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April 04, 2020

Providing sea access to China’s hinterlands under the ‘One Belt and One Road’ Initiative

(Opinions expressed here are those of the author.)

By Dr. Puyam Rakesh Singh

China signed a 43 years lease agreement with the Gwadar Port Authority for developing a special economic zone (SEZ). Spreading across an area of 2,300 acre, this SEZ could shape a new political and economic climate. The Gwadar port in Balochistan Province, however, falls under the shadow of instability. However, the two countries reached understanding on security cooperation to ensure stability along the Pakistan-China Economic Corridor. Undeniably, the completion of the port and the joint declaration issued on 20 April 2015 affirmed their commitment to greater economic integration.
Under the ‘One Belt and One Road’ (OBOR) Initiative, the Chinese dragon lays eggs on the shores of the Red Sea. From Egypt to the Gulf of Aden, China’s increasing economic and strategic interests are expanding.  In this age of the 21st Century Maritime Silk Road, China would strengthen its presence in the region where Africa and Europe meet Asia.  It is because the ‘Chinese dream’ is depended on maintaining stability and freedom of navigation. Moreover, Beijing knows that the Strait of Malacca and the Suez Canal are vital communication lines. In fact, China has strong interests in the political stability and energy market of Middle East making the stretch of maritime route from the South China Sea to the Horn of Africa strategically important.
As part of the strategy, the Chinese hinterlands will be connected to sea ports in the neighbouring countries. For China, Pakistan is a key player in the whole game plan. A narrow strip of land in Afghanistan called Wakhan corridor touches Xinjiang Uyghur Autonomous Region (XUAR) in China but it is not opened for security reasons. With increasing economic presence, infrastructure developments in XUAR along the Wakhan corridor and the need for safeguarding its interests in the Afghan-Pakistan region will guide the policy.
Protecting China from terrorist groups active in these Islamic countries and their joining hands with the home grown separatists in XUAR continue to shape China’s policy. Therefore, a closer relationship with Pakistan is a necessity for security and strategic reasons. This is further corroborated when President Xi Jinping expressed the “unique role” of Pakistan on Afghanistan during his Pakistan visit in April 2015. China called for joint efforts with Pakistan to push the peace and reconciliation process in Afghanistan. The joint declaration also pledged to make “concerted efforts” to crack down on the Eastern Turkistan Islamic Movement (ETIM).
Under the policy of opening-up, the XUAR, Tibetan Autonomous Region (TAR) and Yunnan Province of China are aiming at opening their borders to the neighbouring countries. As a result, China approached Pakistan, India and Myanmar for various connectivity projects. Although Beijing stepped up opening of the TAR through Nepal and India, the projects to get access to the Arabian Sea and the Bay of Bengal through Pakistan and Myanmar respectively, are moving at fast pace.
The Pakistan-China Economic Corridor connecting Gwadar Port to Kashgar in Xinjiang is in progress. Again, the negotiation for the Ruili-Kyaukpyu corridor for connecting landlocked Yunnan Province to the Kyaukpyu Port on the western coast of Myanmar is moving in the right direction lately. Together with the Hambantota port in Sri Lanka, these ports form a triangular maritime route that encloses India. These projects would change the economic landscapes of the landlocked Chinese provinces/autonomous regions. It will also be accomplishment of the ‘Two-Ocean’ strategy of China.
Like Pakistan, Myanmar is another key player that China cannot disparage. In April 2015, the heads of the two States met on the sidelines of the Asian-African summit in Jakarta, Indonesia. In addition to border stability, the two sides talked about creating “new bright spots” in the bilateral relationship. They discussed issues such as China-Myanmar strategic partnership, the ‘OBOR’ Initiative and the BCIM Economic Corridor. Besides connectivity, cooperation on agriculture, electricity and finance were also deliberated during the meeting.
Expressing support to the Asian Infrastructure Investment Bank (AIIB) and the ‘OBOR’ Initiative, Myanmar President U Thein Sein invited Chinese companies to take part in infrastructure construction. Not long after this high-level meeting, the then Chairman of the Union Solidarity and Development Party U Shwe Mann visited China and appreciated the OBOR Initiative. Following such positive remarks, in May, Chinese State Councillor and Secretary General of State Council Yang Jing visited Myanmar to engage Nay Pyi Taw on the AIIB, investment in the energy sector, the 21st Century Maritime Silk Road and development of the Kyaukpyu special economic zone (SEZ).
