Best of the Week
Most Popular
1.Canada Real Estate Bubble - Harry_Dent
2.UK House Prices ‘On Brink’ Of Massive 40% Collapse - GoldCore
3.Best Cash ISA for Soaring Inflation, Kent Reliance Illustrates the Great ISA Rip Off - Nadeem_Walayat
4.Understanding true money, Pound Sterling must make another historic low, Euro and Gold outlook! - Marc_Horn
5.5 Maps That Explain The Modern Middle East - GEORGE FRIEDMAN
6.Gold Back With A Vengeance As Bitcoin Bubble Bursts - OilPrice_Com
7.Gold Summer Doldrums - Zeal_LLC
8.Crude Oil Trade & Nasdaq QQQ Update - Plunger
9.Gold And Silver – Why No Rally? Lies, Lies, And More Lies - Michael_Noonan
10.UK Election 2017 Disaster, Fake BrExit Chaos, Forecasting Lessons for Next Time - Nadeem_Walayat
Last 7 days
Students, It’s Time to Prepare Your Finances for the Years Ahead - 25th Jul 17
Stock Market and Gold Stocks Trend Forecast Update - 25th Jul 17
Saving Illinois: Getting More Bang for Its Bucks - 24th Jul 17
3 Stocks Sectors That Will Win in The Fed’s Great Balance-Sheet Unwind - 24th Jul 17
Activist Investors Are Taking Over Wall Street, Procter and Gamble Might Never Remain the Same - 24th Jul 17
Stock Market Still on Track - 24th Jul 17
Last Chance For US Dollar To Rally - 24th Jul 17
UK House Prices Momentum Crash Warns of 2017 Bear Market - Video - 22nd Jul 17
Crude Oil, Gold, ETFs & more: Pro-grade Market Forecasts - 22nd Jul 17
Warning: The Fed Is Preparing to Crash the Financial System Again - 21st Jul 17
Gold / Silver Shorts Extreme - 21st Jul 17
GBP/USD Bearish Factors - 21st Jul 17
Gold Hedges Against Currency Devaluation and Cost Of Fuel, Food, Beer and Housing - 21st Jul 17
Is It Worth Investing in Palladium? - 21st Jul 17
UK House Prices Momentum Crash Threatens Mini Bear Market 2017 - 21st Jul 17
The Fed May Show Trump No Love - 20th Jul 17
The 3 Best Asset Classes To Brace Your Portfolio For The Next Financial Crisis - 20th Jul 17
Gold Stocks and Bonds - Preparing for THE Bottom - 20th Jul 17
Millennials Can Punt On Bitcoin, Own Safe Haven Gold For Long Term - 20th Jul 17
Trump Has Found A Loophole To Rewrite Trade Agreements Without Anyone’s Permission - 20th Jul 17
Basic Materials and Commodities Analysis and Trend Forecasts - 20th Jul 17
Bitcoin PullBack Is Over (For Now): Cryptocurrencies Gain Nearly A 50% In Last 48 Hours - 19th Jul 17
AAPL's 6% June slide - When Prices Are Falling, TWO Numbers Matter Most - 19th Jul 17
Discover Why A Major American Revolution Is Brewing - 19th Jul 17
iGaming – Stock Prices - 19th Jul 17
The Socionomic Theory of Finance By Robert Prechter - Book Review - 18th Jul 17
Ethereum Versus Bitcoin – Which Cryptocurrency Will Win The War? - 18th Jul 17
Accepting a Society of Government Tyranny - 18th Jul 17
Gold Cheaper Than Buying Greek Villas in 2012 - 18th Jul 17
Why & How to Hedge the Growing Risks of Holding Stocks - 18th Jul 17
Relocation: Everything You Need to do for a Smooth Transition Abroad - 17th Jul 17
A Former Lehman Brothers Trader: It’s Time To Buy Brick And Mortar Retailers - 17th Jul 17
Bank Of England Warns “Bigger Systemic Risk” Now Than 2008 - 17th Jul 17
Bitcoin Price “Deja Vu” Corrective Sequence - 17th Jul 17
Charting New Low in Speculation in Gold and Silver Markets - 17th Jul 17
Bitcoin Crash - Is This The End of Cryptocurrencies? - 17th Jul 17
The Fed's Inflation Nightmare Scenario - 17th Jul 17
Billionaire Investors Backing A Marijuana Boom In 2017 - 17th Jul 17
Perfect Storm - This Fourth Turning has Over a Decade of Continuous Storms to Come - 17th Jul 17
Gold and Silver Biggest Opportunity Since Late 2015, Last Chance at These Prices - 17th Jul 17
Stock Market More to Go - 17th Jul 17
Emerging Markets & Basic Materials Stocks Breaking Out Together - 16th Jul 17
Stock Market SPX Uptrending Again After Microscopic Correction - 15th Jul 17

Market Oracle FREE Newsletter

Crude Oil, Gold, ETFs & more: Pro-grade Market Forecasts

How the China Belt and Road Could Change the 21st Century

Economics / China Economy May 16, 2017 - 02:50 PM GMT

By: Dan_Steinbock

Economics Until recently, globalization was led by the West and benefited only a few advanced economies. After China’s three decades of rapid growth, the Belt and Road initiatives hold potential for more inclusive globalization.

