
strong, prosperous, democratic, culturally advanced, and harmonious.
15
Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road (Beijing:
Foreign Languages Press, March 2015), 2; see also Banerjee, Chinas One Belt One Road Initiative An Indian
Perspective, 2-3.
16
Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 5.
 5

With reference to the Maritime Silk Road, Xis initiative envisages two sea routes, one from
Chinas east coast to Europe via the South China Sea and the other from Chinas east coast
to the South Pacific via the South China Sea.17 China would give priority to jointly building
smooth, secure and efficient transport routes connecting major sea ports along the Belt and
Road such as the China-Pakistan Economic Corridor, and the Bangladesh-China-India-
Myanmar Economic corridor.18 In addition, China has identified priority areas to promote
cooperation: policy coordination, facilities connectivity, unimpeded trade, financial
integration and people-to-people bond.19
Chinas vision of financial arrangements is expansive and includes pan-Asian systems for
currency stability, investment and finance, and credit information and expanded bilateral
currency swap and settlement arrangements. China also envisages multilateral cooperation
to provide syndicated loans and bank credit including permitting companies and financial
institutions along the OBOR with good credit standing to issue Renminbi denominated
bonds in China. Chinese financial institutions and companies with good credit ratings would
be permitted to issue bonds in Renminbi and foreign currencies outside China. Further,
China would like to expand practical cooperation through the China-ASEAN Interbank
Association.20
China also has identified four cooperation mechanisms: existing bilateral arrangements
(joint committee, mixed committee, coordinating committee, steering committee and
management committee), Memoranda of Understanding or plans, bilateral cooperation
projects and bilateral joint working mechanisms. China also singled out existing multilateral
institutions and fora, including ASEAN Plus China (ASEAN Plus 1), Asia Pacific Economic
Cooperation, Asia-Europe Meeting, Asia Cooperation Dialogue, Conference on Interaction
and Confidence-Building Measures in Asia, the Greater Mekong Subregion, the Boao Forum
for Asia, and the China-ASEAN Expo. To cap this off, China proposed to set up an
international summit forum on the One Belt and One Road Initiative.21
Chinas OBOR master plan includes a major stress on the role of involving Chinas provinces
and regions. For example, the Guangxi Zhuang Autonomous Region in the southwest would
interact with ASEAN countries. The Beibu (Tonkin) Gulf Economic Zone and the Pearl River-

17
Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road (Beijing:
Foreign Languages Press, March 2015), 10. There are reports that China excluded the Philippines from its
Maritime Silk Road initiative; see: Andrew Browne, China Bypasses Philippines in Its Proposed Maritime Silk
Road, The Wall Street Journal, November 10, 2014. http://www.wsj.com/articles/china-bypasses-philippines-
in-its-proposed-maritime-silk-road-1415636066.
18
Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 10 and
Chan, Chinas New Silk Road: A New Global Financial Order in the Making?. China financed two pipelines
across Myanmar that bring Middle East oil and gas to cities in southwestern China. The pipelines across
Myanmar run for 771 km and continue for another 1,631 km in China to reach Kunming, Chengdu and
Chongqing. The total cost of this project was $2.5 billion.
19
Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 12-23;
see the discussion in Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, 5-6.
20
Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 19-20.
21
Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 15-26.
 6

Xijang Economic Zone would link up to form an international corridor opening to the ASEAN
region.22 In addition, Chinas plans include:
[making] good use of the geographic advantage of Yunnan Province, advance the construction of an
international transport corridor connecting China with neighboring countries, develop a new highlight
of economic cooperation in the Greater Mekong Sub-region and make the region a pivot of Chinas
opening-up to South and Southeast Asia. 23

In November 2014, President Xi announced at the APEC Summit in Beijing that China would
establish a $40 billion fund to finance infrastructure construction as part of the OBOR
initiative while the Bank of China announced plans to extend $20 billion in credit to OBOR-
related projects in 2015 and $100 billion over the next three years. After the APEC meeting
Xi delivered a major policy speech to the Chinese Communist Partys Foreign Affairs Work
Conference. Xi stated, We should prepare timetables and road maps for the coming years
for the OBOR project and will focus on some significant projects and let the construction of
OBOR commence as soon as possible. 24
Chinas One Belt One Road Initiative embraces up to sixty-five countries with a combined
population of 4.4 billion or sixty-three per cent of the worlds population and twenty-nine
per cent of the worlds Gross Domestic Product (GDP) or $21 trillion. The Maritime Silk Road
envisages linking China with eleven countries in Southeast Asia and seven countries in South
Asia for a total of eighteen.25

