The concept of a new Silk Road was born in China not so long ago. In 2013, Chinese President Xi Jinping announced the idea officially, although it circulated in intellectual circles of the country since 2012. A concrete plan of action within the economic strategy was born in 2015. Since then, the country has begun to involve partner countries that are in its strategic zone.
The new Chinese Silk Road as an innovative economic strategy consists of two programs: the program for creating the economic belt of the Silk Road and the network of sea lanes between the ASEAN countries, inform Economic News.
The first part of the strategy envisages the organization of an infrastructurally modernized China-Europe communications belt which will allow for the uninterrupted supply of goods along the Europe-China route, significantly reducing the time spent on deliveries. China itself originally intended to add about $ 2.5 trillion to its own annual trade turnover in ten years of strategy implementation. It should be due to the intensification of trade ties with countries in the belt of the new Silk Road.
55% of world GDP, 70% of the world’s population and 75% of all known energy resources will potentially account for the new Silk Road, analysts of the Institute for Strategic, Political and Security Studies and Economic Consulting write. If this initiative is implemented in practice, it can seriously affect the geopolitical landscape and lead to the creation of a number of alternative economic associations and opportunities.
Ukraine, presumably, will benefit from this, including the flow of investment and the possibilities for infrastructure modernization. The concept of the economic belt of the Silk Road implies not so much the creation of a network of profitable transport corridors and the unification of infrastructure for more convenient transportation of goods along the route. Globally, it aims to create an alternative regional economic space. Ukraine can take an honorable place in this space as a key transport and logistics hub.
What does Ukraine need from the new Silk Road
According to Anton Zatsepin, the head of the Chinese company Xinwei Group, in Ukraine very few people understand what the new Chinese Silk Road is. «It’s not just lines on the map. In fact, today the new Silk Road is all mutually beneficial routes and economic ties». The Silk Road does not imply the existence of a specific route on the map. It involves the creation of an economic space based on mutually beneficial cooperation.
«We are talking right now not so much about creating communication routes but about joint projects with China. If we compare it with our colleagues, for example, with Kazakhstan and Azerbaijan, we are lagging behind in the complex understanding of this Silk Road», Ukraine’s ambassador to China Oleg Demin said. According to the diplomat, Ukraine is not actively engaged in attracting real Chinese investments, especially when compared to the successes of Georgia, Kazakhstan and Azerbaijan. Given the deeper understanding of China’s new economic strategy, it is all the more interesting for Ukraine to attract Chinese money for production in Ukraine itself and further sending it to Europe and China, the ambassador said. This is, in his opinion, the strategic task of Ukraine within the initiative of the Chinese Silk Road.
Vladislava Rutitskaya, Deputy Minister of Agrarian Policy and Food of Ukraine on European Integration, stressed that 2015 marked a significant increase in Ukrainian agricultural supplies to China. «We have overcome the barrier of 1.3 billion UAH agricultural exports», the Deputy Minister commented. According to her, Ukrainian milkmen also had the opportunity to export products to China but for them, the issue of the development of communication routes remains important.
In general, according to Rutitskaya, the new Silk Road as a strategy of cooperation with the Chinese side, apart from transit potential, suggested «the possibility of creating joint ventures or industrial parks to attract Chinese investments to Ukraine». And we are talking not only about the sphere of agriculture but also about the chemical, pharmaceutical, machine-building industry. «It is interesting for our Chinese partners to cooperate within commodity markets or financial stocks market, commented Vladislav Rutitskaya. This issue also concerns investments and joint projects in the field of agriculture».
At the moment Ukraine considers its role in the Silk Road, first of all, as a transport and logistics hub. «To this end, Ukraine plans to build a deep-water seaport, modernize existing ones, and build new high-speed railways and highways, and provide high-level logistics», says Silk Link, a public organization established as a platform for ensuring political and business cooperation between China, Ukraine and Europe.
