Infrastructure Investment Bank (AIIB) as a new financial tool to support regional inter-connectivity and further economic integration through network infrastructure. The two New Silk Routes by land and by sea are grand initiatives to link China with Southeast and South Asia, Eurasia, Africa and Brazil through trade, investments, transport and energy infrastructure projects, tourism, education, culture and other areas of cooperation. This is reminiscent of the galleon trade, which linked China and the Philippines with South America.
Beyond huge Chinese investments in the building of road and railway infrastructure, seaports and airports, high-speed fiber-optic networks and energy pipelines, along with the establishment of regulations and trade logistics and coordinating institutions in the participant countries, the One Belt and One Road initiative seeks to achieve policy coordination among the participating nations through inter-governmental cooperation, macro-policy coordination and new cooperative multilevel mechanism among the participating nations.
By constructing or upgrading transport, energy and communication infrastructure along the One Belt and One Road, and connecting it with existing infrastructure, to form a new, vibrant network, China is creating an opportunity to export technologies, creativity, management skills, as well as materials and labor, that will reduce the pressure of domestic overcapacity in sectors such as steel manufacturing and cement, etc., and sustain its moderately high economic growth rate.
The implementation of the One Belt and One Road initiative will also promote the deepening of regional economic integration. This can be achieved through increasing cross-border trade, which can benefit from the construction of new infrastructure and simplified procedures for visas and procedures for cross-borders trade, and from unified standards for trade and investment.
Washington has been pushing two economic initiatives on both fronts of its global dominance: across the Atlantic and across the Pacific, namely the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), both of which exclude China. The TPP initiative was supposed to counter the OBOR initiative but, sad to say, both Clinton and Trump as well as the US Congress, which has the final say, are ambivalent about the initiative, which will open up the US economy to Asia Pacific country competition. The more the US hesitates, the more it is left behind, which diminishes its credibility as an Asia-Pacific powerhouse and the more Asean leans toward her formidable Chinese competitor.
Obviously, the One Belt and One Road initiative will strengthen China’s importance as an economic partner for its neighbors and increase its political and strategic power in the region, including its strong cultural influence.
The project should not be looked at, however, as simply a gigantic and daring attempt by China to “export” its model of rapid development through giant infrastructure projects and intra-regional and inter-continental investments. It is designed to save its own growth during the implementation of structural reforms!
For some analysts, an obstacle to the One Belt and One Road initiative has been its possible competing goals with simultaneous or geographically overlapping initiatives or project initiatives by other countries or regional organization. For one, the Asean has designed its 2020 and beyond development paradigm which, it is hoped, will not collide with the Chinese dream project.
To complement the Belt and Road initiative, China has also been working to develop a system of financial institutions that can offer financial support for the Belt and Road projects such as the AIIB while at the same time providing opportunities for foreign and private investors to take part in the established network of financing.
Should we jump into the bandwagon? Thus far we have not been included in the OBOR initiative, which has already roped in almost all our neighbours in the Asean region. Unless we seize the initiative, carpe diem as they say in Latin, we may very well become the wallflower in the region!