China's One Belt One Road Initiative: What Does It Mean for Global Development?

China’s One Belt One Road initiative (OBOR) has captured the world’s attention, and not just because of its name and length of 6,000 miles (9,656 kilometers). It represents China’s effort to extend its geopolitical influence into Europe through Central Asia as well as into Africa through the Middle East and beyond. The initiative will give China the chance to shape economic development in these regions, and that could have long-term implications for global development. 


In 2013, Chinese President Xi Jinping proposed the One Belt One Road initiative, also known as the Belt and Road initiative. The initiative consists of two parts: the Silk Road Economic Belt and the 21st-century Maritime Silk Road. The goal of the initiative is to boost economic growth in China and other countries along the routes by increasing investment and trade. Specifically, it will provide infrastructure that can help reduce transportation costs, improve regional connectivity, facilitate regional cooperation and promote cultural exchanges. 

The Belt and Road initiative will be financed by $1 trillion worth of investments over the next decade from both public and private sources. Among those projects are ports, railways, roads and power plants. These initiatives will connect about 65% of the world’s population, 60% of global GDP and 30% of all goods traded internationally. A number of countries have already agreed to participate in these projects including Pakistan, Kyrgyzstan, Laos and Nepal. For example, with this initiative, China would link up with the rest of Asia through Pakistan. Similarly, Kyrgyzstan would serve as a key link between Russia and Europe via Turkey. Furthermore, Beijing is negotiating a free trade agreement with Bangladesh, India and Sri Lanka, which together account for 1.6 billion people or 17% of the world’s population. Given its large scale, the One Belt One Road initiative has become a part of some popular conspiracy theories in Western media because many believe it aims to create a new hegemony similar to that of Rome or Britain at their height.


The initiative has the potential to increase global trade by $2.5 trillion, according to a study by the McKinsey Global Institute. In addition, it could create up to 26 million jobs and increase incomes by $250 billion by 2025. The initiative could also help reduce transportation costs and improve infrastructure in participating countries. For example, this would make goods from Ethiopia more competitive on the international market. A second economic benefit of OBOR is that Chinese investors are required to use local contractors and suppliers when they invest in construction projects abroad. As a result, the supply chain becomes more diverse and includes companies not based in China. Local suppliers can thus become producers for large multinational corporations. For example, after building its first factory in Indonesia, Lenovo was able to double its production capacity due to increased demand from other markets. 
A third major benefit of OBOR is an improvement in regional peace and stability. According to the Asian Development Bank, if peace and stability were improved throughout Central Asia, 600 million people living there would be lifted out of poverty. Currently, many infrastructure investments do not take into account what will happen in 20 years or how climate change will affect development needs. These problems need to be addressed with long-term thinking if OBOR is going to be successful in increasing economic growth and improving quality of life around the world.