Mega Trends of China: The Belt and Road Strategic Plan

13 Jan 2016

However beautiful the strategy, you should occasionally look at the results. Winston Churchill


  • China’s Belt and Road strategy aims at achieving long-term economic and political objectives. Its east-west land route will enable China to access huge natural resources reserves and exert influence on the world’s oil production and consumption regions. But this route is fraught with difficulties.
  • The north-south route will link China to South and SE Asia by land and sea. The land route will most likely take priority for implementation due to favourable economic and political factors, with the Mekong sub-region likely to be the first to benefit.
  • China’s Yunnan province will be the gateway linking the rich SE China with the Mekong sub-region and the rest of SE Asia. This linkage will also extend China’s influence to the Indian Ocean and the South China Sea. But there seems to be no coordinated effort on implementation, despite the grand vision.

Beijing’s Belt and Road (BAR) initiative is a “one stone kills three birds” strategy that will help China achieve international, domestic and political objectives in the long-term by opening up new trade and investment opportunities that will reshape the global balance of economic power. It will build:

  1. an economic land belt (called the Silk Road Economic Belt) that includes countries on the ancient Silk Road through Central and West Asia, the Middle East and Europe, and
  2. a sea route (called the 21st Century Maritime Silk Road) that links China’s port facilities with the African coast through South and SE Asia, moving up through the Suez Canal to the Mediterranean.

What is it in for China1?

Domestically, BAR aims at helping export China’s excess capacity by creating new markets for Chinese construction firms and capital goods makers. This should enhance domestic investment returns and stabilise GDP growth. The project envisages building roads, railways, pipelines and industrial corridors across some 67 countries, requiring billions of tonnes of steel and cement, hundreds of thousands of workers, tens of thousands of cranes and diggers, and dozens of new dams, power stations and power grids.

Internationally, it should unleash an infrastructure boom by connecting China with Asia, Europe and Africa by land and sea, and boost renminbi internationalisation by encouraging its usage in both trade and financial transactions. Politically, Beijing hopes to use BAR to secure foreign trade relationships to counteract major trade pacts, such as the Trans Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP)2, that have excluded China, and to breakout of the US “pivot Asia” policy that blocks China’s expansion eastward.

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