Hambantota isn’t just a place in Sri Lanka, it's a lesson. Located 250 kilometers from Colombo, this was once a place best know for its nature preserves, jungle tours, and pristine beaches. Today, it’s a metaphor for opaque government dealings, poor planning, and rivalries between vying political factions. What started out as an ambitious endeavor to transform an undeveloped swath of Sri Lankan jungle into the country’s number two city soon descended into a parable of what happens when China presents its bags of money to corrupt, polarized democracies for massive development projects that are out of their league. It’s the story of how gluts of half-finished developments are left hanging in the balance when governments are voted out of power and what happens when the bill for these under-producing projects comes due. The dream was for Sri Lanka and China to join together in the building of a new masterplanned city that would show the world what the Belt and Road could do. Instead, it showed the world precisely what the Belt and Road actually does. 

It’s an uncomfortable experience looking through the photo album of someone from Hambantota. This small town at the southern tip of Sri Lanka was virtually wiped off the map by a tsunami in 2004, which killed over 30,000 people in throughout the country. Almost invariably, every second or third person in the pictures are no longer around anymore.

I sat on the beach with Mahesh, a fisherman who now works at a little bed and breakfast right down the coast from Hambantota port, as he flipped through a photo album. 

“He isn’t here anymore. He was killed by the tsunami.”

He then flipped to another page. 

“He isn’t here anymore,” he pointed out a young guy whose arm was interlocked with a young version of himself. “He isn’t here anymore,” he pointed to another.

Eventually he began just pointing at people in photos and say a single word: tsunami.

“Tsunami.”

“Tsunami.”

“Tsunami.”

“Not many people talk about what happened here,” he continued. “More than 1,000 people died here on that day.”

“What was this place like before?” I asked.

“I wish I didn’t have to remember anything from before,” he replied after a long pause. “I used to have a bungalow hotel on this beach. Look here, you can see it.”

He pointed to photo of him smiling in front of a bamboo and palapa hotel.

“It is gone now. I used to have a very nice Jeep. It was taken away too.”

He flipped through some pages of photos of him taking tourists into the jungle in a white Jeep.

His jungle tours, his small hotel, and his stall in the market where he sold fish was how he made his livelihood. All of it was washed away in an instant.

“Here’s a picture of me selling fish.”

The rippled and bent old 35mm photos that he was showing me told of a different era here. He was smiling big in all his photos. He was young, muscular, and always with friends. Looking at his photos were like looking into someone’s rose-tinted memories of the past. 

Mahesh took a group of tourists on a trip to the jungle one day and returned to find his entire life washed away. He is now the night guard at a hotel on the beach that doesn’t attract many guests. I believe I was the only one there during my stay. He touts at the bus station. His face is worn, his hair fell out. He never recovered.

Hambantota hasn’t either. Much of what was destroyed was never built again.

We sat there for a moment in silence, looking out at the sea. The waters looked so calm today, gently lapping against the shore.

Another man eventually walked up and sat down with us and told me his story. He was 58 and lived his entire life in that small village.

“I once had a wife and two children,” he said. But they are all gone. Tsunami. Now I am all alone.”

He now sleeps at night in whatever unoccupied plastic lawn chair he can find on the beach. Tonight he is curled up on one in front of my door.

15 years ago this place was wiped out by a tsunami. Today, the waves of development are rolling through as the place is being reimagined as a global center for trade. 

This is Hambantota, a place that the Sri Lankan government has been trying to develop by any means necessary since 2010. It started out as the dream of President Mahinda Rajapaksa: to transform his impoverished, tsunami-ravaged home region in the remote south of Sri Lanka into the country’s number two city. A massive $1.5 billion deep sea port would be built, a $209-million international airport would be dropped between two wildlife preserves, and a massive convention center, a cricket stadium, new luxury resorts, and new, higher-end residential neighborhoods would be created out of proverbial nothing. Holding this scheme together was a proposed industrial zone, which would give ships a reason to come into port and a place for people to work. It was to be a completely new city built in a place best known for its elephant tours, the eastern terminus of corridor of coastal development that would stretch to Kandy and Colombo beyond, an entirely new economy that would catapult Sri Lanka into the modern world — almost completely financed with Chinese money.

However, the reasons for Rajapaska’s proclivity for finding Chinese partners for his development projects wasn’t completely due to personal preference but as a reaction to political and economic pressure from the West. Between the 2006 and 2009, the EU and U.S. shut down most economic concessions and sources of aid to Sri Lanka to demonstrate their disapproval of alleged abuses that transpired during the final stages of the country’s decades-long civil war. Dubbed war crimes, the Sri Lankan government was called up before the UN Human Rights council and in 2009, when the EU’s GSP-Plus trade concessions to Sri Lanka came up for renewal, an ultimatum was issued: comply with a list of human rights related demands or no money for you. Sri Lanka declined to engage and the concessions were discontinued. On the same grounds, the United States also cut back on many sources of aid.

“Then China came in and filled that diplomatic vacuum,” Dushni Weerakoon, a researcher at the Colombo-based Institute of Policy Studies, told me as we sat in her office drinking tea.

While the West tried to exert political and economic pressure on Sri Lanka to force the country to atone for alleged humanitarian abuses, what they actually did was push the country into a closer alliance with China. As sources of Western funding dwindled, China made up the difference and then some, pumping the country with over $8 billion in soft loans destined for infrastructural development.

“China has a hands-off approach,” Weerakoon explained. “It will give you money and let you do what you want to do. They won’t lecture you on humans rights.”

In the years that followed, Sri Lanka virtually became an outpost for Chinese development. Chinese-backed highways, ports, airports, convention centers, stadiums, and even an entirely new financial district built on reclaimed land began proliferating over the country. The details of many of these projects were extremely murky and, allegedly, extremely corrupt. Mahinda Rajapaksa, who was president for nine years and reigned with near omnipotence, remains a highly polarizing, controversial figure in Sri Lanka. He is held by some to be a national hero, having ended a decades-long civil war; while to others he is a corrupt, despotic war criminal. 

On The New Silk Road

Sri Lanka's Colombo Port City: The Frontline Of China And India's Geopolitical Showdown

The story goes that in 2011 Sri Lanka’s then-president Mahinda Rajapaksa looked out from the land reclamation site of Colombo's emerging South Container Terminal and had an epiphany: why not just keep going and build an entirely new city district? The idea was as pragmatic as it was visionary -- the area next to the new port was silting up naturally any…

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10 years ago · Wade Shepard

I walked down the beach towards the new deep sea port that the locals simple refer to as China Harbor. Development of the port began in 2008 and it was slated to become the world’s largest port constructed on land, taking up 16 square kilometers and providing capacity for 33 ships. It was financed by China, built by China, and run by COSCO Shipping, one of China’s finest. While Hambantota was originally a national Sri Lankan project it soon became a core part of Chinese President Xi Jinping’s plan to construct a string of Chinese-controlled shipping hubs from the east coast of China to Africa and Europe along the Maritime Silk Road. 

But in this fray of all out development, the people Hambanota seem to have been conspicuously left out of the picture. 

“We don’t want to see it like Dubai, with big buildings everywhere and no trees,” Mahesh said. “This is Sri Lanka, we like green, all of this development — I’ve seen it since I was a kid — they make some new buildings but it is still the same.”

When I asked what he thinks of China Harbor he just shrugged, as though it was something remote and irrelevant, far removed from his life rather than the venerable fortress of trade rising up within view right down the beach. 

“The old government, they start something then the new government they are slow to keep doing it,” he spoke gruffly and shrugged as he turned and walked away. It had nothing to do with him.

I walked down the beach and some young fishermen began waving at me. They saw me taking photos of their boats, which they painted with an array images and colors — one being painted to look like a Jamaican flag with a big Bob Marley head on the bow. They were sitting in a circle under a shoddily assembled palapa hut blasting reggae music from a small speaker that was hanging from one of the beams. They were thin, dressed in ragged t-shirts and torn shorts, and were smiling and smoking after returning from a morning of fishing. I asked them about the port and how it impacted them. 

They told me that since construction began their fishing grounds had been limited. They were barred from fishing anywhere near the port, needed to go farther out to sea, and had to dodge the occasional freighter. 

“They make it fail,” one of them said suddenly 

“Is the fishing worse now?” I asked, wondering what exactly he meant by that. 

“Yes, very worse.”

“Can you fish by the port?”

“No, they have navy. Very dangerous.”

Life goes on in Hambantota as though the port and other new infrastructure projects didn’t exist. The rural status-quo churns onward in spite of the fact that the landscape is being physically altered being by all-out fiat. The massive projects of the BRI reshape places with a distinct absence of citizen engagement, as though they are somehow encapsulated away from the local ecosystem. While people in these new epicenters of development are told that these big mega-projects will be to their benefit, the sheer disconnect between the locals and the projects is remarkably stark. The people there who continue their traditional ways of life are often removed from the scene, either physically displaced by the state’s relocation committees or ignored completely. The environment is degraded, the landscape turns from green to brown to grey. And those opportunities for employment may or may not materialize.

On The New Silk Road

Done Deal: China Buys Strategic Sri Lankan Seaport; The Belt And Road Reigns Victorious

A deal between China and Sri Lanka over the Hambantota deep seaport is over and done — finally. After nearly a year-long showdown that brought China and India into the ring and sparked tensions and even outright violence between the various facets of Sri Lanka’s political spectrum, the toboggle may now be over . . . at least on paper…

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9 years ago · Wade Shepard

The idea of a port at Hambantota wasn’t completely without logic. Sri Lanka has been pondering building a port there since 1977, as it sits on the doorstep of one of the busiest shipping lanes in the world, with 70,000-80,000 ships pass right by it each year. While it takes four hours for ships to divert from their routes to stop in Colombo it would only take 45 minutes to go to Hambantota. It was thought — or at least pitched — that a new port could attract upwards of 10,000 of these ships, creating 50,000 local jobs in the process. Another aspect of the plan that seemed to make sense was that Hambantota was never meant to compete with the booming Colombo port, as it was designed to handle bulk cargo, such as car parts and crude oil, whereas Sri Lanka’s primary port would mostly handle containers. 

However, the Asia Maritime Transparency Initiative immediately casted doubts on these projections, stating that “the economic rationale for Hambantota is weak, given existing capacity and expansion plans at Colombo port, fueling concerns that it could become a Chinese naval facility.”

But they built it. And they didn’t come. Hambantota continues to operate at severe under capacity, as the bulk of ocean traffic passes right by the place at full throttle. 

On The New Silk Road

A Journey To The World's Emptiest Airport

Hardly anybody goes to Sri Lanka’s Mattala Rajapaksa International Airport (HRI) because they have a flight. No, the air transport hub is currently a daily flight or two away from being completely defunct, and the people who do go there tend to be tourists making a side trip from the nearby wildlife parks to see the stunning, fully modern airport in the…

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10 years ago · Wade Shepard

Photo gallery

I started this Substack at the end of 2019 with the goal of covering the New Silk Road / Belt and Road in a deeper, more conversation, and, hopefully, more entertaining way than I could on Forbes or The Guardian or the other, more conventional publications that I was writing for at the time. I felt that there were a lot of stories not being told during my three years of Silk Road travels and I really didn’t have a platform for talking about the cultures that I interacted with and people that I met.

No one publication, book, or writer is going to be able to fully cover something as vast as the New Silk Road. Some of us go out there, find out what’s going on, and report from the ground. Others sit in cubicles at news agencies or offices of universities and read every article, book, and report that’s published on this topic. It’s difficult — probably impossible — to do both. So we all do our part, contribute the type of information that manifests our strengths, and work together to present a broader picture of a colossal movement that’s shaping our world. This Substack is an attempt for me to enhance my contribution.

I also had an idea of being able to provide stock interviews, images, and videos that other journalists and researchers could use. I tend to collect massive amounts of content when traveling, and I only ever use a small fraction of it, so why not share it? It’s also a way of adding something a little more to justify a $5/ month subscription fee.

This intent seems to have resonated, as this Substack started growing fast right from the beginning, bringing in a surprising amount of free and paid subscribers. I looked at the metrics after those first few months and I was like, “This is going to work.”

Then you all know what happened next.

I’m not the kind of reporter who’s going to sit in his room and act like he knows all about the world outside. You can say what you want about me, but I’m not a frog in a well. So I put this Substack on hold and paused the paid subscriptions until the pandemic was over and I could start traveling again. I was thinking a three month hiatus. It ended up being three years.

Up to that point, my entire career (and life) was based on travel. I literally spent 20 years on the road, traveling through almost 100 countries. I didn’t have a plan for not being able to travel, and I didn’t handle it well. I basically shut down everything — I put a lid on everything that I was doing before and just tried not to think about it. I moved on to other intrigues: I started a film company called Real Life Cinema and finished editing a documentary about Melaka Gateway and the upheavals of the “culture wars.” I had a front row seat to J6 as part of the only professional film crew that was there, on other occasions I filmed people beating each other, stabbing each other, screaming at each other, and ultimately acting not much different than I imagine the Red Guards did during the Cultural Revolution.

