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Insights into Editorial: India’s Opposition to China–Pakistan Economic Corridor Is Flawed

 

 


Insights into Editorial: India’s Opposition to China–Pakistan Economic Corridor Is Flawed 


 

Summary:

The 3,000 km-long China–Pakistan Economic Corridor (CPEC) consisting of highways, railways, and pipelines is the latest irritant in the India–China relationship.

 

What is CPEC?

CPEC is clutch of projects valued at $51 billion project which aims at rapidly expanding and upgrading Pakistan’s infrastructure and strengthening the economic ties between the People’s Republic of China (China) and Pakistan. It includes building roads, laying railway lines and pipelines to carry oil and gas.

  • CPEC eventually aims at linking the city of Gwadar in South Western Pakistan to China’s North Western region Xinjiang through a vast network of highways and railways.
  • The proposed project will be financed by heavily-subsidised loans, that will be disbursed to the Government of Pakistan by Chinese banking giants such as Exim Bank of China, China Development Bank, and the Industrial and Commercial Bank of China.

 

Why is it important?

The CPEC, once completed is expected to cut short the trade route for China’s oil imports by 6000 miles. It is expected to open up a brand-new strategic gateway for China to tap into African, West Asian and South Asian trade.

  • The CPEC is expected to give the flagging Pakistan economy a shot in the arm too. About 90 per cent of the total outlay for this project will be funded by the consortium of Chinese banks and the balance 10 per cent by Pakistan. Reports claim that this project will likely add about 7 lakh direct jobs between 2015 and 2030 and add about 2-2.5 percentage points to the Pakistani GDP.
  • Besides the potential for growth, power and jobs, Pakistan also expects the CPEC to bind it in an even tighter embrace with close friend China, giving it greater strategic leverage with both India and the United States in the Indian Ocean region.

 

And what’s in it for China?

The CPEC is part of China’s larger regional transnational ‘One Belt One Road’ (OBOR) initiative, whose two arms are the land-based New Silk Road and the 21st century Maritime Silk Road, using which Beijing aims to create a Silk Road Economic Belt sprawled over a large patch of Asia and eastern Europe, and crisscrossed by a web of transport, energy supply and telecommunications lines.

  • Gwadar lies close to the Strait of Hormuz, a key oil shipping lane. It could open up an energy and trade corridor from the Gulf across Pakistan to western China, that could also be used by the Chinese Navy. The CPEC will give China land access to the Indian Ocean, cutting the nearly 13,000 km sea voyage from Tianjin to the Persian Gulf through the Strait of Malacca and around India, to a mere 2,000 km road journey from Kashgar to Gwadar.
  • The development of Kashgar as a trade terminus will reduce the isolation of the restive Xinjiang province, deepen its engagement with the rest of China, and raise its potential for tourism and investment. Central Asian republics are keen to plug their infrastructure networks to the CPEC — this will allow them access to the Indian Ocean, while contributing to the OBOR initiative.
  • For Chinese companies, the massive scale of the CPEC provides investment opportunities for several years to come. As per the terms of the agreement, they will be able to operate the projects as profit-making entities.

 

Why should India support this initiative?

If the corridor opens up a major new global trade route, not just Pakistan and China, but also India which is quite strategically located on the corridor, may see positive spillover effects from burgeoning trade with West Asia or Africa.

 

But, why is India concerned?

CPEC establishes a symbiotic relationship between China and Pakistan and political analysts worry that this may have ramifications for the geopolitical situation in Kashmir, especially as the CPEC corridor passes straight through disputed Pakistan-occupied Kashmir (PoK). The worry is if the high economic stakes in the project will allow China to remain neutral if the Kashmir dispute escalates.

 

Options for India:

India should stop making intermittent and tentative overtures and instead adopt a robust policy on PoK. Quite clearly, India’s non-endorsement or indifference to China’s Silk Road proposal appears to be short-sighted thinking, perhaps stemming from suspicion and insecurity.

  • Also, India can do little to stop OBOR or scuttle the CPEC. Almost all the countries in the subcontinent are excited about the project. India’s non-participation would lead to isolation and loss of clout at the regional level.
  • Being the world’s second largest economy and India’s largest trading partner, New Delhi is unable to ignore China anyway. To be sure, OBOR may be carrying security undertones but India also requires massive infrastructure investment and only China seems to have the surplus capital. Without partnering with China, India’s integration in Asian regionalisation would be less than smooth.
  • Chinese companies are building infrastructure in India and there is little difference whether one gains by helping or limiting China’s influence. It cannot be in India’s interest to support the project and not reap all the economic benefits of those projects. It is important to establish a fine balance between economics with security.
  • India also cannot ignore the significance of the symbolism of history. After all, it was the Silk Route on which Indian trade and philosophy (Buddhism) travelled to the rest of Asia. As China is fast transforming internally, the imperatives of cultural affinity will demand closer propinquity between India and China.
  • Thus, staying outside cannot be to India’s advantage. New Delhi needs to re-conceptualise and seek new realities on the ground. China has called upon India to join the Silk Route and India should respond positively while accepting a trade-off here and there.
  • A wise approach would be to join the regional networking process just as India joined the Asian Infrastructure Investment Bank (AIIB). There is nothing wrong in exploring CPEC as an alternative as long as India’s security interests are not compromised.

 

Conclusion:

There’s little that India can do about the CPEC. But to look at the bright side, a more economically stable Pakistan may be quite good for India, as both countries can then look to de-escalate tensions across the border and talk trade.

The CPEC project promises rich rewards not just to Pakistan and China but to India and other countries in South and Central Asia as well. It is in the economic interest of Islamabad and Beijing to draw India into the project. India’s markets are the big prize that they should be eyeing and work to connect with. This will require them to allay Indian misgivings about the project.