China's Proposed Maritime Silk Road: Challenges ...

China’s Proposed Maritime Silk Road: Challenges and Opportunities with Special Reference to the Bay of Bengal Region Mohd Aminul Karim

The aim of this article is to explore the challenges and opportunities of the 21st Century Maritime Silk Road – presumably a gigantic economic project launched by China – for better connectivity and economic cooperation in Asia. The article examines the variables that may either limit or bolster its implementation. The project, once implemented, is likely to give rise to both economic and strategic upshots. Economically, it is likely to be win–win for both China and other powers in Asia who are willing to participate. On the other hand, it may get trapped because of the presence of geopolitical issues and great powers rivalry, specifically in the Bay of Bengal region. The article, in the final analysis, attempts to provide certain policy prescriptions, mainly for China, for maximum optimization. Key words: maritime silk road, challenges, opportunities, connectivity, economic cooperation, geopolitics, Bay of Bengal.

Introduction China presumably would like to occupy a central place on the world stage – despite the fact that it is committed to going slow and hiding its brilliance. Of late, however, there has seemingly been a paradigm shift as its assertiveness has become visible, at least in the economic field. Friedberg’s comments seem convincing: “China … [is] an essentially rational actor that has chosen on the basis of strategic calculations to become more assertive.”1 It is the change in relative power that is probably triggering the process. While China’s military modernization is, in a way, going through a kind of military revolution, its economic diplomacy or cooperation is moving at an even faster pace. 1. Aaron L. Friedberg, “The sources of Chinese Conduct: Explaining Beijing’s Assertiveness,” The Washington Quarterly, 37-4 (2014), p. 142. Pacific Focus, Vol. 30, No. 3 (December 2015), 297–319.

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China has an oversupply of disposable funds that can be better utilized in overseas investments. Economic diplomacy is presumably directed to help ameliorate the economic and social conditions of the countries in Southeast Asia, Central Asia, and South Asia, and essentially their inter-connectivity. It is even stretched to Africa and South America. The scope of this article is, however, confined to Asia only with a special reference to the Bay of Bengal region. Some say China is rising, and the United States is declining or in retreat – somewhat similar to the situation after the Vietnam War. Young Deng is succinct: “The Iraq War started to drag down U.S. power and image. Meanwhile, China and other emerging economies continued robust growth and began to carry increasing weight in global affairs.”2 This, however, may not be the whole truth. There are still clear indications that the United States is putting forward its best efforts to revitalize its military forces, especially in its Pacific Command area, and is going around – especially to those countries surrounding China – to make allies, friends, alignments, ententes and so on – both in the military and economic spectrum. The strategy assures “All Domain Access” which is gradually expanding its network with allies and partners in a “global network of navies,” to secure stability and maritime security.3 Safeguarding freedom of navigation and uninterrupted commerce in the global commons seemingly remains vital for the United States. Given the high-political developments that emanate from both sides, this period is called a period of transition. A period of transition is not merely a change of power balance between two great powers but more importantly it is about a change of relationship between the existing preponderant power and a potential contender for future system leadership. Secondly, rising powers may not necessarily aspire to such a role but China is visibly trying to play that role to modify the world order in her ways.4 New polarizations or a leadership race are thus taking place and giving rise to tensions. There are inexorable geopolitical moves that can be slowed down – maybe by diplomacy or by creative or cooperative ideas, such as economic integration, physical and cultural connectivity – but are difficult to resolve altogether. On the face of it, they carry potentials for conflict or a near-war situation. This is substantiated by the fact that while China moves up militarily, the United States continues to maintain effective and credible sea control capabilities in different sea lines of control, with particular emphasis on the East and South China seas, and at the throat – the Malacca Strait – that connects the Pacific Ocean with the Indian. The possibility of connecting the Pacific with the Indian Ocean brings to the fore the issue of the Bay

2. Yong Deng, “China: The Post-Responsible Power,” The Washington Quarterly, 37- 4 (2014), p. 123. 3. Geoffrey Till, “New US Maritime Strategy: Why It Matters?” RSIS Commentaries, No. 095 (21 April 2015), at (searched date: 9 October 2015). 4. Lai, David, “China’s Strategic Moves and Counter-Moves,” The US Army War College Quarterly Parameters, 44 - 4 (Winter 2014-15), p. 17.

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of Bengal region. The Bay is even comparable to the South China Sea as some scholars tend to suggest. However, China is yet to project itself in the Indian Ocean, where India is also a major power. And India seemingly claims it is the net provider of security in the Indian Ocean. It is discernible that strategic alliance or alignment among Japan, India, South Korea, and Australia are tending to tilt the strategic balance that tends to contain China. China has to, therefore, look for partners and resources – mostly energy – in the region. The Shanghai Cooperation Organization may be called a case in point on which China is putting a lot of emphasis. Pakistan is another case in point that may be compared to the entente relation that exists between the United States and India. Additionally, the leadership race and strategic compulsions – strategic stability is also critical – are drawing our attention. Nevertheless, there are positive indications also, where there may be a convergence of ideas for cooperation. This quandary is the rationale as to why both the United States and China are seemingly suffering from a policy of ambiguity. The United States’ policy of rebalancing tends to send two messages: its military works as a deterrent when it comes to the issues and flashpoints; and it tends to export Western values, such as democracy, human rights, and rule of law to the Asian countries. Both presumably work as credible deterrence to China. Now the dilemma is whether to go strong with a rebalancing strategy or to find a way to collaborate with China to maintain strategic stability. On the other hand, China claims its rise is peaceful, which the Western world or its allies are contesting. There are ambiguities in the term “Chinese dreams” – it is difficult to decipher whether it is mainly a dream for a harmonious or prosperous world or it is purely a race for leadership and strategic competition. China, again, tends to go for multipolarity made up of distinctive poles of attraction in contrast to a unipolar or United States-dominated world. It is a political idea that creates an opportunity for Eurasia to emerge. Interestingly, the interests of the two potential builders of Eurasia – China and Russia – seem to have converged.5 China is determined to fill the void, so it has floated the idea of the Maritime Silk Road (MSR). A US strategist comments on China’s “One Belt, One Road” or MSR strategy as follows: “If China wants to create a parallel system in Eurasia and convince others that its system beats America’s, it could then demand from its partners … by asking them to restrict or refuse US access to their seaports and that is where the direct security and military implications come in.”6 5. Robert Skidelsky, “The Sino-Russian Marriage” (18 June 2015), at (searched date: 17 July 2015). 6. Wendell Minnick, “China’s ‘One Belt, One Road’ Strategy: Modern-day Silk Road Effort Could Challenge US Influence in Asia, Africa, Mideast,” DefenseNews (12 April 6. 2015), at (searched date: 17 July 2015).



