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Implementing the Belt and Road Inititative in Tonga and Pacific Islands

Nuku'alofa, Tonga

Col. (Ret’d.) Siamelie Latu is Secretary General of the Tonga China Friendship Association, a former Tongan Ambassador to China, and Former Acting Secretary Foreign Affairs.

By Col. (Ret’d.) Siamelie Latu

How to implement the Belt and Road Inititative in the Pacific Islands Region, especially Tonga

The Chinese proverb goes: Yāo Xiǎng Fù Xiān Xiū Lù” / “If you want to get rich, build a road.” This can be updated as: “If you seek prosperity, build connectivity.”

1. President Xi Jinping of the People’s Republic of China announced in 2013, the Belt and Road Initative (also known as One Belt, One Road or OBOR). The aim of the Belt and Road Initiative is to promote peaceful cooperation and common development around the world and to strengthen China’s connectivity with the world. It combines new and old projects, covers an expansive geographic scope, and includes efforts to strengthen hard infrastructure, soft infrastructure and cultural ties. Cooperation under the Belt and Road (B&R) framework is something in which all countries, big or small, rich or poor, can participate on an equal footing. This cooperation is public, transparent, and open, and brings positive energy to world peace and development. It carries forward the spirit of the Silk Road, and pursues mutual benefit and complementary gains. Under this framework, the countries concerned adhere to the principle of achieving shared growth through discussion and collaboration, and join hands to build a new system of global economic governance. Cooperation helps to promote efficiency in the flow of elements and in-depth integration of markets, to achieve diversified, independent, balanced and sustainable development. It aims to promote regional development, prosperity and stability, and expand dialogue and mutual learning between civilizations.

2. I shall elaborate on the five routes for the Belt and Road Initiative and the framework China has proposed including six corridors, six means of communication, multiple countries, and multiple ports. I shall also attempt to discuss how to implement Belt and Road Initiative in the Pacific Islands Region with a focus on Tonga since it signed the Belt and Road Initiative Memorandum of Understanding on 12 November 2018; the proposed forward-looking conceptual goal for the Pacific Islands Region; and conclude with part of the result of the analysis and findings conducted by the World Bank 2019 Belt and Road Economic Opportunities.

The Five Routes of Belt and Road Initiative

3. Taking into consideration the routes of the ancient land and sea Silk Roads, China has determined five routes for the Belt and Road Initiatives. The Silk Road Economic Belt has three routes and the Maritime Silk Road has two major routes. They are as follows:
Three routes of the Silk Road Economic Belt ranges from:

  1. Northwest China and Northeast China to Europe and the Baltic Sea via Central Asia and Russia;
  2. Northwest China to the Persian Gulf and the Mediterranean Sea, passing through Central Asia and West Asia; and
  3. Southwest China through the Indochina Peninsula to the Indian Ocean.

4. The 21st-Century Maritime Silk Road has two major routes which ranges from:

  1. the coastal ports of China, crosses the South China Sea, passes through the Malacca Strait, and reaches the Indian Ocean, extending to Europe; and
  2. the coastal ports of China, crosses the South China Sea, and extends to the South Pacific.

5. Based on the above five routes, and the focus of cooperation and spatial distribution for building the Belt and Road Initiative, China has proposed a framework including six corridors, six means of communication, multiple countries, and multiple ports. The “six corridors” are:

  1. The New Eurasian Land Bridge Economic Corridor;
  2. The China-Mongolia Russia Economic Corridor;
  3. The China-Central Asia-West Asia Economic Corridor;
  4. The China-Indochina Peninsula Economic Corridor;
  5. The China-Pakistan Economic Corridor; and
  6. The Bangladesh-China-India-Myanmar Economic Corridor.

6.    The “six means of communication” are:

  1. Rail;
  2. Highways;
  3. Seagoing transport;
  4. Aviation;
  5. Pipelines; and
  6. Aerospace integrated information network.

