With the successful completion of the 'One Belt One Road' Summit, in the presence of 30 world leaders and delegations of more than 100 countries including the G-7 countries, China has affirmed its status as a global leader. The project is being viewed as a milestone in the economic history of the world and has the potential to rebalance economic globalization. Such is the massive scale of this project that it encompasses 65% world’s population passing through 60 countries and is expected to attract investment in the range of $ 4-8 trillion in the long term. The project envisages creating huge business and employment opportunities across the corridor including India. However, India gave a miss to this forum on the ground of violation of India’s sovereignty over Kashmir and the building of CPEC (China-Pakistan Economic Corridor) through disputed Pakistan Occupied Kashmir (POK) territory.
Nonetheless, there are conflicting views in India on whether China's OBOR strategy represents a threat or an opportunity. Some consider it as a strategy against America's "Pivot of Asia Policy' which China will use to encircle India. Some view it as a great opportunity for India to attract investment in its infrastructure and give a much-needed boost to growth and employment. Others advocate that India must participate in it and derive as many benefits from it as possible.
OBOR is an initiative to revive China’s old Silk Trade Route1, which used to pass through Asia, Africa and Europe in ancient times and promoted the progress of human civilization contributing greatly to the prosperity and development of the countries along this trade route. The blueprint of the revival plan in the name of the “one belt one road” initiative was presented by China's National Development and Reform Commission (NDRC) in 2013. Since then the project has become the single largest focal point of China’s foreign policy. The project links Eurasian landmass with Indo-Pacific maritime routes through road, rail and port projects. A number of flagship projects have been announced this grand initiative such as China-Pakistan Economic Corridor (CPEC), New Eurasian Land Bridge, Bangladesh-China-India-Myanmar (BCIM), China- Indochina Peninsula Economic Corridor, China-Mongolia-Russia Economic Corridor, China-Central Asia- West Asia Corridor and 21st Century Maritime Silk Road.
The OBOR project is a mix of economic planning, market dominance, market development and political assertion – geo-economics mixed with geopolitics. Its schemes are shaped by its goals and those are layered (Joshi, Can the OBOR Project Be Made to Work for Countries Other Than China? 2017).
Having achieved the status of the world's largest manufacturer and exporter, China is now in the process of transforming itself once again. It has 2 long terms goals- the first involves the doubling of the GDP as of 2010, and making China a "moderately prosperous society", and the second is to take China to the level of a "moderately developed country", which means a per capita GDP of $55,000.
To achieve this, China needs to maintain an annual per capita growth rate of at least 6.3 per cent by 2021 and 5.8 per cent through 2049. Both these are challenging especially when China is facing the heat of global slowdown. In the backdrop of this, China is now looking to move away from its investment and export-driven economic model to domestic consumption and productivity & innovation-driven growth model to sustain its growth.
The OBOR will allow Chinese companies to link themselves with the global value chain, to find the market for its high-end manufactured goods and to have a better acceptance of its technological standards in the west which in turn will help China to emerge as an innovation-based economy and a leader in research and development. At the same time, OBOR will entail China to address regional imbalances in its western provinces and the problem of excess capacity in its economy which it is facing since the 2008 financial crisis.
Using its vast monetary reserves in infrastructure projects across the corridor China would not only create a huge demand for steel, cement, and other local industries but also shape the geopolitics across Asia, Africa and Europe. Several projects and naval activity in the Indian Ocean littoral such as Gwadar Port suggest that one of its aims is to overcome the so-called Malacca Dilemma. Again, control over Gwadar port and port at Djibouti would give China a permanent naval presence in the western Indian Ocean and a commanding position at the mouth of the Gulf as well as the busiest trade route of the Red sea. Then there is Investment along the corridor in Eastern Europe which has already started showing geopolitical results when most of these countries have participated in the event and started tilting towards China.
India's unwillingness to join OBOR is largely due to the projection of the China-Pakistan Economic Corridor (CPEC) as a flagship project of OBOR, which it believes undermines its sovereignty. The CPEC connects Kashgar in China’s with the Gwadar port in the volatile Baluchistan province of Pakistan. However, the corridor goes through the controversial Pakistan-occupied Kashmir (PoK) and Gilgit-Baltistan region. India thinks any formal nod to the project will serve as a de-facto legitimization to Pakistan’s rights on PoK and Gilgit-Baltistan region.
The project has wide geostrategic implications in South Asia. India by dint of asymmetry of its size, economic and military might and stature in the world is considered as a leader in the region. For long, it enjoyed its position of influence uncontested. However, India’s neighbours, mostly small countries with large numbers of poor population, are under pressure of developing their socio-economic status and for which they need large capital which they do not have. Taking the benefit of this China is investing strategically in the projects that provide legitimacy to the ‘street of pearl’ hypothesis, which aims to encircle India.
It will be naïve for India to overlook the political considerations that have drawn its neighbours to China. For most of the regional countries, India had been a consideration in their China policy. The Indian neighbours are playing the China card to counterbalance India in the region.
Further, there are issues of security. Both the countries have disputed borders and they have already fought a war against each other. Several insurgents groups in the northeast are getting support from China. Moreover, China’s claim over Arunachal Pradesh has complicated the issue further.
Since most of the money invested in OBOR will be in the form of loans, India is also wary about the economic ramification of the project. For example, the indebtedness issue has already begun to create problems in Sri Lanka and Central Asia. Moreover, the OBOR plan lacks transparency and little consultation has been made on the issue. Hence, it is difficult to get away from the impression that OBOR investments are by China and for China.
