OBOR - the new initiative for open global economy

Dhaka,  Sun,  23 July 2017
Published : 20 May 2017, 18:18:06
printer

OBOR - the new initiative for open global economy

Muhammad Mahmood
The OBOR Forum held on May 14-15, 2017 in Beijing has outlined the plan to build a vast network of new trade routes covering Asia, Africa and Europe - and even further into the Pacific region. Leaders of 28 countries and heads of the UN, IMF and World Bank and 70 government representatives attended the conference. 

The One Belt One Road (OBOR) initiative seeks to connect nations along the new Silk Road through economic cooperation and infrastructure development.  This is a massive global development project which is expected to open up these countries to pursue their economic development through increased trade flows which will be facilitated by massive infrastructure investment in railways, highways and ports helping to bridge the infrastructure gap. Thus the initiative will accelerate economic growth across Asia, Africa and Eastern Europe. Some have likened OBOR to the Marshall Plan but that is a wrong analogy. The Marshall Plan was conditional upon the beneficiary countries (they were all European countries, Japan was not part of the Plan) joining  the military alliance  (NATO) against the former Soviet Union, the predecessor state to the present-day Russian Federation. The OBOR initiative has no scope for military alliance. China very clearly emphasises One Belt One Road is all about partnership and cooperation; there is no hidden agenda in it - it is all open and transparent.

President Xi Jinping outlined the idea of 21st century Maritime Silk Road in his speech at the Indonesian Parliament in October, 2013. A month earlier he gave a similar speech at the Kazakh capital outlining how to revitalise the ancient trade route known as the Silk Road. He called it the Silk Road Economic Belt.  

The OBOR initiative has two components: the land-based "Silk Road Economic Belt'' and the ocean-going "Maritime Silk Road''.  The initiative envisages a cohesive economic area without forming a regional trade bloc through building infrastructure, broadening trade opportunities and increased cultural exchanges. These undertakings will significantly reduce trade costs thus accelerating the pace of trade flows.   While the area covered is analogous to the historical Silk Road, it now also extends to the Pacific region.

President Xi  in his keynote speech at the opening ceremony of the One Belt One Road forum for international cooperation held in Beijing said that the Silk Road has become a great heritage of human civilisation. The ancient Silk Road embodies the spirit of "peace, cooperation, openness, inclusiveness, mutual learning and mutual benefit''. 

In the face  of rising trends in protectionism around the world,  he emphasised the benefits  of open economic engagement by pointing out that two millennia ago, the ancient trade routes, which used to be open and tolerant, promoted win-win cooperation. He then reiterated "we will not follow the old way of geopolitical games during the push for the Belt and Road Initiative, but create a new model of win-win and cooperation''.

The USA and many of its allies in Europe and Asia are sceptical and even cautious about the OBOR initiative.  They see it as an attempt by China to secure global dominance at a time when the USA is in a declining phase in its economic power. Under the current Trump Administration, the USA is pursuing an inward-looking policy of "America First". This goes against the letter and spirit of multilateralism while China remains firmly committed to multilateral trading system. Such an inward-looking economic policy does not augur economic prosperity rather a recipe for economic decline.  Moreover, the USA carries a very heavy military burden and its unending military aggressions worldwide which do not feed back into economic growth while China does not carry such a burden.  Fore most of the last two millennia China remained the largest and most advanced economy in the world. But in the wake of the Industrial Revolution and aggressive European colonial expansion in Asia resulted in China becoming a semi-colonised country that had to pay indemnity and surrender territories to various Western powers. China eventually established its independence and sovereignty in 1949.What we are witnessing now is just an attempt by China to regain its lost economic position. 

