Chinese Prime Minister Li Keqiang looks at a map of the port of Piraeus, where Chinese shipping giant Cosco controls two of the three container terminals, on Friday June 20, 2014. Louisa Gouliamaki/AP
How China Is Building the Biggest Commercial-Military Empire in History
China’s outsized latticework of global infrastructure is said to be rooted in a fierce competitiveness learned from 19th-century America.
In the 18th and 19th centuries, the sun famously never set on the British empire. A commanding navy enforced its will, yet all would have been lost if it were not for ports, roads, and railroads. The infrastructure that the British built everywhere they went embedded and enabled their power like bones and veins in a body.
Great nations have done this since Rome paved 55,000 miles (89,000 km) of roads and aqueducts in Europe. In the 19th and 20th centuries, Russia and the United States established their own imprint, skewering and taming nearby territories with projects like the Trans-Siberian and the Trans-Continental railways.
Now it’s the turn of the Chinese. Much has been made of Beijing’s “resource grab” in Africa and elsewhere, its construction of militarized artificial islands in the South China Sea and, most recently, its new strategy to project naval power broadly in the open seas.
Yet these profiles of an allegedly grasping and treacherous China tend to consider its ambitions in disconnected pieces. What these pieces add up to is a whole latticework of infrastructure materializing around the world. Combined with the ambitious activities of Chinese companies, they are quickly growing into history’s most extensive global commercial empire.
China views almost no place as uncontested. Chinese-financed and -built dams, roads, railroads, natural gas pipelines, ports, and airports are either in place or will be from Samoa to Rio de Janeiro, St. Petersburg to Jakarta, Mombasa to Vanuatu, and from the Arctic to Antarctica. Many are built in service of current and prospective mines, oilfields, and other businesses back to China, and at times to markets abroad.
But while this grand picture suggests a deliberate plan devised in Beijing, it also reflects an unbridled commercial frenzy. Chinese companies are venturing out and doing deals lacking any particular order. Mostly, they’re interested in finding growth abroad that is proving difficult to manage at home. This, too, is typical for a fast-growing power.
“This is very much in line with what we would expect from other great powers whose military posture follows its economic and diplomatic footprint,” Lyle Morris, a China specialist with Rand, told Quartz.
Below are snapshots of components that are either already in place or on the way.
The story starts with a reimagined Silk Road …
In September 2013, newly anointed Chinese leader Xi Jinping visited Kazakhstan’s capital, Astana. He was in town to seal the Chinese purchase of a $5 billion stake in Kashagan, one of the world’s largest oilfields. On that trip, he unveiled a plan ultimately dubbed “One Belt, One Road”—a land-and-sea version of the fabled East-West Silk Road trading route.
The idea is audacious in scope.
On land, Beijing has in mind a high-speed rail network (map 2). It will start in Kunming, the capital of Yunnan province, and connect with Laos and on into Cambodia, Malaysia, Myanmar, Singapore, Thailand and Vietnam.
Another overland network of roads, rail and energy pipelines will begin in Xi’an in central China and head west as far as Belgium (see dotted brown line above). As we’ve written previously, Beijing has already initiated an 8,011-mile cargo rail route between the Chinese city of Yiwu and Madrid, Spain. Finally, another 1,125-mile-long bullet train will start in Kashgar and punch south through Pakistan to the Arabian Sea port of Gwadur. The thinking behind this rail-driven plan isn’t new–as we have written previously, Beijing has been piecing it together for awhile.
At sea, a companion 21st-century Maritime Silk Road (see dotted blue line in map 1) would connect the South China Sea, and the Indian and South Pacific oceans. China would begin to protect its own sea lanes as well. On May 26 it disclosed a strategy for expanding its navy into a fleet that not only hugs its own shores, but can wander the open ocean.
China does not need to build all of these thousands of miles of railroads and other facilities. Much of the infrastructure already exists; where it does, the trick is to link it all together.
Everywhere, new public works will be required. And to make its vision materialize, Beijing must be careful to be seen as generously sharing the big engineering and construction projects. Up to now, such contracts have been treated as rare, big profit opportunities for state-owned Chinese industrial units. These include the China Railway Group, whose already-inflated share prices have often gone up each time another piece of the overseas empire has fallen into place. If local infrastructure companies are excluded from the largesse, there will be push-back on almost every continent.
