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DAILY
CLASS NOTES
Political Science & International Relations

Sino-Indian Relations || India’s

Look East Policy
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Sino-Indian Relations || India’s Look East Policy

One Road One Belt

The idea of One Road One Belt was given during the visit of Chinese President Xi Jinping

to Kazakhstan.

It has 3 components -

(1) Maritime silk route,

(2) Land Silk route,

(3) Digital silk route.

1. Maritime silk route - It will consist of maritime infrastructure involving ports, coastal

infrastructure from China's Eastern Coast and covering through entire South East

Asia, Indian Ocean region, eastern part of Africa, Persian Gulf, Mediterranean, till

Venice in Italy.

2. Land silk route - It consists of Rail-Road networks, power stations, pipelines, etc. It

will cover China's least developed South-Western region, Xinjiang province, Central

Asia, Mongolia, Russia, Europe and ending at Venice.

Proposed investment in BRI is more than $ 2 trillion dollars (according to Morgan

Stanley, investment under BRI can go as high as $14-$16 trillion dollars). The plan is

to criss-cross Asia, Africa and Europe.

3. Digital silk route-The project also envisages connecting BRI countries through high

speed internet networks. It is also known as the Digital Silk route.

Intent of OBOR

1. To turn China into epicentre of global economics and politics.

2. To replace the USA from the position of number 1 power of the world".

3. To realise Chinese dream of turning China into the centre of Universe China.
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4. To create conditions for Sino-centric narrative to dominate Asia

5. To enable China to diversify its transport routes so that Malacca dilemma of China

can be resolved.

6. To replace the dollar from being the most preferred currency of the world (in all the

countries of BRI only 2 currencies will be used - either Renminbi or local currency).

Objectives of OBOR

1) Geopolitical objectives-

a) To create a dependency bond between China and other partners of BRI.

b) Swift movement of troops would be possible.

2) Geoeconomic objectives -

a) To utilise overcapacity existing in China.

b) Slowdown of Chinese economy can be arrested and much needed push can be

given to Chinese economic growth. So that Chinese economy will keep a healthy

rate.

c) BRI project will help China to utilize its enormous forex to promote China's

economic and strategic interest.

d) It will also help in boosting China's export and balance China's trade shortfall with

USA and Europe.

e) It will help in accelerating development of underdeveloped North western

provinces of China.

F) Cultural exchanges would be made possible.

3) Geo Strategic objectives:

❖ It will help in resolving China's Malacca dilemma which is also a diplomatic

chokepoint for China.

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❖ BRI project will help China in ensuring its energy security by getting oil and Gas from

Russia and Central Asia. That is why China plans to connect Russia through the

China-Mongolia-Russia land corridor.

❖ China plans to connect all the land corridors under BRI.

❖ It will also help in underlining India's influence in Asia.

Proposed Land Corridors:

1. CPEC (China-Pak economic corridor).

2. China -Eurasia land corridors.

3. Central Asia -West Asia-land corridor

4. Mongolia - Russia land corridor.

5. Indo-China Singapore land corridor

NOTE -Six land corridor - BCIM-has been removed from list of BRI after India's

objections.

Challenges

1. Political opposition to Belt and Road initiative can be seen in many countries of Asia,

e.g., Malaysia pulled out of many Chinese projects under BRI.

2. Legitimacy question that it passes through Gilgit Baltistan region which India

considers an Indian territory illegally occupied by Pakistan.

3. There is insistence from the Chinese side on the signing of FTA with participating

countries but countries are apprehensive that it will lead to Chinese goods flooding

their market. Countries are also concerned about the possible hidden agenda of China

and also the opaque nature of BRI.

Meaning of Belt and Road

The Belt

❖ The Silk road economic belt element refers to plans for a revitalised series of ancient

overland trading routes connecting Europe and Asia to be built largely with Chinese

expertise.
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❖ The idea was first proposed by Chinese President Xi Jinping during a visit to

Kazakhstan in 2013. Central Asia is seen as the most vital region for the belt

element.

