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Belt and Road Forum: An Analysis

The Belt and Road Forum for International Cooperation, or BRF was held on May 14–15, 2017 in Beijing, and claimed to draw 29 foreign heads of state and government and representatives from more than 130 countries and 70 international organizations. The purpose of the forum as described by Wang Xiaotao, deputy head of the National Development and Reform Commission, in an interview with Xinhua was building “a more open and efficient international cooperation platform; a closer, stronger partnership network; and to push for a more just, reasonable and balanced international governance system.”Western media coverage portrayed the forum in a similar way with CNN referring to the event under the headline “China’s new world order” and the Los Angeles Times running the article “Globalization 2.0: How China’s two-day summit aims to shape a new world order”. According to analyst, the Belt and Road Forum reinforced China’s claim to leadership of an emerging geopolitical and economic world order. The summit was the clearest expression yet of China breaking out of its old foreign policy mould that had restrained it from attempting a global role.

What happened in BRF?

The BRF, according to its pre-decided schedule, began with an opening ceremony and high level meetings including a plenary session and six parallel panel discussions during the first day. Thereafter, a round table summit took place on the second day, chaired by President Xi Jinping with the participation of all attending heads of state and government and heads of the UN, World Bank, and International Monetary Fund. At the conclusion of the round-table summit, the body issued a document agreeing to goals and principles for the initiative. The document said that the forum will be a platform for working out action plans for implementation of the initiative in the areas of infrastructure, energy and resources, production capacity, trade and investment and identification of major projects. The BRF, as intended, served as an opportunity for the signing of cooperation agreements with countries and international organizations in the areas of financial cooperation mechanism; a cooperation platform for science, technology and environmental protection; and enhanced exchanges and training of talent and financing agreements for backing projects.

BRF Manifestation of China’s geopolitical ambition

China’s multibillion-dollar One Belt, One Road (OBOR) infrastructure development project linking the old Silk Road with Europe, is a manifestation of China’s growing geopolitical ambitions. A brainchild of President Xi Jinping, perhaps, the most powerful Chinese leader after Mao Zedong, OBOR has now been under development for four years, spanning 68 countries and accounting for 60% of the global population and around a third of global GDP. The China Development Bank alone has earmarked $890 billion for some 900 projects.

The OBOR forum brings out clearly China’s aspirations to be a global power. President Xi’s ambition of propelling China to centre stage of the global power game represents a sharp departure from the approach of previous Chinese leaders who strictly adhered to Deng Xiaoping’s tenet to “hide our capabilities and bide our time, never try to take the lead”. Thus over the past two decades, China has avoided being drawn into global conflicts and has completely focused its energies on development that helped it to become an economic superpower. China’s push to take the world leadership has come at a time when a strong anti-globalisation wave is sweeping the Western world that is showing a growing tendency of returning to more protectionist regimes. The United States under the Trump administration with its inward-looking approach has virtually abandoned the mantle of globalisation thus ceding greater space to Beijing’s assertion.

Breaking the dominance of US and countering its pivot to Asia policy

It is evident that OBOR is not just about infrastructure development; one of the major objectives of the initiative is to turn Eurasia into an economic and trading centre, breaking the domination of the American-led transatlantic regime. It is also a manifestation of the changing geopolitics and the realignment of forces, reflecting a move to shift the centre of gravity of trade to the East and establish China’s predominance in global politics. The US foreign policy has adopted a pivot to Asia policy to shift its focus from the Middle East to East Asia, the region which has high growth potential in terms of market, trade and investment. China is not willing to give this space solely to the US. As the US has exited the Trans Pacific Partnership Agreement, an important component of its pivot to Asia policy, China would try its best to grab the space and increase its sphere of influence in the region.

Security and diplomatic calculus

OBOR is not based only on economic calculus. It has a security and diplomatic calculus as well. The economic calculus emphasizes various benefits to China and participating countries in terms of growth in GDP, trade and investment in infrastructure. But there are strategic advantages which China must be aiming at such as setting up maritime outposts in the Indian ocean, ensuring its military presence in the name of protecting its overseas infrastructure, ensuring multiple supply channels for energy security etc. It will also improve its engagement with the South Asian and South East Asian Countries through soft diplomacy that includes dollar diplomacy as well as cultural communication and interaction.

Russia has been facing sanctions from the NATO countries on its transgression in Crimea. Russia is in a serious search of reliable partners against the Western powers. Indeed, Russia has lent active support to the Chinese initiative indicating a growing strategic partnership between the two countries. Moscow’s major interest is to consolidate its primacy in Central Asia through regional security and a trade bloc. So it is willing to accommodate China’s economic and geopolitical interests more than ever because of Western sanctions following the Ukraine crisis. Since 2014, the two countries have reached several high-profile multibillion-dollar economic and trade deals signalling their close, evolving economic ties. Unsurprisingly, Russian President Vladimir Putin used the forum to lash out at the US and other Western countries over their increasingly protectionist policies. China also considers the China-Pakistan Economic Corridor (CPEC) a “flagship project” in the whole scheme of OBOR. This multibillion-dollar investment programme has added a new dimension to the friendship between Pakistan and China. From purely strategic and security cooperation spanning more than five decades, the relationship has now evolved into a dynamic economic and commercial partnership. But it is also part of China’s contain India policy as no clear cut direct indication was given by China to India to participate in OBOR for a long time.