On The New Silk Road

Inside The Belt And Road’s Premier White Elephant: Melaka Gateway

“White elephants,” chuckled Martin Thesaria, a 62-year-old ethnic Portuguese fisherman and community leader, while pointing out to sea at the half-finished reclamation area that sat a few hundred meters before us. “Melaka is famous for its white elephants…

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6 years ago · Wade Shepard

It was the kind of clusterfuck that I thought I was made for documenting. But I couldn’t stomach it. There was no middle ground, no nuance — you were either on this side or that side. I looked to my left, I looked to my right, and they didn’t look too different to me — two groups of morons manifesting a perverted take on class war. As you probably can tell, I’m kind of a lone wolf out here; I’ve never been in this camp or that camp about China, or anything really. While I believe this benefitted my reporting in Asia, in America nobody wanted to hear it. There was a fight to be won, and someone pointing out the rationale of the other side really wasn’t helpful. So I dumped my footage with another film company for one of their documentaries and bailed.

I went on to work on some other film projects in New York — helped start up a cable news opinion / comedy show, made a bunch of videos for alcohol companies, comedy clubs, and restaurants. Fun, but kind of like real work — just trading hours for dollars — but I can’t complain.

But then the other day while going for a walk I realized that I can get back to my old life and pre-pandemic work. “What am I doing?” I asked myself. “I can go. Why am I still here?” I thought about it for a couple of blocks, put some pieces together, and then dove in to get back to where I was in March 2020.

Today I enabled a new element of the On the New Silk Road Substack: subscriber chat.

This is where we can discuss all elements of the New Silk Road / Belt and Road development, broader global changes and developments, or just provide a place were we can ask questions and share knowledge with each other. The idea is very similar to our open threads, where we’d host an expert on the Silk Road and have a discussion. It’s also a place where you can recommend places and projects for me to travel to as well as let me know the type of content that you’d like to see here.

To join our chat, you’ll need to download the Substack app, now available for both iOS and Android. Chats are sent via the app, not email, so turn on push notifications so you don’t miss conversation as it happens.

How to get started

1. Download the app by clicking this link or the button below. Substack Chat is now available on both iOS and Android.

Get app

2. Open the app and tap the Chat icon. It looks like two bubbles in the bottom bar, and you’ll see a row for my chat inside.

3. That’s it! Jump into my thread to say hi, and if you have any issues, check out Substack’s FAQ.

Join chat

A few weeks ago I paused subscriptions for paying subscribers. This means you won’t be charged until we get going again and yearly subscribers will have their subscriptions extended.

I had made a pretty big miscalculation when I began this newsletter. At that time, good data was coming out about how Covid-19 wasn’t nearly as deadly as previously thought and I believed that by June most of the world would have come to its senses and opened up again. Then I’d be able to get back on the road and do this site like it’s intended to be done.

That hasn’t happened yet. So rather than limping through months of analysis style posts where I discuss Silk Road news from afar I decided to pause the newsletter until things get back to normal.

The hallmark of this site is on the ground reports and experiential stories about what’s happening on the Silk Road, the people who are being impacted, and those doing the impacting. It’s meant to be something different — a complimentary publication to be paired with more traditional media sources. Without being able to travel I feel as if I’m not offering a product worth paying for. But as soon as the travel restrictions get lifted I will be back out there, asking questions, shooting video, and publishing stories. We’ll meet up again at that time.

Until then …

Walk Slow,

Wade

Our Q&A open thread topic this week is about the future of the Belt and Road and China-EU relations and our guest is Plamen Tonchev, who has been the Head of Asia Unit at the Institute of International Economic Relations (IIER) in Greece since 1998. Plamen is also a founding member of the European Think-tank Network on China (ETNC), sits on the EU Chapter of the Council for Security Cooperation in the Asia Pacific (EU CSCAP) committee and the Asia-Europe Sustainable Connectivity (AESCON) Scientific Committee, has been on over 120 missions to Europe and Asia as an EU expert, and has published books about Japan, India, and Pakistan, as well as articles for academic journals and major media about political/economic co-operation between Europe and Asia.

To put it simply, Plamen knows a thing or two about the New Silk Road. He is also extremely well-traveled in the regions that he covers, and infuses his analyses with on the ground perspectives and experience. He tweets @TonchevPlamen and also plays a mean guitar.

Feel free to ask Plamen any questions you’d like — don’t hesitate to veer off topic — but some points to consider may be:

1) The coming future of China / EU relations in the wake of the novel coronavirus pandemic.

2) The impact of China’s “health Silk Road” on Europe?

3) Serbia’s apparent pivot to China and other European countries, such as Hungary, increasingly looking eastward.

4) The Belt and Road’s impact on Greece.

5) The role that travel plays in his research methodology.

6) Advice on how to pursue a career like his.

As always, be nice, challenge ideas not people. Fire away.

Walk Slow,

Wade

His name is Charles Stevens. He’s the founder of The New Silk Road Project, the aforementioned Jeep expedition along the Silk Road, and contributor to many geographic and Silk Road related publications — read his article here. Though still young, Charlie has become one of the foremost Silk Road travelers in the world, having also traveled from Beijing to Tehran by bicycle. For more about Charlie and his Silk Road travels, check out this recent interview that I did with him here:

Feel free to ask Charlie any questions that you may have in the comments below.

Some potential questions:

1) What is your advice for people wanting to undertake a similar Silk Road expedition?

2) What were some of the differences in terms of your ability to do research and meet people between traveling by bicycle and by Jeep?

3) How exactly did you put the New Silk Road Project expedition together?

4) What has all of this travel taught you about the Silk Road?

5) Why do you feel that it’s important for people to go out and experience the Silk Road for themselves?

Or ask anything else that you want.

As always, be nice, challenge ideas not people. Fire away.

Thank you.

Walk Slow,

Wade

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Our Q&A open thread topic this week is about investing in the New Silk Road / Belt and Road and our guest is Chris Devonshire-Ellis, the chairman and founder of Dezan Shira and Associates, a consultancy firm that advises corporations and governments on their Asian investment strategies. He is the author of several books, speaks multiple languages, and was part of the first wave of foreign investors to move into China.

Most of you here are probably by now very familiar with Chris. He has been one of the most enthusiastic participants in these open threads, taking his time to share his knowledge, experience, and opinions with the community here. Many of you, I am sure, appreciate his in-depth responses and advice, while others may find him to be, well, a little controversial. Whatever the case, I’ve have known Chris for quite a while — he was one of the earliest researchers / investors to take the New Silk Road seriously — and I find what he has to say to be extremely valuable. While we disagree on some topics, we are still friends, and being exposed to outside and sometimes contrarian viewpoints is what ultimately drives our understanding of the world a little deeper.

One of the main ideas of this newsletter is to bring together as many different perspectives as possible and provide direct access to players across various sectors of Silk Road research, investment, operations, politics, and travel. One week we may have on a university student who has traveled the Silk Road on a bicycle, the next week we may have a CEO of a major logistics hub in the Caucasus, the next week our guest may be the director of a prominent think tank.

Feel free to ask Chris any questions you’d like, but some points to consider may be:

1) How to get started investing in the Silk Road?

2) What has been the impact of the novel coronavirus pandemic on Silk Road business? What advice do you have for people running such businesses during this time?

3) What are your strategies for learning the business environment in a foreign country?

4) What does art and culture have to do with Silk Road investing?

5) What are some personal highlights from your years of working on the business side of the Silk Road?

As always, be nice — challenge ideas, not people. Fire away.

Walk Slow,

Wade

Subscribe now

What will become of China’s Belt and Road Initiative and the broader New Silk Road in the wake of the novel coronavirus pandemic?

This is probably the question that I’m asked most these days, and it’s a question that can spark many different responses depending on how you look at it. The most accurate answer is, of course, “I have no idea.” However, intelligent speculation is essential to lay down coherent plans and a framework for the road ahead.

To these ends, I’ve asked this question to a wide array of Belt and Road researchers, travelers, and operations specialists. This is what they had to say:

Plamen Tonchev, Head of Asia Unit at the Athens-based think-tank Institute of International Economic Relations (IIER):

We need to see the precise impact of the outbreak and that'll take some time, but it is reasonably safe to assume that there will be considerable delays in the execution of a number of BRI contracts. Some delays are already being recorded, with thousands of Chinese workers being stranded at home. In addition, the delivery of Chinese equipment may also be delayed, after the extensive lockdown in China and the suspension of industrial activities for more than two months.

At a later stage, funding may be in short supply:

• The recovery of China's domestic economy will be Beijing's utmost priority in 2020 and that will require much-needed resources. BRI will be hard to sell domestically and mostly probably won't be publicized in China for a while.

• All the countries along BRI routes will find themselves in a tight spot and there will be an ever-growing demand for infrastructure, but extremely limited resources available in the wake of the outbreak. Chinese banks will be particularly "picky" and wary of giving loans that may turn out to be non-performing.

A diplomatic fall-out cannot be precluded, but this will depend on the extent of the socio-economic damage sustained by BRI recipients in South and Southeast Asia as well as in Africa and Europe. It'll be interesting to watch China's ongoing "charm offensive" with the provision of health equipment and whether this soft-power push can turn the tables on Beijing's critics.

Chris Devonshire Ellis, founder of Dezan Shira & Associates and editor of Silk Road Briefing:

The BRI will be fine. It's a core pillar of China's state overseas investment policy. Covid-19 won't have much impact other than slowing it down a bit while Chinese labor is locked down. China needs the supply chain infrastructure build and is funding less wealthy nations at lower rates than is typically available to them.

For example, China is an A+ rated economy and that means it can borrow at lower rates as the risk element is reduced. Countries such as Kyrgyzstan for example are B2, interest rates are higher if they want to borrow. All China does is provide the loans at far lower rates that countries like Kyrgyzstan cannot obtain anywhere else. You look at practically all the countries along the BRI it's the same story. Borrowing money from China for less cost than is obtainable elsewhere. So that's the infrastructure cost dealt with. What about the repayment?

The repayment aspect comes in the use of the infrastructure build and the economic and commercial development that brings. For example, Sri Lanka's Southern Expressway from Colombo to the South Coast beaches cost nearly US$350 million as a capital expenditure. The highway reduced travel time from 5 hours from Colombo to Galle to 90, then now 60 minutes. I know, because I have property there and remember the previous, tedious and busy old coast road journeys.

Consequently, the tourism industry that it services has expanded in size from US$3 billion in 2016, when that was completed, to US$4.5 billion annual revenues by the end of 2018. This means that Sri Lanka borrowed US$350 million at low interest rates to have the Chinese build the Highway, yet is receiving an additional US$1.5 billion per annum in additional revenues afterwards. That's a good deal, even if the Sri Lankan's paid over the odds for the road.

There will be bad infrastructure investments and some white elephants built along the BRI. But the majority of them make complete economic sense. It's exactly what China did at home, and I recall then Premier Zhu Rongji stating quite clearly several years ago "If we build the infrastructure, the money will come." The Belt & Road Initiative is no different. As I said previously: China's Belt & Road Initiative - It's About The Trade Opportunity, Stupid.

Dr. Frans-Paul van der Putten, Senior Research Fellow at the Clingendael Institute:

BRI is an instrument for China to strengthen its economic ties with other countries, and to increase its influence over those economic ties. The decline in global trade that results from the corona pandemic is likely to lead China to play a more active international role in order to stabilize and strengthen the country’s foreign economic relations.

Current frictions between China and other countries, in particular the US, stimulate the Chinese government to actively take measures to prevent China from becoming economically isolated. Therefore, the combined effect of the pandemic and geopolitical tensions may be that the Chinese government sustains and further develops the BRI program.

However, infrastructure financing, while still important, is likely to play a less prominent role compared to previous years, due to greater risk awareness by both China and host countries. As a result, the amount of money that China lends for new construction projects abroad is likely to decrease.

But there are other ways in which China can improve its external supply chain efficiency that involve less opposition. Key actors for BRI are Chinese commercial banks, trading firms, e-commerce platforms, telecommunication companies, logistical service providers, and transport companies. In the coming years they may strengthen their global market positions, with support from the Chinese government, through new and deepened strategic partnerships with non-Chinese companies and governments, in combination with low-profile acquisitions of some foreign assets.

Sebastian Holler, co-founder of EUROPE GOES SILK ROAD and Silk Road traveler:

The post-pandemic effects on the Belt and Road Initiative depend on how long the pandemic will keep hampering the revival of global exchanges. Yet it is not clear when the movement of people can restart, let alone when it will reach the pre-COVID-19 level again. If current expectations of several COVID-19 waves until an available vaccination and sufficient immunisation of world population in 2022 prove to be true, then not only the world economy will be traumatized but also the minds of people. Wide-spread globalisation anxiety could not only hamper global flows but also put nationalist leaders with isolationist world views in power.

