Learning from China’s OBOR playbook

A rare opportunity to travel recently to Lianyungang in Jiangsu province of China provided a good insight into the implementation of China’s ‘One Belt, One Road’ (OBOR) strategy- the grand connectivity plan announced by President Xi Jinping last year, at the provincial level. The occasion was the ‘Yangtze River International Forum Summit 2015’ organised by the Jiangsu Association for Friendship and International Exchanges which brought together Chinese national and provincial policy makers, academicians, Chinese businesses, journalists, lawyers, among other. Gateway House was the only Indian representation and one of the very few outside entities attending the conference.

The conference was held in Lianyungang, a city situated on China’s North-eastern coast and a major shipping hub with its proximity to South Korea and Japan. Under the OBOR, the city has been designated as the starting point of the Eurasian Land Bridge- a 11,870 kms. trans-continental rail and road corridor to Europe, also called as the ‘New Silk Road’. As part of this, the Lianyungang city administration is also setting up an International Logistics Park, with the help of the Shanghai Cooperation Organisation, which will provide logistics and warehouse service to the cargo coming in from the Lianyungang port.

Given the key location of Lianyungang, the conference was an opportunity to take stock of OBOR’s implementation – six months after China’s National Development and Reform Commission officially unveiled the OBOR vision document.

Most of the Chinese scholars agreed that OBOR has become the most important initiative for China’s foreign and domestic policies, but resented that some of China’s smaller neighbours such as Vietnam and Cambodia had not enthusiastically embraced this idea. Some suggested that for those countries which have reservations in aligning their domestic connectivity projects with OBOR, China should nonetheless help in implementing some of these road projects in South East Asia, earning Beijing goodwill.

There was a repeated emphasis on the China-Pakistan Economic Corridor (CPEC) and China-Pakistan economic cooperation. This was understandable because currently CPEC is the only part of the OBOR plan to materialise outside of China’s boundaries. This repeated emphasis on China-Pakistan cooperation notwithstanding, the forum did not have any representation from Pakistan or any Chinese company invested in Pakistan although many of the projects under the CPEC are already approved projects and investments.

Concomitantly, many were also curious about India’s and Prime Minister Narendra Modi’s views on the OBOR and the CPEC. PM Modi was described by one Chinese speaker as India’s Deng Xiaoping, who opened China to the world in the late 1980s. Clearly, the Chinese have expectations from Modi. Such was the level of curiosity among the Chinese side that this author was asked to give a speech on India’s attitude towards the OBOR and the CPEC, at the last minute.

Being a provincial conference, most of the discussions were in Mandarin, and focused on supporting Chinese businesses to become active participants in OBOR. Many speakers noted that ‘going out’ (investing abroad) has become a trend for Chinese companies – described as the 3.0 version of China’s going-abroad initiative (1.0 being the launch of China’s economic reforms in the 1980s and 2.0 being China’s accession to the World Trade Organisation in 2001). However, current Chinese overseas investment is mostly by state-owned enterprises such as Sinopec and China National Petroleum Corporation. The government wants to change this by encouraging and assisting private enterprises to participate in external projects under OBOR and Asian Infrastructure Investment Bank.

As part of this, the government is holding orientation sessions for its private enterprises to increase awareness of the economic opportunities therein, even promising financial help to local entrepreneurs who want to invest abroad. One such step is aligning the China-Africa Development Fund, set up in 2007, to OBOR to help Chinese private enterprises to enter the African market. [After Pakistan and South-east Asia, China has decided to focus on the African continent for OBOR].

Another step is orienting Chinese lawyers to study the domestic legislations of those countries/regions where OBOR will roll out. For instance, Jiangsu province has a training programme for its lawyers to study the laws of Pakistan, South-East Asia and Africa, with a focus on dispute settlement, intellectual property rights, trade laws, procurement procedures. Many risk management firms are being actively asked by the government to help private enterprises carry out due diligence, study risks and conduct public relations exercises to win bids for foreign projects. Industrial associations in various provinces are researching various aspects of OBOR and how their own provinces will benefit.

Insights such as these from inside China on how a grand initiative like OBOR is being implemented, is critical learning for India. India too is considering its own plans for trans-national corridors and increasing its overseas economic profile by fostering closer links with businesses. Indian policy makers will do well to study China’s implementation of OBOR, especially at the provincial level.

Sameer Patil is Fellow, National Security, Ethnic Conflict and Terrorism, at Gateway House.

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