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“China and the new silk way”

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“China and the new silk way”, by Antonio Salvatici.

The analysis by Antonio Selvatici shows how in few years China has become a “factory of the world” and  a global protagonist. This is a strategic, economic, military and ideological challenge to transform China in a crucial world actor.

“New Silk Road” means that it is the project of an economic and infrastructural expansion based on the target of China as an alternative, even military, to the West. China wants to become a partner able to offer protection and economic advantages, monetary and political.

The Chinese President uses his second mandate to carry out this project, which began during his first term, but the West tends to respond only with impromptu initiatives (the duties imposed by President Trump on Chinese goods, for example), which show poor capacity of perspective view.

The comparison between East and West shows how  the Western democratic systems is weak, suffers a lack a medium / long-term economic planning, a preference for short-term results, more profitable in terms of electoral consensus; an authoritarian system like the Chinese one is, instead, characterized by a long-term planning, supported by the State treasury.

China is supported by its peculiar system of governance: political, economic, strategic authoritarianism, enormous public resources against a set of weak democratic systems and sometimes in opposition to each other (an “authoritarian economic system to public guide “).

The differences between China and Western democracies are substantial: in China  a link between democracy and economy. Western countries have a consolidated net of the power managed by some elites that are able to strongly influence governance. Moreover, while in the West these elites are made up of representatives of lobbies, large financial groups and large multinationals, in China they are members of the Communist Party. Finally, if in the West the multinationals and the large companies that deal with global finance are private, in China the great strategic companies are largely related to the public capital.

 

We have to remember that the “New Silk Road” project was included in the Chinese constitution, so as to give it the character of an unquestionable long-term objective, aimed to lead the new globalization through a soft strategy, which does not involve war or conflict. The States involved in the “BIS” (Belt and Road Initiatives) project have indeed given their consent to be helped by China.

For the author, this is a type of political conquest, not aggressive, which passes through the open accession of the countries interested on. It is the infrastructure strategy that creates consensus: the “Belt and Road Initiative” (BRI) project.

The process dates back to 2001, and would have been elaborated by China also to solve demographic dysfunctions consequent to the “one child” policy (of 1979). China responded to this imbalance by increasing productivity through the Made in China 2025 project, to modernize the country’s industrial system, as well as through the BIS. In this way China intends to expand the sphere of territorial influence becoming able to rely on a vast economic and labor market.

When the BIS will be completed, it will be the most important infrastructural-commercial-strategic network between East and West, according to two lines, land and sea (“belt”), for whose realization China has allocated about 1.4 trillion of dollars to invest in the next decades.

The final destination of the maritime section must be a port in the upper Adriatic, probably Venice or Trieste. To complete this part of the project, China would be willing to make major investments in Italy; the project, in fact, plans to create a new port structure and an infrastructural network  capable of bringing large quantities of goods together, with the aim of a port (in 2030)  that moves 6 million TEUs (acronym of twenty-foot equivalent unit, is the standard measure of volume in the transport of ISO containers, and corresponds to about 40 total cubic meters).

To execute the new off-shore and in-shore port facilities, 2.2 billion euros are required and the Chinese have already shown interest both in the construction and in the management of the new port.

A similar interest was shown by the Chinese leadership towards countries of Central and Eastern Europe to which China has offered bilateral agreements. China easily gains support among these countries as it offers, in a short-term perspective, large amounts of resources through the sponsorship of infrastructures, in the face of the stricter and more rigorous economic policy that Europe normally holds instead.

For Selvatici it is therefore necessary to recognize the difference in economic systems and the quality of products in order to be able to introduce a system of effective reciprocity that makes the Chinese system less “competitive”. The Chinese expansionist approach is based on the principle of convenience: China offers immediate benefits in terms of financing and / or execution of infrastructure and energy power.

The sea route remains the privileged one, so much so that we speak specifically of a “Maritime Silk Road”, designed to safeguard the supply of energy raw materials. China is a voracious consumer of energy, consequently, the energy strategy adopted by the country, to be less vulnerable, also includes the increase in the number of external suppliers and the use of modes of transporting energy sources that are not only maritime ones, but they also provide for the construction of a supply network.

