China heading off cold war through economic diplomacy

F. William Engdahl

During his visit to Duisburg, Chinese President Xi Jinping made a master stroke of economic diplomacy that runs directly counter to the Washington neo-conservative faction’s effort to bring a new confrontation between NATO and Russia.

China heading off cold war through economic diplomacy

Using the role of Duisburg as the world’s largest inland harbor, an historic transportation hub of Europe and of Germany’s Ruhr steel industry center, he proposed that Germany and China cooperate on building a new “economic Silk Road” linking China and Europe. The implications for economic growth across Eurasia are staggering.

In his remarks, accompanied by German Economics Minister Sigmund Gabriel and local politicians, Xi stressed that Germany and China were the two economic locomotives at either end of that Silk Road and, by cooperating on a shared vision of rail and other infrastructure, could being entire new economic areas into being along the route. The term Silk Road is a conscious Chinese revival of the term used to describe the ancient trade and cultural routes between China and Central and South Asia, Europe and the Middle East that were created during the Han Dynasty, about AD 200 BC.

The Economic Silk Road and a separate Maritime Silk Road were first mentioned in a speech by Xi last November at the 3rd Plenary session of the 18th Central Committee of the Chinese Communist Party. Xi’s latest diplomacy promoting the idea confirms it is no pipe dream. It is strategic priority. China needs to find new export markets or preserve existing ones, as well as to narrow development gaps between the well-developed coastal areas like Shanghai and the less-developed inland parts of the country and preserve stability inside China and its neighborhood. Xinjiang province lies along the Silk Road and is also home to a radical current within its Muslim Uyghur population.

What Xi left unsaid but is clear, is that his proposal comes at an extremely critical point when the issue of peace and war by miscalculation hangs in the balance over Washington’s manipulation of events in and around Ukraine. The path of the new infrastructure corridor passes through Russia. There is no economic alternative. Thereby, it serves at the same time to bind the economic futures and prospects for peaceful cooperation between Russia and Germany especially.

Xi made his Duisburg remarks as part of a highest-priority Chinese economic plan. A week before flying to Germany, Xi met Saudi Arabia Crown Prince Salman Bin Abdulaziz Al Saud in Beijing. He asked Saudi Arabia to join in building the Silk Road Economic Belt and the 21st Century Maritime Silk Road, to promote transportation connectivity and cultural exchanges. Two days later, the Foreign Minister of Kazakhstan, also a critical land along the proposed economic Silk Road, was in Beijing where he discussed cooperation on the huge project. He indicated his country’s readiness to cooperate as did Afghanistan President Karzai.

The Economic Silk Road is clearly central to China’s economic strategy of developing the western areas of China and creating economic stability among her neighbors to secure stable supplies of raw materials and also open new trade markets. Since taking office March 2013, Xi and his prime minister have paid personal visits to Russia, Turkmenistan, Kazakhstan, Uzbekistan, and Kyrgyzstan—all along the proposed route of the Silk Road project.

Xi said China’s proposal of building the Silk Road economic belt, based on the idea of common development and prosperity, aims to better connect the Asian and European markets, will enrich the idea of the Silk Road with a new meaning, and benefit all the people along the belt. China and Germany, at the opposite ends of the belt, are two major economies that serve as the driving engines for economic growth respectively in Asia and Europe, Xi stressed. Currently China and Germany are linked by the Chongqing-Xinjiang-Europe international railway.

In 2011 China opened the Chongqing-Xinjiang-Duisburg railway. In 2013 the Chengdu-Lódź Poland direct cargo rail link crossing Kazakhstan, Russia and Belarus was launched. The economic benefits of rail links as opposed to sea shipping from China’s coastal ports to Europe or air freight are huge. A complete trip on the Chongqing-Xinjiang-Duisburg connection takes only 16 days, while for the Chengdu-Lódź line, it’s 12 days. China-Europe railway transport is considerably quicker than sea passage that takes about 40–50 days and is much cheaper than air cargo. Moreover, railway transport enables more convenient trans-shipments and enables more rapid transport to the final destination.

Notably, among the Putin advisers singled out by Washington for personal sanctions was the head of the Russian Railways, a vital partner in the new Silk Road project. Washington seems locked into an ideology of economic sabotage, confrontation and wars to maintain their failing global hegemony.

Central Asia stability key

The concept of a New Silk Road Economic Belt was presented during Xi Jinping’s landmark 10-day visit to Central Asia in September 2013. He visited four Central Asian states: Turkmenistan, Kazakhstan, Uzbekistan (Premier Li Keqiang visited this country as well in his November trip) and Kyrgyzstan. He also took part in the 13th Shanghai Cooperation Organization (SCO) summit in Bishkek and went to Russia to attend the G20 summit in St. Petersburg, where he met Vladimir Putin for the fifth time in the first year in office.

Xi presented a five-point proposal to jointly build the New Silk Road Economic Belt to strengthen relations between China, Central Asia and Europe. They are:

1. strengthen policy communication, to help “switch on a green light” for joint economic cooperation;
2. strengthen road connections to build a great transport corridor from the Pacific to the Baltic Sea, and from Central Asia to the Indian Ocean, then gradually build a network of transport connections between eastern, western and southern Asia;
3. strengthen trade facilitation, with a focus on eliminating trade barriers and taking steps to reduce trade and investment expenses;
4. strengthen monetary cooperation, with special attention to currency settlements that could decrease transaction costs and lessen financial risk while increasing economic competitiveness; (this would see a lesser role for the dollar).
5. strengthen people-to-people relations. Here China has made available to Shanghai Cooperation Council members 30,000 governmental for study in Chinese universities over 10 years and announced that China intends to invite 10,000 teachers and students to come to China as well.

A key driver of economic development among the bitterly poor regions of the Silk Road will be establishment of Special Development Zones by Beijing along the route that will connect to other economic centers in China as well as China’s western and southern neighborhoods. The first has just been created called Lanzhou New Area in China’s Gansu Province. A “New Area” is a comprehensive economic development zone in or close to a big city or metropolitan area. They are established by the State Council with preferential conditions and privileges to boost its development. Currently, there are six New Areas in China, with four of them in coastal provinces. The decision to establish the Lanzhou New Area in northwest China—one of the poorest regions—is a clear signal that Beijing is paying special attention to speeding up development of China’s western regions and to connecting it to other, well-developed parts of China. Lanzhou New Area, in a population center of almost 4 million people, is the first comprehensive zone of this type in northwest China, and the first on the historic Silk Road.

China’s decision now to focus on “going West” also has a major security component.  Beijing needs to secure export markets and diversify its transport network—the main topic raised by Xi during his trip to Central Asia—especially the increasingly unstable sea lanes in Asia’s South and Southeast. China is very vulnerable to disruption of the Malacca Strait, where there has been an increase in pirate attacks, illegal trafficking and unresolved maritime disputes. Almost 85% of imports to China are transported along this route, including 80% of China’s energy imports. Beijing is well aware should Washington ever decide to Target China in a confrontation, blocking the Malacca Strait would be no problem.

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