By 2020, China’s FTA with ASEAN nations will get another big boost; a 3,900km high-speed railway system linking China’s Kunming through Laos, Thailand, and Malaysia down to Singapore becomes operational and construction has already started. See my hand-drawing in the regional map below to get a sense of scope of this project. China’s trade with the ASEAN countries has sky-rocked to $292.78 billion in 2010, the year the FTA went into effect. ASEAN countries exports to China at $154.56 billion already dwarfed the U.S.’.
First, there was the supposed sinking of the South Korean navy ship, Cheonan, during a joint U.S.-South Korea military exercise, which a U.S.-South Korean lead ‘international’ investigation concluded the North responsible. Russia rebuked the conclusion after looking into the evidence with China also not agreeing to blame the North.
Then there was the shelling of disputed Yeonpyeong island by North Korea killing South Korean marines and civilians. A Chinese fishing trawler and a Japanese coast guard ship colliding near disputed island (Diaoyutai/Senkaku) just north of Taiwan.
Russian President Medvedev landed in one of the disputed Kuril Islands promising further development (and I suggested Foreign Minister’s resignation was due to it). ASEAN countries supposedly invited the U.S. to join a regional forum, but nobody signed up to say anything bad about China.
(For completeness, I mind as well add in the Takeshima/Dokdo dispute with South Korea, because Japan is so embroidered up northeast.)
The March 2011 earthquake and the ensuing tsunami came, then everything went quiet.
Well, arguably, Wikileaks was another earthquake with the epicenter in Washington, D.C..
So, what now?
With that said, the opinion I would like to share is rather simple. When the aggressive geopolitiking and military schoolyard nonsense are kept at bay, doesn’t everything seem much more peaceful? (I am talking about East Asia in case it is not clear.)
Back to this Kunming-Singapore high speed railway; I think it will play a major role in accelerating the trade between China and ASEAN countries. According to this report,
Furthermore, energy and goods that Japan and South Korea need can also be transported to both countries through this railway network of global significance.
The railway network will facilitate the movement of goods and people, improve the efficiency of economic activities, and help create a more peaceful and stable geopolitical environment.
By the way, the red outline is just me connecting the dots, and I wanted to use the map to visualize this massive under-taking. After completion, Vietnam and Cambodia will become linked with Thailand and Myanmar further by train.
I applaud the recent KORUS free trade agreement between South Korea and the U.S.. ASEAN+1 is already in effect, and the next step will be ASEAN+3, adding South Korea and Japan. China is already Japan’s largest trade partner, so this expansion is rightfully to be expected.
In the future, as more developed countries advance, trade will become a more important factor in standards of living anywhere on the planet. And I applaud China’s leaders in making free trade a priority.
Want more examples? President of the European Council Herman van Rompuy is currently in China in talks with President Hu Jintao to expand trade. EU needs all of China’s help it can get in financing as well as market access. China could use more high-technology exports from the region.
Chinese Commerce Minister Chen Deming is in Brazil talking to Trader Minister Fernando Pimentel on “China, Brazil open wider for each other.” (For some reason, this headline sounds funny.) Though trade volume is still modest, China-Brazil trade is expected to grow 20% in 2011 to $37 billion.
Imagine that kind of growth percentage wise between China and the U.S.?
Don’t forget the just completed Strategic & Economic Dialog between those two countries. Lets hope they yield concrete results. Otherwise, it seems certain U.S.’s trade volume with China will decline as a percentage of China’s overall. And I predict ASEAN to over-take America soon.
In terms of high speed rail, I will be impressed when the U.S. leads in building one connecting Canada down to Mexico. And it cannot for the lack of examples.
pug_ster says
I don’t see anything special in terms of trade. However, it might increase cultural and social exchange though.
silentvoice says
There are two potentially misleading parts in blog post above, though I’m sure it is unintentional, the readers might get the wrong picture here.
First, it is not such a giant project. It only involves connecting regional rail lines that are already in place. For example, Singapore is already connected by rail all the way to Thailand. It’s not as if China is funding and building the entire distance. They are probably just building a few hundred km here and there. My guess is they would need to build some infrastructure between China and Laos, and between Laos and Thailand. The rest are pretty much in place.
Second, it is not “high speed” as we know it. The current speed for the KTM (Keretapi Tanah Melayu) line running between Singapore and Malaysia is about 70 km/hr, as I recall. (Freight rail might be slower) If they want to run anything faster than that, it will involve laying an entire new track from scratch which is going to be very costly.
It took Malaysia and Singapore almost 2 decades to decide where to place a train station. Let alone come to a decision about a new track. I am almost certain a “high speed” rail is out of the question.
pug_ster says
Actually, I think they are going to lay a new high speed track. The distance between Kunming and Singapore is more than 3000km, which takes more than 10 hours do the math.
YinYang says
@pug_ster
I should have elaborated an American example, because I see this high-speed rail having a similar type of impact for the over-all region that can come from infrastructure. The U.S. Interstate highway system is widely recognized as one of the best public projects in the history of America. Below is a section on the economic impact alone over a 4 decade period:
http://www.publicpurpose.com/freeway1.htm#econ
YinYang says
@silentvoice
I also read about the regional railway build outs in the region. This high-speed artery will help expedite the shorter local route investments in Southeast Asia.