Then, of course, in the usual fashion India is having its own tantrum despite its own drive to become global India. It has had a long-standing reputation as a spoiler in international trade forums, especially at the World Trade Organisation (WTO). It criticised the OBOR initiative and refrained from attending it on the ground that China-Pakistan Economic Corridor passes through Pakistan-occupied Kashmir which India claims for itself. But India itself is an occupying country in the other part of Kashmir where it has been facing political and armed resistance from the Kashmiri people since 1947. Also China's refusal to allow India a seat at the Nuclear Suppliers Group is another factor which contributed to India's absence at the summit. But India is also deeply obsessed. The obsession verges almost to paranoia - that China is out to strategically control the Indian Ocean.  

There is, however, no reason to think that India's non-participation will have any impact on the progress of the OBOR initiative. While most South Asian countries welcomed the initiative, India's non-participation will definitely create negative impact on the implementation of this initiative in the South Asian region thereby depriving these countries of the share of its benefits. India appears to view developing any closer economic relationship by its smaller neighbours with China with suspicion - even hostility. Therefore, India's smaller neighbours have to make their own decision and develop strategies to safeguard their national interests in the face of its negative attitude towards China.

 The USA and Japan made a last-minute decision to send delegations. Obama's "pivot to Asia'' to contain China proved irrelevant as already 65 countries are now participating in the trillion-dollar OBOR infrastructure project. These countries together account for 60 per cent of world population and a third of global output. Many European countries in their age-old habit of looking everything in geo-strategic terms have failed to realise that the world is changing fast and moving towards a mutually beneficial global economic order as exemplified by the OBOR initiative. These countries see OBOR as an attempt by China to encircle Eurasia.  But British Chancellor Philip Hammond was more realistic in his support for OBOR, declaring "Britain, lying at the western end of the Belt and Road, is a natural partner in this endeavour''.

The world is facing a rising trend of protectionism which is now threatening the global rule-based economic order. For almost over three quarters of a century a rule-based multilateral trading system has evolved enabling goods and services to move freely across borders.  But that system is under serious threat as the USA, the largest economy and the second largest trading nation in the world, is challenging that structure.  The USA, which had always been at the forefront of espousing free trade until very recently, has changed its direction now in the opposite. In many ways protectionism has become the new norm now. In this context OBOR opens up a new initiative for pushing the agenda of strengthening global multilateral system. It offers the world's largest economic corridor and physical infrastructure development which will facilitate increased and faster flow of goods across borders. In contrast to the prevailing trend, President Xi declared "China will not shut the doors to the outside world but will open it wider''.  

OBOR stands for resisting protectionism and increased trade liberalisation. This is not a tactical or strategic move by China to gain influence in Asia or elsewhere. Countries along OBOR are a mix of cultures and systems and in various stages of economic development. All these countries have their own unique cultural heritage and they are likely to maintain their core values and become modern nations and prosper. China's strong desire to foster global economic co-operation among these countries is the result of its rapid economic development which has led to a revival of Chinese culture with ren (benevolence) as its core value.

China's One Belt One Road Initiative offers a huge opportunity for countries involved to push ahead with stimulating economic growth through massive infrastructure development which will enable greater flows of trade across borders. The initiative will also lead to the global liberalisation process at a time when the multilateral system is facing tremendous challenges from the rising forces of protectionism and authoritarianism. The OBOR initiative has now shown us that despite all odds that outward-looking economic engagement is not only possible but also beneficial to all countries. OBOR is charting out the new phase of globalisation which is to be distinguished by its all-embracing inclusiveness.

The writer is an independent economic and political analyst.

muhammad.mahmood47@gmail.com

 
ADDRESS
Editor : A.H.M Moazzem Hossain
Published by the Editor for International Publications Limited from Tropicana Tower (4th floor), 45, Topkhana Road, GPO Box : 2526 Dhaka- 1000 and printed by him from City Publishing House Ltd., 1 RK Mission Road, Dhaka-1000.
Telephone : PABX : 9553550 (Hunting), 9513814, 7172017 and 7172012 Fax : 880-2-9567049
Email : editor@thefinancialexpress-bd.com, fexpress68@gmail.com
Copyright © 2017. All rights reserved
Powered by : orangebdlogo
close