Written by Irina Ionela Pop, Centre for Geopolitics & Security in Realism Studies (CGSRS)

China’s “One Belt, One Road” (OBOR) initiative, formally presented on 28 March 2015, is not just another “new Silk Road project”. Rather it is a consistent and ambitious Eurasian strategy of an emergent power. The OBOR initiative is based on existing and planned linkages from various regions of China towards the outside world. Supported by large financial contributions, it seems to be better articulated than other similar projects. Therefore, this paper aims to present the strengths and implementation challenges of China’s OBOR initiative. We took into account several levels on analysis: national, regional and international. In this sense, we focused on domestic constraints, tensions in China's neighbourhood, and great power rivalries. Finally, we tried to offer several suggestions regarding the improvement of China’s initiative. The suggestions concern the initiative’s planning and implementation, the means to improve its bilateral relations with neighbours and great powers, in order to be perceived as a responsible power on the international arena.

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By Ernst & Young

2015 was special for Chinese investors. Due to the unrest in the global market, China’s economic growth rate has been slowing. China’s economy grew by 6.9% in 2015, the lowest in the last five years. However, China’s outward FDI grew by 13.3% in 2015, hitting a historical high of USD 139.5 billion. Over the past five years, China’s average annual economic growth has been 7.4%, but its outward FDI CAGR reached as high as 16.9%. Ernst & Young predicts China’s growing outbound investment would become the kErnst & Young driver of future domestic economic growth and acceleration of the globalization. In 2016, the global economic recovery remains uncertain. However, China’s outbound investment was strong in the first quarter of 2016. One of the announced key deals was ChemChina’s acquisition of the Swiss giant Syngenta for more than USD 43 billion, the biggest-ever overseas acquisition by a Chinese enterprise. Ernst & Young expects the imperative need to upgrade, transform and improve Chinese enterprises’ international competitiveness is propelling them to “Go Global”…

With national strategies being carried forward, Chinese enterprises are being presented with new opportunities to expand overseas. However, risks always exist. The economic and geopolitical risks in the target countries and fierce competition in the global market will bring uncertainties to overseas investment. To realize the dream of a global manufacturing power, Chinese enterprises need wisdom and courage, on their way to the globe.

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Other related reports:
Riding the Silk Road: China Sees Outbound Investment Boom
Navigating the Belt and Road: Financial Sector Paves The Way for Infrastructure

By Fung Business Intelligence Centre

It has been a year since the Chinese government unveiled the official action plan for the Belt and Road Initiative. With new developments emerging all the time and more information available, it is necessary to have an up-to-date wrap-up on how the Initiative has progressed. One common confusion is which countries are exactly included in the Initiative as the Chinese government has never announced an official list. A Chinese report, released by the China International Trade Institute in August 2015, identified 65 countries along the Belt and Road that will be participating in the Initiative. Together, the countries along the Belt and Road will create an "economic cooperation area" that stretches from the Western Pacific to the Baltic Sea. According to our computation, these 65 countries jointly account for 62.3%, 30.0% and 24.0% of the world’s population, GDP and household consumption, respectively, today.

It is worth noting that, the Initiative should be taken as an open platform for all parties that are willing to contribute to global connectivity. As the official action plan for the Belt and Road puts it, "The Initiative is open for cooperation. It covers, but is not limited to, the area of the ancient Silk Road. It is open to all countries, and international and regional organizations for engagement…"

And Chinese President Xi Jinping has reiterated in many official occasions that the Initiative is an open, diversified and win-win project poised to bring huge opportunities for the development ofChina and many other countries. The Fung Business Intelligence Centre has in the past year collected a list of those other countries that have participated or have showed interest in the Initiative, through joining the Asian Infrastructure Investment Bank (AIIB), developing transport infrastructure in collaboration with China, or through many other forms of cooperation. In this way, we have identified 48 such countries which are not covered in the 65-country list above but are likely to become active participants in the Belt and Road in the future.

Please visit the Fung Business Intelligence Centre website for the full report.

By Norton Rose Fulbright

Introduction

The Belt & Road Initiative (B&R) is without a doubt the most ambitious, strategic interconnected infrastructure initiative devised in recent memory.

What?

