THE NEW CHINESE SILK ROAD AND ECONOMIC BELT LEADING TO A NEW WORLD – IMPLICATIONS FOR SRI LANKA AND OUR FUTURE
Posted on July 9th, 2015

By Wakula Gunapala (Former Head Science and Technological Education, Faculty of Education, University of Colombo), Ilford, Essex, UK.

A new weekly tabloid has appeared on the London newsstands from a few weeks back.. Named  CHINA DAILY’, It presents to readers in the EU a selection of news, articles and reading matter for discerning readers in Europe about the fast growing role of China in the emerging new world.

That the paper is targeting all sectors of the European Union as can be gathered from the long list of European capitals in which it is available for sale with the prices in different currencies, ranging from the sterling pound, euro etc. These indicate the wide range of links China has built up with the European Union over the last forty years since about 1975 up to today.

Extensive Mutual Growth

As described in a recent article in an issue of this tabloid,” in 1975 when most Chinese families were struggling to keep the wolf from the door and Europeans enjoyed the kind of lifestyle that many Chinese do now, Beijing and Brussels wooed each other. Today after 40 years, both China and Europe have changed enormously. By and large Chinese can feed themselves and go abroad in their millions for work or travel. Many struggle to lose weight and try to keep fit by adopting healthy lifestyles. The EU has evolved from a community of several powers in Western Europe in 1975 to a union of 28 countries and an economic block and a population of 500 million”.

China’s Tremendous Economic Growth

During the last 15 years, China’s manufacturing capacity and production has been so vast that today China is indisputably accepted as the workshop of the world. This leap forward has been in the face of and in spite of economic blockades, viscous financial and other obstructions as at the entry to the World Trade Organization in 2002 by the Western Block led by the US. This economic growth has left China with surplus foreign funds which have made it possible for the country to move outward encompassing the three continents around it, Asia, Africa and Europe. The first move has been started from around the time of the 18th National Congress of the Chinese Communist Party in 2012. Commencing with President Xi Jinping’s  Central Asian Tour of 2013, a new economic project named The New China Silk Road and the Economic Belt” leading to a new world has been launched. The idea of such a massive development project had been around as a concept for some time and China had been making moves, laying the financial and diplomatic infrastructure for the last two to three years

 The Asian Infrastructure Investment Bank (AIIB)

Although the Eastern Regions of China have been developing rapidly in the recent past, the need for a common economic framework in the regions around China, especially in the Central Asian Region had been noted for some time. There is a significant gap between the region’s infrastructure financing and the financial resources available from existing multilateral and bilateral institutions. It is partly to meet this need that China seems to have put forward the idea of this bank.

Basic Principles

The principles followed by China in establishing this bank has been in keeping with the country’s foreign policy which emphasises it as an extension of its domestic policy. In its foreign policy, China stresses that it is based on three No”s and three ”Yes”es.

They are:

of the ”No”s, the first No is to expansion. China will never follow the policies of the former colonial powers of expansion. The second is No” to hegemony. China will never follow the policies of the United States or the Soviet Union of forming leadership blocks or groups. The third is No Alliances”. It will never form military alliances with any country.

Of the Yes”es, the first Yes is to peace. China has vowed to develop itself internally and externally. Peace is the sine qua non for development. So the second Yes” is for development. Being a developing country, China faces many problems. In a globalized world, no country can solve its problems in isolation. This has to be done in cooperation with other countries. So the third Yes” is for co-operation.

In keeping with these foreign policy principles, since the 18th congress of the CPC in 2012, China has been moving towards creating a development initiative for the Asian sector countries. The AIIB proposal is a major initiative in this direction. This proposal when put forward in early 2014, received a mixed reception initially. The response of the West led by the US was hostile as usual. Views such as whether it was an attempt at Chinese dominance, doubts as to whether China is capable of managing the affairs of such a global institution, can it be trusted etc. were brought forward with the usual arguments by the economic pundits and gurus conditioned by Western views.

But before long it became clear that countries led by US and its lackeys like Japan, Canada etc. saw this bank initiative as a threat to their lending institutions such as the World Bank, IMF, ADB etc. who had all along dominated this sector.

However, the Middle East and many countries of the European Union including France, Germany, Italy and Ireland had by a few months expressed their desire to join as Prospective Founding Members (PFMs).

China had offered as an initiative some capital support with $100 billion for the Bank’s coffers. It had also established a $40 billion Silk Road Fund. By March 2014, private investors had also contributed 30 billion yuan (4.3 billion euro) for the Green Silk Road Fund.

