One Belt One Road initiative: OBOR Index
London has become the latest European city to join the China-Europe rail freight routes. The first UK-bound train left Yiwu on China’s east coast in January 2017 to journey across Kazakhstan, Russia, Belarus and the EU and arrived at the freight terminal in Barking within 16 days.
The service is symbolic of the economic ties between the UK and China, underpinned by the One Belt and One Road Initiative (OBOR) announced by the Chinese government in 2013, which promised over a trillion dollars to develop transport, energy, and trade infrastructure from Western China to Eastern Europe.
The Belt and Road Initiative, proposed by the Chinese government has the intention of promoting economic prosperity in more than 64 countries from East Asia to Western Europe with an aim to facilitate unimpeded trade and achieve mutual understanding. It's a win-win scenario in which more than 40 cooperative agreements and memorandums of understanding have been signed among China and other countries along the routes within three years.
The term of OBOR has deep root reference to the original Silk Road, or Silk Route which got its name because of the large volumes of trade in that commodity which passed along that route, commencing in the days of the Han Dynasty in China (BC 207 – 220). China had been expanding for a hundred years before – reaching out and exploring.
The imperial envoy Zhang Qian is often named as the initiator of activities intended to protect Chinese trade and at the same time – also for protection – extended the Great Wall continuously.
China must be afforded credit for the commencement and development of the first great terrestrial trade and cultural development which progressively changed the world – eventually connecting Europe with Arabia, North Africa, what was at that time Persia, India and China.
Very many races and tribes were embraced, in what some might say was one of the earliest examples of globalisation. There were maritime trade routes also established from about the same time involving more, India, Arabia and the Roman Empire. But The Silk Road was clearly a world changer.
At a time today when the geopolitical situation is in some state of turmoil and wherein nationalism and protectionism is rearing its head in different forms, it is a sign of great hope to many of us that the Chinese government and nation has embarked on a huge and bold initiative to recreate and extend the Silk Road Economic Belt and at the same time invest in a 21st century Maritime Silk Road strategy.
The objectives of this exciting and far reaching plan include enhancing the orderly free flow of economic factors and the efficient allocation of resources. The intention is to enable or improve market integration and create a regional economic co-operation framework of benefit to all.
In March 2015, the National Development and Reform Commission (NDRC) of China issued its Vision and Actions on Jointly Building the Silk Road Economic Belt and 21st Century Maritime Silk Road. The Belt and Road Initiative aims to connect Asia, Europe and Africa along five routes.
It is anticipated that the One Belt One Road project initiated by the Chinese government will usher in a renewed era of trade and cooperation alongside the path of the silk road of ancient days. Financial institutions, taking advantage of this economic and political tendency, have seen the potential for years to come. Most of all, it is anticipated that an index product would unleash the capital flows into sectors and countries affected by the initiative, while fostering the innovation of financial instruments that meet the ever-growing appetite of global investors.
BBD, a new joiner to the Cambridge technology cluster, is a China-rooted big data company that is leading the tendency of real time based analytics for economic development and driving for better investment decisions. The company, with sophisticated algorithm and service provision, offers products that enable in depth analysis and measurement of economic and financial activities and performance. These capabilities extend far beyond simple risk analysis software to a range of measures and big data enabled Indices which allow forward projections to meet the needs of governments, companies and investors.
Zeng Tu, CEO of BBD China, said: “The Belt and Road Initiative gives birth to the One Belt One Road Index. Business will flourish along the belt road, generating significant growth. The ingenuity from BBD developers will enable extraordinary new measurements to be made. It is surely an unprecedented product in support of the OBOR, which will give opportunities to financial institutions to meet global investors.”
It is clear that The Belt and Road Initiative has vast potential to give momentum to strategic co-operation amongst the various participants. Huge opportunities exist for investment as well as co-operation in infrastructure development, energy, transportation exploitation of new technologies and progress in other sectors, for example:-
- $14 Bn investment - Due to the fast progress of the B&R, Chinese enterprises have invested a total of more than 14 billion U.S. dollars in countries along the route.
- 35 per cent of World’s GDP – It is estimated that the B&R will engage as much as 63 per cent of the global population in locations representing 35 per cent of the world’s GDP and will enhance economic growth.