4. What are the security benefits of this initiative?

Maritime Silk Road. The OBOR initiative aims to link Chinas western regions over land with
Eurasia, ensure safe navigation by sea and improved relations with countries that lie along
both land and sea routes. As the OBOR initiative matures China would strengthened its
presence in Central Asia/Eurasia and, at the same time, would have reduced the Malacca
Dilemma.26
Chinas OBOR initiative is primarily aimed at domestic economic development by enlisting
the provinces on Chinas borders as well as underperforming regions (Xinjiang, Ningxia,
Qinghai and Yunnan) and rust belt provinces in the northeast and integrating them in an
externally orientated development program.27 OBOR might mitigate security challenges on
Chinas periphery such as instability in Afghanistan.
The OBOR initiative would absorb Chinas industrial iron, construction materials such as
steel, cement and heavy machinery.28

22
Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 29.
23
Vision and Actions on Jointly Building Silk Road Economic Belt and 21 st-Century Maritime Silk Road, 30.
24
Quoted in Johnson, President Xi Jinpings Belt and Road Initiative, 1.
25
Chan, Chinas New Silk Road: A New Global Financial Order in the Making? and Johnson, President Xi
Jinpings Belt and Road Initiative, 1.
26
Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, 7 and 9.
27
Johnson, President Xi Jinpings Belt and Road Initiative, 20.
28
Johnson, President Xi Jinpings Belt and Road Initiative, v, 18 and 20 and Geoffrey Till, Dominion, Trade
and the Maritime Silk Road: A Review of the Issues, Soundings No. 9, Canberra Sea Power Centre Australia,
2016, 4.
 7

OBOR would be a proverbial lifeline to state-owned enterprises (SOEs) that are over
burdened with debt and non-performing loans by injecting new capital from state banks
that would not be available otherwise. New capital would also enable Chinas larger SOEs to
transform themselves into internationally competitive global companies.29
Chinas OBOR initiative would benefit the countries that participated in it by addressing
their massive demand for investment in developing infrastructure. Both China and the
participating countries would benefit from secure market access, efficient customs
clearances, secure banking, interstate money exchange facilities, comprehensive
infrastructure development, and security along sea lines of communication (SLOCs). In sum,
OBOR would provide mutual benefits to all the parties and economic growth would spill
over and positively impact on internal security.
Finally, China would emerge with a greater role in the global economy and greater influence
over the global financial infrastructure.

5. What are the potential security risks and pitfalls of this initiative?
Maritime Silk Road. Chinas OBOR initiative is historically unprecedented. It is several times
greater than the scope of the Marshal Plan.30 The major risk is the continuing slowdown in
the Chinese economy fuelled by scepticism about Chinas official GDP growth rate figures.31
A slowdown in Chinese growth would reduce to a certain extent Chinas role in regional
trade and investment.
Critics have questioned whether China has the requisite experience, human capital and
technological knowhow and expertise to manage such a gargantuan project involving so
many central government ministries and agencies as well as provincial governments.32
There is a risk that some provinces may seek funds primarily to assist debt-ridden state-
owned enterprises or that OBOR projects could encourage adventurism by Chinese SOEs
looking to expand overseas. Another risk is that some projects may turn out to be
economically unviable.
OBOR is more of a sweeping vision with a multitude of objectives than an operational
blueprint. Critics charge that OBOR is too hasty, too broad, too ambitious, and without
sufficient preparation that could result in financial wastage. One of the potential major
pitfalls is how China will deal with unexpected contingencies such as: economic difficulties
such as credit risks, environmental issues (for example, the Mitsore dam in Myanmar33),
political instability and insecurity arising from ethnic and religious complexities., especially
where land routes are linked to seaports along the Maritime Silk Road.

