A Second Wind for an Ancient Route

　　The 21st Century Maritime Silk Road initiative is expected to bring benefits to countries and regions along the route

　　China’s going-out development strategy is manifested most through the One Belt and One Road initiatives. The Silk Road Economic Belt and the 21st Century Maritime Silk Road， both put forward by Chinese President Xi Jinping in 2013， signify China’s commitment to further opening up its economy and revitalizing the ancient Silk Road in a mutually beneficial fashion， experts say.

　　Cooperation potential

　　The Maritime Silk Road dates back to 2，000 years ago， when ancient merchants sailed from China’s eastern coast， passing Southeast Asia， the southernmost tip of India and East Africa， all the way to the Persian Gulf and the Red Sea， strengthening economic ties and cultural communication of the regions along the route.

　　The new Maritime Silk Road is expected to further communication and cooperation between China and the countries and regions along the route through trade， investment， cultural and currency exchanges.

　　“Compared with the Silk Road Economic Belt， the Maritime Silk Road is of more significance，” said Mei Xinyu， a senior researcher at the Chinese Academy of International Trade and Economic Cooperation， a think tank affiliated with the Chinese Ministry of Commerce. “The route originates from China’s backyard， where it has relatively matured economic and trade ties with ASEAN members. The new concept will help upgrade trade ties.”

　　Wang Xiaopeng， an expert on maritime and border studies at the Chinese Academy of Social Sciences (CASS)， said that the initiative could help China and its partners build strategic trust and manage disputes through breakthroughs in the economic sphere.

　　“Politicians in those countries will have to get bilateral ties back on track， because they can’t afford the consequences of missing out on opportunities provided by China’s growth，” Wang said.

　　“All in all， the initiatives are two programs of the grand going-out strategy adopted by China in recent years，” said Xu Hongcai， Director of the Department of Information under the China Center for International Economic Exchanges， a Beijing-based think tank.

　　The initiative to build the 21st Century Maritime Silk Road was proposed by President Xi during his visit to Indonesia in October 2013 to deepen economic and maritime links and integrate all the existing cooperation mechanisms among the countries along the route.

　　“With China playing a more important role in global trade， the new Maritime Silk Road will be a new type of trade route linking China and the rest of the world in a new globalized era，” said Han Feng， Deputy Director of the CASS’ National Institute of International Strategy.

　　Zheng Yongnian， Director of the East Asian Institute of the National University of Singapore， said that the new Maritime Silk Road will open new ship routes for increasing the flow of goods， information， tourists， students， businesses， technologies and scientific knowledge between China and many other countries.

　　“It will open the door for China to go to the rest of the world， after more than 30 years of reform and opening up and inviting foreign business in，” Zheng said， adding that going out will be a major theme for Chinese capital in the coming years.

　　Chang Jian， Barclays’ chief China economist， said that the initiative will create trade and investment opportunities in infrastructure and construction， including transportation， ports， pipelines， power generation and environmental projects， as well as stimulating energy and resource exchanges， consumption and tourism.

　　“We think the initiative is underpinned by a mutually beneficial approach and a strong desire from China to export excess capacity， invest abroad and diversify its foreign exchange reserves. China has competitive edges in capital and expertise， while many Asian countries face large financing gaps，” Chang said.

　　She said that the establishment of the China-led Asian Infrastructure Investment Bank (AIIB) in October last year demonstrated the regional desire to cooperate. With authorized capital of $100 billion， the AIIB will be up and running before the end of 2015.

　　The Asian Development Bank estimates infrastructure financing demand in Asia will be around $8 trillion between 2010 and 2020. The latest HSBC global research report also said that China’s infrastructure sector has the capacity to meet the needs of Asia and further abroad. It also said China’s overseas investment should also generate demand for its exports and help take up the economic slack.

　　“Since the investment will be in roads， railways， ports and airports， it should benefit all parties， due to lower trade costs. Investing in infrastructure along the Belt and Road routes will serve to develop new export markets for China， generate better longer-term returns on its foreign reserves， and act as another channel through which China can internationalize its currency， complemented by the likely boost to trade flows，” the HSBC report said.

　　Chang said that more than 30 potential partner countries had expressed interest so far， accounting for more than 60 percent of world’s population and 30 percent of global GDP.

　　“We think the new Silk Road plan offers a structured platform to leverage comparative advantages， improve economic cooperation and increase synergies across the region. New growth areas will be cultivated and new competitive edges could emerge through strengthening value-added， innovation， investment and market activities，” Chang said.

