IMPACT OF ECONOMIC LEADERSHIP OF DRAGON THROUGH ROAD AND BELT PROJECTS ON INDIAN
RELATIONS AND SOUTH ASIAN MARKET VS.
GLOBAL MARKET
Dr. Vishal Chavan
Assistant Professor, Thakur Insitute of Management Studies and Research, Thakur Village, Kandivali (East), Mumbai (India)
The rise of dragon is ongoing talk for many of the developed and developing economies. The economy of China is base on global export and to deal with this critical issue, Chinese government came up project called ONE BELT ONE ROAD. Many participating countries will get benefit out of such project but at the same time, there is political will power, which is require when it comes to unilateral, bi-lateral and multi-lateral agreements between BRIC members or the members on the issues like clarity on physical boundaries to mental boundaries, terrorism, tariff list/chart and other important issues.
The key issues are discussed in this paper related to member countries point of view on OBOR, Impact of OBOR on India and its relation with neighboring countries and note on Marshall Plan is explained at the end.
Keywords: OBOR, Silk route, Maritime time silk route, Category: International Business
Research Methodology: Exploratory in Nature
The human‟s species is entirely different than any other species in this world. We can prove this by tracing such incidents in past like- The rise and fall of Magadh Kingdom, entry of Britishers in India, or Post world war II- Implementation of Marshall Plan in Germany and affected areas all these examples tells us how people use to do businesses in different times in same direction China has come up with OBOR. This type of projects may have strong positive effects on participating economies if some of the issues are taken care by all members in area of fixing political boundaries, framing strict policies on cross border terrorism, and etc.
I. THE OBJECTIVE OF THIS PAPER TO UNDERSTAND
1) The Impact of OBOR (One Belt One Road) on development of participating members 2) The impact of OBOR (One Belt One Road) on India and its relation with neighboring countries 3) The Impact of OBOR (One Belt One Road) on various Markets and Sectors
II. LITERATURE REVIEW
The European Union and the North America Free Trade Agreement have already established successful track records before a successful Asian equivalent came to exist. And the EU was considered the most successful regional cooperation organization in the contemporary world. Huntington (1998:89, 93) comments that within a decade, an agglomerate Europe, with sufficient population, economic power, technology as well as both real and potential military force, would be a competent super power in the 21st century. On the other hand, the NAFTA, led by the USA, the most powerful nation in the world, has never lost its influence on the international economic system.
Hence, from that point onwards, East Asian countries have realized that they must adopt regionalism, setting up regimes to build up an integrated East Asia in order to maintain their competitiveness against two other regional blocs, i.e. the EU and the NAFTA. However, it is also agreed that the East Asia Pacific shall undertake a different type of integration method with less political motivation involved.
Das (2001: 71-72) points out that “strengthening trade and economic linkages did not occur to ASEAN economies until 1978, when ASEAN put into force an Agreement on the ASEAN Preferential Trading Arrangement (PTA)”.
Renato Ruggeiro, the Director-General of the WTO, goes a step beyond the CEA in defining open regionalism. He contrasted two interpretations of open regionalism: “... The gradual elimination of internal barriers to trade within a regional grouping will be implemented at more or less the same rate and on the same timetable as the lowering of barriers towards non-members. This would mean that regional liberalization would in practice as well as in law be generally consistent with the MNF principle” (WTO, 1996: 11).
In just 30 years, China has developed from a poor inward-looking agricultural country to a global manufacturing powerhouse. Its model of investing and producing at home and exporting to developed markets has elevated it to the world‟s second-largest economy after the USA. Now faced with a slowing economy at home, China‟s leadership is looking for new channels to sustain its appetite for growth at a time when developing neighbors are experiencing rapidly rising demand.
Historical roots: The Silk Road was a network of trade routes, formally established during the Han Dynasty. The road originated from Chang'an (now Xian) in the east and ended in the Mediterranean in the west, linking China with the Roman Empire.
As China‟s silk was the major trade product, German geographer Ferdinand von Richthofen coined it the Silk Road in 1877. It was not just one road but rather a series of major trade routes that helped build trade and cultural ties between China, India, Persia, Arabia, Greece, Rome and Mediterranean countries.
