China's Malacca Dilemma

Context: The proposed Kra Canal has been in the news attracting significant geopolitical interventions; while it has some advantages, it is threatened by increased power play in the Indo-Pacific and Indian Ocean Region (IOR).

Significance of Kra Canal:

• Connects the Andaman Sea to the Gulf of Thailand: Once constructed, it would allow international shipping to save about 1,200 km by avoiding the already congested Strait of Malacca.
• Push for a logistics hub: A special economic zone with infrastructure facilities is also proposed to be set that could potentially transform Thailand into a logistics hub.

• The project is estimated to cost around $30 billion with a further $22 billion for the economic zone.

Significance of the project for China:

• Avoiding Malacca Dilemma: Chinese concerns about the closure of the strait in a conflict situation in the Indo-Pacific.

• About 80% of Chinese oil imports annually transit the Malacca Straits,
• China would like to fund and control the Kra canal that would become the alternative route reducing its dependence on the Malacca chokepoint

Issues with the building of the canal

• Threatening to entrench divisions: Presence of north and south ethnic-religious divide in Thailand with southern Thailand plagued with conflicts between Thai Buddhists and Thailand’s Malay Muslims.

• Construction of the Kra canal would physically separate the southern provinces from the rest of the country

• Impact of Sovereignty of Thailand: Chinese funding could mean erosion of sovereignty for Thailand.

• China has often been blamed for debt trapping the governments it has loaned money for infrastructure projects and taking control of natural assets.

• Sri Lanka’s Hambantota port that China took control off in 2017 is a case in point.

• Chinese modus operandi is to push for projects where only the Chinese state-owned enterprises can bid, leading to projects being expensive and unviable

• For, E.g. the Mombasa-Nairobi railway line in Kenya built at the cost of $5.6 million per km — roughly four times the original estimate.

• Tourism and Environmental Concerns
• Potential friction within ASEAN: Since there would be gains for Vietnam, Thailand and Cambodia while Singapore, Indonesia and Malaysia could stand to lose shipping business.

• Friction in ASEAN will suit China eminently.

• United States’ concerns: 

• Chinese funding would tighten the grip on Thailand, making it a long-term security partner.
• Chinese Navy entering into the India Ocean would heighten US security concerns.
• Fissures in the ASEAN would undermine Indo-Pacific strategy.

• Implications for India:

• The Canal pose a threat to long-term maritime security as it could lead to enhanced surveillance and quicker deployment of Chinese vessels in the IOR.

Setback for Chinese Ambitions: Given the serious issues involved with the canal, Thailand is considering a land and rail bridge across the Kra Isthmus with deep seaports on either side, instead of a canal.

Way Forward:

• Ensuring united ASEAN: as it can act as a bulwark against China.

• Greater infrastructure upgrades in the Andaman and Nicobar Islands: allowing it to increase its own naval and air power projection capabilities in the South China Sea.