7. The “six means of communication” comprises the main targets of infrastructure connectivity. “Multiple countries” refer to a number of countries along the Belt and Road Initiative which first joined the initiative, and China will cooperate with them on the basis of equality and mutual benefit. But pragmatism requires a need to cooperate first with a number of particular countries, and try to achieve results with them that have a demonstrative impact and embody the concept of the Belt and Road, so that more countries will be attracted to participate in the initiative. “Multiple ports” refer to a number of ports that ensure safe and smooth sea passages. By building a number of important ports and key cities with countries along the Belt and Road Initiative, China works to promote maritime cooperation. The cooperation framework is the framework for joint building of the Belt and Road, giving a clear direction for countries involved to participate in the initiative.

The Five Priorities of the Belt and Road Initiative

8. As highlighted above, the five priorities of the Belt and Road Initiative are as follows:

  1. Policy connectivity. The goal is to build an inter-governmental, multi-tiered mechanism of macro policy communication to better synergize development strategies of the participating countries;  
  2. Infrastructure connectivity. It refers to building a network of infrastructure to link communities, economies, and nations through transport, communications, and energy, across economic corridors.
  3. Trade connectivity. The purpose is to promote trade liberalization and facilitation to realize coordinated industrial development;
  4. Financial connectivity. Efforts will be made to build a framework of diversified means of investment and financing; and
  5. People-to-people connectivity. To enhance international understanding and friendship through educational, academic, tourism cultural, and humanitarian activities involving the exchange of ideas and experiences directly among peoples of different countries and diverse cultures. This will bring together people around the world, and make our societies more inclusive.

Forward-Looking Conceptual Goal for the Pacific Islands Region

9. From China, sailing west, the Maritime Silk Road winds its way. It travels from Fuzhou via many Chinese ports to South East Asia, the Indian sub-continent, Nairobi and thence via the Red Sea, to Venice in Italy. It is a famous journey everyone knows as part of the Belt and Road economic initiative. It is one of the two ribbons of trade, goodwill and friendship (the other being the land-based Silk Road), which entwine the major centres of commerce, industry and population. The two Roads together, northern and southerly, embrace much of the world’s activity.

However, there is much more to do, and here is where Her Royal Highness Princess Salote Pilolevu Tuita, Patron of the Pacific China Friendship Association and President of Tonga China Friendship Association enters a plea as well as conjecture.  She sees no further easterly progression past Indonesia. Nothing, so as smaller nations of the Pacific, whose home covers one quarter of this planet’s surface, are not in this broad and vital supply line as above mentioned. The region of the Pacific Islands does not exist along this line of life and trade.

10. The appeal is basically this: on the Southern Trade Winds which we know so well, why cannot we have an extension to the Maritime Road and name it as “The Maritime Pearl Road”, one distinctly created for the Pacific region. This will become a shiny pearl for commerce industry, education and cultural exchanges, with the overarching tenet of friendship, whilst recognising the uniqueness of the environment of the Pacific Islands region and its challenges.

11. Climate change, rising sea levels and salination of our portable water are our adversaries and causes for deep concern. However, our pristine areas of conservation, our fresh and unspoiled harvests, our willing workers and our vast knowledge of land, sea and air, passed down from ancestor, are our strengths. Together, we can harness what we have to share with the world, opening our doors to clean, green investment.

12. Each of our Pacific nations has its own specialities. Each has a unique feel and diversity of product to bring to the rest of the world. We can work collectively to bring the new Maritime Pearl Road to life, one which will bring us all closer together in so many ways.

How to implement Belt and Road Initiative in the Pacific Islands Region

13. Policy connectivity. The goal is to build an inter-governmental, multi-tiered mechanism of macro policy communication to better synergize development strategies of the participating countries including Pacific Islands region.  The Pacific Ocean occupies 180 million square kilometres half of the earth’s sea surface and more than a third of the Earth’s surface. Scattered in the western half of this immense area are 200 high islands and 2,500 low islands or atolls, which make up the 22 countries and territories of the Pacific Islands. siteresources.worldbank.org/INTPACIFICISLANDS/Resources/3-chapter+1.pdf

14. As the Pacific Ocean occupies half of the earth’s surface, it is thus important that reforms and actions to shape future development under the Belt and Road Initiative should be based on three core principles for Belt and Road corridor economies, including China.