The positive globalisation narrative of the Silk Road could also become severely damaged, with the newly rediscovered pandemic threat which is a consequence of all deeper global integration processes. An unbundling of global supply chains will take place with a re-nationalisation or insourcing of crucial production sectors. Goods will still travel along the Belt and Road corridors, but further infrastructural and economic integration projects could decelerate.

Whereas current travel restrictions severely hamper personal people-to-people encounters, new digital communication tools arise and are adopted by society. They will trigger new developments under the Digital Silk Road framework. Taking the recent proposal of Huawei to Italy into account and also the Health Silk Road will have a strong digital component and will be more than just face masks.

Carlos Santana, general manager at Yixinou (the company that runs the Yiwu to Madrid rail line, among others) and Adjunct Professor at IE Business School:

First and foremost, it is time to do everything in our hand to end this crisis. However, while ending it we must think and reflect about the future, which probably won’t be as we imagine before.

Our rail routes respond to the need for more sustainable transport with less environmental impact and time-efficiency oriented. IMHO, railway transportation was where the logistic industry was leading pre-crisis. This whole situation has just accelerated it.

The coronavirus crisis has radically transformed all spheres of our lives, especially the personal one. The crisis has transformed our reality and accelerated many changes: implementation of telecommuting, labor relationships, or the digital transformation within companies, amongst many others. The supply chains and logistics sectors were not left out of the general reflection that needs to be made about our way of understanding the world.

BRI was an international initiative born in China but with the aim of being global. Under its umbrella our project was born. As the rest of the international projects it cannot be fixed; otherwise are condemned to disappear.

Citizens, companies, institutions and all stakeholders will need to pivot to adapt to new challenges. All the global institutions (or companies) that do not, will lose credibility, influence and leadership.

China always adapts perfectly to the different scenarios without losing its essence. I am sure BRI will keep being a useful and powerful tool to achieve growth and get back to “normal” after the crisis.

Jacob Mardell, researcher at the Mercator Institute of China Studies and Silk Road traveler:

Covid-19 changes everything, but the Belt and Road is here to stay. We will be tracing the fallout from this first pandemic of the digital age for the rest of our lives. We can’t know the shape of our post-pandemic world, but unless we are beaten back to the dark ages, I’m guessing the Belt and Road will have a place in it.

The Belt and Road Initiative is the name Xi Jinping gave the world for China’s global ambitions, and for as long as he survives, those words will continue to hold rhetorical significance. The projects they describe will also exist in our post-pandemic future.

However, the global economy is in trouble. A good many BRI loans will pass their grace periods soon, and countries indebted to China may struggle to make payments. Rock-bottom oil prices, dried-up remittance flows, and decimated export sectors are hitting developing countries hard. How Beijing treats its debtors will be a test of its worth as a global leader. China is also suffering, but economic crisis won’t lead straight to austerity – the BRI isn’t an aid program and Chinese companies benefit as much from BRI loans as local governments do. China Development Bank has already signed one Covid-19 linked loan - $500 million to Sri Lanka – and Beijing will probably continue in its role as creditor post-covid.

It’s tempting to see the BRI as a conduit for disease, and to envisage a post-pandemic world allergic to globalization, but Tajikistan won’t stop needing paved roads just because protectionism is on the rise. If the world becomes a more distant place because of our shared vulnerabilities, that is symbolically damaging for an initiative that professes to be building a “community of common destiny,” but the BRI is also about economic fundamentals like building power plants.

Covid has exposed our shared vulnerabilities, but the Black Death rampaged before humans flew in the sky, and total autarky probably isn’t on the cards.

BRI spending was tapering off pre-pandemic and that trend will probably continue. Spending might also see a shift in focus towards the Digital Silk Road and the high-tech, cost-effective solutions it offers. Beijing’s “Health Silk Road” has already come into focus, and assuming humanity has been sufficiently burnt by this pandemic, I can imagine a serious role for the BRI in future global public health efforts.

A more serious problem for the BRI is how and when we get to this imagined post-pandemic world. While we are without a vaccine, international travel remains a memory. Under these circumstances, the world holds its breath, and work on the BRI crawls to a standstill.

Jonathan Hillman, Director of the Reconnecting Asia Project at the Center for Strategic and International Studies (CSIS):

Coronavirus is exacerbating many of the Belt and Road's preexisting ailments. We're looking at an environment where resources are even more limited, animosity toward Chinese workers is higher, and Chinese tech companies continue to face scrutiny in Western market. All of this suggests the digital silk road will accelerate.

David Smrkovsky, former global logistics manager at HP and Foxconn:

The economies in Europe and elsewhere in the world will be weakened. I would not be surprised if we see something that happened some years ago with Greece, when Greece was struggling financially in the last economic crisis and they were selling parts of the state infrastructure, for example, Piraeus port to China. I would not be surprised to see more examples of this. I imagine Chinese state conglomerates are already looking to buy because there are some discounts right now. It doesn't have to be transport or infrastructure related; it can be any company.

There can be some links between the BRI and the pandemic, because the pandemic weakens certain countries. Gor some countries, it's an economic disaster from which they will be recovering for years. Some countries, their debt is so high that they will probably not be able to raise the needed money from additional lending but they will simply sell something.

It could be a boost to the BRI to get some elements on the global transportation map under the control of Chinese companies. There could become a need to sell or privatize certain parts of the infrastructure and there comes a question of who's going to buy it? In this case, it will be China first and, sometimes, the only potential candidate.

Wade Shepard, author of On the New Silk Road

The coronavirus pandemic and its subsequent fallout will not change the fact that the development that comes via the Belt and Road is wanted and, in some cases, needed in the markets it touches. The infrastructure-funding gap in Asia and Africa is not going to go away because of a virus. While demand may lessen in the short-term, one of the main ways that countries stimulate their economies is through infrastructure development — as we’ve seen in China in the wake of multiple economic downturns. So the pandemic may actually become a boon for the Silk Road.

Even before the pandemic, the countries of Asia were not jumping up and down to become Chinese vassel states. Many pivoted to China because few other options were available to pursue the development paths that they desired. As Chris pointed out above, by going through China countries with lower credit ratings can get cheaper loans for their infrastructure projects. If we look at a rundown of major BRI endeavors to date, we will find that many of them were the result of national governments approaching China looking for support for their pet projects rather than Beijing coming in and imposing their own plans. So even though Beijing’s global image is taking a big hit due to the pandemic, this won’t change the fact that China is the only game in town for many countries.

However, in the short-term, we should probably expect many countries to try to restructure their loans and other financial obligations to China, which, I imagine, China will attempt to spin into a positive by offering more funding for new projects. We can’t lose sight of the fact that China’s objectives and the objectives of many countries along the BRI will remain one and the same, and keeping construction firms operating, laborers working, and markets emerging will be way more important than any diplomatic squabble. If anything, as David pointed out above, as economies around the world embark on pandemic recovery initiatives China is going to become more needed than ever. The BRI isn’t going anywhere. In fact, it will probably come out of this mess stronger than it was before.

What’s your take? Let us know in the comments below.

We’ve just concluded our third week of publishing this newsletter, and it’s going pretty well so far. Many new subscribers and some pretty lively discussion in our weekly open threads. Please forgive the fact that I’m getting this roundup out a day late this week. I’ve never worked 9-5 before, so having a schedule is something that’s a little foreign to me.

Anyway, this past week I was mostly focused on getting my Silk Road book finished. My previous publisher was bought out by Bloomsbury, which is exciting news, so I’m trying to get that manuscript finished ASAP. Therefore, I had a little less output on this newsletter than I would like. When the book is finished and when borders open and I can get on the road again, things will start spinning fast again.

My first post of the week was for paying subscribers only and was the story of an Oralman Kazakh named Sergei who headed out to the Khorgos border region to try his luck starting a bubble tea shop in a fledgling new city: To The Edge Of The Earth For Love … And Bubble Tea.

Belt and Road coverage in the mainstream media tends to be deficient in these personal, on the ground types of stories. You get all the numbers of TEU and the announcements of MOUs and all this information that makes the Silk Road seems rather sterile and a little boring. But the reality is anything but. The Silk Road is about people, first and foremost. In the words of a wise CEO who once started up a prominent Belt and Road port: “It can’t only be about the containers.” We sometimes forget this in the fray of big government deals and endless discussions of big picture geopolitics that ultimately have very little to do with anything.

One of the reasons why I started this newsletter was to have a platform to deliver these types of stories. It’s one thing to know that some men in suits got together and signed some papers and cut some ribbons; it’s quite another to know how people are actually using the new infrastructure that’s being created all up and down the Silk Road. These types of stories give us a deeper impression of what is happening, and they allow us to dream … and come up with ideas. It’s also where I add value.

This week I also looked into the role of less powerful, traditionally looked over countries on the New Silk Road in a story called Keystone Countries: What The New Silk Road Is All About. It’s countries like Kazakhstan, Sri Lanka, and Poland are where the action is happening. I feel that how these countries are relating to / playing the dominant global powers is essential to understanding the new Great Game that the Silk Road has become. I also define what I mean by the term “New Silk Road.”

I decided to cut the news roundup out of the publication stream this week. If you really liked these run downs of the Silk Road headlines just let me know. If enough subscribers are into it, then I will consider starting it back up again. The problem is this: I’m the guy who travels to places, makes friends, and finds out what’s going on in the streets. I’m not the guy sitting in a room far away talking about the news all day.

Well, under normal circumstances, that is.

To be honest, I’m getting a little pent up here in New York City. I’m trying to stay rationale, sit back, and take advantage of this time to finish some big projects that were suffering due to my usually intense travel regimen. I got back from my last trip in February, and I haven’t stayed in one place for so long since … probably since I first began traveling when I was 18. To sit somewhere for months on end is an odd new experience.

But, realistically, I’m probably looking at staying put until the beginning of June, and I probably won’t be able to get back out on the Silk Road until July or August, at best. When those borders do open up again, I’m looking at three separate swaths of travels:

Greece—> Serbia —> Czech Republic

Uzbekistan—> Kazakhstan —> Kyrgyzstan

Thailand —> Cambodia —> Myanmar

Then I will be able to make this newsletter into what I intend for it to become.

Anyways, I have a new batch of my first book, Ghost Cities of China, coming in. If you’d a signed copy just Paypal $22.50 to vagabondsong@gmail.com (US only). If you’re outside the US and would like a signed copy, just get in touch and we can discuss shipping costs.

As always, please consider becoming a paying subscriber to this newsletter, as this is what keeps these wheels spinning. Subscribers receive all posts, permission to re-publish photos and videos, access to complete interviews, private consultation, and introductions to my contacts along the Silk Road. It’s a buck a week or $50 a year.

Thank you.

Walk Slow,

Wade

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It’s time for another Silk Road Q&A open thread.

Rather than having this Q&A session be just for Friday, let’s extend it out through the weekend. We have many community members in timezones spread out across the globe, and our discussions tend to go on for a couple of days anyway ...

Feel free to open the discussion up a little more, as many of the people commenting here have a lot of their own experience and expertise that’s worth sharing. So feel free to ask questions to both myself and anyone else who participates in these threads.

That said, last week’s session was even better than the week before it. We had 73 comments from a wide array of Silk Road researchers, travelers, and watchers, and I feel as if we learned a lot from each other and had a good time doing it.

We seemed to have a good deal of interest in Silk Road travel last week, so let's make that the theme this week.

How to travel the New Silk Road / Belt and Road?

Sample questions:

—> How do you get started traveling the Silk Road / doing on the ground Silk Road research?

—> What places do you recommend traveling to?

—> How do you balance being researcher and being a tourist?

—> Why document Silk Road development?

—> What to do when you’re actually there on the ground?

—> How to make contacts and make the most of your travels?

—> How and where to publish your findings?

Or ask any other questions that you may have.

Please also feel free to go off-script. While each open thread will have a theme this doesn’t mean you need to constrain your enquiries to fall within these parameters. If you have a question, ask it.

As always, let’s have fun with this. Be nice. Fire away.

Walk Slow,

Wade

This newsletter depends on reader support. Please consider becoming a paying subscriber. Thanks!

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The projects of the New Silk Road are like pieces of a puzzle scattered across a clutter-filled room. You see some here, some there, but they mean very little in and of themselves. On their own, they range from moderately impressive works of engineering to mystifying, newfangled dreams of development — why are obscure resource-dependent nations building massive transport and manufacturing hubs in the middle of the desert or bulk cargo ports peaking out of the jungle? It’s only when we start to put the pieces together can we start to see the much larger picture … and that is when things start getting interesting.