Nevertheless, the United States has presumably missed an opportunity to integrate these two countries into a single world system by not reforming the IMF, which could have given more clout to China, and by also blocking Russia’s proposition for NATO membership? China needs to reorient its economy so it goes to Eurasia, in which Russia also has an interest. In 2000, Putin already proposed for the Iron Silk Road and multilateral economic projects in Eurasia.7 So an alternative strategy could be: actors have to identify the positive areas – liberal, constructivist, cooperative, altruistic – in the spectrum that may connect both sides and utilize the potentials for the benefit of teeming millions in Asia for as much and as long as possible. Creativity has to be engendered in locating a middle-path – a stable path. With this backdrop, this article attempts to look for both the challenges and opportunities where the powers – in this case China and other powers in Asia – can cooperate and bring in creative ideas for better integration and prosperity, where there are also distinct sub-zones. Interestingly, each sub-zone – which can be identified as Northeast Asia, Southeast Asia, Southern Asia (especially the Bay of Bengal region) and Central Asia – has its own cultural, economic, and geostrategic interests and compulsions. Will the powers cooperate for a win–win outcome? Will some of the powers in Asia come to odds with China’s objectives? Is the Bay of Bengal region emerging as the new frontier of great power rivalry and competition? The article also provides certain policy advice basically meant for China that may seemingly contribute to smooth implementation of the project, thus contributing to economic prosperity and connectivity of Asia. To do that, China has to craft such strategies that can take most of the actors on board. The uniqueness of the article is its attempt to identify and assess the hindering and contributory variables both from economic and geopolitical perspectives. The article also underscores the importance of the Bay of Bengal region, which is likely to be the new frontier of power-political rivalry. The basic methodologies are a literature survey and collecting primary data via personal interactions with relevant experts. These are reinforced by realistic inputs and observations provided by the author, who has a professional security background. The article has the inherent limitation of not being able to access enough details from the official sources as the project is still under study.

Cooperative Strategy Asia is broadly rising as a continent. As a matter of fact, four of the largest economies of the world today – China, Japan, India, and South Korea – are located in Asia. But are they converging for a synchronized common good? Both Japan and 7. Seung-Ho Joo, “Russia’s Policy on Nuclear Proliferation and National Unification on the Korean Peninsula,” Pacific Focus, 29-2 (August 2014), pp. 167-187.



China have historical animosities, to block convergence, that tend to give rise to intermittent tensions in the region. But one should look for areas where the stakeholders can cooperate or where there is common ground to meet and act, and thereby make their mark in history when the future generation may take pride in the fact that their forefathers created a space for them where they remain better integrated and more prosperous. I am fully aware of the consequences of powerpolitics, strategic alliances and alignments, and ententes that have emerged during the last few decades. This even encompasses areas like nuclear cooperation – euphemistically called civilian mainly implying energy support – but in reality contributing to military collaboration.8 Power-politics is intrinsic to inter-state relations. That’s fine. But certain initiatives that propose to develop economic corridors, zones and areas, to connect people and cultures, and to help each other in times of crisis may rightfully deserve our attention and consideration. We have to be creative to derive the best advantage from it for the best good of the maximum number of people, especially in Asia, which is greatly poverty-stricken and often-times battered by natural and manmade disasters. Asia is also the epicenter of thousands of boat-people – homeless refugees – moving from post to pillar for survival. About 30 percent of people in Asia live below the poverty line. There are many smaller countries in Asia that are almost perennially plagued by national integration and state-building problems. There are serious economic and social inequalities between the peoples of the countries concerned and between the sub-regions in the wider Asia–Pacific. To forge better understanding and egalitarianism, a cooperative strategy – where seemingly no strings are attached – is ostensibly the way forward. For Asia, what else can be a better strategy than a cooperative?

Silk-Road Concept and Its Visualization As a matter of fact, Arabs, Persians, Indians, Chinese and Southeast Asian traders have been, for several thousand years, cruising and trading in the East China and South China Seas, the Indian Ocean, the Arabian Sea, and the Persian Gulf – collectively known as the Indo–Pacific. This may also be called the ancient Maritime Silk Road. This MSR ensured freedom of navigation without which trade could not have prospered. And they traded successfully because they treated each other’s culture with respect.9 Ostensibly taking cues from the concept of cooperative strategy, and the ancient MSR, in October 2013, China’s President Xi Jinping initiated the proposal of 8. For details see Mohd Aminul Karim, “Strategic Visions of China and the United States in South Asia and Beyond,” Korean Journal of Defense Analysis, 24-2 (June 2012), pp. 175-191. 9. Tommy Koh, “21st Century Maritime Silk Road,” The Straits Times (4 August 2015), at (searched date: 9 October 2015).



