© 2018 by Robert Person.  The views expressed on this website are my own and do not represent the official policy of the U.S. Army, Department of Defense, or U.S. Government.

Mar 25

One Belt on Road Developments

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Although the One Belt One Road initiative has received a large amount of criticism, China has many reasons for continuing with this project. The One Belt One Road initiative can be considered a framework for a huge multinational corporation, one with the Chinese government sitting right at the center pulling the strings. This ambitious project has thus far proved challenging to say the least, and as the article states, much of the money spent on the project could be used toward the internal problems China is currently facing. So why? Reaching into our back pocket of IPE theory, we can take a look at some of the broader reasons as to why China has a vested interest in this project. For China, this multinational project targets both location advantages and market imperfections. China has a huge wealth of human labor, and comparatively less in natural resources. This project directly connects China with resources from key countries and opens the market, making transactions more efficient especially with their "partners" playing by their rules. It targets market imperfections by allowing for vertical integration, making it so that Chinese businesses can spread the development and manufacturing of intermediate goods to locations with a comparative advantage for producing them. If successful, the One Belt One Road initiative allows China to essentially control a huge portion of the global value chains for many other MNCs and their products. China is pitching the One Belt One Road initiative as an exclusive club that countries and business do not want to be left out on.

 

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