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OBOR must be less Chinese centric to survive, say experts

Business Finance

ANI  |  Singapore City [Singapore] 

China's plan of winning over friends and supporters in the 70-odd countries through which its multi-billion dollar One Belt One Road (OBOR) initiative runs through could come unstuck in the wake of think tank study claiming that 89 percent of contractors working on OBOR conceived by President Xi Jinping in 2013 belong to Chinese companies.

Question marks over this China-centric approach are bound to exist, says the study undertaken by the Washington-based Centre for Strategic and International Studies (CSIS). The study is actually surprised that only 11 percent of contractors are from companies belonging to other countries.

The website has flagged this issue, which has also appeared in a report published by the Singapore newspaper Sinchew.

According to the CSIS, of the 34 current projects in Europe and Asia, around 89 percent have been contracted to Chinese construction companies and only 11 percent have been given to contractors from other countries.

The Sinchew claims that international analysts have expressed their concern about this China-centric approach, since more and more countries are reportedly having a rethink over extending support for China's expansionist goals.

Experts are of the unanimous view that it would be better for China to open up and ensure fair competition. They warn that if this is not done, they see no reason why any country would be interested to join the initiative, or if they have joined it, to consider withdrawing from it because of unequal benefits.

Compared to the Chinese way of favouring its own contractors, contracts that the West has funded, typically under the Bank and the International Monetary Fund (IMF), are more neutral toward the bidders and the grants have been more diversified.

The study showed that 41 percent of these grants were given to local contractors, 29 percent went to Chinese contractors, and 30 percent went to a bidder from a third country.

Sinchew quotes Rafaello Pantucci, Director of the Royal think tank RUSI, as saying, "When we hear the beautiful speech on the Belt and Road, we think its core content is that China wants to share love and give us money and contracts, but, they will say that the way they share love is to help fill the infrastructure deficit and help owe Developed countries."

Therefore, in pushing for this ambitious project across Eurasia, sharing is just an afterthought for China.

The OBOR a.k.a The Belt and Road, (B&R) and The Belt and Road Initiative, (BRI) is a development strategy proposed by Beijing that is focused on connectivity and cooperation between Eurasian countries. The strategy underlines China's push to take on a larger role in global affairs through a trading network. It was initially called One Belt and One Road, but in mid-2016 the official English name was changed to the Belt and Road Initiative.

In the past three years, the focus is mainly on infrastructure investment, construction materials, railway and highway, automobile, real estate, power grid, and iron and steel.

By various estimates, the BRI is regarded as one of the largest infrastructure and investment mega-project in history, covering more than 68 countries, equivalent to 65 percent of the world's population and 40% of the global GDP as of 2017.

According to reports there are numerous stalled and aborted OBOR projects. Among them are:

· Nepal - US2.5 billion: USD 2.5 billion Budhi Gandaki Hydro Electric Dam Project was canceled by Nepal in November 2017 for the violation of bidding rules.

· Hungary: European Union is investigating Hungary-Serbia high-speed railway project build by Chinese contractors for the violation of bidding rules.

· Myanmar - US3 billion: USD 3 billion refinery contract to China was terminated after financing issues.

· Pakistan - US22.3 billion: USD 10 billion Karachi rail project and $260 million Gwadar airport were stalled and US12 billion Diamer-Bhasha Dam in Gilgit-Baltistan was cancelled due to sovereignty claims by India.

· Thailand - US15 billion: High-speed railway was cancelled in 2016 for not subcontracting sufficient work to Thai companies.

· Tanzania - US11 billion: Bagamoyo Port was stalled due to financing issues.

· Sri Lanka - 1.5 billion: Hambantota Port led to Sri Lanka running into financial problems due to the high interest rate of loan given by Chinese, leading to assets transfer to China.

· Asia, Africa, and the Middle East projects: BMI Research database of Asia, Africa and the Middle East shows many projects are too vague and some are planned up to 30 in the future.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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First Published: Wed, January 31 2018. 07:10 IST