15. The first is transparency which include providing more information on projects more broadly. Transparency in project planning, fiscal costs and budgeting, and in procurement will improve both the effectiveness of individual infrastructure investments and national development strategies. Moreover greater transparency is essential to build public trust in investment decisions and to encourage community involvement.

16. The second is the Pacific Islands Countries specific reform. Many countries in the Pacific region have trade policies and border management practices that inhibit cross-border trade. Making it easier to import and export goods is essential for the Pacific Islands Countries to reap the full benefits of BRI investments.

17. The third is multilateral cooperation, including coordination across BRI projects. For the Pacific Island countries to fully benefit from the positive spill overs of economic corridor development, they will need to work together to improve trade facilitation and border management, unify standards in building infrastructure, agree on legal standards and investor protections that will encourage further investment along BRI corridors and manage environmental risks. It will also require finding a multilateral approach to deal with potential debt distress problems associated with the BRI and with possible investment disputes and procurement issues. http://to.chineseembassy.org/eng/zt/y1r8u9018u2r/t1680947.htm

18. Infrastructure Connectivity. It is about building a network of transportation, energy and communication. Hence, the Pacific China Friendship Association (PCFA) is currently working on a feasibility study for a regional airline to connect all the Pacific Islands countries with China. Some of the basic fundamental numbers and figures PCFA should come up with for the feasibility study are:

  1. Verify via a simple Excel matric range and ability to reach respective Pacific countries (with safety fuel reserve) with AVIC’s planes;
  2. Together, list the countries who could certify AVIC’s planes;
  3. From this simple study, quickly determine where likely Hub of the Regional Airline should be. For example, Tonga; and
  4. Countries, such as Palau, have expressed great interest in AVIC’s sea planes.

19. The PCFA is looking at the larger picture, while awaiting new aircrafts as the C919. Including in the study is the number of airports with the ability to land large charter aircraft such as C919 while MA600 disperses and/or distribute to smaller islands.

20. It is also crucial in this planned feasibility study to assess the socio-economic and long term financial projections. PCFA believes that a strong feasibility study should look at the business plan, appropriate airplane models, and how this project could be fund a regional airline could be linked to the South South Cooperation Fund operated by CICETE www.cicete.org.

21. The first part (business plan & models) should be done together between (AVIC+CDB+ Pacific based local firm);

22. The second part (socio-economic impacts & long-term financial projections) should be essentially carried out by a Pacific based local firm. The Pacific based local firm would identify local counterparts in all interested countries and collectively carry out ground and desktop compilations. These local driving forces are essential in our communities and they need to make sure small things don't cause big issues, delay or cancellation.

23. One of the main ideas seems to be to push for cargo driven initial market development. The study should include locally and internationally based aviation focal points which should be brought to AVIC headquarters to review and test pilot planes and facilities.

24. Trade connectivity. The purpose is to promote trade liberalization and facilitation to realize coordinated industrial development.

25. Traditionally in Tonga, vessels were a means of travelling between islands, fishing, trade, exploring, and migrating to new areas. With modern technology it is rare to see these vessels in operation. The oceans are our high ways for our individual vakas (double-hull canoes) to connect the Belt and Road through the “Pearls” of Tonga island groups as well as the neighbouring Pacific islands. Our ancestors and especially the Royals traded this way. The Polynesians are known for their seafaring skills and intricate knowledge of navigation passing it down through oral history from generation to generation. The distances between islands in Polynesia were much greater and the ocean conditions were much harsher than in Micronesia and Melanesia. Because of this, the Polynesian’s highly developed navigation system included an understanding of many different factors including observation of the stars, ocean currents and swells, wind and cloud patterns, the rise and fall of the sun, colours of the sea and sky, weather, seasonal information, and the migration of animals such as birds. Polynesian navigators relied heavily on their senses which acted more as navigational tools. www.livingoceansfoundation.org/sailing-tonga/

26. Due to these seafaring skills and intricate knowledge of navigation, boat links with today’s technology and skills will definitely cut down freight costs in terms of trade facilitation.

