CHINA’S ONE BELT ONE ROAD INITIATIVE
While the One Belt One Road (OBOR) policy initiative in China came into existence over four years ago, it was given fresh life in the most recent party meeting and by the most recent five-year plan.
The official party line has stated that the primary goals of the initiative are to reestablish old trading routes westward across China and establish China as a global leader, but we think a number of other objectives are desired and possible from the plan. Certainly economists judge the OBOR to be economically feasible in the long run, but the Chinese have in the past been able to launch massive development programs that failed to make economic sense in the short term but held promise for the long term.
A shift in focus toward eastern European economic areas would increase China’s economic influence over a potentially important region. It would also offer new export outlets, diversification away from China’s intense focus on its coastal economic zones, justification for massive infrastructure spending in mostly underdeveloped provinces in western China, and help increase domestic consumption. The potential economic, geopolitical and social windfalls are plentiful, even if many of them are long-term in nature and perhaps difficult to achieve.
If any country were capable of reopening ancient trade routes with modern infrastructure it would be China. The world has already marveled at its capacity to build massive stretches of new highways, a world- class railway system, impressive construction/ engineering projects (bridges, airports, electric grids) and perhaps most importantly, to build developments without expectations for immediate use or return on investment.
Certainly the OBOR initiative could be hindered by pre- existing provincial debt, bureaucratic inefficiencies, less than robust economic development in large
portions of the Eastern European target markets and difficult physical terrain. However, it should be noted that the miracle in the eastern part of China also defied expectations and logic among Western politicians and economists. The familiar refrains of overbuilding, debt debacle fears, pollution damage and government corruption appears to have only minimally held back China’s growth and rising per capita income over the last 15 years.
THE POSITIVE IMPACT ON COMMODITIES While the impact on the national economy from OBOR could be glacial in its speed and initially insignificant toward industrial commodities, it would be very surprising if imports of certain commodities failed to expand under an effort to bring to the western three quarters of China the growth and development that has unfolded in coastal areas. The most direct market impact is likely to be an expansion in energy consumption. A number of economists have already suggested that people migrating from rural to urban areas end up doubling their energy consumption.
A SHIFT IN FOCUS TOWARD EASTERN EUROPEAN ECONOMIC AREAS WOULD INCREASE CHINA’S ECONOMIC INFLUENCE OVER A POTENTIALLY IMPORTANT REGION.
28 | ADMISI - The Ghost In The Machine | November/December 2017
Source: Wikipedia
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