I
recently returned from a fascinating two week speaking tour in China.
The occasion was the international premier of my newest book, One Belt,
One Road–China and the New Eurasian Century. In the course of my visit I
was invited by China’s Northwest University in Xi’an to give a lecture
and seminar on the present global political and economic situation in
the context of China’s New Economic Silk Road as the One Belt, One Road
project is often called. What I’ve seen in my many visits to China, and
have studied about the entirety of this enormously impressive
international infrastructure project convinces me that a Eurasian
Century at this point is unstoppable.
The idiotic wars of the Washington
war-hawks and their military industry–in Syria, in Ukraine, Libya, Iraq
and now the South China Sea provocations against China–are not going to
stop what is now clearly the most impressive and economically altering
project in more than a century.
The term “American Century” was
triumphantly proclaimed in a famous editorial in Life magazine in 1941
in the early phase of World War II, before the United States had even
entered the war, to describe the system publisher Henry Luce saw
dominating the postwar world after the fall of the rival
British Empire.
The American Century has lasted a mere
seven decades if we date from the end of the war. Its record has been
one of dismal failure on balance. The industrial base of the United
States, the predominant leading industrial nation and leading scientific
innovator, today is a hollowed, rotted shell with once-booming cities
like Detroit or Philadelphia or Los Angeles now burned-out ghettos of
unemployed and homeless.
The Federal Debt of the United States,
owing to the endless wars its Presidents engage in, as well as the
fruitless bailouts of Wall Street banks and Government Sponsored
Enterprises like Fannie Mae, is well over 103% of GDP at an astonishing
$19.5 trillion, or more than $163,000 per taxpaying American and
Washington is adding to the debt this year at near $600 billion.
Countries like China and Russia are moving away from subsidizing that
debt at a record pace.
America’s economic basic
infrastructure–bridges, sewer and water treatment plants, electric grid,
railways, highways–have been neglected for more than four decades for a
variety of reasons. The American Society of Civil Engineers recently
estimated that gross domestic product will be reduced by $4 trillion
between 2016 and 2025 because of lost business sales, rising costs and
reduced incomes if the country continues to underinvest in its
infrastructure. That is on top of the fact that they estimate the
country at present urgently requires new infrastructure investment of
$3.3 trillion by the coming decade just to
renew.
Yet US states and cities are not able to
finance such an investment in the future in the present debt situation,
nor is the debt-choked Federal Government, so long as a cartel of
corrupt brain-dead Wall Street banks and financial funds hold America to
ransom. This is the sunset for the American Century, a poorly disguised
imperial experiment in hubris and arrogance by a gaggle of boring old
patriarchs like David Rockefeller and his friends on Wall Street and in
the military industry. It is the starkest contrast to what is going on
to the east, across all Eurasia today.
Flowing the Thought to Transform
The Eurasian Century is the name I give
to the economic emergence of the countries contiguous from China across
Central Asia, Russia, Belarus, Iran and potentially Turkey. They are
being integrally linked through the largest public infrastructure
projects in modern history, in fact the most ambitious ever, largely
concentrated on the 2013 initiative by Chinese President Xi Jinping
called the One Belt, One Road initiative or OBOR. The project and its
implications for Europe and the rest of the world economy have been so
far greeted in the west with a stone silence that defies explanation.
It’s been now three years that have
transpired since then-new Chinese President Xi Jinping made one of his
first foreign visits to Kazakhstan where he discussed the idea of
building a vast, modern network of high-speed train lines crossing the
vast Eurasian land space from the Pacific coast of China and Russia
through Central Asia into Iran, into the states of the Eurasian Economic
Union, principally Russia and potentially on to the select states of
the European Union. That initial proposal was unveiled in detail last
year by the National Development and Reform Commission (NDRC), China’s
economic planning organization, and the ministries of Foreign Affairs
and Commerce.
It’s a useful point to look now more
closely at what has transpired to date. It reveals most impressive
developments, more because the development process is creative and
organic. The great project is no simple blueprint made by the Central
Committee of the Communist Party of China and then simply imposed, top
down, across the so-far 60 countries of Eurasia and South East Asia.
An international conference was recently
held in Xi’an, origin of the ancient version of One Belt, One Road,
namely the Silk Road. The purpose of the international gathering was to
review what has so far taken place. It’s fascinating, notably, in the
care that’s being taken by China to do it in a different way, as
indications so far are, different from the way American Robber Barons
like Cornelius Vanderbilt, E.H. Harriman, Jay Gould or Russell Sage
built rail monopolies and deluded and defrauded investors with railroad
monopolies more than a century ago.
The seminar, titled the Belt and Road
Initiative (BRI): Shared Memory and Common Development, on September
26th, brought together over 400 participants from more than 30 countries
including government officials, universities, corporations, think tanks
and media.
