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Research Article | Volume 2 Issue 1 (Jan-June, 2021) | Pages 1 - 8
China’s Infrastructure Diplomacy in South Asia: Motives and Impacts
 ,
1
PhD Student, Institute for Indian and Southwest Asian Studies, Vietnam Academy of Social Sciences, South Korea
2
PhD student at University of Social Sciences and Humanities, Vietnam National University in Hanoi, South Korea.
Under a Creative Commons license
Open Access
Received
Jan. 5, 2021
Revised
Jan. 17, 2021
Accepted
Feb. 19, 2021
Published
March 22, 2021
Abstract

China's "Infrastructure Diplomacy" is multi-purpose to build "Partnerships in Link" towards global goals, realise the "Chinese dream". Currently, China makes connections with South Asian countries through hard and soft infrastructure systems. For an objective assessment, the paper based on the theory of Liberalism and Realism in the study of international relations as a framework to assess the motives and impacts of China's "infrastructure diplomacy" in South Asia. By using policy analysis, the paper find out that from 2012 to 2018: (i) the motives of Chinese policy in the implementation process at the national, regional, and international levels aim to clarify the multi-objective of civilians and the building-ability military bases abroad through its infrastructure projects in South Asia; (ii) specify the ways and tools of policy implementation; (iii) thereby, provides some assessments of the impact of this policy at the national and regional levels on South Asia.

 

Keywords
INTRODUCTION

The Government of China does not make any official statements about infrastructure diplomacy. However, from reality in recent years, it can be seen that China is applying the "infrastructure diplomacy” to build and connect relationships with South Asia in both ways: hard and soft infrastructure. Despite, closely linked on geographically, culturally and historically, South Asia’s economic potential and economic integration level is still low due to the differences in politics, diversity in ethnicity, religion, as well as barriers from the poor quality of infrastructure and the inadequate investment of South Asian Nations. Infrastructural investment in each country and the whole region is still limited, create a considerable gap in regional infrastructure investment. Infrastructure in South Asia is creating "gaps" for "economically rich" countries like China to implement "infrastructure diplomacy."

 

Over the past 15 years, China has started an infrastructure development program and has been vigorously promoted since President Xi Jinping introduced “The Silk Road Economic Belt" and "The 21st Century Maritime Silk Road" in South Asia. Since the first part of the Karakoram Highway (KKH) connecting China's Xinjiang Uyghur Autonomous Region and Gilgit-Baltistan of Pakistan via the Karakoram Mountains, through the Khunjerab Pass is interrupted, Beijing has sought to develop a system of ports, roads, and railways to connect China with these regional countries. Today, the BRI initiative is new evidence of China's inheritance of investment projects in South Asia. 

 

China is using money to "charm" South Asia, drawing countries on its side. In particular, the infrastructure is considered as a stepping stone to expand the strategic space, gradually approaching the role of global economic leader, competing with the leading position with India in South Asia region. Along with its rise, China's infrastructure projects have contributed to strengthening China's geoeconomic, geopolitical and national security position; Although it is an appearance of a lucrative and economically prosperous ally, but also a "potentially risky" and challenging force for South Asia.


 

MATERIALS AND METHODS

Research Methods

Since the 18th China Party Congress [1], Beijing has started an infrastructure development program and has been introduced the 21st-century silk road and the silk economic belt. Accordingly, a more luxurious and more powerful China is creating a global stance, maintaining relations with leading countries, stabilizing friendships with developing countries, taking cooperation between Asia and Africa, expanding South-South cooperation, promoting North-South cooperation as the core cooperation viewpoint, increasing strong motivation to establish an open economic situation, reviving the world economy to become a strategy in China's diplomatic strategy.

 

For an objective assessment, the paper based on the theory of Liberalism (or free approach) and Realism (or realistic approach) in the study of international relations as a framework to assess China's policies and motives in South Asia. The aspects chosen to interpret the issue are China's economic, geopolitical and strategic effects. Specifically: 

 

  • China's national interest in the policy implementation process

  • the connection and ties of China and South Asian countries in terms of economy and political solidarity 

  • the ability to build military bases overseas through Chinese infrastructure projects; and 

  • the impact of the policy on South Asian regional order

 

The paper has based on secondary sources on China's development strategy, China's economic policy and infrastructure investment in South Asia, Chinese Government statements and the media as research materials.

