China's Maritime Silk Road Initiative and South Asia A Political Economic Analysis of Its Purposes, Perils, and Promise by Jean-Marc F. Blanchard PDF

PALGRAVE STUDIES
IN ASIA-PACIFIC
POLITICAL ECONOMY
China’s Maritime Silk Road

Initiative and South Asia
A Political Economic Analysis of its
Purposes, Perils, and Promise
Edited by
Jean-Marc F. Blanchard
Palgrave Studies in Asia-Pacific Political Economy
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School of Advanced International and Area Studies,
East China Normal University,
Shanghai, China
Mr. & Mrs. S.H. Wong Center for the Study
of Multinational Corporations, Los Gatos,
California, USA
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China’s Maritime Silk

Road Initiative and
South Asia
A Political Economic Analysis of its Purposes,
Perils, and Promise
Editor
School of Advanced International and Area Studies
East China Normal University, Shanghai, China
Mr. & Mrs. S.H. Wong Center for the Study
of Multinational Corporations, Los Gatos
California, USA
Palgrave Studies in Asia-Pacific Political Economy

ISBN 978-981-10-5238-5 ISBN 978-981-10-5239-2 (eBook)
DOI 10.1007/978-981-10-5239-2
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This book is dedicated to my mother for her unending support for my
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Preface and Acknowledgements
In November 2015, the Mr. & Mrs. S.H. Wong Center for the Study of
Multinational Corporations (Wong MNC Center), a US-based think tank
focusing on the political economy of multinational corporations in/from
East Asia, and East China Normal University (ECNU)’s School of
Advanced International and Area Studies (SAIAS) orchestrated a very suc-
cessful international academic conference in Shanghai entitled “The
Political Economy of China’s Maritime Silk Road Initiative and South
Asia” which gathered academics, consultants, and researchers from
Australia, China, India, and the United States of America to present their
latest research findings about and discuss topics such as the goals, imple-
mentation, and implications of the MSRI. Seeking to go beyond past
treatments of the Maritime Silk Road Initiative (MSRI), which have often
been subsumed within overly general discussions of China’s One Belt,
One Road (OBOR) initiative, workshop participants focused only on the
MSRI, examined specific country pairs like China’s MSRI and Pakistan,
China’s MSRI and India, and China’s MSRI and Sri Lanka, and under-
took deeper political economic analysis than most other analysts do. The
results of that conference are embodied in this book, which represents one
of the most in-depth contemporary treatments of the MSRI.
There are many who merit acknowledgement for their contribution to
the aforementioned conference as well as this book. At the institutional
level, I would like to thank ECNU and, above all, ECNU SAIAS where I
currently serve as Distinguished Professor, for their financial and adminis-
trative support for the November 2015 event and this multi-year project
on China’s MSRI. Beyond this, I would like to thank the Wong MNC
vii
viii PREFACE AND ACKNOWLEDGEMENTS
Center for its vital managerial, financial, and administrative support for this
project, a topic which the Wong MNC Center Board of Directors imme-
diately recognized has great importance to multinational corporations in
and from East Asia and is pervaded by political economic dynamics.
In terms of individuals, Professor Liu Jun, ECNU SAIAS Dean, was a
vital backer of the aforementioned conference and from the get-go
expressed ECNU SAIAS’s willingness to host it and contribute resources.
I also would like to thank my colleagues Professor Zang Shumei and Ms.
Chen Jing who ably dealt with a slew of conference matters. All the par-
ticipants in the November 2015 event, many of whom are contributors to
this book, deserve appreciation for their intellectual contribution and
enthusiastic participation. I would like to express my gratitude to Professor
Yang Jiemian, former President of the Shanghai Institute of International
Studies, Ambassador Liu Youfa, former Consul General of the People’s
Republic of China in Mumbai, Professor Feng Shaolei, former Dean of
the ECNU SAIAS, Professor Zhang Cuiping, Deputy Director, Research
Institute for Indian Ocean Economies, Professor Shi Yinhong, and
Professor Zheng Yu for taking time out of their busy schedules to partici-
pate in the November conference. Special thanks are due to Professor
Yang and Ambassador Liu for giving very informative keynote speeches.
Professors Colin Flint and Gregory Moore also deserve special acknowl-
edgement for their yeoman’s discussant work providing content on
numerous papers delivered in Shanghai. Professor Flint also warrants spe-
cial mention for his guidance on and involvement, as advisor, editor, and
contributor, in a special section of Geopolitics (entitled “The Geopolitics of
China’s Maritime Silk Road Initiative”) in which a few of the conference
papers appeared. I look forward to opportunities to work with Colin in
the future. Finally, Dr. Bas Hooijmaaijers, my new colleague at ECNU
SAIAS and the new Assistant Director of the Wong MNC Center, merits
kudos for his excellent work in assisting with the production process for
this book. I look forward to many years of collaboration in the future. Ms.
Chen Yifan’s efforts in support of the production of the book are also
much appreciated.
Contents
1 China’s Twenty-First Century Maritime Silk Road

Initiative and South Asia: Political and Economic
Contours, Challenges, and Conundrums 1
2 China’s Rise and the Eurasian Transportation Revolution 33

John W. Garver
3 The MSRI and the Evolving Naval Balance

in the Indian Ocean 55
David Brewster
4 China’s Strategy Towards South Asia in the Context

of the Maritime Silk Road Initiative 81
Xinmin Sui
5 The China–Pakistan Economic Corridor

and the China–India–Pakistan Triangle 105
Jabin T. Jacob
ix
x Contents
6 Sri Lanka, the Maritime Silk Road,

and Sino-Indian Relations 137
David J. Karl
7 The Maritime Silk Road and China–Maldives Relations 173

Srikanth Kondapalli
8 The MSRI, China, and India: Economic Perspectives

and Political Impressions 203
Amitendu Palit
Index 229
List of Figures
Fig. 1.1 Map of China’s Twenty-First-Century Maritime

Silk Road Initiative 4
Fig. 8.1 Intraregional trade shares (%) 205
xi
List of Tables
Table 5.1 Pakistan–China Bilateral Trade, 2005–2014 110

Table 7.1 Maldives trade with China, 1999–2003 186
Table 7.2 China–Maldives trade, 2003–2014 187
Table 8.1 Busiest container ports on MSRI route, 2013 215
xiii
CHAPTER 1
China’s Twenty-First Century Maritime Silk

Road Initiative and South Asia: Political
and Economic Contours, Challenges,
and Conundrums
Introduction
In 2013, People’s Republic of China (PRC) President Xi Jinping put forth
two separate initiatives, the Maritime Silk Road (MSR) initiative (MSRI)
and the Silk Road Economic Belt (SREB) plan, both integral components
of the Chinese mega-project known as One Belt, One Road (OBOR). It
is far from a foregone conclusion that China’s two ambitious plans will
yield what Beijing wants them to deliver economically or politically or that
both projects will be fully realized. Regardless, it is hard not to be capti-
vated by the two schemes given their immense scale and potentially trans-
formative effects on power hierarchies, global, regional, and subregional
institutions, individual countries, and multinational corporations (MNCs).
J.-M.F. Blanchard (*)

School of Advanced International and Area Studies, East China Normal
University, Shanghai, China
Mr. & Mrs. S.H. Wong Center for the Study of Multinational Corporations,
Los Gatos, California, USA
© The Author(s) 2018 1

J.-M.F. Blanchard (ed.), China’s Maritime Silk Road Initiative
and South Asia, Palgrave Studies in Asia-Pacific Political Economy,
DOI 10.1007/978-981-10-5239-2_1
2 J.-M.F. BLANCHARD
As well, top PRC decision-makers have made abundantly clear that OBOR
is a top Chinese-government policy priority.1
To date, scholars have provided background on OBOR, assessed its fit
with China’s grand strategy, and probed its links to China’s energy security.
In addition, they have considered OBOR’s implications for the PRC’s bilat-
eral relations and global security, examined the economic issues associated
with China’s schemes, and judged OBOR’s narratives. Beyond this, they
have opined on OBOR’s attractions, challenges, and significance.2 While
the existing literature is useful in providing information about OBOR, it has
diverse shortcomings. First, there are few monograph-length treatments and
most works speak to OBOR as a whole even though the MSRI and SREB
have their own unique features, players, and obstacles, which necessitate
separate, in-depth discussions. To illustrate, China–India relations are a
huge issue requiring detailed attention in studies of the MSRI, whereas
China–Russia relations and Xinjiang are significant questions meriting
extensive analysis in the case of SREB analyses. Second, many studies neglect
the interaction of politics and economics, even though they will be, and are,
closely intertwined and OBOR will have political and economic effects.
Third, most studies overlook the role of subnational (e.g., Chinese prov-
inces) and nonstate actors (e.g., MNCs) even though they are both objects
of the MSRI and SREB and shapers of them.3 In light of these limitations,
the Mr. & Mrs. S.H. Wong Center for the Study of Multinational
Corporations organized a conference on “The Political Economy of the
Maritime Silk Road Initiative and South Asia,” which was co-hosted with
the School of Advanced International and Area Studies, East China Normal
University, in November 2015. At the behest of the organizers, presenters
offered papers related only to the MSRI and, moreover, narrow topics such
as China, the MSRI, and Sri Lanka, or the MSRI-Indian business dynamic.
There are numerous theoretical rationales for studying the MSRI. One is
that it can inform work on the political economy of national security which
contemplates how economic forces influence state policies.4 Second, it can
enhance our knowledge of the factors shaping China’s foreign policy and its
implementation. Third, it can provide a mechanism for appreciating how
geography molds and is molded by foreign policy.5 From a policy stand-
point, the MSRI merits analysis because it entails the creation of interna-
tional organizations, the reconfiguration of the Asia-Pacific Region (APR)’s
infrastructure, and closer political ties between China and MSRI partici-
pants as well as a, potentially, greater leadership role for China.6 To para-
phrase John Garver (see Chap. 2), the MSRI and associated schemes, which
CHINA’S TWENTY-FIRST CENTURY MARITIME SILK ROAD INITIATIVE... 3
consist of interlinked, intermodal sea-land corridors, mean China will no

longer be trapped in East Asia because with its “application of modern
transportation technology … age-old geographic barriers … are collapsing”
and China will be able to interact at greater distance, more intensively, and
in a more sustained way than ever before.7 Turning to economics, we should
study the MSRI because it will affect: aid; trade and investment flows; the
growth rate of China and MSRI participants; and renminbi (RMB) interna-
tionalization. For businesses, it will raise new competitive challenges in the
form of Chinese companies and “Chinese” goods going overseas.
Acknowledging that the MSRI is a work in process and that many
things can change as it unfolds, this volume offers several key findings,
some already recognized and others less well appreciated. One is that the
MSRI has numerous economic and political purposes and that, on a
related note, even if it does not have explicit political objectives there still
are likely to be political consequences flowing from it. Regarding the lat-
ter, however, it is important to point out, as this volume shows, that the
link between economic and politics is a contingent one and affected by
numerous intervening factors. Another is that China faces a number of
serious political and economic challenges in bringing its ambitious venture
to fruition in South Asia. These challenges include India’s ambivalence
(and even opposition), the need to coordinate government ministries and
subnational actors (e.g., provinces), the troubled economic and political
situation in some of its partner countries (e.g., Pakistan), the immense
amount of money needed, and the risk that a successful MSRI may breed
a backlash among partner and host countries. Yet another is that nonstate
actors in China, MSRI participants, and MSRI non-participants are an
important part of the story of the MSRI in South Asia.
The next section provides basic background information on the MSRI,
delving into, among other things, its geographic features, its participants,
and a number of actions China has already taken to advance it. The third
part of this chapter delves into the initiative’s putative economic objectives
and the obstacles China will face in realizing them. The fourth section
considers the plan’s potential political goals and the challenges China will
face in bringing them to fruition. The fifth part provides an overview of
the chapters in the volume and assesses what they have to say about the
future of the MSRI and its potential political and economic implications.
The last section inter alia supplies some summary remarks, highlights
various findings of interest to academics, business people, and policymakers,
and identifies some potential avenues for future research.
4 J.-M.F. BLANCHARD
Background on the MSRI
In October 2013, Chinese President Xi Jinping proposed the idea of a
MSRI during a visit to Indonesia.8 China’s contemporary MSRI (see
Fig. 1.1 below) relates to the ancient maritime Silk Road that began in
Fujian (a province in China) and connected to Southeast Asia through the
South China Sea and then, via the Malacca Strait, Indian Ocean, and the
Mediterranean, to Europe, still the end destination of the contemporary
MSRI. Unlike the ancient maritime Silk Road, news reports officials sug-
gest that it is possible the contemporary MSRI may branch to various
African countries like Djibouti, Kenya, Madagascar, Mozambique, and
Tanzania and that the MSRI may have a branch linking it to the South
Pacific Islands.9
The MSRI involves dozens of hard infrastructure initiatives on the land
and sea as is well detailed in the chapters by Garver, David Brewster, Jabin
Jacob, and Amitendu Palit, among others. Specifically, it will entail the
construction of hundreds of billions of dollars’ worth of projects with
dual civilian and military potential such as airports, bridges, pipelines
and power plants, railways, and roads. Furthermore, it will include the
Fig. 1.1 Map of China’s Twenty-First-Century Maritime Silk Road Initiative

evelopment of large industrial parks and special economic zones (SEZs)

d
and the construction of factories and trade zones within these parks and
SEZs. Many expect the development of the MSRI will also witness large
investments in shipping, communications, energy, commerce, tourism,
information technology, biotechnology, and alternative energy as inves-
tors try to take advantage of the opportunities flowing from it, and as it
boosts economic activity in China as well as MSRI participant nations.
Finally, the MSRI will bring with it trade fairs, exhibition halls, and other
structures that facilitate and support MSRI-related economic activity.10
It needs to be appreciated that the MSRI is not just about hard infra-
structure and that Chinese leaders seek the development of soft infrastruc-
ture, too. President Xi has stated, “linking Asian countries is ‘not merely
about building roads and bridges or making linear connection of different
places … it should be a three-way combination of infrastructure, institu-
tions, and people-to-people exchanges and five-way progress in policy
communication, infrastructure connectivity, trade link[s], capital flow[s],
and understanding among peoples.’”11 This soft infrastructure will or
should entail various hard and soft institutions: accords on air travel and
logistics, agreements to facilitate people-to-people exchange, bilateral
investment treaties, policy coordination among MSRI participant nations,
and structures allowing for the movement of capital, goods, and labor.12
Beijing has taken numerous steps to advance the MSRI which have
involved leveraging its own financial muscle. One was the establishment of
financial institutions such as the $40-billion Silk Road Fund (SRF) and the
$50-billion Asian Infrastructure Investment Bank (AIIB), which will fund
infrastructure projects relating to the MSRI, SREB, and OBOR as a
whole. Another is to direct existing financial institutions to support the
MSRI. In this vein, the China Development Bank (CDB) reportedly plans
to invest more than $890 billion in the MSRI and other OBOR initia-
tives.13 On top of this, in August 2015, China’s State Administration of
Foreign Exchange (SAFE) injected $90 billion into the CDB and into the
Export-Import Bank of China (the China Exim Bank) to support the
MSRI and other initiatives.14 Per the official Chinese media, Chinese
financial institutions already have entered into a number of concrete finan-
cial undertakings, with the China Exim Bank having funded more than
1000 MSRI- and SREB-related projects in 2015 alone.15
Looking specifically at the MSRI and South Asia, China has pursued
warmer relations with diverse countries such as Maldives, Pakistan, and Sri
Lanka through various political and economic mechanisms. To illustrate,
6 J.-M.F. BLANCHARD
in the case of Maldives, Srikanth Kondapalli (Chap. 7) exhaustively details

high-level civilian and military exchanges between the two countries, vari-
ous formal bilateral agreements, and Chinese backing for part of Maldives’s
key diplomatic agenda like measures to fight climate change.16 With respect
to Pakistan, China’s “all-weather friend,” Jacob reports (Chap. 5) China
has supplied it with billions of dollars of loans, sold it billions of dollars of
weapons, and offered Islamabad precious diplomatic support, though not
all of this is directly related to the MSRI or the China-Pakistan Economic
Corridor (CPEC), which connects the MSRI and the SREB. Turning to
Sri Lanka, David J. Karl (Chap. 6) writes China is funding hundreds of
millions of airport and port projects, dispatching submarines to the island
nation, and building infrastructure there. Beyond this, China’s diplomatic
and political interactions with countries such as Egypt, India, and Iran now
regularly incorporate discussions about the MSRI and ways China and
these countries can enhance their MSRI-related interactions.17
In terms of hard infrastructure, it is extremely difficult to isolate proj-
ects in South Asia that tie exclusively to the MSRI. Nevertheless, the chap-
ters by Garver, Brewster, Jacob, Karl, and Kondapalli make manifest that
the MSRI is linked directly and indirectly to various energy, transporta-
tion, and other projects, ongoing or completed, in MSRI participant
countries such as Maldives, Pakistan, and Sri Lanka. As far as Maldives is
concerned, significant activities include a prospective bridge, which would
link the capital and the country’s international airport and for which a
Memorandum of Understanding (MoU) has been signed, as well as
China’s potential construction of roads in Male, the capital, coupled with
an upgrade of its airport. Noteworthy examples with respect to the latter
two countries include China’s allocation of $46 billion for diverse airport,
hydropower, pipeline, port, power-plant, railway, and road projects in
Pakistan, and involvement in the multi-billion dollar Colombo Port City
and Hambantota port and international airport projects in Sri Lanka.
MSRI Economic Goals and Challenges

A key goal of the MSRI is to promote China’s economic growth by
increasing its exports. Beijing expects this export boost to result from the
opening of existing or new markets (Chap. 4, Xinmin Sui); the reduction
of tariff and non-tariff barriers; the slashing of transportation costs through
improved connectivity (Palit); the vertical integration of trading activities
(Chap. 3, Brewster); increased Chinese foreign direct investment (FDI);
the construction of industrial parks, SEZs, and trade zones; and the
MSRI’s spurring of participant growth.18 Furthermore, the MSRI will
promote growth by helping China dispose of its excess capacity while con-
currently easing industrial restructuring.19 Beyond this, Beijing feels the
infrastructure associated with the MSRI will support growth.20 First, it will
provide a foundation for China to sell more overseas.21 Second, the MSRI
will energize networks of capital, services, and people that are key to
economic exchange.22 Third, as several writers in this volume note, the
building of hard infrastructure itself will generate prospects for Chinese
companies and sale and service openings for Chinese firms.
The MSRI also performs the function of giving China more profitable
ways to use its massive foreign currency reserves, of which the vast major-
ity are invested in low-yielding US Treasury securities.23 One way this will
occur is that these moneys will go to Chinese financial institutions like the
SRF, AIIB, and CDB, mentioned above, which, in turn, will lend money
for MSRI projects. These institutions (China) will not only make money
from these loans, but the loans will also increase the likelihood that MSRI
projects will be completed.24 On a related note, the MSRI will contribute
to Beijing’s effort to internationalize the RMB because MSRI countries
and companies (including Chinese ones) are expected to increase their
usage of it for debt issuances, swaps, settlement, credit insurance, currency
speculation, trade pricing, investment, and trade financing as a way to
hedge and reduce transaction costs.25
At the non-governmental level, Chinese businesses see new opportuni-
ties of all kinds flowing from the MSRI. They feel the MSRI will enlarge
the market for their products and services.26 In addition, they believe the
MSRI will ease access to production inputs, provide new financing sources,
bolster the ability of Chinese companies to diversify their client base, and
provide them with new opportunities to participate in consortia or joint
ventures.27 The MSRI further fits with the desire of many Chinese firms to
obtain increased opportunities for outward FDI (OFDI) to boost their
profit margins, build regional production bases and headquarters, and
gain brands, technology, and production knowledge.28
Turning to specific companies, we see Alibaba looking to build, in part-
nership with other public and private entities, a cross-border e-commerce
platform involving logistics, financial services, and customs clearance ser-
vices to promote goods from countries and regions along the MSRI.29
Similarly, IZP Technologies plans to set up cross-border clearing and pay-
ment systems, dual-currency credit cards, and finance small and medium
8 J.-M.F. BLANCHARD
enterprises and trade logistics and marketing networks.30 COFCO, the

Chinese commodity/food giant, believes the MSRI will give it greater
opportunities to build grain and agricultural product supply chains.31
CRRC Corporation Limited, a railway company and state-owned enter-
prise (SOE), sees exciting possibilities in terms of selling trains, building
trunk and light-rail systems, setting up overseas manufacturing, marketing
exposure and providing services.32
As Sui observes in Chap. 4, the MSRI may help China by bolstering the
economies of MSRI participants. Many of them have significant economic
problems, including poor integration with their neighbors, a lack of mar-
kets, and serious capital shortages.33 Regarding markets, China, obviously,
offers a huge one, especially for raw materials. Looking at capital, China
can make two contributions. One is that it directly will help MSRI coun-
tries develop their hard infrastructure.34 This may have multiple positive
externalities. For instance, as Jacob makes clear in his treatment of the
CPEC in Chap. 5, China’s contribution to Pakistan’s power infrastructure
is not just about boosting the latter’s energy capacity; it also is about
enhancing Pakistan’s industrial capacity which, in turn, boosts its growth
and export potential. Second, it will lend moneys for infrastructure. Third,
Chinese companies will engage in OFDI, partly through greenfield invest-
ments, and thus inject capital into host country economies. This infra-
structure, ceteris paribus, will help MSRI participants boost economic
activity, spark investment by others, and fuel new kinds of economic activ-
ity. Of course, if the growth prospects of MSRI countries improve, then
China, in turn, gains new opportunities.
It will be immensely challenging to realize China’s MSRI. It could not
be otherwise given the MSRI’s size, the number of massive infrastructure
projects involved, and variation in regional financial, logistics, and transpor-
tation systems. Furthermore, Sui highlights that the MSRI will have to
develop in an environment that lacks solid, extant infrastructure and legal
institutions. On top of this, the future of the MSRI will be closely linked to
the economic situation in China and other countries. We have many reasons
to be positive about China even if it does not grow at the same rates as in
the past. It is far from certain, however, that other key MSRI participants in
South Asia like Pakistan will succeed in surmounting their economic prob-
lems. If not, this undoubtedly will limit the progress of the MSRI. Regarding
economics, it remains uncertain if all of the MSRI’s infrastructure projects
make economic sense, with some, for example, expressing doubt if train-
based systems really are more cost effective than ships.35 Brewster, Karl, and
Palit point out in their respective pieces in this book that it is open to
question if the volumes at MSRI “nodes” (e.g., ports or logistics facilities)
will be sufficient or whether MSRI facilities and pipelines will be more cost
effective or attractive than the alternatives, given domestic issues in host
countries and the existing low level of trade integration, intensity, and net-
working in South Asia (see Palit, Chap. 8).
A major economic issue is that the MSRI has little chance of reaching its
full potential unless India enthusiastically participates.36 Yet almost all the
contributors to this volume seem skeptical this will happen. Power, mili-
tary, economic, prestige, and identity considerations and China’s close
relations with Pakistan (see Jacob, Chap. 5), coupled with the way China
has gone about promoting the MSRI, have made India quite cautious
about the project. Indeed, Delhi has been adopting various measures that
directly or indirectly counter or slow the MSRI. Examples include building
better relations with MSRI countries such as the Maldives and Sri Lanka
and active involvement in their domestic politics (see Karl, Chap. 6 and
Kondapalli, Chap. 7), launching an Indian MSRI “equivalent” (Project
Mausam), seeking better ties with extra-regional powers like Japan, build-
ing up its own naval capabilities, and so on.37 Even if the Indian govern-
ment per se was on board, Indian political parties have expressed strong,
uniform concern about the project.38 Moreover, the Indian strategic com-
munity has been voicing alarmist sentiments about the end goals of China’s
MSRI, deeming it a scheme to balance against India, establish a “string of
pearls” (bases) that would allow it to dominate the Indian Ocean and trade
across it, and “cement Chinese influence in its near and extended neigh-
borhood at the exclusion of other significant actors such as the US, Japan,
Russia, and India.”39
One of the largest challenges facing China with respect to the successful
implementation of the MSRI will be the actions of Chinese businesses,
which often lack adequate knowledge of the cultural, social, and environ-
mental contexts in which they will operate abroad, do not understand the
political and credit risks they face, and are ignorant about foreign bureau-
cracies, legal mechanisms, and regulatory procedures, as well as local part-
ners.40 These defects plus each firm’s own selfish interests can cause
businesses to take actions that diminish the appeal of the MSRI, disrupt
efforts to complete projects, and waste financial resources. Ensuring Chinese
companies behave in accordance with Beijing’s wishes will not be easy given
their number, the fact they will be operating far away from Beijing, and the
fact that some are SOEs and/or otherwise have political clout.
10 J.-M.F. BLANCHARD
MSRI Political Goals and Challenges

Many argue that China is pursuing the MSRI to improve the security of its
sea lines of communication (SLOCS) and, relatedly, its resource (energy
and raw materials) security.41 With respect to SLOCS, the MSRI gives
China alternatives to them by establishing routes through Pakistan,
Myanmar, and Bangladesh through which commodities, energy supplies,
and other goods can flow to China.42 Of course, resource security requires
not just access, but also steps to ensure there is sufficient production of the
needed resources. In this regard, MSRI-fueled infrastructure develop-
ment, MSRI-spurred investment (by Chinese firms and others) in oil, gas, and
mines, and cooperation with MSRI host countries, should be quite helpful
as they will expedite certain resource projects and lubricate the completion
of projects that otherwise might not have been initiated/completed.
Some believe the MSRI will facilitate China’s efforts to strengthen its
relationships with MSRI participants and bolster its ties with other coun-
tries.43 One reason for this is that the MSRI will promote a multitude of
flows that could potentially bind countries together.44 A second is that
MSRI loans, infrastructure, and the like have the potential to boost
China’s soft power by showing it to be an economic and political leader
and benefactor.45 This is especially salient in the case of countries like
Myanmar, Pakistan, and Sri Lanka, which lack other avenues for aid, capi-
tal, equipment, technology, or weapons. One Sri Lankan official put it
thus: “Who else is going to bring us money, given the tight conditions in
the West?”46 A third is that the MSRI offers a counterpoint to what some
countries see as China’s recent military assertiveness and helps Beijing
“‘convince countries … it is in their interests to accept China as the alpha
power in the continent.’”47 Chinese leaders and elites have underscored
repeatedly the potential of the MSRI to enhance China’s image and foster
more cooperative relations with other countries.48
Many writers, including Garver (Chap. 2) and Kondapalli (Chap. 7),
feel China backs the MSRI in order to achieve a role commensurate with
its status and rising global power.49 After all, an important aspect of
Chinese President Xi’s “Chinese dream” of the “rejuvenation of the
Chinese nation,” is China assuming a leadership role.50 There are those
who assert the MSRI has more nefarious connotations, including helping
China break American hegemony and seize the Eurasian heartland.51
Furthermore, the MSRI putatively will bind surrounding countries and
regions more closely to China.52 Finally, the MSRI will allegedly help
China diminish existing financial institutions like the Asian Development

Bank (ABD) and the World Bank and undermine the standards that these
and other Western-created and/or -dominated institutions advocate.53
China refutes those who see the MSRI as having malevolent aims. It
stresses that the MSRI, MSRI-associated financing institutions, and MSRI
principles are not closed/exclusionary.54 Painting it differently, Chinese
representatives underline the MSRI is “not a solo but a symphony” and
that China’s initiatives are “open to all countries wherever they are” “‘as
long as they accept the spirit of the initiatives.’”55 Palit (Chap. 8) takes a
neutral stance, but observes that China’s creation of China-centric insti
tutions and concurrent neglect of non-Chinese regional organizations
raises suspicions.
There are those who argue that the MSRI is a way for China to leverage
its economic capabilities to realize strategic objectives.56 Beijing, though,
has said repeatedly it is not going to leverage its economic might for politi-
cal ends and that MSRI-related financial institutions do not represent any-
thing akin to the Marshall Plan.57 Similarly, Sui (Chap. 4) argues the MSRI
is a recognition of the fact that contemporary world politics is about eco-
nomics (which Sui terms a world of “geo-polionomics”) and that it does
not constitute a nefarious scheme to empower China or ensnare its neigh-
bors, but is rather a way to elevate the situation of those neighbors, which
will help China economically as well as politically. Yet, even if the MSRI is
not a Marshall Plan involving any overt strategic goals, it can help China
achieve such aims indirectly. After all, China will be the key player in MSRI
integration, hard and soft infrastructure- and institution-building, and
exchange initiatives.58 Beyond these political benefits, the MSRI should
give China some measure of agenda-setting power and deference since it
is and will be its leader. Finally, the MSRI will afford Chinese public and
private actors diverse opportunities to penetrate the political and eco-
nomic borders of MSRI participants.
According to some, the MSRI has some country-specific political
objectives. For example, Garver (Chap. 2), Brewster (Chap. 3), and Jacob
(Chap. 5) see the CPEC and the MSRI, of which CPEC is a part, affect-
ing the ability of Pakistan (and its neighbor Afghanistan) to deal with a
myriad of economic issues which, in turn, can stabilize China’s long-time
ally. Furthermore, these schemes can transform the Sino-Pakistan rela-
tionship from one that has been almost entirely military to one that does
a better job of serving China’s economic interests. In the case of Maldives,
China is attempting to solidify its friendship with a country that is strate-
gically placed (Kondapalli, Chap. 7).
The MSRI’s realization will require China to address numerous political

challenges. The large number of MSRI actors and the plan’s scope and
scale alone will present daunting hurdles. Paradoxically, a successful MSRI
will have the potential to create political challenges for China. First, some
companies and workers in MSRI participant countries will suffer costs
from greater inflows of Chinese goods or firms, or increased competition
in third markets. These costs, in turn, could generate political friction.
Second, some MSRI participants will be concerned about their trade defi-
cits with China, and Chinese pressure on their industries. Jacob (Chap. 7)
writes, illuminatingly, “in the case of the Sino-Indian economic relation-
ship … bonhomie evaporated as soon as India’s trade surpluses turned
into persistent trade deficits with China.” Third, resource-rich MSRI
countries will worry about becoming excessively dependent on resource
exports. Fourth, MSRI participants will fear domination as they become
economically bound to China.59 Fifth, a successful MSRI will open new
routes for crime (e.g., drug smuggling and human trafficking), the spread
of fundamentalism and separatism, and environmental degradation.
Another political hurdle to the MSRI’s successful realization is the fact
China will have to obtain the approval of countries with vastly different or
poorly developed political, regulatory, and legal systems.60 In some cases,
it will be quite daunting to get countries not only to buy into, but also to
become meaningful contributors to the MSRI because of security worries,
identity and prestige considerations, territorial and maritime quarrels,
domestic political issues, or other factors.61 Indeed, some countries along
the MSRI may take actions that affect its progress. To illustrate, as detailed
above, China’s progress in expanding into the Indian Ocean Region
(IOR) and advancing the MSRI have pushed India to bolster its relations
with MSRI participants like Sri Lanka, to build up its navy, to expand
resource exploitation activities, to endeavor to enhance regional institu-
tions, and to increase its maritime surveillance activities.
Implementing the MSRI will be formidable even if all embrace the
project. After all, as various contributors comment, the MSRI will involve
countries that have boundary conflicts with each other and China; have
unstable leaderships, governments, and policies; and possess limited
technocratic capacities. For example, Pakistan is confronting a severe

separatist insurgency in Baluchistan that is creating and will engender
future problems for the implementation of the MSRI, as noted by many
contributors to this book. In Sri Lanka, leadership change has brought
about project delays and cancellations, and, to some extent, changed the
economic atmosphere between Sri Lanka and China.62 While Myanmar is
not directly part of the MSRI in South Asia, the MSRI in its entirety
includes Myanmar and infrastructure in Myanmar will link to China’s MSRI
in South Asia. Thus, what happens in Myanmar has potential ramifications for
the MSRI in South Asia. In this vein, it is worth highlighting that leadership
turnover there, infrastructure construction problems, and border and ethnic
minority issues have disrupted investment ties between Myanmar and China
and are impeding the completion of certain projects.63
One obstacle confronting the MSRI is the coordination of Chinese
companies. Many take it for granted that Beijing “can completely override
enterprises in making decisions” and force them to participate consistently,
enthusiastically, and substantively in the implementation of the MSRI. Yet
this is not necessarily the case. Chinese firms, like businesses throughout
the world, will be cautious because of potential low investment returns, a
lack of host-country legal safeguards, and unfavorable commercial envi-
ronments as well as sundry political and other risks.64 If Chinese firms are
too cautious, though, then it will be difficult for the MSRI to reach its full
potential. It will be a political challenge for Beijing to gain full control
over the investment and operating decisions of Chinese companies, espe-
cially in the case of SOEs, which have a variety of tools that allow them to
influence policy.
A related problem will be the misbehavior of Chinese companies.
These firms will often be inattentive to the political dynamics in the
countries where they invest or operate and/or may not be sufficiently
conscientious with regard to the negative externalities that flow from
their mining projects, infrastructure building, energy-extraction activi-
ties, port and utility construction, and so on. All of this has the potential
to, among other outcomes, prevent projects from receiving approval,
stop projects midstream, and to turn MSRI participants or their publics
against the MSRI or select initiatives. Such dynamics have been seen in
the case of non-MSRI-participant states like Cameroon and Peru and
MSRI participants such as Myanmar.65 Beijing is well aware of these
potential problems. Illustrating this, in February 2015 Vice Premier
Zhang said at a conference that it was important for Chinese companies
to protect the environment and be aware of Corporate Social
Responsibility.66 Sui mentions in Chap. 4 that the Chinese government is
working to encourage its companies to behave in order to minimize the
risk of a domestic political backlash in partner countries.
Chapter Summaries
In Chap. 2, John Garver focuses two historical lenses on China’s MSRI:
one that examines it relative to past Chinese efforts to access the South
Asia and the Indian Ocean (SA-IO) littoral, and another which compares
it to what other countries like Germany have done. He details China’s
construction of multiple railway and highway corridors linking China with
countries in the SA-IO littoral. He argues these corridors create powerful
two-directional conduits carrying SA-IO region (SA-IOR) resources to
China and Chinese goods to SA-IOR markets. In fact, previously daunt-
ing barriers such as the Tibetan plateau are becoming platforms for
power projection. Chinese initiatives build on efforts that can be traced
back to the 1930s and 1960s, but its contemporary programs are quali-
tatively different because they are powered by the previously unparal-
leled capabilities of an ambitious Chinese state facing declining external
constraints. In Garver’s view, China’s programs are partially inspired
by a desire to grow its influence across the SA-IOR and overcome the
tyranny of distance and difficult terrain that historically separated it
from that region. Garver points out that China’s use of transportation
technology to enhance its national influence is not new historically,
relative to what other countries have attempted, but contends that
Beijing’s efforts mean the territorial sphere of influence of a truly
“risen” China will exceed that carved by China’s historic dynasties,
with profound implications, as detailed elsewhere in this volume.
David Brewster (Chap. 3) enhances our ability to ponder the military-
strategic dimensions of the MSRI in South Asia. He notes that control
over access to the Indian Ocean, whether by land or by sea, has tradition-
ally been viewed through an intensely strategic lens. He adds that the
unusual geography of the Indian Ocean has long made it a relatively
closed strategic space that could be dominated by a succession of extra-
regional naval powers—most recently the USA—while land powers such
as China have largely been excluded from the region. But China’s MSRI,
involving the construction of new maritime pathways to and across the
Indian Ocean, will likely alter the naval balance in the Indian Ocean and,
perhaps, the entire strategic nature of the region such that the Indian
Ocean is no longer a mare clausum. Moreover, whereas China’s previous
“remoteness from its Indian Ocean neighbors often helped give it the
luxury of being able to avoid getting its hands dirty,” Brewster posits that
China’s new interests in Indian Ocean ports and the development of new
overland pathways have the potential to fundamentally change the nature
of China’s security role in the region. More specifically, China may
increasingly become a resident power in the Indian Ocean rather than just
an extra-regional power. Still Brewster is doubtful that China can domi-
nate the Indian Ocean given its lack of bases, its long supply lines, and its
limited naval capabilities, among other things.
In Chap. 4, Xinmin Sui provides a history of China’s links with South
Asia, which, over time, shifted to become more focused on and favorable
to Pakistan. He also paints a portrait of China’s contemporary ties with
various South Asian countries, which he labels a “patchwork of bilateral
relations” and as non-reflective of any grand strategy towards the region;
and of China’s stance towards various regional institutions such as the
South Asian Association for Regional Cooperation. Turning to China’s
policies towards South Asia in the context of the MSRI, Sui contends
China’s goals are economic, with Beijing seeking to enhance its resource
security, find new markets, and facilitate the development of its West and
South Asian neighbors. He argues that China’s increasing naval presence
in the Indian Ocean is not about containing India or securing a dominant
position, but rather about defending its resources and economic interests.
While Sui believes the MSRI will be beneficial to all, he recognizes there
are a multitude of obstacles in the region and with respect to China, which
may slow or obstruct its realization.
Chapter 5 (Jabin Jacob) is the first chapter in this volume stressing a
specific bilateral relationship, China–Pakistan ties, in the context of China’s
MSRI and South Asia. It focuses on the CPEC, which has its own history
and existence separate from the MSRI, but also is incontrovertibly related
to it and has implications for Sino-Indian relations which, in turn, have
ramifications for the development of the MSRI. Jacob informs us about the
historical and present-day Sino-Pakistan relationship, which has been and is
a long-term one of strategic political and military interdependence, as has
been reaffirmed repeatedly by Beijing. For Jacob, the launch of the CPEC
under the framework of the MSRI and China’s OBOR scheme more gener-
ally is a sign the relationship is graduating to become a more complex and
multilayered one with economic facets, too. Still, CPEC was designed to
serve a number of political purposes for China such as bolstering its influ-
ence in the IOR and stabilizing Pakistan (and neighboring Afghanistan).
Aside from India’s major sensitivities about anything strengthening Sino-
Pakistan relations, Jacob notes that impediments to the implementation of
CPEC and the MSRI will flow from terrorism, corruption, and other
political problems inside Pakistan and observes that the economics of vari-
ous projects in the latter country may not pan out because of the attitude
of Chinese companies or the situation on the ground in Pakistan.
In Chap. 6, David J. Karl examines China’s rapidly advancing ties with

Sri Lanka, Sri Lanka’s relations with China in the context of the MSRI,
Indo-Sri Lanka dynamics, and the challenges Sri Lanka’s internal situation
may present to the realization of China’s scheme. Sri Lanka would seem
unworthy of Beijing’s attention, but, as Karl points out, the country sits
“astride shipping lanes that carry two-thirds of the world’s oil shipments
and half of all container traffic.” Moreover, its “centrality in the Indian
Ocean” makes it “a vital node” in the MSRI. India is attuned to these
issues, too, and they coupled with other links between India and Sri Lanka
suggest, to quote Karl, “the stage is thus set for Sri Lanka to become an
arena of maritime competition and geopolitical rivalry.” India is in a disad-
vantageous position, however, because of China’s superior capabilities.
Political changes in Sri Lanka have complicated China’s MSRI and other
economic plans, but the reality is that Sri Lanka needs China because there
is nowhere else to turn. Consequently, Karl believes it likely will be a coop-
erative partner in China’s MSRI scheme.
Chapter 7, penned by Srikanth Kondapalli, addresses themes similar to
those of Karl’s chapter, albeit with a focus on Maldives. As with Sri Lanka,
China cares about Maldives partly because of the latter’s strategic position
in the Indian Ocean through which it imports hundreds of millions of
tons of oil and exports hundreds of billions of dollars of manufactured
goods. Furthermore, an intensification of interactions with Maldives
would benefit China and could help to advance the MSRI, which
Kondapalli believes Beijing is pushing to bolster its sagging growth rates,
expand its dealings with countries far and wide (which has both economic
and political rationales), and address the US “rebalance to the Asia-
Pacific.” In line with its growing relationship with Maldives, China has
opened up an embassy in Male and initiated high-level political, economic,
and military consultations with the Maldivian leadership. Moreover, China
is deeply involved in infrastructure, maritime cooperation, and tourism in
Maldives. Kondapalli reports China has been making inroads into the
Maldivian political landscape, too. For its part, Maldives has embraced
China’s MSRI and AIIB and also given China support on some of its
regional initiatives relating to, for example, South Asian Associaition for
Regional Cooperation.
Chapter 8 (Amitendu Palit) is the most economically oriented chapter
in this volume, but makes quite clear that economic issues have political
consequences and politics have economic ones. In his chapter, Palit exam-
ines some of the economic implications of the MSRI with a particular
focus on its maritime dimensions and China–India economic relations.
He first analyzes the MSRI as an economic corridor and assesses varia-

tions across its economic geography by identifying those regions that will
be more capable of exploiting the opportunities the MSRI generates. He
then reviews the implications that existing and pending regional frame-
works relating, too, for instance, rules of origin (ROOs) have on the
benefits that will flow from the MSRI. In both instances, he discusses
Indian business and government perceptions and points out that India’s
poor trade integration with the world, its weak logistical capabilities, and
its minimal role in trading limit the upsides of its to participating in the
MSRI. Recognizing this helps us to understand some of India’s apathy
towards the scheme, though Palit also highlights several political issues
that magnify India’s suspicions about China’s plan. In his chapter, Palit
identifies conditions necessary for India’s successful integration into
China’s connectivity plan, too.
Conclusion
Since China proposed the MSRI in 2013, businesspeople, government
officials inside and outside China, and scholars have been spending an
increasing amount of time contemplating the details and implications
of China’s grand scheme and the details of the SREB and the larger
OBOR. While the number of studies has been expanding steadily, the
extant literature is afflicted by various shortcomings including, most
noticeably, a lack of focused analysis, no or insufficient attention to
politico-economy, and a failure to consider the importance of subnational
and nonstate actors. This book surmounts these limitations in various
ways. One is that it focuses only on the MSRI. A second is that it looks at
the MSRI in the South Asian context. A third, related to the second, is
that it has a number of chapters offering special insights on subjects
such as China, the MSRI, and Pakistan, or China, the MSRI, and the
Maldives. A fourth is that it is highly attuned to the interaction of polit-
ical and economic factors. Finally, as the context warrants, the volume
pays attention to nonstate and subnational actors.
While this volume is not meant to be theoretical, it does have a number
of conceptual implications. First, it shows that economic stimuli (the aid,
trade, and investment associated with the MSRI) do not necessarily have
positive political consequences for reasons such as, inter alia, the fact they
can be negative, be offset by international or domestic political factors, or
be diminished by countervailing signals. Second, it demonstrates that stu-
dents of Chinese foreign policy should not confine themselves to national
security actors, issues, or tools, but pay attention to economic ones, too.
Turning to policy ramifications, the various chapters herein demonstrate
that while the MSRI has potentially transformative effects, there are numer-
ous, daunting political, military, economic, social, and other obstacles that
China has to surmount before these effects will occur. Thus, for many
years yet, it seems one should be calm about the MSRI’s implications.
Furthermore, the chapters make clear that it is vital for China to bring India
on board to realize the MSRI’s full potential. Finally, the chapters suggest
there are many business and economic opportunities and challenges that
will flow directly and indirectly from China’s MSRI, though the specific
magnitude of these opportunities and challenges is not known at present.
The MSRI, in tandem with other Chinese initiatives, has been seen by
many as leading to a sea change in the world political and economic order;
as a “game changer” to quote one Voice of America news story.67 The stud-
ies herein indicate that many changes are afoot throughout South Asia and
in regard to specific dyadic or triadic relationships and that China indeed
hopes the MSRI can help it achieve multiple political and economic ends.
Yet, they also reveal that there has been no transformation as of yet and
that a significant change can occur only after China and MSRI participant
countries have resolved many serious political, economic, and social issues,
some external and others internal. This, however, can hardly be taken for
granted despite China’s political and economic weight and past successes
in realizing large-scale projects. Moreover, other countries, schemes, and
technologies will not stand still while China’s MSRI unfolds, making it
even fuzzier what new world we will see in 10, 20, or 50 years. It should
not be forgotten, too, that China’s original Maritime Silk Road came to an
end because of dynamics internal to China. This, too, is a matter to which
we must be attentive and which will add to the uncertainty and excitement
of watching the MSRI unfold.
Notes
1. Jeremy Page, “China Sees Itself at Center of New Asian Order,” The
Wall Street Journal, November 9, 2014, http://www.wsj.com/articles/
chinasnewtraderoutescenteritongeopoliticalmap1415559290; and Charles
Clover and Lucy Hornby, “China’s Great Game: Road to a New Empire,”
Financial Times, October 12, 2015; “Chinese Vice Premier Urges Closer
Cooperation along Belt and Road,” China.Org.cn, January 16, 2016, http://
www.china.org.cn/business/2016-01/16/content_37590431.htm.
2. For discussion and references, see Jean-Marc F. Blanchard and Colin Flint,
“The Geopolitics of China’s Maritime Silk Road Initiative,” Geopolitics 22,
no. 2 (2017): 223–245.
3. The issue of subnational actors and the MSRI receives extensive attention
in Jean-Marc F. Blanchard, “Probing China’s Twenty-First-Century
Maritime Silk Road Initiative (MSRI): An Examination of MSRI
Narratives,” Geopolitics 22, no. 2 (2017): 246–268.
4. An illustrative work is Jean-Marc F. Blanchard and Norrin M. Ripsman,
Economic Statecraft and Foreign Policy: Sanctions, Incentives, and Target
State Calculations (London: Routledge, 2013).
5. For an attempt to do this, see the special section entitled “The Geopolitics
of China’s Maritime Silk Road Initiative” in Geopolitics 22, no. 2 (2017).
6. Shannon Tiezzi offers some similar observations in “The New Silk Road:
China’s Marshall Plan?” The Diplomat, November 6, 2014, http://the-
diplomat.com/2014/11/the-new-silk-road-chinas-marshall-plan.
7. David Brewster remarks the MSRI and associated schemes mean that the
long-isolated Indian Ocean will no longer be a mare clausum, or closed sea.
8. Two years later, China promulgated an associated government White Paper.
It is formally called the “Vision and Actions on Jointly Building Silk Road
Economic Belt and Twenty-First-Century Maritime Silk Road” [hereinafter
the “SREB/MSRI Vision”] and was jointly issued by the PRC National
Development Reform Commission, Ministry of Foreign Affairs (MFA), and
Ministry of Commerce on March 28, 2015. It is available at http://news.
xinhuanet.com/english/china/2015-03/28/c_134105858.htm, among
other sites.
9. Wu Jiao and Zhang Yunbi, “A New ‘Maritime Silk Road’ Called
For,” China Daily, October 4, 2013, http://usa.chinadaily.com.cn/
epaper/2013-10/04/content_17009583.htm; Shannon Tiezzi, “China’s
Maritime Silk Road’: Don’t Forget Africa,” The Diplomat, January 29, 2015,
http://thediplomat.com/2015/01/chinas-maritime-silk-road-dont-for-
get-africa; Chen Jia, “‘Belt and Road’ Takes New Route,” China Daily,
April 15, 2015, http://europe.chinadaily.com.cn/business/2015-04/15/
content_20435638.htm; and Ambassador Xu Bu, “Maritime Silk Road Can
Bridge China-ASEAN Cooperation,” The Jakarta Post, August 5, 2015,
http://www.thejakartapost.com/news/2015/08/05/maritime-silk-road-
can-bridge-china-asean-cooperation.html.
10. T.K. Premadasa, “Twenty-First-Century Maritime Silk Road,” Financial
Times, October 25, 2014; “China to Speed up Construction of New Silk
Road: Xi,” Xinhuanet, November 6, 2014, http://news.xinhuanet.com/
english/china/2014-11/06/c_133770684.htm; Page, “China Sees Itself
at Center of New Asian Order”; “China Sketches Out Priorities of
‘Belt and Road’ Initiatives,” China Daily, February 2, 2015, http://www.
chinadaily.com.cn/business/2015-02/02/content_19464329.htm;
Nathan Beauchamp-Mustafaga, “NPC Meeting Touts New Silk Road as

New Driver for Economic Growth,” China Brief 15, no. 6 (2015): 1–3;
and Chen, “‘Belt and Road’ Takes New Route.”
11. “China Pledges $40 Billion for New ‘Silk Road,’” The Japan Times,
November 9, 2014, http://www.japantimes.co.jp/news/2014/11/09/
business/economy-business/china-pledges-40-billion-for-new-silk-
road/#.VF_2KvSUdzM.
12. Page, “China Sees Itself at Center of New Asian Order”; Charles Hutzler,
“China Lays Out Path to Silk Road,” The Wall Street Journal, March 28,
2015, http://blogs.wsj.com/chinarealtime/2015/03/28/china-lays-
out-path-to-one-belt-one-road; He Yini, “China to Invest $900b in Belt
and Road Initiative,” China Daily, May 28, 2015, http://www.chinadaily.
com.cn/business/2015-05/28/content_20845654.htm; “Air Transport
Ties to Deepen Along Belt and Road,” China.Org.cn, July 19, 2015,
http://www.china.org.cn/business/2015-07/19/content_36093293.
htm; and “C. Asia, Africa to Benefit Most from B&R Initiative: ITC
Executive Director,” CRIEnglish, May 31, 2016, http://english.cri.
cn/12394/2016/05/31/4203s929463.htm.
13. John Liu, “China’s Xi Pledges $40 Billion for Silk Road Infrastructure
Fund,” Bloomberg, November 8, 2014, http://www.bloomberg.com/
news/print/2014-11-08/china-s-xi-pledges-40-billion-for-silk-road-
infrastructure-fund.html; He, “China to Invest $900b in Belt and Road
Initiative”; and Economist Intelligence Unit (EIU), “Prospects and
Challenges on China’s ‘One Belt, One Road’: A Risk Assessment Report,”
2015, 3–4, http://www.eiu.com/public/topical_report.aspx?campaignid=
OneBeltOneRoad
14. Chen Jia, “Policy Banks Get $90b Cash Infusion,” China Daily,
August 19, 2015, http://www.chinadaily.com.cn/business/2015-08/19/
content_21643373.htm.
15. “China Exim Bank Boosts Lending to Belt and Road Projects,” China.org.
cn, January 14, 2016, http://www.china.org.cn/business/2016-01/14/
16. PRC, Ministry of Foreign Affairs, “China and Maldives,” http://www.
fmprc.gov.cn/mfa_eng/wjb_663304/zzjg_663340/yzs_663350/
gjlb_663354/2737_663478.
17. EIU, “Prospects and Challenges on China’s ‘One Belt, One Road,’” 2;
Daniel Balazas, “Monsoons on the New Silk Road,” Foreign Policy, June
23, 2015, https://foreignpolicy.com/2015/06/23/monsoons-on-the-
new-silk-road; Zhang Yunbi and Wu Jiao, “Iraq Looks to Chinese
Companies for Rail Expansion,” China Daily, December, 24, 2015,
h t t p : / / e u r o p e . c h i n a d a i l y. c o m . c n / b u s i n e s s / 2 0 1 5 - 1 2 / 2 4 /
content_22790922.htm; and “Spotlight: Belt and Road Initiative Boosts
Mideast Development,” Xinhuanet, January 19, 2016, http://news.
xinhuanet.com/english/2016-01/19/c_135024655.htm.
18. Page, “China Sees Itself at Center of New Asian Order”; Ji-Yong Lee,
“Political and Economic Implications of China’s New Silk Road Strategy,”
IFANS BRIEF, Winter 2014; and Xu, “Maritime Silk Road Can Bridge
China-ASEAN Cooperation.”
19. Tiezzi, “The New Silk Road”; He Huifeng, “China Needs New Trade
Route to Future, Premier Li Keqiang Says,” South China Morning Post,
April 6, 2015, http://www.scmp.com/news/china/article/1757174/
china-needs-new-trade-route-future-premier-li-keqiang-says; and Lucio
Blanco Pitlo, “Chinese Infrastructure Investment Goes Abroad,”
The Diplomat, August 6, 2015, http://thediplomat.com/2015/08/
chinese-infrastructure-investment-goes-abroad.
20. “China Sketches Out Priorities of ‘Belt and Road’ Initiatives”; “Two
Sessions to Focus on Growth,” Global Times, March 2, 2015, http://
www.globaltimes.cn/content/909845.shtml; and Beauchamp-Mustafaga,
“NPC Meeting Touts New Silk Road as New Driver for Economic
Growth.”
21. Liu, “China’s Xi Pledges $40 Billion for Silk Road Infrastructure Fund”;
“China Pledges $40 Billion for New ‘Silk Road’”; and Gordon G. Chang,
“This Is How You Blow $1 Trillion if You’re China,” Forbes, June 7, 2015,
h t t p : / / w w w. f o r b e s . c o m / s i t e s / g o r d o n c h a n g / 2 0 1 5 / 0 6 / 0 7 /
china-blowing-a-trillion-dollars-on-its-silk-roads.
22. Michael Spence, “China’s International Growth Agenda,” Project
Syndicate, June 17, 2015, http://www.project-syndicate.org/print/
china-international-growth-agenda-by-michael-spence-2015-06.
23. Liu, “China’s Xi Pledges $40 Billion for Silk Road Infrastructure Fund”; John
Kemp, “China Flexes its Silk Road Muscle,” The Japan Times, November 11,
2014, http://www.japantimes.co.jp/opinion/2014/11/11/commentary/
world-commentary/china-flexes-silk-road-muscle; and Lee, “Political and
Economic Implications of China’s New Silk Road Strategy,” 15. This also is
one of the purposes of the China Investment Corporation (CIC). On the
CIC, see Jean-Marc F. Blanchard, “The China Investment Corporation:
Power, Wealth, or Something Else,” China: An International Journal 12,
no. 3 (2014): 155–175.
24. Beauchamp-Mustafaga, “NPC Meeting Touts New Silk Road as New
Driver for Economic Growth.”
Wang Liwei, “Closer Look: So China’s Silk Road Fund is Marshall Plan
Redux? Not Really,” Caixin, November 10, 2014, http://english.caixin.
com/2014-11-10/100749151.html; and Huo Kan, Wang Ling, and Wu
Hongyuran, “Investors Embrace China’s Big Belt, Risky Road,” Caixin,
June 17, 2015, http://english.caixin.com/2015-06-17/100820036.html.
26. “Chinese Cosmetics Firms Shine in Mideast with New Silk Road
Drive,” China Daily, May 27, 2014, http://www.chinadaily.com.cn/
business/2015-05/27/content_20834245.htm.
27. Zhang Yuhe, “With New Funds, China Hits a Silk Road Stride,”
Caixin, December 9, 2014, http://www.caixinglobal.com/2014-12-
03/101012865.html; Shannon Tiezzi, “What’s It Like to Have China
Build You a Port? Ask Cameroon,” The Diplomat, February 27, 2015,
http://thediplomat.com/2015/02/whats-it-like-to-have-china-build-
you-a-port-ask-cameroon; Beauchamp-Mustafaga, “NPC Meeting Touts
New Silk Road as New Driver for Economic Growth”; “Beijing’s Belt and
Road Means Overseas Military Bases,” WantChinaTimes, May 31, 2015,
http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=201505310
00044&cid=1101; Huo et al., “Investors Embrace China’s Big Belt, Risky
Road”; and “Belt and Road Initiative Opens Opportunities for Chinese
Gold Miners,” China Daily, October 23, 2015, http://www.chinadaily.
com.cn/business/2015-10/23/content_22268061.htm.
28. For a general treatment of the drivers of Chinese OFDI, see Jean-Marc
F. Blanchard, “Chinese MNCs as China’s New Long March: A Review and
Critique of the Western Literature,” Journal of Chinese Political Science 16,
no. 1 (2011): 91–108.
29. Qiu Quanlin, “E-Commerce to Help Build Maritime Silk Road,” China
Daily, November 13, 2014, http://www.chinadaily.com.cn/business/
tech/2014-11/13/content_18906835.htm.
30. Dai Tian, “Big Data Conglomerate Dreams Big on Silk Road,” China Daily,
July 29, 2015, http://www.chinadaily.com.cn/business/2015-07/29/
31. Zhong Nan, “COFCO Commits to Belt and Road Initiative,”
China Daily, June 3, 2015, http://www.chinadaily.com.cn/
business/2015-06/03/content_20895016.htm.
32. PRC, MOFCOM, “Chinese Company Invests in Malaysian
Rail to Boost Maritime Silk Road,” September 23, 2015, http://
english.mofcom.gov.cn/ar ticle/newsrelease/counselorsof fice/
westernasiaandafricareport/201509/20150901120981.shtml.
33. Wang, “Closer Look”; “Experts Say ‘Maritime Silk Road’ Will Stimulate
Economic Potential of Developing Countries,” Xinhuanet, February 9,
2015, http://news.xinhuanet.com/english/2015-02/09/c_133981299.
htm; Nicholas Choa, “Building a High-Speed Silk Road,” US News and
World Report, April 14, 2015, http://www.usnews.com/opinion/blogs/
world-report/2015/04/14/asian-infrastructure-investment-bank-and-
china-rail-network-worth-watching; and Spence, “China’s International
Growth Agenda”; and Sui’s chapter in this book, Chap. 4.
34. “Experts Say ‘Maritime Silk Road’ Will Stimulate Economic Potential of
Developing Countries.”
35. Andrew Browne, “On Track or at Sea? Beijing Reopens Old Land Routes,”
The Wall Street Journal, March 3, 2015, http://www.wsj.com/articles/
c h i n a s - w o r l d - o n - t r a c k - o r- a t - s e a - b e i j i n g - r e o p e n s - o l d - l a n d -
routes-1425371903.
36. Yang Jiemian, “Making the Maritime Silk Road a New Promoter of
Cooperative Interaction between China and South Asia” (keynote speech
given at the “Political Economy of China’s Maritime Silk Road and South
Asia” conference, Shanghai, China, November 21, 2015).
37. Akhilesh Pillalamarri, “Project Mausam: India’s Answer to China’s
‘Maritime Silk Road,’” The Diplomat, September 18, 2014, http://
thediplomat.com/2014/09/project-mausam-indias-answer-to-chinas-
maritime-silk-road;DavidBrewster,“China’s Rocky Silk Road,” East AsiaForum,
December 9, 2015, http://www.eastasiaforum.org/2015/12/09/
chinas-rocky-silk-road; Liu Zongyi, “India’s Political Goals Hinder
Cooperation with China on ‘Belt, Road,’” Global Times, July 3, 2016,
http://www.globaltimes.cn/content/992047.shtml; “Narenda Modi
Changed India’s ‘Attitude’ towards Maritime Silk Road: Chinese Daily,”
The Economic Times, July 4, 2016, http://economictimes.indiatimes.
com/news/politics-and-nation/narendra-modi-changed-indias-attitude-
towards-maritime-silk-road-chinese-daily/articleshow/53042664.cms.
38. “India Important Cooperative Partner in Silk Road Project: China,” The
Economic Times, October 20, 2015, http://economictimes.indiatimes.
com/news/politics-and-nation/india-important-cooperative-partner-in-
silk-road-project-china/articleshow/49472560.cms.
39. See the chapters by Brewster (Chap. 3), Karl (Chap. 6), and Kondapalli
(Chap. 7) herein. The quotation comes from Jacob’s chapter (Chap. 5).
40. Wang, “Closer Look”; Chen, “‘Belt and Road’ Takes New Route”; Huo
et al., “Investors Embrace China’s Big Belt, Risky Road”; and Blanco,
“Chinese Infrastructure Investment Goes Abroad.”
41. This is emphasized in Sui’s chapter (Chap. 4) and also mentioned in the chap-
ters by Garver, Karl, and Kondapalli (Chaps. 2, 6, and 7). See also Nathan
Beauchamp-Mustafaga, “Dispatch from Beijing: PLA Writings on the New
Silk Road,” China Brief 15, no. 4 (2015): 1–2; Shuaihua Wallace Cheng,
“China’s New Silk Road: Implications for the US,” YaleGlobal Online, May
28, 2015, http://yaleglobal.yale.edu/content/china%E2%80%99s-new-silk-
road-implications-us; and Blanchard, “Probing China’s 21st Century Maritime
Silk Road Initiative,” 255–256.
42. Beauchamp-Mustafaga, “Dispatch from Beijing,” 3; Philip Stephens, “Now
China Starts to Make the Rules,” Financial Times, May 28, 2015; and Spence,
“China’s International Growth Agenda”; “New Silk Road Ruins US Military
Plans to Impose Blockade of China,” Sputnik International, June 29, 2015,
http://sputniknews.com/business/20150629/1023998554.html.
43. See Premadasa, “Twenty-First-Century Maritime Silk Road”; Yang
Jiemian, “Making the Maritime Silk Road a New Promoter of Cooperative
Interaction between China and South Asia”; and Garver’s chapter below
(Chap. 2).
44. Xu, “Maritime Silk Road Can Bridge China-ASEAN Cooperation.”
45. D.S. Rajan, “Indian Ocean in Focus: China-India-US Jostling for Power-
Analysis,” Eurasia Review, February 23, 2015, http://www.southasiaanalysis.
org/node/1718. For a general discussion of issues surrounding the analysis of
China and soft power, see Jean-Marc F. Blanchard and Fujia Lu, “Thinking
Hard about Soft Power: A Review and Critique of the Literature on China and
Soft Power,” Asian Perspective 36, no. 4 (2012): 565–589.
46. See Karl’s chapter (Chap. 6).
47. Page, “China Sees Itself at Center of New Asian Order.”
48. Xu, “Maritime Silk Road Can Bridge China-ASEAN Cooperation”;
“Chinese President calls for Asian Political Parties’ Support on Belt and
Road,” Xinhuanet, October 15, 2015, http://news.xinhuanet.com/
english/2015-10/15/c_134717621.htm; and Yang Jiemian, “Making
the Maritime Silk Road a New Promoter of Cooperative Interaction
between China and South Asia.”
49. Zhang, “With New Funds, China Hits a Silk Road Stride”; Beauchamp-
Mustafaga, “Dispatch from Beijing,” 2; Stephens, “Now China Starts to
Make the Rules”; Cary Huang, “New World Order: Xi Bent on Securing
Bigger Role for China in Global Affairs, Analysts Say,” South China
Morning Post, October 14, 2015, http://www.scmp.com/print/news/
china/diplomacy-defence/article/1867576/xi-set-securing-new-role-
china-world-affairs-analysts; and Garver (Chap. 2).
50. Ting Shi, “Xi Risks Road Backlash to Remake China Center of the World,”
Bloomberg, November 26, 2014, http://www.bloomberg.com/news/
print/2014-11-25/xi-risks-silk-road-backlash-to-reclaim-china-as-center-
of-world.html; “‘One Belt, One Road’ Initiative Will Define China’s Role
as a World Leader,” South China Morning Post, April 2, 2015, http://
www.scmp.com/comment/insight-opinion/article/1753773/one-belt-
one-road-initiative-will-define-chinas-role-world; and Theresa Fallon,
“The New Silk Road: Xi Jinping’s Grand Strategy for Eurasia,” American
Foreign Policy Interests 37, no. 3 (2015): 141.
51. Ting, “Xi Risks Road Backlash to Remake China Center of the World”;
Beauchamp-Mustafaga, “Dispatch from Beijing,” 2; Choa, “Building a
High-Speed Silk Road”; Michael Clarke, “Understanding China’s Eurasian
Pivot,” The Diplomat, September 10, 2015, http://thediplomat.
com/2015/09/understanding-chinas-eurasian-pivot; and Fallon, “The
New Silk Road: Xi Jinping’s Grand Strategy for Eurasia,” 142.
52. Page, “China Sees Itself at Center of New Asian Order”; Beauchamp-
Mustafaga, “Dispatch from Beijing,” 2; and Fallon, “The New Silk Road:
Xi Jinping’s Grand Strategy for Eurasia,” 142.
Page, “China Sees Itself at Center of New Asian Order”; and Kemp,
“China Flexes its Silk Road Muscle.”
54. “China to Speed up Construction of New Silk Road”; Zhu Wenqian, “Tax
Plan to Support the Belt and Road Initiative,” China Daily, April 1, 2015,
http://www.chinadaily.com.cn/business/2015-04/01/content_19973451.
htm; and “Chinese President calls for Asian Political Parties’ Support on Belt
and Road.”
55. The first quote comes from Wang Sheng, “Commentary: Chinese Marshall
Plan Analogy Reveals Ignorance, Ulterior Intentions,” Xinhuanet, March 11,
htm. The second quote comes from Chen Boyuan, “‘Belt and Road’ Opens
to All,” China.Org.cn, October 19, 2015, http://www.china.org.cn/
china/2015-10/19/content_36836016.htm.
56. Tiezzi, “The New Silk Road”; Kemp, “China Flexes its Silk Road Muscle”;
and Li Yonghui, “Constructing a Strategic Peripheral Belt to Support the
Wings of China’s Rise,” Contemporary International Relations 23, no. 6
(2013).
57. Wang, “Closer Look”; “Silk Road Not Marshall Plan: Scholars,” China.
Org.cn, February 12, 2015, http://www.china.org.cn/world/2015-
02/12/content_34805640.htm; and “Belt and Road Not Geopolitical
Tool, Says Spokesperson,” Xinhuanet, December 29, 2015, http://news.
xinhuanet.com/english/2015-12/29/c_134962167.htm.
58. Xu, “Maritime Silk Road Can Bridge China-ASEAN Cooperation.”
59. Zhao Minghao, “Silk Road Aspirations Face Complications from National
Squabbles,” Global Times, December 18, 2014, http://www.globaltimes.
cn/content/897363.shtml.
60. Zhang, “With New Funds, China Hits a Silk Road Stride”; Yang Jiemian,
“Making the Maritime Silk Road a New Promoter of Cooperative
Interaction between China and South Asia”; and Shi Yinhong, “Belt and
Road: A Searching for Strategic Rationale and Appealing for Political
Prudence” (presentation to the “Political Economy of China’s Maritime
Silk Road Initiative and South Asia” conference, Shanghai, China,
November 22, 2015). On these issues, see also Jacob’s chapter (Chap. 5).
61. Christopher Len, “China’s Twenty-First-Century Maritime Silk Road
Initiative, Energy Security, and SLOC Access,” Maritime Affairs 11, no. 1
(2015): 9–10; “Indonesia Says Could Also Take China to Court over
South China Sea,” Reuters, November 11, 2015, http://www.reuters.
com/ar ticle/2015/11/11/us-southchinasea-china-indonesia-
idUSKCN0T00VC20151111.
62. Premadasa, “Twenty-First-Century Maritime Silk Road”; Len, “China’s
Twenty-First-Century Maritime Silk Road Initiative, Energy Security, and
SLOC Access,” 10; and Karl’s chapter (Chap. 6).
63. Len, “China’s Twenty-First-Century Maritime Silk Road Initiative, Energy
Security, and SLOC Access,” 11–12.
64. Zhao, “Silk Road Aspirations Face Complications from National Squabbles.”
65. Tiezzi, “What’s It Like to Have China Build You a Port?”

