CHINA: ONE BELT, ONE ROAD

china-silk-roadCHINA: ONE BELT, ONE ROAD

One of the main elements of China ’s strategy to acquire a superpower status is the “Silk Road Economic Belt and the 21st-Century Maritime Silk Road”, launched at the end of 2013 by President Xi Jinping.

It was released as an official document at the end of March 2015 by China’s National Development and Reform Commission, together with its ministries of foreign affairs and commerce, and it is often shortened to “One Belt, One Road.”

One Belt, One Road calls for increased diplomatic coordination, standardized and linked trade facilities, free trade zones and other trade facilitation policies, financial integration promoting the Chinese currency, the renminbi (RMB, yuan), and people-to-people cultural education programs throughout nations in Asia, Europe, the Middle East, and Africa.

Although the exact details of One Belt, One Road vary by map to map and proposal to proposal, generally, the overland belt, comprising roads, rail links, energy pipelines, and telecommunications ties, seeks to link China, Central Asia, the Middle East, Europe, and Russia.

The maritime “road” will sail from China’s coasts through the South China Sea, the Indian Ocean, the Red Sea, the Mediterranean Sea (through the Suez Canal), with stops in Africa along the way. One Belt, One Road builds on earlier calls by Chinese academics to “march West” as a response to the United States’ strategic pivot to Asia.

One Belt, One Road serves foreign policy goals as well: the dual plans will also expand Beijing’s ties to major developing countries, and build support for a reshaped international system that puts China at the center of world power. Strengthened bilateral ties with nations along the dual trade routes will support China’s ambitions to build a network of non-Western international organizations in which China plays the main, if not dominant, role.

One Belt, One Road – from China to Piraeus

The One Belt, One Road project, with its emphasis on high-visibility infrastructure projects, targets key littoral states located along the great trade routes in the Indian Ocean. This critical ocean region, extending from Australia to the Middle East and South Africa, is likely to determine the wider geopolitics, maritime order and balance of power in Asia, the Arabian Gulf and beyond.

Through its Maritime Silk Road, China is challenging the existing balance of power in the Indian Ocean. Its effort involves securing port projects along vital sea lanes, building energy and transport corridors to China through Myanmar and Pakistan and assembling a “string of pearls” in the form of refueling stations and naval-access outposts along the great trade lanes. The Maritime Silk Road project is driven by the belief that the maritime domain holds the key to China achieving pre-eminence in Asia. In this light, the new Asian order will be determined not so much by developments in East Asia as by the contest for major influence in the Indian Ocean.

Since President Xi Jinping articulated the goals of the One Belt, One Road project, it was meant to be a grand strategy, by integrating the domestic needs of economic restructuring with the international ambitions of expanding China’s diplomatic and economic influence.

One Belt, One Road encompasses 64 countries, 4.4 billion people, and a combined economic output of $21 trillion (about twice the annual gross domestic product of China, or 29 percent of global GDP). This is literally China’s economic diplomacy for half of the world, under one single policy framework and Beijing is interested that nothing internationally should stand in the way of its execution.

Analysts consider that this may be the motive for the announcement, at a Foreign Affairs Ministry press conference, on June 16, that Beijing would soon conclude its land reclamation projects in the South China Sea. While Beijing’s South China Sea policy hasn’t changed and Beijing hasn’t changed its claims to the area, its current policy is seen as potentially conflicting with One Belt, One Road, because it is damaging China’s relationships with the Association of Southeast Asian Nations (ASEAN), countries on which the success of the Maritime Silk Road depends.

In fact, all 10 members of ASEAN have joined the Beijing-led Asian Infrastructure Investment Bank, one of the financial arms of One Belt, One Road, thus signaling their desire to partake in its economic opportunities. But the persistence of South China Sea tensions and China’s growing military clout in the region will dispose them to view One Belt, One Road in geopolitical terms, not in terms of economic cooperation.

Beijing is realizing that excessive and ongoing tensions in the South China Sea are detrimental to its larger foreign-policy interests. Given the greater ambitions of One Belt, One Road, the South China Sea project should not be allowed to hijack or distort the overall direction of Chinese foreign policy.

Another significant aspect is the fact that Beijing’s announcement came just before the seventh U.S.-China Strategic and Economic Dialogue, an annual series of top-level bilateral meetings, and also several months before the biggest event of Sino-U.S. relations for 2015, President Xi’s state visit to the United States in September, and the planned IMF meeting that might decide whether to include the yuan in the SDR reserve currencies. The maritime western end of the One Belt, One Road project is the broader Mediterranean region, of real interest for China in terms of both energy security and trade. In order to provide the Silk Road with a western maritime outlet, Chinese companies have poured considerable resources into modernizing and expanding Mediterranean ports, including the Port of Piraeus in Greece.

The broader Mediterranean region, and extending down to the Gulf, is also an important source for China’s supply of energy, which is absolutely crucial to fuelling China’s industries and modernization. China’s energy interests in the region may expand, as the eastern Mediterranean emerges as a new source of oil and gas.

In the Mediterranean area, the Chinese “Belt” reaching Piraeus has as a main actor the China Ocean Shipping Company (Cosco) , the communist state’s first freight company, founded on April 27, 1961 by Mao Zedong.  Almost 54 years later, Cosco is steering toward acquiring the majority of the Greek state’s share in Athens’ Piraeus Port Authority. So far, it is the most promising bidder.

Aside from Cosco, which is considered the front runner, port operators from Denmark, the Philippines, the United States and the United Arab Emirates have expressed interest. If Cosco prevails, Piraeus would then be completely in Chinese hands. China is thinking far into the future. Piraeus is the closest port in the northern Mediterranean to the Suez Canal. From here, it can conquer the EU domestic market. Recently, three freight trains began leaving the port each week.

When Chinese Prime Minister Li Keqiang visited the port in June 2014, Piraeus was described as China’s gateway to Europe: China’s exports could reach Germany, Hungary and Austria between seven and 11 days faster. Huawei, the electronics conglomerate, has already opened a logistics center right at the port.

In fact, analysts note that in the European region, China is acting in a similar way with the global powers, targeting the EU’s weaker, less protected economies, such as those of Greece, Spain and the Balkan countries.

 

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