The One Belt One Road (OBOR) initiative of China, also known as the Belt and Road (B&R), is an ambitious and visionary approach to revitalize ancient trade routes, give them a retouch with modern infrastructure and technological interventions, and foster economical, social and cultural relations among 65 countries along the route for a brighter future. The enormity of this project can also help in achieving Sustainable Development Goals (SDGs) with better coordination between the partner countries with a collective sustainable agenda
Chinese President Xi Jinping introduced the concept of the Belt and Road initiative in 2013 to promote economic engagement and investment along two main routes—the Silk Road Economic Belt and 21st Century Maritime Silk Road. The belt, the physical road, and the maritime Silk Road strive to recreate the shipping routes that made China one of the world’s foremost powers many centuries ago. The B&R initiative also gives thrust on building infrastructure- roads, railways, airports, seaports, energy pipelines, and other core projects for economic development in the region. The initiative will further the political, social, and cultural linkages between countries en-route.
The mammoth scale of the project can be gauged by the fact that the initiative would cover almost two-third of the world’s population, around 4.4 billion people living in about 65 countries, and one-third of global GDP. The countries along the route fall in seven key regional spheres—Africa, Central Asia, Eastern Europe, the Middle East, Russia, South Asia and South-east Asia. The implementation and wide acceptance of the initiative hold the key to its success. According to experts, it is a Chinese version of Marshall Plan that was introduced to revitalize Europe after the Second World War. The official information provided by China’s state news agency ‘Xinhua’ suggests that ‘One Belt, One Road’ comprises two physical routes, with various side-branches along the way. These two different routes ultimately connect China with Europe, Africa and Southeast Asia. This impression is further enhanced by a map published by the news agency, depicting both a land route running from inner China to Southern Europe (via the Netherlands) and a sea route connecting the port of Shanghai ultimately with the end point of the land based route in Venice, via India and Africa.
It is an initiative of China but if it has to be successful it has to be embraced by the world. They have to open their markets for foreign products. Most of the areas China is looking for along the OBOR are in developing countries. This is high risk, not just economic but also political and social. For any country to develop,it requires infrastructure, investment, technology and market. China is offering itself as part of the solution
Nicholas Kwan, Director of Research, Hong Kong Trade Development Council (HKTDC)
However, the initiative is not officially directed to achieve SDGs approved by the United Nations in 2015 but many of the components of the OBOR embody certain principles required to achieve SDGs. It is an opportunity for member countries to inculcate the objectives and goals envisioned under the SDGs through long term planning, cooperation between states, and the development of public-private partnerships. OBOR should be undertaken with the SDGs in mind.
Aniket Shah, Programme Leader for Sustainable Finance at the UN Sustainable Development Solutions Network, says in his report for Center for International Relations and Sustainable Development, “If the SDGs and OBOR can be successfully integrated, a new form of multilateralism will have been created. This new model will combine the best of the United Nations, including global consensus around future direction, and the best of China’s growing leadership in the world—namely, a focus on long-term investments and infrastructure development. In so doing, OBOR can prove to be a new and innovative form of multilateralism for the twenty-first century—one that focuses on solving the most pressing sustainable development challenges of the world. The world will also have a blueprint for similar regional initiatives for sustainable development.”
The Chinese government is not just romanticising by reviving the traditional silk route through which China had become one of the most prosperous nations some 2000 years ago. According to foreign policy experts in the West, this modern plan also targets to take more of a role in regional and global governance and indicates the genesis of a shift in world order.
André Loesekrug-Pietri, Founder, A CAPITAL, mentions in one of his articles for the World Economic Forum, that China’s explicit focus on the wide definition of inclusiveness, the right to development, and based on a relatively fuzzy management style, will inevitably challenge the current Western principles of global governance. The surprisingly highly successful launch of Asian Infrastructure Investment Bank (AIIB) may just be a teaser from China to the existing institutions. But it should be taken as a wake-up call. The ball is now in the hands of the EU to decide if and how to engage in these emerging processes. Although Europe continues to struggle with its own crises, It should make the Silk Road its own and its strategic priority.
