The Latest Status of “One Belt, One Road” – The Current Status of the Participating Countries, the Merits of Japan, and the Relationship with the AIIB

The Latest Status of “One Belt, One Road” – The Current Status of the Participating Countries, the Merits of Japan, and the Relationship with the AIIB

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The “One Belt, One Road” concept, proposed by Chinese President Xi Jinping in 2013 and still being promoted today, refers to the concept of a huge economic zone spanning from Asia to Europe to Africa.

This article, “The Basics of One Belt and One Road,” explains in an easy-to-understand manner not only the basic information of One Belt and One Road, but also the background of the One Belt and One Road concept proposed, the countries participating in One Belt and One Road and their current status, the international issues of One Belt and One Road in relation to the “AIIB,” the relationship between One Belt and One Road and the benefits to Japan and Japanese companies, and so on.

Although “One Belt, One Road” has been seen as a factor in the trade war between the U.S. and China, it is also a project with meaningful benefits for the global economy, correcting the economic disparity between Asian countries.

Regarding the spread of the new corona epidemic that is sweeping the world, Chinese pharmaceutical companies have begun conducting clinical trials in the countries that have already joined “One Belt, One Road” and elsewhere. After the trials, they are expected to supply vaccines to those countries, and the future of “new corona diplomacy” based on “One Belt, One Road” is also attracting attention.

In this article, we will examine China’s national strategy of “One Belt, One Road” from such diverse angles.

“One Belt One Road” is China’s mega culture economic vision

The “One Belt, One Road” initiative, proposed by Chinese President Xi Jinping in 2013 and still being promoted today, is a huge economic zone spanning the continents of Asia, Europe, and Africa.

It is often abbreviated as “OBOR” or “BRI” in “The Belt and Road Initiative.

It is said to be China’s national strategy to build economic cooperation in the whole area by connecting the routes from Asia to the Middle East, the east coast of Africa, and Europe, starting from China, by a land route called “One Belt” and a sea route called “One Road”.

Incidentally, “One Belt” refers to the “Silk Road Economic Belt” that runs from western China to Europe via Central Asia, and “One Road” refers to the “21st Century Maritime Silk Road” that runs from the Chinese coast to Southeast Asia, Sri Lanka, the Arabian Peninsula coast, and the east coast of Africa.

The economic strategy of “One Belt, One Road” is to contribute to the economic development of these cities connected by land (one belt) and sea (one road) through the development of transportation networks (i.e., building an efficient logistics system with highways, railroads, and ports), the laying of pipelines, the opening of production plants, and so on, and thus contribute to the economic development of these regions.

As mentioned above, “One Belt, One Road” is an extremely broad economic concept led by China, but it is also a national strategy closely related to the country’s geopolitical security. Specifically, it is said to have strong implications for the formation of an international order based on the “Chinese model”.

That is exactly what “One Belt, One Road” has been one of the major factors in the U.S.-China trade war that broke out in 2018, but at the same time, it is also meant to be a globally significant project to correct the economic disparity between countries by promoting economic development in the region.

One Belt, One Road” proposed by President Xi Jinping in 2013

Let’s start again with the background of the birth of the “One Belt, One Road” concept: in 2013, shortly after becoming president, Xi Jinping first publicly proposed the “One Belt, One Road” concept as part of his new foreign policy and opening-up strategy.

Eventually, in May 2017, the “‘One Belt, One Road’ International Cooperation Summit Forum” was held in Beijing, which led to increased interest in the international community.

What is the “AIIB” and the “Silk Road Fund” that supports One Belt and One Road

In addition, the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund have been established to finance the One Belt, One Road Initiative, respectively.

The Asian Infrastructure Investment Bank (AIIB) was proposed by President Xi Jinping at the APEC summit in October 2013 and officially established in 2015 as an international financial institution to support China-led infrastructure development in the Asia-Pacific region.

The Silk Road Fund was created by China in December 2014 for the purpose of developing infrastructure in Asia, and unlike the aforementioned AIIB, the Silk Road Fund is an institution that decides where to invest at China’s own discretion, and its investment size is estimated to be $40 billion.

The real reason why Xi Jinping proposed the “One Belt, One Road” concept…?

So why did President Xi Jinping propose the “One Belt, One Road” concept?

Although not formally announced, the “One Belt, One Road” concept is said to be a new economic strategy to solve the problem of domestic production surpluses by exporting the excess production capacity generated by China’s massive domestic investment up to 2013, and spreading the economic growth that has stalled at home abroad.

To begin with, China was focused on developing its domestic infrastructure to host the 2008 Beijing Olympics. China’s economy was enjoying a bubble around the Olympics, but in September of the same year, the Lehman Brothers bankruptcy, a major U.S. investment bank, led to the outbreak of the “Lehman Shock”.

Many countries, including Japan, the United States, and Europe, experienced negative economic growth, causing a global recession. However, China is the only country that has a huge amount of money to stimulate the economy. The amount of stimulus money spent on various domestic infrastructures such as high-speed railroads, highways, public facilities, telecommunication facilities, housing, etc. was a staggering 4 trillion yuan (about 57 trillion yen).

