Three Clarifications of the 21st Century Maritime Silk Road


CHINESE President Xi Jinping proposed the joint building of the Silk Road Economic Belt in September 2013 during his visit to Kazakhstan. One month later during his trip to Southeast Asia, the President put forward the idea of the 21st Century Maritime Silk Road. The Belt and Road Initiatives have since emerged as China’s major diplomatic strategy in the new era. The Central Economic Work Conference held last December stated that implementation of the initiatives would take priority in the country’s efforts towards optimizing its geographical pattern of economic development.

Since the 1990s, several regions and countries, including the U.S., Russia, Europe, Japan, and India, have presented their respective versions of the Silk Road plan. China’s Belt and Road Initiatives, however, are distinct in stressing cooperation and joint construction; also in drawing strength from the respective characteristics and development models of countries along the road. Xi’s proposals have consequently been warmly received by these countries’ leaders and elites.

There are misgivings, however, about the Belt and Road Initiatives, both in and outside China, attributable to concerns over national interests. Why is China proposing the 21st Century Maritime Silk Road at this time? What are the ramifications with respect to the interests of other countries?

To answer these questions, China International Publishing Group (CIPG) reporters attended the international conference convened in Fuzhou last February under the theme of Collectively Building the 21st Century Maritime Silk Road and Creating a Community of Common Destiny. There they interviewed some of the officials, scholars, and businesspeople participating in the event. 


Why is China putting forward the idea of the 21st Century Maritime Silk Road at this time? Is it an Asian version of the Marshall Plan?

International Monetary Fund (IMF) statistics show that China, the world’s second largest economy, contributed 27.8 percent to world economic growth in 2014 — the largest share of all countries. As the world’s largest developing country, however, China faces a multitude of domestic problems that demand more reforms. Similarly, Asia, as a main engine of the world economy, must also resolve a number of conundrums, including low levels of regional integration, uneven inter-regional development, and poor infrastructure connectivity. It is under this context that China advocates the 21st Century Maritime Silk Road, and is hence mobilizing financial and other resources.

Noriyoshi Ehara, chief economist at Japan’s Institute of International Trade and Investment, expressed his view that Chinese economy took off after the country commenced opening-up and reform, and that by adopting the Belt and Road Initiatives China intends to share the fruits of its economic development with the rest of the world. In the early days of reform the late Chinese leader Deng Xiaoping made the famous remark that the state should allow certain people to become wealthy before prosperity throughout the nation could be realized. Noriyoshi Ehara sees the Belt and Road Initiatives as an expression of China’s willingness — having become better off as a result of opening-up and reform — to strive together with all countries along the ancient trade route for common prosperity.

Li Xiangyang, director of the National Institute of International Strategy, Chinese Academy of Social Sciences (CASS), believes that building a 21st Century Maritime Silk Road will achieve China’s goal of comprehensively deepening opening-up and reform. Mr. Li divides China’s opening-up and reform into three stages: the first lasted from its commencement in 1978 to Deng Xiaoping’s famous southern tour speeches in 1992; the second ended in 2001 with China’s accession to the WTO; and the years following constitute the third stage. For the past 30 or more years the country’s opening-up drive has mainly focused on its coastal areas. China is now ready for more comprehensive opening-up.

Li Mingjiang, associate professor of Nanyang Technological University of Singapore, agreed. He believes that, at the current stage of development, China needs a tour de force that will spur deeper, fuller, and higher-level opening-up, and that the 21st Century Maritime Silk Road fits the bill. The initiative also complies with China’s diplomatic requirements in the neighboring region. As Prof. Li sees it, China’s relations with its neighbors were largely stable for 20 or more years until new challenges appeared — the U.S.’s “Pivot to Asia” policy, Japan and India’s intensified efforts to step up exchanges with countries surrounding China, and territorial disputes that stoke suspicions about China among some of its neighbors.

The 21st Century Maritime Silk Road Initiative can help alleviate these tensions and reduce differences by steering the region’s attention towards exchanges and cooperation. This will create a more benign diplomatic environment for China and to some extent improve its image.

As to the view that the Belt and Road Initiatives are a modern vision of the Marshall Plan, James Leroy Peck of the U.S.-China Book Design Press expressed the view that there are fundamental differences between the two projects. The Belt and Road Initiatives do not betoken political aspirations. Their aim is rather to create an open, inclusive, and multi-layered platform of participation for all countries in the region.

Prof. Li Mingjiang conceded that there are similarities between the Chinese initiatives and the Marshall Plan, insofar as both projects consist in one country offering the necessary capital and resources to stimulate the economic development of others. Yet they are essentially different. The former is not motivated by either ideological notions or global competitiveness. The purpose of the latter, however, was to counter the Soviet-led Eastern bloc, and consequently ideology-oriented. The Marshall Plan was moreover a unilateral aid program, whereas the Belt and Road Initiatives involve cooperation and collective construction, and invite input from all countries along the Silk Road.  


How will the 21st Century Maritime Silk Road benefit countries other than China?

