https://orcid.org/0000-0001-7320-1151
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ABSTRACT
In the post-2008 global economy, infrastructure development and financing have risen to the top of the development agenda, emerging as a contested field for global investments involving seemingly divergent interests, objectives, rationalities and practices. Whereas multilateral development banks such as the World Bank advocate the market-based public–private partnership aimed at attracting private finance and deepening marketized governance, China is forging a state-capitalist alternative through its Belt and Road Initiative (BRI). These models are far from mutually exclusive. Through a conjunctural approach, the paper examines the broader trade and financial interdependencies in which these models are entangled, and the geopolitical–economic objectives enframing the emergent infrastructure regime. These are explored vis-à-vis Indonesian infrastructure projects, framed by competition between China and Japan.
摘要
银行’发展’：基础设施融资的地缘政治经济。Area Development and Policy. 反观2008年后的全球经济，基础设施的开发和融资已成为发展议程的重中之重，并成为全球投资的一个存有争议的领域，它涉及不同的利益、目标，合理性和实践。尽管世界银行等多边开发银行倡导以市场为基础的公私合作，其目的是吸引私人融资并深化市场化管理，但中国正在通过’一带一路’倡议打造一种国家资本主义的替代方案。本文表明，这些模型并没有互相排斥，作者通过一种联合方法，对于更广泛的贸易和金融相互依存关系进行了研究，表明这些模型相互纠缠，以及涵盖新兴基础设施制度的地缘政治经济目标。研究是在中日竞争的背景下，针对印尼基础设施项目而进行地。
RESUMEN
‘Desarrollo bancario’: la economía geopolítica de la financiación de infraestructuras. Area Development and Policy. En la economía mundial tras 2008, el desarrollo de infraestructura y su financiación se han convertido en una prioridad en el programa de desarrollo, y han emergido como un tema de debate para inversiones globales que implican intereses, objetivos, racionalidades y prácticas aparentemente divergentes. Mientras que los bancos de desarrollo multilaterales, tales como el Banco Mundial, abogan por la colaboración entre el sector público y privado basada en el mercado con el objetivo de atraer la financiación privada y profundizar la gestión comercial, China está forjando una alternativa de capitalismo de Estado a través de su iniciativa La Franja y La Ruta. Estos modelos están lejos de ser mutuamente exclusivos. A través de un enfoque coyuntural, este artículo examino las interdependencias comerciales y financieras más amplias en las que se combinan estos modelos, y los objetivos geopolíticos y económicos que enmarcan el régimen de infraestructura emergente. Aquí analizo estas interdependencias en comparación con los proyectos de infraestructura de Indonesia, enmarcadas por la competencia entre China y Japón.
Аннотация
Банковское ‘развитие’: Геополитическая экономика инфраструктурного финансирования. Area Development and Policy. В период после 2008 года развитие инфраструктуры и финансирование глобальной экономики заняли первое место в повестке дня в области развития, превратившись в спорную область для глобальных инвестиций, включающих, казалось бы, различные интересы, цели, рациональность и практику. В то время как многосторонние банки развития, такие как Всемирный банк, выступают за рыночное государственно-частное партнерство, направленное на привлечение частного финансирования и углубление рыночного управления, Китай создает государственно-капиталистическую альтернативу через свою инициативу ‘Пояс и путь’. Эти модели далеко не взаимоисключающие. С помощью конъюнктурного подхода я исследую более широкие торговые и финансовые взаимозависимости, в которых переплетаются эти модели, а также геополитические и экономические цели, лежащие в основе формирующегося инфраструктурного режима. Они изучаются в контексте индонезийских инфраструктурных проектов, связанных с конкуренцией между Китаем и Японией.
ACKNOWLEDGEMENTS
The author is grateful to Eric Sheppard, Shaina Potts and John Agnew for their careful reading and constructive feedback on earlier drafts, helpful comments from anonymous referees, as well as organizers and participants at the Finance for Development session at the American Association of Geographers (AAG) meeting in Washington, DC. The author is also indebted to Suryono Herlambang, Liong Ju Tjung and Regina Suryadjaja for their support during the research process.
DISCLOSURE STATEMENT
No potential conflict of interest was reported by the author.
Notes
1. A result of structural changes in which the role of traditional intermediaries such as local banks, mutual societies, and savings and loans organizations has been diminished as they have become consolidated, and as the growth of financial assets has led to banks being bypassed by investors.
2. That is, ‘the search for investment returns outside conventional opportunities’ such as equities and bonds (Clark, 2017, p. 231).
3. Though the term ‘geopolitical–economy’ highlights the dialectic between geopolitics and geo-economics (Sparke, Citation2018), analyses variably emphasize the relative importance of ‘the political’ (e.g., military) and ‘the economic’ (e.g., transnational business). The emphasis here tends towards the latter.
4. The paper draws on Hart’s (Citation2001) distinction between small-‘d’ development, reflecting actually existing development trajectories and patterns, and big-‘D’ Development, as the normative (neoliberal) path set out by global policy-makers (primarily from the Global North) for the Global South.