The New Silk Road is a network — a network of various initiatives being blended together into a new economic grid that spans the entirety of the Eurasian landmass. China's Belt and Road Initiative (BRI) intersects with India and Russia's North-South Transport Corridor, which connects with Europe's TRACECA corridor, which will complement Japan and India's Asia-Africa Growth Corridor and the nascent US-driven Blue Dot Network, which will be bolstered by the plethora of “unbranded” endeavors led by the big international development banks, national and local governments, and players like Japan, Russia, and Turkey.

What we're looking at is an array of diverse economies and political systems that stretch from East Asia to Western Europe and contain 65% of the world’s population, 75% of known energy resources, and 40% of global GDP being same-paged as they move towards very similar goals. Ultimately, roads know no nationality, and elements of many of these initiatives will overlap, serving as as tributaries flowing into the vast undertaking known as the New Silk Road.

While we often speak of the New Silk Road in terms of end-to-end shipments — from China to Europe, for example — it is actually the countries that make up the interior regions that stand to be impacted the most. The nations of the South Caucasus, Central Asia, South Asia, Southeast Asia, and Eastern Europe are currently in rapid transition as they move from being under-developed backwaters to the new focus points of the next phase of globalization.

Silk Road development is also central to the plans of many of these centrally positioned countries. For Kazakhstan, Azerbaijan, and Oman, the NSR provides an opportunity to develop their non-oil sectors and bolster their claims for political legitimacy. For Bangladesh, Sri Lanka, and the Maldives, it means a chance to get out from under India’s political umbrella and the opportunity to develop their transport infrastructure, industry, and attract foreign investment. For Georgia, it means a bid at international relevance as a manufacturing hub in the geographic heart of Eurasia. For Poland, it's the chance to be a gateway between the EU and China.

These are countries that have traditionally been ruled over and dominated by more powerful political entities who are now pushing back against these historic allegiances as they engage with countries on both ends of the geopolitical spectrum. They are selling ports to China, building roads with the World Bank, extracting natural resources with Russia, creating logistics zones with Dubai, developing special economic zones with Japan, and giving oil rights to companies from the UK. They market themselves as neutral territory, as friendly to all but aligned with none.

Dubbed the multi-vector strategy, the goal is to balance the influence of the big powers of the world -- the USA, Russia, China, Japan, India, the EU -- against each other through creating a competitive dynamic on the playing field of their own territory. I.e. If Japan doesn’t build Bangladesh a new port, China will; if China makes big investments in Kazakhstan, Russia is going to feel pressure to follow suit; if China makes a big wager on Sri Lanka, India is going to feel oblidged to ante up. Rather than being aligned with a single ally or patron state, these nations in the middle suck in investment from all sides, creating a situation where China, India, Japan, Russia, and the USA must compete against each other by providing loans, FDI, aid, manufacturing capacity, technical know-how, and trade in exchange for influence.

Fading fast are the days where South Asia is overruled by India, where Central Asia is the domain of Russia, and where the eastern realms of Europe are only looking west for support and economic sustenance. There are new players in town and a new game being played, where traditional alliances, similar culture, and congruent political and economic systems are mattering less and the amount of investment on the table more. This leads to an interesting form of independence and leverage for these less powerful, traditionally bullied countries in the core of Eurasia, as they are suddenly no longer backwaters but front and center in the new Great Game — and in the process become geopolitical buffer zones, the keystones holding the New Silk Road together.

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I met Sergei in the dark confectionery bar of the movie theater in Zharkent — a single screen outlet that shows re-runs of new releases past which has become the de facto beacon of modernity in the dusty border town. This is where the town’s youth gather, munching popcorn and sipping sodas; a little piece of the outside world in a place that’s the proverbial middle of nowhere. Zharkent sits near the Eurasian Pole of Inaccessibility, the farthest point on earth from an ocean.

The Khorgos border with China is 30 kilometers to the east, while Almaty, Kazakhstan’s cultural capital, sits 300 kilometers to the west. While 30,000 people live in Zharkent — sizable for Kazakhstan — the place comes off as more of a little-village-that-could rather than anything approaching urban. The streets here are narrow and dusty; only the main thoroughfares are paved, and even these are chewed up and potholed, requiring drivers have to navigate in snake-like curves. The houses tend to be small, single story, cinder block affairs. Some are conglomerations of welded together shipping containers caked in mud. In the winter, dark coal-fired smoke rises from a thousand chimneys. While being located at the epicenter of Kazakhstan’s modernization scheme, Zharkent still has the feel of being on the edge of the earth.

Zharkent is an old Silk Road town, and the legacy of those ancient trade routes still live on here — the town’s main street is called the “Silk Road,” the people are mostly Uyghur. Once a trans-continental trade hub, Zharkent descended into irrelevance during the Soviet era, when the nearby border to China was firmly closed shut. But the new development projects that are emerging on the now open Chinese border are reviving the town’s ancient role as a trading post, and the outside world has begun flowing into Zharkent once again.

Like in the past, the people here are traders. They are buying trucks to ship incoming goods, they do runs to the duty free zone on the Chinese border or to the new city of Horgos on the other side. Some even venture to Urumqi to buy merchandise that they can bring back to Kazakhstan and resell for a bit of profit.

In this landscape, Sergei was unmistakable. He was tall, around 25 years old, and had flowing, long black hair that gave him the look of the Kazakh movie stars in the posters that surrounded us in the cinema. He strode in, sat down in front of me, and called for coffees. Originally born in Uzbekistan, Sergei and his family took part in a government program for ethnic Kazakhs to return to Kazakhstan when he was a teenager.

In 1991, the same year that Kazakhstan became an independent nation, a decree was issued to the Kazakh diaspora: come home, we will pay for it. It was one part nation-building exercise, one part pragmatism, as the new state sorely needed to bolster its depleted population. In the 1930s, under Stalin, upwards of a million Kazakhs fled the chaos, scattering to China, Afghanistan, Iran, and other parts of Central Asia. Another wave of outward migration happened after the dissolution of the Soviet Union, with ethnic Russians, Chechens, Poles, and other groups returning to their native homelands. Called Oralman — Returnees — over a million ethnic Kazakhs have taken participated in the program, and now make up 5.5% of the country’s population.

Sergei’s family settled in Almaty, where he finished high school. When the time for him to decide where to go to university, he went the way that many young Central Asians are going these days: he went to China.

Landing in Chongqing, an established Belt and Road hub in the center of the country, Sergei began studying Mandarin. Within a couple of years he obtained fluency. He also obtained something else: a fiance. He hooked up with a Chinese classmate and endeavored to start a life in China with her. However, love isn’t grounds for a visa extension, and her parents weren’t on board with her marrying a foreigner — especially one from the other side of Xinjiang who lacked wealth and prospects. So after graduating Sergei found himself with little other option than to return to Kazakhstan.

Washing up in Almaty, Sergei had the singular objective of getting back to Chongqing by any means necessary. Rather than going into mining and working as a cog in a state firm — the iron rice bowl of Kazakhstan — he cobbled together a very different scheme while wallowing in his star-crossed exile.

“My dream is to go to Chongqing,” he told me. “I have a girl there and I want to move there. So I was like, ‘what can I do to be in Chongqing?’ And I said, ‘maybe I should open my own business.’”

He decided that bubble tea would be his ticket. This sugary, tapioca drink has become such a trend in Asia that it could almost be used as a gauge to measure economic development: how many bubble tea outlets per block — a “bubble tea index” of sorts. But in the heavily congested service sector of Almaty, Sergei found himself without any economic handholds. The competition was stiff and the barriers to entry were high. He couldn’t find a way in and had to re-strategized.

Sergei told me that he kept hearing about this area on Kazakhstan’s eastern frontier called Khorgos that would soon have this new city called Nurkent. The Kazakh media was full of talk about the dry port, the special economic zone, all the companies that would move in, and all the new jobs that would be created.

The new city of Nurkent.

Under its "Nurly Zhol,” (the Bright Road) initiative, Kazakhstan had been attempting to diversify its economy away from being dependent on export commodities. Beginning in November 2014, it outlined a $9 billion plan to revive Kazakhstan’s transportation network and seeding growth in the manufacturing and technology sectors. While there has been talk of such diversification endeavors in Kazakhstan before, Nurly Zhol was kicked into gear as a stimulus plan to help offset the damage of plunging oil prices, which were ravaging the economy. In 2014, oil made up 70% of Kazakhstan’s exports, and, as the price per barrel fell from over $100 to less than $40 over the next two years, the impact resonated through the country. The currency ended up being devalued multiple times, dropping from 170 tenge to the dollar in 2009 to 340 in 2016 ( to 427 today), as savings evaporated and the price of food sky rocketed. A new way was needed.

The Nurly Zhol initiative essentially aimed to restore Kazakhstan’s historic claim of being a Silk Road transit hub, and it blended in smoothly with China’s Belt and Road initiative. Major transport-oriented projects were started in Khorgos in the east and Aktau in the west, new logistics hubs were built at other strategic junctions, and roads and railways were repaired and built anew throughout the country.

The new city of Nurkent.

Sergei imagined that the service sector out at Khorgos wouldn’t yet have that many players, and if he could get in early enough … well, you never know. ‘What other business owner is going to move into a city before it’s even built?’ he reasoned. He knew it would be a crap shoot, but he rode out there anyway to give it a go.

There are two ways of envisioning Nurkent. The first is the present reality: a dormitory town across the highway from a dry port in the middle of nowhere. The second is Kazakhstan’s city of the future, a place that will be packed with hundreds of thousands of people, big companies, and big opportunities right on the doorstep of China.

The latter part of this statement was not lost on Sergei: moving out to Khorgos would put him a little closer to Chongqing.

“I was thinking, maybe I should first open in Nurkent and then I will move to the Chinese side.”

Lacking the funds and connections to just show up in Nurkent and start his venture on day one, he knew he needed to first find a way in. So he took a job with a Chinese mining company who hired him to oversee their customs clearances at the border. He hung out for a while, learned the ropes, then quit.

“I realized that I can do it all myself, so I'm like ‘Why should I give the biggest part of my income to somebody else?’” he queried with a sly smile.

“The biggest problem is crossing the border,” Sergei continued. “So companies are ready to spend a lot of money to just get trucks across the border fast. Customs inspectors sometimes have a lot of stipulations, so sometimes they can stop a truck and usually it goes slowly. So my work is just to communicate with the customs officer and provide all of the documents.”

Basically, inefficiencies in Kazakhstan’s customs process had created a business for Sergei, as knowing the people involved and the way things were done was enough to get his clients’ goods through unimpeded.

But this wasn’t why Sergei moved out to the fringes of the earth. Each day he would go out to the border and peer off across the endless desert of western China in the direction of Chongqing and remember what he was there for: bubble tea. After making the necessary connections, Sergei was able to get approval to open a snack shop in Nurkent. His parents came over from Almaty to help him get started, and he now serves snacks to the workers of Khorgos and their families, as a fledgling new city got one of its first businesses.

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Today concludes our second full week of publishing On the New Silk Road, and it’s going pretty well. Both paid and free subscriptions continue coming in at a good clip, and we’re taking steps towards our initial goal of 10,000 total subscribers, with 1,000 of them paying $5 a month or $50 a year. As our paid subscriptions continue growing we’ll be adding more and more premium content. If you’re on a free plan and would like to jump over to the other side, please to do so here:

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As far as our week of publishing, we started the week out with a dive into what life is like in a Silk Road work camp in Oman (subscribers only), then moved on with a story which looked at how China’s on-going coronavirus response is creating some tense diplomatic situations, a couple of articles which looked into an interesting situation where fake Chinese news caused an international row between China and Kazakhstan, and, of course, our end of the week Q&A open thread. These open threads are getting pretty vibrant, with an array of different experiences and perspectives coming out of various sectors of Silk Road research and travel. If you haven’t checked one out yet, I recommend jumping in.

Silk Road news

China domestic 

Kicked out

One of the more interesting stories coming out of China this week was Paul Mozur of the NY Times talking about the climate in China in the lead up to his expulsion date and, especially, an interview that he did with Michael Barbaro:

"Yeah, what the Chinese government wants to tell is a story of triumph. They’ve emerged from the virus as the rest of the world is under siege and under lockdown. And the story they want to tell is that the reason they were able to beat the virus is the superiority of the Chinese system. This sort of enlightened authoritarianism that is able to technocratically manage every variable and fix everything and make things right. And when they look around the world, they can point and say, look at all of these democracies. They’re suffering terribly. More people are dying. More people are sick. They’re in crisis and we’ve gotten through this. We succeeded. That means we are the new superpower. We are the sort of country in ascendancy and everybody must pay their respects now.”

"I really do think we’ve crossed a point in the U.S.-China relationship that will be difficult to come back from. I think both countries have made it clear the way they view the world is at odds.”

