One Belt One Road: What should we make of it?

The origins of the One Belt One Road (OBOR) initiative, or Belt and Road, can be found in China’s imperial history when China first established the Silk Road – a trade route that linked China and the West, named after one of China’s most important export. For centuries, the Silk Road was key in shaping the development of the entire region. It was only resurrected in its contemporary form when President Xi Jinping announced in 2013 the opening of a new double trade corridor.

Enhanced global connectivity: A golden age of commerce and a new era of globalisation

Beyond establishing extensive physical connections, OBOR aims to drive economic cooperation in policy-making, trade, and financing collaboration. Through a centralized economic belt (One Belt), China envisions to connect China to Europe, the Persian Gulf, the Mediterranean, and the Indian Ocean. The 21st Century Maritime Silk Road (One Road) aspires to link China with regional waterways. The scale of OBOR is astronomical: Its envisioned participating countries comprise 55 percent of global Gross National Product (GNP), 70 percent of the world’s population, and 75 percent of known energy reserves. It is funded by the Asia Infrastructure Investment Bank (AIIB) and the Silk Road Fund – both incidentally launched by the Chinese.

For the participating countries, mostly being less developed and geographically disadvantaged economies, the OBOR serves an immense boost for their long-term infrastructure and labour problems. One core project of the OBOR is a USD$54 billion land route from the Xinjiang region to Gwadar, a deep-water port in Pakistan. An estimated USD$1.1 billion will be spent creating a “port city” in Colombo, Sri Lanka. Most importantly, China stands to benefit immensely: the OBOR is designed mainly as an outlet for its excessive industrial capacity, to secure its long-term energy supply, and to provide stability for its Western borders in face of Jihadist threats. Chinese companies in transport and telecommunications are also poised to expand internationally. Hence, the OBOR opens up several new markets and trade benefits for China – a new impetus for its next phase of economic growth.

A Community of Shared Destiny or the New Middle Kingdom?

However, some have viewed the OBOR announcement with skepticism. After all the staggering amount of infrastructure projects such as railways and oil pipelines associated with the trade corridor inevitably invites doubt about Chinese intentions behind establishing the OBOR. Meanwhile, China has attempted to address claims that the OBOR is another Marshall Plan by insisting that the OBOR is “not and will never be neocolonialism by stealth”.

Is China after shared economic prosperity, or is there more to the story? What are some of the strategic considerations behind China’s move? Undeniably, China’s periphery environment is fraught with complexity. China shares a land border with 17 different countries, of which many are among the least developed and prone to ethnic conflict. Islamic extremist movements remain rampant in its surrounding regions, such as the Middle East and Central Asia, threatening resource and border stability. In face of the South China Sea dispute and rising economic competitiveness of Southeast Asia, the OBOR would help reinforce the existing economic reliance of Southeast Asian countries on China. The Chinese private sector has also been intimately involved in the OBOR, lending several energy projects including oil and gas pipelines between China and Russia, Kazakhstan, and Myanmar. Thus, one may necessarily interpret the OBOR as a platform for China to flex its economic muscles while increasing its political clout as a global power using the cover of the OBOR as a provider of public goods.

Yet on a more nuanced note, in the context of Chinese foreign policy needs the OBOR initiative is key to China’s accumulation of soft power. While the OBOR is fundamentally motivated by domestic needs, it could also signal China’s willingness to step up to provide an all-embracing solution for the world. In turn, there are bound to be costs and risks attached to the vast infrastructure investments China has made in emerging markets. For instance, its core project in Pakistan entails significant risk of being drawn into the fractious politics that have characterized the Middle Eastern region for long. Furthermore, the OBOR is not going to be a guarantee for China to overtake the Americans as global leaders – and it certainly does not aspire to do so for now. For one, China needs to improve its own transparency in governance and can do better in being a “responsible stakeholder” in areas such as climate change and human rights.

Whilst debating whether the ambitions behind the OBOR translate into reality in future remains a worthy cause, what is certain, is that its potential to enhance global financing, especially infrastructure, and promote greater economic collaboration.