Alternative to OBOR

Alternative to OBOR
Australia, Japan, India and the United States are reportedly in talks to build an alternative to China’s proposed One Belt One Road project. Rival nations..

Australia, Japan, India and the United States are reportedly in talks to build an alternative to China’s proposed One Belt One Road project. Rival nations have expressed concern over China’s growing influence especially with the advent of OBOR.

Background

China has initiated a Twenty-First Century Maritime Silk Road – ‘One Belt One Corridor’ that focuses primarily on connecting and encouraging cooperation among Eurasian countries. The emphasis is on enhancing land as well as maritime routes. The policy is significant for China as it aims to boost domestic growth in the country. It is part of China’s strategy for economic diplomacy as it underlines China’s goal to play a larger role in global affairs.

Most of the South Asian countries have signed the deal.  India has however, maintained a strong stand of not being party to the joint initiative. As it abstained from the OBOR forum that was held recently, India’s main concern is that the ‘China Pakistan Economic Corridor’ (CPEC) which is part of OBOR runs through Pakistan occupied Kashmir. However, China has not yet tried to address this issue.

OBOR is a development strategy that focuses on connectivity and cooperation between Eurasian countries, primarily the People's Republic of China (PRC), the land-based Silk Road Economic Belt (SREB) and the oceangoing Maritime Silk Road (MSR). The strategy underlines China's push to take a larger role in global affairs with a China-centred trading network. The future of trade in Asia could depend heavily on what becomes of China’s expansive One Belt, One Road initiative.

Analysis

According to media reports, four nations – India, Japan, Australia and the US – have been working on building an alternative for China’s OBOR project. This will reportedly counter the influence wielded by China when the new ‘Silk Road’ is completed. India and the US have repeatedly expressed concern regarding China’s growing soft power- not only in Asia, but across the world.

One of the officials who was part of these talks noted that this wasn’t to block China from pursuing its own projects. “No one is saying China should not build infrastructure,” the official was quoted as saying. “China might build a port which, on its own is not economically viable. We could make it economically viable by building a road or rail line linking that port.”

This plan will be discussed when Australian Prime Minister Malcolm Turnbull visits the US. He is slated to hold talks with US President Donald Trump. The official has however warned that the plan is still at a very nascent stage and the countries involved have only begun the necessary discussions. Therefore, it is highly unlikely that Turnbull or Trump will announce it during the upcoming visit.

India and the US have in the recent past discussed increased cooperation to counter China in geopolitics. According to a report in the Hindustan Times, when US Secretary of State Rex Tillerson visited India on October 2017, China was discussed by diplomats and he pitched greater bilateral ties between the two countries as a result.

Japanese Chief Cabinet Secretary YoshihideSuga did not confirm or deny the reports. Suga is quoted as stating, “It is not the case that this is to counter China’s Belt and Road.”

Assessment

Our assessment is that there is an increased concern that OBOR infrastructure would be used to export surplus production of Chinese goods to countries that will be in the periphery causing severe damage to local industries. It is estimated that trade in Asia would account for more than 50% of global trade in the coming decade. An alternate project between India, Japan, US and Australia could act as a pivot against any strategic dominance by China. We believe that this project is conceivable because all four countries will continue to have significant stakes in global trade.

Comments