«The new Silk Road is not only an expansion of cooperation in the field of transit transport and infrastructure integration», explains Irina Nikorak, founder and executive director of Silk Link. «This is a complex, powerful tool for the economic development of a number of states. It includes unimpeded trade, the abandonment of customs barriers, free movement of capital, resources, intergovernmental cooperation, cultural exchange. Ukraine can join this large-scale project of China and take advantage of its favorable geographical location, extensive trade relations with neighboring countries, a wide railway network, a system of highways and the availability of seaports. These are the necessary prerequisites for the development of the transit transport system and further integration into the transport system Europe-Asia», Irina Nicorak comments.
From transport to the new regional economic space
China’s strategy for creating an updated network of transit routes Europe-Asia is just the basis for a broader concept of economic space, united by joint projects, trade links, unified rules and regulatory norms. It opens up economic prospects for a large region, once closed and inaccessible. But among other things, the belt of the Silk Road is a revision of the established rules of interaction in the region, a change in the balance of power (this is Russia’s economic influence on the countries of Central Asia) and the creation of new multilateral formats for interaction between the countries of Europe, Central Asia and the South Caucasus.
«The project’s inauguration will take place this fall at the starting point of China. Particular attention in the context of a holistic project is given to the so-called Middle Way (Middle Route). It connects China with Europe and passes through Central Asia, the countries of the South Caucasus, the Black Sea», comments GUAM Secretary General Altai Efendiev. «The southern branch goes to Turkey where the railway infrastructure is already being prepared. The northern branch is a route from Georgia to Ukraine, we work separately on it, it has not been approved yet. It involves docking, container and combined transportation from Ilyichevsk to the Baltic countries (trains ZUBR and Viking). In addition, the backbone of this route connecting China with Europe could constitute the GUAM corridor on which the routes connecting Central Asia are joined, it is not only Kazakhstan but also Turkmenistan. New opportunities are opened by the lifting of sanctions from Iran. There is a lot going on in the region, the dynamics of what is happening is high. However, it is not yet clear how this project will work on its merits”, explained GUAM Secretary General.
According to Altai Efendiev, the problem remains insufficiently clear understanding of the formats of interaction and discussion of the principles of cooperation between Europe and China. «To this end, a platform for cooperation between the EU and China has been created where these issues will be discussed. But whether this format is extended – it is not yet clear. The most interested in this project remains the EU and China. And we, as transit countries, are interested in capitalizing on the advantages of an alternative transport route». In particular, the GUAM proposes to discuss the interaction of countries within the Silk Road strategy in a multilateral format.
At this stage, targeted transportation is carried out mainly along northern routes. «One goes through the territory of Russia, the second part passes through the territory of Kazakhstan, Russia and further – Belarus. The new version, the so-called Medium Path, has a very large potential. 30 thousand containers are transported annually between Germany and China, and this is approximately 400 trains a year. There are plans to bring this figure to 2020 to 100 thousand containers. Naturally, this requires an alternative, competitive existing transport routes. And our way, from all possible, is the most prepared and attractive».
According to Efendiev, the Silk Road project involves strengthening economic competition in the whole region. «If China has something to offer the region, we will seek to cooperate with China». In the context of the threat of Russia’s influence in Central Asia due to China’s activation in the region, Altai Efendiev noted that the project is not considered in the political aspect but the situation should be assessed as «the dynamics of the formation of a new region». «The new infrastructure will form a new geopolitics. Now everything is happening within the integration of the once closed large space of Central Asia and the Caucasus into the global economy. This project offers excellent opportunities for us taking into account its financing and infrastructure development».
In general, in the context of the Silk Road, it is still only an infrastructure component – the creation of points and nodes that will help ensure the smooth transportation of goods along the route Europe-China. But when the infrastructure is ready, it will be about the formation of new markets, access to these markets, followed by investments. In fact, the infrastructural base will be devoted to the creation of a new regional economic space. But this is a strategic task for the distant future.
Author: Ekaterina Fedorishina