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Industry News: What is China’s
One Belt, One Road Initiative?

By October 29, 2018 No Comments
Industry News: What is China's One Belt, One Road Initiative?

The creation of the One Belt, One Road Initiative has historical origins dating back more than 1,400 years. Today, however, the Silk Road is transformed into a technologically advanced route designed with high-speed infrastructure. With the One Belt, One Road Initiative, China is stepping forward as a leader in global expansion and infrastructure investment. This project also incurs a level of multilateralism that fosters economic connectivity and Asia-Pacific industrialization. Below we explore the One Belt, One Road plan and how regional development has benefited from this initiative.

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Origins of One Belt, One Road

The One Belt, One Road (OBOR) Initiative has the potential to transform the future of trade throughout Asia—and much of the world. Also known officially as the Silk Road Economic Belt and the 21st Century Maritime Silk Road, this plan was first conceived in 2013 based on diplomatic visits to Kazakhstan and Indonesia.

According to the Fung Business Intelligence Centre, the One Belt, One Road Initiative is “aimed at promoting orderly and free flow of economic factors, highly efficient allocation of resources and deep integration of markets; encouraging the countries along the Belt and Road to achieve economic policy coordination and carry out broader and more in-depth regional cooperation of higher standards; and jointly creating an open, inclusive and balanced regional economic cooperation architecture that benefits all.”

The plan was formally presented in 2015 at the Boao Forum for Asia. This strategy comes with a price tag of anywhere from 4 to $8 trillion and an anticipated completion date of 2049. China has already invested $900 billion U.S. in the project, and the Chinese government has reestablished funds for infrastructure spending.

Stages in Development of OBOR

The first state of the OBOR Initiative is to establish infrastructure connectivity. This encompasses all forms of public and private transportation including gas pipelines, oil pipelines, railroad, and ports. These infrastructure investments stretch far from China, with Pakistan receiving a gas pipeline and Thailand being linked by high-speed rail. It also requires high-speed internet and satellite imaging capabilities in order to complete this project. The Asian Infrastructure Investment Bank has been established and provided with a $40 billion investment by the Chinese government.

Countries Affected by OBOR

The OBOR will consist of five separate routes. There are three routes within the Silk Road Economic Belt division and include routes from China that lead:

  • Across Central Asia through Russia and over to the Baltic Sea
  • Across Central Asia and West Asia to the Persian Gulf and the Mediterranean Sea
  • Across Southeast Asia and to the Indian Ocean

Regions that will be part of the development of the 21st Century Maritime Silk Road segment include coastal China traversing the South China Sea and the Indian Ocean and through to Europe, and coastal China and to the South China Sea on to the South Pacific.

As of January 2018, 71 countries will be affected by OBOR. Those countries with the most land that will be part of the project include:

  • China
  • Russia
  • Saudi Arabia
  • India
  • Kazakhstan
  • Mongolia
  • Indonesia
  • Pakistan
  • Egypt
  • Turkey

Regional Development and OBOR

As the One Belt, One Road Initiative continues to run full steam, there are already signs of promise. From 2014 to 2016, as the Initiative was put into place, China increased its total trade volume with those countries participating in OBOR by $1.1 billion in revenue.

In addition, more than 180,000 new jobs were added to the local and regional economies. As the OBOR project continues, the mission is to break down the physical and regulatory barriers of trade in Asia-Pacific countries. This will continue to propel economic growth in less developed parts of the continent and increase overall prosperity.

One Belt, One Road—Numerous International Markets

The One Belt, One Road Initiative is poised to offer economic growth and ease of trade throughout the Asia-Pacific region and beyond. If your global expansion plans include expanding into one of OBOR’s 70-plus countries, reach out to Velocity Global to learn how our suite of services can assist with your global expansion goals.

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