Notes

One Belt, One Road (OBOR) 138
When Chinese President Xi Jinping announced in 2013 China’s plan to build the Silk Road Economic Belt and 21st Century Maritime Silk Road, collectively known as One Belt, One Road (OBOR)—or the Belt and Road Initiative—it was a bold economic development scheme. The main goal was to connect economically underperforming provinces in China’s western border with regional economies. The hope was to spur growth in these areas by giving them greater access to global markets and by providing them with a path out of dependence on Beijing handouts.

OBOR is one of the largest and most ambitious development plans in modern history. It is a multi-trillion dollar endeavour encompassing infrastructure, trade, investment and cultural exchanges. The project is intended to strengthen China’s global influence and its position in the world economy by building a network of economic partnerships across Asia, Europe and Africa. It is designed to boost foreign trade and facilitate the internationalisation of the renminbi by promoting Chinese standards, technologies and products.

As a result, some analysts have focused on its geostrategic dimension, interpreting OBOR as part of a wider strategy by China to assert global leadership and dominate the region. Others, however, have emphasised its economic agenda, arguing that the two goals are complementary and mutually supportive.

In terms of energy security, OBOR offers several routes for China to diversify its crude oil supply sources, bypassing the Strait of Malacca. For instance, the Kazakhstan-China oil pipeline completed in 2009 has a maximum capacity of 20 million tonnes per year and is capable of substituting for imports from the Middle East during periods of oil shortages. obor 138 Similarly, the Chinatrans-Myanmar pipeline commenced operations in 2015 and offers another alternative to the strait.

The pipeline projects are expected to improve oil transport efficiency, reduce the cost of importing oil and increase overall energy security by reducing dependence on foreign imports. However, the risk of terrorism and political instability in OBOR countries, especially those with poor governance ratings, may pose a significant challenge for the implementation of OBOR projects. The risk of project delays, cost overruns and unsustainable debt loads also threatens to undermine the economic viability of many OBOR projects.

As a result, Chinese banks have been reluctant to fund these projects. In some cases, they have even stopped lending to rail projects in risky regions such as Xinjiang. This is partly due to the low economic returns from these investments and the risks associated with projects in unstable regions. Nevertheless, it is important to note that the overall economic benefits of OBOR far outweigh these risks. In particular, the economic integration of China’s underdeveloped border regions with neighbouring countries can help to stimulate growth in these areas and boost domestic demand. Moreover, the expansion of a China-centred production chain will push Chinese manufacturers to innovate and compete globally. This will require them to upgrade their technology and adhere to higher manufacturing standards.
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