The twenty-first century known as the era of Blue Economy is included in the 14 Sustainable Development Goals (SDGs). Several initiatives and plans are being laid down across the globe to enhance “Blue Growth”. Unlike other countries, China unveiled a unique and broader concept of economic connectivity and maritime cooperation through its Maritime Silk Road Initiative (MSRI) in 2013. This initiative will help both the (MSRI) states to develop their economies and have a significant impact on the Blue Growth of the participating countries.
The MSRI aims to develop infrastructure and enhance maritime cooperation across East Africa, the Indian Ocean, Oceania, and Southeast Asia. Three “Blue Economic Passages” are part of this initiative; China-Indian Ocean-Africa-Mediterranean Sea Blue Economic Passage, China-Oceania-South Pacific Blue Economic Passage, and China’s connection with Europe via the Arctic Ocean. In its initial phase, China is investing in infrastructure development, energy sectors, and particularly the construction of ports of geographically important states in the Indian Ocean. There are several objectives of MSRI, but here the focus is on economic objectives.
For China, the MSRI’s core goal is to enhance the economic growth of China by increasing exports through the 21st Century Maritime Silk Road. The Chinese government is of the view that the increased Chinese foreign direct investment (FDI), the reduction of non-tariff and tariff barriers, opening of new markets, the vertical integration of trading activities, the construction of industrial parks, trade zones, Special Economic Zones (SEZs) and reduction in transportation costs will boost the Chinese exports and also result in the exponential growth of participating countries in the initiative.
Furthermore, MSRI will provide a foundation to increase exports of China. The networks of people, services, and capital will be energized by MSRI that are keys to economic exchange. The investment in the development of hard infrastructure has already also increased the opportunities for sales and services for China-based firms. Moreover, MSRI is offering several profitable ways to use huge foreign currency reserves. For instance, the money will go to financial institutions of China like CDB, AIIB, and SRF which in turn will lend money for the projects of MSRI. These institutions will earn from the given loans, and interestingly the MSRI will also contribute to the efforts to Internationalize RMB as the companies and countries involved in MSRI are expected to use RMB for swaps, debt issuances, trade pricing, trade financing, currency speculation, and investment to reduce the costs of the transaction.
Chinese private companies also view MSRI as a source of new opportunities to expand their businesses. They believe that it will enlarge the existing markets and open new markets for their products and services. Adding more to it, MSRI will further ease the access to the production unties, and also enhance the ability of the companies to diversify and expand the client base. It will also offer them new opportunities for joint ventures overseas. Moreover, the Chinese firms can build regional production bases that will exponentially boost their profit margins.
For instance, Alibaba, Chinese based company, has plans to build a cross-border e-commerce platform that will involve financial services, logistics, and customs clearance services to promote trade across the Maritime Silk Road. The IZP Technologies is also aiming to develop transnational clearing and payment systems, and dual-currency credit cards that will help to finance medium and small enterprises and also in building strong regional marketing networks.
Moreover, a state-owned railway company considers MSRI as a source of great opportunities in terms of building light-rail systems and trunks, selling trains, and setting up regional manufacturing units. The leadership of a Chinese food giant, COFCO, thinks that the MSRI will provide them the opportunities to build agricultural product supply chains across the Maritime Silk Road.
It is pertinent to mention that many participants of MSRI have been facing economic problems that also include a shortage of capital, poor economic connectivity with neighboring countries, and a lack of markets. The MSRI can help these countries to develop their economies as it can sort out these problems. The leading country of MSRI, China, is offering a huge market, especially for raw materials. In addition, China has pledged to invest billions of dollars in the MSRI participants that can resolve the issue of shortage of capital. These investments will result in multiple positive outcomes. For example, China’s investment in the power infrastructure of Pakistan has not only boosted the energy capacity of Pakistan but also enhanced the industrial capacity, and this enhanced capacity will eventually increase the economic growth and potential for exports of Pakistan. This is a win-win situation for China too as China will also earn more by lending money to the countries and gain new opportunities to strengthen its economy.
In conclusion, it can be said that despite the challenges, Maritime Silk Road Initiative (MSRI) is offering immense opportunities, especially to the developing countries to develop and strengthen their weak economies. It is a win-win situation for all states that are part of MSRI as it will develop their hard infrastructure, and also mitigate their major economic problems. On the other hand, it will not only help China to earn more money by using its massive foreign currency reserves but also open new opportunities to further strengthen its economy.