building the 21st Century MSR during his address to the Parliament of Indonesia. The 21st Century MSR – seen as a complement to various overland Silk Roads, such as those to Nepal, Pakistan, Myanmar, India, Central Asia, and even up to Germany – would provide better connectivity in different modes and dimensions. Thus said, the project is “grandiose, potentially involving an area that covers 55 percent of world GNP, 70 percent of global population, and 75 percent of known energy reserves.”10 Put together, it is called “One Belt, One Road.” Another source estimates that the Belt and Road, put together, covers 4.4 billion people and $2.1 trillion gross production, which makes it 63 percent of the world population and 29 percent of world GDP.11 The MSR involves more than 20 countries and regions. China has 14 maritime and eight land-based neighbors. The MSR is likely to pass from the South China Sea, through the Strait of Malacca, across the Indian Ocean to East Africa, and from these through the Red Sea into the Mediterranean. The other route of the Road is to the South Pacific. “The MSR is expected to boost China’s cooperation with the countries along the road, improve mutual trust and create a win-win situation. It can also be a new platform and mechanism of maritime security. The MSR is not just a road for China, but for the whole of Asia-Africa. It may also be called ‘Civilizational Road’, ‘Economic and Trade Road,’ and ‘Tourism Road’ of the Asian countries. China needs to connect with peoples of the Asia-African countries of the West Pacific and the Indian Ocean so as to develop industrial chain, guarantee maritime security passage, and deal with maritime non-traditional security.”12 The project is conceived to enhance presumably five connections, such as trade, infrastructure, investment, capital and people. In the long run, it is likely to create a community with shared interests, destiny, and responsibilities. It can, therefore, be surmised that the MSR is basically an economic initiative, at least to start with. China’s development banks recently received over $60bn to help fund the projects of the Belt and the Road. China sees it fit to divert more of its $4 trillion foreign currency reserve for the projects.13 It is probable that China may get more return on its investment in these projects than investing in US treasury or security bonds.

10. François Godement, “ ‘One Belt, One Road’: China’s Great Leap Outward,” China Analysis, European Council on Foreign Relations (June 2015), at (searched date: 17 July 2015). 11. Shuaihua Wallace Cheng, “China’s New Silk Road: Implications for the US,” YaleGlobal OnLine (28 May 2015), at (searched date: 9 October 2015). 12. Experts from the Concept Paper for the Conference on “21st Century Maritime Silk Road and Strategic Interaction within the Asian–African Community,” Organized by China Foreign Affairs University, Beijing on 11 April 2015. The author presented a paper and moderated one of the sessions. 13. George Magnus, “China, The New Silk Road, Loud Thunder and Small Raindrops” (15 May 2015), at (searched date: 2 September 2015).



The objectives of the MSR are candidly reflected in a Chinese official document as well: Investment and trade cooperation is a major task in building the Belt and Road … It is aimed at promoting free flow of economic factors, highly efficient allocation of resources and deep-integration of markets; encouraging the countries along the Belt and Road to achieve policy coordination and carry out broader and more in-depth regional cooperation of higher standards; and jointly creating an open, inclusive and balanced regional economic cooperation architecture that benefits all. Jointly building the Belt and Road is in the interests of the world community … The development of Belt and Road should mainly be conducted through policy communication and objective coordination. It is a pluralistic and open process of cooperation that can be highly flexible, and does not seek conformity.14

Its objectives are seemingly clear-cut and mission-oriented. Nevertheless, China’s phenomenal rise in economic growth has led to the rising lifestyles of its people. This impacts its exports due to a rise in production costs. Chain may need to address such high costs by outsourcing its manufacturing to its MSR partners. Another important objective of this project could be: it wants to ensure egalitarian development in all parts of China, specially its western parts.15 But it may have to encounter many challenges when seen from geopolitical, relative power, and leadership perspectives, as mentioned.

Challenges Inevitability of High-politics? High-politics is inevitable but it may not always be the desirable strategy. A case in point is the Warsaw Pact. Established at the behest of the Soviet Union with the onset of the Cold War, the Pact was presumably meant to confront NATO, a Western bloc security organization. Europe was divided in two distinct geopolitical blocs, each spearheaded by the then so-called super-powers. So a kind of mutual deterrence was created. It was definitely not a healthy state. But this deterrence was, in a way, effective in containing a hot-war flaring-up, although hundreds of tanks and bombers were positioned eyeball-to-eyeball. The United States applied its much-talked-about containment strategy. Economically, the Soviet Union could not sustain it so it collapsed from within.

14. Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China, “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road,” National Development and Reform Commission (Ministry of Foreign Affairs and Ministry of Commerce of the People’s Republic of China: Beijing, March 2015, March 2015). 15. Gurpreet Khurana, “Why is India so Coy about China’s Maritime Silk-Road?” The Wire (9 June 2015), at (searched date: 9 October 2015).



Now the case of China may be seen from a different perspective, although China is, otherwise, an astute actor to play power-politics pretty well in international relations. Taking cue from the above statement, we can raise a question: should the US policy of rebalancing do the same tricks for China? It is said that China is a civilization pretending – as Lucian Pye euphemistically suggested – to be a state. A civilization is rather a culturally more integrated being rather than a state-inmaking. Excluding its outlying areas, such as in Tibet and Xinjiang province, China is a compact state – seemingly very proud of its nationalism. Nevertheless, Chinese chauvinistic Han nationalism may also be construed as its own in-house threat. Nationalism of the countries in Northeast Asia is oftentimes called populist nationalism. And that carries the potential for conflict. Nevertheless, the Soviet Union was a somewhat artificially constructed state. Its nation-building was rather fragile. Soviets showed imperialistic tendencies and manifestations from the days of the Tsars. China may not be seen in the same context, and in objectives formulation, even though it gets involved in skirmishes over certain disputed territories in both the East and South China Seas. As indicated, inter-state and domestic politics of a country may thwart such grandiose projects, however altruistic its objectives may be.

Geo-economics Having said so, China is far behind the United States in terms of technology, sophistication, innovation, and also in terms of soft power. But in terms of economic wealth – that is, continued growth of its GDP – China has really done marvels. This component of power may be categorized as both soft and hard power. Now China has a big dilemma as to how to utilize this huge economic power both in terms of soft and hard power. This particular variable is greatly impacting its assertiveness. What is clearly discernible is that it is going all-out to utilize this component of power to beef up its military hard power as mentioned. So a balanced blend of soft and hard powers – some call it smart power – may be a right approach. But can China create the right mix? Is its purported Silk Road/MSR concept going to lead in that direction? It is well known that China imports 80% of its crude oil and 50% of its natural gas, and these resources pass through the Strait of Malacca. These assortments of energy are so critical for its in-house development that China has no choice but to look for alternative options to ensure uninterrupted supply of energy. So building deep seaports in Myanmar, Sri Lanka, Bangladesh and Pakistan – just to mention a few relevant cases – are the alternative facilities for ensuring supply of energy. This, in turn, also benefits relatively smaller economies in its periphery. This may seemingly turn out to be a win–win outcome at least on an economic count where geopolitics is also tangled. It also helps China to invest its substantial foreign currency reserves and obviously its returns on investments should also be substantial, as mentioned. © 2015 Center for International Studies, Inha University


