Path to Prosperity

Jul 30th, 2014 | By | Category: Climatic Changes in Himalayas, Government Policies, News

26063Republica: Building up on the successful visit of Indian Minister of Foreign Affairs Sushma Swaraj, Nepal should seek to enhance the country’s role as a land-bridge between India and China by proposing Trans-Himalayan Economic Corridors during Prime Minister Narendra Modi’s visit.

China’s emergence as the “Factory of the World” based on its focus on exporting labor-intensive manufactures is well-known. Less known is the role that infrastructure played in this strategy. In the short run, infrastructure development boosts investment and economic growth. In the longer run, quality infrastructure boosts productivity of a country and enhances the competitiveness of its exports. A recent issue of The Economist cites a McKinsey Global Institute report that from 1992 to 2007 China spent 8.5 percent of its GDP on infrastructure, well over the developing country norm of 2-4 percent. During the period between 1992 and 2007 it built 35,000 km of highways at the cost of US $120 billion.

Our northern neighbor’s push for infrastructure development within its borders picked up pace with the Western Development or the Go West policy implemented in 2000. Prior to this policy China’s development was confined to the eastern coastal region of the country. Its success in attracting investment into the coastal special economic zones made China the fastest growing country in the world. But it also led to widening economic disparity between the coastal regions and the rest of the country, especially the inner western part. The Go West policy sought to address this disparity by building basic infrastructure towards the country’s hinterland and by attracting investment in the western region.

Last year, China came up with the New Silk Roads policies to enhance connectivity with neighboring countries. These policies have a number of components. First, Xi Jinping, the President of China, made a call for a Silk Road Economic Belt with Central Asia. Second, a 21st Century Maritime Silk Road is also to be developed to connect China with ASEAN countries initially and ultimately with South Asia as well. Third, projects under the One Belt, One Road policy are to be financed, among others, by the New Development Bank set up by the BRICS and the soon to be established Asian Infrastructure Investment Fund, both financed mainly by China.

China’s actions have led to the revival of the Northern Silk Road. Cities in inner provinces, such as Kunming, Chongqing, Chengdu, Xi’an, and Xining have emerged as major metropolitan cities with urban infrastructure projects paralleling those in the coastal areas. China has built east-west railway line to connect far-flung cities like Urumqi and Kashgar to Xi’an and the coastal cities. This railway line has been extended to Moscow, using Central Asia as an economic corridor, and then on to Duisburg (in Germany) to become the China-Europe railway line. Cross-country east-west pipelines such as the Kazakhstan-China and Central Asia-China pipelines have also been built.

Together with India which is actively implementing its Look East policies, China is building the BCIM Economic Corridor to connect the Yunnan province of China with Myanmar, Bangladesh, and India. This is an important segment of the less known Southern Silk Road of the bygone era.

In June this year, the Chinese Ambassador in New Delhi, Wei Wei, proposed a China and India double-engine powered Trans-Himalaya Economic Growth Region (THEGR) so that the two countries could interconnect and prosper. Like many such proposals from China, details are not known as yet. But the proposal is welcome as it addresses an important missing link in attempts to promote the old Silk Roads.

Surely, establishing new economic corridors between India and China through Nepal would be one component of the recent Chinese proposal. Another would be establishing India-China connectivity through the Nathu La pass in Sikkim. Recently the Global Times published by the ruling Communist Party said that the extension of the Beijing-Lhasa railway to Shigaste, a Chinese city close to the Nepal border, would open next month. It also mentioned that the railway line would be extended by 2020 to two separate points, one on the border of Nepal and the other on the border with India and Bhutan.

In a recent study prepared for the Asian Development Bank (ADB), a colleague and I have conceptualized four multimodal Trans-Himalayan Economic Corridors beginning in New Delhi and Kolkota, passing through Kathmandu and Tibet, with two turning east to Southeast Asia and another two turning west to Pakistan, Afghanistan and Central Asia. Complemented by the three economic corridors in the Greater Mekong Sub-region and the six in Central Asia which the ADB has helped develop, the Trans-Himalayan Economic Corridors would contribute to the vision of a seamless Asia.

As C Raja Mohan, an eminent international relations expert of India, many observes in Delhi are uncomfortable with the idea of India cooperating with China across land frontiers. But this policy, he says, should be changed as China is building so many roads and railroads in the region. In relation to the THEGR his advice is that instead of being defensive, Delhi must seek more details and offer a vision of its own for productive engagement with Beijing.
The proposed THEGR offers a big opportunity for Nepal to benefit from being the land-linked state between the two Asian giants, an entrepot role that it had played in the bygone era. It must look forward to benefit from PM Modi’s “neighbor first” diplomacy and China’s push for connectivity by proposing further studies on the Trans-Himalayan Economic Corridors. Mistrust of the past and complains about old deals will not get the country far. A new beginning based on national interest, and not personal or party interest, must be made.

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