China invested 1 trillion RMB in her economic stimulus (2 years ago?), and I read somewhere 37% of that went into rails.
As I was saying above, like the U.S. interstate investment, the rail in China and beyond will have a very substantial impact in the region.
pug_ster says
yinyang,
I would disagree. The US highway system are for consumer cars and commercial trucks carry cargo. Chances are that they won’t carry any cargo in the high speed rail lines because it is not economically feasible to do it. According to this article,
http://www.business-in-asia.com/asia/SKRL_railway.html
There is no direct rail line from China to Singapore, but perhaps China will probably fund a separate slower rail line for cargo. So I guess you’re partially right about this one.
YinYang says
@pug_ster
Ha, okay, in about 10 years time we can revisit this point to see who turns out right. 🙂
YinYang says
Occasionally I check our blog stats to see who is linking to HH and what they are saying. This one comment over at the Canadian the Globe and Mail gave me some laughs:
Haha. Notice what I highlighted. I wonder what that ‘warning’ is all about. Is there something subliminal in my passage’s ‘bias’ the person quoted?
A ‘Taiwanese’ guy – a mix up between Allen and me. Bunch of my relatives live there though, and I have been to Hsinchu on business numerous times. Those relatives would have been persecuted during Mao’s reign as dizhu (地主) had they remained on the mainland. Some of my other relatives who remained were.
A ‘Taiwanese’ guy who is ‘pro-China’ – – ha, the last time I saw Allen, he wasn’t that scary looking. He looked just like his gravatar portrait:
YinYang says
Proximity is always important – for one, exchange of physical goods is taxed less due to lower transportation costs. Map of China’s FDI by region below (source: China Daily). All signs point to a rapidly expanding region as a trading bloc.
Kathy says
HSR to Singapore from China thru Laos will give the US quite a jolt!
raventhorn2000 says
Related, I saw a documentary on the construction of the Qinghai Tibet Railroad. Simply amazing.
Chinese engineers came up with some incredible solutions for building railroad on the permafrost terrain of the Tibetan highland, with low cost.
And the speed and efficiency of the construction was also staggering.
When Chinese immigrants help build the transcontinental railroad in US, they were hardly acknowledged.
It is good to see that today, Chinese engineers and workers are able to use their talents to benefit Asia.
wwww1234 says
this may not be as rosy as you indicated.
see http://www.21cbh.com/HTML/2011-5-25/xOMDAwMDI0MDMxOA.html
mind you 21 cbh is under the southern news media group, an “opposition” news organization funded by the government. Its reporting inclination often has an ultra-liberal and oppositional view point.
Kunming is becoming an attractive city for winter homes for some overseas chinese. You can get to Hong Kong very quickly for medical care when needed.
Timber says
That’s a super construction…
Khouanechay Souphanthavong says
I am laotian and 100% support this project, its will helps my country, China and the rest of Asean nation becomes modernize and prosperous society.
pug_ster says
http://www.nytimes.com/2013/01/02/world/asia/china-builds-a-railroad-and-laos-bears-the-cost.html?hp&_r=0
I just can’t help by looking at NY times propaganda, it seems that Western nations don’t want Laos to succeed, warning that putting up this railroad will put Laos’ “macroeconomic stability in danger” and thinking that Laos will bear the majority of the cost.
Zack says
@pug_ster
exactly how do these Western former colonists of Asians think that this HSR will endanger Laos’ ‘macroeconomic stability’
jealousy much?
jxie says
@pug_ster
The Exim Bank of China’s loan term is 30-year, 2% annual interest with a 10-year grace period. It can clear the 25% concessionality requirement by a mile to qualify as OECD ODA aid. If it’s a deal between any Western countries (or Japan) and Laos, the headline should read as “China Provides $7 Billion Aid to Laos.”
What’s the matter with these NYT reporters? The UNDP spells as United Nations Development Programme.
If it only links up China and Laos, the railway isn’t economically viable. However, in the grand scheme of things, it also is an important link between China, a $8 trillion economy, and close to $1 trillion combined economy of Thailand, Malay Peninsula and Singapore. The logistic market of China is already $1.5 trillion in 2012 (larger than that of the EU27 or the US*). If this line becomes a major freight link, Laos will get on the China gravy train, no pun intended.
The best case scenario for Laos would be the profit from freight and passenger traffic alone can pay off the Chinese loan after the grace period ends, then all external economic benefits will be Laos to enjoy. The worst case scenario, just ask China to restructure the loan term. For anybody who has followed the story, it’s Laos that has been vigorously pursuing this.
BTW, both this line and another $5 billion line between Laos and Vietnam (funded by Malaysia) will use standard gauge. A very interesting development…
* Other than being “energy inefficient”, China is also supposed to be “logistic inefficient”. I think it’s far easier to think the Chinese GDP is severely understated.