For centuries churches across the West have celebrated the
arrival of three wise men in Bethlehem to present the newborn
Jesus with treasures from afar: gold, frankincense, and myrrh.
Though the Bible doesnt identify them by name, the Roman
Catholic Church honored the Magi as saints: Balthasar of
Arabia, Melchior of Persia, and Gaspar of India.
Scholars note that the gifts brought by the Magi were part
of a global trading network that existed centuries before the
birth of Christ. Those goods may have moved roughly from
Changan, the capital of the Chinese Empire, through the
Middle East and finally to Rome along the caravan-packed
routes known as the Silk Road. Gold was the currency of kings
and Chinese silk the preferred fabric for aristocratic women,
with spices, incense, and ceramics making up the bulk of
merchandise flowing between the two empires that then
controlled the Eurasian land mass.
The Silk Road presented such a powerful narrative that 12
centuries after the biblical events in Bethlehem, Venetian
merchant Marco Polo wrote about his journey across Central Asia
and his life as an official in the capital of the Mongol
Empire, Dadu (now Beijing). Polos tale inspired
Christopher Columbus to seek a maritime shortcut to China and
the kingdoms of India and the East Indies, as the spice islands
of Indonesia, Malaysia, and the Philippines were once known.
Columbus, of course, accidentally traveled to the Americas,
which eventually eclipsed the Far East in importance in terms
of global trade.
Today the romance of the Silk Road is alive again, this time
in modern China. The historical narrative remains so inspiring
that China has advanced a plan to rebuild the ancient trade
route in an era of air travel, container ships, and
Though this may sound like a joke, it isnt: Chinese
President Xi Jinping has staked his foreign policy legacy on a
grand strategy known as One Belt, One Road, or,
more simply, Belt and Road with
road referring to an overland route across Central
Asia and belt to maritime routes through Southeast
Asia, South Asia, and East Africa.
Rebuilding the Silk Road is a massive and
transformative undertaking by China, the largest the
world has seen since the postWorld War II Marshall Plan
in Europe, says Patrick Mendis, a former American diplomat who
is now a research associate at Harvard Universitys
Fairbank Center for Chinese Studies. The Silk Road has
both geoeconomic and geostrategic components to promote the new
sphere of Beijing influence beyond the Chinese borders,
adds Mendis, who was born in Sri Lanka (itself once an ancient
island kingdom) and is a commissioner of the State
Departments U.S. National Commission for UNESCO.
Chinas New Silk Road strategy comes at a time when the
West is flirting with retreating from the globalization it
initiated and led for decades. At the recent World Economic
Forum in Davos, Switzerland, Xi announced that China is willing
to take up leadership of the pro-globalization camp. His
message is particularly significant given the antifree
trade rhetoric of new U.S. President Donald Trump, who appears
to be leading his nation toward a new isolationism. In fact,
Chinas New Silk Road strategy is good for that
countrys business and economics, extending connectivity
to frontier markets throughout Central Asia and stimulating
demand for trade at a time when commerce with the West may be
in decline. Chinas economy still depends heavily on
exports to propel its growth.
Xis strategy is being implemented by three new
multilateral institutions based in China: the Asian
Infrastructure Investment Bank (AIIB), the Silk Road Fund, and
the New Development Bank. Most of the $240 billion in committed
capital is coming from China and the rest from dozens of
trading nations. The big exceptions: Japan, which so far has
refused to join, and the U.S. The three institutions will work
together to finance infrastructure projects such as power
stations, superhighways, ports, and bullet-train lines across
Central Asia, the Middle East, the Caucasus, and the Balkans in
an attempt to reunite Eurasia in a network of transport
Chinas new multilateral lenders, along with their
private sector partners, can mobilize as much as $1.5 trillion
of new capital in the coming decade for Asia infrastructure,
estimates Peter Burnett, Hong Kongbased regional head of
corporate finance for Greater China and North Asia at Standard
Chartered, which is partnering with Chinese lenders to
cofinance frontier market deals. However, the funds, though
substantial, are not enough to meet the regions
infrastructure needs, which according to Burnett and others
(including the Manila-based Asian Development Bank [ADB])
amount to $8 trillion just for 201020.
