The Silk Road
Do you ever stop to think for a moment how far some of the goods and products we use and consume have travelled to get to us the customers? Take for example a cell phone, it could be designed in America, assembled and programmed in china but the raw materials have made their way from various parts of the world. The silicon chips and tiny bits of minerals like gold could have come from Sierra Leone; the battery from Zimbabwe, Tibet, Australia or Chile; the electronics from Congo, Zambia or DRC; the amplifier, vibrators and receivers from South Africa, Rwanda or Uganda. That’s a lot more than a most human beings travel during their lifetime.
All of this requires intensive logistics, structured planning, and contingency planning in case one of the countries fails to deliver due to political tensions for one. It would not be in Apples best wishes to halt production of millions of phones and lose millions in revenue due to one countries failure to deliver. Nothing can go wrong.
Now imagine if there was one geographical route that linked a large network of areas to produce not one product but to incorporate several raw materials sources, manufacturers, producers, religions, ethnicities, ideologies, technologies all with the aim of improving and spreading goods as far as they could reach with half the logistical effort and risks. Not only would this improve customer service but international relations, product quality due to constant innovation, entrepreneurship, productivity and livelihoods of the populations involved in the form of employment. It seems like a wild project but the world is what it is today because it has already been done before and was known as ‘The Silk Road’.
The Silk Road is a route that interconnected East, South East and South Asia, Persia, The Arabian Peninsula, East Africa, Southern Europe and it came about due to China’s expertise in silk production hence the ‘silk’ part in the name (V. Elisseeff, 2001). It is believed China structured this economic route in the second century BC with china dominating the silk industry for a thousand years.
Silk was used throughout Eurasia as a luxury material where in China for instance it was only worn by the emperor and his most important officials. In some places it was the ideal clothing due to its lightweight smooth material which made it versatile when dealing with fluctuating weather. Its other uses were fishing lines thanks to its toughness when braided, this encouraged countries from the other side of the continent to buy silk from China.
Other than silk they also performed syncretism which is the synchronization of different ideologies and practices. Syncretism is what made it possible for Buddhism; the first wide spread missionary movement in the world (R, Emmerick. 1987); to exist and other religions such as Judaism and Christianity to spread.
Traders also traded numerous other good such as wine, olives and their oils, iron, silver, gold, ivory, spices and many other different goods (Brittanica, 2020). This was an example of globalization before we knew what globalization was. Mongols were crucial to the success of Silk Road because they were constantly on the move. This made it much easier for them to be the main source of moving goods from one point to another and add a markup on prices as they moved the products.
On the other hand all this trading of goods means that these goods travelled much more than the people selling them meaning they get into contact with several other people before they reach the end of the line at the users. This led The Silk Road to become a major vehicle for the bubonic plague which led to the death of one third of the continents population (A, Lawler. 2016).
The Silk Road began to disintegrate after the fall of the Mongol Empire back in the 15th century AD. All this mixing and mingling ended up being the downfall of the mighty Route by causing disagreements and distrust between many powerful Empires and political states which only worsened after the bubonic plague had taken its toll. The Ottoman and Safavid Empires attempted to revive The Silk Road but failed due to tensions arising between each other and the trade bloc eventually fell completely during the 1720s after the Safavid Empire collapsed.
The Belt and Road Initiative
If you are reading this right now it is highly likely that the product you are using has had some form of Chinese influence in order for it to have made it into your hands. This highlights how much and how fast China has developed its economy over the decades in order to become the world’s largest exporter of goods since 2009 accounting for 12.4% of all global trade ($4.6 trillion dollars) (M, Jahn. 2020).
According to the above image you can see that China is the only one selling more than they are buying and this is due to their ability to produce much more efficiently than other nations in terms of speed and volume of production. As the world’s largest producer the Chinese government had the idea of recreating the Silk Road and modernizing it in order to make their goods flow faster and easier throughout the world therefore increasing their influence over global politics and global markets. According to the Chinese government this is “a bid to enhance regional connectivity and embrace a brighter future” whereas other countries such as the USA are skeptical of the move and view it as a conquest for world domination (A, Chatzky. 2020).
