Belt and Road: China’s Big Ambition for Global Trade

23 January 2020

China’s efforts to revive the ancient Silk Road is a gargantuan project. Called the ‘Belt and Road Initiative’, this global development and investment strategy involves 152 countries, and has even designed to create a single economic area linking markets with new overland and maritime trade routes—the eponymous ‘belt’ and ‘road’ respectively.

It has profound implications for shipping and trade over land and sea, and although it might lack the romance of the old Silk Road we find in art and literature in the West, it is something the entire intermodal industrial is paying close attention to.

At the core of the project is the ‘Silk Road Economic Belt’, the plan to create a single economic area stretching across Eurasia, encompassing the countries situated on the original, ancient Silk Road. It involves massive investments in ‘hard’ infrastructure—roads, railways, airports and seaports—and ‘soft’ infrastructure—trade agreements and legal structures. 

With a projected completion date of 2049, the Belt and Road Initiative will require $900 billion of infrastructure investments per year.

 

Opening Asian maritime trade

The 21st Century Maritime Silk Road is the official name of the sea portion of the project, comprising a programme of investment in global port infrastructure, and fostering trade links between a raft of countries in Southeast Asia, Oceania, and Africa.

One of the project’s priorities is to promote regional trade and boost the economies of China’s Asian neighbours. Not just a philanthropic gesture, Chinese investment into local infrastructure helps equip ports to handle larger and more numerous vessels, helping China to diversify its trade routes, increase market access to Europe and compete with the commercial dominance of the United States.

Investment has involved both renovation of existing port infrastructure and leasing out entire ports for redevelopment. Major beneficiaries include Djibouti, Piraeus in Greece and Colombo in Sri Lanka—each of which is a strategic point along the route—and the Pakistani port of Gwadar, which China has leased for 40 years to promote better connectivity in the Indian Ocean.

 

Looking to the future of shipping

In addition to the Maritime Silk Road, China has begun working with Russia to build an ‘Ice Silk Road’ along the Arctic Northern Sea Route to facilitate better connectivity with Europe for some regions of China. For a number of ports in northern China, the Northern Sea Route decreases travel time to Western Europe and the Baltic Sea by 25-55%.

There are also ambitious plans for a canal across the Kra Isthmus in Thailand, which would relieve the vulnerability of China’s reliance on the Malacca Straits and significantly reducing shipping times between China and Europe—it would potentially shorten transit for shipments of oil to Japan and China by 1,200km.

 

Belt and Road has its admirers

The Belt and Road Initiative has plenty of admirers outside China. It has been lauded as a truly long-term, international project to boost global trade volumes, leverage the global purchasing power of Asia’s rapidly growing middle class, and create an enormous—and immensely profitable—economic area.

China’s flexible, versatile approach to the project has attracted trade, particularly its strategy of relying on ‘soft laws’ such as memorandums of understanding, existing institutions and free trade zones rather than new institutions and supranational agreements. This has enabled it to adapt its strategy to local conditions, and ensure it doesn’t tread on the toes of other international bodies, such as with the EU when Italy, Greece and other European countries signed up to the initiative.

 

Discussing the latest developments at Intermodal Asia

Intermodal Asia 2020 will host a forum dedicated to the projects uniting trade between China, Asia and the world as part of the Belt & Road Initiative. Divided into two segments, part one will feature senior representatives from ports and terminals, while part two will provide a discussion on road and rail freight and the strategies helping countries across Asia and Africa develop their infrastructure.