With the global economy being all... well, pear-shaped, and the international community picking a self-destructive fight with China, it's left to us to try and clean up that mess--through the thrilling business of outsourcing and sanctions-and-tariffs dodging. ASEAN was the prime beneficiary of the original US-China trade war in the late 2010s, and there's no reason to believe that it can't continue; with ASEAN increasingly integrated into the global trade network and developing at a rapid pace; from the Philippines to Malaysia.

​

However, relations with ASEAN have been somewhat testy in recent years; both because of our entanglement with the Kra Isthmus Canal Project--which is not something that Malaysia, Singapore, or Indonesia are liable to be particularly keen on--and our misadventure in Myanmar--though the revelation that the Burmese government is not beyond funding Islamic fanatics is liable to confirm all the worst suspicions of the other ASEAN nations regarding this partner, especially because many ASEAN nations--notably Thailand, the Philippines, and Indonesia--struggle with Islamic extremists. Still, ASEAN has never been one to look a gift horse in the mouth--just look at Sino-Vietnamese trade. So we have some hope that this will be well received, especially as Chinese policy aims to dovetail with local objectives around industrialization--while we see it as reducing Chinese energy demand and outsourcing the most energy-intensive, import-dependent, and dirtiest/lowest-margin areas to foreign countries.

​

Laos

Laos is perhaps the most often forgotten of the Southeast Asian nations. Being landlocked hardly helps with that. In fact, Laos is rather irrelevant, even with new Chinese railroads and dams.

However, China needs to earn trust. Good PR. Help the local economy. And maybe poke the US a little while they're at it. And, fundamentally, there is no better way to do this than the proposed, large-scale Laos Demining Prgramme, which may even one day be widened to Vietnam and Myanmar [the fact that China created new UXO in Myanmar will be quietly overlooked]. With an estimate of up to 80 million undetonated cluster munitions in Laos, there's quite a few left, unlike Cambodia, which recently finished cleaning them up.

​

China is announcing a multimillion dollar initiative [with a budget measured at ~$200 million USD annually] funded entirely with development aid, that will deploy Chinese civilian and, with Laotian permission, military, demining teams to destroy cluster bomblets, landmines, and other unexploded ordnance from the US bombing of Laos during the Vietnam War six decades ago. This demining should significantly improve the quality of life in remote rural villages and open up new land to development, removing a millstone around the neck of the Laotian economy that prevented it from reaching its fullest potential.

​

Cambodia

Cambodia's economy presently revolves largely around textiles and garments, in which it has become a global leader--but we're interested in helping push Cambodia up the value chain; largely via the introduction of production of synthetic fibers in Cambodia, which can be blended with cotton imported from India, China, Central Asia, or other sources in order to produce modern mixed-fiber clothing.

​

In particular, Chinese companies will invest in rPET and rubbish-sorting facilities in Cambodia, which will process garbage--largely from Europe and North America, but also from East Asia and other sources--and sort out plastic bottles from impure recylcing flows in order to produce polyester chip, which will then be spun into fibres for clothing.

​

However, with the planned construction of a new $10 billion Chinese-funded oil refinery in the next decade, Cambodia will also become able to produce polyester domestically from raw feedstocks imported from the rest of the world. In addition, other garbage-processing facilities will ensure that Cambodia will not become overloaded with the world's rubbish, including incinerators [of a lower caliber than used in China, to be sure], scrap mills, and other sources.

​

In addition, China will provide aid to the Cambodian military, in the form of three YLC-2 air-search radars and a squadron of 12 Hongdu L-15 fighter/trainer aircraft, which will allow Cambodia to conduct its own rudimentary air policing; along with two decommissioned Type 053 frigates to be utilized either for the Coast Guard or the Navy per Cambodia's needs.

​

Vietnam

Sion-Vietnamese trade has exploded, largely revolving around one thing: Dodging foreign trade restrictions. With the OECD picking fights with us on a daily basis, we're up for expanding this business, and Vietnam really can't say no to it. A large portion of this will amount to straight up mislabelling goods "Made in Vietnam" with the complicity of Vietnamese officials before shipping it through Vietnamese ports or through Vietnamese railroads, but some of it will be genuine investment.

​

For instance, China is looking into moving its export automobile industry into Vietnam, utilizing aluminum from Indonesia and steel from the Philippines, as well as labor from Vietnam and advanced parts from Japan and South Korea [but mostly China]. Establishment of auto factories in Vietnam, valued at billions of dollars, offer the potential for Vietnam to become a major player in the global auto market--especially for electric vehicles.

​

Another area in which China sees a significant potential for growth is agriculture and food processing; with Vietnamese agriculture potentially benefiting from Chinese investment and modernization with our advanced technologies, and Vietnam potentially becoming a valuable processor of foodstuffs, especially of meat; some of which may well be imported from abroad--places like Australia or Russia with which Vietnam enjoys close relations; and processed in Vietnam where labor costs are lower but the government reliable enough to allow industry to flourish.

​

Electronics, of course, are another such sector; and Chinese investment in electronics manufacturing in Vietnam is expected to continue to expand with the need to produce "Made in Vietnam" computers, smartphones, and smart refrigerators, that, while holding large quantities of Chinese components, will nominally be Vietnamese--and will indeed contain a good bit of value-added in Vietnam.

