Spotlight: China's efforts to enhance interconnectivity inject new dynamism to Asia-Pacific integration

With the launch of China-Thailand, China-Laos railway projects in December, the agreement to upgrade Free Trade Area (FTA) between China and the Association of Southeast Asian Nations (ASEAN) in November, China's efforts to enhance interconnectivity in Asia-Pacific have yielded fruitful outcomes in 2015, injecting new dynamism to the integration of the region.

Since China's "One Belt and One Road" Initiative in 2013, tangible benefits have come out thanks to the joint efforts of China and related countries.

The initiative, also known as the Silk Road Economic Belt and the 21st Century Maritime Silk Road, aims at promoting trade, investment, services, infrastructure construction as well as people-to-people exchange. The goal of enhancing interconnectivity not only dovetails with the Master Plan on ASEAN Connectivity, but also the APEC Connectivity Blueprint.

FRUITS OF ENHANCING INTERCONNECTIVITY

On trade and investment, China and ASEAN sealed an agreement to upgrade FTA during the ASEAN Summit in November. The upgrade helps to realize the target of scaling up two-way trade to 1 trillion U.S. dollars by 2020 and promotes the negotiations on the Regional Comprehensive Economic Partnership (RCEP) and the Asia-Pacific Free trade zone.

Alvin Cheng-Hin Lim, research fellow with Longus Institute for Development and Strategy in Singapore, held the view that the successful upgrade of China-ASEAN FTA will be helpful to the negotiations of RECP.

"China and ASEAN's bilateral trade currently stands at 370 billion U.S. dollars. The upgrade is a promising sign. RCEP is an FTA on a larger scale and its successful negotiation and ratification will be more challenging," said Lim.

Researchers of East Asian Institute, National University of Singapore also pointed out "China's strategic plan of the 21st Century Maritime Silk Road, The Asian Infrastructure Investment Bank and the Silk Road Fund can benefit ASEAN member states."

During Chinese President Xi Jinping's visit to Singapore in November, China and Singapore announced that the two sides would launch negotiations on upgrading their seven-year-old free trade agreement and the third government-to-government (G2G) project in Chongqing city in southwest China, following the first in Suzhou in east China and the second in Tianjin in north China.

Based on sophisticated interconnections and the modern service economy, the third G2G project in Chongqing will implement the Belt and Road Initiative.

China and Singapore also agreed to explore modes of cooperation between the two countries' enterprises in a third market within the framework of "the Belt and Road" initiative, and work toward the early establishment and operation of the Asian Infrastructure Investment Bank.

On infrastructure construction, the launch of China-Thailand, China-Laos railway projects marks the milestone in stepping up interconnectivity in the Asia-Pacific region.

The China-Laos railway is the first overseas route that would connect Laos with the vast railway system in China, using Chinese technology, equipment and investment. While the 845-km railway in Thailand which applies Chinese technology and will be connected to the China-Laos railway. The two railway projects will help to promote exchanges and cooperation among the ASEAN members in trade, investment, logistics, tourism, science and technology, and culture.

Lim noted that China's medium and high-speed rail development in mainland Southeast Asia under the "One Belt and One Road" Initiative fits in with ASEAN's own plans for the Singapore-Kunming Rail Link.

"Cooperation with China offers a solution for ASEAN to meet the significant funding gap that has prevented full implementation of its Master Plan for Connectivity." said Lim.

CHINA'S INCLUSIVENESS BENEFITS ASIA-PACIFIC INTEGRATION

It is known that the devil of economic integration is in the implementation of the myriad of policies at regional and domestic levels. On this point, China has demonstrated its responsibility as the second largest economy in the world.

Irene Chan, associate research fellow with S. Rajaratnam School of International Studies of Nanyang Technological University, said that the China-proposed Belt and Road Initiative shows the country has recognized this major challenge and committed to resolving it.

"The initiative has become an important part of regional economic integration as it dovetails not only with the APEC Connectivity Blueprint but also with the sub-regional Master Plan for ASEAN Connectivity. On top of that, the Belt portion of the initiative provides the Asia-Pacific region possible links to other regions, particularly the largely untapped Central Asia region." said Chan.

Echoing Chan, Lim said "The Belt and Road projects in ICT, air transportation, human resource development, and energy likewise dovetail with similar projects in the ASEAN Master Plan for Connectivity."

In the context that China's economy has been undergoing the period of transformation, Lim noted China's economic transformation is creating a vast consumer market and ASEAN's industrialists and entrepreneurs have many opportunities.

Gu Qingyang, associate professor of the Lee Kuan Yew School of Public Policy of National University of Singapore, said that China's open-up in a deeper degree will push Asia-Pacific integration forward, and the region will also benefit from China's economic development.

"Although China's economic growth has slowed down, China is still a major force of global economic growth. Adopting more open economic initiatives, such as reducing the thresholds for foreign investment, will propel economic development of the Asia-Pacific and the integration of the region." said Gu. Enditem