The Silk Road Economic Belt is a proposed high-speed trade and transportation route in Asia. This would link China to the rest of the world via the vast landmass of central Asia, including the former Soviet Union, Pakistan, and Tajikistan. The plan was formulated during the period of economic reforms in China when the country’s state-owned enterprises were being restructured. Although initially the plan was intended to reduce border tension between the two countries, the Belt has since become a vital trade and transport route for China as well as for ASEAN countries. It currently connects the most developed countries of the world, giving China easy access to markets which are far beyond its borders. If successful, the Silk Road Economic Belt could serve as a new trading route and help boost global economic growth.
The benefits for Central Asian countries would be enormous. The long-distance trade route would eliminate the cost of imported goods, thereby increasing living standards and purchasing power. The newly created economic belt would connect them with nations with more developed economies, giving them access to markets like those of Japan and the United States. In this way, they would be able to export their goods at lower prices, helping improve their overall economy.
Additionally, the creation of the Silk Road would increase connectivity between China and the rest of Asia-Pacific countries. The idea is to increase trade and investment between the Asian Tigers to reduce dependency on Western institutions and currencies. By creating the economic trading route, China would be able to reduce its dependence on foreign currencies and lessen its trade surplus. This, in turn, would encourage greater cooperation among its Asian neighbors, resulting in mutually beneficial trade deals.
Some argue that the creation of the Silk Road would constitute a severe setback to the economic development of ASEAN countries, especially China. These countries fear that the Belt will divert traffic towards their own markets, eventually harming their growth. Others argue that ASEAN countries will use the Belt as a source of raw materials, thereby decreasing their access to international markets. Still others argue that the Belt will help unite the nations surrounding China in a closer economic union, paving the way for closer cooperation and integration into the global economy Silk Road economic belt.
There are some who are in favor of ASEAN countries becoming members of the Chinese economic network. The grouping currently consists of India, Japan, Korea, Taiwan, and Pakistan. The US, UK, and Australia are reluctant to embrace membership in the grouping, citing their fear that it will somehow encroach on their own spheres of influence. China’s neighbors, meanwhile, are wary of Chinese economic penetration, fearing that it will lessen competition for local industries and erode their intellectual property rights. Both the US and Japan have tried to prevent the entrance of ASEAN countries into the Shanghai Cooperation Organization, which is an economic trading partner for China.
There is, however, one thing that all regional trade alliances have in common: greater integration within their regional markets. Trade flows would increase as members gain access to each other’s markets, allowing companies to more easily reach beyond their own borders and to compete with those of other nations. This would, over time, lead to increased regional growth and employment opportunities, as companies in the US and Japan would find products to sell that they did not even know existed in the southernmost regions of China, allowing them to tap into new markets that would have been off-limits to them before.
The SEBEL, meanwhile, could enhance intra-regional trade flows, reducing barriers between Asian economies and allowing the movement of goods between them. This would allow companies from Japan and the United States to directly sell products that they have manufactured in each country to the Chinese consumer market. Such direct selling would, in turn, create a demand for American and Japanese products in China and across the rest of Asia. This would, in turn, boost the regional economies, creating jobs, investment opportunities, and income for citizens from these two countries. Additionally, it would increase competition among Asian nations, resulting in lower exports and more trade friction. ASEAN countries would also gain access to other regional advantages such as mutually beneficial trade alliances and liberalization measures.
All this sounds very good. However, the SEBEL initiative is facing serious delays due to political and practical reasons. Its main obstacles include bureaucracy, sensitivities to China’s trade surplus, the difficulty of integrating the Belt and Road initiative into bilateral trade talks, and the difficulty of coordinating a vision on the connectivity of the SEBEL with other regional development goals. For all its shortcomings, the SEBEL still has a very big potential. Only time will tell whether it can fulfill its dreams and fulfill its role as the best possible trading and connectivity platform for the twenty-first century.