China’s Belt and Road Initiative – Blog #1

, , , ,
(Image credit: srilankabrief.org)

This is the first RAAD blog in a series based on The Geopolitical Significance of the Chinese Belt and Road Initiative and What it may Mean for Supply Chain Operations Worldwide, a Whitepaper (27 pg., 128 endnotes) researched and written for RAAD360 LLC (raad360.com). The goal is to alert supply chain managers worldwide to the complex risks inherent in BRI.

Worldwide Supply Chain Risk Series

China’s Belt & Road Initiative

Blog #1 – The Silk Road Core

The China Strategy – Part 1

Establish a far-reaching transportation network with China having substantial control over supply chain operations worldwide through control of key nodes and maritime routes in the network.

Global trade, shipping patterns and, therefore, supply chains, are undergoing ‘sea changes’ in what China calls “a new era of globalization.”[1]  This is just the beginning.  In September 2013, Chinese President Xi Jinping announced the most ambitious infrastructure program in history, using the Old Silk Road as a metaphor for a transportation and trade plan that has come to encompass a land and maritime network, involving more than 60 countries, across Asia, the Middle East, Europe, Africa, Australia, and even South America and about 30%-40% of world GDP (estimates vary).

60 countries – 30% world GDP

Beyond the land and maritime transportation networks, China’s “Belt and Road Initiative” also includes attention to “developing the mines and oil and gas fields necessary to supply the raw materials for this vast undertaking.”[2]

The plan President Xi set forth in Visions and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road envisions five routes: 1) Central Asia-Russia; 2) Central Asia-West Asia; 3) mainland Southeast Asia-South Asia-Indian Ocean; 4) South China Sea-Indian Ocean; 5) South China Sea-South Pacific Ocean.[3]  The map above shows these land and sea routes.  Southeast Asia and the Indian Ocean are key factors in China’s overall scheme—with Southeast Asia being China’s “doorstep to the world” and the Indian Ocean the conduit from the Pacific and South China Sea to South Asia, the Middle East, Europe, and Africa.

Two Ocean Strategy

Underlying the geographic reach of this “Belt” and “Road” vision is what has been called China’s “Two Ocean “ Strategy, which itself is a response to the growing political and economic rivalry between India and China.[4]  The two oceans in this strategy are the Pacific and the Indian Oceans.  The “Two Ocean” strategy is based on three concepts:  1) the “Belt and Road Initiative” (BRI), to secure China’s economic interests; 2) a major Chinese naval modernization, including “development of force projection capabilities”[5]; and 3)  “obtaining greater Chinese access to ports in the Indian Ocean, usually by granting economic and military assistance to countries in the region.”[6]

 

Questions —

Where does my supply chain intersect with China’s “Belt and Road” transportation network?

What about my supplier’s supply chain?

Can China’s monopoly power increase transportation times in my supply chain?

Can China’s monopoly power increase transportation costs in my supply chain?

 

[1] Phillips, Thomas. “The $900bn question: What is the Belt and Road Initiative?” The Guardian. 11 May 2017. https://www.theguardian.com/world/2017/may/12/the-900bn-question-what-is-the-belt-and-road-initiative

[2] Russell,Clyde. “Damp squib or next commodity super-cycle? The Belt and Road dilemma.” Reuters. 4 April 2018. https://www.reuters.com/article/us-column-russell-china-beltroad/damp-squib-or-next-commodity-super-cycle-the-belt-and-road-dilemma-russell-idUSKCN1HB2BN.

[3] Visions and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road, cited in Irene Chan, “Current Trends in Southeast Asian Responses to the Belt and Road Initiative” in ASEAN and the Indian Ocean: Key Maritime Links, Eds.: Bateman, Sam, Rajni Gamage, and Jane Chan, RSIS Monograph No. 33, July 2017, S. Rajaratnam School of International Studies, Nanyang Technological University, p. 42. https://www.rsis.edu.sg/wp-content/uploads/2017/08/Monograph33.pdf

[4] Mukherjee, Anit.  “Indian Ocean Region Strategic Thinking.” In ASEAN and the Indian OceanKey Maritime Links, p. 22. https://www.rsis.edu.sg/wp-content/uploads/2017/08/Monograph33.pdf

[5] Ibid.  chahttps://www.rsis.edu.sg/wp-content/uploads/2017/08/Monograph33.pdf

[6] Ibid. https://www.rsis.edu.sg/wp-content/uploads/2017/08/Monograph33.pdf

 

————————————————————————————————-

© Shirley M. Loveless, Ph.D. 2018

Dr. Loveless is a consultant, author, and educator in transportation systems, supply chain risk analysis, emergency management, and economic development.  She is a Member of the Transportation Research Board of the National Academies of Sciences, Engineering and Medicine, and an appointed member of several TRB Standing Committees.  She works with RAAD360 LLC as a supply chain transportation consultant.