The New Silk Road - How China Plans to Dominate the World

Duisburg, in Germany’s industrial West, probably isn’t the type of city that most imagine when thinking about the country’s industrial might, but it may well be one of the most important in a new age of globalisation where Europe must forge new trading partnerships across the world to keep pace.

It also signifies, some might argue, a worrying look into the near future for modern Western countries who must find new ways to keep pace with rapidly expanding economies like China, India and Brazil.

Duisburg was already one of the busiest inland hubs in the world, but now it has become one of the leading ports for trade between China and the rest of the Western world. German cars, high tech gadgets, toys, champagne and any number of other goods could be travelling either way between China, Germany, Italy, Spain or Britain.

Around 80% of trains now make this city their first European stop before continuing on around the continent, and there is little sign that this is set to be reduced. As a former industrial powerhouse, the city still has an unemployment rate of 12%, 4 times the national average, but things appear to be getting better and it can be seen as a blueprint for long-term recovery of industrialised European cities that have struggled to adjust to a globalised world.

The worrying part of this development appears to be that the Chinese government have invested heavily into the expansion of Duisburg – billions in fact – meaning that much of the infrastructure itself actually belongs to Xi Ping’s communist party.

But this isn’t a new development, this is part of a much wider commercial strategy announced by the Chinese government stretching back years. Namely that they’re looking to expand trade links across Europe, Asia and the Middle East by investing just short of USD$1 trillion in a ‘new silk road’.

The ambitious plan was detailed in an article for the World Economic Forum back in 2017, where they detailed the fact that China was looking to spend an enormous USD$900 billion over the coming years to establish what it hopes will be a dominant infrastructure network.

The Chinese are planning sections to this new Silk Road, with the ‘Belt’ comprising land routes through the various continents, either through rail or road, and the ‘Road’, which will involve maritime routes.

Given the recent US – China trade war, this plan perhaps takes on extra significance and could go some way to explaining why the world’s current biggest economy, the US, is feeling a little twitchy about China’s ambitious economic expansion plans.

As detailed by the World Economic Forum article, “The aim of the USD$900 billion scheme, as China explained recently, is to kindle a “new era of globalization”, a golden age of commerce that will benefit all. Beijing says it will ultimately lend as much as USD$8 trillion for infrastructure in 68 countries.”

But the scheme hasn’t come without controversy, with many questioning just how altruistic the country’s geopolitical aims really are. It’s hard to imagine, however, that China would be loathed to admit that it harbours big ambitions when it comes to being an economic world leader.

It’s hard to escape the feeling that despite big and aggressive rhetoric coming from the US and Trump in particular, that this is simply an attempt to stem the tide of Chinese economic domination. Whilst it’s certainly true that they won’t be able to keep up the rapid GDP growth of recent years as they become more developed, it seems pointless to suggest that they won’t, in the near future, become the world’s number one.

A good example of the moral paradox of Chinese investment is the tiny fishing port of Bagamoyo, Tanzania.

The tiny village is the planned site for a new Chinese built mega-port, which is being funded in part by an Omani sovereign wealth fund. In just ten years the plan is to raze the village in order to build one of Africa’s first mega-cities, modelled on some of the Chinese hubs of today.

This, however, raises concerns. On the one hand huge investment into these types of areas creates jobs, wealth and status, plusit opens up trade routes to a country that has had terrible troubles with poverty and starvation.

It also marks a step forward for a continent that many are keen to change perceptions of. The Africa of today is a far cry from the infamous adverts of the 80’s and 90’s, with bloated and starving children swarmed by flies. Nations such as Nigeria, Tanzania and others now have expanding economies and a rapidly rising quality of life.

Those with reservations are worried that local people could be thrown out of their homes for what could essentially become a millionaire’s playground for the few and the rich, at the expense of the wider population. There are also environmental concerns for what was once pitched, unsuccessfully, as a World Heritage Site.

On balance, however, most would concede that this level of investment is good for the local people, and will bring opportunity and trade links that could vastly speed up Africa’s progress into the world economy, and is more than the US or Western nations have been doing so far.

Britain’s relationship with China is relatively good, and certainly in the property market inward investment flows into the UK almost more than anywhere else thanks to its solid and profitable environment.

Despite pressure from American politicians, it also appears likely that the British government will go ahead with plans to use Huawei in the building of its 5G network.

Nobody can doubt the ambitious nature of the Chinese government, and on face value it appears to be one of entrepreneurism and adventure, but some caution is certainly advisable. Regardless of this, it’s probably fair to assume that the future is looking bright for world trade.