As is also the case with Chinese traditional philosophy, present, future and past always tend to coincide in one single choice in the Chinese strategic vision.
In Xi Jinping’s initial proposals for the “Belt and Road Initiative” – or, to use the official terminology, the Silk Road Economic Belt and the 21st Century Maritime Silk Road, which were outlined by him on two occasions between September and October 2013 – he starts from two evaluations, namely a strategic evaluation and another one having an immediate interest.
The Maritime Silk Road was actually outlined for the first time by the Chinese President in a speech to the Indonesian Parliament in October 2013, while the Terrestrial Silk Road was first quoted by Xi Jinping in his State visits to Central Asia in September 2013.
The first long-term strategic idea is based on the design of a Greater Eurasia, hinged around Russia, China and the great countries of the Heartland, namely the “world island” as Sir Halford Mackinder called it.
The second most immediate evaluation is that the world has not yet emerged from the great economic crisis which began in 2008.
The Thunder and the River, namely the moment of immediate concreteness and the infinite flow of Time – just to use two concepts and images of Taoism.
But where does the Terrestrial Silk Road pass and which seas are connected by the Maritime Silk Road?
Six corridors have been designed in great detail and paying specific attention to local characteristics: firstly, the New Eurasian Land Bridge, from Western China to Western Russia, which in the future will connect the city of Lyanyungang, in the Jangsu Province, with the Dutch city of Rotterdam.
It is mainly a railway line, with a link between Bulgaria and Turkey, crossing inevitably the Iranian territory.
Secondly the China-Mongolia-Russia Corridor, from Northern China to Eastern Russia; thirdly the China-Central Asia-Western Asia Corridor, from the territory of the People’s Republic of China to Turkey. Fourthly the Corridor from Southern China to the Indochinese peninsula up to Singapore; fifthly the China-Pakistan Corridor where, in the Gwadar port recently purchased by China, there will be one of the links between the Terrestrial and the Maritime Silk Roads. Sixthly the Bangladesh-China-India-Myanmar Corridor and finally the very long Maritime Silk Road, from the Chinese coast to Singapore up to the Mediterranean.
At strategic and economic levels, the individual projects are manifold and significant. Russia, in particular, together with China, is focused on establishing economic and financial alliances allowing to reach a great geopolitical result, which is currently the same both for Russia and China: reduced EU and NATO pressure on its Western and Southern borders and the related expansion of the Eurasian area of influence, precisely the New Greater Eurasia, towards the Mediterranean and our own Eurasian Peninsula, namely Western Europe.
While the United States failed to reach the TTIP agreements with the EU, which negotiated that dossier jointly, with the two Silk Roads, Russia and China will make to the EU and the entire Mediterranean region a proposal they will not be able to refuse – otherwise the current economic recession will persist – a proposal also combined with North America’s and European Central Bank’s monetary expansion policies.
With the two Silk Roads, the United States will be cut down to size drastically.
In fact, Xi Jinping policy lines on the “Belt and Road Initiative” point to the implementation of the old Maoist project of the “Three Worlds”: the World of “global peripheries”, which will have only China as beacon and geopolitical and military representation; the First World which is marginalized also militarily and finally the Second World, the world of the old Soviet universe, that the collapse of “revisionist imperialism” – as Mao Zedong would have called it – has made a stable ally of the new Chinese geopolitics.
Moreover, as early as 2001, the Russian Federation already established a Eurasian Economic Community with Belarus, Kazakhstan, Kyrgyzstan and Tajikistan. In 2010 Belarus and Kazakhstan created a customs union and finally, in 2011, those same countries signed a Declaration on Eurasian Economic Integration and a new Treaty establishing the Eurasian Economic Commission.
Furthermore, in 2012, the decision was also taken to launch the Eurasian Economic Union.
The future integration process will be centred on the Shanghai Cooperation Organization (SCO), ASEAN and hence the two Chinese “Initiatives”.
The aim is to limit the world recession damage but, above all, to mitigate the effects of Western sanctions on the Russian Federation.
Putin wants to quickly merge all strategic-economic integration initiatives into one single process, which would also optimize the anti-cyclical effects of all these initiatives and would provide the opportunity for a “Eurasian phase” of Russian politics – a phase that Vladimir Putin has already announced.
It is worth noting, however, that, by proposing the two integrated Silk Roads, China does not intend to establish binding political mechanisms or to recreate a series of military and strategic buffer zones around China.
Xi Jinping has been very clear about it.
