The New Silk Road; A Chinese World Order?

By Matt Ellison

Twenty-six years after the dissolution of the Soviet empire, Xi Jinping, General Secretary of the Chinese Communist Party, stood before the global elite at the Swiss mountain resort of Davos, the crucible of modern capitalism, and delivered a stunning apologia for globalisation.

Twenty-six years after the United States had triumphed over the spectre of communism, a Communist Party leader was standing before the world and offering to step into the vacuum at the top of global capitalism left in the wake of America’s ignominious departure from the ideals of free trade and diplomacy that had hitherto defined the Western world.

China, Mr Xi promised, would do what the United States had decided it could do no longer. It would take the lead in global affairs, knocking down trade barriers and levelling the playing field across continents, tying the world together through mutual economic cooperation.

The problems troubling the world are not caused by globalisation,” Mr Xi said at the summit in January of this year. “They are not the inevitable outcome of globalisation.”

We should not retreat into the harbour whenever we encounter a storm or we will never reach the opposite shore.”

The New Silk Road

The irony is, of course, hard to escape.

The historical precedent, however, is even more immutable.

Just four years prior to his epochal speech at Davos, Xi Jinping had announced his Belt and Road Initiative, a Chinese-led investment plan to open up the markets of Central Asia, the Middle East and Europe to free trade.

By 2015, the Chinese had pledged upwards of $100 billion to the development of two new routes, one by land and one by sea, stretching from the Pacific to the North Atlantic and the Indian Ocean.

The New Silk Road takes its name and much of its route from an identical trade route operated by China throughout antiquity and the early modern period, lasting from before the city-state of Rome crowned its first Emperor to long after the European powers had colonised the Americas.

When the Romans usurped dominion of ancient Egypt from its Greek occupiers in the last century Before Christ, they came into receipt of the bounties of the Silk Road which at that time reached over 4,000 miles from the territory of the Chinese Han Dynasty.

At the time, the Silk Road took its name from the export of silk from China to the West, as far as the Greek colonies of the Middle East and Anatolia and, from that point on, the fledgeling young empire of the Roman Republic.

Its primary export, unsurprisingly, was silk, a commodity so rare and monopolised by the Chinese that the Roman Senate was forced to pass an ordinance limiting imports, as the cost of Rome’s trade imbalance with China was draining the state’s gold reserves.

Red Dragon Rising

The New Silk Road of Xi Jinping’s era will be a singularly different beast.

The lion’s share of investment into the New Silk Road required to tighten connectivity between East and West has been shouldered thus far by the People’s Republic. The benefits China stands to gain are still, however, huge.

For one, China’s economy, ever teetering on the brink of malaise and vulnerable to credit shocks, will stand to be solidified by the jolt that free trade will bring it. Poorer outlying regions in the west, such as Xinjiang or Qinghai, sit along the path of the Silk Road and will be bolstered by the flow of trade through their borders.

Not only does China propose to open up its own market for Western investment (the first Silk Road trains to reach the port of Rotterdam, in 2015, returned homeward bound with containers full of luxury Western cars), but it, in turn, hopes to give its own homegrown firms the freedom to spread their wings abroad.

Chinese companies have been quick to leap onto the opportunities provided by the energy sectors of Central Asian nations along the path of the Silk Road, which encompasses some 75% of known energy reserves. Chinese tech firms, such as Huawei or Alibaba, also hope to use the Silk Road to facilitate a westwards expansion into European markets.

Upon completion, the project will see the European Union – already the world’s single largest market with some 500 million inhabitants – tied into a commercial basin boasting 70% of the world’s population and accounting for 55% of its GDP.

The news should come as a boon for Ireland in particular, as American President Donald Trump sets the wheels in motion for slashing American corporate tax rates, thus endangering Ireland’s own arrangements with American tech firms based in the State.

With the markets of the East pouring open, Ireland is uniquely positioned within the EU to take advantage of the westward march of Chinese tech companies and offer them the same deals which made the country so attractive to the likes of Google and Facebook.

The Heirs of Empire

At the onset of the Dark Ages, when the Roman Empire was divided into East and West and Rome itself abandoned by its Emperors, it was the eastern half which flourished due to its prime location straddling the trade routes from East to West and commanding the European hub of the Silk Road from Constantinople (now Istanbul).

A mightier economic engine allowed Constantinople and its empire to flourish and outlast its western cousin, for over a thousand years after the last Western Roman Emperor had abdicated his throne.

For centuries, the Eastern Roman (Byzantine) Empire carefully cultivated its trade links with the East, keeping alive the flow of rich goods and wealth between distant Asia and new medieval Europe.

The survival of Constantinople even as Rome faded away provides an allegorical parallel that cannot be lost on Beijing’s strategic planners.

As the United States makes a frantic retreat from its previously taken-for-granted position of global responsibility and leadership, it has left space at the top for leadership that only China has the power to provide. Russia is too hobbled by economic sanctions and the encroaching borders of NATO to assert itself; the EU is too internally divided and, while recovering economically, lacks the structural cohesion that would allow it to assert its mammoth potential on a global scale.

China’s New Silk Road looks to rekindle the route trodden by Greek, Roman, Persian and Arabic merchants in the previous two millennia, a route that in reaching west completely bypasses the United States.

With Trumpian rhetoric of a trade war over steel between China and America to try to boost domestic manufacturing deepening, China looks to bind Europe and Asia to its economic destiny and in so doing cut-out America from the new global order it seeks to forge.

America is not blind to the threat this poses; in May, the Trump Administration announced the resurrection of an identical initiative first floated by then-Secretary of State Hillary Clinton in 2011.

Originally conceived as an exit strategy for the quagmire in Afghanistan, hoping to open the country up to the traditional trade routes it straddled in antiquity once more, the scope of the project pales in comparison to its Chinese counterpart and could at best hope to be but an adjunct to Beijing’s Belt and Road Initiative.

The Art of War

Just as Rome forged its empire on the edge of a gladius, its eastern offshoot sustained itself after the fall of the West in 476 AD by relying on the trade networks it had established with the East to keep its economy ticking over.

In much the same fashion, it seems, does Beijing stand to inherit the world order left abandoned by America.

The superpower status the US has achieved is to a great extent grounded on the security blanket it has offered to its allies,” says Kevin Liu, Chairman of Asia, Partners Group. “Geopolitically, China decided a long time ago that security was too expensive an offer to make. Instead, this new superpower may offer connectivity.

That People’s Liberation Army troops may patrol the highways of the New Silk Road, as soldiers in service to the Han Dynasty once did over 2,000 years ago, seems unlikely. Chinese military hegemony over Asia is disputed along every frontier, by India, by Japan (a point of bitter contention by the Communist Party, for whom the savage memories of imperial Japan have yet to fade), by South Korea (ever trapped under the shadow of an increasingly reckless Pyongyang) and even by Russia, to the north.

Unlike the military alliance won by the United States over the Western world in the chilly aftermath of World War II, as the victorious Allies turned on one another over the partition of Europe, China seeks a hegemonic role defined from the start by its economy.

Where economic cooperation once followed military cooperation by necessity, China has inherited a world made safe by the end of the Cold War and decades of American policing.

In such a world, power can be won through trade and investment alone, without the need for an armed death-struggle that typified the fall of previous superpowers, from the Persians to the Soviet Union.

First and foremost, this is what the New Silk Road must represent to Beijing. The military maxim of Sun Tzu cannot be lost on the grandees of the Chinese Communist Party;

The supreme art of war is to subdue the enemy without fighting.”

 

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