But don’t be fooled or simply unaware, China is becoming a major economic contender and quite successfully championing itself as the new leader of globalism thanks in large part to its One Belt One Road (OBOR) initiative.
Never heard of it? Well it’s time you did.
Arguably the largest overseas investment drive ever launched by a single country, OBOR is an ambitious development campaign headed by China’s President, Xi Jinping, aiming to boost trade and economic growth within Asia, Central Asia, Europe and Africa. The crux of this reimagined “Silk Road” centers on building a massive amount of infrastructure connecting China to countries around the globe through an interconnected web of roads, rail systems, pipelines, and ports. The initiative is financed primarily by China-led development funds, with some estimates showing the country contributing upwards of $150 billion annually toward its success.
Exceeding the pretension and extent of the Marshall Plan spearheaded by the U.S. and integral to the rebuilding of Europe after World War II, China’s new economic diplomacy is two-fold: lend developing countries large amounts of cash to build up their infrastructure and gently guide said countries to use Chinese firms for these construction projects.
From the Chinese perspective, this is win from every angle. Their highly-interconnected country serves as a model of what’s possible, but domestic infrastructure investment has slowed significantly. With an increase in demand in emerging markets and high contractual supply in China, the relationship becomes symbiotic.
And this doesn’t even take into account the clout one receives as the country that brought 30 percent of the global economy, 65 countries and 60 percent of the global population under one trade agreement. That’s not small potatoes.
As U.S. President Donald Trump follows through on his campaign promise to withdraw from the much-anticipated Trans-Pacific Partnership, Chinese-backed strategies like the OBOR will only gain traction in a world that is still generally on board with free trade ideals. Some think the U.S. is turning its back on the rest of the world at a time when the world most needs it to be engaged in such discussions. This back pedaling creates a vacuum, a gap that should be filled, and it appears China and the OBOR initiative are ready and willing.
There is some skepticism over whether China will follow through with the immense amount of funding required to see this plan to fruition, as well as whether ultimately increasing the debt of small developing countries in the name of progress is the answer. Some also tend to brush OBOR to the side due to its grandiose scale and decades-long development timeline—it’s too far out to pay attention, right?
Chinese companies have already spent over $50 billion in OBOR investments, and at the Belt and Road Forum in May, President Xi Jinping pledged to further boost funding by adding another $14.5 billion to the Silk Road Fund. The China Development Bank will also up lending programs totaling $36.2 billion and $18.8 billion for Belt and Road projects. It’s also been reported recently that China will provide OBOR with $8.7 billion for humanitarian efforts centered around food, housing and healthcare.
Can Western countries—the U.S. in particular—become counterparts in this initiative, rather than bystanders or naysayers? For all its vision building and long-term outlooks, OBOR could be very good for the developing world, providing much-needed infrastructure and trade relationships meant to boost the economies of all those involved. As such, the U.S. should at least be part of the conversation, if only to learn more about these projects and see how their involvement could benefit all global players, themselves included.
Cardenas is an accomplished logistics management professional with nearly thirty years of experience in domestic and international supply chains. He currently serves as president of supply chain solutions provider TOC Logistics International.