Based on completed, ongoing infrastructure projects and new proposals between China and South Asian countries, the author selected the primary research subjects, including India, Pakistan, Bangladesh, Sri Lanka, Nepal, and Myanmar. These countries were selected based on their importance in the region, the presence of Chinese-invested infrastructure projects, the level of interaction, trade scale, and economic relations between them and China. For each case, the author will base on the parameters of scale, speed, investment format, and location of implementation to assess the goals and motivations of Beijing. 

The study will aim to answer the following questions: 

 

  • What is China's motivation for infrastructure investment projects in South Asia? 

  • What is the size and scope of the projects?

  • How and which tools to implement it? 

  • What are the results of these infrastructure projects and its impacts on economic, geopolitical and geo-security? Can the investment projects promote China's national interests and influence in South Asia? If so, how is the level?

FULL PAPER

The Motives and Objects of China

National level: For China, South Asia is a highlight of the "Belt and Road Initiative" (BRI), where "The economic belt on land" and "The maritime silk road" meet up (MFA, 2015). China's infrastructure projects in South Asia mark the continuation of the unique relationship between China, a rising power and its southwestern neighbours. In particular, China is using "Infrastructure diplomacy" as a tool to build and connect relations with developing countries in South Asia, a similar form of investment to old colonial powers one [2]. 

Overall, China's infrastructure diplomacy in South Asia has the following main goals: 

 

  • enhance the benefits of trade, economic and security cooperation; 

  • ensure the stability of the supply of resources and fuel; 

  • create an order in the region and in the world that is beneficial to China. Accordingly, a synchronization between China and neighbouring countries in South Asia on the network of infrastructure with common standards will promote the flow of trade, services and tourism from China to the South Asia and vice versa. The uniformity of the infrastructure system creates a situation that mutually benefits for both sides, specifically enhancing the financial capacity of neighbouring South Asia and create opportunities to represent the image of a responsible Chinese power.

 

According to the theory of realism in international relations, China is using money to "charm attack", drawing countries in South Asia on its side. In particular, infrastructure is seen as a stepping stone to expand strategic space, gradually approaching the role of global economic leader, competing with the leading position in the region with India in South Asia. China's infrastructure projects contribute to strengthening China's economic, political and national security status, and for South Asia. China as a lucrative and economically prosperous ally, but also as a "Potentially risky" and challenging force. Besides, China sees investments in South Asia as a "move" to accelerate the "Western Part Great Development", throughout the refuelling route, stabilize the western areas which were previously obstructed by ethnic separatism and religious extremism. Besides, infrastructure projects help China invest foreign exchange reserves in foreign countries and receive contracts and projects for Chinese companies, which are facing problems of excess productivity. Through the AIIB, China focused on building infrastructure for developing countries; in fact, China wants to export excess severe production capacity in order to achieve balance and transformation of China's economy.

 

Regional Level

Along with BRI, China has been promoting the development of infrastructure in South Asia. Although China claims that this initiative aims to create a mutually beneficial environment for cooperation in the Indian Ocean, scholars from realism argue that China's motive aims to use infrastructure as an instrument to establish military bases over abroad, countering Indian influence, and increasing its influence in South Asia. The development of trade and infrastructure agreements with less developed and less influential countries in South Asia will put China as a country that has a position to influence and impact economic and policy in South Asia which that in favour of China. As John Mearsheimer, professor of Political Science at the University of Chicago, USA, said: "Their ultimate aim is to be the hegemon - the only great power in the system ... China is likely to try to dominate Asia the way the United States dominates the Western Hemisphere” [3].