Again, in August 2015, during a meeting between Myanmar Vice President Dr. Sai Mauk Kham and Chinese Ambassador Hong Liang, rural development, agriculture, border areas stability and the Ruili-Kyaukpyu economic corridor were on the agenda. Furthermore, during U Thein Sein’s meeting with Chinese Premier Li Keqiang on the sidelines of the 70th Anniversary of the Victory of the World Anti-Fascist War, the two sides discussed prospects for enhancing China-ASEAN ties, promotion of youth exchange programmes and development of the Kyaukpyu SEZ. On the return journey via Kunming, Thein met with Yunnan’s party general secretary Li Zhihan in Kunming. The provincial authorities advocated promotion of trade, implementation of Ruili (Shweli)-Muse Economic Zone, cooperation on narcotic drug, human trafficking and illegal logging.
China is holding painstaking negotiation with Myanmar to push ahead the plan for constructing an economic corridor connecting Yunnan to Kyaukpyu port in Rakhine State (formerly Arakan). Interestingly, on 4th September, Myanmar Vice President U Nyan Tun interacted with the members of the Central Work Committee for Myanmar SEZs. He expressed the need for ‘one stop service centres’ to attract foreign investors. Reportedly, tenders have been called to develop the Kyaukpyu SEZ and proposals are being scrutinised by a team of experts. It is most likely that the pace of economic reform will catch up after the November 2015 general elections. For China, the moment calls for attention to corporate social responsibility, environmental and social impact assessment and people-to-people exchanges to neutralise any anti-Chinese feeling in Myanmar.
If successfully implemented, these economic corridors and SEZs will boost China’s reform and opening up policy. The Yunnan provincial authorities have been demanding to develop railway and road links to Myanmar’s western coast. The oil and natural gas dual pipeline projects have strengthened Chinese presence along the Rakhine coast. Ruili, a border town in Yunnan province bordering Myanmar’s Muse town, will see larger volumes of trade with the opening of the Ruili-Muse economic zone. This border economic zone will find greater vitality when the Kyaukpyu SEZ comes into operation.
However, it has not been a smooth sail. In April 2011, China and Myanmar signed a memorandum of understanding on a joint rail transport project. It was a part of the plan to establish Kunming-Kyaukpyu railway and road connectivity. This project is not moving since then though then Chinese Ambassador to Myanmar denied scrapping of the project in July 2014. There was report of cancellation of the railway project. Not long after this, during Chinese Premier Li Keqiang’s visit to Myanmar in November 2014, interconnectivity, the ‘OBOR’ Initiative and the Kyaukpyu SEZ were on the agenda. Interestingly, in August 2015, the two sides talked about the Ruili-Kyaukpyu economic corridor. So China persuades Myanmar to establish the Kyaukpyu SEZ and the economic corridor for Yunnan Province to become a hub of regional trade and financial services.
Unlike Pakistan and Myanmar, India has not shown enthusiasm to make similar arrangement with China. There is no talk about an economic corridor to connect Lhasa to Kolkata port. A road connecting Gyangze (also written Gyantse) to Kolkata Port in West Bengal will closely integrate the TAR into India and South Asia. Unfortunately, there is no serious discussion about such a corridor across the Himalayas. The crossing through the Nathu La pass is the best linkage agreed so far. Nevertheless, the Xigaze prefecture (also written Shigatse) will long to touch the water of Bay of Bengal. To set the record straight, without resolving the territorial dispute and the Dalai Lama issue, only geo-economics will find it hard to build bridges across the Himalayas.
China has found Pakistan and Myanmar to open its landlocked XUAR and Yunnan Province to get access to the Indian Ocean. However, TAR is not so lucky compared to XUAR and Yunnan Province. By constructing these economic corridors and investing in the SEZs, China can take part actively in shaping the geo-politics and geo-economics of the Afro-Asian and European regions. Undoubtedly, the Gwadar SEZ and the Kyaukpyu SEZ would be the bright spots in China’s neighbourhood diplomacy.


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