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Opinion & Analysis
POSTED | 3:37 AM | 07-01-2016

China’s grand plans in SE Asia on track with Thai rail deal

-- By Prashanth Parameswaran

In early December, China and Thailand finally signed a deal to build a multibillion-dollar railway line linking the two countries. If realized, the move has the potential to be not only a boost for bilateral ties, but also a feather in the cap of Beijing’s geopolitical ambitions in Southeast Asia. 

The idea of a Sino-Thai rail project has been in the works for years, with the latest plans unveiled in December 2014 during Chinese Premier Li Keqiang’s visit to Thailand, alongside rice and rubber deals. The rail agreement comprises two routes covering more than 530 miles and costing 350 billion baht, or about $9.7 billion, with the trains running at top speeds of up to 110 miles per hour.

Though Bangkok and Beijing have had differences over funding, feasibility and even the speed of the trains, the deal’s finalization last month is no doubt a boon as the two countries celebrate the 40th anniversary of their bilateral relationship. While China is already Thailand’s biggest trading partner and export market, the new railway — in addition to the agreements that will see China buying 2 million tons of rice and 200,000 tons of rubber from Thailand — would be a further benefit for trade, investment and tourism. China’s ambassador to Thailand recently told the Thai newspaper The Nation that the rail project was the most tangible demonstration of progress in ties since he assumed his post in 2013.

More broadly, the rail project caps a year of significant progress in Sino-Thai relations, while Bangkok’s ties with its ally the United States have strained, following Thailand’s May 2014 coup. At a time when the ruling junta has been looking for opportunities to revive the country’s sagging economy, China has willingly stepped in, sending regular high-level delegations to Bangkok to contribute to the government’s economic plans, as well as pushing the envelope on security cooperation — from a potentially far-reaching deal on submarines in June to the countries’ first-ever joint air force exercises held in November 2015.  

But the rail deal is also a spur for China’s regional goals in Southeast Asia, which have seen some setbacks in recent years. Relations have cooled between China and Myanmar after a quasi-civilian government took over in Myanmar in 2011; there is little sign of improvement there with a new civilian-led government coming to power after November’s landmark election win by the opposition National League for Democracy. And ties with Vietnam took a downturn following Beijing’s placement of an oil rig within Hanoi’s waters in 2014.

As a result, China has viewed Thailand as central to its efforts to dominate mainland Southeast Asia, where the economically vital Mekong River runs. Indeed, in November, China publicly praised Thailand for playing a prominent role in Beijing’s new Lancang Mekong Cooperation framework, which was launched in Yunnan and is meant to boost political, economic and security cooperation in the region. Coming on the heels of the US-led Lower Mekong Initiative, initially broached in 2009, growing US and Chinese attention on the Mekong region could be the start of what Thitinan Pongsudhirak, a veteran Thai political observer, has called a new “great game” of geopolitical competition in Southeast Asia.

Thailand, for its part, has been happy to oblige, since China’s outreach dovetails with its own goal of positioning itself as a trade, logistical and financial hub in the so-called Greater Mekong Subregion, which includes China and Thailand along with Laos, Myanmar, Vietnam and Cambodia. Even excluding China, the economies along the Mekong have a population of 240 million and are projected to grow by more than 6 percent this year — more than twice Thailand’s growth rate for 2015, which was revised downward by the country’s Central Bank to 2.7 percent back in September.

“With these new rail and road links to our neighbors, we will have very strong potential markets,” Thai Commerce Minister Apiradi Tantraporn told Bloomberg last October. “Thailand is in the heart of ASEAN and Asia, so we have to make the most of the location.”

China’s grand plans in Southeast Asia do not stop at the Mekong, however. The Sino-Thai rail project is also central to China’s broader infrastructure objectives that reach down into maritime Southeast Asia, too. As part of its massive trade and transportation scheme, known as the One Belt, One Road initiative, or the 21st-Century Maritime Silk Road, China envisions a high-speed railway running from Kunming, China, down to Laos and Thailand and then on to Malaysia and Singapore. The Sino-Thai rail project is a key part of that, as its two segments link the area from Nong Khai near the Lao border to Kaeng Khoi, and then from Kaeng Khoi to Bangkok. With work on a related rail project between China and Laos also getting underway on Dec 3, Beijing’s plans for a Kunming-Singapore Railway are starting to gain steam. 

But at the risk of being carried away, there are significant challenges to realizing the Sino-Thai railway project, and, with it, China’s broader infrastructure dreams in Southeast Asia. It is still early days — the project is only expected to be completed by 2018 — and it is not uncommon for projects of this scale to encounter massive delays or even be canceled altogether. Disagreements could also derail ongoing plans. There have already been fierce arguments over issues such as how much control China should have in the project and the specifics of the related rubber deal, which took a lot of time to resolve.

Political stability is also a concern. While the Thai junta has prioritized the Sino-Thai railway project among its development plans, there is no guarantee that successor governments will follow through on them. Indeed, the evolution of infrastructure schemes introduced by various governments in Thailand in the past, as well as the currently contentious domestic politics in the country, suggest that caution is warranted when trying to project the future.

As for China’s broader infrastructure designs in Southeast Asia and Thailand’s role in them, it is unclear if the recent rail deals help realize that goal. In terms of costs, as Achara Ashayagachat of The Bangkok Post noted somewhat skeptically, estimates for the Singapore-Kunming railway project today are about double those revealed just three years ago.

And just as Thailand’s post-coup environment has moved Bangkok relatively closer to Beijing, a different set of circumstances further down the line could result in a tilt away from China — with implications for all the grand infrastructure plans. Thailand has long been adept at playing off major powers against each other — not just the US and China, but Japan, South Korea and Russia, as well — and bending with the prevailing wind. Such fluid realignments may not always favor Beijing’s fixed infrastructure ambitions.

Prashanth Parameswaran is an associate editor at The Diplomat magazine, currently based in Washington, D.C., where he writes mostly on Southeast Asia and Asian security affairs. He is also a doctoral candidate in international affairs at The Fletcher School of Law and Diplomacy at Tufts University. You can follow him on Twitter @TheAsianist.

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