The Belt and Road Initiative (BRI), mooted by President XiJinping of China in 2013 as an ambitious infrastructure project aimed atglobal trade connectivity, has generatedinterest and acceptability among many nations. China has announced it as aneconomic cooperation initiative, though it is widely perceived as an economic,political and strategic thrust by China at global level.
The precise number of projects under BRI is still fluid, asthese are being worked out informally between the investors and the recipientcountries. As of now, it mainly comprises of many economic corridors slated forcompletion by 2049, to coincide with the 100th anniversary of the establishmentof the People’s Republic of China.
China Pakistan Economic Corridor (CPEC), announced in 2015,is a 62 billion USD endeavour. In addition to CPEC, the Bangladesh-China-India- Myanmar (BCIM) corridor and China- Indo China Peninsula EconomicCorridor (CICPEC) are the most relevant as far as Indian interests are concerned.The New Euroasia Land Bridge Economic Corridor (NELB), China- Mangolia- RussiaEconomic Corridor (CMREC) and the China Central Asia- West Asia EconomicCorridor (CCWAEC) are also being conceived for implementation in ourneighbourhood.
The BRI encompasses infrastructure investments in the eldsof construction, sea and land transport, communication, power and energy acrosslarge number of countries in Asia, Europe, Africa and Latin America.
The key areas of cooperation include synergising developmentactivities, forging financial cooperation to upgrade infrastructure facilitiesand communication, give boost to trade relations, besides promoting social andcultural exchanges between various nations.
When Xi Jinping formally announced the Belt and Road Initiativesix years back from Kazakhstan, not many could foresee its reach and wideacceptance across many countries and continents. Several Asian, European,Caribbean and Latin American nations have signed MOUs to be part of theinitiative.
Italy first G7 nation to endorse BRI
BRI got a big boost when Italy endorsed BRI in March thisyear, becoming the first among the G7 countries to do so. As part of Italy’sstamp of approval, 29 deals were clinched aimed at Chinese investors pumping in$2.8 billion – particularly in developing port infrastructure in Genoa, Palermoand Trieste aimed at cross continent connectivity and China’s economicintegration with Europe.
Italy, which is facing economic problems, believes that thedeal will result in increased exports to China and will help in reducingnational debt, which is among the highest in Eurozone. Following Chineseinvestment Piraeus, the Greek harbour port, saw a steep rise in its growth. Itrose to be globally the 38th largest container port in 2017 from ranking 93rdin 2010. This has raised expectations among many countries in the BRI. China,on the other hand, hopes for faster access to Europe to find newer markets forincreasing inventory of Chinese products at home – giving a boost to slowingdomestic growth and nearly stagnant exports.
Panama was the first Latin American nation to sign MOU withChina to promote BRI. China did not have diplomatic relations with Panama until2017, even though it has extensive trade interests linked to Panama Canal,being its second largest user. President Xi Jinping was successful in gettingPanama on board, rst to establish diplomatic ties and then sign the MOU on BRI.During his visit to Panama last December, large number of agreements weresigned between the two countries on forging and strengthening economic ties,cooperation in the fields of science and technology, education, social andcultural relations and exports of Panamian goods to China.
Shortly after establishing diplomatic relations, PresidentJuan Carlos Varela of Panama had visited China in November 2017, taking along ateam of businessmen, scholars and media persons to take forward the newbonhomie between the two nations and explore and identify all areas for “win-win cooperation”. The Panama Canal, linking the Atlantic and Pacific Oceans, isthe busiest trade artery. Geopolitically and also strategically, it is vital toboth to China and America. Expectedly, USA has labeled Chinese ventures inEurope and Latin America as “predatory economic activities with othercountries”.
China is using its economic power and making it difficultfor European countries to resist Chinese investment at a time of economictroubles in European Union. The enormous expenditure under each of theprojects, coupled with ever increasing number of projects under BRI and China’swillingness to extend loans to various nations to meet the costs, reveals itseconomic and industrial might and its ambition to spread political andstrategic infuence globally.