From the outset, China had clearly expressed that its role would by no means be as a charity provider but seeking investment partners. These partners would share the risks and shoulder reciprocity in the risks. Some economic analysts have expressed the view that China might offer some countries low interest long term loans – similar to those given in Africa or (Sri Lanka?) – Beijing would be seeking investment partners. It is shared risk that would make this proposal more sustainable.

AIIB Established

By October 2014, fifty seven countries from Asia, the Middle East including North Africa and the European Union had expressed the desire to join as Founding Members. Of these 57 countries 19 or one third were from the European Union.

The Pattern of this International Response – Some Inferences

When the idea of AIIB was first proposed, the US had seen this as a threat to the dominant position held by the capitalist countries in Europe and the US started on a barrage of scepticism misinterpreting China’s motive on this move. The dominance held by lending institutions such as the World Bank, IMF and the ADB for decades over the Asian developing countries is well known. They often imposed stringent conditions on borrower countries when providing such funding which were often considered as unfair to the borrowers. These measures had often been pointed out as advantageous to the capitalist countries helping them promote their markets at the expense of these poor borrower countries. Such unfair practices had been pointed out on many occasions. For example, in the Asian Development Bank where the shareholders were supposed to be from the Asian countries, the largest shares had been from the US and Japan with 15% each while China and India, two of the richest shareholders had had been allowed only 6.3% and 6.4% respectively. Many Asian countries had considered this institution as an unfair lender, not mirroring the current economic reality in Asia. No wonder this Bank (AIIB) was seen as a breath of fresh air in an unfair environment.

Of the European countries, the U.K. which has been usually considered as being in the U.S. camp on matters like this, kept on dilly -dallying for some time until it also joined the new AIIB, abandoning the stance taken by the U.S. As one U.K. paper declared in its headline, this was a slap on the face of U.S. administration in this matter.

It is also noteworthy that out of the powerful Asian countries, Japan was the only country that did not join as a founder member preferring to hold onto the aprons of the U.S on a flimsy technical point.

THE SILK ROAD __ OLD AND NEW

As is well known China had been linked with the Mediterranean and Europe by a trade route running for over 6,000 miles across Central Asia for more than 2 millennia. It was by this caravan route that gold, spices, gems and products manufactured in the East used to be transported overland to the West. One of the most valued products from China which was brought by this overland road was silk which was highly sought after. Hence this route began to be called the Silk Route. This was the main route through which East-West trade was conducted until about 600 years ago when this trade was taken over by the development of naval routes from the West to the East and vice versa

map01

The New Silk Road

Today although some rudiments of the East-West trade remains, it has changed vastly with regard to the nature of the commodities as well as the partners in the trade.

map02

Commodities

In the area around the Caspian Sea through which the old Silk Route ran, things have changed vastly. Countries like Iraq, Iran, Tajikistan etc. are the countries which account for more than 1/3 rd of the world’s oil reserves. These would be the new commodities – the black gold – together with the products from Central Asia. The new trade partners would be all the countries around that area which has tremendous potential for development.

From Where to Where? By Land and By Sea

As the biggest manufacturing country in the world, China needs to ensure its own energy supplies as well as ready outlets to transport its manufactured products all over the world. Eastern China being the major manufacturing area and being at the beginning of the New Silk Road too, China would like to build up links with all the countries of the region – Asia, the Mediterranean and Europe. This would be by a network of land and maritime routes.

The Maritime Silk Road

The Maritime Silk Road would stretch from China’s East Coast running South to Indonesia. It would then run West passing ports in Singapore, Malaysia, Myanmar, Bangladesh and Sri Lanka and then onto Africa’s East Coast at Mombasa and through the Suez Canal to Greece in Southern Europe. The Silk Road’s economic belt would be the overland route mentioned earlier with a Northern branch through Kazakhstan, linking Moscow to Poland and on to Western Europe and a Southern route through Iraq, Iran and Turkey to the Mediterranean.

Belt and Road Concept

This belt and road concept involves 60 countries and together they account for more than 60% of the world’s population ( see map for details).

Partnership

It is clear that the most important factor in this New Silk Road and Belt proposal is the partnership undertaken by all traders and producers in the interest of all the players in the region. The fact that the AIIB and the New Silk Road and Belt proposal has drawn in almost all the countries in Asia, their well wishers in Europe and the Middle East augurs well indicating that this is the correct direction for the New World.

Some countries in this region have already started taking concrete steps in the envisaged direction. One such was when on a visit to Pakistan on the 20th April 2015, the Chinese President Xi Jingping unveiled the first major project funded by US $ 40 billion Silk Road Infrastructure Fund in order to make this initiative a reality. It is a US $ 1.65 billion hydro-power plant on the Jhelun River in Pakistan’s North East. The Karot Hydel Project which is a subsidiary of China’s Three Gorges Corporation is to begin building before the end of 2015. This is only one of the initial steps of the 51 projects of the two countries signed by the two leaders. More than 30 of these agreements relate to the One Road-One Belt initiative. This 3,000 km long economic belt and trade corridor will link Xingiyang Autonomous Region in China to Gwardar Port in the Arabian Sea.

