Son “El Sinaloense

Section 3.1 and 3.2 indicate that the BRI does not certainly or not significantly disadvantage India against China in terms of relative size of long-term GDP or ability to disrupt crucial SLOCs. However, when economic influence in other countries in the region, measured in share in international trade, investments,

4 _{The price of oil carried via the Kyaukpyu–Yunnan pipeline is estimated at US$ 4 per bar-}

30

and ownership of key elements of infrastructure, is considered, the (somewhat scarce) statistical data and secondary literature shows a somewhat less optimistic picture from India’s perspective.

Where the situation resembles the most to the opaque picture of GDP growth is trade, in large part because the only analysis that presents exact quanti- tative projections about the BRI’s impact on it is Zhai’s (2018) work that has al- ready been cited in Section 3.1. According to this author, China’s exports to and imports from ‘other BRI countries’ (‘other’ than China or India) will grow by 2020 with 11.4 and 13.9 percentage respectively. India’s total export to and imports from ‘other BRI countries’, however, are expected to grow even more than Chi- na’s similar numbers; moreover, in India’s case, the growth of exports would out- perform the growth of imports (see Table 4). The magnitude of this shift and the difference between the absolute gains on the Chinese and Indian sides, however, cannot be deduced because the baseline of 2020 exports and imports is not given by Zhai. Therefore, and in the light of that this work is the only one in the exist- ing literature with exact country-wise forecasts about the BRI’s implications for trade, the notion that India would in fact be relatively the bigger benefiter in terms of trade cannot be considered a solidly confirmed finding.

Table 4

The BRI: Impact on Trade in 2020, % Change from Baseline (Zhai 2018)

India China

Total exports 16.2 4.0

Export to China 16.1 -

Export to other BRI countries 21.9 11.4

Total imports 13.2 4.0

Import from China 20.3 -

Import from other BRI countries 19.6 13.9

Detecting the direction to which the BRI tilts China’s and India’s share in FDI flow and stock relative to each other is easier. This is the case even if gaps and discrepancies in the data, the problematic classification of Chinese develop-

31

ment assistances (Anderson and Aryes 2015), and the lack of detailed country- wise FDA data since 2012 does not allow for a detailed comparison of trends be- fore and after the launch of the BRI. In 2012 China had 3,047 million USD FDI stock in members of the South Asian Association for Regional Cooperation (SAARC) other than India, although the bulk of it, 2,234 USD million, was in Pa- kistan. India with its 1,099 million USD FDI stock lagged behind China on an all- SAARC level, but had greater share in all SAARC countries other than Pakistan (UNCTAD 2018).

Either this balance changes substantially or not, the BRI in this matter per definition works for China’s favour. While the exact distribution of the BRI’s ap- proximately 4 trillion USD overall portfolio is unknown, a significant part of is necessarily directed into SAARC and other IOR countries: most of the CPEC is situated in Pakistan, the BCIM connects Bangladesh and Myanmar to China, while the MSR has maritime facilities all around the northern Indian Ocean, in- cluding Sri Lanka, the Maldives, Myanmar, Bangladesh, and Pakistan. Regardless of whether defined strictly as FDI or not, in practice every dollar sponsored by China and spent on these projects raise China’s share in the investment inflow and stock in these countries. On the other hand, while the possibility of India’s growing FDI outflow to these countries as the result of the BRI cannot be ruled out (this can happen, for example, as the result of better infrastructural condi- tions in these markets), this remains a (however likely) speculation, not, as it is the case with China’s growing investments, a logical and empirical necessity.

The BRI may, and in some cases already has enhanced China’s regional in- fluence also through the direct ownership or long-lasting lease of key infrastruc- tural facilities, such as ports, airports, or energy infrastructure. In the case of Hambantota, Sri Lanka, a major seaport and international airport has been built from Chinese loans, yet (partially due to the proximity of Colombo’s port) the project failed to become commercially profitable. A heavily indebted Sri Lankan government has eventually been forced to hand over the facilities to China for 99 years (Marlow 2018; Panda 2017). In 2017 October, China also gained 70% share in the port of Kyaukpyu in Myanmar (Brewster 2018b). Cambodia, the Maldives,

32

and—critically from India’s perspective—Pakistan are also considered to face a high risk of debt crisis due to Chinese loans (Anand 2017: 16–17). According to re- ports, the Chinese government has already accepted the loss of about 80% of BRI related investments in Pakistan, 50% in Myanmar, and 30% in Central Asia, and overall about 46–62 billion USD may be channelled into investments behind which the acquiring of strategic gains, and not financial return, is the primary motivation (ibid). While such scenarios becoming rampant would reduce China’s economic gains (the potential of which was assessed in Section 5.1), and therefore would undermine a key dimension of China’s overall power gain, they would on the other hand grant China direct control over key elements of regional infra- structure, therefore add to other dimensions.

