Monday, May 8, 2017

CPEC and How China Will Dominate World Trade

While the United States seems to be moving toward withdrawing from trade agreements and putting up roadblocks with its current trading partners, China and its partner, Pakistan, are moving in the opposite direction, part of China's plan to further open trade with the globe.  As you will see in this posting, this is just another piece of the puzzle in the growing transition from a unipolar, Western-based trade system to a multipolar trade system with more than one nation or group of nations dominating world trade.

Many of you may not have heard about the Silk Road Economic Belt.  The Silk Road Belt is a modern equivalent to the Silk Road network of trade routes which connected China to the Arab world.  In 2013, China's president, Xi Jinping, proposed the establishment of a network of roads, pipelines, railways, energy and utility corridors that would connect China, Central Asia, Western Asia and parts of South Asia through the One Belt, One Road (OBOR) initiative, also known as the Belt and Road Initiative.  The Silk Road Economic Belt has several main routes:

1.) connecting China to Europe by way of Central Asia.

2.) connecting China to the Persian Gulf.

3.) connecting China to the Mediterranean by way of West Asia.

4.) connecting China to the Indian Ocean by way of South Asia.

In total, more than 60 nations with a combined GDP of $21 trillion (more than that of the United States) have expressed interest in what will become the world's largest platform for economic cooperation.

From the Mercator Institute for China Studies, here is a map showing the proposed economic corridors, land trade routes, pipelines and maritime ports for One Belt, One Road:

     
One of the most important parts of the Silk Road Economic Belt is the overland connection between China and Pakistan, known as the China-Pakistan Economic Corridor (CPEC), a $55 billion project which will connect East Asia with South Asia without using the Strait of Malacca, a routing that will make it more difficult for the United States Navy to interrupt the flow of goods through the Malacca maritime choke point.  This will also provide an overland route for China to connect to the India Ocean and allows for the development of an even more massive trading bloc involving Iran, the Russia-led Eurasian Economic Union and the South Asia Association for Regional Cooperation.  It also allows for connection to Africa's eastern coastline, thus allowing easier access to the entire African continent.

Let's look more closely at the various infrastructure projects that make up CPEC, one of the key components of the Silk Road Economic Belt.  Here are three maps showing the highway network, the railway network and the fibre optic network components:




Here are cost estimates for two key components of CPEC:

1.) Infrastructure:


2.) Energy:


While there have been development issues including security and energy supplies, here is a progress update of some of the components of CPEC:




A great deal of investment involves the development of Pakistans' Gwadar Port located on the Arabian Sea, one of the nation's three deep water ports after Karachi and Qasim.  Construction of the road between Gwadar and Saindak will be the shortest route between Central Asia and the sea and the port at Gwadar offers Afghanistan and the Central Asian Republics access to the sea, particularly for their oil and gas industries.  Here are the cost estimates for improvements at Gwadar, all funded by China:


It is interesting to see that China is also aiding in the development of a hospital and technical/vocational institute in Gwadar, all part of their "winning of the hearts and minds" business plan.

Here is a summary map showing the major CPEC projects:


As you can see, China is making significant inroads into the development of a new China-based trading partnership that will allow it access to global markets without the fear of interference by the world's sole superpower.  By developing the One Belt, One Road initiative, particularly the CPEC component, China is moving in the opposite direction to what appears to be an increasingly isolated United States when it comes to international trade.  Only time will tell what impact the development of a multipolar trade system will have on the now dominant American economy.

2 comments:

  1. I am amazed by the information you provide from various resources every time. What is your secret?

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    1. I spend significant time researching various subjects that interest me. Fortunately, in the internet age, there is so much source information out there that is not covered (or poorly covered) by the mainstream media. Thanks for reading!

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