The Road

❖ In 2014, Xi Jinping outlined plans to additionally establish new sea trade

infrastructure along the port Marco Polo route - a maritime silk road connecting

China, South East Asia, Africa and Europe. This would be a longer route avoiding the

Malacca Strait incorporating fuelling Stations, ports, bridges, industry and

infrastructure through South East Asia and into the Indian Ocean.

❖ Pakistan is seen as one of the most crucial partner country in this effort through the

China Pak Economic Corridor.

Issue of debt trap related to BRI

❖ China's debt trap diplomacy is the accusation that China uses Belt and Road as part

of its manipulative global strategy, Funding major infrastructure projects in

developing nations with unsustainable loans then using the debt to gain leverage over

those governments.

❖ The accusation started due to projects such as Hambantota port development in Sri

Lanka. When the Sri Lankan government was unable to service Chinese loans then

China asked for the control of Hambantota port to be handed over to a Chinese

company at a lease of 99 years in 2017. The port provides China with a major piece

of infrastructure and a strategic foothold in the Indian Ocean.

❖ There is also a wider issue of the opaque nature of Belt and Road and the loans on

which it is built, the Chinese government has never published detailed information

about the size and terms of Belt and Road loans. This vacuum of information feeds

confusion and mistrust.

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Note- The Chinese state is the underwriter for the initiative via its 4 state owned bank

lending to state owned enterprises.

BRI has been criticised for the lack of private sector participation but there is little

enthusiasm for the initiative from even the Chinese private sector due to lack of return

on investment.

Future of BRI

❖ Chinese state banks have directed more support to projects at home.

❖ In 2020, Xi Jinping announced China would seek to peak its CO2 emissions before

2030 and achieve Carbon neutrality before 2060. This has real implications for BRI

investments.

❖ The next decade will show to what extent the Belt and Road will drive green

infrastructure, industry, energy solutions and its development will also provide a

much clearer picture of the implications of BRI for the rest of the world.

India's views on BRI

1. CPEC passes through Gilgit-Baltistan region which is an Indian territory illegally

occupied by Pakistan.

2. India calls this project a violation of India's Sovereignty.

3. India is of the view that various projects under BRI in India's neighbourhood and

Indian Ocean region are part of China's string of Pearls strategy to box India in her

own backyard.

4. Flow of Chinese goods into India through countries like Maldives, Sri Lanka with

whom China has FTA can flood Indian markets with Chinese goods.

5. India fears that Indian hegemony in the Indian Ocean region will be challenged.

6. India feels that BRI may bring smaller nation into Chinese debt trap and there is no

transparency in China's BRI.

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Why does China want India to join BRI?

1) If India joins BRI then it is likely to make OBOR more commercially viable.

2) Legitimacy question associated with the project can also be sorted out

Indian strategies to counter BRI

1. Asia-Africa Growth Corridor

2. Project Mausam - this project will help in re-establishing India’s cultural connection

with countries of Indian Ocean region and it will also help in revival of India's

maritime route.

3. Spice route of India - ancient time spice route to Asia, Africa and Europe will help in

rivalling BRI as even during ancient period for spice trade.

China-Pakistan Economic Corridor

❖ It is a 3,000 km long mega project to connect Gwador port in South-Western

Pakistan to Kashgar city in Xinjiang province of China. It is one of the most

important aspect of China's BRI. Gwador will be connected to Kashgar city through a

network of railways, highways, power stations, pipelines, etc. This corridor is central

to China - Pak relationship. So far China has invested $32 billion in China-Pak

Economic Corridor. This corridor is an extension of China's Belt and Road initiative.

Legitimacy question associated with the project

❖ India feels that given the vital nature of this project China may change its stand with

respect to Kashmir in future.

❖ The project may help China in gaining foothold in countries like Afghanistan.

Importance of CPEC for China

1. It will give China direct access to Indian Ocean region.

2. It will also help in resolving Malacca dilemma of China to an extent.

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3. It will give China direct access to Indian Ocean region, Africa, West Asia and Europe

through the shortest- sea route.

India's response

1. To neutralise Gwadar port India has heavily invested in Chabahar port of Iran.

2. Presence of Indian Navy near Chabahar port to provide security to Indian Oil vessels

and merchant cargos coming from eastern part of Africa and West Asia.

