OBOR, Chinese Strategy and Implications

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Singha
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Re: OBOR, Chinese Strategy and Implications

Postby Singha » 24 Nov 2017 07:15

Excerpt from above link


Critics have charged that the principle boils down to China wins twice, a notion that is supported by Chinese plans for Pakistan’s agricultural sector; the extraction of Pakistani onyx, granite, and black gold marble; the disagreement over the dams; and the debt traps that forced countries like Sri Lanka to surrender control of key assets.

Pakistan and Nepal announced their withdrawals last week in separate statements. Pakistani Water and Power Development Authority chairman Muzammil Hussain charged that “Chinese conditions for financing the Diamer-Bhasha Dam were not doable and against our interests.” China and Pakistan were also at odds over ownership of the $14 billion, 4,500 megawatts (MW)-hydropower project on the Indus River in the country’s problematic region of Gilgit-Baltistan near disputed Kashmir.

Nepal’s Deputy Prime Minister and Energy Minister Kamal Thapa announced his government’s decision to scrap a US$2.5 billion deal with China’s Gezhouba Group to build a hydroelectric project on the Budhi Gandaki River in the west of the country two days before the Pakistani decision. With India’s National Hydroelectric Power Corporation (NHPC) waiting in the wings and expectations that the incumbent, Nepali Congress (NC) will be returned to power in elections scheduled for November 26 and December 7, the project plays into Eurasia’s Great Game for regional influence.

The Diamer-Bhasha project was intended to be part of the Chine Pakistan Economic Corridor (CPEC), a key node on the Belt and Road, that with planned investments into infrastructure, including the port of Gwadar in the volatile province of Balochistan; energy, telecommunications and information technology, of more than $50 billion, constitutes China’s largest financial commitment to any one country.

The Pakistani withdrawal takes on added significance because it was included in CPEC after the government had failed to secure funding from international institutions like the World Bank and the Asian Development Bank (ADB) because of Indian objections that it was in disputed territory. The government has broken ground on the project five times in the past 15 years. Mr. Hussain said that the government now has a five-year funding plan for the project that would be completed in 2026.

Chinese analysts suggest that the Pakistani and Nepalese withdrawals could set a precedent.

“It will not be a big surprise if similar problems happen in China’s future overseas projects. And that would not change the big picture. There is a common misinterpretation internationally that the Belt and Road is something China would want to push forwards at all cost. But in fact, all projects are commercial so they have to be justifiable economically, and agreed mutually,” said Zhao Gancheng, a South Asia expert at the Shanghai Institute for International Studies.

China is likely to encounter greater resistance not only on its financial terms, but also regarding assessments of what economic benefit investment target countries can expect.

A State Bank of Pakistan study concluded that exports of marble to China, Pakistan’s foremost rough-hewn, freshly-excavated marble export market, and the re-export to Pakistan of Pakistani semi-processed marble was “hurting Pakistan’s marble industry to a significant extent.”

Pakistani marble exporter and retailer Shakil Khan told Asia Times that “the Chinese buyers go for the square slabs, while the local quarrymen tend to excavate oval-shaped blocks which reduce to smaller bits” and are only of interest to the local Pakistani handicrafts and tile market. The Chinese approach discriminates against mines with cracked marble.

“The Chinese pick only the rare and quality stuff like onyx, black gold marble and high-quality granite from the market. Local processing units don’t have the high-tech processing equipment here to treat these costly marble products,” added Zahid Shinwari, president of the Sarhad Chamber of Commerce & Industry (SCCI), in Peshawar.

The Pakistani marble industry’s experience strokes with the overall suggestion of the leaked long-term plan for CPEC that projects risks of economic domination, the creation of a surveillance state, and would allow China to shape Pakistan’s media landscape. It projected an approach that has already sparked popular resistance and setbacks in countries and regions such as Sri Lanka, Myanmar, and Balochistan.

The plan envisioned Chinese state-owned companies leasing thousands of hectares of Pakistani agricultural land to set up “demonstration projects” in areas ranging from seed varieties to irrigation technology. The Chinese companies would be offered “free capital and loans” from various Chinese ministries as well as the China Development Bank.

Effectively turning Pakistan into a raw materials supplier rather than an added-value producer, a prerequisite for a sustainable textiles industry, the plan sees the Xinjiang Production and Construction Corps in China’s troubled north-western province of Xinjiang, as the vehicle for the introduction of mechanization as well as new technologies in Pakistani livestock breeding, development of hybrid varieties, and precision irrigation. Added value would be produced in Xinjiang as part of China’s bid to quell ethnic unrest among the Uighur population.

The plan envisaged the Pakistani textile sector as a supplier of materials such as yarn and coarse cloth to textile manufacturers in Xinjiang. “China can make the most of the Pakistani market in cheap raw materials to develop the textiles & garments industry and help soak up surplus labour forces in (Xinjiang’s) Kashgar,” the plan said. Chinese companies would be offered preferential treatment regarding “land, tax, logistics and services” as well as “enterprise income tax, tariff reduction and exemption and sales tax rate” incentives.

Pakistan and Nepal’s withdrawal from the dam projects suggests that for China to secure economic dominance in Eurasia, it will have to ensure that win-win amounts to equitable terms and distribution of benefits among those that need the investment.

“China needs to nurture better understanding of its intentions and visions…to prevent unnecessary suspicions about its geopolitical ambition,” The Jakarta Post said earlier this year in an editorial that acknowledged that “we badly need the huge infrastructure spending that China is bringing.”

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Re: OBOR, Chinese Strategy and Implications

Postby SSridhar » 24 Nov 2017 08:00

panduranghari wrote:India wont be drawn into the Thucydidides trap as proven by Doklam. We have to assume China has risen when I am making this claim. So what will China do next? It wants to get one upmanship in someway, anyway. China cannot afford status quo with India especially in relation to OBOR BRI. Longer there is uncertainty in Indian position the higher the risk of derailment of planned work in multiple regimes under aegis of OBOR.

panduranghari, you have raised an important point for discussion. I have certain views on this. Will post later.

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OBOR, Chinese Strategy and Implications

Postby Peregrine » 29 Nov 2017 05:09

X Posted on the Terroristan & Analyzing CPEC Threads

Why China is sinking $46 billion in politically unstable, terror-wracked Pakistan

China has moved from its harm offensive at Doklam to a charm offensive of sorts with its ambassador here mentioning that the China-Pakistan Economic Corridor could be renamed if that would persuade us to join the Belt and Road Initiative (BRI).

In May this year the ambassador had said the same thing, but the embassy’s website subsequently removed a reference to it apparently because of the adverse reaction in Islamabad for which changing the name would imply that China was willing to assuage, even if symbolically, India’s sovereignty concerns that are central to its opposition to the BRI. China’s position remains that the CPEC is an economic project, with no bearing on sovereignty issues which India and Pakistan have to settle bilaterally. In May and now again, to demonstrate China’s benign, win-win intentions, the ambassador has proposed a corridor between China and India through Kashmir or Sikkim.

China loses nothing through this sham diplomacy apparently prompted by suggestions from some China experts in India that a diplomatic way out of the BRI impasse would be to re-name the CPEC and render possible India’s participation in the BRI in the future.

A cosmetic change in nomenclature will, however, make no difference on the ground as any corridor between China and Pakistan has to traverse parts of the erstwhile J&K state illegally occupied by Pakistan. This India cannot accept not only for legal reasons but also for what is a strategic move to encircle India in an area where China itself is involved in a territorial dispute with us. China is drawing Pakistan deeply into its sphere of influence not only to continue using it as a weapon against India, but also to challenge the already declining US presence and power on the Asian landmass.

China will not give up the CPEC - no matter what it is called - as it is central to its geopolitical ambitions in Asia and beyond. If it wants to sink $46 billion or more in a politically unstable, terrorism-wracked country that needs financial bail-outs by the IMF or Arab donors and attracts little foreign investment, and, which, moreover, is bent on creating an unfavourable environment for itself by perpetuating conflictual relations with both its direct neighbours, it is for larger geo-political reasons, not economic gain alone.

The China-India corridor through Kashmir that has been aired would supplement the CPEC, and not be an alternative to it. China pretends that these corridors are politically neutral and that it can envisage a corridor through Kashmir without taking any position on India’s sovereignty over J&K that Pakistan disputes. A corridor through J&K would get linked to the corridor through POK and China would conveniently reap a double benefit.

Through this ploy China will solidify its ts grip over J&K on both sides. Even Mehbooba Mufti has backed linking India to the BRI through Kashmir as a rediscovery of “traditional trade routes of Kashmir”.

Actually, what is intended is not any new China-India corridor through Kashmir but linking Srinagar through Muzaffarabad to the CPEC. The CPEC renaming gambit, in seeming disregard of Pakistani sensitivities, may be intended as a pressure point on implementational aspects and subduing voices in Pakistan questioning the project’s benefits.

The propitiatory kite-flying on corridors should be seen also in the context of the Russia-India-China dialogue at foreign minister level at Delhi on December 11 and 12. Russia supports BRI but India has widened its opposition to it by teaming up with Japan and the US to expose its dubious dimensions.

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Re: OBOR, Chinese Strategy and Implications

Postby arun » 30 Nov 2017 08:08

X Posted from the CPEC thread.

Article in The Globalist by James M. Dorsey , Senior Fellow at the Singapore based S. Rajaratnam School of International Studies on BRI and CPEC aka Conning Pakistan to Enrich China.

Article indicates that the Mohammadden Terrorism Fomenting Islamic Republic of Pakistan might just be cottoning on to the fact that there is no such thing as Free Halal Pork Haleem when it comes to dealing with Higher than Himalaya’s, Deeper than Indian Ocean, Sweeter than Honey, As Close as Lips to Teeth, Stronger than Steel All Weather Friend and Iron Brother, the Peoples Republic of China:

China’s Belt and Road Initiative Hits a Wall

Pakistan concerned about a neocolonial Chinese effort to extract the country’s resources.

By James M. Dorsey, November 30, 2017

In a rare challenging of Chinese commercial terms that underlie the country’s ambitious Belt and Road initiative, Pakistan and Nepal have withdrawn from two dam-building deals.

The withdrawal coincides with mounting questions in Pakistan, a crown jewel in Chinese geo-strategic ambition, about what some see as a neo-colonial effort to extract the country’s resources.

The withdrawals and questioning call into question China’s economics-centred approach to geopolitics based on the long-standing win-win principle of Chinese policy, the notion that all parties benefit from Chinese investment and largesse.

China wins twice

Critics have charged that the principle boils down to China wins twice, a notion that is supported by Chinese plans for Pakistan’s agricultural sector; the extraction of Pakistani onyx, granite, and black gold marble; the disagreement over the dams; and the debt traps that forced countries like Sri Lanka to surrender control of key assets.

Pakistan and Nepal announced their withdrawals last week in separate statements. Pakistani Water and Power Development Authority chairman Muzammil Hussain charged that “Chinese conditions for financing the Diamer-Bhasha Dam were not doable and against our interests.”

China and Pakistan were also at odds over ownership of the $14 billion, 4,500 megawatts (MW)-hydropower project on the Indus River in the country’s problematic region of Gilgit-Baltistan near disputed Kashmir.

Nepal’s Deputy Prime Minister and Energy Minister Kamal Thapa announced his government’s decision to scrap a US$2.5 billion deal with China’s Gezhouba Group to build a hydroelectric project on the Budhi Gandaki River in the west of the country two days before the Pakistani decision.

With India’s National Hydroelectric Power Corporation (NHPC) waiting in the wings and expectations that the incumbent, Nepali Congress (NC) will be returned to power in elections scheduled for November 26 and December 7, the project plays into Eurasia’s Great Game for regional influence.

China-Pakistan Economic Corridor

The Diamer-Bhasha project was intended to be part of the China-Pakistan Economic Corridor (CPEC), a key node on the Belt and Road. With planned investments into infrastructure, including the port of Gwadar in the volatile province of Balochistan; energy, telecommunications and information technology, of more than $50 billion, it constitutes China’s largest financial commitment to any one country.

The Pakistani withdrawal takes on added significance because it was included in CPEC after the government had failed to secure funding from international institutions like the World Bank and the Asian Development Bank (ADB) because of Indian objections that it was in disputed territory.

The government has broken ground on the project five times in the past 15 years. Mr. Hussain said that the government now has a five-year funding plan for the project that would be completed in 2026.

Chinese analysts suggest that the Pakistani and Nepalese withdrawals could set a precedent.

“It will not be a big surprise if similar problems happen in China’s future overseas projects. And that would not change the big picture. There is a common misinterpretation internationally that the Belt and Road is something China would want to push forwards at all cost.

But in fact, all projects are commercial so they have to be justifiable economically, and agreed mutually,” said Zhao Gancheng, a South Asia expert at the Shanghai Institute for International Studies.

China is likely to encounter greater resistance not only on its financial terms, but also regarding assessments of what economic benefit investment target countries can expect.

Pakistan’s marble industry

A State Bank of Pakistan study concluded that exports of marble to China, Pakistan’s foremost rough-hewn, freshly-excavated marble export market, and the re-export to Pakistan of Pakistani semi-processed marble was “hurting Pakistan’s marble industry to a significant extent.”

Pakistani marble exporter and retailer Shakil Khan told Asia Times that “the Chinese buyers go for the square slabs, while the local quarrymen tend to excavate oval-shaped blocks which reduce to smaller bits” and are only of interest to the local Pakistani handicrafts and tile market. The Chinese approach discriminates against mines with cracked marble.

“The Chinese pick only the rare and quality stuff like onyx, black gold marble and high-quality granite from the market. Local processing units don’t have the high-tech processing equipment here to treat these costly marble products,” added Zahid Shinwari, president of the Sarhad Chamber of Commerce & Industry (SCCI), in Peshawar.

Economic domination

The Pakistani marble industry’s experience strokes with the overall suggestion of the leaked long-term plan for CPEC that projects risks of economic domination, the creation of a surveillance state and would allow China to shape Pakistan’s media landscape.

It projected an approach that has already sparked popular resistance and setbacks in countries and regions such as Sri Lanka, Myanmar, and Balochistan.

