The Asia Infrastructure Investment Bank’s (AIIB) response to Covid-19 may determine its emerging role in development finance, for good or ill. While it has responded quickly and substantially to the pressing needs of its members, these actions risk contributing to debt risks, institutional overreach, and perceived favoritism towards Beijing.
Cross-border infrastructure is the next frontier for the economic integration of the Indo-Pacific. As liberalization has driven down regulatory barriers to trade and investment, today it is physical linkages-the road, rail, shipping, energy, and telecommunications connection between economies–which are the principal challenge for regional integration. Indeed, the Indo-Pacific is plagued by a range of ‘infrastructure gaps’, which have arisen as governments have struggled to supply infrastructure at the pace and quality required by their high-speed growth. Estimates suggest that $1.5 trillion of new investment per year, every year, will be required to unlock the region’s developmental potential. Building better infrastructure within and between economies is a top priority for all governments in the Indo-Pacific.
Southeast Asia is home to many of China’s most high-profile Belt and Road Initiative (BRI) projects, including Kyakpyu port in Myanmar, a high-speed railway in northern Laos, and now-stalled rail and pipeline projects in Malaysia. While these physical infrastructure projects have attracted widespread attention, China’s involvement in the region’s digital infrastructure has been far less examined despite holding the potential to have even greater strategic importance in the coming years.
It is clear that China’s Belt and Road Initiative (BRI) carries important implications not only for the world’s water resources, but also for politics in BRI countries. One of the worst outcomes would be for it to exacerbate the growing number of local conflicts over shared, and often shrinking, water resources.
Since China announced its ambitious Belt and Road Initiative in 2013, South Korea has actively pursued international initiatives that are independent of Chinese goals and priorities. In particular, the Moon administration’s two-pronged infrastructure vision, dubbed the “New Northern” and “New Southern” Policies, offers insights into how midsize powers in Asia might navigate growing geopolitical uncertainty in the region.