Officially launched in 2013 – though with roots stretching back over two thousand years – the Silk Road Economic Belt and the Maritime Silk Road have heretofore been more ambition than action. However, as spring sets in around the globe, the One Belt, One Road proposal is beginning to bear fruit. The comprehensive initiative looks to reshape world order as China takes a more hands on approach to both regional and global political, economic, military, and cultural cooperation. In the energy sphere, the relationships could be transformative for China’s lesser-endowed neighbors.
On April 20, China and Pakistan signed a $46 billion investment accord, effectively opening the China-Pakistan Economic Corridor (CPEC) – a crossroad of sorts for the Belt and Road. Over the next 15 years, Chinese companies will embark on an ambitious infrastructure development plan that will see the construction of roads, railways, power plants, and pipelines on a commercial scale. An estimated $33.8 billion will be spent on energy-related projects.
For Pakistan, the impact will be felt almost immediately. Per the agreement, coal, wind, solar, and hydro projects totaling $15.5 billion and 10.4 gigawatts (GW) will come online by 2017. Another 6 GW at a cost of $18.2 billion will follow by 2021 – providing significant aid to the country’s lackluster national grid. These arrangements join an already underway – though much delayed – pipeline project that will supply Pakistan with a possible 40 billion cubic meters of Iranian gas. China will provide 85 percent of the financing for the pipeline, which sidesteps US calls for Pakistan to employ Tajikistan for its energy needs.
In Southeast Asia, China looks to cement the Bangladesh-China-India-Myanmar (BCIM) Corridor as an energy and economic super-highway – one that encompasses nearly 3 billion people and accounts for approximately 10 percent of total world GDP. Toward this aim, the countries have jointly established the BCIM Forum, which is prioritizing infrastructure developments and energy market connections between the four-nation bloc. For Bangladesh, India, and Myanmar, electricity is key – only 55, 75, and 49 percent of their respective populations have regular access to electricity.
On its Northwest border, China is strengthening ties with Kazakhstan, who is eager to reduce its dependence on Russia. On March 27 the two countries signed a package of investment deals, which – valued at $23.6 billion – are designed to expedite Kazakhstan’s industrialization. Oil refining and hydropower, among other industries, are immediate focal points of the cooperative efforts, though nuclear energy is another target area.
For its part in the Belt and Road, China’s aims are a little more long-term and perhaps more self-serving than the cooperative spirit of the initiative implies – of course, it is assuming most of the risk.
Most notably, the CPEC and BCIM will provide China with more ready access to the Arabian Sea, Persian Gulf, East Africa, Red Sea, and Mediterranean Sea beyond – reducing dependence on the crowded Strait of Malacca and diversifying both import and export routes. Eventually, land routes through Kazakhstan, and in turn Russia, will link China to the Baltic. While not of primary concern, China’s efforts to boost its own oil and gas production will be hedged by access to sizeable reserves and untapped potential in Iran, Kazakhstan, Myanmar, and Pakistan.
The CPEC accord, as part of the broader Belt and Road initiative, highlights what China hopes to accomplish elsewhere – development minus political demands. Put another way, a firm counter to western influence in its own backyard.