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The new Silk Road: China's campaign to dominate the global economy


Saturday, February 09, 2019 - 12:00 AM

In the barely-inhabited steppes of Central Asia, China is establishing the centre of its campaign to dominate the global economy, writes Ben Mauk

The Eurasian Pole of Inaccessibility is the point farthest from a sea or ocean on the planet.

Located in China just east of the border with Kazakhstan, the pole gets you at least 2,500km from the nearest coastline into an expanse of white steppe and blue-beige mountain that is among the least populated places on earth.

Here, among some of the last surviving pastoral nomads in Central Asia, the largest infrastructure project in the history of the world is growing.

About 130km from the Pole of Inaccessibility, just across the border in Kazakhstan, is a village called Khorgos. Its official population is just 908. But over the last few years, it has become an important node of the global economy.

It is part of an initiative known informally as the new Silk Road, a China-led effort to build a vast network of motorways, railways, and overseas shipping routes, supported by hundreds of new plants, pipelines, and company towns in dozens of countries.

The 55km Hong Kong-Zhuhai-Macau Bridge which opened last year is a breathtaking feat of socio-political engineering, uniting the Pearl River Delta, now effectively a megacity of 120 million people. But the scale of that project is dwarfed by China’s unfathomably large Belt And Road Initiative which will circle half the globe. Picture: Anthony Wallace/AFP/Getty Images

Ultimately, the Belt and Road Initiative, or BRI, will link China’s coastal factories and rising consumer class with Central, Southeast, and South Asia; with the Gulf States and the Middle East; with Africa; and with Russia and all of Europe, all by way of a lattice of land and sea routes whose collective ambition boggles the mind.

Khorgos is a flagship project of this work in progress, an international shipping hub and free-trade zone that its promoters say is poised to become the next Dubai.

Thanks to its location, Khorgos has become a harbinger of the interconnected planet: a zone fully enclosed by the logic of globalisation, where goods flow freely across sovereign borders, following corridors designed to locate every human being on the planet within a totalising network of producers and consumers, buyers and sellers.

Such victories of the global and industrial over the local, isolated, and rural are heralded as the inevitable future of our species. What would that future look like?

Whom would it benefit? What would it cost? To find out, last July I caught a sleeper train from Almaty, Kazakhstan’s largest city, to the Chinese border, where I woke up in a train yard surrounded by desert.

The “belt” of the BRI refers to the Silk Road Economic Belt, a tangle of rail and motorway routes currently vining their way across the continent from eastern China to Scandinavia.

The “road” is the 21st Century Maritime Silk Road, a shipping lane that will connect Quanzhou to Venice, with prospective stops along the way in Malaysia, Ethiopia, and Egypt.

To date, at least 68 countries, accounting for nearly two-thirds of the planet’s population, have signed on to bilateral projects partly funded by China’s policy banks and other state-owned enterprises.

China has spent an estimated €175 billion on BRI projects so far, mostly in Asia, and has implied it will spend close to €1 trillion on hundreds of projects around the world in the coming years.

When the investments from all the participating countries are combined, the estimated cost rises to €7 trillion. Taken as a whole, the BRI is unfathomable.

Some individual components span hundreds of kilometres, like the €60 billion China-Pakistan Economic Corridor, or the stalled and scandal-mired Bangladesh-China-India-Myanmar Corridor. But at Khorgos, I had heard, I could get closer than anywhere else to appreciating the scope of its aspirations.

CHINA HAS SPENT €175 BILLION SO FAR, AND HAS IMPLIED IT WILL SPEND CLOSE TO €1 TRILLION ON HUNDREDS OF PROJECTS AROUND THE WORLD


Khorgos is one of a cluster of villages encircling a former trading post of the ancient world called Zharkent. From Zharkent a farmer who moonlights as a cab-driver drove me to an overlook. We parked near a small rock-crushing plant above a valley of bright green cornfields, beyond which I could see this improbable new crossroads of the global economy.

The Chinese side of the border was easier to spot. Since 2014, an instant city of 100,000 people, also called Khorgos (sometimes spelled Horgos), has appeared; its dark high-rises glittered in the sun.

The Kazakh side of the border was less impressive from afar, but I knew it now hosted a first-of-its-kind free trade zone, opened on territory shared with China.