　　She said that by building interdependent relationships based on shared economic interests， the initiatives would deepen political linkages， improve mutual understanding and foster long-term stability in the region.

　　“The agreement to set up the AIIB by countries that have territorial disputes with China suggests lower geopolitical risk and a lower probability of military conflicts，” she said.

　　However， the HSBC report warns that details of the allocation and management of the Silk Road fund are yet to be determined and financing and operational risks could endanger the Belt and Road strategy.

　　As most Chinese enterprises are still at an early stage of overseas investment， there is ample room for improvement in areas such as due diligence， environmental protection and working standards， according to the report.

　　Southeast Asia-oriented

　　The willingness of China and ASEAN members to build the 21st Century Maritime Silk Road will inject impetus into upgrading the ASEAN-China Free Trade Area over the long term， industry experts say.

　　ASEAN Community Affairs Development Director Danny Lee said the creation of the new Maritime Silk Road is a very good concept and will bring new opportunities for China and ASEAN to cooperate in many sectors， such as trade， infrastructure and cultural exchange.

　　Lee， a Singaporean who joined the ASEAN Secretariat in February 2011， said there is historical and practical basis for ASEAN and China to cooperate under the framework of Maritime Silk Road vision.

　　“The now ASEAN member nations and China built good and frequent trade cooperation 600 years ago， evidenced by the great voyage to Southeast Asia by Admiral Zheng He (1371-1433) during the Ming Dynasty (1368-1644)，” he said.

　　Since ancient times， Southeast Asia has been an important hub along the historical Maritime Silk Road.

　　Lee said that nine countries out of the 10-member ASEAN are maritime nations and ocean trade with China is vital for the development of ASEAN members.

　　China and the ASEAN countries have labeled the past 10 years the “Golden Decade” for their relations and have coined the term “Diamond Decade” for the next 10 years， which they hope will feature more practical cooperation and regional economic integration.

　　China is the largest trade partner of the ASEAN nations， while the ASEAN ranks as China’s third-largest. Their bilateral trade amounted to $443.61 billion in 2013， around 5.7 times that of 2003.

　　Also in 2013， ASEAN received $8.6 billion of direct investment from China， a significant 60.8-percent increase year on year and representing 7.1 percent of total capital inflow to ASEAN. The two sides are determined to push this figure to $500 billion by 2015 and $1 trillion by 2020.

　　Chen Yingming， Executive Vice President of the Shanghai-based China Port and Harbors Association， said that as a majority of ASEAN nations have long coastlines and important regional ports， the new Maritime Silk Road will help link growth centers like Shanghai， Singapore and Penang in Malaysia， as well as develop new regional hubs， such as Jakarta in Indonesia and Danang in Viet Nam.

　　“From a long-term perspective， the new Maritime Silk Road will fully support trade， state and private investment， industrial productivity and the service industry，” Chen said.

　　Lee said infrastructure in ASEAN countries， especially the ports which are essential for the international trade， are very poor and need to be upgraded.

　　“China has strong experience and technology in infrastructure construction as well as the capital， and ASEAN hails China’s initiatives in establishing the AIIB，” Lee noted.

　　He said that ASEAN is set to build a single market economic community spanning the 10-nation bloc by 2015 and ASEAN can benefit from building the Maritime Silk Road as it will spur the economic development of ASEAN.

　　“Besides， the Maritime Silk Road can also promote people-to-people exchanges and enhance understanding between China and ASEAN as well as countries among ASEAN itself，” Lee said.

　　Luo Renjian， a researcher with the Institute of Transportation Research under the National Development and Reform Commission， said regional connectivity is a top priority for China and ASEAN members， with Thailand， Malaysia， Indonesia and Viet Nam already upgrading their pipelines， port facilities， and land and sea telecommunications.

　　“With growing shipping activities between China and ASEAN members， big multinational corporations， especially from developed markets， could move manufacturing facilities to Southeast Asia to take advantage of cheaper labor and raw materials， and then sell the products back to China at a profit，” said Luo.

　　Opportunities for all

　　In mid-December last year， the Maldives officially joined China’s 21st Century Maritime Silk Road initiative.

　　“Looking from a purely economic standpoint， the Maritime Silk Road will be a platform to exchange cultural values as well as be an asset for academic and research-orientated initiatives， whereby both countries can share expertise，” said Ali Hameed， former Vice Foreign Minister of the Maldives.