 

Several people follow the liberalism argue that the diversity of co-operating and forming of infrastructure investment in South Asia is Beijing's shifting toward multilateralism. In contrast, Indian leaders argue that most of China's infrastructure located strategically outside the Indian border. Accordingly, China's infrastructure projects are likely to act as naval bases in key strategic positions in South Asian besides commercial interests [4].

 

India's rise as a power with a geopolitical and geoeconomics status beyond South Asia is becoming a challenge to China's rise. China is taking advantage of its military and economic advantages to "restrain" India and narrow its traditional influence in South Asia; this has done through infrastructure projects to strengthen power ratios for South Asian countries, which are considered India's "backyards". Typically, the China - Pakistan economic corridor (CPEC), the port of Colombo (Sri Lanka) and the port of Gwadar (Pakistan). Thus, one of the determinants of policy change in China's relationship with South Asia is a strategically competitive goal with India to become "leading power" in South Asia. China is currently working to prevent India from becoming a permanent member of the UN Security Council and the Group of Nuclear Suppliers. According to Minister of External Affairs of India H.E. S. Jaishankar, this is one of the geopolitical and geoeconomic dynamics promoting the pursuit of the "Chinese Dream" in South Asia and globally.

 

Globally level

Along with its sharp rise, China increasingly wants to assert its more excellent voice and position in international affairs. Beijing's actions in South Asia and the Indian Ocean raise the question of whether there is a hidden motive challenging American influence in this region? Because, in addition to the establishment of new Chinese-led financial institutions (such as the AIIB) to create opportunities for joint development, to promote multilateral development, to address issues which regional financial institutions are facing and global problems still entangled, controlling the regional economic order, a "string of pearls" with strategic naval bases in the Indian Ocean was also deployed [5]. Nevertheless, China is the largest shareholder of AIIB (due to the share distribution model based on GDP), which raises concerns about the partial dependence of AIIB members on China. In the view of some realist scholars, this financial institution will challenge Western leaders by reducing Washington's role in South Asia issues, challenging the current international order defined by Bretton Woods systems such as ADB, WB, and IMF. In contrast, liberal scholars argue that, through the AIIB, China is seeking a solution to the issue of voting disparities and increasing voting rights in international financial institutions such as IMF [21] for China and the AIIB member states.

 

How to Implement the Policy

During the implementation Processes, China made connections with South Asian countries through the "hard infrastructure system" which includes railways, highways, ports, airports and the "soft infrastructure system" which includes financial support, economics, energy, information, production capacity cooperation, logistics. Typically, through 3 forms below:

 

The strategy of “Connecting roads” through BRI

The Belt and Road Initiative (BRI), formerly known as the "One Belt, One Road" Initiative (OBOR). BRI is the second act of China's reform and opening process, It aims to realize the "Chinese Dream" and establishes an "economic continent" which that stems from the idea of "physical diplomacy", a means to promote infrastructure links, and trade and economic strategies. The initiative helps connect China with Europe, West Asia, Middle East, South Asia, Southeast Asia, Africa, and South America [6] through the construction of roads, railways, pipelines, and highways in 6 economic corridors: 

 

  • China-Mongolia-Russia Economic Corridor (CMAEC)

  • China-Central West Asia Economic Corridor (CCWAEC)

  • China-Indochina Peninsula Economic Corridor (CIPEC)

  • China-Pakistan Economic Corridor (CPEC)

  • Bangladesh-China-India-Myanmar Economic Corridor (BCIMEC); and

  • the New Eurasian Land Bridge Economic Corridor (NELBEC)

 

 Through BRI, China's investment value in South Asia as of the end of 2016 includes USD 46 billion in Pakistan, USD 22 billion in India, USD 20 billion in Bangladesh and 17 billion in Sri Lanka [7]. China launched BRI in 2015, has strengthened China's economic relations with countries in the South Asia - Indian Ocean through the merger of previous infrastructure projects including "Silk Road Economic Belt" and "The 21st Century Maritime Silk Road" proposed in 2013. With this new strategy, China wants to create a win-win environment with neighbour countries in South Asia through infrastructure advances and trade relations [8]. Some of the liberalist scholars argue that Beijing is seeking to create a game that is mutually beneficial for both sides. However, according to some realist scholars, Beijing is using this strategy to expand its dominance, challenge the current regional order and create opportunities for the establishment of military bases in the Indian Ocean. South Asia is the emphasis of BRI, when 2 of the six official corridors pass through South Asia, namely: 

