arabianbusiness.com 23
COMMENTq THE NEW SILK ROUTES HAVE THE POTENTIAL TO IMPROVE
INFRASTRUCTURES AND TECHNOLOGIES, AND STIMULATE
SOCIOECONOMIC AND AGRICULTURAL DEVELOPMENT”Power plays
Oil continues to bring China
and the Arab countries
closer economically, too; as
the world’s largest crude oil
importer, China is looking
for long-term energy
cooperation with the region.
The Gulf countries together
account for 60 per cent of
China’s energy supplies, and
in 2017 Saudi Arabia was its
second largest supplier of
crude oil after Russia.
By 2030, the new Silk Road
will extend 3,218km from
Kashgar in China’s Xinjiang,
itself a stop on the ancient
Silk Road, to Gwadar Port in
Pakistan, a strategic location
as it overlooks the Arabian
Sea and is surrounded by
countries with two-thirds of
global oil reserves. Middle
Eastern oil currently travels
16,000km by sea to reach
China. That distance will be
reduced to 2,500km under
the China Pakistan Economic
Corridor (CPEC) project
of highways, railways and
pipelines across Pakistan.
China also seeks to
establish a maritime corridor
connecting oil and gas fields
in the Middle East through the
Gulf “string of pearls” – the six
GCC countries plus Iraq and
Iran – to China and the cities
of East and South East Asia.
Taken together, these
projects will not only provide
new markets and business
opportunities, but will also
ensure that oil and natural
gas will reach its markets
quickly, solving the so-called
“Malacca Dilemma” of oil
imports from the region
arriving via the congested
Malacca Strait. Gwadar’s
strategic importance lies in
being another pearl in the
“string” as a terminus for
GCC, African and Iranian oil.
China will also gain powerful
facilities in the Arabian Sea
and onwards to the rest of
the Indian Ocean.GCC collaboration
GCC countries are looking
for stronger collaboration
with China, a market of great
potential. According to The
Economist, the largest share
of GCC exports will go to
China by 2020, worth around
$160bn, while China will also
dominate the GCC import
market, providing about
$135bn of goods to the Gulf.Relations between China
and Saudi Arabia are already
flourishing, built on a
comprehensive strategic
partnership as Beijing seeks
to promote stability on
its 21st-century Maritime
Silk Road – and Saudi has
agreed to invest in Gwadar
Port and join the CPEC.
Chinese port construction
will also extend via the Red
Sea and Suez Canal to the
Greek port of Piraeus on the
Mediterranean, a major entry
point for European markets,
and where China has made
huge investments.
Likewise, the UAE
has established a close
partnership with China and
will participate in the One
Belt, One Road initiative to
strengthen its own regional
hand. Dubai in particular
is seeking to become an
important gateway for
Chinese companies
accessing markets in the
GCC, Africa and Europe.Counter moves
In contrast, India is now
collaborating on a rival
project with Iran and
Afghanistan, the expansion
of a North-South economic
corridor extending from
Central Asia to Afghanistan
through Chahabar in south-
eastern Iran, on the Gulf of
Oman out of the Strait of
Hormuz. Chabahar is located
165km from Gwadar, and
Iran aims to turn it into an
economic centre for the
Middle East, South Asia and
Central Asia.
In addition, Chabahar
port is India’s gateway to
the rich energy reserves of
Afghanistan and Central
Asia. India is the third-largest
crude oil consumer in theworld and imports 80 percent
of its requirements, mostly
from the Middle East.
The One Belt, One Road
initiative has, as a result,
become an arena for a
regional power struggle.
While these economic
corridors can boost
development and nurture
regional integration and
intra-regional global trade,
they can also be manipulated
as tools of influence for
strategic control in Asia.
The CPEC may well boost
China’s hegemony and
may possibly be interpreted
as strategic encirclement
of India. Chabahar, as a
maritime counterweight
to Gwadar, may also be
interpreted as a competition
to Pakistan and a challenge to
China’s growing influence.
The new “Silk Routes”
have the potential to
improve infrastructures and
technologies, and stimulate
socioeconomic and
agricultural development.
They will also promote
financial cooperation,
communication and cultural
exchange – rather like the
ancient trade routes.
For half a century, the world
has experienced an increase
in global economic exchange
and a decrease in conflict
and global war. Theorists still
argue that countries will not
go to war with their trading
partners and that multilateral
economic trade creates a
more stable environment.
But the new trade routes to
the Middle East and Central
Asia could equally be the
new battle lines of the future.
The winner will be the one
with the largest trade and
the shortest and most secure
access to natural resources. a60%
Proportion of China’s energy
that comes from the GCC