5. In advancing its neoliberal vision, the World Bank conveniently ignored the billions of dollars of aid through which the United States sought to maintain its sphere of influence in East Asia vis-à-vis communism: US market access and financial aid created a favourable context – a necessary but insufficient condition – for the emergence of the developmental state in East Asia (Yeung, Citation2017).
6. Indeed the World Bank pointed to the 1997–98 Asian Financial Crisis as evidence of statist failure (e.g., state intervention, corruption etc.), used to justify further market reforms (Wade & Veneroso, Citation1998).
7. Increasingly so with the political ascendance of Xi Jinping and ‘Xi Jinping thought’: a political theory consisting of a 14-point policy, among which to practice socialist core values, including Marxism, communism and socialism with Chinese characteristics.
8. That is, varieties of capitalism: the coordinated capitalism of Japan and Germany, the neoliberal market economy of the United States and UK, and China’s state-led market-socialist economy.
9. This nNIDL is based on, among other things, the relocation of low value-added manufacturing from China to low(er) cost locations in Southeast Asia, and increasing South–South investments.
10. This is only a partial explanation. Another major cause was the recycling of petrodollars from oil-exporting countries in the 1970s–80s, deposited in US banks, and lent on to developing countries.
11. In Bernanke’s view this was because of ‘poorly managed banking systems’ rather than International Monetary Fund (IMF)-led liberalization and excessive lending by Western banks (cf. Wade & Veneroso, Citation1998).
12. The basic mechanism is Chinese households lending money to US households through accumulated/surplus savings from trade, allowing for US current account deficits. This occurs as developing country governments mobilize domestic savings to purchase/invest in US securities (bonds and equities), keeping US interest rates and borrowing costs low for consumers/households.
13. As Brender and Pisani (Citation2015) suggest, the problem may have been too few financing channels for developing countries to invest these savings domestically, not ‘excess’ savings (cf. Wade & Veneroso, Citation1998).
14. For a broader framing of the geopolitical–economy surrounding this event from the perspective of the US, see Corbridge and Agnew (Citation1991).
15. Since the 1980s Japan has remained one of the biggest holders of US treasuries (it was replaced by China in 2008, but regained this position in 2019).
16. The outright purchase of government and (by 2009) corporate securities to increase liquidity and stimulate lending.
17. A notable channel for transmitting the effects of this monetary policy was the ‘yen carry trade’, allowing banks to borrow cheaply in Japan and lend abroad, particularly to investment brokers, who would channel this to subprime borrowers in the United States (Hattori & Shin, Citation2009).
18. These were primarily debt-driven: state bank lending to local governments and SOEs exploded government and private debt (Chen and Kang, Citation2018; Chen et al., Citation2018).
19. African Development Bank, Asian Development Bank (ADB), AIIB, European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB), Inter-American Development Bank, International Finance Corporation, Islamic Development Bank, New Development Bank, and International Monetary Fund (IMF).
20. A slew of multilateral funds have emerged to support private sector investments. In Asia, some of these include the Asian Investment Facility (EU), ASEAN Infrastructure Fund (ADB), Leading Asia Private Sector Infrastructure Fund (ADB and JICA), and the China–ASEAN Investment Corporation Fund. These have emerged in the context of regional integration/connectivity plans: ASEAN Connectivity Plan, BRI and EU–Asia Connectivity Plan, backed by trade agreements.
21. This competition is not mutually exclusive. In the context of the Donald Trump presidency, its protectionist stance vis-à-vis international trade, and its impact on the global economy, Xi Jinping and Shinzo Abe have sought to improve bilateral relations through a series of summits since 2018 (Ministry of Foreign Affairs of Japan, Citation2018). In 2018, the JBIC also signed an MOU with the China Development Bank (CDB) ‘to financially support joint projects between Chinese and Japanese companies in third countries … based on the global standards such as openness, transparency, economic viability, debt sustainability, and compliance with laws and regulations’ (JBIC, Citation2018).
22. JICA and JBIC also collaborate with the International Finance Corporation (part of the World Bank Group) to co-finance infrastructure projects, co-invest in various infrastructure funds and promote infrastructure export by Japanese companies (JBIC, Citation2014; JICA, Citation2017).
23. This scheme was developed in cooperation with other development banks and bilateral aid agencies, such as the Department of Foreign Affairs and Trade (Australia), Kreditanstalt für Wiederaufbau (Germany), JICA, and the Swiss Agency for Development and Corporation.
24. Also making this project ‘bankable’ is an offtake agreement with the state-owned electricity company PLN, guaranteeing cash flows (Figure 1).
25. For Phase I (48 billion yen), signed in 2009 (under the Yodhoyono administration), and Phase II (75 billion yen), signed in 2015 (under Jokowi’s administration).
26. Japan’s proposal offered 0.1% interest through a JICA ODA Yen loan, compared with the CDB’s offer of 60% in dollars at 2% interests, and 40% in RMB at 3.46% interest, over 40 years (Wiryawan, Citation2016).
27. Japan has streamlined financing for riskier PPP projects (under PQI), and removed requirements for host government guarantees in ODA financing (Ministry of Foreign Affairs of Japan, Citation2015).