 

Bangladesh-China-India-Myanmar Economic Corridor (BCIMEC)

Through BCIMEC, while the Indian Government focused on regional connectivity, China's goal was towards a "Southern Silk Road". Infrastructure is a highlight of this initiative. Accordingly, in 2015, during a meeting in Kolkata (India), four-member countries discussed the K2K route (Kunming-Ruili-Bhamo-Lashio-Mandalay-Tamu-Imphal-Sylhet-Dhaka-Kolkata) 2,800 km long, is a route of the "Historical Silk Road" and has the potential to be the best route for this economic corridor. According to initial estimates, the total cost of BCIMEC projects is about USD 22 billion. The BCIMEC Corridor paves the way for China to improve its relations with its neighbour's countries in South Asian, to achieve the goals of its Southward policy.

 

Currently, China is trying to get the movement of this corridor. BCIMEC has committed to linking policies, roads, trade, and currencies between the four countries and is seeking to develop infrastructure to connecting Kunming in China (passing Mandalay in Myanmar; Dhaka and Chittagong in Bangladesh) to Kolkata in India. To achieve this goal, China has granted a preferential credit package with USD 24 billion for Bangladesh besides the deal of trade and investment has worth USD 13.6 billion [9]. For Bangladesh, even other Non-BCIMEC countries in South Asia such as Sri Lanka, Nepal, and The Maldives see that China invested the infrastructure projects in their countries is a way for China to escape the trap of low average income, is an opportunity for them to improve their national infrastructure.

 

China - Pakistan Economic Corridor (CPEC)

CPEC is an integral part of President Xi Jinping's geoeconomics, and geopolitics initiative aims to link China with Asia, Europe, and Africa through land and sea connectivity projects. Through this, it allows China to be "transparent" about the ability to connect land, sea, and air-based to the regions. China described the CPEC project as a "1 + 4" cooperation structure with components including the Gwadar port, transport infrastructure, energy, and industrial cooperation [9], which China has pledged more than USD 46 billion for transactions with Pakistan under the CPEC [10].

 

To implement CPEC, in the year 2001, China has provided one-fifth of the funding for the first phase of construction of the Gwadar port. Also, China has pledged a USD 200 million support package to build a highway (725 km long) connect Gwadar port to Karachi city, and then connect this area with Northern Pakistan via railway [11]. Another China's project aims to link the Gwadar port with Xinjiang autonomous region by a railway line and an oil pipeline [12]. Pakistan has planned to build a railway line between Havellian, a city in Pakistan (near Islamabad) and Kashgar city in Xinjiang. In 2006, Pakistan's Government launched a plan to build an oil pipeline with a length of 3,300 km between Gwadar port and Kashgar city with an estimated cost of USD 4.5 billion to USD 5 billion. There is an opinion that China intends to use its economic power to gain geopolitical interests, influencing Pakistan through the CPEC as a "classical balanced power strategy", using Pakistan to counterbalance India [13]. On the other hand, many Chinese analysts consider that the barriers of geographics, the instability of security and politics, and the issues of disputes in the Kashmir between Pakistan and India are the major challenges affecting CPEC.

