In ancient times, there was a trade route linking China with the countries of the Middle East, Central Asia, Europe, and Africa – the famous Silk Road. Nowadays, the country decided to re-establish its golden age through the new strategy of economic development. In 2013, China’s President Xi Jinping and his government started to develop the strategy “One Belt, One Road” or OBOR. According to one of the most influential financial media groups of China, Caixin Global, the strategy implements the process of linking China with other countries through the New Silk Road Economic Belt and the 21st-century Maritime Silk Road (“One Belt, One Road”, 2014). Considering the fact that OBOR is a result of China’s attempt to strengthen its influence and to integrate itself into the world economy, it is necessary to analyze how the One Belt One Road strategy affects the global economics.
Essentially, OBOR is a strategy for enhancing cooperation between China and its neighbors. Liu Cigui (2014), who is a prominent Chinese politician, claims that the goal of this strategy is to establish the conditions of mutual political trust, economic integration, and cultural inclusion. On the other hand, Grieger (2016) states that China’s new development vision is considered to be an alternative to regional trade agreements, a strategy for declaring China’s leadership role in Asia in response to the U.S. pivot to Asia, an economic outreach towards Asian countries for resolving territorial and maritime, a way to solve numerous internal challenges, and a platform for addressing security issues as well as energy security problems (p. 1). China Radio International (2015) has published a full text of “Vision and Actions on Jointly Building Belt and Road”, issued by the government of the People’s Republic of China. According to this document, OBOR requires such cooperation priorities as policy coordination, facilities connectivity, unimpeded trade, financial integration and people-to-people bonds (China Radio International, 2015). Therefore, it can be clearly seen that the current strategy suggests a wide field for cooperation between China and the surrounding areas.
An implementation of OBOR brings numerous benefits for the countries participating in it. At the end of 2014, China has already started its Maritime Silk Road strategy through the cooperation with the countries of Southeast Asia. According to Tiezzi (2014), such island nations as the Maldives and Sri Lanka were glad to join the project. Being crucial to OBOR initiative, these countries has already received benefits from it. In particular, Sri Lanka has received $1.4 billion from China to build the Colombo Port City, an alternative to ports in Singapore and Dubai (Tiezzi, 2014). Another country that has already achieved results from cooperation with China is Pakistan. According to State Council of the People’s Republic of China (2015), the project of the $40 billion fund is a priority within the broader China-Pakistan Economic Corridor (CPEC) initiative. This initiative involves the development of the roads, railways, and energy projects in Pakistan’s Gwadar Port. In such a way, China is going to shorten the route for its energy imports, whereas Pakistan expects a rapid development of its economy and an improvement of people’s living conditions (State Council of the People’s Republic of China, 2015). Obviously, the situation is beneficial for both participants. Moreover, according to recent data published by Xinhua Finance Agency (2017), Chinese business has already helped to build 56 economic and trade cooperation zones in more than 20 countries, generating nearly $1.1 billion in tax revenue and about 180,000 jobs in the countries of OBOR. Therefore, the strategy shows its promising early results.
Although the initiative demonstrates the great development potential, there are many challenges OBOR have to face. Both Chinese and foreign specialists show doubts while speaking about OBOR. In his article written for The Hong Kong Economic Journal, Willy Lam Wo-lap (2016) claims that President Xi Jinping uses the strategy as a lethal weapon that can help China replace the United States in 20 years’ time as the world’s superpower. The author states, however, that the strategy appeared to be poorly conceived and financially unsustainable: many of the infrastructural projects initiated by China are actually a pure economic aid offered by Beijing rather than bilateral investment projects (Lam Wo-lap, 2016). Another specialist, Huang Yiping (2015), suggests that China should avoid confrontation and the cold war. According to the author, China has no strength to challenge the U.S. because its internal development level is still low. Also, China is not competitive enough to gain returns from its investments overseas. Although the country has become the third largest investing country, most of its deals provide no financial returns (Huang Yiping, 2015). It seems, therefore, that China is trying to achieve political influence by investing a lot of money in the infrastructure of other countries.