Launched by Chinese President Xi Jinping in 2013, the initiative aims to connect major Eurasian economies through infrastructure, trade and investment. It will see a RMB1.5 trillion infrastructure investment pipeline¹ stretching over 10,000 km over more than 60 countries with a total population of 4.4 billion² and 40% of global GDP³ across Asia, Europe, the Middle East and Africa, and cover projects across the infrastructure and energy sectors from small scale renewables to large scale integrated mining, power and transport projects. After its announcement in 2015, over 1400 contracts worth over US$37 billion were signed by Chinese companies in the first half of 2015.⁴

Full details of both the project pipeline and the specific requirements for a project to qualify as a B&R project are still not fully certain. What is clear is that the potential opportunities for infrastructure investment are immense.

For any host country or investor interested in infrastructure in B&R regions, Chinese capital cannot be ignored. Tapping it can be difficult but a foreign investor who can navigate the issues involved is potentially unlocking the key source of capital and equipment for the B&R regions’ major projects over the next fifteen years.

Where?

The Belt & Road Initiative has two main elements: the Silk Road Economic Belt and the 21st Century Maritime Silk Road.

The Silk Road Economic Belt will be an overland network of road, rail and pipelines roughly following the old Silk Road trading route that will connect China’s east coast with Europe via a new Eurasian land bridge. 5 regional corridors will branch off the land bridge, with Mongolia and Russia to the North, South East Asia, India, Pakistan and Bangladesh to the South, and central Asia, West Asia and Europe to the West.

The 21st Century Maritime Silk Road is a planned sea route with integrated port and coastal infrastructure projects running from China’s east coast to Europe, India, Africa and the Pacific through the South China Sea and the Indian Ocean.

The geographic scope of the Belt & Road Initiative is fairly fluid and on some interpretations has also been extended to Australia and the UK.

A snapshot of the land corridors and a map showing both the Belt and the Road is set out……

This article was first published by Norton Rose Fulbright and is reprinted here with their full permission.

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By Pathfinder Foundation/EconomyNext.com

The Maritime Silk Road (MSR) and Economic Belt policy initiatives unveiled by President Xi Jinping in 2013 were identified as significant elements of an overall Chinese attempt to leverage China’s growing economic power and influence along its geographic boundaries.

The objectives of this enormous development initiative is to strengthen and expand co-operative interactions, create an integrated web of mutually beneficial economic, social and political ties, and ultimately lower distrust and enhance a sense of common security.

MSR : Concept and Direction

MSR and Economic Belt, also known as One Belt, one Road initiative, has envisioned the creation of a highly integrated, co-operative, and mutually beneficial set of maritime and land-based economic corridors linking European and Asian markets. The Belt and road run through the continents of Asia, Europe, and Africa, connecting the vibrant East Asia Economic circle at one end to a developed European economic circle at the other and encompassing countries with huge potential for economic development. The Silk Road Economic Belt focuses on bringing together China, Central Asia, and West Asia. The “Maritime Road” which is designed to extend from the China’s coasts through the South China sea, the Indian Ocean, the Red Sea, the Mediterranean Sea (through the Suez Canal), with stops in Africa along the way. After the official announcement by President Xi Jinping, the funding for the implementation of MSR and Economic Belt is to be modified through the Asian Infrastructure Investment Bank (AIIB) amounting to $50 billion, $40 billion from the New Silk Road Fund, and the New Development Bank initiative between BRICS nations.

The scope and content of the One Belt, One Road initiative is breathtaking, and its goals are ambitious. A Chinese authoritative source once declared that the primary goal of this initiative is to promote and achieve five major goals: “policy coordination, facilities connectivity, unimpeded trade, financial integration and people-to-people contacts” among its constituent nation states. The initiative to jointly build the Belt and Road embraces the trend towards a multipolar world, economic globalization, cultural diversity and greater ICT application. It is also designed to uphold the global free trade regime and open the world economy. It is aimed at promoting orderly and free flow of economic factors, highly efficient allocation of resources and deep integration of markets. It is also aimed at encouraging the countries along the Belt and Road to achieve economic policy coordination, carry out broader and more in-depth regional co-operation and jointly create an open, inclusive and balanced regional economic co-operation architecture that will benefit all.

