One Belt and One Road (OBOR) initiative has become the centerpiece of China’s economic diplomacy in the recent years. The essence of OBOR is to promote regional and cross-continental connectivity between China and other developing countries. The ‘One Belt’ and ‘One Road’ refer to China’s proposed ‘Silk Road Economic Belt’ and ‘Maritime Silk Road’. Connectivity covers five major areas of interest: Policy coordination, infrastructure construction (including railways and highways), unimpeded trade, financial integration and people-to-people ties. Among these, infrastructure construction is the dominant feature of the New Silk Road. It is reported that the proposed OBOR has connected around 78 countries from East (Philippines) to West (Europe). The OBOR is not only benefit to China but also central to other developing countries where it connects all countries physically and make economic cooperation with them.
Although the OBOR has started in 2013, it has over 2000 years history. China’s imperial envoy Zhang Qian who was a Chinese diplomat who served as an imperial envoy to the world outside of China during the 2nd century helped to establish the Silk Road (A network of trade routes that linked China to Central Asia and the Arab world). The name came from one of China’s most important exports—silk. And the road itself influenced the development of the entire region for hundreds of years.
In 2013, China’s president, Xi Jinping, proposed establishing a modern equivalent, creating a network of railways, roads, pipelines, and utility grids that would link China and Central Asia, West Asia, South Asia and parts of South East Asia. This initiative, One Belt and One Road (OBOR aims to create the world’s largest platform for economic cooperation, including policy coordination, trade collaboration and social & cultural cooperation. OBOR can be a economic platform to create benefits for everyone.
The State Council authorized an OBOR action plan in 2015 with two main components: The Silk Road Economic Belt and the 21st Century Maritime Silk Road (exhibit). The Silk Road Economic Belt is envisioned as three routes connecting China to Europe (via Central Asia), the Persian Gulf, the Mediterranean (through West Asia), and the Indian Ocean (via South Asia). The 21st Century Maritime Silk Road is planned to create connections among regional waterways. More than 60 countries, with a combined GDP of $21 trillion, have expressed interest in participating in the OBOR action plan.
The effort has already made some practical achievements. China has signed bilateral cooperation agreements related to the project with Hungary, Mongolia, Russia, Tajikistan, and Turkey. A number of projects are under way, including a train connection between eastern China and Iran that may be expanded to Europe. There are also new rail links with Laos and Thailand and high-speed-rail projects in Indonesia. China’s Ningbo Shipping Exchange is collaborating with the Baltic Exchange on a container index of rates between China and the Middle East, the Mediterranean, and Europe. More than 200 enterprises have signed cooperation agreements for projects along OBOR’s routes. Following map shows the various economic routes of China.
The Initiative aims to consolidate and upgrade existing infrastructure and build new transport routes to improve cross-border trade. It also includes efforts to promote a greater financial integration with foreign countries and create a “Digital Silk Road” of international communication and information distribution. The “Silk Road Economic Belt” connects China via land with Central Asia, Russia, Europe and Southeast Asia. The “21st Century Maritime Silk Road” makes a link from the Indian Ocean, through the South China Sea to the South Pacific Ocean (see map). Geographically positioned in the middle of both the Belt and the Road, China has emerged as the facilitator in developing a connection between Europe and Asia. All roads lead to China; the Initiative has given major priority to infrastructure. Plans are already in place to build railway networks, port facilities, airports, highways and electronic communication networks to guarantee smoother and more efficient transportation of goods and people, from Southeast Asia to Western Europe.
OBOR initiative emerged due to the recent economic changes in China. It was well known as a communist country during the cold war period. However in 1979 China liberalized its economy and later joint with World Trade Organization (WTO) in 2001. As a result the production of Chinese goods increased. Many of China’s production sectors have been facing over product since 2006. The Chinese leadership hopes to solve the problem of overproduction by exploring new markets in neighboring countries through OBOR. The OBOR initiative will provide more opportunities for the development of China’s less developed border regions. China also intends to explore new investment options that preserve and increase the value of the capital accumulated in the last few decades. OBOR has the potential to grow into a model for an alternative rule-maker of international politics and could serve as a vehicle for creating a new global economic and political order.
Sri Lanka is one of the economic partners of China for several decades. Sri Lanka’s strategic position in the middle of the maritime Silk Road offers the opportunity of promoting the country as a trading hub in the Indian Ocean. It is with this view that the Government has pledged to support China’s OBOR initiative.
Sri Lanka’s relations with its second largest trading partner, China, have been improving over the years. Linked closely with the OBOR initiative, China has invested in developing Sri Lanka’s infrastructure and has emerged as one of Sri Lanka’s top 5 investors. Latching on to the OBOR initiative could further improve trade and investment linkages with China and other OBOR partner countries including East Asia and Europe.
However, there is still very little awareness of the initiative in Sri Lanka. So far, the country’s experience with OBOR has been strongly linked to infrastructure connectivity, with less emphasis given to other priority areas of cooperation. Though OBOR appears to be promising, the lack of a detailed plan makes it difficult to capitalize on the initiative fully and assess its long-term benefits and implications for the country. Going forward, Sri Lanka will benefit from greater information on the OBOR to determine how best the initiative can be translated into concrete outcomes for the country in the years to come.
According to the Chinese Foreign Affairs Ministry, there are two mega projects which come under the direct initiatives of OBOR in Sri Lanka: Port city project and Hambantota harbor. Although, there are some critics about these two projects at the domestic level, these two can make a huge change in Sri Lanka’s economy in the future. One should bear in minds that rather keep criticizing the Chinese government it is better to get the most out of this OBOR initiative.
Finally OBOR is one of the great economic plans where many countries have committed to work together with the Chinese government. Since China is the largest donor to Sri Lanka, it is better to use China as much as it can for the sake of economic development and the betterment.
Dr. Mohamed Shareef Asees (Lecturer), University of Colombo, Sri Lanka