The Chinese Investment Conspiracy

We were honoured to host Gateway House’s Amit Bhandari for the meeting last Tuesday. Gateway House is a foreign policy think-tank that has been researching and conducting analytic exercises to understand China’s investments. Bhandari’s insightful revelations gave us a more thorough understanding of the current eco-political relationship between China, India, and each country’s allies.

He began by discussing the Belt and Road Initiative (BRI). The BRI is a creation of ports, railways, and road pipelines to connect China to the rest of the world. It is an attempt to create a global trading network and a sphere of influence, both examples of Chinese assertiveness. China has invested over $150 billion in Bangladesh, Pakistan, Nepal, Sri Lanka, Afghanistan, and the Maldives, and is now the largest foreign investor in Maldives, Myanmar, Sri Lanka and Pakistan. The depth of China’s investments in India’s neighbouring countries is an attempt to encircle the country.

To understand the concern about Chinese investments, Bhandari and Gateway House have been mapping the country’s financial moves across the globe. They have observed China’s investments to be in the sectors of energy, connectivity, communications, and finance. In terms of energy, the Chinese have made investments in oil, gas, thermal, nuclear, and hydro energy in the neighbouring countries. One of these investments is in the China- Pakistan Economic Corridor (CPEC), which gives Pakistan increased access to Central Asia’s energy fields. The String of Pearls is a theory about potential Chinese intentions in the Indian Ocean; it asserts that China

is trying to create a network and increase their access to ports and airfields by expanding their geopolitical influence. Moreover, India’s communication lines are routed through Chinese companies (or companies that are close to the Chinese government) which means our data is running through Chinese optic fibres that can easily be tracked by the nation’s Communist Party. Financially, the Chinese want to replace the US Dollar with the Yuan.

Bhandari then took us on a tour of the region from an economic perspective, paying close attention to Chinese investments. In Sri Lanka, China’s ‘debt-trap diplomacy’ began with the supply of weapons. The country has now come to replace India as Sri Lanka’s biggest economic partner, investing largely in their infrastructure.

In Nepal, the Chinese government hopes to develop their airports in the near future. After being deprived of aid from India, Nepal turned to China for assistance. Furthermore, China looks to take over Lumbini, a Buddhist tourist
hub, to sideline Tibetan resistance.

China also has a $62 billion potential investment lined up in Pakistan, which is predicted to cause political backlash on India in the long run. Another of China’s investments in Pakistan is in energy; thermal power plants in
Pakistan cost more per megawatt than in India. Thus, there exists a lot of scope for padding for elite contractors, allowing projects to go through without any scrutiny. On the military front, the Chinese investment in Pakistan’s Gwadar port appears to be more of a military asset than a trade hub.

Heading East, Bhandari highlighted a case where Bangladesh was attempting construction of a bridge when the World Bank backed off on account of lack of transparency. That is when China stepped in as a cheap and reliable investment
alternative. Similar to Sri Lanka, the relationship started with the supply of weapons on a military level and moved on to a more multilateral approach.

He then brought our attention to The Maldivian economy, which is run mostly through tourism. As 30% to 40% of the tourist inflow is from China, any severance of Maldivian-Chinese ties will have a major impact on the country’s
economy.

Finally, Bhandari brought forth the unique political circumstances in Myanmar. The country, run by a brutal military regime, is attempting to reduce their dependence on China. They believe reliance on a superpower like China can have harmful repercussions in the future.

In conclusion, Bhandari told us that the reasons for China’s attempts to invest in India’s neighbouring countries are
straightforward: sovereignty, cultural influence, hegemony, information control, and most importantly, a transformed global financial structure. India’s top priorities should therefore be to strengthen its own economy and regain control of its political atmosphere in order to avoid being caught unawares if and when an adversary strikes.