In any case, not all this will necessarily happen. In a recent note to clients, China observer Jonathan Fenby of the research firm Trusted Sources suggested that it may all be too ambitious. China has had a history of announcing and then shelving projects, such as a $3.7 billion railway canceled by Mexico in February amid allegations of local nepotism. Meanwhile, Japan has begun to challenge Chinese plans. It has launched rival bids for billion-dollar high-speed rail and other projects in Indonesia, Thailand and elsewhere, with relatively low-interest loans and sometimes better technology (paywall).
But Beijing seems to recognize its own limits. Rather, the world may help to build at least some of the infrastructure through another Chinese creation—the Asian Infrastructure Investment Bank, with its 57 founding members, modeled loosely on the World Bank. Projects backed by the bank are meant to be good for the country where they are built. But given China’s outsize influence in the institution, they are certain to include some that fit into its grand scheme of global infrastructure.
…extends into South America…
China’s South American railway project, which cuts through the Amazon rainforest.(Global Forest Watch)
Xi has pledged $250 billion in investment in South America over the next 10 years. The centerpiece is a $10 billion, 3,300-mile, high-speed railroad (dotted red line above) that would start in Acu, near Rio de Janeiro, crossing the Amazon rainforest and the Andes Mountains, and terminate on the Peruvian coast. (NPR’s Tom Ashbrook conducted anexcellent hour-long program on the railroad.)
On top of that, there’s an advanced proposal by Chinese billionaire Wang Jing to build a 170-mile-long, $50 billion canal through Nicaragua.
…and also across Africa
In January, China agreed with the African Union to help build railroads (map 4), roads, and airports to link all 54 African countries. These plans are already under way, including a $13 billion, 875-mile-long coastal railroad in Nigeria; a $3.8 billion, 500-mile-long railroad connecting the Kenyan cities of Nairobi and Mombasa; a $4 billion, 460-mile railway linking the Ethiopian cities of Addis Ababa and Djibouti; and a $5.6 billion, 850-mile network of rail lines in Chad.
Then there are China’s maritime ambitions. These envision modern ports in the Tanzanian capital, Dar es Salaam; the Mozambican capital, Maputo; Libreville, Gabon; the Ghanaian city of Tema; and the Senegalese capital, Dakar.
All these land and marine projects align with existing Chinese natural-resource investments on the continent. For example, the China National Petroleum Corporation (CNPC) has large oil projects in Chadand Mozambique, and Chinese manufacturers are fast setting upEthiopian factories that rely on cheap local labor.
The new Chinese empire is enveloping its neighbors …
In addition to its planned high-speed rail network into Malaysia and Singapore (map 2) and Laos (map 5) into southeast Asia (see map 5 for Laotian portion), China plans a canal across the Isthmus of Kra in Thailand, a deep-water container port and industrial park in Kuantan, Malaysia, and a $511-million expansionof Male airport in the Maldives.
… and nations further afield in the Pacific
Chinese investments in the South Seas, by dollar amount (Lowy Institute)
China wants to dominate not only the South and East China seas, but far into the Pacific (map 6). According to the Lowly Institute, transportation comprises by far the largest portion of $2.5 billion in Chinese assistance and commercial credit to South Sea nations. Among the projects are:
Fiji: A $158 million hydroelectric plant and several sports complexes, including the 4,000-seat Vodafone stadium in Suva.
Samoa: A $100 million hospital in Apia, a $40 million terminal and upgraded runway at Faleolo Airport, and a $140 million wharf at Vaiusu.
Tonga: A $12 million government building to be called St. George Palace, and two small Chinese turboprop aircraft for domestic routes aboard Real Tonga airlines. The aircraft deal has been controversial because neither of the planes are certified for use in the West.
Vanuatu: Two more turboprops, this time for Air Vanuatu, and $60 million to build a Port Vila campus of the University of the South Pacific and a Parliament House (both loans have been forgiven).
Pakistan is pivotal to China’s Silk Road …
The Pakistan-China rail link(Xinhua)
Why has China lavished $42 billion in infrastructure projects on Pakistan? The two have always been allies. But China has a particular goal: It wants to contain Uighur separatists who have been fomenting violence in the western province of Xinjiang. Some of these separatists have sanctuaries in Pakistan and Afghanistan, and Beijing has pushed hard for both countries to hand over Uighurs living there.