The Game Changer
OBOR is more of a large ‘umbrella’ type of initiative. It seems to be a potentially huge collective of current, planned and future infrastructure projects, accompanied by a host of bilateral and regional trade agreements. Ongoing and planned projects will focus on the development of a wide array of assets, including ports, roads, railways, airports, power plants, oil and gas pipelines and refineries, and Free Trade Zones as well as a supporting IT, telecom and financial infrastructure.
Nicholas Kwan, Director of Research, Hong Kong Trade Development Council (HKTDC), says, “It is an initiative of China but if it has to be successful it has to be embraced by the world. They have to open their markets for foreign products. Most of the areas China is looking for along the OBOR are in developing countries. This is high risk, not just economic but also political and social. For any country to develop, it requires infrastructure, investment, technology and market. China is offering itself as part of the solution.
“Look at the area covered under OBOR, the population, the area, the GDP and the trade is two and half times of the China of today. Even if half of the area pick up the growth momentum and repeat what China has done in last 30 years, the world will be very different 30 years later.”
Kevin Sneader, McKinsey’s chairman in Asia, said that potentially, OBOR is world’s largest collaboration around trade. I say potentially because the questions many people ask what it is going to take to move from theory to reality. That question has many parts in the form of an answer. One part is the right financing that is beginning to be put in place in terms of the public financing through three entities—the AIIB, the New Development Bank and Silk Road Investment Fund. They have together contributed around USD 250 billion for investment. However, the sum needed to realize this ambitious plan is many times of it.
In a recent event on OBOR organised by Eurasia Center in Washington, Fang Qiuchen, Chairman of China International Contractors Association, said, “This initiative is not just an initiative proposed by the Chinese government. It is an initiative to build a community with shared interest, destiny and responsibility featuring mutual political trust and economical integrity as well as cultural inclusiveness,”.
Potentially OBOR is world’s largest collaboration around trade. I say potentially because the questions many people ask what it is going to take to move from theory to reality. That question has many parts in the form of an answer. One part is the right financing. Asian Infrastructure Investment Bank, the New Development Bank and Silk Road Investment Fund, have together contributed around USD 250 billion for investment. However, the sum needed to realize this ambitious plan is many times of it.
Kevin Sneader, McKinsey’s chairman in Asia
Hurdles on the Way
Despite all the efforts to make the Chinese initiative successful, the road ahead does not guarantee a smooth ride. Opportunities are abound and so are challenges.
According to a report by Economic Intelligence Unit (EIU) ‘Prospects and Challenges on China’s ‘One Belt, One Road’: A Risk Assessment Report’, underlines different risks involved under ten categories including security, legal and regulatory, government effectiveness, political instability, infrastructure, tax policy, foreign trade and payment, financial, macroeconomic and labour market risks. It adds that political risks may weigh heavier on OBOR efforts than overseas direct investment (ODI) activities led by private firms. Many OBOR projects are slated to be highprofile construction projects, which means that the deals will be made with the heavy involvement of the destination country’s government. Political changes need to be anticipated, as they can change the outcome of a deal.
Despite many staring-onface issues such as rough terrain, persistent regional conflicts, thriving corruption, and scepticism amongst various countries towards China and its intentions, there is a long zigzag road ahead before China, along with all the underdeveloped nations across Central Asia and the Middle East, can reach the position, influence and level of prosperity that they once held in the days of the ancient silk routes. Indeed, the New Silk Road and Maritime Route are the most ambitious and exciting business and economic project of the 21st century. The projects also have potential to change the geopolitical scenario and create a new world order by creating a congregation of partner countries, as enjoyed by the European Union member countries, and foster better relations among countries along the route for inclusive development with a common agenda and shared prosperity benefits.