The New Silk Road
Often it is the history we choose to remember which acts to bind us to the lands in which we live. President Xi Jinping’s allusions to the Silk Road in his 2013 announcement of China's Belt and Road Initiative (BRI) recalls periods in China's history of surplus, peace and a sphere of political, economic and military influence that stretched far beyond its borders. The Belt and Road Initiative, China’s foreign policy centrepiece, is attempting to redraw these ancient trade networks, crafting them to its twenty-first century economic and strategic goals.
The land based Silk Road Economic Belt extends throughout Eurasia in six corridors: from East Asia to Western Europe and South through Africa. Two vital corridors; the New Eurasian Land Bridge Economic Corridor and China-Central Asia-West Asia Economic Corridor pivot around Central Asia. Its other tranche - the Maritime Road - wraps around the Western Pacific and Indian Ocean in a String of Pearls. This initiative is China's most ambitious soft power project and part of its attempt to position itself at the centre of a redrawn geopolitical and economic map of Eurasia.
Up to $4 billon is intended to be invested in infrastructure projects. This includes; roads in Kazakhstan, ports in Pakistan and Sri Lanka, an industrial park for high tech business in Belarus, energy projects and pipelines through Central Asia and railways in Iran and East Africa. Currently, private investment plays little role in its financing, which is led by Chinese state owned banks and the China Development Bank (CDB). Both the multilateral Asian Infrastructure Investment Bank (AIIB) and the $40 billion Silk Road Fund were launched in response to this initiative and are central to financing projects and businesses across an umbrella of over 65 participating nations.
Dampening exports to developed countries and slowing infrastructure growth at home has led China to search elsewhere for the keys to the economic growth it has enjoyed since Deng Xiaoping's economic reforms. BRI will help China export its overcapacity, bolster the Renminbi, forge new export markets for China's construction and engineering companies and foster global trade relations through outbound state financing on an unprecedented scale. This economic diplomacy, larger than Truman’s Marshall Plan, is centred around connectivity, reciprocity and cooperation. It will attempt to state China’s regional leadership, strengthen its subdued economic ascent and 'kindle a new era of globalisation'.
It will help China to achieve its strategic goals and security concerns. Its reliance on the 2.8 kilometre wide Strait of Malacca is troubling to the leadership. It accounts for 80% of its oil imports to China and a quarter of global trade, making China very vulnerable if a naval blockade were to occur. This fear - known as the Malacca Dilemma - has contributed to the construction of pipelines from Central Asia and Pakistan to China. This is with the aim of decreasing reliance on this Strait thereby leaving China less vulnerable in the case of conflict amongst South East Asia. The upgrading and construction of ports and railways also provides alternative routes for trade and a substantial network for mobilising people and resources if war were to break out.
This investment and China's increasing direct access to Central Asia has resulted in a reduction of Russia's economic monopoly in a region it administered for most of the twentieth century. Further east, stability in the Xinjiang region is key to the success of the Economic Belt: many of its projects pass through here. This includes the $56 billion corridor from Gwadar Port in Pakistan to Xinjiang Province in Western China. This investment in less stable regions is evidence of China's regional ambitions as well as its desire to meet growth targets even as its debt-to-GDP ratio rises to 260%.
The Belt and Road Initiative is still a nebulous concept which lacks strictly defined parameters. Beijing has stated that it is open to any country; this includes the US. The one official map which was produced of the initiative was withdrawn and its timespan is not known but it is certainly long term, requiring over thirty years for full implementation. 2049 is certainly seen as an important year as it celebrates the 100th anniversary of the founding of the People's Republic of China. In China, BRI has become a buzzword by officials and is used to gain approval for tenuously related projects, leading to further confusion.
What is unfolding is the world's largest development project, already covering more than 60% of global population. Over the coming decade it is only likely to grow in scope. It is not yet clear if China's leadership is intending for foreign policy to follow economic and trade opportunities, or if this is a geo-economic strategy where shorter term commercial goals will feed into China's long term strategic imperatives. This is one of the many questions we hope to gauge as we travel the length of this very exciting development.