China’s One Belt, One Road initiative, one of the three major strategies outlined by the central government, will open up vast markets for the country while bolstering efforts to internationalize the renminbi, Yiu Ting said in a commentary in the Hong Kong Economic Journal on Thursday.
The land-based Silk Road Economic Belt starts from Xi’an and stretches north to several key cities in Central Asia like Almaty, the largest city in Kazakhstan, then crosses Iran, Turkey and Russia, before reaching Germany and Netherlands.
The Maritime Silk Road will begin in Quanzhou in Fujian province, pass through Guangzhou (Guangdong province), Beihai (Guangxi), and Haikou (Hainan), before heading south to the Malacca Strait. From Kuala Lumpur, it will stretch to Calcutta, India and Nairobi, Kenya, then go north around the Horn of Africa and cross the Red Sea into the Mediterranean, with a stop in Athens before meeting the land-based Silk Road in Venice.
The ambitious plan will have various benefits for China strategically, Yiu said. And it will also help bolster the development of nations included in the scheme.
First, the plan would help China tackle the long-standing overcapacity issue in a number of sectors. These include steel, cement, electrolytic aluminum, glass and shipbuilding. These sectors currently use less than 80 percent of their capacity.
Most developing nations covered by the One Belt, One Road plan have underdeveloped infrastructure and have great demand for pipelines, railways, ports, and airports, as well as telecommunication, nuclear and other facilities.
Second, most of the inland nations have been left out of the global trade network which has been dominated by seaborne trade. Therefore, the interconnected transport network would significantly bolster their economic growth.
Nations along the One Belt, One Road configuration have a combined population of 4.4 billion, accounting for 63 percent of the world’s total. However, they only make up 29 percent of the global economy, with a combined size of US$21 trillion.
Third, the plan would help revitalize growth in China’s central and western regions. The initiative will allow the country’s transport network, including railways, to connect to Europe, enabling manufacturers to move their factories to the west to take advantage of lower costs and move their goods to European markets through the railway system.
Fourth, the plan would help ensure the country’s energy security by enhancing cooperation with energy suppliers in Central Asia. Currently, 60 percent of China’s energy imports come from the Middle East and 80 percent of its oil imports pass through the Malacca Strait.
Therefore, the new routes would enable Chinese importers to ship oil to Gwadar Port in Pakistan and transport it back to China by road, which would cut the distance by 85 percent. It would also get around the Malacca Strait and other sensitive water areas.
There are some similarities between the One Belt, One Road initiative and the United States’ Marshall Plan after the Second World War, Yiu said.
Both plans aimed at exporting their country’s capital, technology, and capacity to other nations that need them badly, he said.
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