Cheered yet feared, China's Belt and Road initiatiative continues to encircle half the world
 At first dimly and now more clearly, China's "string of pearls" policy begins to shine in the darkness. Some pearls have been visible - and worryingly so - for some time, like the seizure of the Spratly Islands in the South China Sea, athwart the Asia-Europe trade lane, and keenly disputed by Vietnam and the Philippines and condemned by the world court in the Hague.
Also becoming increasingly visible is the rail route from China to Poland, now running as far as Spain. Other rail routes through Malaysia and still others reaching into Iran. More prosaic and incremental has been growing port investments at Colombo along the Asia-Europe sea route, and again at Gwadar in Pakistan, Piraeus in Greece and a Chinese funded railway in East Africa from Mombasa to Nairobi.
One could be forgiven thinking this arrangement had a striking resemblance to the development of the British Empire with the Royal Navy protecting the route from India - which is how Sinophobic strategic analysts are inclined to view it.
But Beijing insists its "string of pearls", contained in its "Belt and Road" initiative is benign, while allowing for a measure of enlightened self-interest. The idea, says China, is to bring infrastructure where there is none or is inadequate, and in doing so, create, activate consumers and producers in the hinterland by facilitating delivery, thereby making goods affordable and provide local producers access to markets by enabling the cheap transmission of cheap exports to become widely accessible in an ecommerce age.
To assess Belt and Road, Bloomberg Markets deployed a team of reporters on three continents. What emerges is a picture of mostly poor nations that accepted Chinese-financing of such projects. But the cost of Chinese funding has been criticised as recipients from Sri Lanka to Greece complain, and Malaysia's newly elected Prime Minister Mahathir Mohamad has even rejected projects now in progress.
Perhaps one can begin as Yiwu, 280 kilometres southwest of Shanghai. This is railhead of the New Eurasian Land Bridge. Some 13,000 traders from around the world now live there. More arrive every day, Mohanad Ali Moh’d Shalabi, a Jordanian businessman told Bloomberg.
This begins the symbolic linkage to the 13th century Silk Road to be mimicked by stacked container trains. "The first train pulled out in 2014, heading to Kazakhstan and Russia, then through Eastern Europe and on to Madrid - an 8,000-mile journey. Since then, more routes have opened to London, Amsterdam and Tehran," said Bloomberg. Since then, customers have emerged along the route.
The return journeys bring European goods such as wine, olive oil, vitamin pills, and whiskey. China Railway Express Co said the value of outbound freight from Yiwu in the first four months of 2018 jumped 79 per cent to CNY1.8 billion (US$268 million), while imports tripled to CNY470 million. But while the train shortens the journey, it’s more expensive than seaborne trade and slower than air cargo.
Now to Sri Lanka: Hambantota (pop 11,200) got a new port, an international conference centre, a cricket stadium, and an airport that still doesn’t have a single scheduled flight.
Sri Lanka's biggest port at Colombo is 236 kilometres away on the west coast. The Port of Hambantota was a mere 19 kilometres from the main east-west Asia-Europe trade lane, and would provide bunkering, ship repair, shipbuilding, and crew change facilities.
But the port generates more debt than traffic. Later, it was decided that state-owned China Merchants Ports (CMPorts) will divest 20 per cent of its shares to a Sri Lankan company within 10 years. CMPort will have to spend at least $700 million to $800 million or more to bring the port to operational level. In July of 2017, the agreement was signed, leasing 70 per cent of the port to CMPort instead of the initially proposed 80 per cent.
China Merchants has promised to revive the port and turn it into a major regional trading hub. But some local people have had enough of promises. “All these huge projects are a waste,” says Sisira Kumara Wahalathanthri, a local politician who opposes the current Sri Lanka government. “No ships are coming to the port. No flights are coming to the airport.”
