And all this is at a time when things are becoming fiscally more challenging

And all this is at a time when things are becoming

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And all this is at a time when things are becoming fiscally more challenging for China, whether it be through the flight of capital offshore, record consumer debt levels or a marked slowdown in economic growth when compared to recent years. In addition to the funding challenges which any project of the scale of OBOR would have, there are certain specific challenges that OBOR will face. For example, how does one attract investment to high-risk countries such Pakistan, Afghanistan and Syria? The status quo in countries such as these is already an issue of much concern. Will investors be willing to take the plunge on projects which will span possibly decades of uncertainty? Will Western financial institutions, shackled as they are by European Union (EU) and US regulations, collaborate with Chinese institutions to help finance OBOR? Political While many of the countries which have embraced or at least shown an interest in OBOR are strategically important to China, a number of them find themselves in a difficult position in the world from a political and geopolitical perspective The Chinese do have a track record of taking their enterprise to places others may be more reluctant to in terms of risk appetite. By way of example, the current vision for CPEC sees its run through the region of Kashmir which has been disputed between Pakistan and India since partition in 1947. Tensions between the neighbours over this issue have been frosty ever since and military action has the potential to flare up at any time. So, while CPEC forges through the Pakistan controlled side of Kashmir, there are no guarantees that India will stand by and let it run its course. In India generally, the rollout of OBOR has been watched with a degree of caution. From some quarters the view appears to be that getting onboard with OBOR can only offer India marginal benefits and that it may be better served trying to forge its own path, given its own size and economic might. However, the reality is the two Asian heavyweights will need to forge a path together as the mutual benefits are obvious. Changing of the political guard is also a major risk factor facing OBOR, particularly in the infrastructure projects space where contracts can be awarded for decades at a time, and the periodical changing of administrations presents challenges which should not be underestimated. A very recent example of this and its impact on Chinese
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15 businesses was seen in Sri Lanka when the government of Mahinda Rajapaksa was replaced in early 2015 with the administration of Maithripala Sirisena. Beijing and Moscow have long had a solid relationship with one another, strengthened in part by solidarity through their similar adverse treatment by the West on certain fronts. At a time where the rouble is flailing and oil prices are recovering from record lows, early sentiment from Russia is that OBOR is being see n as complementary to Moscow’s own Eurasian Economic Union vision rather than a threat to it. These and other factors should see the two nations form closer ties in what is a critical
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  • Fall '19
  • jane smith
  • People's Republic of China, OBOR

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