It reached its height during the Tang Dynasty, but declined in the Yuan dynasty, established by the Mongol Empire, as political powers along the route became more fragmented. The Silk Road ceased to be a shipping route for silk around 1453 with the rise of the Ottoman Empire, whose rulers opposed the West.
Today: President Xi Jinping launched China‟s “One Belt, One Road” (OBOR) initiative in 2013 with the stated aim to connect major Eurasian economies through infrastructure, trade and investment. The initiative was later specified to contain two international trade connections: The land-based "Silk Road Economic Belt" And oceangoing
"Maritime Silk Road."
China‟s Belt and Road Initiative is designed to enhance the orderly free-flow of economic factors and the efficient allocation of resources by expanding business cooperation between East and West, from Asia to Europe via Southeast Asia, South Asia, Central Asia, West Asia and the Middle East. The “Belt” and “Road” refer to the Silk Road Economic Belt and the 21st Century Maritime Silk Road, respectively. The Initiative offers companies unparalleled opportunities to tap into new markets and explore the tremendous potential of the Chinese mainland, ASEAN countries and many other economies along the Belt and Road. The “Belt” is a network of overland road and rail routes, oil and natural gas pipelines, and other infrastructure projects that will stretch from Xi‟an in central China through Central Asia and ultimately reach as far as Moscow, Rotterdam, and Venice. Rather than one route, belt corridors are set to run along the major Eurasian Land Bridges, through China-Mongolia-Russia, China-Central and West Asia, China-Indochina Peninsula, China-Pakistan, Bangladesh-China-India-Myanmar.
The “Road” is its maritime equivalent: a network of planned ports and other coastal infrastructure projects that dot the map from South and Southeast Asia to East Africa and the northern Mediterranean Sea.
At this stage, the concept, scope and nature of the initiative are still fluid and the shape of OBOR is likely to evolve over time. Because it was launched by President Xi, the initiative is likely to be prominent in China‟s overseas investment throughout his term in office.
How big is it?
OBOR can be big, indeed. In its largest definition, OBOR would include 65 countries, 4.4 billion people and about 40 percent of global GDP.
What could be the impact of the initiative?
OBOR could stimulate Asian and global economic growth and make it more sustainable. In particular, countries along the corridor — especially those with underdeveloped infrastructure, low investment rates, and low per-capita incomes — could experience a boost in trade flows and benefit from infrastructure development. China would be able to better secure its energy and raw materials supply — which now predominantly gets shipped through the Strait of Malacca and the South China Sea. This will help to create and develop entirely new eco-system of businesses in following areas.
Banking and Financial Services
Logistics and Maritime Services
Professional Services
Infrastructural Development
Cross-border Investment
International Trade and Manufacturing
Governments and Institutions
Banking and Financial Services: Bankers, financiers, fund managers, assets management professionals, private equity managers, etc.
Logistics and Maritime Services: Owners and operators of railways, terminals, ports, airlines, shipping companies;
freight forwarders, third-party logistics services providers, etc.
Professional Services: Lawyers, accountants, business management consultants, experts in arbitration and dispute settlement, etc.
Infrastructure Development: Developers, engineers, surveyors, architects, landscape architects, town planners, contractors, etc.
Cross-border Investment: Heads of sovereign wealth funds, institutional investors, CEOs, entrepreneurs, corporate‟ decision makers, CFOs and finance directors of conglomerates, etc.
International Trade and Manufacturing: Supply chain management professionals, owners and operators of industrial zones, industrialists, traders, etc.
Governments and Institutions: Senior officials in charge of economic development and regional co-operation;
representatives from finance and commerce ministries, trade and investment promotion agencies; heads of think tanks, academic scholars and researchers, etc.
Why OBOR?
China‟s current stage of development further bolsters the credibility of OBOR. In the past decade, China has become a major player in foreign investment based on natural resources development. As China‟s domestic economy is now changing, its overseas investment is gradually shifting toward manufacturing rather than just natural resources.
