Beating the Rhetoric
In recent times few economic developments have brought in so much curiosity as the Chinese flagship OBOR initiative. OBOR or One Belt One Road initiative is China’s plan to connect three continents that focuses on connectivity and trade across Eurasian countries. With China remaining the focus the OBOR initiative is an attempt to replicate the Silk Route which ran in medieval times coupled with Maritime Sea Road or MSR.
The basic infrastructure network covering almost sixty countries are structured along six corridors and one maritime route. The six corridors include: the New Eurasian Land Bridge, running from Western China to Western Russia; the China–Mongolia–Russia Corridor, running from Northern China to Eastern Russia; the China–Central Asia–West Asia Corridor, running from Western China to Turkey; the China–Indochina Peninsula Corridor, running from Southern China to Singapore; the China–Pakistan Corridor, running from South-Western China to Pakistan and finally the Maritime Silk Road, running from the Chinese Coast over Singapore to the Mediterranean. The cumulative anticipated investment range between US$4 trillion and US$8 trillion. The OBOR initiative is expected to bridge the infrastructure gap that countries around the world would need in the next few years.
The OBOR initiative has however opened up questions on economics, polity and international relations. At the outset there is no doubt that OBOR signals the emergence of a new world order, an order where China is firmly placed at the centre. Secondly there is a marked difference between the OBOR initiative and the Marshall plan which the US executed during the development of New Economics. In the Marshall plan the European nations were only provided money which would kickstart their own economies via massive government spending on creating capital goods. On the other hand via OBOR China promises not only to bring its own investments but to also decide how that form of investment would be while also ensuring a permanent benefit to the Chinese economy through the same. The danger of economic hegemony over a nation’s fortunes is real and that’s how the OBOR initiative is designed. At the same time it would be foolhardy to assume that nations would surrender their national sovereignty or pride at the altar of the Chinese diktat. The Sri Lankans effectively negotiated and eventually pushed the Chinese out of the Hanbantota port when the question was of Sri Lankan interests. Similarly Myanmar too had to renegotiate terms of treaty with the Chinese when local population protested against the same. Hence the sceptre of economic domination is often overplayed.
OBOR however has rightly brought focus on the kind of foreign aid that helps a nation. One school of economists believe that the right path to development is massive ‘brick and mortar’ push. A massive capital investment, in the form of roads, industries and others which would kick-start the local economy. There is another school of foreign aid and development that believes the first would only lead to emergence of cartelisation and contractors of local economy who would never let the potential bloom. Instead they advocate the development of long term solutions in terms of capacity building and human resources development. Instead of investing in buildings and roads alone countries must endeavour to train the people and develop the human potential. It would be interesting to see the direction which OBOR embraces. Indian investment in Africa in contrast however has been of the second type. India has consistently chosen to develop the human potential of partner countries in Africa through scientific partnerships, cross cultural students’ exchange and massive scholarship programmes that run across Africa.
The initial signs from OBOR in the above regard however signal the direction towards the first school of thought. Most of the loans that the countries would get would come attached with a number of stringent conditions such as sourcing input resources from China. A large number of labourers have to be imported from China as well. Most of the countries of the OBOR spectre run huge loan deficits with China and OBOR will only seek to enhance it. Often without proper savings rate, massive infrastructure rates would only lead to building of roads and bridges to nowhere. In the context of domestic economy of China itself, massive investments have lead to building of ghost towns and roads to nowhere. Hence countries have to tread the OBOR route carefully.
The most important debate in India, however is how this country chooses to position itself within the OBOR framework. By missing the OBOR meet India has made its displeasure clear regarding the initiative itself. The problem and the resistance towards OBOR are twofold. First there is a threat that China would economically encircle India by partnering with all nations around it within the OBOR initiative. The second objection stems from Chinese presence in Pakistan which does not sit well with Indian security establishment. Hence the discomfort with OBOR initiative is understandable. Yet one cannot shy away from the fact that OBOR is a distinctive reality and India will have to adapt and adjust itself to this changing paradigm in the coming era.( Views expressed by the author are personal)