Tuesday, August 29, 2017

Japan to counteract China in Khazakistan

https://www.forbes.com/sites/wadeshepard/2017/08/29/new-silk-road-japan-to-counteract-china-in-kazakhstan-with-new-asia-europe-rail-deal/?c=0&s=trending#6a9b88cb1365

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Japan continues standing in the ring with China, exchanging blow for blow as the Asian rivals both compete and cooperate with each other in the creation of the trans-Eurasian mega-project that has been dubbed the New Silk Road.

Just months after the announcement of a deal that would see China’s COSCO shipping and Lianyungang Port take a 49% cut of Kazakhstan’s epic Khorgos Gateway dry port on the Kazakh/China border, Japan’s Nippon Express logistics firm has signed an MoU with Kazakh Railways (KTZ) to increase the overland flow of container traffic between the Japan / South Korea region and Central Asia, the Caucasus, and Europe. Nippon Express provides the cargo and KTZ handles the transshipment and processing of the containers through Kazakhstan.

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The parties also reportedly discussed the need to bring more investment into the Khorgos - Eastern Gate special economic zone, of which the Khorgos Gateway is just one part of. Despite the best efforts of DP World, the Dubai-based shipping giant who advises on operations in the SEZ, the colossal development area is still little more than a 5,000+ hectare empty field outside of the dry port.

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This move by Nippon Express and KTZ can be viewed as a continuation of China and Japan’s efforts to vie for influence and investment throughout Eurasia and Africa. In unison with the US, Japan has declined to join the China-initiated Asian Infrastructure Investment Bank (AIIB), despite the fact that many of its allies have jumped in and the need for the bank is very real. In Indonesia, Japan’s plan to construct a high-speed rail line from Jakarta to Bandung was usurped by China. In Bangladesh, Japan was given a contract to build a deep sea port on Matarbari island at the expense of a Chinese proposal to build a similar one nearby. In Sri Lanka, Japan and India are considering a plan to build a port and industrial zone at Trincomalee in reaction to China’s recent takeover of the Hambantota deep sea port. Mere days after China’s Belt and Road Forum in Beijing came to a close, India and Japan announced the Asia-Africa Growth Corridor (AAGC) — a very similar sounding initiative.

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While the “New Silk Road” — the massive movement to better integrate, develop, and boost trade between the countries of Europe and Asia — has often been viewed as a Chinese endeavor since the Belt and Road Initiative (BRI) was announced in 2013, this isn’t really the case on the ground. There are many other countries who have initiated similar plans to construct interconnected trade corridors, ports, power plants, and industrial zones across the region -- of which, Japan has been one of the most active.

While Japan has been at the Asian infrastructure development game for decades, the country has considerably upped its ante as China's BRI progresses. Some of Japan’s recent forays include new natural gas purification and chemical plants in Turkmenistan, a fertilizer factory in Uzbekistan, a deal to construct the Delhi-Mumbai Industrial Corridor, a high-speed rail line between Mumbai and Ahmedabad, two additional metro systems in India, three rail lines in the Philippines, the aforementioned deep sea port in Bangladesh, an array of special economic zones in Cambodia, along with a promise from Prime Minister Abe to provide an additional $200 billion to fund it all.

However, as we have been covering ad nauseam as of late, while China and Japan engage in competing initiatives to develop infrastructure in Asia and Africa and squabble over particular projects and points of geopolitical influence, what both countries are building amounts to the same thing: the New Silk Road. Many of the ports and roads and rail lines and special economic zones that both countries are currently investing in across Asia ultimately overlap and come together in a mutual trans-continental network of bolstered connectivity, development, and trade.

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A case in point:

According to KTZ’s Vice President for Development Arman Sultanov, the newly announced partnership with Nippon Express will see an increased amount of containers from Japan and South Korea transshipped through the partially China-owned Khorgos Gateway dry port

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