One Belt, One Road (OBOR) : An Imperative for China to Salvage its Economy

One Belt, One Road (OBOR) Introduction:

The One Belt, One Road (OBOR) is a development project, which was unveiled by the Chinese leader Xi Jinping in September-October 2013.
The proposal is aimed to enhance connectivity between People’s Republic of China and the rest of Eurasia. The project consists of two major components, one being land based called the Silk Road Economic Belt (SREB) and the other is through the ocean, called the Maritime Silk Road (MSR).
The initiative calls for the integration of the region into a cohesive economic area through building infrastructure, increasing cultural exchanges, and broadening trade. Moreover, the proposal underlines China’s desire to carve out a bigger role for itself in the global affairs.
China will be hosting a two day Belt and Road Forum (BRF) on 14-15 May 2017 to facilitate high-level delegations talks among leaders, including 29 Heads of State, on OBOR.
Heads of state of 29 countries including Russia, Pakistan, Sri Lanka, Maldives, Myanmar, Bangladesh, Nepal (joined OBOR initiative two days ago) will attend the Forum in Beijing, China. In a surprise move, even United States has decided to attend the Forum.
India happens to be the only South Asian country, besides Bhutan, that has not joined in this ambitious connectivity project.
India has decided to boycott the Forum on principle as it opposes the OBOR leg, called the China-Pakistan Economic Corridor (CPEC) that runs through the Pakistan Occupied Kashmir (POK), which is a disputed territory.
Salient Features of the One Belt One Road Project

  1. Scope of Project: Will cover 60 countries across Asia-Europe-up to East Africa.
  2. Anticipated Cumulative Investment over an Indefinite Timeline: Between US$4 trillion to US$8 trillion.
  3. The Silk Road Economic Belt: Will include countries situated on the original Silk Road through Central Asia, West Asia, the Middle East, and Europe. The major routes that defined the erstwhile Silk Route include:
  • Northern Route:It started at Chang’an (now called Xi’an), an ancient capital of China, passed through the breakaway provinces of erstwhile USSR and ended at the Caspian Sea/ Black Sea.
  • Southern Route: Also called the Karakoram route was mainly a single route running from China through the Karakoram Mountains, where it persists in modern times as the international paved road connecting Pakistan and China as the Karakoram HighwayIt passed through northern Pakistan, over the Hindu Kush Mountains, and into Afghanistan, rejoining the northern route near Merv, Turkmenistan. Then, passing through Iran and Mesopotamia, it reached North Africa.
  • South Western Route: This route followed the Ganges/Brahmaputra Delta, passing through northern Burma, into modern Bangladesh and further to Thailand and Java.
The New Silk Route: The New Eurasian Land Bridge, which is railway connectivity from China to Central Europe through Kazakhstan, Mongolia and Eastern Europe going up to Russia. This route, which was planned for implementation in 1990, is also referred to as the “New Silk Road”.
In 2008 the railway line was further extended to connect the cities of Ürümqi in China’s Xinjiang Province to Almaty and Astana in Kazakhstan.
In October 2008 the first Trans-Eurasia logistics train reached Hamburg in Germany from Xiangtan, China and since July 2011 the line is being extensively used by freight service that connects Chongqing, China with Duisburg, Germany. The same has cut travel time for cargo from about 36 days by container ship to just 13 days by freight train.
On 15 February 2016, the first train dispatched under the OBOR scheme arrived from eastern Zhejiang Province of China to Tehran, the Iranian capital. Now plans are underway to extend the route past Tehran, through Istanbul, the capital city of Turkey into Europe.
In January 2017, the service sent its first train to London. The network additionally connects to Madrid, Spain and Milan, Italy.
The Maritime Silk Road: This initiative, also known as the “21st Century Maritime Silk Road”, is a complementary initiative aimed at investing and fostering collaboration in Southeast Asia, Oceania, and North Africa, through several contiguous bodies of water, i.e. the South China Sea, the South Pacific Ocean, and the wider Indian Ocean area.

