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A counter strategy called B3W

  • 19th July, 2021

(Mains GS 2 : Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.)

Context:

  • G-7 leaders finally came around with the proposed Build Back Better World (B3W) to counter China’s rising influence across 100-plus countries through Belt Road Initiative (BRI) projects.

Address infrastructure deficit:

  • The proposal aims to address the infrastructure investment deficit in developing and lower income countries — the space which has been increasingly captured by China through 2,600 BRI projects with trillions of dollars of investment.
  • BRI projects are perceived as corrosive tactics or debt traps laid by China for its strategic dominance in trade, foreign policy and geopolitics in the world. So B3W is a welcome step but late.

Aggressive investment by China:

  • The counter-strategy is necessary to bring down Chinese leverage.
  • A macro view of BRI projects across geography — quantum and pattern of investment — clearly reflects the motive of China-centric international economic integration, production networks, hegemony in the Asia-Pacific region and, eventually, the global economy.
  • Since the inception of the BRI in 2013, outward investment by Beijing has been aggressive as China’s FDI outflow to inflow ratio increased to 1 from around 0.34 during 2001-10.
  • In volume terms, the FDI outflow increased to an average of $140 billion in 2016-19 from an annual average $25 billion during 2001-10.
  • China’s share of FDI outflows increased from 2.3 per cent during 2001-10 to 10.7 per cent during 2016-2019.

BRI project offers investment and construction:

  • China had an overall exposure of around $750 billion between 2013 to mid-2020.
  • After BRI, there is a sudden increase in investment — around $40 billion annually during 2013-19 — in BRI countries, though investment has slowed down due to the pandemic.
  • Since the onset of BRI, China has signed diverse projects worth $548.4 billion, including four-fifths in the BRI participating countries ($461 billion).
  • Post 2013, there was a sudden rise in infrastructure investment in BRI projects compared to investment in non-BRI projects.

BRI cover different regions:

 Africa:

  • Since 2013 to mid-2020, China has an exposure of vast contracts worth around $123 billion in SSA, mainly with Nigeria, Zambia, Ethiopia, Angola, Tanzania and Kenya, mostly focusing on hydro and oil energy, shipping and rail transport.
  •  China has strategically made Kenya the African hub and plans to connect it with other land-locked countries in the region, including Uganda, South Sudan, Rwanda, etc.

    Central, South and West Asia:

    • Central, South and West Asia is China’s second preferred region under the BRI as construction contracts worth $110 billion are under way, and 80 per cent contracts are concentrated in Pakistan, Bangladesh, Russia, Iran and Kazakhstan. 
    • The China-Pakistan Economic Corridor (CPEC), the Bangladesh-China, India, the Myanmar Economic Corridor (BCIM) and the Colombo Port City Project in Sri Lanka, amongst others, are important BRI projects. 
    • China has a plan to complete 4,000 km of railways and 10,000 km of highways within the Central Asian region as part of BRI, with an estimated cost of $16 billion.
    • Some of the major projects include freight trains between China, Turkey and Kazakhstan, and gas pipelines (Siberia and Altai) for production and transportation of oil and natural gas.
    • China has signed construction contracts worth around $96 billion under BRI, largely focusing on Saudi Arabia, UAE and Egypt, with 70 per cent allocation of total regional contract agreements.
    • China is investing in Africa to lay a comprehensive transportation network.

      East Asian region:

      • Since the launch of BRI, China has signed various contacts worth $90 billion with the East Asian region.
      • The biggest contracts have been with Indonesia, Malaysia and Laos worth $18.5 billion, $17.1 billion and $11.2 billion respectively, mostly focusing on transportation, railways, roadways and waterways, for better integration between China and ASEAN countries.

      Exposure of China with Europe:

      • Since the onset of the BRI, the total exposure of China with Europe stood at around $23 billion by mid-2020.
      • Major projects include a freight train project from Ukraine to Kazakhstan through Georgia, Azerbaijan, Kazakhstan and, eventually, China, covering a distance of 5,475 km.
      •  The Greek port Pireaus, the China-Belarus Industrial Park, and the Green Ecological Silk Road Investment Fund are other major projects. 
      • These initiatives would help trade facilitation for China and better delivery of goods and services.

      BRI project and India’s objection:

      • The BRI projects broadly aim to facilitate cross-border transportation of goods, access to energy, creating demand for existing excess capacity in Chinese industries.
      •  Though the objectives of the projects undertaken in different countries vary, the overall focus is on developing transportation, logistics and communications.
      •  This would reduce trade and transaction costs for China’s trade, give more market access to Chinese markets and ensure stable supply of energy and other resources. 
      • Many countries, including India, would see an adverse trade impact on their products’ competitiveness, market access, resource extraction etc. due to Chinese competition.

      China raised acceptance of BRI:

      • China is focussed on its agenda and far ahead through different strategies and investment.
      •  It has also tried to rope in more countries and raised the acceptance level of BRI over time through the BRI summit, Boao Forum for Asia, China-Central and Eastern Europe (CEE), Belt and Road Forum, etc.

      Conclusion:

      • The counter proposal of B3W is certainly a welcome step to contain the adverse implications of a Chinese mega plan. 
      • However, B3W lacks coherent thoughts and proper planning at this stage; however, it is better late than never. 
      • Moreover, it remains to be seen what role India will play in B3W since it has been a strong opponent of China’s BRI.
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