This story made me feel a little sad and nostalgic. The China that I remember — from when I was a traveler / student there from 2005 to 2007 and a writer from 2012-2015 was open and engaging, friendly and absolutely enthralling. My strategy for collecting content in those days was to show up in a new town, head over the KFC, make a friend, and ask them to show me around and tell me about their city. If I wanted to know about a new city that was under construction, all I had to do was walk in and start asking questions. Throughout my entire Ghost Cities project I would very rarely be shot down. It was almost too easy.

While I was often treated like a curiosity, especially in more remote regions, I can’t recall a single instance of hostility. I remember one situation when on a super SUPER crowded train at the height of the Spring Festival travel season when this young Chinese couple stood up and gave my wife, young daughter, and I their seats simply because we were “foreign guests.” Meanwhile, they stood in misery, packed in next to the other standing passengers like pickles in a jar, for the entire ride. That’s the China that I remember.

I understand that the news that I’m getting now about China is filtered and magnified through the lens of the international media — including the references above from a guy who’s probably pretty pissed that he was given the boot — when I call up old friends and expats who are still there what they tell me is largely consistent. Hopefully this will pass soon.

China’s faltering pandemic economy

China’s economic growth has slowed to its most sluggish annual pace in nearly half a century, according to Reuters.

Growth in the world’s second-biggest economy for 2020 was forecast at 2.5%, according to the median of 62 analysts surveyed by Reuters, which would mark the weakest clip since 1976, the final year of the decade-long Cultural Revolution that wrecked the economy.

This is the story of the entire planet right now, so no surprises here. However, the pendulum swing of the pandemic — lower sales as China’s export markets go into recession — is going to continue to hit China pretty hard. Also, the impact that the pandemic and its subsequent political fallout will have on international firms shutting down their manufacturing bases in China will also be interesting to watch. This was a movement that was already in full swing pre-coronavirus, pre-trade ward, pre- … it’s been going on for quite a while (and it’s not just international firms that are leaving).

What’s fascinating to me is how quickly China is able to shift focus to keep itself relevant as a global manufacturer. It took mere weeks for factories to transition into making masks, ventilators, and other medical supplies. I’m fascinated, but not surprised. Modern China has always been able to cut on a dime.

China international

China’s domestic affairs going global

China doesn’t exist in a bubble, and while the country maintains non-interference in domestic affairs as one of the hallmarks of its foreign policy, China’s domestic affairs have a major impact outside of its borders.

There was, as we previously mentioned, the fake news affair:

On December 9, 2019, an article appeared on the Chinese news site Sohu.com entitled Why Is Kazakhstan Eager To Get Back to China? that argued that Kazakhstan is a historic part of China and that the county wants to the motherland. Eventually, word of the story was spread around in Kazakhstan, stirring up an already simmering pot of anti-China sentiment, which resulted in the Chinese ambassador being summoned to Kazakhstan’s Foreign Ministry.

There was also the issue with African’s being unjustly profiled and outcast in Guangzhou due to xenophobic coronavirus fears:

The widespread evictions and mistreatment of African migrants in the southern Chinese city of Guangzhou has caused a serious rupture in China-Africa relations. Chinese ambassadors across Africa have been called into various foreign ministries to explain why so many of their nationals in Guangzhou have been visibly mistreated by authorities and rendered homeless by the evictions from their homes and hotels.

As we covered:

A wave of anti-foreign sentiment then swept over the country that was particularly directed at those from Africa or who were of African descent, which was partially due to a handful of Africans in Guangzhou testing positive for Covid-19:

According to the data provided by the city's health commission, Guangzhou had reported a total of 119 imported COVID-19 cases by Sunday. Among them, 25 were foreigners and 94 were Chinese. Of the 25 foreign patients, 19 were from Africa.

Twitter soon became full of photos of “No blacks allowed” messages being handed out to Africans attempting to enter restaurants — including McDonald’s — in China, as well as videos of Africans effectively rendered homeless after being evicted from their apartments or denied admittance to hotels. Then there was a rather disturbing video of Africans being marched through the streets by the police and a video of an African guy and his baby who were locked inside their apartment by the authorities.

Meanwhile in Thailand, a social media battle ensued between young Thais and Chinese nationalists among the fallout from Vachirawit Chivaaree, a Thai-American celebrity, retweeting a photo of Hong Kong in which it was referred to as a “country.” He quickly apologized, as a large portion of his fan base is located in China. But hsi girlfriend took up the struggle and retweeted the COVID-19 conspiracy theory that China invented the virus in a lab in Wuhan, which stirred up a shitstorm of controversy. From SupChina:

An army of Chinese nationalists also made their way to Twitter, which is blocked in China, to demand a public apology from New. Using the hashtag #nnevvy, which was New’s Twitter handle, legions of Chinese trolls flooded the platform with abusive and vicious comments about her. In addition to personal attacks, some also leveraged the controversy to spew out vitriolic, violent, and flat-out racist comments about Thai people and their government.

When it comes to international social networks, bullying their opponents into submission and silencing criticism has been a common and mostly effective tactic employed by Chinese nationalist trolls. But this strategy didn’t translate well to the #nnevvy saga, where Thais who came to New’s defense masterfully handled the trolls with a meme-fueled online campaign targeting aggressive Chinese nationalists.

The reason why I’m sharing this is that it’s become a bit of an international issue — at least to the level that the Chinese embassy in Thailand released a statement about it — and for the simple fact that I found some of the #nnevvy memes funny.

To dive a little deeper, there is a growing trend of shows of unity between the youth of Taiwan and Hong Kong with other Asian countries. As Fanny Potkin covers for Reuters:

The quarrel, which has seen Southeast Asian internet users join forces with those in Taiwan and Hong Kong, has highlighted old tensions between China and its smaller neighbours fanned by the emergence of the new coronavirus.

“This is the first transnational geopolitical Twitter war Thais have engaged in,” said Prajak Kongkirati of Bangkok’s Thammasat University.

“We see people questioning China’s actions and influence ... The celebrity issue is the tip of the iceberg.”

China’s global model

This isn’t from this week, but I found it a good read. From Jonathan Hillman at the CSIS:

As I’ll explain, China’s efforts to establish new institutions require further monitoring, but it would be a mistake to exaggerate their current scale and effectiveness. Beijing’s willingness to start new institutions underscores its global ambitions and adds weight to its rhetoric about creating an alternative order. But the challenges these efforts face are just as revealing. China’s highest-profile initiatives have not delivered on their promises. Many operational and political barriers stand in the way. Most fundamentally, the world is not clamoring for Chinese leadership.

China and Australia face off in the Pacific

As “mask diplomacy” continues, China and Australia are currently competing for influence among the islands of the Pacific. Via Tycho de Feijter on behalf of the Clingendael Institute’s BRI newsletter:

So why is China so eager for Tonga in these viral times? Because some countries, most notably Australia and New Zealand, see the pandemic as an opportunity to win back influence in the Pacific, influence that was lost to China. The tiny islands nations are scared to their corals of the virus and many have closed their gates to all and everything from afar, while simultaneously dealing with a destructive storm. Australia and China are having a feisty aid-competition in the area, with each country shipping masks and other supplies to any island king that wants them.

But not all is well. Even before COVID-19 many Tongans started to worry about the country’s debt to China. Tonga owes China's Exim Bank about $158 million, or two-thirds of the country’s total external debt. Furthermore, shop owners are openly angry about Chinese taking over their business and last year local landowners refused a proposal by BRI-favorite China Civil Engineering Construction Corporation (CCECC) to build a five-star hotel on Tanna Island.

The virus has made things worse. In a worrying development for China, Tonga refused an aircraft carrying medical supplies after citizens expressed fears it might bring the virus straight into the country. In an effort to appease the Tongan government, the Chinese embassy announced a grandly named China-Pacific Island Countries anti-COVID-19 Cooperation Fund, worth $1.9 million in total, with $200.000 donated immediately to Tonga for anti-virus preparations.

China’s Digital Silk Road post-Coronavirus?

Jude Blanchette and Jonathan Hillman put out an interesting report on the CSIS site that shows just how vital the Digital Silk Road is to China’s future ambitions:

But even as China battled to contain the spread of Covid-19, the Communist Party of China (CCP) continued to call for the expansion of 5G investments. On February 21, as much of the country was on lockdown, the CCP’s Politburo announced that the expansion of 5G was critical to economic recovery. On March 4, the Politburo’s Standing Committee—the apex of political power in China—called for “accelerating the construction of new infrastructure such as 5G networks and data centers.”

Confronting arguably the biggest economic and political crisis of his administration, Xi Jinping still found time to personally press the issue of 5G. During an inspection tour of Zhejiang province earlier this month, he declared, “We must seize the opportunities afforded by industrial digitalization and digital industrialization, accelerate the construction of new infrastructure such as 5G networks and data centers, and step up the layout of strategic emerging industries and future industries such as the digital economy, life and health, and new materials.”

Trans-Eurasian rail is booming

Trans-Eurasian rail is seeing its highest traffic volumes ever as reactions to the coronavirus pandemic has choked road and air cargo transport and ocean shipping takes a hit. From Railfreight.com:

The number of China-Europe trains operated amounts to a total of 1941, equalling 174,000 TEUs of cargo. A full container rate of 98.1 per cent was recorded. Among the train journeys, the number of outbound trips was 1049, carrying a total of 95,000 TEUs. This indicates an increase by 24 and 28 per cent year-on-year, respectively.

In March, China-Europe trains transported a total of 809 containers and 73,000 TEUs, setting a monthly record. Additionally, these shipments had a 98.9 per cent full container rate. Among them, there were 503 outbound trains carrying 46,000 TEUs. Of these outbound trains, the full container rate was even 100 per cent.

I covered the beginnings of this development on Forbes last month:

The only form of transport left standing is the train, which, compared to other forms of freight continues to run relatively unscathed. Between Europe and China, all trans-Eurasian rail lines—including those from Wuhan—are currently in operation, creating an opportunity for the emerging network to step up and become a larger part of many companies’ shipping solutions.

Under normal circumstances, trans-Eurasian rail is generally eight-times cheaper than air freight and only a week or so slower. In these times of elevated air shipping prices and longer transit times in both air and ocean freight means that shipping by rail is becoming more of a viable option for companies that need to receive and send goods between China and Europe as fast as possible.

While a good amount of this additional cargo is more than likely temporary, a reasonable percentage may stick as more companies try out the trans-Eurasian rail product for the first time.

Iran

From RFE/RL:

Rare criticism by an Iranian Health Ministry official of China's controversial COVID-19 figures has angered hard-liners in Tehran, some of whom asked if he was speaking on behalf of the country's archrival, the United States.

Health Ministry spokesman Kianush Jahanpur said at a press briefing on April 5 that China's statistics about the number of deaths and infections from the coronavirus are "a bitter joke."

He added that, if Beijing said it got the coronavirus epidemic under control within two months of its outbreak, "one should really wonder [if it is true]."

As more and more countries experience far worse Covid-19 breakouts than what apparently happened in China, suspicion is growing out of all corners.

Covid-19 in South Africa

Chris Devonshire Ellis of Silk Road Briefing did an excellent overview of the social and economic impacts of Covid-19 in South Africa:

COVID-19 has shown its potential devastating impact elsewhere, but it is a particular cause for concern in South Africa. First, while public health strategies such as social distancing and regular hand washing are encouraged, such strategies are a privilege many cannot afford in the crowded informal settlements that accounted for 13% of all households, many of which may not have access to running water.  Second, the high rate of TB and HIV among the population, in addition to the number of those not on treatment for HIV, have led to concerns that this could impact the severity of COVID-19 in South Africa and make its population more susceptible to the virus. Third, while health systems in high income countries (HICs) are being stretched, most South Africans rely on the public health care system that is under-resourced and will struggle to meet the demand of the epidemic. While the virus does not discriminate on the basis of race, sex or borders, it is likely that it will disproportionately affect the poor and those suffering from other co-morbidities. Although the number of cases as of 15 March 2020 in South Africa remained relatively low in comparison to the rest of the world (61 confirmed cases; 0 deaths) President Cyril Ramaphosa stated that ‘urgent and drastic’ measures were necessary to limit the spread of the virus and address this emergency. As such, a State of Disaster was declared by the President on 15 March thereby giving Dr Nkosazana Dlamini Zuma, the Minister of Cooperative Governance and Traditional Affairs power to limit certain rights and freedoms within South Africa.

Central Asia economy

I could just begin and end this section with a single word: bad.

The decline of the value of the tenge to the dollar. They’re now going to have to take this stairway down into the basement.

