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China’s Silk Road Eyes G7 Nations


March 12, 2019

Russian and Chinese Presidents Vladimir Putin and Xi Jinping at the Kremlin, Russia on 4 July 2017. The Silk Road runs through parts of the Commonwealth of Independent States (CIS) and aligns with Russia’s strategic interests [PPIO]

Thirteenth Century adventurer and explorer Marco Polo opened Europe to China when he journeyed from his home in Venice to then capital Peking (now Beijing).

He chronicled his trip on the legendary Silk Road in a series of writings which introduced Europeans to the splendor and wealth of China.

The ancient Silk Road connected China and Europe from around 100 B.C. The 6,000-km road linked ancient Chinese, Indian, Babylonian, Arabic, Greek and Roman civilizations.

Trade conducted along the Silk Road reached much of Arabia and the eastern Africa and allowed for a proliferation of not just tradeable commodities like spices and textiles, but science and technology.

Nearly 750 years after Marco Polo used the Silk Road, Italy is again looking to connect to the trade route through a number of exchange and commercial deals with China.

Italian officials have said they are still in talks with their Chinese counterparts to sign a memorandum of understanding, possibly before President Xi Jinping’s state visit to Rome on March 20-22.

That a central European and Mediterranean economic influencer like Italy could join China’s One Belt, One Road initiative is not to be understimated.

As Europe reels with the prospect of Brexit, Italy would become the first G7 country to join the Initiative. And given Europe’s recent recession – Italy’s central bank forecasts just 0.6 per cent growth in 2019 after two consecutive quarters of contraction in 2018 – Chinese investments could be a saving grace.

In fact, the scenario is pretty much the same throughout most of the eurozone. On March 7, 2019, the European Central Bank slashed its growth forecast for the 19-member economic zone from 1.7 per cent to 1.1 per cent for 2019.

Italian Prime Minister Giuseppe Conte has already admitted, according to Reuters, that the Initiative would be a boon for his country.

“With all the necessary precautions, Italy’s accession to a new silk route represents an opportunity for our country,” Conte told a foreign policy seminar in the northern city of Genoa, as reported by Reuters on March 9.

Media reports have already speculated that the US is not happy with Italy’s decision.

The Initiative is core to Xi’s vision to expand China’s economic prowess westward; it has become all the more crucial in light of Chinese admission that GDP growth has slowed significantly over the past ten years, from double digits to just six per cent projected for 2020.

Xi wants to revive the splendor of the ancient Silk Road to create an Economic Belt – a 21st Century Maritime Silk Road to facilitate lucrative trade deals with the West and thereby entrench Chinese influence over an area of several thousand kilometers spanning dozens of countries.

In 2014, the Initiative was originally designed to boost Asia-Pacific connectivity, perhaps as a balance to US efforts to create the now-defunct Trans-Pacific Partnership (TPP).

The TPP, which was torpedoed by US President Donald Trump when he withdrew from the effort in his first foreign policy amendment since taking office, had been drawn up to break China’s overwhelming influence in the Asia-Pacific.

It also coincided with growing US naval alarm at China’s efforts to consolidate its hold on most of the South China Sea maritime territory, a large mineral and energy-rich area it claimed as historically its own.

But since then, and getting a kickstart from China’s initial $40-billion investment largely in infrastructure in the Silk Road, Beijing has also looked westward. Its financial commitment to the Initiative has soared to nearly $150 billion, with billions provided to developing countries for critical infrastructure-building.

When Xi became the Chinese leader, the Chinese plans for the Silk Road were designed to traverse through Central China to the northern Xinjiang from where it travels through Central Asia entering Kazakhstan and onto Iraq, Iran, Syria and then Istanbul in Turkey from where it runs across Europe cutting across Germany, Netherlands and Italy.

Since then, Egypt has been added as an important partner.

Both Iran and Russia have been hit by sustained US sanctions, so signing on to China’s One Belt, One Road Initiative is a smart, strategic move. Meanwhile, Turkey continues to move further from NATO partner the US [PPIO]

During EU-Chine trade talks in 2016, Xi announced that Beijing was investing billions of euros in European infrastructure projects. Then European Commissioner for Trade Anna Malmstrom said that China’s growth and investments in Europe were opening a new “economic frontier” for European businesses.

A new frontier built on ancient trade routes. In January 2017, Chinese train service returned the Marco Polo favor and expanded its pan-European railway destinations when a train left Yiwu West station in the eastern Zhejiang province headed for Barking Station in London.

The journey covers an incredible 12,000 kilometers and passes through Kazakhstan into Russia, Poland, and Germany before crossing the Chunnel in France.

At the Davos World Economic Summit in 2017, Xi was seen as a golden child of investment, particularly amid US moves to pull out of multilateral treaties, such as the Paris Climate Accord.

“We should jointly create an environment that will facilitate opening up and development, establish a fair, equitable and transparent system of international trade and investment rules and boost the orderly flow of production factors, efficient resources allocation and full market integration,” he said at Davos in 2017.

“We should build an open platform of cooperation and uphold and grow an open world economy,” Xi added.

European investments in China account for millions of jobs in the EU. And, according to official Chinese data, Europe exported more than $650 billion in goods to China in 2018. That was up by more than 20 per cent from the year before – a staggering growth cycle.

The same data showed that China had exported its goods and products to Europe to the figure of $774 billion.

So, it’s not really surprising that the Shanghai Belt and Road Brand Expo attracted more than 200 companies from 40 countries in July 2018.

That number is expected to rise.

With investments and agreements to build highways, electric power plants, and other critical projects in over 80 countries, including those hit by sanctions such as Iran and Russia, China knows the iron is hot for it to expand the scope of the Initiative.

This also comes as China is angered at North American moves to hinder access of its most advanced telecom companies to global markets. Case in point is US pressure to ban Chinese companies such as telecom giant Huawei from selling goods and services in North American markets citing industrial and other forms of espionage as a result of direct involvement with the Chinese military and government.

Beijing has repeatedly denied those allegations and last week the company filed a lawsuit against the US government saying its actions against Huawei were unconstitutional.

This spat comes amid efforts by American and Chinese trade negotiators to reach a deal which would help both countries avoid increasing tariffs on billions of dollars of products.

It is holding another One Belt, One Road Summit in Beijing in April.

And yes, Italy has already said it will send a high-level delegation.

By Firas Al-Atraqchi with inputs from Agencies for The BRICS Post



https://www.thebricspost.com/analysis-chinas-silk-road-eyes-g7-nations/

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