India is wary of China’s ambitious One Belt One Road (OBOR) project, also known as the Belt and Road Initiative (BRI), and boycotted the first BRI International Forum summit hosted by China on 14-15 May. While India is unlikely to change its policy on this issue, New Delhi is keeping close tabs on the progress of OBOR/BRI, though not many details are available in the public domain.
What Does China Hope to Achieve Through OBOR?
The Chinese companies have already made a huge investment of $50 billion during 2014-16 in the participating countries under the OBOR project, as per the Chinese Ministry of Commerce. China has so far signed 12 cooperation agreements under the OBOR initiative with other countries including Singapore, Montenegro and Kyrgyzstan, as well as with international outfits like the World Economic Forum and agencies within the United Nations.
Twenty countries, including countries in India’s backyard, like Pakistan, Sri Lanka, Nepal and Bangladesh, have agreed to participate in the OBOR project. But the Chinese are roping in more and more countries.
Chinese investment in southern European countries like Greece, Bulgaria and Romania has already rocketed up. In Turkey too the Chinese are expanding their strategic footprints under the OBOR initiative.
Economic Objectives Behind OBOR
- Under the OBOR initiative, China is investing in countries
in India’s immediate neighbourhood as well as European countries.
- The UK is also looking forward to the OBOR initiative in the
wake of uncertain ties with the US and the falling Pound.
- The China-European Union service trade is estimated to touch
$218 billion by 2020.
- By investing such huge sums, China is hoping to diversify
and expand its economy.
- New rail connections to Central Asia and Europe will benefit
cities like Chingqing, Chengdu, Xi’an and Lanzhou.
Trade Ties with EU
The UK too is set to lean more towards China, given its uncertain relationship with Europe, not-so-sanguine ties with a traditional strategic partner like the US, and the falling Pound Sterling. The talk of a China-European Union free trade area is set to gain momentum as China's OBOR bandwagon rolls on.
The China-EU service trade is estimated to breach the €200 billion ($218 billion) mark by 2020. The China-EU free trade will be a game-changer as it will synchronise China's economic transformation and Europe's pursuit of sustainable growth.
The Chinese enterprises have recently invested in Africa under the OBOR. The Chinese entities have made investments in the Port of Djibouti (a gateway to East Africa and the Middle East) and in a major railroad linking it to Ethiopian capital Addis Ababa, and in infrastructure and hydropower sectors in Kenya and Tanzania.
China Knows There Are No Free Lunches
Why has China made such a humongous investment in developing economies with huge investments in the pipeline? What does China stand to gain from this in terms of geopolitics and strategic policy?
Well, there are no free lunches. The Chinese are too smart to throw huge amounts of money into developing economies without any tangible and concrete returns!
First of all, one must appreciate the fact that Chinese President Xi Jinping unveiled his dream project in September 2013 in Astana, Kazakhstan when China had just emerged as the second-biggest economy in the world, relegating Japan to third place.
China showcased the project at the first BRI Forum Summit in Beijing on 14-15 May at a time when the United States under President Donald Trump was rapidly turning inward-looking and protectionist.
Meanwhile, here is a China that is not only fast shedding protectionism but also resorting to globalisation at a breakneck speed. In a way, China's OBOR project of pro-active globalisation is a clever counter to the “America First” inward-looking policy of the Trump administration.
This is China’s golden moment in contemporary history, as it is fast filling up the strategic and international leadership space being ceded by the Americans under the Trump administration. The contrast is huge.
On one hand, you have an America which has reneged on its Paris Pact pledges on climate change and has turned its back on the Trans Pacific Partnership (TPP). On the other hand, here is a resurgent China, which despite its own economic challenges, is wooing the outside world and has turned globalisation on its head.
It only shows that the Xi Jinping-led China is supremely confident of itself and willing to be a great gambler and loosen its purse strings for developing economies at a time when the world is still coping with a severe financial crunch situation.
By doing so, China hopes to attain twin strategic objectives:
(1) financing and building critical infrastructure in developing economies across the continents of Asia, Africa and Europe as a "grand cause benefiting people in regional countries along the ancient route" as Xi said in Kazakhstan nearly four years ago;
(2) and diversifying and expanding the Chinese economy, which needs restructuring.
Rebalancing of Powers
While embarking on OBOR, Beijing is also cleverly indulging in geographical rebalancing and boosting China's international trade by enhancing globalisation. By pursuing its “Go West” policy, China is discreetly developing its western region, which could have triggered serious repercussions for China on social and moral planes.
By constructing new rail connections to Central Asia and further on to Europe, China's western region has become central to the OBOR project, with cities like Chongqing, Chengdu, Xi'an and Lanzhou now becoming major transit hubs under the $90 billion project.
China's OBOR juggernaut is rolling ahead relentlessly. India will have to monitor the dragon's most ambitious project which is essentially aimed at winning friends and influencing people.
(Rajeev Sharma is a strategic analyst and columnist who tweets @Kishkindha. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)