Diplomatic Enclave: Building Belt Road

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China’s Belt and Road Forum in Beijing this weekend will showcase its plans to link China with Asia, Europe and Africa through a network of roads, railways, ports, telecommunications and oil and gas pipelines.

Some of its projects are already underway. Last week a freight train travelled from London to Yiwu port on China’s eastern coast taking three weeks to complete the journey. The journey was less than half the time taken to deliver the cargo by the sea route. Recently, the oil pipeline from Myanmar’s Kyaukphyu port that runs through Myanmar began delivering oil to Kunming, the capital of China’s Yunnan province.

When the One Belt, One Road initiative was first unveiled by Chinese President Xi Jinping in 2013, it was a plan to connect the old silk route and a maritime route. It was a good way of utilising the excess capacity in China’s steel and construction sector, opening up new markets for China and internationalising state-owned Chinese companies. Since then it has been an evolving project with changes in nomenclature, pre-existing projects incorporated with new proposals and new directions. The maritime string of ports stretches from the Indian Ocean, the Atlantic Ocean, the Mediterranean Sea and the Pacific Ocean. With a China-Suez cooperation Zone in Egypt and the Chinese managed Greek port of Piraeus, it provides a gateway to Europe linked with an upgraded railway network.

The Belt Road Initiative (BRI as it is now named) has expanded to become a central feature of President Xi Jinping’s foreign policy. The $1 trillion Belt-Road Initiative has its economic, political and strategic dimensions. Some of the projects serve China’s strategic interests. It would not be the first time that a major economic power would be pushing global integration to increase its economic and political reach.

The Kyaukphyu pipeline to Kunming allows oil importers to avoid the Malacca Strait, the choke point on the sea route through which almost 80 per cent of China’s oil imports are transported. The China-Pakistan Economic Corridor would similarly provide a new route for China from its western-most province of Xinjiang to Pakistan’s Gwadar port strategically located near the top of the Persian Gulf. The project would activate the Chinese built Gwadar port, which has languished due to poor connectivity with the Pakistani hinterland.

China aims to sign up projects in more than 60 countries. Some of the projects are unlikely to be economically sustainable, such as the Hambantota port in Sri Lanka. The project is now being renegotiated to include a special economic zone to make it financially viable. There are various estimates of the kind of losses some of the projects are likely to entail. The London-Yiwu rail link cuts down on transportation time but shipping the cargo by sea would be far cheaper.

Developing economies have been signing on to the Chinese projects as there are practically no other alternatives for constructing those infrastructure projects. The developed economies have not shown much interest in the Chinese vision except for New Zealand, which has agreed to cooperate with the BRI and is looking at a China Rail proposal for building a regional rail line in New Zealand’s Northern Island. China is New Zealand’s second largest trade partner and an important source of foreign investment.

China has been the dominant economic power in the Asean region for many years and has been able to offer large-scale infrastructure projects to countries in the region. In the last decade, China has made major inroads in South Asia with big projects in Sri Lanka, Maldives, and Bangladesh and more recently in Nepal where there is a proposal for constructing a rail link from Tibet to Kathmandu and Pokhara. Chinese financing, work style and Chinese workers resulting in speedy construction have impressed South Asian countries, especially when compared to Indian projects that invariably run over time and costs.

China has been keen to bring in India into its grand vision but India has expressed its reservations over the Chinese economic corridor through Pakistan that runs through Pakistan occupied Kashmir. The CPEC is now billed as one of the more important segments of the BRI. The Chinese envoy to India, Luo Zhaohui’s suggestion that China would be willing to rename the CPEC to assuage Indian concerns created some embarrassment for Beijing. The suggestion was eventually edited out from the ambassador’s speech on the embassy website after protests from the Pakistani allies.

The Belt-Road Initiative brings changes to China’s strategic environment, hugely expands China’s economic power, protects China’s access to its energy sources. But though it aims at projecting China’s global economic leadership, there are still several questions on whether Beijing would be overstretching itself in the process. There is still no clarity about the overall structure of the Belt-Road plans. Beijing is likely to put out its specific vision document at the Forum meeting.

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