Japan Ups Its Game Against China's Belt And Road
Japan, too, is building the New Silk Road.
Japan, too, is building the New Silk Road. What has generally been posited as a Chinese initiative since Xi Jinping announced the Belt and Road initiative in 2013 is actually a multifaceted, international undertaking which contains many complementary and competing visions from various countries across Eurasia. While China is currently going through the growing pains of being a big time international infrastructure investor, Japan has been at it for decades, providing massive amounts of money and direction for the development of roads, rail lines, metro systems, and ports across Asia via financing vehicles like the Asian Development Bank (ADB) and the Japan International Cooperation Agency (JICA).
On December 1st, it was announced that Japan will soon have another vehicle for its international infrastructure building endeavors in the form of a new joint venture called the Japan Infrastructure Initiative. This JV is made up of Mitsubishi UFJ Lease & Finance (47.55%), Hitachi Capital (47.55%), and Bank of Tokyo-Mitsubishi UFJ (4.9%) and aims to invest $878 million into Japanese-directed infrastructure projects, such as railways and power plants, throughout Asia, Europe, and the USA.
As the Xi Jinping / Li Keqiang Belt and Road jamboree continues traveling through Asia and Europe, signing billions of dollarsworth of trade pacts and assisting Chinese-sponsored infrastructure investment initiatives, Japan’s Prime Minister Abe has been following suit, albeit in a much quieter fashion.
Promising to invest $200 billion in Asian and African infrastructure over the next five years, Abe has been on the road, visiting Kuala Lumpur, five Central Asia nations, and South Asia, peddling infrastructure investment packages of his own. Some of the contracts that he has so far procured include a $8.76 billion natural gas purification plant and $4.38 billion chemical plant in Turkmenistan, a big fertilizer plant in Uzbekistan, a deal with India to help build the Delhi-Mumbai Industrial Corridor, a large diesel plant on South Andaman Island, a high-speed rail line between Mumbai and Ahmedabad, two more metro systems in India, and a clutch of other large-scale infrastructure projects.
While most of the other countries involved in Silk Road development have generally maintained cordial relations, realizing that their infrastructure building activities are mutually beneficial, China and Japan have been facing off directly, competing against each other on the neutral territory of third party nations craving the investments of both. Under the slogan “Partnership for Quality Infrastructure,” Japan is marketing their infrastructure investments as being superior to those of other nations — namely China — and has been pushing its vision for a reconnected Asia in the face of China’s Belt and Road. Along with the USA, Japan has refused to join the China-led Asian Infrastructure Investment Bank (AIIB), even though many allies like Australia, German, and the UK have jumped in. In Indonesia, Japan had a contract to build a high-speed rail line from Jakarta to Bandung swiped by the Chinese. In Bangladesh, Japan repaid the favor by scoring a contract to build a deep sea port on Matarbari island at the direct expense of a Chinese plan to build one on nearby Sonadia island. In Sri Lanka, Japan is pursuing a plan to build a port and industrial zone at Trincomalee as a response to the $1.4 billion one that China has already built in Hambantota.
However, no matter who connects the dots, much of the new infrastructure that is being constructed across Eurasia will be usable by all participating parties. New power plants, highways, rail lines, and airports generally don't discriminate against users on the basis of nationality. While a Chinese company is currently building a new highway between Phnom Penh and the port at Sihanoukville in Cambodia, it will be lined with free trade zones that are mostly full of Japanese companies. Ultimately, though competitive in nature, China and Japan are building parts of the same pan-Eurasian trade network.