Foreign analysts also refer to OBOR’s multiple challenges. According to The Economist (2016), OBOR is encountering several problems. For example, Thailand refused to accept financial support from China while building the new high-speed rail line to Singapore. Also, two of China’s first investments were in initial public offerings by Chinese firms in Hong Kong (The Economist, 2016). Being published in Great Britain, The Economist represents European point of view on the current issue, as well as Grieger (2016), who is the author of the Briefing for European Parliament. According to Grieger (2016), OBOR may face problems while cooperating with such countries as Burma/Myanmar, Cambodia, and Laos. Security concerns stem from transport networks foreseen to be built in remote, underdeveloped, or conflict-ridden regions such as Burma/Myanmar’s restive northern provinces, Central Asia’s Fergana Valley, and Pakistan’s Balochistan (Grieger, 2016, p. 9). Not only security but also environmental and social concerns are crucial. Grieger (2016) claims that economic immaturity and limited size of markets, corruption, low administrative efficiency, and high default risks may lead to low- or even zero-return projects (p. 10). Considering these facts as well as the fact that China still has many people with low income, the country should solve its internal economic problems before investing its resources abroad.
Most scholars agree that OBOR is going to threaten the international status of the U.S. According to The Economist (2016), this strategy is a challenge to the United States’ traditional approach to the world trade. This approach requires two trading blocs, the trans-Atlantic one and the trans-Pacific one, with the U.S. as a focal point of each. On the other hand, OBOR treats Asia and Europe as a single space, and China, not the U.S., is at the top (The Economist, 2016). Huang Yiping (2015) believes that China’s attempts to compete with the U.S. as a military power may lead to damages rather than success. In addition, the author claims that the boosting of economic development in the countries of central, southern, southeastern and western Asia is beneficial as it helps to avoid conflicts with the United States in the Pacific region (Huang Yiping, 2015). Such approach helps to consider OBOR as a strategy beneficial not only to China but to the rest of the world as well.
In conclusion, it is necessary to admit that OBOR is a strategy that may lead either to general well-being or conflicts. Both local and foreign specialists have a mixed vision of its benefits and challenges. Although the project helps to establish connections between Asia and Europe, skepticism regarding China’s potential hegemonic ambitions remains strong. It is clear that the country tries to extend its commercial influence and to reduce its dependence on investment. In such a way, tension is inevitable. Still, OBOR is a chance for Asian countries to develop their own infrastructure.
- China Radio International. (2015). Full Text: Vision and Actions on Jointly Building Belt
and Road. Retrieved from http://english.cri.cn/12394/2015/03/29/2941s872030.htm
- Grieger, G. (2016). One Belt, One Road (OBOR): China’s regional integration initiative.
European Parliamentary Research Service. Retrieved from http://www.europarl.europa.eu/RegData/etudes/BRIE/2016/586608/EPRS_BRI%282016%29586608_EN.pdf
- Huang Yiping. (2015). Keys to the Belt and Road Strategy Succeeding. Caixin Global. Retrieved from http://www.caixinglobal.com/2015-02-11/101052914.html
- Lam Wo-lap, W. (2016). Getting lost in One Belt, One Road. The Hong Kong Economic
Journal. Retrieved from http://www.ejinsight.com/20160412-getting-lost-one-belt-one-road/
- Liu, C. (2014). Reflections on Maritime Partnership: Building the 21st Century Maritime Silk
Road. China Institute of International Studies. Retrieved from http://www.ciis.org.cn/english/2014-09/15/content_7231376.htm
- One Belt, One Road. (2014). Caixin Global. Retrieved from http://www.caixinglobal.com/2014-12-10/101052853.html
- State Council of the People’s Republic of China. (2015). Silk Road Fund’s 1st investment makes China’s words into practice. English.gov.cn. Retrieved from http://english.gov.cn/news/top_news/2015/04/21/content_281475093213830.htm
- The Economist. (2016). Our bulldozers, our rules: China’s foreign policy could reshape a good part of the world economy. Retrieved from http://www.economist.com/news/china/21701505-chinas-foreign-policy-could-reshape-good-part-world-economy-our-bulldozers-our-rules
- Tiezzi, S. (2014). China Pushes Maritime Silk Road in South, Southeast Asia. The Diplomat. Retrieved from http://thediplomat.com/2014/09/china-pushes-maritime-silk-road-in-south-southeast-asia/
- Xinhua Finance Agency. (2017). Belt and Road Initiative drives China’s opening-up: official. Retrieved from http://en.xfafinance.com/html/Policy/2017/305607.shtml