But the big question remains: will high-politics allow China to fully realize such a lofty objective? Perhaps not. Some scholars dub it as “China’s Marshall Plan.” But the irony is such that the project may get derailed by “ham-fisted great power diplomacy, inattention to political risks, or excessive central planning.”16 Marshall Plan clearly demarcated Europe into two halves; in the case of Asia, it is a mixed menu where it is difficult to draw a clear geopolitical demarcation line, and also where the actors suffer from ambiguities, economic inequalities, and indecisions. One may also argue that China has floated the idea ostensibly as a counter-move to the US-sponsored strategic economic measures called the Trans-Pacific Partnership (TPP) meant for the wider Pacific region where China’s entry is probably not being considered. This may be debatable, but this is one way to look at it when high-politics abounds in this part of the world. China apprehends barriers to trade, investment and integration by pre-conditions set by the TPP agreement in the making. The TPP is a specialized framework – still being branded and classified – that covers wider economic issues and mostly embraces countries surrounding China. For obvious reasons, China has to be wary of its operation, which may put a damper on its economic agenda. Added to this, days of collaboration between the United States and China – such as economic interdependence, some call it Chimerica – is seemingly being replaced by competition. Complementarities of the US and Chinese economies are on decline. More and more US giants may outsource their production – outside China – in countries such as India, Indonesia, and Vietnam. This may further contribute to Chimerica’s decline.17 Given such milieu, as Kennedy and Parker point out, China emphasizes sovereignty and non-intervention, and adherence to high standards and international norms, and the decisive role of the market in driving the initiative.18 This is suspect, as being divorced from geopolitics, market forces, on their own, are not always reliable, as demonstrated in the recent financial crisis in the Western world. Moreover, China’s economic advantages along the MSR may not be a monopoly, as ASEAN countries produce the same products as China. So competitiveness may be intense. Competitiveness may, however, also be seen as an opportunity. Furthermore, China’s reliance on sea-lanes, when it comes to the MSR, may be blocked during the crunch time by a single power or a combination of powers, especially in the Strait of Malacca, which is a daunting challenge. In the longer term, there is likelihood of both China and the United States concentrating on their

16. François Godement, op. cit. 17. Vasilis Trigkas, “Chimerica in Decline?” The Diplomat (4 May 2015), at (searched date: 9 October 2015). 18. Scott Kennedy and David A. Parker, “Building China’s ‘One Belt, One Road’,” Center for International and Strategic Studies (CSIS) (3 April 2015), at (searched date: 9 October 2015).



respective economic blocs, such as the Regional Comprehensive Economic Partnership and the TPP, while contemplating, at the same time, mutual understanding.19

Opportunities Chinese investment may benefit the Silk Road economies that are struggling or emerging. Overall, China stands to gain from such integration, particularly from an economically dynamic Asia–Pacific.20 China’s opportunities are well elucidated by another official Chinese document: China’s proposal to build an MSR conforms to larger developments in economic globalization and taps into common interests that China shares with countries along the route. The goal is to forge a community of interest with political mutual trust, integrated economies, inclusive culture and inter-connectivity. The construction of a 21st Century MSR is a global initiative that pursues win-win results through cross-border cooperation.21

Now to play well these objectives in terms of combination of hard and soft powers, China, seemingly, is mulling over extensive economic collaboration, investments, creating economic zones, free-trade zones and so on. It has made considerable progress in collaborating with ASEAN’s connectivity projects. As a matter of fact, China’s MSR is a potential boost and catalyst for infrastructure development in the ASEAN region. It fits well into ASEAN’s own connectivity and integration strategies. Bilateral trade between ASEAN and China grew fivefold from $78bn in 2003 to $443.6bn in 2013.22 A phenomenal rise, indeed. President Xi is more committed to a longer-term maritime strategy – as land Silk Roads are also linked – than his predecessors. He may have the ambition to reach the stature of Mao and Deng, and imperceptibly he may have to keep his homefront engaged and satisfied. Over and above the connectivity, the project may also encapsulate maritime diplomacy, maritime consultancy, law enforcement in maritime regime, and harnessing maritime economy. Maritime cooperation may be one of the hallmarks of China–ASEAN maritime cooperation. This may contribute to

19. Shivshankar Menon, “Four Big Foreign Policy Challenges that Modi Needs a Framework to Deal With,” The Wire (6 July 2015), at (searched date: 9 October 2015). 20. Michael Spence, “China’s International Growth Agenda” (17 June 2015), at (searched date: 16 July 2015). 21. Liu Cigui, “Reflections on Maritime Partnership: Building the 21st Century Maritime Silk Road,” China Institute of International Studies (15 September 2014), at (searched date: 16 July 2015). 22. “21st Century Maritime Silk Road to Benefit ASEAN: Experts,” The Philippine Star (13 December 2014).



an institutionalized China–ASEAN Maritime Cooperation Forum.23 Both ASEAN and China are expecting the trade volume to reach $500bn by 2015, and $1 trillion by 2020. The MSR is likely to help achieve these goals. Such cooperation is also likely to expand the size and scale of bilateral currency swap arrangements, and to establish the currency market trade center between Chinese and other currencies of ASEAN countries.24 Apart from ASEAN, China has recently gone into an understanding with Pakistan for huge investment – to the tune of $48bn – to beef up its economy, especially its energy and infrastructure development. President Xi, during his visit to Pakistan in April 2015, has called this China–Pakistan Economic Corridor at the center of two countries bilateral cooperation that covers security as well. This reflects China’s seriousness about the Belt and Road concept.25 Pakistan has handed over the management and operation of Gwadar port to a Chinese company. Gwadar is located at the juncture of South Asia, Central Asia, and the Middle East. It is close to the Iranian border and sits at the gateway to the Strait of Hormuz. This is a key world oil-supply route. There are speculations that this port may turn out to be China’s naval base.26 As a matter of fact, China’s “trade and energy corridor” is already in place. China imports oil from the Middle East, which is stored in the refineries in Pakistan, and then transported to China via roads, pipelines or refineries. China is creeping forward in Central Asia too. It is developing huge gas and oil connectivity with Central Asia. China has built east–west lines connecting its cities, such as Urumqi and Kasghar, to Xián and other major coastal cities. This line has been extended to Moscow, developing Central Asia as an economic corridor and then on to Duisburg, Germany – turning into a China–Europe railway line.27 Generally, leaders of the Central Asian countries have welcomed the Silk Road Economic Belt initiative ever since it was announced by President Xi in September 2013.

