One of the latest turning points of the global economy and the geopolitical landscape is the ‘Belt & Road Initiative’, which is being conducted by China. The One Belt and One Road initiative are being led by the Chinese government, with the sole purpose of improving economic and trade integration within Africa, Europe and Asia.
With the use of infrastructure projects and free-trade agreements, which include ports, railways and roads, the project aims to develop a modern Silk Road, which spans around 65 countries. Combining a GDP of US$21 trillion, the initiative involves a land belt through Europe and Asia; and connects the coastal Chinese cities to the Mediterranean and Africa with the help of a maritime road.
The Belt and Road Initiative is also known as the Silk Road Economic Belt and the 21st Century Maritime Silk Road. The project is a development strategy that is proposed by the Chinese government that is aimed at corporation and connectivity between the Eurasian countries. According to the Chinese government, the project is a chance to boost the regional connectivity and to embrace a better future. While on the other hand, the critics believe that it is meant to push China to have a larger role in global affairs with the China-centered trading network.
What is the Proposed Plan?
According to the proposed OBOR plan, there are going to be two elements in this initiative, which include the 21st Century Maritime Silk and the Silk Road Economic Belt. The regional waters will be connected by the 21st Century Maritime Silk Road, while the Silk Road Economic Belt tends to connect the Persian Gulf and the Mediterranean through West Asia, China to Europe through Central Asia and the Indian Ocean with the help of South Asia.
Moreover, the OBOR is supposed to facilitate development for 6 main economic corridors, including, China-Mongolia-Russia, New Eurasian Land Bridge, Indochina-Peninsula, Bangladesh-China-India-Myanmar, China-Pakistan and China-Central Asia-Western Asia.
Objectives of OBOR:
The initiative aims to fulfill the following goals:
– Financial Segregation.
– Liberalizing the trade.
– Improving the coordination of policy across Asia.
– Enhancing connectivity involving people-to-people links.
Implementation of the Plan:
While China is underway with the project, signing bilateral cooperation agreements with countries like Mongolia, Hungry, Tajikistan, Turkey and Russia, more than 55 other countries have shown their interest in the project. Some projects with these countries are already in process, such as the train connection between Iran and Eastern China, which will expand to Europe.
China has also started constructing new rail-links with Thailand and Laos, and high-speed railway projects in collaboration with Indonesia. The Chinese Ningbo Shipping Exchange is collaborating with Baltic Exchange, in order to derive the index rates between the Middle East and China, along with Europe and the Mediterranean as well. Moreover, China has already raised around $40 billion for the project, while more than 200 enterprises have signed an agreement with China.
The Reasons behind OBOR (When and Why China Initiated the Idea):
The projected started back in 2013 when the Chinese President Xi Jinping endorsed the initiative with aims to improve global cooperation in terms of economy. The plan aims towards regulating China’s own economy, and enhancing the economic relationships while generating in-house and foreign capital.
Some people believed that this project will turn China into a regional power, but regardless to Xi’s insistence, the country was not allowed to interfere in other nation’s matters, in order to maintain the integrity of The Marshall Plan; which was made by the US to rebuild Europe after World War 2. On top of this, it also important in terms of China’s capability to accomplish energy security.
Financial Backup for OBOR:
In 2014, the Silk Road Fund was built by China in US$40 billion, which would fund the infrastructure for the project, as well as the 6 economic corridors with countries. The overhead charges would be funded by the China-backed global bank which was launched in 2014, the New Development Bank (NDB), the Asian Infrastructure Investment Bank (AIIB) and the Shanghai-based bank for countries like Brazil, India, China and Russia.
Influence on the US & It’s Allies:
Although the OBOR is said to be a stepping stone towards global economic cooperation, the expansion of this project is alarming for the US. This initiative not only improves China’s economic standing but also competes with trade agreements, which did not include China, such as Trans-Pacific Partnership, which was introduced by the current American President Donald Trump. As the US and Japan both are not a part of AIIB, their representatives are not going to attend the summit as well.
How Russia and Europe Perceive ‘The Silk Road’?
There are a number of European countries who have welcomed this initiative by China, as they hope that this will lead to Chinese development and investment in their country, but there are certain nations which are still hesitant; as they are alarmed by the growing motivations and influence of the Chinese capital Beijing. Countries like Britain have shown an interest to be a part of AIIB, regardless of knowing about the exclusion of their ally, US.
However, in context to the Brexit Europe, it is hard to tell how the perceptions of different countries will surface about the OBOR. On the other hand, OBOR tends to benefit the Sino-Russian collaboration and is aimed towards bringing the two countries closer in terms of their ties – with the help of joint projects and investments. On top of that, the OBOR also relies on Russian contribution, keeping in mind their historical influence over the Central Asian region, being economically dependent.