In his speech delivered at Nazarbayev University on 7 September 2013, which was part of his official visit to Kazakhstan, General Secretary of the Communist Party and President of China Xi Jinping said, “In order to establish close economic connection, promote cooperation and encourage development in the Eurasian region, we should have an innovative approach and join hands to build an economic belt along the Silk Road”. A month later, speaking to the Indonesian Parliament, he came up with the idea of establishing a maritime silk road, which would aim to deepen economic and maritime connection.

In November 2014, at the 22nd Asia Pacific Economic Cooperation Forum (APEC) Summit in Beijing, he officially announced the “One Belt, One Road” initiative. Soon after that, the Communist Party and Government of China released details of the initiative, which consisted of two parts.

The Silk Road Economic Belt (SREB) was to be built along the Eurasian corridor based on the historical Silk Road. This economic network would begin from Guangzhou in Guangdong province and pass 10 other Chinese cities to connect with a series of economic and commercial centers in Europe and Asia including Alma Ata in Kazakhstan, Bishkek in Kyrgyzstan, Samarkand in Uzbekistan, Dushanbe in Tajikistan, Teheran in Iran, Istanbul in Turkey, Moscow in Russia, Duisburg in Germany, Rotterdam in the Netherlands, Venice in Italy and other cities in Europe and Africa.

The Maritime Silk Road (MSR) also known as the 21st Century Maritime Silk Road Economic Belt, was meant to be an economic and maritime network starting from Fuzhou in Fujian province, passing a few ports in the South of China, connecting with Southeast Asian cities, crossing the Strait of Malacca to reach cities in the West of the Indian Ocean, crossing the Red Sea and Mediterranean Sea and reaching Venice, from where it would go to Nairobi in Kenya and some other cities in Africa.

Thus, the SREB and MSR would create a single larger belt or road connecting China with the Eurasian continent and the rest of the world overland and by sea. “One Belt, One Road” would give rise to an enormous economic and trading space with 4.4 billion people or two-thirds of the world’s population and GDP worth of $21,000 billion or one-third of the world’s GDP. This space could generate trade value worth more than $2,500 billion on an annual basis.

The “One Belt, One Road” initiative identified five main areas of connectivity, policy, infrastructure, trade, money and people-based exchange. It would take measures aimed at promoting trade and investment, developing infrastructure including railroads, freeways, airports, sea ports, telecommunications, pipelines and logistics, increasing economic cooperation in industry, subregions (with industrial zones mainly being built in foreign countries and economic corridors) and finance and promoting people-based exchange.

The Chinese Government’s Report also mentioned particular gateways connecting China with other economies.

The autonomous region of Xinjiang in the West of China would be one of them connecting China with countries in Central, Southern and Western Asia. It would also be one of the final destinations of the Chinese - Pakistani economic corridor.

The province of Heilongjiang would connect China with Mongolia and Russian Far East and build a high-speed road to connect Beijing and Moscow together.

The autonomous region of Tibet would take advantage of its geographical conditions to connect China with Nepal.

Guangxi and Yunnan in the Southwest of China would become points of contact with Southeast Asian nations. Kunming in Yunnan would be the final point in the Bangladesh - China - India - Myanmar (BCIM) economic corridor.     

A Central Steering Committee for the promotion of the “One Belt, One Road” initiative in late 2014 and made its official debut on 1 February 2015. Standing member of the Politburo and Vice Premier Zhang Gaoli was put in charge of the Committee. In late 2014, General Secretary of the Communist Party and President of China Xi Jinping announced the foundation of a $40 billion development fund, which was aimed at making investment in, and providing credit for, projects relating to the “One Belt, One Road” initiative.

According to China’s official points of view, “One Belt, One Road” is a purely economic and commercial project. It does not have anything to do with politics or security and is not led by any single particular country. As the country which started the project, China wishes to take a greater responsibility for it. The project does not have a finishing date. It does not aim to unify the participating countries or establish a tariff alliance. Neither does it eliminate existing bilateral or multilateral relations. It is aimed at mutual benefits and is a win-win project.

On 24 October 2014, in response to China’s call, 20 countries signed a Memorandum on the establishment of the Asian Infrastructure Investment Bank (AIIB). According to the Memorandum, 31 March 2015 was the deadline for world partners to register themselves as co-founders of the Bank. On 1 April 2015, China announced that AIIB had 46 founding partners and an initial capital of $100 billion. Of the founding members, many were from the European Union such as Great Britain, Germany, France, Italy and Spain. Some were allies of the United States such as the Republic of Korea and Australia. Others were members of the BRICS group (Brazil, Russia, India, China and South Africa), Shanghai Cooperation Organisation (SCO) and ASEAN. By April 2015, 57 countries had joined of the AIIB. Of them, 37 were in Asia and Oceania and the remaining 20 in Europe, Africa and America. Countries which signed up after 31 March 2015 would have less authority when it came to preparation of fundamental documents for the organization and operation of the Bank. Vietnam joined the Bank on 24 October 2014.

According to the initial joint agreement, unlike the cases of the World Bank or International Monetary Fund, none of the AIIB members will have a right to veto. The worth of a vote of a country or partner depends on the size of its GDP or GDP (PPP). The AIIB does not only aim to make monetary investment but also to transfer technology and achieve harmonious development between participating countries, territories and partners.

