- Prelims: Current events of international importance(BRI, Regional forums, EEZ etc
- Mains GS Paper II: Significance of Indo-Pacific for India, BRI and issues associated with it, Free and open Indo-Pacific, International organizations.
ARTICLE HIGHLIGHTS
- At the recently concluded summit of G7 leaders in Germany, the U.S. President and his allies unveiled their $600 billion plan called the Partnership for Global Infrastructure and Intelligence which is being seen as a counter to China’s Belt and Road Initiative (BRI), valued at a trillion U.S. dollars by some experts.
- The biggest project under BRI is in Pakistan, the China Pakistan Economic Corridor(CPEC).
- Over time, China Pledged $62 billion in low interest loans and financing from Chinese State Owned banks and the Asian Development Bank(ADB).
INSIGHTS ON THE ISSUE
Context
Belt and Road Initiative(BRI):
- It was announced by the Chinese President Xi Jinping-led regime in 2013.
- It encompassed five kinds of activities:
- Policy coordination
- Trade promotion
- Physical connectivity
- Renminbi internationalization
- People to people contacts.
- The initiative envisioned a Chinese Investment of over $1 trillion in partner countries by 2025.
- More than 60 countries have now joined BRI agreements with China, with infrastructure projects under the initiative being planned or under construction in Asia, Africa, Europe, and Latin America.
- To finance BRI projects, China offers huge loans at commercial interest rates that countries have to pay within a fixed number of years.
- In recent years, the BRI seems to have experienced a slowing down as annual Chinese lending to countries under the initiative slimmed from its peak of $125billion in 2015 to around $50 to 55 billion in 2021.
Routes of BRI:
- New Silk Road Economic Belt: It encompasses trade and investment hubs to the north of China; by reaching out to Eurasia including a link via Myanmar to India.
- Maritime Silk Road (MSR): It begins via the South China Sea going towards Indo-China, South-East Asia and then around the Indian Ocean thus reaching Africa and Europe.
- China-Pakistan Economic Corridor: CPEC is a 3,000-km long route of infrastructure projects connecting China’s northwest Xinjiang Uygur Autonomous Region and the Gwadar Port in the western province of Balochistan in Pakistan.
- It is a bilateral project between Pakistan and China, intended to promote connectivity across Pakistan with a network of highways, railways, and pipelines accompanied by energy, industrial, and other infrastructure development projects.
- It will pave the way for China to access the Middle East and Africa from Gwadar Port, enabling China to access the Indian Ocean and in return China will support development projects in Pakistan to overcome the latter’s energy crises and stabilizing its faltering economy.
BRI’s investments in Pakistan:
- China pledged $62billion in low interest loans and financing from Chinese state owned banks and the Asian Development Bank (ADB), up from an initial $46 billion pledge.
- The CPEC envisioned multiple projects involving energy, transport and communication systems.
- At the center of the CPEC was the $700million development of the city of Gwadar into a smart port city that would become the “Singapore of Pakistan”.
- Gwadar is strategically important as it is an hour’s drive from Iran and less than 320 km from Oman.
- Gwadar’s development under BRI, approved in 2020, would increase the city’s GDP to $30 billion by 2050 and create over a million jobs.
- Other projects:
- The orange line metro
- coal power plants to tackle energy shortages
- Main Line 1 rail project from Peshawar to Karachi.
- While coal plants set up and managed by Chinese firms did help improve the power situation in Pakistan.
Issues:
- Multiple reports have shown that shipping activities at the Gwadar Port is almost negligible so far, with only some trade to Afghanistan.
- Gwadar residents have also protested against the large security force deployed to protect Chinese nationals involved in projects after they became the target of multiple deadly attacks by Baloch nationalists.
- In late 2021, thousands of Gwadar residents staged a sit-in protest against the lack of promised basic amenities in Gwadar and Chinese deep sea trawlers reducing fishing opportunities for locals.
- Chinese power firms operating in Pakistan threatened to close down if the latter did not pay dues worth 300 billion in Pakistani rupees(approximately $1.5 billion).
BRI and Sri Lanka:
- In Sri Lanka, multiple infrastructure projects that were being financed by China came under the fold of the BRI after it was launched in 2013.
- The island nation in the last couple of years has witnessed competition between India and China in port terminal and energy projects.
- In 2021, Colombo ejected India and Japan out of a deal to develop the East Container Terminal at the Colombo port and got China to take up the project.
- It then awarded the project for the Western Side of the Terminal to the Adani Group.
- Some BRI projects in Sri Lanka have been described as white elephants, the Hambantota port:
- A deep seaport on the world’s busiest eastwest shipping lane, which was meant to spur industrial activity.
- The port had always been secondary to the busy Colombo port until the latter ran out of capacity.
- The Sri Lankan government took $1.4 billion in Chinese loans for the port’s expansion.
- Unable to service the huge loan and incurring $300 million in losses due to delays, the government handed Hambantota port to a Chinese State Owned company on a 99 year lease in 2017.
- Other key projects under BRI:
- Colombo International Container Terminal
- Central Expressway
- Hambantota International Airport among others.
