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Chinese "One belt - one way" and a fight of dreamers to profit

Chinese "One belt - one way" and a fight of dreamers to profit

Tags: China, Europe, Economics, Analytics, Russia, Poland, Ukraine, Trade, Railway, Belarus, Shipping

Will geopolitical Moses manage to bite the economic Elephant.

The Chinese global economic project One Belt One Way (OPOP), often called the New Silk Road (although this is incorrect) is today perhaps the most actively discussed topic of the economic future, if not the entire planet as a whole, then Eurasia Exactly. For example, in Eastern Europe, strangely enough, it has hopes that are almost greater than in China itself. There are three reasons for this.

The global crisis has exhausted domestic markets, thereby depriving most states of the sources of economic prosperity. And China often repeats its plans to invest more than 600 billion dollars in OPOP within the next 10-15 years. This is approximately 1,5 nominal GDP of Poland, 3,1 of Czech GDP or more than 12,2 GDP of Belarus for 2016 year. For local ruling elites, the money is absolutely fantastic.

The same crisis exacerbated the geopolitical confrontation. Russia's economic gravity inexorably dragging East European limitrophs into economic, and then inevitably, Moscow's political orbit. The ruling elites of these countries see the threat of their independence in the event and consider participation in the Chinese "New Silk Road" as the only opportunity for Russia's economic attraction to largely compensate. Thus, to restore the geopolitical alignment to the times of multi-vector, or rather balancing on the contradictions of opposing global centers of power.

Well, to top it all, each of the players secretly cherishes plans in the new economic and political conditions to rise. For example, Poland views the "Silk Road" as an opportunity to finally form under its management a cohesive pool of Lithuania, Latvia, Estonia, Hungary, Bulgaria and the Czech Republic with Slovakia, the so-called Inter-Mediterranean project. Ideally, even with the involvement of Greece and a number of fragments of the former Yugoslavia, which have no international prospects at all.

If successful, this will allow Warsaw to gain political control over the aggregate GDP comparable to that of Germany or France, relying on it already to claim a decisive redistribution of power in favor of Poland within the European Union. Some, like Ukraine, generally dream of building an economic and political reality that completely excludes the existence in the world of Russia as such.

In general, the Chinese global economic project causes a serious stir. But, as you can see now, in the vast majority based on dreams that can not come true, although it does not prevent applicants from saving stones in their bosom and even preparing to fight with each other.

The dazzling brilliance of a Chinese polite smile

It should be noted that Beijing is well aware of the essence of the processes occurring in Eastern Europe and perfectly "reads" everything there that it dreams about, but it is not directly stated. Moreover, the Celestial competition between the candidates even exquisitely warms up. First of all, still keeping intrigue at the expense of the final configuration of this very path.

Although the project was announced by the Chairman of the People's Republic of China Xi Jinping back in September of 2013 and since then it has been repeatedly discussed at various levels, including the top officials, today it is still clear that China will really build a "way". The incentive to this is the desire of the Red Dragon to shorten the time of delivery of goods from China to Europe from the current 45-46 days by sea to 10-13 days by land. Everything else to this day remains hidden by a dense veil of uncertainty.

In one form or another, future routes are "viewed" three. One "sea", almost coinciding with the traditional, through the Strait of Malacca, but bypassing it due to the unavailability of American control over the key points of the route. The second, also "sea", along the Russian Northern Sea Route. Although on paper it looks substantially longer than the classical one, across the Indian Ocean, due to the lack of many bottlenecks, such as the Suez Canal and the areas of so completely and not defeated piracy, as well as the zone of potential international military conflicts in the Red Sea, the "northern option" , calmer and cheaper for logistics costs. Well, the most important, as well as the most promising, is the overland transport corridor, which should ensure the delivery of goods from China to Europe in maximum two weeks.

However, it is only generally called one corridor, because in reality, the Chinese are discussing everything as if it were a matter of choosing as many as six very different options. Among them, the most discussed ones are reduced to railway branches: China - Kazakhstan - Russia - Belarus - Poland - Western Europe and China - Central Asia - Iran - Turkey - Southern Europe, but besides them, China is periodically heated interest in the version "through Mongolia" and then through Russia, which completely excludes the whole of Central Asia, as well as "through Georgia and the Caspian, further to Ukraine," which is the basis for rich dreams in Kiev.

Thus, Beijing creates the opportunity to receive from its potential partners numerous and various preferences, without actually binding themselves with any special obligations, while the partners themselves begin to look at each other with a poorly concealed gastronomic interest. A particularly funny situation is now emerging in Eastern Europe, clearly showing the difference in the approaches and expectations of specific countries.

Belarusian-Chinese Friendship for 800 million

For example, Belarus with the "New Silk Road" links three key expectations. First, to increase trade with China from the current 5 to the desired 30% of GDP, thereby substantially offset the growing economic isolation on Russia. Secondly, to modernize your own economy and infrastructure with Chinese money, than to prove the effectiveness of the unique Belarusian economic (and therefore political) model. Third, on the Chinese shoulders to break through to the internal market of the EU. In particular, through joint ventures with China, established in Poland.

One of these projects involves the supply of Belarusian components for the assembly of tractors and various special equipment. As an example, the experience of the joint company MAZ and Zoomlion, where the Minsk Automobile Plant delivers the chassis, and the Chinese partner installs their own equipment (cranes, lifts, etc.) is considered as a sample. Independently to break through to the Europe at the Belarus industrial goods it is impossible, and in a sheaf with penetrative power of the Chinese "silk way" the variant looks quite perspective.

