China first widely pushes its own OBOR economic expansion strategy that is composed of the Silk Road Economic Belt (SREB) and 21st Century Maritime Silk Road (21ST CMSR) sub-strategies, namely: OBOR = SREB + 21ST CMSR.
By Chen Lanjian and Zhang Wei
Yunnan University, China
Map Attribute: Youtube Screen-grab
Definition of OBOR
The "One Belt One Road" (OBOR) strategy encompasses a kind of economic expansion strategy that China pursues.
China has become the world's 2nd largest economic entity with over
$10-trillion-dollar GDP [1] and the world’s largest trading entity with imports
and exports of $ 4.16 trillion US dollars. [2] The rise of China must undergo
the economic expansion strategy for long-term or short-term periods, because
only if the growth strategy, by nature, enables China to constantly expand
Chinese economies of scale, can China turn out to be a big country from a less
competitive one.
China first
widely pushes its own OBOR economic expansion strategy that is composed of the
Silk Road Economic Belt (SREB) and 21st Century Maritime Silk Road (21ST CMSR)
sub-strategies, namely: OBOR = SREB + 21ST CMSR.
Hereinafter
referred to as the OBOR economic expansion strategy in this article. Among
them, the Silk Road Economic Belt (SREB)strategy is to cover the areas from
the Southeast Asia, Central Asia and Middle East countries which they
assimilate finally together as a regional economic entity to lead to Europe,
forming a trend of Eurasian Economic Integration. Whereas, the 21st Century
Maritime Silk Road(21ST CMSR)strategy is to connect China with
Asia, Africa and Europe continents in where OBOR can eventually form a closed
loop on both land and sea routes that serve as the trading channels and
economic corridors. [3]
The SREB
refers to the Silk Road Economic Belt. In September of 2013, China President Xi
Jinping proposed to jointly construct the Silk Road Economic Belt (SREB) at
Nazarbayev University, Kazakhstan, it is a new regional economic development
idea derived from the concept of the ancient Silk Road which was ever a land
passage on where Envoy Zhang Qian (the Western Han Dynasty, 202 BC to AD 9,
viz. 2,217 years ago) went on mission to the western regions from Changan (now
Shanxi Xi'an) as starting point, to the Guanzhong Plain, Hexi Corridor, Tarim
Basin and Central Asian areas such as Transoxiana and Greater Iran between the
Syr Darya River and Oxus River, and finally reached the Mediterranean
countries.
The 21st CMSR
involves the 21st Century Maritime Silk Road. In October of 2013, While China
President Xi Jinping paid a visit to the ASEAN countries and proposed this
program. Ever since the Qin and Han Dynasty (221 BC to AD 221, viz. 2,236 years
ago) opened the China ancient Maritime Silk Road on where it has always been an
important bridge between the East and West economic and cultural exchanges, and
since ancient times, in particular, the Southeast Asian regions have always
played an important hub role on SREB. The 21st CMSR strategic partners include
not only ASEAN, point leading line, line leading plane, but also enhance
exchanges in the countries and regions along the lines of OBOR, it will
communicate with ASEAN, South Asia, West Asia, North Africa, Europe and other
major economic market chains so as to work out the expansion strategy facing
the South China sea, Pacific and India Oceans strategically cooperated economic
belt as well as to develop a long-term goal of integrating economy and trade
into Asia, Europe and Africa.
Preliminary estimating, there would be 27 countries (maybe involved in 65 ones around the
world) along the ways of OBOR with the total population of about 4.4billion,
accounting for 63% of the world's population; the total economy about $21
trillion US dollars, taking up about 29% of the total global economy.
Arthur Thompson Theoretical Framework of
Economic Expansion Strategy:
According to
Arthur Thompson's strategic concepts, he argues that to acquire the competitive
advantages is to take advantage of economic expansion strategy successfully,
making it relies on the following strategic actions: cost, differentiation or
resources/capacity-oriented ones; any successful action can be divided into 3
phases, viz., the first phase Inception, second phase Benefit and third phase
Loss; there are 6 types of successful actions as follows:
- To take steps to catch up with or surpass the rivalry strengths;
- To adopt measures to make use of the rivalry weaknesses;
- To attack the fronts from a multi-access;
- To conduct summative actions;
- To engage in guerrilla actions;
- To pursue preemption actions.
The First
Phase-Inception in which China initiates the OBOR economic expansion strategy
successfully (e.g., AIIB establishment, that is, the Asia Infrastructure
Investment Bank, a regional multilateral bank created and proposed by China in
October of 2014);
The Second
Phase-Benefit in which China shall benefit from the scope of competitive
advantages in infrastructure, energy resources, capacity, foreign exchange
reserves, manpower, and so on.
The Third
Phase-Loss in which the rivalry shall gobble up the OBOR competitive advantages
through simulation, copy or attack.
Based on
Arthur Thompson’s theory, China utilizes an economic expansion strategy to
obtain the globally competitive advantages via a creative OBOR economic
expansion strategy that is hard to be defeated by the competitors. OBOR adopts
the multi-way to win the global market, for instance, the multi-channel access
to oil/gas resources. OBOR takes actions to catch up with and challenge
competitors. At the same time, China can not only provide equal or even better
products, but also compete at the low prices, e.g., to help the countries along
the ways of OBOR with building high-speed railway, highway, digging the canal,
and also to provide them with infrastructure construction investment. The aim of
OBOR is to transfer the domestic excess capacity, excess foreign exchange
reserves and excess manpower in the following competitive advantages such as
capacity, cost, differentiation and resources acquirement/ exploration to the
outside world.
