Definition
One Belt One Road (OBOR) is an initiative by the Chinese government with the intention of improving and creating new trading routes, links, and business opportunities with over 65 countries, primarily between Asia and Europe. It is also known as the “Belt and Road Initiative”. The plan encompasses two parts: the land-based “Silk Road Economic Belt” and the seagoing “Maritime Silk Road.”
Phonetic
wʌn bɛlt wʌn roʊd (Oh-Bee-Oh-Ar)
Key Takeaways
- Infrastructure Development:One of the primary goals of One Belt One Road (OBOR) is to help promote global interconnectivity through infrastructure development. This is established by building roads, rails, ports, pipelines and more in over 60 countries across Asia, Europe, and Africa.
- Economic Growth: OBOR serves as China’s strategic push to take a larger role in global affairs and primarily aims to stimulate economic growth across Asia and beyond. It is expected that OBOR will greatly enhance trade and commerce, creating a myriad of economic opportunities.
- Geo-political Implications: OBOR is not just about developing infrastructure and economic growth, but it also carries significant geopolitical implications. The initiative has been criticised in some quarters as a strategic move by China to gain political leverage over countries participating in OBOR. Thus, OBOR could potentially reshape the political dynamics in the participating regions.
Importance
The One Belt One Road (OBOR), also known as the Belt and Road Initiative (BRI), is a massive infrastructure and investment project launched by China to connect Asia with Africa and Europe via land and maritime networks. It’s crucial from a business/finance perspective as it aims to stimulate economic development in a vast region covering over 60 countries, representing approximately 60% of the world’s population and around a third of the world’s Gross Domestic Product (GDP). Envisaged to construct a broad and integrated trade and infrastructure networks, OBOR promotes transcontinental connectivity, trading relationships, and financing opportunities, thus expected to reshape global economics and politics.
Explanation
The main purpose of One Belt One Road (OBOR), also known as the Belt and Road Initiative (BRI), is to improve and build a new platform for international trade by bridging the ‘infrastructure gap’ to foster economic growth across the Asia-Pacific area, Central Asia, and Eastern Europe. Launched in 2013 by China’s president Xi Jinping, OBOR aims to stimulate economic development in a vast region by increasing connectivity and collaboration across the Silk Road Economic Belt and the 21st century Maritime Silk Road. These connected regions would not only aid trade but also exchange in technologies, policies, and even cultural and academic partnerships.
The OBOR initiative is used for fostering investments in multiple sectors such as infrastructure development – involving railways, airports, seaports, energy pipelines, fiber-optic lines, and other major projects to facilitate trade. For instance, the development of railways in Laos under the OBOR initiative aimed to enhance trade and tourism. It also encapsulates collaborations in archaeology, film and television, sports, health and wellness, and much more, broadening cultural and academic exchanges between countries. The broader goal, however, remains to drive economic growth and prosperity in the region by integrating more than 60 countries economically and politically.
Examples
1. Pakistan-China Economic Corridor: The Pakistan-China Economic Corridor (CPEC) is a flagship OBOR project estimated at about $62 billion. As part of this project, power plants, ports, highways and other infrastructure are being developed. The key element is the development of the Gwadar Port, which would provide China direct access to the Arabian Sea.
2. Hungary-Serbia Railway: Another example of an OBOR project is the reconstruction of the Hungary-Serbia Railway. China is providing loans to both Hungary and Serbia to rebuild this rail link, substantially reducing travel time and boosting trade between these two countries, and allowing faster freight transport from China to Europe.
3. Yiwu-Madrid Railway Line: This is the longest railway route in the world, connecting the Chinese city Yiwu, in Zhejiang province, to Madrid in Spain. This project plays a crucial role in promoting trade exchanges and benefiting economies in areas along the route.
Frequently Asked Questions(FAQ)
What is One Belt One Road (OBOR)?
One Belt One Road (OBOR), also known as the Belt and Road Initiative (BRI), is a global development strategy initiated by the Chinese government. It focuses on connectivity and cooperation among countries, primarily in Eurasia, via two main components – the land-based Silk Road Economic Belt and the naval 21st Century Maritime Silk Road.
What is the purpose of the One Belt One Road initiative?
The purpose of OBOR is to stimulate economic growth across the Asia-Pacific region, East Africa, and Europe. It aims to do so by creating a platform for economic, political, and cultural cooperation based on the principles of mutual respect and mutual benefit.
Who are the significant participants in the One Belt One Road initiative?
While initiated by China, over 130 countries and international organizations have signed Belt and Road Initiative agreements with China, making it a significant participant. Other key partners include Russia, Pakistan, and various European and African countries.
What industries does the One Belt One Road initiative encompass?
OBOR encompasses a wide range of industries such as infrastructure development, transportation, digital industry, clean and renewable energy, banking, and finance.
How is the One Belt One Road initiative funded?
OBOR projects are primarily funded by the Silk Road Fund, the Asian Infrastructure Investment Bank (AIIB), and the New Development Bank. Besides, Chinese commercial banks and other financial institutions are also playing a significant role in providing finance.
Does the One Belt One Road initiative present any risks?
There is a concern about the potential geopolitical backlash risks. Critics argue that the project could lead to an unsustainable debt burden for participant countries, environmental damage, and a broader strategic move by China to assert its international influence.
Does the One Belt One Road initiative offer any benefits to smaller countries?
Yes, smaller countries that might struggle to secure financing for infrastructure projects could benefit from the initiative. It helps them attract investment and create jobs, leading to economic development.
How does the One Belt One Road initiative impact global trade?
The One Belt One Road initiative aims to stimulate economic growth by making trade more manageable and less costly. It promotes international trade and global integration by developing trade routes and reducing barriers.
Related Finance Terms
- Economic Belt
- Eurasian Land Bridge
- 21st Century Maritime Silk Road
- Belt and Road Initiative (BRI)
- Infrastructure Development