CPEC undercuts India’s political, strategic interests
CPEC is by far the most relevant BRI project involvingIndia’s political and strategic interests. The cost of various rail, road andpower projects was initially pegged at USD 46bn, which got revised to USD 62bnin 2017. Pakistan recently cancelled the Rahim Yar Khan power project, part ofCPEC, amid fears of rising debt. CPEC is funded by China
Development Bank, Exim Bank of China and Industrial andCommercial Bank of China, besides the two main funding agencies set up by Chinafor the purpose, viz Asian Infrastructure Investment Bank (AIIB) and Silk RoadFund. Recent trends indicate growing scepticism over funding costs of BRIprojects.
The projects under CPEC will virtually extend over thelength and breadth of Pakistan. It will cover Baluchistan, Gilgit Baltistan,Khyber Pakhtunkhwa, Punjab and Sind in Pakistan, besides linkage to Xinjiang inChina. The seaports of Gwadar and Karachi will get linked to northern Pakistan,western China and central Asia. CPEC also involves relaying and rebuilding ofthe Karakoram Highway from Hasan Abdal to Chinese border. The 1100-km highwaybetween Lahore and Karachi and the upgradation of the Karachi-Peshawar railwayline to nally connect with Xinjiang are part of the Initiative. Power generationprojects
worth USD 33bn to overcome electricity shortage and layingof pipeline to transport gas from Iran are included.
China is keen to get India on board and be part of BRI.However, India has concerns and unanswered questions which prevent itsparticipation in this global effort mainly financed by China through provisionof interest-bearing loans from various Chinese institutions and banks.Consequently, India did not participate in the first Border and Road Forum forInternational Cooperation in 2017. The second meet scheduled for April 25-27was attended by representatives of over 100 countries, including around 40leaders of various governments.
Russia, the big neighbour of China, participated.
Indian Ambassador to China Vikram Misri said CPEC “ignorescore concerns on India’s sovereignty and territorial integrity”. He added:”India shares the global aspiration to strengthen
connectivity and it is an integral part of our economic anddiplomatic initiatives. We ourselves are working with many countries andinstitutions in our region and beyond on a range of connectivity issues”.However, the connectivity issues must be based on universally recognizedinternational norms, good governance and rule of law, he added. Consequently,India rejected the invite for the second meet being hosted by Beijing.
The China Pakistan Economic Corridor (CPEC) runs throughdisputed Pakistan Occupied Kashmir, illegally retained by Pakistan after thewar in October 1947. The state of Jammu & Kashmir, like 562 other princelystates, acceded to India through an instrument of accession at the time of thepartition of British India into two sovereign countries of India and Pakistan.Pakistan came to retain over 83,000 sq. km of this former princely statethrough a United Nations-enforced Cease Fire. Out of this, in 1963 Pakistanceded over 5000 sq. km. Shaksgam valley of Gilgit Baltistan to China, despitethe fact that Pakistan itself was in illegal occupation of this land. China,after the 1962 war with India, further occupied over 37,000 sq.km. of AksaiChin in Ladakh region of J&K.
India was left with less than half of the Jammu &Kashmir which had acceded to India through a proper and legally validinstrument of accession, signed in October 1947 by the state’s ruler MaharajaHari Singh and the Indian Government. In 1994, the Indian Parliamentunanimously adopted a resolution declaring the pre- cease re undivided state anintegral part of India, thereby reiterating India’s stated position on Jammu& Kashmir. China again rubbed India on the wrong side by entering into MoUwith Pakistan for building the corridor without consent or consultation withIndia – an act against internationally accepted norms. To expect that ademocratic country of 1.25 billion people will become part of CPEC willundermine India’s stand on J&K, which it has maintained right from 1947. Itwill also project India as a weak nation not able to defend its valid andlegitimate interests. This will amount to a huge letdown of the people by thegovernment. India cannot afford it, despite the economic advantages that BRImay have to offer.
BRI’s debt trap for partner nations
Many smaller nations where projects under BRI have taken offhave started accumulating huge debts. Venezuela has accumulated a debt of$62bn. Brazil, Argentina and Ecuador have piled up debt to the tune of $42bn,$18bn and $17bn respectively in execution of BRI projects till last year,raising the prospect of these many similarly placed countries coming under debttrap. China, on its part, has marketed BRI as a huge opportunity for economicallytroubled nations to kick-start and revive their sagging economy with a forecastof turn around and job creation giving a big boost to GDP. To make thedeal sweeter, funding requirements havebeen arranged through Chinese government- backed institutions and banks.
