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The belt and road to China’s hegemony in Asia

LiveMint logoLiveMint 16-05-2017 Livemint

The Chinese establishment recoils at its grand vision—the Belt and Road Initiative (BRI) or One Belt One Road (Obor)—being compared to the Marshall Plan, the post-World War II American initiative to rebuild the war-ravaged economies of Europe. The Marshall Plan was overshadowed by a zero-sum game between capitalism and communism but the BRI, they insist, is a win-win for all the participating countries. One particular similarity, however, stands out: a geography-centred view of power and influence. The Marshall Plan was a product of the era when Europe was deemed to be the determinant of the balance of global power, and the BRI’s arrival merely reflects the fact that Europe has ceded that privileged position to Asia.

A much bigger vision than the Marshall Plan, the BRI involves the continental connectivity of China to Central and West Asia and onwards to Europe (the ‘belt’ part) and maritime connectivity of China’s southern coast to Africa via South-East Asia (the ‘road’ part). During the two-day (14-15 May) inaugural Belt and Road Forum (BRF) in Beijing attended by representatives of around 60 countries, Chinese President Xi Jinping announced that 68 countries and international organizations have inked belt and road agreements with China. According to some estimates, close to $1 trillion of investments are planned in ports, roads, railway lines, energy projects, etc. under the initiative.

Given Asia’s huge infrastructure deficit, China decided to use its deep pockets and the excess capacity of its domestic industries to counter the security-focused approach of former US president Barack Obama’s pivot/rebalance to Asia. In as much as trade (read the Trans-Pacific Partnership) was a part of the rebalance, it was quickly jettisoned by the new US president, Donald Trump. But the bigger surprise was the Trump administration agreeing to send a high-profile delegation under White House adviser Matt Pottinger to the BRF in return for China promising increased market access for American firms in a few sectors.

The Trump administration’s decision does not necessarily mean that the US has given up on Asia. It simply means that the nearly four-month-old government is still struggling to find a rhyming note in its foreign policy. China also tried to win over Indian participation for the BRF. In a speech delivered at a think tank in New Delhi, the Chinese ambassador to India even offered to rename the China-Pakistan Economic Corridor (Cpec)—the part of Obor that runs through Indian territory illegally occupied by Pakistan. A scholar at an official think tank in China even suggested that Cpec could be stopped to sort out differences with India. Having a better comprehension of the credibility of Chinese promises, the Indian government decided to sit out the inaugural BRF. In addition to registering the legitimate sovereignty issue, the official Indian statement was uncharacteristically blunt in pointing out the apprehensions related to “debt burden for communities; balanced ecological and environmental protection and preservation standards; transparent assessment of project costs; and skill and technology transfer”.

These apprehensions do have historical basis. The previous Chinese investments in the continent of Africa as well as in India’s neighbourhood in Sri Lanka and Myanmar have faced strong local backlash for several reasons. Many of the projects have proved economically unviable, thus impeding the ability of recipient countries to service the loans. A debt to equity swap leaves them with the undesirable option of China owning strategic assets in their countries which can likely be used for military purposes. The tempting loans come with many riders and the recipient countries have to source much of their material from China. Often, a Chinese state-owned enterprise leads the project and large numbers of labourers, including low-skilled ones, are imported from China itself. All kinds of charges, ranging from environmental degradation to labour exploitation, have been levelled against Chinese companies.

The BRI has not had a better start. Pakistan, which has been slavish in accepting Chinese demands, has baulked at the tariffs for power produced by projects under Cpec. The refinery built by a Chinese state-owned company in Kyrgyzstan has found it difficult to source crude oil. Political and social discontent in the Central Asian country is already growing. One should remember that not long ago, entire national election campaigns were held on an anti-China plank in countries like Zambia and Sri Lanka.

Many of the BRI projects, even the Chinese admit (goo.gl/VVo71C), will end up bleeding money. That Beijing is still willing to go ahead suggests that it is eyeing bigger political and strategic gains. This is the battle for Asia, even if it is not as starkly ideological as the Marshall Plan. In fact, the Marshall Plan was much more benevolent; if the details on Cpec revealed by Dawn (goo.gl/qaXSSd) are anything to go by, the BRI is more in line with Japan’s pre-World War II imperial concept of ‘Greater East Asia Co-Prosperity Sphere’.

As an advocate of a multipolar Asia, India has done well to sit out the BRF. A wait-and-watch strategy on the BRI does no harm for the moment but New Delhi should simultaneously step up its infrastructure building in India and the neighbourhood. It should look to pool its resources with the Japanese Partnership for Quality Infrastructure (PQI). Even if India and Japan cannot match the scale and ambitions of BRI, they will gradually begin to attract partners which will likely be alienated as the true costs and motives of Chinese investments begin to show.

Are China’s motives behind the BRI truly benign? Tell us at views@livemint.com

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