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Ever since President Xi Jinping of China unfolded One Belt One Road (OBOR) at World Economic Forum at Davos for global connectivity and trade, Europe is struggling to come to terms with this historic mega project. With the focus of President Donald Trump on 'America first' and cut down on global obligations in business and politics, President Xi could not have selected a better time to try to fill in the gaps of global leadership.

While Western Europe - notably Germany, France and the UK - is suspectical of the real intensions of China, Eastern Europe, being left out in economic development and desperate for investments and new markets has welcomed it as a source of additional infrastructure investments and access to new markets.

The '16+1' dialogue, which includes China and 16 Eastern European countries, of which many are EU members, has added to suspicion and discomfort of Brussels.

The OBOR mega global conference in Beijing last April witnessed favourable response from many of the Western countries and Australia. The second Belt and Road Forum in Beijing planned for end April 2019 is expected to achieve a greater response specially from Eastern Europe. Italy has also indicated that it would formally support the OBOR, making it the first G7 country to do so. Dutch too are keen to mobilise their port of Rotterdam - selected under OBOR as the anchor for transportation of goods from Europe to Asia and Africa.

The US continues to be suspicious about the intentions of China and consider it as a disguised plan for economic and political supremacy and a rival in global economic and political influence. This cautious distrust is growing, but the US has no real strategy nor influence to counter it and appears inclined to let it go and focus more in getting industry and global investments on its soil. This has started to bear fruits as number of emerging markets from Asia are opting for the US as a more lucrative and safer investment location.

Russia is inclined to put its weight behind China and its OBOR initiative in the face of strained economic and political relations with Western Europe and the US.

Asia and Africa largely constitute China's home-ground. The Middle East is still in a state of flux. Saudi Arabia's engagement in the CPEC at Gwadar is a major development in this direction.

But OBOR is encountering some serious challenges of global acceptance primarily on account of high debt it is creating in some countries leading to serious fiscal and sovereignty issues. Recently, the pushback for escaping fury has grown. In some countries, OBOR projects have become victims of influence in domestic fiscal policies and politics. In Malaysia, the new administration under Prime Minister Mahathir has been highly critical of projects agreed upon during the period of his predecessor Najib Razak. There were similar voices from Sri Lanka and Africa. Pakistan too is moving from the wish-list of past government and is scaling down and aligning itself more towards projects of wider social and economic interest and away from mega projects on account of growing debt burden.

China is determined to make inroads in global economies and is working on a well-structured strategy to absorb shocks and deviations. Endowed with remarkable cash flows, China leads in providing project financing next to the World Bank and Asian Development Bank, notably, in Asia, Eastern Europe and Africa. Its economic and political influence in all these countries is consolidating.

The affluent economies need growing Asian markets and OBOR aims to provide a highly valuable connectivity in this regard. In all probabilities, OBOR is there to stay and a vast majority of the global economies will sooner or later opt to be beneficiary of it.

(The writer is former President of Overseas Investors Chamber of Commerce and Industry)

Copyright Business Recorder, 2019


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