Funding of the OBOR

The Chinese premier, Xi Jinping in November 2014 announced a plan to create $40 billion development fund, which would help finance China’s plans to develop the New Silk Road and the Maritime Silk Road.
China has demonstrated perceptive business acumen by investing in businesses rather than lending money to countries for various projects, e.g. the Karot Hydropower Station, 50 kilometres from Islamabad the capital of Pakistan is the first investment project of the Silk Road Fund, and is not a part of the much larger CPEC investment.
Similarly, China has accelerated its drive to draw Africa into the Maritime Silk Road by speedy construction of a modern standard-gauge rail link between Nairobi and Mombasa.
Clearly, such development projects provide China with an avenue for investment and the recipient country benefits from the infrastructure being developed by China over there. Hence, it is a win-win situation for both the partners and in the bargain the Silk Route initiative is getting automatically executed.

OBOR: an Imperative for China to Salvage its Economy
China’s economy is majorly export driven and its growth story was riding high on the manufacture and export of goods. Due to the global economic meltdown the demand for products manufactured by China has significantly reduced.
However, due to the nature of its economic growth model, China has created a problem of serious overcapacity in many of its industries.
The major reasons for creation of this overcapacity was China’s enduring emphasis on heavy industries over the past two decades and inability of the government to read the market trends correctly.
Thus, the falling exports, sluggish economic growth, both globally and at home, industrial overcapacity and an obvious need for China to structurally transform its economic cardinals, has sent the Chinese decision makers into an overdrive mode to accelerate the Belt & Road Concept initiative.
The Foreign Direct Investments (FDI) that it is making in various infrastructure projects is helping to revive the flagging Chinese economy.
China has already invested billions of dollars in several South Asian countries like Pakistan, Nepal, Sri Lanka, Bangladesh, and Afghanistan to improve their basic infrastructure. In an official report by China, between 2014 and 2016, its businesses signed projects worth $ 304.9 billion in belt and road countries.
It is believed that China hopes to sign more than 50 agreements on transportation, energy and communications projects during the OBOR Forum scheduled to be held on 14-15 May 2017.
In fact, China has emerged as one of the fastest-growing sources of Foreign Direct Investment (FDI) into India, in terms of various rail and metro projects that are underway. China has risen from 28th rank in 2014 and 35th in 2011 to the 17th largest investor in India in 2016.
The foreign investment in infrastructure, which is also being termed as “infrastructure diplomacy” by China, has important military implications besides helping China in its trade regime.
One Belt One Road is believed to be a way to extend Chinese influence in order to fight for regional leadership in Asia.

Implications for India


  • India has rightly shown its indignation by refusing to attend the Forum. We are all aware that the China-Pakistan Economic Corridor (CPEC) extends from Kashgar in China’s Xinxiang to the Gwadar port in Balochistan and runs through POK, which is highly objectionable to India.
  • The CPEC provides Pakistan with extensive and modern infrastructure and serves China to not only invest in Pakistan, but also intimidate India by going ahead with this project audaciously.
  • Chinese merchant vessels carrying goods need not to take the long route to skirt around the India peninsula, as it gets an easy access to a port of Arabian Sea, which brings a bonanza of commercial and strategic benefits to China.
  • Thus, India will have to stand its ground on the issue, maybe it needs to garner global support against the construction of the CPEC in POK or perhaps even resort to unethical means to foment trouble in POK/ Balochistan and continue to contest the execution of CPEC.

Constraints Attached with CPEC


  • The CPEC project is being serious opposed by not only India, but also the population of Gilgit-Baltistan and Balochistan, who are fighting for their independence. Frequent disruptions at both the ends of CPEC may restrict its free and optimum utilisation by China, which is spending $57 billion on its construction.
  • Moreover, Pakistan is said to be paying through its nose in terms of interest to China for the infrastructure projects coming along CPEC. The same will further retard Pakistan’s economic position.
  • Lastly, increasing number of Chinese enterprises are acquiring stakes in Pakistan’s economy, and as the government takes out more and more loans from Chinese state-owned banks for balance of payments support, the space to negotiate and protect their own interests will diminish.
Hence, a stage may come when China will start dictating terms to Pakistan.

Conclusion :

The One Belt One Road is clearly an initiative by China to reach out to the prospective buyers of its products and allow its industry to function at full capacity, thereby giving a fillip to its flagging economy.The strategic aim also stands out vividly that outlines China’s desire to emerge as a regional leader. India at this stage does find itself isolated from other South Asian nations and dominated by China from all directions, but its stance is highly justified.

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