REPOST: The Belt and Road Initiative - HKTDC Research

The Belt and Road Initiative (BRI) proposes developing the Silk Road Economic Belt and 21st Century Maritime Silk Road with the intention of promoting economic cooperation among countries along the proposed routes. The Initiative has been designed to enhance the orderly free?flow of economic factors and the efficient allocation of resources. It is also intended to further market integration and create a regional economic cooperation framework of benefit to all. The Chinese government issued its "Vision and Actions on Jointly Building the Silk Road Economic Belt and 21st Century Maritime Silk Road" on 28 March 2015. This outlined the framework, key areas of cooperation and cooperation mechanisms regarding the BRI.

Conceptual Framework

BRI aims to connect Asia, Europe and Africa via:

• The Silk Road Economic Belt
• It focusses on linking China to Europe through Central Asia and Russia; connecting China with the Middle East through Central Asia; and bringing together China and Southeast Asia, South Asia and the Indian Ocean.
• The 21st Century Maritime Silk Road
• It focusses on using Chinese coastal ports to: link China with Europe through the South China Sea and Indian Ocean; and connect China with the South Pacific Ocean through the South China Sea.

The BRI establishes 6 international economic corridors.

1. The New Eurasia Land Bridge Economic Corridor

The New Eurasia Land Bridge, also known as the Second Eurasia Land Bridge, is an international railway line running from Lianyungang in China’s Jiangsu province through Alashankou in Xinjiang to Rotterdam in Holland.

2. The China-Mongolia-Russia Economic Corridor

Linked by land, China, Mongolia and Russia have long established various economic ties and cooperation by way of border-trade and cross-border cooperation.

3. China-Central Asia-West Asia Economic Corridor

This Corridor runs from Xinjiang in China and exits the country via Alashankou to join the railway networks of Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan) and West Asia (Iran, Turkey, etc.).

4. China-Indochina Peninsula Economic Corridor

The Corridor mainly covers the Greater Mekong Sub-region. In particular, Guangxi has opened an international rail line running from Nanning to Hanoi, as well as introduced air routes to several major Southeast Asian cities.

5. China-Pakistan Economic Corridor

The objective of China-Pakistan Economic Corridor is to build an economic route running from Kashgar, Xinjiang, in the north, to Pakistan’s Gwadar Port in the south.

6. Bangladesh-China-India-Myanmar Economic Corridor

BRI proposes developing the Bangladesh-China-India-Myanmar Economic Corridor and facilitate cooperation through building a closer relationship.

Key Areas of Cooperation

BRI has five major cooperation areas, including:

1. Policy Co-ordination

Countries along the belt and road will, via consultation on an equal footing, jointly formulate development plans and measures for advancing cross-national or regional cooperation and resolving problems arising from cooperation through consultation.

2. Facilities Connectivity

Efforts will be made to advance the construction of port infrastructure facilities and clearing land-water intermodal transport passages, aiming to establish an infrastructure network connecting various Asian sub-regions with other parts of Asia, Europe and Africa.

3. Facilitate Unimpeded Trade

Steps will be taken to resolve investment and trade facilitation issues, reduce investment and trade barriers and promote regional economic integration.

4. Financial Integration

Actions will be taken to expand the scope of local currency settlement and currency exchange in trade and investment between countries along the route, deepen multilateral and bilateral financial cooperation and enhance the ability of managing financial risks through regional arrangements.

5. People-to-people Bonds

Efforts will be made to promote exchanges and dialogues between different cultures to form the basis for the advancement of regional cooperation.

The Silk Road Fund

The Silk Road Fund, set up as a limited liability company in December 2014, currently has US$40 billion and RMB$100 billion. It invests mainly in infrastructure and resources, as well as in industrial and financial cooperation related to BRI projects.

The Asian Infrastructure Investment Bank

The Asian Infrastructure Investment Bank (AIIB), which started its operation in January 2016, is a multilateral financial institution founded to bring countries together to address the huge infrastructure needs across Asia and beyond. It offers financing for sound and sustainable projects in energy and power, transportation and telecommunications, rural infrastructure and agriculture development, water supply and sanitation, environmental protection, and urban development and logistics. Currently, the AIIB has over 100 members and prospective members in total (including Hong Kong).