A crash course on The New Silk Road
You have most likely found yourself in a history class learning about the ancient trade route that ran during the days of the Roman Empire called the Silk Road. For those who haven’t, the silk road is essentially the trade route that started in the beginning on the Han Dynasty between China and the west. Its name is derived from the trade of oriental silk from China to Europe. Similarly, it’s also the reason China is no stranger to grapes. More often than not, we’ve seen history repeating itself, and this stands correct for the silk road as we now see it being resurrected. The Chinese initiative plans to use both the land routes and the maritime routes with the aim of improving its regional trade by investing in the infrastructure. Beijing says it will ultimately lend as much as $8 trillion for infrastructure in 68 countries to kindle a “new era of globalisation”, a golden age of commerce that will benefit all.
There’s a new highway in Pakistan, a new rail terminal in Kazakhstan, a sea port in Sri Lanka as well as a new bridge in rural Laos. A part of one country’s project, the Belt and Road Initiative, that spans 3 continents and touches over 60% of the world’s population. Chinese president, Xi Jinping’s speech in Kazakhstan mentions the Ancient Silk Road: A network of trade routes that spread goods, ideas, and culture across Europe, the Middle East, and China as far back as 200 BC. He then says "we should take an innovative approach and jointly build an economic belt along the Silk Road" A month later, Xi in Indonesia says: "The two sides should work together to build a maritime silk road for the 21st century"
These two phrases were the first mentions of Xi’s legacy project, the multi-trillion dollar Belt and Road Initiative, or BRI. They’re also the two components of the plan. There’s an overland Economic Belt of 6 corridors that serves as new routes to get goods in and out of China. The BRI also includes oil refineries, industrial parks, power plants, mines, and fiber-optic networks -- all designed to make it easier for the world to trade with China. So far, over 60 countries have reportedly signed agreements for these projects. And the list is growing, because China promotes it as a win-win for everyone. Chinese president, Xi, calls the grand initiative "a road for peace."
However, Japan and the US remain sceptical about its aim and hint its aim in actually military expansion. For example, the BRI’s flagship project in Pakistan. Like many countries in Central and South Asia, Pakistan has a stagnant economy, and a corruption problem. It wasn’t a popular place for foreign investment, that is until China came along. In 2001, China offered to build a brand new port in the small fishing town of Gwadar. By 2018, the port as well as a highway and railway networks became a $62 billion dollar Corridor within the BRI. It’s where the Economic Belt meets the Maritime Silk Road. And it seemed to benefit both countries. Pakistan saw its highest GDP growth in 8 years and forged a tight relationship with a major world power.
Typically, to get investment from the West, countries have to meet strict ethical standards. But China has been offering billions of dollars, mostly in loans, with far fewer conditions. So, it’s no surprise the BRI has been a big hit with the less-democratic countries in the region -- China has signed agreements with Authoritarian governments Military regimes. Because of China's willingness to loan money to unreliable countries, many experts have called the BRI a risky plan. Eventually, these countries will have to pay China back but corruption and conflict make that payback unlikely. A recent report found that many countries indebted to China are vulnerable, including 8 that are at high risk of being unable to pay.
So why does China keep lending? Because there’s more to the BRI than just economics: In Sri Lanka, China loaned about 1.5 billion dollars for a new deep-water port. It was a key stop on the Maritime Silk Road. But by 2017 it was clear Sri Lanka couldn’t pay back the loan, so instead, they gave China control of the port as part of a 99-year lease. China also controls the strategic port in Pakistan, where it has a 40-year lease, it’s pushing for a similar agreement in Myanmar, and it just opened an actual Chinese naval base in Djibouti. These are all signs of what’s called the String of Pearls theory; It predicts that China is trying to establish a string of naval bases in the Indian Ocean that will allow it to station ships and guard shipping routes that move through the region.
So while China’s not getting its money back, its still achieving some very important strategic goals. The BRI is China's way of leveraging power to become a global leader, by building relationships and taking control of global trade -- Many also see this as China’s attempt of rebuilding an empire. By giving out loans on infrastructure development that are doomed from the start, China has been able to gain land in different countries which undermines the sovereignty of the said nations whilst increasing its own. What do you think are China’s motives? Globalisation or World Domination?
Credit: Vox on Youtube and the world economic forum
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