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:
- 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
- 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.Download to read more