James Leroy Peck predicts that the initiative will bring remarkable benefits to countries along the Silk Road. Many have certain historical bonds, but insufficient economic linkages under the current international order. The 21st Century Maritime Silk Road, James Leroy Peck believes, will facilitate economic interactions among countries along it, and also improve cultural mutual understanding and mutual respect, so generating tremendous vitality. The program is consequently a valuable opportunity for these countries and for the world economy as a whole.

Khin Maung Lynn, joint secretary of Myanmar Institute of Strategic and International Studies, told CIPG reporters that, due to its long coastline, Myanmar has many natural deep-water harbors. They, however, lack good planning and management, as well as infrastructure. There are hopes in his country that major economies such as China will invest in these areas and so enhance regional connectivity.

Dr. Madan Kumar Dahal, chairman of Mega Bank Nepal Limited, told one reporter that Nepal has more than 6,000 rivers but no direct access to the sea. The Himalayan country, therefore, needs China’s help with shipping infrastructure. Meanwhile, the shortfall in power supply that causes frequent blackouts, combined with Nepal’s rich hydropower development potential, imply attractive opportunities for Chinese investment.  

Laos, a landlocked country, is eager to become better connected. Yong Chanthalangsy, director general of the Institute of Foreign Affairs, Ministry of Foreign Affairs of Lao PDR, revealed that the Laos government has an “ambitious” plan to build road and railway links with neighboring countries. One is a 421-km expressway to China via Thailand.

The Singapore business domain also has high expectations of the 21st Century Maritime Silk Road. Teo Siong Seng, chairman of Singapore Business Federation and general manager of Pacific International Lines Pte Ltd., told the reporters: “Singapore, located on the Strait of Malacca, is known as the crossroad of the East. When recalling Ming Dynasty navigator Zheng He’s venture to the western oceans, Singapore could play an even more important role in construction of the 21st Century Maritime Silk Road.”  

This year marks the 25th anniversary of establishment of diplomatic relations between the two countries, and also Singapore’s 50th birthday. The Singapore Business Federation looks forward to joining hands with the relevant parties in China in hosting a seminar in Singapore on the 21st Century Maritime Silk Road, for the purpose of promoting understanding of the initiative. Invitees will include representatives of other ASEAN countries.

Babar Sultan Makhdoo, editor-in-chief of the Daily Mail International of Pakistan, said that the Belt and Road Initiatives endeavor to integrate the development plans of individual countries towards harmonious, win-win development. This is why they are so warmly received by all countries concerned. He hopes China will capitalize on the globalization trend and set up a platform on which to share its fruits of development with other countries. “The Belt and Road Initiatives will undoubtedly promote broad, all-rounded regional cooperation.”


What is the role of corporations in a grandiose project like the Belt and Road Initiatives that is government-led?  

Bai Peijun, executive deputy director of COSCO’s R&D Center, told the reporters that the proposed 21st Century Maritime Silk Road Initiative will have far-reaching impact on his company. But, he cautioned, businesses must gear themselves up to adapt to the “new normal” in overseas investment that will inevitably arise with the creation of this new maritime route.

There are reports that after COSCO bought a pivotal port in Greece its performance improved dramatically, and that the formerly regular employee walkouts ceased soon after the Chinese company took over management. The port was back in the black within a year, and thereafter reported growing profits. But after the left-wing party took power, the port scrapped certain policies introduced by its right-wing predecessor. This caused problems for COSCO at the next stage of its purchasing deal. Mr. Bai suggested that, in building the 21st Century Maritime Silk Road, the government, corporations and media work together towards setting up a framework to help businesses overcome obstacles created by investment policies, differing business environments, culture, and values, and trade protectionism in foreign markets. All constitute barricades that companies cannot surmount alone.  

Li Xiangyang of CASS also pointed out that the government-business relationship could be an issue demanding appropriate handling in the Belt and Road Initiatives. Companies work according to market rules, and have no obligation to comply with any strategic state plan. But without effective corporate community participation, the plan could be downgraded to a foreign aid program of short duration. To avoid such a scenario, Li suggested that the government introduce legal and financial incentives for corporation participation. He recommended that their implementation be differentiated among state-owned enterprises, private Chinese companies, and foreign-funded firms.  

Sameh El-Shahat, CEO of China-i Limited, has long experience of working with Chinese companies. He recognizes the significant role that Chinese enterprises play in the Belt and Road Initiatives, but raised a grim risk that they face in the absence of an effective risk evaluation and control mechanism. Without a pre-estimate of political risks, Chinese companies contemplating investment in a foreign country have no backup should drastic shifts in that country’s political environment occur after they have entered that market.

Mr. El-Shahat remarked that Chinese companies place importance on building rapport with the government of the host country, even though it is not an important factor in international operations. Given the high turnover of administrations in certain countries, it would be wiser for Chinese investors to build bonds with local communities. In addition to business chambers, they should also form social alliances with citizenry of the host country. It takes more than funding for public utilities such as railways, roads, hospitals, and schools to win the hearts of local inhabitants. Good public relations demand effective communications and the ability to reach out. Chinese companies abroad lag behind in this respect, but can compensate through social alliances.

Mr. El-Shahat also strongly advised Chinese investors to fine-tune their approaches to different nations. Countries in any particular vicinity, such as the Philippines, Indonesia, and Myanmar, each have distinct domestic situations that in no way fit a stereotype.