Revival of Silk Road project 'will change Asia'

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

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.


Personally I don't believe in such traps, usually, it's a summary of the history. When you see countries reaching a certain level of income... it's because they don't have enough high technology. The level of technology and innovation determines the income level.

PROF LEVIN ZHU, visiting professor, School of Economics and Management, Tsinghua University, ex-CEO of China International Capital Corporation


Normally new technology is disruptive, but new technology also brings about huge amounts of efficiency and eventually reduces the costs for every one of us. The government needs to put a very gentle hand on it to guide it very carefully... It is quite a balancing thing... in (terms of) financial regulation, digital financing and so on, they are all coming through very rapidly. Be patient with the government, and they will eventually get the thing right. ''

MR TUNG CHEE HWA, former chief executive of HongKong and vice-chairman of the 12th Chinese People's Political Consultative Conference


What is happening in China is vertical integration. China's investments in the interior provinces- Sichuan, Chongqing, Henan,Hunan- are making it possible for the provinces to produce components and parts that used to be produced in Asean. So, Asean can do it in two ways: Move to producing differentiated, higher value parts and components to be more competitive, (and) the other way is to start to increase productivity much faster than has been the case. This means, increasing investment... If it doesn't, then its productivity increases cannot keep up with the productivity increases in China, which are very rapid.

DR HUANG YUKON,senior associate, Carnegie Endowment for International

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.

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''. Print Edition | Subscribe