66. “China Sketches Out Priorities of ‘Belt and Road’ Initiatives.”
67. For the former, see Steve LeVine, “China is Building the Most Extensive
Global Commercial-Military Empire in History,” Quartz, June 9, 2015,
http://qz.com/415649/china-is-building-the-most-extensive-global-
commercial-military-empire-in-history and Robert Berke, “New ‘Silk
Road’ Could Alter Global Economics,” USA Today, May 25, 2015,
http://www.usatoday.com/story/money/markets/2015/05/25/oil-
price-dotcom-silk-road/27746785. For the game-change remark, see Ron
Corben, “China Silk Road Initiative Seen As Game Changer,” VOA,
May 19, 2016, http://www.voanews.com/a/china-silk-road-game-
changer/3336984.html.
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for Political Prudence.” Presentation to the “Political Economy of China’s
Maritime Silk Road Initiative and South Asia” conference, Shanghai, China,
November 22, 2015.
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17, 2015. http://www.project-syndicate.org/print/china-international-growth-
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htm.
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the-new-silk-road-chinas-marshall-plan.
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CHAPTER 2
China’s Rise and the Eurasian

Transportation Revolution
John W. Garver
The Problem and the Approach

The significance of terrain and distance for human affairs has always been a
function of the technology available to humans confronting a particular
geography at a particular time and place. On the basis of this premise, this
chapter undertakes to think in broad historic terms about how patterns of
interaction between Greater East Asia and South Asia were shaped by the
transport technologies available in different periods. The central thesis is
that the combinations of age-old geographic barriers and premodern tech-
nology that attenuated relations between East Asia and South Asia are now
being dissolved by modern transportation technologies. East Asia and
South Asia are coming together as never before. In the maritime realm the
key revolutionary technology at work today has to do with the container-
ization revolution of the 1960s and 1970s. In the terrestrial realm, the
transformative technologies are older: railways dating from the mid-nine-
teenth century and superhighways from the middle of the twentieth cen-
tury. But those older terrestrial technologies are only now being robustly
applied to link East and South Asia. The railway revolution has only just
arrived in the lands lying between East and South Asia. This chapter will
J.W. Garver (*)

Georgia Institute of Technology, Atlanta, GA, USA

DOI 10.1007/978-981-10-5239-2_2
34 J.W. GARVER
focus on the role of transport technology, ancient and contemporary, in

separating or in bringing together East and South Asia.
Throughout history, ambitious states have been key agents in applying
transportation technologies. Some of these earlier cases will be reviewed
below. Today the People’s Republic of China (PRC) is following the path
of earlier rising powers by mobilizing state resources via its One Belt, One
Road (OBOR) initiative to build transport links to achieve its strategic
goals. Focus on one important factor is not intended as a claim to mono-
causality or technological determinism. The two more modest claims
made here are that (1) what technology makes possible at a particular time
and place has a significant impact on geography, and (2) the differing abili-
ties of states to apply packages of transport technology is a major dimen-
sion of relative state capability. This essay will not focus on the strategic
goals underlying those Chinese efforts: Jean-Marc F. Blanchard has done
that very ably elsewhere.1 This essay elides the specific purposes underlying
Beijing’s One Belt, One Road efforts and focuses, instead, on the applica-
tion of technology itself.
The central proposition of the paper is this: Millennia-old geographic
barriers to expansion of the influence of powerful Chinese imperial states—
barriers premised on premodern technology—are now collapsing.2 A key
geographic fact that shaped interactions between East Asia and the rest of
the world for two millennia was the relative isolation of the nations and
states of East Asia from other centers of global civilization. Difficult and
remote terrain combined with premodern transportation technology con-
spired to trap China in East Asia. Now those centuries-old geographic
barriers are collapsing as the Chinese state applies modern transportation
technology.
Use of modern transportation technologies, railroads, and highways to
expand national power in Eastern Eurasia is not new; it is as old as those
technologies themselves. What is new is that for the first time a powerful
Chinese state is applying modern transportation technologies in a large-
scale and systematic fashion to open reaches of Eurasia to growing Chinese
influence. A key characteristic of state systems is the varying capabilities of
that system’s constituent actors. China now has the capability to apply
modern transportation technologies, and is doing that with strategic
thrusts that will spread Chinese influence across far wider regions than was
historically the case. China is escaping its historic confinement to East Asia
via (among other things) its superior capacity to apply modern rail and
highway technology beyond its borders.
CHINA’S RISE AND THE EURASIAN TRANSPORTATION REVOLUTION 35
A bit of historical context is useful here. Earlier great powers—Japan,

imperial Russia and its successor the USSR, Germany, and the United
States/USA)—employed these powerful transportation technologies for
their own purposes, while China was largely a passive observer of the for-
eign transportation schemes that bedeviled it (two exceptions to this were
the construction of the Burma Road, starting in 1939 and of the Karakoram
highway, starting in 1964). China was too weak, and too inward looking,
to join in the game of railway or gunboat diplomacy. Now that has
changed. China is once again the strongest state in East Asia—the “nor-
mal” situation for many centuries. In past centuries, however, the particu-
lar technology–terrain interaction of those times severely limited the
expansion of China’s power and influence beyond East Asia. This is no
longer the case. Age-old geographic barriers that trapped China’s earlier
dynastic empires in East Asia are falling. This presents something new
under the sun: a powerful Chinese state pre-eminent in East Asia but with
a growing sphere of influence across virtually all of Greater East Asia.
There are three main vectors of Chinese railway and highway building
effort:
• via post-Soviet Central Asia plus Afghanistan and Iran

• via Pakistan
• via Myanmar
Many of the railways and highways that China is building or plans to

build through these regions reach seaports on the Indian Ocean. This is
an important aspect of China’s new application of transportation tech-
nologies. In some cases, in fact, access to oceanic terminals (e.g. Gwadar
in Pakistani Balochistan, or Kyaukpyu in Myanmar) seems to be a primary
reason for constructing rail and road links to China.
The Railway Revolution Comes

Late to Greater East Asia
Until the coming of railways, the fastest information or vital goods could
travel over land was the speed of a galloping horse—about 25–30 miles
per hour on level ground. An ox pulling a cart averages about two miles
per hour. By the mid-nineteenth century rail cargo was moving in all
weather and in huge volume at speeds many multiples of horse, ox, or
camel speed.
36 J.W. GARVER
Application of railway technology quickly became a key component of

national power. Germany and the USA tied their territories together
through the use of railways in the second half of the nineteenth century.
Railways gave Union forces in the American Civil War and Prussian forces
in the wars of German unification a decisive advantage in terms of the rapid
mobilization and concentration of military forces. Railways also enabled the
USA to populate and develop the 1000-mile stretch of land between the
Mississippi river and California’s Sierra Nevada mountains. What is more,
Germany and the USA both improved the internal cohesion of their territo-
ries. Russia’s construction of the Trans-Siberian railway in the early twenti-
eth century substantially augmented that state’s ability to support military
operations in Northeast Asia—so much so that Japan opted for war in 1904
to force the issue with Russia before that strategic line was finished.
Ambitious states quickly seized on railways as a means to expand their
influence and power beyond national boundaries. Japanese strategy after
1905 placed the Southern Manchurian Railway at the center of an expand-
ing sphere of Japanese influence in southern Manchuria. In northern
Manchuria, the Chinese Eastern Railway served a similar function for the
Soviet Union. In Africa, Cecil Rhodes and his backers in London worked
to build a “Cairo to Cape Town” railway that would bring all of East Africa
within the British sphere. The rivals of these railway-building states viewed
these moves with deep apprehension. Germany oversaw construction of
“the Oriental Express,” linking Berlin with Basra, the latter an Ottoman
city at the head of the Persian Gulf. Britain saw this as a dangerous German
advance.
The USSR joined in with this railway rivalry, strengthening and defend-
ing its rights in northern Manchuria, to which it had been restricted after
its defeat by Japan in 1905. Moscow opted to sell the Chinese Eastern
Railway to the state of Manchuria (not Japan!) in 1935 to lessen con-
flict between the Soviet Union and Japan. But renewal of the lapsed Soviet
railway rights in Manchuria was part of the price demanded by Stalin at
Yalta in 1945 for Russian entry into the war against Japan. Stalin’s refusal
to relinquish those rights to the new PRC circa 1950 embittered China’s
new Communist leaders. To a considerable degree, the post-Stalin Soviet
leadership saw relinquishment of Soviet special rail rights in Manchuria as a
cost of maintaining an alliance with the PRC.3 Moscow only relinquished
those special rail rights, in all of Manchuria, north and south, in 1955, two
years after Stalin’s death and under intense Chinese pressure.4 But the main
Soviet application of rail technology was not external, but internal. With
the ambitious industrialization efforts of the 1930s, railways were built

tying the Soviet Republics of Central Asia to the industrial centers of
European Russia. Construction of a rail network centered on Moscow and
thereby tying together the constituent Soviet Republics of the USSR was a
major component of the first three five-year plans. An important aspect of
Soviet railway diplomacy was that this powerful technology was not used to
tie the Soviet Central Asian Republics to Greater East Asia. The Soviet
Central Asian rail network was not linked up with Chinese rail lines thrust-
ing westward from Xian and Lanzhou toward Urumqi. A Chinese rail line
had reached Urumqi by 1957, but the gap between that city and
Kazakhstan’s rail lines was not closed until 1990.5
The breakup of the USSR opened Central Asia to the application of
railway technology by ambitious states. The Soviet Union had certainly
mastered that technology by the 1920s and 1930s, but its siege mentality,
autarkic development strategy, and limited financial resources severely
constrained the application of that technology. Fears on the part of the
Soviet Union’s neighbors that rail connections might facilitate Soviet sub-
versive efforts probably played a role in some of those constraints; such
neighbors included China under both Chiang Kai-shek and Mao Zedong.
Be that as it may, with the demise of the USSR the vast area of Central Asia
was opened up and has become the chessboard for a new round of railway
and highway rivalry. China is the main player in this new “great game.”
Other state actors include the European Union, Russia, Turkey, Pakistan,
Iran, and even Japan. But China seems to be the key player thanks to the
programs described below.
Highways as a Second Component

of the Transportation Revolution
The development of internal combustion technology in the early twenti-

eth century made possible a form of overland cargo transportation that
was far more versatile than railways: trucks. While not necessarily faster or
cheaper than rail, trucks could go where trains could not—to or from a
railhead and multiple diverse locations, or between points not linked by
rail. Again it is important to keep in mind how relatively recent this tech-
nological transformation is. Cities in a few countries began building motor
roads (as they were then called) in the early decades of the twentieth cen-
tury, but it was not until the second half of that century that the real
transformation occurred. Germany led the way with its autobahn system
38 J.W. GARVER
of the 1930s, built in part for the military advantages associated with these
new highways. Alignments of these new roads were straighter, cuts deeper,
and tunnels and bridges more frequent, piercing mountain ranges and
spanning wide depressions. Autobahns cut through rather than following
the earth’s terrain. Entry onto the highway was limited by clever design
and stops along the thoroughfare were eliminated. Trucks also became
more powerful, carrying ever more cargo at faster speeds.
German autobahn engineering spread to the USA after 1945. Supreme
Allied Commander in Europe, General, and later President, Dwight
Eisenhower, was deeply impressed by Germany’s autobahn, and immedi-
ately understood its military significance. Eisenhower had been part of a
transcontinental “convoy” undertaken by the US Army in 1919 to survey
the conditions of roads across the USA. That condition was discovered to
be abysmal, with few hard-surfaced highways linking major American cities.
In the 1920s the US Army Chief of Staff John Pershing submitted a report
calling for a major, nationwide highway construction effort. In 1956, under
Eisenhower’s leadership as President, the National Interstate and Defense
Highway Act was passed. Within 35 years (by 1999) the network laid out at
that time would be complete and the USA would have an extremely
advanced system of “superhighways.” By that point, however, the US road
network was second to China’s in total length. China, after 1978, also
understood the transformative power of modern transportation.
Regarding China, highway construction, like railway construction, was
part of the Stalinist model of comprehensive economic planning pioneered
in the USSR in the 1920s and 1930s and was adopted by China after 1949.
But the crux of that model was maximization of investment in heavy and
defense industry, achieved by holding down investment in other sectors,
including infrastructure of all sorts. Roads and rail lines were built if neces-
sary for the growth of heavy industry or military defense, but since large
percentage increases in heavy industrial output was taken as the hallmark of
success, relatively little investment went into highways. At the beginning of
China’s scrapping of the Stalinist economic model circa 1979, roads
between even major Chinese cities were often primitive. But under Deng
Xiaoping, China followed the example of both the USA and an earlier gen-
eration of East Asian industrializers (Japan, South Korea, Taiwan, and
Singapore) in recognizing the centrality of modern transportation for effi-
cient production and commerce. Railway spurs and modern highways—the
latter often designed and engineered up to global standards by Hong Kong
firms—were frequently supplied as part of the state support given to the
new Special Economic Zones and, later, open cities. Progress was rapid and
impressive. By the beginning of the twenty-first century, in many regions of

China the system of “superhighways” approximated the interstate highway
system of the USA. China now possesses the technological and financial
resources, and the political will, to apply this highway technology to the
lands to its west. That vast, mineral-rich and centrally located region is just
entering the modern transportation revolution.
Collapse of Millennium-Long Geographic

Barriers: Tibet
The Tibetan plateau was a prominent part of the difficult terrain historically
locking China into East Asia. With an average elevation of 14,800 feet (4500
meters), that plateau, together with the mountain ranges associated with it
(the Himalayas, Karakoram, Tianshan, Kunlun, Pamir, Hindu Kush), deeply
constrained movement between East Asia and South Asia. Broadly speaking,
commerce went around, not over, the Tibetan plateau. Trade went either to
the west of Tibet through Afghanistan and Central Asia, or east over the
Shan-Yunnan plateau. There was some trade and cultural exchange between
the Sinic civilizations that emerged in East Asia and the Indic civilizations of
South Asia during the period ce 600–1400 , but that trade was limited in
volume, if not in cultural significance, by the very difficult terrain of the
Tibet-Qinghai plateau. The most important channel of communication
between ancient and medieval India and China was, in fact, via Central
Asia—that is, around Tibet.6 In the era of premodern transportation, the
Tibet-Qinghai plateau constituted an almost impenetrable barrier.
To the west and north of China’s successive great empires lay the vast
prairies and deserts of Central Asia—“steppes of Inner Asia” as per Owen
Lattimore’s classic formulation (the literal meaning of “steppe” is “waste-
land”).7 The string of oases that existed where underground rivers, fed by
snowmelt from the tall mountain ranges associated with that tectonic
uplift, emerged here and there from rocky deserts, provided water and
thus a food supply adequate to support occasional trade caravans of cam-
els. These developed, of course, into the “silk road” which was a major
axis of global trade and of contact between East Asia and more westerly
Eurasian civilizations for over a thousand years.
But while trade caravans could move conveniently from oasis to oasis
along the foot of these mountain ranges, it was difficult for armies to follow
such a path. The demands of armies for food and fodder was simply too
great to be met by meager agriculture based on oasis wells. Armies had to
40 J.W. GARVER
take their supplies with them, or send them to forward armies by wagon
convoys—which themselves consumed a lot of the supplies they carried,
and which were vulnerable to raids. Defense against such raids required
protective forces, which further increased the requirement for food and
fodder. Because of these constraints, thrusts by Chinese armies into more
distant westerly regions were typically short-lived. Occasional thrusts by
Chinese states to the far west were motivated by the desire to tax lucrative
silk route commerce and guard against invasion. But Chinese armies sta-
tioned too far west faced the logistic difficulties described above. The typi-
cal result was that these armies would fall back to more logistically
sustainable, more easterly bastions—the “green corridor” along the Yellow
River in Gansu and its upper tributaries around Xining in today’s Qinghai
(the old Amdo).
Movement between East Asia and Western Eurasia via the silk roads of
Inner Asia increased under the Pax Mongolica in the thirteenth to six-
teenth centuries. Administration, including taxation, was unified and reg-
ularized, while trade was protected and encouraged. For the first time
direct contact between Europe and China was established, with European
priests and adventurers only now frequenting China.8 This was of immense
historical importance. Mongol rulers were great adaptors of modern tech-
nology (both firearms and machines for siege of cities), but in terms of
transportation the most advanced technology was still plodding camels or
galloping horses supported by frequent way stations. The revolution in
transportation technology that was then underway took place not on the
steppes of Inner Asia, but on the ocean.
The Maritime Silk Road and China’s

Confinement to East Asia
Historically, the currents and winds of the Pacific Ocean helped contain
China within East Asia. Powerful currents in the Pacific north of the
Equator generally circulate in a clockwise fashion, flowing southward
along the west coast of North America before turning west roughly
around Acapulco to cross the Pacific and circulate north and east of, first
the Philippine archipelago, then Japan; and then pass by Alaska to restart
the cycle again.9 This means that it is much easier to pass from the tem-
perate climates of North America to comparable latitudes in East Asia. To
reach Guangzhou or Hangzhou from Acapulco is fairly easy. To reach
Acapulco from say, Quanzhou or Manila—the latter the center of Spain’s
early modern East Asian empire—ships had to sail far north, into frigid
and frequently stormy waters, avoid occasional icebergs, frequently
against strong prevailing winds, and pass by immense stretches of for-
ested wasteland before reaching anywhere that seemed worth going to.
In the age of wind and sail, these were considerable barriers. Chinese
mariners had a much easier route with which to reach the commercial
emporia of Western Eurasia—the South China Sea. This is one reason
why Chinese explorers never “discovered America.”10
Winds conspired with currents to keep Chinese vessels off the high
Pacific Ocean. The South Pacific and northern Indian Oceans have power-
ful monsoon cycles, with colder, dryer winds blowing southward from the
Arctic and Siberia for several months in the winter. Then warmer, wetter
winds from the equatorial regions blow from south to northwest during
the summer. Thus, cargo-laden ships could move from East Asian ports
southward to commercial emporia around the Strait of Malacca in winter,
and then back north to home ports—with a different cargo!—in summer.
A nice year-long round trip, over twice as fast as by camel overland, and
with two deliveries per year, rather than one as with the overland route.
Trade over this “maritime silk road” was ethnically segmented. Chinese
merchants typically handled trade north of Malacca, while Hindu, Persian,
or Arab merchants handled commerce west of Malacca. Greeks and Italians
monopolized the Mediterranean terminus—a fact that impelled Portugal
and Spain to seek new western Atlantic Ocean routes to Cathay. This
“maritime silk road” paralleled the terrestrial routes and waxed in impor-
tance as Chinese maritime technology improved in the second millennium
ce under the commerce-oriented Song dynasty, and in the context of the
maritime battles between the Song and its Jurchen and then Mongol
enemies.
By the fifteenth century China had developed a ship design perfectly
adapted to monsoon navigation: the junk. With large square-rigged sails,
broad beam, shallow draft and no keel, but with a sternpost rudder, the
junk was excellent for use in a monsoon environment. With strong, regular
winds behind it, a junk could skim over the water faster than the Spanish,
Portuguese, and Dutch ships that began arriving in East Asia in the six-
teenth century. What the junk could not do was sail close to the wind—
that is, sail at tighter angles into adverse winds. All sailing ships navigate
adverse winds by zigzagging (“tacking”) into them, but square-rigged
sails must sail into such winds much more obliquely (at higher angles).
European ship designers had discovered in the fifteenth century that a
42 J.W. GARVER
lateen-rigged triangular sail with a top or bottom boom designed to swing

from one side of the ship to the other, adopted from Arab designs in the
Western Indian Ocean, could force a ship into adverse winds at much
lower angles. Lateen sails, combined with the keel board and deeper hull
of European ships, allowed those vessels to better stay the course against
the wild winds and powerful currents or the great oceans of the world.11
This resulted in a great saving of sailing time and distance.12 The addition
of new European-designed ships in the early modern period to patterns of
East Asian maritime trade that were already hundreds of years old created
an extremely robust economy, integrating East Asia into global markets.
Had Chinese rulers of the late Ming and Qing dynasties undertaken to
emulate and master the new and revolutionary maritime technology pre-
sented by the Europeans, world history might have been different. But
that did not happen—at least not to much historic effect. The new, ocean-
based global economy that developed was dominated by states and nations
other than China. China remained trapped in East Asia.
Steam engines and then internal engines began to power oceangoing
vessels in the mid-nineteenth and early twentieth centuries, opening a new
revolution in maritime transport technology. As with terrestrial transpor-
tation, speeds and cargo tonnage increased greatly. Important additions to
the suite of revolutionary maritime technologies came with the replace-
ment of paddle wheels with screw propellers and wooden ships with iron-
build ships of vastly greater carrying capacity. Construction of the Suez
and Panama Canals, the latter especially a masterpiece of technological
design, completed the technological kit of the early twentieth-century
maritime system.
China’s disinterest in mastering the revolutionary maritime technolo-
gies wrought by Europeans in the fifteenth to seventeenth centuries and
again in the nineteenth to twentieth centuries should not be exaggerated.
The standard model goes something like this. China is a continental
country for whom oceanic trade was of marginal importance, politically
suspect, and culturally disparaged. China’s major external security threats
came from the horse-riding peoples of the steppes. Even when “Japanese”
pirates (many were actually Chinese or half-Chinese) bedeviled China in
the fifteenth to sixteenth centuries, China’s government used land power
to counter the threat: defensive walls and forts with coastal artillery, evac-
uation of coastal zones. In order to deal with questions over the legiti-
macy of his succession, the Yong Le emperor did authorize Zheng He’s
magnificent ships and voyages But after Yong Le’s death, the imperial
court scrapped Zheng He’s oceanic programs, even going so far as to

destroy the blueprints for his costly ships, lest they someday be revived.
But against this “standard model” must be set these episodes/
considerations:
• Both Northern and Southern Song embraced naval forces in defense

against first the Jurchen and then the Mongols. Throughout the
Song era, seaborne commerce was recognized as an important source
of government revenue.
• The Ming embraced quite effectively European maritime technology
quite effectively, including especially the practice of mounting can-
non on ships, during the war against Japan in the 1590s (in Korea)
and against the Dutch (in Taiwan) in the 1640s.
• China’s junk-borne coastal trade was integrated with high-ocean-
faring European ships to produce a dynamic early modern trade sys-
tem. China’s trade and European ships constituted a complimentary
and mutually beneficial division of labor. China did not abstain from
the sea; it played, rather, a role in that division of labor that remained
confined to East Asia.
• Under the treaty system, Shanghai and Hong Kong capitalists
embraced the most modern transportation technology and built
important shipping companies on that basis. Sometimes this was
done with state backing.
• During the Self-Strengthening period, the Qing government built
two modern and potent battle fleets, which were destroyed in 1885
and 1894 by France and Japan respectively.
In view of these episodes, China’s minor role in the maritime revolu-

tion is perhaps best attributed not to a culturally determined disinterest,
but to the overall weakness of the state and the absolute domination of the
Western Pacific by China’s rivals, first France and Japan, and then (after
1949) the USA. The autarkic and import-substitution orientation of the
Soviet economic model adopted by China circa 1949 also played a role.
Now, however, on land and on sea in regions around China, the age-
old geographic barriers that historically limited the growth of China’s
influence are collapsing under the impact of the latter’s application of
modern transportation technology. It is not generally understood, or so it
seems to this author, how recent and how profoundly important this tech-
nological transformation of the political significance of terrain in fact is.
44 J.W. GARVER
After many centuries of being “trapped” in East Asia— first by the high
elevations of Tibet, the deserts of Inner Asia, and the winds and currents
of the North Pacific combined with China’s specialized junk-trade role in
the early modern East Asia trading system; and then by the thalassocracy
of Imperial Japan and Cold War America, and by China’s own industrial
and technological backwardness—China now sees the oceans of the world
and the steppes of Central Asia as global highways. Following a long
cohort of other ambitious and powerful states, China is now vigorously
applying the most advanced transport technologies to enhance its national
influence and power.
The Transportation Revolution Transforms

the Geopolitical Role of Tibet
Let’s start with Tibet. When the PRC was established, there were no
motor roads into Tibet. In the middle of the twentieth century, Tibet’s
transportation was still based on animal or human muscle power. Tibet’s
major external commercial route was then with India via animal pack
trains through the Chumbi Valley. China itself had three routes passable
by horse and animal pack trains; one from Xining in the north in today’s
Qinghai province; one via Kashgar in far-western Xinjiang; and one via
Changdou in today’s western Sichuan. Each of China’s three routes was
far longer than the Chumbi route to India. Calcutta was far closer to
Lhasa than was Changdou or Xian. Of the three Chinese routes, that via
Changdou was the fastest. By the mid-eighteenth century the Qing had
established a system of horse relay stations along this route. Until the
twentieth century, the fastest a person or information could travel from
China to Tibet was via galloping horse over the mountain ranges along the
Changdou route. Chinese armies were not stationed in Tibet, in large part
because the local primitive agriculture could not feed those armies, and
food shipped from China proper would be immensely expensive. This
relative isolation from China was a key basis for Tibet’s internationally
recognized status as an autonomous region under Chinese suzerainty (not
sovereignty) and for its role (at least from the British and Indian perspec-
tives) as a buffer between China and India.
Construction of motor roads into Tibet did not begin until 1950. From
that point on, road-building was a, perhaps the major People’s Liberation
Army (PLA) activity in Tibet. All three traditional Chinese routes were
turned into motor roads. Improvement was steady. New alignments and
deeper cuts moderated grades. Bridges spanned depressions. Tunnels were

drilled. Repair stations were set up. Dormitories and restaurants were built
to lessen the rigor for teamsters. By 1969 a pipeline from Xining to Lhasa
had been opened to deliver gasoline to support truck traffic, plus railway
and road construction, along the way. New roads were built in order to
better control border areas, counter-intrusions, and infiltration from
India; draw the rich mineral resources of Tibet into China’s industrializa-
tion drive; and modernize the economy and society of Tibet; all while
linking that region ever more closely to China. Crushed rock surfaces were
eventually paved. The Lhasa–Kathmandu highway, “the Sino-Nepali
Friendship Highway” one of the main east-west roads in southern Tibet,
was surfaced with asphalt only in the 2000s.13
Tibet entered the railway age only in 2006, when a rail line opened
linking Xining and Lhasa. Efforts to construct such a line had begun in the
1960s but had been abandoned in 1969. One reason for that suspension
was China’s continuing technological backwardness. Chinese construc-
tion equipment, which worked adequately at lower elevations, simply did
not have the power to operate effectively at high altitudes. Another short-
coming was inadequate understanding of engineering construction on
permanently frozen soil, permafrost. Regions of the Tanggula Mountains
that were to be transited by the Xining–Lhasa railway consisted of perma-
frost. Tanggula Pass itself stood at an elevation of 16,640 feet (5072
meters). Railways require exact and constant alignment, and permafrost
presents great difficulties in this regard. In the 1960s only two countries
in the world, the USSR and Canada, had mastered this critical technology,
and China was not in a position to acquire it from either. There were other
reasons, of course, for the 1969 suspension. But the point is that Tibet did
not enter the age of railways until the first decade of the twenty-first cen-
tury. When that happened, the political significance was great. One exam-
ple: following the opening of the Lhasa railway in 2006, India’s military
planners reduced from six months to three weeks the estimated warning
time India would have of a potential PLA assault from Tibet. Indian
defense planners now assumed that the time required by China to mobi-
lize a two-division force on the Tibet-Indian border was 20 days, down
from 90 days before the opening of the rail line. India’s military began
lobbying for a significant increase in road-building to counter China’s
increased capabilities. India raised and deployed new mountain divisions
were raised and deployed in or near the Himalayas, while its air forces were
also strengthened.
46 J.W. GARVER
The extension of the Xining–Lhasa rail line to Kathmandu in Nepal is

currently under way, with construction scheduled for completion in 2020.
The Lhasa–Shigatze section of the line opened in 2014. An eastern exten-
sion of the Lhasa railway to the village of Nyingchi is also planned.14
Nyingchi is near the far eastern end of India’s Arunachal Pradesh and is
situated between two passes—Tunga and Yonggrap—through the
Himalaya crest line in this region. One offensive during China’s 1962
punishment of India passed over this general alignment. A PLA railhead at
Nyingchi would constitute another adverse factor in the already grim situ-
ation India faces in terms of defending its northeastern states against a
potential Chinese assault. A Lhasa-Nyingchi railway will also constitute an
initial segment of an eventual Lhasa-Kunming railway, a line that would
represent a further strengthening of links between Tibet and east-coast
China. Again the broad point is that Tibet’s geopolitical role has been
transformed from that of a buffer separating the power of Chinese and
Indian states, to that of a platform for the projection of China’s power.
As Tibet’s railway and high-speed highway system approaches the level
of east-coast China and is increasingly tied to China’s east-coast cities,
China’s capacity to support direct PRC–Nepal trade will grow. Thickening
rail and road connections from Tibet to Nepal will also increase China’s
ability to counter Indian efforts to coerce Nepal by economic embargo. In
1988–1990 India implemented an embargo on Nepal when its king pur-
chased arms and signed an intelligence exchange agreement with China.
New Delhi felt these moves violated India’s fundamental security interests
and responded by closing all but two transit points to trade between Nepal
and China. Nepal was quickly brought to heel, while Beijing did little to
help it. The absence of rail connections between Tibet and Nepal severely
limited China’s ability to support Nepal in the face of Indian pressure, and
within 18 months Kathmandu had been induced to cancel the taboo
agreements with China. The absence of rail links was not the most impor-
tant influence on Chinese passivity at this juncture; the need to escape
post-Beijing Massacre opprobrium, and India’s importance in that regard,
was far more important. But the simple inability of Chinese transportation
networks to meet Nepal’s import needs was one factor in Beijing’s calcula-
tions. The opening of the Lhasa railway resulted in a large and rapid
increase of Sino-Nepalese trade.15 In 2005, the year before the Lhasa rail-
way opened, Chinese exports to Nepal were 9.32 percent of India’s
exports to that country. By 2012 China’s share of Nepal’s imports had
increased to 64 percent of India’s.16 China’s role as a consumer of Nepali
goods is minor—a mere 5 percent of India’s. Still, China’s ability to poten-

tially support Nepal in any future Indian strong-arming of Nepal has been
strengthened by the Tibetan railway.
The key point here is that the geopolitical significance of the Tibetan
plateau has been transformed by China’s application of modern transpor-
tation technology. For the first time in history Tibet is being integrated
into the mainstream of China’s national life, courtesy, in large part, of
modern transportation technology. Moreover, this vast piece of territory,
whose rugged remoteness has historically underpinned its role as a “buf-
fer” limiting Chinese power, has been transformed into a platform from
which Chinese power and influence is being projected.
The Pakistan and Myanmar Corridors

Pakistan and Myanmar have long been major transport corridors for
China. Those corridors are now being strengthened by ambitious Chinese
transport programs. Regarding Pakistan, in 1964 China began construc-
tion of a highway from Kashgar, south over the rugged Karakoram
Mountains to Pakistan. This is extremely difficult terrain, with very frac-
tured rock structures and steep-walled canyons following the upper Indus
River. Yet the road was passable by truck in 1969. The primary role of the
Karakoram highway at that juncture was as a secure route through which
China could resupply Pakistan in the event of another war with India. The
“Burma Road” between Kunming and Mandalay was also rooted in war;
China’s war of resistance against Japan, in this case. Work on the Burma
Road started in January 1939 after Japanese forces occupied China’s east
coast ports, and as a result China’s resistance forces needed a new channel
to procure munitions from third countries. Both the Karakoram highway
and the Burma Road have undergone a virtually continual process of
improvement since their inception. With the opening of China’s economy
after 1978 commercial considerations grew in importance.
In 2000 China undertook to construct a new commercial harbor at
Gwadar in Pakistani Baluchistan that was to be linked by rail and road to
Pakistan’s existing transport lines. Once complete, the Gwadar project was
projected to double Pakistan’s cargo throughput capacity. That project was
complete by the end of 2006 and was turned over to the Singapore Port
Authority for operation. US pressure on Pakistan reportedly resulted in
Singapore, rather than China, being given operational authority over the
new port. The Singapore Port Authority insisted, however, on o perating
48 J.W. GARVER
the port on a purely commercial basis, an approach which resulted in little

follow-on development of the new facility. This led in April 2015 to trans-
fer of operational responsibility, for a period of 40 years, from Singapore to
a Chinese entity. A month later China pledged $46 billion for sweeping
modernization of Pakistan’s infrastructure, including transport. Accelerated
construction of a railway linking Kashgar and Gwadar and a coastal high-
way linking Gwadar with Karachi were key parts of the expanded Chinese
effort. Chinese security personnel were to be deployed to Pakistan to guard
Chinese construction teams and their projects.
Turning to Myanmar, in 1985 a Yunnan specialist issued a report out-
lining how improvements in the Burma Road, utilization of the Irrawaddy
River for barge traffic, and shoreside loading facilities could combine to
link Yunnan and Sichuan provinces with ports on the Bay of Bengal.17
Dubbed “the Irrawaddy Corridor,” the project reflected Yunnan’s interest
in joining the ocean-based global import–export boom that was then
beginning to lift China’s east coast to comfortable mid-levels of develop-
ment. Again, the tyranny of distance exerted itself here. Guangzhou or
Shanghai were a lot further from Kunming than were Burmese ports on
the Bay of Bengal.
Political conditions for development of the Irrawaddy Corridor were
not propitious in the 1980s. Burma (as it was then still named) was in the
grip of an economic isolationism imposed by a “Buddhist socialist” mili-
tary dictatorship. A military coup in 1988, however, empowered a new
military clique, which began to open the economy. A brief experiment
with free elections then led to a bloody crackdown, followed in turn by
severe Western sanctions ostracizing Myanmar. The Chinese capital rushed
in to meet Myanmar’s needs. For a period of some 20 years (from the
bloodshed and cancellation of elections in 1988–1989 to limited political
liberalization and rapprochement with the West in 2011–2012), China
made great strides in moving forward with the Myanmar Corridor.
Components in place by 2015 include: an entirely new port with large
petroleum-unloading facilities at Kyaupauku on the north end of Ramree
Island, to feed Middle Eastern oil into a pipeline to Kunming; a new high-
way paralleling that pipeline; much-improved highways and alternate
routes along the general alignment of the old Burma Road; new bridges
over the Irrawaddy river at Magway; and refurbished ports at several cities
on the Bay of Bengal.18 China has also undertaken to construct a new,
modern north–south railway linking Yangong and Mandalay, replacing
the current decrepit line built by Britain in the 1930s. The term “Myanmar
Corridor” has fallen into desuetude, perhaps because that term seems too
China-centric. The currently favored nomenclature is Bangladesh, China,
India, Myanmar (BCIM), a phrasing that is clearly multilateral. We will
return to this point in the conclusion.
Objectives and Consequences
Several purposes of China’s ambitious transportation-construction efforts
are apparent. Expanded access to ports on the Indian Ocean, and at a
somewhat further reach via rail to the Middle East and Europe, will facili-
tate continued growth of China’s trade and the development of China’s
poorer western and southwestern regions associated with that growing
trade. Modern rail and highways, and the myriad commercial links that
will follow, will expand China’s influence in large regions of Eurasia.
Chinese investment in and provision of higher education services to the
expanding middle classes in emerging economies will probably become
important vectors of Chinese influence. When China’s ongoing economic
dynamism is contrasted with the far less successful economic performance
of Russia—the traditional and still preeminent holder of soft power in
Central Asia—it could well be that as new railways and superhighways link
that region ever more closely with China, the latter will gradually replace
Russia as the dominant soft-power holder in vast regions in Central Asia.
This may be an overly bold proposition, but we may be witnessing a rever-
sal of the historic turning point that came with the battle of Talas in ce
751 when an Arab army defeated a Tang army in today’s Kyrgyzstan. That
Umayyad victory at Talas shifted Central Asia from the B uddhist-Confucian
civilizational realm of East Asia to the emerging Islamic realm. Later
Russian conquests in the eighteenth and nineteenth centuries shifted
Central Asia to the Russian sphere. No armies are today forming up for
civilizational clashes; rather, profound issues of ethnic identity are involved
here. But it may be as well to recall that East Asia, centered around China,
formed a powerful civilization—and as this paper points out—that long-
standing geographic barriers to the expansion of that civilization’s influ-
ence are now collapsing. Whether intended or not, China’s application of
modern transport technology is helping contemporary rising China escape
the East Asia trap that hedged in imperial Chinese states.
More modestly, in terms of China’s current national security concerns,
Indian Ocean ports linked to China by rail and highway (and pipelines)
would diminish China’s vulnerability to any US naval blockade resulting
50 J.W. GARVER
from a conflict over Taiwan or Japan. In the event of such a blockade, US

forces could block third-country Indian Ocean ports only at the cost of vio-
lating the rights of neutral, non-belligerent powers under international law.
A Chinese focus westward could also help stabilize PRC–US relations.
The original proposal in October 2013 by the prominent strategist Wang
Jisi that China shift geopolitical focus away from the West Pacific toward
the regions to China’s west, maintained that such a shift would lessen
Sino-US conflict and expand Sino-US cooperation, even while strength-
ening China’s Eurasian position in order to counterbalance US global
dominance.19 According to Wang, US alliances with Western Pacific coun-
tries locked in territorial conflicts with China (i.e., Japan and the
Philippines) raised the prospect of a PRC–US military clash. Even if no
such clash occurred, the possibility created tension in PRC–US relations.
In Central Asia, however, the USA had no allies. Instead Washington and
Beijing shared an interest in drawing that vast and energy-rich region into
the global economy, both for the sake of purely economic gain and because
economic growth was seen by both Washington and Beijing as a counter
to religious extremism.
This convergence of PRC–US interests creates uncertainty for India.
Ever since the USA rethought its India policy in the aftermath of India’s
1998 nuclear tests, a gradually deepening India–US strategic partnership
has been premised on mutual concern about China’s growing power.
Across the George W. Bush and Barack Obama administrations, the USA
has sought to enhance India’s military and technological capabilities to
strengthen India as a balancer to China. At the same time, Washington has
sought neither to exclude the growth of Chinese influence in either the
Indian Ocean, where the USA welcomed China’s December 2008 entry
into the anti-piracy patrols in the Gulf of Aden, nor to stymie Chinese
infrastructure efforts in regions to India’s north such as Afghanistan and
Central Asia. For India, US non-opposition to what many Indians deem
China’s “creeping encirclement” raises questions over the reliability of the
US as a backer against China. A full-scope alliance with the USA would be
one way for India to deal with these uncertainties. But there are several
major obstacles to an India–US alliance; most importantly, traditionally
and currently, the USA’s China policy has sought/seeks to cooperate with
China, not contain it. Expanded Indian cooperation with Japan is more
plausible, especially after the successful final passage in September 2015 of
Shinzo Abe’s reinterpretation of Article Nine of Japan’s constitution.
China’s seeming creeping encirclement of India by land and by sea,

combined with Japan’s deepening apprehension of China’s naval power,
could see the emergence of a Japan–India coalition to balance against
China. Under such an arrangement the USA would be torn between two
traditional but increasingly conflicting strategic objectives: coopting China
to long-term partnership with the USA, or preventing any power from
achieving hegemony over greater East Asia and thereby endangering US
security and interest. The decisive factor that will influence US alignment
one way or the other will probably be, in this author’s view, the skill of
Chinese diplomacy. Confrontational Chinese policies will push its neigh-
bors into alignment against it. Skillful and subtle Chinese diplomacy may
succeed in dividing India, Japan, and the USA. Either way, the interna-
tional context of China’s sweeping Eurasian infrastructure programs will
play a significant role.
Notes
1. Jean-Marc F. Blanchard, “China’s Twenty-First Century Maritime Silk
Road Initiative and South Asia: Political and Economic Contours,
Challenges, and Conundrums.” Geopolitics, 22, no. 2 (2017), 246–268.
2. This thesis, of geography conspiring to confine Chinese power to East
Asia, was developed most famously by C.P. Fitzgerald, The Chinese View of
Their Place in the World (Cambridge: Harvard University Press, 1964).
3. This is discussed in John Garver, China’s Quest: Foreign Relations of the
People’s Republic of China (New York: Oxford University Press, 2016).
4. Soviet efforts to defend the Chinese Eastern Railway against Japanese and
Chinese encroachment is investigated in George Alexander Lensen, The
Damned Inheritance: The Soviet Union and the Manchurian Crises
1924–1935 (Tallahassee: The Diplomatic Press, 1974). Stalin’s recovery
and defense of the same rights against China after Japan’s 1945 defeat is
described in O. Edmund Clubb, China and Russia: The “Great Game”
(New York: Columbia University Press, 1971).
5. This is described in John Garver, “Development of China’s Overland
Transportation Links with Central, Southwest, and South Asia, China
Quarterly 185 (2006), 1–22.
6. Tansen Sen, Buddhism, Diplomacy, and Trade: The Realignment of Sino-
Indian Relations, 600–1400 (Honolulu: University of Hawaii Press, 2003).
7. Owen Lattimore, Inner Asian Frontiers of China (Boston: Beacon Press,
1940).
52 J.W. GARVER
8. Significantly, the west-to-east movement of Europeans (and an occasional

Arab—Muhammad Ibn Battuta, 1309–1369) was not matched by an east-
to-west flow of Chinese adventurers, merchants, and missionaries. One of
the most astonishing facts of this era is that while probably hundreds of
Europeans began arriving in China during this era, apparently not a single
Chinese person was tempted to head west over the great Mongol Silk Road
to find out where these Westerners were coming from. The exception to
this was, of course, Zheng He, with his voyages of exploration in the
Indian Ocean between 1403 and 1431. But even Zheng He never contin-
ued on to Europe.
9. This logic is explained by Walter A. McDougall, Let the Sea Make a Noise:
A History of the North Pacific from Magellan to MacArthur (New York:
Basic Books, 1993), 25–31. McDougall’s description of Pacific Ocean cur-
rents is confirmed by Atlas of the World, 7th edition (Washington, DC:
National Geographic Society, 1999), 127–128.
10. An interesting but far-fetched argument to the contrary is, Gavin Menzies,
1421: The Year China Discovered America (New York: Harper Collins,
2003).
11. These matters of ship design are discussed in Alan McGowan, Tiller and
Whipstaff: The Development of the Sailing Ship, 1400–1700 (London: Her
Majesty’s Stationery Office, 1981).
12. An interesting literature on this early modern East Asian maritime econ-
omy has emerged over the last several years. For example, Tonio Andrade,
Lost Colony: The Untold Story of China’s First Great Victory over the West
(Princeton: Princeton University Press, 2011).
13. This author traveled over this road twice as far south as Dingri near the
cut-off to the Everest base camp. The first trip was in 1998, the second in
2006. During the first trip only sections of the highway through towns
were hard surfaced. By 2006, the entire road was paved.
14. “Qinghai-Tibet Railway”, Wikipedia, https://en.wikipedia.org/wiki/
Qinghai%E2%80%93Tibet_Railway.
15. John Garver, “The Diplomacy of a Rising China in South Asia,” Orbis 56,
no. 3 (2012), 400.
16. International Monetary Fund, Direction of Trade Statistics, http://
elibrary-data.imf.ort/DataReport.aspx? It is impossible to determine from
this data what percentage of Sino-Nepali trade comes overland, as opposed
to sea and transit via Indian territory. To the extent that China’s trade
transits India, this argument for the strengthening of China’s ability to
support Nepal in the event of another economic embargo would not hold.
17. Pan Qi, “Opening to the Southwest: An Expert Opinion,” Beijing Review
(September 2, 1985), 22–23.
18. A map depicting the Irrawaddy Corridor is available in John Garver, The
Protracted Contest: Sino-Indian Rivalry in the Twentieth Century (Seattle:
University of Washington Press, 2001), 268.
19. Wang Jisi, “‘Xi Jin,’ Zhongguo diyuan zhanlue de zai pingheng”
[“‘Marching westward’: China’s Geostrategic Rebalance],” Huanqiu
shibao [Global Times], October 17, 2012, http://opinion.huanqiu.com/
opinion-world/2012-10/3193760.html.
References
Andrade, Tonio, Lost Colony: The Untold Story of China’s First Great Victory over
the West. Princeton: Princeton University Press, 2011.
Blanchard, Jean-Marc F. “Probing China’s Twenty-First-Century Maritime Silk
Road Initiative (MSRI): An Examination of MSRI Narratives.” Geopolitics 22,
no. 2 (2017): 246–68.
Clubb, Edmund O., China and Russia: The “Great Game.” New York: Columbia
University Press, 1971.
Fitzgerald, C.P. The Chinese View of Their Place in the World. Cambridge: Harvard
Garver, John, China’s Quest: Foreign Relations of the People’s Republic of China.
New York: Oxford University Press, 2016.
Garver, John, “Development of China’s Overland Transportation Links with
Central, Southwest, and South Asia, China Quarterly, No. 185 (2006): 1–22.
Garver, John, The Protracted Contest, Sino-Indian Rivalry in the Twentieth
Century. Seattle: University of Washington Press, 2001.
Garver, John, “The Diplomacy of a Rising China in South Asia,” Orbis 56, no. 3
(2012): 391–411.
George, Alexander, The Damned Inheritance; the Soviet Union and the Manchurian
Crises 1924–1935, Tallahassee: The Diplomatic Press, 1974.
International Monetary Fund, Direction of Trade Statistics. http://elibrary-data.
imf.ort/DataReport.aspx?
Lensen, George Alexander, The Damned Inheritance: The Soviet Union and the
Manchurian Crises 1924–1935. Tallahassee: The Diplomatic Press, 1974.
Lattimore, Owen, Inner Asian Frontiers of China. Boston: Beacon Press, 1940.
McDougall, Walter A. Let the Sea Make a Noise: A History of the North Pacific from
Magellan to MacArthur. New York: Basic Books, 1993.
McGowan, Alan, Tiller and Whip staff: The Development of the Sailing Ship,
1400–1700. London: Her Majesty’s Stationary Office, 1981.
Menzies, Gavin, 1421: The Year China Discovered America. New York: Harper
Collins, 2003.
Pan, Qi, “Opening to the Southwest: An Expert Opinion,” Beijing Review,
September 2, 1985: 22-23.
54 J.W. GARVER
“Qinghai-Tibet Railway”, Wikipedia. https://en.wikipedia.org/wiki/

Qinghai%E2%80%93Tibet_Railway.
Sen, Tansen, Buddhism, Diplomacy, and Trade, The Realignment of Sino-Indian
Relations, 600–1400. Honolulu, University of Hawaii Press, 2003.
Wang, Jisi, “‘Xi Jin,’ Zhongguo diyuan zhanlie de zai pingheng” [“‘Marching
westward’: China’s geostrategic Rebalance], Huanqiu shibao, October 17,
2012. http://opinion.huanqiu.com/opinion-world/2012-10/3193760.html.
CHAPTER 3
The MSRI and the Evolving Naval Balance

in the Indian Ocean
David Brewster
Control over access to the Indian Ocean, whether by land or by sea, is

often seen through an intensely strategic lens. For centuries, major actors
have sought to use geographical constraints to maintain the Indian Ocean
and its littoral as a relatively closed strategic space that could be dominated
by naval power. The Indian Ocean has only a few narrow maritime entrance
points and the ocean is not well connected with the interior of the Eurasian
continent—overland links between the ocean and the hinterland are few
and extremely valuable. These factors have contributed to the historical
domination of the region by a succession of extra-regional maritime pow-
ers and the virtual exclusion from the region of major Eurasian land pow-
ers such as China. But these constraints are not immutable. Indeed,
China’s Maritime Silk Route Initiative (MSRI), involving the construction
of new maritime pathways across the Indian Ocean and related overland
linkages, has the potential to alter the Indian Ocean naval balance and the
entire strategic nature of the region.
This chapter is divided into four parts. It first describes how the geog-
raphy of the Indian Ocean has historically led to its control by a succes-
sion of extra-regional maritime powers. Second, it describes the evolving
naval balance in the Indian Ocean, including China’s growing interests
D. Brewster (*)
National Security College, Australian National University, Canberra, Australia

DOI 10.1007/978-981-10-5239-2_3
56 D. BREWSTER
there. Third, it examines China’s growing interests in Indian Ocean ports

(now as part of the MSRI) and the differing narratives attached to these
developments—should we see these primarily in security or economic
terms, or both? Fourth, this chapter discusses Beijing’s plans to build new
overland pathways to connect China with the Indian Ocean, and the
potential strategic impact of these pathways on China and the region.
The chapter concludes that:
• China’s naval interests in the Indian Ocean are growing alongside its
maritime trade across the Indian Ocean, and this will likely include
establishing a naval presence at several Indian Ocean ports.
• These developments can be seen as part of growing number of mari-
time security interactions between the Pacific and Indian Oceans,
expressed through the idea of the “Indo-Pacific.”
• The new overland routes being built between China and Indian
Ocean have the potential to fundamentally change the nature of
China’s security relationships in the region.
• All of these factors may mean that in the long term China may
increasingly regard itself as a resident power in the Indian Ocean, not
just as an extra-regional power.
The Strategic Geography

of the Indian Ocean Region
The particular geography of the northern Indian Ocean region has made it
a semi-enclosed strategic system in which extra-regional maritime powers
have historically predominated over the ocean and much of the littoral.
The Indian Ocean is largely enclosed on three sides, with few maritime
entry points from other oceans and seas and vast distances between major
ports. This creates a strategic premium for powers that are able to gain
control of the so-called maritime “chokepoints” and deny their rivals access
to ports within the region.
There is also an unusual scarcity of overland pathways between the
Indian Ocean and the Eurasian hinterland, reflecting formidable geo-
graphic barriers. Mountain ranges, deserts, and jungles extend across
southern Asia, cutting off much of the continent from easy access to the
sea. Indeed, until well into the twentieth century, there were no major
transport routes—roads, railways, or rivers—connecting the Indian Ocean
THE MSRI AND THE EVOLVING NAVAL BALANCE IN THE INDIAN OCEAN 57
with the Eurasian hinterland. This disconnect has caused major Eurasian
continental powers such as China to be economically and politically ori-
ented away from the Indian Ocean and has severely limited their presence
and influence in the region. Instead the Indian Ocean region has been
dominated by a succession of extra-regional maritime powers.
The Portuguese adventurer and imperialist Afonso de Albuquerque first
used a maritime chokepoint strategy in the fifteenth century in an attempt
to transform the Indian Ocean into a mare clausum (or “closed sea”) over
which Portugal had exclusive jurisdiction. The strategy of gaining control
of the Indian Ocean chokepoints has been more or less followed by a string
of maritime powers, including the Netherlands and Britain. Albuquerque’s
ideas continue to influence strategic thinking about the Indian Ocean.
Competition among major powers for control of overland access to the
Indian Ocean has been just as intense as competition at sea. The scarcity
of connections between the Indian Ocean littoral and the Eurasian hinter-
land means that the development of even a few routes into the hinterland
could have a considerable impact on the naval balance in the region.
Indeed, the extra-regional maritime powers that have dominated the area
for the last few centuries have acted several times to prevent Eurasian con-
tinental powers from developing new overland pathways to the ocean.
As part of the geopolitical jostling of the “Great Game,” Imperial
Britain saw any plans by continental powers to develop railways and ports
connecting to the Indian Ocean as threatening its control of India and the
region. In the late nineteenth century, Britain stopped Russian proposals
to build a railway across Persia to the port of Bandar Shahpur on the
Persian Gulf by creating a sphere of influence over southern Persia that
essentially gave it a veto over the project.1 A few years later, Britain ensured
Germany’s Baghdad Railway through Mesopotamia would not affect the
naval balance in the Indian Ocean by declaring a protectorate over the
Sheikhdom of Kuwait. In the 1980s, Washington (incorrectly) perceived
the Soviet intervention in Afghanistan as motivated by ambitions to create
a Soviet sphere of influence in southern Asia and establish a warm-water
port at Gwadar.
Importantly, these overland pathways or gateways operate in two direc-
tions, and control over them also has the potential to alter the strategic
balance in the Eurasian interior. During World War II, the United States
of America (USA) and Britain supplied vital war material to the Soviet
Union through Persia and to Nationalist China through Burma, which
played a critical role in ensuring these powers continued to fight against
58 D. BREWSTER
the Axis Powers, Germany and Japan. During this period, Burma and
Persia acted as essential, if tenuous, gateways between the Indian Ocean
and the Eurasian hinterland. The strategic importance of Burma/Myanmar,
and potentially also Pakistan, as gateways between the Indian Ocean and
the Eurasian hinterland is now reasserting itself, primarily due to China’s
ambitions to carve new overland pathways, through mountain ranges,
jungles, and deserts, to the ocean. The impact of these new pathways and
related transportation technologies (such as railways) in allowing China to
break out of its historical confines is explored in John Garver’s contribu-
tion to this volume (Chap. 2).
The Indian Ocean Naval Balance

The USA has been the predominant naval power in the Indian Ocean
since the early 1970s, the latest of a succession of extra-regional powers
that have dominated this ocean for around 500 years. The US Navy is
principally focused on securing the Persian Gulf and its surrounds and the
sea lines of communication that carry energy from there to the USA and
its allies in Europe and East Asia. By providing these international “public
goods,” the USA gains the benefit of access to ports and military facilities
in the territories of friends and allies throughout the Indian Ocean, includ-
ing large US naval bases at Diego Garcia and Bahrain.
Increasingly, the USA is encouraging other powers, such as India, to
take a greater share of security responsibilities in the region. Over the last
decade US reliance on energy imports from the Persian Gulf has dropped
dramatically, reducing the region’s strategic importance to Washington.
Simultaneously, as part of its Asian ‘rebalance’ strategy, the USA hoped to
devote a much greater proportion of its defense resources to East Asia,
which would in part require a reduction in the defense resources devoted
to the Persian Gulf. This has given Washington good reason to encourage
India to build its naval capacity and become a ‘net security provider’ to an
expanded region that includes much of the Indian Ocean.
India has long harbored aspirations to become the dominant power in
the Indian Ocean. It considers itself the leading Indian Ocean state and as
destined to be a natural leader of the region. Though few Indian officials
might care to publicly admit it, many in New Delhi see the Indian Ocean as
more or less “India’s ocean.”2 As Donald Berlin commented, “New Delhi
regards the Indian Ocean as its backyard and deems it both natural and
desirable that India function as, eventually, the leader and the predominant
influence in this region—the world’s only region and ocean named after a
single state.”3 Many Indian strategic thinkers aspire to create a defensive
sphere of influence in the Indian Ocean within a more or less closed strate-
gic system. They apply geostrategic perspectives that are sometimes strik-
ingly similar to those of the British Raj.4 These include a somewhat
proprietary attitude towards the Indian Ocean and deep instinctive fears
about the potential for Asian land powers to penetrate the protective
Himalayan barrier that separates India from the Eurasian hinterland, a
nightmare that seemed about to come true during the Sino-Indian border
war of 1962.5
K. M. Panikkar, often regarded as the father of Indian naval strategy,
adopted British imperial thinking about the need for India to exercise
control over the entire Indian Ocean based on control of the maritime
chokepoints and major ports between.6 Panikkar was the exemplar of stra-
tegic thinking about the Indian Ocean as a closed system, advocating that
India should create a “steel ring” through controlling the farthest reaches
of the Indian Ocean.7 Indian strategic thinking continues to be strongly
influenced by his work, and this has contributed to India’s particular sen-
sitivity over the control of ports in the Indian Ocean and the development
of new overland pathways into the hinterland that may undermine the
closed nature of the system.8 Panikkar’s most famous book, India and the
Indian Ocean: An Essay on the Influence of Sea Power on Indian History,
deliberately named after the famous work by the nineteenth-century US
naval strategist Alfred Thayer Mahan, remains foundational to Indian stra-
tegic thinking about the Indian Ocean.
Over the last decade or so, China’s naval interests in the Indian Ocean
have also grown, more or less in line with its interest in protecting its trad-
ing routes across the northern Indian Ocean, particularly the routes car-
rying energy from the Persian Gulf. China had no material naval presence
in the Indian Ocean during the twentieth century but over the last decade
its regional role has grown, particularly in connection with its anti-piracy
deployments in the western Indian Ocean. Since December 2008, China’s
PLA Navy (PLAN) has almost continually had two–three surface vessels
in the Arabian Sea, in at least 24 separate deployments. In the last few
years the PLAN has also deployed conventional and nuclear submarines
and amphibious warships to the northern Indian Ocean as a part of its
familiarization exercises and as a demonstration of its capability to respond
to multiple threats. But China’s ability to project naval power into the
Indian Ocean is highly constrained: China is disadvantaged by the long
60 D. BREWSTER
distances from its home ports in the Pacific, its need to deploy its naval
forces to the Indian Ocean through narrow chokepoints in Southeast
Asia, and the limited and uncertain logistical support that it can access
when it arrives. Nevertheless, China’s growing naval presence in the
Indian Ocean, and particularly Beijing’s search for dependable access to
logistical support for its navy, is of major concern to India, which sees it as
presenting a significant challenge to its own strategic aspirations.
China’s New Maritime Pathways in the Indian Ocean

Anxieties over the control of ports are again at the forefront of strategic
thinking about the Indian Ocean. Since the turn of this century, as shown in
various chapters in this book, Chinese companies have been involved in the
construction, expansion, or operation of numerous commercial port facilities
in the northern Indian Ocean, including at Gwadar (Pakistan), Hambantota
and Colombo (Sri Lanka), Kyaukpyu (Myanmar), Lamu (Kenya), and
Bagamoyo (Tanzania); and several others (such as Sonadia in Bangladesh)
have been proposed.9 These projects are not just focused on the Indian
Ocean, but are part of Chinese investment in port infrastructure throughout
the world, which is apparently driven by the motivations of vertically inte-
grating China’s trading activities. Hutchinson Whampoa, a privately owned
Hong Kong conglomerate, claims to be the world’s leading port investor,
developer, and operator, with a network comprising 52 ports in 26 coun-
tries.10 Chinese state-owned companies have also acquired major stakes in
the ports of Antwerp/Zeebrugge, Piraeus, Lomé, Suez, Djibouti, Gwadar,
Karachi, Colombo, Hambantota, Chittagong, Kyaukpyu, and Singapore, as
well as smaller investments in the US ports of Seattle and Los Angeles.11
China is also believed to be interested in taking a stake in the Panama Canal
and constructing rival linkages between the Pacific and Atlantic Oceans.12
In considering the geoeconomic significance of these projects, it is use-
ful to broadly differentiate them by economic function. The first category
is that of the service ports such as the proposed port of Sonadia in
Bangladesh, which are primarily aimed at servicing imports/exports for
local markets. The second category covers the hub ports such as
Hambantota and Colombo in Sri Lanka, whose principal purposes are
those of regional transshipment hubs, servicing huge ships carrying more
than 18,000 containers and transshipping them onto smaller ships to con-
nect with smaller feeder ports. The functionality and profitability of these
hubs depend on having a critical mass of throughput, just as airport hubs
require sufficient passenger numbers to support frequent feeder services.

