With OBOR Party being over, Chinese diplomats have hailed the first OBOR forum a great success story, as it has led to assurances of buy-in
from 30 states. The ultimate challenge now is to ensure universally recognised good practices of transparency and equality along with an inclusive development theme.
Too Many Goals lead to No Priority
Hailed as the “world’s project”, the OBOR initiative is aimed to boost infrastructure in Asia and Africa for the next
decade and a half. In an attempt to bring all partners on board, the forum identified and approved over 270 goals under the umbrella of OBOR initiative.
Though setting high-level goals is a step in the right direction, but an agenda that involves 270 goals, runs the risk of being too general. The problem with this impossibly long list of goals is that nothing gets prioritised
at the end of the day. All these 270 goals would not only result in a total lack of focus, but they would also be self-defeating.
Pitfalls of not being transparent
The situation clearly indicates that strategic bits of the initiative are not very clear. In fact, every Chinese province and state-owned firm has its own version of investment
plan for OBOR projects. No framework was ever presented by Beijing in the forum and it seems that the Chinese are willing to throw cash without first working out the business case.
Beijing’s billion dollar investments to build ports in Sri Lanka became a nightmare for the country which has been mired in unsustainable debt. Similarly, dam projects in Myanmar have not gone well
Last month, Nepal and China signed a memorandum to build an $8 billion cross-border rail link as part of proposed
China-India-Nepal corridor, but without first getting New Delhi on board.
Since 2009, China has poured $6.8 trillion in wasteful
infrastructure investments with negative rate of returns and its incremental capital output ratio (ICOR) has increased by at least 50% in the last decade. At present, there are over 900 deals in the pipeline worth $900 billion which are set to reach $4 trillion
mark in a couple of years – yet little is known about the project’s feasibilities. In fact, Chinese investors call the initiative “one road, one trap”.
The recent leaks of documents which detail China-Pakistan Economic Corridor’s (CPEC) long-term plan drafted by Beijing has raised many eyebrows and confirm worst fears of some people that the whole corridor
may be actually ill-planned – rising bilateral trade deficits to skyrocketing levels.
At present, Pakistani exports to
China are raw materials and primary goods such as textiles, rawhides, oil seeds, skins and agro products; whereas Pakistan imports from China are mainly finished goods such as machinery and chemicals. So, it is a no-brainer that Chinese investments to set
up factories for production of value-added products from primary inputs would be highly profitable. In fact, this offers China the perfect opportunity to move its outdated polluting industries offshore as per its commitments to the Paris Agreement
and focus primarily on innovation.
This Chinese version of the plan is still very vague and at the very best,
is wishful thinking. There is very little that talks about the cross border movement of labour, environmental impact assessments of corridor projects and fiscal risk management.