What Is China’s Belt and Road Initiative?

What Is China’s Belt and Road Initiative

The Belt and Road Initiative (BRI)  was proposed by President Xi Jinping in September 2013 during his visit to Kazakhstan. The BRI covers two paths: the Silk Road Economic Belt and the 21st Century Maritime Silk Road (MSR).

The Silk Road Economic Belt is a transcontinental passage that links certain Chinese cities with South and SouthEast Asia, Central Asia, Russia, and Europe by land.

The MSR is a sea route that connects China’s coastal regions, South and SouthEast Asia, the South Pacific, the Middle-East, Eastern Africa, and Europe.

The Belt and Road Initiative aims to build trade and infrastructure networks along these regions, and beyond the Ancient Silk Road Routes.

The BRI may be the largest infrastructure development plan set in motion in the history of the world.
The Initiative is focused on sharing infrastructure development with the region which consists mostly of low, middle, and upper-middle income countries. The BRI also has a focus of extending and sharing their knowledge and expertise in IT, Telecommunication, and Financial Services across the region and creating a network of mutually beneficial cooperation and shared progress among BRI countries, which includes China.

Currently, around 1700 BRI projects worth over a $ 1 Trillion have been approved. These projects include roads, railways, ports, power grids, telecoms, and energy storage and distribution systems. Such projects have been authorized and financed with careful consideration for their ability to stimulate each country’s economy by encouraging foreign direct investments and invigorating local businesses.

This will create a rich network for sharing technology and resources among BRI countries, similar to that along the Ancient Silk Road Routes. 

More than 172 countries have signed around 200 agreements with China. Among them, Tajikistan was the first to sign a co-operation agreement under the Belt and Road Initiative.

What the Belt and Road Initiative could mean for the World

The Belt and Road Initiative’s network is certainly a buoyant mechanism through which resources and prosperity can be shared more fruitfully and fairly across the globe. The era of great economic progress being condensed around a few nations will no longer prevail.

Economic prosperity along the belt and road regions will most likely create a ripple effect on development in adjoining nations as well, taking into consideration how the BRI extends through key points across Asia, Europe, Africa, and parts of South America.

The BRI is estimated to have an impact on almost 4.4 Billion people across its expanse.

The Belt and Road Initiative will not only improve prospects for economic development among BRI countries, it will also improve regional cooperation among nations, especially during times of crisis. Sending and receiving aid in the form of supplies or manpower between countries will be faster and more efficient. An example would be the likes of something similar to the Covid-19 pandemic or a natural disaster where effective communication and collaboration among neighboring states can greatly assist in mitigating disasters.

The vibrant interconnectivity and alliances among nations along the belt and road can foster better mutual understanding and harmony among diverse cultures, people, and societies in this region.
President Xi Jinping’s vision for “Building a community with a shared future for mankind” through the Belt and Road Initiative will have a cultural impact for BRI nations as well. Enhanced communication among BRI countries will introduce rich and constructive cultural exchanges among its peoples.

Previously dubbed the One Belt One Road project, Chinese President Xi Jinping said this about the BRI: “The Belt and Road Initiative China launched is designed to mobilize more resources, strengthen connectivity, leverage potential growth drivers, and connect markets. It is designed to integrate more countries and regions into economic globalization and achieve shared prosperity through mutually beneficial cooperation.”

He also said, “The Belt and Road Initiative may be China’s idea but its opportunities and outcomes are going to benefit the world. China has no geopolitical motives, seeks no exclusionary blocs, and imposes no business deals on others.”

The more strong and self-sufficient economies there are around the world, the better we can address and act on challenges such as climate change and poverty alleviation much more effectively.
A major roadblock to addressing climate change concerns is the global imbalance of power and economic strength plaguing a majority of nations. Better economic collaboration and shared growth among nations will build a more robust tradition of teamwork in the world. 

What the BRI may mean for Business and International Relations 

Infrastructure developments had a profound positive effect on China’s economy many decades ago. It increased collaboration between previously disconnected regions within China and jump started a strong culture of productivity and more streamlined business activities.
The Belt and Road Initiative is set to stimulate a similar growth in the BRI regions.

In 2020, 12,406 trains were in operation under the BRI. Through their routes 9.3 million pieces of Covid-19 essentials weighing 76,000 tonnes were transported to their desired locations. This is a feat that would have cost more money and time to execute in the absence of these train routes.
The infrastructure already in place within the BRI is proving to be of great use in their respective regions.

A study carried out by the World Bank that analyzed the impact on trade in 71 potential participant nations. The BRI would increase trade flow among these nations by upto 4.1%.
The study also estimated a 4.97% increase in Foreign Direct Investment (FDI) to BRI countries resulting from its proposed transportation network. The World Bank study found that FDI flows within BRI countries could increase 4.36%, and a potential 5.75% increase in FDI flows from non-BRI countries.

As of 2017, Chinese enterprises have established more than 52 economic cooperation zones in BRI countries. China has paid more than $ 900 Million in local taxes to these BRI nations, and created more than 70,000 local jobs. 

The Belt and Road Initiative will be similarly of great importance to Beijing as it opens up many more new markets for Chinese products. At the same time, shipping costs will be cut by the improved transcontinental road and sea connections.
Importing and exporting of goods among BRI countries is going to be more convenient, more direct, and will happen at a lower cost. The lower transport and freight forwarding costs and new markets within countries along the BRI is bound to increase the incomes of these nations significantly.