A key role is being played by Renmin
University of China’s Chongyang Institute for Financial Studies to
identify progress and problems of the OBOR project. Their report in
Xi’an presented principles underlying the OBOR international project: It
adheres to the principles of the UN Charter; it is completely open for
new participant nations to cooperate; it will follow market rules and
seek mutual benefit of participating
countries.
Those are noble words. What’s more
interesting is the flow process underway to realize such words and to
build the mammoth game-changing infrastructure.
Notably, China’s Xi Jinping decided to
encourage input from sources other than the state central planning
agency or the Communist Party for the complex OBOR. He encouraged
creation of private and independent think-tanks to become a source of
new creative ideas and approaches. Today there is a Chinese Think Tank
Cooperation Alliance group coordinating efforts around OBOR headed by
the dean of the Renmin University. In turn they partner with think tanks
along the OBOR route including think tanks in Iran, Turkey, India,
Nepal, Kazakhstan and other
countries.
There will be two main routes of the
OBOR. On land there are several routes or corridors in work. The
Initiative will focus on jointly building what is being called a new
Eurasian Land Bridge from China via Kazakhstan on to Rotterdam. Other
OBOR land rail corridors include developing China-Mongolia-Russia,
China-Central Asia-West Asia, China-Pakistan,
Bangladesh-China-India-Myanmar, and China-Indochina Peninsula economic
corridors.
v This is huge.
It will build on international transport
routes, relying on core cities along the OBOR route and using key
economic industrial parks as “cooperation platforms.” At sea, the
Initiative will focus on jointly building smooth, secure and efficient
transport routes connecting major sea ports along the “Belt and Road”
including modern upgraded super port construction that will link present
China ports at Haikou and Fujian with Kuala Lumpur’s port in Malaysia
at the Malacca Strait passage, Calcutta in India, Nairobi in Kenya and
via the Suez Canal to Athens and beyond. Crucial is that land and sea
parts of OBOR are seen as one whole circulatory system or flow of trade.
The OBOR Initiative will link key Eurasian ports with interior rail and pipeline infrastructure in a way not before seen.
To date China has signed memoranda of
understanding with 56 countries and regional organizations regarding
OBOR. Since his initial proposal in 2013, President Xi Jinping has
personally visited 37 countries to discuss implementation of OBOR. China
Railway Group and China Communications Construction Company have signed
contracts for key routes and ports in 26 countries. Power plants,
electricity transmission facilities and oil and gas pipelines, covering
19 countries along the “Belt and Road” in some 40 energy projects have
begun. China Unicom, China Telecom and China Mobile are speeding up
cross-border transmission projects in countries along the “Belt and
Road” to expand international telecommunication
infrastructure.
Already, taking the full sea and land
routes of OBOR, some $3 trillion of China trade since June 2013 has
flowed over the route, more than a quarter of China’s total trade
volume. To date China has also invested more than $51 billion in the
countries along the present OBOR route. The new land rail routes will
greatly reduce transportation costs across Eurasia, enable formerly
isolated regions to connect efficiently to sea and land markets and
ignite tremendous new economic growth across Eurasia.
The effects of the OBOR are already
beginning to appear. Earlier this year an Iranian container ship arrived
at Qinzhou Port in China with 978 containers from several countries
along the 21st-Century Maritime Silk Road opening the first shipping
route linking the Middle East and the Beibu Gulf or Gulf of Tonkin in
Vietnamese. In February 2016 a container train with Chinese goods took
only 14 days to complete the 5,900 mile (9,500km) journey from China’s
eastern Zhejiang province through Kazakhstan and Turkmenistan. That was
30 days shorter than the sea voyage from Shanghai to the Iranian port of
Bandar Abbas, according to the head of the Iranian railway company.
China and Iran, now formally part of the OBOR, have targeted bilateral
trade, none in US dollars by the way, to exceed $600 billion in the
coming
decade.
China is presently in negotiations with
28 countries China is in talks with 28 countries including Russia, on
high-speed rail projects, China’s train maker, China CNR reports.
It includes a major joint China-Russia
$15 billion high-speed Kazan to Moscow line. The 770 kilometers of track
between Moscow and Russia’s Tatarstan capital, Kazan, will cut time for
the journey from 12 hours now to just 3.5 hours. China has agreed to
invest $6 billion in the project which would become a part of a $100
billion high-speed railway between Moscow and Beijing.
Notably, for the new high-speed track
being laid, China is developing a new generation of trains capable of
reaching speeds of 400 kilometers per hour. And the new trains will
solve the costly rail gauge switching problem between China rails and
Russian. Trains in Russia run on a 1520mm track, compared to the
narrower 1435mm track used in Europe and China. Jia Limin, the head of
China’s high-speed rail innovation program told China Daily that, “The
train… will have wheels that can be adjusted to fit various gauges on
other countries’ tracks, compared with trains now that need to have
their wheels changed before entering foreign
systems.”
