China’s top economic planning agency, the National Development and Reform Commission (NDRC), on 28 March 2015 released a new action plan One Belt, One Road initiative. The initiative will establish new routes linking Asia, Europe and Africa.
It has two parts, a new Silk Road Economic Belt (SREB) linking China to Europe that cuts through mountainous regions in Central Asia; and the Maritime Silk Road (MSR) that links China's port facilities with the African coast and then pushes up through the Suez Canal into the Mediterranean Sea.
The word Belt is referred as a planned network of overland road and rail routes, oil and natural gas pipelines, and other infrastructure projects that will stretch from Xi’an in Central China, through Central Asia, and ultimately reach as far as Moscow, Rotterdam, and Venice.
While Road is its maritime equivalent, that is, a network of planned port and other coastal infrastructure projects that dot the map from South and Southeast Asia to East Africa and the northern Mediterranean Sea.
Scope of the plan
The scope of the initiative will extend well beyond infrastructure construction. It also includes efforts to promote greater financial integration and use of the Renminbi, Chinese Currency, by foreign countries.
The plan will further extent to create an Information Silk Road linking regional information and communications technology networks, and lower barriers to cross-border trade and investment in the region, among other initiatives.
New regional institutions, such as the Asian Infrastructure Investment Bank (AIIB) and New Silk Road Fund (NSRF) are also designed in part to complement and support the Belt and Road’s development.
Benefits to China
• The infrastructure projects proposed as part of the Belt and Road—many of which would run through some of China’s poorest and least developed regions—could provide stimulus to help cushion the effects of the deepening slowdown of China.
• The Belt and Road will improve China’s internal economic integration and competitiveness and spur more regionally balanced growth.
• The construction is intended to help make use of China’s enormous industrial overcapacity and ease the entry of Chinese goods into regional markets.
• The plan would strengthen China’s importance as an economic partner for its neighbors and, potentially, enhance Beijing’s diplomatic leverage in the region.
• Increased investment in energy and mineral resources, particularly in Central Asia, could also help reduce China’s reliance on commodities imported from overseas, including oil transiting the Strait of Malacca.
Chinese president Xi Jinping has made the program a centerpiece of both his foreign policy and domestic economic strategy. Initially billed as a network of regional infrastructure projects, this latest release indicates that the scope of the Belt and Road initiative has continued to expand and will now include promotion of enhanced policy coordination across the Asian continent, financial integration, trade liberalization, and people-to-people connectivity.
China’s efforts to implement this initiative will likely have an important effect on the region’s economic architecture—patterns of regional trade, investment, infrastructure development—and in turn have strategic implications for China, the United States, and other major powers.
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When: 28 March 2015