The AIIB is officially operating as a regional organization and international financial institution based in Beijing. It has the provisional secretariat. The aim of the bank is to provide finance for infrastructure projects in Asia. 24 October 2014 is considered to be the date of birth of the bank.

The “One Belt, One Road” initiative as well as the AIIB are products of an increasingly globalized world and an international economic and political system which is undergoing restructuring.

Over the past decades, especially since the late 20th century, globalization has given the world a number of dynamic, complex geo-economic and geopolitical faces. Connectivity belts, unification spaces, integration circles and diverse multilateral relations keep appearing and changing as well. Due to the impact of such complex levels of integration, the world has become increasingly unified. Economic activities have been organized into global production and business chains.

The Asia-Pacific is one of the typical examples of modern globalization. It is home to various forms of connectivity, integration and unity. In terms of scope, mention must be, first of all, made of the Asia Pacific Economic Cooperation Forum (APEC), which consists of 21 of the world’s largest and most dynamic economies, make up 40% of the world’s population and contribute more than 55% of the world’s GDP and nearly 50% of global trade. Another example is the Trans-Pacific Partnership (TPP) Agreement initiated by the United States. This agreement is going to lead to an enormous free trade area consisting of 12 nations with a population of more than 800 million people and accounting for 40% of the world’s GDP and 30% of global trade. The China-led Regional Comprehensive Economic Partnership (RCEP) consists of 16 countries and territories with more than three billion people and making up half of global markets and one-third of the world’s economic output. The Association of Southeast Asian Nations (ASEAN) is of a smaller scale but is by no means less dynamic. The Association is composed of 10 countries with more than 600 million people and a combined GDP worth approximately $2,000 billion. It has been working hard to establish the ASEAN Economic, Political-Security and Cultural-Social Communities. On the Eurasian continent, the Shanghai Cooperation Organisation (SCO) was established in 2001. Its members include China, the Russian Federation, Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan, which make up 60% of the natural area of Asia and 25% of the population of the world. Since 2003, the SCO has been working as an institution providing support for the member countries and promoting economic cooperation amongst them.

Amid such a complex, diverse atmosphere of connectivity, the “One Belt, One Road” initiative was launched as a supplement to the existing models and methods of international integration and facilitated cooperation among its member countries and partners for mutual benefits.

Given radical geo-economic and geopolitical changes in the modern world with China emerging as the largest developing power, the initiative and AIIB are considered to be a necessary, positive development.         

Over the last decades, the G7 economies have dominated world economics. The U.S. economy is at the top of the pyramid. Things started to change a few years ago when the 7 emerging economies (E7), namely China, Brazil, Russia, India, Mexico, Indonesia and Turkey saw galloping growth. In 2014, their GDP (PPP) exceeded that of the G7 group. China surpassed Germany in 2008 and Japan in 2010 to become the world’s second largest economy behind the United States. Although China’s growth slowed down in 2014, it remained in the second position with a GDP of approximately $10,400 billion and had the highest trade and investment volume in the world. In 2014, its foreign trade volume amounted to more than $4,300 billion. It attracted $119.6 billion worth of FDI while its overseas direct investment (ODI) reached $102.9 billion, contributing 27% to global economic growth. It had the world’s largest foreign currency reserve worth about $4,000 billion.

After nearly 40 years carrying out it open-door policy, China has gained enormous achievements in socio-economic development. Its aggregate national strength has increased markedly. Its role, position and influence in global economics, culture, military, security and politics are undeniable. Inspired by that strength, the 18th Congress of the Communist Party of China in November 2012 set a general objective of realizing “the Chinese dream” through two stages. In the first stage, it would have built a wealthy society by 2020 and its GDP and GDP per capita would have doubled that of 2010. In the second stage, it would have become socialist, wealthy, powerful, democratic, civilized and harmonious by 2049”.

Although changes in the balance of power in the world are obvious, there has not been corresponding changes in global economic and political institutions. The Asian Development Bank (ADB) remains and functions as a tool of power of the United States and Japan, each of which holds 13% of shares whereas China holds only 6% despite the fact those loans from the China Development Bank alone are bigger than those from the ADB. The General Director of the ADB has always been a Japanese national. Delegation of power at the World Bank and the International Monetary Fund is similar. The United States and Europe dominate these organizations whereas China has only 3.65% of shares. At the G20 Summit in 2010 in Seoul, South Korea, the major members of these financial and monetary organizations agreed to increase China’s shares to 6.19%. However, because the U.S. Congress did not approve that, paradoxically, imbalance in financial and monetary power in the world remained. The WB, IMF, ADB and many other international political, security and economic institutions were founded during the Cold War, realities show that they need to be reformed or even replaced with new institutions which reflect more fully current balance of forces in today’s rapidly changing, complex world.

The “One Belt, One Road” initiative in general and the AIIB in particular are no longer a policy of China only but a common will of nearly 60 countries in Asia, Europe, Africa, America and the Oceania. Each of the member country or partner can pursue its own objectives and interests. Therefore, the initiative and the bank are completely able to facilitate cooperation for mutual benefits. Moreover, if they work, they will become one of the factors giving rise to a multipolar, multicentric region and world.

Assoc. Prof., Dr. Nguyen Viet Thao

Vice President of Ho Chi Minh National Academy of Politics