23. Tan Qingsheng, “China-ASEAN Maritime Cooperation,” keynote speech at the International Conference on Crisis Management and Maritime Cooperation in the Asia-Pacific, China Institute of International Studies, Beijing (25 November 2014). The author participated in the Panel Discussion. 24. Xu Bu, “Maritime Silk Road can Bridge China-ASEAN Cooperation,” Jakarta Post (5 August 2015), at (searched date: 9 October 2015). 25. Angela Stanzel, “China’s Silk Road to Nowhere?” European Council on Foreign Relations (13 May 2015), at (searched date: 9 October 2015). 26. Ghulam Ali, “China’s Strategic Interests in Pakistan’s Port of Gwadar,” East Asia Forum (24 March 2013), at (searched date: 9 October 2015). 27. Pradumna B. Rana and Wai-Mun Chia, “The Revival of the Silk Roads (Land Connectivity) in Asia,” RSIS Working Paper No. 274 (12 May 2014).



Establishment of the $40bn Silk Road Infrastructure Fund – covering both the Road and the Belt – shows a silver lining for the economic development of the area in the backdrop of Russian economic recession and a gloomy global economic outlook.28 The Fund’s Chief Executive gives a hint on the exit strategy of the Fund. When long-term infrastructure projects are completed, the methods that may be used are: transfer to the governments, or resort to selling back to the main business, listing or share transfers.29 Thus said, the land-corridors presumably may work as maritime bridgeheads and overcome the tyranny of geography, especially China’s hinterland areas, which are less developed than its eastern coast. Details of the MSR are yet to unfold but indications reveal it may have a system – or system of systems – of linked roads, infrastructure projects, economic zones, tap market potential, promoting investment and consumption, creating demands and job opportunities, and so on in Southeast Asia and in the northern Indian Ocean. This may be called the first phase. This may also imply development of new production and distribution chains in the region. Countries such as the Maldives, Sri Lanka, and Bangladesh have agreed in principle to be part of the project but India has opted out of the project presumably for geopolitical reasons. India has a stronger demeanor now, especially since the second visit of US President Barack Obama to India in 2014. Nevertheless and as mentioned, China has a substantial reserve of currency to the tune of $4 trillion. The economy of the Soviet Union was half the size of the United States’ during the Cold War. On the other hand, China’s economy today is about to overtake that of the United States at least in purchasing power parity terms. So the possibility of China collapsing economically, as the Soviet Union did during the Cold War, under the strain of this mega project is remote. China has already established the Asia Infrastructure Investment Bank (AIIB) – China has put $50bn for the Bank, and for the Silk Road another $40bn – to fund this mega-project. The largest and third largest economies of the world – the United States and Japan, respectively – did not apply for AIIB membership, even though more than 60 other countries, such as Germany, the UK, France, and Brazil, are members. The global economy today is basically a network that connects flows of goods, services, people, capital, and, probably more importantly, information. The AIIB tends to develop a multinational development strategy. Its benefit may outweigh the risks, and it is understandably open to everyone, especially in Asia. After all, trade and investment are likely to benefit all, not only China. China can help its neighbors to defend themselves against volatile capital flows as well.30 28. Zhang Hongzhou and Arthur Guschin, “Chain’s Silk Road Economic Belt: Geopolitical Challenges in Central Asia,” RSIS Commentaries (24 April 2015), at (searched date: 9 October 2015). 29. “China’s Silk Road Fund Eyes Listings among Exit Strategies: CEO,” The Business Times (27 June 2015), at (searched date: 3 September 2015). 30. Michael Spence, op. cit.



It is likely to promote greater financial integration and use of the renminbi by foreign countries. It can reasonably be assumed that China has enough good will and economic vitality to take the project forward. And the developing countries in the neighborhood are most likely to benefit from the project as long as geopolitics does not hamper its operation.

Context of Southern Asia, India, and Bangladesh Strategic developments, as mentioned, may be juxtaposed with the Chinese 21st Century MSR Initiative, which has drawn sharp reactions from India.31 India is the main player in South Asia and it claims to be the net provider of security in the Indian Ocean. The Indian Navy provided assistance in hydrographic surveys to the Seychelles, trained the Mauritius Coast Guard, undertook surveillance for the Maldives and helped Sri Lanka in counter-terrorism against the Liberation Tigers of Tamil Eelam. India provided warships and aircraft to these countries to augment their maritime capabilities. One Indian strategist, therefore, claims such interactions have catapulted India to the stature of a “net security provider.”32 Nevertheless, one can always question such a claim and mandate. Questions may also be raised about the use of maritime commons by other powers or the international traffic when one particular power seemingly wants to ensure its security all by itself. Such a question has been raised by the United States against China in respect of the South China Sea. China, however, has very recently clarified officially that the global commons would remain unaffected in the South China Sea. Only a UN Security Council mandate may delegate such an authority to any single power or combination of powers. India might have meant it euphemistically or implicitly. It may, nonetheless, also have its own geopolitical ambitions and compulsions involved in such an assertion. India and the United States are now strategic ententes. The US Navy is active in the Indian Ocean. China’s People’s Liberation Army (PLA) Navy is slowly creeping forward in the Indian Ocean. The PLA Navy docked its submarines in the Chinese-built port in Colombo in September and October 2014, which created much furor in Indian strategic and political circles. During October 2014, seemingly as part of the MSR project, China was invited to take over the management of the new segment of Hambantota Port in Sri Lanka – built with the financial assistance of China – which may include berths dedicated for Chinese use. It gives rise to the speculation that China wants to maintain a kind

31. Vijay Sakhuja, “Blue Economy: China Explores Bay of Bengal Partnership” (29 July 2015), at (searched date: 9 October 2015). 32. Vijay Sakhuja, “Indian Ocean: Modi on a Maritime Pilgrimage” (2 March 2015), at (2 March 2015).



