The New Silk Road – A Ray of Sunlight on a Gloomy Horizon?

The 21st century began with seemingly bewildering opportunities as a new global business horizon unfolded.

The latter half of the 20th century or more saw the international economy divided into predominantly autonomous worlds, the so-called first, second and third worlds. Then at the turn of the century, four major discontinuities occurred.
The first and probably most impactful was the reforms carried out by China. As the thought leader Zheng Bijian noted: “The most important strategic choice the Chinese made was to embrace economic globalisation rather than detach themselves from it.” For almost two centuries, China, the world’s biggest country by population, had been exploited by imperialist powers and then ostracised from the global market economy. But now came China’s steep and rapid ascension to the status of global economic power.
The second big change was the revolutionary transformations occurring in information and communications technologies. As the late business guru Peter Drucker has said, the ICT revolution is not an industrial revolution, nor is it just a scientific or technological revolution; it is in essence an intellectual revolution, radically redefining the parameters of information and knowledge.
Thirdly, the erstwhile ‘three worlds’ of the international economy dissolved into one global market with only a few nations opting to stay out. This trend gave rise to a stupendous increase in the amount of South-South economic activity, including both trade and investment, with China being a major driving force.
The fourth change was demographic, including the massive urbanisation occurring across the planet, accompanied by a dramatic decrease in poverty and equally dramatic rise in the middle class. This has profound business implications as new and highly lucrative markets open up.
However, as the late former Director General of the WTO, Renato Ruggiero, noted: “We have gone from a divided world to an integrated world – and an integrated world is much more difficult to manage!”

Pessimism and mistrust
Who could have believed less than a decade after the promising dawn of the 21st century that we would be in such a mess? In the wake of numerous shocks since the 2008 financial crisis, one increasingly hears that the world economy has entered a ‘new normal’ of low growth and stagnation.
More worrying than the figures is what lies behind them. There is a deep mood of mistrust and lack of confidence. Global economic governance is failing – the most vivid illustrations being the lamentable failure of the Doha Development Round and the stasis of the WTO. This is in part caused by a strong populist backlash against globalisation in a number of countries, but more alarmingly by the intensification of centrifugal forces.
On the trade policy front, the rules-based multilateral agenda has been jettisoned in favour of exclusive bilateral, regional, or indeed mega-regional agreements. Trade has become geopoliticised. Having gone from a divided world to an integrated one, there is a strong risk that we are returning to a divided world.
This trend is reinforced not only by the mistrust noted above, but also by rising protectionist sentiment (and policies) driven by a deep mood of business pessimism.

Renewing optimism
The New Silk Road and Maritime Route initiative (dubbed by Beijing as the One Belt One Road – OBOR) has the potential for renewing a sense of optimism and excitement in the global business environment. It is truly visionary.
The plan is one of economic integration along the route of the old Silk Road. The project will stretch across the Eurasian continent from Xi’an in China to Rotterdam in the Netherlands, and across the Pacific and Indian Oceans from Indonesia and into the Mediterranean to Venice – the European destination of the old Silk Road and the city from where Marco Polo hailed.
Arguably, the project’s greatest distinction is that in contrast to many recent initiatives, the New Silk Road is inclusive. Sixty-five countries are engaged, and it will bring a number of marginalised nations into the orbit of global business, particularly in western and central Asia. While the project primarily reinforces the historic links across the Eurasian continent and the Indian Ocean, it offers potential entry opportunities to other continents, including not only Africa, but also Latin America.
The overriding business emphasis at the initial stages of the New Silk Road will be infrastructure. This evokes parallels with the development of the railway in the 19th century, which transformed the world in so many tangible, but also intangible ways. While business opportunities will initially revolve around ‘hard’ sectors to include railways, roads, ports and telecoms, there will increasingly be scope for ‘softer’ options in areas such as culture, education and tourism.
Having in many ways missed the great opportunities that came with the start of the 21st century, we must ensure that the New Silk Road and Maritime Belt does not become a missed opportunity.