Integrate countries by removing trade barriers
To increase connectivity through the building of infrastructures
To co-ordinate policies and increase cooperation
The aim is to benefit all countries through improvement in trade, cultural exchanges and connectivity.
The Asian Infrastructure Investment Bank (similar to the World Bank) has been set up with the majority of the fund from China to address infrastructure needs in Asia.
Export excess industrial capacity
OBOR creates a large demand for railways, pipelines, power station and steel.
The current steel production capacity in countries along OBOR is far from meeting their domestic demand.
China’s overproduced cement companies may benefit from expanding into Central Asia.
Export markets for consumer goods
Open up markets for trade and create more export markets for consumer goods produced by China.
Cost of trade may be lowered following improved connectivity and removal of trade barrier
Balancing regional economic development in China
Factorie owners in the past were not willing to set up their factories inland due to higher costs and transportation problems. With many infrastructural projects of OBOR, railways start from Sichuan, Xinjiang and Chongqing.
Energy security
China is a net oil importing country from countries such as Saudi Arabia, Angola and Russia.
Oil is shipped by oil tankers through the sea route via the Strait of Malacca, which is a weak link to China’s energy stable supply
With the cooperation with Russia, natural gas can be transported in through a gas pipeline. Oil can also be shipped in from various countries such as Kazakhstan.
RMB internationalization
RMB internalization is the process of the Renminbi being increasingly accepted in international trade and finally establishing the status of freely convertible international currency.
RMB internationalization brings down the trade costs with China, facilitates trade settlement and can avoid the risks of using a third-party currency
More employment opportunities of OBOR countries can be created.
Improve local transport infrastructure and international connectivity.
To meet basic utility needs of people in some underdeveloped regions, especially the -places with limited or no access to electricity, clean water supply and internet.
Infrastructural projects
Transportation facilities: railway, road, port, airport
e.g., China Petroleum participated in building the Sino-Burma oil and gas pipeline costing around USD 2.5 billion.
ICT
Energy
Water and sanitation
Free trade agreement and custom unions
Large investment and small return on some infrastructural projects.
Poor management of companies and projects that covers a large area
The diplomatic relationship between China and OBOR countries affects the success and outcome of certain infrastructure investments.
The domestic problems in the OBOR countries may stall large international projects such as labour shortages or dispute, environmental concerns of local residents.
Competition with other countries, e.g. China and Japan battled for high-speed rail projects around the world.
2012 L.A. Class-based quiz
(Marking scheme in Chinese)
(Annotated answer by Mr. Andy)
Reference
速讀精華 (中文) [A more comprehensive summary topic than the above]