A major problem with the Indian response is that it concentrates exclusively on the geopolitical leg of OBOR—Pakistan, Sri Lanka and so on while ignoring the aspects of geo-economics attached to it. By staying out of it India risks being systematically frozen out of business opportunities in an enlarging area that is integrating with the Chinese economy around the world.
Experts argue that since the Kashmir dispute is not going to be solved in the near future and LoC has been more or less accepted as the international border; it will not be pragmatic for India to exaggerate its reservation on CPEC. A more sophisticated policy would be to use OBOR for Indian purposes where it can.
OBOR can provide India with an opportunity to modernize its infrastructure and thus give a push to industrialization and employment creation in the country. India can invite Chinese investment in Indian infrastructure, and use the connectivity to increase trade and investment with other South Asian countries and, of course, with China.
In the process, India can try to find out more concessions in the OBOR scheme, re-route the CPEC to pass through the Indian portion of Kashmir, connect more Indian ports like Kochi or Mumbai along the Maritime Road and demand connecting Bangladesh-China-India-Myanmar (BCIM) corridor with OBOR. It could fit together with India’s own Sagarmala’ project, and thereby contribute to the nation’s efforts to enhance sea trade connectivity, while also progressively leading to ‘port-led development’ of the hinterland and the SEZs.
According to China, the OBOR initiative can also be linked with India’s ‘Mausam’ and ‘Spice Route’ projects, thus forming a new starting point and a new bright spot in China-India cooperation. On the surface, the projects do have much in common – both seek to expand regional integration, especially when it comes to trade and commerce.
Moreover, India is a member of the Chinese-led Asian Infrastructure Investment Bank and the New Development Bank. OBOR can enable India to seek funding from there to hardwire its own connectivity schemes to South-East Asia and across Iran to Europe.
Further, India wants better connectivity with Afghanistan and the rest of Central Asia to its west, and with Myanmar and the rest of South-East Asia to the east. Both regions suffer from intermittent connectivity due to the insurgency, and terrorism has stalled several infrastructure projects undertaken by India in these regions. Any financial and engineering contribution coming out of OBOR will advance this regional connectivity.
Since India has already avoided the meeting citing “lack of engagement in meaningful dialogue on its connectivity initiative OBOR”, it should now use its choices wisely. At this point of time, India must focus on speeding up its own infrastructure projects and find ways to strengthen its sphere of influence.
India should work on the execution of its maritime initiative such as ‘Project Mausam’ and ‘Spice Route’ which connects Africa in the west to Southeast Asia in the east and envisions India as the centre of the Indian Ocean world. This project can boost India’s regional commercial and cultural linkages similar to the Maritime Silk Road of China.
At the same time, India should work with like-minded countries such as Japan, the US, and multilateral institutions to develop regional connectivity in the Indian Subcontinent and beyond. India should take advantage of Japan’s ‘Partnership for Quality Infrastructure project which aims to provide approximately USD 110 billion (more than USD 50 billion from Japan and more than USD 50 billion from the ADB) for quality infrastructure investment in Asia over the next five years. Now, Tokyo’s focus has shifted towards South and Southeast Asia. This can significantly provide an opportunity to India to promote joint initiatives and thereby countering China’s OBOR in the region. India and Japan are already in discussions for cooperating in Chabahar, Asia-Africa Economic Corridor and the Trincomalee port development schemes.
Simultaneously, India can also attract a major part of the PQI project for its own infrastructure development. Japan already has many high-profile projects to its credit, including the Delhi Metro and the Delhi-Mumbai Freight Corridor. In 2014, Japan committed $33 billion for the next five years in a range of areas like transport systems, river development, clean energy and skill development. In its own way, Japan’s assistance to the development of India’s infrastructure is no less than what is said about OBOR.
Further, the US has recently revived two major infrastructure projects namely New Silk Road and Indo- Pacific Economic Corridor in South and Southeast Asia in which India would play a pivotal role, a move that will not only enhance its stature but also help it to counter China’s aggressive infrastructure push in the region.
Apart from that India should expeditiously implement the International North-South Transport Corridor (INSTC) project which will connect it to 16 Eurasian countries through West Asia. This will not only increase connectivity through rail, roads, and port but also ensure increasing trade among the countries. Along with this, there are a number of corridors India is launching to Improve its connectivity in South Asia and ASEAN countries such as East-West Corridor, BBIN ext. If executed properly these infrastructural pushes can pose a big challenge to China’s OBOR and at the same time will give a boost to its own economic growth along with the increasing sphere of influence in world politics.
Clearly, India needs to make up its mind on OBOR. It cannot remain isolated from such a sea-changing phenomenon in the economic history of the world. It has to resolve the dilemma of whether OBOR represents a threat or an opportunity for it. The answer undeniably indicates both. Chinese economic expansion and political ambitions, tied together, are the two sides of the same coin. It would require India to have institutional agency and strategic imagination to make use of opportunities that comes with OBOR.
At the same time, India requires complementing its ambition with the commensurate expansion of its own capacities that let it be a net security provider in the Indian Ocean region. This will necessitate India to not only overcome its problem of red-tapism in defence partnerships and procurement but will also require a sustained period of predictable economic growth. In short, the best policy India should adopt at this moment is to “cooperate wherever possible compete wherever needed