As regards the development of maritime trade and infrastructure, China has signed agreements and defined participations with numerous companies in different States. In particular, in Italy the China Development Bank, together with the Cassa Depositi e Prestiti, has set up a fund with initial assets of 100 million euro aimed at participating in the capital of small and medium-sized companies operating in Italy and China.

The investments do not seem to concern only Europe, but a special fund would have been created to support the “New Silk Road” also to the countries of the so-called BRICS (Brazil, Russia, India, China and South Africa). The States so far most interested in the project are Egypt, Djibouti, Iran, Algeria, Turkey, Saudi Arabia and, in Europe, Greece and, in particular, Pakistan (the port of Gwadar will be managed for forty years by a Chinese public company).

Similarly, since the Chinese have long understood the importance of Djibouti – a strategic basis for ships that, coming from the Red Sea, through the Suez Canal, they intend to reach the Mediterranean Sea – they are already engaged in the construction of strategic infrastructures: port, network railway and airport (in Djibouti China has also established its first military base outside the borders, with the aim of safeguarding maritime transport, but this could represent the first step of an expansionist policy even in the military field).

China is also Egypt’s second commercial partner and has been invested directly in that state for some decades, given the enormous importance that the Suez Canal represents for transport in the Mediterranean; when the development project is completed, the Suez Canal will become a huge logistical and manufacturing hub in a strategic area of ​​the Mediterranean.

As for Europe, it is enough to note that in 2016 the Chinese bought the port of Piraeus, given the strategic position of Greece, as its insular part is a crossroads between Asia, Africa and Europe (the the importance of this acquisition is evident because the goods cleared in Athens become internal to the European Union and therefore customs control is more difficult).

In essence, the BIS affects the east coast of China until it involves Europe and a large part of Africa. Added to this is the control of the Panama Canal, the management of the new Arctic route and the domination of the islands that arise in the South China Sea.

Moscow, Beijing and Teheran are among the leading countries of the BIS and this aspect is a real concern, given that weapons, oil, nuclear weapons production, trade and strategic infrastructure projects are the main elements of what has been called the Great Triangle of Eurasia.

Europe, however, does not seem to have acquired a real awareness of the concrete scope of this new arrangement and only recently is it beginning to assume a more attentive attitude towards the Chinese expansionist approach, having noticed that some strategic purchases could have damaged national economies (hostile initiatives regarding individual nations).

For this reason, Europe would be thinking to some countermeasures: the maximum participation of 49% and the identification of the equity quota allowed to a foreign company to participate to the companies that produce technology and power activities. Moreover, some states are already organizing to establish control bodies with the power of veto in case of sales of assets deemed strategic for national interests.

n important part of the BIS involves the upper Adriatic, or the ports from which the goods will be transferred from the so called megaship (large container ships), to continue towards the final destination by other means (trains, trucks, barges, etc.). It is therefore a question of creating an intermodal transport system, in which the maritime infrastructure must be connected to the railway, road and motorway network, in turn connected to one or more European corridors.

In this perspective, the issue of Special Economic Zones takes on particular importance.

The opportunity to establish these Zones has attracted the interest of some port like Trieste and Venice, but above all the Piana di Gioia Tauro, considering that the decree establishing the Zones was related to the South of Italy.

 

In any case, Venice and the ports of the upper Adriatic are the most convenient way to reach central and eastern Europe and, for this reason, Venice is already gearing up to play a leading role on the route between China and the EU.

The overall plan of the new offshore port involves investments of 2.2 billion euros, half of which should come from the public sector and the other half from private individuals in exchange for a concession to use for forty years. And it is precisely in this space that, since 2013, China has positioned herself by assuming the burden of financing the off-shore port, through the China Harbor Engineering Company (which is performing work in Egypt, Djibouti, Pakistan and Sri Lanka).

In conclusion, Selvatici notes that European approach must realize that China is already present in the territory and must therefore verify the repercussions of foreign investments on national sovereignties. Europe has to understand  that in the global economy everyone must follow the same rules, to avoid the risk of determining clear inequalities in terms of competitiveness.

E.A.