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  China has Undertaken the Largest Economy Project in World’s History

Gytis Janiðius
2016 09 28

Sixty countries, trillions of dollars of investments, 4.4 billion people, and 40 percent of the world’s economy – that’s the platform of the largest economyproject in world’s history, undertaken by China. President Xi Jinping personally oversees the implementation of this idea.

One Belt, One Road

In 2013, the Chinese president announced the restoration of the Silk Road, which will connect China and Europe onceagain. China plans to develop a transport corridor extending from its western provinces and reaching Iran, Iraq, Turkey and Western Europe through Central Asia. One of the branches of this infrastructural project should also encompass Moscow and Eastern Europe.

In China’s vision, the land Silk Road should be supplemented with agrowth of infrastructure and new connections in the sea. East China would be connected to Southeast Asia and Indonesia, proceeding through Sri Lanka, East Africa and Egypt, all the way to Western Europe. The project was dubbed One Belt, One Road.

The train arrived from Harbin to Hamburg in 15 days; in 14, it reached Tehran; and in 13, it covered the distance between Chongqing in China and the Kena railway station in Lithuania. These are the project’s test routes, which are set to become an alternative to the sea routes that take 60 days to ship cargo over.

Route to Network

The One Belt, One Road initiative is not only a new, shorter or quicker route to connect distant regions – plans outline it as a whole chain of industrial territories, logistics centers, new airports, harbors, cities and commercial centers. Chinese traders and diplomats are actively travelling to different countries, promising investments. A 40-billion-dollar Silk Road fund, set to invest in related projects, was unveiled in December 2015, in Beijing. Chinese media has announced 900 projects with a total worth of 890 billion dollars that are already agreed upon. The Asian Infrastructure Investment Bank, which currently controls 100 billion dollars’ worth of capital, was created specifically to that end.

The first Chinese initiative is already underway in Pakistan, whereBeijingis financing economyprojects spread out over the entire country. A total of 46 billion dollars’ worth of investment has already been announced.

Kazakhstan has announced it will build a new city along the part of the Silk Road that crosses it, which will be home to 155,000 people by 2025. 260 million Euros will be assigned for building its infrastructure.

Chinese businessmen and diplomats are setting their sights on Eastern Europe. The first official meeting of Chinese and Central and Eastern European ministers, called China +16, aimed at promoting cooperation and improving transport connections between the East and West, was held in May 2016. Work is also underway in Belarus, near Minsk, where the Chinese are developing the industrial park Big Rock. The park is set to be equipped with industrial and residential areas; office, commercial and entertainment complexes; and financial and scientific research centers.

Triple Benefit to China

According to Chinese investors, now is the right time to develop One Belt, One Road, as Beijingis currently in possession of a great deal of capital that it wants to invest; technology has reached a level which enables projects that were impossible in the past; and China has become strong enough to coordinate large, global-scale agreements. According to President Xi Jinping, this initiative is a win-win situation for the entire world, although the Chinese expert Helen H. Wang claims the new Silk Road would be most beneficial to China itself.

First of all, as the country’s economic growth wanes, new economic relations and faster trade become necessary. After implementing a project this vast, China would find itself at the junction of the major trade routes.

Secondly, the regions of western China are economically weaker than its eastern provinces. New overland trade routes would significantly increase the economic growth of the country’s western part, while economic development in the surrounding countries should decrease conflict and terrorism, the export of which Peking fears.

Thirdly, One Belt, One Road would significantly increase Beijing’s influence the world over, and especially in Central Asia, which would become tightly bound to China’s western provinces and the Pacific Region.

Can the Project Fail? 

The critics of the new Silk Road are careful in their evaluations of such a large project.

China’s economic ambitions are based on political demands. The US, Western Europe and Southeast Asia may feel reluctant to join due to fear of becoming too dependent on Beijing.

Investments don’t always bring only positive changes. A Gallup poll has shown a decrease in support for Chinese leaders in 7 out of the 11 African countries where the Chinese had recently been heavily investing.

One Belt, One Road involves many countries, not all of which are stable and capable of long-term commitments. There’s a great risk of armed conflict and corruption. In some countries, investments could simply be stolen or ruined by bureaucracy.

And let’s also not forget about economic crises. Investing and building is one thing; ensuring that investments pay off – is a different thing altogether. According to the American Business Institute, a quarter of Chinese foreign investments, which took place in 2005-2014 and come in at 246 billion dollars in total, failed. Half are in the energy and transport sectors, which are also prioritized in the One Belt, One Road initiative.

Taking into account Beijing’s diplomatic and financial efforts, it’s clear the intentions are serious. Even a country as small as Lithuania receives some attention: three Chinese universities teach Lithuanian language, one of which also offers a master’s degree in it. If the project succeeds at least partly, it could become the world’s largest economic phenomenon that’s difficult to even compare to anything else, except maybe the Marshall Plan after the Second World War. Many business leaders and international companies believe that success would not only bring economic benefits, but would also promote peace, prosperity and build trust around the world.

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