In the case of Gwadar port at the western edge of Pakistan on the Gulf of Oman, one sees a port capable with sufficient naval prowess to blockade the Persian Gulf - at least, there is more promise of that than any hope to make a profitable commercial port. Gwadar, across the Arabian Sea from Oman, is so remote that its electricity comes from Iran, 60 miles down the coast. In recent years, the village has become a city of 100,000 or so.
Local shopkeeper Ghulam Hussain now gets six to eight truckloads of rice, flour, sugar, and other groceries delivered to him from Karachi, an eight-hour drive to the east. Five years ago, three loads a month met his needs, Bloomberg reported. “There was nothing in Gwadar before. It was deserted. We were really backward. Since the Chinese came, our businesses are booming.”
The Chinese who came here to work don’t mix much with the locals. Some of the 150 or so of them live in a guarded and gated compound where green shipping containers have been converted into living spaces.
Now to Kenya. In 2011, with the old British Mombasa-to-Nairobi narrow-gauge railway was falling into disrepair. China agreed to finance and build a standard-gauge railway at a cost of $3.8 billion. The Mombasa-Nairobi SGR, as it’s called, is the nation’s largest infrastructure project since independence from Britain in 1963.
Some 30,000 Kenyans were employed directly on the project, which was run by China Road and Bridge Corporation with an additional 8,000 working for subcontractors. Along its 471 kilometres, the SGR crossed 100 bridges and viaducts. The railway cuts the Mombasa-Nairobi trip to five hours, down from more than eight by truck. Five freight trains a day were making the journey during spring. The number could eventually increase to 12, removing as many as 1,700 of the 3,000 trucks that currently ply the route.
But the SGR has its detractors. Economist David Ndii says it’s not commercially viable, while a Kenyan newspaper, the Standard, accused China Road and Bridge of “neo-colonialism, racism and blatant discrimination” in its treatment of local employees.
But SGR has its fans too. Michael Ndungu, 21, a student who studies in Mombasa and visits Niarobi on weekends, used to take the bus. “The SGR has made my life much better,” he said. “It is faster and definitely safer.” In Mombasa the surge in passengers - 1.3 million during the first six months of the year - has been good for the economy. “Business is good,” said taxi driver Stephen Kazungu.
Another big investment China made came in the spring of 2016 when Greece was in the grip of the European sovereign debt crisis. Creditors demanded austerity. So Greece sold control of Piraeus, the Athens seaport, to China Cosco Shipping, a Chinese state-owned enterprise.
One of China’s biggest Belt and Road projects, it began in 2009, when Cosco won a contract to run part of Piraeus’s container business and was then handily folded into the initiative.
Ioannis Kordatos, managing director of the Hellenic Welding Association, said. “What matters isn’t that they are Chinese, but that they are a private company doing serious business in the area.”
The 2016 deal gave Cosco a 67 per cent share of Piraeus Port Authority (PPA) for EUR368.5 million (US$429.5 million). During PPA’s first full year under Chinese control, its net income jumped 69 per cent, to EUR11.3 million, as revenue from its container terminal rose 53 per cent. Since Cosco first became involved, Piraeus has risen to be Europe’s seventh-busiest container port; 10 years ago, it wasn’t in Europe’s top 15.
But not every is happy. Giorgos Gogos, general secretary of the Piraeus Dockworkers Union, says he’s worried about the impact of a Chinese state-owned enterprise on labour relations and the local community. “We think it’s a mistake for infrastructure like this to leave the state.”
For all the concern about the potentially corrosive effects on Greece’s economy and sovereignty - and about Beijing’s ulterior motives - Cosco’s incursion into Piraeus has something in common with other investments by Beijing along its vast Belt and Road: China put its money where others wouldn’t, said Bloomberg.
Taken as a whole, it seems clear that some of the designs of the Belt and Road have security potential, but with the exception of the Spratly Islands and perhaps the base in Pakistan, the others, that is, where most of the money has been spent, have more immediate commercial uses - especially in an ever spreading ecommerce world. |