The economic breakthrough of China at that time was so tremendous that it is said that the phenomenal growth of the Chinese economy halted the global economic downturn caused by the Lehman shock.

However, once it reached a certain point, there was naturally an overproduction in China. As a result, the country began to have a glut of various materials, such as iron and cement. Eventually, after the collapse of Lehman Brothers, the investment efficiency in China will be greatly reduced due to the stimulus package of up to 4 trillion yuan. To begin with, the amount of investment was significant, so the backlash was also considerable. …Such a period coincides with 2013, when the “One Belt, One Road” concept was announced…

As mentioned above, the “One Belt, One Road” concept is strongly viewed by some as an efficient way to recover such domestic overproduction by investing in foreign countries…it should be kept in mind.

Following the background of the birth of “One Belt, One Road”, we will discuss the coastal countries that are participating in One Belt, One Road and their current status. In addition, we will again look at the areas covered by One Belt and One Road.

As of March 2019, the Chinese government has signed with 125 countries, including Italy

As of March 2019, the Chinese government claims to have signed 173 government cooperation documents with 125 countries and 29 international organizations.

Countries involved in the “One Belt, One Road” co-building have already spread to Asia, Europe, Africa, Latin America, and the South Pacific region, with Italy becoming the first G7 (seven major countries) to sign a memorandum of understanding in March 2019.

The signing of the Memorandum of Understanding by Italy, one of the EU’s core countries, came as a shock to European countries, as it is one of the 15 EU countries that have signed a “One Belt, One Road” Memorandum of Understanding (MOU), making Italy the 16th.

Greece, Portugal and Malta have also joined the “One Belt, One Road” community

What is “Lioukou Liou Multi-Guo Port”?

Following the coastal countries of the One Belt and One Road, let’s look again at the areas covered by the One Belt and One Road.

In conclusion, unlike the impression given by its name, the One Belt and One Road consists of a more complex structure consisting of multiple corridors that are further branched off from the “Silk Road Economic Belt” and the “21st Century Maritime Silk Road”.

To begin with, the “Silk Road Economic Belt” has three routes, as follows

(1) The route from northwest and northeast China through Central Asia and Russia to Europe and the Baltic Sea.

The route from northwest China, through Central and West Asia, to the Persian Gulf and the Mediterranean

The route from southwest China to the Indian Ocean, via the Indochina Peninsula

There are also two routes along the “21st Century Maritime Silk Road”.

The route from China’s coastal ports, through the South China Sea, through the Strait of Malacca, to the Indian Ocean, and then to Europe.

(2) A route from China’s coastal ports through the South China Sea and further into the Pacific

In addition, a framework called “Six Corridors, Six Roads, Many Countries, Many Ports” has been announced based on those five routes.

The “Six Corridors” refers to the six major international economic cooperation corridors. The “Six Corridors” refers to the six major international economic cooperation corridors.

The six corridors are “New Eurasian Land Bridge”, “China-Mongolia-Russia”, “China-Central Asia-West Asia”, “China-Indochina”, “China-Pakistan”, and “Bangladesh-China-India-Myanmar”.

The “Six Roads” refers to the six roads: railroads, roads, shipping, aviation, pipelines, and information networks.

Multinational” refers to the countries cooperating in the One Belt One Road Initiative.

Multi-Port” refers to the cooperating ports on major maritime transport routes.

Thus, the framework of “six corridors, six routes, multiple countries and multiple ports”, which consists of “six economic corridors, six routes, multiple countries and multiple ports”, is being set up to invite cooperation and participation in the “One Belt, One Road” concept.

What are the international issues of One Belt One Road?

In the second half of the text, we will look at some of the topics that have been identified as problems with One Belt and One Road internationally.

In conclusion, the two major problems of One Belt One Road are “AIIB and debt traps” and “major factors of the U.S.-China conflict”.

What is the link between the AIIB and the “debt trap”?

First, let’s take a look at the AIIB and the debt trap.

As mentioned earlier, the AIIB is an international financial institution established at the initiative of China, called the Asian Infrastructure Investment Bank (AIIB), and is an international development financial institution for Asia.

As of January 2020, the AIIB has 102 member countries and regions (with Japan and the U.S. having decided not to join).

The problem lies in the relationship between the reality of the AIIB and the “One Belt, One Road” relationship, which is still considered unclear.

Originally, the AIIB was formally established in 2015 as an international financial institution to support China-led infrastructure development in the Asia-Pacific region.

It was also intended to provide a complementary response to the growing need for funds for infrastructure development in the region, which was growing beyond the capacity of the ADB (Asian Development Bank), of which Japan and the United States are members.

For a time after its establishment, the cumulative amount of loans approved by the AIIB’s Board of Directors was set at $12 billion. However, it was reported that less than 20% of the loans were actually provided. It was reported that most of the loans were cofinanced by the ADB (Asian Development Bank) and World Bank (World Bank) in a manner of speaking.

Also, since 2017, criticism of the One Belt and One Road has surfaced in cases of what has been called the “debt trap” by China to developing countries.

A prime example of this is the case of the transfer of the rights to operate the Hambantota Port in Sri Lanka to China.