The third category consists of what could be called “gateway” ports such
as Gwadar in Pakistan and Kyaukpyu in Myanmar, whose purpose is to
connect the Indian Ocean with China via new overland transport corri-
dors. The viability of these gateway ports will depend on the viability of
the overland connections (road/rail/river/pipelines) that feed them.13
China has been involved in two controversial hub port developments in
Sri Lanka. At Hambantota in southern Sri Lanka, close to the sea lanes that
round the southern tip of India, Chinese entities funded the development of
a new port and an associated airport in 2010. A proposed expansion of this
port would be operated by a Chinese company and allocate berthing space
to Chinese shippers. However hopes that Hambantota would become a
regional transshipment hub for southern India have not yet been realized.
Chinese companies have also funded the 2013 expansion of the existing port
of Colombo. Colombo already acts as a major transshipment hub to India,
carrying some 13 percent of India’s container traffic, which could potentially
rise to 28 percent if the expanded port were operating at full capacity.14
Another controversial project is at Gwadar in western Pakistan, about
600 km east of the Strait of Hormuz. China has sponsored the develop-
ment of a deepwater port, a new airport, and road connections to Karachi.
The Singapore Ports Authority initially operated the port, intending for it
to become a transshipment hub,15 but in 2012 a Chinese state-owned
company took over as operator.16 Gwadar has so far had little commercial
success. It has not been able to compete with existing regional hubs in
Dubai, the United Arab Emirates, and Oman for regional transshipment
trade.17 The port’s infrastructure connections with other parts of Pakistan
are also poor. Since its failure as a transshipment hub, the principal eco-
nomic justification for Gwadar is now claimed to be its future role as the
gateway port for a new China–Pakistan Economic Corridor (CPEC) that
would connect China with the Indian Ocean through Pakistan, as further
described in Jabin Jacob’s chapter (Chap. 5).
China’s port projects in the Indian Ocean are the subject of several com-
peting narratives which alternatively emphasize their political-strategic or their
economic significance. Some security analysts claim that China is following
what has become known as a “String of Pearls” tactic—essentially a Mahanian
strategy of building a chain of naval bases across the northern Indian Ocean
that would be used by the Chinese navy to protect China’s trade routes and
potentially dominate the Indian Ocean. Beijing offers its own “de-securitized”
narrative of economic development, as part of the MSRI.
62 D. BREWSTER
The “String of Pearls” Narrative

Over the last decade or so many security analysts have claimed that
Chinese-sponsored port projects are part of a concerted plan by Beijing to
develop a so-called “String of Pearls” or a string of naval bases across the
Indian Ocean.18 These bases could be used by the PLAN to protect
China’s sea lines of communication (SLOCs) across the Indian Ocean
from conventional or unconventional threats, and to potentially interdict
maritime trade by others. This theory assumes that China is building a
maritime pathway across the Indian Ocean so that China can ultimately
become the dominant naval power in the region in a manner similar to the
USA and Britain before it.
This narrative in its various forms is at its strongest in India, to a large
extent reflecting the continuing influence there of Mahanian strategic
thought. Alfred Thayer Mahan was a strong advocate of the connection
between naval power and great power status. He foresaw decisive engage-
ments between main battle fleets of great powers and emphasized the need
for navies to ensure access to a chain of logistics stations in order to project
power at long distances. Mahan’s influence has long ago receded in the
West. Most European states for example now see their navies primarily in
terms of providing maritime security on a cooperative or collective basis
rather than primarily as instruments of power projection. Mahan now
tends to be associated with outdated and self-fulfilling ideas of zero-sum
naval rivalry between competing nineteenth-century empires.19
But Mahanian thought has reflowered in both China and India, par-
ticularly among those who see naval power as an indispensable element in
their country’s reach for great power status and, in turn, access to ports
and way stations as essential for the projection of naval power.20 According
to an analysis of Chinese naval thinking by Yoshihara and Holmes,
“Judging from available literature, Mahan’s more nuanced assessments of
sea power have yet to sink in … They accept at face value, for example, the
notion that Mahan’s single-minded purpose was to persuade nations to
build navies able to settle economic disputes through force of arms.”21 In
their interpretations of Mahan, Indian and Chinese naval analysts tend to
see the strategic actions of the other in zero-sum terms. Both Indian and
Chinese strategists also frequently, if mistakenly, cite Mahan as claiming
that “Whoever controls the Indian Ocean controls Asia” as justification
for an argument that there is a “Great Game” afoot for the control over
the Indian Ocean.22 Given this, it is not surprising that many Indian naval
analysts interpret Chinese actions in classical Mahanian terms: that China

is building a series of bases and way stations across the Indian Ocean so
that it can become the dominant naval power in the region.23
Chinese naval vessels are increasingly using a number of ports across
the northern Indian Ocean. Port visits by Chinese submarines to Colombo
in late 2014 were particularly controversial, provoking a strong reaction
from Delhi.24 The fact that the Chinese submarines used new commercial
port facilities at Colombo that had been constructed by a Chinese com-
pany seemed to some to give credence to the String of Pearls narrative. As
noted in David Karl’s chapter (Chap. 6), which focuses on China, the
MSRI, and Sri Lanka, this incident may have contributed to the ouster of
the Rajapaksa government in Sri Lanka only a few weeks later, perhaps the
first instance in which China’s naval activities in the Indian Ocean have
contributed to regime change.
For years China flatly denied any intention to establish any overseas
military bases in the Indian Ocean (or elsewhere), claiming that this was a
strategy used by “imperialist” Western powers.25 But this rhetorical posi-
tion has become difficult to sustain, particularly since Beijing opened new,
exclusive-use port and other military facilities at Obock in Djibouti to
support its naval activities in the western Indian Ocean.26 There are also
reports that Pakistan has encouraged China to establish a naval base at
Gwadar, and Beijing is deploying marines there probably as a forerunner
of a broader military presence.
But this should not necessarily be taken to indicate that China seeks
naval dominance over the sea lanes across the Indian Ocean in the manner
of previous great naval powers. There are considerable doubts about the
military value of ports such as Obock, Gwadar, or Hambantota to the
PLAN in the event of conflict with another major power such as India or
the USA. The cost of necessary investments and the exposed position of
these ports may make their utility questionable against an enemy equipped
with long-range precision-strike capability.27 China’s new facilities in
Djibouti, for example, will be located relatively close to naval facilities
operated in Djibouti by France, the USA, and Japan. As one Chinese ana-
lyst commented, given the distances separating any Chinese interests in
the Indian Ocean, these ports would look more like “sitting ducks” than
a String of Pearls.28 As yet there is little firm evidence that Beijing intends
to establish a “string” of permanent naval bases across the northern Indian
Ocean in a manner analogous to, say, the strategy of the Royal Navy in the
nineteenth century or US worldwide naval strategy post-1945.
64 D. BREWSTER
Senior analysts, particularly in the USA, are now debating whether

China may primarily be pursuing a “places not bases” strategy in the
Indian Ocean under which the PLAN would only have access to limited
facilities, and then only for specific purposes or contingencies. A report by
the US Institute for National Strategic Studies concludes that although
China has a significant need for military basing facilities in the Indian
Ocean region it is unlikely to construct dedicated military facilities there
for the purpose of supporting major combat operations.29 China may
instead prefer arrangements for contingent and limited access to critical
infrastructure in countries with which it has friendly and stable relation-
ships. These could range from standing agreements for PLAN vessels to
use port facilities on a commercial basis, to the positioning of Chinese
“civilian” service providers, to the prepositioning of spares or munitions,
to the use of facilities dedicated to the PLAN. At least for the moment,
China’s new facilities in Djibouti do not appear to be inconsistent with
this latter interpretation.
Crucially, it is also difficult to see how the PLAN could, in any reason-
able scenario, substantially alter the fundamental strategic vulnerability of
China’s SLOCs across the Indian Ocean.30 The great triangle of Indian
subcontinent that juts south from Eurasia dominates the entire northern
Indian Ocean, giving India a natural centrality in the region. In the mari-
time realm, the Indian Ocean represents “exterior lines” for China and
“interior lines” for India.31 India has considerable advantages in the Indian
Ocean, including short lines of communication to its own bases and
resources. China has corresponding disadvantages, including the need to
deploy its naval forces to the Indian Ocean through narrow and dangerous
chokepoints and then cope with very uncertain logistical support when it
arrives. As a result, unlike other dimensions of strategic competition
between India and China, the Indian Ocean is one area where India holds
a clear military advantage over China. As the former Indian Chief of Naval
Staff, Admiral Mehta, once commented, “The weak area for China today
is the Indian Navy. We sit in the Indian Ocean and that is a concern for
China and they are not happy as it is not so easy for them to come inside.”32
In summary, while China’s naval capabilities in the Indian Ocean are
growing it may need to pursue a different strategy in that theatre in the
manner comparable to that of the USA or Britain. Control over the entire
northern Indian Ocean would be well beyond China’s capabilities in any
reasonable time frame in view of its geostrategic disadvantages. More
plausibly, China may instead seek to gradually develop a more limited
naval presence, including capabilities focusing on so-called Military

Operations Other Than War (MOOTW) such as anti-piracy and noncom-
batant evacuations of Chinese citizens. China might also seek to reinforce
limited sea denial capabilities to provide asymmetrical options in the event
of the interdiction of Chinese SLOCs or other contingencies.
Despite the claims of some, China’s naval capabilities in the Indian
Ocean are likely to be relatively constrained for some time to come, and
there is little evidence as yet that China intends to pursue a strategy of
achieving naval predominance across the region in the manner of previous
major naval powers.
China’s Silk Route Narrative

China offers a very different narrative from the “String of Pearls” debate.
Beijing argues that as part of its “peaceful rise”, Chinese companies are
building ports in the Indian Ocean region for the economic benefit of all
concerned. China has sought to reframe and de-securitize debate about its
maritime interests in the Indian Ocean through bundling its existing inter-
ests and future plans in the region into the MSRI, which is positioned as the
maritime version of the “One Belt, One Road” (OBOR) initiative. As noted
in the introduction by Jean-Marc F. Blanchard, the MSRI would involve the
construction of a chain of ports, logistical stations, storage facilities, and free-
trade zones in Southeast Asia and across the northern Indian Ocean. The
MSRI will focus on infrastructure construction, including ports and free-
trade zones in Pakistan, Sri Lanka, and Bangladesh and in addition to provid-
ing finance China will play a role in coordinating customs, quality supervision,
e-commerce, and other agencies, to facilitate the scheme (see Amitendu
Palit’s chapter, Chap. 8).33 This might essentially be seen an attempt to
“rebrand” China’s existing maritime infrastructure interests and future plans
in the Indian Ocean under the umbrella of a single coherent plan.
China claims to be building an economic and not a military pathway
across the Indian Ocean as part of a policy of promoting peaceful trade
and development. Over the last several years, many Chinese writers have
sought to reinforce the narrative of China as a naturally non-hegemonic
trading partner through publicizing the exploits of the Chinese Admiral
Zheng He, who in the early fifteenth century led several huge fleets of
Chinese vessels on exploration and trading missions over much of the
Indian Ocean and perhaps beyond into the Atlantic.34 The apparently
peaceful expeditions led by Admiral Zheng are often contrasted with the
66 D. BREWSTER
imperialistic European traders who entered into and began colonizing the
Indian Ocean littoral only a few years later. According to one writer in the
Global Times, Zheng He “did not invade, colonize or swindle, but went for
trade along with spreading amity and cracking down on piracy. Zheng He’s
fleet received welcome and assistance from the countries along the route,
and touching stories about Zheng He are still being told to this day.”35
It seems unlikely at time of writing that China will be able to organize the
Indian Ocean region to support the MSRI as part a single plan. Although
China has invited India to participate in the MSRI, Delhi views the initiative
with considerable suspicion. Indian Foreign Secretary S. Jaishankar called the
MSRI: “A [Chinese] national initiative devised with national interest, it is not
incumbent on others to buy it. Where we stand is that if this is something on
which they want a larger buy in, then they need to have larger discussions,
and those haven’t happened.”36 In May 2017, India refused to send repre-
sentatives to China’s international OBOR conference, which was intended to
showcase its new international leadership role among regional and world
leaders. But several other states in the region have indicated their desire to
participate in the MSRI project. Sri Lanka, in particular, has been an enthusi-
astic partner in the project, seeing it as a way of capitalizing on its location
midway across the Indian Ocean near the major sea lines of communication.
Beijing has not been entirely forthcoming about the details for the
MSRI, and the plan is still evolving. While much of the public discussion
about the MSRI has focused on China’s plans to develop ports and related
infrastructure, possibly of greater significance is the intention to develop
new production and distribution chains across the region, with China at
their center – perhaps something akin to Japan’s “Flying Geese” strategy
in the 1970s. This could drive the economic integration of much of the
northern Indian Ocean region with China in a manner similar to the eco-
nomic integration of Southeast Asia with China seen in recent decades,
with considerable strategic consequences for the region.
China’s New Overland Pathways to the Indian Ocean

China’s plans to build overland connections between China and the
Indian Ocean—essentially the landward element of the MSRI—could
perhaps have even greater strategic significance than the strictly maritime
elements of the MSRI. China’s OBOR project as a whole would involve
carving a series of new pathways across the Eurasian continent, better
connecting China with Russia, Europe (via Central Asia), and the Indian
Ocean (via Myanmar and Pakistan). As will be argued later, the new
north–south pathways between the Eurasian hinterland and the Indian
Ocean may have greater strategic significance for the Indian Ocean region
than Chinese interests in its ports. The two key overland pathways to the
Indian Ocean would run through from the western Chinese province of
Xinjiang through Pakistan to Gwadar and from the southern Chinese
province of Yunnan through Myanmar to the Bay of Bengal.
The “Southern Corridor” through Myanmar would involve several
new connections to the Indian Ocean, including the Kunming–Yangon
road and river route, links to a new port at Kyaukpyu, and potentially, a
more ambitious Bangladesh China India Myanmar (BCIM) Corridor
through Myanmar and Bangladesh to India. Although the Kunming–
Yangon road-river route was under development for more than a decade,
it was not fully implemented as the Myanmar government stalled plans for
a new intermodal port at Bhamo on the Irrawaddy river. According to one
report, Myanmar’s former leader, General Than Shwe, did “not want to
see Chinese flags on the Irrawaddy river.”37
China has also developed the Kyaukpyu–Yunnan route as a new con-
nection to the Bay of Bengal; this work included the construction of a
deepwater port at Kyaukpyu and parallel oil and gas pipelines to Yunnan
province at a cost of more than USD $2.5 billion. The gas pipeline will
carry up to 12 billion cubic meters of gas annually from Myanmar’s off-
shore gas fields in the Bay of Bengal. The oil pipeline, with a capacity of
12 million tonnes of oil per annum, was built to transport oil direct to
China, avoiding the Malacca Strait and cutting shipping distances by
1200 km. The financial justifications for the oil pipeline are somewhat
questionable: one analyst has estimated that it will cost some USD $4
per barrel to deliver oil to Yunnan province by the pipeline, as compared
with some USD $2 per barrel if shipped via China’s Pacific coast.38 It
appears that the decision to build the oil pipeline was heavily influenced
by strategic considerations, principally Beijing’s concerns over creating
new oil supply routes that did not transit the Malacca Strait.39 But the
strategic value of Kyaukpyu port for China is limited by the lack of road
and rail links. The Kyaukpyu corridor was originally intended to also
include a 1200-km railway to Kunming, to be built at an estimated cost
of USD $20 billion. However, it seems that many in the Myanmar lead-
ership (both military and civilian) are uneasy over the strategic implica-
tions of the rail project, and there are also questions about its commercial
viability.
68 D. BREWSTER
A much more ambitious project is the so-called “BCIM Corridor,” an

economic corridor from China through Myanmar and Bangladesh to
India. This would provide a direct connection between the two most pop-
ulous countries, potentially creating new value chains that could become a
major economic driver for the region and world. However, the project,
which has been under discussion for more than a decade, seems unlikely to
be implemented any time soon. The process of negotiation among four
fractious and distrustful neighbors will be difficult and slow. India in par-
ticular has major concerns about the potential economic impact of Chinese
economic penetration and the security implications of creating new physi-
cal connections. Memories of the 1962 Border War, when Chinese troops
were able to breach India’s Himalayan “barrier” and defeat India in short
order, weigh heavily in any considerations on the part of Delhi about con-
structing physical connectivity with China. Among other things, Delhi
would prefer only to open land connectivity with its northeast states very
gradually, so as to reduce the risk of its “economic annexation” by China.
Delhi also sees China’s north–south connectivity proposals as essentially
competing with India’s preferred east–west connections with other littoral
states such as Myanmar and Thailand. Overall, India is unwilling to go
forward with the BCIM project within the conceptual parameters of
China’s OBOR initiative.40
Another major constraint on the development of the Southern Corridors
have come from the partial democratization and liberalization of Myanmar
and its partial move away from China’s strategic orbit. These events have
led to concerns in Beijing about the dependability of the Myanmar regime
in protecting Chinese interests. According to Yun Sun, a USA-based ana-
lyst, the Chinese railway agency has significant reservations about building
the planned rail link to Kyaukpyu under the “China-unfriendly” invest-
ment environment in Myanmar.41 The rate of development of new Chinese
infrastructure projects has slowed and Myanmar is now considered to rep-
resent a considerable political risk. Beijing is also moving to diversify its
political relationships away from reliance on the Rangoon regime, includ-
ing, for example, by developing closer links with local political groups.42
Beijing has now moved its primary focus for new routes between China
and the Indian Ocean to Pakistan, as discussed in detail in Jacob’s chap-
ter, Chap. 5. The so-called CPEC would develop links between the
Arabian Sea and China’s Xinjiang province through Pakistan, including
pipeline and road/rail links from the Chinese border to Gwadar. This
initiative was given prominence during President Xi’s 2015 visit to
Pakistan, which involved reported investment commitments of some

USD $46 billion.43 The project includes the expansion of the Karakoram
highway, the construction of a railway and of petroleum pipelines, and the
creation of an associated corridor of manufacturing facilities and Pakistan
has announced ambitions to carry some 5 percent of all Chinese cargo
through Pakistani ports.44 However, it remains to be seen whether those
commitments will materialize, as historically China has only delivered a
tiny fraction of investment commitments made to Pakistan.45
China’s Bridgehead Strategy and the Indian Ocean

One of the primary justifications for these new pathways is to drive eco-
nomic development in China’s less developed “landlocked” southern and
western provinces. Yunnan province will now become China’s economic
gateway to the Indian Ocean and serve as a “base,” facing South Asia and
Southeast Asia, to support export processing. Similarly, Xinjiang province
will be China’s base facing Central Asia and Pakistan. Liu Jinxen, one of
the chief architects of the trans-Myanmar route, argues that this can be
seen as part of a national “bridgehead” strategy of identifying cities or
regions that occupy a strategic position on a logistical and supply chain
and that can control the flow of resources along international trade routes.
Just as the Chinese cities of Rizhao and Lianyugang were developed as
bridgehead terminuses to the Pacific Ocean in the 1990s, Kunming (in
Yunnan) and Kashgar (in Xinjiang) will now be bridgeheads to connect
with neighboring states.46
Although the OBOR initiative is principally economic, Chinese offi-
cials acknowledge that it has a political and security component vis-à-vis
neighboring states.47 Indeed, there can be little doubt that the trans-
Myanmar and trans-Pakistan projects, if completed, will have major eco-
nomic and strategic implications for the region, perhaps not all of them
yet fully understood—or indeed, intended. The connections could stimu-
late considerable economic development in the landlocked provinces of
Xinjiang, Tibet, and Yunnan, and lead to an expansion of China’s eco-
nomic and political influence in Pakistan and Myanmar and other neigh-
boring states.
Importantly, the new overland pathways will operate in two directions,
potentially opening China’s landlocked provinces to new threats. The
opening of the Karakoram highway to Pakistan in 1979 facilitated the
creation of new networks between Pakistani and Uighur traders and new
70 D. BREWSTER
communities of Chinese-origin Uighurs in Pakistan and the Gulf. Despite

attempts by Beijing to manage the security impact of these developments
(in cooperation with Islamabad and with Pakistani extremist groups),
these linkages are now feeding back into separatist unrest in Xinjiang.48
Liu claims that Beijing will seek to channel and control the new and greatly
expanded connections with Pakistan and Myanmar through relying on the
“bridgeheads” of Kashgar and Kunming as “a foundation of protecting
border security and stability” and “as a front line in partial wars and non-
traditional security issues.”49
There has also been considerable discussion among analysts of the stra-
tegic implications of these new connections for China’s energy security,
and particularly their ability to mitigate China’s so-called “Malacca
Dilemma;” that is, China’s strategic vulnerability to a blockade of the
transport of oil and gas across the Indian Ocean and through narrow
chokepoints such as the Malacca Strait. While the Yunnan–Myanmar pipe-
line and the Xinjiang–Gwadar pipeline (if ever built) would certainly
reduce the proportion of China’s energy imports that must transit the
Malacca Strait under normal conditions, it is questionable whether these
projects would materially mitigate China’s vulnerability to interdiction of
energy supplies. According to Bo Kong, a US analyst, the Kyaukpyu–
Kunming oil pipeline will only account for some 6.7 percent of China’s
total oil imports in 2015 and 3.4 percent by 2030, suggesting that a num-
ber of such pipelines would be required to materially address China’s stra-
tegic vulnerabilities in the transport of energy. Nor would these pipelines
prevent the interception of Chinese tankers in the Strait of Hormuz, the
Arabian Sea, or the Suez Canal and the pipelines themselves would be
highly vulnerable to attack by either state or nonstate actors.50 Around half
the length of the Kyaukpyu pipeline in Myanmar passes through Shan
State, which has large insurgency-prone areas; Kyaukpyu port, located in
Myanmar’s Rakhine State, comes with its own significant security prob-
lems. The Gwadar pipeline would also traverse regions of Pakistan where
there are considerable security issues, and it seems unlikely that the highly
adverse security environment in Pakistan’s Baluchistan province and the
northwest and northern territories will improve any time soon.
Indeed, a major and perhaps unintended consequence of these over-
land pathways may be to give Beijing a much greater direct stake in the
internal security of Indian Ocean gateway states than has previously
been the case. Arguably a significant factor in Beijing’s historically warm
relations with Pakistan and Myanmar was its ability to largely avoid
involvement in domestic political issues, allowing security relations to

largely function at the level of political and diplomatic support or, for
example, through the supply of defense technology. In effect, China’s
“virtual remoteness” from its Indian Ocean neighbors often helped give it
the luxury of being able to avoid getting its hands dirty in politically unsta-
ble countries. But this may become more difficult to sustain as it builds
these new overland corridors.
According to some reports, Beijing has previously had to deploy secu-
rity forces in Pakistan-administered Kashmir to protect Chinese workers
on the Karakoram highway from attacks from Islamic and tribal groups,51
and China could soon find itself called upon to secure a corridor extend-
ing across much of the length of Pakistan. Pakistan will reportedly estab-
lish a 12,000-strong special security force (including nine army battalions
and six wings of the civilian security forces) to protect Chinese workers
involved in the China–Pakistan Corridor.52 According to another report,
an estimated 8000 security officials have already been deployed to protect
more than 8112 Chinese workers employed on around 210 projects in
Pakistan.53 But China’s previous need to deploy its own security forces in
Pakistan-administered Kashmir is indicative of the limitations of the
Pakistani security forces, especially in the tribal territories.
China could also find itself in a similar position in Myanmar. Popular
reactions against Chinese infrastructure projects, including proposals for
the huge Myitsone Dam, seem to indicate that there are significant risks
for China there. China could also find itself with a growing stake in
Myanmar’s long-running civil conflicts (e.g. the Kokang insurgency near
the Chinese border; or a civil conflict with the Rohingyas in Rakhine State)
in the event that they represent a threat to major infrastructure invest-
ments. Beijing’s recent efforts to develop new relationships with Rakhine
political groups, for example, point to a much greater involvement in
political-security issues at the local level.
This is not to claim that China will necessarily be forced to directly
protect its new gateways to the Indian Ocean. But the development of
significant direct physical connectivity between the Eurasian heartland and
the Indian Ocean littoral creates the conditions, for the first time in his-
tory, for sustained direct security interaction between China and its Indian
Ocean neighbors that goes beyond mere political support. China may be
forced to grapple with the problems that arise from direct physical connec-
tions with these neighbors, many of whom have considerable security
problems. These include problems that may arise from substantial increases
72 D. BREWSTER
in people-to-people interactions (including between extremist groups),

illegal population movements, smuggling, dangers arising from the pres-
ence of large numbers of Chinese citizens in unstable regions, and the
need to protect vulnerable Chinese-owned infrastructure. This increased
interaction, which might be expected to occur across a much broader
spectrum of security issues than previously, may, in a sense, tend to “nor-
malize” the geostrategic character of the northern Indian Ocean region.
Conclusion: The Strategic Impact of China’s New

Pathways on the Indian Ocean
For hundreds of years major powers have jostled over the control of Indian
Ocean ports and the handful of overland routes between the ocean and
the Eurasian hinterland. Chinese-sponsored investments in ports and
infrastructure in the northern Indian Ocean being made as part of the
MSRI are now becoming a significant factor in strategic competition in
the region. Chinese investments in Indian Ocean ports such as Hambantota,
Gwadar, Kyaukpyu, and Obock have led to claims that China intends to
establish naval bases in the Indian Ocean. While some of these claims may
be fanciful, China certainly has significant strategic incentives to expand its
naval presence and these will almost certainly require greater access for the
Chinese navy to ports. In coming years we should expect to see the devel-
opment of a Chinese naval presence—of various degrees—at several Indian
Ocean ports. Alongside the implications of this control of ports for the
Indian Ocean’s naval balance, we must also bear in mind the implications
of the new overland transport routes between China and the Indian
Ocean, which are being built as part of the OBOR.
Although it has provided the main trading route from Europe to Asia
for centuries, the Indian Ocean has long been seen as an essentially sepa-
rate and independent strategic space from Pacific East Asia. The existence
of narrow chokepoints of entry to the Indian Ocean and the disconnect
between the ocean and Eurasian hinterland made the Indian Ocean a
semi-closed strategic space which could be dominated by a single naval
power.
But these traditional dynamics are being changed by the growing inter-
actions between the Pacific and Indian Ocean regions, which is expressed
through the idea of the “Indo-Pacific.”54 Beijing’s OBOR/MSRI initiative
reflects the expansion of China’s area of strategic interest into the Indian
Ocean as part of the growing strategic and economic interdependence of

East Asia and Southern Asia.
The OBOR/MSRI will have a significant impact on the strategic nature
of the Indian Ocean region. Control over ports will facilitate an ever
greater Chinese naval presence. The development of new overland path-
ways from China to the Indian Ocean could also be seen as part of a reach
by China towards the ocean, potentially making China a resident power in
the Indian Ocean and not just an extra-regional power. This could signal
the demise of the Indian Ocean as a largely enclosed strategic system easily
dominated by maritime powers.
Notes
1. Geoffrey Kemp and Robert E. Harkavy, Strategic Geography and the
Changing Middle East: Concepts, Definitions, and Parameters (Washington,
DC: Brookings Institution, 1997).
2. David Scott, “India’s ‘Grand Strategy’ for the Indian Ocean: Mahanian
Visions,” Asia-Pacific Review 13, no. 2 (2006), 97–129.
3. Donald L. Berlin, “India in the Indian Ocean,” Naval War College Review
59, no. 2 (2006), 60.
4. C. Raja Mohan, Crossing the Rubicon: The Shaping of India’s New Foreign
Policy (London: Palgrave Macmillan, 2003).
5. See, generally, David Brewster, India’s Ocean: The Story of India’s Bid for
Regional Leadership (London: Routledge, 2014).
6. Peter John Brobst, The Future of the Great Game: Sir Olaf Caroe, India’s
Independence and the Defence of Asia (Akron: University of Akron Press,
2005), 13.
7. K. M. Panikkar, India and the Indian Ocean: An Essay on the Influence of
Sea Power on Indian History (London: George Allen & Unwin, 1945), 95.
8. The Indian Navy’s 2007 strategy document expressly invokes Albuquerque’s
name to justify India’s strategy of controlling the Indian Ocean chokepoints.
Indian Navy, Freedom to Use the Seas: India’s Maritime Military Strategy
(New Delhi: Integrated Headquarters, Ministry of Defense, 2007), 59.
9. Indian companies, which have been slower off the mark in investing out-
side of India, are involved in port projects at Sittwe (Myanmar) and
Chabahar (Iran).
10. http://www.hutchison-whampoa.com/en/businesses/port.php.
11. “The New Masters and Commanders,” The Economist, June 8, 2013, 52.
12. ‘Now for the next 100 years’, The Economist, August 16, 2014, p. 34.
13. See Amitendu Palit’s chapter (Chap. 8) for a discussion of other issues that
are relevant for evaluating the viability writ large of China’s port projects.
74 D. BREWSTER
14. “The New Masters and Commanders.”

15. Then President Pervez Musharraf was reportedly sensitive to Washington’s
concerns about China having control of the port. Farooq Yousaf, “Is
Gwadar Worth the Theatrics?” The Diplomat, August 22, 2013, http://
thediplomat.com/2013/08/is-gwadar-worth-the-theatrics.
16. Syed Fazl-e-Haider, “China Set to run Gwadar Port as Singapore Quits,”
Asia Times, September 5, 2012, http://www.atimes.com/atimes/China_
Business/NI05Cb01.html.
17. In 2012, Dubai handled some 13.3 million containers, Khor Fakkan in the
UAE handled around 4 million containers and Salalah, Oman handled
more than 3 million containers. “The JOC Top 50 World Container Ports,”
Joc.com, http://www.joc.com/port-news/joc-top-50-world-container-
ports_20130815.html.
18. For a few examples from the extensive literature on the “String of Pearls”
theory, see Christopher J. Pehrson, “String of Pearls: Meeting the Challenge
of China’s Rising Power across the Asian Littoral,” Carlisle Papers in
Security Strategy, July 2006; Josy Joseph, “Delhi Entangled in the Dragon’s
String of Pearls,” DNA India, May 11, 2009, http://www.dnaindia.com/
india/report-delhi-entangled-in-the-dragon-s-string-of-pearls-1254896;
James R. Holmes, “China Could Still Build ‘String of Pearls’?” The
Diplomat, November 8, 2014, http://thediplomat.com/2014/11/china-
could-still-build-string-of-pearls; and Benjamin D. Baker, “Where Is the
‘String of Pearls’ in 2015?” The Diplomat, October 15, 2015, http://the-
diplomat.com/2015/10/where-is-the-string-of-pearls-in-2015.
19. “Chasing Ghosts,” The Economist, June 11, 2009, http://www.econo-
mist.com/node/13825154.
20. James R. Holmes, Andrew C. Winner, and Toshi Yoshihara, Indian Naval
Strategy in the Twenty-First Century (London: Routledge, 2010); and
Toshi Yoshihara and James R. Holmes, Red Star over the Pacific: China’s
rise and the Challenge to US Maritime Strategy (Annapolis: Naval Institute
Press, 2010).
21. Yoshihara and Holmes, Red Star over the Pacific, 31.
22. Holmes, Winner and Yoshihara, Indian Naval Strategy in the Twenty-First
Century, 132.
23. See, for example, Ramtanu Maitra, “India Bids to Rule the Waves,” Asia
Times, October 19, 2005; and Sudha Ramachandran, “China Moves into
India’s Backyard,” Asia Times, March 13, 2007, http://www.atimes.
com/atimes/South_Asia/IC13Df01.html.
24. David Brewster, “Sri Lanka Tilts to China,” East Asia Forum, November
26, 2014, http://www.eastasiaforum.org/2014/11/26/sri-lanka-tilts-
to-beijing.
25. “China Has No Plan for Indian Ocean Military Bases,” The Hindu,
September 4, 2012, http://www.thehindu.com/opinion/interview/
china-has-no-plan-for-indian-ocean-military-bases/article3855313.ece.
26. Charlotte Gao, “China Officially Sets Up Its First Overseas Base in
Djibouti”, The Diplomat, 12 July 2017.
27. Davd Kostecka, “The Chinese Navy’s Emerging Support Network in the
Indian Ocean,” China Brief 10, no. 15 (2010), https://jamestown.org/
program/the-chinese-navys-emerging-support-network-in-the-indian-
ocean; and James R. Holmes and Toshi Yoshihara, “China’s Naval
Ambitions in the Indian Ocean,” Journal of Strategic Studies 31, no. 3
(2008), 379–380.
28. Ye Hailin, “Securing SLOCs by Cooperation—Chinese Perspectives of
Maritime Security in the Indian Ocean,” 2009, Mimeo.
29. Christopher D. Yung and Ross Rustici, Not an Idea We Have to Shun:
Chinese Overseas Basing Requirements in the Twenty-First Century
(Washington, DC: National Defense University Press, 2014).
30. David Brewster, “An Indian Ocean Dilemma: Sino-Indian Rivalry and
China’s Strategic Vulnerability in the Indian Ocean,” Journal of the Indian
Ocean Region, 11, no.1 (2015), 48–59.
31. James R. Holmes, “Inside, Outside: India’s ‘Exterior Lines’ in the South
China Sea,” Strategic Analysis, 36, no. 3 (2012), 358–63.
32. “China Afraid of India’s Naval Presence in the Ocean,” Zeenews.com,
August 13, 2009, http://zeenews.india.com/news/nation/china-afraid-
of-indias-naval-presence-in-the-ocean_555196.html.
33. “China Accelerates Planning to Re-Connect Maritime Silk Route,” China
Daily, April 16, 2014, http://www.chinadaily.com.cn/china/2014-
04/16/content_17439523.htm.
34. See, for example, Jin Shaoqing, ed., Zheng He’s Voyages down the Western
Seas (Fujian, China: China Intercontinental Press, 2005).
35. Yang Jiechi, “Mutual Trust Foundation of New Silk Road,” The Global
Times, April 3, 2015. This narrative of peaceful exploration is challenged
by other writers. See Howard W. French, Everything under the Heavens:
How the Past Helps Shape China’s Push for Global Power (New York: Knopf,
2017), p. 103.
36. Charu Sudan Kasturi, “Indian Wrinkle on Chinese Silk,” The Telegraph,
July 21, 2015, https://www.telegraphindia.com/1150721/jsp/front-
page/story_32798.jsp.
37. Min Zin, “China-Burma Relations: China’s Risk, Burma’s Dilemma,” in
Burma or Myanmar? The Struggle for National Identity, ed. Lowell
Dittmer (Singapore: World Scientific, 2010), 271.
38. Andrew Erickson, “Pipe Dream: China Seeks Land and Energy Security,”
Jane’s Intelligence Review 21, no. 8 (2009), 55.
39. Bo Kong, “The Geopolitics of the Myanmar-China Oil and Gas Pipelines.”
In Pipeline Politics in Asia: The Intersection of Demand, Energy Markets,
and Supply Routes, NPB Special Report #23 (2010), 63.
76 D. BREWSTER
40. Patricia Uberoi, “Problems and Prospects of the BCIM Economic

Corridor,” China Report, 52, no. 1 (2016), 19–44.
41. Yun Sun, “China, Myanmar: Stop that Train,” Asia Times, August 14, 2014,
http://www.atimes.com/atimes/Southeast_Asia/SEA-01-140814.html.
42. Rhys Thompson, “China’s Moves to Win Friends and Influence People in
Myanmar,” Lowy Interpreter July 6, 2015, http://www.lowyinterpreter.
org/post/2015/07/06/Myanmar-Chinas-moves-to-win-friends-and-
influence-people-in-Rakhine-State.aspx.
43. “Corridor of Power: Xi Jinping Arrives, Bearing Gifts,” The Economist, April
20, 2015, http://www.economist.com/news/asia/21648918-xi-jinping-
arrives-bearing-gifts-corridor-power.
44. Gavin van Marle, “Intermodal Link Could See Pakistan’s Ports Handling
5% of China’s Cargo,” The Loadstar, December 19, 2013, http://theload-
star.co.uk/chinese-link-transform-pakistans-ports.
45. According to Andrew Small, of Chinese investment commitments made
between 2001 and 2011, only 6 percent ever eventuated. Andrew Small,
The China-Pakistan Axis (Oxford: Oxford University Press, 2015).
46. Liu Jinxen, “China’s Bridgehead Strategy and Yunnan Province,” East by
Southeast, November 16, 2013. http://www.eastbysoutheast.com/
chinas-bridgehead-strategy-yunnan-province/#comments.
47. For discussion, see Blanchard’s introduction in this volume as well as Yun
Sun, “China’s Strategic Misjudgement in Myanmar,” Journal of Current
Southeast Asian Affairs 31, no. 1 (2012), 73–96, 83.
48. Small, The China-Pakistan Axis, chapter 4.
49. Liu, “China’s Bridgehead Strategy and Yunnan Province.”
50. Andrew S. Erickson and Gabe B. Collins, “China’s Oil Security Pipe
Dream,” Naval War College Review, 63, no. 2 (2010), 91–92.
51. Selig S. Harrison, “China’s Discreet Hold on Pakistan’s Northern
Borderlands,” New York Times August 26, 2010, http://www.nytimes.
com/2010/08/27/opinion/27iht-edharrison.html. However, Chinese
troops likely numbered in the hundreds and not the thousands as reported.
52. Saeed Shah and Josh Chin, “Pakistan to Create Security Force to Protect
Chinese Workers,” Wall Street Journal, April 22, 2015, https://www.wsj.
com/articles/pakistan-to-create-security-force-to-protect-chinese-
workers-1429701872.
53. Zahid Gishkori, “Economic Corridor: 12,000-strong force to Guard
Chinese Workers,” The Express Tribune, March 30, 2015, https://tribune.
com.pk/story/861078/economic-corridor-12000-strong-force-to-
guard-chinese-workers.
54. Rory Medcalf, “The Indo-Pacific: What’s in a Name?” The American Interest,
9, no. 2 (2013) https://www.the-american-interest.com/2013/10/10/
the-indo-pacific-whats-in-a-name.
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CHAPTER 4
China’s Strategy Towards South Asia

in the Context of the Maritime Silk Road
Initiative
Xinmin Sui
In recent years, the international community has been fixing its sights on
how a rising China manages its relations with the outside world. China is
committed to innovation in both theory and practice, in line with main-
taining the continuity and stability of its foreign policy. In line with this, it
has unveiled such concepts as a community of interest; security and shared
destiny; a new pattern of major power relations; and neighboring diplo-
matic principles of amity, sincerity, mutual benefit, and inclusiveness. To
put its innovations into practice, in 2013 Chinese President Xi Jinping
proposed successively to build the Silk Road Economic Belt (SREB) and
the Twenty-First Century Maritime Silk Road (MSR), collectively known
as “One Belt, One Road” (OBOR) in order to boost comprehensive coop-
eration with relevant countries.1 Since then, the details of the OBOR ini-
tiative have become clearer, with the Chinese government issuing an
The author would like to express his gratitude to Drs. Jean-Marc F. Blanchard,
Gregory J. Moore, and Colin Flint for their help in improving this chapter.
He can be reached at xmsui@cfau.edu.cn
X. Sui (*)
Zhongyuan University of Technology, Zhengzhou, China

DOI 10.1007/978-981-10-5239-2_4
82 X. SUI
OBOR action plan.2 Furthermore, the plan has shifted gradually from
vision to implementation. Regarding the latter, China has launched a
number of major projects in hopes of bolstering connectivity with its
neighbors and enhancing international cooperation in economics and
technology. South Asia (SA), whose northwest region links parts of the
SREB and MSR geographically, is a crucial strategic area for China to
ensure regional security and stability, especially to implement its innova-
tions and the MSR initiative (MSRI). China’s strategy towards SA, there-
fore, is critical in understanding how the MSRI will unfold. But what is
China’s strategy towards SA? What opportunities and challenges are there?
How should China put the MSRI into practice in SA? This chapter will
tackle these important questions.
In terms of challenges to the execution of the MSRI, China will have to
deal with ideational innovation, economic risks, and political instability
because of the relevant participants’ domestic political disputes, and out-
side pressures. Further, as is demonstrated in various chapters in this edited
volume, it will have to contemplate syncing its plans with India’s proposals
for SA because of the significance of India’s attitude to the future of the
MSRI. With respect to implementation, the OBOR initiative requires
innovation in China’s diplomacy and regional policy if it is to succeed in
achieving its own strategic and economic goals. For example, the execu-
tion of the MSRI requires China to consider more evenly balanced policies
with India and Pakistan and an integrated policy towards SA.
The paper is divided into four sections. It first looks at the evolution of
China’s policy towards SA, which, generally speaking, has been character-
ized by a patchwork of bilateral relations. Second, it contemplates various
perspectives on China–SA interactions within the MSR and the strategic
objectives of the MSRI. Third, it studies the impact of the MSR on China’s
policy towards SA. The paper concludes by discussing paths and obstacles
to the implementation of the MSRI, and concludes the latter will deliver
economic benefits to both China and SA. It also argues China should pay
close attention to India’s security concerns when advancing MSRI.
The Evolution of China’s Policy Towards SA

After the partition of British India in the late 1940s, China’s policy
towards the newly created states of India and Pakistan was largely one of
subtle balance. Still, China–India relations experienced a so-called honey-
moon. China was lukewarm towards Pakistan’s entry into two US-led
CHINA’S STRATEGY TOWARDS SOUTH ASIA IN THE CONTEXT... 83
organizations—the Southeast Asia Treaty Organization and the Central

Treaty Organization—and it adopted a neutral stance towards the India–
Pakistan Jammu–Kashmir dispute. Given the asymmetry of capabilities
between India and Pakistan, China’s neutrality favored India which was in
dominant advantage vis-à-vis Pakistan. Nevertheless, China’s Premier
Zhou Enlai very politely refused Indian Prime Minister Jawaharlal Nehru’s
invitation to visit Srinagar, the capital of India-controlled Kashmir, as well
as refusing to make any remarks that could be construed as partial to
India’s position.3 Meanwhile, China appealed to both sides to engage in
peaceful talks about the Kashmir dispute and opposed intervention by any
outside parties. China’s conduct towards the volatile Kashmir issue
showed its balanced SA policy.
The 1959 Tibetan Rebellion and the 1962 Sino-Indian border war
affected China’s policy towards SA in general dramatically because these
events drove it to perceive India as an increasingly grave threat to its ter-
ritorial integrity. In contrast, Sino-Pakistani relations improved consider-
ably and rapidly, especially after the signing, in 1963, of an agreement
setting the border between China and Pakistan-controlled Kashmir as well
as an air transportation agreement. Better relations led to and were fueled
by China giving Pakistan moral support on the Kashmir dispute as well as
supplying weapons to Pakistan during the 1965 Indo-Pakistan war.
Around this time, China also mobilized its military along the border and
delivered India an ultimatum on September 19, 1965 stating that it was
prepared to take any action necessary to prevent India from encroaching
on that border, and would do so unless India stopped moving forward and
promptly dismantled military forts along the Sino-Indian border.4 Clearly,
in 1965, Pakistan received unrestricted defensive support from China in
its conflict with India.5 Subsequently, China and Pakistan reached four
agreements on military aid and defense cooperation.6 These agreements
kicked off the “all-weather-friendly” Sino-Pakistani relationship. For their
part, Sino-Indian relations became more difficult and entered a state of
antagonism which was to last for more than 25 years.
Besides the aforementioned China–Pakistan border agreement, China
peacefully concluded two border agreements with Nepal in 1961 and
Afghanistan in 1965 respectively. With respect to trade and economic coop-
eration, Ceylon (now Sri Lanka) was the first SA country to send an official
delegation to Beijing and, in 1952, it signed a five-year rubber-for-rice trade
agreement with China despite intense pressure from the United States of
America (USA) not to sign.7 The deal temporarily eased the food crisis that
84 X. SUI
Ceylon was undergoing at that time, while helping China access strategic
goods and break the US embargo against it. Although Ceylon worried
about India’s response to its warming relations with China, its negotiations
with China yielded one-sided political and economic concessions from its
new partner without requiring it to give up much in return.8
Against the backdrop of a global Cold War, a regional cold war in SA,
involving a contest between the India-Soviet Union alliance and the so-
called USA-China-Pakistan axis, emerged in the early 1970s.9 Over the
following (approximately) two decades China’s policy towards SA did not
go beyond the framework of confrontation between the two aforemen-
tioned groups, with Sino-Indian relations frozen in stalemate in the wake
of the border war in 1962. Top-leader reciprocal visits and senior-level
institutional exchanges between China and India from the late 1980s
through the early and mid-1990s laid the groundwork for improvement
of bilateral relations. After the mid-1990s, the significant improvement in
bilateral ties and the end of the Cold War led Beijing to adjust its policy,
from siding with Pakistan in Indo-Pakistani disputes to maintaining a bal-
ance between the two sides. For instance, China ceased pressing for a solu-
tion of the Kashmir dispute on the basis of United Nations (UN)
resolutions passed in 1948 and 1949, which had called for a popular ref-
erendum, and shifted to advocating bilateral talks based on the 1972
Indo-Pakistani Simla Agreement.10
Aside from embracing a more impartial policy, another significant
change in China’s SA policy since the mid-1990s was that Beijing began
to increasingly think about SA’s role in China’s energy security and trade.
In addition, it began to pay more attention to economic cooperation and
commercial gains in its SA policymaking. Even Myanmar, which is geo-
graphically situated in the northwest of Southeast Asia, was increasingly
taken into account in China’s regional integrated policy towards SA
because of its strategic location.
Analytical Perspectives on China–SA Interactions

Within the MSRI
How can we understand the MSRI’s impact on China-SA interactions?
One relevant analytical framework is geopolitical economy (geo-polinomics)
as it can shed light on how to mitigate the effects of security dilemma in SA
and to promote confidence-building among the main players in SA, a
group which includes both regional and extra-regional major powers.11
Realist international relations scholars argue that state preferences in an

anarchic world are exogenously determined such that competition among
states in geographic proximity is predestined. Liberal international rela-
tions theorists counter, however, that anarchy does not automatically
mean competitive behavior will ensue.12 For instance, if there is an “iter-
ated” game then rational players can still engage in international coopera-
tion by using a tit-for-tat strategy whereby they selectively reward
cooperation and penalize non-cooperation.13 One analyst retorts, though,
that cooperation remains extremely difficult in such circumstances because
in an anarchic world states are preoccupied with relative, not absolute
gains when they interact with other states.14 This argument is quite appli-
cable to the case of SA, where states are very sensitive to relative gains.15
In response, neoliberals retort that the degree of a state’s concern for rela-
tive gains is conditional and relies on the intensity of the security dilemma
it faces.16 For example, international regimes can serve to dampen the
security dilemma.17
Offering a different viewpoint than that of the realists, advocates of
geo-polinomics believe states have been increasingly focused as much on
economic as on political gains, if not more on the former, since the end of
the Cold War. Conventional one-dimensional foreign policy calculations
have given way to mixed-motive games involving a combination “of inter-
dependence and conflict, of partnership and competition.”18 In line with
this, Wang Zheng, a Chinese critic of competitive international relations
theory and a strong advocate of geo-polinomics, holds that the geopoliti-
cal economy marks the decline of international relations based on a com-
petitive mentality. He argues instead for greater attention to global
governance, which necessitates a greater emphasis on international coop-
eration and leadership.19 Some experts’ arguments about the positive role
of transnational investment and trade in improving international security
also help to explain China’s policy towards SA in the context of the MSR.20
China’s relevant policies, to a large extent, validate the position that col-
laborative international policies rest not merely on a state’s capacity to
maintain domestic political consensus, but also on its calculation of over-
seas strategic and economic objectives.21
Carrying on a policy of reform and opening up to the outside world
over three decades, China, one of the five permanent members of the UN
Security Council (UNSC), and the second-largest economy in the world,
has become a real participant in the international community, instead of a
bystander or a challenger as perceived by some observers. The reality is
86 X. SUI
that since the 1980s, China has actually been integrating itself deeply into
the international system.
With regard to China–SA ties, it is important to keep in mind that, as
Adam Smith once articulated, only in an environment where its neigh-
bors are also rich, industrious, and commercialized, can a nation acquire
great wealth by means of foreign trade.22 Put differently, China cannot
live in either prosperity or safety as a rich man on the hill surrounded by
impoverished peoples. China is acutely aware of its symbiotic relationship
with the outside world and is therefore striving for win-win interactions.
China is willing to allow its neighbors and others worldwide to take a free
ride on its rise. These behaviors are the opposite of what the perspective
of geopolitics would lead us to infer were the most likely. Thus, geo-
polinomics is a better framework for interpreting China’s strategic objec-
tives in regard to the MSRI in SA. More specifically, China aims to bolster
its economic interests and safeguard its sea lines of communications
(SLOCs) in the North Indian Ocean, while also enhancing mutual confi-
dence and gains in the relations between China and SA states, especially
between itself and India.
Key Objectives of China’s MSRI

