China is looking to rebuild the fabled “Silk Road” trade route through Asia and Europe, which is remembered — somewhat apocryphally — as one of the great commercial achievements of the previous millennium. (The last two millennia, in fact, give or take a century.)
China’s updated 21st century version will be a vast “network of roads, railways pipelines and shipping lanes connecting China to South Asia, Southeast Asia, Central Asia, Africa and Europe,” writes NPR. “With this in mind, China’s President Xi Jinping visited Pakistan last month, promising $46 billion in infrastructure investment.”
China has plenty of construction materials and capital on hand for the job. Success would evoke the glories of the ancient kingdom and assert China’s economic dominance across Asia, and well into Europe. That is not an attractive prospect for everyone involved.
NPR cites historical experts who say the old “Silk Road” was overhyped, and ancient China’s interest in foreign trade has been overplayed by modern history revisionists. That’s not a problem for the modern Chinese government, of course — the new Silk Road will be an exercise in myth-making, not a museum exhibit. Worse news for anyone looking forward to Silk Road 2.0 is that China might be talking a much bigger game than it intends to play. It has goods to sell, but perhaps not enough eager customers to justify a vast new intercontinental trade network.
A skeptical Financial Times puts the new Silk Road initiative (officially known as “One Belt, One Road”) in perspective alongside two banking initiatives as a Chinese play for global attention. “Protagonists say that the beneficiaries of investment and suppliers stand to gain from new infrastructure, energy pipelines, fibre optic and communications systems, and lower trade barriers,” George Magnus of Oxford writes. “It is also argued that it suits China to a tee. It could offset the effects of a falling investment rate and rising overcapacity at home, offer commercial sweeteners to potential anti-corruption campaign targets to co-operate with reforms, improve internal economic integration between the country’s advanced coastal and the more backward western provinces, and, importantly, spur greater financial integration including wider use of the renminbi.”
“Yet, this is to put the cart before the horse,” Magnus continues. “One Belt, One Road and complementary agencies such as the [Asian Infrastructure Investment Bank] could be transformative but not in the abstract, and only if they reflect Beijing’s pursuit of other long-term economic and political goals. These include catapulting China’s income per head to US levels, the embrace of open governance, the willingness of other nations to buy into China’s foreign policy, and the development of the renminbi as a reserve currency rather than just a more widely used vehicle for transactions. It will be necessary to see the commitment to such ambitions.”
Magnus observes that the maritime component of the new Silk Road would “inevitably require China to project its growing naval power further.” That’s going to sound like a feature, not a bug, in Beijing. In fact, it might be the primary point of the exercise.