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China’s Historic Silk Road is Resurrected from the Rubble

Posted by Kristal Arianne Calagui | February 21, 2018

China is leading an initiative to revive one of the largest feats of trade infrastructure the world has ever known.


Dating from China’s Han Dynasty, the Silk Road has stood sentinel for centuries — a network of trade routes linking the country’s commerce hubs to its biggest trading partners. Ancient records show that the route stretched from Chan’an, China (present-day Xian) in the far east, through India, Persia, Arabia, and — by its sea routes — as far as Europe’s Mediterranean coasts. The road not only paved the way for trade among these civilizations to flourish — it also served as a medium for cultural exchange. Massive changes in technology, transportation, and power dynamics over the centuries, led to the eventual abandonment of the road. Despite this neglect, the Silk Road has not been forgotten — nor has its inherent geographical logic escaped modern-day governments.


Reinventing the Road

More than 2,000 years after its creation, the road that changed the face of Chinese commerce is being revived. In 2013, President Xi Jin Ping introduced an initiative to construct a modern-day equivalent of the Silk Road as part of the country’s 2030 Agenda for Sustainable Development. The project is being called the Belt and Road Initiative (BRI) or One Belt One Road (OBOR). When completed, it will span over 65 countries, representing 60 percent of the global population and around a third of global GDP. The China Development Bank has reserved US $890 billion for some 900 projects. What prompted China’s government to undertake this behemoth task?  

China’s economy saw double-digit growth for almost 30 years, until the global recession caught up to it in 2010. Despite the slowdown, the country’s leadership shows every sign of wanting to continue expanding economic activity around the globe. With growth flagging, China needs vast amounts of energy and raw materials to maintain momentum. In a move criticized by some as neo-colonialism, it has become Africa’s largest trading partner, establishing trade zones in several African countries and importing 1.4 million barrels of oil a day from the continent. With similar economic interests in the Middle East and South America, China must find ways to facilitate expanding trade with these regions.

The project aims to facilitate free trade, more advantageous trade agreements for China, and better integration of financial systems (i.e. more banks carrying the Chinese yuan and easier currency conversion). It will also facilitate greater connectivity and communication between Chinese businesses and their global partners. Overall, China stands to gain a lot of control over economic development and infrastructure growth across the countries that BRI will cover.

To achieve all this, the initiative includes a two-pronged solution to reopen the road’s ancient land and maritime routes. The first is called the “Silk Road Belt.” If completed according to plan, it will reintroduce ancient land routes connecting China with Europe via parts of Central Asia and the Middle East. This will include a rail route stretching from Chongqing, China, through Kazakhstan, Russia, Belarus, and Poland to Duisburg in Germany. The second prong is the “21st Century Maritime route.” It will span global waters to facilitate inter and intranational trade, establishing new ports from along China’s southeast coast to Africa, the Mediterranean region and beyond.




Investments and Cooperation

“We will build an open platform, defend and develop an open world economy, jointly create an environment for development, and push for a just, reasonable, and transparent international trade and investment system so that materials can circulate in an orderly way and be allocated with high efficiency, and markets are deeply integrated.”

— President Xi Jin Ping

Since the project’s conception in 2013, international organizations including the World Bank have expressed an interest in taking part. In September 2016, China signed an MOU with the United Nations Development Programme that provided a framework for strategic collaboration between the two parties on the initiative. The collaboration will initiate a total of US $113 billion in funding to promote free trade, openness, and shared prosperity between countries.

The government, businesses, and media have all been quick to tout BRI as a groundbreaking move that will revolutionize global trade. China has emphasized that it sees the initiative as an important pushback against US policies favoring protectionism and isolation (for example, the Trump Administration’s 30% tariff on solar panel imports, enacted last January). 


Forecasting the Megaproject’s Future: Transforming the Global Trade Landscape

By facilitating exports and imports, incentivizing local and foreign direct investment, and increasing revenue along the new trade channels, the project directly affects multiple facets of China’s GDP. From an economic perspective the links initiated by the project will have a major impact on global trade by enhancing communication between suppliers, distribution warehouses, and manufacturers. With 64,000 km of rail route and highway proposed, we can anticipate some adjustment in the coming years for shipping and logistics operators — but in the long run the new routes may drastically reduce delivery and lead times for countless raw and finished materials, aiding a more seamless supply chain experience for Chinese companies and buyers of Chinese goods.

Despite concerns about the Belt and Road Initiative becoming just another buzzword wielded by Chinese tycoons to justify their expansion into developing economies, Xi Jin Ping is determined to see the project through at least to the end of his term. If all goes to plan, it will accommodate nearly $900 billion worth of projects and investments when finished. Plans for ports, bridges, tracks, railways, and other massive infrastructure projects such as motorways and wind farms have already been proposed.

Among one of the biggest projects is the $62 billion China-Pakistan Corridor, which will facilitate increased trade with one of China’s biggest allies in the region. Other notable projects include a port project in Sri Lanka, an industrial park in Cambodia, and a high-speed rail link in Indonesia — all of which are forecasted to spark major changes in global trade if they actually materialize.


Sustainability and Interconnected Economic Growth

The original beneficiaries of the Silk Road understood its vital role not just in facilitating trade, but in opening channels for communication and cooperation across different cultures and industries. Proponents of the Belt and Road Initiative claim that it will revive this spirit of collaboration. And despite the obvious privileges the project will accrue to China, there are glimmers of opportunity for real development in the other countries affected by the initiative.

As infrastructure is developed, trade agreements are expanded, and technologies flow across borders, business development will contribute to higher employment rates in the countries along the route. Overall, the project may provide more than just a short-term boost to trade — it may usher in a long-term strengthening of industry, infrastructure, employment, and GDP, across China’s ever-growing sphere of influence.