The plan envisioned Chinese state-owned companies leasing thousands of hectares of Pakistani agricultural land to set up “demonstration projects” in areas ranging from seed varieties to irrigation technology.

The Chinese companies would be offered “free capital and loans” from various Chinese ministries as well as the China Development Bank.

Effectively turning Pakistan into a raw materials supplier rather than an added-value producer, a prerequisite for a sustainable textiles industry, the plan sees the Xinjiang Production and Construction Corps in China’s troubled north-western province of Xinjiang, as the vehicle for the introduction of mechanization as well as new technologies in Pakistani livestock breeding, development of hybrid varieties, and precision irrigation.

Added value would be produced in Xinjiang as part of China’s bid to quell ethnic unrest among the Uighur population.

Pakistani textiles for Xinjiang

The plan envisaged the Pakistani textile sector as a supplier of materials such as yarn and coarse cloth to textile manufacturers in Xinjiang.

“China can make the most of the Pakistani market in cheap raw materials to develop the textiles & garments industry and help soak up surplus labour forces in (Xinjiang’s) Kashgar,” the plan said.

Chinese companies would be offered preferential treatment regarding “land, tax, logistics and services” as well as “enterprise income tax, tariff reduction and exemption and sales tax rate” incentives.

Pakistan and Nepal’s withdrawal from the dam projects suggests that for China to secure economic dominance in Eurasia, it will have to ensure that win-win amounts to equitable terms and distribution of benefits among those that need the investment.

“China needs to nurture better understanding of its intentions and visions…to prevent unnecessary suspicions about its geopolitical ambition,” The Jakarta Post said earlier this year in an editorial that acknowledged that “we badly need the huge infrastructure spending that China is bringing.”


From The Globalist:

Clicky

SSridhar
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Re: OBOR, Chinese Strategy and Implications

Postby SSridhar » 30 Nov 2017 20:42

arun wrote:Pakistan’s marble industry

A State Bank of Pakistan study concluded that exports of marble to China, Pakistan’s foremost rough-hewn, freshly-excavated marble export market, and the re-export to Pakistan of Pakistani semi-processed marble was “hurting Pakistan’s marble industry to a significant extent.”

So, Terroristan is losing its marbles too!

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Re: OBOR, Chinese Strategy and Implications

Postby ramana » 07 Dec 2017 00:08

#INSTC is ready for inauguration.

Cuts a lot of distance between Mumbai to Moscow.

https://twitter.com/ramana_brf/status/9 ... 6206326784

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Re: OBOR, Chinese Strategy and Implications

Postby Philip » 07 Dec 2017 09:31

3 neighbours are now ditching their Chinese funded projects, Pak, Nepal and Burma.Big dams end up in becoming environmental disasters and these 3 nations do not want to end up like SL, mortgaged to China.

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Re: OBOR, Chinese Strategy and Implications

Postby ramana » 07 Dec 2017 23:01

Philip, The Hoover Dam was built during the Great Depression and is an engineering marvel. Unfortunately it has cut of water flow downstream in Mexico and desertified that Colorado River delta.

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Re: OBOR, Chinese Strategy and Implications

Postby Philip » 08 Dec 2017 12:47

There was a v.good article in an environmental magazine 30 yrs. ago that gave stats how big dams usually ended up destroying the ecology of the country in Q.The Aswan Dam Destroyed the annual flooding of the Nile,which was the feature of Egyptian civilisation for millennia. The Mahaveli projects in Sri Lanka failed to deliver enough (elec) as promised,destroyed settlements ,nature nd brought back malaria,etc. to the island.The resrvoirs further silted up reducing the reservoir capacity.China will enjoy similar "success' with its 3-Gorges disaster.

China's Three Gorges Dam: An Environmental Catastrophe?
Even the Chinese government suspects the massive dam may cause significant environmental damage

https://www.scientificamerican.com/arti ... -disaster/

The refusal of the 3 S.Asian nations to proceed further with the Chin projects,making them get into the debt trap is also going to save them environmental disasters in the future if cancelled.

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Re: OBOR, Chinese Strategy and Implications

Postby chetak » 08 Dec 2017 13:22

Philip wrote:3 neighbours are now ditching their Chinese funded projects, Pak, Nepal and Burma.Big dams end up in becoming environmental disasters and these 3 nations do not want to end up like SL, mortgaged to China.


Not clear about nepal and burma but the pakis backed out in a panic because the hans wanted the completed diamer bhasha dam as well as another already existing paki dam to be signed over as collateral for the financing of the diamer bhasha dam project, in case the pakis were unable to pay up.

Clearly, the pakis thought that a big and free chinese lunch was headed their way and had no intention of ever repaying. So when the pakis were most unexpectedly presented with the bill upfront, they bolted from the scene.

shameless beggars.

we have to dig and see why the others also bolted. It looks like the tallel and sweetel perceptions of the hans are rapidly being revised and long barge poles are being deployed.

could it be that the han magic is beginning to fade??

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Re: OBOR, Chinese Strategy and Implications

Postby TKiran » 08 Dec 2017 13:45

^^^ if you are Han and your aim is to divert Tibet waters, in the process if environment in Tibet and some other southern states, which are not part of Han core China, would you really bother about the environmental damages??

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Re: OBOR, Chinese Strategy and Implications

Postby chetak » 08 Dec 2017 14:12

TKiran wrote:^^^ if you are Han and your aim is to divert Tibet waters, in the process if environment in Tibet and some other southern states, which are not part of Han core China, would you really bother about the environmental damages??


the environment does not come into it.

the pakis and the hans are otherwise motivated. Each thinks that the other is going to help it damage India.

we are lucky that the govt has changed in India. I shudder to think what would have happened otherwise.

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Re: OBOR, Chinese Strategy and Implications

Postby yensoy » 08 Dec 2017 14:19

Philip wrote:There was a v.good article in an environmental magazine 30 yrs. ago that gave stats how big dams usually ended up destroying the ecology of the country in Q.The Aswan Dam Destroyed the annual flooding of the Nile,which was the feature of Egyptian civilisation for millennia. The Mahaveli projects in Sri Lanka failed to deliver enough (elec) as promised,destroyed settlements ,nature nd brought back malaria,etc. to the island.The resrvoirs further silted up reducing the reservoir capacity.China will enjoy similar "success' with its 3-Gorges disaster.

China's Three Gorges Dam: An Environmental Catastrophe?
Even the Chinese government suspects the massive dam may cause significant environmental damage

https://www.scientificamerican.com/arti ... -disaster/

The refusal of the 3 S.Asian nations to proceed further with the Chin projects,making them get into the debt trap is also going to save them environmental disasters in the future if cancelled.


I feel this is a defeatist attitude. Any large dam is going to have rather huge implications for the surrounding ecology and geology. There will certainly be downsides, but before writing off dams as evil (i) their negatives have to be deducted from their positives and (ii) other means to counter their negatives should be explored. If malaria emerges, fight the disease, mosquitoes and stagnant pools of water (not just the catchment lake which usually has reasonable wave activity to not encourage breeding). Seismic effects are the only poorly understood phenomenon because of lack of full knowledge of the balance of forces under us and the time scale these forces take to manifest; and seismic effects are probably the only unique feature of dams. Landslides happen with all kinds of construction (see how landslides affect roads and railways, especially Konkan Railway). The Scientific American article is 9 years old and nothing has happened there. Doesn't prove anything one way or another. A "really big one" is expected to hit the Western US, yet life goes on https://www.newyorker.com/magazine/2015/07/20/the-really-big-one.

I generally don't advice messing around with mother nature - small check dams and run of the way turbines are preferable; but I will not blacklist huge intrusive projects either.

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Re: OBOR, Chinese Strategy and Implications

Postby yensoy » 08 Dec 2017 14:25

chetak wrote:
TKiran wrote:^^^ if you are Han and your aim is to divert Tibet waters, in the process if environment in Tibet and some other southern states, which are not part of Han core China, would you really bother about the environmental damages??


the environment does not come into it.

the pakis and the hans are otherwise motivated. Each thinks that the other is going to help it damage India.

we are lucky that the govt has changed in India. I shudder to think what would have happened otherwise.


In both cases (Eastward and Westward flows from Mount Kailash) India is a pass-through, eventually rivers go downstream to Bangladesh and Pakistan respectively. So while the Chinese intention may be to harm India, they will have severe collateral damage as well. If they wish to hurt us, they would collect a lot of water behind a dam on the Brahmaputra and then without warning release it downstream. Would it be an act of war? Possibly, if we could prove it. Regardless they would be hurting Bangladesh as well - or we would need a check dam on Brahmaputra which we will open when we detect a wall of water coming towards us. This game can be played by us as well, unfortunately the parcel has to be passed to someone else.

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Re: OBOR, Chinese Strategy and Implications

Postby SSridhar » 09 Dec 2017 12:37

Maldives signs trade pact with China - PTI
The Maldives on Friday signed a crucial free trade deal with China, while endorsing its Maritime Silk Road project shunned by India for its strategic implications in the Indian Ocean.

“China deems the Maldives as an important partner to building the 21st Century Maritime Silk Road (MSR),” President Xi Jinping told his visiting Maldivian counterpart Abdulla Yameen as they witnessed signing of 12 agreements, including the free trade agreement (FTA).

The China-backed multi-billion-dollar Belt and Road Initiative (BRI) — of which the MSR is a part — is similar to Maldives’ strategy of achieving economic progress by making use of its geographic advantages, Mr. Xi told Mr. Yameen while expressing appreciation for the Maldives’ proactive participation in the BRI, official media here reported.

President Yameen said the Maldives viewed China as “among our closest friends, most trusted and most dependable partners”.

“The Belt and Road Initiative has greatly helped the development of many small and medium countries,” state-run Xinhua news agency quoted him as saying.

After acquiring Sri Lanka’s Hambantota port on a 99-year lease in a $1.1 billion debt swap deal, China has now roped in the Indian Ocean archipelago nation, located strategically in India’s backyard, to implement the MSR.

China has also set up a ‘logistics base’ for its navy in Djibouti, also located in the Indian Ocean region in the Horn of Africa.

Besides the FTA, the agreements signed were on economy, human resources, oceans, environment, health care, and finance, state-run Xinhua news agency reported.

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OBOR, Chinese Strategy and Implications

Postby Peregrine » 10 Dec 2017 01:04

X Posted on the Analyzing CPEC Thread

India eyes Asean pivot against OBOR

NEW DELHI: Amid fresh controversy over China's One Belt, One Road (OBOR) projects in south Asia, India will next week host the first ever Asean-India Connectivity Summit with help, not surprisingly, from Japan, which has emerged as the linchpin of India's Act East Policy.

The summit, which will be held on December 11-12, has secured participation from all 10 Asean nations, with Vietnam and Cambodia likely to be represented at the ministerial level. Japan will be the only country outside of Asean to participate in the summit, which aims to enhance economic and industrial relations between India and Asean or the Association of Southeast Asian Nations.

Japan, which inaugurated an Act East Forum with India on December 5, will be represented by Japan International Cooperation Agency (JICA) and Japan External Trade Organisation (JETRO). The forum is meant to expand cooperation with Japan in the northeast, which, according to Japanese ambassador Kenji Hiramatsu, is where Japan's Free And Open Indo-Pacific Strategy converges with India's Act East Policy.

The Asean-India Connectivity Summit, which will also seek private partnership, is important for India and Japan as they seek to counterbalance China's OBOR that has often been accused of following exploitative debt financing practices. As officials here say, India's development partnership is based purely on needs identified by partner countries and the MEA has tried to accommodate as many requests as possible from these countries as is "technically and financially possible" .

In the present geopolitical situation, Southeast Asia is the most important focal point of India's foreign policy. By focusing on connectivity, the government wants to make the point that it considers the region a part of its immediate, not extended, neighbourhood, given that it shares maritime boundaries with some countries and also land boundary in the case of Myanmar.

India had, in 2015, proposed a $1 billion line of credit to promote projects with Asean that support physical and digital connectivity. In addition, it has also set up a project development fund of $77 million for developing manufacturing hubs in CLMV (Cambodia, Laos, Myanmar and Vietnam) countries.

The summit will also focus on ensuring better digital connectivity as the government looks to align its initiative with Asean's Master Plan on Connectivity, 2025, which centres on five strategic areas: sustainable infrastructure, digital innovation, seamless logistics, regulatory excellence and people mobility. The summit will look at regulatory frameworks to support digital technologies, financing of digital infrastructure and use of technology by MSMEs.

India and Asean have just completed 25 years of dialogue partnership, 15 years of summit-level interaction and five years of strategic partnership. India has also invited the leaders of all 10 Asean nations for the 2018 R-Day.

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Re: OBOR, Chinese Strategy and Implications

Postby periaswamy » 11 Dec 2017 02:13

Chinese Bank funds road connecting Turkmenistan and Afghanisthan. Source ToloNews.

Ghani Inaugurates Qaisar-Laman Road Project In Badghis

President Ashraf Ghan visited western Badghis province on Sunday and officially inaugurated the first and second sections of the Qaisar-Laman ring road project.

Speaking at the inauguration of the Qaisar-Laman road project in Badghis province, Gani thanked the Asia Bank for its support of the Badghis's Qaisar-Laman road. “In the upcoming two years, you will witness a rail link to Badghis. It will change the lives of the people,” Ghani said. “It is an honor for me to inaugurate this project today in this province.”

Local officials, MPs, Provincial Council members and residents of the province participated in the ceremony.

The first and second phase of the ring road is 82km of the total of the 233 km-ring road of Afghanistan. The first and second phase of the project will be complete in 913 days, according to Presidential Palace statement.
With the completion of the whole project, the South Asia will be linked to Central Asia by this project, it said.
“Badghis should have a transit future,” Ghani said, adding that Badghis and Herat are provinces which could provide wind electricity in the future.

Ghani warned that the security situation had to be changed in the next year and the forces should take an offensive role. “It is an order to security organizations that they go on the offensive in the next year, but the people must also support the government,” he said.

President Ghani said that Qaisar-Laman is one of our biggest national projects. “I hope this project will be supported everywhere in the country. It is necessary that such projects be implemented in other provinces.”

