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CHINA’S STRATEGIC SHIFT TOWARD THE REGION OF THE FOUR SEAS: THE MIDDLE KINGDOM ARRIVES IN THE MIDDLE EAST

 

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Since the Arab Spring, China has been quietly asserting its influence and fortifying its foothold in the Middle East, while the United States pivots to the Asia Pacific after a decade of war.  It is aligning with states that have problematic relations with the West and are also geo-strategically placed on the littoral of the “Four Seas”–the Caspian Sea, Black Sea, Mediterranean Sea, and Arabian Sea/Persian Gulf. Paradoxically, the U.S. eastward pivot is matched by the resurgent Middle Kingdom’s westward pivot across its new Silk Road, and threatens to outflank the citadel of American geo-strategies in the region.

INTRODUCTION: CHINA’S STRATEGIC INTERESTS IN THE MIDDLE EAST

Energy Security

China’s interest in the Middle East is first and foremost energy-driven.[1] In 1993, when it became a net oil importer for the first time, Beijing embarked on a “go out” (zhouchuqu) policy to procure energy assets abroad to feed its growing economy.  The legitimacy of the Chinese Communist Party (CCP) rests on continued economic growth and delivering a rising standard of living for the Chinese population.  As a corollary, China is also concerned about security of energy supply lines and Sea Lines of Communication (SLOCS).  Because the United States is considered its main opponent in the international system, China is wary of U.S. naval dominance and the risk of choking China’s energy supply through the Malacca Straits should hostilities break out over Taiwan.  This is referred to as the “Malacca Dilemma,” where 80 percent of China’s oil imports traverse this chokepoint that is vulnerable to piracy and U.S. blockade.  Indeed, given increasing tension in the three flash points of the South China Sea, the Korean Peninsula and the Taiwan Straits, this concern is even more pressing for the Chinese leadership.

Market Access

The Middle East is also a strategic logistics and trade hub for China’s exports and market access in Europe and Africa. China understands the importance of having strong economic foundations for military power and sees that continued market access for their exports to fuel China’s economy would build up their war chest to further underwrite military modernization.[2]  The EU is currently China’s largest trading partner ahead of the United States.[3] Moreover, China also has vast interests on the African continent–both via infrastructure projects and long-term energy supply contracts.  More than 1 million Chinese are in Africa (up from about 100,000 in the early 2000s), with trade at $120 billion in 2011.[4] In 2009, China overtook the United States to become Africa’s number one trading partner.[5]  As such, the Middle East is a strategic region that connects Europe, Africa, and Asia markets.

Thus, given the Middle East’s location as a trade hub linking the three continents, a vital region for market access, and site of vast energy reserves to fuel China’s continued economic growth, the CCP deems the Middle East as a high priority on its foreign policy agenda. As the United States “pivots” towards Asia, China will naturally seek strategic depth in areas that were once dominated by the United States and its Western allies.  This is even more so in the aftermath of the Arab Spring.

Continue reading CHINA’S STRATEGIC SHIFT TOWARD THE REGION OF THE FOUR SEAS: THE MIDDLE KINGDOM ARRIVES IN THE MIDDLE EAST

Hauling New Treasure Along the Silk Road

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AZAMAT KULYENOV, a 26-year-old train driver, slid the black-knobbed throttle forward, and the 1,800-ton express freight train, nearly a half-mile long, began rolling west across the vast, deserted grasslands of eastern Kazakhstan, leaving the Chinese border behind.

Dispatchers in the Kazakh border town of Dostyk gave this train priority over all other traffic, including passenger trains. Specially trained guards rode on board. Later in the trip, as the train traveled across desolate Eurasian steppes, guards toting AK-47 military assault rifles boarded the locomotive to keep watch for bandits who might try to drive alongside and rob the train. Sometimes, the guards would even sit on top of the steel shipping containers.

The train roughly follows the fabled Silk Road, the ancient route linking China and Europe that was used to transport spices, gems and, of course, silks before falling into disuse six centuries ago. Now the overland route is being resurrected for a new precious cargo: several million laptop computers and accessories made each year in China and bound for customers in European cities like London, Paris, Berlin and Rome.

Hewlett-Packard, the Silicon Valley electronics company, has pioneered the revival of a route famous in the West since the Roman Empire. For the last two years, the company has shipped laptops and accessories to stores in Europe with increasing frequency aboard express trains that cross Central Asia at a clip of 50 miles an hour. Initially an experiment run in summer months, H.P. is now dispatching trains on the nearly 7,000-mile route at least once a week, and up to three times a week when demand warrants. H.P. plans to ship by rail throughout the coming winter, having taken elaborate measures to protect the cargo from temperatures that can drop to 40 degrees below zero.

Though the route still accounts for just a small fraction of manufacturers’ overall shipments from China to Europe, other companies are starting to follow H.P.’s example. Chinese authorities announced on Wednesday the first of six long freight trains this year from Zhengzhou, a manufacturing center in central China, to Hamburg, Germany, following much the same route across western China, Kazakhstan, Russia, Belarus and Poland as the H.P. trains. The authorities said they planned 50 trains on the route next year, hauling $1 billion worth of goods; the first train this month is carrying $1.5 million worth of tires, shoes and clothes, while the trains are to bring back German electronics, construction machinery, vehicles, auto parts and medical equipment.

DHL announced on June 20 that it had begun weekly express freight train service from Chengdu in western China across Kazakhstan and ultimately to Poland. Some of H.P.’s rivals in the electronics industry are in various stages of starting to use the route for exports from China, freight executives said.

The Silk Road was never a single route, but a web of paths taken by caravans of camels and horses that began around 120 B.C., when Xi’an in west-central China — best known for its terra cotta warriors — was China’s capital. The caravans started across the deserts of western China, traveled through the mountain ranges along China’s western borders with what are now Kazakhstan and Kyrgyzstan and then journeyed across the sparsely populated steppes of Central Asia to the Caspian Sea and beyond.

These routes flourished through the Dark Ages and the early medieval period in Europe. But as maritime navigation expanded in the 1300s and 1400s, and as China’s political center shifted east to Beijing, China’s economic activity also moved toward the coast.

Today, the economic geography is changing again. Labor costs in China’s eastern cities have surged in the last decade, so manufacturers are trying to reduce costs by moving production west to the nation’s interior. Trucking products from the new inland factories to coastal ports is costly and slow. High oil prices have made airfreight exorbitantly expensive and prompted the world’s container shipping lines to reduce sharply the speed of their vessels.

Slow steaming cuts oil consumption, but the resulting delays have infuriated shippers of high-value electronics goods like H.P’s. Such delays drive up their costs and make it harder to respond quickly to changes in consumer demand in distant markets.

Read more » The New York Times
http://www.nytimes.com/2013/07/21/business/global/hauling-new-treasure-along-the-silk-road.html?smid=fb-share&_r=0