What I Learned From Two Years Travelling China's Belt And RoadWade Shepard
The markets of Europe and Asia are being drawn more closely together via an array of enhanced land and sea trade routes that are part of a multinational, multi-faceted development that has been vaguely dubbed the New Silk Road. China took a leading role in building this trade network with its 2013 Belt and Road initiative (BRI), which is touted to pump $150 billion per year into mostly emerging markets in dozens of countries throughout Asia, Africa and Europe for the purpose of bolstering connectivity, security, and, by extension, prosperity.
In the spring of 2015, I began traveling the various routes of the New Silk Road to see what was really happening on the ground. Two years and more than 30 countries later, I’ve compiled a list of key takeaways from this endeavor — part two of which is below.
The BRI spearheads a new type of foreign policy
Declaring the ‘buddy-buddy’ type of foreign relations which consists of countries forming strategic bonds with select other countries as “outdated geopolitical maneuvering,” China instead pursues diplomatic and economic relations with pretty much any taker — aiming to “forge partnerships of dialogue with no confrontation and of friendship rather than alliance,” as put by Xi Jinping himself.
The hallmark of China’s 21st century foreign policy so far has been its brash disregard for the established geopolitical divisions of the world. Concurrently, China is building political and economic partnerships with Israel and Iran, India and Pakistan, Azerbaijan and Armenia, the U.S. and North Korea, the EU and Russia. China doesn’t flaunt its morals or embargo countries for diverging from its ethical standards.
Politically indiscriminate, China seemingly doesn’t not care if you’re a democracy, a dictatorship, a monarchy, a theocracy, or even a borderline failed state. If you’re willing to step up to the table and do business, China is your friend — well, just so you don’t meddle in what China posits as its “internal affairs.”
With the Belt and Road we’re not looking at a dimetric partitioning of global power that will see China leading a contingent of allies against the United States; we’re not looking at any type of Orwellian, east vs. west showdown. We’re looking at China solidifying ties with every player possible as a way of gaining the leverage necessary to enhance its own autonomy, economic prowess, supply chains and security. As what amounts to the BRI extends around the world, we’re going to see a geopolitical makeup where nearly all countries have one thing in common: a deeply intertwined partnership with China, a common link which Chinese leaders tout as a recipe for peace.
The BRI will pave the way for China’s economic transition
China is in a state of mass transition: The country no longer wishes to merely be the world’s factory, the wellspring of cheap, “Made in China” junk. Rather, the country is opting — meaning, investing billions of dollars and the political will of the central government — to become one of the world’s epicenters for high-tech R&D and high-end, high-value manufacturing.
While many critics have posited that the BRI is just a more streamlined way for China to dump its perceived excess of commodities, such as steel and cheap consumer goods upon the markets of the world, the view from the ground is a little different. While certainly large amounts of building materials and low-quality consumables will pour out from China along the five emerging routes of the BRI, what will be far more significant is the off-shoring of Chinese companies and manufacturing operations. Low-end manufacturing and dirty energy production are becoming less and less viable in China: large swaths of the country are maturing beyond their industrial adolescents, the wage advantage in the east and central regions is dwindling, and the public is no longer uninformed and passive about pollution. China sees the writing on the wall, and the BRI is one of the mechanism that the country is employing to keep the tether tied to its enterprises as they inevitably go off-shore.
Meanwhile, China is going all-in on building up its high-tech sector. The country is moving up the manufacturing value chain, is buying up western technology in droves, has companies designing some of the most high-tech productsavailable today, and legions of factories starting their own brands.
In some ways, China and the west are switching positions. The low-level manufacturing operations that the rise of China was built upon are now being dispersed around the world — even being re-shored to the U.S. and Europe — while the high-tech, high-end manufacturing that was once the forte of the west is being gobbled up by China. So China is now making iPhones, drones and green energy technologies, while the west is going back to making t-shirts.
The BRI makes Europe relevant again
Every road has a beginning and an end. When looking at the BRI we must not only look at China but also at Europe, the place where all of these enhanced Silk Road trade routes ultimately lead to.
At a time when many European countries are either economically stagnant — or even in periods of contraction — and the U.S. is looking more and more inward, the possibility of new political and economic horizons carries significant potential. The BRI is making Europe relevant again, one trans-Eurasian rail line, financial district and revitalized portat a time. The initiative invariably ties the often slow-moving, bureaucratically hamstrung, and cash-strapped continent in the west with the high-paced, emerging superpower to the east who just happens to have more money to spend than any other country on earth.
While the BRI does increasingly open the gates of Europe to Chinese products and M&A, it also opens the gates of China for European producers. It is a mistake to think of the BRI as a one way street. As China’s middle class continues exploding, disposable income continues rising, and buying power goes through the roof, China has become one of the most targeted markets on the planet. The fact that the BRI opens up enhanced ways for companies to get their products to China is a potential that Europe is finally waking up to.
There are currently 39 rail lines which directly link 15 cities in Europe with upwards of 20 cities in China. The type of goods that these trains are best suited for are precisely what Europe produces and are just what the rising middle class in China is hungry to buy. European pharmaceutical, automotive, luxury, agriculture, and high-end food industries are starting to leverage these new transport routes. BMW, for example, is already shipping cars to China by rail from Duisburg and Land Rover has shown interest in potentially using the newly established London to Yiwu train.
Yes, China doesn’t play fair. Yes, China rigs the system to give domestic enterprises an advantage over foreign companies. Yes, European markets are far more open and transparent than those in China.
But the BRI also offers Europe economic and infrastructural opportunities that otherwise wouldn’t exist — opportunities which, if leveraged properly, could help boost Europe back up on its pedestal.