Manoj Joshi: China paves the road to Europe

Perhaps the most fascinating aspect of Chinese President Xi Jinpingrsquos foreign visits relate to Chinarsquos enormously ambitious One Belt One Road or the Belt Road Initiative There is a great deal of confusion as to what exactly OBOR means It is a compound of two separate plans to develop connectivity mdash one over the land across Asia to Europe and the other through sea routes The OBOR is not simply a collection of highways pipelines and sea routes but a geopolitical destination That endpoint in both the land and maritime versions is Eurasia and the aim of OBOR is to compact the vast region and make China its driving force in the coming two decades So even as the US pivots to Asia China is rebalancing to EuropeChinarsquos President Xi Jinping and his Polish counterpart Andrzej Duda after signing a cooperation treaty between China and Poland at the presidential palace in Warsaw on June 20 PicAFPEurope is the largest economy in the world if you count the 28 EU nations Norway Switzerland and Iceland This grouping accounts for 254 of the worldrsquos output in 2014 as compared to the US 225 and China 134 They also account for 285 of all consumer spending in 2014 above the 266 spent by US consumers and 156 by all BRICS nations combined So the EU is both a potential market as well as a source of hightech and trade and commerceSo there is a class of foreign visits of Xi that are aimed at a Eurasian consolidation It began with his first visit abroad as President to Russia Now it is clearer through his most recent tour to Poland Serbia and then Uzbekistan the last named also being the venue of the Shanghai Cooperation Organisation summit Prior to this in March Xi was in the Czech Republic and before that in October 2015 UK and in May 2015 in Kazakhstan Belarus and RussiaThe visits are tied to more complex regional diplomacy that is visible in the summits of China and Central and East European Countries CEECs also known as the 161 summit In November 2015 China hosted the fourth summit in Suzhou Countries like Poland Czech Republic Serbia Albania Bosnia Bulgaria Croatia Estonia Latvia Hungary Lithuania Macedonia Slovenia Montenegro sent their Prime Ministers or heads of state to the event and a few others sent senior ministers Not surprisingly the major theme of the meeting was connectivity CEECs want to join up with China hoping to rub off its prosperity and gain investments through the OBOR schemesChina has already built up an impressive set of pipelines roads and railways to link up to Central Asia For some years trains have begun carrying cargo from China to European destinations mdash Suzhou is now connected to Warsaw Lianyuang to Rotterdam Chengdu to Lodz Chongqing to Duisburg Yiwu to Madrid Zhengzhou to Hamburg The time taken for freight to reach from China is two weeks and currently they go north and join up with the Trans Siberian route or they go through Central Asia Iran and Turkey which however is not too well developed The Chinese also have ambitions of building a third route south of Kunming to Yunan Myanmar Bangladesh India Pakistan Iran and Turkey before reaching EuropeThe relatively lower labour costs in some of these European states are being viewed by China as intermediate bases to establish its logistics and manufacturing facilities to target the richer states of EU The way the Chinese plan it in the coming decades they plan to get out of lowend manufacturing and move to higher value innovationbased products These would obviously require better off markets and Europe fits well into this having markets that become progressively richer as you move from east to westChina is also working at this problem from the other end which was evident from Xirsquos visit to UK in October 2015 He plonked down 87 billion in a onethird stake on a British nuclear power plant a deal for British Petroleum to supply China with 1 million tonnes of LNG per annum worth 10 billion for 20 years Rolls Royce got engine sales worth 3 billion In addition there were announcements of other joint ventures and investments in areas ranging from cruise ships research and development in tissue engineering hospitals real estate electric cars education and training London is of great interest to the Chinese as a finance centre and in the past two years the trading volume of the RMB has doubled and recently the London Metal Exchange announced its acceptance of RMB Similar Chinese investments exist in the other two major European economies Germany and FranceIn this grand scheme of things the message to countries like India is that either you participate or risk being bypassed The ChinaPakistan Economic Corridor CPEC is a manifestation of this However India is riposting through the Chah Bahar project and the International North South Transport Corridor to link Bandar Abbas in Iran with Russian ports The hurdles before India are many scarce finance being the lesser one The big challenge is to implement the projects on schedule something New Delhi is simply not good atThe writer is a Distinguished Fellow Observer Research Foundation New Delhi