Sino-Indian trade relations

❖ Both India and China have a thriving bilateral trade which used to be merely $1.7

billion at the beginning of 21st century but it has grown significantly in last 2

decades.

❖ Major concern of India in this trade relationship is ever growing trade deficit which

has reached an all-time high in financial year 2022 at $69.4 billion (if we include

India's trade with Hong Kong in this number then it will grow even higher).

❖ India is the 7th largest trade destination of Chinese products whereas India is 24th

largest exporter to China. India's export to China reached $26.3 billion in the

financial year 2022.

Indian exports to China

1. Agricultural products like fruits, vegetables, etc.

2. Agricultural commodities like rice (only non- Basmati rice)

3. Organic chemicals.

4. India is the 2nd largest exporter of cotton yarn to China

5. India is the largest diamond exporter to China

6. Export of meat products has also been allowed recently.

China's export to India

1. Mobile phones

2. PCs and Laptops

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3. Fertilizers

4. Antibiotics

5. Finished manufactured products

6. Electrical machineries

Indian demands

1. To open Chinese markets for Indian IT industry,

2. to open Chinese market for Indian pharma companies,

3. to open Chinese market for buffalo meat which alone has potential to generate $2

billion for India,

4. to liberalise tariffs on Indian products specially China has so far invested only $4

billion in Indian economy in the 21st century.

China has not accepted the above Indian demands favourably. It appears as if China is

not willing to look at Indian demands favourably. It is merely looking at India as an

attractive market and not as an economic partner.

Challenges before India in reducing trade deficit:

1. Manufacturing ecosystem is missing in India.

2. The cost of land acquisition is very high-It acts as a deterrent in setting up factories.

3. Bureaucratic hurdles-inspector raj

4. Archaic set of laws.

5. India is not a part of the global supply chain which also acts as a hindrance.

Indian Strategies to tackle China

India has adopted a strategy of overt engagement and covert containment in dealing

with China.

Overt Engagement Strategy

1. Both countries are collaborating on the platforms of G-20, SCO, BRICS, Russia-

India- China Summit etc.

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2. Both countries are also collaborating on climate change negotiation platforms.

3. Both countries want reforms at Western dominated international financial

institutions namely World Bank and IMF.

4. Both countries are part of AIIB and BRICS Bank (also known as NDB - New

Development Bank). These two institutions are created as an answer to western

dominated IMF and World Bank.

5. Both countries have taken common stand against USA's protectionism.

6. Both countries are collaborating on the platforms of SCO, RATS (Regional Anti-

Terrorism Structure). RATS is a part of SCO which is involved in the following:-

i) Extradition of criminals and terrorists,

iⅱ) Anti-drug trafficking operations,

ⅲ) Intelligence sharing, etc

Note-Above areas of engagement will remain relevant only in short to medium term but

in the longer run both countries are bound to have differences because of differing

perception on the future of Asian and world order.

India wants multipolarity in Asia and China wants unipolarity in Asia. Experts are of the

opinion that strategic rivalry between these two Asian giants are likely to intensify in

coming decades.

India's covert containment strategy

1. India's Look East Policy,

2. Asia-Africa Growth Corridors

3. Improving relationship with China's neighbour-like Strategic partnership with

Vietnam,

4. India should also utilize proposed quadrilateral arrangement involving India, Japan,

USA and Australia,

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5. India has also started constructing a series of military and commercial facilities

throughout the Indian Ocean region.

6. India entering into defence agreements with the USA.

Note- India should avoid any open and passionate containment of China strategy because

any such strategy would prove counterproductive for India and this will intensify China's

response in unsettling India.

Areas of differences

1. Ever growing trade deficit between India and China - China is reluctant in giving

India's IT and Pharma industries access to the Chinese market.

2. China is blocking India's entry at NSG.

3. China Pakistan Economic Corridor which passes through Gilgit Baltistan region which

India considers an Indian territory illegally occupied by Pakistan.

4. China wants India to remain tied down to the Indian Ocean region and South Asia.

5. China does not want India to go out at international level.

6. It tries to keep India off balance by evolving India into border stand off and border

incursions so that India would utilise its resources for containment of China rather

than for its socio-economic development.

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