The interest rate for the loans for funding these projectsis significantly higher than the soft loans extended by developmentalinstitutions like World Bank and IMF. Besides the loan repayment, defaultingnations run the risk of losing ownership of projects and immovable assets likeland or ports, as happened with Sri Lanka. It had to part with Hambantota Port,and leased it to China for 99 years in lieu of the loan extended to it fordeveloping the port. China thus got the much-needed foothold at a vantage pointto control its maritime trade through Indian Ocean.
Of late, there is global skepticism about the implicationsof the huge funding involved in the BRI projects. For China, BRI is aconvenient channel to export its surplus capital, generated and accumulatedover decades of export-led investment, to pro table outlets. BRI willfacilitate and establish new markets for goods manufactured in China. Two endsof Euroasia, Africa and the oceans are planned to be economically integratedwith China along with the Silk Road economic belt and the maritime silk road.
Beyond economic strategy, China has taken the BRI route tosignal a paradigm shift in its foreign policy. Beijing’s thrust to build portsand other trade facilities in Latin America has raised alarm in Washington.Russia, USA, Japan, India and other nations are skeptical at the prospect ofChina gaining economic and strategic advantage at their expense, and makinginroads in their traditional regions of influence.
Right from the days of Europe’s exploratory sea voyages inlate 15th century towards the West by Christopher Columbus (1492) or to east byVasco da Gama (1497-99), ocean routes have been dominant for world trade.Domination by recognized western powers has been a key feature of the globalsystem that China, through this initiative, wants to reverse or at leastdilute.
China using BRI as a exible tool
China initiated BRI projects with Malaysia in order to gaininfluence in Malacca Straits. The new Malaysian government announcedcancellation of some BRI projects due to debt concerns. China responded byslashing the cost of a major rail project by 30%. CPEC will give China directaccess to Arabian Sea. Taking cue from Malaysia, the Imran Khan government inPakistan wants to renegotiate CPEC cost due to fears of mounting debt. BRIprojects in Maldives have put the nation in debt equal to two-third of its GDP.BRI projects in Sri Lanka resulted in the surrender of Hambantota port to Chinafor 99 years.
China’s BRI ventures in Myanmar and Bangladesh aim to securein uence in Bay of Bengal and Indian Ocean. In Latin America, BRI has enabledChina to gain strategic foothold in Panama Canal and two most important oceanson either side of America. These are part of Chinese efforts to dilute thedominance of western powers on global trade routes. The import of Chinese workforce in these countries has belied their expectation of jobs creation. Criticsallege opacity in the financial deals, and a deliberate attempt by China toimpose financial imperialism on economically weak but strategically locatednations. World Bank has said that BRI comes with “potential bene ts and risks”.Noted economist Michele Ruta cautions that for some countries, “the financingrequired for BRI projects may expand debt to unsustainable levels”. The biggerprojects carry “environmental, social and corruption risks”, especially incountries with weak governance.
India must continue to study BRI closely
Given the implications encountered by countries implementingBRI projects, India’s participation or otherwise in BRI will require anin-depth analysis of the terms and conditions on offer by China. We will haveto take into account India’s security, and also strategic implications of theintended projects in India and neighbouring countries.
The projects undertaken by China under BRI in Pakistan,Myanmar, Bangladesh, Maldives and Sri Lanka have negatively impacted India’sdefense, strategic and maritime interests. India has many unresolved issueswith China. These have the potential of escalation if not resolved permanentlyas per internationally accepted norms and in the spirit of good neighbourlyrelations.
The unresolved border issues between India and China havebeen a cause of concern since decades. India has a well de ned position on theDoklam issue. China is trying to distort the issue and create uncertainty inour north-eastern states. This has the potential to disturb the integrity ofour nation. China’s territorial claims over Arunachal Pradesh, raisingquestions on Sikkim’s integration with India, occupation of Aksai Chin inLadakh are issues where China needs to understand and appreciate India’s viewpoint before we can take BRI as a genuine Chinese effort vis-à-vis India.
