In 2015, the China Development Bank announced that it would INVEST $900 billion towards rebuilding the ancient Silk Road. This time, however, the Silk Road will consist of a network of railroads, oil pipelines, ports, new financial institutions, and Special Economic Zones.
The project is absolutely massive and involves building a railroad from Beijing to Berlin, pipelines from Moscow to Shanghai, and the construction of numerous new cities and ports along the way.
The New Silk Road has been made into a major pillar of President Xi Jinping’s program, and has received significant media attention in China. Despite this, few Westerners are aware of this colossal project.
In addition to being the largest government-driven development package since the Marshall Plan, the New Silk Road has very dire geopolitical ramifications.
China’s expanding industrial economy requires a steady stream of natural resources to fuel it. China has relatively few natural resources within its borders, so the country is heavily reliant on foreign exports. Most of China’s natural resources come from nations friendly to the United States. Should tensions between China and the West escalate, the West could easily impose harsh economic sanctions and cripple the Chinese economy.
The New Silk Road helps mitigate this problem by providing China with the infrastructure to cost effectively import raw materials from new locations as well as improve Chinese relations with various resource-rich countries.
The New Silk Road can be divided into two sub programs: the Maritime Silk Road, and the Silk Road Economic Belt.
The Maritime Silk Road is China’s attempt at expanding its maritime trading presence. In order to accomplish this, the Chinese are building or improving ports in Malaysia, Indonesia, India, Sri Lanka, and Kenya.
An example includes the construction of a new city in Sri Lanka near the port of Colombo. The Chinese have ANNOUNCED a $1.4 billion project. This not only includes the construction of shipping infrastructure, but also hotels, shopping malls, skyscrapers, and a marina. The entire project is being BUILT on 270 hectares of reclaimed sea land.
It is to be connected to the Silk Road Economic Belt via the China-Pakistan Economic Corridor.
China faces many challenges in the implementation of the Maritime Silk Road which it does not face with the land route. Many of the necessary sea routes pass through the South China Sea. Neighboring countries, such as Vietnam, view the Maritime Silk Road as Chinese imperialism.
This contrasts with the land-based components of the New Silk Road: rather than aggravate the South China Sea crisis, they help mitigate it by providing China with an alternative export/import infrastructure that bypasses maritime routes entirely.
The land based component of the New Silk Road is the most important. The project involves the construction of railways, roads, pipelines, and new cities retracing the ancient routes of the old Silk Road.
The largest portion includes 10,800 KM of rail to connect China to Europe. Although shipping via rail costs more per ton than shipping via the sea, rail is roughly 10 days faster than the sea routes. This makes it optimal for exporting high added value goods, such as electronics, to Europe.
The width of existing railroad lines differs in certain countries, which presents a challenge to the New Silk Road. Soviet central planners feared that NATO would use existing Soviet railroad lines to supply and stage an invasion of Russia. As a result, shipments crossing in and out of these countries need to be transferred from one train to another. Part of the Chinese project includes the standardization of railway widths in the massive export processing zones on the Chinese-Kazakh border.
Part of the project involves the creation of oil pipelines to import from Russia to China. The main Chinese motivation is to reduce their oil costs. But the pipelines will have another, more geopolitically profound, effect. Russia is currently reliant on income from oil sales to European countries. When the EU sanctioned Russia after the Crimean invasion, the Ruble tanked. These pipelines will allow Russia to continue selling oil to China instead.
Connecting the land based Silk Road Economic Belt and the Maritime Silk Road is the $54 billion China-Pakistan Economic Corridor.
The bulk of the project involves building a network of highways across Pakistan, including a 1,100 KM motorway from Karachi to Lahore. Other transportation networks under construction include seaports, rail terminals, and most important, $2.5 billion in oil pipelines going through Iran.
Part of the project also includes the creation of 42 Chinese-backed SEZs in Pakistan. The zones include significant tax incentives, numerous tariff reductions, and regulatory harmonization.
Like most other aspects of the New Silk Road, the corridor’s purpose isn’t purely economic, but also geopolitical. India and Pakistan have a longstanding rivalry. India is a consistently pro-NATO country, and has had several armed clashes with China in the past. The China-Pakistan Economic Corridor is critical in cementing Sino-Paki relations, and might lead to a possible anti-India alliance.
The New Silk Road is a massive project, and there is much that this article hasn’t covered, such as the Asia Infrastructure Investment Bank.
President Xi Jinping hopes that the plan will generate $2.5 TRILLION in economic activity. Whether the plan meets its economic goals remains to be seen. Government infrastructure projects have a notoriously bad track record of success.
Even if the economic goals aren’t met, the China’s One Belt, One Road policy has numerous important geopolitical implications across the whole of Eurasia. Its land routes will allow China to bypass the South China Sea. Moreover, Its oil pipelines will allow Moscow to become less reliant on European oil sales. Furthermore, China's SEZs will strengthen relationships with its neighbors in Central Asia.
No Western nations are undertaking projects on the scale of the New Silk Road anymore. The few infrastructure projects Western countries undertake often suffer from massive delays and cost overruns, making the projects useless.
A new world order is emerging. A new Chinese world order.