Connectivity: A Turning Point

One Belt, One Road is a trillion-dollar project initiated by China to stimulate and boost trade through infrastructure and mutually beneficial development programmes. Revitalization of China’s three Silk Roads to Southeast Asia, South Asia and Central Asia was first addressed by Professor Wang Jisi in October 2012. One year later, in 2013, in a speech at Kazakhstan’s Nazarbayev University President Xi Jinping formally announced “One Belt, One Road” initiative and called for reviving the “Silk Road” by establishing the “Silk Road Economic Belt”. Premier Li Keqiang in the same year spoke about the new “Maritime Silk Route” at the 16^th ASEAN-China Summit in Brunei. Finally, on 28^th March 2015, the National Development and Reform Commission, the Ministry of Foreign Affairs, and the Ministry of Commerce published the first document, titled “Vision and Actions on Jointly Building Silk Road Economic Belt and 21^st Century Maritime Silk Road”.

The Belt and Road connects the continents of Asia, Europe and Africa. The Silk Road Economic Belt seeks to bring together China and Europe through Central Asia and Russia. It also encompasses the Middle East through Central Asia, Southeast Asia, South Asia and the Indian Ocean region. The Maritime Silk Route focuses on using Chinese coastal ports to link China with Europe through South China Sea and Indian Ocean, including South Pacific Ocean.

The policy of OBOR has the intentions to promote Economic co-operation among countries along the proposed Belt and Road routes. The initiative has been designed to enhance orderly flow of economic factors and efficient allocation of resources. It is also intended to promote further market integration and creation of regional economic co-operation framework for the comprehensive mutual benefits. The five major goals of the Belt and Road initiative are policy co-ordination, connectivity facilitation, unimpeded trade, financial integration and people-to-people connection.

“One Belt, One Road” is a comprehensive strategy initiated by China to reap the benefits of economic co-operation; but this strategy faces challenges which can be broadly categorized in three segments –  (a) domestic constraints or the problems in China, (b) tensions in China’s neighborhood and (c) the great power rivalry. The regional inequality has crucial social and economic consequences. Coastal China and Provincial China have regional disparity in terms of economic growth rate. Coastal China is the most dynamic part of the country and has an impressive economic growth rate, while its provinces do not have the much-needed raw material. This has caused a rural-urban migration as well aa massive intra-regional migration towards the Chinese coast. North and western China (Xingjian, Tibet, Inner Mongolia) are the least developed parts of the country. Conversely, China’s rise has not been embraced by all its neighbors, partly due to lack of trust among them and partly due to China’s outstanding bilateral tensions with certain Asian countries. In recent years, China has been very active in the South China Sea. It is involved in disputes with Vietnam, the Philippines, Brunei and Malaysia over the Spartly and Paracel Island, the Macclesfield bank and Scarborough Shoal in the region. There are also disputes involving Russia, along the Ussuri River and the Sino-Russian border along the west of Mongolia. On the Indian side, the dispute principally deals in Aksai Chin and the Northeastern region with respect to the McMahon line and the status of the Indian   state of Arunachal Pradesh.

The great power rivalry is perhaps the biggest hindrance on the path of successful implementation of OBOR. One Belt, One Road is suspected as the major foreign policy reform of China to sideline US and become a dominant power in the region and world. The Chinese elites more often assert that China’s economic, political, military and moral powers should be in equilibrium with the US. Russia, the US, India and Japan are the vital players in the OBOR countries.

High population density, ethnic, linguistic similarities and a large number of cities close to borders are the attributes in South Asia. India is by far the largest, most populous and most powerful nation in the region.  China’s enormous investments in India’s immediate neighboring countries and South-east Asia tend to play against India’s security concerns. Thus, political differences and security issues prevent the region from the rational benefits of connectivity and economic integration. Belt and Road Initiative as a whole and CPEC in particular have sparked a heated debate in India. CPEC runs through the disputed Northern Indian territory; moreover, it allows China to gain a toehold in the Indian Ocean through direct access to the Arabian Sea. Development of military base in the area is also a matter of concern for India.  The border disputes as well as Chinese support for Pakistan keep the trust levels low between China and India in the military sphere. India proposed its own project named “Mausam” as a counter measure for China initiated OBOR.

Development of ports which are incorporated in the Belt and Road Initiative has the potential to change the bilateral equation of India and China. Apparently, it supports China’s trade flows through the Indian Ocean. This will also lead to trade diversion of Indian goods and services due to easy access to Chinese goods and currency exchange.

Apart from the above challenges, OBOR is an opportunity and a turning point for developing countries. It will improve their physical infrastructure and boost trade and investment. The benefits of the project are not just limited to China alone and give tremendous opportunities to its members. Europe will get direct opportunities to cooperate with the markets of West Africa, the Indian Ocean and Central Asia. The project will also connect resource and commodity rich West and Central Asia to emerging South and Southeast Asian countries which have an emerging huge middle-class consumer markets. OBOR has the potential to address the gap between the resources rich region and the regions with infrastructure deficit and industrial underdevelopment.

OBOR is a mega project, aiming at rejuvenating the trade routes and opening up markets within and beyond the region. In order to make OBOR successful, China is keen to offer more economic and financial assistance to countries along the route and beyond through a connectivity programme, technical exchanges and by building infrastructure. As far as India is concerned, opting to stay out of OBOR will certainly hamper its share in global trade. Conversely, India’s participation will give a new start to India-China co-operation as it may foster new policy coordination, increased trade & investment and people-to-people connectivity. At the same time, there are potentials for socio-economic improvements that might bring China and India closer to cooperating on Asian governance. These include a possible reduction in US interference in Asian affairs, including the accession of India and Pakistan to the Shanghai Cooperation organization (SCO). Since India plans to tap energy resources from Central Asia and Russia directly, the investment in Chabahar port development is a massive strategic and economic undertaking. Given the Indian energy strategy, the Belt and Road project may prove to be an additional boost. Thus, it becomes imperative for Indian policymakers to plan out strategies that not only mitigate adverse consequences of OBOR, but also enables the country to reap benefits from the same.

Binita Kumari

Adjunct Researcher, AGA

15/4/2018