UPSC Preparation: China's "One Belt, One Road" Initiative

The topic “China's One Belt One Road" Initiative comes under the following themes in General Studies Paper – II:

• India and its relations with its neighbourhood
• Bilateral, regional and global groupings and agreements involving India and/or affecting India's interests
• Effect of policies and politics of developed and developing countries on India's interests 

The ‘New Silk Road Economic Belt' initiated by the President of the People’s Republic of China Mr. Xi Jinping in 2013 and the '21st Century Maritime Silk Road' (SERB AND MSR) together called the 'ONE BELT ONE ROAD' (OBOR) seeks to connect China with the Middle East, Africa and Europe through its landlocked neighbours in Central Asia and the littoral states of Southeast Asia and South Asia. China intends to build a 'community of interest' through the OBOR initiative. It calls for increased diplomatic coordination, standardized and linked trade facilities, free trade zones and other trade facilitation policies, financial integration, people-to-people cultural ties and educational initiatives .It can be viewed as a part of China's foreign policy of “Go West” and “Leap East.” Through the Belt, it will connect to the countries in the West from Central Asia to Europe and through the "Road"(Maritime equivalent) it will jump from its conflicting neighbours in the South China Sea to the countries in the Indian Ocean region. Although China calls it a win-win situation for all, many in the West compare it to the 'Marshall Plan' of the USA. The launch of Asian Infrastructure and Investment Bank (AIIB) by China has also been therefore seen as China's effort to counter US dominated World Bank. According to experts it will make China an undisputed geopolitical powerhouse in the region.

Although the exact plan has not been made official and may differ as per different proposals to different countries along the route, yet the details so far indicate the “Belt” as a planned network of overland road and rail routes, oil and natural gas pipelines, and other infrastructure projects that will stretch from Xi’an in central China, through Central Asia, and ultimately reach as far as Moscow, Rotterdam, and Venice.

The ‘Road’ will be utilised as a maritime route connecting South East Asia, Africa and Asia Minor by developing a network of planned ports and other coastal infrastructure projects.

 

Why is it important for China?

1. Balanced Growth - China is currently going through economic slowdown. To give its economy a boost, it needs to improve connectivity between its under developed southern and western provinces, its richer coasts, and the countries along its periphery. The Belt and Road initiative can help to balance the internal growth.

2. New Markets and Demand - China's economy is mostly export oriented and hence to sustain the growth it needs to create domestic demand as well as search new markets. Infrastructure development plans such as network of ports can help Chinese goods to enter regional markets easily and also boost demand.

3. Energy Security - The system of ports, railways and roads which have variously been completed or are under construction or being proposed will enable China to diversify the routes by which it can secure the transport of oil and gas and other essential goods needed to sustain China’s economy. It enhances the country’s energy and economic security and mitigates the risks attendant to transporting fuel and goods through unstable, unsecured or unfriendly channels.

4. Soft Diplomacy - In recent years China has shifted towards "soft diplomacy". To leverage its new economic position in the world, it needs to establish itself as an alternative to USA's soft power. The China-backed Asian Infrastructure Investment Bank (AIIB) — established in 2013 to assist regional neighbours in infrastructure development and to help facilitate the creation of facilities to support the "One Belt, One Road" initiative — is one example of China's soft power efforts which will help in countering America's rebalance-to-Asia policy (also called ASIA PIVOT )

5. Security underpinnings - China has conflictual relations with the countries in South China Sea and also has to face unrest in the Xinjiang region. By establishing a network of ports in the Indian Ocean and connecting economies of Central Asia to its relatively under developed regions, China wants to reduce its vulnerabilities.

 

Why the world needs it

1. Infrastructure gap - According to the Asian Development Bank, there is an annual “gap” between the supply and demand for infrastructure spending in Asia on the order of $800 billion. Given that infrastructure is at the heart of the Belt and Road initiative, there is room for the initiative to play a constructive role in regional economic architecture.

2. Stability in the region - More sustainable and inclusive growth would help in strengthening the political institutions in the region and reduce the incentives and opportunities for terrorist movements.

3. Capital needs - China follows 'No String Attached Policies' with less restriction and reservations on loans. For the countries gasping for capital and technology, this is a welcome initiative.

4. Boost in Trade and Commerce - Increased connectivity in the region would boost regional integration leading to boost in trade and commerce.

 

What are the stakes for India?

1. Increased presence of China in the Indian Ocean region and friendly overtures and investment plans has created discomfort for India. Docking of Chinese submarines in Sri Lanka, Pakistan's invitation to China to set up a naval base in Gwadar has increased India’s fears about the intention of China.

2. There is also concern of "OBOR" being part of China’s "String of Pearls" strategy.

3. India sees itself as a regional power in South Asia, but with the increased interest of China in its neighbours, it stands to lose its position. Recently Nepal also joined the Belt and Road initiative.

However if we look at the positive side of the ‘One Belt, One Road’ initiative, India has certain interests to gain which are as follows:

1. Increased connectivity and port facilities would help India to get new markets as well as attract new investments. A Silk Road Fund of $40 billion has been announced and the Asian Infrastructure and Investment Bank (AIIB), of which India too is a founding member is expected to support Belt and Road Initiative (BRI) projects. For example, China is committed to financing the Colombo Port expansion project with a credit of $1.4 billion.

2. Stability in the region would ultimately benefit India as it would be able to carry on its trade activities with the Central Asian countries and the Middle East.

3. A developed neighbour state is much better than a conflict ridden, failed state. If the initiative helps Pakistan in growth and development, it could lead to stability in Kashmir too.

4. Moreover, USA seems to have lost its hold in the Middle East and Middle Eastern countries are also looking forward to China. Enhanced connectivity and integration could be an added advantage for India's Middle East policy.

5. South Asia is one of the least economically integrated regions. Regional trade agreements like the US-led Trans-Pacific Partnership (TPP) in Asia-Pacific and the Transatlantic Trade and Investment Partnership (TTIP) will have significant implications for the Asia Pacific region and Asian regionalism and could lead to the marginalisation of India in the region. In such a situation, India needs to explore its options and the BRI can be one of the alternatives.

 

Conclusion

According to experts, the Chinese Belt and Road Initiative is going to be a reality with more and more countries joining the bandwagon. If India remains isolated, it can lose more and would not be in a position to protect its strategic interests. Instead, if it decides to cooperate, it can work out a plan beneficial for both. India also needs capital and infrastructure to realize its "Make in India'’ dream. With the US economy yet to recover fully from the global economic crisis, Russia struggling from sanctions and European Union busy in collecting the pieces of the crumbled economies of its member countries, China is set to fill the global power vacuum. In such a situation, there are three urgent imperatives for India: (1) Upgrade India’s own frontier connectivity, (2) Modernise border management and build new ports & (3) Develop better coordination between the Government and Indian corporate entities in taking up infrastructure projects abroad. For this, India has to cooperate and compete with China in regional connectivity. Ignoring these aspects would lead to India’s marginalisation from the unfolding geo-economic transformation in Asia and the Indo-Pacific. 

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