On 16 August, China announced a massive infrastructure improvement plan, including the “One Belt, One Ocean” initiative. It aimed to construct a “super highway” along the width of the Pacific Ocean, rapidly upgrade modernization and urbanization, create huge fiscal wealth for the Chinese population, and increase bilateral trade surplus. In doing so, China hoped to strengthen its hold over the regional and global currencies, in addition to reviving its faltering economy. While the rest of the world was scrambling to react, the Chinese government stood quiet, waiting for the markets to “re-establish themselves.”

Silk Road economic belt

With this latest action, China has effectively completed the Silk Road Economic Belt. Although the construction of the belt does not directly benefit China, it does signal China’s intention to continue its economic expansion through the Middle East and into Central and South America. For the US, this represents a significant victory, as it has long been speculated that China would utilize the Middle East as a route to economically enlarge down through Central Asia. The economic development of Pakistan, Tajikistan, Turkmenistan, and Uzbekistan to provide a direct link to China through the Central Asia Economic Belt.

In addition to the Middle East, the Asian Infrastructure Investment Program (AIP) will also contribute to this latest development. The Silk Road Economic Belt and the AIP will run parallel through India, which is currently the primary economic partner of China in the AIP. The countries participating in the Silk Road Economic Belt and the AIP share similar interests in closer cooperation, with India and China playing an important role as they complete projects. China hopes to ultimately incorporate all of its neighbors into its markets. This process is being done in parallel with India’s effort to develop its own economy through the AIP Silk Road economic belt.

The economic model being implemented through the Silk Road Economic Belt and the AIP will require both developing countries to cut commercial and investment deals with major players in the international trade environment. Developing nations have long debated whether they should develop closer economic relationships with the European Union or the United States first, or go after larger trading partners like India and China. China’s recent declaration that it will use the AIP as leverage to get nations in its neighborhood to participate in its regional economic model is only one step towards fulfilling this strategy.

On a more fundamental level, this new development is a clear example of how globalization can have a negative impact on a country’s economy through trade. For centuries, the United States has focused its trade policy toward exporting American products to the rest of the world. Trade deficit growth has contributed to a large percentage of the nation’s debt, leaving the American people today with a large debt burden that will take decades to pay off. China’s announcement that it plans to develop the Silk Road Economic Belt shows that China does not plan to stop trying to acquire foreign investment and foreign currency to support its rapidly growing economy. This strategy represents a significant deviation from past American efforts at promoting closer economic relationships with the rest of the world.

One of the most common criticisms of the AIP is that it will lead to a race to the bottom in international trade. Economists have warned that because of the plan, nations in the region will become less focused on reducing their domestic unemployment rates and more concerned with meeting the economic needs of their consumers. This outcome could prove detrimental to the regional economies and the middle class that have sustained them through the past few decades. The effects could be particularly felt in Europe, which currently has the highest unemployment rate in the world.

Despite this worry, the AIP has received an earful of support in the United States. President Obama and his economic team have repeatedly stated that the proposal is a realistic way to increase economic freedom for all of those involved. President Obama has also stated that the plan will help to level the playing field between the United States and other countries, creating a situation where the United States can promote free market policies while others struggle to do so. Proponents of the Silk Road Economic Belt argue that by establishing the economic ties between nations, they will be able to encourage the growth of their respective industries and allow these industries the opportunity to thrive and compete with other countries. The plan has been embraced by both Democrats and Republicans in Congress, with the potential for a compromise between the two parties present.

For now, the United States is the United States and any attempt to try to pull the country into the AIP is, to some degree, futile. China, on the other hand, is not necessarily looking to do business with nations that are not part of its trading arrangements. Rather, it seems that more nations are looking to partner with China in order to reduce their dependence on imported goods. The Silk Road Economic Belt may not completely change the balance of trade between the two countries, but it could change the balance of power between them.

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