OBOR may signal the start of the Asian century

OBOR may signal the start of the Asian century

By John Dobson | 27 May, 2017
OBOR, Asian century, UK, Srinagar, Kashmir, Early Day Motion, British Parliament, CPEC
Chinese President Xi Jinping and Indonesia’s President Joko Widodo arrive for their meeting at the Great Hall of People in Beijing, China,on 14 May, on the sidelines of the Belt and Road Forum. Photo: REUTERS
According to some commentators, the reference by Xi to China undergoing a ‘great rejuvenation’ has a hint of revanchism in the region.
Twenty-eight years ago, I was in heaven, or at least the nearest you can get to it on earth. I was a member of a small UK delegation to India and following a busy week visiting a number of government ministries in a hot, dusty New Delhi, we were flown to Srinagar and then taken on to the Dal Lake to spend a quiet weekend. The jaw-dropping sight of the Kashmir valley, the elegance of the Victorian-era wooden houseboats and the sheer beauty of the Mughal-era gardens left their impregnable mark on me to this day. The return to New Delhi after that weekend for a further week of meetings brought me back to earth.

Those stunning memories of Kashmir flooded back two months ago when I was following an Early Day Motion in British Parliament on the “Annexation of Gilgit-Baltistan by Pakistan as its Fifth Frontier”. It is so important that the Motion is worth citing in full. “That this House condemns the arbitrary announcement by Pakistan declaring Gilgit-Baltistan as its Fifth Frontier, implying its attempts to annex the already disputed area; notes that Gilgit-Baltistan is a legal and constitutional part of the state of Jammu and Kashmir, India, which is illegally occupied by Pakistan since 1947, and where the people are denied their fundamental rights including the right of freedom of expression; further notes the attempts to change the demography of the region in violation of State Subject Ordinance and forcibly and illegally to build the China-Pakistan Economic Corridor (CPEC), which further aggravates and interferes with the disputed territory.” Clearly, this move by Pakistan is seen as consolidating a land-grab for political, geographical and economic reasons.

The $62 billion CPEC, a collection of infrastructure projects intended to rapidly modernise Pakistani infrastructure and strengthen its economy by the construction of modern transportation networks, numerous energy projects and special economic zones, is linked to the polarisation of policy, which appears to be developing across the world. On the one hand there is President Donald Trump declaring America First, arguing that globalisation has brought American citizens more pain than gain, and in his first week in office, scrapping the Trans Pacific Partnership between the 12 countries around the Pacific Rim. On the other hand, China’s President Xi Jinping is promoting the concept of a new Silk Road, with his One Belt One Road (OBOR) initiative, introduced in 2013 and designed to promote more globalisation; the exact opposite to Trump’s current policy and designed to fill the void left by him. During the gathering of some world leaders and representatives in Beijing this month, Xi hailed OBOR as the “project of the century” and pledged at least $113 billion to it, urging countries around the world to join hands with him in pursuit of globalisation. China has identified some 65 countries along the belt and road which it hopes will participate, representing 62% of the world’s population and 30% of its economic output. Already 47 state owned enterprises are carrying out some 1,700 projects in these countries. A collection of Chinese banks and multilateral institutions will be major financiers of the project, but many analysts have warned of the high risk associated with OBOR, with the possibility that significant sums could be lost.

A collection of Chinese banks and multilateral institutions will be major financiers of the project, but many analysts have warned of the high risk associated with OBOR, with the possibility that significant sums could be lost. 

For this reason, the European Union (EU), although broadly welcoming the OBOR initiative, displayed extreme caution by refusing to sign China’s trade statement, expressing concerns on its economic and environmental viability. The EU also insisted on a fair tendering process, with some countries showing considerable scepticism about China’s true intentions of shifting its excess industrial capacity to less developed nations and drawing poorer countries tighter into Beijing’s economic grip.

The extent to which non-Chinese countries would have any involvement in OBOR projects remains unclear, with the fear that it could turn into a Chinese construction blitz. Sensitive to these concerns, Beijing hit back by saying that the project is “not and never will be neo-colonisation by stealth. China harbours no intention to control or threaten any other nation. China needs no puppet states!” However, with plans for a pipeline and a port in Pakistan, bridges in Bangladesh, railways to Russia, high speed rail link in Indonesia, an industrial park in Cambodia and a $1.1 billion port project in Sri Lanka, the jury is out on who gains the most from this construction and the subsequent control. According to some commentators, the constant reference by Xi to China undergoing a “great rejuvenation” has a hint of revanchism in the region, being seen as a desire to re-create a regional hierarchy, with China at the top.

There is, of course, an optimistic and positive view of OBOR, argued strongly in this newspaper. It is almost 30 years since the idea of the 21st century being “the Asian century” was floated. In 1988, the Chinese leader Deng Xiaoping warned the Indian Prime Minister Rajiv Gandhi that if both India and China do not prosper it will not be an Asian Century. Since then, the economies of both countries have flourished, with India set on course to be the world’s third biggest economy in the next decade. China in second place, however, has seen a fall in its GDP growth from 6.9% in 2016 to 6.7% in 2017, the slowest since 1990. As a result, Moody’s, one of the world’s big three ratings agencies, has cut China’s credit rating from A1 to Aa3, in a move which could be serious for China, possibly increasing the cost of borrowing for the government. This downgrade reflected expectations that China’s financial strength would “erode somewhat over the coming years, with the economy-wide debt continuing to rise as potential growth slows”. The other side of the coin is that the downgrade could push China into seeking and accepting greater cooperation and further joint ventures within OBOR between member countries, “not a solo song but a chorus”, according to the Chinese government’s website. If so, OBOR could signal the realisation of the Asian century.

John Dobson worked in UK Prime Minister John Major’s Office between 1995 and 1998 and is presently a consultant in the private sector.

 

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