India's response to China's New Silk Route :
When China’s president Xi Jinping laid out his plans to built a 'New
Silk Road' across Central Asia in 2013, he was doing more than invoking
China’s distant past. Instead, he was sketching out a new direction for
Chinese trade and investment, one that aims not only to improve China’s
links with Europe, but also to facilitate China’s macroeconomic
priorities and its integration in the global economy.
However, such a bold, long-term plan will face challenges, and those
challenges will be commercial, economic and political. First of all,
although a focus on expanding trade along the proposed routes into
Europe might seem like a 'win-win' for all those involved, from the
perspective of business, the benefits are not as clear cut.
A senior source from the Asian freight industry thinks the direct
benefits of better rail links between China and Europe would “probably
not be much” because “you’re looking at a difference of 14 days into
Europe as opposed to four to six weeks by sea.
So it really depends what sort of commodity you’re moving, what value
it has and how time sensitive it is.”
This restrained skepticism is reflected in wider market-based views
of the New Silk Road. “Although obviously we are interested in specific
investments across the region, the ‘New Silk Road’ is the sort of
strategic policy initiative that generates little in the way of obvious
and direct tangible benefits,” says Banking and Finance Partner at the
law firm Norton Rose Fulbright in Hong Kong, Jonathan Silver. “While
business would generally welcome the potential benefits, most would only
take a direct interest in the concrete results, as they arise.”
“It certainly makes for a nice announcement and it has a nice name,”
says lecturer at the China Institute, School of Oriental and African
studies, University of London, Daniel Tobin . “But when you’ve been
looking at these things for a while, you tend to get quite skeptical
about the way things are packaged.
The policy is consistent in one sense, but the big problem always
seems to happen with implementation.”
Moving beyond trade and implementation, it is also clear that some of
the hoped for macroeconomic benefits will be difficult to realize. For
example, Li Haitao, Professor of Finance at Cheung Kong Graduate School
of Business expresses particular skepticism that the New Silk Road will
help output China’s industrial overcapacity overseas.
“Just think about a country that is big enough, that has huge demand
for infrastructure building, could be India right? But do you think
India would open its doors and let China in to build all the bridges and
roads?” he says. “They want to do it themselves.”
Setting aside the mundane matter of threading the whole idea together
with actual steel, concrete and trade agreements, there is also the
question of politics, or at least, the question of political perception.
From the outset, the New Silk Road initiative has been less about
specific trade routes, than it has been a kind of political symbolism,
and a statement of intent to other countries.
He Liping, a professor at the School of Economics and Business
Administration at Beijing Normal University, suggests that “it is a
reflection that China’s leaders want to make friends with many countries
around the world, particularly those that are geographically close to
But the political challenge is that if these three basic routes that
comprise the spine of the New Silk Road become so important to China’s
national interests, it naturally will be at odds with some major global
“Russia will definitely have concerns with China’s expansion through
Central Asia,” says Song Gao, Managing Partner at PRC Macro Advisors in
“For the maritime route, China will have to secure the trading route
through the Indian Ocean, that will at least be perceived as a
threatening move by India.”
Indeed, so threatening that India is developing its own strategic
vision for the Indian Ocean region - so far called ‘Project Mausam’ - as
a direct response to China’s New Silk Road.
Unfortunately, time can also herald unwelcome changes. China prefers
stable, long-term relations with other countries, but some of the New
Silk Road countries are democracies, at times leading to dramatic
changes in governments.
President Maithripala Sirisena’s new government in Sri Lanka has
promised to review a Chinese-backed port project in Colombo that was
launched by Xi Jinping in September last year, and which is already
Prime Minister Ranil Wickremesinghe had previously said the project
would be stopped if his party came to power.
He later told the press in February that the administration still
hadn’t decided whether to proceed with the project.
Meanwhile, in Greece, Syriza, the party that has just gained power,
has just suspended the sale of the port of Piraeus to China Ocean
Shipping Company (COSCO), who were planning to transform it into an
important European hub on the New Silk Road.
Chinese leaders are, of course, aware of these negative perceptions,
and so far opposition to the initiative remains quite fragmented. But
just like the ancient Silk Road that ran across vast deserts and
drastically different cultures, one shouldn’t expect the new one to be
hazard-free - Forbes