Connectivity between China and SA is a significant aspect of the MSRI,
which is designed to go from China’s coast to Europe and Africa through
the South China Sea and the Indian Ocean along one route, and from
China’s coast through the South China Sea to the South Pacific along
another.23 Why has China proposed the MSRI? One reason is that its
export-oriented and investment-driven growth strategy over the past
three decades has caused it to become deeply reliant on trade, foreign
direct investment (FDI), and foreign sources of energy and intellectual
property (IP). Illustrating this, its dependence on foreign trade has
reached nearly 64 percent, much higher than the average (roughly 20
through 25 percent) for major economies. FDI accounts for 10 percent of
capital formation and over 25 percent of industrial capital stock respec-
tively. China’s basic energy imports constitute nearly 40 percent of certain
energy sources and its “own” IP rights are below 4 percent. This pattern
of growth is simply not sustainable. Another driver is the imbalanced
development between China’s west and east, which has impeded the
country’s further financial progress and engendered concerns over domes-
tic stability and sustainable growth. All of these factors have given impetus
to the Chinese government’s effort to revamp the reform and opening-up

strategy. They also explain why, to a large extent, Chinese academics
regard the MSRI specifically, and OBOR more generally, as an improve-
ment of China’s contemporary strategy. On the one hand, these schemes
represent a way to narrow the gap between developed and underdevel-
oped regions at home. On the other hand, they constitute a mechanism
for ensuring the seaborne supplies of the imported energy and mineral
resources on which China is deeply dependent. Recent statistics clearly
demonstrate China’s reliance on seaborne imports: these represent 91
percent of crude oil imports, over 97 percent of iron ore imports, about
92 percent of copper ore and coal imports, and more than 90 percent of
foreign trade.24 It is quite understandable, then, China is attempting to
ensure the future of its SLOCs through construction of the MSRI.
The MSRI, concomitantly with the SREB, represents a way for China
to upgrade its industrial structure and shift its growth pattern. China has
realized continuous and rapid growth for three decades and has become
the world’s second-largest economy. Consequently, its economy has drawn
worldwide attention, with many criticizing China’s mercantilist trade and
investment position and China’s image suffering commensurately. Indeed,
its enormous trade surplus has contributed directly and indirectly to job
losses around the world.25 China’s tarnished image is a function of some
of its unwise policies, but also a result of misperceptions both intentional
and unintentional. In any event, China has reflected on its policies and on
ways to profit from outward FDI (OFDI), and is working on encouraging
domestic demand and developing underdeveloped markets. It feels its
plans offer a fresh and enduring impetus to its industrial restructuring, and
offer great potential for increasing trade and investment with the econo-
mies encompassed within those plans.26 In line with this, China is devoting
itself to promoting a more balanced and reasonable flow of trade and
investment between China and countries in Southeast Asia (SEA) and
SA. China’s west and southwest, which are usually deemed impoverished
or underdeveloped areas, but possess their own comparative advantages in
natural resources and labor, have become the vanguard of China’s out-
ward opening to SEA and SA. Beyond this, the MSR can link SA with the
East Asia economic circle, shape an Asian regional network of production
and trade, and facilitate Asian regional integration. It is anticipated, then,
that China’s surplus productivity will readily transfer abroad, with recipi-
ents benefitting as well.
88 X. SUI
The MSRI and China’s Strategy Towards SA

As an emerging independent geopolitical theater, SA is situated in close
proximity to China’s west and southwest.27 Afghanistan and Pakistan in
the northwest of SA function as a junction of the SREB and MSRI, both
geographically and in terms of geo-polinomics. Therefore, the response of
SA to the MSRI, to a large extent, will have a decisive impact on the
MSRI’s future. Considering the complicated situation in and varied atti-
tudes towards the MSRI in SA, it is certain that China will confront some
unprecedented challenges in advancing the MSRI in the SA.
Jeffrey Paine has argued that China, as a risk-averse state, has no inten-
tion of assuming responsibility when facing security challenges.28 By con-
trast with its policy towards East Asia, Northeast Asia, and SEA, China so
far does not have any holistic strategy towards SA. Instead, he suggests, its
strategy in the region is largely a patchwork of bilateral strategies, reflect-
ing its view that the SA is not an independent strategic theater, but an
aggregation of independent states. Frankly, this assessment of China’s
policy towards SA is to some extent correct, albeit not exactly.29 Perhaps it
is more accurate to say China is actually neither an altruist nor an egoistic
neocolonialist. It pursues its interests like a stakeholder who functions as
an engine to drive the world economy as well. The MSRI also offers
numerous opportunities to relevant countries such as the development of
all kinds of energy, telecommunication, and transportation infrastructure
and enhanced connectivity, which will, in turn, fuel participant countries’
economic development and social stability.
As an emerging independent theater of geo-strategy, SA should be
weighed as an independent variable impacting the fate of the MSRI.30
After all, whether the MSRI advances smoothly or not relies on the inter-
action between China and countries in SA.31 China’s foreign policy
towards SA emphasizes the following dimensions:
1. Maintenance of peace and stability: in SA, China faces many chal-

lenges such as territorial disputes, religious conflicts, terrorist attack,
piracy, and even freshwater disputes that endanger regional security.
China has taken constructive action to push forward a solution to
such disputes, based on a belief in the efficacy of principles such as
mutual respect for territorial integrity and sovereignty and noninter-
ference in others’ internal affairs. Since India–Pakistan relations are
the key to regional peace and stability, China has appealed to both
countries to solve their disputes through peaceful dialogue and has

taken a more balanced position on their various disputes. To some
extent, it played the role of a mediator in ending the 1999 Kargil
war and the 2002 armed confrontation.
2. Protection of SLOCs, especially chokepoints, against threats:32

dependence on seaborne transportation is impeding China’s rise as
noted earlier. Over 90 percent of its foreign trade and crude oil
imports are transported through sea routes and more than 90 per-
cent of oil imports are carried by foreign oil tankers.33 The Strait of
Malacca is one critical SLOC chokepoint worth highlighting. As of
2014, more than 60 percent of China’s crude oil supply was con-
veyed through this strait. Combining the heavy flow of its crude oil
imports across the sea, its dependence on foreign oil tankers, and its
vulnerability to a closure of the Malacca Strait, there appears to be a
triple dependence dilemma for China’s supply chains of basic energy
and national security.34 The presence of the People’s Liberation
Army (PLA) navy (PLAN) in the Indian Ocean aims to keep SLOCs
safe and guarantee the smooth flow of goods and resources from the
South China Sea through the Strait of Malacca across the Indian
Ocean to the origin of vital resources. It is not about containing
India. Likewise, the so-called “String of Pearls”, which is seen by
some as a Chinese strategy to gain increased geopolitical influence
through increased access to ports and airfields, the creation of spe-
cial diplomatic relationships, and modernized military forces, actu-
ally aims to diversify China’s basic energy supplies and facilitate
bulk-cargo transportation. The strategy is not concerned with shap-
ing China’s sphere of influence in the Indian Ocean region (IOR),
as the vast majority of Indian analysts, in Mahanian terms, assert.35
3. Invigoration of SA industrialization and regional integration: this is
to be done by making a large number of infrastructure investments,
building industrial parks in the countries along the MSR, and pro-
moting regional and subregional integration. The East Asian experi-
ence shows that China has played a vital role as a regional growth
engine. For instance, China’s massive stimulus policy and sustain-
able growth in 2008 prevented Asia from descending into reces-
sion after the global financial crisis.36 The MSRI puts great emphasis
on infrastructure connectivity because it will facilitate regional
cooperation and integration. But this is not just about linking
harbors along the MSR; it is also about stimulating the growth and
90 X. SUI
industrialization of the relevant countries through the construction

of harbors and logistics facilities. Moreover, the MSRI aims to link
different economies and coastal industrial parks with inland areas
(rather than just SLOCs) which should drive inland development,
subregional integration, and development in the entire region of
SA. Finally, construction programs such as the Gwadar deepwater
harbor in Pakistan, the Colombo International Container Terminal
(CICT) and Colombo International Financial City (CIFC) in Sri
Lanka, and the Kyaukpyu energy terminal in Myanmar will increase
the shipping capacity between the Indian Ocean and China as well
as strengthen these countries’ position in the international shipping
industry. Of course, the MSRI will also give Chinese enterprises
ample opportunities to participate in business activities in the SA.37
Turning to regional integration, SA remains one of the least inte-
grated regions in the world. Relatively little energy trading between
countries in the region by the World Bank, intraregional trade is less
than 2 percent of GDP in SA versus over 20 percent in East Asia;
only 7 percent of international phone calls in SA are intra-regional
versus over 70 percent in East Asia; the running costs across borders
in SA is amongst the highest in the world; and notwithstanding pro-
pitious geography, there is relatively little energy trading.38 Progress
in East Asian integration, both vertically and horizontally, will enable
the economic circles of the major intra-regional economies to keep
pace with China’s economy.39
Paths and Challenges to Implementing

the MSRI in SA
In the text below, I discuss what China is doing and could do in future to
help bring about the implementation of the MSRI.
Paths to Realizing the MSRI

SA’s geographic unity has not witnessed the emergence of a concomitant
shared identity. Creaking infrastructures and the trauma of the Partition
of India in 1947 have caused SA to remain one of the least integrated
and developed regions in the world, rife with territorial, religious, and
national disputes, especially the enduring Indian-Pakistani conflict.40
Commensurately, economic and technological cooperation between
China and the majority of individual SA states is still at a relatively low

level. India’s response to the MSRI has been cool and the existing
regional regimes such as the SA Association for Regional Cooperation
(SAARC) and SA Free Trade Area (SAFTA),41 and the emerging Regional
Comprehensive Economic Partnership (RCEP) cannot offer efficient
platforms or paths for China and other SA countries to join together.
With this in mind, we can see that the question of how China can best
push forward the objectives of the MSRI, given the aforementioned
regional divergences and fissiparous tendencies in SA, is a serious one.
Besides developing conventional defense and security cooperation with
some countries in SA and readjusting its strategic balance between India
and Pakistan, China is exploring cooperative paths such as developing
and financing infrastructure, building cross-border economic corridors,
and developing industrial parks.42
As for China’s policy towards SA, it once prioritized friendly political
interaction over closer economic relations. In recent times, this has
changed greatly, if not completely reversed, except in the case of
Afghanistan. To put differently, China pays more attention to expanding
or deepening its economic interaction with SA countries. For instance, in
the wake of opening its embassy in Male in November 2011, China
stressed its economic interaction with Maldives to improve political confi-
dence.43 When Chinese President Xi Jinping visited Male in September
2014, the two countries reached an agreement on the development of the
MSRI. Consequently, they agreed to enhance cooperation in the fields of
maritime economy, maritime security, ocean research, environment pro-
tection, and disaster prevention; and also pledged to start some key proj-
ects that could yield quick results at an early date. Maldives’ government
has already given the go-ahead to an $800-million expansion of its main
airport by a Chinese-funded company, Beijing Urban Construction
Group. Maldives’ president, Abdulla Yameen, stated that the expansion of
the airport would become the economic backbone of the Maldives and
that this would be the main gateway of future development.44 Beyond its
burgeoning relations with Maldives, in May 2014, China earmarked $1.6
billion for the building of ports to step up maritime cooperation with
Southeast Asian and Indian Ocean littoral states including Maldives and
Sri Lanka.45 Finally, China has reiterated its support for SAARC while,
bearing in mind Indian concerns, not seeking to become an official mem-
ber, and whilst also taking action to enhance confidence-building in, and
economic cooperation with, countries in SA.
92 X. SUI
In terms of MSRI project financing, China established the Silk Road

Fund (SRF) in December 2014, with initial funding of $40 billion, as well
as the Asia Infrastructure and Investment Bank (AIIB) in January 2016.
Both institutions will support connectivity and basic energy programs and
have already begun to finance projects. Beyond this, in April 2015, the
SRF, China Three Gorges SA Investment Ltd., and Pakistan’s Private
Power and Infrastructure Board (PPIB) signed a Memorandum of
Understanding (MOU) on financing a major Pakistani hydropower proj-
ect. Specifically, the SRF will provide $1.65 billion for the Karot hydro-
power station on the River Jhelum; this is one of the priority energy
projects in the China–Pakistan Economic Corridor (CPEC).46
So far as economic cooperation between China and the countries in SA
is concerned, the CPEC is treated as a model and flagship MSRI program.
The corridor, which stretches nearly 3000 km from Kashgar in China’s
Xinjiang Autonomy in the north to Gwadar in Pakistan’s Baluchistan in
the south, focuses on four areas: the construction of the Gwadar port,
energy programs, infrastructure investments, and industrial cooperation.
Geographically, the CPEC connects the SREB and MSR, and plays a cru-
cial role in China’s geo-strategic layout, which illuminates why China has
paid so much attention to its implementation and has allocated USD $40
billion for the construction of road facilities, oil and gas pipelines, the opti-
cal fiber network, and the grand Gwadar Port Economic Zone (GPEZ).
As one of the CPEC’s major projects, the GPEZ, which has an expected
total investment of over USD $1.6 billion, will achieve a rich harvest of
benefits early on, including an expressway connecting Gwadar port and
Pakistan’s eastern coast, the implementation of capital works in the Gwadar
free trade area, and the new Gwadar international airport. Over time, the
CPEC will evolve in complexity and richness with further infrastructure
investment, a broadening of its scope through urbanization and industri-
alization, the more rapid free flow of goods, services, and people across
borders thanks to trade facilitation, and policy coordination between con-
cerned states that shapes a real economic corridor.47 Nowadays, many
Chinese state-owned enterprises such as the Industrial and Commercial
Bank of China (ICBC), China North Industries Group Corporation
(Norinco Group), CGGC International Ltd., China Railway Engineering
Corporation, and ZTE Corporation, have launched programs in Pakistan
along the CPEC. So far, the CPEC has involved an entire chain of
industries, a mix of investments and participants, and a spirit of win-win
cooperation among all the players. Furthermore, it will play a significant
role in promoting Sino-Pakistani economic relations, which in 2014, had

a trade volume exceeding USD $16 billion, Chinese OFDI (COFDI)
around USD $1 billion, and involved the exchange of more than 7500
engineering and technical staff.
In the wake of an exchange of visits by the Premiers of China and India
in 2013, the Bangladesh-China-India-Myanmar Economic Corridor
(BCIM) was upgraded in status, from a subregional economic cooperation
forum to the first track of quadrilateral business talks. The BCIM, which
covers China’s southwestern regions, Myanmar, Bangladesh, and northeast
India, is another important platform for China to carry out the MSRI and,
critically, connects SEA and SA. Meanwhile it functions, from a perspective
of geo-economy, as a bridge between the East Asian and SA economic cir-
cles, along with the Greater Mekong Sub-Regional Economic Cooperation
program (GMS) and the Bay of Bengal Initiative for Multi-Sectoral Technical
and Economic Cooperation (BIMSTEC).48 The construction of the BCIM
may, therefore, give a great fillip to the RCEP, which is advocated and
actively driven by the Association of Southeast Asia Nations (ASEAN).
The BCIM requires massive infrastructure investment. Considering
connectivity is given precedence in the execution of OBOR, the BCIM’s
infrastructure component naturally ranks as a top priority. Focusing on
Bangladesh, we see FDI from China playing an important role in develop-
ing its infrastructure. Examples include the Chittagong harbor project
into which nearly USD $14 billion has been pumped by the China Harbor
Engineering Company; an underground tunnel through the River
Kanapuli, built by China Communications Construction Company with
an investment of USD $800 million; a coal power plant in Patuakhali; and
the Padma Bridge undertaken by the China Major Bridge Engineering
Company. Turning to Myanmar, the oil and gas pipeline project between
China’s Kunming and Myanmar’s Maday/Kyaukpyu, which extends
771 km, has achieved substantial progress with the expenditure of over
USD $2.5 billion. Of course, “hardware” is not enough. There needs to
be “software”, such as policy coordination between member states and
subregional trading arrangement to fully facilitate trade and investment
and shape a substantive BCIM economic corridor.49 Beyond the above,
China and India have reached an agreement on technological support for
the upgrade of an existing railway from Chennai through Bangalore to
Mysore. China has also committed to providing India with about $20 bil-
lion over the following five years to help develop its industry and
infrastructure.50
94 X. SUI
China views industrial parks as a third path by which to promote economic

and technological cooperation between China and SA states within the
framework of the MSRI. It believes the industrial parks to be built in some
SA countries will function as drivers of local industrialization and strengthen
their countries’ exporting competitiveness on the one hand, while function-
ing as a channel through which China can shift and upgrade its industry on
the other. Regarding industrial shifting, SA countries possess abundant labor
resources so they are appropriate for labor-intensive industry. Regarding
industrial parks and SA, China and India are about to join hands to establish
two industrial parks in Gujarat and Maharashtra. Four industrial parks, sched-
uled to be built in Punjab, Sindh, Khyber-Pakhtunkhwa, and Baluchistan
respectively, are an indispensable component of the CPEC. With respect to
Bangladesh, Chinese company Orion Holdings is going to set up a garment
village in Munshiganj near Dacca and an exclusive export-oriented processing
zone in Chittagong. Some industrial parks and export processing zones have
been established by Chinese investors in other SA economies, which will help
push forward the recipient countries’ industrialization and competitiveness,
and provide them with social and economic improvements accordingly.
Challenges to the MSRI
The biggest challenge to the success of the MSRI is not material but ide-
ational.51 Globalization and regional integration have intensified interde-
pendence amongst the members of the international community.
Leadership and governance styles often favor going far beyond a situation
in which there is a balance of power; and states seek hegemonic control
over raw materials, sources of capital, markets, as well as competitive
advantages in the production of high valued goods. Hegemonic stability
theory argues that the more one state dominates the world political econ-
omy, the more cooperative interstate relations will be.52 In contrast, mul-
tilateralism emphasizes the ability of international regimes, and a different
mindset, to play a key role in promoting international cooperation and
maintaining global peace.53
China’s ideas of a community of shared interests, destiny, and responsi-
bility, and a neighborhood diplomacy of amity, sincerity, mutual benefit,
and inclusiveness, show its policies are in conformity with the tide of inter-
dependence and that it is exploring new models to keep the international
community stable and prosperous. As President Xi said:
The old mindset of zero-sum game should give way to a new approach of
win-win and all-win cooperation. The interests of others must be accom-
modated while pursuing one’s own interests, and common development
must be promoted while seeking for one’s own development. The vision of
win-win cooperation not only applies to the economic field, but also to the
political, security, cultural and many other fields. It not only applies to coun-
tries within the region, but also to cooperation with countries from outside
the region. We should enhance coordination of macroeconomic policies to
prevent negative spill-over effects that may arise from economic policy
changes in individual economies. We should actively promote reform of
global economic governance, uphold an open world economy, and jointly
respond to risks and challenges in the world economy.54
Not all states share the idea of a community of common destiny and win-
win cooperation. The mindset of balance of power and zero-sum game
still exists. Although the MSRI was borne out of geo-economic consider-
ations, others still evaluate China’s intentions from a geopolitical perspec-
tive. In fact, there appears to be some spillover of geo-economic
cooperation into the field of political security, which is a positive fillip to
the strategic interaction among relevant states. Economic cooperation
under the aegis of the BCIM and the Economic Cooperation Framework
Agreement (ECFA), for instance, encourages confidence-building among
relevant participants.
Thinking about SA specifically, challenges to the MSRI come from
three directions. The first challenge is that of unpredictable political and
security risks. Political instability in SA not only hampers regional states’
economic and social development, but also damages MSRI cooperation
initiatives. In Myanmar, domestic political discord led the Myanmar gov-
ernment to successively pause or delay the development of the Myitsone
hydropower plant, which has a planned total investment USD $3.6 billion,
and the Letpadaung copper project, which has a planned investment
exceeding USD $1 billion.55 Even though Pakistan is an all-weather friend
of China, its domestic political situation may have an impact on the CPEC
and, in turn, the MSRI. In Sri Lanka, the Colombo Port City (CPC)
project was halted in early 2015 by newly elected President Maithripala
Sirisena in the name of an environmental re-evaluation, while the real rea-
sons were a domestic political struggle and opposition from India. Facing
a grave economic crisis, the Sri Lankan government appealed to China for
favorable debt terms and a resumption of the suspended program. Although
96 X. SUI
the program, renamed Colombo International Financial City (CIFC), has

restarted after peaceful dialogue in August 2016, the root cause of the
problem has not been removed and thus uncertainty about China’s rela-
tions with Sri Lanka persists.
How does China respond to challenges emanating from internal politi-
cal struggles in other countries? At the government level, it has strictly
abided by its principle of nonintervention in the internal affairs of other
nations. Additionally, it has increasingly recognized that confidence-
building measures (CBM) and a good image are conducive to risk-
minimization in international interaction and it is consciously trying to
create CBMs and a good image through public diplomacy. At enterprise
level, top Chinese officials such as Foreign Minister Wang Yi have appealed
to Chinese commercial firms to obey the laws of host countries, respect
local customs, pay more attention to the protection of the environment,
enhance public welfare work, and fulfill all social obligations when they
conduct economic activities abroad.
The second challenge is that of economic risks. In general, major infra-
structure initiatives require a huge amount of money, involve long project
cycles, and entail high risks. The MSRI initiative itself prioritizes infra-
structure projects characterized by high risks and low return. All countries
in SA are underdeveloped and the investment environment features poor
facilities and legal institutions that increase visible and invisible transaction
costs for investing Chinese firms. Furthermore, investment in natural
resources has added risks associated with the deterioration of security in
the recipients’ domestic society. For example, the deteriorating security
situation in Afghanistan after the withdrawal of American troops delayed
the construction of the Aynak copper mine, which had nearly $4.4 billion
invested by a Chinese consortium including the Metallurgical Corporation
of China (MCC) and Jiangxi Copper Corporation, and also disrupted the
production of an oilfield in Amu Darya Basin, which is being developed by
a China-Afghanistan joint venture comprising China National Petroleum
Corporation (CNPC) and Watan Group.
The last, but not least, challenge is India’s response to the MSRI. India’s
attitude is critical because it is the biggest power in the region and has a
heavy influence on regional affairs. It is well known that India worries
about China’s behavior and strategic intention in SA and the IOR. In fact,
while China does not appear to be implementing a “String of Pearls” con-
struct in Maldives and Sri Lanka right now, these geographical locations
are increasingly alluring to Beijing given its global ambitions.56 Even if
China just develops normal relations with other states in SA, the Indian
strategic community often suspects China’s goal is to contain India’s rise
or to encircle it. With regard to the MSRI, India is ambivalent and on its
guard in contrast to other states in SA.
Conclusion
As with the SREB, China has proposed the twenty-first-century MSRI for
reasons primarily driven by the geo-economic logics of narrowing the gap
domestically between developed regions and underdeveloped ones, and
ensuring stable supplies of resources and the open SLOCs on which China
is deeply dependent through an upgrade of reform and opening. The
OBOR initiative does not represent either a response to America’s strategy
of rebalance, as some suppose, or a strategic encirclement of India.
The MSRI benefits not merely China’s industrial upgrading and shift-
ing growth pattern, but will also boost the industrialization and economic
development of SA countries through a huge level of infrastructure invest-
ment and the construction of industrial parks and an export-processing
zone.
When implementing the MSRI by building economic corridors across
borders, China should pay careful attention to India’s concern over its
comprehensive security. In the meantime, it is necessary for China to take
the initiative to match India’s policies or proposals in SA such as Indian
Prime Minister Narendra Modi’s Mausam, Cotton Routes, and Spice
Programs.
Notes
1. See Xi Jinping, “Follow the Trend of the Times and Promote Global Peace
and Development,” MGIMO University, March 23, 2013; “Build a New
Model of Major-Country Relationship between China and the United
States,” main points of the speech at the press conference with US President
Barack Obama, Annenberg Estate, California, June 7, 2013; “Diplomacy
with Neighboring Countries Characterized by Friendship, Sincerity,
Reciprocity and Inclusiveness,” Seminar on China’s Neighborhood
Diplomacy, October 24, 2013; “Work Together to Build the Silk Road
Economic Belt,” Nazarbayev University, Astana, Kazakhstan, September
7, 2013; “Work together to Build a Twenty-First-Century Maritime
Road,” People’s Representative Council of Indonesia, October 3, 2013.
These speeches and talks can be found in Xi Jinping, The Governance of
China (Beijing: Foreign Languages Press, 2014), 297–308, 315–329.
98 X. SUI
2. People’s Republic of China, National Development and Reform

Commission, Ministry of Foreign Affairs, and Ministry of Commerce,
“Vision and Proposed Actions Outlined on Jointly Building OBOR,” 2005,
http://www.sdpc.gov.cn/gzdt/201503/t2015328_669091.html.
3. Lin Guangliang, Ye Zhengjia, and Han Hua, Relations between China and
SA (Beijing: Social Science Academic Press, 2011), 127.
4. Wang Taiping, ed., The History of Diplomacy of China 1957–1969 (Beijing:
World Affairs Press, 1998), 85–90.
5. Zhang Li, “China’s Diplomacy of South Asian and Kashmir Dispute,”
South Asia Studies Quarterly 22, no. 1 (2006), 42–43.
6. Wang, The History of Diplomacy of China, 88.
7. Pei Jianzhang, ed., The History of Diplomacy of China: 1949–1956 (Beijing:
8. Wang Taiping, ed., The History of Diplomacy of China 1970–1978 (Beijing:
9. Sun Shihai, ed., South Asia (Beijing: China Social Sciences Publishing
House, 1998), 141.
10. Zhang Li, “China’s Diplomacy of South Asian and Kashmir Dispute,” 42.
11. To put it briefly, geo-polinomics is equivalent to geographical political
economy. It initially derives from the concept of “geo-economics” intro-
duced by Edward N. Luttwak in the early 1990s (see his “The Theory and
Practice of Geo-Economics,” in The International System after the Collapse
of the East-West Order, edited by Armand Clesse et al. (Leiden, Boston:
Martinus Nijhoff Publisher, 1994). Subsequently George J. Demko and
William B. Wood refined “Geo-polinomics” to focus on states’ concern
over political and economic gains under anarchy in the twenty-first century
(see their Reordering the World: Geopolitical Perspectives on the Twenty-First
Century (Boulder, CO: Westview Press, 1994). Chinese scholar Wang
Zheng goes further to classify states as finance-centralized states,
manufacture-oriented states, and resource-oriented states.
12. Robert O. Keohane, After Hegemony: Cooperation and Discord in the
World Political Economy (Princeton: Princeton University Press, 1984),
65–84.
13. Robert Axelrod, The Evolution of Cooperation (New York: Basic Books,
1984).
14. Joseph Grieco, “Anarchy and Limits of Cooperation: A Realist Critique of
the Newest Liberal Institutionalism,” in Neorealism and Neoliberalism: The
Contemporary Debate, ed. David A. Baldwin (New York: Columbia
University Press, 1993), 116–142.
15. E. Sridharan, “International Relations Theory and SA: Security, Political
Economy, Domestic Politics, Identities, and Images,” in International
Relations theory and South Asia, Vol. I, edited by E. Sridharan (New Delhi:
Oxford University Press, 2011), 6.
16. A predominant factor shaping relative gains concerns is a state’s percep-

tions of the strategic setting.
17. Judith Goldstein and Robert O. Keohane, “Ideas and Foreign Policy: an
Analysis Framework,” in Ideas and Foreign Policy: Beliefs, Institutions, and
Political Change, edited by Judith Goldstein and Robert O. Keohane
(Ithaca, NY: Cornell University Press, 1993), 3–30.
18. Thomas C. Schelling, The Strategy of Conflict (Cambridge: Harvard
University Press, 1980), 89.
19. Wang Zheng, “A Speech on an Idea of Geopolitical Economy” (May 31,
2015). http://blog.sciencenet.cn/blog-2211-925674.html.
20. Susan Strange argues that transnational investment and production play a
more important role than a league of transnational communication does in
creating a security community. States and Market: An Introduction to the
International Political Economy (London: Pinter Publishers Ltd., 1988).
John G. Ruggie advanced the term “embedded liberalism” to elaborate a
compromise between safeguarding one’s domestic economic objectives
and opening one’s domestic market to the outside world for restoration of
international investment. John Gerald Ruggie, “International Regimes,
Transactions, and Change: Embedded Liberalism in the Postwar Economic
Order,” in International Regimes, edited by Stephen D. Krasner (Ithaca:
Cornell University Press, 1983).
21. John Ravenhill, “The Study of Global Political Economy,” in Global
Political Economy, 4th ed., edited by John Ravenhill (Oxford: Oxford
University Press, 2014), 13.
22. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of
Nations (New York: Random House, 1937), 462.
23. See endnote 3 above.
24. CNCP Economics & Technology Research Institute, “The Development
Report of Oil & Gas Industry 2014,” http://etri.cnpc.com.cn/etri/
qydt/201502/da730b1a55cd492d9a13b1b9ac30afa9.shtml.
25. David Shambaugh, China Goes Global: The Partial Power (New York:
Oxford University Press, 2013), 4–23.
26. The viewpoint was expressed at 2015 Conference of National Policy
Consultation by Zhao Jinping, Director of the International Cooperation
Department, Development Research Center of the State Council, http://
www.chinairn.com/news/20150213/095820540.shtml.
27. Saul Bernard Cohen defines SA as one of three existing geostrategic areas:
the North Atlantic-North Pacific Area, which is dominated by the USA;
the Eurasia heartland area, which is dominated by Russia; and the East
Asian area, which is dominated by China. See Geopolitics (Lanham:
Rowman & Littlefield Publishers, 2009), Introduction.
28. Jeffrey Paine criticized China’s policy towards South Asia in a paper origi-
nally published on the website of The National Interest (August 19, 2013).
Here see The Global Times (August 21, 2013).
100 X. SUI
29. China cannot have a holistic strategy towards SA partly because of a lack of
integrated identity in SA. To a certain extent, this lack of a regional identity
is attributable to India’s strategic thinking as well as various impediments
to the integration of SA politics, economy, and society. So, China’s policy
towards SA mainly remains at the level of bilateral interaction between
China and relevant states.
30. Cohen, Geopolitics, 7–9.
31. Zhao Gancheng, “On OBOR Strategy from South Asia Perspective and
India’s Choice,” The Contemporary World no. 6 (2015): 20–21.
32. See the second part of David Brewster’s chapter (Chap. 3) and David
Karl’s contribution (Chap. 6) herein for further information on this point.
33. http://finance.ifeng.com/a/20141029/13228636_0.shtml.
34. Here, the so-called “triple dependence dilemma” refers to three aspects on
which China’s security deeply depends: the importing of basic resources;
SLOCs from China’s coast through the South China Sea, the Strait of
Malacca, and across the Indian Ocean; and foreign oil-tanker fleets.
35. On the String of Pearls, see Christopher J. Pehrson, “String of Pearls:
Meeting the Challenge of China’s Rising Power across the Asian Littoral,”
The Strategic Studies Institute (2006). On the presence of PLAN in the
Indian Ocean, see Sudha Ramachandran, “China Moves into India’s
Backyard,” Asia Times, March 13, 2007, www.atimes.com/atimes/
South_Asia/IC13Df01.html. Additional information on both these topics
can be found in Brewster’s contribution to this volume (Chap. 3).
36. Juthathip Jongwanich et al., “Trade Structure and the Transmission of
Economic Distress in the High Income OECD Countries to Developing
Asia,” ADB Economics Working Paper Series no. 161 (2009), http://www.
adb.org/sites/defult/files/pub2009/Economics-WP161; and Doughyun
Park and Kwanho Shin, “Can Trade with the People’s Republic of China
Be an Engine of Growth for Developing Asia?” ADB Economics Working
Paper Series no.172 (2009), http://www.adb.org/sites/default/files/
pub/2009/Economics-WP172.
37. Ye Hai-lin, “Does China Need India’s Participation in MSR?” 2015,
http://www.thepaper.cn/newsdetail_fora=ward_1295387.
38. World Bank, South Asia: Growth and Regional Integration 2006
(Washington, DC: 2006). See also Pratap Bhanu Mehta, “Sovereignty
Tradeoffs and Regional Integration: Theoretical and Comparative
Reflections,” in International Relations Theory and South Asia, Vol. I,
edited by E. Sridharan (New Delhi: Oxford University Press, 2011), 46.
39. Asian Development Bank, “Asian Economic Integration Monitor,”
(2014), http://reliefweb.int/sites/reliefwebs.int/files/reliefweb_pdf/
node-654319.pdf.
40. The poor infrastructure and the initial stage of industrialization in SA have
seriously impeded cooperation both among between intra-regional states
and between the SA countries and extra-regional economies. According to

a World Economic Forum ranking of infrastructure development, the
overall level of infrastructure in SA is low or middling. Of 133 countries,
Sri Lanka, India, Pakistan, Bangladesh, and Nepal rank, respectively, the
64th, the 76th, the 89th, the 126th, and the 131st. It is predicted that the
total investment in infrastructure in SA in 2010 through 2020 will reach
USD $2.549 trillion, and accounts for nearly 11 percent of the region’s
GDP. It is much higher than the average 6.5 percent in Asian economies.
See Biswa Bhattacharyay, “Estimating Demand for Infrastructure in
Energy, Transport, Telecommunications, Water and Sanitation in Asia and
the Pacific: 2010–2020,” ADB Working Paper Series no. 248, http://
www.adbi.org/working-paper/2010/09/09/4062.infrastructure.
demand.asia.pacific.
41. The existing regional cooperative regime includes SAARC and SAFTA,
established in 1985 and 1997 respectively. Due to India’s incapacity to give
preferential treatment to goods and services produced by other members,
Indian-Pakistani conflicts, and disputes rooted in diversity, neither the
intra-regional liberalization of trade and investment nor mutual confidence-
building has reached the predicted objectives. See Li Xiangyang, “The
Diversified Cooperation Mechanism of MSR,” World Economics and
Politics 35, no. 11 (2014), 14; and Mehta, “Sovereignty Tradeoffs and
Regional Integration,” 49.
42. There is a debate on China’s strategy towards SA in the Chinese academic
and strategic communities. It focuses on whether Pakistan or India should
be selected as the strategic pivot-point in China’s chessboard of grand
strategy. So far the strategy towards SA is ambiguous.
43. For further information on the evolution of China–Maldives relations,
please see Srikanth Kondapalli’s contribution to this volume (Chap. 7).
44. http://news.iyuba.com/m/essay/2016/04/11/46031.html.
45. Ruhal Mishra, “What China Must Do to get India on Silk Route,” 2014,
http://www.rediff.com/news.
46. http://www.silkroadfund.com.cn/enweb/23809/23812/318098a4/
index4.html. CPEC is the focus of Jacob Jabin’s piece in this edited vol-
ume (Chap. 5).
47. Pradeep Srivastava, “Regional Corridors Development in Regional
Cooperation,” ADB Economics Working Paper Series, No. 258 (2011),
http://www.adb.org/sites/default/files/pub/2011/Economics-WP258.
pdf.
48. BIMSTEC, covering India, Sri Lanka, Nepal, Bhutan, Bangladesh,
Myanmar, and Thailand, was established in 1997. Its final objective is to
set up a Bay of Bengal rim FTA. So far, however, there has been no sub-
stantial progress because of disputes about tariff concession.
102 X. SUI
49. Li, “On the Diversified Cooperation Mechanism of MSR,” 15.

50. See “Joint Statement of the People’s Republic of China and the Republic
of India on the Construction of a More Closely Related Development
Partnership,” published in New Delhi by the Chinese and Indian govern-
ments on September 19, 2014.
51. For a detailed discussion of the MSRI’s challenges, see Jean-Marc F.
Blanchard, “Probing China’s Twenty-First-Century Maritime Silk Road
Initiative (MSRI): An Examination of MSRI Narratives.” Geopolitics 22,
no. 2 (2017): 246–268 and his introduction in this book.
52. Keohane, After Hegemony, 34.
53. Ibid., 49–64.
54. Xi Jinping, “Towards a Community of Common Destiny and a New
Future for Asia,” keynote speech delivered at the 2015 Boao Forum for
Asia Annual Conference, 2015, http://www.en84.com/nonfiction/
remarks/201503/000161043.html.
55. http://www.mhwmm.com/Ch/NewsView.asp?ID=8652. Geographically
Myanmar is located in Southeast Asia. I discuss events in Myanmar because
Myanmar is a member of BCIM and more importantly China takes it into
account when calculating its strategy towards SA and the Indian Ocean.
56. For further information, please see David Brewster’s and Srikanth
Kondapalli’s contributions to this edited volume (Chaps. 3 and 7
respectively).
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CHAPTER 5
The China–Pakistan Economic Corridor

and the China–India–Pakistan Triangle
Jabin T. Jacob
The Sino-Pakistani relationship is a long-term relationship of strategic

political and military interdependence. Chinese President Xi Jinping’s visit
to Pakistan in May 2015, despite several postponements, reiterates the
centrality of Pakistan to Chinese strategic interests in South Asia and the
wider region. However, it is only now with the launch of the China–
Pakistan Economic Corridor (CPEC), under the framework of China’s
“Belt and Road Initiative” (BRI), that the relationship is graduating to
become a more complex and multilayered one. This is a situation that
offers opportunities, but might create problems as well, not only for the
two principal actors but also for their neighbors.
More of the Same in China–Pakistan Relations?

At the inauguration ceremony of the China–Pakistan Year of Friendly
Exchanges in Pakistan in 2015, Chinese Foreign Minister Wang Yi
observed, “We Chinese have coined a special term for Pakistan, ‘Iron Pak,’
which means iron-clad, unalterable friends.” He asked, “Why is this so?
And why has it [the relationship] been so rock-firm and persistently
J.T. Jacob (*)

Fellow, Institute of Chinese Studies, Delhi, India

DOI 10.1007/978-981-10-5239-2_5
106 J.T. JACOB
strong?” Answering his own question, he suggested that it was so because

the bilateral relationship was:
based on high moral principles. Over the years, our two countries have ren-
dered each other mutual understanding, mutual trust and mutual support.
Rising above changing times and standing to the tests of international vicis-
situdes, our relationship has been exemplary for state-to-state relations …
Because our relationship has withstood the tests of trials and tribulations …
Because our relationship is one that is between men of noble characters.1
Whatever “high moral principles” might mean and the high rhetoric not-
withstanding, the China–Pakistan “all-weather friendship” is a relation-
ship of some substantial national-interest calculation on both sides. In the
immediate aftermath of 9/11, the warming of Indo-American ties created
pressure on China to improve its relations with India and thus China had
a greater geopolitical interest in keeping Pakistan at a distance. The recent
warming of the relationship has much to do with increasing attacks on
Chinese citizens and assets on Pakistani territory as well as the ingress of
Pakistan-origin terrorism and instability into Xinjiang via Uyghur separat-
ists, and perhaps, also via religious fundamentalists. Nevertheless, as the
geopolitical context changed with the United States of America (USA)
withdrawing from Afghanistan and facing fresh trouble in West Asia, as
well as equally importantly, reeling from the effects of the global financial
crisis, the Chinese policy calculus has also changed.2
One beneficiary of these developments has been Pakistan. After some
major issues in the mid-2000s, especially over terrorist attacks on Pakistani
soil against Chinese citizens and of which the thawing of Indo-Pak ties
during the same period might have been part of a cause-and-effect
dynamic, the China–Pakistan relationship seems to have picked up again.
The CPEC is a reflection of this. Xinhua has, in fact, termed the CPEC
“the ‘flagship project’ of China’s ambitious vision for a modern recon-
struction of the Silk Road” and Xi Jinping’s visit to Pakistan underlines
this aspect.3 And yet Xi’s visit was also not a single issue-based visit: terror-
ism continues to buffet ties even as strategic military relations continue to
be emphasized and strengthened. Chinese scholars have also not been shy
of highlighting the importance of the terrorism factor in China’s relation-
ship with Pakistan.4
Xi’s visit to Pakistan was the first by a Chinese head of state since Hu
Jintao’s visit in November 2006 and took place after several postponements.5
THE CHINA–PAKISTAN ECONOMIC CORRIDOR... 107
Despite the postponements, however, exchanges at the highest levels have

continued, with Pakistani leaders in particular visiting China frequently.
To cite recent examples of some significant meetings besides the multiple
yearly visits to China by the Pakistani president or prime minister, State
Councilor and Minister for Public Security Guo Shengkun received
General Ashfaq Parvez Kayani in Beijing in October 20136 while Meng
Jianzhu, Secretary of the Chinese Communist Party (CCP) Central
Committee’s Political and Legal Affairs Commission, met with Kayani’s
successor General Raheel Sharif in June 2014.7 It is also the case that visit-
ing Pakistani leaders always meet with Yu Zhengsheng of the Politburo
Standing Committee who also heads the leading group on Xinjiang affairs.
There is no doubt that these meetings have involved direct or oblique
statements to the effect that China was not happy with the measures that
the Pakistanis were taking in combating terrorism or at the very least in
preventing the spillover into Xinjiang.8
Also to be noted is the fact that Xi in a meeting with the chiefs of
Pakistan’s armed forces reportedly called Pakistan’s operations against
militants near the Afghan border “a game changer in bringing peace.”9
The Chinese might be trying to be appreciative of Pakistan’s efforts against
terrorism and to remind the rest of the world to be so, too, but clearly,
they are also not losing any opportunity to remind the Pakistanis to keep
working at counterterrorism.10 Such events as China’s repeated “technical
holds” at the United Nations Security Council on sanctions against the
Pakistanis Masood Azhar and Zakiur Rehman Lakhvi, responsible for sev-
eral terrorist attacks in India,11 do not necessarily reduce Chinese pressure
on Pakistan. As late as January 2017, in fact, it was reported that China
had tightened security along Xinjiang’s border with Pakistan-occupied
Kashmir, in order to prevent the flow of terrorists.12
Military Ties
The Sino-Pak military relationship continues to be important.13 China’s Central
Military Commission (CMC) members have also either visited Pakistan or
hosted Pakistani armed forces chiefs,14 often promoting, among other things,
joint development of weapons platforms, most prominently the JF-17
(Xiaolong) multirole fighter aircraft. Eight of these from the Pakistan Air Force
escorted President Xi’s plane into Pakistan in 201515 while six had done so
when Premier Li Keqiang had visited Pakistan in 2013.16 Pakistan and China
are also planning to sell these fighters to third countries,17 as well as their
108 J.T. JACOB
jointly developed Khalid tank.18 There has also been an arrangement in place
for some time between the two countries under which the Pakistanis allow the
Chinese to have access to Western military technologies.19
Chinese Defense Minister Chang Wanquan in a meeting with visiting
Pakistani Chief of Air Staff Air Marshal Tahir Rafique Butt in November
2014 sought to increase “practical cooperation in various fields with the
Pakistan military, such as military training, equipment and anti-terrorism.”20
It is no surprise then that Pakistan in 2015 approved the largest ever mili-
tary deal between the two countries, and also China’s largest arms-export-
ing deal, for eight submarines worth some USD $5 billion.21 Chinese
analysts also view the development of Gwadar port in Balochistan as guar-
anteeing maintenance and supply for Chinese naval vessels in the Indian
Ocean.22 That there will be opportunities in the military dimension for
China from the BRI is a given in many debates outside China.23 The CPEC
and its security is a case in point. Two Chinese ships handed over to the
Pakistani navy in January 2017 were specifically slated for deployment at
Gwadar “to ensure joint security along the CPEC sea route.” That such
military-equipment transfers to Pakistan will continue is evident in the fact
that the Chinese are constructing two more ships for Pakistan.24
Meanwhile, the Pakistanis have also engaged in their own brand of
flattery conferring, for instance, the Nishan-i-Imtiaz military honor on
General Xu Qiliang (then People’s Liberation Army [PLA] Air Force
[PLAAF] commander and now CMC Vice-Chair) in 200925 and the
Nishan-i-Pakistan on Li Keqiang during his visit there. Similarly, a book
launch was held for the Xi Jinping-authored The Governance of China, at
which a host of Pakistani leaders and commentators, led by the Pakistani
president Mamnoon Hussain himself, had nothing but the sweetest praise
for the book.26 No less a figure than the Pakistani prime minister’s brother
wrote an op-ed in the Global Times, praising the Xi visit to Pakistan.27
The CPEC: Resetting Sino-Pak Relations28

Also known as the “One Belt, One Road” (yidai yilu) or OBOR initia-
tive, the BRI comprises in the main the Silk Road Economic Belt (SREB)
connecting China to Europe through Central Asia and the 21st Century
Maritime Silk Road Initiative (MSRI) connecting China, via Southeast
Asia, South Asia, and West Asia, to Africa.29 The in-between points are
crucial from India’s point of view since these are all areas where Indian
empires and later the British Raj exercised influence, either together with
China or exclusively, for long periods of history. And yet today it is China
that appears to have run away with the game as it were, with India cut
out from Central Asia, struggling for influence in Southeast Asia, trying
to hold on to its dominant space in South Asia, and a bit player in West
Asia. India’s accession as full member to the Shanghai Cooperation
Organization in 2017 does not necessarily change this reality in the
immediate term.
The two main prongs of the BRI are actually overlays on pre-existing
networks of roads and railways that are now being fortified with additional
infrastructural capacity and new axes of communication branching off in
different directions. In South Asia, China has similarly attempted to incor-
porate the Bangladesh-China-India-Myanmar (BCIM) Economic Corridor
and the Karakoram highway through Pakistan as part of the BRI. The lat-
ter, in fact, has a new nomenclature as the CPEC, with an extension up to
the Arabian Sea coast of Pakistan.
Xi’s visit, and earlier Li Keqiang’s, have tried to reset the relationship
with Pakistan away from one of purely military/Cold War-era transac-
tions and political stability interests to one of greater strategic depth,
integrating both China’s domestic economic development interests and
wider diplomatic goals in the neighborhood.30 Li has been quoted as say-
ing that the CPEC provided a strategic framework for China and Pakistan
to carry out “practical cooperation,” while Pakistan has been declared as
forming part of China’s ambitions for what it calls “a community of com-
mon destiny.”31
China and Pakistan operationalized a free trade agreement (FTA) in
2007 and had a bilateral trade of USD $13 billion in 2013, which was
expected to reach USD $15 billion by 2015 and USD $20 billion within
the following three years (Table 5.1).32
Major Chinese exports to Pakistan include mobile phones, machinery,
and steel, while Pakistani exports to China included mainly textile yarn,
agricultural products, and unwrought copper and copper products.
Islamabad has highlighted a large trade deficit, the need to ensure easier
access for Pakistani products in China and for a level playing field for
exporters from Pakistan, and the need to encourage investment and trade
delegations from China for bulk purchases from Pakistan.33 Why is this call
of encouragement to Chinese investment and delegations needed, even
after the CPEC announcement? Clearly, there are concerns in Pakistan
about the pace of progress of the CPEC. The Pakistani government has in
fact blamed this on the Chinese side.34
110 J.T. JACOB
Table 5.1 Pakistan–
Trade
China Bilateral Trade,
2005–2014 Year (USD $ billions)
2005 2.798
2006 3.420
2007 4.787
2008 5.467
2009 4.794
2010 6.743
2011 8.159
2012 9.309
2013 9.295
2014 11.874
Source: Trade Statistics Branch, United

Nations Statistics Division (2016)
Generally, Pakistani global exports have been declining for a variety of

reasons, among which is that the energy crisis has significantly reduced the
textile industry’s production capacity, especially in Punjab.35 According to
Chinese reports, Pakistan needs as much as USD $20 billion in investments
over the coming five years to overcome a 10,000 MW shortfall in power
capacity.36 These figures indicate the dire economic development straits
that Pakistan finds itself in and full credit must be given to the Chinese for
identifying and targeting these areas as critical to ensuring Pakistan’s politi-
cal stability. A “1+4” Sino-Pak cooperation structure has been envisaged
with the CPEC at the center and the Gwadar Port, transport infrastructure,
and energy and industrial cooperation being the four key areas.37
China’s promised infrastructure investments “nearly equal” the amount
of foreign aid the USA has provided to Pakistan over the past decade in
support of its war efforts in Afghanistan.38 During Xi’s visit to Pakistan,
some USD $28 billions’ worth of agreements were signed to build roads,
ports, and power plants.39 However, projects started taking off well before
the visit. For instance, Prime Minister Nawaz Sharif broke ground as part
of a ground-breaking ceremony for a section of the 60 km-long four-lane
fenced Hazara motorway in Khyber Pakhtunkhwa province, expected to
cost USD $297 million.40
The USD $1.65-billion Karot hydropower project near Rawalpindi was
the first declared investment under China’s Silk Road Fund, plans for
which were unveiled during the Xi visit to Pakistan.41 The list of other
important projects announced in the early days of the CPEC include USD
$3.7 billion worth of upgrades of the 1681-km Karachi-Lahore-Peshawar
rail line, USD $2.8 billion for four coal-fired stations (totaling 1980 MW)
plus another USD $2.2 billion to develop two coal-mining blocks at Thar,
Sindh, a USD $2-billion LNG pipeline and terminal between Gwadar and
Nawabshah, USD $2.09 billion for two coal-fired generation plants at
Port Qasim, Karachi (total capacity of 1320 MW), USD $930 million
links to the Karakoram highway from Islamabad and Havelien, and USD
$230 million for building an international airport at Gwadar.42 Including
the airport, Chinese investment in the Gwadar project totals some USD
$1.62 billion, also covering the construction of an eastern expressway
linking the harbor and coastline, a breakwater, and nine other projects
expected to be complete in three to five years.43 Just over USD $1.5 bil-
lion has also been committed for a 900-MW solar power park in
Bahawalpur, Punjab and a 100-MW wind farm at Jhimpir, Sindh.44
According to a 2015 figure, 21 agreements on gas, coal and solar energy
projects were expected to add some 16,400 MW of electricity—roughly
equivalent to Pakistan’s existing capacity.45
Subsequently however, many projects under the CPEC framework have
been moved around in the order of priority for completion for a variety of
economic, political, and legal reasons. Questions about the progress and
viability of CPEC projects inevitably depend on a range of factors includ-
ing China’s own economic growth and conditions and the state of play of
politics in Pakistan itself, which is explained in the next section.46 Suffice it
to say here, the Chinese have some experience working in Pakistan and
dealing with Pakistani conditions, but both the scale of the CPEC and of
Pakistan’s economic underdevelopment and political and social conditions
demand an altogether different sort of commitment and patience in order
to ensure that these investments and projects fructify. The Chinese might
well receive a crash course in the politics and society of their South Asian
neighbors that their close military and diplomatic partnership in the past
has not prepared them for.
CPEC and Pakistan’s Internal Dynamics

China’s BRI will inevitably run into problems arising out of internal con-
ditions in the countries it passes through.47 The CPEC is no exception.
Pakistan’s internal political dynamics have major implications for the
development and success of the CPEC.
112 J.T. JACOB
Security
Security is of course, the first obstacle. Chinese leaders have repeatedly
called on Pakistan to take effective measures to ensure the safety of Chinese
projects and people in Pakistan.48 The CPEC is now additional reason for
the Chinese to stress security cooperation with Pakistan, but this is not
entirely a one-way street, with Pakistan and China gaining political and
military leverage against India and the Chinese not publicly demanding
much of Pakistan internally. However, there appears to be at least some
amount of pressure, in discussions on countering terrorism, for the
Pakistanis to also walk the talk. The connection between CPEC and
Pakistan’s security situation is explicit, for instance, in an article which is
headlined “China vows to back Pakistan’s anti-terrorism efforts,” but
which also talks about China’s willingness “to work closely with Pakistan
to upgrade our strategic coordination, deepen all-round cooperation, and
step up the building of [the] China–Pakistan economic corridor.”49
Indeed, it was at the aforementioned meeting between Meng and
General Sharif that the former declared that China was “willing to enhance
cooperation with Pakistan in combating terrorism to protect the security
of Chinese personnel and institutions in Pakistan and maintain national
and regional security and stability.”50 The emphasis in this statement is, of
course, on protecting the security of Chinese citizens and institutions, no
doubt a reference to Chinese economic assets and enterprises. Here per-
haps, is an early indication that China might be willing to take a more
direct role in Pakistan where Chinese interests are at stake. It is possible
that Pakistan’s announcement that it plans to train more than 12,000
security personnel and establish a “special unit” to protect Chinese work-
ers in the Corridor are directly linked to these interactions.51
For his part, then Pakistan Army chief General Sharif, at an inspection of
a road project under the CPEC in Balochistan, declared that the “CPEC
and Gwadar Port will be built and developed as one of the most strategic
deep sea port in the region at all costs.” In his speech during the inspection
tour he also made references to the support of the local people and to
Pakistan’s anti-terror operation, Zarb-e-Azb, in effect also highlighting the
challenges the CPEC faced.52 Meanwhile, Chinese analysts are careful.
Wang Dehua, formerly of the Shanghai Institutes for International Studies,
has been quoted as saying that while the problems of building infrastructure
in Balochistan, including those posed by militants, could be overcome, this
would take time.53 Shi Yinhong (Renmin University) has also stated that
Chinese enterprises were not only worried about their profits in Pakistan,
but also about security and domestic stability there.54 Zheng Yu of Fudan
University has also highlighted the risks to China from BRI investments in
unstable nations, of which Pakistan is surely one. At the same time, there
are also attempts by other Chinese commentators to present a rosier pic-
ture on the security front. One Global Times op-ed, for instance, following
an attack in June 2016 against Chinese engineers working on a CPEC
project in Sindh, suggested that even as more such attacks might be
expected due to “Pakistan’s domestic and foreign opposition groups” these
in effect also implied that the CPEC was “achieving real progress.”55 There
is also now talk of a joint counter-terror command between the armies of
the two countries, which has come about specifically in the context of the
security of the CPEC.56
Regional Divides
There are Pakistani news reports about the difficulty of achieving consen-
sus on the CPEC between the various political parties, especially on the
exact alignment of the route.57 The Chinese too, have acknowledged this
reality, and that of a general history of political instability in Pakistan.58 As
time passes, and the results take time to show, there is every likelihood that
fissures will solidify or re-emerge between the provinces in Pakistan. Punjab
has been specifically accused by Balochistan and Khyber Pakhtunkhwa
leaders of manipulating Chinese investments to serve its own interests and
dominate the Pakistani economy, resources, and institutions. The conten-
tion is that while the mineral resources being exploited belonged to the
poorer provinces, as did many of the important trade routes, the energy
infrastructure was being hoarded by Punjab. Provincial politicians have also
lobbied Chinese diplomats and officials, including Xi.59
During the Xi visit, Pakistani Prime Minister Nawaz Sharif took care to
mention that the CPEC would “benefit all provinces and areas in Pakistan,
and transform our country into a regional hub and pivot for commerce and
investment” (emphasis mine). Xi attempted to strike a similar note, saying,
“These projects span across the provinces and areas of Pakistan and the two
sides have also made it clear that they will include the central and western
lines of the corridor in the long and midterm plans …” (emphases mine).60
It is also the chief minister of Balochistan province who is the patron-in-
chief of the Pakistan–China Economic Corridor Council (PCECC). At the
inauguration of the Council, Federal Minister for Planning and Development
114 J.T. JACOB
Ahsan Iqbal declared, “I feel very proud after signing the CPEC docu-
ments from [the] Pakistan side because I know this historical project will
open a gate of opportunities for all areas and people of Pakistan.”61 The list
of 51 Memorandums of Understanding signed between Pakistan and
China does appear to cover all Pakistani provinces.62
Such regional divides in Pakistan could create a political backlash for
Chinese interests as the CPEC matures, and the Chinese seem well aware
of this.63 Awami National Party leader Iftikhar Hussain has warned that
the dissatisfaction over the CPEC could turn Khyber Pakhtunkhwa and
Balochistan against China, stating, “If someone is determined to commit
an economic genocide of our people, it is my duty to resort to everything
possible to defend them … If our legal and peaceful protests are not heard,
we will be forced to adopt illegal and extraconstitutional means.”64 These
attitudes and positions within Pakistan could affect not only the progress
of the CPEC but also the stability of the Pakistan government itself.
Pakistani Expectations
According to a Pew Research Center survey in 2014, 78 percent of
Pakistanis held a favorable opinion of China, compared to just 14 percent
having a similar view of the USA.65 As Chinese involvement in the Pakistani
economy deepens, the two peoples will come into greater contact with
each other, or at the very least, ordinary Pakistanis will certainly come into
greater contact with actual Chinese entities and citizens in a far more con-
sequential way than they ever have before. It will no longer only be the
speeches and statements of their leaders that will inform them about
China, but actual bread-and-butter issues of roads and employment,
including dealing with Chinese businessmen, investors, work supervisors,
and so on. This then creates the risk that the positive images that both
sides have held of each other for so long will also begin to be shaken. Some
Chinese scholars foresee precisely this possibility and have suggested that
the Chinese government therefore increase its understanding of local cul-
tures and communication with local communities.66
The USD $1.4-billion Karot hydropower project, scheduled to become
operational by 2020, will be run by the Chinese for 30 years before being
handed over to Pakistan.67 In other words, this is a build-operate-transfer
project, but with a significant time lag. A Chinese news report on the
Port Qasim power plant outside Karachi also indicated that “in the long
run, Chinese companies would have the option to relocate some of its
production capacity to Pakistan, due to the country’s large population