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OBOR, Chinese Strategy and Implications

Postby Peregrine » 31 Jan 2018 23:37

X Posted on the Analyzing CPEC & Terroristan Threads

Chinawalas have a Severe Affliction of "Ants in their Pants"- just can't sit still - If it is not CPEC then it is OBOR!

India should join BRI, says Chinese expert

SINGAPORE: India should leave its bilateral disputes with China aside and join the Beijing-backed Belt and Road Initiative (BRI), a Chinese scholar has said.

"We will keep the door open on India's participation in the BRI. China has repeatedly extended invitations to India to be part of the BRI," said Associate Professor Huang Yunsong, Associate Dean, Sichuan University School of International Studies.

"But India is not interested in BRI at this stage," he told PTI after addressing a BRI symposium in Singapore on Monday.

He pointed out the number of disputes between China and India, but stressed these should not be used against the BRI.

Touted as Chinese President Xi Jinping's ambitious project, the One Belt One Road initiative focuses on improving connectivity and cooperation among Asian countries, Africa, China and Europe.

The BRI also included the China-Pakistan Economic Corridor (CPEC) which India opposed as it goes through Pakistan-occupied Kashmir.

"There are a lot of issues between India-China since 1947, such as the China Pakistan relationship," he said. Among others issues, there were growing trade imbalance between the two countries, Dokalam border situation, Tibet and Dalai Lama, he pointed out.

"China has an agreement with Pakistan that it will not back any side in their (disputed) claims on Kashmir. It is between Pakistan and India," stressed Huang who is well versed on China-South Asia issues.

But he also noted the positive points, for India and China having agreed to work on border disputes at its own pace while taking a more cooperative approach in pursuing economic activities between the two countries.

He called on India to offer more favourable terms for Chinese investments as a way forward to manage the trade deficit.Thereby China will end up owning and controlling Indian Industry!

According to figures, India's trade deficit with China was $51.08 billion in 2016-17.India should start curtailing Chinese Origin Imports and reduce its Trade Deficit with China.

Huang also called for removal of tax-based restriction on exports of Indian iron ore and cotton to China.

"India should remove restrictions on Iron ore and cotton for export to China. China may allow pharmaceutical imports," said Huang, who is also the Coordinator, Centre for South Asian Studies at Sichuan University of China. In return China will Arm and Supply Terroristan so that Terroristan can continue its Terrorist Activities in India.

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Re: OBOR, Chinese Strategy and Implications

Postby Singha » 01 Feb 2018 08:43

Maldives will not survive another 50 years rise in sea levels, their max ASL is 8 feet (Male) and that cowers behind a seawall . there is no place for any major naval or air base there...unless cheen wants to build one of their patented squatter reefs

Maldives real threat is saudi tableeqs spreading their poison (now in collusion with cheen intel maybe) and the free run of the place that maldivians get in india for work and play.

that being said, they are in need of a good slapping and deportation of all undesirables and a friendly regime and democracy to be restored with monitored and sanitized madrasas allowed only.

we have given them a very very long rope, probably because that desk at the MEA is used for sleeping only.

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Re: OBOR, Chinese Strategy and Implications

Postby chetak » 01 Feb 2018 11:36

Singha wrote:Maldives will not survive another 50 years rise in sea levels, their max ASL is 8 feet (Male) and that cowers behind a seawall . there is no place for any major naval or air base there...unless cheen wants to build one of their patented squatter reefs

Maldives real threat is saudi tableeqs spreading their poison (now in collusion with cheen intel maybe) and the free run of the place that maldivians get in india for work and play.

that being said, they are in need of a good slapping and deportation of all undesirables and a friendly regime and democracy to be restored with monitored and sanitized madrasas allowed only.

we have given them a very very long rope, probably because that desk at the MEA is used for sleeping only.


Many of these jokers have already settled in India permanently.

Simply followed the tried and tested beedi methodology.

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Re: OBOR, Chinese Strategy and Implications

Postby chola » 01 Feb 2018 14:59

Not technically part of OBOR but part of the chini investment drive across Eurasia.

With money, they are everywhere. Even Israel will fall into the chini spider web being built across the width and breadth of the landmass from Cheen to the Balkans.

http://www.ejinsight.com/20180201-china-to-overtake-us-as-biggest-investor-in-israel/

China to overtake US as biggest investor in Israel
Mark O'Neill

China will soon overtake the United States as the biggest foreign investor in Israel.

That was the astonishing prediction made by the Jerusalem Post in December. In 2016, Chinese investment in the Jewish state reached a record US$16.5 billion, according to Thomson Reuters.

Driving this are Chinese companies eager to invest in high-technology and Internet startups, of which Israel is one of the world centers.

...

Technion Institute of Technology is the MIT of Israel. It is the oldest university in Israel, set up in 1912, 36 years before the Jewish was re-established. The Guangdong site is only its second branch outside Israel.

In 2013, Li donated US$130 million to Technion. A large part of the money came from the profits he made from the IPO of Waze, a GPS-based map software company, in which he held a 11 percent stake. His was the largest donation ever made to Technion and one of the biggest to any Israeli academic institution. Li has been the pioneer of Chinese investment in Israel.

...

Chinese firms are also investing in other sectors in Israel. In the major sea port of Ashdod, China Harbour Engineering is building a new pier at a cost of US$1 billion. Five state-owned Chinese construction firms are building thousands of new homes in Israel; each can import 1,000 workers.

In 2017, a record 185,000 Chinese tourists visited Israel, an increase of 46 percent over a year earlier.

The Israeli government and big business welcome this inflow of Chinese money, because it brings new investment and reduces the country’s economic dependence on the United States and Europe.

But not everyone is so supportive. China is a major exporter of arms; its customers include countries and organizations in the Middle East hostile to Israel, including Syria, Iran and Yemen. Its short-range missiles and rockets delivered to these countries have reached Hizbullah in Lebanon and Hamas in the Gaza Strip. Beijing has not used its considerable diplomatic weight to work actively for a peace settlement in the Middle East.

...

Critics also question whether China will protect the intellectual property rights of Israelis and Israeli companies.

For the moment, however, this opposition is in a minority. This year and next the flood of Chinese investment into Israel will continue.


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Re: OBOR, Chinese Strategy and Implications

Postby venug » 01 Feb 2018 20:32


chetak
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Re: OBOR, Chinese Strategy and Implications

Postby chetak » 04 Feb 2018 16:36

Singha wrote:Maldives will not survive another 50 years rise in sea levels, their max ASL is 8 feet (Male) and that cowers behind a seawall . there is no place for any major naval or air base there...unless cheen wants to build one of their patented squatter reefs

Maldives real threat is saudi tableeqs spreading their poison (now in collusion with cheen intel maybe) and the free run of the place that maldivians get in india for work and play.

that being said, they are in need of a good slapping and deportation of all undesirables and a friendly regime and democracy to be restored with monitored and sanitized madrasas allowed only.

we have given them a very very long rope, probably because that desk at the MEA is used for sleeping only.


Same with the beedis.

Large portions of their country will be inundated and like the maldives, they also see India as the lebensraum.

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Re: OBOR, Chinese Strategy and Implications

Postby chetak » 04 Feb 2018 16:37

China Is Starting to See India as a Major Threat




China Is Starting to See India as a Major Threat

More and more, scholars in China see India replacing Japan as the second biggest threat to Beijing, following the U.S.

By Hemant Adlakha
January 11, 2018



As the new year gets underway, and Chinese foreign policy analysts join their counterparts around the world in assessing the events of 2017, the emerging international relations (IR) discourse in Beijing is quite a revelation — at least to the Japanese and Indian strategic affairs community.

While most Chinese believe Japan to be the second biggest threat to China’s “peaceful rise,” according to a few Chinese experts, the rising global profile of India, especially under the “right-wing” nationalist Prime Minister Narendra Modi and his Bharatiya Janata Party (BJP), has gone unacknowledged.

In February 2015, The Diplomat carried an article by a Chinese scholar titled “Why China Doesn’t See India as a Threat.” In April 2017, Sanjeev Nayyar, an independent columnist, wrote: “One thing China must understand is that the Indian government is not obsessed with being a threat to China but only wants a rightful place for India in the world.” And in the fall of 2017, China’s semi-official, hyper-nationalist Global Times dismissed with disdain any talk of India worrying China in an article titled “India-Japan intimacy poses no real threat to China.” The article was written in response to Japanese Prime Minister Shinzo Abe’s India visit in September.

The Global Times also – it now seems ignorantly – wrote off India’s successful test of its long-range ballistic missile Agni-IV a year ago, commenting: “China should realize that Beijing wouldn’t hold back India’s development of Agni-IV. However, Chinese people don’t think India’s development has posed any big threat to it.”

As the year 2017 was drawing to a close, however, Yin Guoming, a Chinese foreign affairs analyst, argued that India, and not Japan, is now the second biggest threat to China after the United States. Here’s an excerpt:

China-India standoff has compelled us to regard India as a serious rival. During the Dong Lang [or Doklam] confrontation, it became very clear to everyone – from ordinary Chinese to foreign policy experts – China must reckon India to be its second biggest rival. And that China needs to re-assess, re-examine, and reformulate its India strategy.

However, more significantly, the article pointed out that most people in China were not yet ready to recognize the Indian threat.

China’s strategic affairs community has been arguing for some time now that, viewed geopolitically, Sino-Indian relations are the second most important bilateral ties for Beijing following the Sino-U.S. relationship. Most Chinese came in for a rude shock in the summer of 2017, when the Indian army openly crossed into Doklam border region and for weeks refused to withdraw. Writing in an influential, widely read online patriotic portal based in China’s Hainan province and popular among rich, educated urban Chinese, Li Yang, a current affairs commentator wrote in July – midway through the Doklam confrontation – “The biggest mistake we have made in the past two decades has been to underestimate India and ignore India. During these years of India’s rapid progress, we did not trouble India, did not make India stumble or make India shed tears.”

Earlier, in May 2017, India announced – just a day in advance – that it would not be present at the inauguration of China’s first mega-diplomatic event of the year, the Belt and Road Forum, citing sovereignty concerns. The Chinese, though angered by India’s last minute boycott, chose to officially remain silent. A section of China’s foreign affairs commentators did indeed hint it was a mild setback to their diplomacy.

By comparison, the Doklam faceoff, which cropped up within a few weeks of Belt and Road Forum, was a “game changer.” It went well beyond the Chinese imagination. Interestingly, as the days passed, India’s refusal to withdraw its troops as well as its dismissive attitude toward engaging with the Chinese on the issue, simply left the Chinese puzzled and clueless as to the Indian game plan. Not surprisingly, Shen Dingli, an eminent and influential Chinese international relations scholar at Fudan University, counted the Doklam crisis as among China’s top five diplomatic failures under the so-called “Xi-style Diplomacy.”

Current trends in Chinese discourse on the potential India threat, if acknowledged and accepted at the official level by the central authorities in Beijing, would mean further intensification of China and India viewing each other as a hostile “enemy” in the future. The following arguments have been offered by some Chinese scholars as to why India, and not Japan, will pose a bigger threat and challenge for China in the coming years.

In the context of geopolitics, China believes it enjoys a greater advantage over Japan. Japan is a maritime nation and maritime trade and transportation forms Japan’s economic as well as survival lifeline. Geographically too, Japan’s location makes its energy supply route from the Middle East longer than China’s. Both logistically and economically, the South China Sea route is the shortest path. Once China establishes its full hegemony in the South China Sea (and also regains control over Taiwan, which has long been Beijing’s dream), China would naturally be able to easily place a stranglehold on Japan by dominating maritime trade routes – crucial for Japan’s existence.

In contrast, China’s own crucial maritime energy supply route passes through the Indian Ocean, which falls within the Indian military threat zone. During the Doklam confrontation, the Chinese took due notice of Indian analysts making statements that in the event of a India-China military clash, India would cut off China’s maritime access to the Indian Ocean.

Of course, it is true many Chinese dismiss the Indian threat as nothing but a joke. But that is more because India has not yet fully realized its potential, not because India is not capable of becoming a future threat to China.

Some analysts in China have also expressed their frustration over India’s “unchecked” rapid economic progress during the past two decades. These experts and scholars are rather candid in admitting China had failed to anticipate the “revolutionary” transformation Narendra Modi has brought about in the Indian national psyche. True, it is not a revelation to the Chinese that India has always viewed China is its “imaginary enemy.” Moreover, it is not hidden from the Chinese either that the Indian defeat during the 1962 boundary war has since remained the single most crucial factor in determining India’s national defense strategy. Yet, it is only now and under Modi, as India’s stature in global politics has risen, that China has suddenly realized that — unlike Japan — India is a nuclear weapon state. Finally, thanks to the Modi government’s uncharitable stance, it has dawned upon China’s strategic affairs community that Beijing’s Belt and Road strategy is bound to produce more and more structural contradictions between the two neighbors, already rapidly becoming hostile.

No wonder, if the media reports from Beijing are true, that the Peoples Republic of China for the first time keenly awaited the outcome of this year’s assembly elections in India. Following the Gujarat elections, the mandarins watching India in the Chinese foreign affairs ministry, it is believed, have predicted in their dossier that Modi will enjoy a second term as the prime minister in 2019.

Going by the current Chinese discourse, Beijing is certainly not going to just sit and watch and let India become a threat. The question that looms large, then, is what China is going to do about it.


Hemant Adlakha is a professor of Chinese at Jawaharlal Nehru University, New Delhi and an Honorary Fellow at the Institute of Chinese Studies (ICS), Delhi.

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Re: OBOR, Chinese Strategy and Implications

Postby chetak » 06 Feb 2018 16:35

Why Chinese One Belt One Road (OBOR) is dangerous for the economic well-being of the world



Why Chinese One Belt One Road (OBOR) is dangerous for the economic well-being of the world

By Shekhar Tankhiwale, February 5, 2018

One Belt One Road (OBOR) is an ambitious project conceptualized by China in 2013 ostensibly to revive and build trade routes between China and the countries in Indo-Pacific region, Central Asia and Europe. China is trying assiduously to position it as ‘be all end all’ initiative, especially for the developing nations to end their infrastructure deficit and boost their GDP. Four years down the road, is it really turning out to be so? Here is an attempt to look at OBOR from wider perspective

What is the global infrastructure investment demand and the gap?