　　“I believe strongly that the time is ripe for the ancient silk route to be reborn again and to develop a bridge of connectivity， friendship and mutual development between China and the Maldives，” he added.

　　The Maldives was always an important stop along the ancient Maritime Silk Road. “China welcomes its active participation in the new maritime initiative，” Xi said during his visit to the country in September last year.

　　Xi has pledged support for Chinese investors in the Maldives， and is considering investment in a bridge to link Malé， the country’s capital， and its international airport.

　　In fact， China is already involved in many major maritime projects in South Asia. In Sri Lanka， state-owned China Harbor Engineering Co. (CHEC) has started a large project to help the country reclaim land for a new business district in Colombo. CHEC also signed a memorandum of understanding with Sri Lankan port authorities on the joint operation of Hambantota Port.

　　“In fact， the Maritime Silk Road initiative provides equal opportunities for all Asian countries， including China itself，” said Liu Shuguang， a professor with Qingdao-based Ocean University of China.

　　Since the announcement of building the 21st Century Maritime Silk Road， China’s coastal provinces have been trying to become the key hubs along the new Maritime Silk Road.

　　Fujian is one of the areas that have been actively engaged in developing its ports， particularly the one in Quanzhou， a city recognized by UNESCO as the starting point of the maritime road， said Zheng Xincong， Mayor of Quanzhou.

　　“Although the authorities are still doing research to decide which provinces will be involved， Quanzhou is in full swing to upgrade the ancient port，” Zheng Xincong said， adding that improving the port’s customs clearance is high on the agenda of the local government.

　　With current cargo capacity of over 1.7 million TEUs， or 20-foot equivalent units， the Quanzhou Port has embarked on a large infrastructure development program to increase total capacity.

　　The port， at an important location on the sea transport network， has opened about 130 shipping routes， establishing trade with 28 countries and regions that include Indonesia and the Philippines.

　　Meanwhile， as a city with long history of trade， Quanzhou is also planning to further strengthen its advantageous industries， including costume， tea and ceramics， to develop the city into an export-oriented trade center.

　　Apart from Fujian， south China’s Guangxi Zhuang Autonomous Region and Hainan Province are also making efforts to develop a maritime industry.

　　Chen Wu， Governor of the Guangxi Zhuang Autonomous Region， said the Maritime Silk Road idea brings a golden opportunity to Guangxi， considering ASEAN has been Guangxi’s largest trade partner for 13 consecutive years.

　　The region will enhance joint exploitation of the maritime space of the Beibu Gulf with Viet Nam and work on a tourism project that allows people to travel between Guangxi and the ASEAN countries on cruise ships， according to Chen Wu.

　　Luo Baoming， Party chief of Hainan， said the province is well-positioned to be a part of the new Maritime Silk Road project， given that it serves as the southern gate of the country， administering about 2 million square km of the South China Sea.

　　Sansha， China’s youngest and southernmost city， could become a hub and supply base， Luo said. With its tropical climate and beautiful scenery， Sansha can jointly develop tourism with neighboring countries and gradually develop into a world-class travel spot and prompt economic ties with Southeast Asian countries， Luo said.

　　Luo added that the Yangpu Economic Development Zone， located on the northwestern coast of the province， has the potential to turn into the logistical and industrial base for the road.

　　The Yangpu zone has one 35，000-ton berth， one 20，000-ton berth and three 3，000-ton berths， with three 20，000-ton berths under construction， according to the zone’s official website.

　　Liu with the Ocean University of China suggests that different provinces should set up distinct projects to match their strategies.

　　“The Maritime Silk Road initiative triggered active responses from a number of provinces， but these provinces should plan in accordance with their own situations， rather than blindly following suit，” he said.

　　“For instance， since Fujian has developed trade relations with South Pacific countries， the province should focus on facilitating maritime exchanges with that region，” Liu said.

　　Because Guangxi Zhuang Autonomous Region is in the Pan-Beibu Gulf Economic Rim， which involves such countries as Viet Nam and Malaysia， Guangxi might concentrate on cooperation with those countries， he said.

　　“Meanwhile， more efforts should be made to improve infrastructure in the coastal provinces， such as ports and railways， in a bid to connect overseas market with China’s inland regions，” Liu added.

　　By Yin Pumin

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