base and relatively low labor cost.” However, it is also not clear what the
terms would be, nor entirely certain that this relocation will come to frui-
tion given “stability issues.”68
On employment specifically, it was not until early 2017 that the first
figures for employment outside of the security domain began to be pro-
vided. One Pakistani source reported that 2.32 million jobs would be gen-
erated by the CPEC, but without providing exact details of which projects
would create exactly how many jobs, only saying “one finds thousands of
Pakistani engineers and laborers working hand in hand with their Chinese
counterparts” and, in another instance, “[t]hese jobs are likely to be on
ground within a span of [the] next two years.”69 However, such informa-
tion is still rarely highlighted or available in any consistent manner.
Moreover, there are also fears that the CPEC might—as in the case of the
FTA—in fact, lead to a loss of jobs because of the influx of cheaper Chinese
goods that would drive Pakistani products out of the market.70
There are other potential problems. For instance, the lack of adequate
representation of locals such as, say, Balochis in the Gwadar port, environ-
mental damage, and so on, could create additional problems, adding to
those that the CPEC is trying to solve. It is, of course, already well known
that Baloch separatists are opposed to Chinese investments in the prov-
ince, fearing an ingress of migrants from Punjab and Sindh.71
Meanwhile, some big-ticket investments such as the Karot dam project
on the Jhelum in Punjab province, which is also the first investment proj-
ect under China’s USD $40-billion Silk Road infrastructure fund, are
likely to generate both environmental problems as well as allegations of
corruption.72 There are, in addition, other concerns highlighted by
Pakistani intellectuals and international agencies about costs and transpar-
ency issues related to the CPEC, issues that are only likely to grow in
volume and significance.73
Economic Returns
The issue of returns from its investments is also an important question for
China. The Pakistanis themselves realize that “Chinese investors are not
here for charity.”74 Since Chinese investments abroad are encouraged,
partly in order to address domestic overcapacity problems and subse-
quently declining returns, the question is whether Pakistan can repay
its loans and if it will provide the best return on Chinese investments.
116 J.T. JACOB
If Pakistan does not do this, then China will not only have lost investment
returns, however low their value at home, it will also face the prospect of
being unable to get its investments back, a lose–lose scenario for the two
countries. Even though Pakistan has exempted Chinese investors in power
generation from income tax, sales tax, promotional tax, and withholding
tax, and also provides support in the form of legal assistance, foreign-
exchange guarantees, export credit, indexing of energy prices to inflation
rates, and so on, questions about China’s eventual return on its investment
are valid given the current state of the Pakistani economy.75 In essence, this
is a bit of a catch-22 situation whereby Pakistan needs massive infusions of
capital to get its underdeveloped economy and human resources into any
sustainable state of development and growth, but its political instability,
weak rule of law, difficult civil-military tensions and unstable security situa-
tion conspire also to heighten the risks for such infusions of capital.
The combination of equity investments and loans that is the main fea-
ture of the BRI projects will be supported by a combination of public and
private investors, as well as both existing and new international organiza-
tions.76 China, therefore, seeks to spread the risk a little, even as it portrays
itself as taking the lead in creating a new model of state-to-state relations
as well as that of a power that rises peacefully, and also does so by means
of sharing the benefits of its own economic development and growth.
However, a viable balance of equity and loans over the long term is diffi-
cult to achieve in the best of situations and China is trying to achieve this
in one of the most politically unstable and dangerous countries in the
world, one in which its own citizens have already been targeted on account
of nationality. A Pakistani analyst writing in the Global Times himself
pointed out his country’s “past indifferent record” on seeing projects
through to completion, warning that “[w]ith the whole world competing
for Chinese investment, there is no room for backsliding.”77
Clearly, then, returns in terms of money cannot be the only driving fac-
tor for Xi and his colleagues at the top rungs of the Chinese leadership.
There are, thus, certainly strategic geopolitical imperatives that drive the
CPEC but what is less clear is how Xi will manage the internal contradic-
tions within the Chinese system whereby the central and provincial-level
state-owned enterprises (SOEs) have increasingly displayed a mind of their
own, despite the anti-corruption crackdown aimed at making them fall in
line with the Party’s injunctions. In the main, this has to do with these
enterprises’ need to fulfill their primary mandate, which is to turn in a
profit. SOE leaders and managers, particularly those at the provincial level,
are likely to be less concerned about grand national strategic objectives
and more about safety and profits. In other words, it is possible that China
will not deliver on all its promises to Pakistan. Apart from all the factors
mentioned above, the progress of the CPEC will also depend on how
much sustained interest Chinese leaders take in Pakistan; this outcome will
depend partly on geopolitics and for China will involve issues and areas
that do not necessarily have anything to do with Pakistan.
All of this also has implications for the larger China-India-Pakistan
triangle.
CPEC and India
Beyond the conflictual dynamics, there are other ways in which the CPEC
is viewed in Pakistan and in China. For Pakistan, the CPEC connects
China with West Asia and Central Asia, and the Chinese see the Corridor
as providing them with “an important land route to its markets in Europe
and Africa.”78 While the Pakistanis see the CPEC as part of Chinese stabi-
lization efforts in the AfPak (Afghanistan and Pakistan) region, they also
view the CPEC as “ultimately expand[ing] to link other countries, stimu-
lating an economic and trade boom in the region.”79 Surely, then India
must also be part of the mix.
Indeed, Pakistani analysts have noted that despite the boundary dispute
with India and tensions due to growing Indo-US ties, China has tried to
maintain good relations with India with a growing economic relationship.
Pakistani leaders “need to learn from the sophistication of China’s foreign
policy.”80
A People’s Daily commentary specifically stated that “China, Pakistan and
India have all recognized that the zero-sum game can only result in mutual
pain” before going on to state that “Sino-Pakistan cooperation is not only
conducive to improving the trade and investment environment in Pakistan,
but also helps improve the security environment in [the] South Asia and
Central Asia region as well as reduce security risks in the region.”81 In the
latter statement, it is not entirely clear if the “security risks” are emanating
from India or from Pakistan, but as it is left open-ended, there is a certain
display of neutrality and an acknowledgement that economic engagement,
perhaps involving India, was essential for stability in the region.
China’s BRI strategy presents India with a challenge from which it can-
not run away. Indian policymakers have declared that while India joined
118 J.T. JACOB
the Asian Infrastructure Investment Bank because it was an international

institution with certain rules and a clear framework, they are chary of join-
ing the BRI because it lacks a clear structure or design and because the
Chinese have never discussed the matter with them. As the Indian Foreign
Secretary, S. Jaishankar, declared in Singapore in 2015, the BRI was “a
national Chinese initiative … devised with [Chinese] national interest”
and therefore, it was “not incumbent on others to buy it.”82 These and
subsequent statements have set up India in opposition to what is a major
Chinese foreign-policy plank and one that the Chinese are not likely to
back away from or stop promoting.83
New Delhi has made the significant mistake of expecting more clarity
from the Chinese on a project (i.e., the BRI) which is probably not very
detailed even for the Chinese, except at the broadest possible level. It is cer-
tainly true that this is a Chinese initiative in the Chinese national interest and
that it is most certainly intended to cement Chinese influence in its near and
extended neighborhood leading to the exclusion of other significant actors
such as the USA, Japan, Russia, and India. However, given that the initiative
is still evolving and given that India is not seen in the same threat category as
the USA or Japan, New Delhi still has considerable leeway to influence,
shape, and direct the BRI as the Chinese struggle to give it momentum and
overcome suspicions from other countries in the early stages.
Specifically with respect to the CPEC, as it runs through Pakistan-
occupied Kashmir, the Indian government has made it unambiguously
clear to Beijing that this is a violation of its sovereignty. A China that is
touchy about its sovereignty claims in the South China Sea is expected to
understand. This also makes official Indian acceptance of and participation
in the BRI initiative all the more difficult, which in turn, imposes real
opportunity costs on China. For the MSRI to succeed, Beijing will need
India’s cooperation. China’s difficulties in Sri Lanka with the loss of
Mahinda Rajapaksa in the presidential elections earlier this year and Indian
Prime Minister Narendra Modi’s visits to Sri Lanka, Mauritius, and
Seychelles show that India continues to exercise a fair degree of influence
in the Indian Ocean region.84
However, the CPEC is also an opportunity for India to recalibrate its
own approach to the Sino-Pakistani relationship. Saving the Pakistani
economy and/or bolstering the Chinese economy might well be in
India’s strategic interest. For Beijing to give greater weight to Indian
concerns and to stop deferring to Rawalpindi or Islamabad, India must also
be seen by both the Chinese and the Pakistanis to be reasonable and
accommodating. New Delhi could start by dialing down its noise on the fact
that the CPEC passes through Pakistan-occupied Kashmir. Instead, India

could, without prejudice to its position on Kashmir, cultivate important
constituencies in both neighbors by showing greater openness to con-
necting the Indian economy with the CPEC. In essence this would actu-
ally only be an extension of the cross-LOC trade initiatives and other
exchanges that have continued desultorily between India’s Jammu and
Kashmir and Pakistan-occupied Kashmir.
While neither the Pakistanis nor the Chinese have officially given any
indication that they are interested in such a possibility, there was at least
one instance in which a serving lieutenant-general in the Pakistan army
openly extended an invitation to India to join the CPEC. However, the
invitation was conditional on India putting a stop to alleged “anti-Pakistan
activities and subversion,” which calls into question the sincerity of the
offer.85 Chinese commentators, too, seem inclined to believe such Pakistani
allegations and their references to “hostile forces” also appear to include
India by implication.86
For China’s SOEs however, what might count as more important are
the kind of returns on their investment that Pakistan can provide. Chinese
SOEs are a politically powerful interest group within the CCP and are
under pressure at home both from the anti-corruption drive and from
turbulence in the domestic economy. Going abroad is, therefore, an escape
in more ways than one and despite Sino-Indian tensions, and also in the
context of the CPEC, they are surely aware that the Indian market is the
real prize in China’s much-vaunted BRI.
Politically, meanwhile, China’s support for India’s membership of the
SCO suggests that Beijing might well be hoping for a level of involvement
in the AfPak region that ensures there is at least a veneer of multilateral
consensus, if not also action, on the region’s severe security challenges.
China has, for example, desired to prioritize the SCO’s role in the region
and its call for SCO members to “coordinate and cooperate closely to
actively deal with the new regional threats and challenges” is significant.87
As part of its discourse that tries to paint the separatist movement in
Xinjiang as largely a terrorism problem, China has also called for SCO
members to increase cooperation in law enforcement, intelligence sharing,
personnel training, antiterrorism, and combating drug trafficking.88 China
and India conduct the annual Hand-in-Hand antiterror exercises and
there has been considerable interest on the Chinese side to scale these up
substantially. During CMC Vice-Chairman General Fan Changlong’s visit
to India in November 2015, both sides agreed on the need for coopera-
tion in fighting terrorism.89
120 J.T. JACOB
Conclusion
On his arrival in Islamabad, Xi declared that he felt like he was “returning
to the home of my own brother.”90 Chinese Foreign Minister Wang Yi
characterized China and Pakistan as “iron brothers” and stated that the
brotherhood “will never go rusty.”91 Perhaps not, but the brotherhood
certainly has cracks in it. An op-ed in the Global Times on the eve of the Xi
visit seemed to be at pains to emphasize:
Pakistan is no “little brother” to China and under no circumstances will it

be manipulated to fight in China’s favor. Beijing has never pushed Islamabad
to do anything with its geopolitical position nor has China tried to turn it
into a Chinese geopolitical outpost. Every single cooperation between
China and Pakistan is in line with mutual benefits and win-win principles.92
The need to stress this aspect suggests there are, in fact, tensions in the
relationship, or that there is a need for China to be seen as a neutral, hands-
off partner perhaps not just by Pakistan but also by other external actors.93
Leaving aside the security situation, it is not clear the Pakistanis are
likely to give the Chinese any quarter when it comes to taking their cut—
the lack of a strong legal framework or of much organized labor in
Pakistan, and the reality of the way businessmen-politicians work there, for
example former Pakistani President Asif Ali Zardari or Prime Minister
Nawaz Sharif, suggests that there are at least as many opportunities for
rent-seeking on both sides as there are for national development in
Pakistan or for China to achieve its strategic goals.
In effect, just as in the case of the Sino-Indian economic relationship
where the bonhomie evaporated as soon as India’s trade surpluses turned
into persistent trade deficits with China, the CPEC and its attendant con-
sequences might actually introduce more complications in the relation-
ship, which cannot always be transcended at the highest leadership level or
by the Pakistani security forces capturing and handing over a few Uyghur
militants to the Chinese.
Indeed, problems will not be far from the surface once the Corridor
finally starts taking shape, in particular if the promised benefits do not
materialize for certain sections, ethnic groups, or provinces in Pakistan.
If this happens, then China will be far more exposed and vulnerable to
Pakistan’s internal political dynamics than it has hitherto been. And this is
not something it can really rely on either the Pakistan Army or the central
government civilian leadership to help it tackle.
From the Indian point of view, this presents an opportunity to see if

India can help expand the definition of “strategic goods” for the Chinese
in their relationship with the Pakistanis from just deliverables on the mili-
tary side. Indian policymakers, by taking a black-and-white view of the
Sino-Pakistan relationship, ignore the possibilities that China offers as a
pressure point on Pakistan.
Notes
1. The People’s Republic of China, Ministry of Foreign Affairs, “Remarks by
Foreign Minister Wang Yi at the Inauguration of The Year of China-
Pakistan Friendly Exchanges,” February 13, 2015, http://www.fmprc.
gov.cn/mfa_eng/wjb_663304/wjbz_663308/2461_663310/
t1244615.shtml.
2. For more on these concerns in China’s policy towards Pakistan, see Jabin
T. Jacob, “China-Pakistan Relations: Reinterpreting the Nexus,” China
Report, 46, no. 3 (2010), 216–228; and Jabin T. Jacob, “The Future of
China-Pakistan Relations after Osama bin Laden,” Associate Paper, Future
Directions International, August 8, 2011, http://futuredirections.org.
au/wp-content/uploads/2011/08/FDI%20Associate%20Paper%20-%20
08%20August%202011.pdf.
3. “China Voice: Old friends, new cooperation,” Xinhua, June 4, 2015,
http://news.xinhuanet.com/english/2015-06/04/c_134297754.htm.
Other reports call the CPEC “key” to or an “important model” for the
entire BRI. See for example, Chu Daye, “Pakistan Corridor Key to ‘One
Belt, One Road,”’ Global Times, April 16, 2015, http://www.globaltimes.
4. See, for example, Shi Zhiqin and Lu Yang, “The Benefits and Risks of the
China-Pakistan Economic Corridor,” Carnegie-Tsinghua Center, December
21, 2016, http://carnegietsinghua.org/2016/12/21/benefits-and-risks-
of-china-pakistan-economic-corridor-pub-66507.
5. “Xi Jinping to Make First State Visit to Pakistan,” South China Morning Post,
February 13, 2015, http://www.scmp.com/news/china/article/1711762/
xi-jinping-make-first-state-visit-pakistan; and Ananth Krishnan, “China
Considers Presidential Visit to Pakistan Amid Security Concern,” India Today,
February 4, 2015, http://indiatoday.intoday.in/story/china-presidential-
visit-pakistan-amid-security-concerns/1/416916.html.
6. “Regional security discussed with China,” Dawn, October 29, 2013,
https://www.dawn.com/news/1052580.
7. “China Pledges Cooperation with Pakistan against Terrorism,” People’s
Daily Online, June 6, 2014, http://en.people.cn/n/2014/0606/c90883-
8737539.html.
122 J.T. JACOB
8. “China Vows to Back Pakistan’s Anti-Terrorism Efforts,” Xinhua,

January 26, 2015, http://news.xinhuanet.com/english/china/2015-
01/26/c_133948230.htm. For a Pakistani acknowledgement of Chinese
concerns over “growing radicalism in Pakistan,” see Talat Masood
“Pakistan’s Unique Relations with China,” The Tribune, February 11,
2015, http://southasiamonitor.org/detail.php?type=n&nid=10660.
9. “China Picks Pakistan Dam as First Stop on US$40b Silk Road
Investment Plans,” South China Morning Post, April 21, 2015, http://
www.scmp.com/news/china/diplomacy-defence/article/1772841/
china-picks-pakistan-dam-first-stop-us40b-silk-road.
10. See, for instance, “China Supports Pakistan’s National Anti-Terror Plan,”
Xinhua, December 26, 2014, http://news.xinhuanet.com/english/
china/2014-12/26/c_133881110.htm; and China Military Online,
“China Vows Anti-Terror Cooperation with Pakistan,” March 27, 2015,
http://english.chinamil.com.cn/news-channels/china-militar y-
news/2015-03/27/content_6416409.htm.
11. Sushant Singh, “Behind the News: Lakhvi, UNSCR 1267, and China’s
“Technical Hold,”’ The Indian Express, June 25, 2015, http://indianex-
press.com/article/explained/behind-the-news-lakhvi-unscr-1267-and-
chinas-technical-hold; and “China Extends Its Veto on India’s Move for
UN Blacklisting of Jaish Chief,” Hindustan Times, October 1, 2016,
http://www.hindustantimes.com/india-news/china-extends-veto-on-
india-s-move-for-un-blacklisting-of-jaish-chief-masood-azhar/story-
Ut9sxWSJGQJb5Rc70cIweM.html.
12. “China Tightens Xinjiang Border amid Rising Terrorist Threats,”
South China Morning Post, January 10, 2017, http://www.scmp.com/
news/china/policies-politics/ar ticle/2060837/china-tightens-
xinjiang-border-amid-rising-terrorist.
13. See for instance, “Chinese FM Hails China-Pakistan Military Ties,”
Xinhua, February 14, 2015, http://news.xinhuanet.com/english/
china/2015-02/14/c_127494933.htm; “Air Forces of China and
Pakistan Cement Ties,” China Military Online, June 2, 2015, http://
eng.chinamil.com.cn/news-channels/china-military-news/2015-06/02/
content_6520025.htm; Zhao Yanrong, Wu Jiao and Wang Xu, “Fighting
Terrorism Remains Priority,” China Daily, April 21, 2015, http://www.
chinadaily.com.cn/china/2015-04/21/content_20495354.htm. See also
Masood, “Pakistan’s Unique Relations with China.”
14. For example, “Chinese Navy Commander Meets Pakistani Counterpart,”
China Military Online, March 26, 2015, http://eng.chinamil.com.cn/
news-channels/2015-03/26/content_6415388.htm.
15. “Pakistan Dispatches 8 Fighters to Escort Xi’s Plane on State Visit,”
Xinhua, April 20, 2015, http://news.xinhuanet.com/english/2015-
04/20/c_134167315.htm.
16. Mandip Singh, “Li Keqiang Visit to Pakistan: Assessing the Outcome,”
Institute for Defence Studies and Analyses, June 5, 2015, http://www.
idsa.in/issuebrief/LiKeqiangVisittoPakistan_mandipsingh_050613.
17. “Pakistani Air Commodore: 11 Countries Want to Purchase JF-17,” China
Military Online, January 27, 2015, http://eng.chinamil.com.cn/news-
channels/china-military-news/2015-01/27/content_6325314.htm.
18. “俄媒:中巴哈立德坦克若能大卖将击败西方坦克” (Emei: Zhong-Ba Halide
tanke neng da mai jiang jibai xifang tanke) [Russian Media: China-Pakistan
jointly developed “Khalid” tank, if sold, will challenge the hegemony of
Western tanks], Huanqiu Shibao [Global Times], February 16, 2015, http://
oversea.huanqiu.com/article/2015-02/5700703.html.
19. Jonah Blank, “Thank You for Being a Friend,” Foreign Affairs, October
15, 2015, https://www.foreignaffairs.com/articles/china/2015-10-15/
thank-you-being-friend.
20. “China, Pakistan Pledge to Strengthen Air Force Cooperation,” Xinhua,
November 14, 2014, http://news.xinhuanet.com/english/china/2014-
11/14/c_133790591.htm.
21. “China, Pakistan to Sign Largest Military Contract: Reports,” People’s Daily
Online, June 3, 2015, http://en.people.cn/n/2015/0403/c90786-
8873628.html.
22. Zhao Gancheng, Shanghai Institutes of International Studies, quoted in
Liu Sha and Chen Heying, “Gwadar Set to Be Regional Hub as Port
Readies Launch,” Global Times, April 15, 2015, http://www.globaltimes.
23. Jean-Marc F. Blanchard, “Probing China’s Twenty-First-Century Maritime
Silk Road Initiative (MSRI): An Examination of MSRI Narratives,”
Geopolitics 22, no. 2 (2016), 246–268.
24. “Two Chinese Vessels Arrive to Secure Gwadar Port,” The Express Tribune,
January 15, 2017, http://tribune.com.pk/story/1295572/two-chinese-
vessels-arrive-secure-gwadar-port.
25. “Zardari Awards Nishan-e-Imtiaz to Chinese Commander,” Dawn, April
11, 2009, http://www.dawn.com/news/456613/zardari-awards-nishan-
e-imtiaz-to-chinese-commander; and Singh, “Li Keqiang Visit to Pakistan.”
26. Omer Qayyum and Sabahat Afsheen, “Launching Ceremony of Book
“President Xi Jinping—The Governance of China,”” Pakistan-China
Institute, December 27, 2014, http://www.pakistan-china.com/news-
detail.php?id=Mzk0&pageid=news.
27. Muhammad Shahbaz Sharif, “Xi’s Heartwarming Visit Demonstrates Iron
Brotherhood of China and Pakistan,” Global Times, June 1, 2015, http://
www.globaltimes.cn/content/924836.shtml.
28. The CPEC also is addressed in Xinmin Sui’s chapter (Chap. 4) in the spe-
cific context of China’s strategy towards SA as well as the challenges China
faces in bringing the MSRI to fruition.
124 J.T. JACOB
29. See the introduction in this volume by Jean-Marc F. Blanchard as well as

various other chapters for additional detail on the MSRI and the SREB.
30. Bai Tiantian, “Xi Upgrades Pakistan Ties,” Global Times, April 21, 2015,
http://www.globaltimes.cn/content/917856.shtml; and Xu Changwen,
“New Momentum for Ties with Pakistan,” China Daily, April 17, 2015,
h t t p : / / w w w. c h i n a d a i l y. c o m . c n / o p i n i o n / 2 0 1 5 - 0 4 / 1 7 / c o n -
tent_20453755.htm.
31. The quotes come from, respectively, “Chinese Premier Emphasizes All-
Round Cooperation with Pakistan,” Xinhua, January 30, 2015, http://
news.xinhuanet.com/english/china/2015-01/30/c_133959971.htm;
and “Xi’s Fruitful Visit Leads China, Pakistan to Closer Community of
Common Destiny,” Xinhua, April 22, 2015, http://news.xinhuanet.
com/english/2015-04/22/c_134171477.htm.
32. Bai, “Xi Upgrades Pakistan Ties.”
33. Chen Yingqun, “Pakistani Ambassador Welcomes China’s Help in
Developing Agriculture,” China Daily, January 22, 2015, http://www.
chinadaily.com.cn/world/2015-01/22/content_19377133.htm.
34. Shahbaz Rana, “Army Seeks Role in CPEC Administration,” The Express
Tribune, April 16, 2016, http://tribune.com.pk/story/1085784/
for-timely-completion-army-seeks-role-in-cpec-administration.
35. Farooq Tirmizi, “Trade Map: Why Are Pakistan’s Exports Declining?” The
Express Tribune, January 11, 2015, http://tribune.com.pk/story/820203/
trade-map-why-are-pakistans-exports-declining.
36. “China Picks Pakistan Dam as First Stop on US$40b Silk Road Investment
Plans.”
37. Regarding the Gwadar port, Chinese Overseas Port Holdings Ltd., a sub-
sidiary of China State Construction Engineering Corporation, has been
granted the right to operate Gwadar for 40 years. Two thousand, two hun-
dred and thirty-one acres of land have been acquired to establish free-trade
zones near the port and a 23-year tax holiday declared for Gwadar. Liu and
Chen, “Gwadar Set to Be Regional Hub As Port Readies Launch”; “巴媒
称瓜达尔港月内启用由中国企业全面经营” (Ba mei cheng Guadaer gang
you nei qiyong you Zhongguo qiye quanmian jingying) [Pakistan media: The
Gwadar port will be in operation from this month], Huanqiu Shibao
[Global Times] April 13, 2015, http://mil.huanqiu.com/observa-
tion/2015-04/6168252.html. On the other issues, see “Commentary:
Silk Road Fund’s 1st Investment Makes China’s Words into Practice,”
04/21/c_134171060.htm; and “Xi’s Fruitful Visit Leads China, Pakistan
to Closer Community of Common Destiny.”
Plans.”
39. Josh Chin and Liyan Qi, “China Makes Multibillion-Dollar Down-
Payment on Silk Road Plans,” The Wall Street Journal, April 21, 2015,
http://blogs.wsj.com/chinarealtime/2015/04/21/china-makes-
multibillion-dollar-down-payment-on-silk-road-plans.
40. “Foundation Stone of China-Pakistan Economic Corridor’s Motorway
Laid,” Xinhua, November 30, 2014, http://news.xinhuanet.com/eng-
lish/china/2014-11/30/c_133822684.htm.
41. Chen Jia, “Silk Road Fund Makes First Investment,” China Daily, April
22, 2015, http://www.chinadaily.com.cn/business/2015-04/22/con-
tent_20501255.htm.
42. Chin and Qi, “China Makes Multibillion-Dollar Down-Payment on Silk
Road Plans.”
43. Wang Ting, “China Gets 40-Year Rights at Pakistani Port,” China Daily,
April 14, 2015, http://www.chinadaily.com.cn/world/2015-04/14/
Road Plans.”
45. “Backgrounder: China-Pakistan Economic Corridor,” China Daily,
April 22 2015, http://www.chinadaily.com.cn/world/2015xivisitpse/
2015-04/22/content_20503693.htm.
46. Chin and Qi, “China Makes Multibillion-Dollar Down-Payment on
Silk Road Plans”; “Backgrounder: China-Pakistan Economic Corridor”;
and Mian Abrar, “2017—Year of the CPEC Take-Off,” Pakistan Today,
February 19, 2017, http://www.cpecinfo.com/cpec-news-detail?id=
MTI5NQ, date accessed 10 March 2017.
47. Blanchard, “Probing China’s Twenty-First Century Maritime Silk Road
Initiative (MSRI).”
48. Zhao Shengnan, “Corridor to Progress,” China Daily, January 30, 2015,
http://www.chinadaily.com.cn/china/2015-01/30/content_19453160.
htm; and Zhang Dejiang “China, Pakistan Vow Closer Parliamentary
Links,” Xinhua, January 29, 2015, http://news.xinhuanet.com/english/
china/2015-01/29/c_127437741.htm.
49. “China Vows to Back Pakistan’s Anti-Terrorism Efforts,” Xinhua,
January 26, 2015, http://news.xinhuanet.com/english/china/2015-
01/26/c_133948230.htm.
50. “China Pledges Cooperation with Pakistan against Terrorism,” People’s
Daily Online, June 6, 2014, http://en.people.cn/n/2014/0606/
c90883-8737539.html.
51. “巴基斯坦拟设特别安全部队保护中国工人促走廊建设” (Bajisitan ni she
tebie anquan budui baohu zhongguo gongren cu zoulang jianshe) [Pakistan
plans to create Special Security Forces to protect Chinese workers engaged
in construction of the Economic Corridor], Huanqiu Shibao [Global Times],
126 J.T. JACOB
March 31, 2015, http://world.huanqiu.com/exclusive/2015-03/6053000.

html. See also Tariq Osman Hyder, “Xi’s Visit Cements Sino-Pakistani
Cooperation,” Global Times, April 21, 2015, http://www.globaltimes.cn/
52. “Pakistani Army Says to Ensure Success of China-Pakistan Economic
Corridor,” Xinhua, July 26, 2015, http://news.xinhuanet.com/
english/2015-07/26/c_134447673.htm.
53. Liu and Chen, “Gwadar Set to Be Regional Hub as Port Readies Launch.”
54. In response to a question at the conference, November 22, 2015.
55. Liu Zongyi, “Criticism of CPEC is Proof of Progress,” Global Times, June
13, 2016, http://www.globaltimes.cn/content/987915.shtml.
56. Ananth Krishnan, “In a First, China and Pakistan Plan Joint Army Counter-
Terror Command,” India Today, November 8, 2016, http://indiatoday.
intoday.in/stor y/china-pakistan-joint-army-counter-terror-com-
mand/1/805609.html.
57. Abubakar Siddique, “Chinese Investments Divide Pakistani Provinces,”
Gandhara, April 21, 2015, http://gandhara.rferl.org/content/pakistan-
provinces-divided-over-chinese-investment/26970678.html; and Qamar
Zaman, “China-Pakistan Economic Corridor: Backdoor Meetings Helped
Forge Consensus,” The Express Tribune, May 29, 2015, http://tribune.
com.pk/story/894102/china-pakistan-economic-corridor-backdoor-
meetings-helped-forge-consensus. There are similar implications in Hyder,
“Xi’s Visit Cements Sino-Pakistani Cooperation.”
58. Shi and Lu, “The Benefits and Risks of the China-Pakistan Economic
Corridor.”
59. Siddique, “Chinese Investments Divide Pakistani Provinces.”
60. Mateen Haider and Irfan Haider, “Economic Corridor in Focus as Pakistan,
China Sign 51 MoUs,” Dawn, April 20, 2015, http://www.dawn.com/
news/1177109/economic-corridor-in-focus-as-pakistan-china-sign-51-mous.
61. “Pak-China Economic Corridor Council Launched in Islamabad,”
04/09/c_134134731.htm.
62. Irfan Haider, “Details of Agreements Signed during Xi’s Visit to Pakistan,”
Dawn, April 20, 2015, http://www.dawn.com/news/1177129/details-
of-agreements-signed-during-xis-visit-to-pakistan; and Abrar, “2017—
Year of the CPEC Take-Off.”
63. Wang, “China gets 40-year Rights at Pakistani Port”; and Hu Weijia,
“Successes of the CPEC Serve as a Model for Potential of China’s Belt and
Road Initiative,” Global Times, November 14, 2016, http://www.global-
times.cn/content/1017921.shtml.
64. Quoted in Siddique, “Chinese Investments Divide Pakistani Provinces.”
Plans.” For a Chinese survey of Chinese attitudes towards Pakistan,
see “Online Survey Confirms China-Pakistan Ironclad Friendship,”
04/18/c_134162237.htm. Issues of integrity apart, of those surveyed 89
percent of the Chinese and 90 percent of the Pakistanis described the Sino-
Pak relationship as one between “iron brothers.”
66. Shi and Lu, “The Benefits and Risks of the China-Pakistan Economic
Corridor.”
Road Plans.”
68. “Power China to Build Power Plant outside Karachi,” Global Times,
April 10, 2015, http://en.people.cn/business/n/2015/0410/c90778-
8876505.html.
69. Muhammad Luqman, “CPEC: The Sino-Pak Project All Set to Generate
2.32 Million Jobs in Pakistan,” CPEC Info, February 8, 2017, http://
www.cpecinfo.com/cpec-news-detail?id=MTE4NA.
70. Faseeh Mangi, “Banker Fears Flow of Chinese Goods on Silk Road in
Pakistan,” Bloomberg, January 20, 2017, https://www.bloomberg.com/
news/articles/2017-01-19/banker-fears-influx-of-chinese-goods-on-silk-
road-in-pakistan.
71. Siddique, “Chinese Investments Divide Pakistani Provinces”; and Zaman,
“China-Pakistan Economic Corridor.”
Plans.”
73. On cost issues, see Khurram Husain, “IMF Warns of Looming CPEC Bill,”
Dawn, October 17, 2016, https://www.dawn.com/news/1290523;
Khurram Husain, “Pakistan’s Road to China,” Dawn, November 26,
2016, http://www.asianews.network/content/asian-editors-circle-pak-
istans-road-china-29495; and Maha Qasim, “How Chinese Money Will
Transform Pakistan,” China Dialogue, October 13, 2016, https://www.
chinadialogue.net/article/show/single/en/9307-How-Chinese-money-
will-transform-Pakistan?mc_cid=6188ba8005&mc_eid=1a1f63d25d.
On transparency issues, see “Pakistan Should Be More Transparent on
$46 Billion China Deal: SBP,” The Express Tribune, December 4, 2015,
https://tribune.com.pk/stor y/1004177/cpec-needs-to-be-more-
transparent-sbp; Abrar, “2017—Year of the CPEC Take-Off”; and Saad
Ahmed Dogar, “Four Reasons Why CPEC Will Not Be Another East India
Company,” The Express Tribune, January 3, 2017, http://tribune.com.pk/
story/1282887/four-reasons-cpec-will-not-another-east-india-company.
128 J.T. JACOB
74. Zia Banday, “Chinese Are Not in Pakistan for Charity,” The Express Tribune,
May 9, 2016, https://tribune.com.pk/story/1099554/wooing-investors-
chinese-are-not-here-for-charity. See also Farooq Tirmizi and Syeda
Masooma, “Pakistan’s Next Economic Crisis,” Profit, Pakistan Today,
February 20, 2017, http://profit.pakistantoday.com.pk/2017/02/20/
pakistans-next-economic-crisis.
75. “习近平4月访问巴基斯坦启动瓜达尔港’, (Xi Jinping 4 yue fangwen
Bajisitan qidong Guadaer gang) [President Xi to visit Pakistan in April, will
inaugurate the Gwadar Port], DWNews, April 7, 2015, http://global.
dwnews.com/news/2015-04-06/59645576.html.
76. Chen, “Pakistani Ambassador Welcomes China’s Help in Developing
Agriculture.”
77. Hyder, “Xi’s Visit Cements Sino-Pakistani Cooperation.”
78. For Pakistani views on CPEC connecting China with Afghanistan, West
Asia, and Central Asia, see “Pakistan Hails CPEC as Fate Changer, Vital in
Driving Economic Growth,” Xinhua, June 5, 2015, http://news.xinhua-
net.com/english/2015-06/05/c_134299244.htm. The quotation comes
from “China Voice: Old Friends, New Cooperation,” Xinhua, June 4,
htm.
79. Rooh-ul-Amin, “China’s role as Peacemaker Welcomed in AfPak Region,”
Global Times, May 8, 2015, http://www.globaltimes.cn/content/920663.
shtml; and “China Voice: Old Friends, New Cooperation.”
80. Masood, “Pakistan’s Unique Relations with China.”
81. Jia Xiudong, “Sino-Pakistani Ties to Get Closer,” People’s Daily Online
(trans.), February 11, 2015, http://en.people.cn/n/2015/0211/c98649-
8849317.html.
82. Charu Sudan Kasturi, “India Wrinkle on China Silk: Jaishankar Speaks Out
on Absence of Consultations,” The Telegraph, July 21, 2015, http://www.
telegraphindia.com/1150721/jsp/frontpage/story_32798.jsp.
83. See Government of India, Ministry of External Affairs, “Speech by Foreign
Secretary at Raisina Dialogue in New Delhi,” March 2, 2016, http://
mea.gov.in/Speeches-Statements.htm?dtl/26433/Speech_by_Foreign_
Secretary_at_Raisina_Dialogue_in_New_Delhi_March_2_2015.
84. See also Chap. 6, by David J. Karl, on Sri Lanka and Chap. 7, by Srikanth
Kondapalli, on Maldives.
85. “India Should ‘Shun Enmity’ and Join CPEC: Pakistani General,” The Indian
Express, December 21, 2016, http://indianexpress.com/article/india/
india-should-shun-enmity-and-join-cpec-pakistani-general-4438849.
86. For instance, see Wang, “China Gets 40-Year Rights at Pakistani Port.”
87. “China Strives for SCO Development, FMs Urge Bigger UN Role,”
Xinhua, August 1, 2014, http://news.xinhuanet.com/english/china/
2014-08/01/c_133524872.htm.
88. Ibid.
89. “Chinese, Indian Senior Defense Officials Call for Cooperation in Fighting
Terrorism,” Xinhua, November 17, 2015, http://news.xinhuanet.com/
english/2015-11/17/c_134822847.htm
90. “China, Pakistan Will Always Stand Together, Move Forward Together:
Xi,” Xinhua, April 21, 2015, http://news.xinhuanet.com/english/2015-
04/21/c_134171244.htm
91. “Pakistan, China Vow to Expedite Work on Economic Corridor,” Xinhua,
February 14, 2015, http://news.xinhuanet.com/english/china/2015-
02/14/c_127494926.htm
92. “Sino-Pakistan Ties Set Win-Win Example,” Global Times, April 19, 2015,
http://www.globaltimes.cn/content/917624.shtml.
93. However, see also “外媒:中巴关系”铁上加铁”令美印侧目,” (Wai mei:
Zhong-Ba guanxi “tie shang jia tie” ling Mei-Yin cemu) [Foreign media:
China-Pakistan “cast-iron” relationship raises American and Indian eye-
brows], Cankao Xiaoxi [Reference News], April 24, 2015, http://col-
umn.cankaoxiaoxi.com/2015/0424/755146.shtml; and “美媒吃醋中国
巴基斯坦铁杆关系称美战略极失败” (Mei chicu Zhongguo Bajisitan tiegan
guanxi cheng mei zhanlüe ji shibai) [American media envies China and
Pakistan for their “iron friendship,” calls US strategy a failure], Huanqiu
Shibao [Global Times], April 21, 2015, http://mil.huanqiu.com/obser-
vation/2015-04/6243259.html.
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130 J.T. JACOB
“美媒吃醋中国巴基斯坦铁杆关系称美战略极失败 (Mei mei chicu Zhongguo

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China and Pakistan for their ‘iron friendship’, calls US strategy a failure].”
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132 J.T. JACOB
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Xinhua, November 30, 2014. http://news.xinhuanet.com/english/
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Hu, Weijia. “Successes of the CPEC serve as a model for potential of China’s Belt
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2016a. https://www.dawn.com/news/1290523.
Husain, Khurram. “Pakistan’s road to China.” Dawn, November 26, 2016b. http://
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Hyder, Tariq Osman. “Xi’s visit cements Sino-Pakistani cooperation.” Global
Times, April 21, 2015. http://www.globaltimes.cn/content/918006.shtml.
“India should ‘shun enmity’ and join CPEC: Pakistani General.” The Indian
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Jia, Xiudong. “Sino-Pakistani ties to get closer.” People’s Daily Online, February
11, 2015. http://en.people.cn/n/2015/0211/c98649-8849317.html.
Kasturi, Charu Sudan. “India wrinkle on China silk: Jaishankar speaks out on
absence of consultations.” The Telegraph, July 21, 2015. http://www.tele-
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Krishnan, Ananth. “China considers Presidential visit to Pakistan amid security con-
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Krishnan, Ananth. “In a first, China and Pakistan plan joint army counter-terror
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com/cpec-news-detail?id=MTE4NA.
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11, 2015. http://southasiamonitor.org/detail.php?type=n&nid=10660.
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2015. http://news.xinhuanet.com/english/2015-04/18/c_134162237.htm.
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“Pakistan should be more transparent on $46 billion China deal: SBP.” The Express
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CHAPTER 6
Sri Lanka, the Maritime Silk Road,

and Sino-Indian Relations
David J. Karl
Developments in the island nation of Sri Lanka will have a major bearing
on India’s calculus regarding China’s “Maritime Silk Road” (MSR) initia-
tive (MSRI) – and by extension, New Delhi’s overall approach to Beijing
in the years ahead. With a population of some 22 million people, the
country is tiny compared to Asia’s two titan-size states. Yet it has dispro-
portionate strategic importance. Lying just off the southeast coast of the
Indian subcontinent, the island sits on India’s doorstep, separated by a
stretch of water (the Palk Strait) which is shallow and narrow enough
(53 km wide at its thinnest) that there is recurring talk of infrastructure
projects to physically link Sri Lanka and India.1 Such geographic propin-
quity means both states have deep, millennia-long historical and cultural
affinities with each other. The island features prominently in the Ramayana,
the ancient Sanskrit epic that is a central part of Hindu literature. The pres-
ence in Sri Lanka’s northern and eastern areas of a significant Tamil minor-
ity, who have close ties with ethnic kin lying just across a slim maritime
border, has serious ramifications for domestic politics in both countries as
well as for bilateral relations.2 Finally, Beijing’s increasing commercial and
military dealings with Colombo engage not only New Delhi’s traditional
D.J. Karl (*)

Asia Strategy Initiative, Los Angeles, CA, USA

DOI 10.1007/978-981-10-5239-2_6
138 D.J. KARL
apprehensions about the influence of extra-regional powers along its

periphery but also newer strategic aspirations that have come to the fore
as India’s own national power matures.3
China, in contrast, is more geographically removed from, and has a less
extensive historical record vis-à-vis Sri Lanka. The island was part of the
“Silk Road” trade network connecting ancient China with the Mediterranean
Sea. And some six centuries ago, during the early Ming dynasty, Chinese
admiral Zheng He landed his legendary naval expeditionary force there,
though the episode was far less idyllic than that which Beijing now por-
trays.4 But as modern China seeks out new foreign markets and resource
supplies, its focus on Sri Lanka has grown dramatically over the past decade
in view of the island’s strategic location astride shipping lanes that carry
two-thirds of the world’s oil shipments and half of all container traffic. The
country’s centrality in the Indian Ocean also means that it will be a vital
node in the MSRI, which is President Xi Jinping’s signature initiative for
the enhancement of maritime trade and transportation networks connect-
ing China’s coastal areas to other parts of the world.5
Colombo has keenly embraced this connectivity plan, as it matches well
with Sri Lanka’s own growth aspirations. But New Delhi has so far kept its
distance, fearing that the MSR is a mechanism for the further entrench-
ment of Beijing’s regional influence. In July 2015, the Indian foreign sec-
retary condemned the MSRI as a unilateral endeavor formulated without
consultations with other relevant parties: “We are concerned this is a
national Chinese initiative. The Chinese devised it, created a blueprint. It
wasn’t an international initiative they discussed with the whole world, with
countries that are interested or affected by it.” He added that “Where we
stand is that if this is something on which [the Chinese] want a larger buy
in, then they need to have larger discussions, and those haven’t happened.”6
At a conference on Asian connectivity in early 2016, Indian and Chinese
officials clashed over their countries’ respective plans for regional infra-
structure, with New Delhi promoting its own “SAGAR” (“Security and
Growth for All in the Region”) scheme as an alternative to the MSRI.7 At
the forum, the Indian foreign secretary reiterated his earlier point, stating:
The key issue is whether we will build our connectivity through consultative
processes or more unilateral decisions. Our preference is for the former …
But we cannot be impervious to the reality that others may see connectivity
as an exercise in hard-wiring that influences choices. This should be discour-
aged, because particularly in the absence of an agreed security architecture
SRI LANKA, THE MARITIME SILK ROAD, AND SINO-INDIAN RELATIONS 139
in Asia, it could give rise to unnecessary competitiveness. Connectivity

should diffuse national rivalries, not add to regional tensions…. Indeed, if
we seek a multi-polar world, the right way to begin is to create a multi-polar
Asia. Nothing could foster that more than an open minded consultation on
the future of connectivity.8
In some ways, the stage is thus set for Sri Lanka to become an arena of
maritime competition and geopolitical rivalry as both China and India
increase their national power and strategic reach.9 This is all the more so
since Colombo is looking to continue tapping Beijing as a major source
of foreign investment and infrastructure development – functions at
which New Delhi is notoriously deficient. Yet it is also possible to imag-
ine a different, more sanguine, future in light of India’s growing focus
on building up the maritime elements of its national economy and
engaging in the potentially vast commercial opportunities proffered by
its northern neighbor.
Indeed, the contours of these alternative scenarios were visible during
President Xi’s visit to India in September 2014 when he met with newly
elected Prime Minister Narendra Modi. The Indian leader had made his
political reputation as the business-friendly chief minister of his home state
of Gujarat and actively sought out Chinese investment there. On one of a
number of trips he made as chief minister to China, he proclaimed that the
two countries “will make Asia the center-stage of the global economy.”10
At the time of Modi’s elevation to the prime ministership, the bulk of
Chinese investments in India were in Gujarat and analysts in China saw
him as “ready to do business” with Beijing.11
Modi no doubt saw Xi’s visit as an opportunity to strike a deal that
would channel China’s vast foreign currency reserves toward his country’s
massive infrastructure needs and enlist Chinese companies in his own sig-
nature Make in India program, which seeks to transform the country into
a global manufacturing powerhouse. Earlier in the year, the Chinese gov-
ernment communicated its willingness to fund a large part of India’s infra-
structure requirements, including in such key sectors as transportation,
telecommunications, and power generation.12 In the run-up to the sum-
mit, Modi’s national security advisor proclaimed that bilateral relations
were on the verge of an “orbital jump” and one media analysis noted that
the Modi government was preparing to “overcome the reflexive suspicion
of its giant neighbor and open the floodgates to Chinese capital.”13 The
Indian leader made a special effort to woo his Chinese counterpart by
140 D.J. KARL
hosting him in Gujarat. The outing featured the two leaders seated
together on a swing in a riverfront park and an elaborate dinner in celebra-
tion of Modi’s birthday, all symbolism evoking the long-ago days of Hindi
Chini Bhai (“India-China brotherhood”). Indeed, Xi revealed during the
visit that Modi had told him during the BRICS (Brazil, Russia, India,
China, and South Africa) summit in Brazil two months earlier that both
countries were like “two bodies, one spirit.”14
Yet alongside the summit bonhomie were open signs of the ulcerating
strains in India–China relations. The day before Xi’s arrival in India, media
accounts reported that Modi’s government was about to launch its own
maritime initiative designed to counter Beijing’s growing heft in the
Indian Ocean region.15 And the summit itself was upended by a major
standoff between Indian and Chinese military forces along their disputed
Himalayan border that began just prior to Xi’s arrival. The episode, which
reportedly involved more than 1000 troops on each side, was the most
serious border confrontation in nearly three decades.16 Many in the Indian
security establishment interpreted the incident as a deliberate provocation
by Xi, intended to test the mettle of Modi, who at the time had been in
office for less than three months. This impression was strengthened by the
fact that, less than a year earlier, the two countries had signed an agree-
ment to stabilize the border dispute.17
Reinforcing this dim view of Chinese strategic intentions was the berth-
ing, just days before Xi showed up in India, of a Chinese diesel-powered
attack submarine at a container facility in Colombo that was constructed
and managed by a Chinese state-owned company.18 The episode was
unusual on a number of counts: the submarine did not dock in the port
area commonly allotted to foreign military vessels; it was the first time a
Chinese submarine had docked in any Indian Ocean port; and it seemingly
violated a long-standing understanding between New Delhi and Colombo
that Sri Lankan territory was not to be used by foreign militaries in ways
unconducive to Indian equities. Sri Lanka’s initial attempts at secrecy,
combined with China’s unconvincing explanation that the submarine was
on its way to join antipiracy patrols in the Gulf of Aden, aroused concerns
that Colombo was ending its traditional deference to New Delhi’s security
imperatives.19 The episode was so disquieting from New Delhi’s perspec-
tive that a senior Indian diplomat subsequently characterized it as “the last
straw.”20 If this was not enough, another Chinese submarine – this one
nuclear-powered – turned up in Colombo six weeks later even after the
Modi government had raised protests about the first visit with Sri Lankan
leaders.21 According to another Indian official, “There was real anger” in

New Delhi regarding these events.22
Anxieties about the proliferation of Chinese influence around South Asia
were further excited when Xi choose to preface his India tour by traveling
first to Maldives and Sri Lanka, signing major infrastructure agreements in
both countries, and proclaiming, without notifying India in advance. that
Colombo would be a major node for the MSR.23 While in Colombo, he
inaugurated the Port City complex, a $1.4-billion mega-project that was to
be financed and constructed by Chinese entities. The complex, to be built
on reclaimed land approximating the size of Monaco, was to host commer-
cial offices, hotels, apartment buildings, shopping malls, a golf course, a
marina, and even a Formula One race track. The development quickly
attracted attention – as it promised to be the country’s largest-ever foreign
investment project – as well as controversy for its unusual tendering proce-
dures and freehold land concessions to Chinese interests. Xi’s visit to Sri
Lanka was broadly interpreted as a new marker of China’s success in erod-
ing India’s traditional sway over the island.24 As a result of these concate-
nating events, the Modi government helped orchestrate the political
opposition that succeeded in defeating Sri Lanka’s China-tilting president
in January 2015 elections in favor of a government in Colombo that prom-
ised to be more accommodating toward India. Expressing satisfaction with
how the chain of events had turned out, one Indian official noted “The
message is clear, that you do not ignore Indian security concerns.”25
The remainder of this chapter explores in greater detail the dynamics of
the China–India–Sri Lankan triangular relationship and how they might
shape New Delhi’s considerations toward the MSR initiative. The next
section focuses on the Sino-Indian tussle for influence in Sri Lanka and
how it exacerbates Indian security anxieties vis-à-vis China. This is fol-
lowed by an examination of how the cooperative impulses arising out of
increasing economic engagement between China and India might militate
in favor of New Delhi’s involvement in the MSR project and its willingness
to countenance roles played by immediate neighbors like Sri Lanka. A final
section offers thoughts on policy actions Beijing and New Delhi could
take to ensure the MSRI advances the bilateral relationship.
The Maritime Great Game?

Given its vast size and geographic nearness, India has long wielded sig-
nificant influence in Sri Lanka, though China began making dramatic
inroads following Mahinda Rajapksa’s election as the island’s president in
142 D.J. KARL
November 2005.26 Determined to bring a decisive end to a prolonged

insurgency that was attempting to carve out a separate homeland in the
country’s Tamil-dominated areas, Rajapaksa launched a military offensive
to which China (and Pakistan) quickly contributed with the provision of
military equipment and training. New Delhi had adopted a low-key
approach in support of Sri Lankan efforts to stamp out Tamil militancy
but objected to the arrangements with Beijing and Islamabad, even while
the opposition of political parties in the Indian state of Tamil Nadu pro-
hibited Indian supply of the major offensive systems Rajapaksa desired.27
In May 2007, India’s national security adviser publicly admonished
Rajapaksa for relying on other states for arms, stating “We are the big
power in this region. Let us make it very clear. We strongly believe that
whatever requirements the Sri Lankan government has, they should come
to us. And we will give them what we think is necessary. We do not favor
their going to China or Pakistan or any other country.”28
Compounding Indian apprehensions was the fact that China proved to
be a more generous economic partner for Rajapaksa, who hoped to lever
Sri Lanka’s central position in the Indian Ocean to transform his country
into a maritime hub along the lines of Singapore and Dubai. In short
order, Beijing became Colombo’s leading foreign investor and lender of
development assistance, as well as its second-largest trade partner. In all,
China provided some $5 billion in financing to the Rajapaksa government
for high-profile infrastructure projects, including $500 million for a con-
tainer terminal at Colombo’s port that hosted the September 2014
Chinese submarine visits, as well as $350 million for a port complex and
$200 million for an international airport in Hambantota, in Rajapaksa’s
home district on the island’s southern coast. New Delhi had declined the
Sri Lankan leader’s invitation to participate in these undertakings and as a
result the bulk of these projects were funded by Beijing and built by
Chinese enterprises. Writing in 2010, one Indian analyst noted that “India
is struggling to make itself more relevant to Sri Lanka than China,” while
another observed:
… the Chinese presence in Sri Lanka has increased so much so that there is
no major infrastructure project in which the Chinese have not invested. It is
estimated that China was Sri Lanka’s biggest source of foreign funding in
2009, providing $ 1.2 billion, or nearly triple the $424 million given by the
number two overseas lender, the Asian Development Bank.29
In the end, Rajapaksa’s close dealings with the Chinese proved costly. The
infrastructure projects in Hambantota have so far failed to provide much
return on investment, and repayment of the loans taken out from Beijing
has badly strained the Sri Lankan treasury.30 The construction spree also
generated concerns within the country about corruption and environmen-
tal degradation that played a role in Rajapaksa’s startling defeat in the
country’s January 2015 presidential elections. Rajapaksa’s embrace of
Beijing also had negative foreign-policy consequences. China’s heavy
involvement in the port projects – coming just as the Chinese navy began
making regular transits through the Indian Ocean in support of counter-
piracy operations in the Gulf of Aden – fed easily into the “String of Pearls”
narrative that has wide currency both in the Indian media and strategic
communities. This perspective posits that China is aiming to complete the
strategic encirclement of India by building a network of civilian port facili-
ties that could be utilized for the projection of naval power into the Indian
Ocean.31 Over the past decade or so, China has been quite active in con-
structing significant maritime infrastructure around the region’s periph-
ery – not just in Sri Lanka, but also Pakistan, Bangladesh, Myanmar, the
Maldives, Seychelles, and the Horn of Africa. Although there is a debate
over whether this intense activity has an explicit military dimension, these
port facilities could be used to support a more sustained Chinese naval
presence, particularly extended patrols of nuclear-powered attack subma-
rines, thereby undermining Indian national security and eroding New
Delhi’s traditional ascendancy in the region.32
China now has one of the world’s largest attack-submarine fleets and its
deployment in South Asian waters would give Beijing the capacity to men-
ace Indian overseas commerce, strike at targets ashore using land-attack
cruise missiles, and threaten the Indian navy’s emerging submarine-based
nuclear deterrent force.33 This fear is all the more acute since Indian capa-
bilities in terms of undersea warfare and anti-submarine operations are
quite deficient.34 In early 2013, an Indian defense ministry report surfaced
in the media warning that Chinese nuclear-powered submarines were
making frequent forays into the Indian Ocean. It cautioned that Beijing
was building up “expeditionary maritime capabilities” and that the deploy-
ments were aimed at undermining the Indian navy’s capacity “to control
highly-sensitive sea lines of communications.” It also foresaw the emer-
gence of an intense Sino-Indian naval rivalry.35 In late 2013, Beijing
alerted New Delhi that it was dispatching a nuclear-powered attack sub-
marine into the Indian Ocean for a two-month patrol, the first time China
144 D.J. KARL
had acknowledged such a voyage. Assessments by Indian intelligence

agencies depicted the deployment as “seriously aggravating Indian secu-
rity concerns” and as being aimed at sending “a message of persuasion to
Indian Ocean Rim States.” They also predicted the deployment of aircraft
carrier battle groups by the Chinese navy into South Asian waters in the
near future.36 Alarms were raised once more when Chinese attack subma-
rines actually began showing up in Indian Ocean ports, in late 2014 in
Colombo, and again in May 2015 when an attack submarine docked in
Karachi, the first such deployment in Pakistan.37 According to one media
report, senior Indian navy leaders believe these deployments are “part of a
carefully choreographed exercise to expand [China’s] military presence in
the region.”38 Indeed, the dockings in Sri Lanka so agitated the Modi
government that it reportedly demanded that Colombo scrap the Port
City infrastructure project Xi Jinping had just unveiled.39
Rajapaksa’s ouster from power in January 2015, which was widely seen
as a repercussion of his Beijing-friendly leanings, has provided some ame-
lioration of New Delhi’s concerns.40 His successor, Maithripala Sirisena,
promised a more pro-India stance and greater attentiveness to its security
fears. But any hopes the Indian government harbored for an overall dimi-
nution of China’s influence in Sri Lanka have so far proven futile given the
country’s faltering economy and Colombo’s continued desire to recast the
island into a major maritime hub.41 Despite early pledges to bar future
Chinese submarine dockings, the Sirisena government had reversed its
policy by the end of 2015, though it promised greater openness about the
visits.42 Sirisena had charged during his election campaign that Rajapaksa’s
economic dealings with China would turn Sri Lanka into “a colony and we
would become slaves.”43 Yet within months of taking office, his govern-
ment was back to courting Chinese investment and infrastructure assis-
tance. It has reached out to Beijing to firm up the struggling finances of
Hambantota’s port facilities and to jump-start a series of special economic
zones, including a huge industrial park at Hambantota, geared to produc-
ing exports meant for the Indian marketplace.44 According to one observer,
the Hambantota project now, “seems well on the way from being a Sri
Lanka national project financed by China to a full-fledged Chinese enclave
at a very strategic position on the Indian Ocean.”45
A high-level committee in Colombo has also been set up to expedite an
official review of Chinese investment proposals, and a new round of
Chinese-funded infrastructure projects has been sketched out alongside
calls for more construction of port installations and transportation links,
including expansion of Hambantota’s port and airport facilities.46 And

despite Sirisena making early noises about canceling the Port City project,
the mega-development is now back on track though Colombo has taken
care to rebrand the complex as a financial, business, and logistics hub open
to Indian participation.47 During an April 2016 visit to Beijing, Sri Lanka’s
prime minister announced that “a comprehensive economic strategy” had
been agreed to between the countries, an accord he likened to the 1952
agreement between Beijing and Colombo when Sri Lanka traded rubber
with China in return for essential rice supplies. A joint statement put out
at the end of the visit emphasized:
The two sides will use the development of a 21st Century Maritime Silk
Road as an opportunity to further advance infrastructure development, the
China-Sri Lanka [free trade agreement] negotiations, promote joint ven-
tures and expand cooperation in the areas of economy, culture, science and
technology and people to people contacts.48
Taking note of the Sirisena government’s quick turnabout, a media assess-

ment in mid-2016 observed that “India’s strategic gains in the island
nation over the past 15 months … seem to be fast petering out.”49 A Sri
Lankan official put things this way: “The stance on China has completely
changed. Who else is going to bring us money, given the tight conditions
in the West?” Similarly, the chief economist with the Ceylon Chamber of
Commerce explained that “The government has done a U-turn on the
port city project because reality set in. If we are to boost investment, we
have to look at whoever brings in the investment and clearly China has the
money”.50
To India’s detriment, such sentiments are not confined to Colombo.
For example, a former president of Maldives recently stated that his coun-
try prefers Chinese investment proposals since they are “more attractive”
than ones from India.51 The same pattern is being played out in Myanmar,
where India has been long on rhetoric but short on delivery. Despite the
inherent advantages of geography, culture, and history, as well as a r egularly
repeated policy emphasis on using its eastern neighbor as a launching pad
to connect more solidly with Southeast Asia, New Delhi has been unable
to sustain more than minimal engagement with Myanmar.52
These cases illustrate a strong point of comparative advantage that
Beijing enjoys in South Asia: despite India’s geographic nearness and
extensive cultural legacy, China’s vast arsenal of political will, efficient
146 D.J. KARL
administration, and financial resources means that Beijing has been able to
economically knit together the region in a way that New Delhi has failed
to do. India has a notoriously poor implementation record when it comes
to connectivity projects within the country and along its periphery.53 New
Delhi has been involved in a number of infrastructure projects in Sri
Lanka, though none as ambitious as what the Chinese accomplished and
in any case Indian performance has not been particularly impressive.54 A
prominent Indian commentator laments that “Delhi does not have the
capacity or a policy framework to bid for and execute major infrastructure
projects in the Indian Ocean littoral,” while a major newspaper notes that
Indian infrastructure projects “have been delayed by tardy Sri Lanka gov-
ernment clearances, but a bulk of the blame for the lack of progress must
lie with Indian inefficiency. India cannot cavil at Chinese investment in the
island unless it is able to finish its own projects.”55 Moreover, Indian proj-
ects have focused on improving Sri Lanka’s Tamil-populated northern
areas rather than directly advancing the country’s maritime infrastructure
goals, since these would have the effect of taking commercial traffic away
from India’s own ports.56
Beijing’s relative advantage extends to an overall preponderance of eco-
nomic resources.57 As an Indian commentator observes, the Sirisena gov-
ernment “will find it hard to completely walk away from the Chinese for a
variety of reasons. The fact that India is not yet in a position to match
Chinese economic investments in Sri Lanka is a big factor.”58 A Western
expert on the region concurs, noting: “There has been an underestima-
tion of the power of Chinese money, the simple and pure power, and how
much of it they are willing to throw around the region,” while another
analyst simply notes that “The Chinese are the only game in town.”59
Although the new leadership in Colombo has broadcast its openness to
additional Indian investment, New Delhi, unlike Beijing, has yet to submit
proposals regarding Sri Lanka’s newly formed special economic zones.60
A Cooperative Future?
If New Delhi is in danger of being outcompeted in Sri Lanka, might it
choose to join forces with Beijing to work collaboratively on such issues as
regional economic partnership and infrastructure connectivity? More spe-
cifically, how likely is it that Indian leaders will assume a more forthcoming
posture toward the MSRI, both on projects within India and those around
its periphery? This scenario, which is a dramatic counterpoint to the
“String of Pearls” narrative, is not implausible. New Delhi, after all, has
worked with Beijing to establish the Asian Infrastructure Investment Bank
(AIIB), in which it is the second largest shareholder, as well as the New
Development Bank (NDB).61 In contrast to previous Indian administra-
tions, the Modi government has warmed up to the idea of the Bangladesh–
China–India–Myanmar (BCIM) transportation corridor, which would
link the West Bengal capital of Kolkata to Kunming in China’s Yunnan
province, via Dhaka and Chittagong in Bangladesh and Mandalay in
Myanmar.62 While Modi has not shied away from the antagonistic ele-
ments of the Sino-Indian relationship, he has also given some prominence
to the cooperative impulses of growing economic engagement. As one
observer notes, Modi’s approach toward Beijing is one of “pragmatic
engagement,” in which the Indian leader “plays geopolitical hardball with
China [but also] woos Chinese investment with unprecedented vigor.”63
In the past, national security suspicions have worked to dampen Sino-
Indian commercial interaction, with New Delhi being wary of joining
with China in regional infrastructure projects or allowing Chinese partici-
pation in critical sectors of the domestic economy. Yet this is beginning to
change as China has emerged as India’s largest merchandise trade partner
and as New Delhi becomes more receptive toward Beijing’s deeper
involvement in the Indian economy, especially in infrastructure and indus-
trial development. One well-informed Indian analyst notes how Modi is
determined to forge a new bilateral relationship, in part by expanding
commercial linkages:
Modi has recognized that India can’t construct a serious business relation-
ship with China—the world’s second largest economy and a major exporter
of capital—by giving the security establishment a veto over economic policy.
Whether it is granting business visas or attracting Chinese investments, secu-
rity fears in Delhi, borne out of the limited border war that the two sides
fought in 1962, have often trumped economic common sense.64
The Modi government has been active in knocking down the security bar-
riers that in the past blocked significant Chinese involvement in critical
economic sectors.65 Indeed, according to one media report, the prime
minister’s office has explicitly told the security bureaucracy that “stringent
security clearance rules are contrary to Modi’s Make in India campaign.”66
Modi also overruled objectives from Indian security authorities to ease
rules for the granting of electronic tourist visas to Chinese nationals.67
148 D.J. KARL
Similarly, the prime minister has demonstrated a greater willingness

than his predecessors in considering how Chinese assistance could help
India overcome its elephantine infrastructure challenges.68 A number of
leading Indian commentators have made the case that the grand regional
infrastructure plans Beijing has announced in recent years dovetail well
with the emphasis Modi has placed on bolstering domestic connectivity
within India, modernizing the electrical power grid, constructing modern
infrastructure connections that can plug into global trade and production
networks, and renovating the country’s deteriorating cities.69 One close
observer of Indian foreign policy reports that “Although India’s response
to the Chinese connectivity initiatives has tended to be negative, some
officials in New Delhi are calling for a more sophisticated response to what
Beijing calls the ‘One Belt One Road’ (OBOR) initiative.”70 A former
national security advisor advocates “using the infrastructure and institu-
tions being created [by Beijing] to further India’s transformation.”71
Likewise, a retired but still influential foreign secretary recommends
“Before taking a stand [on the MSR], we ought to engage the Chinese,
understand what the components of the initiative are, and whether and
how India can participate to its advantage.”72 Others argue that “just as
US trade and economic architecture underwrote the rise of China, Chinese
railways, highways, ports and other capacities can serve as catalysts and
platforms for sustained Indian double-digit growth.”73
These sentiments extend to the 3000-kilometer-long China–Pakistan
Economic Corridor (CPEC) that will connect Gwadar port in southwest-
ern Pakistan to Kashgar in China’s Xinjiang region—a project that is one
of the most visible symbols to date of Beijing’s broader regional infrastruc-
ture ambitions.74 The Modi government has voiced strong opposition to
the CPEC as an infringement on Indian territorial claims over the entire
Kashmir region.75 Some in the Indian strategic commentariat also view the
project as an element of a long-standing Chinese effort to build up Pakistan
as a strategic distraction for India.76 Gwadar’s likely use as a calling station
for the Chinese navy will no doubt exacerbate these worries. According to
a senior Pakistani diplomat, “As Gwadar becomes more active as a port,
Chinese traffic both commercial and naval will grow to this region.”77
But other commentators urge a more pragmatic attitude and see
potential synergies between Chinese and Indian objectives. One analyst
suggests, for example, that New Delhi should “reach out to Pakistan and
China and propose trilateral collaboration on mega infrastructure proj-
ects” and “instead of treating trans-border infrastructure projects as
competitive, Delhi can see them as part of a wider regional economic

cooperation.”78 To this end, he calls for extending the CPEC to India,
since “restoring economic cooperation between the two Punjabs through
the Wagah-Attari border between Amritsar and Lahore has been a major
goal of India’s effort to normalize trade relations with Pakistan.”79 On
similar lines, a former Indian foreign secretary opines that connecting
with the CPEC could secure direct overland access to Central Asian mar-
kets that India presently lacks, while the recently retired Indian ambas-
sador to Pakistan advises New Delhi to be open to the corridor since it
promises to bring greater economic stability to the most volatile country
on India’s periphery.80
The Modi government has two other initiatives that could provide fur-
ther incentive for pursuing a more cooperative approach vis-à-vis the MSR
project. The first focuses on the development of the country’s maritime-
based economy. The prime minister, for example, recently stated that “We
have increased our focus on ocean or blue economy … We are at the cusp
of a new era. Oceans will become the drivers of economic growth and it is
central to our development.”81 He has given new energy to the “Sagarmala”
(“Ocean Garland”) effort that aims to catalyze port-led economic devel-
opment and bolster the country’s standing in the global maritime indus-
try, in part through greater receptivity to foreign investment.82 To some in
India, there is “an ideal congruence of interests” between New Delhi and
Beijing in the maritime connectivity sphere, as “the MSR could well
become the vehicle for boosting infrastructure development of the ports
in India.”83
A second initiative Modi has undertaken is to revitalize India’s ties with
its island neighbors, repairing what many in New Delhi felt was a neglected
item on the country’s foreign policy agenda. During a high-profile tour of
Seychelles, Mauritius, and Sri Lanka in March 2015, Modi highlighted the
theme of maritime regional connectivity. Speaking in Mauritius, where he
signed an agreement to upgrade air and sea links, he declared, “To me the
blue chakra or wheel in India’s national flag represents the potential of
Blue Revolution or the Ocean Economy. That is how central the ocean
economy is to us.”84 During his stop in Sri Lanka, which was the first bilat-
eral visit by an Indian prime minister in nearly three decades, he unveiled
plans to help advance the country’s maritime infrastructure objectives by
expanding the oil terminal at Trincomalee, a strategically placed port on
the island’s northeastern coast, into a regional petroleum hub. The previ-
ous Rajapaksa government had earlier restricted Indian access to the area,
150 D.J. KARL
which hosts one of the world’s largest natural harbors and served as the
main base for the British navy’s eastern fleet during World War II. Modi
also announced the creation of a joint task force on the ocean economy,
declaring that “The ocean economy is a new frontier that holds enormous
promise for both of us. It is a priority for our two countries.”85
Yet even while Modi was busy reasserting India’s profile in the Indian
Ocean area, he also signaled a willingness to work with external powers in
enhancing regional security and economic cooperation. One analyst
reports:
There is sufficient realism in Delhi to recognize that India can’t build a