As per World Economic Forum (WEF) estimates, the current global infrastructure investment gap is pegged at $1tn per year vis-à-vis the annual infrastructure investment demand of $3.7tn. As per The Global Infrastructure Outlook report, which is a joint report developed by the Global Infrastructure Hub with Oxford Economics, road, electricity and rail are the major sectors with the bigger investment gaps vis-à-vis the forecast. The infrastructure investment needs are leapfrogging now because of growing world population and at the same time faster rate of urbanization. Unless these investment gaps are addressed in a robust manner, United Nations Sustainable Development Goals (SDGs) would also be at the risk of not being met.

How the investments are financed now?

Both developing as well as developed economies need significant investments to maintain or raise their economic profile. US for example spends $400bn every year and yet falls short on investment needs. All over the world the investments are being funded through private as well as public route. There are variety of choices available today ranging from financing available in multiple markets, including municipal bonds, project finance loans, dedicated federal credit programs, and private equity investments to Pension Funds, Sovereign Wealth funds to multilateral or bilateral institutions such as World Bank (through their Overseas Development Assistance), Asian Development Banks, BRICS Bank, EU Bank etc. These funds are being provided through the combination of debt and equity. Many governments have set up dedicated infrastructure financing funds e.g. Indian govt for example has set up National Investment and Infrastructure Fund (NIIF) for enhancing infrastructure financing in the country. If the cumulative infra spending needs of the nations is worth say Rs 100, then all the alternate routes put together supply Rs 73 worth of funds today. This gap of 27% in demand and supply of funds is being seen as an opportunity by China to further its strategic objectives. To that aim, China is seeking to fill this gap partly by leveraging its massive foreign exchange reserves. Enter China’s One Belt One Road (OBOR) project

What is China’s funding and execution strategy for OBOR?

China has $3.2tn foreign exchange reserves held in US dollars. The money is depreciating 2-3% a year vis-à-vis US Dollar. Also, China is getting a mere 0-1% interest on the money and sometimes even made to pay the servicing cost. Effectively the money isn’t fetching great returns for the Chinese. If they take the money back to Yuan, there are severe inflationary repercussions that they will most certainly face. On positive side, IMF’s 2016 decision to include Chinese Yuan in the basket of currencies that make up the Special Drawing Right (SDR), an alternative reserve asset to the dollar, has also come in handy. Even though only about 1% of the total foreign exchange reserves are currently being held in Yuan but it certainly offers Chinese a comfortable position and a window of opportunity.

Chinese figured out in 2013 a clever means of ensuring higher returns on its foreign exchange reserves along with attaining the strategic and geo-political objectives through OBOR project. Under OBOR, China is funding strategically important projects on maritime silk route as well as one belt region. Chinese offer loans at 6% plus of LIBOR rates vis-a-vis World Bank’s standard rate of around 3%. The other conditions attached to Chinese loans are pertaining to using min 40% of Chinese equipment, 100% of China manufactured raw material such as steel, cement etc. The projects too are executed by the Chinese companies by shipping in cheap labor from China in the host nation. OBOR is envisaged to provide an answer to China’s industrial overcapacity woes especially for its steel and cement sector. In summary, this effectively means the Chinese loan money spent on building the infrastructure in the host nation ultimately goes back to China’s own infra companies, manufacturers and the Chinese workers who are brought overseas to execute the projects.

How can these investments become a noose around host nation’s neck?

Now with this kind of costly investments and “only China” kind of execution model, if the requisite volumes are not generated quickly on the completed projects, be it air traffic for airports, container traffic for sea ports etc. it would become extremely difficult for the host nation to service the debt and Chinese investment can quickly turn into a massive burden for the host nation leading to debt trap like situation.

Normally an infrastructure project benefits the local economy in very many ways. Besides bringing in investments, it helps create jobs, pump primes local ancillary and raw material industry, creates new economic and social opportunities for growth etc. All of this results in betterment of local purchasing power, propelling growth in demand for products and services. With OBOR kind of model, the investment in the form of debt would certainly come in the host nation but because of the “unique” execution model, all the related benefits which should accrue to the local economy would instead be passed back to Chinese economy. This would stem the growth of purchasing power in the local economy. Imagine a situation where the host nation gets the infrastructure built say an airport through the debt investments but since the local economy isn’t pump-primed the new jobs aren’t created, the money hasn’t been spent with the local companies, the purchasing power of the local economy doesn’t change significantly. This means the necessary volumes needed for servicing the debt for the completed infra projects doesn’t get generated easily. The host nation then gets faced with a challenge of how to repay Chinese loan when there are no revenues from the completed project? This leads to a debt trap for the host nation.

Take the case of Hambantota airport in Sri Lanka which is also known as world’s emptiest airport. Hambantota was built at the cost of $210 mn of which around $190mn came from Exim Bank of China as a loan at 8%. This massive airport in Southern Lankan district of Hambantota has the capacity of handling 1 million air travelers a day. Four years in operation Hambantota still far away from generating enough revenues to payback the interest on Chinese debt. The airport operates only 3 flights-2 domestic and 1 international to UAE. Because of their inability to pay back, Sri Lankans govt finds itself in deep trouble and in debt trap now. Similar situation prevailed on the massive investments in Hambantota port which was recently handed over to a Chinese port management company amidst huge uproar in Sri Lanka. Similar fate awaits CPEC projects in Pakistan where economist have already raised alarms about Pakistan’s imminent default on repayments by March of 2018. The Chinese solution for this situation has been to swap the debt with an equity as also to extract huge concessions from the host nation e.g. Chinese have asked for and have been given 15000 hectors of land near Hambantota port apparently for developing other port led development projects. In case of Zimbabwe, China has agreed to cancel $40mn worth of debt and in return Harare to increase local use Yuan as a currency for foreign exchange reserve. This model is very similar to west’s economic colonialism model that they practiced earlier in Hong Kong and Macau.

How does OROB impact global economic well-being?

OBOR model of “growth” has implications for the entire global economy. Going by OBOR’s expanse (OBOR aims to cover 60 countries, 30% of world GDP & 60% of world population), a large population would be impacted by OBOR in next 2-3 decades. OBOR has a project pipeline cutting across South Asia, West Asia, Eastern Europe etc.

PM Modi speaking at WEF 2018 in Davos implicitly alluded to an alternate model of infrastructure development to Chinese OBOR, which is being promoted by India and Japan. While talking about three major challenges before humanity today, PM Modi outlined the failure of globalization due to protectionism as the third biggest challenge after environment and terrorism. Modi attributed the decline in overall global Foreign Direct Investment (FDI) to protectionism being followed by some western economies. Whilst remaining unmindful of the fact that if the overall FDI quantum reduces due to protectionism, the more number of developing nations who can’t generate enough resources internally would be compelled to seek Chinese funds. This would set many of them on the course for debt trap and faltering local economy. This will obviously have a cascading impact on the exporting nations as well as the overall consumption rates in the defaulted economies are expected to come down significantly. Thus, the 60 odd participating nations would be at risk leading to a global crisis situation where only China benefits and all the rest undergo a severe distress.



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Re: OBOR, Chinese Strategy and Implications

Postby SSridhar » 14 Feb 2018 18:36

China’s ‘own courts’ for BRI rows raise eyebrows - Dipanjan Roy Chaudhry, Economic Times
China's recent announcement that it would establish courts under its own judicial system to handle international disputes arising from projects under the Belt and Road Initiative (BRI) has triggered apprehensions that this would lead to dispute settlement on its unilateral terms and conditions.

The courts, which are to be based in Beijing, Xi'an and Shenzhen, have been established under the authority of the Supreme People's Court of China
, ET has learnt.

The Xi'an court will manage commercial disputes for the Silk Road Economic Belt, which connects China, West Asia and Europe. The Shenzhen court will manage commercial cases for the Maritime Silk Road, which connects China, Southeast Asia, Africa and Europe.

Chinese media has reported that the country will seek to promote the courts to resolve disputes that emerge from the BRI. Experts said that the courts could be similar to the International Commercial Court in Singapore and the International Finance Centre Courts in Dubai.

"It is unclear over which authority the Chinese have claimed jurisdiction over BRI disputes," said a recent brief on the issue by law firm Dezan Shira & Associates, which has been guiding foreign investors in India, ASEAN and China since 1992.

"There are existing mechanisms to deal with such matters, ranging from existing bilateral investment treaties to multilateral agreements such as those ASEAN has with China, the 2012 'Agreement on Dispute Settlement Mechanism of the Framework Agreement on Comprehensive Economic Cooperation'," said the brief, seen by ET.

Most bilateral treaties and the ASEAN treaty provide for similar conflict resolution processes: consultation, followed by mediation, followed by arbitration by an ad hoc arbitration tribunal, with no preset venue or choice of law, either procedural or substantive, according to the law firm.

The Chinese government is trying to force other sides to accept Chinese mediation and arbitration through its proposal to have these three courts rule on all BRI disputes, experts said.

The country's move to establish BRI-specific courts seems to alter that position, and move jurisdiction specifically to China on bilateral projects.

The memorandum of understanding (MoU) that China has signed with more 70 nations concerning cooperation on BRI projects does not appear to suggest any differing mechanisms for dealing with disputes, other than the usual terminology referring to "friendly consultations", though these may differ from case to case, according to Dezan Shira & Associates.

"The question concerning China's establishment of the BRI courts therefore revolves around the question of how this mechanism was agreed to between China and the BRI nations with which it has signed agreements," it said.

There are other existing alternatives to accepting arbitration in China. These include an agreement reached in September last year between the Singapore International Mediation Centre and the China Chamber of International Commerce Mediation Centre (CCOIC), which entered into an MoU to resolve BRI cross-border disputes.

"Despite these steps by China, the choice of arbitration venue and law, both procedural and substantive, should be left to negotiation between the concerned parties... third party jurisdictions with established rules and an experienced body of jurists are always preferable to those jurisdictions affiliated with one or the other of the parties to a contract," the law firm said.
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chetak
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Re: OBOR, Chinese Strategy and Implications

Postby chetak » 15 Feb 2018 11:04

SSridhar wrote:China’s ‘own courts’ for BRI rows raise eyebrows - Dipanjan Roy Chaudhry, Economic Times
China's recent announcement that it would establish courts under its own judicial system to handle international disputes arising from projects under the Belt and Road Initiative (BRI) has triggered apprehensions that this would lead to dispute settlement on its unilateral terms and conditions.

The courts, which are to be based in Beijing, Xi'an and Shenzhen, have been established under the authority of the Supreme People's Court of China
, ET has learnt.

The Xi'an court will manage commercial disputes for the Silk Road Economic Belt, which connects China, West Asia and Europe. The Shenzhen court will manage commercial cases for the Maritime Silk Road, which connects China, Southeast Asia, Africa and Europe.

Chinese media has reported that the country will seek to promote the courts to resolve disputes that emerge from the BRI. Experts said that the courts could be similar to the International Commercial Court in Singapore and the International Finance Centre Courts in Dubai.

"It is unclear over which authority the Chinese have claimed jurisdiction over BRI disputes," said a recent brief on the issue by law firm Dezan Shira & Associates, which has been guiding foreign investors in India, ASEAN and China since 1992.

"There are existing mechanisms to deal with such matters, ranging from existing bilateral investment treaties to multilateral agreements such as those ASEAN has with China, the 2012 'Agreement on Dispute Settlement Mechanism of the Framework Agreement on Comprehensive Economic Cooperation'," said the brief, seen by ET.

Most bilateral treaties and the ASEAN treaty provide for similar conflict resolution processes: consultation, followed by mediation, followed by arbitration by an ad hoc arbitration tribunal, with no preset venue or choice of law, either procedural or substantive, according to the law firm.

The Chinese government is trying to force other sides to accept Chinese mediation and arbitration through its proposal to have these three courts rule on all BRI disputes, experts said.

The country's move to establish BRI-specific courts seems to alter that position, and move jurisdiction specifically to China on bilateral projects.

The memorandum of understanding (MoU) that China has signed with more 70 nations concerning cooperation on BRI projects does not appear to suggest any differing mechanisms for dealing with disputes, other than the usual terminology referring to "friendly consultations", though these may differ from case to case, according to Dezan Shira & Associates.

"The question concerning China's establishment of the BRI courts therefore revolves around the question of how this mechanism was agreed to between China and the BRI nations with which it has signed agreements," it said.

There are other existing alternatives to accepting arbitration in China. These include an agreement reached in September last year between the Singapore International Mediation Centre and the China Chamber of International Commerce Mediation Centre (CCOIC), which entered into an MoU to resolve BRI cross-border disputes.

"Despite these steps by China, the choice of arbitration venue and law, both procedural and substantive, should be left to negotiation between the concerned parties... third party jurisdictions with established rules and an experienced body of jurists are always preferable to those jurisdictions affiliated with one or the other of the parties to a contract," the law firm said.
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own cheeni currency for OBOR related transactions, own cheeni workforce used for constructing OBOR infrastructure in other countries, OBOR assets become cheeni's own property in case of loan defaults and now own cheeni courts to resolve OBOR related disputes.

They have also redefined the word "hegemony", imparting it with a dominant cheeni flavor.

Good going for the cheenis and their "peaceful" expansion/rise.

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Re: OBOR, Chinese Strategy and Implications

Postby Singha » 15 Feb 2018 15:41

ndtv.com

China Says "Firmly Opposed" To PM Modi's Arunachal Visit, Will Protest
China routinely protest visits of Indian leaders to Arunachal Pradesh and reiterates its claims over it.

China Says 'Firmly Opposed' To PM Modi's Arunachal Visit, Will Protest
PM Modi addressed a rally in Arunachal Pradesh today.

BEIJING: China today voiced its "firm opposition" to the visit of Prime Minister Narendra Modi to Arunachal Pradesh which it claims as part of South Tibet and said it would lodge a diplomatic protest with India.

"China's position on the China-India boundary question is consistent and clear-cut," said Chinese foreign ministry spokesperson Geng Shuang in response to reports that PM Modi visited Arunachal Pradesh today.