Behind a copse of cypress trees, I could also make out the gantry cranes of the new dry port — an inland shipping-and-logistics hub for freight trains — that began operating in 2015.

Adjacent to it was a nascent railway company town, and other plots nearby were cleared for factories and warehouses to be staffed by some of the future residents of the city of 100,000 that, if all goes as planned, will soon rise to match the one across the border.

Three kilometres beyond the checkpoint, across a valley of farmland, a tangerine ridge signalled the start of China’s largest territory, Xinjiang Uyghur Autonomous Region.

In recent years, the Chinese government has erected the most advanced police state in the world in Xinjiang, targeting the region’s Turkic Muslims, especially its Uyghur ethnic group, who make up about half the region’s population.

As part of what Chinese Communist Party literature describes as “de-extremification” efforts to combat terrorism, authorities have created an exclusion zone of state surveillance, arbitrary mass internment, brainwashing and torture.

According to the United States State Department, between 800,000 and two million people, or up to 15% of Xinjiang’s Muslim population, have been incarcerated in a growing network of more than 1,000 concentration camps.

The BRI can be seen as a framework through which China’s leaders can present virtually any component of its foreign policy as part of a nonthreatening vision of what party representatives like to call “win-win” global development.

In recent years, China has floated several expansions of president Xi Jinping’s initial Belt and Road vision that make its scope seem all but limitless: the “Digital Silk Road” into the frontiers of the virtual, the “Pacific Silk Road” to South America, and the Arctic-crossing “Silk Road on Ice.”

FOR ALL ITS POTENTIAL, THE PROJECT HAS ALSO CREATED A HALO OF MASS INTERNMENT CAMPS FOR THE POWERLESS, AND GREY-MARKET ECONOMIES FOR THE POOR


Xi himself has meanwhile extolled the merits of globalisation at Davos, and worked to brand his “project of the century” as a natural extension of the spontaneous trade routes that once laced across the Eurasian continent.

Critics have described the BRI as a new kind of colonialism or even part of a strategy of “debt-trap diplomacy,” seducing cash-poor countries with infrastructure projects that are unlikely to generate enough revenue to cover the interest on the loans that funded them.

That is the unhappy situation at the China-funded port of Hambantota in Sri Lanka, which the China Harbour Engineering Company took over after Sri Lanka fell behind on debt service.

The Center for Global Development lists eight countries that face high risk of “debt distress” from BRI projects that they can’t afford. Some experts view the camps and other security measures in Xinjiang as partly a reaction to the increased freight traffic now moving across the region.

Kazakhstan is poised to play a central role in China’s plan. The BRI was first announced in Astana, at a 2013 ceremony attended by Xi and Kazakhstan’s longtime president, Nursultan A Nazarbayev.

At the same event, Xi and Nazarbayev also celebrated the opening of a joint gas pipeline, and signed €26bn worth of trade and investment agreements.

Although in the past, Kazakhstan’s economy has tended to orbit Russia’s, in 2007, China edged out Russia as Kazakhstan’s top importer, and some critics fear that the BRI is leading the country deeper into economic vassalage.

But the government is not letting such criticisms, or even the presence of a prison state across the border, interfere with its collaboration with China.

President Nursultan Nazarbayev of Kazakhstan (left) shakes hands with Chinese president Xi Jinping before their meeting during the Belt and Road Forum in Beijing in May 2017. Picture: Kenzaburo Fukuhara/Getty Images

Khorgos Gateway rises out of the flat desert basin, a moon base of cranes and storage silos into which, every so often, a freight train slowly rolls. The chief executive of Khorgos Gateway, Zhaslan Khamzin, welcomed me into a tidy office overlooking the freight yard. “The future lies here,” he said proudly.

Since the dry port opened in 2015, Khamzin said, companies that manufacture goods in China have begun to recognize the advantages of a modernised overland trade route across Asia.

The dry port has transferred John Deere combines to Azerbaijan, he claimed, and Hewlett-Packard parts to Western Europe. He added that it may be much cheaper to ship containers by sea, but it can take more than three times as long, and air transit is the most expensive by far.

