Illustration: Lommes. Source: Wikimedia
In 2013, China’s President Xi Jinping announced plans to connect East Asia and Europe via a network of rail, road, and sea routes to facilitate trade, cultural exchange, and open flows of capital and people. Shortly thereafter, China announced that over $160 billion of infrastructure projects were in planning or construction along the way, projects like a 700 MW hydropower station near Islamabad, Pakistan, or extending the current Eurasian Landbridge – a 7,000 mile rail service between Chongqing and Warsaw. This freight line has cut shipment times between China and Europe from 36 days by sea to 16 days by rail.
This isn’t just a “New Silk Road” – the overland trade route through Persia and Central Europe that facilitated textile and spice trade during the time of the Mongol Empire. That fell apart due to regional fragmentation and excessive transport fees charged by regional powers. Instead, Xi wants to integrate the Chinese economy more deeply into the world economy – via investment, through education, through technology, and by starting new multilateral institutions like the Asia Infrastructure Investment Bank.
The Belt Road Initiative is like a Marshall Plan for Asia. By building more ways to connect China’s manufacturing powerhouse to Europe’s consumer economy, Xi can promote China’s interests without investing heavily in a blue-water navy. In addition, a land connection will promote growth in the perennially backward Xinjiang and Yunnan regions in the west, and among China’s restive Uighur people.
Xi has learned his economics and history lessons well. More trade means more influence and greater overall prosperity. And it also puts China at the center of Asia’s economic growth.
Douglas R. Tengdin, CFA
Charter Trust Company
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