"The Chinese government has never recognised the so-called Arunachal Pradesh and is firmly opposed to the Indian leader's visit to the disputed area," Mr Geng was quoted as saying by state-run Xinhua news agency.

"We will lodge stern representations with the Indian side," he said.

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Re: OBOR, Chinese Strategy and Implications

Postby SSridhar » 19 Feb 2018 14:33

Australia, US, India and Japan in talks to establish Belt and Road alternative: Report - Reuters
Australia, the United States, India and Japan are talking about establishing a joint regional infrastructure scheme as an alternative to China’s multibillion-dollar Belt and Road Initiative in an attempt to counter Beijing’s spreading influence, the Australian Financial Review reported on Monday, citing a senior US official.

The unnamed official was quoted as saying the plan involving the four regional partners+ was still "nascent" and "won’t be ripe enough to be announced" during Australian Prime Minister Malcolm Turnbull’s visit to the United States later this week.


The official said, however, that the project was on the agenda for Turnbull’s talks with US President Donald Trump during that trip and was being seriously discussed. The source added that the preferred terminology was to call the plan an "alternative" to China’s Belt and Road Initiative, rather than a "rival."

"No one is saying China should not build infrastructure," the official was quoted as saying. "China might build a port which, on its own is not economically viable. We could make it economically viable by building a road or rail line linking that port."

Representatives for Turnbull, Foreign Minister Julie Bishop and Trade Minister Steven Ciobo did not immediately respond to requests for comment.

Japanese Chief Cabinet Secretary Yoshihide Suga, asked at a news conference about the report of four-way cooperation, said Japan, the United States, Australia, and Japan, Australia and India regularly exchanged views on issues of common interest.

"It is not the case that this is to counter China’s Belt and Road," he said.

Japan, meanwhile, plans to use its official development assistance (ODA) to promote a broader "Free and Open Indo-Pacific Strategy" including "high-quality infrastructure", according to a summary draft of its 2017 white paper on ODA. The Indo-Pacific strategy has been endorsed by Washington and is also seen as a counter to the Belt and Road Initiative.

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Re: OBOR, Chinese Strategy and Implications

Postby arun » 19 Feb 2018 18:41

X Posted from the Terroristan thead to the CPEC and OBOR threads.

Financial newspaper from the Mohammadden Terrorism Fomenting Islamic Republic of Pakistan is concerned about the antecedents of the China Overseas Ports Holding Company Pakistan (COPHC-Pakistan), the company that is running the “the centerpiece of the CPEC and a key node of China’s OBOR”, the “Next Dubai or Hong Kong”, the port of Gwadar:

The mysterious China Overseas Ports Holding Company

BR RESEARCH FEB 19TH, 2018 0 VIEWS: 479

China Overseas Ports Holding Company Pakistan (COPHC-Pakistan), the company building Gwadar Port – the centerpiece of the CPEC and a key node of China’s OBOR – is a company of unknown credentials at best, or a fishy one at worst.

On its website (cophcgwadar.com), COPHC-Pakistan says it is “a branch company of COPHC which is an emerging and fast growing company in Hong Kong”. That is the only thing the company has to say about its profile, background and key management.

Documents submitted by COPHC-Pakistan to the Securities and Exchange Commission of Pakistan (SECP) reveal that save for three shares – one each for its three directors – the rest of its total 10 million shares is owned by COPHC Limited based out of Hong Kong.

The COPHC-Pakistan has not submitted its annual documents for FY17; nor has it submitted its annual accounts to the SECP for all the years since its incorporation in Pakistan in October 2014. Under Pakistani law, companies that have a capital of Rs10 million or more are required to submit their annual accounts to the SECP.

BR Research is told that the SECP, which has recently signed MoU with COPHC-Pakistan to set up a facilitation office at Gwadar Port, has sent a show-cause notice to COPHC-Pakistan (on Feb 9, 2017) for not filing the annual accounts and other updated documents. But this is a small matter. The real deal is about the company’s origins and profile.

In its dated annual documents (2016’s Form-A) submitted to the SECP, COPHC-Pakistan mentions the following address of its parent company: Room D, 3/F Thomson Commercial Building, 8-10 Thomson Road, Wanchai, Honk Kong. BR Research has obtained documents from the government of Hong Kong and those documents confirm this address.

That an “emerging and fast growing company” is based out of a single room is a red flag – often indicative of a classic paper company – especially if that room is shared by at least four other companies, one of which featured in the Panama Leaks.

The four companies registered in the same room as COPHC-Pakistan’s parent firm in Hong Kong are as follows: Acota Limited (https:// offshoreleaks.icij.org/nodes/262770); Chums Asia Limited (https:// www.chums.jp/company/en/); China Dynasty Trading Limited (https:// panjiva.com/China-Dynasty-Trading-Ltd/44033963); and a certain auto parts company (https:// www.auto-bee.com/Contact-us.html). To re-confirm, BR Research randomly selected two companies (Acota and Dynasty) and purchased their documents from the government of Honk Kong – and both have the same addresses as COPHC-Hong Kong.

It may be possible that COHPC-Hong Kong is a vehicle for a consortium of Chinese companies operating in the businesses of port operations, port development, port financing and so forth. But even if that may be the case, then those involved in the port’s handover to COPHC and those overseeing the port ought to know and disclose the details of the consortium. After all, they are building the central pillar of the CPEC, and sharing the details of consortium parties is not uncommon: the strategic stake sale of Pakistan Stock Exchange is one such recent example.

Upon sighting the red flag, BR Research reached out to a host of stakeholders to find the profile and background of COPHC-Pakistan’s parent company and its key management. Most stakeholders, from the Planning Commission to the signatories of the concession agreement signed in 2013, said it was a Chinese state-run company. But when pressed for evidence, they said they didn’t have any, and that theirs was only an “assumption” that COPHC is a state-run company.

BR Research also sent letters/emails and made phone calls to both COPCH-Pakistan and Gwadar Port Authority officials, asking for the profile of COPHC’s Hong Kong based parent company. But nearly a week has passed, and no one has officially responded so far. For a piece of information that is standard and usually readily-available, the silence is disturbing.

China has been shopping for ports around the world. The matter has caught the interest of both international media – the likes of The Financial Times and the Economic Intelligence Unit – as well as of international research firms such as Drewry maritime and shipping consultants. Several detailed reports and studies have been published on the subject in recent months.

In those reports, three Chinese ports and terminal buyers feature the most: Cosco, China Shipping, and China Merchants. The COPHC does not feature in any of those studies, even though, according to Hong Kong government documents, the company is not entirely new; it was incorporated in August 2012. So much for “emerging and fast growing”!

When Pakistan invited bids to develop Gwadar port in 2006, leading seaport operating companies from Dubai, Saudi Arabia, China, and Singapore took part in the bids for the award of the build-operate-transfer (BOT) contract. The tender committee back then was headed by Farooq Rehmatullah – a seasoned and well-respected energy professional – in consultation with Arthur D. Little, the original consultant for Gwadar Port. The PSA International of Singapore had won that bid.

In 2013, when the COPHC was given port concessions after years of non-performance by the PSA International, there was no such list of contenders. If there was, it wasn’t surely made public. The port was simply handed over to the COPHC with the media reporting silence over the profile and background of the firm. Most observers assumed that it is a Chinese state-run firm. But no one really knows for sure. Will a Chinese state-run company have a shared single-room office?

At the one end, one is inclined to think there is something fishy about COPHC-Pakistan, considering that it is based out of a single room in Hong Kong. Yet at the other end, one would like to give benefit of the doubt that perhaps this is the way how Chinese work, especially considering that the Chinese government is also closely involved in the development of Gwadar.

This column fully supports the CPEC. But not at the cost of transparency. The CPEC is the flagship project of the OBOR. Gwadar is the raison d’être of the CPEC. And while the development of Gwadar as a city is critical, the successful development of Gwadar Port is what will breathe life into CPEC. No amount of urban development will turn Gwadar into an emerald unless its port is successful. Yet Pakistanis, individuals and businesses alike, have no idea about the firm that holds the concession for Gwadar port for 40 years.

The Chinese may not be used to answering the public. But here in Pakistan, the public is becoming sensitive to democratic standards of transparency and accountability. As a private company, the COPHCL may be well within its rights not to disclose its key corporate particulars, but the government of Pakistan cannot afford such secrecy. Ports are strategic assets. And therefore, the public, especially businesses, have the right to know in whose hands rests the fate of CPEC before they go about making grand business plans.

The Chinese government, too, should consider that it is at the risk of making OBOR an international joke with the central pillar of its flagship project (CPEC) being built by a firm that has unknown credentials at best and questionable at worst.

Copyright Business Recorder, 2018


Above from Business Recorder :

The mysterious China Overseas Ports Holding Company

Meanwhile Foreign Minister of the Mohammadden Terrorism Fomenting Islamic Republic of Pakistan, Khawaja Asif, had this to say about Gwadar Port:

Addressing a ceremony at Sialkot on Sunday, Asif said that Gwadar port would emerge as a busiest port and play a dominating role in ensuring drastic economic stability of the country as well as in the region.


From here:

Gwadar port, CPEC projects to open new vista of prosperity: Asif

Neshant
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Re: OBOR, Chinese Strategy and Implications

Postby Neshant » 19 Feb 2018 18:52

So far OBOR is proving to be a money losing venture.

Lots of money (more like over billing by China) going in and no profitable income stream coming out.
Last edited by Neshant on 19 Feb 2018 18:59, edited 1 time in total.

arun
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Re: OBOR, Chinese Strategy and Implications

Postby arun » 19 Feb 2018 18:56

Article in China Worker, a publication run by “The Committee for a Workers’ International (CWI)” who claim to base themselves “on the method and analysis of Marxism, to politically re-arm and organise the working class in the fight for a socialist world” titled “‘Belt and Road’: Imperialism with Chinese characteristics”.

An excerpt on what they say is the Peoples Republic of China’s “Imperialistic” motivation in launching the Belt and Road Initiative (BRI) aka OBOR, namely a strategy to avert a domestic PRC bad debt, non performing assets, problem:

Clearly, there are special features in China’s variant of imperialism. This is shown in the case of the BRI, firstly in terms of size. The scale of the BRI is gargantuan – if it can actually be realised. Secondly, it aims to repeat key features that distinguish China’s domestic growth model, powered by credit from the state-owned banking sector.

This model has allowed China to rapidly industrialise and upgrade its infrastructure, but has also led to its monumental and – according even to the Chinese government – unsustainable debt problem. Beijing hopes to disperse this debt burden to other countries through BRI-linked loans. China’s financial elite see this as a way to cut the banking system’s exposure to heavily-indebted “zombie” companies at home.

They set up the Asian Infrastructure Investment Bank (AIIB) in 2016 as an auxiliary to the BRI in order to draw in Western capitalist states (61 countries have joined including Britain, Germany and France) and harness their financial “expertise”. This has been done to shape AIIB/BRI lending practises along more traditional capitalist lines, as with US-dominated institutions like the World Bank and IMF, and thereby reduce the risk of debt defaults. Or so Beijing believes.

BRI projects, they hope, will replace China’s local bad debts with sovereign debt, guaranteed by national governments. But more likely this will just replicate China’s “zombie” predicament on an intercontinental scale, while also sharpening national and inter-imperialist conflicts.


See here:

‘Belt and Road’: Imperialism with Chinese characteristics

arun
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Re: OBOR, Chinese Strategy and Implications

Postby arun » 19 Feb 2018 19:02

Neshant wrote:So far OBOR is proving to be a money losing venture.


If one goes by the above posted China Worker article then the PRC may not be concerned as long as OBOR / BRI is a less money losing venture than domestic bad debts :roll: .

Neshant
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Re: OBOR, Chinese Strategy and Implications

Postby Neshant » 20 Feb 2018 02:00

^^ True dat.

There is no way China has spent 60 billion in Pakistan on infrastructure.

They are making up large bills claiming work their imported workforce has conducted in Pakistan, Sri Lanka..etc with surplus materials from their country is 5X what it's actually worth.

Any country dumb enough to accept China's billing claims deserves to be in debt trap to them.

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Re: OBOR, Chinese Strategy and Implications

Postby chetak » 20 Feb 2018 10:38

The Backlash to Belt and Road




The Backlash to Belt and Road

A South Asian Battle Over Chinese Economic Power

By Andrew Small

When Beijing announced its One Belt, One Road initiative five years ago, the global reaction was immediate and pronounced. OBOR, as it became known, was hailed as a transformative effort to deploy China’s economic might in service of its strategic goals. By going out of their way to reject analogies to the United States’ Marshall Plan in Europe, Chinese leaders in fact invited the comparison. Chinese ports, pipelines, roads, and railways would expand commercial, investment, and infrastructure linkages from Asia to Europe. They would build new markets, integrate poorly connected regions, and stabilize the Chinese periphery. Ultimately, they would lay the groundwork for a Sinocentric global order.

No region seemed to make a more promising target for such ambitions than South Asia. Sparsely populated Central Asia is a transit route and energy source rather than a serious market. East Asian trade and infrastructure connections are already well developed. EU public procurement rules preclude a privileged role for Chinese companies. Russia is in economic decline.

South Asia, by contrast, appeared to have all the right ingredients for the Chinese economic model: large populations, fast-growing economies, GDP per capita comparable to China’s a decade earlier, weak connectivity, and major infrastructure deficiencies. When Chinese Premier Li Keqiang undertook his first overseas visit in 2013, South Asia was the location he picked to tout two new economic corridors, a version of OBOR avant la lettre.

But five years on, such hopes have proved unfounded. The region has instead become the main battleground for OBOR’s future—with India as its chief opponent, Pakistan as its chief enthusiast, and, in between, countries from Nepal to the Maldives facing economic choices that have become highly politicized. While the hope may have been that Chinese investment schemes would help mitigate competition in the region, the result so far has been precisely the opposite: OBOR has fused with and reinforced existing divisions. If China wants the economics of the initiative to achieve its intended strategic effects, it will need to square the politics first. South Asia illustrates the obstacles Beijing will face when it fails to do so.

