What does the One Belt One Road Do for China?

China, through the One Belt One Road, has linked its domestic economic policy to its foreign policy, implying that the best way to protect national interests is to transform international politics. 

China’s One Belt One Road (OBOR) initiative is the centrepiece of its foreign policy and domestic economic strategy. The “New Silk Road,” as it is also termed, plans to transform international trade and substantially revamp the Asian subcontinent. The OBOR includes investments in roads, ports, energy and other infrastructure of participating nations with the aim to underpin trade between the Atlantic and the Pacific much in the same way the  ancient silk road did. The project was originally bifurcated into two initiatives: Overland Silk Road Economic Belt and the Maritime Silk Road. Together, they form the OBOR or what is also known as the Belt and Road initiative.

The OBOR has the potential to become one of  the largest platforms for transnational trade. Some of the benefits include remitting money for infrastructural development to those countries that are opportunity–rich but capacity–deficient. Other than this, the construction of a Sino-centric value chain will create commonalities among pluralistic nations. Analysts have looked at the transformation of China as one of the most significant incidents in global economic history in the last 40 years. 

However, there are also several contentions that the OBOR gives rise to. Experts have labelled the OBOR as Chinese new imperialism, and as an instrument that will allow China to establish itself as a hegemon. The OBOR is not just a means to establish physical manifestations of Chinese hard power in the form of infrastructural projects but also a way to purvey Chinese soft power. The rectitude that China shows while extending a helping hand to participating countries is a strategic manoeuvre for what experts term as “debt trap diplomacy.” This along with the strategic implications of the OBOR that seem to insouciantly bypass the sovereignty of many nations has led to many countries such as India protesting against it. New Delhi has even boycotted the One Belt One Road Forum twice to protest its passing through the Pakistan–occupied Kashmir (PoK) region.

This reading list explains why despite all odds and criticism, China is moving forward with the “New Silk Road.”

1) China’s ‘New Marshall Plan’

Chinese investments are contingent on the recipient realigning his interests to those of China. Using the OBOR, therefore, China can reorient policies of foreign governments, global networks of trade, and international institutions. As Mukul Sanwal writes:

China’s Belt and Road Initiative is not a project, or even a number of projects. Its conclusion, planned for 2049—the centenary of the founding of the People’s Republic of China—aims to create a negotiated order in world economy and politics (Holmes 2018). Just like in the 1950s, the US too  shaped institutions, rules and approaches to serve its interests, which was described as creating the “liberal order.” The Marshall Plan offered aid only to those who agreed to these new rules and the new order extended to the global commons. Today, the US continues to pay over one-fifth of the salary of the United Nations (Graham 2017). This  was part of the strategy to control—either directly or indirectly—resources, markets and industrial infrastructure of newly independent countries. The difference now is that the emerging order is not based on military might and does not require a hegemon to keep the others in line. The emerging global order is unlikely to be defined by the strategic thinking that the best way to protect national interests is to transform international politics.

2) The Composition of the South Asian Region

The characteristics of the South Asian region creates favourable conditions for the OBOR. The region is populated by developing economies which are driven by intensive external capital investment and large populations. Though there are visible cultural distinctions, one also finds similar traits that have been disseminated through interactions of these countries over centuries. As Srinath Raghavan writes,

South Asia has at least three attributes that make it well-suited for integration by connectivity and trade: the highest population density in the world, linguistic and ethnic overlap across borders, and the presence of a large number of cities close to the borders.

3) Buttressing the Chinese Economy

Geethanjali Nataraj and Richa Sekhani provide key insights into how the project provides high potential gains for China’s domestic economy.

Excess capacity in Chinese factories is a serious problem. It is expected that by promoting investments in course of implementation of OBOR projects, new opportunities and markets would be created for Chinese firms which would have a multiplier impact on production of goods and services domestically, thereby creating more jobs and higher incomes for the Chinese populace.

Having a strong currency is an indication of a country's clout, and the authors further speak of how the OBOR will boost the value of the Yuan.

This project will help the internationalisation of the Yuan and encourage Chinese companies to issue Yuan bonds to fund projects for the OBOR initiative. As more and more trade will get channelised through the route, the demand for Chinese currency will increase. This will further help increase its weightage in the International Monetary Fund and special drawing rights.

4) Ameliorating China’s Regional Development Strategy

Geethanjali Nataraj and Richa Sekhani write that for China, the OBOR is a means to rectify an unbalanced domestic development policy which often favoured eastern China leaving the west behind. 

Since decades, China’s opening-up policy has favoured development of east China and coastal areas while west China and inland areas limited by their geographical location, resources, and development foundation have remained relatively less developed. The OBOR strategy contributes to the establishment of “one body two wings” of the new pattern of comprehensive opening up (Hucheng 2014). Through this initiative, China hopes to develop and modernise its landlocked and underdeveloped southern and western provinces, to enable them to access the markets of South-east Asia and West Asia, thus shaping China’s regional periphery by exercising economic, cultural and political influence.

Read More:

  1. China's 'Belt and Road Initiative' Revisited I Kishan S Rana, 2018 
  2. India's Flawed Opposition to China–Pakistan Economic Corridor Is Flawed I Atul Bhardwaj, 2015
  3. The New Silk Road I Editorial, 2017

 

 

 

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