 

Besides, China, through BRI export of infrastructure, investment, and human resources to the outside, making the neighbour economies "absorb" Chinese model, depend on the structure of the Chinese economy. "Infrastructure diplomacy" or businesses all have geopolitical significance to China's Government. The projects of the Nicaragua canal, the Kra canal in Thailand, the trans-South American railway, or base construction in East-African Djibouti are significant examples for this view. In its strategy of "connecting roads", China also implements measures to connect bilaterally with South Asian countries, specifically: In Nepal, after affirming its intention to join BRI, China pledged to build oil reserves bases, support to upgrade two Arun-Kimathanka and Rashuwagadi-Kerung hydroelectric plants. Focus on strengthening road and air connectivity, pledged to repair and upgrade Aranilo, Suaphrubesi-Rasuwagadhi highways, Kathmandu ring road, build a new Kimathanka - Khandbari-Dhankuta highway, build a bridge across the Karnali river at Hilsa Pulan/Yari port; implementation of transboundary rail project between the two countries, with priority given to Rashuwagadi-Kathmandu, Kathmandu- Pokhara-Lumbini; providing the concessional capital for an international airport construction project in Pokhara. Also, China has pledged to assist Nepal in establishing the Madan Bhandari Institute of Technology (MBIT) and expanding civil society hospitals [14].

 

For Afghanistan, China proposed to build a railway from Kabul to Xinjiang; with this, Afghanistan is likely to become an important transport hub for BRI, as well as a market for Chinese goods. Because without Afghanistan, Central Asia, South Central Asia, East Asia, and West Asia, it would not be connected [10]. Chinese companies are involved in dozens of infrastructure projects in Afghanistan, with the presence of major Chinese corporations such as Huawei, ZTE and Sinohydro. As of 2008, according to data of the Ministry of Commerce, Chinese companies in Afghanistan had 33 infrastructure projects worth USD 480 million, excluding the Aynak mining project [15]. Beijing also plans to build railroads to Aynak and Kabul, as well as other potential projects such as the route through Pakistan to connect to Central Asia. China's largest project is the USD 4.4 billion Aynak copper mine, invested by China Metallurgical Corporation, with associated promises such as service provision and support, and complete infrastructure. The project deploys construction of a 400 megawatts power plant (to serve Kabul), a new coal mine to make materials for the factory, a refinery for copper ore, and a rail line running from the border of North Afganistan to Southern Tajikistan, and to Pakistan [16]. Moreover, the company has pledged to build roads, hospitals, schools, water supply systems and mosques for locals in Afghanistan; this indicates that infrastructure is always China's accompanying tool to pave the way to access and realize the strategic benefits of trade and investment. The Afghan government has estimated that mining and related projects will directly generate 8,000 to 10,000 jobs, and more than 30,000 indirect jobs for the country.

 

In a speech in May 2011 at the China Institute for International Studies in Beijing, the Afghan Minister of Foreign Affairs had estimated that China had contributed about USD 200 million in aid and reconstruction activities for this country. Although in terms of numbers, this is much less than aid from the U.S, U.K, Japan, Canada, and India, All countries have provided more than 1 billion USD [17]; this indicates that Afghan officials have also made moves to recognize the livelihood of the people's social significance of Chinese infrastructure for the country. Nevertheless, some view has shown that Beijing is pursuing a "narrow" and self-interest investment strategy because it is primarily focusing on exploiting or serving the exploitation of natural resources.

 

The Asian Infrastructure Investment Bank (AIIB)

It is a multilateral development bank, demonstrating a constructive move, taking on more international responsibility, and promoting the completion of China's current international economic system. Priority fields for lending are energy and electricity, transport and telecommunications, rural and agricultural infrastructure, water supply and sewage treatment system, environmental protection, and development of city and logistics. With initial lending of the AIIB was expected to be around USD 1.5 billion to USD 2 billion [18] in the next 5 to 6 years; after that, the annual loan may reach USD 10 billion to USD 15 billion [19]. Six of the eight countries in South Asia (except Afghanistan and Bhutan) are founding members of the bank, of which India has recently been elected to the Bank's Board of Directors.

 

The AIIB can help South Asia realize its dreams of becoming a prosperous economic region in the future, which is also an essential criterion for China to restructure international institutions. Different from sponsors such as the USA, Europe, and Japan, China lends money from bank loans to which Chinese state-owned enterprises hold a majority stake. It means that recipient countries have to use Chinese loans to buy products from Chinese companies themselves.

