The One Belt One Road (OBOR) initiative announced in 2013 has provided an overarching framework for China to achieve its global ambitions, both at the economic as well as strategic level. As China’s President Xi Jinping’s signature move, OBOR, aims to strengthen China’s economic leverage by spearheading infrastructure construction and enhancing connectivity across nearly 70 countries accounting for 33% of global GDP along the overland Silk Road Economic Belt and the Maritime Silk Road across Eurasia.
Strategically, OBOR as a ‘brand’ provides the right platform for China to push its ‘soft’ power across Eurasia while underplaying ‘hard’ power tactics, which often spark geopolitical tensions, with China perceived as a rising threat.
China’s large industrial overcapacity in the wake of on-going economic rebalance, tested expertise in infrastructure, capital account surplus and efforts to secure food and energy resources are well complemented by the need to address infrastructure and funding constraints in most recipient countries of OBOR.
Turkey’s location as a passage between Europe and Asia is pivotal for OBOR’s success. For Turkey, the initiative presents both strategic as well as economic opportunities. It enables Turkey to lead development initiatives across the region while achieving closer and more balanced trade integration with China and other participating countries
For Latin America, OBOR provides an opportunity to enhance bilateral financing from China while providing opportunity to reduce the region’s commodity dependence while focusing on boosting productivity and value added to sustain stable growth.
Strong geopolitical and economic linkages achieved through OBOR could enhance internationalization of RMB through trade, construction and manufacturing, mergers and acquisitions, and bilateral currency swaps.
Nonetheless, the challenges faced by OBOR initiative are significant. Excluding Singapore, nearly 54% of OBOR investments have flowed to countries with speculative grade sovereign rating. This raises implementation and credit risk concerns for Chinese stakeholders. Recipient countries risk being exposed to less stable and move expensive funding amid increased dependence on Chinese lending.
All said, OBOR is rapidly expanding in scale, scope and ambition. China has emphasized on open participation and that OBOR is not intended to become a China-led bloc. As such, leaving OBOR less structured and openended seems a deliberate attempt by China to tackle international scepticism over China’s global ambitions.