One Belt, One Road Opportunity to benefit US companies | Anders Phillippe

Asia-Pacific Uncategorized

The goal of China’s One Belt One Road Initiative (OBOR) is to link China to the rest of the world by two great arcs of international trade – a land-based ‘belt’ and a maritime ‘road’ stretching west to Europe and Africa and south to Southeast Asia and Australia.

Estimates of the total investment involved range between $US1.4 trillion and $US6 trillion, depending on which projects are included and the timescale used.

At a time of increasingly isolationist political thinking in the West, China’s massive commitment to broadening and deepening its international ties represents a huge opportunity to countries globally.

The development of ports, logistics hubs and other infrastructure across 60 countries is central to the OBOR, and work on joint projects with China is already underway in many partner nations.

Beijing-backed financial institutions such as the New Development Bank, Asian Infrastructure Investment Bank and The Silk Road Fund have a combined financial firepower of $US240 billion ready to commit to OBOR projects, but long-term capital requirements will be far higher.

The vast initiative will run over several generations and its sheer scale and ambition will impact across global initiatives, such as shifting to a lower carbon economy.

According to Worldwide Funding Corp Head of Research, Anders Phillippe, “Joint projects could bring benefits to US companies and Worldwide Funding Corp is already focused on the possibilities.” Take for example General Electric’s operations in Pakistan, orders are more than $1 billion today, compared with less than $100 million five years ago.

According to Phillippe, China hopes to achieve several goals with the OBOR. He added, “China has an excess capacity issue. Global trade isn’t strong enough to absorb all the products China is producing. One Belt One Road is a way for China to create new routes to get its products into its major markets such as America which is its top export destination. At the same time, it allows for greater infrastructure investment as well, connecting up the interior regions of China and expanding economic activity inland – up until now, most growth has tended to be towards the eastern seaboard. But it’s not just limited to China. It extends to anywhere that can allow more connectivity into China or out.

“For America, it offers potential growth opportunities, particularly for American companies that are able to get work tied into any infrastructure projects. Stronger regional trade routes and economies will have a self-reinforcing positive effect on Chinese economy and the world for decades to come. From an American perspective, I can only see a benefit,” says Phillippe.