Common Cents

"King’s Highway" … China’s new Silk Road

Ralph Murphy

(2/2014) It is one thing to generate demand for a nation's products, and quite another to reach them with the goods. China has embarked on a major international effort spanning continents to develop infrastructure to extract, transport, sell and consume commodities and finished goods domestically and abroad. The effort projects an outlay of up to six trillion dollars over the next decade, and is aimed at lifting living standards for their expected 400 million new, urban residents.

Besides considerable expenditure on highways, rail links, dams for hydropower projects, and canals, China has reportedly set aside $237 billion for an ambitious five year plan of the State Environmental Protection agency to tackle the notorious pollution plaguing the country's air and water. The nation with an unlikely communist government protecting itself from the onslaught of an enormously successful capitalist economy is finding markets to buy and sell abroad, and is helping them grow through targeted investments.

The "new Silk Road", "Inter Oceanic Nicaragua Canal", ventures in Northern and Sub Saharan Africa, not to mention huge investments in their own economy have made China a major player on the economic world stage which may be troubling to many in the West, but could provide much needed investment in the host nations.

The Silk Road was an ancient trade route that spanned China, India, Persia, Europe and Arabia centuries before and after the time of Christ. Its varied highways, Northern and Southern land routes, through modern South Asia as well as East Asia, linked the Far East with material goods as well as religious dogma - primarily Buddhism - various philosophical beliefs, and also scourges such as the Bubonic Plague of the early 1330's.

The modern Silk Road actually already exists as that nation drove the last spike into a freight rail link spanning Eurasia and Germany in 2011. It reportedly cuts travel time between the nations from over five weeks by container ship to less than two weeks on the train.

China has spearheaded a highway project, which includes 32 nations at 44 billion dollars that is designed to link Indonesia, Thailand, India, Pakistan, and even Iran, which is reported by the periodical "Business Insider" to be in the planning for an unfettered drive to Europe. Much of that over the ancient Silk Road trade routes.

Getting little Western press notice, but potentially of major, economic and associated geopolitical import, is a new canal which is proposed to run through Nicaragua, and would be able to accommodate the 10% of the world's merchant fleet which are too large to journey through the Panama Canal even when that country completes its ambitious new set of locks.

The 40 billion dollar project would take a decade to complete once construction starts, and may well be in the offing as the Nicaraguan National Assembly Infrastructure Committee gave it a green light in June of 2013 and was quickly signed into law by the nation's President on 15 June. This "Inter Oceanic Nicaragua Canal" is centuries in design by nations such as France and America, but could come to fruition through the efforts of Hong Kong-based "Nicaragua Canal Development and Investment Company" led by "businessman" Wang Jing. He is believed to be a billionaire, and promised the construction effort would be funded by a variety of private sources - not the Chinese government. This would be of some comfort to a nation which has granted a concession which would be managed by Jing's HKND for the next fifty years, and an option to continue another fifty years after that mandate expires.

The new canal would be accompanied by a "mega project" in the region to include "seaports, an airport, free trade zones, and a railroad" that would parallel the new waterway. It has raised immediate protests by local, indigenous people because it would reportedly cut through their territory, and they were not officially given a voice in the project.

China is also heavily invested in Africa, where the nation is putting over two and a half billion dollars into Libyan coastal rail lines, five billion into a Nigerian oil project, seven billion into a Sudanese oil venture, and another seven billion into an Algerian East/West highway.

As one might expect the "lion's portion" of China's infrastructure spending is aimed at domestic projects, and they are considerable to include over seventy seven billion dollars into a Liaoning Hyongyanhe nuclear power plant, 800 billion dollars into a Zheyiang Sanmen nuclear power project, 900 billion dollars for a northern chemical-base project, and a full trillion dollars for a "new area" northern region infrastructure investment project. The list goes on, but one can see the nation is developing its infrastructure to aid the still growing economy.

What all this spending means for the West is not immediately clear. China could use its new economic power to replace traditional spheres of influence as might be occurring in Central America. The nation's North - South relations appear to be more oriented at securing commodity flows from the third world to produce and sell finished goods, potentially replacing Western markets with the country's less expensive products. Even more than they've already done!

Whatever the case, China with the world's second largest economy and 1.35 billion, hungry, domestic consumers, can be expected to continue its forays into less developed nations while exporting to the rest. Money doesn't necessarily buy loyalty, but it can help relieve immediate hunger concerns. It looks like the joint ventures between China and the recipient nations will continue as long as that reality is addressed.

Ralph Murphy is a former member of the CIA Headquarters Staff in Langley, VA.