MUCH has been said about the One Belt One Road (OBOR) initiative, a project initiated by China. The project aims to link China with the rest of Asia and Europe over land routes and sea ports. Covering 68 countries at a cost of US$1 trillion (RM4.04 trillion), this project aims to be the largest ever infrastructure project undertaken by any one country in the world.
Under the initiative, trade routes will be built between China and countries in Central Asia, Europe and Indo-Pacific littoral countries (countries bordering the shores of the Indian and Pacific Oceans). During ancient times, the Silk Road connected Eurasian regions by economic and cultural exchanges. Commodities, technologies and people all moved along the Silk Road, a path that was meaningful in the growth of regional development along trading routes.
The “belt” is the overland route, while the “road” is a series of port developments in the Indian Ocean linking China with Central Asia, Pakistan and South East Asia.
The Chinese government was instrumental in reviving the silk road tradition when it proposed the initiative as a development strategy to promote cooperation and connectivity between Eurasian countries. With OBOR, China would be in a position to take a greater role in global affairs and transport its wealth using OBOR’s trading network.
The initiative would, therefore, see a network of roads, railways, bridges, oil pipelines, power grids, ports and other infrastructural projects linking China to the rest of the world.
OBOR has two main components: the sea-based 21st Century Maritime Silk Road (MSR) and the land-based Silk Road Economic Belt.
MSR connects the European economic industry with the Asia-Pacific financial industry in the east.
Six economic corridors and one maritime route (Maritime Silk Route) will be the start of OBOR. The six economic corridors are the New Eurasian Land Bridge, the China-Mongolia-Russia Corridor, the China-Central Asia West Asia Corridor, the China-Indochina Peninsula Corridor, China-Pakistan Corridor, and Bangladesh-China-India-Myanmar Corridor. The whole project spans 68 countries across Asia, the Middle East, Europe and Africa.
However, far from being a mere physical linking of countries, OBOR also aims to “create the world’s largest platform for economic cooperation, including policy coordination, trade and financing collaboration as well as social and cultural cooperation”.
OBOR may thus be “a platform to create benefits for everyone”. Although there may be benefits, there may also be adverse repercussions for the nations involved. Since the launch of OBOR in 2013 a lot of progress has been recorded. China has reached consensus with a number of countries and agreements have been signed. Many projects on improving infrastructure connectivity with respect to the construction of railways, energy pipelines and electricity have been initiated.
Frameworks of financing mechanisms have formed; for example, the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund are operational. Bilateral agreements have already been signed with other countries, including Kazakhstan. Projects have started, with a train connection between eastern China and Iran that may be expanded to Europe. New rail links connecting Thailand and Laos are underway.
There are high-speed-rail projects in Indonesia. On the Maritime Route, negotiations have begun with China’s Ningbo Shipping Exchange and the Baltic Exchange.
What does OBOR mean to China?
The general feeling is that OBOR is designed to open up new markets for Chinese goods and technology. China would be able to move factories overseas to more less developed countries.
This would mean a boost for the Chinese economy as more goods would become available at lower prices.
Economies of less developed countries may improve as they would then be linked with neighbouring countries through OBOR. Tom Miller, the author of China’s Asian Dream, says that OBOR could be a political gambit to boost China’s regional clout as right now, Donald Trump’s United States appears to be moving away from Asia. China may well become the dominant country in the region, “a force to be reckoned with”.
The projects planned under OBOR could be beneficial to the partners in that short-term unemployment woes may be resolved.
Construction crews will build the necessary infrastructure for the movement of trade between the belt and the road, and there will also be increased employment in trade and industry-related sectors.
Other benefits include participating countries getting greater access to China as well as other interconnected markets along the proposed routes. Smaller and landlocked countries will gain from the increased accessibility.
Infrastructure improvement will result in increased investment from China and the partner countries and result in lowering of costs of transporting goods to countries according to the economies of scale and availability of better infrastructure. Furthermore, the exchange of ideas, information and technology among the partner countries will be enhanced.
However, not everyone is happy about OBOR. Reportedly, India’s Prime Minister Narendra Modi has said that while he appreciated the logical reasons that compelled connectivity, he felt that the “regional connectivity corridors should not override or undermine the sovereignty of nations”.
He referred to the support of connectivity as necessary to overcome barriers to reach out to the West and Central Asia, citing India’s own connectivity plans in Chabahar and the International North-South Transport Corridor.
Another country that is not too happy with OBOR is Myanmar. Myanmar has tried to diversify its economy away from China since military rule ended in 2012. It is not favourable towards China as “the fear is that China may control national resources as some believe it did in the past”.
OBOR has its good points as observed by Gary Sands, a senior analyst at Wikistrat, a crowdsourced consultancy. He says that the projects planned under the initiative could increase employment of construction personnel and provide necessary infrastructure for the movement of trade. This would then spur employment in other trade-related industries and service sectors.
Associate Professor at National Security College, Australian National University, Dr Michael Clarke, however, says that development may not be viewed positively by all the population. Some negative results are predictable, especially when people (local population) who are attached to their homes and culture and traditions, religion and language, feel uprooted because the development does not take into account their cultural sensitivities.
Although it is undeniable that there are benefits under OBOR, there are risks. Among them: China could use OBOR to export its surplus steel, cement and other materials to smaller markets.
Poorer countries along the corridor may not be successful in obtaining loans as they may be rated poor by top credit rating agencies. A number of countries lying in the belt and road region are characterised by internal strife, poor governance and political instability. This may have a negative impact on the smooth passage of trade and industry along the belt and road corridor.
Environmental pollution may result as infrastructure projects could displace communities that lie in the way of the belt and the road. Not to mention ocean pollution which can be disastrous to marine life. Problems may abound in relation to territorial and maritime issues.
Disputes, therefore, will need to be resolved in order for the maritime road to work smoothly. Financial implications will also need to be discussed. Financial commitments between the public sector and the private sector will also need to be ironed out. And, last but not least, political instability, or political disagreements between countries that lie along the corridor can push back the project timeline.
Grace Xavier is a research fellow, Faculty of Law, Universiti Malaya
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