The New Silk Road: China’s Belt and Road Initiative

The Belt and Road Initiative stands for the Silk Road Economic Belt and the 21st-century Maritime Silk Road. This initiative was unveiled by the Chinese President Xi Jinping in October 2013 during his state visits to Central Asia. The main objective of the initiative is to construct a unified large market and make full use of both domestic and international markets, through cultural exchanges and integration, to enhance mutual understanding and trust of member nations, resulting in an innovative pattern of capital inflows, talent pools, and technology databases. The Belt and Road Initiative was covering nearly 65% of the world population and 40% of the global gross domestic product in 2017.

One of the most important factors behind China’s push for the Belt and Road Initiative is to export its experiences on infrastructure and transportation to other developing countries in the initiative. China’s development in the 21st century is largely driven by its investment and commitment on building an advanced infrastructure. Under this strategy China now has some of the most advanced airports, high-speed railway system and smart ports in the world. However, problems also arise as a result of this massive investment on infrastructure. There is now an overproduction of steel, cement, and many other industrial products in the Chinese economy. The level of pollution and environmental damage is also severe under this rapid pace of modernization. And therefore, the Chinese government hopes to utilize the Belt and Road Initiatives to export the overcapacity of the Chinese economy to other developing countries that demand it.

Many development economists in China believe that the keys for a developing country to succeed in the 21st Century are its infrastructure level and also its industrial capability. It is certainly true that there is still a huge gap in infrastructure between developing countries and the Organizations of the Economic Cooperation and Development known as OECD countries. And many of these developing countries often lack the capital and expertise to achieve the goal of upgrading their infrastructure. Through the Belt and Road Initiative, developing countries can now get funded by both the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund. They can also collaborate with companies from China on building infrastructure projects such as railways, ports, tunnels, highways, and also hydroelectric power stations. Many Chinese companies are now global leaders in their fields. For example, Chinese infrastructure giant China Railway is now heavily involved in infrastructure projects in Africa and South East Asia. Chinese company COSCO Shipping is also working with many ports in Europe on improving their services and management. The transformation of the Port of Piraeus in Greece is an excellent example to demonstrate the success of investment on infrastructure under the Belt and Road Initiative.

China also came up with the Belt and Road Initiative for historical reasons. Chinese nation is a nation that values history and the past. China was historically an important part of the Silk Road that connected both Asia and Europe. The Silk Road prospered from the Han Dynasty (202BC- 220AD) to the Tang Dynasty (618-907AD). Throughout that period, the exchange of goods, culture and even religion were important and far reaching. After the Tang Dynasty, the central dynasty in China lost control of the Hexi Corridor in the Gansu Province and therefore the Silk Road was lost. However, it was during the Song Dynasty (960AD-1279AD) that the Silk Road of the Sea became popular, and the city of Quanzhou became an important port in China. During the Yuan Dynasty (1271AD-1368AD) China was under the rule of the Mongols, however the Silk Road of the Sea continued to prosper and the custom offices at Guangdong and Fujian contributed significant amount of taxation to the central government in Dadu (modern day Beijing). In early Ming Dynasty, the voyages of Captain Zheng He were funded and supported by both the Yongle and Xuande Emperor. He commanded expeditionary treasure voyages to Southeast Asia, the Indian subcontinent, Western Asia and East Africa from 1405 to 1433. The voyages undertaken by him were significant on building friendships and also trade relationships between Ming China and foreign countries. It also gave China a better understanding of the outside world and also its position in the world. These significant historical developments inspired modern Chinese leadership with the creation of the Belt and Road Initiative.

Finally how can the United Kingdom benefit from the Belt and Road Initiative? First of all, the United Kingdom is a country with great experience and expertise in the area of infrastructure. The UK has a great record of improving public services such as healthcare and education through the government’s policy in the last century. The creation of the NHS in the 1948 and also the privatizations under Thatcher in the 1980s all helped to improve the quality of public service. It is definitely possible for the United Kingdom to share its experiences with other countries through the platform of the Belt and Road Initiative. Secondly the UK and the city of London itself are important part of the financial world. For example, in 2015, the UK exported 63.7 billion pounds worth of financial services, the largest exporter of financial services in the world. Many of the leading financial institutions are located in the UK and they can certainly play an important role in the Belt and Road Initiative. The government could aim to position London as an important destination for funding and facilitating projects under the Belt and Road Initiative. The financial services provided by the leading institutions in the UK could also be utilized on serving the projects under the Belt and Road Initiative. For example, the leading consulting firms in the UK could work with Chinese companies and third party on building a successful project. This will be an excellent business opportunity for many consulting companies in the UK because there are more opportunities in China and other emerging economies compared to the UK. If your company wants to expand and grow, it definitely a great idea to collaborate with Chinese companies and invest together in the opportunities in the emerging economies.

Many strategists and economists believe that the Belt and Road Initiative will eventually become the largest infrastructure project in human history. The impact of this initiative will be profound and far reaching. I believe it is for the benefit of every individual in the business world to study and analyze the Belt and Road Initiative if they want their businesses to expand and succeed.