The New Silk Roads

by Peter Frankopan

  Over eighty countries are now part of the initiative. These include the Central Asian republics, the countries of South and South East Asia, those of the Middle East, Turkey and Eastern Europe—as well as states in Africa and the Caribbean.8 With a combined population of 4.4 billion, those living along the new Silk Roads between China and the Eastern Mediterranean account for more than 63 per cent of the world’s population, with a collective total of $21tr—or 29 per cent of total global output.9

  An evaluation of the Belt and Road Initiative by the World Bank provides a sense of the astonishing scale and impact of the programme. Shipment times would fall by an average of almost 12 per cent in countries that are part of the initiative, according to the bank, while trade costs would fall by more than 10 per cent. The figures are so large that they would have an impact on global trade, bringing down shipment times and aggregate trade costs by as much as 2.5 per cent for the world economy as a whole.10

  The sweeping scale and ambition of the Belt and Road Initiative was made clear at a major forum held in Beijing in May 2017. There was more at stake than money and investments. In fact, said President Xi, the initiative could change the world. “Exchange will replace estrangement,” he said. “Mutual learning will replace clashes, and coexistence will replace a sense of superiority.” It would bring peace, for it would “boost mutual understanding, mutual respect and mutual trust among different countries.”11 The Belt and Road Initiative, he said, would “add splendour to human civilisation” and help build “a new era of harmony and trade.”12

  China’s plans should encourage a new way of thinking and different behaviour, said President Xi. “We should foster a new type of international relations featuring win-win cooperation,” he stated, “and we should forge partnerships of dialogue with no confrontation and of friendship rather than alliance.”13 This sought to capitalise on three wider trends. First, to provide hope at a time of change in the world; second, to fill the vacuum left by isolationist and self-indulgent politics dominating the narrative in developed economies; and third, to demonstrate that China should not only be part of the global community of nations but could and should provide leadership that emphasises the benefits of mutual cooperation. A video released at the Beijing Forum encapsulated this neatly: “What’s wrong with the world? What can we do?” runs the refrain. “China has a solution: A community of shared future for mankind.”14

  The Belt and Road Initiative, said President Xi in May 2017, is the “project of the century.”15 Many agree with him. Jin Liqun, President of the Asian Infrastructure and Investment Bank—a Chinese-led institution with more than eighty member countries—told the Financial Times that “the Chinese experience illustrates that infrastructure investment paves the way for broad-based economic social development, and poverty alleviation comes as a natural consequence of that.” In other words, China had learned from its own experiences that building roads, train lines, energy plants and creating the ecosystem to enable cities to grow does more than just accelerate commercial exchange; it helps lift people out of poverty.16 This conclusion is based on reality. China’s own economic miracle from the 1980s onwards taught important lessons about how policy, infrastructure investment and poverty alleviation can all go hand in hand.17 “We Chinese often say that if you want to get rich, build roads first,” said Le Yucheng, China’s vice-minister for foreign affairs. The “under-development of infrastructure,” he told the Financial Times, has been one of the most important reasons for why some parts of the world have been held back—something that the Belt and Road Initiative is designed to fix.18

  In the words of one commentator, assessing the progress of the Belt and Road Initiative is “part art, part science” because “it is a moving target, loosely defined and ever expanding,” to the point that it is no longer “constrained by geography or even by gravity,” as the vision has expanded since 2013 to include Africa, Europe, the Arctic, cyberspace and even outer space.19 The Belt and Road is all-encompassing and can include anything and everything; but then again, that was the case too with the Silk Roads of the past as well—where events that took place in one part of the world were sometimes directly linked to consequences in another.20

  One attraction of the Silk Roads as a catch-all for closer cooperation is the malleability of the message of a return to the past. When the first direct train from China arrived in Bandar Anzali on Iran’s Caspian coast in the summer of 2018, for example, Iran’s vice president, Es’haq Jahangiri, was quick to use the re-emergence of the new Silk Roads as an affirmation of Iran’s own past. Rather than associating the train with President Xi’s vision or that of the Chinese state, Jahangiri reached a different conclusion: the rebuilding of ties across the spine of Asia was a “sign of Iran’s cultural, historical and civilisational ties with neighbouring countries.”21

  It is a message that can be found elsewhere too—such as in Turkmenabat, in Turkmenistan, where a new 28-metre-high Silk Road sculpture was unveiled in the spring of 2018 with a lavish ceremony that included public bicycle contests as well as marathon races.22 Then there is Tashkent, in Uzbekistan, which will have twelve new gates built at entry points to the city to mark its position as “the symbolic and actual heart of the ‘Great Silk Road’ and commemorate the link between Uzbek culture and those of other peoples.”23 While Chinese capital and leadership clearly play a fundamentally important role, for those living in the centre of Asia the revival of the Silk Roads is something that can be appropriated and moulded into a message that has a national and domestic resonance. As one leading commentator has put it, the Belt and Road Initiative has become “the Baskin-Robbins of partnerships, offering flavours for everyone.”24

