Ten projects that will define China’s Maritime Silk Road Initiative

Kra Canal

While much has been written about China’s Belt and Road Initiative, much less has been said about its sister project the Maritime Silk Road which will connect China via sea routes to nations and cities across South Eastern and Southern Asia, as well as Africa and Europe. Below I look at some of the ongoing and proposed projects which will define the success of the Maritime Silk Road.

Gwadar

Whether Beijing’s largesse can transform Gwadar into a new Shenzhen as some have promised is a moot point, given the city lies in the poor and insurgent heavy Baluchistan region of Pakistan, it may struggle to achieve its potential. Currently it is viewed by Beijing as a primarily strategic investment that will help link the Middle East and Europe with Western China via the Chinese backed Pakistan Investment Corridor. The port’s population is expected to top 2 million in 20 years time from just 80,000 today if it all progresses as planned. A new deepwater port will be built able to handle large vessels alongside a new international airport and an export processing zone. Critics fear that the port and road north to China will just attract terrorists and the development will not benefit locals, only the Islamabad elite and their Chinese allies.

Bagamoyo

Bagamoyo in Tanzania might not be the first place on people’s mind when thinking about the Maritime Silk road. But now thanks to a Chinese/Omani backed investment plan to develop a port there – Bagamoyo could be a key hub in the Maritime Silk Road helping to cement links between East Africa and Asian markets. Once complete the port will be the biggest in Africa and again thanks to the Chinese there will be major rail upgrades to connect Bagamoyo to other parts of the continent as well as a new export development zone, which in theory should help Tanzania export more of its own goods as well as becoming a regional hub for other countries wares. China are also developing ports in around 10 other African countries – helping meet the continent’s massive infrastructure needs.

The Golden Waterway

Perhaps the most controversial potential project around the Silk Road is a proposed canal through the Isthmus of Kra in Thailand. The canal would cut through the thinnest part of Thailand (around 30 km) and allow ships a short cut from China to Europe, avoiding the congested Straits of Malacca. But the project has met with local and international opposition from Thais fearing it would divide the country as well as being highly expensive. Naturally Singapore is opposed as it would undermine its strategic position overseeing and docking a huge proportion of the world’s container traffic. For now Thailand has failed to back the project, but the Chinese still view a long term opportunity to finance and develop a canal which could then fall under their sphere of influence, giving them more power over the sea lanes to China.

Hambantota

Not far behind the Kra Canal in terms of controversy comes the proposed Hambantota port project in Sri Lanka. The new Sirisena government put a halt to the Chinese backed investment, partly to check the deal was a good one for Sri Lanka and but also it was rumoured because India didn’t want a major Chinese development on its doorstep. Now the Colombo government has given the green light to the project, pushed into it thanks to a lack of other investors and unhealthy looking government finances. The proposed project will create a USD 1.7 billion port and international airport, plus supposedly a new special economic/export processing zone. In principle all this will allow Sri Lanka greater access to export markets plus a cut of the docking fees paid by visiting ships, especially given the port is so close to major shipping lanes. But some fear (especially in New Delhi ) that the port is cover for Beijing to develop a naval base in the heart of the Indian Ocean, something the Chinese strenuously deny.

Djibouti

Where China are building a military base is Djibouti in Eastern Africa. A quiet announcement was made last year that the Chinese are developing a logistical base for the country’s anti-piracy naval operations in the region. The Chinese will join the French and US in having a base in the tiny yet strategically positioned country which handily overlooks the passage between the Red Sea and Indian Ocean and through which much of world’s merchant shipping flows. This could be the start of a series of overseas naval bases for China as it looks to extend its military reach in an attempt to protect its now huge and lucrative global trade network.

Kyaukphyu Port

Myanmar is a long-time friend of China and so it is no surprise that the newly emerging democracy is seen as key part of China’s maritime silk road strategy – to this end China signed a deal to develop an industrial park and deep water port in Kyaukphyu in Myanmar. This port in the Bay of Bengal gives China another route which goods and energy can flow to the Chinese heartland while avoiding the Straits of Malacca – currently dominated by the US 6th fleet. However this route is dependent on a new rail line from Kunning in Southern China to Kyaukphyu, not on the table right now – but a long term ambition for both nations. However over the longer term Myanmar’s new government could move away from China and closer to India, raising doubts over the reliance of this friendship.

Woody Island

China’s development of air force and military installations on this tiny outpost and other parts of the Paracel Islands will test the resolve of neighbouring countries that all stake a claim to the region. But perhaps most worrying for China is that its actions here may provoke the USA which is still very much the security chief of Eastern Asia. And while physical control over the islands is in one sense more powerful that any tribunal or court decision (which China rejects in any case), control over the islands could prove a Pyrrhic victory for China if it alienates its neighbours and invokes the ire of the US.

Indonesian Ports

The South East Asian nation is made up of thousands of island and is in much need of new port infrastructure, something which China can help build and finance, but there is a wariness towards Chinese intenions in Jakarta thanks to the simmering territorial disputes which bedevil the South China Sea. Japan has also made promises to help build Indonesian infrastructure and could provide potent competition to China in the years to come

Piraeus Port

Greece’s biggest port was an obvious target when the country fell into depression, while there was anger at such an important asset (Greece is heavily dependent on shipping representing around 7% of employment and GDP) being privatised and falling into foreign hands, the country’s desperate need for cash and fresh investment made it difficult to resist. The Chinese China Ocean Shipping Group – (Cosco) brought a stake and made fresh investment worth around €1 billion. Cosco for their part promised a new start and the renewal of a logistics hub that would help connect Eastern Europe by rail and Asia by sea.

Suez Canal Zone

During Chinese President Xi’s recent trip to Cairo he made a special point of inviting his counterparty –  Egypt’s President Sisi to the G20 Hangzhou summit later this year. This underlined the importance Beijing places on their ties, Egypt is viewed as a central pillar of the Arab world and a key plank of the Maritime Silk Road thanks to its control of the Suez Canal, a strategic chokepoint where much of China’s trade flows to and from Europe. President Xi’s trip also saw the announcements of dozens of new Chinese investments in Egypt, including help with the construction of a new capital between Cairo and the canal.



Categories: Geo-Economics, Silk Road

Tags: , ,

3 replies

  1. this is an amazing list! is everything being financed through AIIB? any secondary tranches for other players / diversification to private sources?

    • Thanks, most projects like this would be financed by the China Development Bank or Export Import Bank, although now the AIIB is up and running we can expect to see more involvement from them in the future. As for private sources the CDB/Exim bank tend to finance alone, but the AIIB being mutlilateral will almost certainly syndicate loans and involve the private sector.

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