At the end of 2013 Chinese President Xi Jinping announced one of China’s most ambitious foreign policy and economic initiatives, the Silk Road Economic Belt and the 21st-century Maritime Silk Road. It consists of:
- The land-based “Belt” – the historic overland Silk Road trading routes that connected China, via Central Asia, to Europe and the Middle East
- The oceangoing “Road” – the maritime equivalents to the south, linking China, Southeast Asia, India, Africa and potentially Australia after Chinese President Xi Jinping called in April last year for the alignment of One Belt, One Road with Australia’s northern development plan.
Why have this enormous vision?
There are strategic drivers behind China’s One Belt One Road (OBOR) initiative, but it is also motivated by the country’s pressing domestic economic challenges. It is a multifaceted, multi-decade strategy aimed at increasing the flow of trade, capital and services between China and countries to its west and south.
This includes building infrastructures such as railways, roads, ports, energy systems and telecommunications networks across Asia, Europe, East Africa and Oceana, with an estimated investment of USD4-8 trillion. It impacts more than half the world’s population according to an early PwC report.
Which sectors of the economy would benefit?
The Australia China OBOR initiative, says the following areas have been identified as strategically important:
- Infrastructure – construction plans across all sub-regions in Asia, and between Asia, Europe and Africa
- Financial & Professional Services – requirement for significant foreign investment and funding structures such as financing, bonds, insurance, asset management and professional services
- Energy & Resources – increased global consumption will require more reliable and efficient energy markets and promotion of sustainable energy and resources
- Health Care – ageing population, rapid urbanisation and expansion of the middle class will require reforms to the healthcare sector
- Agriculture – platform to share agricultural practices and technology, enhance efficiency and effectiveness of resources and foster mutually beneficial agricultural cooperation
- Advanced Manufacturing – building of regional advanced manufacturing sectors focused on innovative technology, talent development and global connectivity
- E-Commerce – cross-border e-commerce platforms for the trade for countries along the OBOR
- Cultural Tourism & Education – with 500 sites of world cultural and natural heritage, OBOR provides the opportunity for these rich cultural and artistic heritage areas to be promoted and protected.
Hong Kong’s role in OBOR
According to the Hong Kong Trade and Development Council, Hong Kong, is ideally positioned to be the “super-connector” between the mainland and the rest of the world. It is home to the world’s busiest air cargo airport, the world’s fourth-busiest container port and offshore Renminbi hub.
Major financial players such as the Asian Infrastructure Investment Bank, and the US$40 billion Silk Road Fund will be supported by expertise in international financing and asset management and professionals in a wide range of services, such as accounting, law, construction, engineering and business management.
How will OBOR benefit Australia?
During President Xi Jingping’s recent visit to Australia, it became clear there has been little local attention given to the One Belt One Road initiative. Australia’s potential inclusion is part of the wider economic integration of the Asia-Pacific and made possible by free trade agreements, including the China-Australia free trade agreement.
According to former Trade Minister Andrew Robb, Australia’s northern development plan will better connect Australia with China and other OBOR countries via both essential infrastructure and a financial framework for cross-border trade.
A recent article in Australia Institute of International Affairs, says the opportunities for Australia lie in three areas: China’s investment in Australia, Australia’s investment in China, and the opportunities for Australian industries in third countries.
To find out more about the OBOR initiative and a range of considerations and views in the current economic and political landscape check out the Lowey Institute Understanding China’s Belt and Road Initiative report by researcher and journalist Peter Cai and the Australian Parliamentary article by Asia commentator Geoff Wade.
About the Author
Stacey Martin is the founder of the Expat Advisors Community network of professionals with internationally connected clients. An Aus-China Business and Significant Investor Visa consultant, Stacey will again be leading the annual delegation to the Asian Financial Forum in Hong Kong in January 2018. To express your interest in joining the mission contact Stacey here.