OBOR Initiative

Mar, 23, 2019

G7 Countries  


Mains Paper 2: IR| India and its neighborhood- relations.

From UPSC perspective, the following things are important:

Prelims level: Belt and Road Initiative

Mains level: Concerns raised by Belt and Road Initiative


  • Italy set to become first G7 country to join ‘Belt and Road’ initiative.

About G7

  • The G7 or the Group of Seven is a group of the seven most advanced economies as per the International Monetary Fund (IMF).
  • The seven countries are Canada, USA, UK, France, Germany, Japan and Italy. The EU is also represented in the G7.
  • These countries, with the seven largest IMF-described advanced economies in the world represent 58% of the global net wealth ($317 trillion).
  • The G7 countries also represent more than 46% of the global gross domestic product (GDP) based on nominal values, and more than 32% of the global GDP based on purchasing power parity.
  • The requirements to be a member of the G7 are a high net national wealth and a high HDI (Human Development Index).

Eyebrows raised in West

  • Italy’s decision to get closer to Beijing has caused concern amongst its Western allies notably in Washington.
  • The White House National Security Council has earlier urged Rome not to give ”legitimacy to China’s infrastructure vanity project”.
  • Critics of the BRI say it is designed to bolster China’s political and military influence, bringing little reward to other nations, and warn that it could be used to spread technologies capable of spying on Western interests.
Sep, 22, 2018

Who is at risk from China’s Belt and Road Initiative debt trap?


Mains Paper 2: IR | India and its neighborhood- relations.

From UPSC perspective, the following things are important:

Prelims level: OBOR, Paris Club

Mains level:  Concerns raised by Belt and Road Initiative of China


Uncertainty over China’s grace

  1. China’s Belt and Road Initiative (BRI) which seeks to invest about $8 trillion in infrastructure projects across Asia, Europe and Africa has come under intense scrutiny.
  2. A study by the Centre for Global Development, a Washington-based think tank, analyses one important consequence of BRI: debt.
  3. The study finds that it is unlikely that the BRI is likely to raise the risk of a sovereign debt default among relatively small and poor countries.

What is Sovereign Debt?

  1. Sovereign debt is a central government’s debt.
  2. It is debt issued by the national government in a foreign currency in order to finance the issuing country’s growth and development.
  3. The stability of the issuing government can be provided by the country’s sovereign credit ratings which help investors weigh risks when assessing sovereign debt investments.
  4. Sovereign debt is also called government debt, public debt, and national debt.

How will BRI trigger this risk?

  1. To understand this effect, the study first uses sovereign credit risk ratings and World Bank debt sustainability analysis to identify 23 of the 68 countries currently at risk of debt distress.
  2. They find that eight countries could potentially face difficulties in servicing their debt includes Pakistan, Djibouti, the Maldives, Laos, Mongolia, Montenegro, Tajikistan and Kyrgyzstan.
  3. Pakistan, which through the CPEC, serves as the centrepiece of the BRI and is by far the largest country exposed, with China reportedly financing about 80% of its estimated $62 billion debt.

Adhering to global discipline

  1. China’s acquisition of Sri Lanka’s Hambantota port after the Sri Lankan government failed to service its debt is an open fact.
  2. Unlike most of the world’s other major creditors, China is not bound to a set of rules on how it addresses debtor repayment problems.
  3. Currently, China is only an ad hoc participant of the Paris Club, a collection of creditor nations which follow a set of rules in dealing with debtor nations.
  4. The think-tank advocates applying globally-accepted creditor disciplines and standards to the Belt and Road Initiative.

Way Forward: Mitigating Lending Risks

  1. The World Bank and other multilateral banks should increase their participation in the BRI and work with the Chinese government to set the lending standards.
  2. Another recommendation is to establish a new creditor’s group which would maintain the core principles of the Paris Club but with China playing a more meaningful role.
  3. China is also recommended to provide technical and legal support to developing countries.
  4. China should offer debt swap arrangements in support of environmental goals where borrowing country debt is forgiven in exchange for a commitment to an environmental objective, for instance, forest preservation.
Oct, 01, 2016

Chinese aid to Pak project

  1. China will provide a whopping $5.5 billion to Pakistan for the expansion and renovation of its main rail link connecting Peshawar and Karachi
  2. This is a part of the investment under the China-Pakistan Economic Corridor (CPEC)
Aug, 29, 2016

