As energy jitters continue to rattle the global economy, regional alliances are being solidified to ensure that China will remain a viable and growing economy as oil depletion becomes a permanent fixture of our daily lives. As cheap trans-oceanic shipping of non-essential goods goes the way of the dinosaurs, these new partnerships will help realign global trade, and as a result, regional diplomacy.
This process has already begun. Consider, for example, the story of a peace deal between North and South Korea, which recently appeared on the front page of the China Daily newspaper. "Korean Pact Seeks to End War" blares a headline proclaiming that the two Koreas want a permanent peace regime that will allow regular freight railway service along tracks crossing the Demilitarized Zone between them.
Global shipping by air and sea, just-in-time ordering and an endless supply of factory orders have been the bread-and-butter of the modern Chinese economy. It is precisely those systems that will bring this economic juggernaut to its knees if measures are not taken to assure access to a trade zone stretching from Western Europe to Vladivostok in Russia, Mongolia in the north, India in the west and all the way to Singapore at the edge of Southeast Asia.
If you take a close look around our world and map out what is manufactured in which nation, you will find heavy industry in China, factories for daily use products spread from Vietnam through China to South Korea, high-tech goods in Japan and Taiwan, raw materials and resources in all parts of Asia, including gas and oil exports from the Middle East, central Asia and Russia. The Eurasia zone is already connected by pipe, rail networks and a telecommunications hub in India, but today’s connections are by no means complete. With construction of a few sections of rail, however, there can be a spider web of steel rail linking it all, despite different rail track standards – some narrower gauge, some wider – creating logistical problems.
Currently, a large concentration of the world’s energy resources, raw materials, factories, communication and production centers are in the Asia zone. Outsourcing factory production from the West has been a blessing for this region. Factories of every conceivable type are in China and the Information Technology revolution where an optic fiber world is now connected to India’s cheap labor and English-speaking skills.
With the groundwork laid, let’s take a trip along the new Silk Road, beginning with the rail links that will allow a newly aligned Eurasian trading bloc to emerge. In this zone, China will be the economic powerhouse.
Peace in Korea: The new China-brokered Korean peace initiative to end the Korean War will open rail links through North Korea to the sea port of Pusan, the closest jump off point to Japan. For comparison, sea delivery from Pusan is just half-a-day by sea, but three days from Shanghai. All production in the northeast section of China will use this route. Japan is extremely vulnerable to shipping disruptions as most of what is consumed in daily life or manufactured using energy is delivered by ship to that nation.
The Vietnam Connection: Rail networks are extensive throughout the Mekong Region, but a small 250-kilometre section of rail will be needed from Ho Chi Minh City to link Phnom Penh, and within Cambodia an 80-kilometre line constructed from Sisophon to Aranyaprathet, Thailand. When these sections are complete, the links in Thailand will access the rest of Southeast Asia all the way to Singapore. Presently there is a great deal of outsourcing from China to Vietnamese factories that produce labour-intensive, 100 per cent handmade items. Again you can see the economic mutual benefit trump card being used to China’s advantage to secure land passage.
Myanmar: The old capital Rangoon is no longer used as a governmental seat, but a new city called Naypyitaw has been constructed 400 kilometres to the north to take its place. The move north puts the new capital more or less in a line with rail connections out of Yunnan Province in China, and onto Aizawi in India’s northeast state of Mizoram and a second line could easily be installed to link up at Imphal in the northeast state of Manipur, accessing all of India. China is giving lip service to the UN censure of the Burmese regime over the slaughter of protesters, including monks. Don’t expect them to push strongly for change in Burma until they know which side will triumph. Right now, China has just what it wants; Western sanctions on Burma leaving the country open for exploitation by Chinese business, with the possibility of new Chinese controlled transit routes to ocean ports along that coast, and rail links to India.
Foreign direct investment will continue to pour in as China’s central location makes it the transit hub of the new Eurasian trade bloc for those businesses that want ready rail access to the Koreas, Japan, India and Southeast Asia. Gas and oil pipelines will follow the same model, but instead will be a conglomeration of Kazakhstan, Tajikistan, Turkmenistan, Kyrgyzstan and Uzbekistan that will link to the far west Chinese province of Xinjiang. From now to 2010, the Chinese government plans to complete an additional 19,800 kilometres of new tracks and upgrade 15,000 kilometers of existing routes, most of it in the western provinces of Yunnan, Xinjiang and Sichuan. Additionally, a second natural gas pipeline from the Xinjiang region to Shanghai is now beginning construction and will be 4,200 kilometres in length.
Sea-borne cargo will become more regional, but with navies from other countries patrolling coastal waters, land delivery routes by rail are essential. This puts China in an advantageous position to have both land and sea links with Europe, Russia and the Middle-East, if their plans come to fruition.
Trade routes from Europe to China were established over a thousand years ago using camels and fortified positions against hostile threats to commerce. Along the modern Silk Road, transport locomotives will chug along burning coal or heavy-sulfur fuels. This will allow a realignment of trade in Eurasia as we pass into a post-peak oil reality that will re-define civilization.