Centuries and millennia ago, China was at the heart of the Silk Road, which spanned from Arabia all the way to China's east coast. Through the centuries, the Silk Road fell apart. And now, years later, the Silk Road will be born again, obviously in a completely different world from when Marco Polo first set out.
The Belt and Road Initiative, or the One Belt, One Road (帶一路 / 一带一路) or the Silk Road Economic Belt and 21st Century Maritime Silk Road (絲綢之路經濟帶和21世紀海上絲綢之路 / 丝绸之路经济带和21世纪海上丝绸之路), is an initiative proposed by China's Paramount Leader (最高领导人 / 最高領導人), Xi Jingping. Xi Jingping announced it four years ago back in 2013, and more countries are jumping aboard. It is a chance for countries around the world to cooperate in the name of economic prosperity and 68 countries have already joined as of May 2017, and that number is definitely expected to rise. China's already dishing out $150 billion a year for the project. It has also established the Silk Road Fun in 2014 worth $40 billion.
While many countries have attended the meetings, some Western European leaders are somewhat skeptical as it is not fitting with China's philosophy of the past few decades, the "hide our capabilities and bide out rime; never try to take the lead" thought touted by Paramount Leader Deng Xiaoping (邓小平 / 鄧小平) in the late 70's and 80's. This is part of Xi's new philosophy, the "Chinese Dream", (中国梦 / 中國夢). Nations like Singapore have gladly joined in; its development board has already pledged $22 billion. There are now hundreds of deals that have stiken up that relate to the Belt and Road Initiative. This six major projects underway are the "New Eurasian Land Bridge", the "China-Mongolia-Russia", "China-central Asia-Western Asia", "Indo-China Peninsula", "China-Pakistan", and the "Bangladesh-China-India-Myanmar". In these clusters, there will me industrial and energy developments. China will increase investments in Asia, and will contribute $100 billion in capital to the Asian Infrastructure Investment Bank (AIIB) and to the Export-Import Bank of China.
This immense transport and logistics system will connect Asia, the Middle East, Africa, and Europe. This new Eurasian network would be a direct rival to the North Atlantic one, where the U.S. dominates. China has foreign-exchange reserves and wants to expand Chinese companies, both subsidized and privately-owned ones to create new markets and to push for more exports and trade deals. Transportation and construction firms, like high-speed rail firms (those are growing in China big-league, or should I say 'bigly') will benefit immensely. China also has an excess capacity in producing cement and other metals.
As if this country could not be more ambitious, China is also launching satellites into space to develop its Beidou-2 Satellite Network. Companies already generated $29 bilion in 2015, two years after its launch. China wants the system to cover the globe by 2020, which is very likely, given the already-rapidly growing pace of development. Member nations of the initiative will no doubt benefit immensely, as the network will support the systems as well as power distribution.
China is deeply involved in Africa, as it has already worked on over a thousand projects, including building 2233 km of high-speed-railways (HSR) and 3350 km of highways. China's HSR network is already the most developed in the world, with 12,000 miles of track down. Xi Jingping wants to expand this to South America where he aims to invest $250 billion more in Brazil and neighboring countries. China is also dabbling in Europe, as it is financing the port of Piraeus in Greece and funding a bullet train from Belgrade to Budapest that costs $2 billion. Move roads, rails, and pipelines will start from Xi'an in central China and grow westward to Belgium. There is also an 8000-mile cargo rail between Yiwu and Madrid that is currently in the midst of construction.
A
great examples of China's head start is the China-Pakistan Corridor,
which I'll cover in a later article. Basically, the "Corridor" is a series of projects and developments between China and Pakistan that will provide financial benefit to Pakistan and open up China's western parts to a direct route to the sea instead of cutting all the way to the port cities like Shanghai (上海), Hangzhou (杭州), Hong Kong (香港), etc. The developments are growing and there seems to be much success and benefit to both nations. This $46 billion corridor will also connect China better with the Middle East, like with Iran. Iran welcomes China's new projects as it hopes Iran can become a trading hub between Europe and China. It would be really interesting to see how it would play out in a couple of years. In fact, the first freight train to go from eastern China to Kazakhstan and Turkmenistan took just 14 days, compared to 45 days through sea. Trade between Iran and China has jumped from $4 billion in 2003 to $52 billion in 2014. That's amazing.
Many countries in central Asia as well as in Africa are not necessarily developed and stable, so investing in such countries will help the country and China in both ways. This is a way for those landlocked nations to finally cooperate on a larger international level. Many of these nations have depended on the former Soviet Union and now Russia for resources like oil, infrastructure, etc. Russia has influenced Central Asia for over 200 years, and with China now stepping in, Russia is obviously not pleased. China also seeks to become a superpower, and with Russia already taking heat for its controversial role in the Middle East...well, we can imagine Russia is quite desperate to extend its sphere of influence. After all, communist China was based off of the Soviet Union's model. China will also further its investments in Asia, as it will contribute $100 billion in capital to the Asian Infrastructure Investment Bank (AIIB) and money to the Export-Import Bank of China.