The Covid-19 pandemic has been reducing the world’s need for oil and prices have been plunging big time. During a March 6th meeting of OPEC+ Saudi Arabia proposed a reduction in oil production, which Russia didn’t comply with. A spat between Moscow and Riyadh ensued, which I won’t get into here, but the result was oil prices going lower and lower. However, on April 12th, OPEC+ came to an agreement to cut crude oil output by a record amount, which will hopefully at least end the showdown:

The April 12 agreement requires Russia to cut crude-oil production by nearly one-quarter in May and June, a much deeper reduction than the one Moscow rejected when Saudi Arabia proposed it in early March. And the showdown may come at a steep long-term cost for the Kremlin, harming a relationship with Riyadh that had been budding after careful cultivation.

The fallout from this and the other impacts from the coronavirus pandemic is an extremely grim economic outlook for Central Asia and the Caucaus — two regions that are integral to the New Silk Road. Via Eurasianet.org:

After a lackluster 2019 in Eurasia’s energy producers, in 2020 COVID-19 will derail economic stability across the region by “interrupting daily activity, putting further downward pressure on commodity prices, disrupting tightly linked global and regional supply chains, reducing travel and tourist arrivals, and decreasing demand for exports,” says the report, Fighting COVID-19, released on April 8.

While stay-at-home orders and the shuttering of non-essential business will sharply reduce economic growth the world over, it is the weakening of the Russian economy (the report expects GDP to contract by 1 percent) and the depreciation of the ruble – due both to the pandemic’s effect on business generally as well as the collapse in the price of Russia’s chief export, oil – that present the biggest threat to remittance-dependent economies from Armenia to Tajikistan.  

This steep economic downturn has had a dire impact on the currency of many Central Asian countries. In Kazakhstan, the tenge plunged to an all-time low against the dollar, while Uzbekistan has devalued their currency two times within a week.

However, as soon as borders open up again this would be an excellent time to do some Central Asian travels — cheaper costs and the ability to inject a little cash into countries that are on the mend. However, this will probably be the case for much of the planet.

Belarus fake fans

Some countries have fake news; Belarus has fake fans:

Over 1,000 spectators attended a Belarusian soccer match, despite calls from fan groups to stay away during the coronavirus epidemic. Cardboard cutouts were used to fill empty seats. Belarus is the only country in Europe still playing public matches and the country's president, Alyaksandr Lukashenka, has played down the domestic impact of the virus, despite dozens of deaths.

Conclusion

That’s about it for this week’s Silk Road roundup. If you have any stories that you’d like covered or anything interesting that you’d like me to check out, please get in touch. As always, On the New Silk Road lives on user support, so if you are able please consider subscribing. Thank you.

-Wade

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It’s Friday, and time for our next Q&A open thread. I am fielding questions again this week, as our intended guest was not able to make it.

As we move forward, I will ideally publish a video interview with a Silk Road traveler, researcher, or investor on Monday and then on Friday invite him / her to be available for the community here to ask questions to directly.

Last week’s Q&A was pretty vibrant, to put it mildly, bringing in 69 comments and a lot of lively discussion. However, I’m going to have to ask everyone to work a little to keep things civil. China’s activities abroad, the Belt and Road, etc… is a big, always changing, and pretty contentious topic — everyone has an opinion and most of us at least a little wrong sometimes. The idea here is not to be right but to learn from what other people have to say, question our assumptions, and learn from each other.

Alright, let’s get to it.

Feel free to ask me — or anyone else in the community (feel free to talk with each other) — anything about the Silk Road:

—> I spent around four years traveling the various routes of the New Silk Road, ask me about the nuances of that and for travel tips.

—> I’ve written hundreds of article for big media (Forbes, The Guardian, etc) and a book about Silk Road development, politics, and culture. Feel free to ask me anything about the journalistic side of Belt and Road coverage.

—> My first book was about China’s “ghost cities” and the modernization of the country. Ask me about that and how it relates to the Silk Road.

—> Beyond the Silk Road, I’ve pretty much been traveling since ‘99, through nearly 100 countries. If you have any general travel questions, ask away.

—> I’ve worked along the Silk Road as a journalist, academic researcher, and videographer. If you have any how-to, tech, or strategic questions related to these profession, ask them below.

Let’s have fun with this. Be nice. Fire away.

Walk Slow,

Wade

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I did an overview of this situation yesterday at Kazakhstan: China's New Territorial Dispute?. Today, I will dive in a little deeper.

While the original article has long since been deleted, I was able to find a partial screenshot:

This is the gist of what it says:

“Looking at world history, loose leaf going back to its roots is not only an individual’s need, but also a nation’s. For many countries that end up being independent from their home country, they all inevitably want to return. As the saying goes, it’s cooler under the shade of a big tree. East Germany had a hard time with their economy, but after it returned to its home country their income multiplied and they got rich and developed. Besides them, countries like Belarus are also trying to get back to it’s own [home country]. There are many countries who are exceptions to this case, the most typical of which is Kazakhstan. So why haven’t they returned? Here are three reasons why:”

Unfortunate for my Western-indoctrinated knowledge of history, I may never know what these three reasons are, as that’s as much of the original story that I was able to procure. However, I was able to locate excerpts from it published on Chinese social media, one of which being:

“Although modern sciences has proven that they [Kazakhs] are genetically closer to the Europeans, they still think they are Chinese descendants, and want to bring the land back to China.”

In addition to this, other media sources have extracted other quotes from the story that alleged that the Kazakh tribes of old showed allegiance to the Chinese emperor, which is why the people of modern Kazakhstan “do not have too many complaints” about being invaded by China, and so on.

Basically, the article referenced a period during the 18th century when the Qing Dynasty was engaged in the conquest of Dzungaria and, for a time, administered a portion of what is now Kazakhstan.

You get the point here. The story had all the ingredients in it to kick Kazakhstan in its soft spot, igniting already combustible fears over Chinese involvement in Kazakhstan and outrage over counter-terrorism initiatives in Xinjiang which have targeted ethnic Uyghurs and Kazakhs. The government of Kazakhstan certainly took it as a provocation.

But where did this story come from?

While the article did appear on a major media platform, Sohu.com, it was in a sub-section called “Revealing the Truth Behind History,” which seems as if it may be self-published or at least lacks proper editorial oversight.

What’s particularly interesting is that this story seems to have provoked a reasonable about of public outrage in China as well, with multiple reaction posts being published which tore it apart and comments like, “such self-orgasming is pathetic and unnecessary.”

I believe it’s safe to conclude that this story doesn’t represent mainstream Chinese thought.

However, as we covered in yesterday’s story, the rhetoric in the article in question was the same as that which is used to support China’s real territorial claims now and in the recent past: we’re not invading, we’re just reclaiming what was already ours. As China engages in territorial disputes on many of its other borders, this is something that Kazakhstan, a country with less people than the city of Shanghai, is rather sensitive about.

While the Sohu.com story appears to be tantamount to fake news delivered by an insignificant actor, there is a fear as to what could happen if that narrative wasn’t isolated and begins to spread and gain popular support.

“Of course, there is a kind of China-phobia,” admitted a Kazakh logistics coordinator who goes by the name Sister on this site. “But, nevertheless, it is worrying. This is how these things start.”

Another argument from Kazakhstan is that, as everyone knows, China maintains a tight grip on its media platforms — articles, videos, blog posts, social media, and even chat apps are subject to having content removed and accounts deleted. As the Sohu.com story in question was allowed to be published and was not taken down until it created an issue, it is perhaps logical to conclude that elements of the Chinese government, on some level, supported the message.

Perhaps.

Another explanation is that nationalistic revisions of Chinese history are not really sensitive topics domestically and probably wouldn’t be prone to censorship. The Great Firewall doesn’t really take into account how Chinese media is perceived abroad.

For example, there is a story making the rounds right now that says that the United States forcibly expelled 100,000 ethnic Chinese from the country due to coronavirus. Of course, this never happened, but people in China are free to read about it and discuss it, and some may actually believe it. Sometimes, even high-ranking government officials will promote such fact-deprived claims.

However, stories in Kazakh media have insinuated that the Sohu.com story was not an isolated instance and that there may be an element in China who are advocating not only for deeper economic integration with Kazakhstan but political as well. While I haven’t seen much hard evidence to suggest this, it also doesn’t make much sense for the Kazakh government to have taken such strong and public action over a single post on a Chinese website.

Update, 4/16:

Global Times Responds

After I published the initial version of this article and sent the newsletter out, an article was published on China’s Global Times which responds to this issue:

Major Chinese social media networks and websites deleted a series of nationalist misleading articles which spread fake information online about China's neighboring countries and regions "eager to return to China" and relevant accounts also get banned, with Chinese experts said that these articles are not mainstream voices in China at all and they have no influence on China's policy making, so neighboring countries don't need to worry. 

With the worsening situation of the COVID-19 pandemic worldwide, a series of misleading articles for hyping nationalism claiming China's neighboring countries or regions including "Kazakhstan, Mongolia, Vietnam, Kokang of Myanmar and Manipur of India" are "eager to return to China" or "become a part of China" have emerged among Chinese social media network including WeChat public accounts and some private-owned major websites like Sohu.com and 163.com recently, which draw attention from other countries and even brought formal diplomatic to protest from Kazakhstan.

These articles are very similar and only provide made-up information without solid evidence, and they are not influential at all since most of them only received a few thousands of views or even less. 

But given some social media accounts and major websites also posted these articles, they caught the eye of the outside worlds, and now most of them have been deleted and relevant accounts also get banned. 

As China increases its global footprint and more people around the world learn to read Chinese and consume Chinese media, look for situations like this to repeat themselves in the future along the Belt and Road. China doesn’t exist in a bubble anymore, which is something the country seems to be having a difficult time coming to terms with on many fronts.

An article entitled Why Is Kazakhstan Eager To Get Back to China? appeared recently on the Chinese website Sohu.com and provoked a shit storm of fury in Kazakhstan, where a large portion of the population, apparently, actually do not wish to be a part of the People’s Republic.

The article reportedly puts forward a rather interesting redub of history, where the Kazakh tribes of old kowtowed before the Chinese emperor and what is now the modern country of Kazakhstan was a part of China. Apparently, this is why the people of Kazakhstan today “do not have too many complaints” about being invaded by China,” according to the author.

This story ignited a fire in Kazakhstan which quickly burned its way up to the upper echelons of government. Yesterday, Chinese Ambassador Zhang Deguang was summoned to Kazakhstan’s Foreign Ministry for a formal browbeating — a regular event around the world these days — where he was informed that the article “does not correspond to the spirit of the eternal multilateral strategic partnership stressed in the joint statement" which was signed between China and Kazakhstan in 2019 to broaden ties between the countries.

Reality check part 1: Some idiot posting a story on the internet is not indicative of any government’s opinion or intentions. It’s not even like it was published on the Global Times and could, kinda sorta, be interpreted as representative of deeper levels of Communist Party thought.

Reality check part 2: The story was published on a Chinese website for a Chinese audience who apparently enjoy reading stories about how the world loves China, wants to be part of China, and welcomes the Belt and Road with open arms. This is a very normal genre of media in China, and should be viewed as a form of satirical entertainment rather than being something to take seriously. It’s an example of nationalistic dribble, not fact-based journalism, which all countries have to some degree.

Reality check part 3: The mass public interpretation of the story and the resulting discontent renders reality checks part 1 and part 2 irrelevant.

This is the absolute worst thing that could happen for the Belt and Road (BRI) in Kazakhstan. While I strongly feel that this is a matter of misinterpretation or the intentional de-contextualizing of a story to fuel a political position, it does bring to the surface a very real underlying fear in Kazakhstan: that China is coming.

As I’ve traveled through Kazakhstan talking with people about China and the Belt and Road, one of the most common perceptions that I’ve heard is that China is going to try to take over the country: that they are going to buy up all the land, move in their people, out-compete the local businesses, and claim the place for themselves.

At the macro level these fears are also evident, as anti-China protests have become a repeated occurrence in Kazakhstan, as the people have taken to the streets to protest a potential change in immigration policy that would allow visa-free entry for Chinese citizens, changes to national property laws that would allow foreigners to buy land, and, in 2019, widespread protests against all things China.

What’s interesting is that the government of Kazakhstan has given into the demands of such demonstrations before, such as during the land rights protests — and this was during the time of Nazarbayev, who ruled the country for nearly 30 years with something approaching an iron fist. In point, regardless of what fuels it, public sentiment in regards to China’s activities in Kazakhstan matters.

What’s also disturbing in this story is that it meshes nicely with the rhetoric that Beijing often uses to justify their claims of Taiwan, the South China Sea, Tibet, Arunachal Pradesh, Aksai Chin, etc: we’re not invading, we’re just reclaiming what was already ours.

Many of China’s disputed territorial claims are debatable, due to the country’s long and varied history, different political iterations, and vacillating geographic reach. Some claims have merit, while others are about as ridiculous as Greece claiming Egypt because Alexander the Great conquered it in the fourth century BC.

