KIEL  WORKING PAPER Does India Use Development Finance to Compete with China?

Since 2013, China has engaged in an unprecedented effort to build a “Belt” of roads, rails, ports, and pipelines from China to Central Asia and Europe and a “Maritime Silk Road” consisting of deep-water ports along the littoral areas of the Indian Ocean.2 India is one of the few countries in the Asia-Pacific region that formally opposes China’s Belt and Road Initiative (BRI) (Pant, 2017). [...] ] In contrast to India’s position, China currently has no ability to exert control over any of these chokepoints and nor has it any regular naval presence in any of the ports between.” China’s purported strategy to address this bottleneck is to “bind countries in the Bay of Bengal and the Indian Ocean closer to the Chinese economy as well as to build trade routes from China through their territory. [...] Therefore, one might expect the efforts of a rival that is seeking to counter Chinese influence to focus on the “frontlines” of the “battle for hearts and minds.” Geographical co-location might help a foreign power like India make the advantages of its own projects and the disadvantages of projects financed by China more salient in the perception of host- country leaders and citizens. [...] We assembled information from these documents for all MEA and Exim Bank-financed projects about the project titles and descriptions, the commitment year, the recipient country, the financing type, and the commitment amount.22 The resulting database consists of 1,194 projects in 93 countries from 2007 to 2014. [...] A first look at the distribution of Chinese and Indian project locations in the world also suggests some geographical clustering of Chinese and Indian projects within countries (see again Figure 3).29 4 Empirical Strategy We use the geocoded information about the provincial location of Indian and Chinese official projects to analyze whether and how India locates projects in the same jurisdictions.