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Emergence of Lucrative Trade Corridors Laying Foundation for a Network of Intercontinental Multimodal Logistics
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Lack of seamless connectivity and poor infrastructure remain the major challenges for trade and logistics in many countries in the Eurasian region. China’s One Belt One Road (OBOR) initiative is expected to improve connectivity by inter-linking the transport infrastructure across East Asia, Southeast Asia, South Asia, Central Asia, Middle East, East Africa and European countries. It will help China to overcome some of the problems associated with its domestic economy such as a decline in export competitiveness due to increasing labor cost and excess capacity. Further, it will lead to improved connectivity to support the international expansion of domestic companies of the major trading partners along OBOR.Developments of projects relating to OBOR are likely to be undertaken in phased manner at different time periods due to financial constraints, local administrative hurdles, pending clearances from government agencies, and, in some cases, public unrest due to a lack of transparency in funding allocation – i.e., absence of international standards on transparency, the rule of law, and adequate financing for projects. Macroeconomic stability, long-term impact on employment, industrial growth, infrastructure finance, and the capacity to service debt funds secured from international and infrastructure development institutions of participating OBOR countries are some of the key factors likely to determine the success of this massive exercise. Clarity relating to dispute handling mechanisms concerning OBOR related projects is expected to remain an important factor in determining the success of the projects. To this end, an international commercial court is being set up in Beijing to resolve any project related disputes.
The aim of this insight is to research and analyze the key developments relating to the China's One Belt, One Road initiative and assess the likely implications to the economy, trade, freight transportation, and warehousing sectors across Asia, Middle East, Africa, and Europe.
This study specifically focuses on the development of economic corridors relating to BRI with focus on improving connectivity with Europe, Central Asia, Middle East and East Africa, South Asia and Southeast Asia. Current and expected growth trends in trade are analyzed to evaluate potential implications for cross-border trade, connectivity, multimodal logistics, and the overall trade growth. New trade routes along the OBOR would enhance multimodal transportation across Asia, Middle East, Africa, Central Asia, and Europe, resulting in estimated trade volumes with China to around $3 Trillion by 2030.
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