Asia’s economic growth has fueled a boom in infrastructure investment across the region. China has taken a lead role with its newly launched Asian Infrastructure Investment Bank and its Belt and Road Initiative — also known as “One Belt, One Road” — which aims to improve connectivity and cooperation between China and the rest of Eurasia.
While the U.S. and Japan cannot offer as much investment as China in the region, they can offer their expertise and high standards, according to Matthew Goodman, the William E. Simon chair in political economy and senior adviser for Asian economics at the Center for Strategic and International Studies. The Washington-based policy research organization recently launched an online database of infrastructure projects throughout Asia to help scholars, policymakers and others get a better understanding of the thousands of projects being planned or carried out.
Q: The CSIS has launched a new website called Reconnecting Asia. Could you tell us about it?
For example, is it linked to the One Belt, One Road initiative of China, or to Japan’s quality infrastructure initiative, or an ADB initiative or something? And then we have taken this data and we’ve put it into a virtual database, and we have created a map of the Asian continent — the Eurasian continent, as our map covers Europe as well as Asia — and we have plotted on this map these projects, these roads, so that you can look at [them].
If you’re interested in understanding these projects, you can go in through this map or through a search function to find the data and the information and photographs.
And then, on top of that database and the map, we will have analysis of the drivers and the implications of this infrastructure investment across Asia. Why is this happening? Are the purposes economic, to create development, or to give business opportunities to construction companies, or what are the economic drivers? Are there political reasons that this infrastructure is being built, and then, what are the implications?
We’re mostly focused on economic and commercial applications first, but you know — is this going to create development, is it going to create business opportunities?
Of course, we will also be interested in the geopolitical implications of all this infrastructure. So Reconnecting Asia is, we think, a unique product, which is available to the public. It is open to anyone who can access the internet.
Through a website, you can use this information as you choose. It is available for scholars, for policymakers, for journalists, for ordinary citizens who are interested in this topic.
Q: How many projects do you have on the website?
We use the open source information — for example, a World Bank loan document. And they might have a map in that document, and they say that this road is going to go from this village to that village, to that village to that village, and then we take a satellite image of that space and we plot on our map. We put little pins in the map so that when you step back, you get a line. We only do that if we have confidence that we know exactly where the road or railroad is going to be.
So far they’re all roads, railroads, ports, but our intention is also to eventually add energy pipelines, ICT infrastructure, power grids and other forms of connectivity infrastructure.
Q: How did you collect the information about infrastructure projects?
A: We have a team of young researchers and interns who have been combing through public documents from major sources. The World Bank, ADB, AIIB now, national development banks, JBIC, JICA, China Development Bank, and so forth. We’ve been looking at these, or national plans.
For example, Kazakhstan has an infrastructure plan, a development plan. The interns and the researchers have been finding interesting projects and putting them on the site.
It’s a little bit random. The basic criteria is any road, railroad or port that will potentially connect countries across Asia. That’s the standard. And so far it’s been open, things that the researchers can find on the internet.
Q: What is the makeup of countries?
A: It basically goes from Turkey to Vladivostok in Russia, and from Siberia down to Southeast Asia.
Most of the projects that we have plotted on the map are in Central Asia, between China and Kazakhstan and the other parts of Central Asia, some in Pakistan and India. And then, many in Southeast Asia, because there are many Japanese projects [there].
We think this will be interesting to China. I don’t think the Chinese even know which projects are part of One Belt, One Road. It’s a work in progress. We don’t have enough data yet [or] enough projects to make real, statistically significant analysis of the trends, but our plan is eventually to have enough information so we can, [for example], say, the Japanese-funded projects tend to be more in this part of the region, or in roads instead of rails or something. Or we could say something, maybe eventually, about the way and the quality of the projects, and so forth.
Q: Why did you start this project? Why are you interested in Asian infrastructures?
A: This development of infrastructure connections across Eurasia is [potentially] a very significant change to the region’s economic patterns … and also potentially significant for geopolitical relationships in the region.
This project is being funded by the Brzezinski Institute on Geostrategy, which is an inside-CSIS virtual think tank. Dr. Zbigniew Brzezinski, as you know, has written much about Central Asia and Russia-China relations [and] grand strategy in Asia. I think he’s especially interested in the intersection of history, geography and current international relations. And this subject brings those things together, because there was a history of connections across Asia.
The somewhat mythical Marco Polo, you know, walked between Europe and Asia. So there was some connection in the distant [past], 1,000 years ago.
That’s why it’s called Reconnecting Asia, because it’s reviving old patterns of trade and interaction. But it also brings geography very much to the fore, because building roads and railroads in this area is very challenging. The geography is very difficult; weather is very bad. It’s very interesting from a geographical point of view.
We think this is potentially very significant and, frankly, very little understood anywhere. Especially in the United States, there’s very little understanding of what’s going on. And so, we wanted to provide both a ground reality of what’s actually happening and analysis of what this means, why it’s happening, and what its implications are.
Q: It can be a showcase or advertisement for particular projects. What are your thoughts about that?