Great Wall against China’s growing economic penetration into the subcon-
tinent. If India itself is more open to Chinese investments, it can hardly
object to deepening economic links between the rest of the subcontinent
and China. This sobering recognition has shaped India’s response to China’s
grand “Belt and Road” initiative.86
The current Indian foreign secretary, while taking umbrage at Beijing’s

unilateralism, has likewise held the door open to mutual collaboration,
stating that “I don’t think there is an inevitability of contestation” between
each nation’s infrastructure initiatives.87
Looking Ahead
Sino-Indian relations are headed into a new era, one in which both coun-
tries are seeking to expand their security reach and economic power via
regional connectivity projects around the Indian Ocean littoral. The poten-
tial for further competition is strong if each side pursues plans without
regard for the other. As Chinese naval deployments become more frequent
in the region, the construction of maritime infrastructure promised under
the MSR banner will inevitably intensify New Delhi’s “String of Pearls”
fears and sharpen the security dilemma between the countries.88 The
expansion of China’s maritime presence as a result of the Gwadar port
project in Pakistan and the establishment of a naval outpost in Djibouti on
the Horn of Africa—Beijing’s first military base in the Indian Ocean litto-
ral – is already having this effect.89 Renewed activity in Sri Lanka, such as
the expansion of Chinese commercial operations at the ports in Colombo
and Hambantota, will likewise have the same outcome. As a former Indian
foreign secretary recently exclaimed, “China’s strategic encirclement of
India is evident in its Indian Ocean strategy, in which Sri Lanka is a pivot.”90
Yet circumstances are also creating an opportunity for a more partner-

like approach to regional maritime development, though its full potential
requires more creative diplomacy and less zero-sum thinking in both capi-
tals. Some encouraging signs are already apparent. In New Delhi, there is
greater acceptance nowadays for Chinese economic engagement in South
Asia and, perhaps, a willingness to consider a degree of cooperation on
regional infrastructure projects. And Beijing has proven ready to allay
some fears about its ambitious infrastructure designs by providing for
international participation (including Indian) in the AIIB and the NDB.91
It has also made an effort to craft partnerships between these institutions
and existing multilateral organizations like the World Bank and the Asian
Development Bank.
But more is necessary in order to temper the flare-up of competitive
dynamics. China, for example, must do better at dispelling concerns in the
rest of Asia that the MSRI is largely driven by the mercantilist impulses
undergirding its past overseas infrastructure developments.92 It can make
a start at this by collaborating with India and other countries on drafting
the initiative’s master plan as well as its various constituent pieces like the
CPEC and pending projects in Sri Lanka.93 For its part, India needs to be
alert to potential synergies arising from the MSRI. But even more, it must
heed a lesson arising from its experience in Sri Lanka (as well as elsewhere)
and upgrade its own capacity to contribute to regional infrastructure
development. In the end, it will do New Delhi no good to grouse about
Beijing’s unilateralism as long it has relatively little to bring to the table.
Acknowledgement The author is grateful to Jean-Marc F. Blanchard, Colin

Flint, Greg Moore, and the other participants at a November 2015 conference in
Shanghai on “The Political Economy of China’s Maritime Silk Road Initiative” for
constructive feedback on an earlier version of this chapter. He also thanks Pleres
Choi and Abigail Eineman for their research support. This manuscript reflects
developments as of March 2017.
Notes
1. a For recent proposals, see N. Sathiya Moorthy, “A Bridge across the Palk
Strait,” Hindu Business Line, January 27, 2015; C. Raja Mohan, “A Bridge
to Sri Lanka,” Indian Express, September 15, 2015; “India to Build Sea
Bridge, Tunnel to Connect Sri Lanka at a Cost of Rs 24,000 crore: Nitin
Gadkari,” Economic Times, December 17, 2015; and P.K. Balachandran,
“Sri Lanka Scuttles Plan for Bridge Over Palk Strait,” New Indian Express,
December 19, 2015.
152 D.J. KARL
2. Dayan Jayatilleka, “The Indian Reality in Sri Lanka’s Existence,” The

Island (Colombo), February 15, 2009. Also see Jayatilleka, “The Geo-
Strategic Matrix and Existential Dimension of Sri Lanka’s Conflict, Post-
War Crisis and External Relations,” in India and South Asia: Exploring
Regional Perceptions, edited by Vishal Chandra (New Delhi: Institute for
Defence Studies and Analyses, 2015), 46–55; and Sankaran Krishna,
Postcolonial Insecurities: India, Sri Lanka, and the Question of Nationhood
(Minneapolis, MN: University of Minnesota Press, 1999).
3. For elaboration, see David Brewster’s Chap. 3 in this volume, David
Brewster, India as an Asia Pacific Power (London: Routledge, 2012); and
David Brewster, India’s Ocean: The Story of India’s Bid for Regional
Leadership (London: Routledge, 2014).
4. See, for example, Tansen Sen, “Silk Road Diplomacy—Twists, Turns
and Distorted History,” YaleGlobal Online, September 23, 2014,
http://yaleglobal.yale.edu/content/silk-road-diplomacy-%E2%80%93-
twists-turns-and-distorted-history.
5. For overviews of this initiative, see Jean-Marc F. Blanchard’s introduction
to this volume, Simeon Djankov and Sean Miner, eds, China’s Belt and
Road Initiative: Motives, Scope, and Challenges (Washington, DC: Peterson
Institute for International Economics, March 2016); and Tom Miller,
China’s Asian Dream: Empire Building along the New Silk Road (London:
Zed Books, 2017).
6. Quotation in Charu Sudan Kasturi, “India Wrinkle on China Silk:
Jaishankar Speaks Out on Absence of Consultations,” The Telegraph
(Calcutta), July 21, 2015.
7. Suhasini Haider, “Connectivity Plans Not Unilateral,” The Hindu, March
4, 2016.
8. Quotation in Tani Madan, “What India Thinks about China’s One Belt,
One Road Initiative (But Doesn’t Explicitly Say),” March 15, 2016,
http://www.brookings.in/what-india-thinks-about-chinas-one-belt-one-
road-initiative-but-doesnt-explicitly-say). Also see Anirban Bhaumik,
“Modi Not to Attend OBOR Meet in Beijing,” Deccan Herald, March 12,
2017; and Anirban Bhaumik, “India Opposed to China’s One-Belt-One-
Road,” Deccan Herald, March 3, 2016.
9. For arguments that the Indian Ocean will emerge as a central locus of great-
power confrontation between China and India, see Robert D. Kaplan,
“Center Stage for the Twenty-First Century,” Foreign Affairs 88, no. 2
(March/April 2009): 16–32; and Rani D. Mullen and Cody Poplin, “The
New Great Game,” Foreign Affairs, September 29, 2015, https://www.
foreignaffairs.com/articles/china/2015-09-29/new-great-game.
Also consult David Brewster, “India and China at Sea: A Contest of Status
and Legitimacy in the Indian Ocean,” Asia Policy, no. 22 (July 2016): 4–10.
10. Ananth Krishnan, “Modi courts Chinese investment, showcasing the

‘Gujarat model,’” The Hindu, November 10, 2011.
11. “Chinese PM Congratulates Narendra Modi; Vows to Take Ties to New
Level,” Economic Times, May 26, 2014; and Liu Zongyi, “Modi Ready to
Do Business with China,” Global Times, May 19, 2014.
12. Dilasha Seth and Yogima Seth Sharma, “China Offers to Finance 30 Per
Cent of India’s Infrastructure Development Plan,” Economic Times,
February 20, 2014.
13. The quotes comes from, respectively, Atul Aneja, “China-India Ties Poised
for an ‘Orbital Jump,’” The Hindu, September 9, 2014; and Debashish
Roy Chowdhury, “Why Modi’s India Is Warming to China,” South China
Morning Post, September 17, 2014.
14. “Modi Told Me China And India Are Two Bodies, One Spirit: Xi Jinping,”
India Today, September 18, 2014.
15. See Sachin Parashar, “Narendra Modi’s ‘Mausam’ Manoeuvre to Check
China’s Maritime Might,” Times of India, September 16, 2014; and
Dipanjan Roy Chaudhury, “India Plans Cotton, Ancient Maritime Routes
to Counter China’s Ambitions,” Economic Times, April 17, 2015.
16. Gordon Fairclough, “India-China Border Standoff: High in the Mountains,
Thousands of Troops Go Toe-to-Toe,” Wall Street Journal, October 31,
2014. According to another report, the Indian army had brought in a
Special Forces unit to prepare for the possibility of escalation. Rahul Singh,
“India Was Prepared to Use Special Forces during Chumar Faceoff,”
Hindustan Times, October 5, 2015.
17. Nirupama Subramanian, “India, China Not to Use Force in Case of Face-
Offs,” The Hindu, October 23, 2013.
18. Rajat Pandit, “India Suspicious as Chinese Submarine Docks in Sri Lanka,”
Times of India, September 28, 2014.
19. For more on this incident, see Ajai Shukla, “New Delhi Woos Island States,
but China Looms Large in Indian Ocean,” Business Standard, November
7, 2014; and David Brewster, “Sri Lanka Tilts to Beijing,” East Asia
Forum, November 26, 2014.
20. Quotation in Frank Jack Daniel, “As Obama Visits, Signs that India Is
Pushing Back against China,” Reuters, January 21, 2015.
21. Sachin Parashar, “Sri Lanka Snubs India, Opens Ports to Chinese
Submarine Again,” Times of India, November 2, 2014; and Shihar Annez
and Ranga Sirilal, “Chinese Submarine Docks in Sri Lanka Despite Indian
Concerns,” Reuters, November 2, 2014.
22. John Chalmers and Sanjeev Miglani, “Indian Spy’s Role Alleged in Sri
Lankan President’s Election Defeat,” Reuters, January 17, 2015.
23. For more on Maldives, see Srikanth Kondapalli’s contribution to this vol-
ume, Chap. 7.
154 D.J. KARL
24. See Dharisha Bastian and Gardiner Harris, “Chinese Leader Visits Sri
Lanka, Challenging India’s Sway,” New York Times, September 17, 2014;
Anusha Ondaatjie, “China Maritime Silk Road Is Sri Lanka’s Boon as Xi
Visits,” Bloomberg, September 16, 2014; and James Crabtree, “Sri Lanka
Sees Benefits of China’s ‘Maritime Silk Road Plan,” Financial Times,
September 17, 2014.
25. Quotation in Daniel, “As Obama Visits, Signs that India Is Pushing Back
against China.”
26. For overviews of the expansion of Chinese clout during the Rajapaksa
period, see Gunjan Singh, “Growing Chinese Influence in Sri Lanka”
(New Delhi: Institute for Defense Studies and Analyses, June 8, 2009);
and Nilanthi Samaranayake, “Are Sri Lanka’s Relations with China
Deepening? An Analysis of Economic, Military, and Diplomatic Data,”
Asian Security 7, no. 2 (2011), 119–146.
27. For a report that India was accelerating military training programs and the
supply of defensive weapons for Colombo in order “to counter China’s
ever-growing strategic inroads into Sri Lanka,” see Rajat Pandit, “India to
Train Lankan Soldiers,” Times of India, July 1, 2008.
28. Quotations in Sandra Destradi, Indian Foreign and Security Policy in South
Asia: Regional Power Strategies (London and New York: Routledge,
2012), 79; and “Won’t Stop Military Cooperation with Lanka: Pranab,”
Indian Express, October 24, 2008.
29. Harsh V. Pant, “The New Battle for Sri Lanka,” ISN Security Watch,
June 17, 2010, http://www.isn.ethz.ch/Digital-Library/Articles/
Detail/?lang=en&id=117624; and R.N. Das, “China’s Foray into Sri
Lanka and India’s Response.” New Delhi: Institute for Defence Studies
and Analyses, August 5, 2010.
30. See Wade Shepard, “Sri Lanka and China’s Hambantota Debacle May Now
Be ‘Too Big to Fail,’” Forbes, August 4, 2016, https://www.forbes.com/
sites/wadeshepard/2016/08/04/sri-lanka-and-chinas-hambantota-
debacle-is-too-big-to-fail; Wade Shepard, “The Story Behind the World’s
Emptiest International Airport,” Forbes, May 28, 2016, https://www.
forbes.com/sites/wadeshepard/2016/05/28/the-story-behind-the-
worlds-emptiest-international-airport-sri-lankas-mattala-rajapaksa; and
Jeff M. Smith, “China’s Investments in Sri Lanka,” Foreign Affairs,
May 23, 2016, https://www.foreignaffairs.com/articles/china/2016-
05-23/chinas-investments-sri-lanka; Sammer Lalwani, “China’s Port to
Nowhere,” Foreign Affairs, April 8, 2015, https://www.foreignaffairs.
com/articles/china/2015-04-08/chinas-port-nowhere. According to one
report, the Hambantota airport is so commercially unviable government
officials were once considering converting it into a rice storage facility.
See Annie Gowen, “Can Sri Lanka’s new Government Break Free from
China?” Washington Post, August 16, 2015.
31. For useful background, refer to James R. Holmes and Toshi Yoshihara,
“China’s Naval Ambitions in the Indian Ocean,” Journal of Strategic
Studies 31, no. 3 (2008): 367–394; Daniel J. Kostecka, “Places and Bases:
The Chinese Navy’s Emerging Support Network in the Indian Ocean,”
Naval War College Review 64, no. 1 (Winter 2011): 59–78; C. Raja
Mohan, Samudra Manthan: Sino-Indian Rivalry in the Indo-Pacific
(Washington, DC: Carnegie Endowment for International Peace, 2012),
esp. Chapter 7; Jonathan Holslag, “The Reluctant Pretender: China’s
Evolving Presence in the Indian Ocean,” Journal of the Indian Ocean
Region 9, no. 1 (2013), 42–52; and Saji Abraham, China’s Role in the
Indian Ocean: Its Implications on India’s National Security (Delhi: Vij
Books India, 2015).
32. On the debate over the strategic consequences of China’s maritime and
naval activity in the region, consult Christopher D. Yung et al., “Not an
Idea We Have to Shun”: Chinese Overseas Basing Requirements in the
Twenty- First Century” (Washington, DC: National University Press,
October 2014); David Brewster, “An Indian Ocean Dilemma: Sino-Indian
Rivalry and China’s Strategic Vulnerability in the Indian Ocean,” Journal
of the Indian Ocean 11, no. 1 (2015): 48–59; and Morgan Clemens, “The
Maritime Silk Road and the PLA,” manuscript, July 2015.
33. For an argument that forward deployments of Chinese nuclear subma-
rines would breach a “redline” set by New Delhi vis-à-vis Chinese naval
activities in the Indian Ocean, see James R. Holmes and Toshi Yoshihara,
“Redlines for Sino-Indian Naval Rivalry,” in Deep Currents and Rising
Tides: The Indian Ocean and International Security, edited by John
Garofano and Andrea J. Dew (Washington, DC: Georgetown University
Press, 2013), 185–209. On a discussion in Chinese defense-policy cir-
cles about using submarines to blockade the Indian coast, see Zachary
Keck, “Can China’s Nuclear Submarines Blockade India?” National
Interest blog, June 5, 2015, http://nationalinterest.org/blog/the-buzz/
can-chinas-nuclear-submarines-blockade-india-13053.
34. Consult, inter alia, Rajat Pandit, “India’s Submarine Fleet Sinking: CAG,”
Times of India, October 25, 2008; “CAG Report Pulls Up Navy on
Submarine Maintenance, IAF On Procurement Shortcomings,” Indian
Express, July 19, 2014; and “How India Lags Behind China in Submarine
Race,” Times of India, July 20, 2015.
35. “China’s ‘String of Pearls’ Is Closer Than You Think, Red Intrusion in
Indian Waters Sends Jitters,” India Today, April 5, 2013, http://indiato-
day.intoday.in/story/chinese-nulcear-submarines-in-indian-ocean-send-
alarm-bells-ringing/1/260806.html; Rahul Singh, “China’s Submarines
in Indian Ocean Worry Indian Navy,” Hindustan Times, April 7, 2013;
and “China Flexes Muscle in Indian Ocean, Navy Concerned,” Times of
India, May 13, 2013.
156 D.J. KARL
36. Sandeep Unnithan, “Indian Navy Headless as Chinese Nuclear Sub Prowls
Indian Ocean,” India Today, March 21, 2014, http://indiatoday.intoday.
in/story/indian-navy-chinese-nuclear-sub-indian-ocean/1/350498.html.
37. “Chinese Submarine Lurked Past Indian Waters, Docked in Karachi,”
India Today, June 27, 2015, http://indiatoday.intoday.in/story/chinese-
submarine-indian-navy-karachi-indian-ocean-pm-modi/1/447505.html.
38. Vishnu Som, “Navy Alert to Chinese Nuclear Submarine Threat in Indian
Ocean,” NDTV, June 2, 2015, http://www.ndtv.com/india-news/navy-
alert-to-chinese-nuclear-submarine-threat-in-indian-ocean-767781. Also
consult Manu Pubby, “As Sightings of Chinese Submarines Become
Frequent, Navy Steps Up Guard in Indian Ocean Region,” Economic
Times, August 8, 2015.
39. T. Ramakrishnan, “Sri Lanka is Neither Pro-India Nor Pro-China: Ranil,”
The Hindu, April 8, 2016.
40. According to one analyst, Rajapaksa’s defeat showed how Prime Minister
Modi’s government “was able to snatch back this pearl from Beijing’s
string.” Kadira Pethiyagoda, India v. China in Sri Lanka–Lessons for Rising
Powers (Washington, DC: Brookings Institution, May 1, 2015). Also con-
sult Heather Timmons, “Sri Lanka’s Election Upset Just Destroyed a
Linchpin of China’s Foreign Policy,” Quartz India, January 8, 2015,
http://qz.com/323718/how-sri-lankas-surprising-election-results-
could-destroy-a-lynchpin-of-chinas-foreign-policy/; Ellen Barry, “New
President in Sri Lanka Puts China’s Plans in Check,” New York Times,
January 9, 2015; and “Wooing Sri Lanka From China’s Embrace,”
Bloomberg View, January 11, 2015, http://www.bloombergview.com/
articles/2015-01-11/sri-lankas-new-president-offers-a-fresh-start.
41. As Sri Lanka’s new deputy foreign minister recently stated, “If we manage
our policies right, we will become the next or even better Singapore or
Dubai.” Quoted in Gauri Bhatia, “China, India Tussle for Influence as Sri
Lanka Develops,” CNBC.com, April 24, 2016, http://www.cnbc.
com/2016/04/24/global-opportunities-china-india-tussle-for-influ-
ence-as-sri-lanka-develops.html. Similarly, the country’s prime minister
wants to turn the port of Hambantota into a new Shenzhen. Atul Aneja,
“China, Sri Lanka to Redefine Colombo Port City Project,” The Hindu,
April 9, 2016.
42. Ananth Krishnan, “Sri Lanka Says Will Not Allow Repeat of Chinese
Submarine Visits,” India Today, February 28, 2015, http://indiatoday.
intoday.in/story/sri-lanka-says-will-not-allow-repeat-of-chinese-subma-
rine-visits/1/421571.html; and Ravi Velloor, “Sri Lanka to Allow Chinese
Submarines to Visit, Says PM Wickremsinghe,” Straits Times, October 19,
2015.
43. Quotation in Barry, “New President in Sri Lanka Puts China’s Plans in
Check.” Also consult Meera Srinivasan, “Colombo Opposition Takes
Anti-China Stand,” The Hindu, December 21, 2014.
44. Debasish Roy Chowdhury, “Sri Lanka Looks to China to Buoy Sinking
Port,” South China Morning Post, October 11, 2015. Also see Daniel Ten
Kate and Anusha Ondaatjie, “China’s Cash Proves Too Irresistible for Sri
Lanka to Ignore,” Bloomberg, August 18, 2015; and Debasish Roy
Chowdhury, “Let Bygones Be Bygones, Colombo Urges Beijing, as
Chinese Loans Take Their Toll,” South China Morning Post, October 18,
2015.
45. Wade Shepard, “Sri Lanka’s Hambantota Port and the World’s Emptiest
Airport Go to the Chinese,” Forbes, October 28, 2016, https://www.forbes.
com/sites/wadeshepard/2016/10/28/sold-sri-lankas-hambantota-port-
and-the-worlds-emptiest-airport-go-to-the-chinese. Also consult B. Channa
Kumara, “Sri Lanka Launches China-Led Investment Zone amid Protests,”
Reuters, January 7, 2017; and “China Plans to Invest $5 bn in Southern Sri
Lanka Economic Zone,” Business Standard, January 8, 2017.
46. Atul Aneja, “China, Sri Lanka Eye New Infra Road Map to Anchor Ties,”
The Hindu, April 9, 2016.
47. Aneja, “Expectations High from Ranil’s China Visit,” The Hindu, April 8,
2016; Aneja, “China, Sri Lanka to Redefine Colombo Port City Project;”
and Munza Mushtaq, “China Invites India to Join Sri Lanka Offshore City
Project,” Asia Times, October 10, 2016.
48. Aneja, “China, Sri Lanka to Redefine Colombo Port City Project;” and
“Sri Lanka Approves Chinese Port Project,” Reuters, January 12, 2016.
Also see “Sri Lanka Deepening Trade Agreements, Exploring China
FTA: Malik,” Lanka Business Online, January 29, 2016, http://www.
lankabusinessonline.com/sri-lanka-deepening-trade-agreements-explor-
ing-china-fta-malik/; and Ben Blanchard, “Sri Lanka Eyes China Free-
Trade Deal This Year, PM to Visit in May,” Reuters, February 4, 2017.
49. Sachin Parashar, “Debt-Ridden Sri Lanka Snuggles Up to China Again at
India’s Expense,” Times of India, May 1, 2016.
50. Quotations in Shihar Aneez, “Short of Options, Sri Lanka Turns Back to
Beijing’s Embrace,” Reuters, February 11, 2016; and Bhatia, “China,
India Tussle for Influence as Sri Lanka Develops.”
51. “Maldives Prefers Chinese Proposals As They Are More Attractive:
Gayoom,” Business Standard, March 9, 2016.
52. Jonah Blank: “India’s Engagement with Myanmar: Regional Security
Implications of Acting East Slowly,” in Heading East: Security, Trade and
Environment between India and Southeast Asia, edited by Karen Stoll Farrell
and Sumit Ganguly (New Delhi: Oxford University Press, 2016), 83.
158 D.J. KARL
53. Bureaucratic lassitude in New Delhi, for example, is a major reason why
development of the Chabahar port complex on Iran’s Makran coast—a
project India emphasizes is critical to its Central Asian ambitions—has been
stalled for years. For more, refer to Gohar Motevalian and Iain Marlow,
“India Slow to Expand Iran Port as China Races Ahead at Rival Hub,”
Bloomberg, October 4, 2016; Amitav Ranjan, “Speed Up Assistance Or
Lose Chabahar, Hints Iran,” Indian Express, January 27, 2016; Kabir
Taneja, “India’s Missed Iran Opportunity,” The Diplomat, May 21, 2015,
http://thediplomat.com/2015/05/indias-missed-iran-opportunity/; and
M. Ramesh, “The Price of Inaction,” Hindu Business Line, July 24, 2014.
54. Shashi Tharoor, Pax Indica: India and the World of the Twenty-First
Century (New Delhi: Allen Lane, 2012), 106. A similar argument is con-
tained in N. Sathiya Moorthy, “Sri Lanka: ‘Re-Defining’ or reiterating
China-India equations,” South Asia Weekly IX, no. 15 (April 11, 2016).
55. Quotations in C. Raja Mohan, “Modi’s Sagar Mala,” Indian Express,
March 11, 2015; and “Modi’s Visit to Sri Lanka,” The Hindu, March
16, 2015. Also refer to Sharmadha Srinivasan, “Assessing India’s
Infrastructure Aid Diplomacy,” (Mumbai: Gateway House–Indian Council
on Global Relations, March 19, 2015); and M.K. Bhadrakumar, “China’s
Regional Strategy Outshines India’s,” Rediff, May 31, 2013, http://
blogs.rediff.com/mkbhadrakumar/2013/05/31/chinas-regional-
strategy-outshines-indias/.
56. Nilanthi Samaranayake, “India’s Key to Sri Lanka: Maritime Infrastructure
Development,” The Diplomat, March 31, 2015, http://thediplomat.
com/2015/03/indias-key-to-sri-lanka-maritime-infrastructure-develop-
ment. Also see Nidhi Verma and Krishna N. Das, “With Eye on China, India
Doubles Down on Container Hub Ports,” Reuters, July 28, 2016.
57. On Beijing’s emergence as the world’s largest overseas investor, see David
Dollar, China as a Global Investor (Washington, DC: Brookings Institution,
May 2016); and James Kynge, “China Becomes Global Leader in
Development Finance,” Financial Times, May 17, 2016.
58. Rajeswari Pillai Rajagopalan, “India-Sri Lanka Relations under Modi,” in
Neighbourhood First: Navigating Ties under Modi, edited by Aryaman
Bhatnagar and Ritika Passi (New Delhi: Observer Research Foundation,
2016), 131.
59. Quotations in Barry, “New President in Sri Lanka Puts China’s Plans in
Check” and Jessica Meyers, “Sri Lankans Who Once Embraced Chinese
Investment Are Now Wary of Chinese Domination,” Los Angeles Times,
February 25, 2017.
60. Aneez, “Short of Options, Sri Lanka Turns Back to Beijing’s Embrace.”
61. “India Elected to Board of Directors of AIIB,” Business Standard, January
18, 2016; and Ananth Krishnan, “India Commits $8 billion to China-led
Asian Infrastructure Investment Bank,” India Today, June 29, 2015,

http://indiatoday.intoday.in/story/indian-investmentaiib-china-south-
asia-infrastructure-development/1/447878.html.
62. Ananth Krishnan, “BCIM Corridor Gets Push after First Official-Level Talks
in China,” The Hindu, December 21, 2013; and Atul Aneja, “China, India
Fast-Track BCIM Economic Corridor Project,” The Hindu, June 26, 2015.
63. C. Raja Mohan, “Towards New Realism,” Indian Express, April 16, 2016.
64. C. Raja Mohan, “Beyond the Boundary,” Indian Express, May 11, 2015.
A similar analysis is found in C. Raja Mohan, “Frankly, Beijing,” Indian
Express, May 18, 2015.
65. According to one report, the Modi government has given permission to
some 18 leading Chinese companies to either set up subsidiaries or estab-
lish project offices in India. Aman Sharma, “Intelligence Agencies On
Board, Chinese Tourists to Get E-Visas Within Three Days,” Economic
Times, September 26, 2015. Also See Aman Sharma, “India to Take
Pragmatic Steps To Boost Chinese Investments,” Economic Times,
February 9, 2015; Sanjeev Miglani, “Indian Rail Projects Outweigh Rivalry
Before Modi’s Visit to China,” Reuters, May 11, 2015; and Rajesh Ahuja,
“Now, Chinese Investment Won’t Hit a Security Wall,” Hindustan Times,
July 1, 2015.
66. “Govt Mulling Relaxing Security Rules for Chinese Investment,” Business
Standard, February 8, 2015.
67. See Bharti Jain, “Intel Agencies Object to E-Tourist Visa for Chinese,”
Times of India, May 7, 2015; and Saibal Dasgupta, “China Cheers for
Modi after E-Visa Surprise at university,” Times of India, May 15, 2015.
68. For an indication of the scale of India’s infrastructure challenges, see “India
Needs $5.15 Trillion in Infra by 2030 to Sustain Growth, Says ADB,”
Hindustan Times, February 28, 2017; and “India Needs $1 Trillion for
New Roads, Ports, Airports: Gadkari,” Times of India, January 31, 2016.
For recent offers of Chinese assistance on infrastructure, see Sanjeet
Mukherjee, “India and China to Cooperate on Delhi-Nagpur High-Speed
Rail,” Business Standard, October 11, 2016.
69. For an argument that “India is China’s Natural and Major Partner in
Supporting the ‘Belt and Road’ Initiatives,” consult Keshab Chandra
Ratha and Sushanta Kumar Mahapatra, “Recasting Sino-Indian Relations:
Towards a Closer Development Partnership,” Strategic Analysis 39, no. 6
(2015), 696–709. Also consult K. Yhome and Zhu Cuiping, Continental
and Maritime Silk Routes: Prospects for India-China Cooperation, (New
Delhi: Observer Research Foundation, January 2016).
70. C. Raja Mohan, “China’s Railway, India’s Opportunity,” Indian Express,
February 17, 2016.
71. Shivshankar Menon, “We Must Now Choose,” Outlook, January 23,
2016. A similar argument is expressed in Menon, “The Rise of China as
160 D.J. KARL
India’s Major Geopolitical Challenge,” The Wire, May 11, 2015, http://
thewire.in/2015/05/11/the-rise-of-china-as-indias-major-geopolitical-
challenge-1467.
72. Quotation of Shyam Saran in Charu Sudan Kasturi, “Call to Embrace
China Projects–Don’t Veto Connectivity Plans: Experts,” The Telegraph,
May 14, 2015.
73. Samir Saran and Ritika Passi, “Seizing the ‘One Belt, One Road’
Opportunity,” The Hindu, February 2, 2016. Also consult Rinku Ghosh,
“Dragon Puffs Beyond Borders,” The Pioneer (New Delhi), June 28, 2015;
Amitendu Palit, “China’s MSRI and Indian Business,” Financial Express,
December 12, 2015; and Pravakar Sahoo, “India Should Be Part of the
new Silk Route,” Hindu Business Line, December 22, 2015.
74. In a recent interview, a former Chinese ambassador who serves as head of
the China-Pakistan Friendship Association called the corridor “China’s
flagship project” in the Belt and Road initiatives. “CPEC is Flagship
OBOR Project,” Business Recorder (Karachi), January 29, 2016. For more
on the CPEC, see Jabin Jacob’s Chap. 5 herein.
75. Consult Rajat Pandit, “India Expresses Strong Opposition to China
Pakistan Economic Corridor, Says Challenges Indian Sovereignty,”
Economic Times, March 16, 2017; Devirupa Mitra, “Modi Criticises
China’s One Belt One Road Plan, Says Connectivity Can’t Undermine
Sovereignty,” The Wire, January 17, 2017, https://thewire.in/100803/
modi-criticises-chinas-one-belt-one-road-plan-says-connectivity-corridors-
cant-undermine-sovereignty/; and “Modi Told China, Pakistan Economic
Corridor Unacceptable: Sushma,” Business Standard, May 31, 2015.
76. For more on this point, see Andrew Small, The China-Pakistan Axis: Asia’s
New Geopolitics (Oxford University Press, 2015); and M.D. Upadhyay,
Sino-Pak Nexus and Implications for India (New Delhi: Vij Books India:
2015).
77. Quotation in James Kynge et al., “How China Rules the Waves,” Financial
Times, January 12, 2017. Also consult “Chinese Navy Ships to be Deployed
at Gwadar Port: Pakistan Navy Official,” Economic Times, November 25,
2016. For a report that Beijing may station marines at Gwadar, see Minnie
Chan, “As Overseas Ambitions Expand, China Plans 400 Per Cent Increase
to Marine Corps Numbers, Sources Say,” South China Morning Post,
March 13, 2017.
78. C. Raja Mohan, “The Great Game Folio,” Indian Express, July 10, 2013.
79. C. Raja Mohan, “Redoing India-China Sums,” Indian Express, March 23,
2015. Also see his argument in “Reimagining the Triangle,” Indian
Express, April 20, 2015.
80. Salman Haider, “Karakoram Corridor,” The Statesman (Calcutta),
February 25, 2014; and “India Not Worried Over the Construction of the
Pakistan-China Economic Corridor: High Commissioner TCA Raghavan,”

Economic Times, April 22, 2015. Also See Srinath Raghavan, “India Must
Involve Itself in the China-Pakistan One Belt, One Road Initiative to Stay
In The Game,” Hindustan Times, March 1, 2017.
81. Aravind Gowda, “Modi Emphasizes on Ocean Economy at Indian
Science Congress,” India Today, January 3, 2016, http://indiatoday.
intoday.in/story/modi-emphasises-on-ocean-economy-at-indian-science-
congress/1/561242.html.
82. See P. Manoj, “Sagar Mala Project to Strive for Holistic Development Of
India’s Maritime Sector,” Livemint, November 7, 2014, http://www.
livemint.com/Opinion/L0SfczFVh8InmFyWUr9BlN/Sagar-Mala-project-
to-strive-for-holistic-development-of-Ind.html; “India Poised for Big Splash
in Maritime Sector: PM Modi,” Business Standard, April 14, 2016; “India’s
Coast Line Can Become Engine of Growth, Says Modi at Maritime Summit,”
Deccan Chronicle, April 14, 2016; and Lalatendu Mishra, “Investments
Welcome in Maritime Sector, Says Modi,” The Hindu, April 15, 2016.
83. P.K. Ghosh, “Linking Indian and Chinese Maritime Initiatives: Towards a
Symbiotic Existence” (New Delhi: Observer Research Foundation,
December 2015). It is worth noting, however, that New Delhi reportedly
vetoed Chinese involvement in a new port development in Vizhinjam, on
India’s southern tip. Verma and Das, “With Eye on China, India Doubles
Down on Container Hub Ports.”
84. Quotation in C. Uday Bhaskar, “India’s Maritime Awakening? Modi
Endorses a Blue Revolution,” Business Standard, March 17, 2015. Also see
Jean Paul Arouff, “India in Pacts to Develop Infrastructure in Mauritius,
Seychelles,” Reuters, March 12, 2015; C. Raja Mohan, “Narendra Modi
and the Ocean: Maritime Power and Responsibility,” Indian Express,
March 12, 2015; and Ashok B. Sharma, “Modi’s New Ocean Politics:
Gluing Security and the Blue Economy,” Jakarta Post, March 31, 2015. It
bears emphasis that the Modi government has also been active in working
with Bangladesh on maritime economic cooperation in the Bay of Bengal.
See C. Raja Mohan, “Bay of Bengal Glad Tidings,” Indian Express,
October 11, 2016; and Mohan, “Chinese Takeaway: Bengal’s Bay,” Indian
Express, June 9, 2015.
85. “India to Help Lanka Develop Regional Petro Hub in Trinacomalee,”
Indian Express, March 13, 2015; and Charu Sudan Kasturi, “Delhi
Toehold in Key Lanka Port, At Last—IOC Role in Strategic Weathervane,”
The Telegraph (Calcutta), March 14, 2015. Also See Chandeepa
Wettasinghe, “Govt. Mulls Doubling Trinco Oil Tank Farm Project Size
with India,” Daily Mirror (Colombo), March 2, 2017.
86. Mohan, “Towards New Realism.”
87. Kasturi, “India Wrinkle on China Silk: Jaishankar Speaks Out on Absence
of Consultations.”
162 D.J. KARL
88. According to Indian naval officials, Chinese submarines have been sighted
in the Indian Ocean an average of four times every three months. Sanjeev
Miglani and Greg Torode, “Wary of China’s Indian Ocean Activities, US,
India Discuss Anti-Submarine Warfare,” Reuters, May 2, 2016. For
acknowledgment by a top US military commander that the USA and India
are jointly monitoring Chinese naval traffic in the Indian Ocean, consult
Ajai Shukla, “US Pacific Commander Admits US-India Jointly Tracking
Chinese Submarines,” Business Standard, January 18, 2017.
89. “China Hints More Bases on Way after Djibouti,” Reuters, March 8, 2016;
Mandip Singh, “Port de Djibouti: China’s First Permanent Naval Base in
the Indian Ocean,” (New Delhi: Institute for Defense Studies and Analyses,
February 22, 2016); and David Brewster, “China’s First Overseas Military
Base In Djibouti Likely To Be A Taste Of Things To Come,” The Lowy
Interpreter, December 27, 2015, http://www.lowyinterpreter.org/
post/2015/12/02/Chinas-first-overseas-military-base-in-Djibouti-
likely-to-be-a-taste-of-things-to-come.aspx.
90. Kanwal Sibal, “Trouble All Around,” Telegraph (Calcutta), October 3,
2016.
91. Sutirho Patranobis, “Expanding Indo-China Ties a Win-Win Oppor-
tunity: New Devpt Bank’s KV Kamath,” Hindustan Times, Septem-
ber 4, 2016; and Madhura Karnik and Manu Balachandran, “An Old
Hand In Indian Banking Will Head The New BRICS Bank,” Quartz
India, May 11, 2015, http://qz.com/402168/an-old-hand-in-indian-
banking-will-head-the-new-brics-bank/.
92. For a positive sign, consult Simon Denyer, “Asia’s New Infrastructure
Bank Is Out to Prove it’s Not China’s Pawn,” Washington Post, June 23,
2016.
93. See “Beijing Wants India, Others to Join CPEC Due to Pakistan’s Appetite,
Says Chinese Media,” Economic Times, December 30, 2016; and Dipanjan
Roy Chaudhury, “China Wants India in One-Belt-One-Road Meet, India
Remains Wary,” Economic Times, January 7, 2017.
References
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CHAPTER 7
The Maritime Silk Road

and China–Maldives Relations
Srikanth Kondapalli
The Maritime Silk Road (MSR)

and Its Larger Context
In September 2013, Chinese President Xi Jinping in a speech to the

Nazarbayev University in Kazakhstan alluded for the first time to the
revival of the ancient Silk Road, which existed for centuries, connecting
China with Central Asia, West Asia, South Asia, and Europe.1 In October
of the same year, he followed up on this idea in a speech to the Indonesian
Senate about the MSR connecting South China Sea with the Indian Ocean
and beyond to Africa and Europe. On March 28, 2015, China released
the first official document outlining the main ideas, thrust, policies, and
programs of the “One Belt, One Road” (OBOR) initiative, which pack-
ages the above two continental and maritime roads. This document claims
that the OBOR profile includes “countries and regions with a total popu-
lation of 4.4 billion and a total economic volume of 21 trillion US dollars,
63 percent and 29 percent respectively of the world’s total.”2 It also sug-
gests that OBOR aims to overcome the current global financial crisis,
“uphold the global free-trade regime,” and enhance connectivity between
Europe, Asia, and Africa. Its principles are to be based on the United
S. Kondapalli (*)
Jawaharlal Nehru University, New Delhi, India

DOI 10.1007/978-981-10-5239-2_7
174 S. KONDAPALLI
Nations (UN) Charter, China’s Five Principles of Peaceful Co-Existence,

inclusiveness, and free-market operation. Five major priorities for the

countries involved in OBOR are the promotion of policy coordination,
facilities connectivity, unimpeded trade, financial integration, and people-
to-people contacts.3 The OBOR, according to some Chinese analysts, will
usher in a new international order that will replace the order that has been
in place for the last seven decades.4
China notes that in conjunction with over 20 visits abroad and interac-
tions with various leaders, President Xi, Premier Li Keqiang, and others
have explained OBOR’s policies and made several tie-ups with a number
of countries. OBOR is expected to include road, railway, air, harbor,
energy pipelines, and fiber-optic connectivity between regions in China
and Europe, Asia, and Africa. It envisages investments, the export of excess
capacities that China has built up in the infrastructure and manufacturing
sectors, renminbi internationalization, setting up export-processing zones,
and skill development. Given the potential economic benefits, various
provinces, cities, and other parties in China have expressed their interest in
getting integrated into OBOR projects.5
The key leader in charge of OBOR, Vice Premier and Politburo
Standing Committee member Zhang Gaoli, in a speech at Chongqing in
May 27, 2015 stated that China is planning to invest over $900 billion in
six economic corridors, viz., China-Mongolia-Russia, New Eurasian Land
Bridge, China-Central and West Asia, Indo-China Peninsula, China-Brazil,
and Bangladesh-China-India-Myanmar (BCIM).6 The BCIM is a part of
the MSR Initiative (MSRI). The State Councilor Yang Jiechi, in a speech
to the Boao Forum for Asia, stated that the twin Silk Road initiative stands
for “peace, friendship, openness, inclusiveness, mutual learning and mutual
benefit” and that “it will not, in principle, involve issues of controversy”
nor will it act as “a tool for any country to seek geopolitical advantages.”
Yang further argued that “While upholding its own maritime rights and
interests, China stands ready to work together with other countries to
build maritime partnerships of win-win cooperation.”7
Regarding the financing of Silk Road projects, Chinese leaders have
launched a flurry of initiatives. China has established a USD $40 billion
Silk Road Fund to finance OBOR projects, as announced by President Xi
during the APEC meeting in Beijing in November 2014.8 Part of the
funding of the Asian Infrastructure Investment Bank (AIIB) established in
2014 is also expected to cater to OBOR projects. Furthermore, the BRICS
New Development Bank has an outlay of nearly USD $100 billion. While
THE MARITIME SILK ROAD AND CHINA–MALDIVES RELATIONS 175
Vice Premier Zhang Gaoli quoted a figure of USD $ 900 billion, as noted
above, Chinese Foreign Minister Wang Yi has suggested a figure of USD
$ 890 billion. The China Development Bank and other financial institu-
tions have also outlined financing of projects roughly coinciding with the
OBOR projects.
However, having learned lessons from its own experiments in infra-
structure project development in China in the wake of the 1997 Asian
financial crisis and the 2007 global financial crisis, today China insists on
public–private partnership and market principles. For, as Luo Yuze has
argued, OBOR emphasizes, on the one hand, the role of the market and
“risk reduction and profitability” and, on the other, “ non-alliance, non-
confrontation and not directed against any other country.”9 OBOR is
not without its security risks. According to Liu Haiquan and other con-
tributors to this book, OBOR and its component the MSRI face acute
security hurdles, including sovereignty issues, transnational crime,
piracy and others. Liu argues that to bring about the successful imple-
mentation of OBOR, China should, in addition to its own deployments,
factor in American and Russian roles.10
The Maritime Silk Road (MSR) and Chinese Views

on the Indian Ocean Region
Turning to the Indian Ocean Region (IOR), which is the thrid largest
ocean in the world and has come to prominence recently due to the rise of
China and India as well as the continuing energy-dependence of South
Korea, Japan, and Southeast Asia on it, a number of Chinese scholars have
suggested a revision of China’s policy in this area. Previously, many
Chinese people have argued that India intends to “control” the IOR
through its naval modernization program.11 It is also a common refrain in
China that the main driver for the growth in Indian enthusiasm is to fulfill
its “great power” (大国心态) ambition, although Chinese scholars do not
mention China’s own ambitions in this regard.12 However, recently, some
have seen an opportunity to work with India in enhancing maritime secu-
rity in the region.13 For instance, Xie Bo and Yue Rong suggest that the
IOR provides foreign countries with a “wide strategic choice” to enter it,
as neither the United States of America (USA) nor the Indian navies could
dominate the entire region. They suggest that while giving full play to
consultations and cooperative mechanisms in the maritime domain, China
should fully utilize its position as a UN Security Council (UNSC) member
176 S. KONDAPALLI
to push through several initiatives in the IOR.14 Cao Tianshu of People’s

University has argued China should strengthen strategic cooperation with
both Pakistan and Myanmar—located on either side of the IOR—and uti-
lize to the full extent the freedom-of-navigation principle to intensify naval
activities in the IOR and defend regional security through the building of
hard and soft power.15 Shu Yuan of Yunnan Provincial Committee School
of the Communist Party has suggested that China should have a clear
target of influencing the Indian Ocean Rim through a 15-year plan: viz.,
in the “foundation stage,” lasting three to five years, of building the
“bridgehead strategy” with Southeast Asia and consolidate Sino-Pakistan
cooperation; the “planning stage,” lasting for up to 10 years, of specific
infrastructure planning and construction; and the “cooperation stage” of
coordination and influence in the IOR.16
Bilateral Relations with Maldives

