Collateral Benefits: WB study suggests China’s BRI may benefit non-members too, but scepticism is hard to shed for India

By: | Published: October 22, 2018 4:55 AM

A key goal of China’s Belt and Road Initiative is to boost connectivity and reduce trade costs through new and improved transport infrastructure projects.

world bank, china, economyWorld Bank study indicates that the average decrease in shipping time ranges between 1.2% and 2.5% across all country pairs in the world. (Reuters)

A key goal of China’s Belt and Road Initiative is to boost connectivity and reduce trade costs through new and improved transport infrastructure projects. But, sceptics believe that it has more to do with influence-buying by China. However, a World Bank study indicates that the average decrease in shipping time ranges between 1.2% and 2.5% across all country pairs in the world. The largest estimated gains are for the trade routes connecting East and South Asia and along the corridors that are part of the BRI. For instance, shipping times amongst countries in the China-Central Asia-West Asia economic corridor will decline by 12% due to the improved transport infrastructure.

The systemic impact of the BRI is hard to ignore: The initiative can have positive spillovers on non-BRI economies. For example, Tanzania’s Bagamoyo port is expected to benefit not only Tanzania but several other countries in the region. As a result, the World Bank analysis says, shipping time between Australia and Rwanda is expected to decrease by 0.5%. Similarly, the improvement of Djibouti’s port will contribute to a decrease in shipping time between Australia and Ethiopia of 1.2%. India is a known sceptic of the BRI. With China now foreclosing on strategically important assets and projects in countries like Sri Lanka and Myanmar that had taken loans from Chinese banks as a part of the BRI, India’s doubts seem legitimate. However, the World Bank study would seem to suggest that India could also stand to benefit, from reduced shipping times, from the BRI. Whether these far-in-the-future gains will influence India’s strategic stand on BRI, or its scepticism will hold, isn’t easy to foretell. For countries that are lining up to shake hands with China, the best hope is that the grip doesn’t become vice-like.

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