What Global Individuals Need to Know About the Belt And Road Initiative
The Belt And Road Initiative
Shaping International Trade
In 2013, Chinese Premier Li Keqiang unveiled one of the biggest projects of the 21st, one that will probably change the paradigm of global trade, its scope not only being wide regarding the fields targeted, but also regarding the number of geographic zones that are to be involved.
Being globally mobile individuals, ASI Movers customers’ will be, if not stakeholders, at least impacted by this new roads China will, and has already been building. As such, let’s explore the key features one needs to know about!
What Is the Belt and Road Initiative (BRI)?
China's proposed Belt and Road Initiative will be composed of 3 land-based roads, and a maritime one, connecting China to Europe through Central Asia, South East Asia, South Asia, the Middle East, Africa and Central Europe. Graphic by Raffy Guzman on China Daily Map.
The Belt & Road Initiative (BRI) can be labelled by different names: New Silk Road Economic Belt and, before 2016, the One Belt One Road Policy, are two of them.
As already stated, it has been introduced in 2013 as a “bid to enhance regional connectivity and embrace a brighter future”, the aim being constructing a unified and larger market, both maritime (MSR Maritime Silk Road) and land-based (SREB Silk Road Economic Belt), connecting the domestic markets, enhancing the exchanges in culture, knowledge, and goods & services with reduced trade barriers.
As for today, 68 countries are involved in Asia, Europe, Oceania and Africa, accounting for 4.4 billion people and 40% of global GDP.
The land-based road is itself divided into 3: a North Belt, a Central Belt, and a South Belt, and is completed by a Maritime Road.
What Is Its Scope?
What are concretely the fields China want to invest in and the projects the country wants to foster through the BRI, which is one of the largest infrastructure and investment project in History?
The main focus of the project is on infrastructure, and addressing the “infrastructure gap” between the different regions involved. China is a perfect candidate for promoting such an orientation since – unlike the major part of the industrialized world after 1980 – the country pursued an infrastructure-based strategy, modernizing and investing heavily in this field, becoming the world’s leader in infrastructure and investment.
Concretely, this means building ports, roads, railways (and any other form of infrastructure) in the least developed part of Eurasia and Africa. Some of these regions are geographically isolated, which makes taking part in the international trade difficult and the scale of it limited, thus the infrastructure investment and works made under the BRI would have a positive impact on the local economies and on their economic integration of these regions, also fostering their production potential. Some critics are concerned about the genuine local demand for such investment and warn them about the risks coming with them.
Investment & Banking
Many of the countries involved in the BRI are also part of the China-led Asian Infrastructure Investment Bank (AIIB). This investment bank is directly aims at financing the infrastructure projects evoked above. As of 2015, already 160 billion USD of infrastructure projects were in planning or construction. Apart from purely financing infrastructure projects, its aim is also to foster regional integration, economic development and access to social services.
A Silk Road Fund has also been announced.
Advocating for an Asia-Pacific Free Trade Zone
Through this initiative, China is advocating in favor of the Asia-Pacific FTZ, “we support the multilateral trading system, devote ourselves to the Doha Round negotiations; advocate the Asia-Pacific free trade zone, promote negotiations on regional comprehensive economic partnership […] as an active promoter of economic globalization and regional integration” said President Xi JinPing.
Reducing physical barriers to trade, goes along with reducing regulatory barriers as well, by aligning standards.
What Is Going to Be Its Impact On International Trade?
Being the large-scale initiative we know, the BRI will certainly have a major impact on international trade. Let’s then explore how it will precisely impact it.
- Directly linked to the infrastructure investment and lending policy, it will foster domestic flows and exports from and to central Asia. New trade agreements linked to the latter regions will emerge and thus one will witness trade diversion effects.
- It will lower the cost of transportation and thus trade costs, especially with China, and thus will eventually result in a larger amount of goods and services flowing to and from the country. Using rail transportation where maritime roads were used before will become more and more common, but also cheaper and faster (making for instance seasonal products more responsive). New ports and roads will appear, with more efficient and more modern operations.
- Even more standardized products and services will emerge from this increase and facilitation of trade.
- Facilitation of trade also means a facilitation of knowledge and technology flows, making progress in these fields and new technologies and products very likely.
As your trusted relocation partner to, from, and within China, ASI Movers knows how important it is to its customers to stay aware of the latest economic orientation of China, and of how it can impact their business.
We dedicate ourselves to provide you the best quality relocation services worldwide and domestically, because we know that a great moving service is a moving service that does not provoke disruption in your business and ensures you peace of mind.