China’s “One Belt, One Road”

China’s “One Belt, One Road”

August 6, 2015
China’s “One Belt, One Road”
A Plan for Economic Connectivity
OBOR’s Objectives
In March 2015, Chinese Foreign Minister Wang Yi stated
OBOR could serve multiple interests for China, not least of
that his ministry’s single “key focus” in 2015 would be
which is extending China’s influence. OBOR provides
“making all-around progress in the ‘Belt and Road’
China with a means to shoulder more responsibility for
Initiative,” highlighting the central place that effort has
global development, but on its own terms. That might help
come to occupy in Chinese foreign policy. China envisions
it address charges, including from President Obama, that
boosting economic connectivity among dozens of countries
China has for too long been a “free-rider” in the
along a land route it is calling the Silk Road Economic Belt
international system. OBOR could also serve as a strategic
and a sea route it is calling the 21st Century Maritime Silk
coordinating framework for China’s extensive overseas
Road. The initiative calls for building transportation and
investments. China has suggested that it hopes the initiative
energy infrastructure and industrial parks on three
will bring greater prosperity, and with it greater stability, to
continents: Asia, Europe, and Africa. It also involves efforts
the countries to China’s west, which could support China’s
to reduce investment and trade barriers, such as customs
efforts to stabilize its own Xinjiang region. China says it
procedures and the lack of a regional credit information
sees potential economic benefits for the economies of all its
system. First proposed publicly by China’s President Xi
western provinces, which have lagged behind the coastal
Jinping in 2013, the plans could, by some estimates, take 35
east in development, and for domestic industries facing
years to complete.
overcapacity at home, such as steel and cement. New land
transportation links stand to give China’s trade-reliant
Figure 1. One Belt, One Road
economy alternatives to shipping routes across seas where
the U.S. Navy is the predominant power. To the east, China
has said that the maritime road may help it to repair
relations with Southeast Asian nations frayed by maritime
disputes in the South China Sea.
Challenges
China’s OBOR vision faces myriad political, security, and
economic challenges. Although they may spur greater
economic activity, infrastructure investments themselves
typically deliver only low rates of return. Physical security
and political risk are challenges in key OBOR countries,
particularly in Central Asia and the Middle East. China has
to tread carefully with Russia, which may fear challenges to
its influence in Central Asia. China must also overcome

suspicions in India, which sees a strategic threat in the
Source: Xinhua News Agency, March 29, 2015, adapted by CRS.
proposed China-Pakistan economic corridor and objects to
Notes: Other Chinese OBOR maps depict the maritime route as
its proposed route through Pakistan-controlled territory also
also including Gwadar, Pakistan, and Nairobi, Kenya.
claimed by India. For the maritime route, China faces deep-
seated tensions in Southeast Asia caused by its assertive
Many details of the “One Belt, One Road” (OBOR)
tactics in the maritime disputes, which remain unresolved.
initiative remain unclear. China has signed a number of
At home, advancing OBOR could require skillful
OBOR cooperation agreements with countries along the
management of competing bureaucratic and geographic
Belt and Road. The chairman of the China Development
interests. China’s leaders may also need to confront the
Bank (CDB), a state policy bank, told the media in March
question of whether, by giving Chinese provinces
that CDB had compiled a database of approximately 900
incentives to invest in new infrastructure, OBOR might
potential OBOR projects in 64 countries, including China.
undermine China’s efforts to rebalance its economy away
China has not released a full list of involved countries or
from reliance on investment and exports and toward greater
planned projects, however, or details about financing
reliance on domestic consumption for growth.
arrangements. Also uncertain is how OBOR will be
coordinated with other countries’ development initiatives,
Recent Developments
including the U.S.-backed New Silk Road initiative in
In February 2015, China established a leadership body to
Central Asia. The Obama Administration has cautiously
oversee OBOR led by Vice Premier Zhang Gaoli, a member
welcomed the initiative, while urging use of “global
of China’s most senior decision-making body, the seven-
standards and best practices” in OBOR projects.
man Politburo Standing Committee. In March 2015,
China’s National Development and Reform Commission,
Ministry of Foreign Affairs, and Ministry of Commerce
https://crsreports.congress.gov

