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History of Silk road:
The Silk Road was a network of trade routes, formally established during the Han Dynasty. The road originated from Chang'an (now Xian) in the east and ended in the Mediterranean in the west, linking China with the Roman Empire.
As China’s silk was the major trade product, German geographer Ferdinand von Richthofen coined it the Silk Road in 1877. It was not just one road but rather a series of major trade routes that helped build trade and cultural ties between China, India, Persia, Arabia, Greece, Rome and Mediterranean countries.
It reached its height during the Tang Dynasty, but declined in the Yuan dynasty, established by the Mongol Empire, as political powers along the route became more fragmented. The Silk Road ceased to be a shipping route for silk around 1453 with the rise of the Ottoman Empire, whose rulers opposed the West.
What is OBOR?
At the heart of One Belt, One Road (OBOR) lies the creation of an economic land belt that includes countries on the original Silk Road through Central Asia, West Asia, the Middle East and Europe, as well as a maritime road that links China’s port facilities with the African coast, pushing up through the Suez Canal into the Mediterranean.
Why is China emphasizing on the revival of Silk road:
In the past few decades, the high economic growth rate experienced by the Chinese economy has transformed her from a poor inward-looking agricultural country into a global manufacturing powerhouse, so much so that aggregate demand in Chinese economy has fallen short of absorbing the production of goods and services. Chinese firms have expanded to such an extent that they have over-capacity which remains unutilized domestically, and this is why China wants to export these surplus goods (as per Adam Smith’s Vent for Surplus theory) to raise it’s per capita income.
Export of these goods would require China to enter into Trade agreements with other World nations but with geopolitics at it’s height, strategic trade agreements like TPP and TTIP have been carefully orchestrated to keep China out of global supply chain. In light of this argument, China seems to have undertaken upon itself the task to boost its exports by reviving the ancient land and sea based silk routes.
However, revival of the ancient silk routes would require investment in logistics infrastructure which explains investment by China in ports in the Indian Ocean – known as China’s String of Pearls strategy, and establishment of AIIB and New Development Bank (BRICS) so as to raise funds for infrastructure investments along the proposed silk routes.
Revival of Silk routes would help China export the surplus domestic output of sectors like steel and cement to World nations in ASEAN, Central Asia, Europe, Africa and subsequently to Latin America with rising aggregate demand.
By: Abhinav ProfileResourcesReport error
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