MAK­ING A TWO-WAY SILK ROAD

China Daily European Weekly - - Comment - Wolf­gang Schus­sel The au­thor is for­mer chan­cel­lor of Aus­tria (2000-2007), and pres­i­dent of United Europe. The au­thor con­trib­uted this ar­ti­cle to China Watch, a new think tank plat­form pow­ered by China Daily. The views do not nec­es­sar­ily re­flect those of C

It’s time to ap­proach the project from both sides, China and Europe, to re­duce some of the skep­ti­cism sur­round­ing it

The Belt and Road Ini­tia­tive, cre­ated by Pres­i­dent Xi Jin­ping in 2013, is now on ev­ery­one’s lips. The Econ­o­mist de­voted its cover story to it (July 28), and the in­ter­na­tional me­dia re­port reg­u­larly about it. Think tanks an­a­lyze the ad­van­tages and dis­ad­van­tages, strate­gic op­tions and se­cu­rity pol­icy con­se­quences.

The project has true geopo­lit­i­cal di­men­sions. The BRI aims to reach a vast Eurasian eco­nomic area from the east coast of China to the At­lantic. Nine­tytwo coun­tries, 4.5 bil­lion peo­ple and 60 per­cent of global eco­nomic power are cov­ered by this — not to for­get Africa, which plays an im­por­tant role in this con­text, a con­cept re­cently sup­ported by the China-Africa Co­op­er­a­tion Fo­rum Beijing Sum­mit. Who­ever masters this area could also dom­i­nate the fu­ture world econ­omy.

This also ex­plains the mixed re­cep­tion.

“The Chi­nese project of the cen­tury in­spires ad­mi­ra­tion and anx­i­ety. There are good rea­sons for both,” ac­cord­ing to The Econ­o­mist. “Coun­tries eager for Chi­nese fi­nanc­ing wel­come it as a source of in­vest­ment in in­fras­truc­ture be­tween Europe and China via the Mid­dle East and Asia. Those who fear China see a sin­is­ter project cre­at­ing a new world or­der with China as pre­em­i­nent power. The con­fu­sion is — there is no sin­gle plan at all. No blue­print of that kind: so much money to be spent, so many kilo­me­ters of track to be laid, so much port ca­pac­ity.”

And the fo­cus is even wider. Now talks about a Pa­cific Silk Road, a Silk Road on Ice cross­ing the Arc­tic Ocean, a Dig­i­tal Silk Road ... .

It would perhaps be bet­ter to con­cen­trate on the ori­gins of the project. The Eurasian area is al­ready eco­nom­i­cally im­por­tant to­day and will be even more so in the fu­ture. The Or­ga­ni­za­tion for Eco­nomic Co­op­er­a­tion and De­vel­op­ment es­ti­mates that in 2050, China’s econ­omy will make up around 25 per­cent of global GDP; the Euro­pean Union and the United States will each have around 15-18 per­cent.

Be­tween Western Europe and the eastern coast of China, how­ever, there is a large belt of very poor coun­tries, with an eco­nom­i­cally slug­gish space in be­tween. This can af­fect China’s sta­bil­ity just as much as it can af­fect — to a smaller ex­tent — Europe’s se­cu­rity. But this is where its great­est po­ten­tial is.

Al­ready to­day, EU trade with four economies — the Chi­nese main­land and Hong Kong, South Korea and Mon­go­lia — worth 770 bil­lion euros ($900 bil­lion; £686 bil­lion) is al­most as much as with North Amer­ica (US, Canada and Mex­ico). In the next 10 years, this Chi­nese bi­lat­eral for­eign trade with the EU will de­velop in a much more dy­namic way (plus 80 per­cent) than with the US (plus 30 per­cent). This was proved by Pro­fes­sor Gabriel Fel­ber­mayer, the next pres­i­dent of the Kiel In­sti­tute for the World Econ­omy, in a note­wor­thy anal­y­sis in the Ger­man magazine Frank­furter All­ge­meine Zeitung on Aug 4.

Here, you could trans­form tran­sEurasian trade in a sus­tain­able way, as it is cur­rently car­ried out al­most com­pletely via sea or air. Only 3 per­cent of goods are trans­ported via rail, though with a strong in­crease over the last few years. Be­tween 2014 and 2017, the goods trade car­ried out via rail has in­creased five­fold, while over­all trade has in­creased by only 20 per­cent. Trans­porta­tion by rail takes half as long as by sea and is much cheaper than air freight. So, if the rail and road in­fras­truc­ture were sig­nif­i­cantly im­proved, sav­ing time and money, goods trade could in­crease sus­tain­ably by 25-30 per­cent — around 200 bil­lion euros — each year.

There can be lit­tle doubt that the planned in­fras­truc­ture of­fen­sive makes eco­nomic sense, but the ques­tion is whether the planned Chi­nese fund­ing is suf­fi­cient to cover such a transcon­ti­nen­tal project. And where is Europe in all of this? That’s a ques­tion asked by many in this sit­u­a­tion. In­deed, the EU will have to make a much stronger con­tri­bu­tion with con­struc­tive ideas, and prob­a­bly also im­por­tant fund­ing, to be able to pos­i­tively shape the de­vel­op­ment and im­ple­men­ta­tion of these ideas.

