The Power of the Belt and Road Initiative
One country’s project spans over 3 continents, touches over 60% of the world’s populations, includes over 65 nations, and is quietly reshaping the world. If you connect the dots it’s not hard to see which country that is — it’s China.
China is using the most ambitious trillion dollar geoeconomic infrastructure project in modern history to solidify it’s position as world leader and to reroute global trade. This is how China plans to become the world’s next super power.
China’s One Belt One Road Initiative (OBOR):
- Also known as the “Belt and Road Initiative” (BRI), “The Silk Road Economic Belt”, and the “21st-century Maritime Silk Road”.
- Ancient Silk Road: A network of trade routes that spread goods, ideas, and culture across Europe, the Middle East, and China as far back as 200 BC.
- All part of Beijing’s push to increase global influence and promote economic cooperation in such areas as trade, investment, finance, transport and communication:
— Building modern infrastructure can attract more investment and trade along the route.
- The BRI is expected to bridge the ‘infrastructure gap’ in Asia, thus accelerating the economic growth across the Asia Pacific area and Central and Eastern Europe.
- Aims to connect Asia, Europe, Middle East, Africa, and most recently Latin America, with a vast transport network including logistics using:
— Roads
— Ports
— Railway tracks
— Pipelines
— Airports
— Transnational electric grids
— Fiber optic lines
In 2013:
President Xi Jinping was visiting Kazakhstan in September/October 2013 where he mentions the Ancient Silk Road. There was the first time he raised the initiative of building an Economic Belt along the Silk Road.
Vision:
The BRI has 2 components to its plan:
>>The “Economic Belt” which is geographically structured along 6 corridors on land to get goods in and out of China.
>> Maritime Silk Road, which are an ancient string of sea trade routes connecting China to the outside world:
- New Eurasian Land Bridge — running from Western China to Western Russia through Kazakhstan.
-An international railway line running from China to Holland.
-China has also opened an international freight rail route linking China to Germany, China to Czech Republic, and China to Poland, respectively.
— These new rail routes offer the convenience of “one declaration, one inspection, one cargo release” for any cargo transported — quite appealing to authoritarian leaders/regimes.
- China–Mongolia–Russia Corridor — running from Northern China to Eastern Russia.
-Linked by land.
-This commitment will strengthen rail and highway connectivity and construction.
— Will help establish the China-Russia-Mongolia Economic Corridor.
- China–Central Asia–West Asia Corridor — running from Western China to Turkey.
-Starts in China and ends on the Mediterranean coast and Arabian Peninsula.
-Mainly covers Iran and Turkey in West Asia and 5 countries in Central Asia:
— Kazakhstan
— Kyrgyzstan
— Tajikistan
— Uzbekistan
— Turkmenistan
- China–Indochina Peninsula Corridor — running from Southern China to Singapore.
-Countries along the Greater Mekong River are engaged in building 9 cross-national highways connecting east and west and linking north to south.
— A number of these construction projects have already been completed.
- China–Myanmar–Bangladesh–India Corridor — running from Southern China to Myanmar.
-Promoting cooperation in areas such as:
— Transportation infrastructure.
— Investment and commercial circulation.
— People-to-people connectivity.
- China–Pakistan Corridor — running from South-Western China to Pakistan.
-Stretching from Xinjiang, North China to Gwadar Port, South Pakistan.
Chinese and Pakistani governments have mapped out a provisional long-term plan for building:
— Highways
— Railways
— Oil and natural gas pipelines
— Fiber optic networks
China-Pakistan already planning several infrastructure projects:
— Phase II of upgrading the Karakoram Highway.
— A new international airport.
— An expressway at the east bay of Gwadar Port. Gwadar Port is also where the Economic Belt meets the Maritime Silk Road.
— An expressway from Karachi to Lahore.
— The Lahore rail transport orange line.
— The Haier-Ruba economic zone.
— The China-Pakistan cross-national fibre optic network.
- Maritime Silk Road — running from the Chinese coast through the Indonesian archipelago, wrapping around the Indian subcontinent then filtering into the Arabian Peninsula, Somalia and finally into the the Mediterranean Sea.
-Also called the “21st Century Maritime Silk Road”
- Ice Silk Road — between China and Russia through the Northern Sea Route in the Arctic region.
