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The China sponsored ‘One Belt One Road’(OBOR) project has caught India by surprise, said Srikanth Kondappally, Professor of Chinese Studies, JNU.
Delivering the valedictory address at the conference on ‘India, China and the new Silk Road Initiatives’ organised by the Mahatma Gandhi University, Prof. Kondappally said while the proposed global scale of the projects connecting Europe, Asia and Africa could provide an opportunity for expanding trade and investments it also challenged the national security of the country as the projects are passing through the India-claimed Kashmir regions currently held by Pakistan.
OBOR projects, if pursued vigorously are expected to connect the ‘heartland’ with the ‘rim land through continental and maritime routes and thus at one stroke make the rising China indispensable in the calculations of any country in the region, he said.
For India, regional and global leadership issues are also a consideration in the OBOR initiative. On the other hand, India also has its own initiative of Project Mausam of reviving commercial and cultural linkages with the Indian Ocean region and beyond, he noted.
Kandaswami Subramanian from Chennai Centre for China Studies, said that the global economic crisis leading to the collapse of exports has fuelled the rebalancing in China.
The earlier economic model had created excess capacity in major sectors like steel, transport, cement, metals. These excess capacities coupled with the management capability of Chinese public and private firms beg for opportunities abroad. These arrangements also seek to challenge the U.S. hegemony and the threat posed through its ‘Pivot Asia’ and TPP negotiations to dislodge China.
Another dimension of the OBOR may be related to China’s ‘going out’ policy, i.e. outward investment, beginning with the turn of this century.
M.J. Vinod, Professor, University of Bangalore, cautioned that while the Maritime Silk Road (MSR) is exclusively economic in orientation, yet it could still have strategic implications for India.
Though India cannot ignore the new Asian order that is fast emerging, the onus also lies on China in assuaging India’s concerns pertaining to the MSR.
K.B. Usha of the Centre for Russian and Central Asian Studies, JNU, pointed out that Chinese logistical initiative has expanded after the Ukraine crisis sharing the vision of Russia’s Eurasian Economic Union (EAEU).
Russia-China strategic partnership is thus growing, she said. Raju A. Thadikkaran, former director, ICCS, chaired the valedictory session.
‘It will connect the ‘heartland’ with the ‘rim land through continental and maritime routes.’
China’s massive One Belt, One Road (OBOR) project aims to connect the world like never before, using land and sea routes to form trade links across Asia and Europe and down to Africa. It’s an extremely ambitious project that will take many years to realize but already OBOR has many people excited about the economic possibilities to come.
Among the billions of people who could benefit immensely from OBOR are the roughly 65 million residents of Central Asia. But being part of OBOR is not necessarily a guarantee for a better future.
To look at OBOR in Central Asia, and some of the potential advantages and disadvantages, RFE/RL assembled a Majlis, or panel, to review the situation.
Moderating the discussion was RFE/RL Media Relations Manager Muhammad Tahir. From Exeter University in the U.K., senior lecturer and Central Asian expert David Lewis joined the discussion. From Geneva, journalist, researcher, and native of Kyrgyzstan Cholpon Orozobekova, who has written for the Jamestown Foundation and The Diplomat took part. I was just back from Washington, New York, and the CESS conference at Princeton and was raring to go, so I pitched in a few comments also.
As Lewis mentioned at the start of the Majlis, the numbers for OBOR are genuinely unprecedented -- $1 trillion of investment with routes potentially reaching some 44 countries with more than half the population of the planet. And, as Lewis pointed out, “This being the initiative of [Chinese President] Xi Jinping, it’s something that the Chinese leadership is committed to and it does involve significant funding for Central Asia in particular, and of course, governments, at least in Central Asia, are very enthusiastic about funding flowing into major infrastructure projects.”
OBOR has already started in Central Asia. Lewis recalled the oil pipeline from Kazakhstan, the natural gas pipelines from Turkmenistan, and a road network from Kyrgyzstan and Tajikistan already lead to China.
