Xi Jinping’s ambitious plan, as many have called it, has been in talks since it was first announced in 2013 and with the beginning of work under the China Pakistan Economic Corridor (CPEC), OBOR’s flagship project, the initiative has changed from an objective to a plan. As popular as it has been, it has also been the subject of many speculations. Does China have the finances to support it? How much will the participating States gain from it?
Amid the ever growing list of questions, China has remained firm in its resolve to go ahead with it. And this persistence brings yet another question, perhaps the biggest one yet: Why is China so intent on OBOR?
A brief look into what OBOR and Silk Road is
OBOR or the Belt and Road Initiative (BRI) is China’s plan at reviving the Silk road of the ancient times. It has two parts under it: the Silk Road Economic Belt connecting China with Central Asia, Europe, Russia, the Persian Gulf, the Mediterranean Sea, South Asia and South East Asia and the 21st Century Maritime Silk Road, a network of sea routes in the Indian Ocean, the South China Sea and parts of the Pacific Ocean.
China has claimed that its primary objective behind formulating and implementing OBOR is to make an area for economic cooperation in the concerned region. They have claimed that through OBOR they will create for an economic market in the region that is integrated and has fair opportunities for those involved and resultantly lead to peaceful development.
This, however, does not justify why China has been fighting hook, line and anchor to implement the plan. Below I have discussed some of the biggest benefits that China has to gain from OBOR, possibly the reasons behind why China is so intent on OBOR:
1. Counter to the economic slowdown:
While China has grown at an unbelievably fast pace in the last 3 decades, its economy now faces a slowdown. It’s population (largest in the world), may now have to face problems of economic security and employment. OBOR will become a new channel for China to sustain its growth.
2. Fixing of development lag in West and Central China:
A study of industrial, transportation and demographic distribution in China shows that East China is much more developed than West and Central China. Through OBOR it is hoped that this disparity will be reduced since the plan will involve the development of connectivity around China, but also within China.
3. Opening up of the economy:
For many developing nations and developed nations in the early stages, opening up their economy can be a move that changes the shape of their economy for the best. Many strategists believe that OBOR will set forth the second phase of China opening up its economy.
4. Becoming a better friend to the surrounding region:
Many strategists are also of the opinion that China continues to get more and more isolated in the area. It is not involved in the G7 and faces criticism as well as a conflict in opinion and technique from India, the other booming economy in its surrounding regions. It is believed that OBOR is China’s way of making itself more integrated into the economics of the region. China might be able to redirect its overcapacity towards ASEAN, Central Asia and Europe, making it better friends with them.
5. High debt:
China’s debt-to-GDP stands at more than 300% which could become disastrous for the country. OBOR will involve heavy investments from China (for which they have established 3 separate financial funds and banks), in the long run, it will help them boost their economy and possibly even reduce the debt on the GDP.
6. A shift from developed economies to developing economies:
China is all about improving its economy, which is why it had started its economic development by targeting the developed nation; providing goods at cheaper prices to the developed countries in the west worked just about perfect for it. Now, however, the demand has reduced. So through OBOR China will be able to shift its attention to the developing economies in its neighbourhood which will help it sustain itself better.
7. Management opportunity:
China has a staggering population. Some countries around China, like Cambodia and Singapore, have good availability of resources but lack the human resource and capital to utilise the resources. Through OBOR China could make way for employment of its population and obtain resources while allowing the other countries to access their resources and make them available to any potential buyers. Works as a win-win situation for parties concerned.
Now that we have discussed what China has to gain, we come to another important question:
Will OBOR abd Silk Road enable China to begin an age of neo-colonialism?
One must remember the way China has dealt with issues relating to territory in the past, whether it is with the forceful occupation of Tibet or its dominating stance over the South China Sea dispute; a ruling against it by the International Court of Justice. It is quite possible that with OBOR China may attempt to establish its dominance over some of the weaker states like Cambodia, Laos, etc. But personally, the chances of that happening are low in the current global order and age of liberalism. However due caution must be taken.
To conclude China has a lot to gain from OBOR and so do the other participating States. However only time will tell whether China will stay true to its word of balancing development of the other states with its own.