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China’s One Belt, One Road Initiative And Asia Is A Crucial Trade Route Starting Point, Part 4, Mongolia, Myanmar, Nepal, New Zealand, Philippines, and Singapore

ArmchairTechInvestor, May 30, 2018, by Brad Peery

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Below are summaries of the OBOR initiatives in the countries covered in the Asia Part 4 Region.

Mongolia

*“Mongolia has a land area of 600,000 square miles. The population of Mongolia was estimated at 3.06 million in 2015. According to Asian Development Bank, poverty remains widespread, with about 21.6% of the population living below the national poverty line.”

The leading economic sectors, including copper, gold, rare earth and coal mining. Some oil is produced in the south of the country. Because of the large mining sector, Mongolia is dependent on commodity prices, especially for cashmere wool and precious and industrial metals. China is the leading importer and accounted for 84% of total exports in 2015. It is reported that China is also the leading foreign investor in Mongolia.

**One of the corridors of OBOR Initiative linking China to Russia passes though Mongolia, with a plan underway to improve communication infrastructure between China and Mongolia.

Mongolia, unveiled its “steppe route” program. Planned are the construction of road links between its two neighbors and the development of the power grid. This national program must then be integrated into OBOR Initiative, as announced by the two countries several times.

“Thanks to the OBOR initiative, Mongolia hopes to reduce its dependence on extraction, diversify its economy and develop its industrial sector. Better integration into regional transport networks would enable Mongolia to increase its exports. Although the steppe route means greater integration with China. Mongolia also hopes that the new silk roads will diversify its economic partners, and attract European investors.
**Mongolia, a new link in the Belt and Road initiative, OBOReurope, April 10, 2017

Myanmar

Myanmar, being very small, is the seventh largest economy of the 10-member ASEAN bloc. It has a large service sector which accounts for about 46% of GDP. Industry and agriculture respectively account for 28% and 26% of GDP. Major sectors include agricultural processing, manufacturing, construction and transportation.

Myanmar’s GDP is forecast to expand by 7.7% in FY 2017/18 and 8% in FY 2018/19 on the back of improved global commodity prices and stronger demand from trading partners. Cumulative FDI into Myanmar had reached US$62.6 billion as of July 2017, with the Chinese mainland, Singapore and Hong Kong being the main sources.

***The Bangladesh-China-India-Myanmar (BCIM) OBOR Economic Corridor is the economic link connecting the Ganges River of India, the Ayerwaddy River of Myanmar, and the Mekong River of Indo-China. It is the lead bridge connecting the Pacific Ocean and the Indian Ocean. It is a market focus point for China, South and South East Asia. Therefore, building of the BCIM Economic Corridor could serve the common interests of the sub-regional countries’ economic and social development.”

The maritime route connecting Myanmar to India, is a transport loop which aims to provide maritime access of goods from Kolkata, via Myanmar’s port of Sittwe, to Paletwa by inland water transport along the Myanmar River, Kaladan, and back via highway to Mizoram in northeast India.
***”One Belt-One Road Initiative and MYANMAR” Connectivity: Synergy Issue and Potentialities, Global New Light of Myanmar, Than Zaw, March 11, 2018

Nepal

*”Nepal is a landlocked Himalayan country sandwiched between China and India. It maintains close relations with the two countries, especially with regard to infrastructure investment. Its hilly topography, however, poses a significant challenge to the improvement of transportation facilities within the country.”

In September 2015, after Nepal adopted a constitution that was received angrily by India, It imposed a five-month-long trade blockade on Nepal. The blockade proved to be a turning point for China, pushing Nepal closer to its neighbor.

****“Faced with crippling shortages of fuel, cooking gas, and even medicine, the then coalition government led by nationalist communist leader Khadga Prasad Sharma Oli signed agreements with Beijing to secure sea access via Chinese ports and to import petroleum products from China, breaking India’s monopoly over Nepal’s fuel supplies and access to seaports.”
****Nepal joins China’s ‘One Belt, One Road’ initiative, possibly alarming India, South China Morning Post, October 10, 2017

New Zealand

*“New Zealand is largely a service-based economy, with its services sector accounting for almost 72% of the country’s GDP, and the industry and agriculture sectors taking up GDP shares of about 20% and 8% respectively. Major economic sectors include real estate services, professional, scientific and technical services, manufacturing and retail trade and accommodation.”

New Zealand has many free trade agreements (FTAs). It has bilateral FTAs with Australia, China, ASEAN, Singapore, Malaysia, Korea and Thailand. It is also a member of the Trans-Pacific Strategic Economic Partnership with Brunei, Chile, Singapore and New Zealand. The Trans-Pacific Partnership (TPP) Is trade deal that has not yet been approved by its members. Major pending FTAs are with Russia-Belarus-Kazakhstan, India and the EU.

*****New Zealand is wary of the Chinese objectives with regard to their OBOR Initiative, despite having signed a MOU with China. “In a statement, Foreign Affairs Minister Gerry Brownlee said Kiwi officials were still working with their Chinese counterparts on a detailed work plan, to be completed within the next 18 months. As a government, we are refining how we will engage with the Initiative. Brownlee said New Zealand’s approach to Belt and Road would ‘be consistent with our track record as an advocate for open, rules-based trading systems’.”
*****What does China’s Belt and Road mean for NZ?, Newsroom, Sam Sachdeva, July 21, 2017

Philippines

*The Philippine economy is expected to have growth of 6.6% in 2017, led by strong domestic demand and a recovery in exports.

President Rodrigo Duterte remains popular after a year in office. Underlining his policy is opening the door to closer economic cooperation with China.

“Infrastructure development has become a top priority, with a list of mega infrastructure projects amounting to US$160 billion in the pipeline. Infrastructure spending is ambitiously targeted to increase from less than 2% of GDP in 2016 to 5% by 2017, then further expanding to 7% by 2019. Infrastructure investment is expected to be a major economic driver over the next few years.”

******China’s President Xi met with President Duterte in November 2017. Both sides committed to cooperate in infrastructure construction, agriculture, investment and other areas aligned with the OBOR Initiative and with the Philippines’ development strategy. The Philippines has entered into over 10 bilateral co-operation agreements with China.
******Nomura: Philippines a winner, but also most at risk, under China’s ‘Belt and Road’ By Ian Nicolas Cigaral (philstar.com) – April 17, 2018

Singapore

*“Singapore’s services sector contributes some 70% of the country’s GDP with the sectors of wholesale & retail trade, business services and finance & insurance being the prime drivers. The industrial sector takes up almost the remaining GDP share, as agriculture contributes to less than 1% of GDP. Construction, electronics, biomedical, petroleum and petrochemicals are the key industry sectors, while precision engineering is also gaining impetus as a driver too.”

*******The top export markets for Singapore were the Chinese mainland first, Hong Kong second, Malaysia, Indonesia and the U.S. Although, many of the trade corridors under the OBOR initiative will bypass Singapore, China’s OBOR Initiative will be a focal point in its relationship with Singapore, Prime Minister Lee Hsien Loong has said. Mr Lee said Singapore and China have identified four major areas of cooperation: infrastructure connectivity, financial connectivity, joint collaboration to help other OBOR countries, and offer of services to resolve cross-border commercial disputes. Singapore is a global financial center and one of the largest offshore yuan centers in the world.

Also, many Chinese companies use Singapore as a base of operations in the region.
*******Belt and Road Initiative a focal point for Singapore’s ties with China, The Straits Times, By Danson Cheong, April 8, 2018

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