CHINA AND INDIA AT A CROSSROADS

At the crux of this contest is the Sino-Indian relationship, which has deteriorated sharply in the last few years. In other regions, Beijing offered careful reassurances to countries that might try to frustrate Chinese investments in their backyards. With Russia, for example, China noted that OBOR would complement and reinforce Moscow’s own connectivity plans. Beijing made no such efforts with India. New Delhi had been willing to join earlier Chinese-led initiatives, such as the Asia Infrastructure Investment Bank (AIIB), when Chinese diplomacy displayed deftness and a multilateral spirit. China’s conduct around OBOR in South Asia took a clumsier and more unilateral form. Its quasi-official maps of the initiative included Indian ports, despite the lack of any consultations between the two sides. The economic corridor linking Bangladesh, China, India, and Myanmar was likewise folded into the scheme without Indian agreement.

Most controversially, China announced that OBOR would include the China-Pakistan Economic Corridor (CPEC), an investment scheme potentially worth tens of billions of dollars, which India has formally objected to on the grounds that the route passes through disputed territory. In practice, the cross-border aspects of CPEC are modest—some fiber optic cable installations and road upgrades had already been under way—and the projects in the contentious region of Gilgit-Baltistan are similarly small in scale. CPEC is essentially an investment package rather than a serious transit route. But the “corridor” terminology and ambitious claims from the Pakistani side about future railways and pipelines implied a more significant change to the status quo. This only deepened New Delhi’s long-standing anxieties over Sino-Pakistani relations, which have for decades been built around the common security goal of counterbalancing India. While China has sought to portray CPEC as a means to stabilize Pakistan, India sees it as emboldening Islamabad.

OBOR’s takeoff in the rest of the region triggered a fresh round of concern about the security risks of China’s growing economic reach. For India, Sri Lanka exemplified its gravest fears. Beginning in 2007, China began supplying arms and diplomatic cover to the government of President Mahinda Rajapaksa, which played a crucial role during the brutal denouement of the country’s civil war. Beijing also lent an already indebted government funds to pursue several vanity projects, which enabled Rajapaksa to woo his political base. Alarm bells went off in New Delhi when China’s People’s Liberation Army (PLA) submarines paid port calls in Colombo without advance notice, the last straw that prompted Indian efforts to bolster the opposition to Rajapaksa in the 2015 election. But the new president, Maithripala Sirisena, who wanted to extricate Sri Lanka from some of the Chinese contracts, quickly found that the terms were inflexible and had left the country with virtually unserviceable levels of debt. China was willing to negotiate but sought a debt-for-equity swap that would give Chinese companies a long lease on Hambantota port.

In spite of this, India has maintained the upper hand politically. The 2015 elections proved that there was a price to be paid by Sri Lanka for ignoring New Delhi’s redlines. With the Hambantota lease deal, the Sri Lankan government carefully assured Indian officials that sensitive port operations, including security management, would be controlled by a Sri Lankan company and that the port would not be used for military purposes. It also denied subsequent requests from the PLA Navy to make port calls in Colombo. New Delhi’s message resonated throughout the region, prompting other governments to provide private reassurances that Chinese investments would not be a prelude to militarization. Beijing may find friendly governments to work with temporarily, but with the exception of Pakistan, it will find it very difficult to establish a dual-use port in South Asia that the PLA Navy can count on.

But Sri Lanka’s case also offered a warning to India of the economic realities working against it. Colombo was forced back to the negotiating table with China for lack of any better options. India has since improved its efforts to offer countries appealing economic alternatives. But its various limitations—in its resources, its capacity for direct investment, its significant infrastructure needs at home—have necessitated partnerships with other concerned countries. The most important of these has been with Japan, which created in 2015 the new “Partnership for Quality Infrastructure,” an expansion of the infrastructure resources provided by the Asian Development Bank (ADB), and in cooperation with India developed an “Asia-Africa Growth Corridor.” Perhaps the most telling Indo-Japanese intervention was in Bangladesh, which in 2015 was in the advanced stages of agreeing to a package of Chinese financing for a new deep-water port. But political pressure and economic incentives (including the largest yen loan that the Japan International Cooperation Agency has ever offered for developmental assistance) pushed Dhaka to opt for a Japanese deal instead.

Almost as important, Sri Lanka handed India a propaganda coup. In Colombo, a convincing story has taken hold, one that paints OBOR as predatory, a debt trap, and a route to military expansionism. In reality, the new Chinese highways have been beneficial; and the expansion of the Colombo port has been an economic success, with the overwhelming majority of the port’s activity consisting of trans-shipment to India. Yet that more nuanced picture is overshadowed by the evocative sight of Mattala Rajapaksa International Airport, a gleaming, fully staffed building with virtually no passengers, no planes, and an empty departures board, surrounded by sweeping highways on which cars are outnumbered by auto rickshaws, cows, and elephant dung. It is that image that has come to embody OBOR in Sri Lanka, much to India’s delight.

A ZERO-SUM FUTURE?

Beyond South Asia, India has been notably effective in influencing the debate over OBOR by consistently raising its concerns at the highest political levels to countries with plenty of reservations of their own. It was no coincidence that in October 2017, fresh off a trip to New Delhi, U.S. Defense Secretary James Mattis testified before the Senate Armed Services Committee about OBOR “going through disputed territory.” India, alongside Japan, has reinforced the Trump administration’s competitive stance toward China and encouraged the adoption of a “free and open Indo-Pacific” strategy that is partly intended as a counterpoint to OBOR. When the newly resumed security “quad” (Australia, India, Japan, and the United States) met in November 2017, these strategic economic issues took up much of the agenda.

Clearly, none of these developments will stop China’s economic advances in South Asia. There are over $20 billion worth of projects moving ahead on the ground in Pakistan. The Southern Expressway in Sri Lanka is progressing ineluctably to connect Hambantota and Colombo. China has just ended India’s Internet monopoly in Nepal. And states elsewhere in the region will continue to take advantage of China’s growing role to gain leverage in their dealings with New Delhi, the traditionally dominant power in their neighborhood. But alongside its partners, India does place certain limits on OBOR in the region by creating an environment in which it is politically costly to pursue various projects without taking Indian interests into account. This puts OBOR at a crossroads in the region.

There are three potential scenarios for what could happen next.

Beijing could make a unilateral course correction, opting to have a greater portion of its efforts in South Asia look more like those of the AIIB: more transparency, less onerous loan terms, a closer partnership with multilateral institutions, and more focus on regional connectivity than bilateral links to China. Beijing is not going to turn the whole of OBOR into the AIIB—it wants to preserve its prerogatives to pursue politically targeted projects with narrower bilateral benefits—but a shift would reduce the levels of criticism and opposition.

China and India could also reach an informal agreement over the scope of OBOR, given that there is still considerable room for negotiation, even over Indian sensitivities about CPEC. Particularly if China made progress on other thorny issues, such as on India’s membership in the Nuclear Suppliers Group, New Delhi’s stance on OBOR could end up resembling Japan’s: retaining economically competitive elements while identifying targeted areas for cooperation. As former Indian National Security Adviser Shivshankar Menon has argued, India’s interest is in seeing more projects like Colombo port and fewer projects like Hambantota. If India more actively engaged China on the rules of the road, its capacity to shape OBOR would arguably be greater.

The most likely scenario is that the competition continues and hardens. Dynamics in South Asia are increasingly taking on a zero-sum quality. And with improving U.S.-Indian and Chinese-Pakistani relations set against a decline in U.S.-Pakistani and Chinese-Indian relations, such dynamics are becoming mutually reinforcing. This is an unhealthy trend, given the pressing need for a better economically integrated region. The connectivity deficit in South Asia remains significant: the World Bank estimates that intraregional trade accounts for only five percent of the total, compared with 25 percent in Southeast Asia, 35 percent in East Asia, and 60 percent in Europe, while intraregional investment stands below one percent overall. Although in East Asia, rivals have been able to sustain mutually beneficial economic relationships, in South Asia, security rifts have stymied trade and investment. Outside parties, including the United States and China, still have an interest in alleviating this problem rather than allowing the economics of the region to turn into an extension of political and military rivalries. The window for doing so is now closing.

So far, OBOR’s rollout in South Asia demonstrates the barriers Beijing will face unless it makes adjustments. Beijing pushed the narrative that growing Chinese trade and investment would spur development, stability, and a more integrated region. But the project’s early promise has been soured by China’s failure to reach a consensus with the region’s major power and to answer serious questions about whether its handling of Sri Lanka is sui generis or symptomatic of its general approach. Even in sympathetic Pakistan, similar concerns are quietly expressed, and the Maldives is shaping up to be the regional test case for 2018. There is still an opportunity for Beijing to push forward a version of OBOR that is likely to command broader support and consent, including from competitors and rivals that can still see benefits in certain Chinese investments. But token efforts, such as recent offers to rename CPEC, are not enough. If Beijing wants a clearer run to advance the economic and strategic goals that underpin OBOR, it needs to do its political homework first.

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Re: OBOR, Chinese Strategy and Implications

Postby AdityaM » 20 Feb 2018 13:11

https://www.ndtv.com/world-news/to-explore-dealings-with-india-nepal-pm-wants-to-deepen-ties-with-china-1814646?DZFS&pfrom=home-topscroll

So a future china-india war will be fought on the borders of UP, right next to the cow belt, if china gets its way.

"Once China brings its rail network up to Shigatse and then Kyirong in Tibet, it should be easy to extend it to Nepal. It s lower altitude than Tibet, and the terrain is actually sloping all the way down from Kyirong.

12
COMMENTS"Apart from that, three roads are under construction connecting China and Nepal, which should be ready in a couple of years. If we can connect this railway network to our east-west rail project, it can revolutionise China-India trade, with Nepal in the middle," he said.

China aims to extend the Qinghai-Tibet railway to the Nepal border by 2020 and has expressed interest in extending it to Kathmandu. Kyirong in Tibet is about 25km from Nepal's Rasuwagadhi border transit point, which is 50km from Kathmandu

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Re: OBOR, Chinese Strategy and Implications

Postby pankajs » 20 Feb 2018 13:18

This is about economic warfare. China want's access to the Indian market by hook or crook and Nepal want's to ride along to extract a *transit* fee.

Same plan as with CPEC as far as China is concerned. Same dream as Bakis had with CPEC acting as a *toll plaza*. No work only lapping up dollars.

India should let Nepal know that Nepal will not be allowed to become a transit point for Chinese goods to India. Rest is up to them. Build a railway by all means if you so desire but India will not subsidize its cost by opening up its market.

Infact, now that Nepal is wanting to open up past treaties, time to put in stringent conditions related to Indian market access and cross-India transit. However, make market access for genuine Nepali good easy.

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Re: OBOR, Chinese Strategy and Implications

Postby Aditya_V » 20 Feb 2018 14:04

Yup, We need to watch quietly and weigh our options, The Anti India section is building huge expectations from the Chinese, we must make it clear. Nepal can't be a party to Chinese wreaking our Market.

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Re: OBOR, Chinese Strategy and Implications

Postby TKiran » 21 Feb 2018 15:05

Seems like China is ultimately going to succeed in OBOR

Nice article by @jmohanmalik

https://www.the-american-interest.com/2 ... ult-lines/

.
ONE BELT ONE ROAD
Dimensions, Detours, Fissures, and Fault Lines
MOHAN MALIK
Will Beijing’s massive infrastructure initiative boost its fortunes in Asia?

President Xi Jinping’s signature initiative “One Belt One Road” (OBOR, 一带一路 or yidai yilu in Chinese), unveiled in 2013 and later renamed in English as the “Belt and Road Initiative” (BRI), aims to take China where it has never gone before. The initiative, which envisages linking China with Asia, Africa, and Europe through a vast network of railroads, highways, pipelines, ports, and industrial zones, signals not just the emergence of China as a great continental power but its desire to be a global maritime power as well. Elevated to the status of a “core interest” at the 18th Party Congress in October 2017 (much like Tibet, Taiwan and the South China Sea), OBOR has nevertheless come under increasing scrutiny.

While supporters see it as a Chinese “Marshall Plan” or a blueprint for a China-led “Community of Common Destiny” to spread growth and prosperity, critics see it as an example of China’s “imperial overreach” at best and as “debt-trap diplomacy” at worst that is intended more to assert Chinese dominance than to promote development. To date, states ranging from India, followed by Japan, the European Union, the United States, Australia, France, and Britain (in that order), have either criticized or expressed skepticism over Xi’s megaproject of the century.

India was the first country to boycott the Belt and Road Forum held in May 2017, and since then Indian concerns have helped shape the West’s response. Concetta Fierravanti-Wells, Australia’s Minister for International Development and the Pacific, recently articulated those concerns: “China is ensnaring small Pacific states in a debt trap with ‘white elephant’ projects.” French President Emmanuel Macron began his January 2018 state visit to China in Xian, an eastern departure point of the ancient Silk Road, by calling on China and Europe to work together on the Belt and Road initiative, arguing that if it was “one-way,” it would not work because “the ancient Silk Roads were never only Chinese.” Macron cautioned: “These roads cannot be those of a new hegemony, which would transform those that they cross into vassals.”

Macron’s rebuke came within days of the U.S. National Security Strategy’s portrayal of China as a “revisionist state” engaged in “predatory economics” and Secretary of State Rex Tillerson’s warning to Latin American countries to beware “a new imperial power [offering] short-term gains for long-term dependency . . . reminiscent of European colonialism.” The resistance against Xi’s project of the century is not limited to Western countries or Asian rivals but has spread to countries enjoying traditionally close ties with China, such as Thailand, Malaysia, Nepal, and Pakistan. To quote Senator Tahir Mashhadi Saeed Shah of Pakistan: “Here’s the danger: the banks are Chinese. The money is Chinese. The expertise is Chinese. The management is Chinese. The profits are for China. The labor is Chinese.”

President Xi’s OBOR initiative is, however, not as new as it is made out to be. It actually builds upon the “Great Western Development” and “March West” campaigns launched under President Jiang Zemin and President Hu Jintao, which aimed at establishing a China-centered “hub-and-spokes economic system” as a strategic counter to the U.S. “hub-and-spokes security system.”

