How will the world look like once the Belt and Road Initiative is finalized? We asked Parag Khanna, global strategy advisor.
Constructing the New Silk Road
Sometimes it is good to look back at history to find inspiration for the future. With the New Silk Road, China is changing the world of logistic. Just as the ancient Silk Road once brought goods and ideas between the East and the West, new routes over land and by sea are again connecting Asia with Europe and beyond.
It has been called “the biggest project of the century” and goes by several different names. It used to be called One Belt One Road. Today the official name is changed to the Belt and Road Initiative, in short BRI. In daily use, however, it is called by perhaps its most beautiful name: The New Silk Road. It is a reference to the ancient merchant route known as the Silk Road which emerged about 2,000 years ago, as the demand for Chinese silk increased in the West. From the former Chinese capital Xian, merchants travelled through central Asia, passing by legendary towns such as Samarkand, on their way to the markets in the cities of Middle East and Southern Europe. Besides bringing goods between the East and the West, the trade on the Silk Road also stimulated the exchange of ideas, science and culture.
In a speech in 2013, Chinese president Xi Jinping officially launched the vision of a New Silk Road. According to Xi, the project is the beginning of a “new era of globalization” which will drastically increase the connectivity between Asia, Europe, Africa – and even further beyond. Panama is also participating in the initiative and there are initiatives to include more parts of Latin America and the Caribbean.
Construction projects in more than 60 countries are planned or already taking place and China has closed 173 deals with more than 120 countries as well as 29 international organizations. As more and more countries are participating, the project continues to grow, and the total extent of the New Silk Road is still to be seen. But when finished in 2049, the 100th anniversary of the People’s Republic of China, this ambitious megaproject will span across at least three continents and involve over half of the world’s population.
The new trade routes are expected to be a game changer for global logistic flows – and the effects are already being noticed.
Since January 2019 goods are being transported by train on the new rail Silk Road between China and Europe. The trains are rolling at an average speed of 80 km/h through the endless steppes of central Asia, passing through newly built towns along the way. In some cases, these new towns have been developed so quickly that they still cannot be found on most printed maps. Yet, they are inhabited by thousands of people. And soon it might be as many as 100,000, as in the case with the new city Nurkent which is being developed around Khorgos on the Chinese-Kazakhstan border. Here, close to the Eurasian “Pole of Inaccessibility”, which means as far away as you possible can get from any ocean and hence literally in the middle of nowhere, lies the largest dry-port in the world.
Khorgos Gateway is one of the main logistical key-points on the New Silk Road where the total number of handled containers per year is expected to surpass 500,000 already 2020.
Not too far from Khorgos lies the sleepy town of Usharal. Life is about to change dramatically here too. Today the town is connected to the next city via a road that has been neglected for decades. Now, a new highway is constructed that will be finalized in four years. The Chinese construction company CITIC Group is responsible for the re-construction, which is part of the Belt and Road initiative.
“It is an extremely long construction site, more than 700 kilometers and we have more than 1,000 machines working on it. This is the largest project of my career so far,” says Project Manager Yang Bo at CITIC Group.
He has more than 60 Volvo excavators working along the construction site and Bo is very pleased with their performance.
“Volvo machines are not cheap to purchase. But they are high quality machines and we can already tell our investment will pay off in the long run,” he says.
The scale of the Usharal-Taldykorgan project requires a large workforce. Yang Bo has 2,000 operators working for him. Among them are 1,500 local Kazakhs, while 500 are Chinese employees.
“It is complex to work in a cross-cultural environment. Chinese and Kazakh culture differs, for example in how we pay attention to time. But we have worked out our difficulties and today operations work very smoothly. One needs to respect each other and communicate to bridge the gaps,” says Yang Bo.
He feels strong pride in the re-construction of the road from Usharal and the fact that it will improve life for the people living in the city.
“They will have a safe road that connects them better to the rest of the area. This will bring work to Usharal,” he says.
Yang Bo feels strongly about the project from a personal point of view too.
“My grandparents worked in the former Soviet Union and they told me about it while I grew up. I feel they are sending me a message every time I see a camel. Camels were the first means of transportation here back then,” says Yang Bo.
Nevertheless, the New Silk Road is not only bringing change on the steppe of Central Asia. In Duisburg, Germany, another logistical key point of the route has emerged. On the area of a former steelwork at the junction of the rivers Ruhr and Rhine, the world’s largest inland port has been created – and with that thousands of well needed jobs in the region. Around 30 trains per week arrive from China at Duisburg where they are reloaded for further transport to London, Madrid or the port of Rotterdam. The number of “China trains” are higher each year and play a large role in the increased rail freight at the port. The trains from China could bring much more freight if the travel time is shortened even further. The “problem” lies in Europe where the trains need about seven days from Poland to Duisburg. But the European tracks can be used more efficiently and the total travel time from southern China to Duisburg is possible in as little as eight days. That is almost the same time needed as when shipping by air – but to a much lower cost.
Taking it all into consideration – the speed, the cost and the efficiency – makes it obvious that the resurrection of the Silk Road will have a huge impact on the world logistic in the decades to come.
The Belt and Road Initiative has a major effect on the construction business. Volvo is involved in 24 projects within the initiative. Now, the megaproject opens up for new collaborations.