In 2013, President Xi Jinping stood at the official podium in Astana, the capital of Kazakhstan and announced the revival of the 4th century BCE’s 6,437 km long silk route that would allow the world’s largest land-locked country to have a share in the economic development of the future. The original silk route stretched across formidable areas like the Gobi Desert, but the present initiative, a pet project of President Xi would, in ten years has metamorphed into the Belt and Road Initiative (BRI), covering Asia, Europe, Africa, Oceania, and Latin America.
As per the council on foreign relations, the silk route was developed during the westward expansion of China’s Han Dynasty (206 BCE–220 CE). It ensured that trade networks reached Europe, while passing through inhospitable terrains of Central Asian countries of Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan. In India, the route extended right to the Bay of Bengal. Thus, Europe and Central Asia began a wave of ancient globalisation where silk, jade, spices moved to Europe while gold, ivory etc came to the east.
History, as they say contains the most important lessons as it frequently repeats itself in different garbs. Yet, even as President Xi announced the initiative in Astana and repeated the same in Jakarta soon after, the western powers barely noticed, not able to recall the impact and import of the ancient silk route to world economy. Until sometime ago! Today, nearly 155 countries have either signed up for BRI or are in the loop, accounting for close to 50% of global GDP. The BRI is not an encore of the ‘silk route’. Not just roads, but ports, buildings, economic zones, railways, airports, coal fired power plants, dams, etc have been developed in BRI. As per a Chinese political science review article, since 2015, BRI has included a “Digital Silk Road,” also called a “community of common destiny in cyberspace” that includes Chinese 5G networks.
By the time the West truly woke up, 18 of the EU’s 27 members had signed up for BRI including Greece, while almost the entire African continent had already become a part of the scheme. In October 2020, trade between China and BRI partners totalled US$7.8 trillion (China daily).
(Countries in BRI: Source : Council on Foreign Relations)
According to some opinions, what really seemed to have alarmed the west wasn’t just the spreading influence of China or the potential trade impact of $7 tn per year (Centre for Economics and Business Research) or the huge security and military implications involved. The major fear was the potential use of the Chinese currency, the Renminbi across the BRI sphere. That would be the first real challenge to the dollar and hence to the west’s domination of global economics.
As the BRI juggernaut rolled on unabated, it wasn’t the west that really put the brakes on it. It was the Chinese!
Inside Kazakhastan, near the China border, in the middle of nowhere, lies a grand rail Khorgos Gateway. Touted as the dry port for Europe entry, it is in serious trouble due to alleged fraud and concerns over the initiative being a backdoor for more sinister Chinese geopolitical ambitions (The Atlantic). In Pakistan, the China Pakistan Economic Corridor (CPEC) was supposed to get $60bn investment right upto the Gwadar port. That level of investment hasn’t happened and neither have the promised returns come to Pakistan (The Economist). The recipient country is now turning to Saudi Arabia and the IMF for a bailout, while the Gwadar port is rumoured to have docked Chinese ships as it is administered by them. A similar story of indebtedness repeats for the Hambantota International Port in Sri Lanka. Here too the revenues did not accrue and given the huge indebtedness, the port was handed over to the Chinese for a 99 year lease.
here is growing unease amongst the partners of BRI regarding the Chinese ‘loans’ as they come with stringent conditions of giving contracts only to ‘opaque’ Chinese concerns at exorbitant prices. AidData, a US based research group says that whereas IMF restructuring loans come at around 2% interest, Chinese ones come at 5% and the BRI countries are being forced to come only to Chinese banks for debt rescue (Council on foreign relations).
Once the west began to comprehend the issue in totality, compounded by the fact that $10bn Chinese investments in BRI energy projects etc were in non-renewables and only $50m in renewables (Council on foreign relations), the US, starting from Obama administration began the counter process of building infrastructure and trade in low-income countries. However, none of the initiatives really had the financial muscle needed, including the Build Back Better World Initiative (B3W) of President Biden. Indian and Japanese initiatives also fell far short; even the Indo-Japanese Asia-Africa Growth Corridor (AAGC). Meanwhile, the Chinese had obtained control of the precious Piraeus port south of Athens, owing to the economic woes of Greece. The US and allies have had a tough time, weaning the beleaguered Greece away from China, halting its inroads deep into Europe.
The result is the G20 announcement of rail and shipping corridor linking India with the Middle East and Europe, which President Biden said is, “a really big deal.” The corridor is designed to help boost trade, deliver energy resources and improve digital connectivity and includes India, Saudi Arabia, the United Arab Emirates, Jordan, Israel and the European Union.Jake Sullivan, Biden’s national security adviser, has stressed on ‘effective American leadership’. Some people opine that the immediate granting of a seat to the African Union at the G20 table is in part an effort to wean Africa away from the Chinese. In the coming months details of the corridor, along with investments in Africa and middle East will be determined and the project started with a bang, it is hoped. Meanwhile, BRI has only slowed a bit and remains a major force.
History writes that the Venetian traveller Marco Polo (1254 CE-1324CE) travelled extensively on the silk route and provided valuable insights into business, economy and politics. It seems that the West is learning those lessons now, a decade later than needed.
(Disclaimer: The views expressed are the author’s own).
Parneet Sachdev is a Consultant, Author, former Principal Chief Commissioner Income Tax. He has also written best-selling books, including “The Six Secrets of Life.”