Given the relative weakness of an economically and demographically declining Russia and the absence of peer competitors in Eurasia, China faces fewer obstacles along the Silk Road Economic Belt (SREB), which resurrects the ancient Silk Road as a modern transit and economic overland corridor to link western China with Russia and Europe through Central Asia. In contrast, the oddly named 21st-Century Maritime Silk Road (MSR) component of the BRI—a maritime route to connect China with the Indian Ocean, the Persian Gulf, Africa, and Europe—faces several road blocks, detours, fissures, and fault lines. Unlike the Belt, the Road is not only home to another rising power, India, but also vitally important to all major trading and maritime powers that depend on the Indian Ocean sea lanes. Hence, the economic, geopolitical and maritime dimensions and fissures of the BRI beg careful examination.

The Economic Dimension

For China today, economics is strategy. Money has replaced Maoism as the tool for gaining global influence. Bandwagoning with an economic juggernaut transforms the fortune of nations. In trade and commerce, nations do not pick sides but play all sides. For conflict-torn countries with autocratic regimes that cannot get funding from global financial institutions, China’s aid and investment comes in handy. Being part of the Chinese sphere of influence may well be, or seem, a small price to pay for economic success.

Of course, many countries may not trust China, but they depend on it for their own growth. The quality or durability of Chinese-built infrastructure projects in the developing world may be questionable but bad roads are still better than no roads. In terms of cold, hard cash, China clearly trumps the West and Japan. For countries that want to build factories, schools, roads and ports, Chinese capital and engineering prowess is a godsend. China’s cash-rich state-owned enterprises (SOEs), backed by the China Development Bank and other government institutions, have established a reputation for delivering big infrastructure projects quickly and without delays caused by environmental, labor, or human rights concerns.

Chinese leaders and official media always stress the megaproject’s economic dimension insofar as it can accelerate economic growth in less developed regions. This initiative was unveiled in the aftermath of an investment boom in China that ended in vast overproduction and overcapacity, particularly in the steel, machinery, and construction material sectors, thereby necessitating the need to find new export markets abroad. It required the building of railroads, ports and trade corridors to link manufacturing centers in China with markets and natural resources around the world. These spokes or arteries would bring in raw materials and energy resources while exporting Chinese manufactured goods to those regions and beyond. Beijing has promised hundreds of billions of dollars in funds for investment in Asia alone. Money matters and development requires investment. Many coastal states (such as the Maldives, Sri Lanka, Malaysia, and the Philippines) are courting Beijing to leverage Chinese financial and technical prowess (e.g., in creating artificial islands via dredging on a scale and speed that is unmatched).

To finance this infrastructure network, Beijing has launched the $40 billion Silk Road Fund and the $100 billion Asia Infrastructure Investment Bank (AIIB). The disbursement of large amounts of money as loans and aid for countries participating in MSR will enhance China’s influence. Most projects are linked by their proximity and utility to diversify, insulate, and secure China’s resource and trade access. Chinese investments in developing countries’ ports, power plants, railroads, and townships fulfil their development needs. Having lost its low cost comparative advantage in manufacturing, Beijing needs to move manufacturing offshore to low cost producers such as Myanmar, Laos, Cambodia, Bangladesh and Pakistan. China’s size, proximity, economic complementarity and familiarity work to Beijing’s advantage.

The Geopolitical Dimension

Economic expansion creates overseas interests, fuels grandiose geopolitical ambitions, and inevitably leads to military expansion. The colonization of Asia, Africa, and Latin America by industrializing European powers in the 18th and 19th centuries was driven by the search for natural resources to fuel industrialization, markets to dump manufactured goods, and bases (coaling stations) to protect both. These three variables—resources, markets, and bases (RMB)—usually go together. Trade, markets, resource extraction, and port and infrastructure development are also now major ingredients of China’s foreign policy.

As in the past, the “new” great game or President Xi’s dream of “Community of Common Destiny” is actually very old; it is essentially about having pliant and friendly regimes in resource-supplier nations and ensuring access to their markets and ports. Not surprisingly, some have drawn parallels between China’s OBOR and Lenin’s theory of “imperialism as the highest form of capitalism.” Both are indeed driven by capitalist surpluses in search of overseas RMB, which bring them into conflict or competition with other overproducing capitalist societies in quests for their own RMB.[1] There is no denying that OBOR has a strong economic agenda, but it blends geopolitical and strategic objectives as well. It points to China pursuing a foreign policy that seeks to simultaneously secure its continental and maritime interests via dominance of the Eurasian heartland and exploitation of its natural resources for its future economic growth, and development of a powerful two-ocean navy. The influence of 19th-century geopolitical thinker Halford Mackinder and maritime strategist Alfred Thayer Mahan is writ large on Xi’s scheme.

Given China’s significant advantages over its Asian neighbors in terms of geography, military, and economic power, infrastructure diplomacy could redefine and reinforce relations with its neighbors. China’s emergence as the fulcrum of the world economy is supposed to restore its traditional supremacy, and make countries seeking prosperity and security gravitate toward the Middle Kingdom as they did in the past. China is thus building an empire of “exclusive economic enclaves” (EEEs) run by Chinese conglomerates through a network of “geo-economic alliances” to usher in the age of Pax Sinica.

Beijing’s growing might has strengthened the hold of traditional notions of hegemony, cultural supremacy, and tributary relationships whereby patronage, protection and trading privileges are dispensed to countries in return for their obescience. Some Chinese officials joke about buying off smaller countries instead of invading them. Countries with resources, markets or chokepoint naval bases tend to be the largest recipients of Chinese generosity. With its infrastructure development and export-oriented industrial strategy, China is creating economic interdependencies that will constrain others from making policy choices that run counter to China’s interests. A Chinese analyst Hu Weijia recently called for “strengthen[ing] economic cooperation with Myanmar, Nepal and Bangladesh to put pressure on India regarding issues related to the disputed region.”[2] Through its economic stranglehold over Cambodia and Greece, Beijing has come to hold an effective veto over the disputed South China Sea issue and the European Union’s stance on human rights and trade issues.

Their nationalist traditions and democratic pretensions notwithstanding, Argentina, Bangladesh, Cambodia, Kazakhstan, Myanmar, Malaysia, Nepal, the Philippines, the Maldives, Sri Lanka, Thailand, and many other recipients of Chinese largesse are leaning toward “the China model” of state-driven development, thereby weakening whatever democratic institutions they may have. China’s economic muscle has ensured that geopolitical tensions or adverse political change, whether in Zimbabwe, Myanmar, the Maldives, or Sri Lanka, will not damage Chinese economic investments and strategic interests. Those wanting to push back against Beijing’s overbearing influence have found it difficult to do so. China’s global clout ensures that neighbors have everything to gain from cooperation with China and a lot to lose from containing China.

A Forward Basing Strategy: “String of Pearls 2.0”

In 2004, President Hu Jintao spoke of the “Malacca dilemma” and the need to develop China into a maritime power. This led to speculation about Beijing’s plans to develop port facilities around the Indian Ocean in a “string of pearls” strategy to secure its own trade and energy supplies. The proverbial pearls on the string included the ports in Cambodia, Myanmar, Bangladesh, Sri Lanka, the Maldives, and Pakistan. While no official acknowledgement of such maritime ambitions was ever made, Chinese analysts and retired naval officers gradually began advocating acquisition of overseas bases to ensure stable energy supplies and to break through the perceived geopolitical encirclement of China by the United States and its allies. As soon as China’s navy began anti-piracy operations off the coast of Yemen in 2008, influential Chinese voices started calling on Beijing to pursue formal military alliances, build overseas bases, and openly compete with Washington.[3]

Coinciding with this chorus for overseas bases was a concerted effort at reclaiming and militarizing artificial islands in the SCS, which was widely viewed as a strategic stepping-stone for naval supremacy in China’s own backyard and for projecting power into maritime Southeast Asia. China’s 2015 Defense White Paper formalized a new maritime strategy encompassing “open seas protection” for which its naval capacity to protect its overseas interests and assets must increase.[4]

Xi’s MSR is a logical culmination of the Chinese navy’s two-ocean strategy (the Pacific and Indian oceans). Many Chinese analysts view Myanmar and Pakistan as constituting the West Coast of China that would help Beijing overcome the risks associated with trade and energy supplies through the Malacca Straits. Rear Admiral (ret.) Yin Zhuo has called for building “at least five to six aircraft-carriers” in order to maintain “two carrier strike groups in the West Pacific Ocean and two in the Indian Ocean.”[5] Senior military officers acknowledge that in order to safeguard the MSR, “the PLA Navy needs to gain the capability to act globally, which means more overseas logistic bases will also be needed.”[6] Major General (ret) Xu Guangyu opines that China “will need at least 10 to 20 ports around the world in all oceans and continents.”[7] Beijing is indeed on a base-buying spree. Nearly two-thirds of the world’s major 50 ports are either owned by China or have received some Chinese investment. While the PLA-Navy is militarizing the First Island Chain, Beijing is buying off the Second Island Chain in the Pacific Ocean. Within a decade, China is projected to have the largest naval and submarine fleets.

Despite China’s propensity to conceal its naval ambitions, coupled with the rhetoric of mutually beneficial “win-win” relationships, the strategic approach dominates in the Indian Ocean as well. Beijing acts in a piecemeal, quiet, and patient fashion, only bringing the pieces together “when the conditions are ripe.” This was the case in Sri Lanka, where China took advantage of the Sri Lankan civil war in the mid-2000s to establish a strong foothold in that country. In return for becoming the regime’s largest benefactor during its fight against Tamil separatists, China’s navy obtained a strategic toehold in the critical sea lanes in the Indian Ocean through its development of the Hambantota and Colombo ports.

China’s strategy of fusing its maritime expansion with regional economic development and multilateral integration is yielding rich dividends. Having acquired on lease Pakistan’s Gwadar port for 40 years, Greece’s Piraeus port for 35 years, Djibouti port for ten years, Sri Lanka’s Hambantota port for 99 years, 20 percent of Cambodia’s total coastline for 99 years, and the Maldivian island of Feydhoo Finolhu for 50 years, Beijing is now pressuring Myanmar to raise China’s stake from 50 percent to 75–85 percent in the Kyaukpyu port on the Bay of Bengal, and to lease it for 99 years as well if Myanmar does not want to pay penalty for reneging on the $3 billion Myitsone energy dam deal. A military base in Djibouti, along with major port development projects in Kenya, Pakistan, Sri Lanka, the Maldives, Bangladesh, Myanmar, Malaysia, and Cambodia define the contours of China’s Maritime Silk Road—an oceanic connectivity project centered on the Indian Ocean.

For Beijing, the Xinjiang-Gwadar railroad and pipeline and the Kunming-Kyaukpyu railway and pipeline constitute the two most critical veins of the Belt and Road, as both provide access to the Indian Ocean and help overcome the Malacca Strait strategic vulnerability. With a fusion of commercial initiatives and strategic goals, Beijing is courting many resource-rich countries and strategically located small states that may facilitate a forward presence and help China thwart any encirclement by a concert of hostile powers. Said one Chinese analyst, “China’s ‘Maritime Silk Road’ is not only an economic development plan, but also a strategic solution to breaking the tight U.S. control of the Strait of Malacca.” China will not spend hundreds of billions of dollars on infrastructure projects without the promise of future strategic benefits, and de facto control or privileged access to dual-use naval ports and airbases. “China usually bundles military and civilian uses in a [single] project,” explains naval analyst Li Jie.[8] Not just commercial ports, but nearly all infrastructure projects (for example, telecommunications and highways) are dual use and can be upgraded to support naval operations in wartime situations. Those who used to claim that, unlike America, China has no military bases abroad or soldiers on foreign soil, or that China was going to be a different, new type of great power now seem to have fallen silent.

Roadblocks, Detours, Fissures, and Fault Lines

Despite its endorsement by nearly 80 countries, major problems confront MSR. Whether it succeeds or falls short of its original objectives depends on how China responds to the hurdles in its path.

At the geopolitical level, “peaceful rise” and “win-win” rhetoric notwithstanding, China arouses unease among Asian countries because of its size, history, proximity, power, and more importantly, because memories of “the Middle Kingdom syndrome” have not much dimmed. Strategic mistrust pervades bilateral relations. “China fever” of the 1990s has given way to “China fear” in the 2000s.[9] Given Beijing’s penchant for using its economic and military muscle to corrupt and coerce others, they worry more about China than about the United States, Japan or India. Foreign Minister Yang Jiechi’s statement to his Southeast Asian neighbors in 2010 that “China is a big country and other countries are small countries and that’s just a fact” still rankles many in the region.[10] Beijing expects others to respect its core interests by placing them above their own national interests—a sort of tributary relationship that acknowledges China as the lord of Asia. Asians want to benefit from economic ties with China, but none wants to become a Chinese vassal. Against this background, linking the Silk Road to China’s national rejuvenation as a maritime power or as part of the “China Dream” may do more harm than good insofar as it arouses suspicions that it is “a Trojan horse for extending geopolitical clout, and dumping excess capacity abroad as China’s economy flags.”[11]

Even as governments in poor developing countries welcome Chinese investments, opposition parties and civil society push back against Beijing’s economic dominance. Chinese aid and loans provide a vital lifeline to beleaguered regimes that allows their leaders to disregard human rights and become more repressive. Far from generating goodwill, the growing economic interdependence creates its own stresses and strains. Tensions center on the use of imported Chinese labor, poor environmental standards and debt accumulation by host governments. The cancellation of the Kunming-Kyaukpyu and Thailand’s railway projects, dam deals in Nepal and Pakistan, and highway project in Bangladesh over bribery charges show the limits of this approach. Beijing often faces the consequences of cutting shady business deals with corrupt and autocratic leaders who get voted or booted out when citizens rise in revolt over corruption.[12]

At the economic level, China’s rise has fundamentally restructured the regional political economy in its favor. This economic dependency creates despondency. Many fear that large-scale investment could open the floodgates to Chinese economic dominance—as it has done in Laos, Cambodia, Myanmar, Sri Lanka, the Maldives, and Zimbabwe—and, by extension, political influence. Several infrastructure projects and billion-dollar investment promises have failed to materialize. Even when they do, they tend to provoke socio-political backlash fearful of the long-term hidden costs of the panda hug. Debt for equity swaps provoke domestic backlash as they lead to foreign ownership. As noted earlier, China’s growing economic and strategic foothold ignited protest among Myanmarese worried about external control over their country. One Myanmarese diplomat said: “We don’t want Myanmar interests trampled on by China on its road to greatness.”[13]

Despite Beijing’s “mutual benefit” rhetoric, and promises of unconditional aid, the recipients of Chinese largesse know that strings are always attached. Beijing warms to national elites willing to co-operate with its strategic agenda, but angrily rebukes them when it is rebuffed.[14] Arguing that host countries’ “embrace of China’s strategic agenda is always at the back of the mind of Chinese officials when they sit at the negotiation table,” Yun Sun adds: “China’s support always comes at a price.”[15] Economic integration has strategic consequences. There is invariably a strategic element attached to enterprises that begin with commercial port construction or management and end with naval presence and long-term ownership rights. To cope with the mounting debt of nearly $8 billion, Sri Lanka was forced to offer China its Hambantota port in debt-for-equity swap, thereby enabling Beijing to acquire a full-fledged Chinese enclave at a strategic location on the Indian Ocean. Accusing China of “seizing land” in the politically-troubled archipelago, Maldives’ opposition leader Mohamed Nasheed laments that 80 percent of his country’s foreign debt is owed to China.[16]

The modus operandi of Chinese state-owned enterprises in Angola, Kenya, Myanmar, Laos, Cambodia, Malaysia, Sri Lanka, the Maldives, Kyrgyzstan, and Greece—all weighed down with heavy indebtedness due to high interest rates of 4 percent to 8 percent on Chinese loans—holds lessons for others to avoid falling into Chinese debt traps that usually end in strategic entrapment. China’s practice of bankrolling huge infrastructure projects through big loans with high interest rates in return for strategic concessions causes tensions internally and anxiety externally. The greater the debt, the more leverage Beijing acquires in negotiating exclusive ownership or access to land, resources, ports and airports. Myanmar, Sri Lanka, and others have expressed unease with unequal deals that burden them with high interest loans for buying Chinese products, services and labor, yet do not alleviate unemployment, corruption, or environmental degradation. China is thus seen as doing in Asia and Africa what powerful European powers did to China and others in their moment of weakness in the 19th century.

