Silk Road Initiative

In this article, we shall discuss China’s Silk Road Initiative, or what is also referred to as “One Belt, One Road.” The Silk Road Initiative is a recent economic program put forward by Chinese President Xi Jinping. In this piece, we will discuss the history of the “One Belt, One Road” policy,

What is The Silk Road Initiative?

The The One Belt, One Road Initiative (The Silk Road Initiative) was first established by Xi Jinping in 2013, in attempts to better link China to other countries through increased trade. Then, President Xi held a two-day summit in mid-May 2017 in hopes of further explaining the One Belt, One Road policy, and also to get countries on board with the initiative. The proposed plan would be upwards of 900 billion USD. Xi has hyped this Silk Road Initiative as the “Project of the Century” (Phillips, 2017) and believes that it will lead to multiple positive developments between China and many countries in the world. Overall, “…the program is an estimated $5 trillion…infrastructure spending spree that spans 60-plus countries across Asia, the Middle East, Europe and Africa” (Huang, 2017).

As it has been noted, “The “One Belt” refers to a “Silk Road Economic Belt” from China through Central Asia to Europe. The “One Road” refers to Beijing’s concept of a “21st century Maritime Silk Road” to connect China to Europe via the South China Sea and Indian Ocean. The initiative involves developing six economic “corridors”: 1. a China-Mongolia-Russia corridor; 2. a new Eurasian “Land Bridge”; 3. a corridor from China to Central Asia and Western Asia; 4. a China-Indochina peninsula corridor; 5. a China-Pakistan economic corridor; and 6. a Bangladesh-China-India-Myanmar economic corridor” (Wharton, 2017).

A related program to the One Belt, One Road Initiative is the “Maritime Silk Road” program which is a similar economic initiative that increases connectivity between China and countries such as Australia to parts of East Africa (Wharton, 2017).

China has already had a large role in the economic development of countries in Southeast Asia and beyond. In fact, “For many countries in the region, China is by far the biggest source of financing: Beijing’s Export and Import Bank of China alone lent $80 billion in 2015, compared with more than $27 billion from Asian Development Bank. Chinese involvement in building railways, ports, roads, dams and industrial corridors is helping to expand its economic and geopolitical sway across Asia, the Middle East, Europe and Africa” (Wharton, 2017).

The Silk Road Initiative is said to be open to any country that wants to be involved, although in the early stages (in 2017), the 65 countries (along with China) that were noted for the program “account for 62% of the world’s population and 30% of its economic output” (Huang, 2017). The two day conference in May of 2017 brought 30 countries together. Here, the countries “reaffirmed their commitment to build an open economy and ensure free and inclusive trade, under the ambitious Belt and Road initiative led by Beijing. As a two-day summit on the project in Beijing wound up, the 30 nations also agreed to promote a rules-based, non-discriminatory trading system with the World Trade Organization at its core and to oppose protectionism, according to a joint communique signed by their leaders” (Reuters, 2017).

How is China Funding the Silk Road Initiative?

One of the main questions regarding the One Road, One Belt Initiative is how China plans to fund the program. As it has been noted, “The $113 billion in extra funding Xi promised will be disbursed through three different sources. These include the state-owned Silk Road Fund, which was officially launched in 2015 with $40 billion of initial capital, and two Chinese policy banks, the China Development Bank and the Export and Import Bank of China. Some analysts have warned (paywall) that some OBOR projects financed by these banks may lose money–maybe a lot of it” Huang, 2017).

Moreover, “Two multilateral institutions led by China, the Beijing-based Asian Infrastructure Investment Bank (AIIB)—with its registered capital of $100 billion—and the Shanghai-based New Development Bank—with $50 billion starting capital—are also major financiers of the initiative. In 2016, for example, the AIIB approved $1.7 billion in loans to nine development projects along the Belt and Road” (Huang, 2017). Furthermore, China is also looking for other states to also provide economic contributions to the initiative (Huang, 2017).

The Political Implications of the Silk Road Initiative

The great amount of attention given to the One Road, One Belt Initiative has been economic. And rightly so. China is greatly increasing its investments and aid abroad. However, that is only part of the picture. There is also clearly a political motivation behind the Silk Road Initiative. For years, China has increased its international relations activities, particularly on matters of aid and humanitarian efforts (Hirono, 2013). Moreover, there are also those who argue that China will use these economic routes for increased military presence throughout the world. For example, “The geopolitical aspects of the OBOR initiative could eventually draw attention from the Trump administration, given its strong stance on national security. “It is an economic initiative, but along the way China will expand its military bases and so forth,” says Wharton emeritus professor Franklin Allen, who also is a professor of finance and economics at Imperial College in London. “On the sea routes they will develop their military capability and on the land routes, too”” (Wharton, 2017).

Thus, it is so surprise that so many people feel that the main reason for the Silk Road Initiative is political as opposed to economic (Griffiths, 2017).

