[MUSIC] The ancient Silk Road connected Asia, the Middle East and Europe over 2500 years ago. It existed for almost 100 years before falling into disuse and decay. Silk spices, porcelains and other exotic high value goods travelled from the East to Europe and from the West came trade goods such as horses, saddles and tack furs, woolen products, gold and silver. The journey in either direction took many months with goods passing through many hands on their journeys. With the coming of global sea trade in the 1500s however, the Silk Road became obsolete and subsequently fell into disuse and disrepair. But the romance and intrigue of the ancient Silk Road remains in memory and in literature. A modern version of the Silk Road is now being reinvented by China, formerly called the Belt and Road Initiative or BRI. China is undertaking an ambitious plan to build land and sea routes from China across central Asia to the Middle East and into Europe. The land routes shown here are the Belt and the sea routes are the Road. The Chinese are spending billions of dollars constructing ports, roads, railroads, pipelines and other facilities to facilitate trade across Asia. Announced in the fall of 2013 by Chinese President for Life, Xi Jinping to enhance regional connectivity and embrace a brighter future, quote unquote. It's an ambitious 40 year initiative. The project has a targeted completion date of 2049 on the 100th anniversary of the founding of the People's Republic of china. It intends to develop and connect Asia with Europe and Africa, connect 68 countries or more and 65% of the world's population and 40% of the global economy. So it's a very ambitious undertaking. The two main components as we've seen is the overland Silk Road, economic belt of railroads, highways, power grid and support facilities. The maritime silk road of harbors, container ports and maritime facilities is to the south. In addition to the hard investments, China is also developing soft infrastructures such as trade agreements, common commercial legal structures, court systems to police the agreements and so forth. The motives for the Chinese BRI are many and include sustaining china's economic growth. China has been rapidly growing it's economy for over four decades. It continues to want to sustain this growth into the future with new markets, in this case to the West. Developed Western provinces, most economic development has been in the East Coast of China and the West Coast has been largely left behind. While Eastern Chinese prosper, hundreds of millions of Chinese remain in relative poverty in the West. So trade through the west will aid this regional region economically. China wishes to promote trade in Central Asia. Central Asia is relatively untapped and undeveloped economically. These include the states or the countries of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan, Pakistan and others. New markets, new customers, new business. Secure overland trade access to energy and resources is another ambition of China. China is largely dependent on sea transport for imports and exports surrounded to the East and South by competitive competing countries such as Japan, South Korea, Philippines, Taiwan, Vietnam, Malaysia and India. It wants to develop secure land routes to the West for transport of energy and other needed resources. China also wants to expand its circle of friends regionally and globally. He wants to develop friendly and secure relations with neighbors to the West, and wants good relations, perhaps dependent relations with its neighbors for strategic security reasons. China also wishes to expand international use of the Chinese currency, the Renminbi. Much of the world commerce is conducted using the US dollar and China and some other nations would like to reduce dependency on the dollar because of the political and economic leverage it gives the United States. As the second largest economy in the world and perhaps soon to become the largest, the Chinese Renminbi could become a logical alternative to the dollar. But the Chinese government school will need to relax its controls on their Renminbi for this to ever happen. Since launching its BRI initiative in 2013, China has undertaken many BRI projects around the world, totaling hundreds of billions of dollars in foreign investment. By the time the Belt and Road Initiative is formally concludes in 2049, China will have invested trillions of dollars in BRI projects around the world, an ambitious undertaking to be sure. Some BRI projects undertaken to date include the following, a rail link in Bangladesh, a hydropower dam in Cambodia, a gas pipeline in central Asia, a port in Djibouti, rail links to Europe. A dry port in Kazakhstan, a railway in Kenya, a fiber optic project in Pakistan, another port in Pakistan, a motorway in Serbia, high speed railroad in Thailand, and a South harbor project in Sri Lanka. With more underway and many more to come. The number of countries involved in the Belt and Road Initiative has grown from 38 at its launch an inception in 2013, to 138 signatories today, with more coming. So large majority of the world's countries have signed on to the BRI Program. One way or another is pretty remarkable. These include most countries in Asia, almost all countries in Africa and countries in Eastern Europe. So far, only a few countries have joined from the Americas in Western Europe. Australia is not signed to date. In addition to the Maritime Silk Road, Russia and China are in discussions about creating a Northern polar ice road to connect China with Eastern Russia and Europe through the arctic ocean. The red line here shows the route of the Polar Silk Road. Currently maritime traffic must transit through the straits of Malacca, the Indian ocean and the Suez Canal on its way to Europe shown in the blue lines here, dark blue lines. While the polar route looks longer due to map distortion, it's actually about 3000 kilometers or 1800 miles shorter than the current route, a big difference. This is all possible because the arctic ice gap is shrinking, presumably due to climate change, leaving more months of open ice free water during the summer. China's Costco shipping company has completed several trial polar trips on arctic shipping routes to prove the feasibility of the concept. Many challenges remain for large scale implementation of polar shipping, since there are no support facilities along the route for refueling, maintenance, repair or onboard supplies. Plus ice breaking ships must be used for part of this summer during the shipping season, which is not inexpensive. So it remains to be seen how rapidly or even if this polar ice road develops. The Belt and Road Initiative is not without its critics, some of these criticisms include the following. Some say that BRI is a form of neo colonialism or debt trap diplomacy. This is where a one country provides cheap financing for large projects to another country and then when the other country cannot pay its debt, the first country takes over the project and essentially now owns a big part of the economy of the client country. Another criticism is low participation rate of local companies and projects. Most BRI projects today have been undertaken and executed by Chinese companies with Chinese labor, leaving domestic companies and domestic labor out of the picture. Another accusation against the BRI is lack of transparency or clarity. Concern has been expressed about a lack of this transparency in part because the BRI is perhaps a grand vision and not a detailed roadmap. So people aren't exactly sure where it's going or what's going to take place. China stated it will work for greater transparency moving forward by working with consultancies and NGOs on new projects. Other concerns include environmental issues. They actually are those of any large scale development project, whether it's BRI or some other. Concerns include deforestation, endangering local species, desertification, greenhouse gas emissions, water use and pollution, air pollution and so on. China claims that it will work with local governments and NGOs to mitigate these problems as much as possible going forward. And finally, there are geopolitical concerns. China is now a world player economically, its military is expanding rapidly and its global soft power influence is expanding as well. All of this is evidenced by the BRI. Questions naturally arise about the long term direction and consequences of the rise of China as a world power. In summary, the BRI is the most ambitious geo-economic vision in recent history. No other nation or trading block is moving as aggressively or as quickly as China is to develop international trade and commerce. It has the potential to lift millions of people out of poverty and bring prosperity to many underdeveloped nations and countries. BRI is described as the best known least understood foreign policy initiative currently underway. It's a work in progress. Long term consequences are unknown, and China traditionally plays his cards pretty close to its vest. What is for sure is that BRI will reshape the geopolitical, economic and business landscape in Asia and the world for many years to come.