China fueled much of its own explosive growth by investing
in modern infrastructure, spending an average of more than 20
percent of gross domestic product annually over 25 years.
Though that investment fell to 8 percent last year, the
countrys infrastructure now is among the most modern in
the emerging markets. For instance, China is investing $503
billion to build a national bullet-train network that spans
almost 19,000 miles more than 15 times the length of
Japans Shinkansen. The trains can reach top speeds of
more than 180 miles per hour, and China has ambitions to extend
its lines to Europe. The Chinese Academy of Engineering in
Beijing has drawn up plans to build a nearly 5,000-mile network
spanning 17 nations; it would take passengers from Beijing to
London in only 40 hours.
To facilitate these ambitions, China has begun to play a
powerful role in the region as a financier, says Laurence
Brahm, a Beijing-based American lawyer, entrepreneur, and
adviser to the Chinese government. China, together with
other key developing nations, is forging an alternative global
financial and economic development architecture, different from
that of the Washington Consensus and postBretton
Woods order, he says. Brahm is working with John
Naisbitt, author of the best-selling Megatrends,
on a book examining Xis efforts to revive the Silk Road.
According to Brahm, if Xis vision is carried out
successfully, China will surpass the U.S. as the largest
economy in the world.
In 2001, I wrote that the 19th century was
Britains, the 20th Americas, and the 21st
Chinas, says Brahm. He was hardly alone in making
that prediction, but the 2001 book he coauthored,
Chinas Century, predicted that China, then the
No. 6 economy, with a GDP of $1.3 trillion, would become No. 1
in the 21st century. China surpassed Japan as the worlds
second-largest economy in 2010 and has since grown its GDP
to $11.3 trillion more than twice Japans $4.7
trillion and behind only the U.S.s $18.5 trillion. Though
Chinas growth rate has slowed from a remarkable average
of 9.9 percent a year, the Middle Kingdom posted 6.7 percent
growth in 2016 and according to many economists should be able
to grow between 3 and 6 percent annually over the next few
Though only a year old, Beijing-based AIIB has already
hit the road running. Since early last year the bank has lent
more than $1.7 billion to nine transportation, energy, and
urban development projects in seven nations: Azerbaijan,
Bangladesh, Indonesia, Myanmar, Oman, Pakistan, and Tajikistan.
We are off to a quick start people see it is a
bank operating to the highest international standards,
says AIIB vice president Danny Alexander. Not long ago
Alexander was serving as chief secretary to the U.K. Treasury
under thenchancellor of the Exchequer George Osborne; he
lost reelection to his parliamentary seat in Scotland in
Alexander was a key player in the U.K.s decision to
support Chinas formation of AIIB. In fact, prime minister
David Camerons government persuaded three other European
nations Germany, France, and Italy to become
founding members of the bank, much to the chagrin of the Obama
administration, which viewed AIIB as a threat to U.S. hegemony.
After Alexanders parliamentary defeat, Beijing asked him
to join AIIB.
Today the 43-year-old is based in Beijing and secretary to
the AIIB board; he helps broker financing for infrastructure
projects across Eurasia. The Chinese maintain that the new
multilaterals do not replace or compete with Washington-led
institutions and in fact complement existing multilaterals.
AIIB is analogous to the Japan- and U.S.-led Asian Development
Bank but focuses only on infrastructure finance in Asia. A
primary difference: Whereas ADBs goal is to alleviate
poverty, AIIB focuses on deepening regional connectivity. The
Silk Road Fund tends to take equity stakes in projects, while
the New Development Bank finances and buys stakes across all
emerging markets, including Africa and Latin America.
Alexander notes that most of the nine projects AIIB financed
in the past year were in conjunction with the World Bank and
other multilaterals, including ADB, the European Bank for
Reconstruction and Development, and the European Investment
Bank. Of course, the Chinese government has taken the
initiative to establish this institution, but we are not here
to deliver Chinese government policy or British government
policy or Indian government policy, he explains.
AIIB is answerable to all 57 founding members.