The New Silk Road Featured
- Written by Maja Jovanov
BELGRADE – On 16 and 17 December, Belgrade hosted a summit conference of the Prime Ministers of the People’s Republic of China and countries of central and eastern Europe, organized by the governments of Serbia and PR of China. The Prime Minister of the People’s Republic of China visited Belgrade for the first time since 1986.
The eyes of the local public are directed at the gathering, from which much is expected, not without reason. The House of Good News will present here the potentials of China, in the form of the restoration of the famous Silk Road, this time a marine road and a land road – through the Chinese foreign-policy initiative Economic Belt of the Silk Road.
The Economic Belt of the Silk Road
Two thousand years ago and later, caravans of camels and horses transported through the central part of Asia to Europe pepper, bales of Chinese and Persian silk, Indian cotton, Chinese rhubarb and precious stones. This exotic exchange came to an end when Portuguese seafarers opened marine routes linking Europe and Asia.
It appeared as if the Silk Road had become another loser in the history of globalization. But now the world’s second biggest economy, its biggest exporter and winner in the latest stage of globalization, the People’s Republic of China, has set itself an ambitious task, restoration of the Silk Road. Not one road, but two.
Last September the President of the People’s Republic of China, Xi Jinping, in a speech to students in Almaty, the capital of the large central Asian country of Kazakhstan, announced a new foreign policy initiative entitled the Silk Road Economic Belt conceived in Beijing as a stimulus to international cooperation and joint development throughout the Euro-Asian zone.
President Xi specified the following goals: boosting economic cooperation; improving road and rail linkage; upgrading trade and investments; stimulating the convergence of national currencies; and improving contacts between the citizens of the countries along the new Silk Road.
The Maritime and Land Silk Roads
The next month President Xi called in an address to the Indonesian Parliament in Jakarta for the restoration of a series of old marine routes aimed at establishing the Marine Silk Road of the 21st century. This would boost international linkages, research in the areas of science and ecology, and the fishing industry.
At last year’s East Asian Summit, the Prime Minister of the People’s Republic of China, Li Keqiang, emphasized the same goals. Since then the establishment of modern land and marine Silk Roads have become the official policy of China, backed by the powerful Communist Party and National People’s Congress.
The new land Silk Road will start from Xi’an, the ancient Chinese capital in the central part of the country. After Kazakhstan, it will follow a route south-west from Central Asia towards northern Iran, and further on through Iraq, Syria and Turkey.
At Istanbul the Silk Road will cross the Bosphorus and through Bulgaria and Romania follow on to the Czech Republic and Germany. From Duisburg it will continue to Rotterdam and then continue south towards Venice, a powerful trade power at the time of the medieval trader and explorer Marco Polo (1254 - 1324), when Europe was endeavoring to open up trade routes to Asia.
The Two Silk Roads will Link Up Three Continents
In Venice the land Silk Road should link up with the equally ambitious waterborne Silk Road, which would begin in Quang Ju, in the southern Chinese province of Fujian and continue to the southernmost province of Hainan before turning to the Malay strait. Through Kolkata in India, it would pass across the Indian Ocean to Kenya. The maritime Silk Road would then turn north to the Red Sea to the Mediterranean, reaching Venice after a stop in Piraeus. In this way the two Silk Roads will link up three continents.
According to Chinese media, interconnectedness at sea and the maritime economy represent areas in which pragmatic cooperation can first be implemented. It is believed that industrial parks in coastal zones, the construction of harbors and cooperation in other areas of maritime economy, such as artificial breeding areas, raw materials exploration, maritime transports and cross-border security will secure a good basis for the maritime Silk Road to bring benefits to those taking part in it. It is expected that China will be a key participant in the construction of a certain number of important harbors along the maritime Silk Road.
If the project were to be implemented without problems, it is estimated that bilateral trade between the PR of China and the ten members of Association of South East Asian Nations (ASEAN) could in five to seven years reach a figure of one trillion US dollars (in 2012 it amounted to 400 billion dollars).