Our galloping trade deficit with China is now a major causeof concern for the government. From $16bn in financial year 2007-08, the tradede cit vis-à- vis China rose sharply over the last decade, and reached $59.3bnin 2017. For any country, whatever its size of economy, a huge trade de cit canhave serious implications on its economic independence.
The Indian government has impressed upon Beijing to increaseIndian imports, and has identi ed areas where the increasing de cit can bescaled down. Under pressure, China agreed to take measures to bring de citgradually to respectable levels. Consequently, trade de cit in 2018 got reducedto $57.4bn from $59.3bn in 2017. Indian Commerce Minister Suresh Prabhucelebrated the figures with a tweet, calling it “whopping, unprecedented reduction”in trade deficit with China.
But it turns out that China may be camouflaging tradefigures. While trade de cit with China has reduced by $1.9bn, our trade surplusof $3.9 bn with Hong Kong has turned into trade de cit of $2.7bn.Interestingly, during 2018 there has been a sharp rise in Hong Kong’s exportsto India of same goods that saw a reduction of Beijing’s exports to New Delhicompared to 2017. There has been re-routing of Beijing’s exports to Delhi viaHong Kong. Consequently, the combined
trade deficit of China and Hong Kong has risen from $55.4bnin 2017 to $60.1bn in 2018. So much for the honesty of purpose displayed byChina in its trade dealings with India.
China’s support in listing Masood Azhar a positive move
Since 2009, China at the behest of terror sponsoringPakistan, blocked the UNSC move four times through “technical hold” to declareAzhar Masood a global terrorist. Frustrated US decided to “use all resources toban Azhar Masood” so that he is “held accountable for terror attack on India”and announced to move a resolution in UNSC. France, UK and all other membershad earlier backed the move to declare Azhar Masood a global terrorist, whichhad landed China in isolation. A discussion on resolution in Security Councilwould have exposed China’s duplicity on fighting global terror and projected itas a terror-supporting rather than as a terror-opposing nation. On May 1, underinternational pressure and in order to avoid global embarrassment, China liftedthe “technical hold”, paving the way for UNSC to declare Mohammad Azhar Masooda global terrorist.
The repeated stance of China blocking India’s entry inNuclear Suppliers Group (NSG) has been another persistent irritant in relationsbetween the two countries. This is despite the fact that India has a proventrack record of being a responsible nuclear state and is committed to its usefor peaceful purposes. India also adopted “No First Use” policy in 1998 afterPokhran-II tests and in 1999, released the draft of the doctrine that nuclearweapons are solely for deterrence and that India will pursue a policy of”retaliation only”. A policy of discrimination against India’s entry in NSG hasbeen displayed brazenly by China citing reasons which it has not applied toitself for continuing to be part of the same group.
On the other hand, India has displayed an honest commitmenttowards developing rm and trustworthy relations with its neighbours, except forterror-sponsoring Pakistan. India settled border issues with Bangladesh in 2015involving 162 enclaves. India ceded 17,161 acres of land to Bangladesh to get7,110 acres in return. This revealed the magnanimous face of India indeveloping positive and lasting relations with its smaller neighbours. Indiasettled the Katchatheevu island ownership dispute with Sri Lanka, favouring thelatter through an agreement. India still awaits concrete positive moves fromChina to remove the trust de cit in relations between the two countries. Toexpect India to join China’s ambitious BRI or be part of CPEC – which runsthrough Indian claimed territory under Pak administration – neither displaysany diplomatic logic nor meets the Indian public’s expectations of laying thefoundation of a long and lasting Indo- China friendly relationship.
Courtesy: India-China Chronicle
The author is a former Director General of J&K Police(2007-2012) and Former Chief Vigilance Commissioner J&K (2013-2017). He isthe recipient of the Webber Seavey Award for Quality in Law Enforcement(awarded by International Association of Chiefs of Police, Washington, USA),Prime Minister’s Award for Excellence in Public Administration, President’sPolice Medal for Distinguished Services, President’s Police Medal forMeritorious Services, Operation Vijay Medal (Kargil operations) and AntrikSuraksha Seva (Internal Security Duty) Medal awarded by the Government ofIndia.