 

The AIIB has expected to offset existing shortcomings in the international financial system, and multilateral financial institutions in investing in the construction of Asian infrastructure, support to developing countries in South Asia overcomes difficulties in accessing capital with multilateral financial institutions (WB, ADB). According to forecasts of the Asian Development Bank (ADB), in about ten years from 2010 to 2020, the construction of infrastructure in the Asia-Pacific region needs to invest USD 8,000 billion, which ADB's annual loan for infrastructure projects is only USD 10 billion; therefore, it is a vast shortage of infrastructure loans. In the coming years, AIIB will pursue open regionalism, promote multilateral mechanisms for mutual development, and strive to become a successful forum for infrastructure investment. China adopts "infrastructure diplomacy" to build a responsible China image and responsible for the international community. However, there are also concerns that other countries will be somewhat dependent on China when China is the largest shareholder in AIIB.

 

In the view of some realist scholars, AIIB will challenge Western countries by reducing Washington's role in South Asian issues; challenges the current international order identified by the Bretton Woods system such as ADB, WB, and IMF [20]. However, liberal scholars argue that, through the AIIB, China is seeking a solution to the issue of disparity in voting rights and increase voting rights in international financial institutions such as the IMF for China and members of AIIB.

 

The connected strategy of "String of Pearls" to the island nations in South Asia

In 2010, China surpassed the U.S to become the world's largest energy consumer. An approximately 85% of the world's oil and natural gas passes through the Indian Ocean, the Strait of Malacca and the South China Sea to China's Pacific ports, which President Hu Jintao said was a "the Malacca Strait dilemma" (You Ji, 2007) of China. It reflects the dependence on the flow of energy resources, economy, and geopolitics into the narrow sea routes in Malacca.

 

China has proposed two countermeasures to this dilemma: that is strengthening its presence in the Indian Ocean and developing trans-ocean shipping routes and energy corridors through Central Asia, which is called China's "String of Pearls" by American analysts [11]. In particular, the ports of Chittagong (Bangladesh), Gwadar (Pakistan), Hambantota (Sri Lanka), Sittwe, Kyaukpyu, Yangon (Myanmar), and Mahé (Seychelles) are the "pearls" in that "String of Pearls." With their "prime" locations, these small countries are playing a significant role in the "New geopolitical game in the Indian - Pacific Ocean". Many Chinese analysts believe that due to energy security, China's effort is reducing its dependence on maritime trade, to realize the "pipeline dream" (oil and gas), as well as establishing an "energy corridor" (Smith, 2015), enticing military "alliances" in South Asia, establishing military bases to surround India through the "String of Pearls". The plan is seen as China's rational response to circumvent the "Malacca Strait dilemma" as well as to use these ports as a fueling station for China's growing maritime transport.

 

China is reaching out to maritime strategical regions and spaces in South Asia, such as the Bay of Bengal, Indian Ocean, and the Arabian Sea along the Pakistan-Iran coast (P S Suryanarayana). The Bay of Bengal, especially the Six-Degree Channel, is near the western departure and arrival of the Malacca Strait, as well as the Ten-Degree Channel, separates the Indian Nicobar Islands from the Andaman Islands in the north, has strategic interests not only for Delhi but also for Beijing in terms of both trade and military. Legally, India has several sovereign military facilities on the Andaman and Nicobar Islands - indeed, this is also a matter of deep Chinese concern.

 

Of these, the Gwadar port in Pakistan is considered to be the brightest pearl for Chinese commerce and the military. The port was built to a depth of 14 meters deep to accommodate submarines and aircraft carriers. Gwadar may have operated as a "listening post" to track U.S. naval activity in the Indian Ocean and the Persian Gulf [22]. Nevertheless, reality has shown that, even if China turned Gwadar into a naval base, it would not be able to overwhelm the U.S in the Indian Ocean. The Indian Navy has seven bases and three "listening posts" along the Indian Ocean coast; the U.S Navy also maintains a significant presence at Diego Garcia base. This context creates a battle-array of "strategic competition" between China - India - the U.S in the Indian Ocean.