of military presence in the Indian Ocean, and that Sri Lanka may contribute to that effort.33 On the other hand, in March 2015, India announced the establishment of a new security arrangement among India and the island states of Sri Lanka, the Maldives and the Seychelles. It also foresees the possibility of expansion to include the Bay of Bengal, or a similar arrangement that could be replicated with other littoral states in the Bay.34 Details on the Bay of Bengal are given in later paragraphs. What is interesting and intriguing – maybe to the Indians or the Americans – is that China is seeking port access agreements with the countries in the Bay or Indian Ocean region. In fact, it has already done so with three of the ports of Malaysia along the Strait of Malacca. Such moves or intent trigger India’s apprehension about Chinese military objectives seemingly hidden under such projects. India seemingly considers the ports of Gwador, Chiattagong, Sittwe and Hambantoata as military facilities built under the disguise of civilian port facilities. The proposed Kra canal project in Thailand, connecting the Gulf of Thailand and the Bay of Bengal, and Iran’s invitation to China to help develop the Jask Port, overlooking the Arabian Sea are the other cases in point. There is an apprehension that Jask could also be used as a forward support facility for the PLA Navy in the event of hostilities in the Persian Gulf or the Indian Ocean.35 The Pakistan and Iranian navies are also present in the southwestern part of the ocean. During the Cold War, the Soviet Union was active in the Indian Ocean. The Russian navy may even make a comeback in the near future in both the Indian and Pacific Oceans as it is already operating in the Mediterranean after a long hiatus. The 2009 Peace Mission Exercise was conducted in the Gulf of Aden in the Indian Ocean where the navies of China and Russia conducted anti-piracy drills. Such activities are seemingly flowing out from certain definite policies and strategic objectives. There are policies – such as the String-of-Pearls Policy by China and Counter-String-of-Pearls Policy by India – in the Indian Ocean. Indians may view the MSR project as another version of the Chinese String-of-Pearls Policy. China is building strategic ports in different countries of the Indian Ocean while India, as a counter-measure, is also building forward naval bases in its offshore islands in the Indian Ocean and making efforts to elbow out China from the strategic ports as mentioned. India has already made counter-moves in the Maldives, 33. David Brewster, “The Bay of Bengal: The Maritime Silk Route and China’s Naval Ambitions,” The Diplomat (14 December 2014), at (searched date: 9 October 2015). 34. David Brewster, “The Bay of Bengal: A New Locus for Strategic Competition in Asia,” Asia Pacific Bulletin, East-West Center (15 May 2014), at (searched date: 9 October 2015). 35. Vijay Sakhuja, “China’s ‘Infrastructure Diplomacy’ Alive and Well,” Nikkei Asian Review (4 March 2015), at (searched date: 9 October 2015).



the Seychelles, and Sri Lanka as mentioned. The Bay is the next frontier in all probability. China has already made substantial investments in constructing ports in some of these countries. So China’s stakes are extremely high at this point in time. As a matter of fact, a kind of Cold War is already on in the Indian Ocean.

The Bay of Bengal Region The Bay of Bengal, the largest bay in the world, is bordered by India on the west and Thailand to the east with Bangladesh, Myanmar, and Sri Lanka lying in between. It falls almost to the geographic center of the Indo–Pacific region. This part of the Asian littoral zone is densely populated and crisscrossed by some of the important trading routes, both inter-continental and regional, of the world. Some of the important ports of the region, such as Kolkata, Chennai, Chittagong, Yangon, Kakinada, Pondicherry, and Vishakhapatnam, are located in the Bay. It is, in fact, much more than the eastern segment of the Indian Ocean. According to one estimate, Myanmar has 21.19 trillion cubic feet of gas reserves while Bangladesh has 13.77 trillion cubic feet, and much of it is located in the Bay of Bengal (British Petroleum estimate). One Indian expert observes, “Bangladesh is sitting over a gas lake … [its] offshore energy potential is estimated at 200 trillion cubic feet … [with the potential to be] one of the largest natural gas producers in the world.”36 The Bay is also a huge reservoir of oil, fisheries and different kinds of minerals. The Bay is important because of its deep inland penetration. It lies – rather ominously – at the intersection of the expanding zones of the strategic interests of China and India. David Brewster brands the Bay as a coherent strategic region within the framework of the Indo–Pacific. He compares it to the South China Sea as a major locus of competition between China and its neighbors.37 The Bay region is, again sadly, plagued by “transnational crimes such as political instability, separatist insurgencies and communal and religious conflicts with cross-border implications and maritime security problems such as piracy, gun running and people smuggling.”38 The Bay is also meaningfully important to the land-locked region, such as India’s northeast, China’s Southern region, Nepal, and Bhutan. Accessing the Bay outlet would add huge value to their development and economic growth. Demand for critical resources, such as energy, and the consequent militarization of the waters of the region are likely to spur competition among the major powers. As part of its long-term objectives, the US Navy is to leverage the sea power of India in the Indian Ocean, and that includes the Bay of Bengal region. It would also not like to see the region being dominated by a single giant, such as China. 36. Vijay Sahkuja, “Blue Economy” op. cit. 37. David Brewster, “The Bay of Bengal; A New Locus for Strategic Competition in Asia,” op. cit. 38. Ibid.



