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WORLD OF INDUSTRIES 07/2018

WORLD OF INDUSTRIES 07/2018

The new silk road:

The new silk road: weaving a future of integrated growth NEWS AND MARKETS Author: Sushen Doshi, International Correspondent for World of Industries 8 WORLD OF INDUSTRIES 7/2018

The new silk route proposed by China’s President Xi Jingping, offers enormous opportunities for growth for some countries while it poses a threat for some other countries. We take a look at how this massive project can affect local as well as global companies while delivering growth to regions that were once trading powers. Astana, the capital of Kazakstan, the land from where the ancient silk route passed, a place where the civilizations of east and west met. The prestigious Nazarbayev university is also located in the central part of this city. Here, in September 2013, Chinese President Xi Jingping delivered a historic speech, talking about the revival of the ancient silk route. With an objective of forging closer economic ties, deepening co-operation and delivering new prospects of development from East Asia, Eurasia and Europe, he proposed building an economic and trade belt along what was once the silk route. A month later, in October 2013, Xi Jingping addressed the Indonesian parliament, where he mentioned the importance of the South East Asian countries in the ancient maritime silk route. He proposed that China and the Asean countries should enhance their co-operation at sea to build a maritime silk road of the 21 st century. This belt and road initiative aims at achieving a win-win outcome by promoting connectivity in the continents of Asia and Europe. This will be built by developing partnerships with countries along the land route and the maritime route as well. These partnerships will in turn develop diversified, balanced and sustained development in the region. On land the focus will be on building economic corridors based on existing transport routes, key population centers and major industrial parks. At sea, the focus will be opening up fast, secure and efficient shipping routes connecting major sea ports. Benefits for China In this era of ‘belt and road’, the Chinese economy is transforming from high growth rate to structured and sustainable growth combined with improving the quality of life. In order to achieve this, China has now shifted its focus from low cost manufacturing to advanced high tech manufacturing with industrial innovation and well integrated supply chain and logistics network. This change of stance will usher in new opportunities and challenges across the sector. These reforms will promote the concept of innovation and industry 4.0 and will help China to effectively cater the demand without creating excess supply and addressing the issue of excessive production capacities, this in turn will create new growth prospects. New global trends of economic development and of international geopolitical scenarios are creating an unprecedented historical opportunity for China’s supply chain and logistics network, overseas distribution, port infrastructure, traffic arteries and the overall trade and investment. In the last 2 years, China has increasingly witnessed the transformation of the logistics sector. In 2015, rapid development of the 4G internet and data analytics has given rise to e-commerce sector, which has increased the consumption of consumer and industrial WORLD OF INDUSTRIES 7/2018 9

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