The New Silk Road Strategy – China’s real answer to the TPP?

Chinese interest in the Russia-Kazakhstan spaceport feud

Picture 1: Soyuz – will it stay or will it go? (Source: http://www.space.com/18838-baikonur-cosmodrome-kazakhstan-jurisdiction.html)

Back in the day, manned Soyuz mission into space sent shivers through observers. Russia’s main spaceport, Roscosmos, then in Soviet Union and now based in Baikonur in central Kazakhstan, has a stirring record of blasting off Sputnik, Laika in the 1950s, and Yuri Gagarin in 1961. Today, Roscosmos still launches most of its rockets from Baikonur, about 22 -25 times each year, and in turn pays about $115m a year to lease the remote chunk of prairie. Currently, the Soyuz is the only way to get people to the 15-nation International Space Station.

But Kazakhstan and its tenant are bickering. The chief of the Kazakh space agency, Kazcosmos, has threatened to tear up the lease. Russia, in turn, is building a new spaceport on its own territory, threatening to make the cosmodrome redundant. And China, generally uninterested in the political or ideological agenda of other countries, is now taking keen interest in resolving this standoff between former Soviet Union members. Why?

China courts Central Asia

The answer lies in China’s multibillion-dollar plans for a land based “New Silk Road”. As Chinese manufacturers move inland, getting their products to European markets has become more complex. The journey back to the coast and halfway around the world by sea takes up to 60 days, an eternity for fast fashion products. As shown in Picture 2, both Kaszakstan and Russia provide that much-needed backdoor route. Trains from Chongqing in south-west China to Duisburg in Germany, 10,800 km (6,700 miles) via Kazakhstan, Russia, Belarus and Poland, supposedly take just 14 days. Kazakhstan’s state-run railway, KTZ, promises to spend $44 billion over the next five years to make that 10 days. On Nov. 8, Chinese President Xi Jinping announced the establishment of a $40 billion Silk Road infrastructure fund, focusing on building “roads, railways, ports and airports across Central Asia and South Asia,” according to Reuters.

Picture 3: Land and sea based Silk Routes (Source: http://thediplomat.com/2014/05/chinas-new-silk-road-vision-revealed/)

The land based silk route complements China attempt to dominate the sea based maritime route (Picture 3), which may even extend to the Panama Canal as highlighted in my previous blog, “Chinese waterway in Central America”, (dated October 25, 2014).

New Silk Route – Chinese response to TPP?

The United States is promoting the Trans-Pacific Partnership (TPP), a massive free trade agreement including 12 nations, excluding China. Proponents of the TPP see it as a new vision for free trade and market liberalization around the world. It would integrate the U.S. economy with Asia to a degree so far unseen, providing a backbone for the U.S. amalgamation to Asia. In doing so, it would set higher standards for doing business, with clauses intended to protect both the rights of workers and the environment. It may even become more authoritative than the WTO, which currently sets the norms for international trade. It also addresses some of the hot-button issues like subsidies to the agricultural sector, manufacturing of parts and components, trade in services, and intellectual property rights protections, which the WTO is silent on.

Certain Washington insiders believe that the TPP could lead to one of two responses from China, both of which are potentially advantageous to U.S. interests: the TPP’s stringent labor and environmental standards would deter China, eliminating itself out of a huge and beneficial trading block in its own backyard. Or, China would request to join, and in the process become a more economically open nation.

Conclusion

Firstly, there seem to be little evidence that China would adhere to any of these expectations. From the Chinese perspective, the Silk Road strategy is a far better fit for Beijing than the TPP. With the TPP, the US emphasizes high standards in market liberalization and openness, and seeks to reduce the roles of governments in market operations and to restrict the importance of state-owned enterprises (SOEs) in the economies of its members. China’s Silk Road strategy does not have explicit “standards,” except for a vague idea of mutual interest and mutual respect. In addition, it relies on top-level government coordination, and would enhance the power of large SOEs and governments. The TPP focuses on services, intellectual property rights, and domestic regulations. The Silk Road strategy aims to facilitate large-scale infrastructure construction, energy sale and transport, and relocation of manufacturing industries.

Secondly, as China seeks to establish itself as an economic and institutional equal to the US, it is inevitable that Beijing will have to take on a more active involvement in regional diplomacy. Relationship among countries in the New Silk route is shaky, as most are embroiled in ethnic, political and economic conflicts. Hence China will have to consider leading the pursuit of regional peace with as much vigor as it does its economical quest, if the country intends to not just attain, but also to sustain its vision as an expanding world power.

 Sources:

http://www.airspacemag.com/space/spaceport-siberia-180951416/?no-ist

http://www.space.com/18838-baikonur-cosmodrome-kazakhstan-jurisdiction.html

http://thediplomat.com/2014/05/chinas-new-silk-road-vision-revealed/

http://news.yahoo.com/china-pledges-40-billion-silk-083300261.html

http://rt.com/news/203515-china-silk-road-economy/

http://online.wsj.com/articles/chinas-new-trade-routes-center-it-on-geopolitical-map-1415559290

http://thediplomat.com/2014/10/following-the-new-silk-road/

 

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