The green light has already been given to update the Gwardar Port, a new airport, roads and rail links and resource pipelines. This gives an idea of the scale of work envisaged under this economic belt and road project.

Another group of countries which will benefit from The New Silk Road and Belt would be the countries in Central Asia such as Turkmenistan and Uzbekistan. These stand to gain as they will carry not only oil and gas lines but also optic fibre pipelines.

This is only a glimpse of the vast opportunities opening up in the new world encompassing these new moves to link South East Asia, Central Asia, the Middle East and Europe.

IMPLICATIONS OF THE ABOVE PROPOSALS AND WHAT THEY INDICATE FOR SRI LANKA AND IT’S FUTURE

In November 2005, Mahinda Rajapakshe was elected as the president of the country. There was much hope for the future especially among the patriotic masses.

Urgent action was needed in the war against the Tamil Tiger separatists who had been waging a war against the Government for over two decades. This terrorist group, led by the megalomaniac Prabhakaran with his suicide bombers, had been causing havoc and destruction for a long while and people were fed up and tired of this war.

The tasks Mahinda had to face were unenviable The first task was to remedy the leftovers for two decades or so of mismanagement of a war by unpatriotic politicians for whom the war had been a source of undue income at the expense of the country, its future and even its sovereignty. So his immediate task was to handle this war that had been passed over to his hands. Much hope had been placed on the new regime for an early success.

Victory and After

We now know how by his prudent management, together with the heroic efforts of our armed forces, he vanquished the enemy and redeemed the country from the enemies’ clutches. This victory came in May, 2009. Of course, there was much jubilation and much long awaited relief.

With a long chapter of war over, the equally daunting tasks of post-war reconciliation, rehabilitation, rebuilding to bring back normalcy were needed urgently. The Government sat down immediately to fulfil these tasks. As this continued, by 2010, the first period of the Rajapakshe Presidency was also almost coming to an end. After the 2010 presidential elections, which Rajapakshe again won with a large majority, the new regime continued on with the post-war tasks they had started.

Enemy Forces Set to Work

We must not forget the fact that what the country set out to do was to bring about reconciliation between a separatist minority group of 12%of the population who had fought against a majority Government of over 73% of the population.

The Country’s Enemies

We know how since the early nineteen eighties, our powerful neighbour India had played a treacherous double game, even training the separatist terrorist forces while pretending to be our friends and helpers.

The Tamil Diaspora Group

Things were complicated further by the minority Tamils in the North and the East of the country migrating to affluent Western Countries on the pretext of being asylum seekers (‘really economic migrants’) at the beginning of the early 1980s for over two decades developing into a diaspora group of almost over a million or more. Actually, these were the people who funded the separatist war effort over the years.

The Tamil Diaspora and Western Countries

As mentioned earlier, the Tamil diaspora carried on a continuous campaign, initially covert and later overt, against the Sri Lankan regime throughout from day one of the separatists defeat still continuing ceaselessly. They also have internationalised their campaign and we know how these issues have been taken to the UN Human Rights Council (UNHRC) with the help of the US, UK, Norway and other Western Countries against us. In these, they have spared no effort to take our leaders of the armed forces to international war tribunals. This is still going on. That is a separate story.

Let us continue with our efforts to develop our country

Large Scale Structural Development Work

Since the early nineteen eighties, the roads and highways in the whole country had been neglected and urgently needing attention and modernisation. The war and unrest in the country had led to neglect in all sectors of the economy and infrastructure. From around 2008, in the first term of the Rajapakshe presidency itself such large scale projects were started post-haste. Some such important projects are:

Ports

Hambantota development projects a.k.a. Magampura port or Mahinda Rajapakshe port commenced in 2008, completed in 2010.

Colombo harbour extension projects: many new terminals were developed.

Special projects: Colombo port city project. It is a major project to re-claim land from the sea and expansion of Colombo city.

Airports

Under the Greater Hambantota City Project, a new airport was started in Hambantota. Hitherto we had only one international airport in Katunayake. In 2006, we saw how inadequate it was to depend on one airport, and the need for another airport in the South away from Colombo was felt sharply. While upgrading the facilities in Colombo to international standards, a new international airport was constructed at Mattala in Hambantota.

A Massive Programme of Development

From about 2010, these tasks which started as the rehabilitation effort developed into a massive programme of structural development. The landscape of the country began to change day by day. Major highways changed into Expressways and flyovers started to appear at junctions around us for the first time in our country. The quality of life also started to improve from which people of all classes began to benefit.

