RECENT BUSINESS travels took me to a part of the world I had never had the pleasure of seeing before – Central Asia. As I wound my way from the resource-rich, bustling Kazakh commercial capital of Almaty to the magical Uzbek cities of Bukhara, Samarkand and Tashkent, I could appreciate the underlying reasons for the Silk Road Economic Belt Policy heralded by President Xi Jinping. With US$40bn of PRC funds aimed to build new Silk Road infrastructure one can easily imagine the opportunities this region holds for cross-border commerce.
It will not be the first time the historic peaks and plains on which Amir Timur and Genghis Khan rode roughshod have witnessed an economic resurgence. The Silk Road once boasted many of the world’s most important cities of commerce along its route. Nor will it be the first time that the geopolitical spotlight has fallen on the region. Volumes have been written about the Great Game, the tussle for Central Asian supremacy played out by the British and Russian empires in the 1800s. And, when looking at the world today, it is clear that this chess game is still in play.
Today, however, more and more attention is being paid to the economic revitalization of one of the world’s oldest and most important trade routes. The rejuvenation of the Silk Road is a key initiative for many of the three dozen nations along both its land and maritime routes. From the western end in Italy to the eastern end in China, national leaders are calling for new and exciting cross-border cooperations.
Today, however, more and more attention is being paid to the economic revitalization of one of the world’s oldest and most Few have embraced the resurgence of interest in the Silk Road more than Central Asia and China. In a September 2013 speech at Nazarbayev University in Kazakhstan, President Xi proposed building a Silk Road Economic Belt as a “grand cause benefiting people in regional countries along the route”. The policy was refined when Xi returned to Beijing after state visits to Turkmenistan, Uzbekistan and Kyrgyzstan. In May 2014, on the 60th anniversary of the Chinese People’s Association for Friendship with Foreign Countries, a detailed policy was announced, followed at year-end by the launch of the ambitious US$40bn land and maritime infrastructure fund important trade routes. The rejuvenation of the Silk Road is a key initiative for many of the three dozen nations along both its land and maritime routes. From the western end in Italy to the eastern end in China, national leaders are calling for new and exciting cross-border cooperations.
The Great Wall II
The scope of the project is immense, perhaps on the scale of building a second Great Wall when one considers the geography. The land road begins in Xian, winds through Lanzhou (Gansu), Urumqi and Khorgas (Xinjiang) before heading across Central Asia to Iran, where a western turn takes the route through Iraq, Syria and Turkey. From Istanbul, the Bosphorus is crossed to Europe and the road runs through Bulgaria, Romania, the Czech Republic and Germany, before zigzagging north to Rotterdam and south to Venice.
The maritime route begins in Quanzhou (Fujian), runs through Guangzhou, Beihai (Guangxi) and Haikou (Hainan) before heading to the Strait of Malacca. From Kuala Lumpur, the route crosses the Indian Ocean to Kolkata and Nairobi, before heading around the Horn of Africa into the Mediterranean, with a stop in Athens before ending in Venice.
Kazakhstan, China’s western neighbour, is already a recipient of China’s Silk Road infrastructure investment. Major railroad projects have been completed or are in the works as an anchor to Beijing’s 11,870 km Eurasian Land Bridge that extends from Lianyungang to Rotterdam. The construction of this railroad through Central Asia, Russia and Europe will allow cargo to travel five times faster from China to Western Europe than by ship.
China and Kazakhstan are major players in the 8,700-km Western Europe-Western China international transport corridor, which will be the shortest road transport link between Central Asian and Europe. Once complete, containers will take two weeks to move from China’s eastern seaboard to Europe, three times faster than by sea. Similar projects will see feeder highways heading to the Middle East, principally through Dubai.
Of course, for these grandiose plans to become commercially successful will largely depend on whether the businessmen along the routes also embrace the vision. As such, the views of two businessmen I met along the Silk Road — one in Almaty and another in Tashkent — give an interesting perspective on the Central Asian opportunities and challenges of this grand vision.
Ivan Khizkhov is a dynamic young Kazakh entrepreneur. From his base in Almaty only a few hundred kilometers from the Chinese border, Khizkhov oversees a burgeoning operation that extends from ownership in the largest heavy machinery sales franchise in the region to a leading car rental agency, an advertising company and a social media business. He travels frequently between the capitals of Central Asia, Russia and China, and has his own clear vision of how the Silk Road will make sense in his commercial world.
Khizkhov considers Russia to be central to the success of a Silk Road commerce network. In the past, the vast majority of Kazakh trade was with Russia and Kazakhstan is a member of the Eurasian Economic Union (EEU). Nearly all the people in Kazakhstan speak Russian, and it is Russian culture that rules: Russian MTV plays in bars, Russian songs are broadcast on radio, and Russian restaurants compete on nearly every street corner with the local beshbarmak vendors and kebab stalls.
“Kazakhstan has built the commercial infrastructure to lead the way in Central Asia from a business perspective,” notes Khizkhov. “The stability of the world of commerce is so important in a part of the world where the rule of law is not always the foremost driving force. Sure, this is still the frontier, but the Eurasian free trade zone between Russia and former republics provides a market of over 200 million consumers, not to mention the opportunity of business with China to the East.”
Just over an hour’s flight away, in the Uzbek capital of Tashkent, Begzod Umarov is a local entrepreneur who combines his background in technical engineering with his other role as an entertainment mogul. Umarov runs the largest film studio in the country, producing two-thirds of all domestic films. He is also a well-travelled businessman who can converse in Uzbek, Russian, French, Farsi, Arabic, Turkish or English. Umarov is a Sinophile when it comes to business, and is now working on manufacturing local versions of the latest Chinese solar power heaters and electrical cars.
Umarov believes that the flow of ideas is just as important as trade in the Silk Road framework. “When I look for innovation and new ideas that are affordable to consumers in Uzbekistan, I look to China for inspiration,” says Umarov. “My aim is to serve the domestic market, and there is a lot of opportunity in this nation of 30 million that can be explored. The Silk Road initiative can bring a breath of fresh air to the economy by opening an exchange of new ideas and a freer trading environment that will benefit all.”
Time will Tell
Khizkhov and Umarov are both cautiously optimistic that the Silk Road initiative will bring them opportunities, and China has stated that the initiative to rejuvenate the Silk Road will bring “new opportunities and a new future to China and every country along the road seeking to develop.”
Yet major uncertainties remain. It is not clear what will tie together the disparate Silk Road countries, with a host of different cultures and religions. For instance, will the trading relationships be bilateral agreements between China and individual countries, or will they be structured on regional lines? Or, will a grander vision emerge, such as a free trade zone incorporating all countries along the routes? It is likely that these questions will be answered in the coming years as billions of dollars of investment roll into the Silk Road project smoothing its path inexorably forward.