China’s energy-dependence, its status as the largest trading partner with
IOR countries, its MSRI, and its positioning for the twenty-first-century
power transition with the USA have all recently triggered renewed interest
in China to take a fresh look at the IOR states, especially Maldives, whose
geopolitical location in the region gives it enormous importance. China
has stepped up relations with Maldives over the last two years, with the
MSRI in the background of this.
In the historical narrative, Maldives is referred to as “Liushan/Liuyang
Kingdom.” It is said that Zheng He reached Maldivian islands (at Star
Rafts) twice during his expeditions to the Indian Ocean.17 Historically
Maldives reportedly sent three missions to the Chinese court.18 Currently,
China’s foreign ministry annual reports suggest that both countries are
“close neighbors enjoying traditional friendship.”19
It took nearly seven years for Beijing to establish diplomatic relations
with Maldives after the latter became independent in 1965; this eventu-
ally took place on October 14, 1972.20 High-level bilateral visits were few
between 1965 and 1972. It would be nearly eight years eight years before
a high-level Maldivian representative would visit China, with Maldives
Foreign Minister Fathulla Jameel visiting Beijing from October 13 to 21,
1980. Huang Hua reciprocated this visit in 1981. In October 1984,
Maldivian President Maumoon Abdul Gayoom made the first state visit
to Beijing. Another visit by Jameel in 1993 was reciprocated by Qian
Qichen in 1994.21 In May 1997, China and Maldives signed an a greement
for visa exemption for Hong Kong.22 Vice Minister of Foreign Trade and
Economic Cooperation Liu Shanzai visited Maldives on April 23, 1998 in
order to further economic and trade contacts.23 The following year, the
Chairman of the Chinese People’s Political Consultative Conference
(CPPCC), Li Ruihuan, visited Malé. The first military visit was made by
the Maldivian side when in September 2000 its Defense Minister and
Abdullah Satar Anmair voyaged to China.
In February 2001, Assistant Foreign Minister Wang Yi visited Maldives
and termed bilateral relations “excellent.”24 Two months later, People’s
Liberation Army (PLA) Chief of Staff Fu Quanyou travelled to the
country. On that occasion, President Gayoom briefed him on the pro-
tection and security of small states as well as the threat posed by rising
sea levels, both high-priority issues for Maldives.25 In the following
month, March 2001, Premier Zhu Rongji visited Maldives—the first
time such a high-ranking leader from China had come—and partici-
pated in the inauguration functions for the fourth phase of a housing
project in Malé.26 The first phase had been launched earlier, in 1988.27
During Zhu’s visit, the two countries signed an Agreement on Economic
and Technical Co-Operation.28 On this occasion, Zhu stated that “China
wants to be a friend and a good partner of the Maldives forever.”29 He
also supported Maldivian concern about the effect of rising sea levels on
the status of the least developed countries.30
In November 2001, Defense Minister Chi Haotian along with PLA
Navy Deputy Commander Ma Xingyuan went to Maldives. On the occa-
sion, Brigadier General Mohamed Zahir, chief of the Maldives National
Security Service, stated that his country was “willing to make joint efforts
with China to safeguard peace and development in the region and in the
world” and expressed gratitude for the support and assistance given by the
Chinese government and military to the nation-building and military con-
struction of Maldives.31 Another Chinese report quoted Zahir as thanking
the “Chinese armed forces for their long-term support and help to
Maldives’ national development and army building.”32 However, a
reported Chinese proposal for building a submarine base at Marao proved
to be illusory.33
Since 2002, both foreign ministries have been holding annual consulta-
tions about foreign policy. In September 2002, Maldives expressed satis-
faction at China’s ratification of the Kyoto Protocol.34 Vice Premier Wu Yi
visited Maldives in March 2004 and stated that her country “counted the
Maldives among its very close friends and that her Government attached a
178 S. KONDAPALLI
lot of importance to the enhancement of the existing bilateral relations

with the Maldivian Government.”35 Vice Chairman of the Standing
Committee of China’s National People’s Congress (NPC) Li Tieying went
to Maldives three months later and met with the President.36 In April
2005, Chinese Foreign Minister Li Zhaoxing visited Maldives and alluded
to expanding links in all fields.37 Following a devastating tsunami in late
2004, China made a cash grant to Maldives “within its capacity.”38
Twenty two years after his first state visit to China, President Gayoom
made a sojourn to Beijing in September 2006.39 In December 2007,
Maldives opened its embassy in Beijing—which China reciprocated in
November 2011 when it opened its embassy in Maldives.40 Maldives’s
Defense Minister Faisal visited Beijing in February 2009 to discuss regional
and international security issues with Chinese General Liang Guanglie.41
In January 2010, Chinese Foreign Minister Yang Jiechi travelled to
Maldives, with President Nasheed visiting Beijing four months after this.42
Chinese NPC Chairman Wu Bangguo visited Malé in May 2011. China
participated in the 17th South Asian Association for Regional Cooperation
(SAARC) summit meeting at Addu as an observer in November 2011. By
the end of the year, China had concluded USD $198 million worth of
projects in the country.43 In September 2012, new Maldives President
Waheed visited China to attend the China-Eurasia Expo, followed by
Defense Minister Nazim in December.44
While, as China’s Vice President, Xi Jinping had previously only visited
Dhaka (Bangladesh) in South Asia, as China’s President, Xi made Maldives
his first stop during a visit to South Asia in September 2014.45 While there
had already been three presidential visits from Maldives to China, this was
the first time a Chinese President had made such a visit, demonstrating the
emerging importance of this region in China’s foreign policy. Xi was
accompanied by a 100-member business delegation, signalling the eco-
nomic focus of the visit. In the joint press communiqué issued on
September 15, 2014, China secured Maldives’s endorsement for upgrad-
ing China’s links with the SAARC.
During Xi’s visit, China mooted the idea of the MSRI and of increased
connectivity between China and Maldives, indicating the strategic nature
of such relations. The joint statement issued during Xi’s visit suggested
Maldives would be “prepared to actively participate” in the MSRI. China
had previously raised the idea of the MSRI to the Maldives in various
venues and the latter had already expressed interest in this initiative. From
the Chinese perspective, according to China’s Ambassador to Maldives
Wang Fukang, the idea of the MSRI with Maldives was first mooted with
Maldives in January 2014 during a meeting between officials from the two
sides. With respect to Maldives, in June 2014, Ali Hameed, former Vice
Foreign Minister and member of the National Executive Committee of
the Republican Party of the Maldives, suggested his country could benefit
from the MSRI in terms of tourism, trade, and culture. Two months later,
President Yameen offered a positive response to the MSRI.
The Xi–Yameen joint statement in September 2014 mentions the same
in addition to specific issues of maritime cooperation. More concretely, it
states, “We have agreed to jointly build the 21st Century Maritime Silk
Road and take this opportunity to enhance cooperation in the fields of
maritime economy, maritime security, ocean research, environment pro-
tection, and disaster prevention. We will also try to start some key projects
that can yield quick results, at an early date.”46
In December 2014 a Joint Committee on Trade and Economic Coope
ration between the two sides signed a Memorandum of Understanding
(MoU) for furthering the MSRI.47 The second meeting of this Joint
Committee in September 2015 signed an MoU to initiate discussions on
a free-trade area.48
The Xi-Yameen talks in September 2014 yielded the following outcomes:
• Housing Project of the Maldives—Phase II is to be financed through

concessional loan financing by the government of China, and imple-
mented by the China Machinery Engineering Corporation
• Laamu Atoll Link-Road, a 15.1-km-long link-road, is to be con-
structed through nonreimbursable aid financing by the Chinese
Government. The project will be undertaken by the Jiangsu
Provincial Transportation Engineering Group Co. Ltd.
• An MoU on promoting the construction of the Malé–Hulhulé
Bridge Project49
• Preliminary contract agreement on the expansion and upgrading of
Ibrahim Nasir International Airport
• An MoU on the tourism infrastructure development project
• An MoU on the Greater Malé power station project
• An MoU on marine cooperation50
It is worth noting that the month before Xi’s visit to Maldives, the latter’s
President Abdulla Yameen journeyed to China and attended the second
Summer Youth Olympic Games in Nanjing. Two meetings of top leaders
180 S. KONDAPALLI
within a month demonstrates quite clearly the two sides’ prioritization of

relations. During his visit, Yameen secured USD $16 million in grant aid
from China. This grant is expected to cover costs for the Malé–Hulhulé
Bridge as well as other projects. China’s aid package also supports the con-
struction of a building to house Maldives’ Ministry of Foreign Affairs, a
National Museum, and the 1000 Housing Units Project. Besides these
endeavors, Beijing is actively involved in several renewable energy projects,
building hotels, and laying out telecommunications networks. Even before
Yameen went to China, Maldives Vice President Mohamed Jameel Ahmed
stopped in China in June. Apart from meeting Vice Premier Wang Yang, he
also attended the China–South Asia Expo and the China–South Asia
Business Forum at Kunming. Ahmed’s visit to China served the purpose of
gaining China’s help for housing-development projects, integrated-develop-
ment projects and airport-development initiatives, which fit with President
Yameen’s plan to set up special economic zones, construct harbors and bun-
kering facilities in the island nation, and diversify from tourism.51 More
recently, in June 2015, to move relations forward, Maldivian leaders
attended the China–South Asia Expo, in conjunction with the 23rd China
Kunming Import and Export Fair at Kunming.52
It is clear from the above that good relations with China fulfills many
political and economic purposes for Maldives. I now turn to China’s
objectives.
China’s contemporary interests in Maldives are multidimensional
and include both security and economic elements. As for strategic con-
siderations, which strongly influence Beijing’s posture towards the
Maldives, China is attuned to its own dependence on energy supplies
flowing through the IOR. In this vein, it is worth highlighting that it
was reported by Xinhua on August 15, 2014 that the Maldives link in
the MSRI is through the Ihavandhippolhu Integrated Development
Project, or iHavan, located on the northernmost atoll of the Maldives.
The design of the project seeks to capitalize on the strategic location of
the atoll, which lies on the seven-degree channel through which the
main East–West shipping routes connecting Southeast Asia and China
to the Middle East and Europe run. Over USD $18 trillion’s worth of
goods are transported across the seven-degree channel annually.53
China has also been actively proposing the MSRI to the Indian Ocean
littorals as a part of its grand strategy to oppose the US rebalance strat-
egy, further its own influence in the region, and create a counterbalance
against India.54
Secondly, with economic interdependencies increasing and China

becoming the largest trading partner for 128 countries, economic devel-
opment issues have come to the fore in China’s foreign policy postures.
Maldives could provide China with raw materials—mainly fisheries and
agricultural products—and its economic development plans create numer-
ous opportunities for China. For instance, in April 2014, Yameen
announced a “youth city” development policy: the planned city was to
have a population of 50,000, sports facilities, a theme park, yacht marina,
and a tourism district.55 That same month, Maldives organized an invest-
ment forum in Singapore for five mega-projects, including special eco-
nomic zones (SEZs), an expansion of Ibrahim Nasir International Airport,
Hulhumalé Phase II development, an expansion of Malé Harbor, and oil
exploration.56 Three Chinese companies, including Dongfang Electric
Corporation, China Machinery and Engineering Corporation, and Beijing
Urban Construction Group have expressed interest in these projects.
With respect to economic facets of the relationship, China’s Ambassador
to Maldives Wang Fukang stressed to Xinhua on July 21, 2014, that
China’s interests in Maldives included:
• promoting tourism; Chinese tourists have been visiting in large num-

bers (the number already reached 330,000 in 2013);
• involvement in huge infrastructure projects by Chinese companies;
• participating in maritime cooperation including training maritime
personnel, cooperation in fisheries, marine research, the protection
of ecology and the environment, and climate change;
• Housing projects, with China already having built and financed, with
concessional loans, 1000 flats.57
Wang stated that China would provide concessional loans and invest-
ments to Maldives for projects relating to the fisheries sector, aquatic
products, and so on.
Thirdly, Maldives offers unlimited tourism potential and Chinese are
flocking to the islands. In 2013, 284,000 Chinese tourists visited the
Maldives, accounting for almost 31 percent of total tourist arrivals. Three
years earlier, only 120,000 Chinese visited Maldives. Tourism Minister
Ahmed Adeeb stated in late June that his country will borrow $400 mil-
lion from China Exim Bank to develop a runway for the Ibrahim Nasir
International Airport. The contract previously had been given to an
Indian company, GMR, but in early 2012 GMRit exited the project and
182 S. KONDAPALLI
sought arbitration, with a Singapore court deciding in its favor to the

tune of an estimated $300–700 million in compensation. Regardless,
during the Xi–Yameen meeting at Malé in September 2014, the contract
to develop this airport was given to Beijing Urban Construction Group
Company Limited.
Although Maldives has joined the MSRI and AIIB, except for those
mentioned above, no other major concrete projects have been commis-
sioned recently. According to the Maldives Ambassador to China,
Mohamed Faisal, his country is looking forward to evolving a strategic
partnership with China in the near future.58 While China has not made any
decisions in this direction, given Beijing’s interactions with Pakistan,
Bangladesh, and recently with Sri Lanka, it appears that it is only a matter
of time until such relations with Malé could also be elevated in the near
future. This is where the concerns of others in the region become evident,
specifically in relation to New Delhi.
Indian Role
India’s Ministry of External Affairs’ annual report states bilateral ties with
Maldives are “close and friendly [and that] India attaches the highest impor-
tance to its relations with the Maldives and is committed to cooperate with
the Maldives in its developmental efforts especially in the human resource
development and health sectors.” (Ministry of External Affairs, 2009–2010)
Besides the maritime areas, both have been conducting a series of Dosti
(friendship) exercises at the coastguard level since the mid-1990s. Aside from
this, due to the tension between different political parties in the Maldives,
various leaders at different times have sought Indian involvement and help
because of the latter’s geographical proximity, resources, democratic system,
and ability to assist quickly. For instance, at the request of the then belea-
guered Maldivian president, India launched Operation Cactus in November
1988, mobilizing over 1600 troops to counter a coup attempt. Today, India
has a trilateral naval cooperation agreement with Maldives and Sri Lanka and
has given naval craft to Maldives to protect the atolls.
The bickering among Maldives political parties is legendary, with dif-
ferences between the Maldivian Democratic Party, Jumhooree Party,
Dhivehi Qaumee Party, Progressive Party of Maldives, and others coming
to the fore frequently.59 Recently these differences have also been spilling
into the international domain, with several leaders voicing preferences for
this or the other country. The maverick political nature of island politics
also tested relations with India when pro-Indian president Nasheed was
ousted and sent to jail for 13 years.60
With Nasheed gone, so were the Indian private company’s fortunes in
terms of their prospects of building the capital airport; this project, as noted
above, has gone to a Chinese company.61 In 2010, the Indian private firm
GMR was given contracts to upgrade the capital’s airport but this was
revoked in 2012 following allegations of corruption and financial burden.62
The arbitration procedure and the wrangling that ensued threatened to
affect the bilateral relations between Maldives and India.63 India also fretted
about Maldives’ passage in July 2015 of a law that provided 10 percent of
the 298 km2 of Maldivian territory to foreign bidders for land reclamation
and development.64 The law also provides that foreigners who invest more
than USD $1 billion can purchase land for development as long as 70 per-
cent of the land is reclaimed.65 These constitutional amendments giving con-
tracts to foreign countries to reclaim land provide new opportunities for
China because it has huge resources and experience in such reclamation
activity in the South China Sea.66 Chinese scholars such as Hu Shisheng and
Fu Xiaoqiang suggest that these lands could be utilized by Chinese compa-
nies for economic development.67 Scoffing at speculations that China will
exploit the latest legislation to build bases in the south central Laamu Atoll
(where China is involved in a road development project), China’s foreign
ministry spokesman stated on July 28, 2015 that such conjectures were
“baseless.”68
In recent times, China’s stock among some political parties has been
rising, including with the current President of Maldives. For instance, the
Dhivehi Qaumee Party is considered to be weighing up China as an
opportunity and a counterbalance to India. Another, the Progressive Party
of Maldives, promotes Islamic traditions. One of its MPs, Ibrahim
Muththalib, was quoted in the local press as stating:
China is a good country. They help us a lot. They have built schools here.
China has been helping Maldivian citizens. And Chinese vegetables are
great. And so are Chinese fruits. Chinese hotels are being built across the
world even as we speak. We love the Chinese people very much. China is a
country that Maldivian people love very much. China also has a lot of land.
And China even has a sustainable economy. Therefore, I use this moment to
declare the Maldivian people’s love for China.69
To compound matters, as far as India is concerned, whenever there is

political turmoil, China’s statements also seem to suggest its increasing
184 S. KONDAPALLI
role in the Maldivian politics, although officially it says that it will not
interfere in the internal affairs of any country. During demonstrations over
the arrest of former President Nasheed or the arrest of the Vice President
on charges of attempting to assassinate the President in a recent bombing
incident, China’s spokespersons called for no outside interference or stated
that independence of the island nation should be respected. In the light of
the above political turmoil and past history, the threat of a coup with for-
eign mercenaries’ assistance was said to be high by Vice President
Mohamed Waheed Deen in January 2013.70
Although China’s political influence in Maldives is increasing, the latter
cannot ignore India given India’s proximity, regional prominence, and
capabilities. In the past, India has provided Maldives with quick assistance
when needed. For example, in December 2004, in the wake of a major
tsunami, India rushed ships, planes, and helicopters with relief material,
medical teams, and specialized personnel to Maldives and provided emer-
gency relief while China, for its part, contributed relief “commensurate to
its ability” and in cash. When in December 2014, the desalination plant
supplying water to the capital city of Malé was damaged and Maldives asked
for international help, India was the first to send emergency supplies by air
and then 900 tonnes of water by sea through INS Deepak, with an addi-
tional production of 200 tonnes a day. Others also pitched in, with China
sending 20 tonnes of water by air a day after and 600 tonnes by sea in less
than a week.71 On this occasion, China’s foreign ministry spokesman Hong
Lei said: “We will keep close contact with the Maldives side and [review]
subsequent aid measures based on the [situation in] the Maldives.”72
Conclusions
As the MSRI takes shape, Maldives is increasingly becoming significant for
China as reflected in President Xi’s maiden visit to Malé in 2014. Plans for
the MSRI envisage building ports and other maritime infrastructure facili-
ties, and some of the projects that China has undertaken in Maldives fit with
this orientation. Maldives has accepted the MSRI and joined the AIIB. Still,
of an estimated nearly $1 trillion in investments embodied in the MSRI and
related projects, China’s relative allocation to infrastructure construction in
Maldives is miniscule, although it remains significant for the latter.
Overall, China–Maldives relations have been on the upswing recently and
appear to be so at the behest of Beijing’s increasing initiatives. The September
2014 joint statement ushered in a “Future-Oriented All-Round Friendly
and Cooperative Partnership” between the two. Today, bilateral ties are
expanding in terms of discussion on a strategic partnership, a free-trade

agreement (FTA), and increasing loans from China to Maldives for infra-
structure projects. It is not clear how the Maldivian leaders will repay back
these debts as most of the loans are given by China at high interest rates and
often without transparent procedures.
At the very least, it could be said that bilateral trade has increased sub-
stantially in the recent times. Still, it is minuscule when considered in the
context of overall China trade statistics, although it is becoming important
for Maldives. In 1998, Sino-Maldivian trade volume totaled a lowly USD
$590,000, consisting of Chinese exports of USD $540,000 and imports of
USD $50,000. By 2000, bilateral trade volume had reached US $1.358
million with Chinese exports totaling US $1.338 million and imports run-
ning to USD $20,000.73 In 2003, total bilateral trade amounted to USD
$3.351 million with Chinese exports totaling USD $3.342 million. In
2004, total trade jumped to USD $8 million and by the next decade it had
soared, reaching over $100 million by the end of 2015. Over time, these
trends caused China to edge out both Hong Kong and Taiwan as the main
trade partners of Maldives. Unfortunately for Maldives, there is a large
trade deficit slanted overwhelmingly in China’s favor, with the latter run-
ning huge surpluses each year (see Tables 7.1 and 7.2).
The trade deficit is offset somewhat by tourism promotion. In
December 2001, Maldives began actively courting Chinese tourists.74
Less than ten years later, China had replaced the UK as the biggest source
of tourists to Maldives.75 That year, as many as 120,000 Chinese people
visited Maldives, taking advantage of direct charter flights.76 Since the
2008 global financial crisis, European tourist inflows has dropped even as
Chinese tourism boomed. By 2011, the number of Chinese tourists to
Maldives had increased to 178,000 per year.77 In 2012, 230,000 Chinese
visited.78 In 2014, Maldives received 1.4 million tourists, out of which
Chinese visitors accounted for 31 percent of the total, outnumbering the
population of Maldives.79 Of course, problems exist in the tourism sector.
Some Chinese social networking sites, for instance, have called for a boy-
cott of Maldives tourism after reports about discrimination against
Chinese tourists in the island nation were reported.80 The Maldives papers
were also critical of Chinese for spending less in local restaurants and busi-
nesses, instead procuring packaged food from China. To diminish ten-
sions, on October 19, 2015, the Maldivian business community and
government in conjunction with the China Council for the Promotion of
International Trade organized an investment promotion forum to attract
186
S. KONDAPALLI
Table 7.1 Maldives trade with China, 1999–2003

Imports by country of consignment (in C.I.F. value in rufiya ‘000)
1999 % 2000 % 2001 % 2002 % 2003 %
China 9523.65 0.20 12,528.99 0.27 19,017.09 0.40 34,678.15 0.69 36,981.12 0.61
Taiwan 14,773.04 0.31 19,844.75 0.43 25,202.88 0.53 14,426.05 0.29 19,875.88 0.33
Hong Kong 71,393.74 1.51 63,528.63 1.39 53,920.55 1.14 115,571.02 2.30 123,401.81 2.05
Exports by country of destination (value in rufiya ‘000)
1999 % 2000 % 2001 % 2002 % 2003 %
China 29.56 0.00 – 0.00 69.04 0.01 – 0.00 283.44 0.02

Hong Kong 20,162.59 2.68 29,263.11 3.26 38,730.78 4.13 22,157.85 1.91 26,419.83 1.83
Taiwan 21,188.60 2.81 10,537.79 1.18 1970.74 0.21 979.37 0.08 516.28 0.04
Table 7.2 China–Maldives trade, 2003–2014 (USD $millions)

Year Exports Imports Total
2003 3.34 0.01 3.35

2004 7.91 0.18 8.09
2005 16.96 0.27 16.96
2006 15.4 0.6 16
2007 24.78 0.28 25.07
2008 31.09 0.14 32.51
2009 40.66 0.12 40.79
2010 63.47 0.04 63.52
2011 97.12 0.13 97.25
2012 76.48 0.18 76.67
2014 104.00 0.38 104.39
Source: China’s Foreign Affairs (Annual Yearbooks). http://www.themaldives.com/scripts/externallink.

asp?main=http://www.customs.gov.mv
investments from China in the fields of tourism, real estate, banking and
finance, transportation, and renewable energy.81
Defense cooperation between the two countries is imminent, with
long-term consequences for both India and the USA. China’s ambassador
to Maldives has already alluded to the maritime cooperation between the
two in the field of training maritime personnel, discussions, and the sign-
ing of MoUs in the area of maritime cooperation. This was also reiterated
in the joint statement by Xi and Yameen. In 2000 it was reported, but later
denied, that China contemplated building a submarine base at Marao in
Maldives. This issue is likely to be revived in future. It is interesting to
note that President Xi termed Maldives (and later Sri Lanka) as a “pearl”
in the Indian Ocean, reviving the “String of Pearls” construct. While
China does not appear to be implementing a “String of Pearls” strategy in
Maldives right now, its geographical location is increasingly wooing
Beijing’s its global ambitions. It is interesting that the iHavan location of
Chinese investments appears to be more strategic than commercial.
Notes
1. “一带一路”大事记” (“‘Yidai Yilu’ Dashiji”) [Chronology of One Belt, One
Road] 大陆桥视 [New Silk Road Horizon], No. 1 (2015), 23.
2. “Belt and Road Initiative facilitates more opening-up China,” Xinhua,
April 22, 2015 http://news.xinhuanet.com/english/2015-04/22/
c_134174847.htm.
188 S. KONDAPALLI
3. People’s Republic of China, “Vision and Actions on Jointly Building Silk

Road Economic Belt and Twenty-First-Century Maritime Silk Road,”
March 28, 2015, http://www.fmprc.gov.cn/mfa_eng/zxxx_662805/
t1249618.shtml.
4. “Is community of common destiny a new world order?” Xinhua, May 5,
2015, http://www.china.org.cn/opinion/2015-05/05/content_35500803.
htm. Jing Lin argues that China’s OBOR should not be seen as the Marshall
Plan for the twenty-first century as the OBOR is meant to usher in mutual
equality and mutual benefit while the USA-led Marshall Plan had political and
security-based strategic aims. See “‘一带一路’: 中国的马歇尔计划?” (“‘Yidai
Yilu’: Zhongguo de majihua?” [“‘One Belt, One Road:’ China’s Marshall
Plan”], 国际问题研 [International Studies] (January 2015): 88–99.
5. Li Lei argues that given several advantages that Shanghai enjoys, viz., inter-
nationalization, overall competitiveness, and innovation, the city should be
considered a bridgehead for the Silk Road initiative. See ““21 世纪海上丝
绸之路”的上海机遇” (“‘21 shiji hanshang sichouzhilu’ de shanghaijiyu”)
[Shanghai’s opportunity in the twenty-first-century Maritime Silk Road]
文汇报 [Wenhui Bao], November 26, 2014: 1–2. Huang Maoxing and Li
Peng argue that, on the other hand, Fujian province has several advantages
in developing the MSR. See “福建积极融入21世纪海上丝绸之路建设的现
实基础与战略方向” (“Fujian jiji jinru 21shiji haishang sichouzhihlu jianshe
de1 xianshi jichu yu zhanlue fangxiang”) [Fujian’s active integration into
the twenty-first century: The strategic direction and real basis of construct-
ing the Silk Road] 福建论坛·人文社会科学版 [Fujian Forum: Humanities
and Social Sciences], no. 7 (2015): 160–166. For Yang Jiuyan et al.,
Guangdong province is a more appropriate location for facilitating the
MSR. See “广东在海上丝绸之路形成和发展中地位与作用” (Guangdong
zai Hanshangsichouzhilu xingcheng he fazhanzhong diwei yu zuoyong)
[Role of Guangdong in developing the MSR] 广东造船 [Guangdong
Shipbuilding] 3, no. 142 (2015): 25–28.
6. “China to invest $900b in Belt and Road Initiative,” China.org.cn, May 28,
2015, http://www.china.org.cn/business/2015-05/28/content_35683
543.htm.
7. Yang Jiechi, “深化互信、加强对接,共建21世纪海上丝绸之路” (“Shenhua
Huxin, Jiaqiang Duijie, Gongjian 21shiji haishangsichouzhilu”) [Jointly
Build the 21st Century Maritime Silk Road By Deepening Mutual Trust and
Enhancing Connectivity], China.org.cn, March 30, 2015, http://www.
china.org.cn/chinese/2015-03/30/content_35193490.htm.
8. Long Kaifeng, ““一带一路,’ 互利共赢的大战略” (“‘Yidai Yilu,” Huli
Gongying de Dazhuanlue”) [“‘One Belt, One Road,’ A win-win strategy”]
金融经济 [Financial Economics], no. 403 (January 2015): 14–15. Long
outlines six problem areas for the OBOR, viz., the OBOR’s wide geographi-
cal area, and large population and economic capacity; the Central Asian
“three evils”; the imbalanced economic situation in the region; India–

China–Pakistan territorial disputes; the Russian sphere of influence in the
Central Asian region; and the Middle East situation and the South China
Sea dispute.
9. Luo Yuze, “‘Belt and Road’ platform for cooperation, no challenge to global
order,” People’s Daily, May 15, 2015, http://en.people.cn/n/2015/0515/
c98649-8892876.html.
10. Liu Haiquan, “‘一带一路’战略的安全挑战与中国的选择” (“‘Yidai Yilu’
Zhanlue de Anquan Tiaozhan yu Zhongguo de Xuanze”) [Security chal-
lenges for the One Belt, One Road strategies and China’s choices], 平洋学报
[Pacific Journal], no. 2 (2015): 72–79.
11. Wang Xinlong, “印度海洋战略及对中印关系的影响” (“Yindu Haiyang
Zhanlue jidui Zhongyin Guanxi de yingxiang”) [Indian Ocean Strategy and
its Impact on Sino-Indian Relations] 南亚研究季刊 [South Asia Research],
no. 1 (2004), 87–91 and Hu Juan, “印度的印度洋战略及其对中国的影响”
(“Yindu de Yinduyang Zhanlue jiqi Zhongguo de Yingxiang”) [India in the
Indian Ocean Strategy and its Impact on China], 东南亚南亚研究 [Southeast
Asia Research], no. 2 (2012): 6–10. Hu argues that India’s efforts are
intended to exclude China from the IOR.
12. Zhang Wei, “印度海洋战略析论” (“Yindu Haiyang Zhanlue Xilun”) [An
analysis of the Indian Ocean Strategy] 当代社科视野 [Contemporary Social
Science Perspective], no. 11 (2009): 41–45; Li Yanan, “India Dreaming to be
a Military Super Power,” Liberation Army Daily (June 12, 1999); Jian Hua,
“The United States, Japan Want To Rope In India Which Cherishes the
Dream of Becoming a Major Country,” Ta Kung Pao (June 6, 2001); and
Liang Guihua, “Yinduyang shang de ‘youling,’” Xiandai Bingqi [Modern
Weaponry], no. 295 (July 2003): 12–15.
13. Zhou Zhonghai, “Maritime Security and the Common Interests of India
and China,” Frontiers of Law in China, 1, no. 3 (2006): 363–371; and Ye
Hailin, “Securing SLOCs by Cooperation: China’s Perspective of Maritime
Security in the Indian Ocean,” Paper presented at International Maritime
Conference, National Maritime Policy Research Center, Bahria University,
Karachi, Pakistan, http://iaps.cass.cn/english/Articles/showcontent.
asp?id=1233.
14. Xie Bo and Yu Rong, “地缘政治视角下的21 世纪海上丝绸之路通道安全”
(“Diyu Zhengzhi Shijiaoxia de 21shiji Haishangsichouzhilu Tongdao
Anquan”) [Security of the twenty-first-century MSR Corridor through geo-
political perspective] 东南亚纵横 [Around Southeast Asia] (May 2015): 5.
15. Cao Tianshu, “印度海洋战略对我国“海上丝绸之路”的影响” (“Yindu
Haiyang Zhanlue dui Zhongguo ‘Haishangsichouzhilu’ de yingxiang”)
[Influence of China’s MSR towards the Indian Ocean Strategy] 山西财经大
学学报 [Journal of Shanxi University of Finance and Economics] (April
2015): 1, 12.
190 S. KONDAPALLI
16. Shu Yuan, “论中国的环印度洋战略构想” (“Lun Zhongguo de huanyin-

duyang Zhanlue Gouxiang”) [On China’s Strategic Concept of Indian
Ocean Rim] 中共云南省委党校学报 [Journal of Yunnan Provincial
Committee School of the CPC], 15, no. 1 (January 2014): 175–177.
17. However, a former foreign minister of Maldives, Ahmed Naseem, argued
that his country had never been part of the Silk Road before and that the
MSR has other motives. See the interview with Rajiv Sharma, “Maldivian
Conundrum: Will India Risk China’s Ire by Militarily Intervening in Malé?”
March 16, 2015, http://www.firstpost.com/world/maldivian-conundrum-
will-india-risk-chinas-ire-by-militarily-intervening-in-Malé-2155393.html.
Another contrasting opinion is offered by former Vice Foreign Minister Ali
Hameed who said, “Looking away from a purely economic standpoint, the
Silk Road I hope will also be a platform to exchange cultural values as well as
be an asset for academic and research orientated initiatives, whereby both
countries can share expertise, … I believe strongly, that the time is ripe for
the ancient Silk Route to be reborn again and to develop a bridge of con-
nectivity, friendship and mutual development for China and the Maldives.”
Quoted in “Maritime Silk Road to Bring Closer China-Maldives Ties:
Former Maldives Senior Official,” Xinhua, June 9, 2014.
18. “China and Maldives,” http://www.fmprc.gov.cn/eng/4388.html.
19. Ministry of Foreign Affairs, Department of Policy Planning, China’s Foreign
Affairs 2005 (Beijing: World Affairs Press, 2005), 223.
20. The joint communiqué on this occasion mentioned that Taiwan is an
inalienable part of the PRC. See “Joint Communiqué on the Establishment
of Diplomatic Relations between the People’s Republic of China and the
Republic of Maldives,” October 14, 1972, http://www.fmprc.gov.cn/
eng/5011.html.
21. For this chronology, “China and Maldives,” http://www.fmprc.gov.cn/
eng/4388.html.
22. “China, Maldives Sign Visa Agreement,” Xinhua, May 4, 1997.
23. “Maldives President Meets Vice Trade Minister Liu Shanzai,” Xinhua
Domestic Service, April 25, 1998.
24. “The Visiting Assistant Minister of Foreign Affairs of China Calls on the
President,” February 12, 2001, http://www.themaldives.com/scripts/
externallink.asp?main=http://www.presidencymaldives.gov.mv. On this
occasion, the Maldivian president suggested that the Kyoto Protocol should
be ratified.
25. “Chief of the General Staff of the People’s Liberation Army of calls on
the President,” April 17, 2001, http://www.themaldives.com/scripts/
externallink.asp?main=http://www.presidencymaldives.gov.mv.
26. “The President felicitates the Chinese President on the Occasion of the
30th Anniversary of the Establishment of Diplomatic Relations between
the Maldives and China,” The Maldives, October 14, 2002, http://
www.themaldives.com/scripts/externallink.asp?main=http://www.
presidencymaldives.gov.mv.
27. “President Gayoom and Chinese Premier Zhu Rongji Inaugurate the
Fourth Phase of the Malé Housing Project,” The Maldives, May 17, 2001,
http://www.themaldives.com/scripts/externallink.asp?main=http://
www.presidencymaldives.gov.mv.
28. “The Maldives and China hold official talks,” The Maldives, May 17, 2001,
http://www.themaldives.com/scripts/externallink.asp?main=http://
29. “Premier Zhu Rongji Held Talks with Maldivian President,” May 17, 2001,
http://www.fmprc.gov.cn/eng/10364.html.
30. “China backs Maldives battle over rising sea level,” Haveeru, May 17, 2001,
http://www.haveeru.com.mv/English.
31. Han Jie, “Chi Haotian Meets with Maldives Guests,” Xinhua Hong Kong
Service November 12, 2001.
32. “Chinese Defense Minister Meets Maldivian Delegation,” Xinhua,
November 12, 2001.
33. A.B. Mahapatra, “China Acquires a Base in Maldives against India with
Some Help from Pakistan,” July 27, 2001, http://www.indiareacts.com.
34. “The President Identifies China’s ratification of the Kyoto Protocol,”
September 4, 2002, http://www.themaldives.com/scripts/externallink.
asp?main=http://www.presidencymaldives.gov.mv.
35. “The President Meets the Vice Premier of the Chinese State Council,”
March 29, 2004, http://www.themaldives.com/scripts/externallink.
36. “The Vice Chairman of the Standing Committee of the National People’s
Congress of China, Calls on the President,” June 13, 2004, http://
www.themaldives.com/scripts/externallink.asp?main=http://www.
presidencymaldives.gov.mv.
37. On this occasion, Li met with the Chinese staff of the Shanghai Construction
Group who were involved in the construction of Ministry of Foreign Affairs
building. See “Li Zhaoxing Holds Talks with Maldivian Foreign Minister,”
April 2, 2005, http://www.fmprc.gov.cn/eng/zxxx/t190336.htm.
Affairs 2006 (Beijing: World Affairs Press, 2006), 231. When the Wenchuan
earthquake hit Sichuan Province in 2008, Maldives made a donation of
$50,000. See Ministry of Foreign Affairs, Department of Policy Planning,
China’s Foreign Affairs 2009 (Beijing: World Affairs Press, 2009), 227.
192 S. KONDAPALLI

Affairs 2008 (Beijing: World Affairs Press, 2008), 200 and China’s Foreign
Affairs 2011 (Beijing: World Affairs Press, 2011), 233–234.
45. This section is based on my article at “Maritime Silk Road: Increasing
Chinese Inroads into the Maldives,” IPCS, November 13, 2014, http://
www.ipcs.org/article/china/maritime-silk-road-increasing-chinese-
inroads-into-the-maldives-4735.html. See also Yang Yi, “Chinese President’s
Visit to Enhance Ties with Maldives, Sri Lanka: Foreign Ministry,” Xinhua
September 9, 2014.
46. Yang Yi, “China, Maldives Eye Stronger Partnership with All-Round
Cooperation,” Xinhua, September 16, 2014.
47. The MSRI, according to Wang, means “more trade, more investment,
more development, more opportunities and more friendship” for both
countries. See Wang Fukang, “China and Maldives: Partners in Building
Twenty-First-Century Maritime Silk Road Together,” Miadhu, January
15, 2015, http://www.fmprc.gov.cn/mfa_eng/wjb_663304/zwjg_
665342/zwbd_665378/t1228935.shtml.
48. Abdullah Jameel, “China-Maldives Sign MOU for Free Trade Pact,” Haveeru,
September 9, 2015, http://www.haveeru.com.mv/business/62166.
49. A six-lane bridge connecting Malé to the airport island Hulhulé, the “China-
Maldives Friendship Bridge” estimated at $100–150 million. “China-
Maldives Friendship to Bridge Opportunity Gaps,” http://www.
the-businessreport.com/article/china-maldives-friendship-to-bridge-
opportunity-gaps.
50. “China, Maldives Agree to Establish Future-Oriented, All-Round
Partnership,” Xinhua, September 15, 2014; “Xi’s South Asia Trip as Smooth
as Silk,” Xinhua, September 16, 2014; Zhao Minghao, “China Understands
South Asia’s Needs Better,” The Global Times, September 16, 2014.
51. “Maldives Gov’t Targets Special Economic Zones, Eyes Trade with China,”
Xinhua, June 5, 2014.
52. “Li Yuanchao to Attend 3rd China-South Asia Expo and 23rd China
Kunming Import and Export Fair,” June 9, 2015, http://www.fmprc.gov.
cn/mfa_eng/wjdt_665385/wsrc_665395/t1271758.shtml.
53. “Negotiations Launched for China-Maldives Free Trade Agreement,”
September 9, 2015, http://maldivesindependent.com/business/
negotiations-launched-for-china-maldives-free-trade-agreement-117176.
54. Teddy Ng, “Maldives Supports China’s Plan for ‘Maritime Silk Road,’”
South China Morning Post, September 16, 2014.
55. “China among Four Countries Interested in Maldives Youth City Project,”
Xinhua, July 22, 2014.
56. “Chinese Envoy Sees Expanded China-Maldives Economic Cooperation,”
Xinhua, October 28, 2014.
57. “Chinese Envoy Sees Expanded China-Maldives Economic Cooperation,”
Xinhua, July 21, 2014; and Bi Mingxin, “Maldives Supports China’s Plan
for ‘Maritime Silk Road,’” Xinhua, September 13, 2014.
58. Faisal’s interview by Yin Yeping, “Maldives Ambassador Talks Cultural
Exchange,” Global Times, February 8, 2015, http://www.globaltimes.cn/
59. Seema Guha, “China Widens Maldives Reach as India Falls Behind,” The
Quint, August 8, 2015, http://www.thequint.com/world/2015/08/08/
china-widens-maldvies-reach-as-india-falls-behind-2. On the limitations in
the democratic experiment in Maldives, see Azra Naseem, “Keeping Up
with the Authoritarians,” Dhivehi Sitee, September 2, 2015, http://www.
dhivehisitee.com/executive/keeping-up-with-the-authoritarians.
60. The anti-Indian rhetoric of some parties in Maldives and China’s new role
in the island nation is said to be the basis for Prime Minister Modi’s Indian
Ocean diplomacy recently, when he skipped Malé but went to Sri Lanka,
Seychelles, and Mauritius. See Darshana M. Baruah, “Modi’s Trip and
China’s Islands: The Battle for the Indian Ocean,” The Diplomat, March 11,
2015, http://thediplomat.com/2015/03/modis-trip-and-chinas-islands-
the-battle-for-the-indian-ocean. It is also said that under Indian influence
the Addu Summit of the SAARC had insisted on “institutionalization” of
the SAARC instead of expanding it with new members (like China).
61. Anand Kumar, “Chinese Engagement with the Maldives: Impact on Security
Environment in the Indian Ocean Region,” Strategic Analysis, 36, no. 2
(2012).
62. “GMR-Maldives spat: China behind Scrapped GMR Deal to Extend
Footprint in Maldives?” The Economic Times (December 15, 2012), http://
economictimes.indiatimes.com/industr y/transportation/airlines-/
-aviation/gmr-maldives-spat-china-behind-scrapped-gmr-deal-to-extend-
footprint-in-maldives/articleshow/17622309.cms.
194 S. KONDAPALLI
63. “Maldives to Face $800 million Claim,” Global Times, December 13, 2012,
http://www.globaltimes.cn/content/750092.shtml.
64. “Maldives Constitutional Amendment Opens Door for Chinese Military
Base,” July 25, 2015, http://www.wantchinatimes.com/news-subclass-
cnt.aspx?id=20150725000082&cid=1101.
65. Shubhajit Roy, “New Land Law in Maldives Gives India China Chills,”
Indian Express, July 23, 2015, http://indianexpress.com/article/india/
india-others/new-land-law-in-maldives-gives-india-china-chills.
66. Eva Abdullah, one of the 14 parliament members who opposed the amend-
ment, was cited as saying that this measure would lead to Maldives becom-
ing a colony of China. Zachary Keck, “Get Ready: China Could Build New
Artificial Islands Near India,” National Interest, July 29, 2015, http://
www.nationalinterest.org/blog/the-buzz/get-ready-china-could-
build-new-artificial-islands-near-13446.
67. Li Xiaokun, “Land Sale Isn’t for Military Purpose, Says Maldives,” China
Daily, July 25, 2015, http://europe.chinadaily.com.cn/world/2015-
07/25/content_21404565.htm.
68. “China says not planning military bases in the Maldives,” Reuters July 28,
2015, http://www.reuters.com/article/2015/07/28/us-china-maldives-
idUSKCN0Q20IU20150728.
69. Quoted by Azra Naseem, “From Maldives, With Love,” Dhivehi Sitee, April 26,
2012, http://www.dhivehisitee.com/executive/maldives-%E2%99%A5-china.
70. “Threat of a Coup with the Assistance of Mercenaries Is Still Imminent—
Vice President,” Miadhu, January, 13, 2013.
71. See Azra Naseem, “Like Water for Politics: Lessons from Malé Water
Crisis,” Dhivehi Sitee, December 9, 2014, http://www.dhivehisitee.com/
executive/Malé-water-crisis.
72. Hong cited at “Spokesman: China to Continue to Aid Maldives,” Global
Times, December 10, 2014, http://www.globaltimes.cn/content/
896022.shtml.
73. “China and Maldives.”
74. In 2000, over 5000 Chinese tourists visited Maldives and in 2001 it
increased to 6707. See “Maldives Embarks on Advertising Tourism in
China,” January 1, 2002, http://www.haveeru.com.mv/English.
75. People’s Republic of China, Development Resource Council, “An Analysis
on the Contribution of China’s Economic Growth to Global Economic
Growth,” 2015, http://www.chinadaily.com.cn/m/drc/2015-07/28/

79. “Chinese Dominated Tourism Sector Evolves to Offer More Choice,”
http://www.the-businessreport.com/article/chinese-dominated-tourism-
sector-evolves-to-offer-more-choice; and Yin Yeping, “Maldives Ambassador
talks cultural exchange,” Global Times, February 8, 2015, http://www.
80. “Maldives Courts Chinese,” Global Times, March 15, 2013, http://www.
81. Yang Feiyue, “Maldives Reaches Out for Chinese Investment,” China Daily,
October 21, 2015, http://africa.chinadaily.com.cn/travel/2015-10/
21/content_22239499.htm.
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CHAPTER 8
The MSRI, China, and India: Economic

Perspectives and Political Impressions
Amitendu Palit
Maritime Silk Road Initiative (MSRI)

and Regional Connectivity
The MSRI connects the Chinese coast, through the South China Sea and
the Indian Ocean, to Southeast Asia and South Asia, and further westward
to West Asia and Europe through the Persian Gulf and Mediterranean Sea.
Its purported aim is to build effective maritime transport linkages by
developing high-capacity, efficient seaports and integrating them through
sea-lanes, as well as land corridors being built as part of the new Silk Road
Economic Belt connecting China and Europe by land.1 The scale and
scope of the initiative is unprecedented leaving little doubt about the
numerous political and economic objectives it aims to secure, including
subnational objectives, from the Chinese perspective.2
A. Palit (*)
Senior Research Fellow and Research Lead (Trade and Economic Policy),
Institute of South Asian Studies, National University of Singapore, Singapore,
Singapore

DOI 10.1007/978-981-10-5239-2_8
204 A. PALIT
Rationale
The economic rationale of the MSRI resonates with the conceptual notion
of “economic corridors.” Corridors link economic agents across specific
geographies by connecting hubs that are large concentrations of economic
resources and actors.3 They, typically, reduce costs for both producers and
consumers by improving connectivity for transporting products from
points of origin to final destinations of consumption.4 From the perspec-
tive of regional development, economic corridors aim to integrate infra-
structure improvements with opportunities in trade and investment and
facilitate linkages of regions with global production networks.5
The conceptualizations of the MSRI and the larger “One Belt, One
Road” (OBOR), of which the MSRI is a part, as economic corridors are
hardly surprising given China’s long involvement in transport corridors.
Apart from the Greater Mekong Sub-Region (GMS) corridor connecting
Western China to “IndoChina” (mainland Southeast Asia comprising
Cambodia, Lao, Myanmar, Thailand, Vietnam), China is actively involved
in corridor development in Central Asia as part of the Central Asia
Regional Economic Cooperation (CAREC)’s transport connectivity ini-
tiatives. Moreover, China also has plans for multimodal economic corri-
dors connecting China with Pakistan, and with Bangladesh, India, and
Myanmar, as connectivity constructs that would eventually merge with
the MSRI and the OBOR.
The MSRI’s new maritime traffic routes should aim to benefit eco-
nomic agents dispersed across its geography by reducing costs of maritime
movement. Lower transport costs are essential for generating higher trade
flows from a network of free-trade areas as specified in China’s National
Development and Reform Commission (NDRC)’s vision document on
the MSRI.6 For firms trading cross-border within the span of the MSRI,
the cost efficiency of the new route is fundamental with transportation and
logistics costs varying widely across the terrain.
Variations in Intraregional Trade

Various subregions of Asia differ widely in trade intensities and quality of
infrastructure facilities. East Asia and Southeast Asia are far more eco-
nomically integrated than the Middle East, Central Asia, and South Asia as
is evident from the large intraregional trades of the former (see Fig. 8.1).
THE MSRI, CHINA, AND INDIA: ECONOMIC PERSPECTIVES AND POLITICAL... 205
Africa
Europe
Middle East
Central Asia
South Asia
Southeast Asia
East Asia
0. 17.5 35. 52.5 70.
Fig. 8.1 Intraregional trade shares (%)

Source: Integration Indicators, Asia Regional Integration Center, Asian Development
Bank (ADB); https://aric.adb.org/integrationindicators
At around 35 percent and 25 percent, shares of intraregional trade in total

trade are greater for East and Southeast Asia, compared with 15 percent,
7 percent, and 5 percent for the Middle East, Central Asia, and South Asia
respectively. Greater intraregional trade by East and Southeast Asia reflects
the intensive intra-industry trade among countries in these regions,
particularly in parts and components that have embedded regional firms in
several global value chains (GVCs), most notably in automobiles, chemi-
cals, machinery, and electronics. These characteristics are less pronounced
for firms in other subregions of Asia that are parts of the MSRI.
Moving beyond Asia along the MSRI, Africa and Europe also reflect
contrasting levels of economic integrations (see Fig. 8.1). While share of
intraregional trade in total regional trade is around 13 percent for Africa,
it is almost 65 percent for Europe. Indeed, the MSRI connects the world’s
most economically integrated regions—East and Southeast Asia, and
Europe—to regions with scant integration.7 Constructing overarching
regional corridors across such disparate regions can result in an uneven
spread of benefits, with more economically networked regions clearly bet-
ter placed to exploit new economic opportunities arising from better and
integrated infrastructure.8
206 A. PALIT
Contrasting Logistics Performances

Better logistics and infrastructure would enable economic actors to plug
in to the new maritime network of the MSRI more quickly. These favor-
able initial conditions are more visible for some subregions than for the
rest, as is evident from their varying logistics capabilities. Logistics perfor-
mances are positively correlated to intraregional trade, with areas with
higher regional trade indicating better logistics (see Annex 1).9 This is
intuitively obvious as without good logistics and trade-facilitating infra-
structure, Europe, East Asia, and Southeast Asia would not have been able
to generate as much intraregional trade as they have and would also not
have been enmeshed in GVCs. But even among regions with high logistics
performance ranks, variations exist in national Logistics Performance
Index (LPI) rankings and their parameters. The most striking contrasts are
within Southeast Asia, where Lao PDR and Myanmar lag way behind
Singapore, Malaysia, Thailand, and Vietnam (Annex 1). Overall, major
economies from Europe, East Asia, and Southeast Asia reflect better logis-
tics and cross-border trade infrastructure than their counterparts from
Central Asia, West Asia, South Asia, and Africa and would be better placed
to exploit the MSRI, at least in the initial stages.
Indian Business and Strategic Perspectives

The distinct economic geographies across the MSRI, characterized by
variations in degree of internal economic integration, regional trade, and
quality of logistics and trade infrastructure, define the contexts for Chinese
and Indian business thinking about engaging with the MSRI. As the larg-
est economies in East and South Asia, China and India, respectively, are
not parts of a cohesive regional economic geography. East Asia’s greater
intraregional trade and presence in GVCs and its better logistics starkly
contrast with South Asia’s situation. Though India and South Asia’s trade
and investment links with China and East Asia have expanded over time,
India symbolizes and suffers from the regional characteristic of low eco-
nomic cohesion and poor logistics.
From the vantage point of Indian businesses, the MSRI offers exciting
prospects of new cross-continental maritime infrastructure encompassing
India through the Indian Ocean and Bay of Bengal. The same Indian
businesses are also acutely conscious of their limitations in becoming
major actors in the MSRI unless India’s existing maritime infrastructure
capacities expand and achieve efficiencies close to those of China and

other major economies from East Asia, Southeast Asia, and Europe.
A critical handicap in this regard is the low efficiencies of major Indian
ports, which will be discussed later in greater detail. This might partly
explain the lack of enthusiastic response on part of Indian businesses until
now, since poor domestic infrastructure would constrain their abilities to
exploit the MSRI compared with their counterparts from China, Southeast
Asia, and Europe.
Port efficiencies cannot be viewed in isolation from trade facilitation.
Much as Indian firms would be aware of opportunities arising from the
corridor on account of their strategic locations midway between East Asia
and Europe, becoming effective conduits in supply chains between China
and Europe would require them to trade vigorously in raw materials,
intermediates, and final products along the MSRI, both east and west.
Their ability to do so would depend significantly on trade facilitation at
Indian ports connected to the MSRI. The trade facilitation agreement
(TFA) adopted at the Bali Ministerial of the WTO in December 2013 was
recently ratified, in February 2017, and will take a few years to produce
results. Until then, the prospects for Indian firms, particularly SMEs, to
dovetail into GVCs through the MSRI will be tempered by operational
inefficiencies of India’s maritime infrastructure. Consequently, they would
be less competitive than firms from other countries in the MSRI that have
better infrastructure capacities.
Indian Strategic Perspective

China and several other Asian economies have been far more successful
than India in improving domestic infrastructure. The Narendra Modi gov-
ernment in India is focusing intently on improving the quality of “Doing
Business” and early improvements are visible.10 Nonetheless, like Indian
businesses, Indian policymakers are aware of the economic opportunities
of the MSRI, as well as the handicaps of Indian firms in gelling seamlessly
into the new maritime route. This awareness may partly explain the Indian
strategic reticence towards the initiative.
Enhancing port efficiencies is a strategic priority for India. This is evi-
dent from the ambitious “Sagarmala” initiative of port-led economic
development, targeting capacity expansion and efficiency enhancement in
major Indian ports and connecting them seamlessly to railways and roads.11
India’s government-owned major ports are suffering from operational
208 A. PALIT
inefficiencies and capacity shortages and are fast losing market share to
upcoming private ports.12 But growth of new ports has been stunted by
various factors including low enthusiasm from private investors due to
high domestic capital costs, and political difficulties in acquiring land
for developing back-end infrastructure. Larger and more efficient port
facilities require the functional revamp of major ports and fresh invest-
ments in new ports, both of which are going to take time.
China’s expansive investment plans for the MSRI would include India,
given that China has been investing heavily in maritime infrastructure in
South Asia (e.g., Colombo in Sri Lanka, Gwadar in Pakistan). New
developments, like the agreement between one of India’s largest private
ports, Mundra, in the western state of Gujarat, and the Guangzhou port
of China, augur well for future.13 But Indian security concerns entail
viewing Chinese investments in Indian ports with skepticism. Indeed,
the uncertainty over whether the MSRI is primarily an economic corri-
dor for upgrading cross-continental maritime infrastructure, or a geo-
strategic design for serving China’s security interests, is instrumental
behind India’s noncommittal attitude to the project.14
The MSRI and Regional Frameworks

The MSRI’s heterogeneous economic geography is evident from differ-
ences in intraregional trade, logistics, and maritime infrastructure. These
regional variations become more distinct if viewed from the perspectives
of regional architectures spanning the MSRI geography. These architec-
tures, and the evolving MSRI, have mutual implications as business per-
ceptions of regional trade and investment shaped by rules of existing
regional frameworks might reshape due to the new pan-regional connec-
tivity architecture of the MSRI. The mutual interdependence between the
MSRI and regional architectures would also influence China–India eco-
nomic relations in the light of their respective roles in regional trade and
business.
Selective Regional Cooperation

The MSRI’s vision statement mentions several regional and multilateral
mechanisms for enhancing regional cooperation such as the Shanghai
Cooperation Organization (SCO), the Association of Southeast Asian
Nations (ASEAN) +1 (China), the Asia Pacific Economic Cooperation
(APEC) forum, Asia–Europe Meeting (ASEM), Asia-Cooperation

Dialogue (ACD), Conference on Interaction and Confidence-Building
Measures in Asia (CICA), GMS Economic Cooperation (GMS-EC),
CAREC, and the China–Arab States Cooperation Program.15 All these
forums include China. The NDRC’s vision statement on the MSRI does
not mention the most significant upcoming architecture in the region—
the Regional Comprehensive Economic Partnership (RCEP)—being
negotiated by ASEAN, Australia, China, India, Japan, Korea, and New
Zealand. It also avoids mention of the South Asian Association for
Regional Cooperation (SAARC) and the cross-regional initiative of the
Bay of Bengal Multi-Sectoral Technology and Economic Cooperation
(BIMSTEC) that involve a group of South and Southeast Asian coun-
tries connecting to the MSRI (India, Sri Lanka, Bangladesh, Myanmar,
and Thailand).
Obtaining support for the MSRI and making it an effective multi-
country initiative requires strong support of regional associations. Ignoring
regional associations that do not include China might be counterproduc-
tive as this would strengthen the impression that China’s larger objective
behind the MSRI is a consolidation of specific national interests through
the active participation of regional bodies with a China presence. While
this might encourage India to invest more in alternative regional struc-
tures for retaining regional strategic influence (e.g., BIMSTEC and
Mekong-Ganga Cooperation [MGC]) and explore new regional alliances,
the effect on Indian businesses could be significant.16 The strategic view of
the MSRI being a purely “Chinese” effort might result in India politically
distancing itself from the initiative and Indian businesses also staying away.
This impression would adversely influence the prospects of potential
Chinese business ventures with Indian firms.
RCEP and Upcoming Trade Rules

Participants in existing regional frameworks, including Indian businesses,
will view the MSRI in the context of the trade rules institutionalized by
the former. India has bilateral free trade agreements (FTAs) in goods and
services with the ASEAN. The India–ASEAN goods FTA harmonizes
trade procedures between India and Southeast Asian countries in customs
practices and rules of origin (ROOs). The first involves India and the
Southeast Asian economies aligning their customs nomenclatures (prod-
uct codes for individual tariff lines) and their export and import invoicing
210 A. PALIT
practices and documentation as closely as possible. The second binds

exporters and importers from India and the ASEAN into a common set of
rules for establishing the “origin” of their products in order to avail of
preferential tariff benefits from the FTA.17 ROOs are particularly signifi-
cant from the perspective of geographical diversification of production
and GVCs. They insist on a certain minimum proportion of the total value
of traded items to be obtained from material and inputs in member coun-
tries of the FTAs—India and the ASEAN countries in this case.18 Traders
require “certificates of origin” so as to claim preferential tariffs that are
often zero for many products.
The customs procedures and ROOs of the India–ASEAN FTA ensure
users operate through ports (both air and sea) that have institutionalized
these facilities. The usual maritime cargo route between India and
Southeast Asia is through the Bay of Bengal into the Malacca Strait if ship-
ments are from (or to) India’s east coast, and from the Arabian Sea and the
Indian Ocean into the Malacca Strait if ships travel from (or to) India’s
west coast. ROOs insist on goods that qualify for a preferential tariff satis-
fying “consignment” conditions; i.e., goods are to be transported “direct”
from the county of the exporter to that of the importer, which, in the
present instance, is India and one or more of the ASEAN countries.19
ROOs do not permit preferential tariff benefits if goods pass through ter-
ritories of countries that are not parties to the FTA. Transit through
“third” countries is allowed only for geographical reasons and specific
transport requirements and on the condition that goods shipped do not
undergo changes in composition or value addition in transit ports.
New ports in the MSRI, as well as new airports and land connections
created by OBOR, can be efficient and rational only if they do not dis-
turb the current ROOs. Since ports in Southeast Asia, East Asia, and
South Asia figure within several regional trade agreements (RTAs) involv-
ing ASEAN (ASEAN’s FTAs with Australia and New Zealand, China,
India, Japan, South Korea); non-ASEAN regional structures (e.g., South
Asian Free Trade Agreement [SAFTA]); and bilateral agreements (e.g.,
India’s bilateral trade agreements with Japan, Korea, Singapore, Malaysia,
and Thailand and China’s agreements with Singapore, Korea, and
Pakistan) with different ROOs, identifying the “right” maritime transit
for satisfying ROOs becomes a critical issue for businesses. Transshipment
hubs allowing quick transit are important in this regard, explaining the
popularity of the Singapore and Colombo ports, which are used exten-
sively for transit between South Asia, Southeast Asia, and East Asia,
enabling users to utilize the benefits of various FTAs. Not all new mari-
time facilities of the MSRI can be transshipment hubs as some may lack
the ability to handle giant containers with large cargoes. Some of the new
facilities therefore might not be attractive for users of regional FTAs.
More ROOs will be added to the region by the upcoming RCEP. Both
China and India have strong stakes in the RCEP for preserving strategic
spaces in the trade architecture of the Asia-Pacific, following the Trans-
Pacific Partnership (TPP) which excludes them both.20 The TPP would
institutionalize trade rules that are different from the ASEAN-FTA style
rules which are more familiar to China and India.21 With the RCEP having
several members common to the TPP (Australia, Brunei, Japan, New
Zealand, Malaysia, Singapore, and Vietnam), the TPP “influence” on
ongoing RCEP negotiations is inescapable. The ROOs are particularly sen-
sitive to such influence, since TPP members in RCEP would prefer largely
similar rules in both agreements for the greater benefit of their businesses.
Notwithstanding the eventual outcome, the RCEP will institute com-
mon trade rules for major economies in East, Southeast, and South Asia
(India), requiring businesses from these regions to transport cargo across
territories in defined fashions in order to avail of preferential tariff bene-
fits. Businesses trading between China and India will look at RCEP
closely as this would be the largest RTA to include both countries. It
would bring together a significant part of the MSRI extending southward
from the Chinese coast to the South China Sea and Malacca Strait, and
further westward to the Bay of Bengal, parts of the Indian Ocean, and the
Arabian Sea, as a “common” territory allowing direct consignment of
cargo. This should encourage Chinese and Indian businesses to look
closely at GVCs connecting both countries through Southeast Asia. The
MSRI’s new maritime infrastructure facilities could play a decisive role in
this regard provided businesses can use the RCEP’s ROOs conveniently
across the MSRI.
Land-Transit Challenges
The OBOR envisages that maritime cargo offloaded by containers at dif-
ferent seaports would be transported across cross-border hinterlands
through land routes provided by the Economic Belt. Vehicles carrying
cargo would require seamless transit facilities, including number plates
with dual registrations, allowing them to move easily across borders.
Extending such facilities will require political agreements to be made
212 A. PALIT
among various countries. Despite years of discussions, countries within

South Asia have not been able to agree on common transit facilities. It is
only recently that Bangladesh, Bhutan, India and Nepal (BBIN) have
signed a Motor Vehicles Agreement for the exchange of traffic rights and
the facilitation of the movement of vehicles across each other’s territo-
ries.22 A similar transport transit agreement between India and Southeast
Asia will be critical for the success of regional connectivity projects like the
India–Myanmar Thailand Trilateral Highway, the Delhi–Hanoi Railway
Link, and the Kaladan Multimodal Transit Transport Project connecting
Indian ports to the Sittwe port in Myanmar—all of which should signifi-
cantly reduce cross-border trade costs and augment regional trade.23
Efficient land-transit facilities are essential for the success of MSRI, par-
ticularly in ensuring movement of cargo across contiguous regions of
South and Southeast Asia and China. A cross-regional connectivity initia-
tive like the Bangladesh-China-India-Myanmar (BCIM) corridor, which
might integrate with OBOR over time, can hardly prosper without proper
transit facilities, which, however, are encountering substantive political
hurdles.24 The latter emanate from a variety of security concerns created
by porous borders and are impediments to effective multi-country coordi-
nation between transport agencies when issuing vehicle permits and fram-
ing rules for joint responsibility for insuring cargo.
The painfully slow progress in South Asia in terms of improving easy
transit inhibits enthusiasm on the part of Indian businesses. Apart from
the political problems bound to surface in granting deep cross-border
transport transit facilities, due to fears of misuse, the larger strategic con-
cern of the OBOR and MSRI being a Chinese design for entrenching
strategic influence in the neighborhood could constrain India from being
proactive in pushing cross-border transport transit. While India should try
to avoid such skepticism given the economic benefits that better transit
can bring for its businesses, China must also be careful in conveying the
correct signals. The experience of implementing the BCIM has made it
evident that regional connectivity initiatives that do not involve China,
but are nonetheless vital in expanding the efficacy of the OBOR and
MSRI—such as the Kaladan Multimodal Transit Project—must be inte-
grated into the framework.25 The below example points to the importance
of China recognizing other cross-border connectivity initiatives in the
MSRI’s extended geographical space and encouraging their dovetailing
into it.
The MSRI and China–India Bilateral

Economic Relations
Bilateral trade between India and China was USD $72.4 billion in
2014–2015, making China India’s largest trade partner, with a share of
9.5 percent in its total merchandise trade of US$758.3 billion.26 Bilateral
trade has grown remarkably from barely US$1 billion at the beginning of
the century. This rapid growth has drawn attention to its conspicuous
imbalance, with China enjoying a surplus of USD $48.5 billion, around
67 percent of the total trade. Along with trade, cross-border investments
have also been increasing, though Chinese inward foreign direct invest-
ment (FDI) in India remains much lower than that from other countries.
The lower Chinese FDI in India is in contrast to the high stock of outward
Chinese FDI in Asia, reflecting China’s strong trade and investment links
with the continent, particularly Hong Kong.27 More Chinese investment
in export-oriented production in India could partly ameliorate Indian
concerns over the large trade deficit.28
Chinese Investment in India

The focus of Chinese FDI in India, till now, has been on producing for
India’s large domestic market in sectors like renewable and solar energy,
real estate, and urban development.29 The focus on investing in infrastruc-
ture is expanding to railways and further to consumer goods, particularly
smartphones, which again reflect the investor focus on exploiting the large
and deep domestic market in India.30 The lure of India’s domestic market
coupled with lower cost of labor-intensive operations should reflect in
more Chinese FDI in India, at a time when China has become a net capital
exporter, and its outward FDI would fall in line with the objectives of the
OBOR and MSRI. More trade-inducing Chinese FDI in India also com-
plements India’s signature “Make in India” initiative, which aims to make
the country a prominent manufacturing hub, and facilitates greater inte-
gration of Indian firms in GVCs featuring Chinese producers.
The above prospect becomes particularly encouraging given China
and India’s featuring in the RCEP, whose ROOs can activate GVCs con-
necting both countries. Enmeshing with the OBOR, through the mari-
time route of the MSRI and the land connections of the Silk Road
Economic Belt, would facilitate these GVCs. This, however, would
214 A. PALIT
require India to: build adequate maritime capacities, particularly on its

east coast; develop land connectivity with neighbors to its north (China),
northwest (Pakistan), and the northeast (Bangladesh, Bhutan, Nepal.
and Myanmar); and, most importantly, build internal infrastructure con-
necting seaports on the east and west coast to the hinterland, and land
borders with neighbors. All three involve formidable challenges such as
transport transit arrangements, multiple agency coordination, and mobi-
lizing substantive investments.
Domestic Maritime Capacities

A comparison of port capacities and efficiencies between countries con-
nected by the MSRI reveals striking contrasts. As revealed by the LPI
indices (Annex 1), the common regional characteristics shared by East
Asia, Southeast Asia, and Europe in comparison with South Asia, West
Asia, and Africa, in terms of the former being far more efficient than the
latter group in moving maritime cargo, is equally evident from differences
in performances among ports between these regions. More specifically,
most Chinese ports are much efficient than Indian ports, with greater
capabilities with regard to handling mega-ships and large cargo. Eleven
Chinese ports figure among the top 50 busiest container ports in the
world, with seven of these among the top 10 (see Table 8.1). In contrast,
only one Indian port is among the top 50. Many of the Chinese ports in
Table 8.1—Shanghai, Shenzhen, Hong Kong, Ningbo-Zhoushan, and
Xiamen—berth mega-ships and have the global lowest turnaround times
(0–1 day), reflecting high productivities.31 Flourishing trade between
China and Europe has led to several ports from East Asia, Southeast Asia,
and Europe figuring among the busiest ports of the world.32
The major ports on India’s east coast featuring in the Indo-China trade
are Kolkata, Visakhapatnam, and Chennai. Those on the west coast include
Kochi, Kandla, Mumbai and the Jawaharlal Nehru Port Trust (JNPT).
Much of the Sino-Indian maritime traffic moves through Southeast Asia
using Singapore as a transshipment hub. On average, containers take
15–20 days to travel from the Chinese coast to India’s east coast, and
around three weeks to move to India’s west coast. Decongestion of traffic
on the Malacca Strait by new maritime routes, particularly alternatives like
the Kra Isthmus canal in Southern Thailand, might reduce travelling time
for containers between China and India.33 Faster traffic and higher levels
of trade imply more pressure for the ports on India’s east coast, stretching
Table 8.1 Busiest container ports on MSRI route, 2013

