India must take part in OBOR
The Belt and Road Forum, hosted by China on May 14-15, for international cooperation evoked splendid response despite New Delhi gratuitously choosing to opt out of this major infrastructure initiative launched by the Middle Kingdom. Even as the United States (US) shunned Beijing's other big bid- Asia Infrastructure Investment Bank (AIIB) a few years ago, the Trump Administration, albeit all its trade reprisal threats against China for unfair trade practices, sent a high-level delegation. Japan too, for all its ongoing altercations with China over the disputed islands in the East China Sea and simmering discontents for decades, sent a high-level delegation.
With a massive 900 billion US dollars investments ranging from ports in Pakistan and Sri Lanka to high-speed railways in East Africa to gas pipeline crossing Central Asia, Beijing's One Belt, One Road (OBOR) project is the largest overseas investment initiative ever mounted by a single nation. Having invested heavily in infrastructure development for decades that saw sustained double-digit growth close to three decades, China is now using its expertise to leverage and state-sponsored infrastructure projects in far-flung places through the OBOR tack. This is being attempted not only to spread its clout and heft globally but also to provide domestic companies—from high–speed rail manufacturers to telecom companies—with domain knowledge and experience to become global brands.
Western analysts note that since 2013 when the OBOR project was launched, it has expanded to cover projects as far afield as New Zealand, UK, and even the Arctic. It is no wonder that China has zeroed in on 65 countries along the Belt and Road that would host hundreds of projects bearing the OBOR insignia. They said core projects include a $54 billion land route from China's Xinjiang region to a deep water port in Pakistan, Gwadar.
About B&R, Indian officials maintain that New Delhi has objections related only to the CPEC traversing through Gilgit and Baltistan of Pakistan-occupied Kashmir (PoK) though the project is of strategic concern. New Delhi is no doubt concerned over this 3,000-km long project that was taken over by the Chinese, would eventually become a future naval base. The Gwadar port opposite the Mumbai's port housing the Indian Navy's western naval command provides a berth for China in the Arabian Sea and to the Indian Ocean. Incidentally, China would spend $1.1 billion on developing a 'port city' in Sri Lanka's Colombo, across from Gwadar. A planned 3000 km (1,900 miles) high-speed rail line from south-west China to Singapore would cost even more.
With domestic savings rate uniquely at the peak and with surplus funds and foreign exchange reserves earned through sustained export growth for decades, China is not found wanting in resources to back up its dream projects like OBOR genre. In fact, there has been a surge of fund-raising and institution-building that was characteristic of a centrally planned economy which seldom fought shy of doing things massively to make the rest spellbound and in awe of the leadership. China's sovereign wealth fund set up a $40 billion Silk Road Fund in 2014 and in the subsequent year Beijing launched with other countries the AIIB. The AIIB with an initial capital of 100 billion dollars is likely to be spent mainly in OBOR countries.
India with its vast amount of investment needs to strengthen its weak infrastructure and to build new ones would have been a whit wiser in at least taking part in the OBOR Forum particularly when many of Beijing critics including the US, Japan, and Russia did send a high-level delegation. No doubt, India's prospective borrowings from AIIB would entail relatively high-interest cost with attendant conditionalities being imposed by Beijing for funding OBOR projects including the purchase of Chinese materials and using their workforce. But as the one who pays the piper calls the tune, one has to get adjusted to commercial irritants if it eventually helps in building or supplementing the massive efforts of indigenous development of the country's vital infrastructure for ensuring high economic growth.
Again, it is not only in OBOR but New Delhi ought to be keen on also associating on other important initiatives of China, lest its commercial engagement with the Middle Kingdom should be mutually rewarding, even as decades of territorial disputes remain unresolved. The initial bonhomie between Xi and Modi soon after the latter assumed office in 2014 and the back to back visit of the two leaders should not go wasted, if the working chemistry is well founded to pave the way for ensuring lasting benefits to Asia's two giant nations. India is set to join the Shanghai Cooperation Organization (SCO) in June and is also participating actively in a Chinese crafted Regional Comprehensive Economic Partnership (RCEP). With the US-led Trans-Pacific Partnership (TPP) now firmly spurned by the Trump Administration, the RCEP which emerged as a sort of riposte for having excluded China in the TPP might be a springing board for more open and free trade among participating nations. The RCEP excludes the US and other TPP members such as Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the US but includes Cambodia, China, India, Indonesia, South Korea, Laos, Myanmar, the Philippines, and Thailand. The latter set of countries provides ample latitude for New Delhi to engage with China and other tiger economies of the South East Asian fame on a vigorous and mutually beneficial footing.
China is also internationalising its currency Renminbi which would be increasingly used for its OBOR infrastructure network concatenating continents-a long- term plan for funding projects along trade corridors to Europe. According to HSBC's Chief Economist for Greater China, Qu Hongbin, internationalisation of Renminbi is likely to benefit from the rising tide of OBOR-related business flows, as financial integration is a crucial part of the strategy.
Given the growing clout of China in the emerging global order with the western nations on a distinct retreat from globalisation and finding increased virtue in being nationalist first and protectionist second, it is time India recognised the stark geopolitical reality and played its card diplomatically and dexterously. It is not that one needs to be afraid of Chinese hegemony in Asia as India is no small a power to be cowed down as it is set to be the world's seventh largest economy by 2019 to coincide with Modi's first term in governance with a comfort of demographic dividend to keep its powder dry for any face-off with any adversary or friend turned into a foe.
(The views are strictly personal.)