27. Financial connectivity. Efforts will be made to build a framework of diversified means of investment and financing. The best possible financial connectivity for the Pacific Islands is to establish a Micro-Credit System for the South Pacific. This system could be used by all of those who do not have access to conventional forms of credit or who simply want to borrow low amounts of money, primarily in the developing countries, such as the South Pacific Island Countries. When this system is used correctly, microfinance is the best means to give the poor that little bit of extra help that will allow them to improve their situation. This micro-credit system will help impoverished borrowers who typically lack collateral, steady employment, or verifiable credit history. This is a viable project that Belt and Road Initiative could offer the South Pacific to support entrepreneurship and alleviate poverty.

28. People-to-people connectivity. More will be done to bring together people around the world, facilitate cultural, educational, academic and tourism cooperation, and make our societies more inclusive. Every society has diversified civilizations but the people to people exchanges connect each and everyone together. We don’t speak about Pacific Islands civilisation, Asian civilization and European civilization. Instead, there is only one civilization which is human civilization where exchange of knowledge, moral, and values are interchangeably taking place, educating each other. In this way, the Belt and Road Initiative helps better connect the world and promote globalisation. Hence, China is not using any kind of war. It speaks about how to develop each country, how to make more civilized projects and how to develop areas from China to Europe, from China to Africa, from China to Latin America and from China to the South Pacific Region. The Pacific Islands region is unique in its geographical characteristics which have helped shape the cultural traits of its people. For Tonga, more China government-funded scholarships will be granted to Tongan students and more Chinese tourists are expected to visit the Kingdom to bring more foreign exchange. Furthermore, as more Chinese companies are keen in making investments in Tonga, more job opportunities will be created and more revenues will be generated, which will definitely help promote the Kingdom's social and economic development and improve the livelihood of the Tongan people. http://to.chineseembassy.org/eng/zt/y1r8u9018u2r/t1657161.htm

29. China has concluded reciprocal visa-free agreements with 55 countries along the Belt and Road, including Pakistan, Russia, the Philippines and Serbia, and concluded 19 agreements (or made arrangements) on simplifying visa procedures with 15 countries including Kazakhstan, Czech Republic and Nepal.

30. Twenty-two countries such as the United Arab Emirates, Iran and Thailand have provided Chinese citizens with the privilege of visa-free entry or visa on arrival.

World Bank Analysis and Findings

31. Economic Effects of Belt and Road Initiative Transport Infrastructure. According to World Bank 2019 “Belt and Road Economics (BRI): Opportunities and Risks of Transport Corridors”, the new BRI investment in transport could boost the real economies of participating countries and the global economy overall. Across a range of dimensions, the impact of BRI investment is expected to be positive, but not for all countries. The improved transport network is expected to reduce trade times and costs and to increase overall trade as Belt and Road corridor economies increase exports and diversify their production. This expansion will increase trade both between corridor economies and non-Belt and Road countries as market access opens. The decline in trade times will also increase foreign direct investment, especially for lower income countries.

32. Overall Trade Flows. Transport infrastructure related to the Belt and Road Initiative is expected to boost world trade. Results from the computable general equilibrium (CGE) model show that the volume of global exports increases by 1.7 percent (in 2030 relative to the baseline). World trade growth is driven by Belt and Road corridor economies’ exports, which increase by 2.8 percent. BRI transport infrastructure will also have a positive effect on exports of non-Belt and Road economies in aggregate, because BRI transport projects will reduce trade costs of non-Belt and Road corridor economies as their exporters take advantage of the denser transport network.

33. Trade effects on poverty. The Belt and Road Initiative could reduce the percentage of people living in extreme poverty, with less than PPP US$1.90 a day, from 9.5 percent in 2015 to 3.9 percent by 2030 (CGE model). At the global level, BRI-related investments could lift 7.6 million from extreme poverty (these effects abstract from the cost of infrastructure investment that could affect household income through changes in government spending and taxation). The benefits extend to 4.3 million in Belt and Road corridor economies and 3.3 million in non-Belt and Road countries.

