BACKGROUND TO BRI

The US$4 trillion Belt and Road Initiative (BRI) is considered to be Chinas most

ambitious foreign trade and investment project to date. The project was initially

named One Belt One Road (OBOR) and then later renamed as BRI as the term

one in OBOR implies only a single network while BRI would better reflect the

projects numerous network clusters. In October 2017, BRI was written into the

Communist Partys constitution at the 19th National Congress of the Communist

Party of China (CPC), a sign of the projects policy significance for China and its

current leadership.

BRI is Chinas attempt at rebuilding the network of the Ancient Silk Route,

which was a trade route connecting China to Europe through both land and

sea routes. Xi Jinping, President of the Peoples Republic of China, unveiled the

project in late 2013 during a visit to Central and South East Asia. BRI focuses on

improving connectivity and cooperation among Asian countries, Africa, China and

Europe. The emphasis is on enhancing land as well as maritime routes through a

network of roads, rail lines and sea ports. This is mainly done through large scale

infrastructure projects to improve ports and trade transport. The project spans 65

countries and about 60 percent of the worlds population (Djankov, Sand Miner,

2016). The funding for the project comes through Asian Infrastructure Investment

Bank (AIIB) and the Silk Road Fund, which is a US$40 billion development fund

created for the initiative.

One arm of BRI, Silk Road Economic Belt (the Belt) extends overland from

China to Europe through Central Asia and the other, 21st Century Maritime Silk

Road (the Road), links China to Southeast Asia, the Middle East, east Africa and

Europe along the Mediterranean, the Indian, Atlantic and Pacific Oceans connec-

ting over 20 countries (Igbinoba, 2017). Sri Lanka has been an important stop on

the Maritime Silk Road since ancient times. It lies along one of the worlds busiest

trade routes, connecting Asia with Europe, and plays a key part in Chinas BRI. The

Belt is a series of overland corridors connecting China with Europe, via Central

Asia and the Middle East.

The initiative was motivated by the concern of the slowdown of the Chinese economy as it transitioned from an investment led growth model a consumer demand growth model. With China experiencing overcapacity in sectors across the country, seeking market access abroad was seen to address this problem at home. Also the initiative will allow Chinese enterprises to access opportunities to undertake various projects and commerce in the BRI countries, assisting them to be globally competitive and become global brands through joint ventures, technology transfers and public-private partnerships. The BRI is considered to be an open and inclusive initiative allowing every country to take part in its development.

BRI has five key objectives, namely, policy coordination, connectivity, unimpeded trade, financial integration, and people-to-people bonds.. BRI expects to achieve policy coordination through intergovernmental cooperation on macro-economic policies and increased connectivity by developing trade infrastructure as well as through trade and investment cooperation. Financial integration will be achieved through joint efforts to establish the AIIB and BRICS New Development Bank, signing of MOUs on cooperation in bilateral financial regulation, establishing an efficient regulation coordination mechanism in the region. The objective of developing people to people bonds is expected to be achieved through cultural and academic exchanges and tourism among others.

Southeast Asia and South Asia are expected to be key beneficiaries of BRI (De-loitte, 2018). For the former, that is partly due to proximity to China and a higher state of development, and partly due to the demand for better infrastructure. For the latter, the size of population and vast market potential is noteworthy. Amongst the other beneficiaries include Europe, Russia and Central Asia and Africa. So far,

infrastructure has attracted more funding than other sectors although it also en- compasses investments in manufacturing and trade, as well as softer investments in tourism and culture.

One of the primary challenges the initiative has faced has been in obtaining the support and cooperation of other emerging economies mainly India. Western powers also remain sceptical of the initiative and view it as a means of China increasing its geopolitical power and influence. Despite this, it has received a high level of cooperation from many nations including those in South Asia (Bangladesh, the Maldives, Nepal, Pakistan and Sri Lanka) and South East Asia.

The BRI project in the past 4 years since its launch has grown in size in terms of investment and the countries being involved. In May 2017, the Belt and Road Forum for International Co-operation was held in Beijing. It was attended by heads of states of 29 governments, representatives from 130 countries and representatives of more than 70 international organizations. This event was the highest-level meeting of its kind since the BRI was proposed in 2013.

The BRI initiative has also extended to Americas (North and South); Chinese investments in Latin America continued to rise in 2017. In little over a decade, China has jumped from being one of Latin Americas smallest trading and investment partners to being one of its largest.

Question

1. Summarize this