Economic Colonisation via OBOR

July 08, 2017
10 months

What is the issue?

China’s emerging economic might, in the form of One Belt One Road Initiative may in future lead to economic colonisation.

What is One Belt One Road Initiative (OBOR)?

  • OBOR is a development strategy proposed by Chinese President Xi Jinping in 2013.
  • It focuses on connectivity and cooperation between Eurasian countries, primarily the People's Republic of China, the land-based "Silk Road Economic Belt" (SREB) and the oceangoing "Maritime Silk Road" (MSR).
  • OBOR covers over 60 countries that form almost 30 per cent of world GDP and 60 per cent of the world’s population.

What is India’s stand on OBOR?

  • India perceives OBOR as a geopolitical architecture aimed at expanding Chinese influence in and around the region.
  • OBOR intent to create an infrastructure which would allow physical movement of goods, more specifically Chinese goods, to large parts of Asia and Europe including Russia.
  • OBOR has the potential to create a debt trap in most of the countries which comes under the ambit of OBOR.

Why China wants to pursue the OBOR initiative?

  • According to the World Bank, the growth of overseas development assistance (ODA) is slowing down globally.
  • Multilateral development banks merely support 10 per cent of the developing world’s infra spending.
  • China is trying to make use of this opportunity to fulfil its expansionist tactics.

How Chinese investments might lead to debt trap?

  • The pattern of growing investments by China would increase the external debt of the OBOR economies towards China.
  • An analysis of the Asian economies shows the average reserves to external debt as on 2015 stands at 53.3%.
  • These debts levels are bound to increase as they get more intertwined with OBOR plans.
  • e.g Sri Lanka’s estimated national debt as per IMF stands at $44 billion in 2015, of which around 15% is owed to China.
  • Recently, for the Hambantota port project, Sri Lanka was coerced to borrow more funds from China in higher interest rate.

What are the implications?

  • The OBOR initiative may affect the domestic production capabilities and make the participants heavily depended upon Chinese imports.
  • The inability to repay the debt, could lead the Chinese acquiring equity possession of these large tracts of infrastructure projects and thereby making inroads into the geographic space.
  • Another implication could also be the spreading the use of Yuan as an alternate currency to the dollar.


Source: The Hindu

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Manish kumar 9 months

Thumbs up! Great going. Hoping for eternal continuance :)