The $10 Trillion Investment Plan To Integrate The Eurasian Supercontinent

Authored by Federico Pieraccini of Strategic Culture

The Chinese Belt and Road Initiative (BRI), by lending out money using an alternative currency to the dollar, opens up huge spaces for investment and the strategic transformation of the region.

The overland integration of the BRI, led by China and Russia, aims to create different transit routes for goods as well as different areas of economic development along the new Chinese Silk Road. A great opportunity is thereby opened up for Chinese banks and for private investors interested in creating infrastructure or developing potential industrial poles in the countries involved in this grand Chinese initiative.

Hong Qi, president of China Minsheng Bank, recently said during an economic forum held in Beijing regarding investments in the BRI that there is potentially about $10 trillion worth of investments in infrastructure in the countries that make up the BRI, such as in railways, urban development, logistics and cross-border e-commerce.

At this point, more than $10 billion has already been committed in investments, thanks to companies already present in over thirty countries and regions along the BRI, with the ongoing intention of financing these loans through China’s public and private sectors. According to data from the China Banking Regulatory Commission, a total of nine Chinese banks are involved in the financing of projects, with 62 branches having been opened in 26 countries. A further $10 billion could come from European countries as a result of investments stemming from the China-CEEC forum.

Despite a delay in investment, and especially in the development of such projects, analysts believe that the BRI is the ideal ground for making regional cooperation agreements based on trust and win-win prospects for future integration of the region. Thus, not only are public and private banks involved in investments but the Asian Investment Infrastructure Bank (AIIB) and the Silk Road Fund are also part of the financial package that should lay the foundation for the accelerated development of the Chinese BRI. Confirming a new approach to the development of the BRI, Chinese investors during the first ten months of 2017 proposed projects totalling $11 billion in the 53 countries involved.

Supercontinent

The effort is mainly focused on the development of railway networks, hospitals, and power plants. Such basic infrastructure will lay the groundwork for further development in countries involved in the BRI that otherwise have little capacity to invest in such projects themselves. According to Zhang Zansheng, an accredited researcher at the China Center for International Economic Exchanges, the first marker is set for 2020, the year that  "further tangible progress" should be made in the development of the BRI, mainly referring to railway links between different Asian regions and the Mediterranean. Reflecting how things are already changing, dozens of trains leave monthly from European countries to reach China, the latest being one from Italy, leaving from the province of Pavia, a few kilometers from Milan.

Robin Xing, Chief China Economist for Morgan Stanley, echoed many analysts in predicting that 2018 and 2019 will be the two key years where tangible implementation of the Belt and Road Initiative will start to become apparent. These projects and investments will increase global trade with the countries involved in the BRI, which could see a 10% increase in their exports to China over the next 10 years, the practical results of the investments in ports, railways and industrial centers.

The People's Republic of China continues to treat investments and risks with a pragmatic and realistic attitude. Accordingly, the main investors in the BRI comprise state-controlled industries and banks, which allows for sufficient control by the central authority in the event of major problems. With investments amounting to at least $60 billion per year, involving more than 1,676 projects, and representing about 0.5% of Chinese nominal GDP, for the moment Beijing wants to have full control over the whole project, a strategic interest that is perfectly understandable.

The BRI is generating many innovations, including a possible new sea route through the Arctic. Although the project is yet to be fully developed, China is beginning to invest in cooperation projects with Russia to exploit this new route. The Russian Federation is the only country to have nuclear-powered icebreakers. Beijing intends to follow its Russian partner in this project in order to pave the way for its freight containers. Cost savings in terms of transport from China to Europe would be in the region of 30-40%. The Northeast Passage can only be crossed during about four months of the year, due to thick ice and unfavorable weather conditions that otherwise exist. Experts forecast that this route will be increasingly free of ice in coming years, and therefore will become more passable. Given the enormous shipping times to be saved, China and Russia have already started cooperating in order to be ready to develop and exploit this new and strategic route.

Considering the great importance of shipping routes, the ability to reach the Mediterranean is of fundamental importance. As things stand now, China is hampered by several strategic vulnerabilities, such as the Strait of Malacca or the passage through the Suez Canal, two choke points that are susceptible to a naval blockade by the US in the unlikely event of war between these major powers. This is not to mention the Panama Canal, which guarantees transit from the Pacific to the Atlantic, and Gibraltar, which controls access to the Mediterranean Sea. Certainly with an Arctic route, passage would be much faster, as well as be free from the possibility of blockade.

