Revival of Silk Road project 'will change Asia'

China's One Belt, One Road initiative goes beyond just trade, infrastructure: George Yeo

Beijing is creating new patterns that the world has not seen before, said former foreign minister George Yeo.
Beijing is creating new patterns that the world has not seen before, said former foreign minister George Yeo. PHOTO: LIANHE ZAOBAO

China's revival of the fabled Silk Road trade links is a fluid initiative focused on human interactions and not solely about developing the physical infrastructure, said former foreign minister George Yeo.

He cited the example of China's plan to build a vast railway network connection to reach "every sea around Euroasia".

The consequence of building the rail network is the "complete reopening up of Euroasia", driven by people who cannot join the global market due to issues of bad connectivity and poor logistics, said Mr Yeo, who is now the chairman of Hong Kong logistics firm Kerry Logistics Network.

"This will change the geoeconomics map of Asia," he added.

Mr Yeo was speaking at the gala dinner dialogue of the sixth FutureChina Global Forum at the Shangri-La Hotel yesterday.

First proposed in 2013, Chinese President Xi Jinping's "One Belt, One Road" initiative is meant to spur economic development along the overland Silk Road economic belt and a maritime Silk Road that connects China with South-east Asia, Africa and Europe.

A participant asked Mr Yeo what lessons ccould be drawn from the Asean-China free trade agreement, that came into effect in 2005, in the context of the One Belt, One Road initiative.

In Mr Yeo's view, the free trade agreement is a success and necessity. Ten years on, he feels that in retrospect, the agreement could have taken on a wider scope and be implemented at a faster rate.

"It was the quickest way to uplift our people," he said. And this Silk Road initiative helps to bring greater connectivity beyond the scope of the free trade agreement. "There is a young population here in South-east Asia, and as a region, we need the financing and access that China will provide, and yet they are not asking us to be Chinese," he added.

In the 90-minute dialogue, moderated by lawyer Hee Theng Fong, who is also a board director of Business China, Mr Yeo also discussed geopolitical implications of China's One Belt, One Road initiative.

In his opening remarks, Mr Yeo noted that China is creating new patterns that the world has not seen before, both in the capital markets and cyberspace.

China will free up its capital market further, which will allow the huge amounts of savings to be put to better use. But liberalisation can only be done up to a certain point as vast inflows of foreign capital could upset China's domestic markets, he noted. So, China will continue to maintain two separate "pools" of the Chinese currency - a big ocean within the country and another pool outside, he said.

While this will create arbitrage problems, the approach of the Chinese is to address the immediate issues first and then manage the side effects later.

Mr Yeo drew the example of the Chinese authorities managing cyberspace by operating a parallel system - one for local users and another for foreigners. Such a dual system approach has been the Communist Party's preferred method to manage the vast country.

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A version of this article appeared in the print edition of The Straits Times on July 21, 2015, with the headline Revival of Silk Road project 'will change Asia'. Subscribe