The ‘Silk Road’ was series of ancient trade routes that connected Asia, as well as areas around the Mediterranean Sea.
Its name is a reference to China’s Han dynasty (207 BCE – 220 BCE), when the routes were used to trade silk. These routes became so valuable that the Chinese also extended the Great Wall in order to protect the route. Many other commodities were also traded on this route as well as religion, philosophies and different ways of life.
As a result, the Silk Road was monumental in developing cultures and civilisations throughout Asia.
How is it used today?Today, the Silk Road refers to the One Belt, One Road Initiative, which Chinese President, Xi Jinping announced in 2013.
His plan was to invest in trade routes from Asia to Europe, with the hope of making trade easier between these two continents. The effects of this new Silk Road can already been seen.
The China Ocean Shipping Company (COSCO) has invested in multiple ports around the world and trains have already made journeys from the China to the UK.
The Silk Road and its impact The Silk Road signifies China’s approach to globalisation and has the potential to reshape global trade. Countries that participate in this project will undoubtedly find a new source of growth. This is particularly important for Less Economically Developed Countries (LEDCs) such as Bangladesh. For example, this new initiative allowed Turkmenistan to break its reliance on Russia and trade more freely.
Also, the new Silk Road will boost the economies of participating countries. For example, China invested US$46 billion, roughly one fifth of Pakistan’s GDP, into the China-Pakistan Economic Corridor. This doesn’t only make it easier and more cost effective to trade, but potentially could raise the standard of living and infrastructure in Pakistan. Raising the stature of ‘poorer’ countries means there will be opportunities for companies in the West too. For example, Western companies could bid for engineering contracts in Nepal. This benefits both countries involved while cementing the global impact of the new Silk Road. Furthermore, the private sector will invest more and more as the Silk Road improves. This will, in turn, provide opportunities for growth to businesses and better access to goods for people worldwide.
Benefits to China While the new Silk Road should benefit countries around the world, it will definitely benefit China as China’s slowing economy will be revitalised. Investment in the Silk Road will create new jobs and business opportunities. For example, in 2015, the Export-Import Bank of China invested $80 billion into the new Silk Road. The economy will also be boosted by China’s interest in infrastructure. It is safe to say that China is a world-leader when it comes to infrastructure, however, there is an overcapacity. These new trade routes could be an outlet, therefore, China’s trade will become more cost effective and efficient.
Investment in infrastructure will also help China in a geopolitical sense. This investment has contributed to China’s ever-increasing foreign exchange reverses. This means China will be able to finance different international projects and invest overseas. This will create the opportunity to make beneficial deals with different countries. Therefore, China can solidify their position as a dominant world-player. Furthermore, the new initiative has the potential to make China more independent when it comes to trade. At the moment, 80% of China’s trade routes are controlled by other countries. However, with the new Silk Road, this figure will decrease considerably and as a result, China will have better access to goods.
What it meansThe new Silk Road has the potential to change global trade and have a great impact on globalisation. It will boost economies, create trade between countries that would be impossible without it and better the lives of people in LEDCs.
It is nowhere near completion but it is already having an effect. It’ll be interesting to see if the Silk Road lives up to its expectations and how China go about turning their vision into a reality
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