Sceptism regarding China’s increased control of world trade and investment

It is not surprising that the OBOR initiative is being embraced by a wide range of countries from Asia and Africa to Europe and even South America, notwithstanding some serious concerns about the cost and benefits of the enormously ambitious project. Surely fewer European countries showed up at the Beijing summit because of their reservations over China’s reluctance to open doors to foreign companies.

Analysts are sceptical that the Asian giant can take the lead in global commerce, while also cautioning that an integrated world trade system where China’s ruling Communist party sets the rules could come with serious risks and hidden costs. The European Union’s ambassador to Beijing, Hans Dietmar Schweisgut, recalled that EU companies have repeatedly complained about unequal market access in China. Schweisgut said, “We hope China will implement domestically what it is preaching internationally. The Chinese market, when it comes to investment, is not as opened as the European market to Chinese companies.”   Jean-Pierre Lehmann of Switzerland’s IMD business school asserted that  Europe’s large absence was a “missed opportunity” indicative of a “very inward-looking, very Eurocentric” outlook on the rise as leaders have less to gain politically at home from engagement with China. He added, “China’s a reality and it’s not going to go away. We can make things better by engaging with China instead of needlessly containing it.”   For China, OBOR is a practical solution to relieve domestic overcapacity that plagues its industrial sectors such as steel. It is also a way to expand its strategic global influence – a key concern for Xi, who frequently trumpets the goal of a “great rejuvenation of the Chinese nation”. China’s propaganda machine is working hard to promote OBOR, with the official Xinhua news agency boasting that it has published 30,000 stories related to the programme in the past three years. “After the elapse of 1,300 years… powerful and prosperous China is emerging from the depth of history and returning to the centre of the world arena,” the official Xinhua news agency has declared.

XI Jinping tried to alleviate apprehensions

While addressing the forum, President Xi tried to alleviate concerns about China’s dominance, inviting other countries to take part in the project. China is spending roughly $150bn a year in the 68 countries that have so far signed on to the plan. According to Chinese government figures, around $1 trillion have already been invested in OBOR, with several more trillions due to be invested over the next decade. This way Beijing hopes to find a more profitable avenue for the country’s vast foreign exchange reserves, mostly invested in low-interest-bearing US government securities.

Although Beijing downplays geostrategic motivations, CPEC represents an international extension of China’s effort to deliver security through economic development. Notwithstanding their growing strategic cooperation, terrorist sanctuaries in Pakistan have remained a major source of worry for the Chinese government. China’s security concerns, especially those that arise from its restive region of Xinjiang, and the Islamist militancy threatening Pakistan’s stability have also been a strong factor in Beijing’s new approach to achieving security through economic development.

India is not happy with OBOR related developments for genuine reasons

India abstained from OBOR forum or BRI forum because it feels the China Pakistan Economic Corridor passes through disputed Pak occupied Kashmir and it is against sovereignty of India. Further India is also sore with isolationist or competitive presence of China in its neighbouring countries and the Indian ocean countries with an intention to encircle and contain India. Despite their geopolitical rivalry and long-standing border dispute, trade between India and China has grown significantly crossing $100bn. But there have been some visible signs of tension between the two most populous nations in the past few years with the strengthening of ties between Washington and New Delhi. India has openly sided with the US and Japan against China over the South China Sea issue. This growing Pakistan-China strategic alliance has also exposed the regional geopolitical fault lines. Predictably, India boycotted the Beijing forum citing serious reservations about the project, particularly regarding China-funded development in Gilgit-Baltistan that is linked to the Kashmir dispute. Yet another excuse given by the Indian authorities was that a trans-regional project of this magnitude required wider consultation.

Doubts about efficacy of OBOR

There are many who doubt the efficacy of the OBOR project. June Teufel Dreyer of the University of Miami said that Trump’s decision to withdraw from the now-defunct Trans-Pacific Partnership free-trade agreement gave countries “added incentive” to join OBOR. However she added, “What may look like benefits may turn out to entrap (participating countries) in a China-centred spider web.” On the feasibility of the OBOR project, Dreyer commented that. reports of trains loaded with Chinese goods trundling towards Europe laden but returning empty have led to the quip “One Belt, One Way.  New York-based Fitch Ratings expressed concern that “genuine infrastructure needs and commercial logic might be secondary to political motivations”, leading to “a heightened risk of projects proving unprofitable”. It further said, “Struggling countries could be saddled with Chinese loans requiring payment regardless of project performance.”

According to Li Ziguo, deputy director of the OBOR research centre at the China Institute for International Studies, the forum was first chance since OBOR’s launch in 2013 to formally communicate its policies to participants on a large scale. But again the implementation is slow for several reasons including funding, security, choice of economically feasible projects and modalities. There will be legal and political hurdle in the countries along the OBOR. Environmental issues also may crop up. Many projects have been signed, but they still need to be implemented on the ground. Yang Shu, of Lanzhou University’s Institute for Central Asian Studies, said many countries still do not really understand the project. He also added that even China was still unclear on what the ultimate goal was.

 

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