China’s Silk Road: Making a Comeback

BusinessChina's Silk Road: Making a Comeback

China’s Silk Road: Making a Comeback

The saying “history repeats itself” is coming true in China. The country is aiming to revive the majestic Silk Road, something most people know from ancient history classes, into a modern (and controversial) geopolitical system that could rock the global economy.

Ancient Silk Road

Around 200 BC, trade routes began to grow through China, India, Persia, Arabia, and other countries, with Chinese silk the hottest commodity. Routes grew for centuries and played a major role in developing civilizations in China, India, Persia, and Europe and in creating the early stages of international relations among the regions. Aside from goods, cultural trade also grew, and traditions, religious thought, and political ideology passed along the routes. The Silk Road shaped multiple cultures and civilizations we know today.

Modern Silk Road

China's New Silk Road
In an attempt to become as large and influential as the original Silk Road, Chinese president Xi Jinping first introduced the idea of a Silk Road Economic Belt in 2013, with the goal of providing financing help for transportation infrastructure throughout Central Asia.  China is calling its modern Silk Road initiative “One Belt, One Road” in an effort to revive trade across Central Asia and Europe with two new trade corridors: one by land and one by sea. The plan is to create a network of railways, highways, and ports to enable trade—a move that could be the biggest geopolitical undertaking since World War II. The projected map includes routes to and from China through countries including Indonesia, India, Kenya, Greece, the Netherlands, Kazakhstan, and more.
The project will likely take decades to complete and will have a final price tag in the tens or hundreds of billions of dollars. China created a Silk Road Fund with nearly $1 trillion of government money, some of which has already been used to finance a hydroelectric power project in Pakistan and a liquefied natural gas project in Russia, and there is room for plenty of other banks and organizations to get involved in the funding. President Jinping is encouraging state-owned businesses and banks to invest in construction and infrastructure to move the project along.

China’s Motivation

So far, the project has turned out to be a controversial one for China. The country has a number of motivations for starting such a project, many of which support its own self-interests. However, China seems to be trying to demonstrate that its main goal is to help the region grow economically and structurally. For starters, creating new trade routes gives Chinese manufacturers a place to grow when the domestic market begins to slow. Making it easier to send goods to much of the world greatly expands their potential customer base and market opportunity. There’s also the fact that adding transportation and manufacturing to underdeveloped areas of Central Asia could help revitalize the area and help reduce the risk of extremism leading to civil unrest for the 10 million Uighar Muslims in western China.
However, most analysts seem to agree that China’s motives aren’t as pure and well meaning as they appear. The Silk Road could also push back against the United States after decades of dominance on the global stage and give China a leg up on the U.S. in terms of physical trading routes and ports. By being the leader to connect the continents, China could gain major military and economy allies and power. With China pouring money and resources into the ASEAN region, countries will prosper and have China to thank for it, which could lead to increased power and prestige.
“It is not an economic project, it is a geopolitical project—and it is very strategic,” said Nadège Rolland, an analyst at the National Bureau for Asian Research. His thoughts have been echoed by government leaders, private business owners, and foreign policy analysts around the world who seem to be slightly wary of supporting the project.

Global Effects

China’s official stance is that the new Silk Road is a public service to the rest of the world, especially Asia, the Middle East, and Europe. Though some say China’s main motivation is to showcase its political power and gain influence, there’s no doubt that the completed project could have a major global impact. Eased visa regulations could lead to regional cruises and vacations, film festivals, jointly run schools, and more. Increased infrastructure leads to more economic and manufacturing growth. Just like the original Silk Road was a large economic and cultural boon centuries ago, so too could a new Silk Road lead to increased trade agreements and a more stable and connected global economy.

Future of the Project

China is actively working on various projects related to the new Silk Road and hopes to make quick progress on the long-term project. It has had support from many countries throughout the region, but not everyone is on board. Time will tell if China can gather the support it needs to complete its ambitious Silk Road and how it will effect the economic and geopolitical face of the world.