Thailand

The country in ASEAN without a doubt the closest to China [well, Cambodia perhaps competes for that title], Thailand is well-developed but suffers from endemic security problems. China, having obtained some information about the activities of terror groups in southern Thailand, is more than happy to collaborate with squashing terror and 'democracy' groups as the junta sees fit; whether by providing shock People's Armed Police forces or, more likely, by providing it with intelligence-sharing capabilities, satellites, drones, signals intelligence equipment and training, and other similar services, with the aim of keeping Thailand stable and secure to ensure a prosperous Southeast Asia.

​

In addition, China will continue routing the Burmese gem trade through Thailand unless Thailand has any objection to this, to avoid disrupting supply chains and links that have been established for decades tying Myanmar's rich natural resources to Thai business.

Indonesia/Malaysia

The Power Of Aluminum

Indonesia is one of the world's premiere bauxite producers, neighbors the world's largest producer [Australia] and also has large untapped hydropower potential--hydropower is especially attractive as aluminum production is extremely electricity-intensive; though Indonesia's ample steam coal reserves aren't shabby either for these purposes.

​

Chinese aluminum corporations would like to outsource a substantial portion of their capacity--that not entailed in processing domestically mined bauxite--to Kalimantan [Indonesian Borneo]. This will entail a whole series of major development projects by Chinese firms [driving up demand for concrete, steel production etc even as flagging domestic and export demand starts to take a hit], including:

Dams/Electricity:

• Completion of 6GW Kayan cascade, already partially built by Chinese companies
• Construction of additional 4GW of capacity in North Kalimantan
• Construction of about 4GW of projects in Sarawak
• Construction of HVDC Sarawak-West Kalimantan Line
• Construction of HVDC North/Central Kalimantan-West Kalimantan Line

Ports:

• Development of Pontianak transshipment port aimed at exporting finished aluminum goods and importing bulk bauxite ore
• Development of inland waterways in West Kalimantan to properly utilize bauxite reserves
• Development of bauxite export ports on the Riau and Bangka Belitung Islands to allow for utilization of these deposits

​

Total investment, mostly by Chinese companies, is expected to amount to around ~$50 billion over the next decade; though a decent portion of this will be focused around exporting aluminum mills sitting idle in China to Indonesia.

​

Oil and Gas: Still Needed

Historically, Indonesia was a major producer, and even participated in OPEC, but years of neglect and a lack of investment have led to steadily declining productivity. In energy-starved Southeast Asia, even with accelerated deployment of renewables and decreasing petrochemical prices, there's still potential for development.

​

If the Indonesian government is willing to be flexible with profit sharing agremeents for older and more marginal fields, Chinese oil companies, having exploited a large portion of China's shale and conventional resources as well as many opportunities abroad, are interested in partnering with Indonesian firms to promote Enhanced Oil Recovery and oil shale production technologies, including coal-bed methane extraction that is quite promising from Indonesia's large stores of thermal coal. With over 1000 Tcf of possible reserves, natural gas is very promising--and is cheaper and cleaner than coal that Indonesia is presently tapping for its development.

​

Geothermal: Buying Something From You Will Make You Feel Better

Geothermal is a technological area where Indonesia is now [provided the glowing news articles are correct] the world's leader, producing more geothermal energy than the United States or the Philippines. China, which has a modest untapped geothermal potential, is interested in acquiring geothermal equipment and technology from Indonesia sufficient to produce perhaps 2.5GW of electricity, which in some sense is not very much for such a large country as China, but in another sense is quite a lot; amounting to maybe $3 billion dollars of investment and funding for a geothermal boom that's perhaps starting to taper out a bit.

​

​

Philippines

While the Philippines have been the 'sick man of ASEAN' for some time, in recent years they have begun a rapid economic ascent. China is especially interested in the Philippine services sector, improving its maritime capabilities, and in steel and electronics production.

​

China would like to establish a special visa programme for the teaching of English to Chinese students by Filipino teachers; while in terms of accent and term they are not as good as Westerners, Filipinos are far cheaper and "more respectful". It is also thought that they can be retained for significantly longer. Given that the Philippines has always been happy to support the ample provision of contract labor to foreign countries, we expect a warm response. However, this visa program is far from the only way we wish to utilize our neighbor's English capabilities--Chinese companies are interested in setting up centers for the production of documentation, translation, media, support lines, and other such services in the Philippines, where time zones and proximity allow for us to work well with management while the wage-laborers work baffling hours to field the calls of confused Americans. Furthermore, to support these efforts, China is also interested in funding a series of [non-ideological] Chinese-language education programmes in the Philippines, aiming to train thousands of Filipino students to speak Chinese, as we believe this could go a long way to furthering trade relations in the region.

​

China also wishes to invest in the development of a Philippine steel industry; at present virtually nonexistent. This is largely because the Philippines have close ties with Australia, abundant labor, and good trade access. Chinese firms wish to dismantle steel mills in China currently sitting unused--the current situation has not been kind to them, nor have governmental environmental regulations and the shift towards more wood-based construction--and move them to the Philippines, amounting to about 30 million metric tons of annual steel production capacity--which we believe the Philippines to be more than capable of utilizing effectively.

​

Finally, Chinese firms are interested in outsourcing certain areas of electronics assembly to the Philippines, largely labor-intensive steps. Curiously, these steps are just enough, that, if you look at it funny, something that would otherwise be "Made in China" is suddenly "Made in the Philippines", albeit with mostly Chinese components [of course, a decent number of Korean, Japanese, etc parts are also included, though in smaller numbers]. Foxconn believes there is major potential for the development of this market in finished smartphones, laptops, televisions, and other components, though most of the heavy industry will remain in Southeast China for the time being as it is rather less portable.