These projects and others were started, and some completed, before the autumn of 2013 when Beijing first articulated the OBOR project. As Orozobekova reminded, “In 2013, trade between China and the five Central Asian states was $50 billion already, while, for example, trade between Russia and these [Central Asian] countries was only $30 billion.”
That trend has only become stronger as Russia’s economy has weakened, limiting Russian investment potential. China, meanwhile, has continued to vigorously pursue OBOR. In February this year, the first cargo train from China arrived in Iran after passing through Kazakhstan and Turkmenistan along new railways in the latter two countries. In September, the first train from China to Afghanistan arrived after crossing through Kazakhstan and Uzbekistan.
According to the plan, the part of the route that runs through Central Asia should continue west through northern Iran into Turkey. Central Asia could benefit greatly from this new route for shipping goods to, and receiving goods from countries with access to the Persian Gulf and the Mediterranean Sea.
But already parts of Central Asia are seeing some of the negative aspects that come with these Chinese-funded projects.
“In Central Asia there are some concerns regarding the flow of migrants from China,” Lewis said. He explained: “Typically Chinese companies like to use their own people, bring in Chinese labor to get a job done. It’s often very effective but it doesn’t always give people local jobs and employ local specialists.”
That has led to problems in the oil fields of western Kazakhstan where Chinese employees work, in mining areas in Kyrgyzstan where Chinese employees work, and along various parts of the roads being constructed in Kyrgyzstan and Tajikistan where locals work alongside Chinese workers. Sometimes the problems are caused by rumors of the Chinese receiving better wages, sometimes the lack of the locals’ ability to communicate with the Chinese workers has led to fights.
Chinese farmers are also tending agricultural land in Tajikistan vacated by local farmers who left to find work in Russia. A proposal to lease farmland in Kazakhstan earlier this year sparked the largest protests seen there in some 20 years, when rumors spread that Chinese farmers would lease portions of Kazakhstan’s farmland.
Orozobekova said, “In Central Asia there are some concerns regarding the flow of migrants from China.”
Additionally, while Chinese workers are coming to Central Asia, Lewis said, “China just doesn’t offer that kind of labor migration, there’s no real option to go to China to work.” So Central Asia’s migrant laborers continue to mainly go to Russia.
And there are also environmental concerns. Chinese companies do not have a good track record when it comes to ecological considerations. Lewis explained, “In Kyrgyzstan and in Tajikistan recently, new cement plants developed by China are notoriously polluting industries and can have a really negative effect on local people.” Refineries in Kyrgyzstan and Tajikistan built or operated by Chinese companies have also received complaints from local administrations and residents.
Orozobekova also pointed out for Kyrgyzstan, OBOR is a competitor project. She said many in Kyrgyzstan “are overwhelmed with the EEU, the Eurasian Economic Union.” The EEU is the Russian-led organization that also includes Armenia, Belarus, Kazakhstan, and Kyrgyzstan. Kyrgyzstan officially joined in August 2015. Orozobekova said, “When it comes to OBOR and the EEU there’s a little bit of a clash between them because currently, Kyrgyzstan and Kazakhstan joined the EEU with Russia [and] there are so many problems within this organization [EEU].”
And Orozobekova reminded that since 1998, Kyrgyzstan is also a member of the World Trade Organization, so officials in Bishkek must do some furious juggling to try to simultaneously meet the regulations of all these organizations.
And Lewis noted, “We know there’s a slowdown going on in the Chinese economy and so these very ambitious plans, which require a lot of funding, may be more difficult than was considered.”
OBOR is a thick topic, and one the Majlis will address again in the near future. Participants in this latest Majlis session explored more deeply the benefits and detriments of being one of the first sections of OBOR, including potential security problems, now and in the future.
An audio recording of the discussion can be heard at:
Yulin, China -- Many municipalities in China are facing the double struggle of curbing coal output and filling the economic void left by closed mines.
But a coal-rich city in the country's northwest is diversifying in attempt to revive its economy — turning to tourism, agriculture and alternative energy.