At the moment, the land route to Europe represents a viable solution, but one that also brings with it continuous challenges and several possibilities. One involves transporting goods from the north through the countries of the Eurasian Economic Union. The second involves going through the south, with a passage through Turkey to arrive either at the Greek port of Piraeus or in Venice. Some sort of competition is bound to occur in the future within the European Union, with countries jostling to become the main transit hub between Europe and China. The link between China and the European Union represents a critical issue for the BRI, with a traffic of goods in the order of tens, if not hundreds, of billions of dollars. At the moment, all the parties involved are aware of a much wider problem for the BRI. Freight trains from Europe to China are often empty, without major exports to the People's Republic of China, a problem that makes overland transport routes unprofitable. In this regard, the European Union must accelerate its economic recovery by aiming to exploit new trade routes that offer benefits for all countries involved. As usual, obstacles lie ahead, especially in the geopolitical arena, with the BRI representing a strategic challenge to American hegemony in Asia and Europe.

With this in mind, there is a need to move away from the dollar when it comes to loans and investments made to finance BRI infrastructure projects. This does not prevent the development of new projects for the time being. But China and other countries involved should pay more attention to this vulnerability that hangs over the whole project. Beijing should therefore accelerate use of an alternative currency in this grand project.

The economic power of the United States depends on the continued need for the rest of the world to have dollars available. This Chinese project aims to integrate countries such that Washington is denied it hegemony over Asia, Europe and the Middle East. For such reasons, it is fundamental that Beijing arms itself with every weapon available in its arsenal to defend itself from the sabotage that Washington will inevitably visit on the project. Avoiding a currency that the United States controls would be a good starting point.

Comments

Luc X. Ifer IH8OBAMA Sun, 12/10/2017 - 01:28 Permalink

America did a capital mistake - it made an enemy from anybody and that with the help of geographical isolation sent America to complete exclusion & isolation. Owning the north of a continent helps when the word around has tech hardship to get at you or can't ignore you during the times you lead on tech and you can reach them, however that changed because the stupid American corporate outsourced their tech & social wealth and more, it tried to be bitchy to the ones who got that free lunch - results, in plain view. Adios, Gringo!

In reply to by IH8OBAMA

BennyBoy old naughty Sun, 12/10/2017 - 07:16 Permalink

 "b,b,but ZH been alerting debt levels of Chinesebanks and state owned enterprises, no?"Like the US, China needs to blow a bigger bubble. Kind of like the internet bubble, US housing bubble, the bond bubble....Thats what happens when you have a debt based financial system that requires exponential debt growth.BRI will succeed and the US will shrink.

In reply to by old naughty

DownWithYogaPants BennyBoy Sun, 12/10/2017 - 07:39 Permalink

The Chinese spend their own capital.  USA spends other people's capital.  What did Maggy T.  say about that again?I am worried this BRI will fail.  My neighbor Mr Rothchild says "Using your own currency is an act of war"   I asked "why is that?"he said "just tis.  Thos who do so incure the furies of the CIA and Mossad"To which I replied "have you bought any Bitcoin?"It was at that juncture Mr Rothchild's dentures fell out and he grabbed his chest.   I had to call him an amperlance.  When they arrived I paid them with 1963 Red Seal United States Notes.  His conditioned worsened.  As the amperlance drove off I pondered how I thought I would never see the day where the Red Chinese had more raw initiative than my country.  But my country was now controlled by private central baniers and their deep state minions who have the collective imagination of a rock.  I sometimes doubt they are truly alive but rather just raw sociopathic reflex to enslave.I just got a call from the rock union and they don't like being compared to bankers.

In reply to by BennyBoy

Luc X. Ifer geno-econ Sun, 12/10/2017 - 12:52 Permalink

LOL, that's what you may wish :) - America is morphing fast into a Neo Feudal Fascist Aristocracy so they will need a strong military force not only to protect from outside enemies but to control & exploit their serf cattle, the former 99% citizen :)  America still own huge natural resources but they will be available only to the rulling Neo Feudal Aristocracy.

In reply to by geno-econ

Demologos IH8OBAMA Sun, 12/10/2017 - 10:40 Permalink

The global center of commercial activity is moving east, toward the population centers. The populations in the US and Europe are essentially stagnant and a poor bet to increase economic growth.

Build the Bering Strait bridge/tunnel to transport goods and materials to the Asian continent and onto the New Silk Road.

In reply to by IH8OBAMA

BobEore SafelyGraze Sun, 12/10/2017 - 03:45 Permalink

Kind enough to supply us with one choice morsel of stuffed turkey...

