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Belt & Road Initiativeh
By FBWorld Team

It's hard to imagine that in 1978 China was one of the poorest countries in the world. As the United States and Russia battled over economic supremacy China seemed to be out of the game stricken with poverty and starvation.

Fast-forward the clock nearly thirty years and China is a world power with firm footing in global trade. With an initiative underway that will likely restructure global trade as we know it. Most famously known as the Belt & Road Initiative. It has other names as well, One Belt One Road, and the 21stcentury Silk Road.

The Chinese government calls the initiative ìa bid to enhance regional connectivity and embrace a brighter futureî. The purpose of the initiative is to built a freight, passenger rail system as well as freeway system for automobile & trucking transport that would connect China to Europe. The Ancient grid of the Silk Road are the guidelines in which this project will be planned.

152 countries are involved. On the North the rail lines & roads will pass through Mongolia, Russia, Middle East, On the South they will pass through India & Africa. On the far west of this project will be Europe on the far east of this project will be China. The idea behind a move like this would be to control transportation and trade through the Continent & put deals in place for the surrounding natural resources.

The advantage of pulling off an initiative like this is a subject of debate, but many people who are looking at the region closely know that while the specifics are unclear what is clear the move will make Beijing the Power broker of the region so itís safe to assume that inland countries that make use of ìSilk Road of the 21st†centuryî more than the maritime shipping lanes made safe by the U.S Navy will slowly pull away from giving the U.S preferential trade status & begin to do what they can to get close with Beijing.


Isle of imported spirits at popular Chongqing store DC metro

This economic reform is already making a tremendous impact and experts believe what were seeing is only the beginning. U.S Associations going forward are going to need to be aware of this so they can adapt or they will have difficulty surviving. Since this reform is creating a middle class with growing spending power and an appetite for the finer things in life.
When people look back on the Gold Rush, they find the real winners were the Inns, Salons, and people who sold picks & shovels. The people stationed along the route serving those traveling in search of fortune. Its important to keep in the mind that the Belt & Road initiative is not where it started. Itís the next chapter of Chinaís economic reform that spawned when Nixon traveled there to get the needed leverage to pull U.S troops out of Vietnam. Since then China has been reforming itself and generating more & more economic activity.

We are talking about a population that went from starving to the leading producers of electronics, clothing, and competitively priced consumer goods. Now that the population is getting skilled the economy is undergoing a second revolution and Beijing is taking steps to give their newly minted work force an arena, they can compete in.
What does this mean? There is a new consumer class emerging in Asia and there going to demand greater products for themselves. Especially in the areas of fine foods & luxury goods.

Now lets take a step back for a second. Why are so many different people in varying disciplines coming to this conclusion? Is it the emergence of brilliant entrepreneurs like Jack Ma, and Steven Hung? Is it the fact that many of the products we come to depend on seem to originate from there? Is it the images we see of modern cities that rival New York and San Francisco that werenít there fifteen years ago?
One thing seems to be true. If you were to stand naked in your room and divide all your possessions into three piles. One pile being from the United States, another from other nations, and lastly China. You might notice your pile from United States to be older clothes and things that you have had for a while. Your pile from China to be mostly new clothes new things and highly useful easily disposable goods like plastic cups etc. (For the sake of simplicity we will not go into what you will find in the pile that has been produced by other nations.)

What makes this so interesting is that if things continue to trend this way. Fast-forward the clock another thirty years and your U.S pile gets pretty small and your Chinese pile becomes the majority of your possessions.


Vendor offering fresh baked Chinese Bread

In the meantime lets take a look at the day in the life of one of the Chinese workers who made those goods. Wake up, peer at Xiaomi smartphone for the mornings We Chat text and voice messages. Spoon break fast rice porridge with one hand; with the other use the phone to order a new air purifier in TaoBao, just another purchase in the 2 trillion Chinese E-commerce market. At work use Baiduís search engine and check the inbox on email provider 163.com. While slurping a bowl of noodles for lunch, pursue the latest musings of actor Yao Chen, who has over 78 million followers on Weibo. (Thatís almost 8 million more than Katy Perry twitters most popular celebrity.) Choose a restaurant to meet for dinner, using Dianpingís recommendations. On the ride home update a dating profile on momo and zone out with Demi-Gods and Semi-Devils, an online game based on a martial arts epic.

There are over 649 million Chinese online, more than twice the number of people online in the U.S. But they live in a parallel universe that is utterly apart from the rest of the world. The tech terms of our era-Google, Twitter, Facebook are forbidden in China, casualties of the ruling Communist partyís opposition to free expression. A vast system of online censorship, commonly known as the great firewall, blocks the populace from viewing material deemed dangerous to the state. Since the advent of the Arab Spring, which underscored for Chinese officials the political power of the Internet, mainland censors have stepped up their work, erasing threats to the party real and imagined.

Cordoned off by the Great Firewall and largely inhabited by indigenous tech outfits, the Chinese online ecosystem is evolving into the Galapagos of the Internet. But unlike the scattering of rocks in the Pacific Ocean, china is crammed with 1.3 billion people who propel the worldís second largest economy. Even as Beijing detaches its citizens from the global net, the nations native tech firms are thriving. Chinese connect to the Internet through homegrown companies some of which boast of greater market caps than those of their foreign counterparts.

