New Silk Road

China is reviving the historic Silk Road trade route that runs between its own borders and Europe. Announced in 2013 by President Xi Jinping, the idea is that two new trade corridors – one overland, the other by sea – will connect the country with its neighbors in the west: Central Asia, the Middle East and Europe.

China seems to pursue three key objectives

1) A new impetus for its economy. One Belt, One Road focuses on infrastructure development and matches the appetite of Chinese state-owned enterprises with overcapacity.

2) The Silk Road will help to alleviate China’s thirst for energy, with new gas pipelines in Central Asia and new deepwater harbors in South Asia to be constructed. These massive infrastructure projects will also accelerate the renminbi’s internationalization and its emergence as an alternative reserve currency, a strategic economic objective.

3) Most importantly, the core of this initiative lies in its strategic and geopolitical importance. China seeks to build a cordon sanitaire of regional stability. Its leadership firmly believes economic prosperity is the only way to maintain peace in its fragile neighborhood, from volatile Central Asia via a fragmented Pakistan and war torn Afghanistan to the terror belt in the Middle East and North Africa. The Chinese government has resisted the idea of labeling the “belt and road” project as its own Marshall Plan, but the commonality of China’s economic interests with the corridor nations and a sound infrastructure bond will be the best way to prevent regional conflicts. It’s also a viable way to export China’s model of development: the right to develop irrespective of political systems.

About the Author

Mark Schlarbaum

Facebook Twitter Google+

Mark Schlarbaum: Building and Developing business relationships with main land Chinese investment professionals including Chinese brokerage firms, QDIE private funds, Chinese investment management firms. Mark Schlarbaum joins the 100000 Strong Foundation as its supporter.