The people of Kazakhstan hear the noise from Xinjiang, Hong Kong, Taiwan, and Tibet. When we mix the story in question through the decontextualizing blender of social media and the megaphones of existing fears and politics we have something small and insignificant that is now having a very real impact on Sino-Kazakh relations and the future of the Belt and Road in Central Asia.

The Sohu.com story has become a tributary of additional anti-China sentiment in Kazakhstan that flows into the fear and anger that is boiling over China’s anti-terrorism campaign in Xinjiang, which has reportedly seen upwards of 1.8 million ethnic Uyghurs, Kazakhs, and other Muslims herded into what amounts to internment camps. While the Chinese authorities do little to try to hide the existence of these camps — they even issued a white paper about them in the English language — they say that they are designed as vocational centers to provision ethnic minorities with employable skills. However, from piles of testimony from people who have family members interned (or disappeared) or those who have gotten out of the camps and escaped China, it’s pretty clear that admittance to these centers is not optional.

How this resonates in Kazakhstan is very direct and rational: If China can do that to our people on the other side of that line then why wouldn’t they do it to us here if they could? I don’t believe there’s a way forward for China’s Belt and Road in Kazakhstan until the camp program in Xinjiang is thoroughly abolished.

“My impression is that Chinese authorities don't always understand that all the questions are connected and that Xinjiang cannot be separate from Huawei, from the Belt and Road, and it has a cost for everything else that China is doing, as much as China tries to keep that as a separate silo. It can't be done,” said Bruno Maçães, the author of Belt and Road: A Chinese World Order. “I hope that there's a change in the Xinjiang policy, as China realizes it's paying a very high cost.”

However, we also need to acknowledge that for Kazakhstan’s Nurly Zhol and other economic diversification programs to work, China is ultimately needed.

China is a major investor in Kazakhstan, in both the natural resource and transport / industrial sectors. To date, China has invested in 55 projects in Kazakhstan amounting to US$27.6 billion. While China is a relatively big supporter of Kazakhstan’s nascent non-oil sector, owning a 49% share in the Khorgos Gateway dry port and being the driving force behind the International Center for Boundary Cooperation bi-national duty-free zone that extends across the Kazakh-China border, around half of China’s investments are in oil and gas projects. However, roughly a third of the China-backed projects completed to date will produce high value-added products — small numbers, but it’s a start. China is also Kazakhstan’s top export destination ($5.86B).

Read more: Khorgos: New Silk Road Documentary

In best case scenario, Kazakhstan’s role in the coming era of globalization is to be a central station in the middle of Eurasia where countries from all arms of the compass meet. But, as of now, Kazakhstan is still heavily resource dependent, with it’s top exports reading like the table of contents of a book about raw commodities: crude petroleum, refined copper, petroleum gas, ferroalloys, and radioactive chemicals. This is an incredibly precarious position to be in, as the recent record plunge of the tenge indicates. In order to diversify from oil and gas dependency they need to build new economic sectors from scratch, and to do this they need a multi-national approach which more than likely won’t happen without China and the Belt and Road initiative.

Read more: The Central Station Of The New Silk Road Has Emerged

The trick is balancing Chinese influence against those of Russia and the West — Nazarbayev’s multi-vector strategy. In a way, public opposition to China provides an adequate check to ensure Beijing is not able to step in and exert too much influence. In another way, it hampers Kazakhstan’s ability to become a great thoroughfare of nations — it’s rightful position on the New Silk Road.

More to come on this story soon.

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As the world is knocked to its knees in the fight against the Covid-19 pandemic, quality global leadership is perhaps needed more than ever. With the United States and the EU largely in disarray and focused on their own battles, the door was left wide open for China to step up and take more of a global leadership role by providing assistance to countries in need, assuaging the economic woes that the crisis has wrought, and finding solutions that could help get us out of this mess.

Instead, China took off the gloves and started swinging.

As much of the world was still simmering from the reports about the attempted cover up of the initial outbreak in Wuhan, Beijing went on the offensive. China’s Foreign Ministry spokesman Zhao Lijian and other diplomats began blaming other nations for pandemic. First, the US was targeted, with the accusation that Covid-19 started there first and was spread to Wuhan via the US military. When that proved ineffective, they moved on to Italy, claiming that they may have had the virus first — a low blow as Italy was being walloped by the virus at the time and had been publicly showing gratitude to China for their assistance, including the blasting of the Chinese national anthem from balconies.

These actions were generally seen as a strategy to muddy the narrative and divert blame from the Chinese government for any perceived mishandling of the crisis. There is a very fine line between responsibility and liability, as we previously covered:

If China is found culpable of not properly stifling SARS-Cov-2 then some nations may theoretically attempt to hold them liable for the losses that they suffer from the pandemic — or at least use this as leverage to get better deals on loans and joint projects.

A pissing match then ensued between the US and Chinese officials and a slew of negative press about China began coming out of the UK — with elements of the government giving credence to the theory that Covid-19 was leaked from a Chinese laboratory and proposing a 'rethink and a reset' in regards to the country’s relation with China and Chinese companies like Huawei.

Compounding China’s already precarious PR situation was the fact that the country’s “mask diplomacy” efforts completely backfired. As we previously covered:

Many of the test kits, masks, and other supplies that China sent out as aid or sold to countries being ravaged by Covid-19 were faulty, potentially dangerous, and overtly unusable. The rapid test kits that China sent to Turkey were only 30 to 35 percent accurate, and were subsequently rejected by the government. Spain had to withdraw 9,000 faulty Chinese test kits from use, the Czech Republic found that 80% of the 150,000 tests they purchased from China didn’t work, and Ukraine and the Philippines experienced the same fate. Slovakia purchased 1.2 million test kits from China for $16 million only to find that they were unable to properly detect Covid-19.

At this moment, China wasn’t looking too good, and it was difficult to imagine things getting much worse … and then the reports began coming out about the mistreatment of foreigners living in the China:

It is now being widely reported in the Chinese media that all new cases of COVID-19 are being brought in by foreigners — a message that’s partially being drummed up due to a terse political climate with the USA. What is often missing in these reports is that 90% of China’s 595 imported coronavirus cases were actually from Chinese nationals returning home.

“They are viewing foreigners and potential vectors for disease at a time when everybody is incredibly concerned about not having another outbreak,” said James Palmer, the author of The Death of Mao. “Letting a foreigner in is just considered too risky. There’s no upside for you. If you let a foreigner in and the foreigner has the virus … that’s now become something that’s truly politically dangerous for you.”

A wave of anti-foreign sentiment then swept over the country that was particularly directed at those from Africa or who were of African descent, which was partially due to a handful of Africans in Guangzhou testing positive for Covid-19:

According to the data provided by the city's health commission, Guangzhou had reported a total of 119 imported COVID-19 cases by Sunday. Among them, 25 were foreigners and 94 were Chinese. Of the 25 foreign patients, 19 were from Africa.

Twitter soon became full of photos of “No blacks allowed” messages being handed out to Africans attempting to enter restaurants — including McDonald’s — in China, as well as videos of Africans effectively rendered homeless after being evicted from their apartments or denied admittance to hotels. Then there was a rather disturbing video of Africans being marched through the streets by the police and a video of an African guy and his baby who were locked inside their apartment by the authorities.

The international and African media soon latched onto these stories:

CNN interviewed more than two dozen Africans living in Guangzhou many of whom told of the same experiences: being left without a home, being subject to random testing for Covid-19, and being quarantined for 14 days in their homes, despite having no symptoms or contact with known patients.

Form the WSJ:

Joan Namutebi, a Ugandan businesswoman who lives in Guangzhou, said she is sealed inside a two-bedroom apartment with her three children, under new quarantine orders that forbid her to walk out her front door. During a previous lockdown, she said, the family had been allowed to walk around the grounds of the residential complex twice a week.

“The Ugandan government should get us out of here,” Ms. Namutebi said, sobbing into the phone over the sound of a screaming toddler. “I have no food left in the house. My children are going to die of starvation.”

As could be expected, this caused an uproar in Africa, where they were not only being impacted by a virus that was first identified in China but were also hearing news about how their compatriots were being mistreated and blamed for the spread of that virus.

African diplomats and government officials were also keen to show their displeasure. The African Group of Ambassadors in Beijing got together and penned a formal letter of complaint to China’s foreign minister, stating that “The singling out of Africans for compulsory testing and quarantine, in our view, has no scientific or logical basis and amounts to racism towards Africans in China.” Over a dozen countries across Africa called meetings with their respective Chinese ambassadors for thorough browbeatings:

However, the Chinese media remained impervious, stating that “The China-Africa friendship is rock-solid and will not be affected by a single incident.”

But will it?

We have already seen how negative public sentiment can impact the fortunes of the Belt and Road. Opposition parties in Sri Lanka, Malaysia, the Maldives, and Zambia have all won elections by running on platforms that heavily criticized China’s activities in their countries, and BRI projects big and small have suffered because of it. In Kazakhstan, anti-China demonstrations have been enough to alter the course of government policy. In Kyrgyzstan, such demonstrations have shut down Chinese projects.

The New Silk Road is about more than steel and concrete and the schematics of engineers; it’s about more than intergovernmental agreements and MOUs and diplomacy; it’s even about more than FDI and loans and aid packages. The New Silk Road is ultimately about people, and how the local population feels about China coming in with their bags of money and big plans has a major impact on what happens next.

When traveling to new cities I try to hang out with the manual laborers — the construction workers, the truck drivers, the heavy machinery operators — as much as possible. There’s two reasons for this: 1) They provided me with key information, different perspectives, and engaging — human — stories that cut through the sometimes sterile and idealistic ve…

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This concludes our first week of publishing the On The New Silk Road newsletter. This is a project that I've been looking forward to doing for many years, and I'm extremely excited that it's now up and running. I can dive deeper into the Silk Road topic than on can on the other sites that I write for, as well as provide a broader platform for discussion.

This week we dove into the big Silk Road topic of the day: China’s actions in the fallout of Covid-19 becoming a global pandemic and how this impacts the Belt and Road. We saw the emergence of something dubbed the ‘Health Silk Road’ and how it seems to have backfired, as much of the sales and donations of medical equipment from China ended up being defective. We then took a look at the apparently senseless squabble between Chinese and American government officials and realized that there may be more of a method behind the madness than what we first realized. On a more positive note, Wuhan has started reopening, and the Wuhan-Duisburg train has been running for over a week. In this story I also shared some memories from my somewhat limited experience in Wuhan and talk about how the city has become an important node on the Belt and Road.

As far as travel goes, we put up a guide of some key locations to visit if you want to check out the New Silk Road for yourself.

I also shared a documentary about Khorgos that I worked on with BBC in 2017. This film brings up a lot of nostalgic memories for me, as this was kind of the end of the salad days of the New Silk Road.

Our Friday open thread received a good amount of activity as readers asked me questions about the Silk Road and Chris Devonshire-Ellis from Silk Road Briefing chimed in some of his takes — which are often rather different than my own.

Our big feature story of the week was about my travels to Duqm — a new city growing up out of the desert of Oman that’s perhaps the quintessential Silk Road project.

We ended the week with a talk that I gave in February at the University of Michigan.

As always, feel free to comment or ask questions on any of these stories and community posts.

As far as the business side of this newsletter goes, subscriptions have been coming in at a good clip. We’ve only been around for a week and we have 586 subscribers with a growing number of them paying members. As the model for this newsletter is to be community supported, those who can toss us that buck a week are vital. As time goes on and our membership grows we will provide more and more premium content and special perks for paying subscribers. If you are able, please consider jumping over into the premium bracket -- it's just $5 a month or $50 a year.

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Silk Road news

This week has been an interesting one for the Silk Road. Many countries have shut their borders to curb the spread of Covid-19, which seems at first seems to be the antithesis of what the Silk Road is all about. However, this crisis puts everybody in the world in the same boat and each day we’re seeing countries providing support for each other, whether it’s by sending medical equipment and personnel or financial assistance. There is something of the “Silk Road spirit” in this. However, the fallout from the spats between China and the West remains worrisome, as does what we’re seeing in China in regards to the xenophobia and discrimination that’s being directed towards foreigners, especially those from Africa and are of African descent. As images of evicted Africans in Guangzhou sleeping homeless on the streets and others being locked inside their apartments have now spread all over the international media, you can only imagine how ugly this could get.

Coronavirus

The Belt and Road post-coronavirus

Plamen Tonchev from Institute of International Economic Relations in Greece delivered an incredible article on The Diplomat this week that takes a look at the future of the BRI after the coronavirus pandemic:

While it is too early for authoritative forecasts, three scenarios are possible at this stage. The best case envisages a moderate economic disturbance, which can hopefully be dealt with by the existing world order and through the mobilization of existing financial tools. A much more likely scenario, which qualifies as bad, foresees severe economic damage necessitating a massive demand for reconstruction, even if it cannot be met through available resources and by the shaky global institutional architecture. The worst-case scenario will be really ugly: it includes a devastating economic collapse of potentially historic proportions, leading to social and political turmoil in a number of countries, a sea change as to configuration of the world order, and curtailed connectivity.

