Not just CPEC, China's new silk road too should have India worried

India's concerns are well founded; project has not been conducted with any consultations

Citing concerns over the China-Pakistan Economic Corridor's (CPEC's) impact on its sovereignty, India on Sunday skipped the opening ceremony of China's Belt and Road Forum. (Read more) However, CPEC is not the only component of China's ambitious new Silk Road that has India worried.   

The meeting, called the Belt and Road Forum (BRF), is being attended by 29 heads of state and governments, including Pakistani Prime Minister Nawaz Sharif and his Sri Lankan counterpart Ranil Wickrmasinghe, besides official delegations from other South Asian countries. Leaders and officials from Russia, the US, Japan, UK, Germany, and France are also attending the meeting.

India's caution is well founded

Speaking on the matter, Ministry of External Affairs spokesperson Gopal Bagley explained: "...No country can accept a project that ignores its core concerns on sovereignty and territorial integrity."

As explained in a recent Business Standard editorial, India's objection to CPEC is legitimate. After all, China routinely blocks any international funding of projects in Arunachal Pradesh on the ground that it is disputed territory. Of late, it has even raised objections to the central government undertaking projects in that state. It is hypocritical then for Beijing to justify undertaking projects in Pakistan-occupied Kashmir (PoK). But India should be cautious about participating in other components of the One Belt and One Road (OBOR) initiative as well. (Read more)

While it is true that notwithstanding Chinese activities in PoK, India saw merit in joining the Asia Infrastructure Investment Bank (AIIB), the BRICS Development Bank and the Shanghai Cooperation Organisation (SCO), all initiatives led by China, the difference is that India was actively involved in shaping the architecture of the AIIB and the Development Bank, their lending policies, and is represented at senior levels in these institutions. The SCO, too, is a multilateral institution and members have an important say in its policies. But the OBOR initiative does not fit into this pattern. India had conveyed to China that a similar consultative process was even more important for such an ambitious undertaking. The Chinese apparently want India to first sign on to the initiative before getting into the specifics of India’s role, the choice of projects and financing. If this, indeed, is the case, then India’s caution is well founded.

Xi's trade plan gets Trump's nod for OBOR

India, however, could find itself alone when it comes to recognition for its concerns. At the last minute, China managed to rope in the US for its Silk Road summit. South Korea, the European Union and Japan also confirmed their participation in the high-profile event. (Read more)

The Trump administration announced that Matt Pottinger, Special Assistant to the President and senior director for East Asia of National Security Council of the White House, would lead the US delegation to attend the OBOR Forum.

"The United States recognises the importance of China's One Belt and One Road initiative and is to send delegates to attend the Belt and Road Forum May 14-15 in Beijing," a joint statement by China's finance and commerce ministries said.

The US attendance at the summit was a concrete result of Xi's trade plan, Finance Vice-Minister Zhu Guangyao told the media. The US participation came after the two sides clinched a lucrative trade agreement which will boost shipments of American liquefied natural gas, beef and other products to China. In turn, Chinese banks and poultry will get access to the US market. The deal follows pledges by US President Donald Trump and Xi during a summit in Florida to address a $350 billion trade imbalance in China's favour by coming up with concrete measures within 100 days.

China is willing to splurge on the initiative

Chinese President Xi Jinping pledged $124 billion on Sunday for his ambitious new Silk Road plan, saying everyone was welcome to join what he envisioned would be a path to peace and prosperity for the world. (Read more)

The summit marks the formal launch of China’s ambitious and potentially game-changing initiative to build a network of transport and economic corridors across Asia and Europe with China as the nodal point.

China has touted what it formally calls the Belt and Road initiative as a new way to boost development since Xi unveiled the plan in 2013, aiming to expand links between Asia, Africa, Europe and beyond underpinned by billions of dollars in infrastructure investment.

Xi pledged a massive funding boost to the new Silk Road, including:

• An extra 100 billion yuan ($14.50 billion) into the existing Silk Road Fund

• 250 billion yuan in loans from China Development Bank

• 130 billion yuan in loans from Export-Import Bank of China

• 60 billion yuan in aid to developing countries and international institutions in new Silk Road countries

• Encouraging financial institutions to expand their overseas yuan fund businesses to the tune of 300 billion yuan

• 2 billion yuan in emergency food aid

• $1 billion to a South-South Cooperation fund

• $1 billion for cooperation projects in countries on the new Silk Road