China’s foreign policy is more focused towards Africa Asia and the Caribbean seeing as the US has more Political, economic and military influence over Europe, East Asia and the Middle East. Chinas foreign policy is one of “hide one’s talent and bide one’s time” which stems from their Marxist-Leninism ideologies which has led to a totalitarian government. This gives it an advantage over other superpower countries like Russia or America because it allows president Xi to make decisions with no real opposition therefore less time to debate and more time to strategize (E, C, Economy. 2010).
How can they manage to do accomplish such an expansive operation? For starters they would need several countries to open their doors to the Chinese markets so they can sell goods at high volumes in order to make goods cheaper for the receiving end. This means access points will need to be built for ease of access of goods from around the world. In order for these access points to be effective the routes to these access points must be highly effective to further enhance efficiency of trade and reducing the logistical nightmare therefore keeping prices low and make it sustainable.
The best way for this to be done was to use the means of transport we already use today such as trucks, ships and trains and optimizing the routes to increase flow of goods to and from China. The project was announced in 2013 and its estimated cost will be far above $1 trillion dollars by the time they plan on finishing it in 2049 which will be the 100th anniversary for the People’s Republic of China. 138 countries (65% of the world’s population) have signed up for this already with China holding just over a quarter of the voting rights (A, Chatzky. 2020).
The new Silk Road is being funded by AIIB (Asian Infrastructure Investment Bank) and Asia and is currently to the tune of $160 billion which are currently being developed or in the process of planning (W, Shepherd. 2017). Unfortunately due to COVID-19 and its harsh economic impact most projects had been halted or stopped completely with some countries asking for debt forgiveness and defaulting on their loans (B, Mahmood. 2020)
The advantages of this initiative are fairly clear and plenty depending on which party you are. Firstly for the Chinese:
• This allows them to produce much more than they are currently.
• It provides them with economic and political clout with the chance of becoming the world’s largest superpower state.
• Increase in production equates to increase in jobs available for their population
• China will either be the beginning or the end of most trade.
• Easier access into faraway places and places which would otherwise place import/export tariffs on trades.
For countries who are in the region or involved in the plan:
• Opportunity for national development.
• Opportunity for higher employment of their populations.
• Chance to become less dependent on American and European goods and services.
• Become more of an exporter than importer.
• Cultural and religious integration.
• Improved technologies and ideologies.
• Cheaper goods and services.
• Less political, social and economic requirements to become a part of the initiative.
For China one of the major disadvantages is that a lot of the countries involved are underdeveloped therefore unable to build the necessary facilities and infrastructure on its own. This then pushed the Chinese government to launch several projects and loan schemes within these countries to build the infrastructure for them. In the long term however this becomes an advantage for the Chinese because they either retain most of if not all control of these projects once they are up and running if the relevant governments fail to pay their dues for the projects.
For countries within the deal disadvantages could be:
• Markets being flooded by Chinese products therefore reducing their own output and causing the threat of becoming dependent on Chinese goods.
• Inability to provide input on certain things already predetermined by the Chinese government.
• Too much Chinese influence on their population.
• Opening up their countries to Technologies they may not fully understand.
• Disease outbreak and global pandemic.
• Falling into a debt trap.
Seeing as most of the countries that are not part of this deal are countries which have a lot of political power already the main disadvantage for them is that power being significantly taken away by the rise in Chinese influence.
An additional disadvantage for all of us globally is the ecological costs that arise from all this development. Forestry will have to be cut down ballooning the effect of erosion and runoff into the ocean as well as floods and landslides, Species will lose their habitats further disrupting the food chain, ocean traffic increase will disturb marine life and their habitats; and climate change will speed up significantly due to all the extra emissions being produced by more boats, trucks and trains plus the fossil fuelled power stations being developed.
Since the 2nd belt and road forum in 2019 there are officially 35 corridors and projects included within the BRI therefore we shall go through the main ones.
