Beijing Diary

5 myths about China's One Belt One Road initiative

For OBOR’s advocates, India is making a big mistake and risks missing out on a $1 trillion game changer for Asia.

 |  Beijing Diary  |  5-minute read |   10-05-2017
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Beijing is getting ready for its big event on May 14, when 28 world leaders will descend on the Chinese capital for the first Belt and Road Forum.

The meet will push China’s "One Belt, One Road" (OBOR) initiative, announcing new agreements and mechanisms to flesh out President Xi Jinping’s vision of building a land economic belt to Central Asia and Europe, and a maritime silk road to Southeast Asia and the Indian Ocean.

The attendees include Russian President Vladimir Putin, the prime ministers of Pakistan and Sri Lanka, and seven ASEAN leaders. As of Tuesday, India isn’t sending any official representative — the only country in South Asia to not do so, Beijing notes — reflecting its wariness about the plan.

One reason is the China Pakistan Economic Corridor (CPEC) that passes through Pakistan-occupied Kashmir. But beyond that, India is also cautious about what China’s long-term strategic goals are with OBOR.

cpecbdreuters_051017105851.jpgChina Pakistan Economic Corridor (CPEC) that passes through Pakistan-occupied Kashmir.

For OBOR’s advocates — and there many in India too — Delhi is making a big mistake and risks missing out on a $1 trillion (Rs 64,69,549 crore) game changer for Asia, that will ostensibly bring infrastructure and prosperity to everyone but India.

Its detractors, though, say OBOR is doomed to fail and will probably result in bankrupting not just China but every country that signs on. Time will tell who’s right, but what’s clear is that OBOR is increasingly emerging as a strategic Rorschach test, with each camp seeing what they want to in the still ambiguous plan.

Keeping that in mind, here are five common OBOR myths that are doing the rounds as Beijing readies for its first summit — and as the OBOR debate grows ever louder — and the views of top Chinese economists on the future of the plan:

Myth 1: It’s a new initiative

OBOR’s ambitious scope has caught the imagination, whether it was the first 12,000km China-London train that opened last week or the many ports China is building, from Hambantota to Gwadar. Question is, how on earth has China managed to build all this in the four years since Xi announced OBOR in October 2013?

As Zhang Yunling, a top economist of the Chinese Academy of Social Sciences in Beijing admits, most of the projects being talked about under OBOR are not new. The 12,000 km track connecting China and Europe existed long before OBOR, as did China’s regional projects (including CPEC).

OBOR is, in many ways, simply repackaging (and credit to Beijing for selling it so well); the Silk Road is mostly a new label for pre-existing Chinese projects (and sounds much less frightening than a “string of pearls”). It is, however, providing a limited boost to such plans, for example, by increasing the frequency of trains on old routes.

Myth 2: There’s an OBOR plan

Experts talk about OBOR as if it’s a spelled out blueprint of strategic projects. Remarkably, three years on, there is still no concrete OBOR vision document or plan. The only official vision, released by China’s National Development and Reform Commission, put forth vague ideas about connectivity and the likely range of projects.

Even more remarkably, three years on, there isn’t even an official OBOR map released by China (the maps circulating are all imagined unofficial renderings of OBOR by the Chinese media). This lack of specifics, actually suits China as it doesn’t have to commit (even if it means experts can let their imaginations run wild).

Myth 3: OBOR is an economic initiative

A common criticism of the plan outside China is that many of its projects are not viable. Wang Yiwei, a top Chinese scholar at the Renmin University in Beijing, laughs this off. He says China is more than aware of the risks and that a fundamental misreading of the plan abroad is an assumption that it’s supposed to be profitable.

“Some are strategic projects like CPEC, they aren’t about making money and the fact is that it’s hard for infrastructure to make money,” he says. “We know this. It’s a long term plan about bringing stability to Pakistan, starting with bridging its energy deficit. And that is already happening,” he argues.

Myth 4: OBOR will bankrupt China

If OBOR’s detractors in India are banking on the plan to fail, they should probably reserve their judgement for now. For China, its actual exposure may be far less than advertised.

As much as Beijing tom-toms a $1 trillion (Rs 64,69,549 crore) investment, the actual money it’s spending is far less. Official data with China’s ministry of commerce shows that China only invested $30 billion (Rs 1,94,040 crore) along OBOR in 2015 and 2016. (It invested more than $2 trillion (Rs 129,39,098 crore) at home on infrastructure in the same period.)

Even in Pakistan, most of the investment so far has not been on fanciful pipelines but on energy projects by Chinese companies (including private ones) that China’s economists believe aren’t high risk. As deep as China’s wallet is, its debt at home is probably a bigger concern.

Myth 5: India will suffer by not signing

Nepal on Monday became the latest country to “sign on” to OBOR through an MoU, but the agreements are symbolic. Ultimately, Chinese companies say they will invest in India depending on specific projects and their returns, regardless of whether or not India officially endorses OBOR.

As of now, there are no clear directives from Beijing on differential policies for signees, so India has little to lose and could still work with China on specific projects, with or without the OBOR label. As China likes to say, a “win win” outcome.

(Courtesy of Mail Today.)

Also read: India must ignore China's One Belt One Road dream, but strike CPEC hard

Writer

Ananth Krishnan Ananth Krishnan @ananthkrishnan

The writer is China correspondent for India Today.

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