With the Belt and Road Initiative (BRI), President Xi Jinping plans to link China to Europe via investments in rail, roads, ports, dams, bridges, gas pipelines and power plants. There are now links between 66 countries across Asia and Europe, with some estimating the final cost of the project to be in the region of $3 trillion.
What about the name? The ‘Silk Road Economic Belt‘ is a series of overland corridors connecting China, Central Asia, the Middle East and Europe. Confusingly, the ‘Twenty-first Century Maritime Silk Road’ is not actually a road but a sea route linking China with Africa and the Mediterranean. It might be easier to use the Chinese name for the initiative: yi dai yi lu (or ‘one belt, one road’)!
China is making use of its’ huge foreign reserves and domestic infrastructure overcapacity for the initiative, which should also alleviate potential unemployment within China and enable access to foreign labour markets. Success will cement China’s place as a global superpower.
The country has transformed itself through high economic growth and poverty reduction – can the same methods work in other parts of the world? Bangladesh, for example, welcomes the injection of Chinese investment and aid. But not everyone is behind the plan.
India has objected to the corridor breaching its territorial integrity. The government in Delhi also believes that other countries are now starting to see risks in the project.
As always, politics is never far from economics!
Author: Gerry Reilly (Senior Teaching Fellow)