Much has been written about the grandiose OBOR(One Belt One Road or Belt & Road) project promoted by China as a project for 21st century. The project envisages linking countries and whole regions by land and sea routes mainly, to facilitate trade with Chinese investments. According to China it will bring in increased trade and as a consequence increased affluence and benefits for all those who participate in this venture. There is also a historical angle as it is supposed to be the New Silk Route.
However there are many who are rather skeptical of this grandiose scheme. After the grand opening in Beijing some countries have begun to express reservations regarding lack of transparency about how the project will be implemented, who will benefit and to what extent. Some analyses have already said that this project mainly benefits China and that other countries especially the poor ones will be paid a lip service. China has built up over capacities in its manufacturing sector over the years and now faces a slow down in world demand for their products. They also have accumulated a lot of debt due to their relentless drive for infrastructure development. Now the Chinese government is under pressure to provide work for their people who have been rendered jobless due to the slow down. Hence OBOR.
CPEC which is a part of OBOR is a flagship project. This project which envisages construction of road and rail connectivity from Kashghar in China to the Gwadar port in Pakistan also includes power plants and agricultural projects. This is said to be a game changer for Pakistan. But transparency is an issue. Nobody in Pakistan is clear as to what will be the division of investments and benefits. All projects are being implemented by Chinese government companies.
Some precedents have been set which have made many uncomfortable. Countries like Sri Lanka and Kazakhstan have burnt their fingers. These countries took loans from China on a much higher interest rate than what is provided by the multilateral agencies. Now they are finding it difficult to repay the loan. China, on its part has asked the countries to convert this debt into equity making them the owners of the infrastructure they invested to build in these countries. Sri Lanka has handed over its Hambantota port to China on a long lease as the country defaulted on its repayment of loans.
Another hurdle for OBOR could be China’s own position. Chinese economy is slowing down after almost three decades of steady and spectacular growth. Moody’s has downgraded China by a single slot in its ratings. China’s debt is now 230 percent of its GDP. This is considered to be a bad sign. China wants to convert this debt into equity hence the check book diplomacy and the buying spree in other countries.
There is another factor which has not been adequately analyzed. This is the Chinese ambition to become a world player, a superpower. After Trump got elected, the US started withdrawing from global pacts like the Trans Pacific Partnership and the Paris Agreement on Climate Change. China now sees itself as an alternative to the US to lead the world and project itself as a global leader.
There seems to be nothing wrong with this ambition on the surface as nations and empires have tried this before. But dig a little deeper and some things do not quite add up. Global powers in modern times have not been able to force themselves upon weaker states to dominate them. It is the circumstances which have created global powers. The Ottoman Empire came into being because of its central location and the resultant trade benefits. The US became a super power after the WWII as American industry received a tremendous fillip due to government contracts for war production. But the world which creates a super power has never tolerated a power which forces issues and muscles its way onto global fora.
Chinese scientific prowess is suspect. They have been caught stealing American rocket and space technology. Also Russians are reluctant to sell them military technology. The Chinese consistently use reverse engineering to copy and then duplicate whatever they get from the Russians. An aspiring global power cannot sustain its industrial innovation on reverse engineering and copied technology.
China already has wide ranging disputes in the South China Sea. It has not accepted the UNCLOS ruling to vacate the disputed Paracel and Spratly islands as well as the nine dash line which it considers its maritime boundary. Its reputation as a reliable trading partner is not very widely accepted. It is considered dominating especially for small and weak economies. OBOR is seen to be more of a strategic than economic initiative.
Another factor is that China is a single party dictatorship. Though this has helped it to become a huge manufacturing behemoth by taking one sided decisions, it has certain intrinsic weaknesses. There is no transparency in its actions. The figures it gives out regarding its economic performance are regularly fudged. It is said that china has been accumulating huge debts since 2008. And despite the denials from Chinese officials a hard landing (economic down turn) is imminent. Premier Xi Jinping is seen to be a very strong leader today with an iron grip over the National People’s Congress. He sustained this grip as the Chinese economy was growing at a double digit figure during the last decade. But as in any dictatorship his position is precarious even at the best of times. If the Chinese economy falters further or fails to pick up in the near future Xi could very well have to step down. This could be weighing heavily on his mind currently. The grandiose OBOR has been initiated to give a great fillip to Chinese prestige abroad and also to quell growing domestic political opposition as the economy starts to falter.
Given all these factors how much will China be able to dominate the world only time will tell. But the start is definitely not very auspicious.
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