By contrast, a container passing through Khorgos can travel from a Chinese point of origin to Europe in about 14 days. “We’re going to be a central distribution point,” he concluded. If all goes well, according to company forecasts, in a few years Khorgos Gateway will be the largest dry port in the world. For now, it’s still a modest operation; if it were a United States seaport, its 2018 throughput would place it somewhere around the 26th-largest in the country.

The national railway company of Kazakhstan owns 51% of Khorgos Gateway. The remaining 49% is split between two Chinese state-owned companies.

Khamzin viewed China’s participation not as economic imperialism but as proof of the port’s likelihood of success. The Chinese, he explained, “are the kind of people that if they saw no commercial opportunity, they wouldn’t invest here.”

Such arrangements are less one-sided in Kazakhstan than in some of the more debt-strapped BRI countries. But Chinese investments have in all likelihood muffled Kazakhstan’s response to the crackdown in Xinjiang.

Khorgos’s other major landmark is a boomtown of open borders known as the International Centre of Boundary Cooperation, or ICBC, which China and Kazakhstan established in 2011 about 10km from the dry port.

In this duty- and visa-free zone, Kazakh citizens willing to brave the hour-long wait at customs control are permitted to enter a walled section of the Chinese side of Khorgos across the border to buy cheap linens and electronics, and Chinese tourists may enter a walled leisure area inside Kazakhstan to buy souvenirs and eat Kazakh delicacies.

A United Nations human rights panel describes the entirety of Xinjiang as a “massive internment camp,” but that didn’t stop workers I met at the dry port from suggesting I cross into China by way of the ICBC

Khorgos Gateway and the ICBC are the products of special economic development zones set up in co-ordination with China: industrial and commercial arenas designed to foster jobs and investments.

There are dozens of such zones within China — the first, Shenzhen, is now a megacity of more than 12 million people — but Khorgos is the first to exist partly outside China’s own borders. That will soon change. Chinese officials have announced plans to build 50 more international zones in countries from Algeria to Vietnam.

At Khorgos, the ICBC seems intended to complement the dry port’s vision of frictionless trade with an equivalent vision of borderless commerce, even if most Kazakhs understand the project as a wholesale depot for cheaply-made Chinese goods.

A popular hustle among shopkeepers from Almaty is to hire one of the locals who wait outside the ICBC, and who are euphemistically called “carriers,” to help circumvent the weight limits on imports. By all accounts, customs officials tend to look the other way.

China is said to be spending billions of euro building up its side of Khorgos. By contrast, Kazakhstan’s share of the ICBC is mostly a dream of the future. Projects like a constellation of luxury hotels, a sports complex and a Disneyland-style theme park called Happy Land Khorgos have languished for lack of funding.

Fields of rubble and stalled construction projects are scattered among the few small retail buildings and the yurt-shaped gift shops that are the Kazakh side’s most distinctive feature.

In recent years, the name Khorgos has instead become synonymous among Kazakhs with smuggling rings and high-profile corruption cases. In 2011, authorities arrested the head of customs at Khorgos as part of a larger takedown of a €115bn smuggling ring.

In 2016, the former head of the ICBC was caught on tape accepting a $1 million (€882m) bribe for a construction bid. Based on the crowds I saw in front of the border checkpoint, informal grey-market carrying at Khorgos seems to have replaced animal husbandry as the region’s main line of work.

The ancient Silk Road was equal parts trade route and social network. The routes themselves were in constant flux and administered by no-one, and they succeeded through incremental growth and local knowledge in response to changing needs — the exact opposite of the Ozymandian ambitions and sweeping autocratic statecraft that characterise the Belt and Road.

For all its potential to create jobs and modernise infrastructures, the project has also created a halo of mass internment camps for the powerless, and grey-market economies for the poor.

While new official jobs in Khorgos are lifting a lucky few out of poverty, it is far more common to find farmers and herders moonlighting as taxi-drivers, security guards or smugglers, part of a precarious network of low-paid freelancers.

Such work is susceptible by design to sudden changes in enforcement, and depends on a constant influx of disposable workers. It seemed like a high cost for connecting the world.


https://www.irishexaminer.com/breakingnews/specialreports/the-new-silk-road-chinas-campaign-to-dominate-the-global-economy-903212.html

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