In fact, China clearly wants a horizontal, non-vertical integration and it always clarifies that there is no hegemonic plan inherent in the Two Silk Roads.
Nor a political one in the strict sense of the term.
Quite the reverse. Indeed, the issue lies in putting an end to the US “hegemony”, not in creating others.
Moreover, macroeconomic data is already very interesting: considering the 2014 data, trade within the SCO region has increased by ten times.
It is worth recalling that in the SCO region (Russia, China, Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, India, Iran, Mongolia and Pakistan) 3.92 billion people live (according to 2014-2015 data), namely 54,4% of world’s population, that generates an aggregate GDP accounting for 32.2% of the global gross domestic product.
It is also worth noting that the Economic Silk Road begins in Xinjiang (hence the importance and the mortal danger represented by the Uighur jihad) and reaches the Caspian Sea, the Baltic Sea, the Black Sea, Ukraine and Romania up to Europe and the Mediterranean.
The meeting of the Beijing Forum held in May was attended by over thirty Heads of State and Government, as well as experts from 110 countries, including the United States. Sixty-five countries are already directly involved in the operations, while, in recent days, many Latin American countries have adhered to the project.
South America no longer wants to have “open veins” – just to use the title of a famous book by Eduardo Galeano, Open Veins of Latin America: Five centuries of the Pillage of a Continent .
Xi Jinping has also promised additional 100 billion yuan (equivalent to 14.5 billion US dollars) of new investment in road infrastructure, while China will also provide 60 billion yuan (8.7 billion US dollars) to fund the countries and the international organizations which participate in the project by creating infrastructure.
Furthermore, with specific reference to the two Silk Roads, China has already pledged 250 billion yuan worth of loans by the China Development Bank, as well as additional 130 billion yuan of the Export-Import Bank of China, further two billion yuan in food aid and one billion US dollars for the South-South cooperation fund.
Hence the total sum amounts to 480 billion yuan, while since 2015 the Russian Federation has replaced Saudi Arabia as the first oil exporter to China, by settling payments with the two national currencies, thus avoiding recourse to the US dollar.
Over the last seven years, Russian oil exports to China have more than doubled, with 550,000 barrels per day, while the area in which the US dollar is used gets increasingly narrower: currently only in the Third World does the US currency still reign, but it is a phenomenon that is bound to last for a short lapse of time.
In a situation in which the US public debt amounts to 20 trillion dollars, the Federal Reserve tends to raise interest rates in a world of zero or even negative interest rates and public spending is expected to rise under Trump’s Presidency, the 1971 old wisecrack by John Connally, the former Head of the Federal Reserve, is still topical: “The dollar is our currency, but it is your problem”.
In recent times, the dollar value in word trade has increased by about 25%.
It is currently 40% higher than in 2011.
Goldman Sachs also claims that the dollar is largely overvalued as against the other major currencies.
And 60% of the global economy is still somehow linked to the US currency value.
Hence we are no longer faced with the “Triffin dilemma”, namely the mechanism whereby as long as the US dollar remains the global reserve currency, trade and production create an additional demand for dollars.
If that happened, however, there should be a constant deficit in the US balance of payments, thus putting pressure on that currency and making it progressively unnecessary for trade.
Now we are in a similar situation, even though Triffin made reference to a context still governed by the Bretton Woods Agreements.
Moreover, the entry of the Chinese currency into the World Bank’s Special Drawing Rights system in 2016 currently allows larger yuan fluctuations. Hence considering this yuan ability, in particular, a free yuan is an excellent way to further internationalize the Chinese economy.
The steps of this process have already been marked: in 2010, the World Bank President, Zoellnick, assumed a new global gold-based financial system – the one that Keynes called the “tribal residue” of the economy.
In 2012, Iran accepted the yuan as means of payment for its oil.
In 2013 the Chinese Central Bank stated it no longer needed to accumulate reserves in foreign currencies. In 2014 gold could be bought on the Shanghai Stock Exchange with the yuan and in 2015 Russia accepted the yuan as means of payment for its oil supplies to China.
According to official statements, the Chinese Central Bank’s gold reserves have increased by almost 56% over the last three years.
Hence, if we consider all these data and statistics and we assess their strategic relevance, we can understand how and to what extent the Silk Road, as well as the Chinese and global Belt and Road Initiative will be the geopolitical, economic and financial paradigm of the near future.
GIANCARLO ELIA VALORI
Honorable de l’Académie des Sciences de l’Institut de France