China cites India’s role in reviving economic corridor

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• There has been a revival in the talks surrounding the Bangladesh China India Myanmar- Economic Corridor (BCIM-EC), with China looking to accelerate the project with India’s support.

 

BCIM EC

• The Bangladesh, China, India and Myanmar Economic Corridor (BCIM EC) is an initiative conceptualised for significant gains through sub-regional economic cooperation within the BCIM.
• The corridor aims to connect the Chinese city of Kunming with the Indian city of Kolkata through Dhaka in Bangladesh and Mandalay in Myanmar, seeking to boost trade, build infrastructure, and foster connectivity among these nations
• The proposed corridor will cover 1.65 million square kilometres, encompassing an estimated 440 million people in China’s Yunnan province, Bangladesh, Myanmar, and West Bengal in Eastern India through the combination of road, rail, water and air linkages in the region.

Background

• The corridor aims to revive the south-western trade route of the ancient Southern Silk Road which facilitated the shortest journey between China and India and served as a highway for merchants carrying gold and silver in the 12th century.
• The issue of promoting connectivity between the said regions has been under discussion since the early 1990s in a Track-II process known as the ‘Kunming Initiative’.
• This was formalised into the BCIM Forum for Regional Cooperation in 1999.
• India and China have consistently expressed diplomatic support for the BCIM Corridor, keeping in mind the need for dialogue in the Sino-Indian relationship.
• However, despite this positive rhetoric, much of this enthusiasm has largely been symbolic and effective cooperation through the BCIM Corridor has been seriously limited.
• While India sees the sense of promoting regional connectivity, it has serious strategic concerns about working with China on its eastern border.

 

Benefits of BCIM EC

• Greater market access for goods, services and energy
• Elimination of non-tariff barriers
• Better trade facilitation
• Investment in infrastructure development
• Joint exploration and development of mineral, water, and other natural resources, Development of value and supply chains by translating comparative advantages into competitive advantages
• Closer people to people contact

 

Concerns

General

• It is strongly believed that the corridor will principally serve the interests of China by boosting economic production and prosperity in China’s Yunnan and adjoining provinces.
• On the other hand, benefits to India, Bangladesh and Myanmar will be minimal.
• The three member countries of BCIM—i.e., Bangladesh, Myanmar and India—have huge trade deficits with China. There are fears that the EC will only worsen their trade deficits as cheap and low-quality Chinese goods are likely to flood their markets to the detriment of domestic industries.

India specific

• While New Delhi sees the sense of promoting regional connectivity, it has serious strategic concerns about working with China on its eastern border.

Geostrategic

• India believes that the initiative is not purely economic, as is sought to be projected, but also carries geo-strategic and geo-political ramifications, for instance the encircling of India by building, establishing and boosting Chinese naval presence in the Indian Ocean through a chain of ports like Gwadar in Pakistan and Hambantota in Sri Lanka.
• The corridor will bring China close to Arunachal Pradesh, which is claimed by it as Southern Tibet. It would pose a strategic risk for India to allow China access to this region before the border issue is amicably settled.

Mutual Distrust

• Long-accumulated distrust of China has prevented India from exploring the possibilities for overland economic cooperation with China.
• The last two years have seen a considerable widening of differences between China and India over issues such as the boundary dispute, the Belt and Road Initiative, Indian membership to the Nuclear Suppliers Group, and China’s presence in South Asia and the Indian Ocean region.

North East

• Given China’s greater economic and strategic might, it is likely that the corridor will bring India’s northeastern states under the increasing influence of China, further weakening their physical, economic, social and emotional chord with mainland India
• The whole region comprising India’s Northeast and areas across its boundaries with neighbouring countries is embroiled in insurgencies, ethnic disturbances, drug and human trafficking and gun-running. Under the prevailing circumstances, it will be difficult to provide security, peace and safety for constructing different BCIM EC segments.

 

 

Revival in talks

Wuhan summit

• There has been a revival in the BCIM-EC after the expanding India-China ties, which have entered a “new phase” after the 2018 Wuhan informal summit between the Indian Prime Minister and the Chinese President.
• After the Wuhan summit, China has been advocating “China-India Plus” cooperation, aimed at adopting a joint approach towards some of the major issues in the region.
• The two leaders agreed that as two major countries and emerging economies, India and China, given their vast developmental experiences and national capacities, should join hands to take lead in offering innovative and sustainable solutions for the development and prosperity of the region, and to create the conditions for the Asian Century.

BRI Debt Trap

• China has also been facing an increasing backlash, not just from India but other countries in Europe and elsewhere, on the economic unviability of its investments under the Belt and Road Initiative (BRI).
• With no internal rates of return on these investments, the Chinese economic system is under huge strain to cushion these shocks. Therefore, China has a special interest in pacifying its neighbourhood, while it deals with its economic and socio-political issues.
• China has promised to take concrete steps to assuage these concerns, that the financial model for funding BRI projects had been revamped, countering criticism that its mega-connectivity undertaking was opening “debt traps” for enhancing its geopolitical influence.

Geopolitics

• Worsening trade situation with the U.S. and the unpredictability of the U.S. administration have made the Chinese leadership nervous.
• An increasingly independent North Korea is also a cause for concern.
• With the U.S. following a more confrontational policy, China has been making outreach efforts to countries in its periphery. An attempt to thaw relations with India is also seen in this context.

Slowing Economy

• On the economic front, Chinese growth is already decelerating. China used to have the ability to manipulate and control its trade flows, exchange rates and capital flows simultaneously. This ability to keep its economy afloat through tight controls, without external repercussions, is also slowly unravelling.