Of course, all these required much funding. A part of this could be met by the Government’s peace dividend saved by the ending of the war. But these were not enough by any means as in addition, modernisation work costs much.

Fortunately for us by this time, China had started on its programs of support for development efforts by Asian and African neighbour countries, utilizing over US$4 trillion foreign exchange reserves. This helped us much in borrowing necessary funding at reasonably low rates. This came by borrowing through the Export-Import (Exim) Bank of China.

Most of this work was carried out using local manpower trained by Chinese technicians and engineers. For example, on the A9 project, out of a workforce of 4,500, only 50 technicians (1.4%) were Chinese. Others were all local technicians and engineers trained by the Chinese. Thus we were building up our own workforce for the future. These did not please some of the local capitalist class who were waiting for the end of the war to get the big contracts out of the peace dividend. Also some big Western countries who had expected to get the lion’s share of these contracts. Also displeased were politicians whom as I mentioned earlier had conducted lucrative businesses in the war supply contracts. All these elements were especially displeased by China coming into the game.

Enemies get Organised

The Western backing opposition in the country who had lost the opportunity for power for about fifteen years were disgruntled by all these developments and started a vicious campaign of vilification against the regime. All these elements started their intrigues and formed an enemy front. Especially busy with their covert activities were the leader of the opposition, an ex-president and some disgruntled ministers in the Rajapaksa cabinet who were known to have met in foreign countries some of the diaspora elements. These rumours started going about which made discerning political observers strongly suspect that these were signs of treachery and intrigue going on. American backed ‘NGOs too had been busy for decades in the country It was just after the series of Arab uprisings which had messed up the Middle East and the concept of regime change” was in the air. This became the favourite catchphrase among the idiotic urbanised and semi-urbanised groups of youth.

Treachery and Intrigue

By about mid 2014, these vilification campaigns had risen to a sort of crescendo but Mahinda Rajapakshe had solid support in the country and in the Parliament among the majority Sinhala community. Also the Tamil community were en masse against Mahinda in spite of all the work he had done for that group. It was clear that only a split in the Sinhala group comprising the ruling party and other minority groups, such as e.g. the Muslims and Indian Tamils moving against him could break Mahinda’s power.

Sri Lankans are well known as a gullible lot that can be taken for a ride easily especially when it comes to politics.

So by the end of 2014 or so the Facebook + rumours + gossip became the main means of political communication in the country. All of these had a field day in the confusion.

To cut a long story short, we know how some opportunistic politicians who had been clinging to the ruling party started crossing over in order to erode Rajapakshe’s power. We know how the president decided to go for elections held on 8th January.

We know how a disgruntled minister of the ruling party crossed over to the opposition and contested as the common opposition candidate defeating Mahinda by a narrow margin. This was a shock to the whole country. According to the deceptions, rumours and false propaganda spread by the opposition, people had expected massive retributory reactions from the defeated power. Mahinda handed over power peacefully to the winner Maithripala Sirisena and moved down South to his country residence.

The Loss to the Country and the Immediate Aftermath

Needless to say that Mahinda’s defeat is unfortunately a tremendous loss to the country. We have had a glimpse of the new world of the 21st century to which Mahinda was endeavouring to take our beloved country with his enthusiasm and effort together with Chinese technological assistance. The new president who came to power and using a makeshift ‘National Government” he set up has stopped much of the work, and started a witch hunt against the Rajapaksas’ the failure of which has glaringly exposed the vicious lies they had used in their election campaign. As for the economic front, it looks as if the country’s Central Bank and the Treasury has been handed over to a new Governor, an incompetent man who is behaving like a blundering cowboy.

Colombo and other cities which had been looked after like a showpiece is now neglected to such an extent, that it looks like a crow infested garbage site. Within a few months, the new rule under these incompetent fools is proving to be a disaster for the whole country. No wonder the people are clamouring for Mahinda’s comeback before all is lost. That seems to be what is happening.

A general election is due shortly and if the country is to progress, Mahinda should be voted into leadership to continue the work he and the people started. This may be the last opportunity to retrieve the country from the impending disaster which only we, the people can prevent.

One Response to “THE NEW CHINESE SILK ROAD AND ECONOMIC BELT LEADING TO A NEW WORLD – IMPLICATIONS FOR SRI LANKA AND OUR FUTURE”

  1. Christie Says:

    “The New Silk Roads”

    One through Russia, one through middle Asia. the old one and Maritime Silk Route again the old sea root passing through Xyelon the land of the Sinhalese. (Naming of Ceylon Sri Lanka is part of the Indian imperialists brain washing of the Sinhalese)

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