- 60,000 Job Growth – Launched only three years ago, the B&R has made very significant progress in creating 60,000 new jobs.
- 1,400 projects – So far, more than 1,400 major projects are in the pipeline, covering more than 10 key industries including steel, electronics, automobiles and equipment-making, etc.
By tracking the economic, political and investment connectivity amongst countries in relation to China, using BBD's cutting-edge big data technology for real-time data analysis, BBD is proud to offer global investors the “One Belt And One Road” (OBOR) index. The index has been constructed and is published monthly to track and measure the progress of the OBOR-oriented economic activities between China and the countries along the routes.
The OBOR aims to provide a forward-looking indicator, adding crucial value for optimising returns from investment. Since the OBOR initiative represents a core part of the geopolitical strategic framework of China, the Index is designed to provide efficient guidance for cross-border communications to improve financial institutions’ influence in the region and achieve mutual development.
The Index is also expected to be widely implemented among countries as a general gauge of the OBOR to provide benchmarks for policymakers to get in-depth assessments and to drive further collaborations.
￼BBD has developed an entire spectrum of real time enabled indices and positioned itself as the global leader in big data driven real time index provider.
Among its many indices, NEI (New Economy Index), published monthly, uses big data analysis to track changes in contribution to overall economic activity in nine sectors of China’s New Economy and providing a high level view of ongoing structural changes in the balance between the Old Economy and New Economy, the NEI dives deeper into the capital, labour and technological inputs driving change across the New Economy and within new economy sectors and industries.
Current statistics can show investors which large areas of China’s economy are experiencing acceleration or deceleration. They fail to show the relative change in scale between China’s old economy and new economy sectors. Additionally, the emphasis has largely been on traditional sectors, which explains why unofficial indicators such as the “Li Keqiang index” have been popular with investors.
However, the inability to measure the New Economy adds to the difficulty and confusion in accurately forecasting GDP growth and increases market uncertainty in China’s growth potential and sustainability.
Dr Chen Qin, BBD’s chief economist, shared his view on why NEI is seen as a revolutionary tool that aims to provide deeper insight into the changing characteristics of China’s economy to improve transparency and forecasting accuracy. By tracking 11 sub-industries from the nine new economy sectors, NEI is able to capture economic patterns in real time, detailing trends impacting the new economy development in China.
The NEI and its sub-indices are thus an important set of indicators that can be used to follow emerging patterns and understand the pace of structural transition as the path for the New Economy gradually unfolds.
Since the release of NEI in Beijing in March 2016 and subsequent showcasing in London in April 2016 at the same time of the launch of BBD UK, NEI has been adopted by a number of leading media players, including the FT and Bloomberg, focusing on the tendency of real time driven economic measurement.
Being highly endorsed by the Chinese government, NEI is broadly recognised as an innovative index that is much needed by the Chinese economy, offering a fresh approach to examine economic development, enabling policy makers, economists and the wider business and investment communities to take a much closer look at the new sectors that drive economic growth.
There are number of other innovative indices forming the family of BBD’s big data indices, such as the New Energy Vehicles Economic Index (NEVEI), an integrated index to describe the development of new energy vehicles in China including sale, infrastructure investment, relevant policies and consumption trends, and enterprise behaviours. Being regarded as a sub-index of NEI, NEVEI enables policy-makers in government and enterprises to gain in-depth understanding of new energy vehicles markets, to make efficient economic decisions.
BBD has recently released its latest member of its index family-BBD New & Renewable Energy Industry Index (NREI). NREI is expected to dynamically monitor and comprehensively depict the latest development trends of the new energy industry. NREI provides an innovative tool to supply-side structural reform in China and will also be a benchmark for relevant enterprises to enhance their strategic planning.
BBD’s ambition travels far beyond its current index products. By taking unprecedented steps, BBD has been working with a number of crowdfunding research institutions in China and abroad, and soon, the firm will offer the first-ever global crowdfunding index.
This would cover a vast scale of real time transactions across large numbers of crowdfunding platforms, providing the most comprehensive crowdfunding data source and analytics available to investors, regulators and policy makers.