China's 1st Silk Road train to reach Afghanistan on Sept. 9

  1. The train left China’s eastern city of Nantong on August 25, to cover a 15 day journey to Hairatan, on Afghanistan’s border with Uzbekistan
  2. Significance: Shows Beijing’s effort to consolidate ties with Kabul, as part of the One Belt One Road (OBOR) initiative along the ancient Silk Road
  3. Also its efforts to establish to secure transportation links along the New Silk Road, linking Asia with Europe
May, 09, 2016

Silk Road revival plans place culture at the centre

  1. What? The first Silk Road International Cultural Expo will be held in Dunhuan in September
  2. Theme: The Mogao grottos
  3. Aim: To anchor a seamless revival of the ancient Silk Road
  4. Soft power: 72 countries have been invited to participate in the mega event
  5. It draws inspiration from China’s traditional engagement with a diverse set of people and cultures along the Silk Road
Feb, 17, 2016

China's Silk Road revival steams ahead as cargo train arrives in Iran


  1. Context: China’s OBOR project
  2. Journey: from China’s eastern Zhejiang province and it took 14 days to reach final destination
  3. Distance: around 9,500 km distance and passed through two Central Asian countries Kazakhstan and Turkmenistan
  4. Significance: It marks the revival the ancient Silk Road and gives impetus to China’s ambitious One Belt One Road (OBOR)
  5. Trade: Boost to bilateral trade between both countries – economic ties worth up to 600 billion dollars
  6. China is Iran’s biggest trading partner and accounts for its 1/3rd of foreign trade
Feb, 16, 2016

Djibouti, Myanmar and Sri Lanka anchor China’s Maritime Silk Road

  1. Context: A military base in Djibouti along with major port development projects in Myanmar and Sri Lanka are defining the contours of China’s Maritime Silk Road
  2. Background: China’s Maritime Silk Road is an oceanic connectivity project, of which, the Indian Ocean is the core
  3. How significant? Djibouti, an ideal location for securing sea lanes, in the vicinity, which radiate from this area towards Africa’s Indian Ocean coastline and Arabian Sea
  4. China’s Plan: Establishing naval “support facilities” in Djibouti, which has the ambition of emerging as another Singapore, leveraging its position at the intersection of busy shipping lanes
  5. Deal with Myanmar: To develop an Industrial Park and a deep water port in Kyaukphyu in Myanmar
  6. Revival in Sri Lanka: Stalled Colombo port city project under new conditions, and the establishment of a SEZ in Hambantota
Jan, 30, 2016

Train to Tehran winds along Silk Road into West Asia

China recently flagged of its first direct freight train to Iran from its trading hub of Yiwu, in the eastern coastal province of Zhejiang.

  1. The container train will cover a journey of 10,399 km in its maiden journey to West Asia in 14 days.
  2. It will exit China through Alataw Pass in western China’s Xinjiang province, and then pass through Kazakhstan and Turkmenistan before heading for the Iranian capital.
  3. Yiwu is already connected by trains that head for Duisburg in Germany and Madrid.
  4. The new train is part of China’s ‘Silk Road’ plan to increase its influence in Eurasia through infrastructure development and economic exchanges.
  5. That are lacking in development but rich in natural resources and geopolitical importance.
Dec, 01, 2015

India re-elected as Member of International Maritime Council

  1. India has been re-elected to the Council of the International Maritime Organization (IMO).
  2. India was elected to the IMO council under Category ‘B’ at the 29th session of the Assembly of the IMO held recently in London.
  3. India ranks amongst the top twenty ship owning countries of the world in terms of Gross Tonnage as well as Deadweight.
  4. India has been one of the earliest members of the IMO, having ratified its Convention and joined it as a member-state in the year 1959.
Oct, 08, 2015

Nanning emerges as a pillar of the Maritime Silk Road

China has made Nanning one of the focal points of the proposed Maritime Silk Road. By 2020, Nanning port’s capacity is expected to rise to 22.83 million tonnes.

  1. Leveraging the southern city’s natural connectivity linkages with Southeast Asia and growth hubs of Guangzhou, Hong Kong and Macao.
  2. The waterways of Xijiang River that flows through the city lead to the Pearl River and the South China Sea.
  3. In view of the vast potential of the greater Pearl River Delta region, Chinese authorities are developing the Pearl River-Xijiang River Economic Belt.
  4. When fully developed, the waterways would strongly reinforce Nanning’s state-of-the-art rail and road connectivity to the coast.
  5. Its prized geographic location is making the city the fulcrum of China’s access to the most dynamic zones of Southeast Asia.
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