However, all the same, Minsk's main source of income is, first of all, the maintenance of goods transit from China to Europe. According to Xinhua Newspaper, in January-November 2016, China's trade with 16 countries in Central and Eastern Europe reached the level of 52,9 billion dollars and grew by 4,5% compared to the same period of 2015. What proportion of this amount Beijing is going to send through the future land corridor is now unknown, but different officials mention plans from "minimum 35-40%" to "at least 2 / 3" of the current volume.

If we take into account that logistics costs reach about 10-15% of turnover, then in the representation of Eastern European partners we are talking about a possible division of the gold river with a volume of about 5-8 billion dollars annually. Even if they are divided proportionally to the distance and then correlated with the length of the route through the territory of a specific country, only one Belarus expects to earn at least 500-800 million dollars per year in transit.

The traditional ambition of the gentry

Where more global plans for Chinese money is building Warsaw, which wants to sell Beijing the remains of its infrastructure heritage. Since 2013, almost 300 trains have been sent from China to Europe. The total volume of cargoes exceeded the sum of 1 billion dollars. In 2017, China promises to bring their number to a thousand. Since Poland is today the westernmost point where the "broad, Russian" railway track reaches, Warsaw is absolutely convinced that in any scenario the transcontinental Chinese railway will still pass through it.

Китайцы, со своей стороны, уже объявили об открытии для Польши целевой кредитной линии на 10 млрд долл. под финансирование проектов в рамках ОПОП, что вызвало у поляков просто форменный проектный бум. Бывший министр транспорта Польши (2005 — 2007) Ежи Полячек предложил идею продления колеи от Славкува еще на 80 километров до портов Гливице и Козле. Последний должен быть интересен тем, что находится непосредственно на Одере и является конечной точкой Одерского водного пути, позволяющего организовать судоходство вниз по течению аж до Щецинского залива и Балтийского моря. По замыслу авторов вообще становится возможным совместно с Чехией реализовать речной транспортный коридор Дунай — Одер — Эльба вглубь Европы.

However, only the Polish Poles do not intend to limit themselves. Warsaw develops and declares a whole gamut of plans covering "any possible options". Among them, as obvious enough - to join the railway corridor with Belarus, - and extremely dubious, such as the closure of the Scandinavian ferry crossings in case if China chooses the main Russian Northern Sea Route as the main one. At the same time, why should Finnish or Norwegian ferries go to Poland, and not immediately to Germany and the Netherlands, or why do Chinese ships transfer cargoes in Northern Scandinavia to a piece of iron, then again reload them on ferries instead of immediately bypassing Scandinavia and unload, say, in the Netherlands - remains a mystery. Moreover, the main goal of the project is to minimize the number of trans-shipments between different types of transport.

But the Poles already carry. It seems to them that, having an exceptionally advantageous geographical position, they received (specifically, received, already) special powers within the whole of the Chinese project, allowing Warsaw to determine with whom in general the entire land transport corridor to build. Periodically, Poland warms up Kiev's dreams of creating a so-called southern route through the Black Sea, the Caspian and Georgia, which completely excludes the use of Russian territory, in exchange for that, tries to bargain away from Moscow and Kiev various, including momentary, monetary preferences. Likewise, in the role of the elder brother, willing to condescend to favor, the Poles try to build relations with Lithuania and Latvia, also counting on some crumbs from the Chinese table. For example, in the form of downloading a part of the "Scandinavian traffic" of the prospective Trans Rail Baltic RailBaltica project, which is planned to be built for Brussels subsidies.

However, the Polish plans have a significant threat. For almost a year now, Beijing has made it very clear that out of all the possible variants of the "way", the most promising and economically advantageous option is through Kazakhstan and Russia, which, of course, inevitably leads to Belarus and then to Poland, but the final key point of the route considers all The same German city of Duisburg. And, if necessary, the Chinese can fully extend the "wide gauge", since Duisburg will serve as a key fork in the traffic flow further to London, Madrid and Milan.

It seems that Warsaw does not like the role of just a corridor, and she tries to stand in a pose "either in our way or in any way". In January 2017, Poland's Minister of Defense Antony Macherevich officially announced that Warsaw would work to disrupt the "New Silk Road" project. According to him, Chinese OPOP is the construction of a "new socialist empire uniting Germany, Russia and China", which runs counter to the policy of the US, and, consequently, of the Polish government.

* * *

"The wind blows, the dog barks, and the caravan continues to go" - this Persian proverb today, perhaps, most accurately characterizes the processes around the Chinese "New Silk Road". While the "great" Eastern European powers selflessly share the skin of the unbroken dragon, China quietly takes advantage of it by investing in key elements of the future transcontinental logistics infrastructure at great discounts. In particular, buying out the port facilities of Greece, Italy, Germany and the Netherlands. Beijing is not at all inclined to put all the eggs in one basket. First of all, he is interested in creating a reliable and stable transport corridor, minimally dependent on momentary "local political conflicts". Given this fact, it may even turn out that in the end the lion's share of the flow will go through Ust-Luga and Peter, bypassing the Baltic states and Poland, immediately to Germany and the Netherlands.

Alexander Zapolskis
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