The article aims to bring out the reasons behind the economic influence of China in South Asia and the investment made by China through the economic corridors under the One Belt and One Road initiative in South Asia. It also examines China’s influencing character in South Asia and how it affects India’s sovereignty.
Introduction:
China, being a ‘regional power,’ has its primary aim set on expanding its influence both politically and economically. The People’s Republic of China (PRC) seeks to extend its strategic presence, safeguard its overland energy routes to circumvent maritime chokepoints, and curb India’s expansion through strategic encirclement in South Asia. The purpose of this paper is to elucidate the reasons behind China’s economic influence in South Asia and the challenges and implications that India faces as a result. China’s influencing role in the South Asia region is driven by its aspiration to become a regional dominator, and it utilizes economic corridors as a positive tool to achieve this status. Under, The OBOR initiative China encompasses a total of six economic corridors namely, The New Eurasian Land Bridge, the China-Pakistan Economic Corridor (CPEC), the China-Mongolia-Russia Economic Corridor, the China-Central Asia-West Asia Economic Corridor, China-Mongolia-Russia Economic Corridor and Bangladesh-China-India-Myanmar Economic Corridor (BCIM). The Belt and Road Initiative is considered both a foreign policy and a domestic economic strategy for China.
The concept of economic corridors was developed to foster regional cooperation, integration, and development in the globalized world, based on reciprocity. China has both geostrategic and economic goals associated with its economic corridors. President Xi launched the initiative with the aim of strengthening China’s connectivity with the world and creating a favourable strategic environment in the international arena. In his own words, he stated, ‘China will actively promote international cooperation through the Belt and Road Initiative. In doing so, we hope to achieve policy, infrastructure, trade, financial, and people-to-people connectivity, and thus build a new platform for international cooperation to create new Drivers of shared development (OCED, 2018). The OBOR initiative covers a combined population of 4.6 billion from all countries involved, which represents 61% of the world’s population. Additionally, it encompasses a combined GDP of $29 billion from all participating countries. The estimated cost of infrastructure needs in the developing parts of the Asia-Pacific region through 2030 is $26 trillion (CSIS, 2020).
The China-Pakistan Economic Corridor and the Bangladesh-India-China-Myanmar Economic Corridor are some of the tools that China employs to exert economic influence in South Asia, where it has made significant investments, both are the South Asian economic corridors included in the OBOR initiative. China perceives India as its sole competitor in South Asia, and therefore, it endeavours to suppress India’s presence in the region by augmenting its economic, political, and military spheres. Additionally, China maintains amicable relations with South Asian countries, particularly with India’s traditional adversaries.
In January 2023, the government-owned newspaper China Daily released new BRI engagement statistics, likely based on Ministry of Commerce (MOFCOM) data covering the period of January to November 2022. According to these data, Chinese enterprises invested about USD19.6 billion in non-financial direct investments in countries “along the Belt and Road” in 2022 (a year-on-year increase of 6.5%). Furthermore, the value of newly signed projects was USD98.19 billion. The MOFCOM data usually focus on 55 countries that are “along the Belt and Road” – meaning on a corridor from China to Europe including South Asia. (Wang, 2023)
This article primarily focuses on the economic relationships between China and countries in South Asia, examining their impact on India’s sovereignty. The methodology employed is a qualitative approach to research, combining analytical and descriptive methods. Both primary and secondary data were gathered using various data collection methods, including information obtained from scholarly publications, books, and official government websites.
The first section of the article brings out the investment made by China in South Asia, the second section discuss CPEC’s geographical implication for India, the third section explains the BCIM EC and its assessment of member state and the last section brings out India’s impact on Economic corridors in south Asia.
Investments by China in South Asia
China’s investment in South Asia has significant importance due to its geographical position in the region. For the smooth flow of trade, China provided financial support and also made investments in South Asia through the economic corridors, to access the Indian Ocean region (IOR) easily. Since the Belt and Road initiative started in 2013, China has signed an investment contract with South Asian countries worth $100 billion. The majority of the investment was made in Pakistan.