Given its strategy of building thousands of kilometers of high-speed
railways and developing its domestic Chinese rail sock manufacture as
well as other rail technology, China today is the world’s leading
producer of rail technology.
Financing the moving
Impressive is that China has secured
capital commitment for the OBOR from various sources including the China
Development Bank, Export-Import Bank of China, the China-initiated
Asian Infrastructure Investment Bank, the BRICS New Development Bank and
other sources including its Silk Road Fund to finance the huge
undertaking. The Silk Road Fund has posted $40 billion to fund the OBOR
projects. So far close to a quarter trillion US dollars of ready money
and another half trillion in supranational institutional working capital
is reasonably within
reach.
The Western doomsday reports of China’s
economy going down the tubes are simply either self-serving propaganda
of hedge funds or speculators or fed by lack of understanding of the
profound transformation in the entire structure of not only China’s but
all Eurasia’s economy through the One Belt One Road initiative. China is
undergoing a major transformation from a cheap-labor screwdriver
assembly nation to a high-value-added high-tech manufacturer.
Geopolitical transformation
The One Belt, One Road initiative of Xi
Jinping and the Eurasian partners, especially Russia, also has strategic
dimensions of major import. The construction of new infrastructure
corridors spanning across the Eurasian landmass in the form of highways,
railways, industrial parks, and oil and gas pipelines, OBOR is
connecting for the first time in the modern era landlocked regions of
hinterland China and Russia and Central Asia republics with the sea
ports. Linking key Eurasian industrial hubs to ports with efficient
transportation will revolutionize connectivity of hinterland industrial
products and raw materials of every kind. The Russian and Eurasian
lands, including China, contain perhaps the richest untapped
concentration of every raw material known.
The One Belt, One Road also includes oil
and gas pipeline transportation corridors. In January 2015 the
Myanmar-China Pipeline project, 2400 km long, was completed, linking
Myanmar’s deep-water port of Kyaukphyu on Maday Island in the Bay of
Bengal with Kunming in Yunnan province in southeast China near Myanmar’s
border. It’s a joint project of the China Development Bank and Myanmar
Foreign Investment Bank. The new pipeline allows China to import up to
400,000 barrels a day of Middle East oil over a route 1100 km shorter
than the previous Malacca Strait sea route, reducing time to reach the
large industrial hub city of Kunming by 30%, major economic gains, and
avoiding the strategic chokepoint of the Malacca Strait where the US
Navy’s Sixth Fleet
dominates.
Previously, 80% of Chinese oil and gas
imports crossed the Malacca straits and were subject to US controls.
Were the present escalating tensions between Washington and China over
the South China Sea or other issues to escalate, China would be brought
to her knees much like Japan prior to declaring war in 1941, when the
USA embargoed her oil. A second pipeline brings natural gas from Qatar
and Myanmar gas fields to
China.
The OBOR includes oil and gas pipelines that reduce time and distance to imports of Middle East oil and gas.
China will pay $53 billion to Myanmar in
pipeline royalties over 30 years. They will also invest $25 million in
schooling and other social development projects along the pipeline and
10% of the gas will stay in
Burma.
Mackinder Outflanked?
The totality of the strategy behind Xi
Jinping’s Eurasian One belt, One Road rail, sea and pipeline initiative,
which is moving quietly and impressively forward, is transforming the
world geopolitical map. In 1904 a British geographer, Sir Halford
Mackinder, a fervid champion of the British Empire, unveiled a brilliant
concept in a speech to the London Royal Geographical Society titled the
Geographical Pivot of History. That essay has shaped both British and
American global strategy of hegemony and domination to the present. It
was complemented by US Admiral Alfred Thayer Mahan’s 1890 work, The
Influence of Sea Power Upon History, which advocated “sea power,”
stating that nations with domination of the seas, as the British Empire
or later the USA, would dominate the world.
The One Belt, One Road, by linking all
the contiguous land areas of Eurasia to the related network of strategic
new or enlarged deep-water ports of OBOR’s Maritime Silk Road, has
rendered US geopolitical strategy a devastating blow at a time the
hegemony of America is failing as never in its short history. The
Eurasian Century today is inevitable and unstoppable. Built on different
principles of cooperation rather than domination, it just might offer a
model for the bankrupt United States and the soon-bankrupt European
Union, to build up true prosperity not based on looting and debt
slavery.
F. William Engdahl is
strategic risk consultant and lecturer, he holds a degree in politics
from Princeton University and is a best-selling author on oil and
geopolitics, exclusively for the online magazine “New Eastern Outlook.”
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