During the weekend, the Belt and Road Forum for International Cooperation flooded Beijing with almost 30 heads of state and government leaders, 1,500 delegates from over 130 nations, and over 70 international organizations.


As the forces of globalization are lingering in the advanced world, the Forum reflected new commitment to more inclusive globalization, particularly by emerging and developing economies. By 2050, their contribution to global GDP growth is expected to climb from 68 percent to 80 percent.

The Forum precipitates huge investments in new roads, railways and ports while facilitating access to vital capital, goods and services, especially to those economies, that benefited so little from the postwar globalization. The investment in infrastructure is likely to accelerate industrialization and growth opportunities in nations where living standards remain low but growth potential is high.

Focus on economic development

In the West, the One Belt One Road (OBOR) is still portrayed as a new plan. Yet, President Xi Jinping raised the initiative of jointly building the Silk Road Economic Belt and the 21st Century Maritime Silk Road already in fall 2013.

If the original belt reflected the ancient world economy until the Italian Renaissance, the OBOR includes countries on the original Silk Road through Central Asia, West Asia, the Middle East and Europe. It also features a maritime road that links China’s port facilities with African coast, through the Suez Canal into the Mediterranean. 

The OBOR has potential to redirect domestic overcapacity and capital for regional infrastructure development to improve trade and relations with Southeast Asia, Central Asia and Europe – and over time across Americas and Sub-Saharan Africa.

The OBOR has been compared with the postwar Marshall Plan, which was designed to support the European recovery and to insulate the Soviet Union. There are parallels, but also major differences.

Presumably, the Marshall Plan was created to help rebuild economies in Western Europe for four years beginning in April 1948. While there is no consensus on exact amounts, the cumulative aid may have totaled $13 billion (some $130 billion in 2016 dollar value). These efforts pale in comparison with the OBOR, which involves far greater cumulative investments, which are currently anticipated at $4 trillion to $8 trillion, depending on timeline and scenario estimates (Figure 1).

Unlike Marshall Plan, the OBOR does not predicate participation on membership or tacit support of military alliances. It is focused on 21st century economic development – not on 20th century Cold War.

Huge expenses of geopolitics

The Marshall Plan was predicated on participation in the US-led North American Treaty Organization (NATO). Historically, almost 75 percent of the total aid went to just five countries: the UK, France, West Germany, Italy, and the Netherlands, which became the NATO’s core members over time.

Today, the NATO still accounts for over 70 percent of all military spending in the world (US 38%, non-US NATO: 32%), although friction about NATO financing by members reflects underlying pressures among the founding members.

While much is made about the humanitarian aid by the West, particularly the US and Europe, it should be seen in context. In 2016, world military expenditure is estimated to have been $1,686 billion, according to SIPRI research. In turn, international humanitarian assistance reached a record high of $28 billion in 2015, according to most recent Global Humanitarian Assistance Report (Figure 2).

In brief, the West-led humanitarian assistance is less than 2 percent of world military expenditures, which is led by the NATO. That’s untenable over time, especially as more than 90 percent of global humanitarian aid goes to long- and medium-term recipients.

Need for global cooperation

Unlike advanced economies, emerging and developing nations have neither the ability nor willingness to over-invest in military spending. In per capita terms, China ($156), India ($42), and even Russia ($481) invest a lot less than the US ($1,885), or major European economies ($500-$860) in military spending.

Moreover, China does not predicate entry to the OBOR on membership in military alliances, as the US once did. That is vital. When NATO’s rearmament replaced economic development as the West’s primary goal in the postwar era and when the Cold War divided the world, instability and economic volatility surpassed stability and economic growth in the global agenda.  That benefited mainly a few advanced economies but not the decolonizing nations, which were penalized by costly conflicts that were exported to the Third World as the direct result from the Cold War.

It is these historical failures in economic development that the OBOR has potential to alleviate over time – through renewed global cooperation, the rise of more inclusive multilateral inter-governmental development banks, and new and massive infrastructure initiatives in a number of pivotal emerging and developing economies that are still amid industrialization or the drive to industrial maturity.

The Belt and Road has the potential to change the 21st century – for the better.

Dr. Dan Steinbock is an internationally recognised expert of the nascent multipolar world. He is the CEO of Difference Group and has served as Research Director at the India, China and America Institute (USA) and visiting fellow at the Shanghai Institutes for International Studies (China) and the EU Centre (Singapore). For more, see www.differencegroup.net   

© 2017 Copyright Dan Steinbock - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife