Chinese is building two modern
silk roads, one by land and one by sea. It has been participated by
more than 60 countries. It is a $3 trillion infrastructure campaign funded
mostly by China. It would take about five years to complete. The idea is from
President Xi and was initiated in 2013. It is natural for China: use of
excessive infrastructure industry, higher wages in China, alternate routes for
energy / ores and rising internal market demands of foreign products. There are multiple purposes:
·
Improve transportation of products between China
and Europe and resources / energy from Middle East to China. From China to
Germany by train, it would shorten the fright time from 2 weeks to 14 days. The
cost would double and hopefully it will be reduced. Some goods have cost less
already especially in Western China.
·
It provides better market for Chinese products.
·
Enrich the wealth and living standards of the
countries between the routes especially the developing countries, which should
benefit when U.S. and the West reduce their foreign aids. China’s objective is
to make the poorer countries rich as a responsibility to the world. Most affected
regions should increase the GDP by 5% on the average.
·
Eventually China’s higher-value products will
catch up with the West and the U.S. When the developing countries are richer,
they are the target markets.
·
It would strengthen the western China and the
affected countries in economics, in politics and cultures.
·
It could reduce some conflicts. Philippines
received billions on the loan and has downplayed the islet conflict with China.
Hence the chance of Chinese military interference would be reduced.
·
China’s Yuan could be used as the reserve
currency instead of USD.
·
Improve China’s political, military and cultural
influences in these countries.
·
China needs their energy supply, natural
resources, energy, trade and road to Europe. Protect the important oil route by
providing one by land and one for sea.
·
Most infrastructure products are financed by
China and built with Chinese management and technologies, hence using China’s
excess capacity such as building roads and bridges.
·
In case of military disputes especially with US,
the land route would be an important alternate route to oil and other important
resources.
Many developing countries and provinces in west China will
benefit. Many projects will be financed via Asian Infrastructure Investment
Bank (AIIB),
which is mainly funded by China. China may supply most of their services such
as building factories or improving ports. However, China will not see their
profits from the investments in the short term. Some loans will be partly
donated to friendly allies. The major challenge is many countries with many
land in desert and semi-desert may not be able to pay back the loans.
China should concentrate on soft power by promoting mutual
respect and understand local cultures and reducing military conflicts such as
South Sea with Vietnam. All the signed contracts could be overturned when a new
governor comes into power. The participating countries should be careful on the
ability to pay back the huge debts. Some countries may not want to change from
their present lifestyles.
US is not participating in this campaign. We will not
benefit from these agreements and we will lose our influences to the developing
countries. However, some big projects require advanced technologies and they
will be supplied by US corporations such as turbines from GE. Honeywell and
Caterpillar will likely benefit. India may not participate due to the road thru
a territory claimed by Pakistan.
As in most projects, China will face problems and
challenges. Thailand and Indonesia are modifying their original railroad
projects. The project is easily accepted in developing countries but not in
developed countries such as EU. China is having its own economic problems. Some
projects may not pay back and China would end up losing money. China needs to
analyze the projects carefully. China has to settle the islet disputes in South
and SE China Sea. The natural resource prices are lower than 3 years ago.
It is better to invest in profitable infrastructure
projects than selling destructive weapons. Many finished projects such as the
major railway in Africa do not benefit China and even the host so far. They
need to select those projects that are beneficial otherwise it would be a waste
of resources. A train started from a Chinese city to arrive in London and
another one to Madrid. In general, it is faster than sea route and less
expensive than air fright. Or, it is more expensive than sea route and more
time consuming than air fright. Many products such as red wine are suitable to
ship by train. It also depends how far the products are from the closest
seaport or railway station. In general west China and their neighbors will
benefit more.
China has or will face challenges and problems. The finance
would drain China’s reserve funds. Many top officers in the countries receive
maximum benefits while their citizens are not. Need to resolve them by making
more jobs available to common citizens. Some current highways would be
abandoned. India will object due to her animosity with Pakistan. Russia may
have the own ideas and/or not investing enough in the part of their
infrastructure. The southern route would weaken the importance their northern
route. The rails among countries are not uniform and that’s why they have dry
docks to transfer goods from one rail system to another.
There will be reactions from U.S. and Japan from losing their influences in Africa and S.E. Asia.
Many countries in South East Asia have already been
benefited by Chinese investment and infrastructure. Under YouTube, search
“Cambodia China Anthony”. Here is one of the
series.
Links
Ethiopia Rail,
Pakistan,
review, Central
Asia
Trade: China’s
export
There are many articles on
this One Belt, One Road Initiative (OBOR): 1 2.0 (very good
from Germany), 3
Challenges
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