Francisco A. Laguna & Annapurna Nandyal
Last year, China announced two ambitious construction / infrastructure projects: the “New Silk Road”; and the “New Maritime Silk Road”. Dubbed “One Belt, One Road”, the projects focus on building roads, railways, ports and airports to connect China with Central Asia, South Asia and continents of Europe and Africa. At this nascent stage, the new projects are being promoted as an infrastructure network which includes energy, communications and transportation to connect all sub-regions of Asia, as well as Africa, Europe and Russia. China hopes to use the projects to enhance regional connectivity and foster trade networks.
Chinese history is well known for its Great Wall of China and for the Silk Road. Established during the Han Dynasty (206 BC – 220 AD), the Silk Road was a strategic transportation channel used to trade with countries such as India, Persia, Greece and the Roman Empire. The Silk Road passed through Central Asia, West Asia, Europe and Africa – the same routes as proposed in the new project. The route not only grew trade exponentially, it also facilitated political and cultural exchange among great civilizations like the Arabic, Chinese, Greek, Indian, Persian and Roman. China would like to recreate that historical success with the New Silk Road and link itself with all the important cities in Central Asia, Russia, Europe and Africa.
The land route’s counterpart, the Maritime Silk Road, has two proposed routes: one linking the Chinese coastline to Europe through the South China Sea and the Indian Ocean; and the other and linking China to the South Pacific through the South China Sea.
China envisions that these two projects could change the global economic and political scene and “break the connectivity bottleneck” in Eurasia. To garner support for its new initiatives and accommodate needs of various countries, China’s President Xi Jinping has identified five specific goals: strengthening economic collaboration, improving road connectivity, promoting trade and investment, facilitating currency conversion and encouraging people-to-people exchanges. Such a framework would encourage investors from Asia and beyond to actively take part in the projects. The completion of these routes would also revive the sometimes strained ties China has mainly with India, Sri-Lanka, Cambodia, Laos, Myanmar, Tajikistan and Mongolia.
Initially, China would fund the projects with ~ US$ 40 billion from its foreign exchange reserves and monies from the China Investment Corporation, the Export-Import Bank of China and the China Development Bank. Additional funds would come from China-backed financial institutions, such as the BRICS bank and the Asian Infrastructure Investment Bank.
While China may be enthusiastic about the revival of the Silk Road and the creation of a new Maritime Silk Road, Western powers are apprehensive that they will further expand China’s political and economic clout in Europe, the Middle East, the Persian Gulf and South Asia, let alone Africa where Chinese investments have focused on strategic sectors such as mining and oil. China argues that stronger economic growth in Asia and Europe will ease the tensions and instability widely prevalent in the region; economists are not necessarily convinced. China notes that it has backed similar, smaller-scale projects like the Shanghai Cooperation Organization, the Bangladesh-India-China-Myanmar Corridor and the China-Pakistan Economic Corridor to develop economic growth in the Asia.
It is unclear whether China will be able to garner support from potential partners, how China’s current economic challenges will affect the New Silk Road and the Maritime Silk Road.
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