Pakistan’s Prime Minister Nawaz Sharif praised Xi Jinping Thursday at the 2014 Boao forum for his “visionary concept” of the New Silk Road, revitalizing discussion on the topic. In a session titled ‘Reviving the Silk Road – A dialogue with Asian Leaders’ he stated that the increased trade and economic relations will bring prosperity to the region.
In the modern world, it’s access to markets and communications links that define the development of a country. China, realizing the importance of infrastructure, combined with its need for growth, embarked on an epic building boom in the early 21st century. The importance of having comprehensive road, rail, mass transit and port networks cannot be underestimated. The utilization of such has allowed the Chinese economy to prosper and grow.
Looking at the next stage of its development trajectory, it has identified Central Asia as playing a key role in its development along the New Silk Road: it was no coincidence one of President Xi Jinping’s first trips abroad was to the region, securing energy deals and pledges of increased security and economic cooperation. China is already the largest trading partner of four out of the five former Soviet Republics (the exception being Uzbekistan), and a main source of foreign investment. Trade between the region and China stands at around USD 46 billion and is set to expand.
The Silk Road Economic belt, as described by President Xi, will aim to provide much needed and integrated infrastructure along new road and rail links that are currently under construction. These arteries will carry fiber optic cables and pipelines across the region creating new towns, manufacturing hubs and transportation crossroads. The development of these sectors will help Central Asian countries move away from their dependence on trade in natural resources to more balanced economies based on trade, manufacturing and services.
This past September, President Xi Jinping embarked on a 10-day tour of Central Asia, leading to a list of agreements signed which will at least double Chinese investment in the region. Existing Chinese investments in Turkmenistan, Kazakhstan and Uzbekistan are estimated at about US$30 billion, while the value of the new contracts will contribute an additional US$51 billion in Chinese investment.
Regarding its investment in Central Asia, China has 3 stated aims:
Provide a dependable and stable energy supply route, diversifying its energy sources.
Create a means for cost effective transportation of goods and services to Central Asia and finally Europe.
The development of Kashgar in Xinjiang into the transport, services and financial center of Central Asia
Other domestic advantages for China would include further securing an export market in this region and preserving stability between its western neighbors.
Central Asian Energy resources
Central to these plans is a shift in focus from China`s eastern coastal regions to the underdeveloped west and in particular the Xinjiang region where Beijing hopes increased economic development and prosperity will help mollify the grievances of the native Uyghur population.
Current major Silk Road Economic belt projects under way or under discussions are:
The Baku-Tbilisi-Kars (BTK) railway, due for completion this year. The project is designed to facilitate shipping of cargo between Asia and Europe, and will connect the railway networks of Central Asia, the Caucasus and China with those of Azerbaijan and Europe. The BTK railway will have an international impact, expected to transport 1.5 million passengers and 3 million tons of freight per year.
Galkynysh Gas field in Turkmenistan. Work has started on the world’s second largest gas field that will more than double the country’s gas exports to China via the world’s longest pipeline. Due to come online in 2016 with development by CNPC Chuanqing Drilling Engineering Company.
Iran-China Natural gas pipeline, via Afghanistan, Tajikistan and Kyrgyzstan, allowing the latter two to reduce their reliance upon Uzbekistan.
China National Petroleum Corp (CNPC) paid $5 billion for a share of Kazakhstan’s Kashagan oil field project in September, giving it an approximately 8% stake in the project.
This New Silk Road will take careful planning and Realpolitik on Beijing’s part as well as favorable support from its Central Asian neighbors. It has yet to been seen if the economic incentives offered will reinforce political integration amongst historically competitive and volatile nations that feel little allegiance to one another. Security in these nations will play a key as well a China’s desire to preserve stability and security in XinJiang: Uzbekistan’s upcoming elections might provide a clue as to the feasibility of these grand plans and ISAF’s withdrawal from Afghanistan will have the China strategists increasing their efforts to engage with the country. Meanwhile China’s continuing development of the Maritime Silk Road, increasing security for China’s shipping lanes through the Indian Ocean and South China Sea, places it in an increasingly dominant position throughout South Asia, meeting the needs of its population.
China`s Investments in Overseas ports