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Will China Win?

Posted June 18, 2015

A relative the other day asked how long it took to get to Washington, D.C. from my house. I quipped that it was four hours and 25 miles.

Fellow travelers in Asia, Africa, and Eastern Europe will know that getting from here to there involves a kidney-shattering drive through a demolition derby of Zen-mastered chaos where death, dismemberment, or a dented fender wait patiently like fetid water in an open-pit pothole. There are rules of the road, but they are guided by physics, bravado, and fear.

Whenever I get to Germany, Japan, or America, I am always grateful for a clean airport. Gandhi said that the greatness of a civilization can be judged by how it treats its animals. I disagree. Advanced civilizations can be judged on their public bathrooms and their roads.

Marco...

In the late 1200s, Marco Polo embarked on a 24-year journey along caravan trading routes from Venice across central Asia and to the heart of China — a trip made possible by the expansion of the Mongol Empire.

He met the Kublai Khan, the founder of the Yuan dynasty, and returned a wealthy merchant. Along with noodles, the world atlas he brought back laid the foundation for the European age of exploration.

New Silk Road

Today, China is seeking to resurrect the great trading routes of the last millennium... and in so doing will build the largest infrastructure project ever undertaken. Chinese President Xi Jinping has called this the New Silk Road.

The vision is to change the economic map of the globe and cement China — the Middle Kingdom — as the dominant economic force.

According to Business Insider:

The ambitious vision is to resurrect the ancient Silk Road as a modern transit, trade, and economic corridor that runs from Shanghai to Berlin. The 'Road' will traverse China, Mongolia, Russia, Belarus, Poland, and Germany, extending more than 8,000 miles, creating an economic zone that extends over one third the circumference of the earth.

The plan envisions building high-speed railroads, roads and highways, energy transmission and distributions networks, and fiber optic networks. Cities and ports along the route will be targeted for economic development.

Fair Winds and Following Seas

There will also be a maritime silk road (MSR). Ports and sea routes will be built up and established from the Far East to the Mediterranean.

This is all tied in with the new Infrastructure Investment Bank and the plan to end the U.S. dollar dominance of global trade. So far, 58 countries have signed on for the plan. Russia is an enthusiastic backer.

The full project will likely take decades and cost trillions of dollars. China has already put up over $100 billion in various banks to get the project started.

This is a game changer for the world economy. Already Goldman Sachs and Blackstone are launching international Infrastructure Investment funds.

Worked for Ike

Scholars tell us that the Interstate Highway system in the USA built by President Eisenhower returned $6 for every $1 spent — a 500% return. Easy movement of people, goods, and services lowers end costs, increases the speed of business, transfers knowledge, and spreads culture.

Here is the New Silk Road map released in May by the Chinese State:

silk road

China is hot out of the gate. Don't think about this as the next “Big Dig” or the rebuilding of the World Trade Center. Asia can move at speeds that America has forgotten...

Last month, President Xi met with the leader of Kazakhstan to sign deals on high-speed rail lines between Kazakhstan, Russia, and China. The Chinese line is already built.

The next day, President Xi met with Russian President Vladimir Putin and signed a number of hundred-billion-dollar deals, including the high-speed train from Moscow to Beijing and oil and gas pipelines.

The week after that, China Railway Group won a $390 million contract to build the railroad, along with two Russian railway companies. Then Xi went to Belarus and got a deal for a high-speed rail extension. China also picked up billion-dollar deals in Africa, Hungary, and Pakistan. And that is just the beginning...

The New Silk Road is a big deal. Modern roads, rails, pipelines, fiber optics, ports... these are tools that increase trade, move money, and change culture. The New Silk Road will create fortunes and cast asunder outdated business models.

If President Xi pulls this off, he will have joined three continents in a way we haven’t seen since the assassination of Berdi Beg in 1359.

All the best,

Christian DeHaemer Signature

Christian DeHaemer

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Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor's page.

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