34. In Kenya and Tanzania, an additional 700,000 poor people would be expected to be lifted from extreme poverty by 2030. This is approximately equivalent to an additional 1.0 and 0.9 percentage point reduction in the extreme poverty headcount. In South Asia, Pakistan would see additional reductions in extreme poverty for 1.1 million people; Bangladesh is expected to see 200,000 people lifted out of extreme poverty (0.11 percent of headcount). https://openknowledge.worldbank.org/bitstream/handle/10986/31878/9781464813924.pdf.

35. Foreign Investment. Longer shipping times constitute a barrier to FDI flows, limiting the ability of countries to trade, thus reducing the value of the location as an export base. The proposed BRI transport network is expected to lead to a 4.97 percent increase in total FDI flows to Belt and Road corridor economies—a 4.36 percent increase in FDI flows within BRI, a 4.63 percent increase in FDI flows from OECD countries, and a 5.75 percent increase in FDI flows from non-Belt and Road countries.

36. Across regions, the proposed BRI transport network could increase FDI flows to corridor economies in East Asia and Pacific by 6.3 percent, Europe by 3.7 percent, and Central Asia by 7.3 percent, in Middle East and North Africa by 3.4 percent, South Asia by 5.2 percent, and Sub-Saharan Africa by 7.5 percent. Reductions in trading time are estimated to have especially large impacts on low and lower middle income economies—with estimated FDI increases of 7.6 and 6.0 percent respectively. http://to.chineseembassy.org/eng/zt/y1r8u9018u2r/t1680947.htm

37. Bilateral Trade Flows. The BRI is expected to reshape trade relations for participating economies with each other and with the rest of the world. Long trading times before the BRI kept intraregional trade low for these economies. All regions expand their exports to East Asia and Pacific, reflecting the large increase in imports by China (5.6 percent) and, to less extent, by other economies in the region with high manufacturing import growth such as Thailand. The improved connectivity will also allow East Asia and Pacific economies to expand their exports among themselves and to other regions.

Tonga Reaps Tangible Benefits

38. China's Belt and Road Initiative (BRI) is an economic pie, thanks to its scale and multi- faceted layers of cooperation. The BRI ensures deeper cooperation and synergy to participating countries. Indeed, the BRI has brought people closer with economic integration and robust infrastructure for the shared future of mankind.

39. As for Tonga, it has achieved early harvests in many sectors such as infrastructure, clean energy, agriculture, education, trade, tourism and people to people’s exchanges under the BRI cooperation. In the infrastructure sector, tourism is facilitated through building roads to the scenic spots and historical sites; sidewalk is under construction in downtown Nuku'alofa; St. George Government Building is situated at the waterfront as a national landmark; and Tonga High School Sports Facility is expected to have its ground-breaking later this year. In addition, the Solar Plant invested by a Chinese Company is operating well and coming soon a Chinese government-aid wind power station to generate more green and cheap electricity for local schools and households. When it comes to people-to-people exchange, more China-funded scholarships will be granted to Tongan students while more Chinese tourists are expected to visit the Kingdom to bring more foreign exchange. Furthermore, as more Chinese companies are keen in making investment in Tonga, more job opportunities will be created and more revenues will be generated, which will definitely help promote the Kingdom's social and economic development and improve the livelihood of the Tongan people.

40. Over the past six years, the Initiative has received positive response from the international community. So far, 126 countries and 29 international organizations have signed 174 cooperation documents with China while more countries have shown support. A large number of cooperation projects are being and have been implemented globally. Trade volume between China and the countries involved has exceeded six trillion US dollars, and total investment has exceeded 80 billion US dollars. China has opened direct flights with 43 countries along the routes. Eighty-two economic and trade cooperation zones have been set up out of China, creating nearly 300,000 jobs for local people.

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