According to some, a key role in the Mediterranean part of the Silk Road could be played by the Greek port of Piraeus, part of which is owned by the Chinese state-owned transport giant COSCO and already represents the main point for the importation of Chinese goods into Europe. Interest has also been voiced in China in the development and use of ports in Thessaloniki and Igoumenitsa, as well as several ports on the Adriatic Sea, including Bar in Montenegro.
Transit Time Reduced by Ten Days Using Piraeus
According to Prime Minister Li, concentrating exports to Europe in Piraeus already shortens the total travel time between China and Europe by at least a week compared with the traditional routes. Earlier Chinese exports travelled through the Suez Canal and on to the ports of Rotterdam, Antwerpen and Hamburg, and would continue to final destinations in Europe by rail. Now Chinese exports can go directly to Greece and be borne by rail through central and eastern European countries to western Europe, it is estimated that total transit times will be reduced from 30 to 20 days.
The new land economic belt of the Silk Road covers 18 countries in Europe and Asia with a total area of 50 million square kilometers and three billion inhabitants. It is an area rich in energy resources, minerals, agricultural output, tourist destinations, cultural monuments.
The economic belt of the Silk Road would be made up of roads, logistics centers, industrial facilities, new cities, oil and gas pipelines. The volume of trade between China and the countries encompassed by the economic belt reached last year 600 billion dollars, or 15 per cent of the total trade exchange of China with the world.
As industrial production in China has been increasingly moving from the coastal south-eastern regions towards the central and western ones of the world’s third largest country (almost 9.7 million sq. kilometers), the transportation of goods to Europe is becoming more complicated. Travel times to the coastal ports and half way round the world now lasts up to 60 days, which is an eternity for the latest I-Pods and other fashionable products. Now sporadic trains travel from Chongqing in south-western China to Duisburg in Germany in just 14 days, passing 10,800 km through Kazakhstan, Russia, Belarus and Poland.
Significance of Horgos Grows – Area Grows by 100 Times
This travel time could be reduced to ten days, if the state railways of Kazakhstan fulfill their promise to invest 44 billion dollars in the next five years in railways in the world’s ninth biggest country by area (2.7 million sq. km). In the first year after a Kazakh-China rail link was opened late in 2012 near Horgos, the volume of 40-foot containers’ transit from China to Europe through Kazakhstan grew by 80 per cent to 6,600. The figure for 2014 is expected to be 10,000, still seen as a modest number.
Eyewitnesses say the scale of China’s preparations to construct the Economic Belt of the Silk Road are visible in Horgos. During the Soviet era, for years the border crossing was closed owing to tensions with the People’s Republic of China. Although the crossing was reopened in 1983, the volume of trade was negligible until recently owing to the poor transport links.
The situation changed in the past years. The first to arrive was a gas pipeline from Turkmenistan entering China through Horgos. After that, China built a motorway to the border. The cross-border railway was completed in 2012, and a free trade zone was established alongside the border.
In September China elevated the status of Horgos, with a population of 80,000, to city, granting the local authorities more power in the sphere of land development. Official maps and statements now describe Horgos as the main inland port of China on the Economic Belt of the Silk Road.
The elevation of the status of Horgos increased its area by more than 100 times (it is now bigger than that of New York City). On the Chinese side of the trade zone investments have reached over 20 billion yuan (3.25 billion dollars), five several-storey shopping centers have been built in which Kazakhs buy Chinese tires, fur, electrical appliances and other goods. By 2017 the construction will be completed of a luxury hotel and an exhibition center. There are also new warehouses, villa complexes and industrial zones, a quick-procedure border crossing for articulated trucks and a new railway station.
The concept of the Silk Road is beginning to develop from neighboring areas to distant lands, including eastern and central Europe. This was especially visible during Prime Minister Li’s visit to Romania in November 2013, when he participated in the second summit of the People’s Republic of China and central and eastern European countries.
High-Speed Rail to Link Budapest and Belgrade
In a joint document both sides expressed a desire for the establishment of international railway transport links and special economic zones alongside them. It was announced that China, Serbia and Hungary had signed an agreement on the joint construction of a high-speed railway linking Belgrade and Budapest. In April and October 2013, respectively, two rail cargo links were opened linking Poland and China - Lodz-Chengdu and Warsaw-Suzhou.