Under CPEC, China committed to contributing significantly to Pakistan’s economy, and the two nations are working together to create projects for connectivity, transportation, and electricity generation. China has invested in many projects like, energy projects, industrial cooperation, transport infrastructure, port construction and social sector development. $50 billion has been committed to the project overall. So far 14 energy projects have been completed and all of these are in operational status, two are being built, including the $884 MW Suki Kinari hydropower project (Khyber Pakhtunkhwa), for which 70% of the work is finished and is expected to cost $2 billion. The other is a 300 MW coal-fired power project in Gwadar, with an estimated $542.32 million in costs. Five under consideration, 1124 MW Kohala hydropower project, AJK estimated cost of the project is $2400 million, 700.7 MW Azad Pattan hydropower project, AJK/Punjab estimated cost is $1600 million. Out of these five consideration projects, three are in the LOl (letter of intent) stage and a total of $35 billion is allocated for the energy project. (Husain, 2023)
$10 billion will be used for infrastructure initiatives like building roads, highways, ports and airports. Two ports have been completed, Gwadar deep water port worth $1620 million and Karachi deep water terminal worth $550 million. The remaining $5 billion would extend through the years 2025 to 2030. (House of Foreign Affairs Committee, 2022).
Apart from the China-Pakistan economic corridor, China has invested in other South Asian countries around India like Afghanistan, Maldives, Nepal, Bhutan and Sri Lanka. The above Figure 1 (House of Foreign Affairs Committee, 2022) shows the investment details and motives of China in South Asia, particularly those near the Indian Territory.
Geographical Implication of CPEC on India
CPEC is considered a flagship project of the One Belt One Road (OBOR) initiative. Half of the OBOR initiative investments were made in Pakistan because of the geographical position. The trade routes of CPEC questioned India’s sovereignty. South Asia is considered the most vulnerable region because the immediate neighbours of India and Pakistan are nuclear power states and traditional enemies. Sharing a border with both Pakistan and China, India occupies a very integral position in the South Asian region by virtue of its economic and military strength. It is the fourth-largest economy in the world. Alongside being the largest country in the region geographically, its strategic location has played a significant role in its dominance over the South Asian countries. Therefore, it is also referred to as the predominant power of South Asia. (Naqvi, 2017)
China is using Pakistan as a trump card to increase its presence in the South Asian region and become a dominating power in Asia through CPEC (China-Pakistan Economic Corridor). The CPEC benefits not only China and Pakistan but also has a positive impact on Iran, Afghanistan, Central Asia, and the surrounding areas. By expanding and enhancing road networks, rail lines, and maritime transportation, the CPEC has improved geographic connectivity. This development has given China a goodwill status in the international arena.
India was against the CPEC project as it passes through the Pakistan-occupied Kashmir (Pok) which is illegally occupied by Pakistan from India. Till now, India and Pakistan have fought four conventional wars and more than ten non-conventional wars. They have been traditional enemies since independence and still, both countries are struggling with an unsolved border dispute. External Affairs Ministry spokesperson Gopal Bagley said, “No country can accept a project that ignores its core concerns on sovereignty and territorial integrity.” (India Today, 2017).
With the development of CPEC, India is hauled into the political enigma behind the ancient proverb ‘the enemy of my enemy is my friend’, assuming this to be China’s perspective (Naqvi, 2017). For India, CPEC is a political and economic threat and it creates a security dilemma. The development projects under CPEC give China easy access to the Indian Ocean Region. Central Asia, South Asia and the Middle East are all connected by the port of Gwadar.
Bangladesh China India and Myanmar Economic Corridor (BCIM EC)- An Assessment
The One Belt, One Road program of China is yielding positive results in the international arena. BCIM EC is part of the six corridors of the OBOR initiative. The Kunming Initiative, which gave birth to the BCIM EC concept, was established in Kunming, the Chinese province of Yunnan, in 1999. It connects Kunming (China), Mandalay and Lashio (Myanmar), Imphal (Manipur) and Silchar (Assam) in Northeast India, Sylhet and Dhaka (Bangladesh), and Kolkata (India) (Marchang, 2021). This BCIM economic corridor will act as a trans-border cooperation between Bangladesh, China, Myanmar and India. China and India are the key players of BCIM EC. The two sides [i.e. India and China] appreciated the progress made in promoting cooperation under the BCIM (Bangladesh, China, India, and Myanmar) Regional Forum. It was encouraged by the successful BCIM Car Rally of February 2013 between Kolkata and Kunming. The two sides agreed to consult the other parties [i.e. Bangladesh and Myanmar] with a view to establishing a Joint Study Group on strengthening connectivity in the BCIM region for closer economic, trade, and people-to-people linkages and to initiating the development of a BCIM Economic Corridor. The region encompassed in the BCIM Economic Corridor is extremely resource-rich, and its trade potential is huge, estimated at about $132 billion. (Miller, 2022)
China’s View on BCIM EC
Through the BCIM EC, China can reclaim its historic Southern Silk Road (SSR) trading route. The SSR comprises a 2000 km-long trade route that stretches from Sichuan (China) through Yunnan, then branches out into Myanmar, Thailand, and India. In the BCIM economic corridor, China has both geostrategic and economic interests. Reopening the trade routes will reduce the cost of transportation by about 30% and make goods reach their destination faster. BCIM EC will make the participating states stay interconnected, which will reduce overland trade barriers, promote broader Market access, and boost multilateral trade to make it easier for people and products to move across borders. The BCIM EC regional cooperation fulfils China’s interest in the Indian Ocean region by freely accessing the ports in cooperation with Myanmar. China can easily enter the Bay of Bengal region through Myanmar.
