China is organising a grand two-day summit tomorrow to showcase its plans to build a network of trade routes—One Belt, One Road (OBOR)—that will connect Asia, Africa, the Middle East and Europe.
Nearly 65 countries are expected to take part in the summit though only 20 heads of state will attend. China plans to issue a joint statement at the end of the two-day summit to showcase a wide approval of its ambitious project. India and Japan have shown reluctance to attend the summit. While Japan will send a delegation, India has refused to send any representative. The US took a U-turn at the last moment and will send a representative.
What is OBOR?
Inspired by the Silk Road, the medieval trade routes between Europe and Asia, the OBOR project will be a vast network of sea and land routes across dozens of countries. It will impact 4.4 billion people. China is said to be spending $1 trillion on it. It is not one project but six major routes which will include several railways line, roads, ports and other infrastructure. China claims these economic corridors will not only build infrastructure in countries that cannot afford to do it themselves but also boost global trade. Most of the countries in Asia and all of India's neighbours, except Bhutan, are willing to take part in the project.
Who will benefit more: China or the host countries?
The participating countries will benefit in terms of infrastructure and trade. OBOR can be an easy and fast way for many small countries to acquire important infrastructure projects which they cannot afford otherwise. But all this will come at a huge hidden cost. China will lend money for OBOR projects to host countries at high rates of interest which the countries may not be able to repay.
This can lead to China acquiring equity and then controlling stakes in these projects, getting a permanent footprint in several small countries which is nearly impossible for it to achieve otherwise. OBOR can provide big long-term benefits to the Chinese economy. OBOR can give it opportunities to use its overcapacity in steel and minerals.
The trade routes will give it access to new markets. Permanent Chinese presence in dozens of countries will give China an edge over its rivals in trading with these small countries. China can even spread its manufacturing across countries as manufacturing costs such as power and wages in China are going up. If OBOR becomes a reality, it can help China create a vast economic empire in Asia and Africa.
Is it all about economy and trade?
No. China always hides its military plans in its economic projects. A vast infrastructural footprint in dozens of countries in Asia and Africa will eventually mean a strong Chinese military presence across OBOR. A small country that hosts infrastructure created by China and unable to repay the loan will be vulnerable to China's diplomatic and military moves.
Why is India not attending?
A key part of OBOR is China-Pakistan Economic Corridor (CPEC), a 3,000 km project connecting Pakistan's deep-water port Gwadar and China's Xinjiang. It passes through Gilgit-Baltistan region which lies in Azad Kashmir. The Chinese presence in a disputed region which India claims as part of its own territory raises sovereignty concerns for India.
India is said to have officially flagged this as its only reason for not taking part in the OBOR summit.
http://m.economictimes.com/news/int...dia-is-not-attending/articleshow/58656653.cms
