One Belt One Road: Chinese Strategic Investment in the 21st Century

By Kenneth Scheve, Ruxi Zhang
2016 | Case No. P87 | Length 26 pgs.
Political Economy

It is September 2013.  The new Chinese President Xi Jinping will soon launch his tour in Central Asia.  On this tour, the President is deciding whether to launch a grand investment strategy, which he calls “One Belt One Road” (OBOR). Through this plan, he hopes to achieve a range of economic, domestic, and geopolitical goals.  Economically, China needs to transition into a growth model that is sustainable but still delivers high growth rates. Domestically, Xi needs to boost the popularity of the Communist Party and consolidate his power relative to other factions.  Geopolitically, China is seeking to gain political leverage in Central Asia.  Critics of the plan have raised a variety of concerns, including the profitability of the investments, its impact on the government’s efforts to transition to a sustainable growth model, and the potential for backlash to the plan’s geopolitical ambitions.

Learning Objective

The case is designed to help students learn about the domestic and international political determinants of foreign direct investment. Students will explore the likely economic and political consequences of a major state-led foreign direct investment program and evaluate the desirability of the plan relative to alternatives for a variety of central actors in China’s contemporary political economy. Students will learn how to think analytically about the design of a foreign investment plan suited to best fit the ruling party’s economic, domestic, and geopolitical goals.
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