China: Pivot of the global economy

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The leaders of all ten ASEAN countries took part in the recent summit. This is hardly surprising for China’s shadow looms large over the entire area. It is moving rapidly ahead to integrate the region with itself through transport corridors and also consolidate investment and trade linkages. Nine European leaders, including the Italian Prime Minister also participated in the summit. Only recently Italy broke ranks with other G7 countries to join the BRI even while emphasising its commitments to the Transatlantic Alliance and NATO. It needs Chinese investments to shore up its infrastructure and economy.

Russian President Putin’s presence served to once again confirm the contemporary Sino-Russian partnership with the former as the principal partner. Prime Minister Imran Khan had a privileged position in the summit for the China-Pakistan Economic Corridor (CPEC) occupies flagship status in the BRI. Nepal’s President’s presence in Beijing only confirmed the seriousness of its leaders in seeking to reduce its transit dependence on India.

BRI has economic, political and strategic objectives. China wishes to become the pivot of the global economy in manufacturing where it already has a major share but also in many areas of frontier technologies. For these purposes it wants to integrate countries especially in Asia, Africa and Europe through land and sea connectivity corridors. To develop the infrastructure for these corridors it is offering vast funds at concessional rates to many countries with the provisos, in most cases, that the projects will be undertaken by Chinese companies on a joint basis. The catch is that these companies bring their own labour and materials and thus often there is little benefit to the local economy. In some cases, as in Sri Lanka, the country is unable to service its debt and has had to give control of the project and other sensitive areas to China through leasing arrangements.

China sought to address these valid and growing misgivings at the recent summit. Even earlier it changed this ambitious project’s name from One Belt One Road (OBOR) to BRI to remove the impression that it was China-centric. However, the change in name or the numerous references to mutual benefit and inclusive and equal growth cannot dilute China’s basic desire of being the anchor of the entire BRI process. Indeed, a simple reading of the annexures to the joint communique issued on April 27 after the leaders meeting establishes China’s centrality.

All BRI infrastructure and corridors are linked to China. Thus, the old name-OBOR-continues to be a more accurate description of China’s purpose. This applies to the land linkages westwards through Central Asia to West Asia and Europe, northwards to Russia and beyond, and to South-East and South Asia. The sea corridors go to the Indian Ocean and thence to the Mediterranean.

BRI’s strategic aim is to develop a large group of countries that will form China’s constituency. They will look at their interests being inextricably tied up with China and with that relationships of dependencies to China will grow. In the modern era global powers need to be leaders of alliance systems in fact if not in name. This is true of NATO and the Transatlantic Alliance led by the US today as it was with the Warsaw pact under Soviet leadership during the Cold War. The Chinese are attempting to build their own alliance system and the BRI is its instrument. On this there can be little doubt.

India cannot be faulted for not wanting to be part of BRI. It has advanced cogent criticisms against the BRI. It has overlooked sovereignty issues and its financing structures have led countries into debt traps with adverse economic consequences and adverse implications for their sovereignty. These concerns are shared by many countries including the United States and in Europe.

The question is if notwithstanding these concerns India should take part in BRI meetings through participating at lower levels. Some Indian analysts advocate such an approach. The question is: How would such participation further Indian interests? For an answer a reference to India’s China policy is needed.

Since Prime Minister Rajiv Gandhi’s time India has pursued a policy of attempting to keep differences and cooperation in separate compartments as far as possible. Thus, bilaterally India and China have developed a vibrant trade relationship even while differences on the border remain. This has been the correct approach.

On regional and global issues, the same compartmentalised approach has to be undertaken. On matters such as climate change there is a need for cooperation but China’s power play in South Asia through the CPEC is contrary to Indian interests. Also, in its quest for global leadership India hardly figures in its calculus. Hence, India needs to maintain its position on BRI. This approach is entirely logical.