BRI and Bangladesh:
- Bangladesh joined the BRI in 2016, with the second highest investment (about $40billion) in South Asia after Pakistan.
- Multiple studies, including research by the Council on Foreign Relations, show that Bangladesh has been able to benefit from the BRI while maintaining diplomatic and strategic ties with both India and China.
- It has managed to not upset India by getting India to build infrastructure projects similar to BRI in the country.
- In 2016, when the Chinese government promised Dhaka BRI investment worth around $40 billion, India followed up in 2017 by extending a $5 billion line of credit and economic assistance.
- BRI projects include:
- China Bangladesh Friendship Bridges
- Special economic zones
- The $689.35 millionKarnaphuli River tunnel project
- Upgradation of the Chittagong port
- A rail line between the port and China’s Yunnan province.
How have projects from India and China progressed in Maldives
- Situated in the middle of the Indian Ocean, Maldives comprises two hundred islands, and both India and China have strategic interests there.
- One of the most prominent BRI projects undertaken in the Maldives is the two km long China-Maldives Friendship Bridge, a $200 million four lane bridge.
- Most of China’s investment in the Maldives happened under former President Abdullah Yameen, seen as proChina.
- The Maldives’ current regime of President Ibrahim Solih has tried to distance itself from the BRI, focusing more on its ‘India First’ policy.
- India has also in recent years sought greater ties with the Maldives under Prime Minister Narendra Modi’s ‘Neighbourhood First Policy’.
BRI and Afghanistan:
- China had promised investments worth $100million in Afghanistan which is small in comparison to what it shelled out in other South Asian countries.
- The projects have not materialized so far and uncertainties have deepened after theTaliban takeover last year.
Issues Associated to BRI:
- Chinese Monopoly in the Projects: The investments under the BRI are mostly done by the state-owned enterprises and banks in China.
- Most of the contracts (93%) have also gone to the state-owned enterprises in China.
- The host countries or other companies hardly have any role to play.
- Increased Corruption and Reduced Competition: Chinese monopoly in lending and building infrastructure has further led to corruption.
- Due to no private sector participation, there is no competitive element in the programme.
- Lack of Transparency and Environmental Concerns: The debt trap diplomacy, the lack of transparency and unreasonable loan conditions have made the scheme extremely unpopular.
- At least 236 BRI projects have been facing the debt related problem.
- This has also led to dumping of steel and cement raising environmental concerns.
- BRI- A Recipe For Total Failure: China sold most of its connectivity projects to the countries which were looking at China for the success of its economic model in infrastructure projects and wanted to emanate the same path, even if it was not viable for the countries.
- Moreover, China has overcommitted itself and now it is not able to sustain the aid-program.
- The fate of those projects is undetermined which were started but not finished.
- More than 35% of the project portfolio is stuck on the implementation stage.
CPEC’s Implications for India:
Way Forward
- Participatory Alternatives: Alternative projects must be launched by more advanced countries which are also participatory in nature keeping into account the interests of the host/recipient countries. Unless there is a partnership with the host country, the success of the project is not assured.
- Alternate Funding Sources: Alternative sources of funding like the $600 billion plan by G7 countries called the Partnership for Global Infrastructure and Intelligence, these connectivity projects must be taken into account. Also, more professional financial institutions shall be invited to provide assistance in such issues.
- India’s Role: India will have to work with its partners in the region to offer alternative connectivity arrangements to its neighbours.
- Connectivity is increasingly seen as a tool for exerting foreign policy influence.
- India stepping forward to enhance interconnectedness will provide a new theater for geopolitical competition with China in South Asia and the Indian Ocean.
- Connectivity also presents India with an opportunity to reestablish its regional primacy.
- Collaboration with Like-Minded Countries: India’s ability to act alone in South Asia and the larger Indian Ocean is limited.
It must seek help from partners like Japan when necessary to build and upgrade its infrastructure and create an alternative to Chinese-led connectivity corridors and infrastructure projects.- Countries like Australia, France, Germany, the UK and the US have technical expertise and are already present in the region to some extent.
- Diplomatic maneuvering: Appropriate diplomatic maneuvering and economic and military assertion is vital for the implementation of India’s interests in the region along with leveraging the space as a building block for a multipolar world order.
- India’s view is to work with other like-minded countries in the Indo-Pacific region to cooperatively manage a rules-based multipolar regional order and prevent any single power from dominating the region or its waterways.
- Supporting Indo-Pacific governments: There needs to be support for Indo-Pacific governments, boost their capacity to make independent political choices by helping partners root out corruption, including through foreign-assistance and development policies.
QUESTION FOR PRACTICE
- The newly tri-nation partnership AUKUS is aimed at countering China’s ambitions in the Indo-Pacific region. Is it going to supersede the existing partnerships in the region? Discuss the strength and impact of AUKUS in the present scenario.(UPSC 2021)
(250 WORDS, 15 MARKS)
- China is using its economic relation and positive trade surplus as tools to develop potential military power status in Asia” In the light of this statement. Discuss its impact on India as her neighbour.(UPSC 2017)
(200 WORDS, 10 MARKS)
- What has been the progress of the BRI so far? What have been the roadblocks and challenges?
(200 WORDS, 10 MARKS)
