‘India’s territorial concerns valid but it can be more flexible on Belt Road Initiative while having red lines’

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While India chose to stay out of China’s Belt and Road Forum in Beijing on May 14-16 because of its objection to China-Pakistan Economic Corridor (CPEC), which runs through Pakistan-occupied Kashmir (PoK), representatives of as many as 64 countries attended. Amitendu Palit, senior research fellow and research lead for trade and economic policy at ISAS, National University of Singapore, spoke to Nalin Mehta on how India could calibrate its strategy on Belt Road Initiative (BRI) and what’s at stake for both Beijing and Delhi:
BRI is said to involve over 60 countries, 4.4 billion people and 29% of global GDP, with over $1 trillion of Chinese government money. How much of this is hype and how much is real?edit-Amitendu-Palit_cutout

Whatever numbers we are getting to hear are what is being told to us by the Chinese but the biggest problem with this initiative so far is that it is not very clear where specifically this money will go, in terms of projects. The only element where some details have been provided is CPEC. No other segment has any clarity: on project or whether there will be Chinese companies coming in or whether they will be collaborating on terms of engagement and so on. What the Chinese are trying to do is to take existing projects like Gwadar port in Pakistan or Hambantota in Sri Lanka and saying that these are all part of OBOR. There is a certain degree of lack of transparency and more information and clarity are needed.

Otherwise, you might end up with situations where countries that need money for new initiatives, bring in Chinese companies on their terms and then end up discovering that they are in a perpetual debt trap. This has actually happened with Sri Lanka. There are expectations this might happen with Pakistan as well.

The majority of countries in the OBOR geography, especially in Central Asia, are all looking for funds and it is quite easy for the Chinese to sell them this carrot of funding for infrastructure and public goods for making OBOR politically legitimate. The only country which can counter this is India. Russia is playing a strategic game as they want to align with China for a variety of reasons.

Is India getting support for its stand on the problems with CPEC?

India is the only country which has a sovereignty issue with this because of CPEC passing through PoK. India’s grievance is legitimate but CPEC came before they started calling this the Belt Road Initiative. China was aware that India would object but didn’t bother. However, the land part is not the only component of this initiative. There is also a big maritime infrastructure part, which India needs to look at more objectively. India can simply say that we won’t agree to the corridor passing through our territories but on the other aspects of the project we are prepared to discuss. That way you don’t send out a signal to the rest of the community that you are spoiling the show. Unfortunately, no country till now has come out openly in support of India’s concerns.

So India can be more flexible while having its red lines?

Exactly. That is what we must do. There is no point in driving ourselves into a corner since we won’t get supporters. A third country will go with whatever benefits it. We can negotiate because this project can never be fully successful without India. Purely from geographic and economic perspectives, it can only work if India is there. Our presence in OBOR will also give a sense of comfort to many other countries.

How is this being seen in Southeast Asia?

BRI is a reasonably big deal in the region and being looked at as an initiative which can recharge economic momentum. No country wants to annoy China. The Nepalese ambassador’s statement sums up the reality where he said we don’t want to cause grief to India but China is an economic giant. You can’t afford not to play ball with them. The ability they have for creating economic damage is substantive.

So as the US retreats, China steps in?

One of the difficulties we have is that China has started projecting this as part of its effort to push trade and globalisation. That sentiment resonates a lot in Asia. We cannot claim that we are a pro-connectivity country while continuing to create obstacles in trade talks. In the BRI vision document, trade is big with mention of multiple economic zones. It could all be speculative but it is there. We can get isolated on this.

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