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OBOR: A Glory of Past or A Gateway to Future

The inception of One Belt One Road (OBOR):

In 2013 China’s President, Xi Jinping, put forward China ambitious One Road One Belt (OBOR) plan in an integrated approach to connect the global trade route seamlessly which is also popularly known as The Belt and Road (B&R). The proposed plan comprises of two routes:

The Silk Road Economic Belt (SREB)
The 21st-century Maritime Silk Road (MSR)

It is a development strategy and framework that focuses on connectivity and cooperation among countries primarily between the People’s Republic of China and the rest of Eurasia.

Glory of the Past:

More than 2,000 years ago in 2nd century BC, during the reign of Hun dynasty, the concept of a global trade route was emphasized. China’s imperial envoy Zhang Qian was instrumental in establishing the route which was named as 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. 

The Silk Road Economic Belt (SREB):

The ‘belt’ includes countries situated on the original Silk Road through Central Asia, West Asia, the Middle East, and Europe. The initiative calls for the integration of the region into a cohesive economic area through building infrastructure, increasing cultural exchanges, and broadening trade. Apart from this zone, which is largely analogous to the historical Silk Road, another area that is said to be included in the extension of this ‘belt’ is South Asia and Southeast Asia. North, central and south belts are proposed.

  • The North belt goes through Central Asia, Russia to Europe.
  • The Central belt goes through Central Asia, West Asia to the Persian Gulf and the Mediterranean.
  • The South Belt starts from China to Southeast Asia, South Asia, and the Indian Ocean.

The Chinese One Belt strategy will integrate with Central Asia through Kazakhstan’s Nurly Zhol infrastructure program

The 21st-century Maritime Silk Road (MSR):

A complementary action plan, aimed at investing and fostering collaboration in Southeast Asia, Oceania, and North Africa, through several contiguous bodies of water – the South China Sea, the South Pacific Ocean, and the wider Indian Ocean area. The Maritime Silk Road initiative was first proposed by Xi Jinping during a speech to the Indonesian Parliament in October 2013. 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.

Proposed Corridors:

  • New Eurasian Land Bridge
  • China–Mongolia–Russia
  • China–Central Asia–Western Asia
  • Indo-China Peninsula
  • China–Pakistan
  • Bangladesh–China–India–Myanmar

These corridors will be the sites of energy and industrial clusters and will be created through the use of rail, roads, waterways, air, pipelines, and information highways.

Member Nations:

Bilateral cooperation agreements have been completed between China the following countries:-

  1. Hungary
  2. Mongolia
  3. Russia
  4. Tajikistan
  5. Turkey

More than 60 nations with a combined GDP of $21 trillion has shown interest in the project.

Project Financing:

Anticipated cumulative investment is estimated to be around US$8 trillion. For the quick flow of fund, two specialized financial institutions were raised by China:-

  • Asian Infrastructure Investment Bank
  • Silk Road Fund

Asian Infrastructure Investment Bank: First proposed by China in October 2013, is a development bank dedicated to lending for projects regarding infrastructure. As of 2015, China announced that over one trillion yuan ($160 billion US) of infrastructure projects were in planning or construction. On 29 June 2015, the Articles of Agreement of the Asian Infrastructure Investment Bank (AIIB), the legal framework was signed in Beijing. The proposed multilateral bank has an authorized capital of $100 billion, 75% of which will come from Asian and Oceania countries. China will be the single largest stakeholder, holding 26% of voting rights. The bank plans to start operation by year end.

Silk Road Fund: In November 2014, Xi Jinping announced plans to create a 40 billion USD development fund, which will be distinguished from the banks created for the initiative. As a fund, its role will be to invest in businesses rather than lend money for projects. The Karot Hydropower Station in Pakistan is the first investment project of the Silk Road Fund. In January 2016, Sanxia Construction Corporation began work on the Karot Hydropower Station 50 kilometers (31 mi) from Islamabad. This is the Silk Road Fund’s first foreign investment project with a future plan to invest more than 350 million USD by 2030 in South Asia.

Competitive Trade Agreements:

Agreements

Initiative By

Trans-Pacific Partnership

USA

Transatlantic Trade and Investment Partnership

USA

North-South Transport Corridor

India, Russia

 

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