Japan's counter to China's silk road (Indian Express: 24-11-2015)

China is vigoursly promoting and moving forward on its premier One Belt One Road (OBOR) initiative. This is alarming for Japan as Japan is decades old player in exporting infrastrasture projects and now its dominance is being challenged by china.

Why OBOR by China?

a)      China is armed with massive cash reserves.

b)      China has huge surplus of industrial capacity which demands to be utilised properly as local market is reaching the saturation point.

c)      Revive ancient silk route and spread dominance of china in the world.

How china will do that?

a)      By building roads, airports, power projects, and high-speed railway systems all across Eurasia and the Indo-Pacific.

b)      By bringing countries ranging from Britain to Brunei and Tanzania to Tajiskistan under its projects.

c)      By establishment of Asian Infrastructure Investment Bank to lend loans for infrastructure projects in Asia.

Japan’s activism against this initiative- Japanese PM Shinzo abe has now laid out a framework for competing with China on the export of mega infrastructure projects. Various measures to counter China’s rising effect and revive its dominance are-

a)      Declaration of $110 billion to promote “quality infrastructuree” in Asia over the next five years.

b)      Japan’s emphasis on “high quality” in projects which has been higher than Chinese ones.

c)      Focus on “sustainable infrastructure development” in comparison to China.

d)      Touring across Asia and pitiching for Japna’s project exports.

e)      Japan is trying to rejuvenate the Asian Development Bank by liberalise the ADB’s terms of lending to counter the China’s Asian infrastructure investment Bank (AIIB) established recently.

f)       Japanese technology and finance have been at the forefront of building road and rail corridors and airorts, including in China

g)      But Japan’s overseas assistance arm the Japanese International cooperation agency (JICA) has been expensive and lacked a larger strategic framework to guide its infrastructure promotion hence traditional development aid has now acquired a strategic dimension under Abe, as he tries to fend off China’s drive to expand its economic and political influence in asia.

Intense competition and Japan’s regaining ground

In this counter drive against China’s initiative, Japan is raising issue of Chinese projects’s hidden costs which will inventually cost OBOR initiative is showing effect. As Srilanka’s new government in Colombo has sought to review the terms and conditions of the various mega projects that the Rajapaksa regime had signed with Chinese companies.

While Japan lost some big deals to China i.e a high speed train line between Jakarta and Bandung meanwhile it won a bid in Bangladesh for construction of a port at the Matarbari island on the south eastern coast. Japan has begun to edge out Chinese competition elsewhere too.

Amidst all this uproar of OBOR and Japan’s counter of it India can avail of this unfolding economic rivalry. Benefits to India-

a)      India Pm Modi has put building world-class infrastructure at the centre of his domestic agenda hence chance to mobilise unprecedented support from China and Japan.

b)      Japan’s new activism will allow Delhi to mitigate some of the perceived threats from China’s growing economic presence in the subcontinent and beyond.

c)      Although China is limiting India’s room for manoeuvre in the subcontinent and the Indian ocean, Japan promises to create new opportunities for leading regional economic integration in its neighbourhood.

d)      India quickly joined both AIIB and Brics Bank considering these as anti western financial institutions. But China’s proposal of linking subcontinent to China is matter of reluctance for India as this infrastructural route passes from Aksai China and POK. But PM is bit more open towards Chinese investments and asking them to take a feasibility study on a high speed train corridor between Chennai and Delhi. This may force Japan to put Delhi out of its strategic misery.

e)      Japan has been old partner of India. It has supported Delhi metro and Delhi Mumbai corridor hence more trustworthy and reliable if stimulate its investment perceiving rise of china. Overall beneficial to India from every corner.

Now this will be interesting to see what way this economic rivalry between China and Japan lead to Asia in particular and World in general and how much India make out of it by managing its partnership with Japan and relations (in perspective of infrastructural projects) with china in near future.