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Insights into Editorial: China’s One-Road-One Belt Initiative: A New Model of Global Governance

 

 


Insights into Editorial: China’s One-Road-One Belt Initiative: A New Model of Global Governance


 

With its ‘One Belt One Road’ initiative, China is now seeking to establish its identity as a world class power. The One-Road-One-Belt (OROB) initiative for connectivity, with clear strategic advantages for China, contrasts sharply with existing treaty-based integration concepts where the geographical scope, partner countries, strategy, principles and rules are clearly defined at the outset. 34 countries have already signed cooperation agreements with China.

 

What is One Belt, One Road initiative?

The One Belt One Road initiative is the centrepiece of China’s foreign policy and domestic economic strategy. It aims to rejuvenate ancient trade routes–Silk Routes–which will open up markets within and beyond the region.

  • Through this initiative, China’s plan is to construct roads, railways, ports, and other infrastructure across Asia and beyond to bind its economy more tightly to the rest of the world.

 

What’s good about this initiative?

  • South Asia is the least integrated region in the world, and that is not in line with global trends. The new initiative aims to integrate the region.
  • The Initiative, seen more as a policy indicator than a set of projects, will link three continents – Asia, Europe and Africa.
  • China has cash and deposits in Renminbi equivalent to USD 21 trillion, or two times its GDP, and expects that the massive overseas investment in the OROB will speed-up the internationalization of the Renminbi.
  • It is also seen as a strategic response to the military ‘re-balancing’ of the United States to Asia.

 

There are several structural challenges that confront the Chinese OBOR initiative:

  • First, the perception, process and implementation to date do not inspire trust in OBOR as a participatory and collaborative venture. The unilateral ideation and declaration — and the simultaneous lack of transparency — further weaken any sincerity towards an Asian entity and economic unity. However, China says that it is committed to pursue wide-ranging consultations with the 60-plus nations on this issue.
  • It is widely accepted that through this initiative China is projecting its military and political presence along OBOR. China is also willing to underwrite security through a collaborative framework. Hence, few countries including India have wholeheartedly not welcomed this initiative.
  • Another challenge deals with the success of the ‘whole’ scheme, given that the Chinese vision document lays out five layers of connectivity: policy, physical, economic, financial and human. While no developing country will turn away infrastructure development opportunities financed by the Chinese, they may not necessarily welcome a rules regime built on a Chinese ethos.
  • This belt runs through Pakistan-occupied Kashmir. Hence, a formal nod to the project will serve as a de-facto legitimisation to Pakistan’s rights on Pakistan-occupied Kashmir and Gilgit-Baltistan under the China-Pakistan Economic Corridor (CPEC) that is closely related to OBOR.

 

China is also aware that it is investing in a risky environment and that the OROB initiative may not be commercially rewarding. China has a three-fold solution to these problems:

  • First, it invites governments to organize summits to identify issues and seek common understandings, cooperation memorandum and people-to–people contact as the basis for regional cooperation.
  • Second, China is also organizing technical workshops of the concerned countries to facilitate investments and is partnering with multilateral institutions in this effort to give greater legitimacy. It is entering into areas the United Nations and bilaterals have ignored but have been considered important by developing countries. For example, a workshop to harmonize intellectual property rights legislation was organized in Beijing in July, jointly with the World Intellectual Property Organization.
  • Third, China is using money to resolve security issues, like paying Pakistan for an army division dedicated to the protection of Gwadar and is actively considering setting up a private security agency, borrowing ideas from something the United States has done for decades, but paid for by the companies rather than the government.

 

India and OBOR:

With China now a USD 10 trillion economy, compared to India’s economy of USD two trillion, India is at a defining movement on how the Asian Century will be shaped. The strategic question is whether Asia will have two poles, as it has had throughout history, or will India remain at Asia’s periphery as a regional power?

  • Chinese political expansion and economic ambitions, packaged as OBOR, are two sides of the same coin. It is being seen as both a threat and an opportunity. To be firm while responding to one facet, while making use of the opportunities that become available from the other, will largely depend on the institutional agency and strategic imagination India is able to bring to the table.
  • China is keen to have India on board and both recognize that working together is necessary for achieving the ‘Asian Century’. India should seek to ‘redefine’ OROB to add a strong component for a ‘Digital Asia’, as that is where our comparative advantage lies, and for Asian connectivity to have two nodes, in China and in India, as has been the case throughout history.

 

Way ahead:

China is determined to push the OBOR initiative as it sees connectivity rather than global rules leading to increased trade, and continuing growth. China plans to have free-trade agreements with 65 countries in the six ‘economic belts’ of the OBOR, accounting for two-thirds of the world population and 30% of GDP and consumption. The areas of cooperation include fibre optics, telecommunication, trade facilitation, monetary policy coordination and arrangements to manage financial risk. Bringing together policy areas that are currently split between the United Nations and Bretton Woods Institutions is a long-standing demand of developing countries.

The OROB initiative has moved beyond the discussion stage to being politically and economically accepted widely. In April 2016, an agreement was signed with the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), treating implementation of the OROB initiative as promoting regional cooperation. This is in part an answer to India’s concerns that connectivity should be built through consultative processes and not unilateral decisions.

 

Conclusion:

It is fair to say that China, in deploying the OBOR initiative, has demonstrated a level of ambition and imagination which is mostly absent in India’s national discourse. India has so far been suspicious of the strategic implications of this initiative. If India sheds its inhibitions and participates actively in its implementation, it stands to gain substantially in terms of trade. Arguably, OBOR offers India another political opportunity. There seems to be a degree of Chinese eagerness to solicit Indian partnership. OBOR could potentially allow India a new track to its own attempt to integrate South Asia. However, India should act strategically on issues such as OBOR which will have a significant impact on India’s vital interests.