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China Is Building A Massive New Silk Road Trade Network: This Will Provide Important Challenges To The U.S.

ArmchairPolitiicianChina, July 27, 2017, by Brad Peery, WWW. ArmchairPolitician.US, ArmchairPolitician.US@gmail.com

China has underway a massive project to build a land and sea network connecting Europe, Asia, the Middle East and Africa. China is planning to spend as much as $3 billion on a trade route infrastructure in over 60 countries. This will include spending on ports, roads, railways, airports, power plants, telecommunications, and other infrastructure, including gas and oil pipelines.

A portion of this network will connect Asia and Europe with a modern $1.4 trillion project along the route used hundreds of years ago for Marco Polo’s ancient “Silk Road”

In May, Chinese President Xi Jinping will hosted 28 heads of state at a summit about China’s “Belt and Road” initiative. The project should significantly reduce trading costs for network participants, and integrate their supply network with China and other countries. Analysts suggest the project could shift the center of global economy and challenge the U.S.-led world order. Among Xi’s guests were Russian President Vladimir Putin, as well as the leaders of Turkey, Italy, Pakistan and the Philippines. A minister from North Korea attended, perhaps signifying the limited effort China is making to isolate North Korea. The U.S. sent Matt Pottinger, a special assistant to President Donald Trump and senior director for East Asia on the National Security Council.

China has made massive infrastructure investments in China, and this trade project could provide places for China to make infrastructure investments in Asia, Africa, the Middle East, and Europe, as domestic spending slows. China has already invested more than $50 billion in 20 countries along the routes.

Project investments so far include:
1. The Gwandar port project in Pakistan will open trade routes to China’s landlocked western region of Xinjiang;
2. The China-Myanmar oil pipeline provides China with its first overland access to Middle East crude; and
3. The Chinese control a Greek port of Piraeus. It will provide a maritime gateway to Central Europe.

Former U.S. Assistant Defense Secretary Chas Freeman described the Belt and Road project as “potentially the most transformative engineering effort in human history.”
He highlighted that the countries involved boast about 55 percent of global economic output, 70 percent of the world’s population and an estimated 75 percent of known energy reserves. Wilbur Ross, the Secretary of Commerce said that this project will open up a $2 billion market to the U.S.

ArmchairPolitician.US Opinion:
China will use the Belt and Road trade route to develop relationships, and seek investments from countries along the route that will make them dependent on China financially, and from a trading standpoint.

The U.S. and U.S. companies could benefit substantially by supplying technology, and resources to the various projects. The U.S. government will decline in stature as a trading resource. It will also be challenged politically, to the extent the countries on the route develop stronger political ties. One example is that the U.S. has relationships with Pakistan and India, who are enemies, because of disputes over Kasmir. The route will go through Pakistan and Kasmir, and India did not go to the meeting in China in May. The project will probably strengthen the ties between China and Pakistan. Even though the U.S. provides foreign aid to Pakistan, as well as Afghanistan, Pakistan has funded al-Queda and the Taliban in Afghanistan. Our relationship with Pakistan could become further strained, while China’s becomes stronger.

There are many details and issues with regard to Belt and Road that we will address in future blogs.

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