  There can be little doubt, however, that in many if not most cases it is China that has been the catalyst in the reconfiguration of a part of the world that has played such an important role in world history. Although it is not easy to assess the precise amount of money that has been invested so far or earmarked for investment, some very major projects have got under way. These include the China-Pakistan Economic Corridor, which includes multiple major investments into roads, energy plants and the development of a deep-water port at Gwadar, on the coast of Balochistan in southern Pakistan, with a total value of these projects usually quoted at around the $60bn mark.25 Some expect investments to top $100bn by 2030.26

  Current schemes being funded include the Port Qasim 1,320-MW coal-fired power plant project, major wind farms in Sindh, multiple industrial parks and the construction of a freshwater treatment facility that will help address chronic water shortages that will stop Gwadar playing its proposed role as a “mega-port” by 2030.27 Plans are also being finalised for the construction and operation of a high-speed train line between Karachi and Peshawar that will increase freight traffic by five times, while passenger traffic would be increased from 55 to 88 million passengers a year. The time taken to journey along the 1,000 miles would be reduced by half, which would in turn reduce congestion at roads and ports, and help make the cost of doing business with and in Pakistan fall.28

  There has already been a discernible pickup in economic growth as a result of rising levels of investment across the country that is best evidenced by the rising sales of cement—the use of which most obviously correlates with construction projects. According to the All-Pakistan Cement Manufacturers Association, year-on-year sales rose by nearly 20 per cent to the end of 2017—a very significant boost, in other words.29

  Other flagship proposals and investments include construction of high-speed and freight-train lines across South East Asia, including the 688-km East Coast Rail Link that is intended to connect Malaysia’s east and west coasts and the peninsula’s main shipping ports in a scheme costing $13bn.30 Then there is a new line that will span Laos, costing $5.8bn, which will supposedly turn the landlocked country into one that is “land-linked.”31 Multibillion-dollar loans for motorways, bridges, power plants and deep-water ports h
ave been approved in Bangladesh, Cambodia, Myanmar and Sri Lanka, with major projects in Indonesia, Vietnam, the Philippines and Thailand also under way. Projects are not limited to Asia, as the $8.7bn railway from Mombasa to the Ugandan border, Kenya’s biggest infrastructure project since independence from Britain in 1963, shows.32 These sit alongside the creation of new international commercial courts in Xi’an and Shenzhen, which will rule on disputes for projects that run into difficulty or disagreement along the land-based “belt” and maritime “road” respectively.33

  New agreements seem to be put in place every day. In June 2018 alone, ten deals were signed off by the Nepalese and Chinese governments for projects ranging from energy and transport to a proposal to build a tunnel under the Himalayas to link Kathmandu with Tibet and beyond.34 These were in addition to previous support given to Nepal that has included the construction of new police-training centres, hospitals and a metro system in the Nepalese capital.35

  This is part of a mosaic of projects that includes the construction of freight-train facilities and “dry ports” like Khorgos, on China’s border with Kazakhstan, which form a web of connections of new railway tracks that enable goods to be shipped overland not only across the spine of Asia but deep into Europe, too. The value of these lines is symbolic rather than of immediate practical use, given that shipping by land is significantly more expensive than by sea: quoted costs for sending containers by rail from China to Europe can be up to five times pricier than by sea. While rail lines may take business away from air routes, even operating at capacity, they are unlikely to account for more than 1–2 per cent of maritime cargo volumes.36 This is partly due to current oversupply in the shipping industry but also because of the sheer size of modern vessels: a train that arrived from China in Barking in east London amid a blaze of publicity in January 2017 was pulling a mere thirty-four containers from its departure point in Yiwu.37 Even small container ships carry hundreds of times more—with ultra-large container vessels (ULCVs) being able to take more than 10,000 containers per voyage.38

  Overland routes, including those that go via Gwadar, are quicker than shipping by sea, but it is hard to see many goods for which the benefit of speed will be decisive. Just think, says a recent Chinese advert: when “Belt and Road Initiative reaches Europe, Europe’s red wine is delivered to the doorstep half a month earlier!”39 Even if the Chinese middle classes grow at the speed some economists project, building costly train lines to get red wine to the dinner table slightly more quickly seems an expensive way to enjoy the finer things in life.40

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  There are three principal motivations underpinning the Belt and Road Initiative, which has become President Xi’s—and China’s—signature foreign and economic policy. The first revolves around long-term planning for the future and China’s domestic needs. Particular attention has been paid to natural resources, especially relating to energy, where the country’s demands are expected to treble by 2030.41 Pipelines that enable gas and oil to be pumped from Central Asia and Russia to China have therefore been one focus, but so too have commercial agreements that guarantee large-scale shipments—such as those with oil companies in Russia and the Middle East, including Iran, Saudi Arabia and the UAE.42

  These have helped fuel China’s growth—and made the country the world’s largest importer of crude oil in 2017, when it imported more than 8 million barrels per day on average.43 Securing energy supplies goes hand in hand with projects in non-hydrocarbon fields, such as the joint venture between Kazakh state nuclear company Kazatomprom and China’s CGNPC, which will produce nuclear fuel for Chinese power plants from 2019.44

