China Gets Serious about Globalization, Starts Belt and Silk Road Initiative

China Gets Serious about Globalization, Starts Belt and Silk Road Initiative | SJ Petith
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“We will build an open platform, defend and develop an open world economy, jointly create an environment good for opening-up and development, and push for a just, reasonable and transparent international trade and investment system so that production materials can circulate in an orderly way, be allocated with high efficiency and markets are deeply integrated.” – Chinese President Xi Jinping

Chinese President Xi Jinping, in his keynote speech to the Belt and Road Forum for International Cooperation in Beijing on Sunday, urged countries around to world to participate in an ambitious project that aims to re-establish the ancient trade routes with the intention of driving global trade and investment.

The new Silk Road initiative has received pledges of at least $113 billion in extra funding, with $8.7 billion coming from China. Part of the funding is set to provide aid to countries along the new Silk Road routes. A major fair will be held next year to benefit the participants of the initiative. Such fair will be hosted by China, the key player of the project.

The establishment of such initiative shows China’s strong commitment to trade and openness in the midst of the US’ retreat from the international stage ever since Donald Trump took office earlier in the year.

What is the new Silk Road concept?

China Gets Serious about Globalization, Starts Belt and Silk Road Initiative | SJ Petith
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The Silk Road route concept is not new. In ancient Chinese history, the Silk Road was a network of trade routes that were established during the Han Dynasty. It linked regions through commerce and it was used from 130 BCE until the Ottoman Empire closed it in favor of the West in 1453 CE.

Launched four years ago, the new Silk Road initiative, dubbed as the “Belt and Road Initiative” aims to promote trade and infrastructure links across Asia, Europe and Africa. It was endorsed to increase global economic cooperation, stimulate China’s own economy and bolster its economic relationships and influence while providing political gains both locally and internationally.

The plan is not to seek geopolitical gains but to seek cooperative win-wins. It counters “protectionism”, which is where Donald Trump’s administration seems to be heading.

President Xi confirms that China will only share its development experience to the world, but will not intervene with internal affairs nor will it force on nations its social system and development model.

Perhaps the next big question is this: how will this ambitious plan be financed?

Apart from China’s own funds, the Silk Road initiative will be financed by the Asian Infrastructure Bank (AIIB), the China-backed global bank and the New Development Bank.

The US is not part of the Silk Road initiative so if it gets launched, what will happen to the US? The expansive reach of the project has definitely set off alarm bells for the US, which has noticeably gone wary of China’s growing influence. It challenges trade agreements that have previously excluded China. The classic example of which was the Trans-Pacific Partnership.

On the other hand, many European countries have warmly welcomed China’s initiative. Even Britain has signaled its willingness to join China even though its ally, the US, has been excluded from the initiative.

In Russia, the Silk Road is expected to benefit Sino-Russian relations through joint projects and investments. The scheme also relies heavily on Russian cooperation and involvement, which is seen to be economically symbiotic.

Overall, China’s Silk Road initiative promises huge political and economic advantages. However, it could also cause Chin’s downfall if the projects are not managed well.

“History is the best teacher. The history [of the ancient Silk Road] showed us that we can move along with mutual respect and development and towards the future of happiness, peace and harmony if we bravely walk the first step,” Xi said.

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