29
Johnson, President Xi Jinpings Belt and Road Initiative, v.
30
Johnson, President Xi Jinpings Belt and Road Initiative, 21.
31
Ye Xie and Phil Kuntz, China GDP suspicions arise anew, The Australian Financial Review, 14 April 2016 and
Johnson, President Xi Jinpings Belt and Road Initiative, 2.
32
This paragraph and the following two paragraphs draw heavily on Johnson, President Xi Jinpings Belt and
Road Initiative, vi , 10 and 21-23; see also Till, Dominion, Trade and the Maritime Silk Road: A Review of the
Issues, 5-8.
33
Reuters, China offers $11.5 billion in loans, credit to Southeast Asia, Bangkok Post, 23 March 2016.
 8

Chinas OBOR initiative is supposed to provide mutual benefits for the parties involved.
Many of the mooted OBOR projects are high-profile ones involving China and the host
governments. Set backs and failures could have domestic repercussions. There are multiple
risks that OBOR will be viewed a self-serving by host governments and companies thus
generating concerns over competition as new markets open up and over dependence on
economic networks centred on China.34
Chinas development of ports in Myanmar, Sri Lanka and Pakistan (Gwadar) are likely to
raise alarm bells in India about Chinas intrusion into the Indian Ocean if not Chinese
encirclement and isolation of India.35
6. Net Assessment: Geo-political Impact
Geoffrey Till provides a suitable framework for a net assessment of the geo-political impact
on Chinas One Belt, One Road and Maritime Silk Road.36 Both of these initiatives promote
trade and raise issues about the relationship between trade and what Till calls dominion
(domination or control).
Till presents four schools of thought:
The Manchester School that argues trade and the threat or use of force (war) are
antithetical because private companies primarily compete for private gains. This school
seems least relevant to the concerns of this paper because much of the focus on Chinas
trade is related to state-owned enterprises.
The second school argues that trade is not conducted in a strategic vacuum and the
state has to intervene at some point in time. This could lead to state versus state
conflict.
The third school argues that trade generates economic power and this in turn increases
the resources available for the military in general and the navy in particular. According
to this school of thought a state should pursue an advantage in trade to enhance the
capacity for strategic dominion.
The fourth school argues that success in sea-based trade can usurp the role of military
power at sea by shaping the way states behave. In other words, states can use their
economic power as a lever of influence over another states.37
Till notes in his summary that the latter three schools on the role of trade and dominion are
mutually supporting and in their broadest sense may be used to identify five major Chinese
geo-political objectives behind it OBOR initiative (1) a general desire to reshape the world
with a greater role for China; (2) winning friends and influencing people; (3) advantageous
access to resources; (4) energy security (diversity sources and routes); and (5) reducing
strategic vulnerability through Malacca Straits.38
Forty per cent of Chinas trade passes through the Straits of Malacca. China views the straits
as a point of vulnerability in times of crisis and is thus developing alternate routes for its

34
Johnson, President Xi Jinpings Belt and Road Initiative, vi.
35
Till, Dominion, Trade and the Maritime Silk Road: A Review of the Issues, 6.
36
Till, Dominion, Trade and the Maritime Silk Road: A Review of the Issues, 1-4.
37
Till, Dominion, Trade and the Maritime Silk Road: A Review of the Issues, 1.
38
Till, Dominion, Trade and the Maritime Silk Road: A Review of the Issues, 1 and 4-5.
 9

energy needs. For example, normal shipping from Saudi Arabia to Shanghai via the Malacca
Strait takes up to two weeks. The Bangladesh-China-India-Myanmar Economic corridor has
slashed transport times substantially. This has implications for the global oil market as well
as the strategic importance of the Straits of Malacca and hence the geo-strategic
calculations of Southeast Asian and other stakeholders.
India has a crucial role to play in the overall success of the One Belt One Road initiative. The
ancient southwest Silk Road by land linked India to Chengdu and Kunming. Kolkata and
Kalinga on the coast of Orissa provided maritime access the outside world. Indias non-
participation could result in isolation.39
India is in need of massive investment for its infrastructure and that was no doubt a
motivating factor in Indias decision to join the AIIB. 40 As yet neither India nor China has
indicated any clear commitment to jointly developing infrastructure in India that would
support the Maritime Silk Road.
The Maritime Silk Road will allow China to reduce risks of the Malacca Dilemma through
access to maritime facilities in the Indian Ocean, such as ports in Myanmar and Sri Lanka not
to mention Pakistan.41 The China-Pakistan Economic Corridor gives China enhanced strategic
security and greater bargaining power and negotiation flexibility in resources market and
transportation market.42 In sum, China diversification of energy supplies and related
transportation routes therefore serves its geo-political interests.43
If Asias future demands for quality infrastructure are met that will result in increased global
trade by land and by sea, this will not reduce the importance of the Straits of Malacca as a
vital transit corridor. Indeed, regional specialists forecast a rise in shipping passing through
the Straits of Malacca in coming years.
If the OBOR initiative succeeds it will support Chinas continuing economic growth. A larger
Chinese economy will have more resources to advance Chinas interests along the Maritime
Silk Road and also will result in increased funding for the Chinese military and the Peoples
Liberation Army Navy (PLAN) in particular. The PLANs role in the South China Sea and
western Pacific and Indian oceans will expand as part of the new normal far seas
activities.44
Chinas OBOR initiative is likely to achieve some success and improve connectivity along the
Maritime Silk Road. This raises the salience of security for Chinas SLOCs via the South China
Sea to the Indian Ocean.
China will continue to give high priority to provide the funds to enhance ASEAN connectivity
modern highways, railways, ports, power lines, telecommunications, and pipelines.

