Evaluation of Belt and Road Initiative Project

Running Head: EVALUATION OF BELT AND ROAD INITIATIVE PROJECT
Evaluation of Belt and Road Initiative Project
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1EVALUATION OF BELT AND ROAD INITIATIVE PROJECT
Table of Contents
Introduction......................................................................................................................................2
Main aspects of Belt and Road initiative (BRI)...............................................................................3
Benefits to South East Asian countries........................................................................................6
Evaluation of BRI on the chosen countries.....................................................................................6
Comparison of Pre and Post BRI period....................................................................................11
Long term sustainability of BRI....................................................................................................14
Prediction for next five years.........................................................................................................16
Conclusion.....................................................................................................................................17
Reference list.................................................................................................................................20

2EVALUATION OF BELT AND ROAD INITIATIVE PROJECT
Introduction
The Belt and Road initiatives undertaken by China is considered as its biggest initiative
till data to strengthen its position in the global economy through projects that include 65 nations.
The project aims to connect different nations through building infrastructure that focusing on
transport and energy (Huang, 2016) Xi Jinping, the president of China in 2013 prosed to made
economic development through in terms of interlinking nations that can strengthen their trade
relation. The two proposed roots intended to cover more than sixty nations ranging from Asia to
Europe including nations in Southeast Asia, West Asia, Central Asia and Middle East. At
present, these nations together accounts around 30 percent world GDP and more than 35 percent
of total merchandise trade. The six main economic corridors built under BRI are- China-
Mongolia- Russia Corridor, China-Central Asia – West Asia Corridor, China-Indochina
Peninsula Corridor, China-Pakistan Corridor and Bangladesh- China-India-Myanmar Corridor
(Swaine, 2015).
The paper aims to evaluate impact of Belt and Road Initiatives for nation outside China.
The regions broadly covered under BRI are East Asia, Southeast Asia, Central Asia, Middle East
and North Africa, South Asia and Europe. The paper particularly focuses on BRI impact on
ASEAN economies. For this, four countries are chosen namely Malaysia, Indonesia, Singapore
and Vietnam as representatives of ASEAN. Apart from theoretical consideration evaluation is
largely based on empirical evidences obtained from the four chosen nations. To find out the
effect of BRI on economic growth of the respective nation for different regression models are
framed taking GDP as dependent variables and export, import and unemployment as explanatory
variables. The movement of average GDP, export, import and unemployment in the pre and post
BRI period are compared before reaching any firm conclusion about the potential impact of BRI.

3EVALUATION OF BELT AND ROAD INITIATIVE PROJECT
Additionally, the paper also discusses aspects related to long terms sustainability of the
initiatives based on which future prediction can be made.
Main aspects of Belt and Road initiative (BRI)
The five key objectives of Belt and Road initiatives are discussed as follows
Policy Coordination
The first priority of the project is to increase policy coordination among nation which will
enhance intergovernmental communication and coordination. The increasing communication and
coordination in turn promotes overall trade, transfer of knowledge, increase in trust and political
stability and reduction in political barriers present in regional projects (Wang, 2016). To fulfill
objective of the project, it is necessary to promote policy for building intergovernmental
mechanism which will help to build trust and mutual consensus for economic and political
cooperation.
Development of infrastructure
This is another important motivation behind the design of BRI. It encourages
development of infrastructure to establish connectivity across all the sub-regions of Asia, Africa
and Europe. The main rationale is that growing connectivity would help to reduce the existing
logistical and structural barriers in trade. The infrastructural development should be undertaken
keeping in mind each of the participating nation’s sovereignty and security. For this, the
participating nations should be make active plan to connect infrastructure and implement suitable
technical standard toward developing international passageways (Liu & Dunford, 2016). The
project intensively focuses on development of transport infrastructure, supporting energy
infrastructure, cross-border cable and different other communication network.

4EVALUATION OF BELT AND ROAD INITIATIVE PROJECT
Unimpeded trade
Flawless trade is one of the primary objective of designed BRI project. One key
motivations for the project is to create a favorable business environment for different countries
and regions connected through the routes by eliminating barriers and attract investors. All these
should be done by designing agreement on bilateral investment protection in order to protect
their legitimate rights and interest (Cheng, 2016). The focus is to broaden trade areas and
improvement of trade structure besides identifying new growth areas and promote a balanced
trade.
Financial Integration
One vital part of implementation of BRI is enhancement of financial integration among
countries through stabilizing currencies exchange, credit system and investment and financing
system. In connection to this, Asian Infrastructure Investment Bank (AIIB) was developed to
accomplish this role. The institution was formed to provide financial support and necessary
funding to implement BRI. This is further enhanced by creation of Shanghai Cooperation
Organization (SCO). Countries involve in AIIB and SCO will cooperate in the financial
integration to make better use of Silk Road Fund along with sovereign wealth fund (Djankov &
Miner, 2016). This will also encourage investment through commercial equity funds and other
private investors to participate in developing BRI projects.
People-to-people bonds
The Belt and Road Initiative projects aims to promote cultural and academic exchange
between people in different nations and regions. Successful achievement of this goal will help to
gather great public support and strengthen bilateral and multilateral cooperation across countries.

5EVALUATION OF BELT AND ROAD INITIATIVE PROJECT
The B&R initiative has the potential to foster cross border exchange leading to multinational
cooperation (Wang, 2016). This in turn will create stability and encourage investment which us
beyond the home country.
Benefits of Belt and Road Initiative outside China
The benefits of the proposed Belt and Road initiative project is not limited to China only.
It covers numerous countries of Europe, Africa and Asia. The foreign trade and investment
relation plays an important role in distributing the benefits of Belt and Road initiatives to other
nations. International trade explains a mutually beneficial exchange of goods or services among
different nations. In the process, both the participating nations are benefitted by producing and
exporting goods in line of their specialization (Callahan, 2016). One of primary objective of Belt
and Road Initiative project is to promote a barrier free trade among nations. The active
participation of China in foreign trade offers a broad market for its trading partners. China’s
import since 2001 have grown approximately by five times accounting 20 percent of the annual
growth. The growing imports of China contribute a significant proportion of world economic
growth by providing nations a widely extended export market. Currently, China offers the largest
export market to nations like Japan, Republic of Korea, ASEAN, Australia, South Africa and
Brazil. China is the second largest export market for EU and third largest export market for US
and India. The main imports of China include crude oil, plastic in the primary forms, iron ore,
copper, copper alloys and soybeans. Different exported goods of China help to satisfy demand of
these goods in different nations. The main exports of China include computers, telephones,
broadcasting equipment, machine part and integrated circuit. China export these items in
different regions of nations like United States, Hong Kong, Germany, Japan and South Korea