 

Assessment of Impacts

At the National Level

For South Asian countries, Chinese infrastructure projects in the region creating a centripetal geo-economic trend on China, while creating a centrifugal geostrategic from themselves. China is carrying out a "double diplomacy" with South Asia. On the one hand, it launches a "Charming attack" through the strategy of "soft power, strong money" to strengthen multi-cooperation mechanisms. On the other hand, China is building its cooperation mechanisms to compete with India.

 

  • China's "infrastructure diplomacy" has played a positive role in addressing "infrastructure thirst", a tool to promote integration, infrastructure links, trade, and the economy in South Asia. South Asian developing countries will not miss this opportunity to develop their infrastructure; however, they do not necessarily welcome a regulation system that is regulatedaccording to China's "model"

  • The system of railway, highway, seaport and other infrastructure structures may be the basis for the economic growth of South Asian countries in the coming decades. For countries such as Pakistan, Sri Lanka, Bangladesh and Myanmar, China's emergence of assets and construction capacity makes sense in removing bottlenecks in economic development, getting rid of the middle-income trap [23]. For India, China is helping the country to develop its connection to its "backyard" area through the BRI strategy from the sub-roads to highways, and the "Railway silk road". To date, this common prosperity has been manifested under the form of economic support, trade relations, and, of course, infrastructure development. For example, since 2003, China's exports to its South Asian neighbours: Bangladesh, Myanmar, Nepal, and Sri Lanka, have increased to USD 45 billion between 2006 and 2011. Also, bilateral investment increased by USD 500 million, total USD 2.8 billion between 2005 and 2010 [24]. With this growth during the BRI pre-constructed period, there is a reason to believe that increased connectivity will lead to growth bigger economy

  • Besides, infrastructure is the foundation for regional stability. Pakistan is a prime example, with USD 46 billion invested in completing modernization projects in Gwadar Port is the best hope to turn an "unstable" area into a vibrant, rich-vitality centre by economic growth [25]. By creating new jobs and modern amenities in the region, China is following a model similar to the US strategy during the Cold War (ibid). As a result, billions of dollars have been invested in South Asia infrastructure since 2000, and potential projects through BRI forecast a continuous growth potential across the South Asia region. Chinese banks, which provide funding to important ports in Sri Lanka and Bangladesh, have opened bottlenecks due to the lack of infrastructure for these countries

 

Therefore, while China expanding into South Asian markets through "infrastructure diplomacy" clearly promotes China's national interests, it also brings many benefits to its neighbours in South Asia. As a recent report of the University of Wisconsin, "These increases create opportunities for growth and development as a wider variety of exports flow from China into the region, and as Chinese outward direct investment improves infrastructure and creates jobs." [24]

 

Nevertheless, South Asian countries need to pay attention to the implications associated with China's infrastructure investment projects such as environmental degradation, resource depletion, threaten the livelihood of local people; labour disputes caused by the appearance of Chinese workers in native countries; violations of labour rights, disregard for employment regulations and minimum wages. Chinese infrastructure projects do not create jobs for indigenous people; instead, they bring a large number of Chinese workers. There are also issues such as land acquisition, land encroachment, and land use by China, which greatly affects social security in these localities. According to research results of the U.S Research and Development Corporation (RAND) published in 2013, more than 80% of official aid and funding from China to host countries focused on the fields of exploitation of natural resources, raw materials, and construction of essential roads, bridges, and ports to serve the transportation of raw material sources to China. Projects focus solely on gathering resources for the Chinese market. Besides, there are other issues to note as cumulative debts of host countries, the lack of transparency in some investment projects, the imbalance in bilateral economic relations. Typically, the pairs of economic relations China - Myanmar, China - Pakistan, and China - Nepal. The disproportionality is reflected in their increasing dependence on China for import-export goods, aid, trade, and investment leading to the influence and dependence on politics, especially foreign policy.