It seams the Chinese are taking to their new lifestyle well. Of the 649 million who are now members of the middle class their level of discretionary spending is expected to rise.

Many things have happened Since Nixon made his famous visit. Why was his visit such a turning point for China?

To answer this question were going to have to tumble down the rabbit hole a bit. The year is 1974 and I would like to introduce you to a key personality whom circumstance conspired with to completely change the way a nation saw themselves and addressed global commerce.

Deng Xiaoping a loyal supporter of Mao Zedong. (Also known as Chairman Mao) Known in the west for enforcing mass starvation and genocide. Known in China for raising the standard of living, raising annual life expectancy, and the status of women. To truly understand the significance of what followed one would have to see the world, as Deng Xiaoping would have in 1974.

Mao Zedongís health is fading and Hua Guofeng is next in line to succeed him. Just two years ago in 1972 a historic event happened. As pressure mounted on the U.S to turn the tide on the Soviet Union and pull the U.S troops out of Vietnam. Nixon came to china and Brokered a landmark deal with Mao. This Deal gave the U.S political power to pressure North Vietnam to let the U.S troops out and diplomatic might when negotiating with Russia. This Gave mainland china official recognition as China under the direction of Mao Zedong which was originally given to Taiwan under the direction of Chiang Kai Shek After world war 2. Which came with an official seat on the U.N.

Now lets take a second step back to really understand what it meant to have been given an official seat on the U.N. Even though Deng Xiaoping had been educated in France and Russia. He and pretty much all of his associates have been isolated in china since the Japanese invaded in 1932. From that point forward it seemed that one incident after another continued to isolate the country. Then smack its 1972 and here comes Nixon. Without warning Deng and associates are traveling to New York and all the worlds recognized leaders are in one room.

Imagine what this must have been like. Deng and associates can now meet and talk to world leaders casually. If synergy existed they could meet up at their hotel room and make future arraignments. As Deng Xiaoping experienced this I am sure he learned a great deal about other countries and the United States. This instilled a curiosity in Deng Xiaoping that would slowly mutate into resolve over time.


Chinese Hotpot very popular in Central China.

Knowing this letís refocus on 1974. For the last two years Deng Xiaoping has been watching how the west is conducting themselves and finds that he does not agree with Democracy but does agree with how the west approaches commerce. While it is true he is part of the Communist Party he was never a Marxist at heart. More of a revolutionary nationalist who wants to see China on equal terms with great global powers, and adopting western economic practices appears to be a path that just might bring about that outcome.

Driving Deng Xiaoping to make a huge gamble. He will challenge the party agenda and work to out maneuver Hua Guofeng as Maoís Successor. A huge risk that could cost him his life. Four years later in 1978 Deng Xiaoping takes power and begins to reform the country.
Deng was able to hold power for 14 years until he retired in 1992. His affects on the country completely restructured the way things are done in China and have spawned the saying that nobody knows capitalism better than communist China.

Presently there is a legion of Chinese Entrepreneurs who have been unleashed after decades of communism and they are taking no prisoners. Many have cast away poverty and starvation and with the pain fresh in their minds of those hard times they are resolved to never return to that level of poverty and starvation again.

Ask Zuo Zongshen an Entrepreneur in Chongqing China who grew up in poverty and now owns a motorcycle company with over 18000 employees ìChongqing Zongshen Power Machinery Companyî if he is willing to give up what he has built and go back to poverty. Ask his employees if they would like to return to the days when that kind of work and its benefits were not available to them. Today there are over 750 million examples of people like Zuo Zongshen and his employees and even though the economy is currently appearing to peak. Rest assured the people who drove the economy to those heights are not done, and will willingly sacrifice to pull themselves past this slide to even greater heights.

Which is a huge opportunity for entrepreneurs throughout the world. How does one profit as this shift is taking place? Turns out the things most in demand are food products, Luxury goods & raw materials.
For entrepreneurs in California that means offering wine, craft beer & anything edible. Lets also not forget entertainment. There is a Disneyland Shanghai.


Chinese Entrepreneur who imported
Napa Wine Frank Family Vineyards and put together a wine club.

Bare in mind this is a transition that has taken place up until now. Now that this Belt & Road initiative is underway China is going to be directly connected to every country on the Asian, African, and European continent. Itís safe to assume that Chinese nationals will be given preferential treatment when it comes to positioning themselves on the Silk Road of the 21st†century to make a profit. Given the natural resources and access this is going to give the Chinese workforce its safe to assume their going to be demanding better and better goods.

As this next transition takes place it makes sense that China could surpass America as the worldís consumer. Does this have implications as to how credit and world resources will be distributed? Absolutely! But the change should not be feared.

According to Euromonitor Chinese consumers prefer to buy their goods through E-commerce platforms like Alibaba & JD.com Which paints a pretty nice target for U.S entrepreneurs looking to feed this growing monster. Hopefully selling to the companies looking to sell to consumers who are and will be traveling and trading on this Silk Road of the 21st†century.

 


By Arthur Walsh

 

 

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