Silk Road Economic Belt – A New Trading Channel
A Silk Road Economic Belt is a proposed economic zone along the eastern part of China, which will be connected to the rest of the country via various transport routes. It was conceptualized during mid 1990’s and was designed to create higher trade volume between China and other Asian countries. This idea was later used by the World Trade Organization as a means to separate the economic development in the east from that in the west. The concept was later accepted by the central government as well as by the regional governments of the country. These associations are working on the feasibility study of a Silk Road Economic Belt, which includes the participation of twenty-one countries namely, China, India, Malaysia, Singapore, Thailand, Philippines, and Vietnam. The Association of Southeast Asian Nations or the ASEAN is also an actor involved in the Silk Road Economic Belt project.
Recently, the Indian Ministry of External Affairs made a statement that the connectivity projects along the corridor of the corridor will be managed through the Use of Holdco’s. Holdco’s are essentially loans given by the private sectors to developing nations. These loans are given at high interest rates and are used by the low-income countries as their source of income. Some of these countries like India and Indonesia have huge resources but due to lack of the necessary infrastructure they could not make use of these resources. Other countries like Pakistan and Myanmar do not have such sources of income, but they too are able to construct the roads and rails that lead to other countries. The countries of the subcontinent too are in need of these types of infrastructure projects and hence there is a big possibility that all of them will be able to get hold of funding from this global facility.
Recently, I had a talk with an Indian citizen who is a member of the APMP (Association of Private Machineries) in India. He told me that he is happy about the connectivity projects being constructed between various South Asian countries, mainly India and Sri Lanka, via the Use of Holdco’s. He further explained that these projects can be used to transport raw materials, products and passengers between these countries. He further explained that there are two kinds of roads in these sub-continent countries, the connectivity projects like the Silk Road Economic Belt and the road construction like the Golden Link. According to him, both of these projects can be used as transport infrastructure but the connectivity project should be constructed first before the road construction can take place Silk Road economic belt.
Recently, I had a discussion with an Indonesian official who is a member of the Asian Infrastructure Investment Bank (AIIB). He also told me that there are many road projects that are being planned in Indonesian soil and these projects include the revival of the old silk Roads across the country. He further explained that there are many projects like the New Silk Road coming up for connectivity in Indonesia and most of these roads are still in the early stages of development. There is also new Silk Road Economic Belt coming up for the countries of the region. The governments of these countries are also eager to improve the connectivity among these countries through the use of Holdco’s. Most of these projects are in the initial phases and have a potential to become hugely popular once completed.
The Silk Road Economic Belt is being used by both India and China as the future trade routes. But this future trade route was primarily conceived to benefit China because it will enable China to access the markets beyond its immediate area of influence, mainly in Asia and also in Europe and America. However, the future economy of these nations is highly dependent upon the continued development of their own internal markets, like their manufacturing sectors and infrastructure. These nations have also agreed to enhance regional integration and cooperation as well as to boost trade and connectivity.
The road, of course, will connect all nations of the region, but in addition to this there are also numerous connectivity and free trade areas. For example, there are huge connectivity and free trade areas through the Pakistan-India border. There are also numerous small, but powerful countries of the region, which are already members of the Asian Infrastructure Investment Bank. Most of these nations have very positive prospects of growth and prosperity. They have successfully overcome their economic problems in the past and are now looking forward to a bright future.
Besides connectivity, the Silk Road has brought together a lot of countries and made them work closely together, through a common market, economy and political system. This integration process is seen in all kinds of economic activities, from agriculture and textiles to construction and tourism, which form the key industries of the region. These countries are building strong economic, political and military partnerships with each other.
The road has played a vital role in the regional integration process. But it is up to each country to make their own contribution to the development of the road. Only through such a massive endeavor, can we see the emergence of stronger administrative systems and peaceful societies. Silk Road economic Belt is here to stay. It has contributed to the development of a new and stronger regional community.