The Belt and Road Initiative aims to promote the connectivity of Asian, European and African continents and their adjacent seas. Established and strengthened partnerships among the countries along the Belt and Road, sets up multi-dimensional, multi-tiered and composite connectivity networks, which promote diversified, independent, and sustainable-balanced development among nations. The connectivity projects of the Initiative will help align and coordinate the development strategies of the countries along the Belt and Road, tap market potential in this region, promote investment and consumption, create demand and job opportunities and enhance people-to-people and cultural exchanges.

Perception of the West and the Indians

An article authored by Jacob Stokes, which originally appeared on the Times of India, states that, “the plans have strong financial backing, particularly through China’s vaunted AIIB, and the support of China’s political and economic elites. But huge stumbling blocks still remain, and could challenge China’s ability to realise its ambitions. While efforts to fill Asia’s infrastructure gap - estimated at $8 trillion through 2020 - are welcome, lax lending standards could undermine progress”. If nations use the funding to pursue illogical or unfeasible development projects related to One Belt, One Road, Chinese investments will suffer as debtors struggle to pay back loans. In addition, projects that come with unexpected environmental or human rights scandals could dampen Chinese efforts to upgrade port infrastructure along the route and create free trade zones which add trade capacity for participating nations. He also added that, “it is not yet clear how the maritime road will supplement existing shipping lines”.

Further, although Chinese Foreign Minister Wang Yi has stated that One Belt, One Road is “not a tool of geopolitics,” there is concern that China would attempt to turn economic co-operation into political influence. Doing so will require Beijing to overcome a number of difficult obstacles, primarily, managing great power competition with India, Russia, and the United States within Central Asia, South Asia, and the Middle East. Russia’s efforts to create a Eurasian Union, linking former Soviet states through economic co-operation, poses direct competition to China’s own integration strategy, even though Chinese-Russian relations are on the mend. India would have reservations about Chinese regional aspirations as well, since Beijing’s programs could hinder its own “Act East” and “Connect Central Asia” policies.

Chinese maritime expansion into the Indian Ocean - especially within ports that could serve as staging grounds for Chinese naval operations - only adds to India’s unease. Although the United States involvement in Central Asia is waning as its role in Afghanistan winds down, Chinese involvement across Eurasia, the Indian Ocean, and the Middle East will test Beijing’s ability to balance competition with co-operation - working with, than against, neighbours and global political powers.

Benefits and Pitfalls of Sri Lanka aligning with MSR

MSR itself will have many positive impacts on medium and longer term economic development of Sri Lanka as a country located strategically in the middle of the proposed Maritime Silk Road. Initially, it will attract infrastructure development oriented funding from the Chinese sources, such as Exim Bank, Asian Infrastructure Investment Bank, Silk Road Fund as well as private investors. Such improvements will provide the basis for flow of FDI from a large number of other investors from both the East and the West.

However, the Western and Indian analysts perceive and project the Chinese one-belt-one- road strategy as a security threat to its neighbours specially India, Sri Lanka’s closest neighbour. Historical animosity and suspicion between India and China is now being fueled by the latter’s emerging economic and military power. Issue in question is whether Sri Lanka should be the victim of rivalry between two countries which claim to be genuine friends of us.

Sri Lankan leaders, taking into consideration the complexities that exist in the geopolitical situation need to manoeuvre Sri Lanka - China and Sri Lanka - India relations to achieve a win-win-win situation.

This article was firstly published at EconomyNext.com.

By Michal Romanowski (Program Officer, German Marshall Fund of the United States, Poland, in association with PASOS, Policy Association for Open Society, Czech Republic)

(This paper was commissioned by the European Parliament's Committee on Foreign Affairs)

Central Asia, located at the centre of the Eurasian continent and straddling the borders of some of the world’s most pressing hot spots, offers economic opportunities and natural resources but also remains insecure and troublesome. For the European Union, the region is not a priority. It is too distant and Brussels experiences difficulties in executing its democratic and value-based agenda on the ground.

Regional dynamics have been significantly influenced by many players present in the region; Russia, China and the United States are the most significant. Russia’s position relies on a holistic approach, including military might and the more recent Eurasian narrative. China, pursuing its Silk Road ideas, has no equal in trade and energy. The US has partially retreated from Central Asia and is reviewing its security-centered strategy.