By investing more in places like
the South China Sea, China will also be able to reaffirm its claims in
the area (well-played, China), amid international controversy. China will no doubt have to be able to work with the other Asian nations that are all fighting over the Spratly Islands.
A problem is the risk of debt, as billions are at risk with countries like Ethiopia and Sri Lanka. Those nations might not be able to pay back all of the money and/or in time. Just like how China's investments in Venezuela (they lost a lot of money...I mean look at Venezuela now...check out my article from like a week ago), China may lose a lot of money. In addition, China must still unite its institutions together, as there are arguments between the Ministry of Commerce, the Planning Commission, and of course, it's ethnically-diverse provinces (look at Tibet and Xinjiang). With such a grand project, it is difficult to identity specific projects within the BRI countries that are worth investing in and will be profitable. In fact, some Chinese businessmen are calling the initiative the "One Road, One Trap". It will definitely be difficult to persuade countries to stay on board for long-term commitments. Some countries like Sri Lanka and Myanmar want to renegotiate projects that the former leaders agreed to. Eurasia is still unstable, so there are many dangers that face the routes. In regards to the maritime route, China does not have a navy that is strong enough to secure all of the lines. Furthermore, China may alienate some of its allies. India refused to attend the forum earlier this year in May, obviously because it did not like China working so close with Pakistan, a country that India doesn't really like.
In terms of finance and investing, China is restricting flow of capital out of the country and is working to stop acquisitions and mergers that are debt-fueled in order to ensure stability and to protect Chinese companies versus having buyers create external deals. The numer of mergers and acquisitions from China has actually dropped 42% already. China is assessing deals and agreements more closely and inspecting all of the details. The regulators are paying attention to big companies like Dalian Wanda Group, Fosun Group, and HNA Group, that have been investing abroad for some time. It's worth noting that Chinese companies spend $220 billion in 2016 alone on international assets, like football clubs and movie studios. Companies that strike deals relating to the BRI have an easier approval process because obviously they are helping the companies and in turn helping the country. This year, a Chinese enterprise bought out Global Logistics Properties for $11.6 billion.China National Petroleum Corp also bought 8% of an Abu Dhabi oil company for almost $2 billion. More deals are underway as you read this.
Call
it what you will, OBOR, BRI, One-Belt, One Road, SREB21CMSR, but this
imitative is real is is rapidly developing. This is not trial meant to
test the waters, but an endeavor that China as well as nations around
the world have pledged to are and are working with. China is ready to
lead the way, and this is the sign of a shift in global powers as China
join the ranks of the world's superpowers. There are numerous benefits
as well as some drawbacks, but in the end, it is all for the purpose of
global cooperation. It's safe to say that now it's China's turn. For
centuries, China had been a superpower. Look at Zheng He's voyages (his
ships were 10 times the size of Columbus' ships), or the inventions that
came from the former dynasties. China is once again proving itself as a
capable nation, one that will not have cities partitioned by European
nations or be subjugated by foreign powers. As you can see, the Belt and Road Initiative comes in many parts that all are meant to connect the world on a whole new level. It will definitely be a challenge to win over every country, as China does need to account for everyone's interests. China must also pay attention to the environment as well as different cultures as it starts coming into other lands.China will have to broker cooperation which is not impossible but is difficult.
https://www.cnbc.com/2017/07/18/heres-why-chinas-belt-and-road-initiative-is-risky-think-tanker-says.html
https://www.economist.com/blogs/economist-explains/2017/05/economist-explains-11
http://nationalinterest.org/feature/chinas-huge-one-belt-one-road-initiative-sweeping-central-17150
https://blogs.wsj.com/chinarealtime/2016/12/28/chinas-one-belt-one-road-takes-to-space/
http://fortune.com/2017/08/15/china-one-belt-one-road-obor-investments/
http://www.businessinsider.com/one-belt-one-road-doomed-to-failure-2017-7
http://www.mckinsey.com/industries/capital-projects-and-infrastructure/our-insights/one-belt-and-one-road-connecting-china-and-the-world
http://www.heritage.org/asia/commentary/chinas-huge-one-belt-one-road-initiative-sweeping-central-asia
https://qz.com/983460/obor-an-extremely-simple-guide-to-understanding-chinas-one-belt-one-road-forum-for-its-new-silk-road/
http://thediplomat.com/tag/one-belt-one-road/
http://www.newindianexpress.com/world/2017/may/15/indias-refusal-to-join-chinas-belt-and-road-forum-regrettable-chinese-media-1605000.html
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ReplyDeleteGud
Deletecool stuff man
ReplyDeletelove this! very detailed! Now I'm curious to see how China will become a major player in the next 10 years.
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