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Race for supremacy: India, Japan plan alternative to counter China's OBOR

Discussion in 'World Economy' started by randomradio, May 17, 2017.

  1. randomradio

    randomradio Mod Staff Member MODERATOR

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    http://www.japantimes.co.jp/opinion/2017/05/18/editorials/obor-oh-boy/


    OBOR? Oh boy


    For years, China’s leadership followed the guidance of former leader Deng Xiaoping, who urged the country to “hide our capacities … maintain a low profile and never claim leadership.” Last weekend marked the end of that era as President Xi Jinping hosted an international gathering that sought to sell Beijing’s “One Belt, One Road” (OBOR), a multitrillion dollar regional infrastructure initiative. Xi’s “project of the century” has many purposes, not least of which is assertion of China’s leading role in Asia and beyond, a bid to fill a vacuum that is emerging in the wake of the Trump administration’s “America First” approach.

    Economists and experts reckon that there is a $5 trillion shortfall in infrastructure — roads, ports, railways and power facilities that provide the very foundation of economic development — in Asia and its periphery. China’s leaders see that gap as an opportunity — a way to make friends, spur demand for Chinese goods and services, and expand Beijing’s influence.

    To do so, Chinese planners and strategists have drawn on age-old iconography, that of the Silk Road, and fashioned a modern construct around it, one that will extend past Central Asia and the Indian Ocean and extend all the way to Europe. The Silk Road Economic Belt aims to re-create and expand those land-based trading routes; the 21 Maritime Silk Road does the same for maritime routes. Together, they constitute the OBOR initiative and Xi invited the leaders of countries that would receive OBOR funds and those who would donate to it.

    Nearly 70 countries and international organizations gathered Sunday and Monday in Beijing to bless the project. China has identified 65 countries that will join — although in theory it is open to everyone — and they represent about 62 percent of the world’s population and 30 percent of its GDP. While there is no single list of OBOR proposals, nor of the total amount to be invested, China promised to invest at least $113 billion in the effort and it is estimated that 50 Chinese state-owned enterprises have invested in nearly 1,700 projects since 2013. They include high-speed railroads, oil and gas pipelines, and refineries, to name a few. The accounting firm PricewaterhouseCoopers tallied nearly $500 billion in projects and M&A deals in 2016 in OBOR countries — remarkably, a decline from 2015.

    For skeptics, OBOR is an attempt to spur demand for Chinese construction and export industries as the domestic economy slows. There is truth to that. But it is also a response to a shortfall in demand in developing nations. In so doing, China assumes a larger role in the region and the world as a provider of public goods and stakes a broader claim to leadership more generally.

    This assertion of a leading Chinese role is the most important element of the OBOR project. While Beijing has been moving in this direction — creation of the Asian Infrastructure Investment Bank (AIIB) is another leadership gambit — that effort has accelerated in recent months, spurred by the coming to power of Donald Trump in the United States and his “America First” mentality. Xi first staked out this position at the World Economic Forum meeting in January, when he positioned himself as the guardian of a liberal and open world trading order.

    The OBOR meeting attempted to spell out principles for engagement and forge a larger multilateral mechanism, in which China would provide a — albeit a leading — voice. And here the difficulties accumulate. China wanted a large turnout of world leaders to approve the project. While 20 heads of state attended, most were from countries that are dependent on Chinese aid and trade. Only one Western leader participated, Italian Prime Minister Paolo Gentiloni, representing the Group of Seven, and host of that meeting this year. Other notable attendees included Russian President Vladimir Putin and Christine Lagarde, managing director of the International Monetary Fund.

    There were no senior government figures from Japan, the U.S. or South Korea (although Toshihiro Nikai, secretary-general of the ruling Liberal Democratic Party, attended the conference), as those governments worried about the long-term designs and content of the OBOR plan. Those concerns were born out when European participants protested and refused to sign the statement on trade cooperation released after the meeting because it did not mention transparency and standards for making tenders. India sent no representatives. It has boycotted OBOR because parts of the project partner with Pakistan and run through the disputed territory of Kashmir, which Delhi and Islamabad both claim.

    China is also facing resistance from some recipients of its investment. They complain that money does not go to local economies or ends up in the pockets of government officials. Critics charge that China brings its own construction crews and support staffs — part of that effort to stimulate the Chinese economy — incurring charges of “neo-imperialism.”

    In other words, skepticism about Chinese intentions remains high. Beijing must address these concerns if the OBOR plan is to serve its ultimate goal of providing the cornerstone of a regional and global order. There is a long way to go.
     
    Sam_ and Bloom 17 like this.

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