Such a con­cept is now avail­able and could be in­ter­twined with China’s BRI. Ex­perts at the Vi­enna In­sti­tute for In­ter­na­tional Eco­nomic Stud­ies re­cently de­vel­oped the plan of a Euro­pean Silk Road, which is sup­posed to con­nect the in­dus­trial cen­ter of Western Europe with the highly pop­u­lated but less-de­vel­oped ar­eas in the east.

The full ver­sion of this Euro­pean Silk Road is around 11,000 kilo­me­ters on land (rail and road). The north­ern route (6,700 km) runs from Lis­bon to Uralsk at the border of Rus­sia and Kazakh. Its core piece con­nects Lyon with Paris and leads via Brussels and the Nether­lands into the Rhine-Ruhr re­gion. Via Ber­lin, War­saw, Minsk and Moscow are con­nected with an ex­pan­sion via Nizhny Nov­gorod, Sa­mara, to Uralsk.

The south­ern route (some­what shorter at ap­prox­i­mately 4,300 km) would start in the metropoli­tan re­gion of Mi­lan, the eco­nomic cen­ter of Italy, and lead via Zurich and highly de­vel­oped south­ern Ger­many to Vi­enna, Bu­dapest and Bucharest to the port of Con­stanza on the Black Sea. From here, the sea route could lead via the Russian port of Novosi­birsk to Vol­gograd and, on the other hand, via the Ge­or­gian port of Poti and Ti­flis to Baku on the Caspian Sea.

Mod­ern high-speed trains and mo­tor­ways con­nected with lo­gis­tics hubs, sea­ports, river ports and air­ports should set new Euro­pean stan­dards, even in e-mo­bil­ity. Over a pe­riod of 10 years, the in­vest­ment of around 1 tril­lion euros (8 per­cent of the GDP of the coun­tries cov­ered by both routes) would lead to eco­nomic growth of 3 to 3.5 per­cent on av­er­age and a growth in em­ploy­ment of sev­eral mil­lion in wider Europe.

This ini­tia­tive can be net­worked with no prob­lem with the BRI. It would be com­ple­men­tary to it, in­stead of in com­pe­ti­tion. Re­gard­less of this, it is in the in­ter­est of the EU to ex­pand mar­kets with its eastern neigh­bors us­ing mod­ern transport in­fras­truc­ture. This re­gion is home to al­most as many peo­ple as in the EU it­self — 30 mil­lion in the Balkans, 200 mil­lion in the for­mer Soviet re­publics, al­most 90 mil­lion in Cen­tral Asia and the Cau­ca­sus, 80 mil­lion each in Tur­key and Iran. But in­comes are only half as much.

So, the time is ripe for such a far­reach­ing Euro­pean vi­sion­ary an­swer amid the pub­lic ar­gu­ment about glob­al­iza­tion. Pro­tec­tion­ism and iso­la­tion, tar­iff in­creases and threats of trade war on one side, and the de­fense of open trade re­la­tions, pro­po­nents for the break­down of non-tar­iff bar­ri­ers on the other. Europe is prob­a­bly a trust­wor­thy ad­vo­cate for an open, global and so­cially bet­ter-bal­anced or­der.

“Each pre­vi­ous round of glob­al­iza­tion was ma­rine-based, spread­ing from the At­lantic to the Pa­cific. This time it is dif­fer­ent. The in­land econ­omy will be­come a large com­po­nent in eco­nomic glob­al­iza­tion,” said Zheng Bi­jian, for­mer ex­ec­u­tive vice-pres­i­dent of the Cen­tral Party School and now chair­man of the China In­sti­tute for In­no­va­tion and De­vel­op­ment Strat­egy.

“Con­nect­ing con­tainer cargo trans­porta­tion, ex­press­ways, high­speed trains, air trans­porta­tion, in­ter­net ... is fully in­te­grat­ing the ma­rine econ­omy and in­land econ­omy, which will bring about over­all eco­nomic rise of the eastern, cen­tral and western re­gions of China and eco­nomic co­op­er­a­tion and de­vel­op­ment across the Eurasian con­ti­nent.”

With such vi­sion­ary projects, it is also a ques­tion of sus­tain­abil­ity (debt sus­tain­abil­ity), trans­parency of ten­der­ing and sup­pli­ers, in­clud­ing the lo­cal pop­u­la­tion, tak­ing into ac­count civil and so­cial ob­jec­tions and in­clud­ing eco­log­i­cal as­pects. Oth­er­wise, the fi­nan­cial car­ry­ing ca­pac­ity of smaller states can eas­ily be over­stretched and the un­der­stand­ing of cit­i­zens over­taxed. Even the temp­ta­tion to cor­rup­tion and crony­ism can be­come too strong. The union has built up a vast wealth of ex­pe­ri­ence over decades and could con­trib­ute a great deal in in­ten­sive ex­change and co­op­er­a­tion with the BRI and perhaps help re­duce some skep­ti­cism sur­round­ing Chi­nese projects.

So, it is time to ap­proach each other and tackle the Silk Road Project from both sides, from China and Europe. French Pres­i­dent Em­manuel Macron was right in Jan­uary when he said: “The an­cient silk roads were never purely Chi­nese; these roads are to be shared and they can­not be one-way.”

Let’s start it!

ZOU LEI / FOR CHINA DAILY

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