One of the most important projects in the history of the world economy is silently making the world even an smaller place.
Golden sand dunes and a clear blue sky fill the landscape as far as the eye can see. A caravan of camels is taking riders up the hill. This is the Mingsha Shan mountain in Dunhuang, in western China. You may have never heard of Dunhuang before, but this city was one of the most important transit points along the ancient Silk Road. Gantsu province, where Dunhuang is situated is a must travel path from China to Eurasia.
Today, 280 journalists form more than 170 countries have gathered here to learn and discuss about reincarnation of the Silk Road, a modern version of the trade route which made an essential impact on the cultures and economies of the countries it connected, from Java all the way to Venice. Chinese president Xi Jinping called it “the project of the century” and a staggering $292bn funding bets that it’s going to become just that. It is called “One Belt, One Road”, or shortly, the “Belt and Road Initiative”.
First proposed in 2013, with the working titles such as “Silk Road Economic Belt” and the “21-century Maritime Silk Road” the B&R Initiative has already brought billions of investment dollars into infrastructure of the participating countries in central and Southeast Asia, the Middle East, Europe and Africa. The effects are also already tangible; First ever train traveling directly from China to UK arrived last year. The trip took 16 days, compared to the 32 days by sea.
One of the essential elements of the OBOR is to build infrastructure links to bind China more directly to the 65 participating countries in four continents. Chinese outbound foreign direct investment in BRI countries has been an average of $13bn. per year since 2014. This investment has indeed worked, as Chinese exports to BRI countries have grown faster than total exports since 2013, to an average of around $600bn per year, which puts the investments in perspective and easy to understand. So far, the BRI has resulted in 1600 cooperative projects with 40 countries and created millions of jobs.
How do the BRI countries see the Chinese initiative? “Business model and the soft power of BRI makes China more approachable” says Ms. Lee Huay Leng, head of Chinese Media Group in Singapore. Singapore is of special interest as 29% of Chinese investments in BRI countries was made there.
Investments - as important as they are - are not the only tool of BRI. Lots of effort and attention has also been allocated to removing barriers for trade and making international cooperation between BRI countries easier. “If you remove barriers to people starting business and remove barriers to trade; if you make it easier for people to innovate, then they do really well in starting businesses and creating jobs”, Says John Liu, Executive Editor of Bloomberg in Greater China. “The best thing that BRI can do is to remove barriers and build the infrastructure, and people of the BRI countries will do the rest.”
What does Belt and road initiative mean for Finland?
In a Team Finland Future Watch Report titled: One Belt One Road: Insights for Finland, Prepared for Tekes in January 2016 by Enright, Scott & Associates the authors recommend that Finnish companies take initiative and seek opportunities proactively in which Finland and Finnish companies might be favoured. The report suggest that Finnish companies should seek out the right Chinese partners as the lion’s share of projects related to OBOR are likely to go to Chinese companies. “Many countries and companies will wait until there is more definition before engaging. The trouble is that by the time projects are defined, they are often allocated. The best way to obtain business associated with the OBOR initiative is to help define the projects.” says the report.
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