On the 14th of May 2017, with over 30 world leaders in attendance, Chinese President Xi Jiping unveiled his much talked about project for the world to see – the One Belt, One Road Initiative. The massive $800 billion venture is said to be China’s response to the current, Western-oriented world order, which China seeks to overturn. From Europe, to Russia, to Pakistan, to Myanmmar – China has commited to estabilish and upgrade infrastructure throughout the Eurasian region, which it says will generate massive employment, and will thus lift millions of people out of poverty. Most of the Asian countries have responded favourably to this strategy, with Russia and the Philippines whole-heartedly embracing the project. However, there is one nation that boycotted the grand opening ceremony for the initiative by refusing to send even a single representative to Beijing, and that country is none other than India.
It seems somewhat ironical that the world’s fastest growing economy and world’s largest democracy will refuse to participate in perhaps the greatest infrastructure project since the end of the Second World War. Then why is India so adamant on not participating in this trillion-dollar mega venture? This article attempts to analyse and briefly sum-up New Delhi’s calculated reluctance to embrace this strategy.
First of all we need to realise that China’s One Belt – One Road initiative isn’t solely an economic venture, but a political one as well. With this project, China is sending a loud and clear message to the West, that the oft-disussed rise of China has come of age, and that China is ready to effectively lead Asia into the 21st Century. This project also potrays China as a champion of globalisation, amidst calls of isolationalism and unilateralism from the West. At first glance, it looks like it is the perfect oppurtunity for India to join hands with China to shape the new-global order. A major economy, India would get the much-needed global recognition it wants if it joins the project in its infancy. But things aren’t as rosy as they seem.
First of all is the issue of sovereignity. A part of the Silk Road project – which is a subsidary of the broader OBOR – passes through the disputed region of Kashmir, which is partly controlled by Pakistan. This part is called the China – Pakistan Economic Corridor, or simply CPEC, and is worth over $57 billion as of 2017. Thousands of Chinese labourers have been allowed by Pakistan to work on the project, which greatly annoys India. Despite repeated assurances by China that it is solely an economic venture, India believes that joining the project is tatamount to accepting Pakistani sovereignity over Kashmir. Another problem somewhat connected to the CPEC is that China is converting the Pakistani port city of Gwadar into a major maritime trading facility. In exchange for the Chinese loans and expertise, Pakistan has agreed to lease the port to China for 99 years. With Chinese presence just a 100 kilometers from the Indian financial capital of Mumbai, it is natural for India to feel wary.
The other point is the problem of debt repayment. China isn’t making roads, highways, bridges, and ports for free. It is granting huge guaranteed sovereign loans to countries – and it expects the money to be paid back, either in form of investment returns or hard cash. But most of the countries participating in the project – like Pakistan, Myanmmar, and Bangladesh – have a poor record of debt repayments. How will China deal with a scenario where a country defaults on Chinese loans? Not suprisingly, it has happened before, and unfortunately, the result was not favourable to India.
Two years ago, Sri Lanka accepted billions of dollars worth of loans from China, and awarded Chinese contractors to develop a huge port and airport at the city of Hambantota. The port and the airport were completed in record time, and everything looked great on paper. But everything changed after the inaugration of the project. Sri Lanka soon realised that there was no demand for either of the two facilities. The Hambantota airport became the world’s emptiest airport, and the port soon ceased operation due to a lack of demand. It was a crisis for Sri Lanka, as it had no way to pay back the loan it had taken from China. China ruthlessely convinced the Sri Lankan government to sign a debt-equity swap deal. Soon, the port was purchased by the Chinese maritime authority with Chinese trading ships based there. It is not hard to imagine a Chinese naval presence there in the near future. This has severly unhinged India, and Indian leaders are worried that China might encircle India by purchasing stakes in other South-Asian countries.
Thus, India has valid reasons to remain cautious about the massive Chinese investments in Asia, and it would be foolish of India to embrace the new Chinese regional order, when so little is known of Chinese intentions. On the other hand, India cannot risk antagonising China by openly denouncing the project. All that India can do for now is to wait and watch.
Note:- All the opinions stated in the above article are the author’s own.
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