Tonchev dives deeper, and this is where things get really interesting. He proposes the potential creation of a different sort of Belt and Road that improves on some of its early deficiencies, creates better institutions, and scales down its oftentimes bombastic, overly-ambitious nature.

In the mid to long run, ongoing BRI projects will pick up again, though it is reasonable to assume that this will be a new BRI, an enterprise of a different complexion. And the BRI is bound to change, with inescapable questions about its China-centered nature: overdependence on Chinese companies and Chinese staff working on BRI projects financed through loans from Chinese banks. But, above all, it needs to change due to its inherent conceptual defects. Long before being hit by COVID-19, the BRI was infected with the virus of poor design, misconception, and chutzpah.

There are now some very real pressures — both from within and outside of China — that are forcing the BRI to adapt if it wishes to survive. Could China use the coronavirus upheaval as a impetus to address these issues?

2020 Asian economic outlook?

The Asian Development Bank just put out a report looking at the impact of Covid-19 on Asian economies in 2020:

The report forecasts regional growth of 2.2% in 2020, a downward revision of 3.3 percentage points relative to the 5.5% ADB had forecast in September 2019. Growth is expected to rebound to 6.2% in 2021, assuming that the outbreak ends and activity normalizes. Excluding the newly industrialized economies of Hong Kong, China; the Republic of Korea; Singapore; and Taipei, China, developing Asia is forecast to grow 2.4% this year, compared to 5.7% in 2019, before rebounding to 6.7% next year.

In the People’s Republic of China (PRC), a sharp contraction in industry, services, retail sales, and investment in the first quarter due to the COVID-19 outbreak will pull growth down to 2.3% this year. Growth will rebound to an above normal 7.3% in 2021 before reverting back to normal growth. In India, measures to contain the spread of the virus and a weaker global environment this year will offset the benefits from recent tax cuts and financial sector reforms. Growth in India is forecast to slow to 4.0% in fiscal year (FY) 2020 before strengthening to 6.2% in FY2021.

It is estimated that the coronavirus pandemic will shave between US$2 trillion and US$4.1 trillion — 2.3 to 4.8 percent — off of global GDP.

Did Turkmenistan ban coronavirus?

180 countries in the world have had documented cases of coronavirus, leaving Turkmenistan as one of the only nations claiming to be unscathed. Or could this be because nobody is allowed to talk about? Turkmenistan is one of the most closed, tightly-controlled, authoritarian countries on the planet, and this has created a North Korea-like effect where where it’s easy to believe almost anything coming out about it.

Via Catherine Putz at The Diplomat:

On March 31 and April 1, various mainstream Western media outlets were repeating the claim that Turkmenistan had “banned” the word “coronavirus.” NPR ran an update proclaiming that “Turkmenistan Has Banned Use Of The Word ‘Coronavirus.’” So did Newsweek and ABC, among many others.

The root of the claim is two-fold. First, a report in Turkmenistan Chronicle, an exile-run independent Turkmen news source, noted that health information brochures published by the Turkmen government no longer included specific references to “coronavirus.” Second, RFE/RL’s Turkmen Service reported that individuals had been arrested by plainclothes police for talking about the global pandemic in public.

RSF’s original post stated: “The state-controlled media are no longer allowed to use the word and it has even been removed from health information brochures distributed in schools, hospitals and workplaces, according to Turkmenistan Chronicle, one of the few sources of independent news, whose site is blocked within the country.”

Making the most of quarantine in Bishkek

American photographer Stephen Lioy has turned his mandatory quarantine experience in Bishkek into an opportunity to photograph a place that he’d always wanted to go: an old US military base at the edge of town — but it’s not like he was given another choice. Unable to gain access in the best of times, he found himself there in the worst, where he produced a photo essay for The Diplomat:

Like most travelers arriving via Manas airport last month, I was sent to a repurposed military base, once home to the U.S. military’s Transit Center Manas and donated to the Kyrgyz National Guard upon the departure of the United States from the facility in June 2014. As an American formerly working in Kyrgyzstan and now married to a Kyrgyz citizen I had long been curious to see inside the facility, but never expected to do so for an extended visit.

Coronavirus pushing Serbia closer to China?

One of the big Belt and Road stories to come out of the coronavirus pandemic is how Serbia very publicly pivoted to China as the EU reputedly declined to ship them medical supplies. As we previously covered:

When it comes to China’s “pandemic diplomacy,” we don’t need to look any further than Serbia to see its desired results. After being denied protective equipment by the EU, who banned medical exports since Covid-19 took hold, Serbia very publicly pivoted to China, with President Aleksandar Vučić proclaiming that "European solidarity does not exist" and “Only China can help us in this situation,” while repeatedly referring to Xi Jinping as a “brother.” Beijing rapidly responded with five million masks and a team of doctors.

Vuk Vuksanovic digs deeper on Foreign Policy:

The EU has since removed Serbia from its list of priorities, creating a sense among Serbians that the country would never enter the bloc. In that environment, the Chinese-Serbian partnership has flourished. This entails not only cooperation related to the Belt and Road Initiative, through which China poured $4 billion in direct investments and pledged slightly over $5 billion through loans and infrastructure projects for Serbia, but also tighter security cooperation and a burgeoning technological partnership with the Chinese telecommunications giant Huawei. More importantly, the Serbian elite have been working hard to quash information critical of Beijing while at the same time promoting themselves as facilitators of a strong relationship with a rising China.

The end of Huawei’s “mask diplomacy”?

Huawei, the Chinese telecom giant, has donated million of masks to Europe to assist in the fight against coronavirus — a move that some have said may have ulterior motives, as the company attempts to woo some of these same nations for rights to set up 5G networks. But, via EURACTIV, Huawei claims that they are drawing this program to a close. The reason is supposedly due to statements from the EU’s Foreign Chief Josep Borrell that China was attempting to gain leverage through such gifts — a “politics of generosity” — and Huawei said that this was not what they were doing and that they do not wish to be included in this narrative.

“We will be putting an end to our mask donation programme here in Europe,” the official added. “For us, this was never meant to have been a PR campaign.”

Tajiks buying up all the garlic and lemons to fight coronavirus

Garlic and lemon prices have tripled amid shortages in markets in Tajikistan. The rise is reportedly due to a belief among some that they offer protection against the coronavirus. Medical experts say they offer no defense, while the World Health Organization says it's not just fighting a pandemic, but also "an infodemic of misinformation."

However, the shortages may also be due to import restrictions.

New Silk Road status reports

China-Pakistan Economic Corridor at five

Jonathan Hillman and Maesea McCalpin of the Center for Strategic and International Studies just released an excellent report which looks at how far the the China-Pakistan Economic Corridor (CPEC) has actually progressed up to its five year point. They looked into the CPEC’s energy, industrial, and ICT projects, and what they found left a lot to be desired — canceled projects, stagnant projects, empty SEZs. Although this is not particularly surprising. Throughout the Belt and Road, project after project is proving to be over-ambitious, with scales, scopes, and timelines running in opposition to what is possible in the real world (i.e. outside of China).

Of 122 announced projects, a quarter (32 projects) have been completed, or roughly $20 billion of the estimated $87 billion in funding. While this is a significant amount of activity, particularly in the transport and energy sectors, it also highlights a gap between projects announced and completed.

Using official targets, however, the CPEC has underperformed. “By 2020 . . . major bottlenecks to Pakistan’s economic and social development shall be basically addressed, and the CPEC shall start to boost the economic growth along it for both countries,” a joint planning document promised in 2017. By 2018, Pakistan was again facing unsustainable debt levels and sought assistance from China, Saudi Arabia, and the United Arab Emirates. In 2019, Pakistan received a bailout from the International Monetary Fund, and its economy mostly appeared to be moving in reverse: growth slowed to 3.3 percent, inflation hit a five-year high, and deficits soared. The CPEC is not responsible for all Pakistan’s troubles, of course, but it has exacerbated long-standing challenges.

The state of the BRI in Sri Lanka

Sri Lanka was a key region for Belt and Road development in the early days of the initiative, with a string of big and very costly projects. What became of much of this investment now reads as a cautionary tale speckled with white elephants and under-performing endeavors. However, the situation seems to be stabilizing and Chatham House just released a report looking deeper into this:

The pattern of Chinese investment in Sri Lanka reveals a nuanced picture of benefits and costs. Similarly, it shows that a matrix of Sri Lankan, Chinese and multilateral policies are required to maximize the benefits and minimize any risks of Chinese investment. Sri Lanka is not in a Chinese debt trap. Its debt to China amounts to about 6 per cent of its GDP. However, Sri Lanka’s generally high debt levels show the country needs to improve its debt management systems. This step would also reduce any risk of a Chinese debt trap in the future.

Specific projects have contributed positively to Sri Lanka’s economy. Some have brought greater benefits than others, such as the Colombo International Container Terminal (CICT), which has allowed the Colombo port to grow at a rapid pace. However, imports from China for projects in Sri Lanka have widened the trade deficit between the two countries. In addition, there have been only limited economic spillovers for Sri Lanka, including knowledge transfer in the local labour force.

Problems with the green Belt and Road

During the second Belt and Road summit in Beijing last April there was a lot of talk about the “clean and green” nature of the Belt and Road. For those of us who have been traveling or researching this continent-spanning initiative in any depth it’s readily apparent that the BRI is anything but.

We covered the greenwashing of the Belt and Road a little in February, but there are aspects of this which go deeper than the surface. China’s BRI partnerships are partnerships, and local players and local contexts have major impacts on the decisions being made and the types of energy sources that are being utilized. As we’ve written before, China is often a victim of its own Belt and Road.

A new report came out by Tsinghua University’s Research Centre for Green Finance Development and the think tank Greenovation Hub which took a look into why renewable energy projects are so rare on the Belt and Road. Their findings are pretty obvious: funding.

But this is a vital topic, as some feel that Belt and Road nations are going to be the ones who make or break the Paris climate agreement.

From ChinaDialogue:

Building energy infrastructure is at the heart of the BRI. While the initiative has seen strong growth in China’s overseas investments in wind and solar power since its launch in 2013, fossil fuel projects still account for a big proportion of its energy projects. Figures compiled by Greenpeace from publicly available data show that between 2014 and 2018 Chinese equity investments built 1,277MW of new solar capacity in BRI nations, 2.8 times the figure for the previous five years. Wind power capacity totalling 432.5MW was built over the same period. But in that time Chinese equity investments also built 10,400 megawatts of coal power capacity – and further large amounts of coal power capacity were built by Chinese firms working under EPC projects.

A report published last year by Tsinghua University, Vivid Economics and ClimateWorks Foundation found that if the 126 BRI nations do not cut emissions, global temperatures will rise to 3C above pre-industrial levels, regardless of what action other countries take. This is far above the 2C upper warming limit of the Paris Agreement. China’s infrastructure investments have a huge impact on the carbon pathways of those nations.

Hungary classifying Chinese high-speed rail project details

The Budapest to Belgrade high-speed rail project will be the biggest infrastructure endeavor in Hungary’s history, however, this doesn’t mean the country wants anyone to know anything about it. In typical Belt and Road fashion, under the cover of the Covid-19 pandemic, Budapest snuck through a bill that would classify the details of the $2.1 billion project for 10 years. This includes all construction contracts. The reason for this? Because Budapest feels that if the truth was known it would “threaten Hungary’s ability to pursue its foreign policy and trade interests without undue external influence.”

What we know is that the contract was awarded to the CRE Consortium, which includes Hungary’s Opus Global Holdings and two subsidiaries of the state-owned China Railway Group. 85% of the finances will come from China, including big loans from the Export-Import Bank of China.

New Deals

Even though times have been tumultuous due to the pandemic, we have had some New Silk Road deals being made.

The biggest comes from Turkey, where the country’s sovereign wealth fund signed an MoU with the China Export & Credit Insurance Corporation (Sinosure) for up to $5 billion in export insurance and financing for Chinese companies working on projects in the energy, petrochemical, and mining industries. It smells a little funky though, as Turkey Wealth Fund (TVF) is led by President Erdoğan and his son in law. We’ve seen what happens to these types of deals when these types of politicians are removed from power (i.e. in Sri Lanka and Malaysia).

Another big deal happened in Nigeria, where China Harbour Engineering Company (CHEC) dumped in an additional $221.05 million to finalize its acquisition of a majority share in the Lekki deep-sea port project. This port is expected to be Sub-Saharan Africa’s deepest port and the first of its kind in Nigeria when it is completed in 2022.

Conclusion

That’s it for this week. Thanks for reading and subscribing.

Walk Slow,

Wade

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This is a discussion post, so please feel free to ask questions, present arguments, and drive the coversation deeper below.

Thanks for watching.

Walk Slow,

Wade

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