As part of July’s monthly member briefing, AmCham Shanghai members were treated to a speech on China’s One Belt One Road (OBOR) strategy by Mary Boyd of the Economist Intelligence Unit. Although Xi Jinping’s expansive plan for OBOR has yet to be clarified, it has become a popular topic among China-analysts. Boyd shared her insights on the geopolitical construct of OBOR, the infrastructures that are already in place, and how this ambition fits into the “new normal.”
Introduced in 2013, One Belt One Road is the combination of two of Xi Jinping’s “Go Out” strategies. Xi’s vision for the project is to build transportation infrastructure to promote economic engagement and investment. The New Silk Road Economic Belt (pictured below in red) will run westward from China, crossing central Asia and eventually reaching Western Europe. The second is the 21st Century Maritime Silk Road (in blue), which will loop south from China connecting Southeast Asia, South Asia and Africa before arriving in Europe.
The construction of OBOR comes with sensitivities as some construction will take place in areas where China has active geopolitical tensions. At the forefront is China’s overlapping maritime claims with several countries in the South China Sea, while to the West China must deal with regional rival India. Indian Prime Minister Modi has economic initiatives of his own and recently proposed a potential counter proposal to OBOR, the so-called Project Mausam, to reclaim some of India’s dominance on the trade routes in the Indian Ocean.
With the hope of gaining more influence in Southeast Asia, Japan and China are participating in what Boyd calls a “development assistance war.” Japan has recently initiated a rival development assistance plan to assist the poorest countries of Southeast Asia, a region where China is very active.
China’s emerging influence in Africa in recent years has not gone unnoticed and the Maritime Road looks only to build on that. China has already leased land to build a port on the small coastal country of Djibouti, with plans to build a port and naval base.
Central Asia, a region long dominated by Russia’s influence, is now becoming increasingly leveraged by China’s infrastructure and trade capacity. Boyd added some of OBOR’s success depends on the willingness of countries in the region to “join the rest of the world.”
Funded by the newly formed Asian Infrastructure Investment Bank (AIIB), OBOR will pass through areas that have already existing infrastructure projects ongoing. Over the recent years, the Asian Development Bank and the Central Asia Regional Economic Cooperation have been funding infrastructure projects in Central Asia, many with similar objectives to OBOR.
Aside from the physical infrastructure, China must also consider what Boyd calls the “trade infrastructure” already in place. OBOR overlaps with many regional trade unions that enable regional cooperation, as well as competition, between countries. Russia holds a prominent position in both the Eurasian Economic Union and the Shanghai Cooperation Organization and uses it as a means to stretch its influence within the region. On the Maritime Road there is trade infrastructure in the form of the ASEAN economic area, the free trade agreement between China and the ASEAN countries, and the pending Trans-Pacific Partnership.
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