39
Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, 1, 3-4 and 7-8.
40
Shao Yuqun, Two Roads, But One Destination?, Paper presented to the Inaugural International Conference
on China-US Relations in Global Perspective sponsored by the New Zealand Contemporary China Research
Centre, Victoria University of Wellington, Wellington, New Zealand, 8-9 October 2015.
41
Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, 1 and 3-4.
42
Chan, Chinas New Silk Road: A New Global Financial Order in the Making?.
43
Johnson, President Xi Jinpings Belt and Road Initiative, v.
44
Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, 2.
 10

Mainland Southeast Asia will be drawn closer to China economically. According to one
analyst, At worst, it could turn ASEANs countries into southern Chinese provinces.45 And
China will have more influence and leverage in Southeast Asia to promote a more China-
centred economic (if not security) architecture.
According to Johnson, OBOR is comprehensive, focused and personal to President Xi.46
Chinas priority is internal development and modernization and promotion of stable external
environment, including stable relations with the United States. China is not overtly seeking
to be a disruptive power either regionally or globally (however Chinas assertiveness in the
South China Sea partly undercuts this argument because it raises regional tensions).
Chinas OBOR initiative and increased economic and political leverage will induce the United
States, Japan, India and other countries to respond with aid and investment inducements of
their own to preserve their interests in Southeast Asia and to balance China. 47 Major power
rivalry will continue to have both a bilateral and multilateral focus.
The emergence of the AIIB and other China-initiated multilateral banks will challenge the
dominance of the global financial architecture established after the Second World War
World Bank, International Monetary Fund and later the ADB. Nevertheless, both sets of
institutions will have a continuing role because the demand for investment in infrastructure
will exceed the funding available from all sources.
There will also be competition about regional trade arrangements if the United States
Senate ever approves the Trans Pacific Partnership. Chinas will continue championing the
Regional Comprehensive Economic Partnership (RCEP) and push to upgrade the China-
ASEAN Free Trade Agreement. 48
Chinas Maritime Silk Road will result in linking ports and maritime facilities from Chinas
east coast through the South China Sea to the western Indian Ocean. China will acquire
access to and control over harbour facilities, marine logistics, security of transportation at
sea, access to marine resources and the type of naval support and facilities that it lacks
today.49 There is little evidence of a push back by Southeast Asian states to Chinas OBOR
initiative.50 They appear to welcome Chinese investment and this will result greater
economic linkages to China as long as China can sustain its economic growth rate. A
downturn in the Chinese economy would dent the Maritime Silk Road initiative. At the same
time, Southeast Asian states will continue to rely on the United States for strategic
balance.51

45
Stewart Taggart, Chinas Southeast Asia Infrastructure Drive, China-US Focus, 8 April 2016.
46
Johnson, President Xi Jinpings Belt and Road Initiative, v.
47
Iis Gindarsah and Adhi Priamarizki, Indonesias Maritime Doctrine and Security Concerns, Policy Report,
Singapore: S. Rajaratnam School of International Studies, 2014, 6-9.
48
Shao, Two Roads, But One Destination?; Peter Drysdale, Beijings RCEP is a far bigger deal than
Washingtons treaty, The Australian Financial Review, 27 April 2016; and Banerjee, Chinas One Belt One
Road Initiative An Indian Perspective, 9.
49
Banerjee, Chinas One Belt One Road Initiative An Indian Perspective, 9.
50
Johnson, President Xi Jinpings Belt and Road Initiative, 24.
51
Chan, Chinas New Silk Road: A New Global Financial Order in the Making?.
 11

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