It has to consider balancing investments in the regional countries where Chinese investments are broadly overwhelming.39 As such, the United States and Japan also tend to carve out their own share of influence in the Bay. Japan offered $500m in new loans to Myanmar and wrote off $1.74bn in debt to Japan during Prime Minister Abe’s visit in 2013. A Japanese editorial commented on the visit, “One of the purposes of Japan’s move (to Myanmar) is to counter China’s growing influence in the country.”40 Geopolitical competitions in the western Pacific are seemingly being extended to the Bay as exemplified in the conduct of the yearly joint military drill in the south of the Bay of Bengal, near India’s Theatre Command and the Strait of Malacca. The 2015 Exercise Malabar will witness the presence of Japan along with India and the United States in the drill in the Bay of Bengal after a lapse of 8 years. Jeff Smith, a South Asia specialist at the American Foreign Policy Council observes that Japan is keen to take part in the said drill at a time when it wants an expanded military role against a more assertive China.41 All such variables tend to lead to a tug of war among China, India, Japan, and the United States, over influencing the region. India’s only Theater Command is also involved – the Andaman and Nicobar Islands, which are located not far from the Strait of Malacca. China has constructed a deep seaport in Kyaukpyu in Myanmar and also a gas-and-oil pipeline connecting its mainland. China has recently declared more than $40bn during the ASEAN–China Conference for the infrastructural development of Myanmar apart from what it has been investing in different infrastructure projects. Such investments may contribute to ASEAN connectivity or connectivity between China, India, Myanmar, and Bangladesh. The Bangladesh–China–India–Myanmar (BCIM) economic corridor is in the final stage of its feasibility study. This would be a stellar project of connectivity if implemented in time, and, hopefully, high-politics does not cause any hurdles. It can also be assumed that the MSR could be an effective alternative to the land-based BCIM economic corridor. For Bangladesh, the Bay is the next frontier of development and sustenance as it is densely populated with scarce resources. For Bangladesh, it has two critical and distinct sea lines of communication (SLOCs) in the Bay – one going east to Southeast Asia, China and Japan through the Strait of Malacca, and the other to the west to Saudi Arabia, the UAE, Iran, Pakistan and so on. These two distinct SLOCs are

39. Mohammad Humayun Kabir and Amamah Ahmad, “The Bay of Bengal: Next Theatre for Strategic Power Play in Asia,” Croatian International Relations Review, 21-72 (2015), pp. 199–238. 40. K. Yhome, “The Geopolitics of New Energy Route,” East Asia Forum (19 June 2013), at (searched date: 9 October 2015). 41. Sanjeev Miglani, “India, Japan, U.S. Plan Naval Exercises in Tightening of Ties in Indian Ocean,” Reuters (22 July 2015), at (searched date: 9 October 2015).



the economic lifelines for Bangladesh, especially for energy. Bangladesh’s stakes are extremely high in case either of the SLOCs become blocked for any reason. That said, there is a glitch over the construction of a deep seaport in Sonadia, Chittagong in the south of Bangladesh, located close to the Andaman and Nicobar Islands, Myanmar, and the Strait of Malacca. China is contemplating constructing this port. This seaport is of critical importance to Bangladesh as two of its ports will find it difficult to handle the burgeoning cargo after 2020. However, no deal, so far, has been struck. Bangladesh approached China to fund the project. China had sent the draft memorandum of understanding (MOU) and assigned its stateowned company China Merchants Holding International Company for the construction of the proposed seaport. China is focused and objective-based, as spelt out in its official pronouncements: “We should build a unified coordination mechanism for whole-course transportation, increase connectivity of customs clearance, reloading and multi-modal transport between countries, and gradually formulate compatible and standard transport rules, so as to realize international transport facilitation. We should push forward infrastructure construction, build smooth land-water transportation channels, and advance port cooperation; increase sea routes and the number of voyages, and enhance information technology cooperation in maritime logistics.”42

This planned port is supposed to be operational from 2016, which is suspect. It is facing hiccups in its implementation as seemingly hard-politics may have put a damper, as mentioned. This project may presumably not go well with the strategic objectives of the United States and India. When Bangladesh was about to sign an MOU with China in 2014 during Bangladesh Prime Minister Sheikh Hasina’s visit to China, it got stuck at the last moment. Bangladesh is probably rethinking its implementation – it may have to go for a consortium of donors, such as China, the Netherlands, and the UAE. Bangladesh is seemingly mulling over the idea of identifying a few more locations to accommodate the likely stakeholders, to obviate, at least to some extent, geopolitical complexities. Geopolitics is one part of the problem, and the huge investment that it needs is seemingly another daunting challenge for Bangladesh. One estimate shows it may need $50bn over a period of 20 years, segmented into three phases. In Asia, particularly, it is only China that is seemingly capable of making such a huge investment. More so as it falls into the scheme of things in its proposed MSR. Bangladesh also needs huge investment in its infrastructure development if it wants to kick off economically to reach its aim of a higher middle-income group country within 5 years. This is quite a tall order. Again, Bangladesh is trying to modernize its navy for the security of two of its SLOCs in the Bay of Bengal with whatever meager resources it has. A deal has been finalized with China for the purchase of two diesel-powered submarines. These are expected to be delivered by

42. Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic of China, op. cit.



2019. Bangladesh procures most of its defense equipment from China. For Bangladesh, such procurement is cost-effective, as Western equipment is exorbitantly expensive. Bangladesh has also opened another source of military hardware procurement from Russia. Over and above the criticality of the SLOCs, Russian entry into the arms bazaar of Bangladesh may complicate the issues further as there is apparent convergence between Russia and China, and competition between the United States and China. Geopolitical rivalry that may brew in Central Asia because of Chinese land-connectivity may not be applicable here. Here the polarization game and context may be different. It is likely to be win–win for both Russia and China. Nevertheless, the Bay of Bengal region may not be turned into another frontier to play only geopolitics and not geo-economics. This is likely to draw smaller states, such as Bangladesh, Myanmar, and Thailand, into the power-political game of the giants.

Suggested Ways Forward 1 All stakeholders should identify possible areas of cooperation. They should set aside more critical issues from relatively less conflicting ones and address the less conflict-prone areas first. A pragmatic approach has been to set aside the India–China border demarcation issue for the time being. This has left space for substantial boom in inter-country trade, and exploring the potential for connectivity. This is true for the South China and East China Seas as well. 2 To start with, concerned parties should concentrate more on non-traditional security issues, such as climate change, disaster management, anti-piracy, terrorism, extremism, inter-faith dialogue and defense diplomacy. In fact, both the United States and China have, in principle, agreed to work together on all such issues. Such an approach is likely to contribute to better confidence building. China may take forward the New Model of Major Power Relationship – agreed between China and the United States in June 2013 – “on the basis of mutual respect, co-operation, and win–win results for the benefits of the people of the two countries, as well as the world.”43 3 All concerned parties should make an unambiguous declaration that freedom of navigation and unimpeded commerce shall be ensured to all stake-holders in the global commons. This may seemingly hold good for China and India in respect of the South China Sea and the Indian Ocean, respectively. Understandably, China has recently provided such an assurance, officially. However, the Indian Ocean case is not that sensitive, at least at the operational level. But the stakeholders may remain wary of its spiraling. 43. Joseph Yu-shek Cheng, “Xi Jinping’s ‘A New Model of Major Power Relationship’,” paper presented in a seminar in the University of Malaya, Kuala Lumpur (7 July 2015). Author participated in the panel discussion.