 

For China, after three decades of 10% growth, the Chinese market is in danger of scarcity of resources, industrial surplus, and could not find a suitable solution to use more than USD 3.5 trillion in foreign exchange reserves [26]. Also, balancing the domestic economic disparity between the rich eastern region and the underdeveloped western region is a big problem. Therefore, "By connecting China to countries along OBOR, it will help to develop an economic space that will create a new frontier not just for China's western region, but for the country as a whole" [27]. Furthermore, for western China, the first potential international markets are located in South Asia.

 

Nevertheless, China also faces some risks in the process of implementing these projects. The level of economic dependence of countries in China is increasing, but this has not yet transformed political trust in China. In the opposite direction, the closer the process of economic cooperation, the common interests are not expanded, as well as the doubts about the politics and security precautions of South Asian countries for China is constantly increasing. Besides, fluctuations in the government apparatus in the host countries lead to a reevaluation of the transparency of Chinese investment projects (some countries have sought to renegotiate the contract with China like Sri Lanka); Unequal distribution of benefits between China and the investment-receiving countries; Environmental and labour issues disrupt the progress of projects, resulting in the problems of incurred in financial (Myanmar and India).

 

At the regional level

The presence of China in South Asia has changed the quality of several relations in the region, most notably the India - Pakistan relations. From New Delhi's point of view, China's promise of advanced infrastructure for South Asian nations creates profound concerns about its motives. With the tensions inherent between the two countries in the past over border issues, many Indians see China's actions as an "escalating circle" and a challenge to India's South Asia region [4].

 

Nevertheless, China's "infrastructure diplomacy" also contributes to the adjustment of hostile relations in South Asia, typically the India-Pakistan relationship. As an infrastructure supplier to developing countries, China contributes to the more liberal flow of population, goods, and cooperation in the region. On May 5th, 2015, to respond to the concerns over its military strategy over abroad, a spokesman for China's Ministry of Defense stated, "China has not any overseas military bases...China pursues a defensive national defence policy and seeks no hegemony or military expansion." [28]

 

The size and speed of China's infrastructure investment have created a "domino effect" on infrastructure investment for emerging countries in South Asia, typically India is starting to implement Similar investment projects in these countries. For South Asia, this is considered a move that contributes to connecting South Asian countries closer to each other, cooperating to develop for a prosperous South Asia region. However, China is looking for a place for their "funds" investment to achieve profit and primarily fund for the projects that are part of their global intentions and goals. China is acting strategically, while India is mostly reacting generally. Although India has implemented numerous projects in those countries, it has not been possible to prevent these countries from seeking Chinese funds. As one Indian commentator said, "the size of India's investment in neighbouring countries, may somewhat reduce China's sphere of influence and dominance in South Asia to some extent." Besides, this infrastructure synchronization has created a collaborative environment based on multilateral institutions, demonstrating China's readiness as part of the South Asian community.

CONCLUSION

South Asia is one of the regions with the potential for rapid economic development in the world. A stable infrastructure system will multiply its value and significance, provide a new path towards regional integration, a driving force for stability and development in this region. According to the liberalism approach, China's "infrastructure diplomacy" is also evidence that Beijing is trying to promote multilateral cooperation and growth [29]. However, under the lens of realism, China's actions are only the beginning of a series of other development strategies that serve China's global goals. South Asian countries, therefore, need to avoid the "infrastructure leverage" trap.

 

The policy of China's "infrastructure diplomacy" is promoting an environment conducive to both South Asia and China, creating a binding commitment between China and South Asian nations. In conjunction with AIIB and the "Silk Road" Investment Fund, the "infrastructure diplomacy" policy will contribute to supporting and overcoming the current limitations of lending financial institutions in the international financial system such as the World Bank, IMF, and ADB. Therefore, the promotion of infrastructure in South Asia undoubtedly provides an opportunity to create cooperation and economic growth, if pursued in a truly balanced way, to win, as well ass based on international cooperation standards of mutual respect, transparency and mutual responsibility in the process of cooperation as well as the implementation of corporate social responsibility standards.It does not only improve the image of China but also ensures the stability and long-term benefits for China's infrastructure projects in South Asia as well as in other regions of the world.

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