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Thursday, April 19, 2018

To be in step with China’s ambition, South Asian nations walk tightrope

The diplomatic close shave in Sri Lanka is emblematic of South Asia’s dilemma when it comes to pursuing closer ties with China.

Written by Jyoti Malhotra | Updated: May 12, 2017 12:57:49 am
China, South Asian nations, China-Sri Lanka. China - South Asia relations, South Asian nations, world news, indian express explained, indian express Prime Minister Narendra Modi being received by Sri Lankan Prime Minister Ranil Wickremesinghe and other dignitaries upon his arrival at Bandaranaike International Airport, in Colombo on Thursday. (Source: PTI)

Until a few weeks ago, Prime Minister Narendra Modi’s visit to Colombo and Kandy was in jeopardy because Sri Lankan Prime Minister Ranil Wickeramasinghe was intent on flying to Beijing on Friday — so he could be well in time for the May 14-15 One Belt, One Road (OBOR) Summit in the Chinese capital. As many as 29 Heads of State and 110 countries, including several South Asian nations, are expected to attend.

Wickeramasinghe was ultimately persuaded to stay back until Modi had prayed at the Temple of the Tooth in Kandy and flown back home on Friday evening. Certainly, it would have been terrible optics if the leader of one of India’s closest friends in the region was absent when the Prime Minister came visiting.

The diplomatic close shave in Sri Lanka is emblematic of South Asia’s dilemma when it comes to pursuing closer ties with China. Pakistan, with its self-avowed and decades-old “special relationship that is higher than the mountains and deeper than the oceans”, has it the easiest. Its powerful Army cushioned by Chinese assistance, especially in the nuclear and missile arenas, Islamabad can ask Beijing for infrastructure aid without compunction. That is why, at last count, the China-Pakistan Economic Corridor (CPEC), which begins at the Karakoram and ends at the Gwadar port on the Indian Ocean, was worth a cool $ 57 billion.

Nepal’s Prime Minister Prachanda aims at balancing India and China — which is why he allowed his country’s first military exercise with China a few weeks ago. According to the 1950 Treaty of Friendship between India and Nepal, such an idea would have been anathema as Kathmandu was honour-bound to recognise India’s strategic concerns about another country looming at New Delhi’s doorstep.

But Prachanda knows that Nepal’s population would prefer closer ties with India; besides, New Delhi had backed the Nepalese people’s lead in overthrowing the monarchy in 2006, which enabled Prachanda and his fellow Maoists to come to power.

The Bangladesh story is more complicated. In mid-October 2016, China’s President Xi Jinping travelled to Bangladesh and cut a cheque of $ 29 billion, sending a frisson of excitement across the country. India now wants to push infrastructure projects into Bangladesh, alongside $ 5 billion of credit and $ 9.24 billion worth agreements, to fund power plants and supply liquified natural gas.

Meanwhile, the Maldives is happy to accept large Chinese investments in building Male’s new airport (which was taken away from India’s GMR), as well as a housing estate.

It is important to note that Sri Lanka’s Wickeramasinghe is not thrilled with the high cost of Chinese loans that Colombo must now begin to repay for the port expansion in the capital and the Hambantota port in the south — all this, as India funds a $ 350 million refurbishment of an 84-tank oil farm in Trincomalee.

And yet, the alacrity with which Wickeramasinghe wanted to fly to Beijing is reflection of the fact that he — like the other South Asian leaders — will not allow his affection for India to come in the way of his country’s need for China.

With over $ 3 trillion in foreign exchange reserves, China is liberally using its spare cash to promote influence. In an article in the Global Times, Ding Gang, a senior editor with People’s Daily, wrote, “…With the wheels of history turning into the 21st century, China has reinstated itself as the global economic centre.”

OBOR, or as the Chinese now call it, the Belt and Road Initiative (BRI), is the linchpin of President Xi’s strategy to make China the world’s richest and most powerful nation again. The monarchs of the Middle Kingdom were used to vassals kowtowing to their superior presence. Xi believes the BRI and the Maritime Silk Road (MSR) — just like Marco Polo’s ancient Silk Road, but much bigger and better connected — will unfold across the heartland of Central Asia down to the Indian Ocean, as well as across the Mediterranean and onwards into Europe. Trade and investment, which generates wealth, will be followed by influence.

In 2013, while formally naming the project, Xi had allotted a mere $ 40 billion to it. But as the President’s and his country’s incredible ambition began to take shape, its scope increased exponentially.

The China-led Asian Infrastructure Investment Bank (AIIB), established in late 2015 as a regional financing mechanism for OBOR, has an initial total capital of $ 100 billion. As many as 50 Chinese state-owned undertakings are already part of 1,700 projects to develop ports, roads, railway lines and industrial parks. China’s manufacturing machine will move both surplus goods and low-paying jobs to less affluent nations, while pulling up its own economy to enter a higher-income bracket such as Europe. Over the next decade, Ding Gang wrote, the annual trade volume along the BRI route will exceed $ 2.5 trillion and enrich about 1 billion people, the equivalent of the total population of Europe and the US.

Ding also made a point about the uniqueness of China’s growth explosion:

“Different from the globalisation which began in Europe 500 years ago, the BRI is by no means a one-way flow of wealth enabled by the exploitation of the empires. It aims to build an active economic and trade corridor and an interconnectivity network in Asia, Europe and Africa, via stimulating the potential of these regions, creating an unprecedented convergence effect.”

Indeed, Xinhua, the official Chinese press agency, has declared, “This is the China solution for global economic revival.”

Certainly, the BRI is not a done deal — yet. At an ADB meeting in Japan last week, the Deputy Governor of the central bank of the Phillippines, Diwa Guinigundo, pointed out that BRI was “still a vision, (and you) have to translate that into some working parts”.

India, of course, remains the most put off by the summit in Beijing, not only because the CPEC, a key element of BRI, passes through Pakistan-Occupied Kashmir, but also probably because the summit is an accurate reflection of the widening chasm between the two Asian powers.

Chinese government officials, who say they have tried to alleviate India’s apprehensions, point out that more than 50 MoUs, plans, cooperation letters and projects will be signed during the summit in the transportation, energy and communications sectors — besides a joint consultative document reflecting the “shared consensus” by all parties.

Xinhua invoked Confucius: “He who wants success should enable others to succeed.”

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