A: I’m not so worried about that because, again, we’re showing not just Chinese projects; we’re showing Japanese projects, we’re showing Indian projects and Russian projects. We’re trying to show what everyone is doing in this area.
And we will be asking hard questions. For example, we’re going to show a project in Bangladesh, which — actually, it’s a World Bank project, but it’s an example of asking hard questions. This is a bridge project, and the idea is 10 years old, maybe six or seven years old, and nothing has happened. It has not been built.
We’re going to show a satellite picture of this river, and the possibility of connecting with this bridge is very powerful. It would create a lot of new traffic all up and down Bangladesh. But the reality is, six years later … nothing has happened.
I am not so worried that we’re going to be falsely hyping or creating expectations. If anything, I think we’re going to be more skeptical than we are positive about this. I think we’re going to be asking a lot of skeptical questions.
We’re doing this as an open platform and, kind of like Wikipedia, we want the users to help us make it better. So we expect people to write to us or to give us information that says, “Oh no, this is not a real project,” or, “It’s not a good project,” or, “Yes, there’s a road here, but the road has got many holes and bumps in it because it wasn’t very well made.” And in many Chinese projects, I think that’s true.
We’re trying to give a real hard-nosed look at what’s really happening, not just what countries are advertising.
Q: I think the problem is money. Do you think institutions like the AIIB are helpful for building infrastructure in Asia?
A: Actually, I don’t think the problem is money. The problem is bankable projects — that is, projects that can generate an economic return. It’s very difficult. Even in Japan and the United States, it’s a very difficult business because, you know, these are long-term projects, and generating a return, which has to come through tolls or payments by users, [there are] a lot of questions about how to generate that return.
Therefore, the money doesn’t come into these projects, because they don’t know if they’re going to get a return. If they thought there was a bankable project where there was a good return, I think a lot of pension funds who need long-term returns — U.S. or Japanese pension funds — would come in. So it’s not really a problem of money.
And that leads to your question about the AIIB. Personally, that raises a question in my mind about why we need another investment bank. We already have the World Bank; we have the ADB. As I said, we have the potential of private investment. So why do we need another institution to do this kind of lending? Maybe, if they have good practices and they catalyze, they create a spark. You know, catalysts, they drive broader investment. But I, personally, when I heard about the announcement of the AIIB, I said, “Why do we need another one of these banks, when the problem is not money?”
The problem is, how do you get the conditions for good investment in these countries? If the AIIB addresses that, then I’d feel more positive about it. But anyway, the AIIB is there, so I’m not arguing against the AIIB. The AIIB is a reality, and I think at the margin, it might be helpful.
The Chinese say that the AIIB is going to be lean, clean and green. Lean means efficient, clean means not corrupt, and green means, of course, environmentally sound. But they also want to lend quickly, more quickly than the World Bank and the Asian Development Bank. There’s a tension there, because if you do loans quickly, maybe you won’t be so careful about the environment. But if you’re careful about the environment, it takes a long time to do these loans, because you have to do an environmental impact study.
I am waiting to see how China is going to balance that. And, if it does it the way I think they should do it, the investment, then I think it’s going to be just another ADB. It’s going to be, frankly, slow, bureaucratic, not very big, in terms of its impact. I’m a little cautious about the impact of the AIIB. I see the AIIB as more about China trying to establish its position as a leader in the global economy or the regional economy, and less about economic development.
Q: How do you think the U.S. should engage in economic development in Asia?
A: [It is] difficult for the United States, because it’s far away. We aren’t going to announce One Belt, One Road or quality infrastructure with $200 billion of investment. We have that money, but we’re not going to spend it on big Asian infrastructure projects.
We do have a lot of influence at the World Bank and the Asian Development Bank. We do have great companies [that] build things, like Bechtel or Halliburton or many other American companies. We do have financial capability to support investment, in theory. And we have great standards.
I mean, we have rule of law, we have good standards of quality investment — but also environmental safeguards, social safeguards to make sure that, you know, if you build a dam in Laos you don’t displace 20,000 people without caring about what happens to those people.
Japan has that too, so I think Japan and the U.S. have a shared set of interests, capabilities and, frankly, values. I think there’s a lot of scope for the U.S. and Japan and other partners in the region — maybe Korea, Australia and others, to work together to ensure that the highest standards of infrastructure investment are made and that those environmental and social safeguards are strong, and that we don’t create a new debt burden.
That’s another question which people aren’t focusing on. China says, AIIB or One Belt, One Road, it’s an investment. They expect to be paid back, right? They’re not giving money away. That raises questions about the ability of the borrowing countries to be able to pay it back, so there are a lot of questions about debt sustainability in the borrowing countries.
I think the U.S. and Japan have a lot of experience, a lot of our shared interests, shared capabilities, that I think we could bring together to this story. Exactly how is more challenging, but through our work in the World Bank, through the ADB, through APEC, through other mechanisms … I think there’s a possibility for us to work together.
We’re not going to offer as much money as China, but we can offer other things. We can offer quality, we can offer good standards and safeguards. That’s what the U.S. has to offer, and should, in my view.
Interviewed by Nikkei Washington bureau chief Hiroyuki Kotake