China’s $900bn OBOR project hits security potholes

China’s hopes of rewriting globalisation in its own image using the One Belt, One Road programme are running into trouble

  • By Elliot Wilson
  • 15 Jun 2017
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Riots, terror attacks and a welter of security issues are stalling and undermining many of the infrastructure projects central to China’s grandiose $900bn One Belt, One Road programme.

The Chinese government is determined to build a vast grid of railway lines, highways, pipelines and ports that slash the cost of shipping Chinese goods overland to Europe, and by sea to South Asia, Africa and beyond. But its hopes of rewriting globalisation in its own image are running into trouble.

In Myanmar, fishermen have protested after being banned from trawling a stretch of coastline earmarked for a $10bn special economic zone. The zone is being built by Chinese state-run Citic Group, which will construct a 770km pipeline pumping crude oil overland to China through the impoverished ASEAN state. China has also threatened to back out of building a $3.6bn dam in Myanmar after mass protests.

Similar problems have surfaced in Pakistan, where China is building ports, highways, railways and oil pipelines. Last week, two Chinese nationals working on a highway in the troubled region of Balochistan were shot dead by Islamic State terrorists.

THE START OF PROBLEMS

Experts say this is just the start of problems for a country unsure of its footing on the international stage — yet which touts itself as the arbiter of globalisation and aims, via OBOR, to influence the evolution of world trade flows and politics.

“Myanmar is just the start,” says Andrew Polk, head of China operations at policy intelligence specialist Medley Global Advisors. “All the projects China does through OBOR are going to be big and disruptive, and this highlights the learning curve involved in operating in troubled places. They will run into trouble wherever they go.”

Another challenge China faces is to meet expectations. Take Mongolia, a kind of OBOR branch line. It is only partially plugged into the main trade route, which links China with Europe via Russia and former Soviet Central Asia.

“Bypassing Mongolia is a mistake,” said Munkhdul Badral, CEO of Ulaanbaatar-based consultancy Cover Mongolia. “It sends a sign that China is trying to exert control by forcing Mongolia to trade only with Beijing, using their trade routes. Beijing should build a third trade route that goes through us. True, a lot of Mongolians see OBOR as an easy way to make money by acting as a transit state, but this is also a chance for China to show that it is a good neighbour and to consider our needs as well.”

Other Asian states see OBOR as a chance to build crucial infrastructure, and as a cost-effective way to embed local firms and banks into global supply chains.

Nayana Mawilmada, head of investments at Megapolis, a scheme to rebuild Sri Lanka’s western provinces, believes that for OBOR to be a success, both local governments and China need to focus on projects that really matter.

“Some of the infrastructure funded by Chinese money in the past, including highways and an airport in the south [of the country], wasn’t that useful, and left us with debts,” he says. “OBOR is a chance to do this better — to plan properly and to build the infrastructure that Sri Lanka really needs. But the onus is on Sri Lanka to channel these resources properly — not on China.” 

  • By Elliot Wilson
  • 15 Jun 2017

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