But sending goods through Pakistan (map 7) also helps China avoid the Malacca Strait (map 8). Much of Beijing’s oil and other natural resources passes through this narrow, 500-mile-long stretch of sea between Malaysia and Indonesia. China worries that, if its relations with Washington become truly hostile, the US could theoretically blockade the strait and starve the country of its lifeblood resources. That is in large part why Beijing is financing a deep Arabian Sea port at Gwadur, and the 1,125-mile-long super-highway, high-speed railway and oil-pipeline route to the Chinese city of Kashgar.
… as is Central Asia …
Central Asia has been an almost exclusively Russian playground for almost two centuries. It still is when it comes to pure muscle. But in matters of cash, China is fast moving in.
The relationship revolves around oil and natural gas. Turkmenistansupplies more than half of China’s imported gas. It gets there throughthree, 1,150-mile-long pipelines; a fourth pipeline is soon to begin construction. China is the only foreign nation that Turkmenistan allows to drill for gas onshore, in particular from Galkynysh, the second-largest gasfield in the world. China’s $5 billion share of the Kashagan oilfield in Kazakhstan is one of its largest oil stakes anywhere. Xi also has signed $15 billion in gas and uranium deals inUzbekistan.
… and Russia
Two years ago, Russia announced a pivot towards China. The centerpiece of the shift is two natural-gas pipelines (the larger of the two is the dotted red line in map 9) through which a fifth of China’s gas imports would flow. The deal had some snags, but they reportedly have been worked out, and construction is to begin soon. In addition, China is to build a $242 billion, 4,300-mile high-speed railway from Beijing to Moscow, a two-day trip compared with the current six-day Trans-Mongolian Express.
China is speeding up how fast goods get to Europe …
The Maritime Silk Road (the solid blue line in map 10) will enter Europe through a $260 million Chinese-funded upgrade of the Greek port of Piraeus. From there, rail service will continue into the Balkans. Ships from China will also make port in Lisbon, Portugal, and Duisburg, Germany. To take the network into the heart of Europe, Beijing has agreed to finance a 250-mile bullet train, costing up to $3 billion, from Belgrade to Budapest. Separately, China’s new 8,011-mile cargo railroadfrom Yiwu to Madrid is taking away business from far more time-consuming truck shipping.
… and has piled into US real estate
For now, the Chinese web of infrastructure does not extend to the US. Instead, what has been built elsewhere is serving as a jumping-off point to the gigantic US market. High-speed trains are only now starting to be planned in the US, and Chinese firms are front-runners to win contracts, including a $1 billion contest for the San Francisco-to-Los Angeles route, expected to be worth $68 billion. China’s CNR Corp. is already providing 284 passenger cars worth $566 million to the Boston subway system.
Another big splash: the United States is China’s favored destination for real estate investment (see chart above). This has included commercial jewels such as New York’s Waldorf Astoria ($1.95 billion to Angbang Insurance) and the Chase Manhattan Plaza ($725 million to Fosun). But the bigger sums have been spent in all-cash deals by wealthy Chinesefor residential properties (pdf, page 12).
Last but not least, China has polar ambitions
Though the closest Chinese territory gets to the Arctic Circle is a thousand miles away, China nonetheless calls itself a “near-Arctic state.” Chinese oil company Cnooc has a majority share in Iceland’s Dreki oil and natural gas field, and Beijing established the Arctic Yellow River Station, a permanent research facility on Norway’s Spitsbergen Island. In Antarctica, China has four research stations, structures that allow nations to stake a claim to the continent. Plans for a fifth station at a place called Inexpressible Island are under way. It is positioning itself to move for the continent’s resources when a 1959 treaty guaranteeing its wilderness status expires in 2048.
Some of the infrastructure China is creating around the world will align with Western economic interests. But to the extent that it does, that will be inadvertent. Some of the most modern transportation infrastructure going up not only in China, but around the developing world, is deliberately linked to China. It is meant to make the global economy a friendly place for Chinese commerce.
That does not make China’s ambitions necessarily menacing or pernicious. But it does make them China-centric. It’s worth remembering that this way of doing economic development is not a Chinese invention. As Michael Pillsbury, author of “The Hundred Year Marathon,” tells Quartz, China’s ambitions are rooted in “a fierce sense of competitiveness which they claim they learned from the America of the 1800s.”