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10 October 2019
We still entertain romantic notions of the Silk Road: of silks, spices and porcelain borne by camel through mountains, oases, cities and deserts with evocative names like Sogdia, Samarkand and Transoxiana. For centuries, these trade routes were the commercial arteries of Eurasia, taking goods and people between China and the West.
China’s effort to revive the Silk Road is a far more prosaic affair – but no less consequential. Called the ‘Belt and Road Initiative’, it is a global development and investment strategy involving 152 countries designed to create a single economic area by linking markets with new overland and maritime trade routes – the eponymous ‘belt’ and ‘road’ respectively.
At the core of the project is the ‘Silk Road Economic Belt’, a 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 up Asian maritime trade
The 21st Century Maritime Silk Road has enormous implications for the container shipping industry.
It is designed to diversify China’s trade routes, increase market access to Europe and compete with the commercial dominance of the United States. By investing in the maritime infrastructure of target countries, China can exercise greater control and influence over the ocean passageways through which the majority of its seaborne trade travels.
As a result, China has been investing significant amounts into port infrastructure to equip them to handle larger and more numerous vessels. Major beneficiaries include Djibouti, Piraeus in Greece and Colombo in Sri Lanka, strategic points along the route. This has involved both renovation of existing port infrastructure and leasing out entire ports for redevelopment – China has leased the Pakistani port of Gwadar for 40 years, raising fears among India in particular about increasing Chinese influence in the Indian Ocean region.
The country has become the undisputed world leader in so-called ‘mega-infrastructure’ projects, exporting this expertise to the developing world. Today, roads and ports across Africa and South Asia are financed from Chinese coffers and built by Chinese engineers.There are even ambitious plans for a canal across the Kra Isthmus in Thailand, relieving the vulnerability of China’s overreliance on the Malacca Straits and significantly reducing shipping times between China and Europe.
Belt and Road has its critics
The scheme is not without its critics. The Chinese government has been accused of exercising a kind of neo-colonialism, using its economic heft and favourable bilateral deals to control and influence governments in the developing world – particularly in Africa and South Asia.
There are challenges, too, particularly to the maritime route. Disputed territories and competing national interests are a barrier to development, and China has found it difficult to corral various governments into action.
One of the larger hurdles is whether China will be able to secure the co-operation of India. The two countries have traditionally had a frosty relationship, and India is wary of China’s attempts to use investment and infrastructure development to gain strategic control over the Indian Ocean region. Indeed, many commentators in India have suggested launching a similar scheme to increase the country’s own influence at China’s expense.
Discussing the latest developments at Intermodal Europe
However, the Belt and Road Initiative has plenty of admirers outside China. It has been lauded as a truly international way to boost global trade volumes, leverage the global purchasing power of Asia’s rapidly growing middle class, and create an enormous – and profitable – economic area.
Intermodal Asia 2020 is hosting a day-long Belt & Road Initiative Forum, providing insights into the latest developments in the Belt and Road project, looking at logistics, technology, new routes, possible future expansion and shipper feedback. Global experts will join the discussion, including Muyuan Li, the Vice Chair & Secretary General of the China Container Industry Association who will outline the latest trends within China’s container industry.