  Pressures on agricultural production as a result of a rapid urbanisation have also encouraged Chinese companies to look outside the country to ensure future food supplies by buying farms, farmland and food producers in Asia, Africa, Australia and elsewhere at a time when the spending powers of the middle classes are rising and eating habits are changing quickly as a result. Retail prices for beef and pork rose by 80 per cent between 2009 and 2013, while imports of dairy products grew fourfold in almost the same period.45

  The dangers posed by high levels of pollution have also played a role in leading the Chinese authorities to look at food and water security as key areas that need to be addressed. According to official Chinese figures, more than 70 per cent of the country’s groundwater in the North China Plain is so polluted that it is “unfit for human touch,” while the Ministry of Environmental Protection reported that a sixth of the agricultural land has been affected by soil contamination.46 Worsening air-quality readings in the first months of 2018 across China’s industrial heartlands and the Yangtze River Delta show the scale of the problem.47 This is one reason why green and clean technologies are being actively championed at governmental level.48 It is also why President Xi has spoken repeatedly of the need to address environmental problems including pollution, and to talk about the importance of ecological sustainability.49

  A second motivation is the transition of China’s own economy from manufacturing to services as a result of its transformation over the last three decades, which led to what the International Monetary Fund (IMF) has termed a decisive shift from “high-speed to high-quality growth.”50 This has in turn resulted in excess capacity in steel, cement and metals. These can be usefully deployed abroad—as can a workforce that has been instrumental in realising large-scale construction projects in China, which are now less numerous than in the recent past.51

  Other parts of Asia, meanwhile, are hungry for upgraded infrastructure. According to figures from the Ministry of Transport and Communication in Kazakhstan, for example, a full third of Kazakh roads are in unsatisfactory condition; Chinese finance—and know-how—has been therefore offered to fill useful gaps.52 The scale of potential is made clear by a recent report by the Asian Development Bank, which estimates that “infrastructure needs in developing Asia and the Pacific will exceed $22.6 trillion through 2030, or $1.5 trillion per year, if the region is to maintain growth momentum,” with that figure rising to $1.7tr per year if climate-change mitigation is included.53

  By supporting large-scale projects, the Belt and Road also raises the prospects for Chinese businesses to open up new opportunities for the future, too. Penetration of household appliances in South Asia, for example, is extremely limited: less than 10 per cent of homeowners have a personal computer or a microwave, while just a third of families own a refrigerator.54 The logic is that if more and better roads, transport links and reliable energy sources exist in countries with large and growing populations, their economies will expand quickly too, increasing the disposable wealth and stimulating demand for goods that Chinese businesses will be well placed to service.

  Supporting infrastructure projects in neighbouring countries also has a knock-on effect for China’s own centre of gravity, which is heavily centred on the eastern coastal region. The rapidity and extent of urbanisation have led to the authorities seeking to limit the size of cities like Beijing and Shanghai and to look to stimulate growth in smaller, poorer cities—locations that are less populous, less industrialised and where life is cheaper to live. This has had the effect of leading to average incomes rising faster in so-called third- and fourth-tier cities, and to higher growth rates than in the biggest, most established urban conurbations.55 The issuing of residency permits has led to the population of cities like Xi’an surging—and with it, inevitably, a spike in house prices, which have risen by 50 per cent year on year.56

  Investment in transportation, water conservancy, power generation and communication has led to a rash of new businesses being established in China’s western provinces, including a tourism boom and higher levels of growth than in other parts of the country—at least until spending was curtailed in the wake of fears about a debt bubble brought on by excessively optimistic projections by local officials.57

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  Security plays an important part in the motivations for the Belt and Road, too. The chaotic situation in Afghanistan has long been a cause for concern for Beijing, because of fears of contagion from Islamic fundamentalism in western China. Concern about large numbers of Uighurs who travelled to Syria to fight for Islamic State has also worried the authorities, even if estimates of those involved vary from several thousand to many times that number.58

  The importance of Xinjiang’s energy reserves is one reason why the region has become the focus of considerable government focus, defence spending and political repression. According to local government figures, spending on security in Xinjiang doubled during 2017 alone to more than $9bn, part of a drive to protect against any threat to China’s largest gas fields, half its coal deposits and as much as a fifth of its oil reserves.59

  Worries about the spread of instability have led to strict measures being imposed on the Muslim Uighurs in Xinjiang. These include travel bans, controls over names given to children and the shaving off of “abnormal” beards.60 According to reports, many hundreds of thousands of Uighurs have been sent to special “re-education camps,” whose existence is not acknowledged by the government, and where detention—and release—are not subject to decisions made in a court of law but by party officials and police.61 In some areas, it was reported that 80 per cent of the adult population have been detained.62 A report on the situation also found that Beijing had secured deportation of multiple members of the Uighur population from other countries back to China.63

  China has denied the existence of these camps, with a Foreign Ministry spokesman stating that reports were being circulated by “anti-China forces” and that “the people of all ethnic groups in Xinjiang cherish the current situation of living and working in peace.”64 “There are no such things as detention centres,” said Hu Lianhe, a member of the Chinese delegation to the UN. “There is no suppression of ethnic minorities or violations of their freedom of religious belief,” he said, adding that those “deceived by religious extremism” were being assisted “through resettlement and education.”65