India’s View on BCIM EC
The BCIM EC helps India open the trade route to Southeast Asia, and the BCIM EC promotes development in the northeast part of India, but at the same time, it also has lots of negative impacts. India has some security concerns as it moves forward in the economic corridor. Firstly, historically, China has not been a trustworthy partner, and China’s dominance in South and Southeast Asia made India hesitant to establish economic cooperation and regional economic integration under BCIM-EC. Secondly, India’s security is threatened by the surrounding countries. There is a possibility of increasing non-traditional security threats like drug trafficking, insurgency, smuggling, and so on. India is sandwiched between the Golden Triangle and the Golden Crescent, both illegal drug production areas. If the project proceeds, there is a high possibility of transmitting the drugs through India. So this BCIM EC may pose a threat to India’s security. But recently, India has expressed interest in creating the economic corridor as a means of achieving the geostrategic goal of its Act East Policy (AEP).
Myanmar and Bangladesh’s View on BCIM EC
The BCIM economic corridor cuts through the contested borderlands of Northern Myanmar. The Myanmar government has been supporting the BCIM EC and BRI initiatives from the beginning. Through this economic corridor, Myanmar gains the benefit of exporting its natural gas. BCIM cooperation may help Bangladesh gain greater market access, integrate economically into the regional supply chain, attract foreign direct investment, create a commercial hub, increase multilateral trade, and improve the flow of goods and people with improved connectivity, among other benefits (Marchang, 2021).
Conclusion
China’s BRI plan has been a great success. Through the economic corridor of the BRI initiative, China has increased its influence in the South Asian region. Except for India, other South Asian states have shown a positive signal to the Economic corridor in South Asia (CPEC and BCIM EC). India is a regional hegemon in South Asia. It is geographically the only country in South Asia to border the majority of the other states in the region. India has frequently adopted a paternalistic approach toward its small neighbours and placed a high priority on keeping its diplomatic clout with other South Asian nations. However, China has recently attracted small South Asian nations through investment, and the government’s response to the BRI plan has been enormous. The participating states of the economic corridors namely Pakistan, Bangladesh and Myanmar give immense support to the activities of the Chinese in the region. All these states are dependent on China for their economic and infrastructural development. China’s as both the geostrategic and economic interest in South Asia is notable.
With the help of South Asian states, China will be able to connect itself with the rest of the world for trade purposes and it gives strategic importance in the international arena. Due to these very reasons, China poses the greatest geopolitical challenge to India. It has encircled the Indian Territory through their Investment with half of the BRI investment being invested in the traditional enemies of India leading to security concerns for India. China is putting India in a position to manage its territorial disputes and security-related issues in order to lessen and limit its position on the global scene. It serves its own interests to grow into a strong state in the international arena, and these economic corridors help China achieve those ends.
India should expand the regional alliance and security cooperation in order to restrain the growth of Chinese influence in South Asia. India will benefit from improved ties with QUAD (the Quadrilateral Security Dialogue) and ASEAN (the Association of Southeast Asian Nations) in the context of regional cooperation and economic growth. The QUAD agreement gives India the chance to collaborate on numerous projects that can contribute to the development of an open and free Indo-Pacific region. This conference serves as a strategic counterweight to Chinese military and economic expansion in the area. The Act East Policy (AEP), or India’s foreign policy, will support connectivity initiatives that encourage regional cooperation and integration with Southeast Asian nations. An analysis of the existing geostrategic environment should be done before deciding on foreign policy.
Disclaimer: The views and opinions expressed by the author do not necessarily reflect the views of the Government of India and Defence Research and Studies
Title image courtesy: medium.com
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