The Belt and Road Initiative is the biggest undertaking of modern-day China in an effort to unite the country with various regions across Asia, Africa and Europe. This initiative is funded by the state and is a well-strategised move to increase Chinese economic relations. The Belt and Road is a project by President Xi Jinping, launched in 2013, which is estimated to total well over $1 trillion. He refers to it as ‘the project of the century’, and it might as well be. The BRI (Belt and Road Initiative) is made up of 71 countries in various regions whose combined GDP is approximately a third of the world total.
What It is
The China Belt and Road refers to an infrastructure system categorised in two. There is the belt, which aims to recreate the Silk Road. Traders across Asia and Europe used the ancient Silk Road to move from one region to another. Silk, food and other commodities were transported back and forth. By reviving this route, the infrastructure project will make it less challenging for companies to conduct business. The second aspect is the Road, which can be confusing because it refers to a network of maritime routes through various shipping ports. Belt and Road, however, goes far beyond road and ocean routes. It also includes pipeline systems like the natural gas system that runs from China to Central Asia passing through Kazakhstan, Turkmenistan and Uzbekistan.
What It Means
Why are countries eager to get involved in the BRI? What is in store for them? The Belt and Road brings with it different levels of development for the countries involved. An example of the initiative is a freight train that covers the Kouvola-Xi’an route. The trip from Finland to China is 17 days long, which is considerably shorter than transporting merchandise by sea, and it is more cost efficient than using air. Another 9,800-km railway runs from China to Poland, facilitating the transportation of shoes from the Asian nation and bringing back drinks and food. Even companies in areas that are not part of the BRI are capitalising on the initiative. General Electric, for instance, made about $2.3 billion by selling equipment for various infrastructure development projects. DHL and Caterpillar are other global corporations that are benefitting a great deal.
It is not clear how much the China Belt and Road project has spent so far on investment. The figure is around $900 billion. BRI is set to improve connections for many countries in Asia, Europe and Africa that have been struggling in terms of trade. The initiative is open for any country to join. Some of the nations that have already signed up include New Zealand, Russia, India, Poland and Pakistan.
The Challenges
Any project the size of the Belt and Road is bound to have some hiccups. The biggest that President Xi is facing is the lack of a definitive scope to identify Belt and Road projects. Reports have been fronted that some investors classify their projects as Road and Belt to secure contracts.
Increased debt by the participating countries is another global concern of the BRI. Poor countries that are part of the initiative accumulate a lot of debt and end up making certain concessions to pay it back. There have been doubts that the project is fueled solely by economic growth. Fears are that China will use its loans to some countries as leverage to gain some political milestones like settling territorial disputes.
The need for infrastructure in Europe, Africa and Asia cannot be denied, which is why the China Belt and Road project has attracted so much attention. The initiative is not only profitable for countries but individual enterprises and investors that can capitalise on the numerous opportunities that BRI is creating around the globe.