For the Sake of Development
The aim behind starting a project isn’t necessarily always earning commercial gains. Some projects are established just for the purpose of development. It seems to be a philosophy of Chinese that construction of roads and other infrastructure can lead you towards development. The same notion is reflected in Beijing’s Grand design of constructing transport links between China and Eurasia. Through this project, Beijing believes that they will get an easy access to the markets in Eurasia which will prove to be economically beneficial for them.
Similarly, China Pakistan Economic Corridor, which links the Gawadar port on Arabian Sea to north-west China, is a project of $46 billion and it is not driven by any commercial logic but by the need. China imports oil from the Middle East and this economic corridor will provide China with an alternative route to the Middle Eastern oil producing countries. Through this, China would be able to avoid the rising tension in the South China Sea. Even some of the Chinese officials believe that there is a high chance of losing most of the investment in this project. Thus, it is quite evident that the motive behind projects financed by a Chinese policy bank is not always profit. CPEC or the China Pakistan economic corridor is an example of the Chinese ideology of development rather than monetary goals.
Revival of the Silk Route
One Bank, One Road plan isn’t new for China. It had been there for thousands of years by the name of Silk Road. China is just seeking to revive that old Silk route through OBOR plan. Beijing’s investment in the ‘New Silk Road’ is estimated to be at $890 billion. According to Jin Liqun who is the president of the Asian Infrastructure Investment Bank, past experiences of China proves that infrastructure investment not only helps to improve the socio-economic standing of a country but also helps in eradicating poverty.
When it comes to financing the Silk Road plan, there are a lot of problems that come in the way. First of all $890 billion is a huge sum of investment which is not that easy to arrange. Secondly, there often occur delays in construction process so it is likely for the process to spread over a long period of time where as in 64 countries that are involved in this project, the political conditions keep on changing. AIIB plans to invest $10 billion in the ‘New Silk Road’ strategy in 2018.
AIIB is a China-led international financial institution. It aims to finance the infrastructural development in Asia. This year AIIB is planning to invest $1.5-$2 billion, almost double than that in the next year and $10 billion in 2018. This investment would help to solve some of the problems in the region and those faced by the project.
It is believed that if China operates through the bilateral mechanism such as policy banks, it is likely to have more impact. In this way it will be able to lend to more countries.
In 2015 the Export Import bank of China lent $80 billion where as the Asian development bank lent $27.1 billion. More than 1000 projects in the 49 countries, which are involved in the New Silk Road plan, were financed by the Export-import bank.
Rising Interest in the revival of the Silk Road
It has also been observed that there is a shift of preferences of Chinese institutions. Instead of international pension funds, wealth funds, equity funds and others, they seem to be more interested in OBOR project. Many institutions are attracted towards it due to a promise of long term return of 6 to 8%. Even, IE Singapore that is a state-owned trade development board has agreed to do a partnership with China Construction Bank and will provide a finance of $22 billion for the OBOR project.
The associations between different countries and cultures spattered across and around the veins of Asia is nothing new for the Chinese. For millennia, the the Silk Road, brought cultures, races, trade goods and innovative ideas into contact with each other.
Two and a half thousand years ago, Chinese writers gathered vital information regarding the various cultures and races that were around and along the silk route. They studied, traded with and understood the topography and the people that lived there. Chinese traders always assessed their clientele, even then. The trade route was important; focusing on the local leaders, strengths and weaknesses of a culture and those that followed it was an integral part of trade on the silk route. Chinese authors were not the only ones that understood the value of the one true bridge between the East and the West, the writings of Herodotus is a testament to the importance of this historic land route.
Historic Significance Vs. Current Importance
Due to the introduction of sea travel and how trade route became shorter and a lot more convenient, the value of silk route dwindled. But in today’s world, globalization and the complex international laws and conflicts that are erupting around the globe the need to revive the ancient trade route, has never been clearer. The Chinese more than other countries, realizes the gravity of conflicts and consequences of feuds in international waters. An alternative trade route that links China with its ancient arteries along the silk route is essential in the current global state of affairs. The world is all about economy and the booming consumerism of the Asian market is an enticing objective and if development is done, this region has always been a gold mine of resources.
There was good reason why the Silk route was considered the “heart of the world” — just as today it has the potential of becoming the future of free trade and commerce. Two thousand years ago, the importance was partly due to the natural wealth. Silver, gold and lapis lazuli still found in rich abundance in modern day Iran, Iraq, Afghanistan and most Central Asian states was once a great attraction for traders and rulers alike. The great cities such as Samarkand, Mosul and Merv offered great economic possibilities, thanks to their rich elite cities and consumers. In the ancient world the control of the silk route constituted control of the trade pulse of the world. If the OBOR is anything compared to its past glory this might entail a similar status for the silk road in current times.
Historic Trade and Value
The route was important for trade and access. The connection to landlocked regions like Afghanistan and other Middle Eastern countries were through this road. There was a reason that heavy taxes were levied for traders to access the silk route. The Silk road offered connections that linked oases, towns and cities. Empires and dynasties rose and fell with the control of the Silk route’s rich arteries.
In the 19th century the silk road was carrier of ideas, goods, faith and culture. The spread of main religions such as Islam and Christianity with an intermingling of faiths and cultures taking root faster and more permanently in Asia than they could in the Mediterranean.
The system of credit, lending and borrowing with goods as collateral that were thousands of miles away began here 2500 years ago. Trade flourished across this belt due to excellent networks, shared values of faith, culture of race and later by family connections, common identities and goodwill built over time. This system might be antiquated but in today’s world with technology we see the same kind of networking, only faster.
The Sogdians ruled transcontinental trade in late antiquity. Later the Armenians played a vital role in part due to their linguistic prowess. Many recent studies have concluded that the development of the ancient language of Yiddish comes from the Jewish traders that travelled the Silk route.
The Silk route has been a witness to trades of all kinds from slaves to spices, the road was no stranger to exotic or erratic goods. The boom of the road was in the middle ages but the boons and banes of the road went hand in hand. The road was a route for disease and plague as well. Violence and death too found passage with the road. The most famous devastation attributed to the road was the “black death” plague, originating in central Asia it spread from town to city. The major attraction of this region was the possibility of controlling taxes that meant a great deal of wealth for the conqueror or ruler of the time. This region has seen the most rules and invasions from around the world than any other region; from Alexander the Great to the British Empire and even as late as the Cold war with Russia trying to take control.
Highways and the immediate access to oil rich countries and the natural abundance of resources in this region keeps the demand for this region high, this aspect of the road has remained intact since ancient times.
The heart of the world is a treasure that has always enticed conflict; the most recent wrestling match was between the US and the Soviet Union, both powers trying to strong-arm one another for influence in the region. Afghanistan, Iran and Iraq were the interests and at the end of the US managed a grudging half victory in the region. However, it seems China is on the right track.
The amalgamation of economic prospects and challenges offered by the “One Belt, One Road” project are a repetition of how the Chinese felt about the silk road 2,500 years ago.