At the moment, the land route to Europe represents a viable solution, but one that also brings with it continuous challenges and several possibilities. One involves transporting goods from the north through the countries of the Eurasian Economic Union. The second involves going through the south, with a passage through Turkey to arrive either at the Greek port of Piraeus or in Venice.

which will handily serve as metaphor for his entire proposition... our author blithely steers clear of all messy rocks n shoals which belong to the real world operating outside his fantasy BRI one.Apparently unaware that the 47 mile stretch of rail line in western Turkey needed to connect anything to "the Greek port of Piraeus" ... let alone Venice... has remained unoperational for over a dozen years...or alternatively... is unconcerned bout it... as he is in fact simply driving a chhoo chhoo train of the home modeler kind which allows for a handy grab of track to be added at a moment's notice...our caboose man driver has ONCE AGIN achieved the impossible - by ignoring the realities on the ground, in setting the goal posts even further from the limitations of fact-bound discussion.Chi Chi Choo Choos to the Parthenon> and other bedtime stories for good boyz n gender confused hangers on.

In reply to by SafelyGraze

Crazy Or Not BobEore Sun, 12/10/2017 - 04:23 Permalink

In working with Chinese counterparts whats been impressive is their "how do we fix this / how do we make it better" attitude. One look at their growing inftrastructure illustrates they mean to do things better. 217mph trains are phenomenal. Mayors of every town & City go on infrastructure training courses every year, results are expected. So when a delegation turns up in Greece saying we're doing this, we're doing that..the Greek/Turkish/Austrian whatever may say yeah yeah. Then they come back in six months and say its built we've done it. Then the foreign partners wake up and realise if they don't act swiftly then their competitors will benefit. If the Greeks don't haul ass, the Turks, the Bosnian/Serbs or the Italians will.

In reply to by BobEore

BobEore Crazy Or Not Sun, 12/10/2017 - 05:18 Permalink

The biggest obstacle to working your 'get er done' counterparts into the storyline here -is that the Chinese actually want nothin to do with the purported "southern" silk road which confused, newly hatched Turcophiles think is the cat's meow.It's a geopolitical fact - inconvenient to our authors' fictions - that the Turks dalliance with jihadis in western Sinkiang - similar to their mistaken pursuit of creating trouble in Russia's muslim back yard - has created friction with Beijing which is not about to abate any time soon. So the picture of a Sinitic sanction for the creation of a Balkans bound BTK rail line, so beloved to witless westerner readers...is another in a long line of fairy tales... knowing that the majority of readers here would prefer NOT to believe the evidence of their own lying eyes... I can only suggest that - if that description does not apply to yurself - you can brush up on the facts here - https://www.al-monitor.com/pulse/originals/2017/11/turkey-officials-pla… also provided a handy anti-dote to fanbouy fiction on my own platform - here (Pepe Escobar's "New Silk Road" Oasis or Desert Illusion?)which, though written 3 years ago... seems to just get MOAR relevant with time!Cheers! 

In reply to by Crazy Or Not

Infinite QE Crazy Or Not Sun, 12/10/2017 - 06:35 Permalink

Problem is that the Chinese elite know to the thimble how much corrupt, inferior product went into building these high speed trains to nowhere and refuse to ride on them. as they know they will fly apart well before MTBF would dictate. Compare that to Japan where the highest standards were used and decades have past without a major incident.China, like its pirate-state-in-the-Med mother, is simply a container for all the western ingenuity and IP stolen from the West.

In reply to by Crazy Or Not

CuttingEdge Infinite QE Sun, 12/10/2017 - 07:35 Permalink

Don't want to be picky, IQE, but...

"Compare that to Japan where the highest standards were used and decades have past without a major incident."

Its a shame your "highest standards" don't apply to the nuclear industry in that country. Simple choice:  The odd high speed train coming off the rails or the odd planet-killing nuclear meltdown - both due to extreme corruption and incompetence? I know which one I'd take any day of the week.

In reply to by Infinite QE

wildbad gatorengineer Sun, 12/10/2017 - 03:33 Permalink

excellent point.

we tend to think of the vast plains of eurasia much like the "flyover" in the USA. the key for success here is linking the isolated population centers on that long march in a mutually beneficial way.

the infrastructure is often just the kick needed to get the ball rolling much like the buildout of the railroads in the US back in the day.

The CAN bring the economic seeds with them.

In reply to by gatorengineer

truthalwayswinsout Sat, 12/09/2017 - 22:08 Permalink

Let them make a foolish investment. WE need to take NASA public to raise $800 billion and use that money as venture capital to commercialize space. That is where the next great economic revolution is going to occur.