Not all details of the Silk Road concept are known so far, as well as concrete funds. Some eastern European observers believe the concept could be profitable for central and eastern European countries which are focusing on strengthening ties with the People’s Republic of China.
Those countries are endeavoring to reduce their great trade deficit with China and attract investments from China. At the first summit of China and the central and eastern European nations held in the spring of 2012, the then prime minister Wen Jiabao announced a line of credit worth ten billion dollars for the countries of the region.
Certain central and eastern European nations have a strategic partnership with the People’s Republic of China, and the first such in the region was concluded by Serbia. For them the economic belt of the Silk Road is an opportunity to establish economic zones alongside the transport corridors with the aim of creating facilities for Chinese-made products.
The Silk Road is an Opportunity for Central and Eastern Europe
The Silk Road also represents an opportunity for better cooperation with the western parts of the People’s Republic of China, which represent an exit of that country towards Europe, and have greater economic growth than the average gross national product. This part of China could in the economic sense be more attractive for central and eastern European countries than cooperation with the eastern provinces, where very competitive multinationals have been doing business for years.
The Silk Road could also facilitate cooperation between local authorities in China and the central and eastern European countries – many projects are applied at local level.
The Silk Road could also represent a way to improve infrastructure in central and eastern Europe. New logistics routes could be a chance for the opening of Chinese distribution centers, either for more favorable trans-shipment and quicker transport to other destinations in the region, or for sending goods to the People’s Republic of China.
For funding the construction of the two Silk Roads China intends to use funds of the Asian Infrastructure Investment Bank, founded in October by 21 countries, with its seat in Beijing and authorized capital of 100 billion dollars.
Early in November, President Xi announced the foundation of a Fund for the Silk Road for the construction of “roads, railways, ports and airports throughout central and south Asia”. The Fund’s starting capital will be about 10 billion dollars, to grow gradually to 50 billion and not have any limitations.
The Chinese president said the Fund would be open for the active participation of investors from Asia and outside it. He said investments from private and state-owned firms in China would be encouraged.
The Asian Bank for Development estimates that funding infrastructural projects in Asia would require around eight billion dollars between 2010 and 2020. The People’s Republic of China could have a significant deal in this, given that its foreign currency reserves are almost four trillion dollars.
The Travels of Envoys of Jiang and Jeng
Two millennia ago, Jiang Qian, a diplomat from the Han Dynasty period, was sent as an envoy to the western areas, today’s central and western Asia. Six hundred years ago, Jeng He, a respected navigator from the Ming Dynasty (1368 – 1644), was sent abroad as an envoy heading a great fleet to seven journeys, the longest taking him to the Equator and east Africa. The travels of envoys Jiang and Jeng upgraded to a large extent the cultural and economic exchange and development between China and other countries, contributing to world civilization and progress.
Tourism is Becoming a Leading Industry along the Economic Belt of the Silk Road
Tourism will become one of the leading industries along the economic belt of the Silk Road, which covers western parts of China, central Asia and Europe, officials and experts in Beijing say. The Road is very attractive, and tourism will be a leading industry of the economic belt of the Silk Road, Pavlos Geroulanos, the former Greek Minister of Tourism and Culture, said at a gathering held in China.
The city of Xian, which lay at the beginning of the ancient Silk Road, should advance the development of tourism. Xian was the capital of more than ten dynasties of ancient China, including Qin (221 – 206 BC) and Tang (618 – 907 AD). The city of several million proudly displays its renowned tourist attractions like the Qin Shi Huang museum of ceramic warriors and horses.
In the first half of this year, a total of 43.6 million people visited Xian, including 530,000 foreign tourists.
Alongside the economic belt of the Silk Road there are major opportunities for tourism, including many cultural monuments and landscapes in central Asia, Jiang Yong Ke, the president of the tourist administration of Xian, has said.
Source: House of Good News