The Silk Road, an ancient trade route that connected the Forbidden City to the Roman Empire, will be rebuilt. In ancient times, this trade route was responsible for giving Europe many exotic products from the orients, and for bringing western influence into Asia. In 2013, President Xi Jinping announced that they will be starting the Belt and Road Initiative, a trade corridor connecting central Asia, the Middle East and Europe.
This initiative comes in two parts: ‘the belt’ covers the land routes and ‘the road’ covers maritime routes, with the aim of improving trade relations through the three regions. China wishes to create ‘a new era of globalisation’ open to all. China already has 1 trillion of dollars’ worth of projects underway in Africa and Asia that were potentially generated through lead network. The China Development Bank had set aside 900 billion in 2015 right before the Belt and Road Summit held in Beijing. Over the long term, China will lend 8 trillion to build infrastructure in 68 countries.
“One Belt, One Road” is to date the most important public good China has given to the world, first proposed by China but for all countries to enjoy,” China’s Foreign minister Wang Yi said. “The culture and historical genes of One Belt, One Road come from the old Silk Road, so it takes Eurasia as its main region.”
One major incentive is to bolster trans-Eurasian trade, which in turn bolsters global trade. The lesser developed countries in Asia and Africa are going to receive massive infrastructure boosts. Myanmar, for example, a country with infrastructural problems have received loans to develop their infrastructure.
Joe Ngai said in a McKinsey Podcast “China is seeing a bit of a slowing down in its growth. A lot of people are saying that that’s part of the next growth wave of Chinese exports, which is that it’s going to have its influence and its infrastructure build-out in many of these countries, most of them emerging markets, in lots of things that frankly have fuelled the very high growth in China over the past decade.’
There will be benefits to Chinese industries in steel, transport and telecom, who have experienced a slow in growth in the past few years as they look to expand globally. These industries have already started work in connecting pipelines between China, Russia and Myanmar. More road projects are also being built in Ethiopia, Kenya and Thailand.
China is also doing this to cement its status as a global superpower. Charles Parton, a former EU diplomat in China told the Financial times that the initiative is a ‘domestic policy with geostrategic consequences, rather than a foreign policy’. There is little evidence to suggest that this policy will benefit China alone.
The US has traditionally extended its influence via the security it offers, but China has not been interested in doing that. Instead, through this initiative, China will offer bridges through the connectivity and economic of the Silk Road Initiative.
62 countries could see up to 500 billion in investments in the next few years. The investments will go to Pakistan, India, Russia, Philippines, Indonesia, Egypt and Iran. Pakistan is a staunch supporter of this initiative. Its Prime Minister Nawaz Sharif said it was the ‘dawn of a truly new era of synergetic intercontinental cooperation’. Pakistan will alone gain at least 46 billion worth of infrastructure upgrades backed by China.
According to the Foreign Ministry of China, President Donald Trump informed China’s State Councilor Yang Jiechi that the he is willing to work with Beijing on projects related to its Belt and Road Initiative. In the first Belt and Road Summit, the US was represented by Matt Pottinger, a senior director for East Asia for the National Security Council. US firms will greatly benefit from being able to invest in infrastructure in emerging markets.
With recent frosty relations between China and India, it is no surprise that the Indian Prime Minister Narendra Modi is one of the most vocal critics of this initiative. He is particularly concerned with the 46 billion China-Pakistan Economic Corridor which will run through a apart of Kashmir claimed by India. India also boycotted the One Belt One Road Summit.
Interestingly, Japan, South Korea and North Korea made no appearances in the Summit as well, and only Italy, from the seven industrialised nations(G7) attended the Summit. Paul Haenle, director of the Carnegie-Tsinghua Centre for global Policy said “while countries welcome Beijing’s generosity, they are simultaneously wary of its largesse. China’s growing influence is a concern for nations whose political interests do not always align with Beijing’s”.
Kevin Sneader from MacKinsey has likened the One Belt One Road initiative to the Marshall Plan, whereas Indian PM Narendra Modi called it a ‘colonial enterprise’. One thing is certain, China is expanding its geopolitical influence and economic prowess by building on the remnants of an ancient trade pact, and it will shape the world in the years to come.
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