Harder to quantify but similarly important is the political influence China gains in the region through playing a leading role in regional integration and in- stitution-building. The proper implementation of the BRI initiative would require the creation of more effective mechanisms and institutions of regional multilat- eral cooperation (Zhai 2018: 92; Huang 2016: 317-318; Acharya 2015c; Hubbard 2016). Would they be created in a process led by China and according to China’s standards and expectations, they could be considered as key elements in enhanc- ing as well as legitimising China’s regional influence. Examples for such institu- tions are the Asian Infrastructure Investment Bank (AIIB) or the Silk Road Eco- nomic Fund, which are the primary institutions involved in the allocation of the resources dedicated to the BRI. China’s influence over regional integration in Asia may gain further momentum by U.S. withdrawal from the Trans-Pacific Partnership (TPP). In the meantime, ASEAN, which also claims to be a leading force and norm-maker of Asian regionalism, is deeply divided over relations with China, Cambodia and Laos being firmly aligned with Beijing, Indonesia being largely neutral in conflicts, and Vietnam and Philippines having bitter territorial disputes with China over the South China Sea (Anand op. cit.: 8).

To be sure, India has its own much propagated visions and concepts of de- veloping connectivity in and between South and South-East Asia. ‘Project Mau- sam’, named after seasonal monsoons in the Indian Ocean and similarly to Chi-

33

na’s MSR, is claimed to be based on ancient seaborne trade routes that once stretched from South-East Asia to East Africa (). The project was announced as early as in 2014, and was claimed by the Indian press to ‘check China’s maritime might’ (Parashar 2014; Pillalamarri 2014). In practive, however, it remained a cul- tural initiative to ‘re-connect and re-establish communications between coun- tries of the Indian Ocean world’ and ‘focus is on understanding national cultures in their regional maritime milieu’ (Ministry of Culture, n.d.), with no considera- ble resources allocated on India’s part to fund investments on the BRI’s scale.

Even older is India’s ‘Look East’ strategy that focuses on relation with South-East Asia since the early 1990s. ASEAN nations have indeed engaged with India with growing intensity in the past period, and powers like the United States and Japan also encourage India’s engagement in the region driven precisely by their concerns over China’s growing profile there. Since 2014 the Modi Ministry even changed the strategy’s name to ‘Act East’. Yet, not only is India’s true com- mitment for deeper integration with the region questioned (Am. Acharya 2015a); it clearly lacks the financial ability to overspend China in infrastructural projects and buying regional influence.

Most recently it has been reported in Australian media and confirmed by Japanese officials that the Quad countries are planning the launch of an alterna- tive connectivity development initiative in the Indo-Pacific region (Coorey 2018; Reuters 2018). Unlike India alone, this combination of countries certainly has the financial means of providing countries in the region with alternatives to China’s MSR, and in the light of the scale of the BRI it would be logical on their part to balance against Chinese power in a similar way. However, there is little concrete information available about this initiative, therefore its countering effect on the power shift between India and China is concerned cannot be measured. When India’s own ability to counter this process via regional initiatives is concerned, it is seriously limited by the enormous difference between the two countries’ eco- nomic capabilities.

In the methodological section, China’s and India’s share in the international trade and FDI flow and stock of other countries in the region, as the role they

34

play in regional integration have been named as indicators where a shift of re- gional economic influence between them should be detected. In the light of the evaluation above, the conclusion of this section is the following. While some pro- jections show that on bilateral trade India may gain even more absolutely (and, given India’s smaller GDP, also relatively) than China, the BRI clearly advantages the PRC over India in terms of investment outflow and stock in other countries in the region, ownership or control over key elements of infrastructure, and in- fluence through the creation of institutions for regional integration.

35