Mega projects under belt and road initiative will last decades, most likely taking a half century to reach their full zenith peak of unlimited prosperity for those countries and entrepreneurs prepared to take intelligent well planned strategic risks, with massive financing available for sound projects. The process will include the creation and further development of six major international economic corridors in which major infrastructure projects will be built along the five major routes bringing many undeveloped nations into the modern 21st century fold.
The marketing ploy was to reinvent the three ancient Silk Roads one land based and two shipping maritime transportation routes, spreading across Eurasia up-to the African continent where merchant trade flourished from East to West during the great Han dynasty that enriched a vast array of savvy merchants along the routes.
Continental Land Bridges
The six major economic corridors along the OBOR will be made up of the following:
1) New Eurasian Land Bridge/ Second Continental Bridge a rail system nearly approximately 8,000 miles linking the East Asian Chinese seaport of Lianyungang in Jiangsu province to Rotterdam, Holland in Europe; while passing mainly through Kazakhsan, Russia, Belarus, Poland, and Germany. In actuality there are three Eurasian Land Bridges as the initial first Eurasian Land Bridge is presently an outdated transport rail system due to frate rail gauge size and distance, while linking the seaport of East Russia to Rotterdam. The Third Eurasian Land Bridge links the Shenzhen seaport of China to Rotterdam. The shortest route to Rotterdam is through the New Eurasian Land Bridge also known as the Second Continental Bridge which will be the major hub.
2) China-Mongolia-Russia Economic Corridor is a land based rail route connecting Beijing, China through Mongolia to Moscow in Russia covering over 5,600 miles of terrain.
3) China-Central Asia-West Asia Economic Corridor is a rail line beginning in Xinjiang, China traveling through the Central Asian countries of Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and Turkmenistan. Afterwards, it passes through the West Asian nations of Iran and Turkey ending near the Mediterranean Coast and Arabian Peninsula.
4) China-Pakistan Economic Corridor connecting the Chinese region of Xinjiang down to the Pakistan port of Gwadar is composed of a rail and highway system, oil and natural gas pipelines, and fiber optic networks beginning in Kashgar all the way to Gwadar port.
5) The China-Indo-China Peninsula Economic Corridor is a maritime route beginning in China covering the Indochina Peninsula of Myanmar, Thailand, Laos, Cambodia, and Vietnam. 6) The Bangladesh-China-India-Myanmar Economic Corridor is over 1700 miles long beginning in the Chinese Yunnan Province of Kunming traveling through major strategic economic focal points of Mandalay in Myanmar on through Dhaka in Bangladesh and finishing in Kolkata, India. This route is made up of a network of highway (roads), shipping, train and air travel covering an area servicing approximately 440 million people in the region.
Belt-Road Vision
The five major visionary goals by the Chinese government concerning the OBOR initiative are the following:
1) Policy coordination among nations for efficiency where trade can flow quickly across nations rapidly without much in the way of bureaucratic red tape causing delays.
2) Facility connectivity where technological updated logistical hubs flow uninterrupted for instance with universal track sizes preventing delays in unloading and reloading trains.
3) Unimpeded trade without major custom delays providing uniform legal codes with an efficient streamlined process keeping everything on a tight schedule with minimal delays.
4) Financial Integration where currency flow among nations well managed where experienced financial institutions are able to facilitate the complex various monetary transactions efficiently without much in the way of inconveniences and delays.
5) Cultural bonds among nations promoting harmony and financial trust among countries through various cultural, tourist, and sports attractions leading to further integrations and tourist dollars. This will keep the economic ball rolling picking up steam among the various economic corridors, nations, and local enterprises along the Silk Road concerning keeping people engaged in the OBOR initiative.