The East Meeting the West in OBOR Economic
Growth Strategy:
Tai Ji (The Great Ultimate) Element:
Chinese
believe in Tai Ji, an ancient philosophy in China, which argues that "Yin
and Yang are the Tao", Tao consists of the heaven Tao, earth Tao and man
Tao, which says that all things have two aspects of Yin and Yang, for example,
heaven and earth, day and night, mountains and rivers, man and woman, rigid and
flexible, etc. and both sides change constantly, possess some ties relevantly
between them. Of which the man Tao mainly refers to thought, thought decides
behavior and attitude. Tai Ji advocates that people should respect their own
ideas, respect the laws of nature and learn to control their emotions.
Thus, Chinese
like fuzzy, softness, China does not pursue the American boxing to KO
(knockout) anybody, the American boxing focuses on strength style,
straightness, strikeout, and so on, the best shot is to KO (knockout)
opponents, then everything is clear-cut; but China tries to resolve all the
movements of opponents. Therefore, Chinese like Tai Ji boxing, too, and in
fact, Tai Ji boxing is indeed cleverer than American boxing. OBOR applies well
Tai Ji idea to the present situation and believes Rome was not built in a day.
If China thought that the situation is in favor, then China would have won
right away, it is out of the question, because OBOR is a process of integrating
hearts and minds of the peoples along the countries of OBOR, to integrate
peoples is much slower than to build high-speed railway and highway, lay
oil/gas pipelines or erect power stations, etc. Only China reins the hearts and
minds of peoples, can OBOR move in a right orientation.
Feelings of the World:
The OBOR
strategic thinking contains the feelings of the world ‘All serves me, I serve
all, too’ rather than definitely taking a country's selfish interests into
considerations. After the 30-year-reform, opening up and rapid development,
China's economy has become an indispensable link in the global resources and
capital markets. Initiating OBOR is not only to more effectively integrate
global resources and capital, but also to more effectively give full play in
industry and capital advantages so that the countries along the ways of OBOR
can achieve common development and prosperity.
Mr. Zbigniew
Brzezinski, a famous American geopolitical strategist, restated that Thucydides
Trap and said, “China and the United States is about to fall into the trap of
Thucydides. This phenomenon derives from the ancient Greek and Roman, since
then people began to talk about that all emerging countries finally would
inevitably fall into a trap of challenging the old imperial. China provides the
countries along the OBOR with money, technology, equipment, etc. to engage in
infrastructure construction such as high-speed railway, highway, oil and gas
pipelines, power stations, etc.), which enable peoples of the countries along
the OBOR to enjoy the convenience and progress of public infrastructure, it can
either solve China's excess capacity, foreign exchange reserves and labor or
pull the domestic demand of the countries along the OBOR, and also avoid the
zero sum game, achieve mutual benefits and smart win-win situations between
China and the countries along the OBOR. This means that not all of the rise of
great powers must fall into the trap of Thucydides; the zero sum game is no
longer necessarily a unique choice among great powers.
Therefore,
OBOR is not only beneficial to China, but also conducive to China's strategic
choice. OBOR consists of both Arthur Thompson growth strategy and the thinking
elements of oriental management; OBOR is a typical combination of the east and
west thinking.
Domestic Context of OBOR:
On the basis
of Arthur Thompson theory, China overcapacity production means a sort of
advantage; in the meantime, its transfer brooks no delay!
OBOR serves as
an important, long-term national development economic expansion strategy which
is to solve several strategic problems such as China excess capacity market,
resources acquisition, strategic depth, strengthening trade development,
national security and trade dominance, etc. China excess capacity causes plenty
of problems on economic operations, through the OBOR, it is a very good means
to open up new export market. China has both excess capacity and excess foreign
exchange assets; whereas, the emerging markets and less developed countries
still lack the construction of infrastructure, China makes full use of foreign
exchange reserves as driving global growth capital, at the same time, the China
capital output drives excess capacity to be digested abroad.
About The Authors:
Chen Lanjian - School of Business and Tourism,
Yunnan University, China
Zhang Wei - Department of Financial
Management & EDP Training Center, Yunnan University, China
References:
[1] He Ailian, China 2014 GDP Ranked 2nd and Broke through
$1Trillion US Dollars, [N], South Daily, http://www.askci.com/finance/2015/01/21/15414dcmh_all.sh
tml. 01/21/ 2015.
[2] Qiu Guanshi, Last year, China, Imp. And Exp. Trading
Volume Amounted to $4.16 trillion dollars and Became The Largest Trading Nation
in the World, [W], http://gb.cri.cn/42071/2014/03/07/4865s4452754.htm,
09:15:20, 03/07/2014.
[3] Gao Jiangbo, 2015 "One
Belt and One Road" Track Transportation Development and Cooperation Summit
Forum held in Shanghai, http://news.swjtu.edu.cn/ShowNews-1003 2-0-1.shtml,
09/04/2015
This article is an excerpt from
a research paper titled - China OBOR in Perspective of High-speed Railway (HSR)
—Research on OBOR Economic Expansion Strategy of China, which was pubslished under Creative Commons License.
Copyright © 2015 by authors, all rights reserved. Authors
agree that this article remains permanently open access under the terms of the
Creative Commons Attribution License 4.0 International License
Download The Paper - LINK