Country/Region Port
China Shanghai (1st), Shenzhen (3rd), Hong Kong SAR (4th), Ningbo-
Zhoushan (6th), Qingdao (7th), Guangzhou (8th), Tianjin (10th),
Dalian (12th), Xiamen (18th), Lianyungung (26th), Yingkou (29th),
India Jawaharlal Nehru (34th)
Other Regions along MSRI
East Asia Busan, South Korea (5th); Kaohsiung, Taiwan (14th); Keihin, Japan
(17th); Hanshin, Japan (28th); Nagoya, Japan (49th)
Southeast Asia Singapore (2nd); Port Kelang, Malaysia (13th); Tanjung Pelepas,
Malaysia (20th); Tanjung Priok, Jakarta, Indonesia (22nd); Laem
Chabang, Thailand (23rd); Ho Chi Minh, Vietnam (24th); Manila,
Philippines (36th); Tanjung Perak, Surabaya, Indonesia (44th);
South Asia Colombo (33rd)
West Asia Jeddah, Saudi Arabia (30th); Salalah, Oman (41st);
Africa Port Said East, Egypt (43rd);
Europe Rotterdam, Netherlands (11th); Hamburg, Germany (15th);
Antwerp, Belgium (16th); Bremen, Germany (25th); Algeciras Bay,
Spain (31st); Valencia, Spain (32nd); Gioia Tauro, Italy (44th);
Source: World Shipping Council, “Top 50 World Container Ports,” http://www.worldshipping.org/

about-the-industry/global-trade/top-50-world-container-ports
their abilities. The “Sagarmala” project of port development alluded to

earlier should make a major difference to port capacities, but only in the
distant medium term.
The Kolkata port features prominently in the MSRI. Kolkata is the only
Indian port city featuring on the map of the MSRI released by China.34
The strategic importance of the Kolkata port is evident from the OBOR’s
plan to connect the land-based BCIM to the MSRI. The Kolkata–Kunming
road connectivity established by the BCIM would integrate Yunnan prov-
ince and Western China with the maritime traffic in the Bay of Bengal
through Kolkata port. The port could be an important conduit in the
flourishing of value chains connecting Chinese and Indian firms. This
would, however, require the development of extensive capacities at the
Kolkata port, which is currently saddled with inefficiencies.
The Kolkata port’s problems partly stem from its geography. As a river-
ine port, it suffers from silting. Frequent bends developed by the old river
Hooghly make it difficult for ships to move straight into the port. The port
also has less depth compared with the Chennai port further down the east
coast and requires continuous dredging for the entry of large containers.
216 A. PALIT
The downstream Haldia port, built as an ancillary to reduce c ongestion in

Kolkata, also suffers from silting. Modernization efforts have improved
performance, with Kolkata port being awarded “Major Port of the Year”
in 2014–2015 following handling of its largest volume of container cargo
since the inception of container facilities in 1979.35 Notwithstanding this
improved performance, playing a major role in Sino-Indian trade through
the MSRI would require far greater increases in capacity and efficiency.
The port needs to develop as a major transshipment hub in the Bay of
Bengal by allowing smooth access to large containers and reducing the
time taken for unloading and repacking. It needs to match the Colombo
port in efficiency; the latter handles the largest transshipment cargo for
both of India’s coasts. The Colombo International Container Terminal
(CICT) is a China–Sri Lanka joint venture, with the majority stake held by
the China Merchants Holding International (CMHI).36 Though not
depicted on the current MSRI map, Colombo is expected to figure promi-
nently in the larger MSRI scheme. A further challenge for the Kolkata
port is improving connectivity with its vast hinterland—the large Indian
states of West Bengal, Bihar, Jharkhand, Uttar Pradesh, Chattisgarh, and
Madhya Pradesh—and, most importantly, the Northeastern states (Assam,
Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim,
and Tripura) as they will be the conduit for land trade between Kolkata
and Kunming.
Land Connectivity
The BBIN agreement mentioned earlier, along with India’s ongoing plans
to connect to Myanmar and Thailand, reflects some progress on land-
connectivity efforts with India’s neighbors. These efforts should comple-
ment the BCIM and link India’s northeastern states to China, Bangladesh,
Bhutan, Nepal, Myanmar, and Thailand through overlapping road net-
works. Problems will persist over transit and transport permits, as dis-
cussed earlier, as well as over efficient customs practices at cross-border
land ports. Given that a considerable portion of these road links would
traverse locations in the Himalayan mountain range at high altitude and
through ecologically fragile areas, the challenges of construction will be
arduous, particularly for building “all-weather” roads capable of trans-
porting multimodal cargo.
The challenge for land connectivity is more formidable in India’s north-
west. India’s continuing political standoff with Pakistan does not produce
encouraging prospects for integrating its northern and western states with
the China–Pakistan Economic Corridor (CPEC), notwithstanding China’s

interest in doing so.37 Indeed, India’s cooperation with the rest of its
South Asian neighbors other than Pakistan appears to have moved on to a
more positive trajectory as is evident from the cooperation within BBIN. It
is noteworthy that the transport agreement of the BBIN was signed as a
subregional initiative within South Asia following the failure of the SAARC
group of countries to sign a similar agreement for the region due to oppo-
sition from Pakistan.38 The India–Pakistan differences do not show signs
of disappearing in the near future and will impinge on their mutual con-
nectivity and their integration with the OBOR.
Domestic Infrastructure Imperative

Successful evolution of GVCs connecting Chinese production facilities
located in India to the economic geography of the OBOR and MSRI is
contingent on the ease with which products can be transported from
within India to its coasts. In this regard, road connections within the hin-
terland of the Kolkata port are particularly important. While connections
to the Kolkata port across its hinterland have improved in recent years due
to the construction of cross-country national highways and upgrading of
state highways, movement of road transport across the country continues
to suffer from delays created by procedural inefficiencies, most notably the
large number of interstate check posts and toll plazas across national high-
ways. Delays encountered in the movement of goods by road coupled
with those in ports are reflected in higher shipping costs from India. The
Associated Chambers of Commerce in India (ASSOCHAM) estimates
container costs from India to be double those from China and thrice those
from Singapore. This makes it more cost-effective to export from China to
India, leading to much larger volumes of Chinese exports to India than
Indian exports to China.39 Unless these operational costs fall, greater con-
nections to seaports and land borders would still leave Indian exports
uncompetitive compared with those from China and Southeast Asia.
The challenge of building an efficient internal infrastructure is com-
pounded by domestic policies inhibiting coastal shipping. India’s ship-
ping laws have until recently only allowed Indian flagships to ply on
coastal routes connecting Indian ports. As a result, Indian businesses
were forced to utilize major transshipment hub ports in the neighbor-
hood, such as Singapore, Colombo, and Dubai, for shipments, leading to
higher operational costs. Restrictions on foreign containers for coastal
shipping would impinge on the abilities of India-based businesses to
218 A. PALIT
exploit the commercial opportunities produced by the MSRI. These

restrictions have prevailed due to pressures from the domestic shipping
lobby and it is only recently that the Indian government has allowed
selective relaxations in the laws for certain categories of foreign ships.40
The welcome move should contribute to the growth of coastal shipping
services and decongestion of traffic on roads and railways, speeding up
their movement. Such policies should also encourage greater Chinese
investment in integrated transport service facilities in India, particularly
railways, given the prospects of linking deeper into the China–India
GVCs through the OBOR and MSRI.
Final Impressions
India’s relatively poor maritime infrastructure and logistics capabilities, par-
ticularly the inefficiencies of its major ports, create distinct disadvantages
for its firms in exploiting the potential economic opportunities of the
MSRI. Businesses from Chinese, European, and several Southeast Asian
economies are better placed to exploit the MSRI as an economic corridor.
More investment in maritime facilities and modernization of existing capac-
ities are important for India. Chinese investment and expertise could be
helpful in this regard. Such investments are unlikely to enthuse India until
it is convinced that OBOR and the MSRI are international ventures much
like the Asian Infrastructure Investment Bank (AIIB) and not China’s
national initiative for serving specific strategic interests, such as gaining
greater strategic control over the Indian Ocean, or creating alternative sea
routes for transporting energy from Africa in order to reduce its depen-
dence on the clogged Malacca Strait.41 The impression of “China-centrality”
in the MSRI is strengthened by the failure of its official vision statement to
mention non-Chinese regional forums. Nonetheless, notwithstanding the
geopolitical character of the MSRI, which is clearly aligned to serve Chinese
national interests, India can utilize the initiative for economic benefits, pro-
vided it can overcome its domestic infrastructure deficit.42
As argued by some Chinese experts, a more objective Indian perspective
on the MSRI will be able to emerge after a clear outlining by China of the
specific projects being planned and their economic benefits.43 Until such
clarity is forthcoming, the possibility that the MSRI might induce counter-
strategic responses from India, such as the Project Mausam, intended to
re-establish ties with ancient trade partners in the Indian Ocean, cannot be
overlooked.44 Chinese strategic opinions are already reflecting on whether
India might use its strategic influence in the Indian Ocean to leverage a
more prominent role in the MSRI.45 Mutually counterbalancing strategic

initiatives would constrain the participation of businesses in the MSRI and
reduce its effectiveness as an economic corridor. As the proponent of the
initiative, it is important for China to engage in more consultations and
share more details with participating countries and regional associations to
avoid mistrust and secure greater commitment to the project.
In spite of not being a direct stakeholder, India’s commercial perspec-
tive on the MSRI can hardly ignore the implications of complicated rela-
tions between China and several Southeast Asian countries over territorial
issues in the South China Sea. India’s robust trade links with China and
Southeast Asia, and the possibility of its businesses utilizing the maritime
infrastructure of the MSRI to contribute to GVCs running through China
and Southeast Asia, depend significantly on relations between the latter.
The South China Sea is testing ASEAN’s political cohesiveness by intro-
ducing divisions among pro- and anti-China members and preventing the
adoption of common postures on major regional issues.46 Divisions within
Southeast Asia might also increase due to Chinese efforts to carve out new
shipping routes, like the Kra Isthmus canal, which would divert significant
traffic from the Malacca Strait. Indian businesses would be perturbed over
the implications of a politically disturbed South China Sea for the
RCEP. The MSRI’s success requires its playing a complementary role to
that of the RCEP, which has the ASEAN at its core. For India, the RCEP
is an opportunity to be a part of one of the world’s largest RTAs, which
offers deep access to the Chinese market. Regional impressions that con-
sider the MSRI to be a Chinese design for greater strategic influence in
Southeast Asia and Indian Ocean could bring it into conflict with the
RCEP, with adverse implications for businesses.
New infrastructure and greater regional connectivity could help Chinese
and Indian businesses feature prominently in regional production networks
and GVCs. Chinese investments in India would be conscious of such possi-
bilities, along with their potential local partners. But converting opportuni-
ties created by the MSRI into distinct economic gains will require significant
infrastructure improvements within India. New connectivity capacities would
hardly encourage more trade till Indian exports become more competitive.
This would require sustained improvements in the conditions of “doing
business”. While early signs in this regard are encouraging, as are changes in
domestic shipping laws, the challenge for India is to increase the momentum
of this change. Unless change hastens, foreign investments, including
Chinese investments, may hesitate to commit to India, notwithstanding its
unique strategic location in the economic geography of the MSRI.
220 A. PALIT
Annex 1
Logistics Performance Index (LPI) Rankings, 2014
East Asia LPI Customs Infrastructure International Logistics Tracking Timeliness

rank shipments competence and tracing
Japan 10 14 7 19 11 9 10
Hong Kong, 15 17 14 14 13 13 18
China
Korea, Rep. 21 24 18 28 21 21 28
China 28 38 23 22 35 29 36
Southeast Asia
Singapore 5 3 2 6 8 11 9
Malaysia 25 27 26 10 32 23 31
Thailand 35 36 30 39 38 33 29
Vietnam 48 61 44 42 49 48 56
Indonesia 53 55 56 74 41 58 50
Philippines 57 47 75 35 61 64 90
Cambodia 83 71 79 78 89 71 129
Lao PDR 131 100 128 120 129 146 137
Myanmar 145 150 137 151 156 130 117
South Asia
India 54 65 58 44 52 57 51
Pakistan 72 58 69 56 75 86 123
Maldives 82 49 82 72 74 92 148
Sri Lanka 89 84 126 115 66 85 85
Bangladesh 108 138 138 80 93 122 75
Central Asia
Kazakhstan 88 121 106 100 83 81 69
Russia 90 133 77 102 80 79 84
Tajikistan 114 115 108 92 113 119 133
Uzbekistan 129 157 148 145 122 77 88
Turkmenistan 140 122 146 116 155 134 153
Kyrgyzstan 149 145 147 127 151 145 155
West Asia
Saudi Arabia 49 56 34 70 48 54 47
Oman 59 74 57 31 73 80 67
Iraq 141 149 131 139 147 136 116
Yemen, Rep. 151 159 153 134 141 144 124
Africa
Egypt, Arab 62 57 60 77 58 43 99
Rep.
Kenya 74 151 102 50 90 60 45
Ethiopia 104 102 134 121 96 97 78
Tunisia 110 146 118 73 120 124 80
(continued )
(continued)
East Asia LPI Customs Infrastructure International Logistics Tracking Timeliness

rank shipments competence and tracing
Libya 118 104 119 140 131 78 114

Tanzania 138 135 114 137 145 150 107
Sudan 153 155 152 144 144 125 156
Somalia 160 147 160 159 160 160 160
Europe
Germany 1 2 1 4 3 1 4
Netherlands 2 4 3 11 2 6 6
Belgium 3 11 8 2 4 4 2
France 13 18 13 7 15 12 13
Italy 20 29 19 17 23 14 22
Austria 22 23 25 40 26 10 23
Turkey 30 34 27 48 22 19 41
Greece 44 28 42 62 40 61 54
Source: Logistics Performance Index, World Bank (http://lpi.worldbank.org/international/global).

The LPI indices are weighted averages of six key parameters: efficiency of clearance processes at the
borders; quality of trade and transport infrastructure (including ports, roads, and rail); ease of arranging
competitively priced shipments; quality of logistic service providers (transporters, customs agents);
tracking and tracing consignments; and timeliness of shipments to destinations
Notes
1. People’s Republic of China, National Development Reform Commission,
Ministry of Foreign Affairs, and Ministry of Commerce, “Vision and
Actions on Jointly Building Silk Road Economic Belt and Twenty-First-
Century Maritime Silk Road,” March 28, 2015, http://en.ndrc.gov.cn/
newsrelease/201503/t20150330_669367.html.
2. Jean-Marc F. Blanchard, “Probing China’s Twenty-First-Century Maritime
Silk Road Initiative (MSRI): An Examination of MSRI Narratives.”
Geopolitics 22, no. 2 (2017): 246–268.
3. Hans-Peter Brunner, “What Is Economic Corridor Development and What
Can It Achieve in Asia’s Subregions?” in ADB Working Paper Series on
Regional Economic Integration (Manila: Asian Development Bank, 2013),
http://www.adb.org/sites/default/files/publication/100110/reiwp-
117-economic-corridor-development.pdf.
4. Examples of prominent economic corridors include the EU corridor from
Latvia to Frankfurt and the Greater Mekong Sub-Region (GMS) transport
corridor connecting China to Vietnam, Lao, Cambodia, Myanmar, and
Thailand.
5. Kunal Sen, “Global Production Networks and Economic Corridors:
Can They Be Drivers for South Asia’s Growth and Regional Integration?”
In ADB South Asia Working Paper Series (Manila: Asian Development
222 A. PALIT
Bank, 2014), http://www.adb.org/sites/default/files/publication/

152708/south-asia-wp-033.pdf.
6. See Jean-Marc F. Blanchard’s introduction to this volume and Blanchard,
“Probing China’s Twenty-First-Century Maritime Silk Road Initiative
(MSRI).”
7. Both East Asia and Europe have higher shares of intraregional trade in
their total trades than North America—26 percent—while Southeast Asia
has an almost identical share.
8. Corridors tend to disperse benefits more widely in regions that are eco-
nomically more cohesive as opposed to those where benefits are usually
localized (Brunner, “What Is Economic Corridor Development and What
Can It Achieve in Asia’s Subregions?”).
9. Annex 1 compiles logistics performances of countries either directly con-
nected to or in relatively close proximity to the MSRI.
10. India improved its position by 16 places in the World Economic Forum’s
Global Competitiveness Index (2015–16) to 55 from a previous 71 (World
Economic Forum, “Global Competitiveness Report 2015–2016,” India,
http://reports.weforum.org/global-competitiveness-report-2015-2016/
economies/#economy=IND). Its “Doing Business” rank also improved
four places to 130 in 2016 from 134 in 2015. World Bank, “Doing Business”
rankings, http://www.doingbusiness.org/data/exploreeconomies/india.
11. Republic of India, Press Information Bureau, “Sagarmala: Concept and
Implementation Towards Blue Revolution,” March 25, 2015, http://pib.
nic.in/newsite/PrintRelease.aspx?relid=117691.
12. “India Private Ports Grab Market Share from Government-Owned Rivals,”
Joc.com, January 5, 2015, http://www.joc.com/port-news/asian-ports/
port-nhava-sheva/india-private-ports-grab-market-share-government-
owned-rivals_20150105.html.
13. P. Manoj, “Mundra-Guangzhou Pact May Pave Way for Chinese
Investments In Indian Ports,” Live Mint, May 22, 2015, http://www.
livemint.com/Opinion/lNKkA24l1SfRNMjaKPpSYP/
MundraGuangzhou-pact-may-pave-way-for-Chinese-investments-i.html.
14. Geethanjali Nataraj, “Why India Should Join China’s New Maritime Silk
Road,” The Diplomat, July 3, 2015, http://thediplomat.com/2015/07/
why-india-should-join-chinas-new-maritime-silk-road.
15. See Jean-Marc F. Blanchard’s introduction to this volume and Blanchard,
“Probing China’s Twenty-First-Century Maritime Silk Road Initiative
(MSRI).”
16. The Mekong–Ganga Cooperation (MGC) includes India, Cambodia, Lao,
Myanmar, Thailand, and Vietnam. It began in 2000 in order to facilitate
greater cooperation between the river basins of Ganga and Mekong.
17. The WTO defines the Rules of Origin (ROOs) as “criteria needed to deter-
mine the national source of a product.” World Trade Organization,
“Technical Information on Rules of Origin,” https://www.wto.org/

english/tratop_e/roi_e/roi_info_e.htm.
18. ROOs also feature in the bilateral FTAs India has with other countries in
the MSRI geographical area (e.g., Singapore, Malaysia, Thailand, Sri
Lanka). The India–ASEAN agreement is more significant in scope and is
discussed here as an illustrative example.
19. Association of Southeast Asian Nations, “Agreement on Trade in Goods
under the Framework Agreement on Comprehensive Economic
Cooperation between The Association Of South East Asian Nations and
the Republic of India,” Rule 8, “Direct Consignment,” 35, http://www.
asean.org/wp-content/uploads/images/archive/22677.pdf.
20. The TPP is a mega-RTA negotiated by Australia, Brunei, Chile, Canada,
Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Vietnam, and the
USA. The agreement is awaiting legislative ratification by members. The
USA withdrew from the TPP in January 2017.
21. Amitendu Palit, The Trans-Pacific Partnership, China and India (Oxon
and New York: Routledge, 2014).
22. “Full Text of BBIN Agreement on Motor Vehicles,” Nepal Foreign Affairs,
http://nepalforeignaffairs.com/bbin-agreement-on-motor-vehicles-
agreement.
23. “India for Greater Transport Connectivity with ASEAN,” The New Indian
Express, August 25, 2014, http://www.newindianexpress.com/nation/
India-for-Gr eater-Transpor t-Connectivity-with-ASEAN-
Sushma/2014/08/25/article2397830.ece. See also Prabir De, “ASEAN-
India Connectivity: An Indian Perspective,” in ASEAN-India Connectivity:
The Comprehensive Asia Development Plan, Phase II, ERIA Research
Project Report 2010–7, edited by Fukunari Kimura and So Umezaki
(Jakarta: ERIA, 2011), 95–150, http://www.eria.org/CHAPTER%20
3%20%20ASEAN%20-%20India%20Connectivity%20An%20Indian%20
Perspective.pdf.
24. BCIM links Kolkata in the eastern Indian state of West Bengal to Kunming,
the capital of Yunnan province in Western China, through Dhaka and
Mandalay in Bangladesh and Myanmar, A major hurdle for the project is in
constructing the land corridor through the northeast Indian state of
Arunachal Pradesh, over which China and India have a territorial dispute.
“China-India Fast-Track BCIM Corridor Project,” The Hindu, June 26,
2015, http://www.thehindu.com/news/national/china-india-fasttrack-
bcim-economic-corridor-project/article7355496.ece.
25. Chinese officials pointed to the importance of drawing India’s northeast-
ern state of Mizoram and the Kaladan Project into the BCIM in order to
make it a complete structure. Ibid.
26. Republic of India, Department of Commerce, Export Import Data Bank,
http://commerce.nic.in/eidb/iecnttopn.asp.
224 A. PALIT
27. Alicia Garcia Herrero, “China’s Outward Foreign Direct Investment,”

Bruegel, Blog Post, June 28, 2015, http://bruegel.org/2015/06/chinas-
outward-foreign-direct-investment.
28. “Investment the Way to Reduce the India-China Trust Deficit,” The Wire,
May 16, 2015, http://thewire.in/2015/05/16/investment-the-way-
forward-to-reduce-india-china-trust-deficit-1871/.
29. The Samy Group and Clint Group from China have invested in manufac-
turing renewable energy and solar power equipment in India, while the
real estate group Dalian Wanda plans to expand beyond its current invest-
ment in Navi Mumbai in India’s western state of Maharashtra to industrial
townships and real estate projects in other major Indian states such as
Haryana, Andhra Pradesh, Gujarat, and Delhi.
30. On the former, see “China Has a Lot to Offer to Indian Railways: Suresh
Prabhu, Railway Minister,” Indian Express, May 17, 2015, http://indian-
express.com/article/cities/ahmedabad/china-has-a-lot-to-offer-to-
indian-railways-suresh-prabhu-railway-minister. On the latter, see “Chinese
Smartphone Makers Fall in Love with PM Modi’s ‘Make in India,’” Sify
News, October 12, 2015, http://www.sify.com/news/
chinese-smartphone-makers-fall-in-love-with-pm-modis-make-in-
india--news-business-pkmqnMiigdehd.html.
31. Mega-ships have cargo volumes of at least 13,300 TEU. For more details,
see Figure 4.2, Chapter 4 of International Transport Forum, “The Impact
of Mega-Ships,” International Transport Forum (ITF)–OECD, 2015,
https://www.itf-oecd.org/impact-mega-ships.
32. Asia–North Europe and Asia–Mediterranean were the second and third
busiest maritime routes, after Asia–North America, in 2013. World
Shipping Council, “Trade Routes,” http://www.worldshipping.org/
about-the-industry/global-trade/trade-routes.
33. The 100-km Kra Isthmus canal would enable ships to bypass the Malacca
Strait and cut through the South China Sea into the Andaman Sea and Bay
of Bengal, reducing the total distance covered by around 1200 km and
journey time by two–five days. There are reports of this being conceived as
a part of MSRI though there has been no official confirmation. “Will
China and Thailand’s Kra Isthmus Canal Agreement Sink Singapore?” The
Establishment Post, May 21, 2015, http://www.establishmentpost.com/
will-china-thailands-kra-isthmus-canal-agreement-sink-singapore/.
34. Xinhua’s map of the New Silk Road outlines its clearest geography till now.
“New Silk Road Project,” Great Silk Road, October 5, 2015, http://
greatsilkroad.com/new-silk-road/new-silk-road-project.
35. “Kolkata Port Adjudged Major Port of the Year,” The Times of India, August
26, 2015, http://timesofindia.indiatimes.com/city/kolkata/Kolkata-Port-
adjudged-Major-Port-of-the-Year/articleshow/48687327.cms.
36. “Colombo Breaks Through as South Asia’s Next Big Trans-Shipment
Port,” Joc.com, October 20, 2015, http://www.joc.com/port-news/
asian-ports/port-colombo/colombo-breaks-through-south-asia’s-next-
big-transshipment-port_20151020.html.
37. “India Needs to Be Part of China-Pakistan Economic Corridor,” The
Economic Times, October 10, 2015, http://economictimes.indiatimes.
com/news/politics-and-nation/india-needs-to-be-part-of-china-pakistan-
economic-corridor/articleshow/49298727.cms.
38. Anasua Basu Ray Chaudhary, Pratnashree Basu, and Mihir Bhonsale,
Driving across the South Asian Borders: The Motor Vehicle Agreement between
Bhutan, Bangladesh, India and Nepal (Delhi: Observer Research
Foundation, 2015). The SAARC members include Afghanistan, Bangladesh,
Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka.
39. The ASSOCHAM study estimates shipping cost of a container from India
at around US$1200 compared with US$600 from China and US$400
from Singapore. See “WTO pact or not; India has to catch up fast on trade
facilitation; costs are prohibitive: ASSOCHAM,” Assocham.org, August 26,
2014, http://assocham.org/newsdetail.php?id=4657. The ASSOCHAM
study vindicates similar conclusions drawn by other agencies. Organization
for Economic Cooperation and Development, “The Costs and Benefits of
Trade Facilitation,” Policy Brief, OECD Observer, October 2005, http://
www.oecd.org/trade/facilitation/35459690.pdf.
40. “Government Relaxes Cabotage Law for Special Vessels Like Ro-Ro,” The
Times of India, September 15, 2015, http://timesofindia.indiatimes.
com/india/Govt-relaxes-cabotage-law-for-special-vessels-like-Ro-Ro/
articleshow/48964834.cms.
41. “One Belt, One Road Not International Venture: India,” Deccan Herald,
July 21, 2015, http://www.deccanherald.com/content/490656/one-
belt-one-road-not.html.
42. Amitendu Palit, “India’s Economic and Strategic Perceptions of China’s
Maritime Silk Road Initiative,” Geopolitics 22, no. 2 (2017): 292–309.
43. “China Should Detail Maritime Silk Road Projects to Get India’s Support:
Chinese Think Tank,” The Economic Times, July 17, 2015, http://
economictimes.indiatimes.com/news/defence/china-should-detail-mari-
time-silk-road-projects-to-get-indias-support-chinese-think-tank/article-
show/48110690.cms.
44. Akilesh Pillalamarri, “Project Mausam: India’s Answer to China’s ‘Maritime
Silk Road,’” The Diplomat, September 18, 2014, http://thediplomat.
com/2014/09/project-mausam-indias-answer-to-chinas-maritime-
silk-road.
45. “India Using Strategic Projects as Bargaining Chip,” NDTV, April 10,
2015, http://www.ndtv.com/india-news/india-using-strategic-projects-
as-bargaining-chip-says-chinese-think-tank-753953.
46. “South China Sea Tensions Torpedo Asia Defense Chiefs Statement,” Channel
News Asia (CNA), November 4, 2015, http://www.channelnewsasia.com/
news/asiapacific/south-china-sea-tensions/2237348.html.
226 A. PALIT
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Index1
NUMBERS AND SYMBOLS Albuquerque, Afonso de, 57

1+4 Sino-Pak cooperation Alibaba, 7
structure, 110 “all-weather” friendship, 106
1000 Housing Units Project, 180 Amritsar, 149
1962 Sino-Indian Border War, 59, 83 Amu Darya Basin, 96
1997 Asian financial crisis, 175 Arabian Sea, 68, 70, 109, 210, 211
2007 global financial crisis, 175 Arunachal Pradesh, 46, 216, 223n24
Asia-Cooperation Dialogue
(ACD), 209
A Asia-Europe Meeting (ASEM), 209
ADB. See Asian Development Asia Infrastructure and Investment
Bank (ADB) Bank (AIIB), 7, 16, 92, 147, 151,
Abbas, Bandar, 57 158n61, 174, 182, 184, 218
Adeeb, Ahmed, 181 Asian Development Bank (ADB), 11,
Afghanistan, 11, 15, 35, 39, 50, 57, 100n39, 142, 151, 159n68, 205,
83, 88, 91, 96, 106, 110, 117, 221n3, 221n5, 222n6
128n78, 225n38 Asian maritime trade, 42
AfPak region, 117, 119, 128n79 Asia-Pacific Economic Cooperation
African countries, 4 Forum (APEC), 174, 209
Ahmed, Mohamed Jameel, 180 Associated Chambers of Commerce
AIIB. See Asia Infrastructure and in India (ASSOCHAM), 217,
Investment Bank (AIIB) 225n39
Note: Page numbers followed by “n” refers to notes.

1

DOI 10.1007/978-981-10-5239-2
230 INDEX
Association of Southeast Asia Nations Bhamo, 67

(ASEAN), 93, 208–11, 219, Bhutan, 101n48, 212, 214,
223n19, 223n23 216, 225n38
Atlantic Ocean, 41 Bihar, 216
Australia, 210, 211, 223n20 bilateral investment treaties, 5
Awami National Party, 114 Blanchard, Jean-Marc F., 19n2, 19n3,
Aynak Cooper Mine, 96 19n4, 21n23, 22n28, 34, 51n1,
Azhar, Masood, 107, 128n80 65, 102n51, 123n23, 124n29,
125n47, 152n5, 222n15
Blue Revolution, 149, 161n84,
B 222n11
Baghdad Railway, 57 Bo, Kong, 70, 75n39
Bahawalpur, 111 Boao Forum for Asia, 102n54, 174
Bahrain, 58 Brewster, David, 4, 6, 8, 11, 14, 15,
Balochistan, 35, 108, 112–14 19n7, 23n39, 73n5, 74n24,
Baluchistan. See Balochistan 75n30, 100n32, 100n35,
Bandar Shahpur port, 57 102n56, 152n3, 152n9, 153n19,
Bangladesh-Bhutan-India-Nepal 155n32, 162n89
(BBIN), 212, 216, 217, 223n22 Britain, 36, 48, 57, 62, 64
Bangladesh-China-India-Myanmar Brunei, 211, 223n20
(BCIM), 76n40
economic corridor, 68, 93, 109,
159n62 C
transportation corridor, 147 Cambodia, 204, 220, 221n4, 222n16
Bay of Bengal, 48, 67, 93, 101n48, Cao, Tianshu, 176, 189n15
161n84, 206, 209–11, 215, 216, CCP Central Committee’s Political and
224n33 Legal Affairs Commission, 107
Bay of Bengal Multi-Sectoral Technical Central Asia Regional Economic
and Economic Cooperation Cooperation (CAREC), 204, 209
(BIMSTEC), 93, 101n48, 209 Central Treaty Organization, 83
Beijing, 1, 5–7, 9–11, 13–16, 34, 46, Ceylon Chamber of Commerce, 145
50, 56, 61–3, 65–8, 70–2, 83, 84, CGGC International Ltd, 92
91, 96, 107, 118–20, 137–51, Chang, Wanquan, 108
153n19, 156n40, 157n44, Chattisgarh, 216
157n50, 158n57, 160n77, 174, Chennai, 93, 214, 215
176, 178, 180, 182, 184, 187 Chiang, Kai-shek, 37
Beijing Urban Construction Group Chi, Haotian, 177, 191n31
Company Limited, 91, 181, 182 China-Afghanistan joint venture, 96
Bengal, 147, 216, 223n24 China-Arab States Cooperation
Berlin, 36 Program, 209
Berlin, Donald, 58, 73n3 China-Central and West Asia, 174
INDEX
231
China-centric institutions, 11 China’s National People’s Congress

China Communications Construction (NPC), 178
Company, 93 China’s political-economic model, 18
China Council for the Promotion of China-South Asia
International Trade, 185 Business Forum, 180
China Development Bank (CDB), 5, Expo, 180, 193n52
7, 175 interactions, 84–6, 88, 91
China-Eurasia Expo, 178 China’s Silk Road Fund, 92, 110
China Exim Bank, 5, 181 China’s State Administrative of
China Harbor Engineering Company, 93 Foreign Exchange (SAFE), 5
China-India China Three Gorges SA Investment
economic relations, 16, 117, Ltd, 92
208, 213 Chinese
relationships, 2, 82 armies, 40, 44, 177
China-India-Pakistan Triangle, commercial operations, 150
105, 117 connectivity initiatives, 148
China Machinery and Engineering, economic engagement, 141, 151
179, 181 foreign policy, 17, 118
China Major Bridge Engineering investments, 49, 72, 76n45, 109,
Company, 93 111, 113, 115, 116, 139, 144,
China-Maldives relations, 101n43, 146, 147, 150, 158n57, 187,
173–87 208, 213, 218, 219, 222n13
China Merchants Holding Chinese business, 7, 9, 114, 209
International (CMHI), 216 Chinese companies, 3, 7–9, 13, 15, 60,
China National Petroleum 61, 63, 65, 94, 114, 139, 159n65,
Corporation (CNPC), 96 181, 183. See also Chinese
China North Industries Group business. see also Chinese firms)
Corporation, 92 Chinese Eastern Railway, 36, 51n4
China-Pakistan Chinese firms, 7, 10, 13, 96
border agreement, 83 Chinese-funded infrastructure
Economic Corridor, 6, 61, 92, Projects, 144
105–21, 125n40, 125n45, Chinese government, 2, 13, 81, 87,
125n46, 126n52, 126n57, 114, 139, 177, 179
126n58, 148, 217 Chinese investment, 145
Year of Friendly Exchanges, 105 Chinese People’s Political Consultative
China-Pakistan Economic Corridor, Conference (CPPCC), 177
127n66, 127n71 Chinese state-owned enterprises (SOEs),
China-Pakistan Year of Friendly 8, 9, 13, 92, 116, 117, 119
Exchanges, 121n1 Chittagong, 93, 94, 147
China Railway Engineering Chittagong harbor projects, 93
Corporation, 92 Chongqing, 174
China’s connectivity plan, 17 Cold War, 44, 84, 85, 109
232 INDEX
Colombo capabilities, 11
international container terminal development, 61, 69, 88, 97,
(CICT), 90, 216 109, 110, 116, 149, 181,
International Financial City 183, 207
(CIFC), 90, 96 engagement, 117, 147
Port City (CPC), 6, 95, 156n41, environment, 96
157n47, 157n48 growth, 6, 50, 111, 128n78,
Community of Common Destiny, 95, 149, 194n75
109, 124n31, 124n37 integration, 66, 205, 206
Conference on Interaction and objectives, 3, 85, 99n20, 203
Confidence-Building Measures Economic Cooperation Framework
in Asia (CICA), 209 Agreement (ECFA), 95
confidence building measures Egypt, 6, 215, 220
(CBM), 96 Eisenhower, Dwight, 38
counter-terrorism, 107, 112 Eurasian civilizations, 39
cross-border Eurasian hinterland, 56–9, 72
connectivity initiatives, 212 Europe, 4, 38, 40, 49, 52n8, 58,
economic corridors, 91 66, 72, 86, 108, 117, 173,
trade infrastructure, 206 174, 180, 203, 205–7, 214,
transport transit, 212 221, 222n7
CRRC Corporation Limited, 8 European Union (EU),
37, 221n4
D
Dacca, 94 F
Delhi-Hanoi Railway Link, 212 Faisal, 178, 182, 193n58
Deng, Xiaoping, 38 financial crisis, 185
Dhaka, 147, 178, 223n24 Five Principles of Peaceful
Dhivehi Qaumee Party, 182, 183 Co-existence, 174
Diego Garcia, 58 Five Year Plan, 37
Djibouti, 4, 63, 64, 150, 162n89 “Flying Geese” strategy, 66
Dongfang Electric Corporation, 181 foreign currency reserves, 7, 139
Dubai, 142, 156n41, 217 foreign direct investment (FDI)
inward (IFDI), 213
outward (OFDI), 7, 8, 87, 93,
E 213, 224n27
East Asia, 3, 33–44, 49, 51, 51n2, 58, free trade agreement (FTA), 101n48,
72, 73, 87, 88, 90, 204, 206, 109, 115, 145, 157n48, 185,
207, 210, 214, 215, 222n7 209–11
East China Normal University, 2 Fu, Quanyou, 177
e-commerce platform, 7 Fu, Xiaoqiang, 183
economic Fudan University, 113
annexation, 11, 68 Future-Oriented All-round Friendly
atmosphere, 13 and Cooperative Partnership, 184
INDEX
233
G Hong Lei, 184

Gansu, 40 Horn of Africa, 143, 150
Garver, John, 14, 51n3, 51n5, 52n15, Hu Jintao, 106
53n18, 58 Hu, Shisheng, 183
Gayoom, Maumoon Abdul, 176, 178, Huang Hua, 176
191n27 human trafficking, 12
Germany, 14, 35–8, 57, 58, 215, 221 Hussain, Iftikhar, 114
global economy, 42, 50, 95, 139 Hussain, Mamnoon, 108
globalization, 94 Hutchinson Whampoa Limited, 60
global value chains (GVCs), 205–7,
210, 211, 213, 217–19
Greater Mekong Sub-Regional I
Economic Cooperation Ibrahim Nasir International Airport,
program, 93 179, 181
Great Mekong Sub-Region (GMS), Ihavandhippolhu Integrated
93, 204, 221n4 Development Project, 180
Guangzhou, 40, 48, 208, 215 India, 73n8
Gujarat, 94, 139, 140, 208, 224n29 air forces, 45
Gulf of Aden, 50, 140, 143 business, 17, 160n73, 206, 207,
Guo Shengkun, 107 209, 211, 212, 217, 219
Gwadar firms, 207, 209, 213, 215
airport, 92, 111 foreign secretary, 66, 118, 138,
harbor international, 47 149, 150
Gwadar Port Economic Zone Jammu-Kashmir dispute, 83
(GPEZ), 92 Navy, 64, 143, 144, 155n35,
156n36
India-ASEAN FTA, 210
H India-Myanmar Thailand Trilateral
Haldia port, 216 Highway, 212
Hambantota, 6, 63, 72, 142–5, 150, Indian Ocean
154n30 littoral, 14, 55–7, 66, 68, 71, 91,
Hambantota international airport, 146, 150, 180
6, 142, 154n30 Region (IOR), 12, 89, 175
hard infrastructure initiatives Rim, 144, 176, 190n16
land, 4 Indian-Pakistani conflicts, 90, 101n41
sea, 4 Indian subcontinent square, 64, 137
highway technology, 34, 39 India’s Arunachal Pradesh, 46, 216,
Himalaya, 39, 45, 46 223n24
historic transportation corridors India’s Ministry of External Affairs,
between East Asia and SA-IOR, 14 128n83, 182
Hong Kong, 38, 43, 177, 185, Indo-China Peninsula, 174
213–15, 220 Indo-China trade, 214
234 INDEX
Indonesian Senate, 173 Jharkhand, 216

Indo-Pakistan Jhelum River, 92
ties, 84 Jhimpir, 111
war, 83 Jiangsu Provincial Transportation
Indo-Pakistani Simla Agreement, 84 Engineering Group Co. Ltd, 179
Indo-Sri Lanka dynamics, 16 Jiangxi Copper Corporation, 96
Indo-US ties, 117 Joint Committee on Trade and
Indus River, 47 Economic Cooperation, 179
Industrial and Commercial Bank joint ventures, 7, 96, 145, 216
of China (ICBC), 92 Jumhooree Party, 182
industrialization, 37, 45, 89, 90, 92,
94, 97, 100n40
industrial parks, 5, 7, 90, 91, 94, K
97, 144 Kaladan Multimodal Transit
infrastructure Transport Project, 212
connectivity, 5, 89, 146 Kanapuli River, 93
construction, 13, 65, 184 Kandla, 214
initiatives, 4, 96, 150 Karachi, 48, 111, 114, 144, 189n13
intellectual property (IP), 86 Karachi-Lahore-Peshawar rail line, 111
international cooperation in Karakoram highway, 47, 69, 71, 109,
economics, 82 111
intraregional trade, 90, 204–6, 208 Kargil war, 89
IOR. See Indian Ocean, Region (IOR) Karl, David J., 6, 8, 9, 16, 23n39,
Iqbal, Ahsan, 114 23n41, 63, 100n32, 128n84
Iran, 35, 37, 158n53 Karot
Iran-China friendship association, 6 dam project, 115
Irrawaddy River, 48, 67 hydropower project, 110, 114
Islamabad, 6, 70, 109, 111, 118, hydropower station, 92
120, 142 Kashgar, 44, 47, 48, 69, 70, 92, 148
IZP Technologies, 7 Kazakhstan, 37, 97n1, 173
Khyber Pakhtunkhwa, 94, 110, 113,
114
J Kochi, 214
Jacob, Jabin, 4, 6, 8–12, 15, 61, 68, Kolkata, 147, 214–17, 223n24,
101n46, 160n74 224n35
Jammu-Kashmir dispute, 83 Kolkata-Kunming road
Jameel, Fathulla, 176 connectivity, 215
Japan, 9, 36–8, 40, 43, 44, 47, 50, Kondapalli, Srikanth, 6, 9–11, 16,
51, 51n4, 58, 63, 66, 118, 175, 23n41, 101n43, 102n56,
209–11, 215, 220, 223n20 128n84, 153n23
Jawaharlal Nehru Port Trust Kra Isthmus canal, 214, 219,
(JNPT), 214 224n33
INDEX
235
Kunming–Yangon road, 67 Malacca Strait, 4, 67, 70, 89, 210,

Kuwait, 57 211, 214, 219, 224n33
Kyaukpyu, 35, 67, 68, 70, 72, 90, 93 Maldives Ministry of Foreign
Kyoto Protocol, 177, 190n24, 191n34 Affairs, 180
Kyrgyzstan, 49, 220 Maldives National Security
Service, 177
Maldivian Democratic Party, 182
L Malé Harbor, 181
Laamu Atoll, 183 Malé–Hulhulé Bridge Project, 179
Laamu Atoll Link-Road, 179 Manchukuo, 36
labor-intensive industry, 94 Manchuria, 36
Lahore, 149 Mandalay, 47, 48, 147, 223n24
Lakhvi, Zakiur Rehman, 107 Manipur, 216
Lanzhou, 37 Mao Zedong, 37
Lao People’s Democratic Republic, 206 maritime
Lattimore, Owen, 39, 51n7 economy, 52n12, 91, 179
legal mechanisms, 9 security, 56, 62, 91, 175, 179
Letpadaung copper project, 95 Maritime Silk Road Initiatives (MSRI)
Lhasa, 44, 45 MSRI host countries, 10
Lhasa railway MSRI participants, 2, 3, 5, 6, 8,
Lhasa-Kunming railway, 46 10–13, 18
Lhasa-Nyingchi railway, 46 MSRI-related interactions, 6
Li Keqiang, 107–9, 123n16, 174 Marshall Plan, 11
Li Ruihuan, 177 Mauritius, 118, 149, 161n84, 193n60
Li Tieying, 178 Mausam, 9, 97, 218
Li Zhaoxing, 178, 191n37 Mediterranean Sea, 4, 41, 138, 203
Liang, Guanglie, 178, 189n12 Meghalaya, 216
Lianyugang, 69 Mekong-Ganga Cooperation (MGC),
Liu, Haiquan, 175, 189n10 209, 222n16
Liu, Jinxen, 69, 76n46 Memorandum of Understanding
Logistics Performance Index (LPI), (MOU), 6, 92, 179
206, 214, 220, 221 Meng Jianzhu, 107, 112
Lomé, 60 Mesopotamia, 57
Luo, Yuze, 175, 189n9 Metallurgical Corporation of China
(MCC), 96
Middle East, 49, 180, 189n8, 204, 205
M military interdependence, 15
Ma Xingyuan, 177 Military Operations Other Than War
Madhya Pradesh, 216 (MOOTW), 65
Mahan, Alfred Thayer, 62 Ming dynasty, 138
Maharashtra, 94, 224n29 Mississippi River, 36
“Make in India” program, 139 Mizoram, 216, 223n25
236 INDEX
MNCs. See multinational corporations New Eurasian Land Bridge, 174

(MNCs) New Zealand, 209–11, 223n20
Modi, Narendra, 97, 118, 139–41, nonstate actors, 2, 3, 17, 70
144, 147–50, 153n15, 156n40, North America, 40, 222n7
159n65, 161n84, 193n60, 207 Northeast Asia, 36, 88
Moscow, 36, 37 North Pacific, 44
MOU. See Memorandum of
Understanding (MOU)
multinational corporations (MNCs), O
1, 2 OBOR. See One Belt, One Road
multi-role fighter aircraft, 107 (OBOR)
Mumbai, 214 ocean economy, 149, 150
Myanmar, 10, 13, 35, 47, 48, 58, Oman, 74n17, 215, 220
67–71, 84, 90, 93, 95, 101n48, One Belt, One Road (OBOR), 1, 2, 5,
102n55, 143, 145, 147, 176, 15, 17, 34, 65, 66, 68, 69, 72,
204, 206, 209, 212, 214, 216, 73, 81, 82, 87, 93, 97, 108, 148,
220, 221n4, 222n16, 223n24 173–5, 188n8, 204, 210–13,
Myanmar corridor, 47–9 215, 217, 218
Myitsone Dam, 71 Oriental Express, 36
Myitsone hydropower plant, 95 Orion Holdings, 94
Mysore, 93
P
N Padma Bridge, 93
Nagaland, 216 Pakistan-China Economic Corridor
National Executive Committee Council (PCECC), 113
of the Republican Party, 179 Pakistani ports, 69
National Interstate and Defense Pakistan-occupied Kashmir,
Highway Act, 38 107, 118, 119
Nawabshah, 111 Pakistan-origin terrorism, 106
Nazim, 178 Palit, Amitendu, 4, 6, 9, 11, 16, 17,
Nehru, Jawaharlal, 83, 215 65, 160n73, 223n21, 225n42
Nepal, 46, 47, 52n16, 83, 101n40, Palk Strait, 137
101n48, 214, 216, 225n38 Panama Canal, 42
Netherlands, 57, 215, 221 People’s Liberation Army (PLA),
New Delhi, 46, 58, 102n50, 118, 44–6, 89, 108, 177
137–51, 155n33, 158n53, People’s Republic of China (PRC), 1,
161n83, 182 2, 34, 36, 44. See China; Chinese
New Development Bank (NDB), 147, government)
151, 174 People’s University, 176
INDEX
237
Pershing, John, 38 R
Persia, 57, 58 Rajapaksa, Mahinda, 63, 118, 142–4,
Persian Gulf, 36, 57, 58, 203 149, 156n40
Piraeus, 60 Rakhine State, 70, 71
PLA. See People’s Liberation Ramree Island, 48
Army (PLA) Rangoon port, 68
PLA Navy (PLAN), 62–4, 89, Rawalpindi, 110, 118
100n35, 177 regional
Politburo Standing Committee, economic partnership, 146
107, 174 peace, 88
political security, 82, 88, 112, 150, 176
challenges, 12, 13 stability, 82, 88, 112
consensus, 85 Regional Comprehensive Economic
disputes, 82 Partnership (RCEP), 91, 93,
dynamics, 13, 111, 120 209–11, 213, 219
goals, 3, 10–13 regional trade agreements (RTAs),
implications, 3, 111 210, 211
instability, 82, 95, 113, 116 religious conflicts, 88
issues, 12, 17, 71 renminbi (RMB), 3, 7, 174
order, 10, 13, 18, 111 resource exploitation activities, 12
political-economy Rhodes, Cecil, 36
of the Maritime Silk Road Initiative, 2 Rizhao, 69
of OBOR, 2 RMB. See renminbi (RMB)
of South Asia, 2 Rohingyas, 71
port efficiencies, 207 ROOs. See rules of origin (ROOs)
PRC. See People’s Republic Royal Navy, 63
of China (PRC) rules of origin (ROOs), 17, 209–11,
PRC-US military clash, 50 213, 222n17, 223n18
Private Power and Infrastructure Russia, 9, 35–7, 49, 66, 99n27, 118
Board (PPIB), 92 Russo-Japan struggle, 118
profit margins, 7
Progressive Party of Maldives,
182, 183 S
Prussian forces, 36 SA. See South Asia (SA)
public-private partnership, 175 SAFE. See China’s State Administrative
Punjab, 94, 110, 111, 113, 115, 149 of Foreign Exchange (SAFE)
SA-IOR. See South Asia and Indian
Ocean Region (SA-IOR)
Q sea lines of communication (SLOCs),
Qasim Port, 111 10, 58, 62, 64–6, 86, 87, 89, 90,
Qian Qichen, 176 97, 100n34, 143
Qinghai, 40, 44 Seattle, 60
238 INDEX
Security and Growth for All in the South Asia (SA), 1–18, 33, 34, 39, 69,
Region (SAGAR), 138 81–97, 108, 109, 117, 141, 145,
Seychelles, 118, 143, 149, 193n60 151, 173, 178, 203–6, 208,
Shanghai Cooperation Organization 210–12, 214, 217
(SCO), 109, 119, 208 South Asia and Indian Ocean Region
Sharif, Nawaz, 110, 113, 120 (SA-IOR), 14
Sharif, Raheel, 107 South Asian Association for Regional
Shenzhen, 156n41, 214, 215 Cooperation (SAARC), 15, 91,
Shigatze, 46 101n41, 178, 193n60, 209, 217
Shi Yinhong, 112 South Asian Free Trade Agreement
Shu Yuan, 176 (SAFTA), 91, 101n41, 210
Shwe gas pipeline, 67 South China Sea, 4, 41, 86, 89,
Shwe, Than, 67 100n34, 118, 173, 183, 189n8,
Sichuan, 48 203, 211, 219, 224n33
Sikkim, 216 Southeast Asia Treaty Organization, 83
Silk Road Economic Belt (SREB), 1, Southern Manchurian Railway, 36
2, 5, 6, 17, 19n8, 81, 82, 87, 88, South Korea, 38, 175, 210, 215
92, 97, 108, 203, 213 South Pacific, 4, 41, 86
Silk Road Fund (SRF), 5, 7, 92, Soviet Central Asian rail network, 37
110, 174 Soviet Republics, 37
Singapore, 38, 47, 48, 118, 142, Soviet Union, 36, 37, 57
156n41, 181, 182, 206, 210, special economic zones (SEZs), 5, 7,
211, 214, 215, 217, 220, 38, 144, 146, 180, 181
223n18, 223n20, 225n39 Spice Program, 97
Singapore Ports Authority, 47 SREB. See Silk Road Economic Belt
Sino-Indian (SREB)
border war, 59, 83 SRF. See Silk Road Fund (SRF)
commercial interaction, 147 Sri Lanka, 2, 5, 6, 9, 10, 12, 13, 16,
economic relationship, 12, 120 63, 65, 66, 83, 90, 91, 95, 96,
naval rivalry, 143, 155n33 101n40, 101n48, 118, 137–51,
tensions, 119 209, 220, 225n38
trade, 216 Srinagar, 83
Sino-Maldivian trade, 185 Stalinist economic model, 38
Sino-Pak economic relations, 93 Star Rafts, 176
Sino-Pakistani military relationship, 107 Strait of Hormuz, 70
Sino-US Strait of Malacca, 89. See also
conflict, 50 Malacca Strait)
cooperation, 50 string of pearls, 9, 61–5, 89, 96, 143,
Sirisena, Maithripala, 95, 144–6 147, 150, 187
Sittwe port, 212 Suez Canal, 70
Sonadia port, 60 Sui, Xinmin, 6, 15, 123n28
SLOCs. See sea lines of communication Summer Youth Olympic Games, 179
(SLOCs) Supreme Allied Commander, 38
INDEX
239
T United States (US), 7, 9, 14, 16, 35,

Taiwan, 38, 43, 50, 185, 36, 38, 39, 43, 47, 49–51, 58,
190n20, 215 62–4, 68, 70, 83, 84, 97n1,
Tamil minority, 137 99n27, 106, 110, 114, 118,
Tamil Nadu, 142 129n93, 148, 162n88, 173, 175,
tariff barriers, 6 176, 180, 185, 187, 188n4, 213
territorial United States Army, 38
disputes, 88, 189n8, 223n24 United States Institute for National
integrity, 83, 88 Strategic Studies, 64
terrorist attack, 88, 106, 107 United States Treasury bonds, 7
Thar, 111 Urumqi, 37
Tibetan plateau, 14, 39, 47 US. See United States (US)
Tibetan Rebellion, 83 US-China-Pakistan axis, 84
Tibet-Indian border, 45 Uttar Pradesh, 216
Tibet-Qinghai plateau, 39 Uyghur, 106, 120
tit-for-tat strategy, 85 Uzbekistan, 220
tourism infrastructure development
project, 179
trade V
deficits, 12, 109, 120, 185, 213 Vietnam, 204, 211, 215, 220, 221n4,
facilitation, 92, 206, 207 222n16, 223n20
integration, 9, 17 Visakhapatnam, 214
interdependence, 94
trade facilitation agreement (TFA), 207
transaction costs, 7, 96 W
trans-Myanmar route, 69 Wagah-Attari border, 149
Trans-Pacific Partnership (TPP), 211, Wang Dehua, 112
223n20 Wang Fukang, 179, 181
transport corridor, 47, 204, 221n4 Wang Jisi, 50, 53n19
Trans-Siberian railway, 36 Wang Yi, 96, 105, 120, 175, 177
Trincomalee, 149 Wang Zheng, 85
Tripura, 216 Watan Group, 96
Turkey, 37, 221 West-East transport links, 45, 180
Turkmenistan, 220 Western military technologies, 108
Western Pacific, 43, 50
win-win interaction World Bank, 86
U World Trade Organization (WTO), 207
Union forces, 36 World War II, 57, 150
United Arab Emirates (UAE), 74n17 WTO. See World Trade Organization
United Nations Charter, 174 (WTO)
United Nations Security Council Wu Bangguo, 178
(UNSC), 85, 107, 122n11, 175 Wu Yi, 177
240 INDEX
X Yue Rong, 175, 189n14

Xi Jinping, 1, 4, 81, 91, 97n1, Yun Sun, 68, 76n41, 76n47
106, 108, 144, 173, 178 Yunnan, 48, 67, 69, 147,
Xiamen, 214, 215 215, 223n24
Xi’an, 37, 44 Yunnan Provincial Committee School
Xie Bo, 175 of the Communist Party, 176
Xining, 40, 44–6 Yunnan-Shan plateau, 39
Xinjiang, 2, 44, 67–70, 92, 106,
107, 119, 148
Xinjiang affair, 107 Z
Xu Qiliang, 108 Zahir, Mohamed, 177
zero-sum game, 95, 117
Zhang Gaoli, 174, 175
Y Zheng He, 42, 43,
Yalta, 36 52n8, 66, 176
Yameen, Abdulla, 91, 179 Zheng Yu, 113
Yang Jiechi, 75n35, 174, 178, 188n7 Zhou Enlai, 83
Yellow River, 40 Zhu Rongji, 177
Yu Zhengsheng, 107 ZTE Corporation, 92

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PALGRAVE STUDIES

China’s Maritime Silk Road

More information about this series at

China’s Maritime Silk

Palgrave Studies in Asia-Pacific Political Economy

Library of Congress Control Number: 2017952342

© The Editor(s) (if applicable) and The Author(s) 2018

Cover illustration: © hakule / Getty Images

Printed on acid-free paper

This Palgrave imprint is published by Springer Nature

1 China’s Twenty-First Century Maritime Silk Road

2 China’s Rise and the Eurasian Transportation Revolution 33

3 The MSRI and the Evolving Naval Balance

4 China’s Strategy Towards South Asia in the Context

5 The China–Pakistan Economic Corridor

6 Sri Lanka, the Maritime Silk Road,

7 The Maritime Silk Road and China–Maldives Relations 173

8 The MSRI, China, and India: Economic Perspectives

Fig. 1.1 Map of China’s Twenty-First-Century Maritime

Table 5.1 Pakistan–China Bilateral Trade, 2005–2014 110

China’s Twenty-First Century Maritime Silk

J.-M.F. Blanchard (*)

© The Author(s) 2018 1

consist of interlinked, intermodal sea-land corridors, mean China will no

Fig. 1.1 Map of China’s Twenty-First-Century Maritime Silk Road Initiative

­ evelopment of large industrial parks and special economic zones (SEZs)

in the case of Maldives, Srikanth Kondapalli (Chap. 7) exhaustively details

MSRI Economic Goals and Challenges

enterprises and trade logistics and marketing networks.30 COFCO, the

MSRI Political Goals and Challenges

China diminish existing financial institutions like the Asian Development

The MSRI’s realization will require China to address numerous political

In Chap. 6, David J. Karl examines China’s rapidly advancing ties with

He first analyzes the MSRI as an economic corridor and assesses varia-

Nathan Beauchamp-Mustafaga, “NPC Meeting Touts New Silk Road as

65. Tiezzi, “What’s It Like to Have China Build You a Port?”

Pillalamarri, Akhilesh. “Project Mausam: India’s Answer to China’s ‘Maritime Silk

China’s Rise and the Eurasian

The Problem and the Approach

J.W. Garver (*)

© The Author(s) 2018 33

focus on the role of transport technology, ancient and contemporary, in

A bit of historical context is useful here. Earlier great powers—Japan,

• via post-Soviet Central Asia plus Afghanistan and Iran

Many of the railways and highways that China is building or plans to

The Railway Revolution Comes

Application of railway technology quickly became a key component of

the ambitious industrialization efforts of the 1930s, railways were built

Highways as a Second Component

The development of internal combustion technology in the early twenti-

impressive. By the beginning of the twenty-first century, in many regions of

Collapse of Millennium-Long Geographic

The Maritime Silk Road and China’s

lateen-rigged triangular sail with a top or bottom boom designed to swing

court scrapped Zheng He’s oceanic programs, even going so far as to

• Both Northern and Southern Song embraced naval forces in defense

In view of these episodes, China’s minor role in the maritime revolu-

The Transportation Revolution Transforms

deeper cuts moderated grades. Bridges spanned depressions. Tunnels were

The extension of the Xining–Lhasa rail line to Kathmandu in Nepal is

goods is minor—a mere 5 percent of India’s. Still, China’s ability to poten-

The Pakistan and Myanmar Corridors

the port on a purely commercial basis, an approach which resulted in little

1 China’s Twenty-First Century Maritime Silk Road

2 China’s Rise and the Eurasian Transportation Revolution 33

3 The MSRI and the Evolving Naval Balance

4 China’s Strategy Towards South Asia in the Context

5 The China–Pakistan Economic Corridor

6 Sri Lanka, the Maritime Silk Road,

7 The Maritime Silk Road and China–Maldives Relations 173

8 The MSRI, China, and India: Economic Perspectives

Table 5.1 Pakistan–China Bilateral Trade, 2005–2014 110

evelopment of large industrial parks and special economic zones (SEZs)