The One Belt One Road Initiative (OBOR) is a foreign policy and economic strategy of China where the two ends of Eurasia, as well as Africa and Oceania, are economically linked to China. This OBOR initiative was first declared during the during China’s president, Xi Jinping’s visit in 2013 to Central and Southeast Asia. In March 2015, this OBDR document was released with its Action and vision on jointly building the 21stCentury, Economic and Maritime Silk roads. Its main aim consists of connecting the European, African and Asian continents and to increase support of partnerships among the BRI towards to promoting significant importance of aspects the different aspects of sustainable development; balanced, diversified, independent.
OBOR has two routes, firstly; The Land route calledThe SilkRoad Economic Belt which focusses on connecting the Baltic states; Russia, Europe, Central Asia and China together. Furthermore, the belt is completed by The Sea route, called the 21stCentury Maritime Silk Road, this road map would begin from the coast of China to Africa, Europe through the South China Sea and lastly the Indian ocean all in one economic direction(Kuo and Kommenda,2018) This Belt and Road Initiative (BRI) is an ambitious effort for the improvement in connectivity aiming on a trans-continental scale and to promote strong regional cooperation.
Three Strengths of China’s One Belt One Road Initiative
Firstly, concentrating on the vast Investment and OpportunityOBDR offers to developing nations. International trade routes have existed for many years in order to transfer goods and services to and from countries and increase connectivity (O’Brian,2016) Belt Road Initiative (BRI) economies generate up to 66% of the world’s population and 33% of global trade and GDP. Additionally, the percentage of population in terms of the poverty line, has been high- Kenya 25%, Djibouti and Uzbekistan 23% and Laos 21%. With the growing potential that the BRI contributes, it would have successful influence towards benefiting a large percentage of low income countries, thus leading to greater impact on global welfare and sustainability. (World Bank,2016)
Secondly, it contributes to promoting infrastructure and facilitating networks. The BRI economies has huge scope towards connecting the world in aspect of the large growing unexploited potential. However, mostly China and majority of BRI economies are responsible for the high percentage of these exports. The BRI trade between countries such as Laos, Afghanistan and Nepal is poor, due to the lack of policies, infrastructure etc. (World Bank,2016). The Belt and Road intuitive could help reduce these gaps and contribute to boosting and strengthening trade relations and investment. Particularly help target countries that could not incorporate with the world’s economy.
Thirdly, OBDR plays a significant role in Increasing global connectivity and existing economic communities. The increase in development for an improved transport system of railways could encourage improves and increased growth, investment and border trade (The trade post,2018). It is imperative for regional cooperation to play a vital role on the improvements of infrastructure to resolve this global connectivity challenge. If it is successfully resolved BRI projects would create easy trade to most of the important economic corridorsin the world.
Three Weaknesses of China’s One Belt One Road Initiative
Firstly, the implementation of Thick borders has been pressured by Policy barriers. Issues such as restrictions on FDS, delays to cross borders and custom procedures have been of much focus in countries of BRI in comparison to other regions. For example, in Central Asia, procedures for imports of goods and services could take up to a 50 day. In comparison to G7 (Group of seven) countries taking 10 days. FDI policies have become restrictive towards BRI countries (Csis,2018) The organization for economic co-operation, OECD and its 38 member countries, have more benefit to accessing industrial land, foreign business and determining commercial disputes. This encourages policy reforms and cooperation to boost connectivity and infrastructure projects.
Secondly, the Potential risks connected with the main projects for Infrastructure Development. This has brought dangers in the aspect of corruption, environment and social and governance standard involvement. Thus, creating loss of biodiversity and degradation of environment. Essentially these factors are highlighted in BRI countries, which have a weak electoral system and government. In order to reduce these negative attributes, more importance to the understanding and identifying of such risks should reduce the weakness of the negative feature to BRI. Important roles played in support of the BRI investments, by the Multilateral Development Banks and World Bank group could help support these issues of concern(Trade post,2018)
Thirdly, the risingIssue of Macro Risks for BRI projects. The inclination of the expanding debt crisis has made required financing for project development to unmanageable levels. For example, the railway construction project in Kunming- Singapore has approximately led to US$6 Billion worth of cost, which accumulates to 40% of GDP in the country in 2016. Many of the countries authorities have taken up the challenge of this impact by the use of public finances, thus leading to limitation in involvement to $0.7 billion, in return of which the $0.5 billion Chinese loan, is paid to the government (World Bank,2018) According to a recent estimate given by the Center for Development, it has been expected that there would be an increase in debt to GDP ratios by BRI projects for BRI countries. The Participation of countries in such project development set by BRI countries would need a scrupulous balance with the link between the exposure of debt levels and such development projects.
- O’Brien, R. and Williams, M. (2016.). Global political economy. Evolution and Dynamics
- Aph.gov.au. (2018). China’s ‘One Belt, One Road’ initiative – Parliament of Australia. [online] Available at: https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook45p/ChinasRoad [Accessed 14 Dec. 2018].
- The Trade Post. (2018). Six Corridors of Integration: Connectivity Along the Overland Corridors of the Belt and Road Initiative. [online] Available at: https://blogs.worldbank.org/trade/six-corridors-integration-connectivity-along-overland-corridors-belt-and-road-initiative [Accessed 14 Dec. 2018].
- Csis.org. (2018). China’s Maritime Silk Road: Strategic and Economic Implications for the Indo-Pacific Region. [online] Available at: https://www.csis.org/analysis/chinas-maritime-silk-road [Accessed 14 Dec. 2018].
- China’s “One Belt, One Road” Initiative: An ESCAP Report. (2017). Population and Development Review, 43(3), pp.583-587.