ASSESSMENTS

The Grand Design of China's New Trade Routes

Jun 24, 2015 | 09:15 GMT

A Chinese engineer supervises workers building a bridge over a river near Muzaffarabad, the capital of Pakistani-administered Kashmir.
A Chinese engineer (L) supervises workers building a bridge over a river near Muzaffarabad, the capital of Pakistani-administered Kashmir.

(SAJJAD QAYYUM/AFP/Getty Images)

Forecast Highlights

  • Over the next several years, China will devote significant resources to the construction of Eurasian trade routes under its Belt and Road Initiative.
  • As transit routes come online, the proportion of Chinese maritime trade passing through South China Sea chokepoints will shrink.
  • The new infrastructure built as part of the Belt and Road Initiative will support China's economic rebalancing by opening new markets, generating demand for higher value-added Chinese goods and helping China build globally competitive industries.
  • Improving transit routes will lead to new security and political risks, and China's efforts to mitigate these threats could create frictions in the very areas where Beijing is trying to diversify its trade routes.

The strategy behind the Belt and Road Initiative is to diversify transit lines, thereby mitigating China's vulnerability to external economic disruption and reinvigorating China's slowing economy. China's ideal would be to link its inland cities to global markets with a diversified network of transit routes and energy pipelines, many of which would take inland routes and serve as alternatives to existing sea-lanes. The name of the initiative, "One Belt and One Road," is slightly misleading; this will not be a single overland road coupled with a single maritime route. The initiative envisions six corridors across Eurasia, many of which will mix land and maritime components....

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