link to page 2 China’s “One Belt, One Road”
jointly issued a preliminary OBOR “Visions and Actions”
China has launched a $40 billion Silk Road Fund. It has
document, presenting OBOR as intended to build “an open,
also launched a new multilateral development bank, the
inclusive and balanced regional economic architecture that
Asian Infrastructure Investment Bank (AIIB), and joined
benefits all.” China has also established new financial
with Brazil, Russia, India, and South Africa to launch the
institutions wholly or in part to support the initiative. (See
New Development Bank BRICS. (For more information on
“Financing” below.) In July 2015, Vice Premier Zhang
the AIIB, see CRS Report IF10154, Asian Infrastructure
confirmed that a top priority for the initiative is
Investment Bank, by Martin A. Weiss.) China has proposed
constructing six “international economic corridors.” One is
a Shanghai Cooperation Organization financing institution.
a “new Eurasian land bridge,” an extensive rail network
It has said it hopes to involve the World Bank and Asian
linking China to Europe. The others are corridors linking
Development Bank. Beijing has tasked the CDB and the
China, Mongolia, and Russia; China, Central Asia, and
Export-Import Bank of China with supporting OBOR. It
West Asia; China and Indochina; China and Pakistan; and
foresees roles, too, for sovereign wealth funds, commercial
Bangladesh, China, India, and Burma.
equity investment funds, bond issuances, and private funds.
OBOR’s Scope
China’s Assurances
Infrastructure investment clearly is one focus of OBOR, but
Critics have faulted some previous Chinese overseas
the March 2015 OBOR “Visions and Actions” document
investment projects for favoring Chinese state-owned
discusses a total of five focus areas:
companies and Chinese workers and materials, dismissing
environmental concerns, and failing to consider the needs
 Policy coordination, including coordination of
of local populations. The March 2015 OBOR document
economic development strategies and policies.
pledges that China “will abide by market rules and

international norms [and] give play to the decisive role of
Facilities connectivity to “form an infrastructure
the market in resource allocation.” In the case of Chinese
network connecting all sub-regions in Asia, and between
Asia, Europe and Africa step by step.” This includ
companies operating in OBOR countries, the document
es
says the Chinese government supports “localized operation
joining up unconnected road sections, improving port
and management of Chinese companies to boost the local
and aviation infrastructure, building cross-border power
economy, increase local employment, improve local
supply networks and power-transmissions routes,
livelihood[s], and take social responsibilities in protecting
ensuring the security of oil and gas pipelines, and
local biodiversity and [the] eco-environment.”
building optical cable networks and improving “spatial
(satellite) information passageways” in order to create
The Obama Administration’s Response
an “information Silk Road.”
Speaking in April 2015 about the AIIB, President Obama
 Unimpeded trade, including enhanced customs
said, “to the extent that China wants to put capital into
cooperation; streamlined inspection and quarantine
development projects around the region, that’s a positive.”
procedures; and efforts to promote the World Trade
He emphasized, though, the need for adherence to best
Organization’s Trade Facilitation Agreement. The
practices, such as transparency about financing, and for
document also calls for cooperation in exploring and
projects to benefit local populations and not just “the
developing conventional and renewable energy sources.
leaders of some countries and contractors.” In Central Asia,

OBOR overlaps with the U.S.-backed New Silk Road. The
Financial integration, including building an Asian
State Department describes the New Silk Road, launched in
exchange rate stabilization system, investment and
2011, as intended to stabilize Central Asia and Afghanistan
financing system, credit information system, and
through improved economic and energy connectivity along
financial risk early warning system; expanding bilateral
a north-south axis. After May 2015 talks in Beijing about
currency swap and settlement agreements; and
possible coordination of the New Silk Road with OBOR, a
developing the Asian bond market. The document says
senior State Department official said he believed China’s
China will support OBOR countries and firms issuing
efforts “can be quite complementary to our own.” The same
bonds in China in renminbi, and encourages Chinese
month, Assistant Secretary of State Nisha Desai Biswal
firms to issue renminbi and foreign currency bonds
stated, “Whether it is the Eurasian Economic Union
outside China.
promoted by Russia or the One Road One Belt [sic] strategy
 People-to-people ties, including student and personnel
promoted by China, all are interested in a more connected
exchanges, more convenient tourist visa procedures, and
region. Our only stipulation is that trade be inclusive,
information sharing for epidemic control.
multidirectional, and rules-based.”
Financing
Susan V. Lawrence, Specialist in Asian Affairs
The OBOR initiative’s total capital requirements are
Gabriel M. Nelson, Research Assistant
uncertain. The projects on the March 2015 CDB list would
reportedly require funding of $890 billion. In early 2015,
IF10273
China’s provinces reported plans for $167 billion in OBOR-
related spending at home and abroad. To support OBOR,

https://crsreports.congress.gov

China’s “One Belt, One Road”

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to
congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress.
Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has
been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the
United States Government, are not subject to copyright protection in the United States. Any CRS Report may be
reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include
copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you
wish to copy or otherwise use copyrighted material.

https://crsreports.congress.gov | IF10273 · VERSION 2 · NEW