Infrastructure

Retired economist Zeng Yongchang shares his views on China’s land finance policies — while quick and efficient, land finance is unsustainable, as evidenced by the widening inequality, intensifying social conflicts and dire economic situation.

Despite challenges arising from the slowing Chinese economy, China is likely to continue pushing forward on the BRI, it being a key plank of President Xi Jinping’s foreign policy. Along the way, however, it will have to make certain adjustments for a smooth transition into BRI 2.0.

The BRI’s implementation will be slowing down as a result of multiple factors ranging from the global Covid-19 pandemic, the shift in the global geostrategic environment and the Chinese economic slowdown. As it changes its model to suit change, it could focus more on sustainable financing for BRI countries and lower the long-term financial impacts of loans for infrastructure projects. It could also pursue “third-party market cooperation” as a flexible approach in its pursuit of cooperation with other countries under the BRI umbrella. This is the second in a five-part series of articles on the future of China.

The Group of Seven’s new infrastructure and investment drive seeks to provide what Southeast Asia needs, such as financing for hard infrastructure. However, ISEAS academic Chanrith Ngin believes that the need for multiple stakeholders and financing issues might not garner much buy-in from the region, and some countries may opt out to avoid being caught in the geopolitical competition between China and the US.

Malaysian academics Goh Chun Sheng and Guanie Lim observe China’s strong presence in the upstream and downstream sectors of developing Nusantara, the envisaged new capital of Indonesia in East Kalimantan on the island of Borneo, allowing for potential cooperation between China, Indonesia and Malaysia. Could this be the start of greater China-led cross-border collaborations in the region?

Taiwanese commentator Chen Kuohsiang believes that China’s economy is under threat, with the unravelling of intertwining issues in the financial industry, property sector and government finances that cannot be easily resolved. How will China boost its investment-led economy, push down unemployment rates, and regain consumer and investor confidence?

Data centres have become a thriving sector in the Asia Pacific, with global companies setting up infrastructure in hotspots such as Singapore, Hong Kong and Sydney. Compared with traditional real estate assets, data centres promise higher returns on investment. However, developers will need to contend with rising energy costs and stricter regulations for greener developments.

Amid the economic slump due to the unpredictable Covid-19 situation, China is increasing its investments in infrastructure in efforts to jumpstart domestic demand and boost economic recovery. While profitable projects are hard to find, the renewables, technology and water management sectors are set to benefit from the government's push. However, the risk of inflation and rising cost of raw materials could limit the boost to economic growth.

In this fourth instalment of a seven-part Lianhe Zaobao-Business Times series on China and ASEAN, we look at the role of Chinese investors in the rise, fall and recovery of Cambodia’s Sihanoukville province.