New Eurasian Land Bridge
This strip of road is planned to run 11870km from the City of Xinjiang in China to Rotterdam in Holland passing through Belarus, Kazakhstan, Poland, Germany, Russia and many others (M, Hatipoglu. 2019).
West Asia Corridor
This route connects China with Turkey and into Europe using Azerbaijan, Georgia, Albania, Armenia, Bulgaria, Iran, Iraq, Israel, Jordan, Montenegro, Kazakhstan and several other countries. On November 7th 2019 the first train set off from China to Europe reducing travel time from China to Turkey by 16 days. This route is also known as the Iron Silk Road (M, Aydin. 2017).
Maritime Silk Road
This is an ocean route that already existed during the 15th century and the present day version is roughly the same with a few alterations. This route connected several ports with each other making sailing logistically efficient and faster while increasing the traffic which the Chinese government plans to exacerbate further (K, C, Guan. 2016).
China-Indochina Peninsula Corridor
This corridor connects Cities like Bangkok, Kuala Lumpur, Hanoi, Vientiane, Phnom Penh and Singapore to Southern China by means of a 5000km railway. This is one of the major routes in the whole initiative because these cities are already part of the ASEAN-China free trade deal so this could see that deal reaping significant benefits.
China-Pakistan Economic Corridor
This route plays a role in connecting China to the Indian Ocean coast using Pakistan and as of 2020 projects in this zone are worth over $70 billion. This deal consists of motorway expansion, special economic zones and energy production. The railway line leading from Karachi to Peshawar will be renovated to improve the speed of trains using it in order to allow them to move as fast as 160km/h, additionally, 1100km long of the roads have been resuscitated (I, Alam. 2015).
The plan is to alleviate Pakistan’s energy shortage therefore they plan on constructing one of the world’s largest solar farms as well as including hydroelectricity and wind powered farms however a large majority of the planned 10400MW of energy is planned to be produced by fossil fuels with an effort to construct pipelines bringing in gas from Iran.
Projects vary from airports, seaports, telecommunication hubs, railways, highways and gas lines with the largest construction projects being constructed within Pakistan for an estimated $31.9 billion, Nigeria coming in second at $23.2 billion and Bangladesh coming third at $17.5 billion. Other than China most of the investment came from Singapore providing $24.3 billion, Malaysia investing $14.1 billion and Russia giving $10.4 billion all over a period of 4 years from 2014-2018. Some projects range from loan schemes in the range of 5-100 years from the Chinese government to the receiving countries.
Regional Comprehensive Economic Partnership (RCEP)
On 16 November 2020 The world’s largest trade bloc was formulated between 15 Countries, 10 of which are Southeast Asian and the others being South Korea, China, Japan, Australia and New Zealand. This deal leaves out the USA which withdrew from the Trans-Pacific Partnership soon after Donald Trump became the president of America.
This is the first trade deal between rivals China, South Korea and Japan and overall accounts for 30% of the world’s total GDP ($26.2 Trillion). The deal is aiming to have technology as the cornerstone between trades of the fellow countries and is extremely significant in China’s quest to recreate the Silk Road.
Notable exclusions from the deal are India and Pakistan; India choosing to take on a role as an observer in the beginning of the pact with an option to join later. India has stated it is reluctant to join immediately as it believes its sovereignty and control over its oceans are at risk.
The process to finalize this deal could take up to 2 years and so far it has taken 8 years of planning for us to get here. Currently there are no environmental protection laws or set labour standards included in the deal which has caused some resistance worry in the public seeing as a cleaner and more equal post pandemic future is hoped for globally.
This deal is predicted to grow global national income by $186 billion by 2030 and improve the economies of the signed states by 0.2%. Furthermore, some of the signed countries already have free trade agreements which have been viewed by experts as more complicated that the RCEP which could see businesses in member states have more options for suppliers in the region. This deal is only the beginning in the new Silk Road initiative and is already bigger than deals signed by America-Canada-Mexico and the European Union (P, Petri. 2020).
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