There are good reasons for this transition: at home, China faces rising labor costs and increasing environmental demands on production. Shifting some of its production base overseas makes sense — as long as the infrastructure exists to move the goods produced there. Chinese investment through OBOR provides countries along the Road and Belt an added incentive to join the initiative.
Will it work?
China‟s top planning body, the National Development and Reform Commission, has issued a document on its vision for OBOR that discusses strengthening bilateral cooperation and improving existing regional cooperation
mechanisms. However the document stops short of “multi-lateralization” of the initiative, such as a formal treaty or partnership.
The question is whether OBOR would need a more formal agreement at some point — covering trade, investment and business climate issues — to maximize its benefits. For now, countries along the Belt and Road have highly diverse development conditions, and some have challenging governance environment that has made investment in infrastructure hard.
So using the initiative to help countries improve their investment climate, technical standards and customs and logistics procedures through a formal agreement could bring major benefits. If a more formal agreement were to ensue, it would be among the largest of its kind, and similar in size to the just-concluded Trans-Pacific Partnership Agreement (TPP).
III. INDIA’S CONCERN ON OBOR
OBOR has not been able to spark enthusiasm with China-skeptical Indian policymakers. Additionally, security concerns related to Pakistan have also played party pooper to India signing up for the project. The project will involve a China-Pakistan Economic Corridor as well as the Bangladesh-China-India-Myanmar Economic Corridor (which India has already agreed to be a part of). The defense establishment in New Delhi, though, is concerned that the project might not be altogether benevolent and that these corridors in future could be used for military mobilization. On top of that there are concerns in India about being part of a “hegemonic project” that would ensure China-led development in the Indian Ocean region.
Unfortunately, India has fared poorly in developing infrastructure in the Northeast. To do so will require domestic as well as foreign investment with support and participation by the local state governments in decision making. Being part of OBOR will not only provide India with that funding but also the technical knowhow that could later be used in domestic infrastructure sector. Additionally, if India needs to a fillip for its Act East policy, OBOR has the potential to provide a platform that can improve not only trade and security, but also research and development.
India also needs to be cautious that it does not become a dumping ground of Chinese overproduction.
Some Other projects in Asia- Turkmenistan-Afghanistan-Pakistan India pipeline (TAPI) through a land-sea route via Iran for transporting Turkmen gas. , The Spice Route Initiative focuses on an India-centred linkup of historic sea routes in the Indian Ocean, Central Asia, Europe and Africa., Iran-Pakistan (IP), International North-South Transit Corridor (INSTC), Oman-India Multi-Purpose Pipeline (OIMPP), to transport Iranian natural gas via Oman to Gujarat.
REFERENCES
[1]. http://china-trade-research.hktdc.com [2]. https://en.wikipedia.org/wiki/
[3]. Li Jinlei, “Report: Silk Road Economic Belt May Be Divided Into Three Phases; Initial Completion Predicted in 2049”, Zhongguo Xinwen Wang, 28 June 2014.
[4]. Graham Allison, “Thucydides's trap has been sprung in the Pacific”, Financial Times, 21 August 2012, available at: http://www. ft.com/intl/cms/s/0/5d695b5a-ead3-11e1-984b-00144feab49a. html#axzz3cZGPCmig.
[5]. The “One Belt, One Road” research centre is affiliated to the Ministry of Foreign Affairs‟ China Institute of International Studies (CIIS).
[6]. Wang Jun, “How can the AIIB succeed?”, Caixin Zhoukan - Caixin Weekly, 6 April 2015, available at:
http://weekly.caixin. com/2015-04-03/100797344.html.
[7]. “Project Mausam” is an initiative announced by Indian President Modi to increase India‟s links with countries impacted by the Maritime Silk Road. Characterised in the Indian press as a “transnational initiative meant to revive [India‟s] ancient maritime routes and cultural linkages with countries in the region”, the project is seen as a direct response to China‟s OBOR. See Sachin Parashar, “Narendra Modi‟s „Mausam‟ manoeuvre to check China‟s maritime might”, The Times of India, 16 September 2014, available at:
http://timesofindia.indiatimes.com/india/NarendraModis-Mausam-manoeuvre-to-check-Chinas-maritime-might/
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