Financing Belt Road Initiative
The Chinese designed OBOR initiative currently spans 65 countries covering nearly 4.4 billion people, 63% of the global population, 66% of the world land mass, nearly 75% percent of all the known energy reserves, approximately 30% of global GDP, around 24% of global trade in merchandise, and has an economic global output of an estimated 21 trillion US dollars. Conservative estimates believe the OBOR initiative will require roughly 6 trillion dollars a year for the next 15 years to fund infrastructure projects in the Eurasian region alone. The Chinese plan on investing 4 trillion dollars in total concerning the OBOR initiative which would be 31 times the size of the Post World War II Marshall Plan investment of 120 million.
The Chinese already have 3 trillion set aside from their foreign exchange surpluses as reserves. The financing for the OBOR initiative will come from numerous sources. The initial main source of funding specifically established toward OBOR was the Silk Road Fund on December 29th of 2014 in Beijing by the Chinese government. The central government pledged to invest 40 billion in currency reserves for the promotion of economic expansion in the Eurasian region among countries and enterprises along the Silk Road pathways. The four government entities that procured the initial funding were the State Administration of Foreign Exchange, Export-Import Bank of China, China Investment Corporation, and the China Development Bank. The next main source of direct funding geared toward OBOR was also created in Beijing by the Chinese led Asian Infrastructure Investment Bank (AIIB).
The (AIIB) became operational in January of 2016 with 57 founding member countries as signatories to the articles of agreement. Presently, there are thirteen approved prospective member countries eagerly awaiting to become full members of the AIIB, where 100 billion of currency reserves were installed among member nations, concerning this multilateral distribution lender for the promotion of infrastructure projects along the Asian Pacific region of the Silk Roads. The Chinese alone invested more than a third from their reserve currency to fund the AIIB. In total the Chinese have placed close to one trillion dollars aside concerning the 65 developing countries along the OBOR framework, mainly from the Silk Road Fund and the China Development Bank; to finance an approximated 900 infrastructure projects.
The BRICS nations of Brazil, Russia, India, China, and South Africa are significant emerging economies who meet annually at a forum summit since 2010 for mutual benefit concerning political and economic progress. These nations have a combined population of 3.6 billion, which is nearly half of the global population at 46% and 26% of the global land mass. The combined annual GDP of the BRICS nations for 2015 was 16.6 trillion, representing approximately 22% percent of the global GDP wealth. The BRICS nations created a New Development Bank in Shanghai, China for infrastructure development for developing and emerging economies.
The Bank became an operational lender in February of 2016 with an initial investment of 50 billion shared equally among the BRICS nations. The available funds will eventually reach to the designed goal of 100 billion for multilateral funding development having a natural inclination towards the promotion of the OBOR projects due to the nation make up of BRICS. There are traditional supplemental sources of funding available for OBOR projects outside the more formal established network, among various institutions working in a concerted effort to help fulfill the massive OBOR objectives; especially now with the United Nations Security Council endorsement in passing resolution 2234 promoting the concept implementation concerning the OBOR initiative.
OBOR Job Creation
The OBOR initiative since its inception in 2013 has created 60,000 jobs along the Silk Road, implemented 1400 projects in ten major industries, developed economic trade zones in 20 countries, produced 50 memorandum of understanding agreements among nations, created a 180,000 jobs in 35 nations, and lead to the positive collection of 1.1 billion in tax revenues for the various government entities. The OBOR initiative is supposed to produce over 2 million jobs between 2015 through 2030, including 12,000 engineering contracts.
We believe this OBOR initiative will overall deliver positive returns for those nations and enterprises engaging in the numerous productive business arrangements developing from this far reaching initiative. The success on behalf of world progress will be when underdeveloped nations will advance in infrastructure, technology and wealth. Some businesses will reap fantastic rewards, some modest, and others may only break even. In the end all will have succeeded for the valuable business experience and connections made along the way will advance their business acumen propelling them toward other future successful financial adventures Yes, some will wall flat on their face but in life it is rare and usually happens to those who are least prepared with an intelligent business program established or miscalculating by underestimating the available funding needed to successfully compete in the new economic frontier of prosperity along the Silk Road concerning their industry start up and lasting requirements.
DISCLAIMER: The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy and position of Regional Rapport.