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The New Silk Road: China’s Belt and Road plan the biggest infrastructure program ever
The Belt and Road initiative is China’s attempt to resurrect the Silk Road, the ancient path linking Europe and Asia. This modern version of the plan wants to unite multiple regions with a monumentally large infrastructure program that could consume close to $1tn by the time it is complete. Comprising roads, port projects, pipelines, trains, shipping lanes and economic zones, the plan stretches from the South Pacific Ocean to Central Europe. The aim on the surface is to boost trading and reinvigorate multiple economic regions.
However when the plan is examined more deeply, the initiative is designed to boost China’s economy and diplomatic status in the region and there are multiple agendas running in parallel which justify Chinas huge spend on this project. Some members of the project are absolutely ecstatic that China has seen fit to invest in them, whereas other nations want no part of it and see China as cynically manipulating the initiatives members to suit its own plans.
The two main prongs of the Belt and Road project are a “road” which was a maritime trade route through Southeast Asia harking back to the 14th and 15th century during the Ming Dynasty and the “belt” which is mimicking the road which extended through central Asia to Europe during the Han Dynasty 2,000 years ago. The project is taking these old trade routes and expanding them into a vast scheme of infrastructure. The ancient routes have modern significance too as these were a byproduct of times when China was a hegemonic superpower, and the reference is applicable to the lofty aims that China has with this project.
The benefits to China of funding and leading such a project are varied and deep. Initially China gets to present itself as a champion of globalism at precisely the time when the US and Europe are domestically focused and China can bring in and gain the confidence of multiple countries adding to its sphere of influence and geopolitical power. Coupled with this China needs to find new ways to focus its economy and continue to generate growth whilst simultaneously shedding overcapacity in industries such as concrete and construction. It also signifies a new type of China, the China of the twentieth century was growing, watching and learning and now it has learned how to play the global political game and is starting to.
Despite absolute adulation from countries such as Pakistan and Russia that stand to gain a great deal, there are countries vocally opposed to the new Silk Road and India is perhaps the most significant of them. India boycotted the May 2017 meeting in Beijing, furious about Himalayan border and sovereignty concerns, dealings with its bitter rival Pakistan and what it sees as dangerous loans that will serve only to bankrupt the region.
To read our full report, please visit: http://advantage.marketline.com/Product?ptype=Analyst+Insights&pid=MLAI0002-065