Located on the northern tip of Shaanxi province, Yulin has become a poster child for the country's attempts to move away from an economic reliance on mineral resources.
The city has been lauded by the national media as a consummate example of economic transformation.
Deputy Mayor Zhang Haifeng said Yulin was aiming to become "one of the most important cities along the Silk Road."
Zhang was referring to the ancient Silk Road trade route, consisting of a string of cities across Central Asia, West Asia, the Middle East and Europe. The route is enjoying a contemporary revival with backing from China's central government.
The new "Silk Road Economic Belt," along with the "Maritime Silk Road" sea route, forms the "One Belt, One Road" initiative started by the China's central government in 2013.
The ambitious plan seeks to adapt the links of the historical Silk Road, and solve the country's domestic overcapacity by improving trade connections with Eurasia.
The history of Yulin comes to the fore when one takes a walk down the streets in the city's downtown, where local snack vendors dot alleys crammed with centuries-old buildings.
A traditional bakery sells hard, dry bread that requires incredible effort to bite into. Our local guide said this durable food had been popular with merchants passing through the city had, as it could last for weeks during the long, dusty journey ahead.
Chinese Kuwait
The discovery of large-scale mineral deposits in the 1980s dramatically changed the face of Yulin.
Zhang said Yulin was known as the "Kuwait of China" given its abundance of gas and coal fields.
The deputy mayor said the city had been "a key area in Shaanxi since ancient times because of its strategic position."
He added that Yulin continued to be an "important city in the nation's 'One Belt, One Road' initiative."
During the city's 11th International Coal and Energy Expo in September, a record-breaking 101 domestic and overseas deals were made with a combined value of 119.7 billion yuan — the highest in history, according to the government.
Local officials seem confident the city will cash in on its cultural capital. With help from the new opportunities provided by central government initiatives, they hope to expand the city into an international hub for the energy and chemical industries.
Turning to Tourism
Yulin's municipal government highlighted tourism and the cultural industries as key development areas.
"We will speed up progress in building up key tourist attractions, improve services offered to foreign visitors and create a unique tourism brand for Yulin," said Zhang.
Head of the tourism bureau Cui Yuan expressed confidence that Yulin's cultural heritage would attract tourists.
As part of these tourism efforts, Yulin was planning to renovate and upgrade its airport and offer flights to more destinations, Cui said.
One way of explaining the amazing surge in commodity prices in the wake of Donald Trump becoming US President-Elect is that there is going to be an infrastructure investment surge on both sides of the Pacific.
The idea is that Trump's commitment to rebuilding America's infrastructure will coincide with an increase in China's policy of investing in infrastructure from China to the Middle East.
Ironically, this confluence of commodity-friendly investment, which would benefit Australia's terms of trade, would be triggered by Trump's isolationist and protectionist trade policies.
"A more domestically-focused US will probably make more room for China to expand its geopolitical and economic interests through initiatives like "One-Belt-One-Road", according to Steven Sun, head of China Equity Strategy at HSBC.
One-Belt-One-Road is a regional infrastructure investment plan involving the investment of billions of dollars in infrastructure in 60 countries.
Other economists agree that a logical Chinese response to the imposition of tariffs on Chinese exports to the US would be to turn inward and step up its stimulatory domestic policies.
"The trade tensions will also put more pressure on domestic macro policy, introducing an easing bias on the fiscal policy," according to economist Haibin Zhu at JPMorgan in Hong Kong.
Commodity prices were on a roll before the Trump wildcard was thrown down this week. That surge in the price of base metals as well as iron ore and coal was attributed to China's fiscal stimulus over the past nine months and its decision to wind back the production of coal.
Following Trump's election, key commodities took off. Copper, which is a bellwether of global industrial production, rose 3.4 per cent on the London Metals Exchange, taking its gains over the past two weeks to 17 per cent.