Under these circumstances, what should the EU regional approach look like? What are the shared interests and divergent objectives of the actors present in Central Asia? With what actors could the EU co-operate and with whom should it abstain from regional rapprochement? Finally, what options does the EU have to strengthen its posture in the region from a regional and geopolitical perspective? ……

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By World Commerce Review

The Chinese President Xi Jinping mooted the idea of the New Silk Road and 21st Century Maritime Silk Road initiatives in 2013. Later, in November 2014, the One Belt, One Road (OBOR) concept was officially unveiled at the Asia Pacific Economic Cooperation (APEC) meet with the establishment of a $40 billion silk fund. The OBOR project has two parts. One Belt will be a land based economic corridor slated to run from Xian in Shaanxi province, China, traversing through Central Asia and Europe before terminating at Venice in Italy. The belt involves significant investments to develop road and rail infrastructure along this corridor along with other ancillary facilities like high speed fibre optic cables for better communication and energy pipelines.

The One Road, on the other hand, refers to the 21st Century Maritime Silk Road - a sea based route, originating from Quanzhou in Fujian province China, passing through the Strait of Malacca in order to reach Nairobi (Kenya), before merging with the land based route at Venice. Investments are likely to be undertaken in development of ports in the participant countries along with initiatives to simplify procedures of transporting goods across the borders……

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By DIIS - Danish Institute for International Studies

China’s Belt and Road Initiative remains a grandiose and abstract wish list rather than a coherent blueprint of interconnected international investments. Once it is set into motion many of the infrastructure projects will encounter financial uncertainties as well as political and security risks.

China’s “Belt and Road Initiative” is President Xi Jinping’s signature foreign policy initiative. First announced in 2013, the land-based “Silk Road Economic Belt” and its maritime twin, the “21st Century Maritime Silk Road” are ambitious plans aimed at placing China at the heart of regional trade networks and restoring it to a prominent geopolitical position in Asia. The combined Belt and Road envisage new transport infrastructure, industrial corridors, power lines, railways, ports and trade routes that will enable a two-way flow of goods, people and ideas that stretches from China to the Middle East and Europe……

RECOMMENDATIONS

• Western governments should engage China on global issues in order to shape rules jointly, rather than attempting to socialize Beijing or fearing newly created institutions.
• Western governments should engage Beijing in specifying how the Belt and Road Initiative will advance the interests of potential foreign partners.
• China and the international community can draw lessons on political and security risk, and labor and environment issues, from Chinese overseas investments in the past two decades……

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Prepared for Tekes by Enright, Scott & Associates

“One Belt One Road” is a Chinese initiative to connect more than 60 countries (64 at present) with physical, commercial, cultural, and other links. These countries have a combined population on the order of 4.4 billion. The “One Belt” refers to the “Silk Road Economic Belt,” a recreation of the old land-based Silk Road trade routes from China through Central Asia and on to the Middle East and Europe. This is also called the “Modern Silk Road.”……

Finally, we stress once again that Finland and Finnish companies should not be passive. China’s leaders have not fully defined the OBOR initiative or the full range of OBOR projects. Many countries and companies will wait until there is more definition before engaging. The trouble is that by the time projects are defined, they are often allocated. The best way to obtain business associated with the OBOR initiative is to help define the projects. According to Chinese officials, the OBOR initiative is supposed to be open and participative. Finland and Finnish companies should try to identify projects that they are well suited for and that are consistent with the OBOR initiative to present to Chinese counterparts.

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By IAI Working Papers

The European Council has mandated the High Representative of the Union for Foreign Affairs and Security Policy, Federica Mogherini, to draft a Global Strategy by June 2016. Given Europe’s status as a global power, such a strategy must respond to Europe’s own challenges as well as to the new grand strategies of other major players in world politics, like China. To better understand the central tenets of the Chinese leadership’s strategic thinking, two keywords are most important – the “Four Comprehensives” and the “One Belt and One Road” (OBOR). As an initiative mainly focusing on promoting Eurasian integration and reshaping Chinese geoeconomic advantages, the OBOR is highly consequential to China’s interactions with Europe and the rest of the world at large in the decades to come. How to take advantage of the OBOR, create new EU-China synergies, and tackle relevant challenges are questions the EU leaders should be attentive to.

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