Positive Responses to the Silk Road Initiative

The One Road, One Belt Initiative received a range of positive responses from political leaders throughout the world who are said to be impacted by the initiative. For example, “Ethiopia’s prime minister, Hailemariam Desalegn, hailed what he called a unique, historic, extraordinary and momentous project. “Many of us in the developing world – especially we in Africa – continue to view China as a successful economic model and a reliable ally in the fight against poverty and in our quest for prosperity,” he said, describing the Belt and Road as the greatest economic collaboration of the 21st century” (Phillips, 2017).

Moreover, as Phillips (2017) notes, “Malaysia’s prime Minister, Najib Razak, tweeted his approval from the audience for the “visionary and exciting” initiative while Chile’s president, Michelle Bachelet, predicted it would “pave the way for a more inclusive, equal, just, prosperous and peaceful society with development for all”. “Chile is ready to become a bridge country between Asia and Latin America,” Bachelet said.”

Critiques of the One Road, One Belt Initiative

Despite many countries’ excitement about the new possibilities of trade with China, not everyone has been so optimistic. In fact, there has also been heavy criticism of this plan. For example, one of the most outspoken critics has been the Indian government, who view it not as a good-hearted attempt by China to help other countries develop, but rather, it is merely a program that serves to hide an underlying agenda of colonialism. For example, the Indian government spoke out against the program, protesting the two-day summit in May of 2017, saying that “We are of the firm belief that connectivity initiatives must be based on universally recognised international norms, good governance, rule of law, openness, transparency and equality. Connectivity initiatives must follow principles of financial responsibility to avoid projects that would create unsustainable debt burden for communities; balanced ecological and environmental protection and preservation standards; transparent assessment of project costs; and skill and technology transfer to help long term running and maintenance of the assets created by local communities” (in Bagchil, 2017).

India is most upset with the program because of the increased ties between China and Pakistan. Pakistan has been a regional rival to India, with current hostilities in areas such as Kashmir. As mentioned in the video above, China is supporting a major Pakistan development project in Kashmir, which infuriated Indian officials, leading them to speak out against what they believe is a violation of sovereignty (see our article on India-Pakistan Relations for more detail on the history of Kashmir between Pakistan and India). However, the response by Pakistan to the Silk Road Initiative was very positive. As noted, “One of the most resounding endorsements came from Nawaz Sharif, the prime minister of key ally Pakistan, who told the audience he had come to offer his “deepest tributes” to Xi’s “seminal initiative”. “We stand at the cusp of a geo-economic revolution. In fact, this is the dawn of a truly new era of synergetic intercontinental cooperation,” Sharif said” (Phillips, 2017).

Xi responded to critics, saying that this was not an imperialism effort by China (Phillips, 2017). Published in the government outlet Xinhua Net, China responded saying that they are not looking to be a world hegemony, and that the objectives of the Silk Road Initiative are to focus on infrastructure and economic development, programs that will help multiple countries involved (Xinhua, 2017).

Silk Road Initiative References

Bagchill, I. (2017). India slams China’s One Belt One Road initiative, says it violates sovereignty. The Times of India. May 14, 2017. Available Online: http://timesofindia.indiatimes.com/india/china-road-initiative-is-like-a-colonial-enterprise-india/articleshow/58664098.cms

Griffiths, J. (2017). Just what is this One Belt, One Road thing anyway? CNN. May 11, 2017. Available Online: http://www.cnn.com/2017/05/11/asia/china-one-belt-one-road-explainer/

Hirono, M. (2013). Three Legacies of Humanitarianism in China. Disasters. 22 July 2013. Available Online: http://onlinelibrary.wiley.com/doi/10.1111/disa.12022/full

Huang, Z. (2017). Your guide to understanding OBOR, China’s new Silk Road plan. Quartz. May 15, 2017. Available Online: https://qz.com/983460/obor-an-extremely-simple-guide-to-understanding-chinas-one-belt-one-road-forum-for-its-new-silk-road/

Phillips, T. (2017).China’s Xi lays out $900bn Silk Road vision amid claims of empire building. The Guardian. May 14, 2017. Available Online: https://www.theguardian.com/world/2017/may/14/china-xi-silk-road-vision-belt-and-road-claims-empire-building

Reuters (2017). China’s new Silk Road promises trade and riches, with President Xi at helm. Reuters. May 15, 2017. Available Online: http://www.reuters.com/article/us-china-silkroad-protectionism-idUSKCN18B0B5

Wharton School of Business (2017). Where Will China’s ‘One Belt, One Road’ Initiative Lead? Wharton School of Business. March 22nd, 2017. Available Online: http://knowledge.wharton.upenn.edu/article/can-chinas-one-belt-one-road-initiative-match-the-hype/

Xinhua (2017). Commentary: Is China’s B&R Initiative just hegemony in disguise? Xinhua. May 13, 2017. Available Online: http://news.xinhuanet.com/english/2017-05/13/c_136279650.htm