A participant at the recent LME Week event in London said the bullish mood towards copper was far greater than in previous years. The metal is now trading at a 15-month high despite evidence this week that Chinese imports in October were the lowest since February 2015.
Coking coal prices rose 4 per cent on Wednesday night to a five-year high of $US295 a tonne.
That helps explain the significant increase in the share prices of irone ore stocks, including Rio Tinto, BHP Billiton and Fortescue Metals Group.
There is a common theme evident with these stocks. When analysts plug in the spot prices for iron ore into their models for these companies there is a material upside risk to their earnings forecasts.
Investors have been reluctant to rely on the high spot prices because of caution about what might happen in China. But the optimists have pointed out that China's President, Xi Jinping, has many incentives to continue his stimulatory policies to maintain growth in the Chinese economy ahead of his reappointment by the Chinese Communist Party early next year.
Xi has as much incentive as every Western leader to ensure that the social harmony, which has been a feature of the country's extraordinary growth over the past decade, is maintained. He does not want a populist, extremist upheaval upsetting his plans to appoint a range of chosen colleagues to important party positions next year.
Trump's election holds out the prospect of the world's largest economy competing with China for the mantle as global infrastructure investment leader.
It is telling that the equity futures markets in the US were down substantially when Trump rose to give his victory speech. The sentiment changed and the futures prices reversed dramatically from negative to positive as soon as Trump mentioned infrastructure.
As with most things that Trump has said, his victory speech was light on detail. But the message was clear that America is going to need a lot of concrete and steel.
"We are going to fix our inner cities, and rebuild our highways, bridges, tunnels, airports, schools, hospitals," Trump said. "We are going to rebuild our infrastructure, which will become ... second to none and we will put millions of our people to work as we rebuild it."
One of Trump's campaign pledges was to work with lawmakers to introduce legislation to "spur $1 trillion in infrastructure investment" over the course of a decade, according to FTI Consulting.
Trump claims the infrastructure bill would be "revenue neutral" and leverage "public-private partnerships, and private investments through tax incentives"
This law is meant to go through in his first 100 days.
MINSK, 10 November (BelTA) – Belarusian Economy Minister Vladimir Zinovsky invited Latvian businesses to become residents of the Chinese-Belarusian industrial park Great Stone as he met with a Latvian delegation led by Economy Minister Arvils Aseradens on 10 November, BelTA has learned. “Belarus is a good investment platform. We are building an industrial park in cooperation with China, and we invite all European companies, not only those of Belarus and China, to join the project. We would like to see Latvian companies in the park. Its residents are given good preferences,” Vladimir Zinovsky noted. He stressed that businesses can enjoy preferences not only in the industrial park Great Stone, but also in a number of free economic zones in Belarus. Vladimir Zinovsky said that the trade between Belarus and Latvia has declined recently. However, the minister expressed confidence that the countries have not yet exhausted their potential and will manage to improve the situation. “We are ready for open and constructive work.
Now it is important to catch up and switch to new forms of cooperation and projects with good economic returns,” the minister emphasized. He noted that Belarus seeks to develop fruitful and effective relations with Latvia and to strengthen the mutually beneficial economic cooperation. In this context, Vladimir Zinovsky said with satisfaction that Belarus' cargoes traditionally account for a considerable share of the total volume of Latvia's rail transportation. Belarus' and Latvia's participation in the large-scale Chinese projects Silk Road Economic Belt and 21st-century Maritime Silk Road will enhance the countries' appeal and intensify their cooperation in logistics.
Arvils Aseradens said that the relations between Belarus and Latvia are fruitful. He said that Latvia is eager to develop close economic cooperation. “There is great potential with respect to the Belarusian economy. I think we can expect the mutual trade to double,” he noted. Besides, the minister said that Latvia would like to cooperate with Belarus within China's One Belt, One Road project. Arvils Aseradens emphasized the importance of the Days of Latvia which are currently underway in Belarus. “It is very good that Belarusians will have a chance to learn about the life in their neighboring country,” Arvils Aseradens said.