-Chinese and Russian companies are seeking cooperation on oil and gas exploration in the area and to advance comprehensive collaboration on infrastructure construction, tourism and scientific expeditions.
The BRI is promoted as a win-win for everyone. Many of the countries involved need new infrastructure and access to new markets, and Chinese construction companies saw few opportunities within their own country. But the BRI construction contracts helped boost Chinese economy and now 7 out of 10 of the world’s largest construction firms are now Chinese.
The 5 Major Goals of Belt Road Initiative:
- Policy Coordination
-Formulate development plans and measures for advancing cross-national or regional cooperation.
-Together provide policy support for practical cooperation and large-scale project implementation.
- Facilities Connectivity
-Prioritizing areas of construction as part of the Belt and Road strategy.
-Create an infrastructure network connecting various Asian sub-regions with other parts of Asia, Europe and Africa.
- Unimpeded Trade
Steps will be taken to resolve investment and trade facilitation issues:
— Reduce investment and trade barriers.
—Lower trade and investment costs.
— Promote regional economic integration.
- Financial Integration
-Enhance coordination in monetary policy.
-Expand the scope of local currency settlement/currency exchange in trade and investment between countries along the route.
-Deepen multilateral and bilateral financial cooperation.
-Set up regional development financial institutions.
-Strengthen cooperation in monitoring financial risks.
-Enhance the ability of managing financial risks through regional arrangements.
- People-to-People Bonds
-Promote exchanges and dialogues between different cultures.
-Strengthen friendly interactions between the people of various countries.
-Heighten mutual understanding and traditional friendships.
What sets China apart from the West?
- To get investment from China:
China’s direct involvement are one of its very few demands — seen as more flexible and far less bureaucratic:
-Requires Chinese workers to be brought on for infrastructure projects in various countries.
-Chinese firms and projects have already directly built local projects in Pakistan, Serbia, etc involving highways, railroads, dams, etc.
- To get investment from the West
World Bank requirements — must meet strict ethical standards such as:
-Time-consuming studies
-Consultations
-Mitigation measures
-Mandatory prior public disclosure
All the above must be approved before project can move ahead.
String of Pearls — Geopolitical Theory:
China is loaning trillions of dollars to countries willing to host these projects. But many of the countries involved in the BRI are authoritarian, corrupt, and in conflict — risky places for China to invest money in. Eventually these countries will have to pay China back but corruption and conflict make that pay back unlikely.
So why does China keep lending?
There is more to the BRI than just economics — these are all signs in what’s been called the String of Pearls theory which predicts that China is trying to establish a ring of navel bases in the Indian Ocean that will allow to station ships and guard shipping routes that move through the region mainly because it is wary of India’s stronghold in the Indian Ocean.
- The Strait of Malacca, one of the most important shipping lanes, is key for China’s energy requirements — about 80% of their fuel passes through here.
-In 1971: China gave impressions about aligning with Pakistan during the Liberation War for Bangladesh — India had threatened to block the Strait of Malacca.
-In 1999: During the Kargil War, India choked supply to Pakistan — practically blocking Karachi port — using its dominance in the Indian Ocean.
- In Sri Lanka, China loaned about $1.5 billion for a new deep water port — a key stop in the Maritime Silk Road.
-By 2017, it became clear Sri Lanka could not pay back the loans — instead they gave China control of the port on a 99-year lease.
-Recently, the Sri Lankan government had rejected Chinese request of allowing one of its nuclear submarine dockings at Hambantota.
- In Pakistan, China controls the strategic Gwadar Port which has a 40-year lease.
-Gwadar Port is also where the Economic Belt meets the Maritime Silk Road.
- In Myanmar, China is in talks for a similar lease at the Kyaukpyu Port.
-The port has given China access to have a commercial Maritime facility which can be used as a military facility at the time of conflict.
- In Bangladesh, China has developed Port of Chittagong.
-China has been pushing Bangladesh to allow a naval base near Chittagong.
- In the Maldives, they have leased an island close to the Male airport to China for 50 years.
- In Djibouti, China just opened up a Chinese Naval Base.
So while China is not getting their money back, they are achieving certain strategic goals — such as challenging the United States in their role as global leader by building foreign extensive relationships and taking control of global trade.