Announced in October 2013 by President Xi Jinping, the Belt and Road initiative (Belt and Road) promotes economic cooperation and partnership through the building of a trade and infrastructure network connecting China, Central Asia, the Middle East, Africa, Europe and Russia.
Sometimes referred to as the 21st century Silk Road, the Belt and Road draws inspiration from the ancient Silk Road, which consisted of trade routes from the old Chinese capital, Xi’an, to ancient Rome.
Through the Belt and Road, China aims to bolster economic cooperation and pave the way for free trade agreements among countries along the route. The Belt and Road will serve as a platform to promote exchange and mutual learning between different countries for the purpose of mutually beneficial cooperation.
"Official figures indicate that China has invested more than US$50 billion in Belt and Road countries since 2013."
National Development and Reform Commission (NDRC), March 2017
What countries are under Belt and Road?
The Belt and Road consists of the:
- Land-based Economic Belt which connects China with Central Asia, the Middle East, Europe and Russia; and
- Maritime Silk Road which connects China’s coastal cities through the South China Sea to ports on the Indian Ocean, the African coast, the Red Sea and the Mediterranean Sea.
Belt and Road in a nutshell:
- Involves over 60 countries
- There are nearly 50 cooperation agreements signed between governments to date
- Will affect 4.4 billion people over its lifetime
- Will generate an aggregate GDP of USD20 trillion – approximately 30% of global GDP
The following six economic corridors are earmarked for development under the Belt and Road:
- The New Eurasian Land Bridge Economic Corridor
- China – Mongolia – Russia Economic Corridor
- China – Central Asia – West Asia Economic Corridor
- China – Indochina Peninsula Economic Corridor
- China – Pakistan Economic Corridor
- China – Bangladesh – India – Myanmar Economic Corridor
What does Belt and Road mean for businesses?
The Belt and Road complements China’s ‘Going Global’ strategy in encouraging Chinese enterprises to invest overseas and take opportunities in international markets. The initiative also welcomes foreign companies to participate.
The Belt and Road will see infrastructure construction on an unprecedented scale, including projects such as railroads, highways, pipelines, ports, airports, and telecommunications.
As China prepares to enter into a “new normal” pace of economic growth, Chinese enterprises will need to focus on more sustainable growth. The Belt and Road will provide Chinese enterprises with opportunities to export their engineering and construction capabilities to new markets. The increased connectivity brought by the Belt and Road will provide opportunities for trade of Chinese goods and services, thereby contributing to growth and boosting China’s GDP in the long-term.
In the same vein, the initiative offers ample opportunity and potential to non-Chinese businesses. For non-Chinese businesses, the Belt and Road route connecting Europe, the Middle East and Africa with China offers opportunities for investment or co-invest with Chinese counterparts, import/export, technologies and services.