The BRI projects are principally funded by China’s extensive foreign reserves. State-owned banks such as the China Development Bank and the Export-Import Bank of China have also taken part in issuing loans for several initiatives under the Belt and Road. Loans are issued to ensure that there can be no defaults or strain on the borrower in paying them back.

The Hambantota International Port (HIP) located in Southern Sri Lanka is located adjacent to the Hambantota Port Industrial Park (HPIP) that is currently attracting both foreign and local investments. A 300 million dollar agreement with Shandong Haohua Tires was signed in 2020. The company is set to begin operations at the HPIP, and use Sri-Lankan rubber resources for manufacturing, and export these products worldwide.

Sea Horse, a maldivian company has also signed a USD 58 million agreement to assemble and export yachts at Hambantota Port. There are many more projects the HPIP have signed, or currently in the discussion phase. HPIP has a special advantage over other similar economic zones as it is immediately linked to a strategically located International Port.
Over a phone conversation with President Xi Jinping, Sri Lankan President Gotabaya Rajapaksa said that projects like the Hambantota Port “have vast potential in contributing to the socio-economic development of Sri Lanka”.
The Hambantota International Port is acting as a catalyst to attract new business opportunities into the country.

Over in Cambodia, the Sihanoukville Special Economic Zone (SSEZ) was jointly built by both Cambodian and Chinese private companies. It spans 11.13 square kilometers. It is already a thriving multinational investment platform bringing much needed industry into the still developing nation. Once fully completed, it will be able to facilitate at least 300 enterprises and employ upto 100,000 industrial workers.

The Ethiopia-Djibouti Railway connecting Addis Ababa to the Red Sea Port of Djibouti has cut down a 4 day journey to a mere 12 hours. The railway covers a 751.7KM route, and can carry up to  24.9 million tonnes of freight annually. Ethiopia is a mostly agrarian economy and relies heavily on the timely and efficient supply of fertilizer. Already, the railway has helped transport more than 70,000 tonnes of fertilizer into Ethiopia.

Some other projects under the BRI are the China-Pakistan Economic Corridor (CPEC) connecting China to Gwadar seaport in Balochistan Province in Pakistan; The Port of Khorgos bordering China and Kazakhstan; a rail route connecting Yiwu in Zhejiang Province to London through Moscow, and many other projects.

The Belt and Road Initiative Projects seek to create win-win business situations for investors and the countries involved. 

Possible Land and Sea Routes for The Belt and Road

More than 172 countries have signed around 200 agreements with China.
[Image credit: www.oecd.org]

The Laos High Speed Rail (also called The Boten–Vientiane railway) connecting the capital Vientiane and Boten Town in Laos, on the border with Yunnan, China, is an electric railway spanning 422 KM. Extreme care was taken in preserving the flora and fauna along the route during construction.

70% of the world’s high speed rails run on Chinese tracks. High speed rail travel helps mitigate several metric tonnes of carbon dioxide emissions per year. Not only is it a greener way to travel and transport goods over long distances, it is also the fastest and most convenient.

China’s dedication to promoting green energy and carbon negative economic growth starts within the nation and most certainly extends into the BRI. China’s installed capacity for green energy has reached 2.32 Billion kW, and continues to grow by at least 9% each year.
Thanks to large scale green investments made mainly in China, the overall cost of renewable energy has dropped by nearly 90% globally over the last decade.
President Xi Jinping has also halted all investments in coal, and will be focusing future energy related endeavors on carbon neutral options such as wind power and photovoltaics.

The 2022 Beijing Winter Olympic Games currently underway are powered 100% on renewable energy, with the aid of the Zhangbei DC Flexible Power Grid. Zhangbei HVDC Power Grid is the first of its kind in the world, and improves the efficiency of transmitting large amounts of power over long distances, by leaps. It incorporates power supplied by different sources of renewable energy and transmits it seamlessly to the winter olympics venues. As it’s never been done before, the energy intensive games are proving to be a successful testing and demonstration event for this new grid type. It can very well be the key to transitioning to 100% renewable energy in China in the near future. 

The gradual introduction of the Digital Yuan will play a great part in mitigating the carbon footprint associated with using fiat currency. The E-CNY, a Central Bank issued Digital Currency, will use far less resources in its creation and countrywide use.

For more than a decade, China has been developing and implementing renewable energy sources to support its National Grid to address the country’s CO2 emissions. The leaps made in this direction have been impressive. China’s dedication to the research and development of renewable energy, its efficient transmission, and practicality in their production heavy economy, is a hopeful look into a sustainable future for the country and even the BRI.

One of China’s goals with the Belt and Road Initiative is to share technological advancements in green energy with countries in the region, fostering a healthier future for all of us. The exchange of the science, techniques, and resources is needed to bolster sustainable economic prosperity for all nations along the Belt and Road Initiative. 

In Conclusion

The Belt and Road Initiative (previously One Belt One Road), is undoubtedly the mechanism through which higher international unity can be obtained and nurtured. Through it, we will see more vibrant, connected, and prosperous regions in Asia, Europe, and Africa.
The BRI may just be the answer to achieving a more equal and prosperous world.