Sri Lanka received a loan from China to build a large port called Hambantota Port in their country, but they were stuck in repayment of the loan and had to hand over the operating rights of Hambantota Port to a Chinese company for 99 years.

Wary of this “debt trap,” it spread to the participating countries along the route, which had previously been supportive of the One Belt One Road Initiative. In some countries, administrations that had favored economic cooperation with China were defeated in elections, and the new government was forced to review the project.

A study published in March 2018 by the Center for Global Development (CGD), a U.S. research institute, noted that eight countries – Mongolia, Laos, Kyrgyz Republic, Tajikistan, Pakistan, Maldives, Montenegro, and Zipchi – are facing debt risks associated with the One Belt One Road.

Why is One Belt and One Road a major factor in the U.S.-China conflict?

To sum up, the “One Belt, One Road” concept for China was also a national strategy to avoid a head-on confrontation with the United States. That’s why they dared to seek a way out to Asia, Africa, and Latin America, the regions where American capital is relatively less concentrated.

However, due to the aforementioned problem of the “debt trap” for developing countries and the announcement of Italy’s participation, the first G7 country to join, Western countries, led by the United States, are becoming more wary of the One Belt, One Road movement every year.

In addition, the United States is also keeping a close eye on China’s “pearl necklace,” a sea-lane strategy that is being constructed in conjunction with the One Belt One Road.

A sea lane is a sea traffic route of great importance for trade and security, and a “necklace of pearls” means that the sea lanes are connected like a necklace, just like India is like a human face.

China deploys Chinese naval vessels in ports in the Indian Ocean that are on the sea route. This is an important issue in the security strategy of not only India, but also of the United States as a representative of the West.

In addition, activities related to the dissemination and use of the online networks included in the “Digital Silk Road,” or “One Belt, One Road,” are also of concern to the United States.

The topic in question is the National Information Law passed in China in 2017. According to it, organizations and individuals in China must provide information upon request by the Chinese government, and in theory, if the Chinese government requests information that passes through the optical cables and new standard high-speed, high-capacity “5G” networks owned by Chinese companies that are being extended on the Digital Silk Road. It is because of the possibility of obtaining them.

Needless to say, not only the United States, but also other countries around the world are already engaged in information warfare, and the expansion and development of the information network associated with One Belt One Road has become a major threat to the United States, which is an expert in information strategy.

What is the relationship between One Belt One Road and Japan & its benefits?

Japan cooperates in the framework of “Third Country Market Cooperation

In this section, we will look at the relationship between the “One Belt, One Road” concept and Japan, as well as the benefits for Japanese companies.

As of 2020, One Belt, One Road is in a situation that is being forced to change due to the changing global economic situation and the intensifying conflict with the aforementioned United States.

At the One Belt and One Road forum held by China in April 2019, President Xi Jinping also commented on the international community’s consideration of ensuring financial sustainability… while respecting the laws of each country, based on international rules.

The Japanese government is also seeking cooperation in the framework of “third-country market cooperation,” a situation in which the Japanese government shared a certain common understanding with the Chinese side during Prime Minister Abe’s visit to China in October 2018.

Japan’s Ministry of Economy, Trade and Industry (METI) states that “Japanese and Chinese companies jointly receive and operate infrastructure projects” as a type of third country market cooperation, and Japan-China cooperation in Thailand’s East-West Economic Corridor program is truly a project that demonstrates the relationship between the One Belt One Road Initiative and Japanese and Japanese companies and its benefits.

Will One Belt, One Road contribute to world peace?

World peace and security strategies that combine the poles  “One Belt, One Road

In the last section, we will examine the significance of One Belt, One Road.

At the risk of misunderstanding, world peace and security and military strategies among nations have always been inextricably linked.

The Chinese government has stated that “One Belt, One Road” is also essential for the development of Asia, and is effective in reducing the economic disparity among Asian countries and for world peace and development.

It is true that the U.S. and other Western countries are wary of China’s One Belt, One Road initiative, and in fact, some see it as “neo-colonialism”.

However, in the 21st century, the One Belt, One Road initiative led by China should continue to be an important national strategy, and the economic situation of Asian countries and other coastal countries is definitely changing due to the One Belt, One Road initiative.

In any case, for the people living in the “new normal” world of the post-Corona disaster era, in which globalism has permeated the world, and for Japanese companies in the global market, it is not a good idea to engage in economic activities without recognizing the existence of One Belt One Road.

As I mentioned at the beginning of this article, with regard to the spread of the new corona epidemic that is sweeping the world, Chinese pharmaceutical companies are conducting clinical trials in the countries that are participating in the “One Belt, One Road” initiative. After the trials, they are expected to supply vaccines to those countries, which is also known as “new corona diplomacy” based on the “One Belt, One Road” approach.

As of August 2020, President Xi Jinping has indicated that he will supply vaccines to Africa on a priority basis, and Premier Li Keqiang has commented that he will supply vaccines to Thailand, Vietnam, and other countries in the Mekong River basin on a priority basis, so it is hard to predict how the participating countries of the One Belt One Road will change as a result.

In this sense, it is worthwhile to deepen our understanding of “One Belt, One Road”.

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