4 Such rhetoric or terms as “core interests,” “vital national interests,” “militarily important area,” and “net security provider” should not be used, especially in diplomatic circles or officially, at least for the time being or when it comes to the global commons. 5 All parties should maintain the status quo till all legal, quasi-legal or diplomatic recourses are exhausted in resolving any issue. 6 China should not be seen as overly assertive, as the Western world tends to portray it. Such a stance may be counter-productive for China. 7 This is, in fact, truer for Southeast Asia than South Asia. For South Asia, China should handle India differently by playing a different card. Diplomacy has to play its due role here. China should also play the role of an honest broker and help bridge the gap between India and Pakistan or between India and Bangladesh. China should be more visible as displaying its interests in resolving inter-state contentious or humanitarian issues. 8 China would be prudent to work together with both the United States and India in the Bay of Bengal and South Asian regions. India, on the other hand, may also accommodate China. The pie may be shared on a win–win basis. 9 China should contribute more actively to all regionalism initiatives, such as ASEAN+3, ASEAN+8, the South Asian Association for Regional Cooperation and the Shanghai Cooperation Organization. On such counts, there are discernible competitions between China and Japan, especially over influencing ASEAN. This even extends to institutions such as ASEAN+3, the ASEAN Monetary Fund, APEC, ASEAN Regional Forum, and East Asian Summit. Euikon Kim suggests that South Korea is the only country that can play the role of a mediator between China and the United States.44 China should take advantage of such a mediating role by South Korea. China should, as far as possible, not sideline ASEAN while handling high-politics, even though China and ASEAN have extensive trade relations, as mentioned. China should keep ASEAN engaged pragmatically. 10 China should not provide an opportunity to any party to drive a wedge between China and its neighbors. No country should be singled out, in the ASEAN context, as being pro-Chinese, as was highlighted during the ASEAN Summit 2012. China should play its diplomacy so deftly that it should be seen to embrace all states, at least in Asia, as friends. 11 China should try to soften its nationalistic fervor while dealing with Japan and vice versa. The booming inter-country trade should be taken forward with all seriousness. Both the powers should be seen as great development partners for all Asians. There is nothing wrong if they go parallel for the common good of all Asians.

44. Euikon Kim, “Korea’s Middle-Power Diplomacy in the 21st Century,” Pacific Focus, 30-1 (April 2015), pp. 1–9.



12 China should re-invigorate its soft-politics. It may need further refinement and focused direction. Lofty objectives should be followed by tangible and useful end-states for the common good of the greatest number of people. 13 India should settle its scores with its neighbors in order to better integrate itself with the Asian/ South Asian regionalization process. “Prosper thy neighbor” should be the hallmark of foreign relations of all Asian countries, especially in South Asia. China and Japan have major roles to play. They should be perceived, to make the point once again, more as development partners rather than geopolitical actors. 14 China may critically evaluate the feasibility, security environment and longtern impacts even before launching or investing in a part of the project. This strategic vision has to confront problems such as harsh terrain, in-house political instability, in-house regional disparities, and geopolitical tensions, especially centering the flashpoints.

Concluding Remarks China has embarked on a very ambitious project that may, seemingly, not have a smooth sailing. It is likely to encounter difficulties from its geopolitical rivals who have their own geopolitical and economic ambitions as well. Long-term objectives coming from opposite camps are likely to come to odds with each other. The MSR may be a win–sum game for China and others, even if it succeeds partially. China has substantial reserves of currency that it wants to invest in Asia and beyond, and get a good return on its investments. In the process, it wants to connect the important maritime ports of Asia for better connectivity – connectivity may encompass a wider canvas than merely physical – and economic cooperation. This may come at odds with the strategic objectives with the United States and India, as mentioned. But China is likely to make or has already made inroads in Pakistan, Myanmar, Bangladesh, ASEAN countries, and Central Asia. As a matter of fact, the objectives of China and the ASEAN countries are already converging on connectivity and economic cooperation. The United States has floated the idea of the TPP to checkmate, in a way, China’s grand-strategic objectives. Details of both the strategies are yet to be made public. Nevertheless, China has already started its implementation, may be in bits and pieces. But China needs to further study the pros and cons of the project. And China has to craft its modus operandi in a most subtle way in order to befriend its stakeholders, and not project itself as an assertive power as the Western world tends to do. China also needs to tackle both India and Japan by applying different modus operandi. Populist nationalist fervor may need to be toned down. Smaller economies in the region are likely to benefit immensely from China’s investments. But it is a time-consuming and tedious process. Nevertheless, China has already gone ahead with the Gwadar Economic Corridor with Pakistan. It has already declared its investment to the tune $50bn to Pakistan, and of a similar © 2015 Center for International Studies, Inha University


amount to Myanmar. China has made substantial inroads in Sri Lanka, which India is contesting by making counter-moves. This is also true for the Maldives and the Seychelles. A tug-of-war is on in respect to Bangladesh on the establishment of a deep seaport in Chittagong in the Bay of Bengal. Power-politics has put this particular project in limbo. The Bay of Bengal may turn out to be another frontier of great power rivalry. It lies in the geostrategic junction of the Asia–Pacific. It is located close to the Malacca Strait and the Indian Theater Command in the Andaman and Nicobar Islands. Thus, powers like India, China and the United States tend to play their cards as deftly as possible to get a toehold in the Bay. Nevertheless, the Bay’s resources are critical for Bangladesh and Myanmar. Again, Bangladesh acutely needs the deep seaport to keep its SLOCs functioning and thus sustain its economy, but it is apprehensive of major-power rivalry. It also needs huge investment, which China, all by itself, seemingly, is capable of providing.

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