For historical reasons, most Asians and Africans remain highly sensitive to foreign domination. Most nations prefer open markets (if not, open politics) and are wary of putting all their eggs in the China basket. Faced with growing criticism of Chinese firms’ work practices, trade imbalances, and low environmental standards, China’s leaders have begun to acknowledge commercial disputes and “growing pains” in the partnerships.[17] Dealing with vibrant civil society and democratic political transitions remains a major challenge for an authoritarian China.

Furthermore, the organizing principle of Xi’s OBOR is a Sino-centric unipolar Asia which is diametrically opposite to the vision of a multipolar Asia held by China’s rivals; its cumulative effect will be to bring Central, Southeast and South Asia closer into China’s orbit, and extend its economic, diplomatic, and possibly military supremacy across the entire region to disadvantage Beijing’s rivals. In geostrategic terms, OBOR’s success would be detrimental to the interests of the United States, Japan, India, and Russia which have long dominated these regions.[18] Far from integrating, OBOR is polarizing Asia. China’s irredentism also encourages Asians to seek greater American, Japanese and Indian involvement in regional affairs to countervail China. Thus, China’s economic and strategic forays are not without repercussions. Wherever China goes, Japan, India, and the United States are not far behind, offering potential partners options and opportunities to look beyond China.

To counter China’s AIIB, Japan announced a $110 billion “partnership for quality infrastructure” (PQI), with very low interest rates, funded through the Asian Development Bank. Japan’s focus is on increasing its investments and trade and building East-West corridors in competition with China’s north-south railroads to Southeast and South Asia.[19] Japan’s partnerships with India in port and infrastructure development in the “Asia-Africa Growth Corridor” (AAGC) and with the U.S. Trade and Development Agency and the U.S. Overseas Private Investment Corporation on financing infrastructure are aimed at countering Beijing’s neo-mercantilist policies.

Like Japan, India is deeply suspicious of growing Chinese naval presence in the Indian Ocean and views the Silk Road as a disguised “String of Pearls 2.0.” To balance China’s north-south transport corridors in Southeast Asia, rival India is pitching to gain an entry into Indo-China by building an east-west corridor (the India-Myanmar-Thailand Highway and the Kaladan Multimodal Transit Transport Project) that cuts horizontally through Myanmar toward Thailand and on to Vietnam.[20] India’s construction of ports at Chabahar in Iran and at Sittwe in Myanmar are seen as India’s counterbalance to the Chinese-built Gwadar Port where CPEC culminates and to Kyaukpyu port in Myanmar where the pipelines start for Kunming. With Myanmar allowing Japan and India to build ports on its Bay of Bengal coast, the prospects of China gaining unimpeded access to a western seaboard now look dim. India has reportedly committed around $25-30 billion in credits and grants to its extended neighborhood from East Africa to Southeast Asia, and offered an alternative vision to MSR with “Project SAGAR” (Security and Growth for All in the Region) declaring that the “responsibility for peace, prosperity and security rests with those who live in the Indian Ocean.”[21] This is Delhi’s counter to Xi’s “Asia for Asians” rhetoric and attempts to revive India’s ancient trade routes and cultural linkages around the Indian Ocean region.

The greater frequency of naval forays by Chinese warships and nuclear submarines in the Indian Ocean reinforces those suspicions and increases the risk of blowback for Beijing. As China’s navy goes south to the Indian Ocean, India’s navy is going east to the Pacific Ocean. Beijing’s MSR has prompted the Indian navy to unveil a three-pronged strategy: fortify its defenses in the Indian Ocean by acquiring privileged access to bases in Mauritius, the Seychelles and Madagascar; conducting joint naval exercises in the East and South China Seas; and launching an ambitious naval expansion program. Since 2011, India’s naval voyages have grown in number by 300 percent.[22]

The U.S. government has helped. The U.S.-India Logistics Exchange agreement benefits both as it provides India’s Navy access to American bases in Diego Garcia, Djibouti and the Pacific, while the U.S. Navy gains access to India’s ports. More of the LEMOA-type agreements with Australia, France, and Japan to gain reciprocal access to ports are reportedly on the anvil. The U.S.-India “Joint Strategic Vision” of 2015 mentioned “support for regional economic integration” and “accelerated infrastructure connectivity.” Beijing’s efforts to acquire sea-denial and sea control capabilities have also prompted leading maritime powers (the United States, Japan, Australia, and India) to coalesce together in a Quad to ensure that the northern Indian Ocean does not fall under Chinese hegemony.[23] While India and the United States are collaborating in tracking Chinese submarines in the Indian Ocean, India and Japan plan to build a sea wall of “hydrophones”—microphones with sensors placed on the seabed—between southern India and the northern tip of Indonesia to keep a check on Chinese submarine movement.

Washington has noted that OBOR treats Asia and Europe as a single space for creating a Eurasian Co-Prosperity Sphere, wherein China, not the United States, is at its core. Not only that, the only part of the world that remains untouched by OBOR is the Americas. For, the new Silk Road is mostly about building alternatives to U.S. power. Since the new great game is about supply chain geopolitics, both China and the United States are vying for influence over the crucial industrial, financial, and commercial nodes across Eurasia.[24] China’s growing economic stranglehold over small states has had the effect of weakening regional cohesion and organizations (for example, the European Union, ASEAN, and the Pacific Islands Forum). Beijing and its cheerleaders claim that while the Western democracies are in utter disarray, China has built a successful alternative governing model that works and should be emulated. Xi’s OBOR has raised the strategic stakes for small nations which are under intense pressure to choose one side or another in the contest. Though Washington is not opposed to China’s infrastructure projects—provided they are open to competitive bidding by all, do not incur unsustainable debt burdens (that is, no predatory lending), are environmentally sound, and generate local employment and good governance—the United States is seeking like-minded democratic, free-market societies as partners in upholding the rules-based order.

Signs of pushback are growing. Neither the Belt nor the Road would succeed in completely de-coupling Asia or Europe from the United States. For the Quad, the OBOR challenge is both economic and ideological. The lurch toward authoritarianism in Cambodia and the Maldives could not have occurred without Beijing’s financial backing. The Quad versus OBOR contest of clashing values and visions is on not just in the Maldives but in other countries as well. The Quad countries are now coordinating on tactics and strategy to offer an alternative vision of development finance across the Indo-Pacific. Even Jakarta has come up with its own vision to transform Indonesia into a “global maritime fulcrum”—a key goal being the development of Indonesian maritime infrastructure and connectivity. And the possibility of a post-Putin Russia turning China’s strategic latitude on its northern frontiers into Beijing’s “northern discomfort” cannot be ruled out.

China always plays by its own rules. The BRI-inspired overseas “exclusive economic enclaves” (EEEs) distinguish themselves from the domestic “special economic zones” (SEZs) that transformed China into an economic superpower in the sense that, while Chinese SEZs welcomed multinational corporations (MNCs) from all over the world, the OBOR-driven EEEs are meant primarily for China’s state-owned enterprises and closed to foreign competition from other multinational corporations. One study shows that of the contractors working on China-funded transport infrastructure projects in 34 Asian and European countries, 89 percent were Chinese, leaving only 11 percent from other countries.[25] So the downside of “globalization with Chinese characteristics” is that it could split the world economy into two rival trading blocs—one bloc of non-OBOR economies and the other bloc dominated by Chinese financial institutions, conglomerates, and technology, pursuing mercantilism and governed by Chinese laws, courts, standards, rules, and dispute resolution mechanisms.[26] Of the G-20 countries, China remains the most closed to foreign investment, even as Chinese companies seek to acquire strategic industries and critical infrastructure in other countries.

A related problem is that OBOR projects enmesh China much more closely in other countries’ domestic politics. Negative portrayals of China rise in conjunction with its increased involvement in other countries. That leads to situations where Chinese businesses bear the brunt of criticism for the governance failures of ruling elites. Beijing’s nod for the military coup in Zimbabwe in 2017 and support for the Cambodian and Maldivian regimes’ suppression of democracy shows that China will intervene in the domestic affairs of other states should it perceive Chinese interests at stake, and if the costs of intervention are relatively low. In short, China’s expanding economic footprint often weakens democratic institutions, shifts civil-mil relations in military’s favor, favors strongman politics, increases corruption, and results in restrictions on civil liberties.

Not only that, economic slowdown coupled with dramatic falls in the Chinese currency market and in foreign exchange reserves from $4 trillion to $3 trillion raise questions about the longevity of the “China Dream.” Official estimates show that Xi’s dream would require $4–8 trillion of investment to bring to fruition. Some wonder if it is wise to pour such huge amounts into low-return projects and high-risk countries at risk of default when China’s own debt is 250 percent of its GDP and climbing. Many of the infrastructure projects, driven not by commercial logic but by the geopolitical consideration of acquiring a strategic foothold, don’t make money and, often end in “white elephant” projects saddling host countries with heavy debts. Chinese officials privately expect to lose 80 percent of their investments in Pakistan, 50 percent in Myanmar, and 30 percent in Central Asia.[27] Of the 68 nations China lists as its BRI partners, Bloomberg reports the sovereign debt of 27 are rated as junk, or below investment grade, by the top three international rating firms.[28] In fact, Beijing may have already overreached itself by creating a far-flung empire of “exclusive economic enclaves” as the problems of harsh terrain, political change and geopolitical rivalries add to financial woes.

Lastly, China’s vision may be backed with trillions worth of investment, but money alone (or often at all) cannot buy love and loyalty. At most, it can buy short-term influence, as in Cambodia. China’s railroads, highways and pipelines may bring about physical integration with Asian countries, but the politico-security integration will take place only when their interests, values and vision are in harmony with those of China’s. Put simply, Beijing may have accumulated unmatched comprehensive national power, but it needs enviable positive national identity to court friends and win allies. Until then, China’s neighbors may well take its money but balk at allowing greater Chinese influence over policy or granting strategic concessions to Beijing. Suspicion and distrust of China would deliver less than promised. Beijing needs to outline a vision of the regional order that transcends the centrality of Chinese world order in ways that appeals to other peoples.

Will It Succeed or Fail?

As in the past, the Silk Road is an avenue for development and expansion. OBOR is cold-blooded geostrategy. Should it succeed, it would bend borders and change internal and external power dynamics. China’s infrastructure diplomacy plays to its strengths and offers insights into Beijing’s long-term strategy for reshaping both the landscape and the seascape of the Eurasian continent and its maritime domain. There is always a strategic element attached to Chinese enterprises that begin with commercial port construction and management and end with naval presence and long-term ownership rights. It is the ultimate “China solution” to dealing with domestic problems of economic slowdown, growing wages and excess industrial capability in conjunction with the geostrategic imperatives of acquiring strategic footholds along the vital sea lanes and maritime chokepoints, undermine the U.S. dominance and usher in a post-American Sino-centric order.

Many countries seeking to improve their living standards are tilting toward Beijing. Some are, however, uncomfortable with Beijing’s neo-colonial diplomacy that invariably ends in a trail of debts, IOUs and strategic entrapment in the form of long-term Chinese presence. From Myanmar to Mexico, concerns over China’s stranglehold over local economies often generate domestic pressure for political change. As its experience in Myanmar and elsewhere indicates, Chinese companies will need to grapple with the additional socio-political and economic considerations and adopt international best practices for sustainable development.

Other major players—Japan, the United States and India—could create major road blocks along the Silk Road as Beijing has failed to get their buy-in. To be successful, OBOR may well need to become “an order based on rules” (OBOR), and the rules have to be arrived at consensually. No single country built the old Silk Road in the past; it developed organically. No one country can build it alone again. Its dimensions will be determined by the laws of supply and demand. As in the past, there will be not one but several roads in the future. While optimists predict the Silk Road will kickstart flagging global economic growth, skeptics see it as China’s play for power and influence that is doomed to fail. However, Xi’s OBOR is too big to fail completely. Beijing can take credit if it stimulates development and galvanizes its rivals to step up to contribute to others’ development. Since many, if not all, of the projects that sport the label would probably have been built anyway, by 2049 Beijing can proclaim success, whatever the realities or paths taken to get to them


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