The Silk Road is an ancient network of trade and cultural transmission routes that were central to cultural interaction through regions of the Asian continent connecting the West and East by merchants, pilgrims, monks, soldiers, nomads from China and India to the Mediterranean Sea during various periods of time*. Marco Polo travelled along the Silk Road and it seems that the very first travelers were following it already during the Fifth century. But today in China “Silk Road” has a different meaning: major change, growth, economic development, gigantic infrastructure works under China supervision.

China’s ‘One Belt, One Road’ [OBOR] initiative is President Xi Jinping’s signature strategy for realizing China’s emergence as a prosperous and stable world power, and a significant counterweight to the US-led Trans Pacific Partnership, from which China is currently excluded. There is a risk that the competing initiatives of China and the United States will lead to some regional conflicts but it is more likely that Sino-American competition will lead to deeper integration throughout Asia-Pacific.

A research report estimates that the Belt and Road strategies will cover 4.4 billion populations from 26 countries and regions and the economic effect is valued at $21 trillion.

OBOR was initially conceived as a plan for expanding trade and commerce along former Silk Road routes by investing in regional transport and communications infrastructure. New ports, airports, highways and railways would facilitate trade and economic growth from Northern China to Europe via Eurasia, and along a new maritime corridor (the road) linking Southern China with East Africa via Southeast Asia.

OBOR projects were also intended to fight lagging growth at home, by absorbing China’s excess industrial capacity and capital, and by securing access to the region’s energy and resources. Since 2013 OBOR has morphed into something much bigger than a regional infrastructure development plan.
It has become a framework for what President Xi Jinping’s dream of a “community of common destiny,” types of activities that will promote deeper engagement with OBOR countries. OBOR now calls for deeper engagement between the economies and societies of China and 65 countries in Central, South and Southeast Asia through free-trade agreements, closer policy coordination, financial integration and cultural exchange. The language of OBOR documents is rooted in principles of peaceful coexistence and two-way exchange.

“The Belt and Road Initiative is a way for win-win cooperation that promotes common development and prosperity and a road towards peace and friendship by enhancing mutual understanding and trust, and strengthening all-round exchanges.” It is certainly a clever and dynamic path toward sustaining employment and continued growth. It is certainly also a strategic approach to preserve exporting and promoting China.

China is offering a different approach from the United States, it is not confrontation but it is a very capitalistic path consisting of buying through investment in different part of the world. China has clearly understood that growth and wealth bring peace, a critical ingredient to wealth. Instead of invading countries let’s make them rich, you acquire a friend and a trade partner.

Investing in major infrastructure works, building dams, railways, highways, etc. it does clearly remind us of FDR’s New Deal approach and we know by experience that it works.
The current and the new Administration should learn from our past history. In the meantime China has understood and their peaceful approach is helping China consolidate its forefront economic power and expand its political influence.

There is no doubt that the United States is losing its status and influence as the world’s economic leader and China is offering a peaceful alternative approach that is certainly tempting for a lot of central Asia nations and beyond. One could hope that the TPP led by the Obama administration is a new direction and will bring economic peace and growth.

Last year, despite US resistance and protestations, the Asian Infrastructure Investment Bank (AIIB), a Chines lead project, succeeded in raising a working capital of $50 billion from 57 founding members. Among them were some of the closest allies of the United States such as UK, Germany, France, Israel and South Korea. The unchallenged dominance of the World Bank and the International Monetary Fund has finally come to an end and the dominant power of the United States as well.

AIIB is not the only project in this global economic approach lead by China. Look at what China has done in Africa: China development projects in Africa, to which it has committed more than $70 billion in the last decade, have had fundamental effects in a continent forgotten by Europe where the influence of the USA has been steadily decreasing.

The USA should look at South and Latin America and do it quickly adopting the path that the Chinese have learned from our capitalistic system but the USA needs to act very quickly as China will invest abroad US$14 trillion within the next four years. Let’s expand the wealth and make friends around the world!

Reference: *Wikipedia- ** China Daily - *** Brookings Institute

Libra6 Management is present in Shanghai and invests in Cleantech, Media, Healthcare and Real Estate.