Tracing the impact of China’s 21st century Maritime Silk Road

How China’s investment in ports could reshape current trading routes

China’s Maritime Silk Road provides the oceanic network supporting the land Economic Belt

Over 2,000 years ago, the Han Dynasty established a network of trade routes linking China to Central Asia and the Middle East. Named after one of China’s major exports, the Silk Road supported the entire region’s economic growth for centuries. 

In 2013, the Chinese government announced its intention to form a modern-day counterpart – the Belt and Road Initiative (BRI). With massive investments in infrastructural networks across Asia, Africa and Europe, the economic “belt” and its sea road equivalent serve as a long-term project to expand global economic cooperation and development.

The Maritime Silk Road (MSR) serves as the sea route for Beijing’s transcontinental ambitions. The MSR runs from the Chinese coast to the south through Hanoi to Jakarta, Singapore and Kuala Lumpur, across the Strait of Malacca and underneath India. East Africa finds its connection at Mombasa to Djibouti, then up to the Red Sea and Suez Canal to the Mediterranean. 

The network ultimately reaches southern Europe via Haifa and Istanbul. The sea route hits Athens and the international free port of Trieste, serving rail connections to Central Europe and the North Sea.

The overland and oceans routes work in tandem. Investments in rail and land transport infrastructure connect China to Europe through Central Asia, and the maritime return route proceeds through southern Europe through the Suez Canal and back to Asia.

A multilateral advance

As of 2018, China had signed 38 bilateral and regional maritime agreements, covering 47 countries along the BRI route. According to the Ministry of Transport of China, Chinese companies also participated in the construction and operation of 42 ports in 34 countries.

Significant investments have been made globally including a 99-year lease at the Hambantota port in Sri Lanka, a 40-year lease at the Gwadar port in Pakistan, a $350 million investment in the port of Djibouti and stakes in terminals in Belgium, France, Spain, Greece, Italy and Israel to name but a few.

The scale of the initiative is enormous. A total of 146 countries have signed some type of cooperation agreement with China under the BRI, but one can observe the individual activity around some of its major centres. 

Using the Voyage Planner on MarineTraffic, we can visualise transit through the specific routes and ports called at which are included in the MSR. In this case, we can see how Shanghai connects via sea pathways to the Middle East.

The Maritime Silk Road

The Chinese government hopes the BRI can facilitate “unimpeded free trade” to release growth potential. Maritime infrastructures have historically had this effect, as the construction of the Suez Canal reduced travel time and transport costs. Conversely, lagging port infrastructure can depreciate commercial activity. 

Related: Shining the spotlight on shipping’s busiest routes

Research in the World Bank Economic Review in 2001 found that by upgrading national infrastructure from the 75th to the 25th percentile, transport costs could be reduced by 30% to 50%. Ongoing studies by the World Bank also indicate that BRI cooperation could lower global trade prices by 1.1% to 2.2%. 

This is the kind of economic trajectory which China is anticipating with its massive investments across key port locations. Improved connectivity between countries with considerable consumer markets, natural wealth and productive potential.

Re-routing global shipping 

One major factor driving the BRI is reducing China’s over-reliance on existing routes by developing alternative pathways to avoid potential blockages. The MSR doesn’t just add new China-sponsored robustness to the Malacca Straits, for example, but circumvents it.

Malacca strait on MarineTraffic
China is investing $7.2 billion in redeveloping the Malacca strait into a new deep sea port. Image: marinetraffic.com

This is primarily due to an existing dependence on the seaborne trade stop in Singapore. Any serious change in global supply chain orthodoxy could be potentially troublesome for the city state’s status as a shipping hub.

Several other ports linked to the MSR initiative are also being developed. The MarineTraffic Live Map visuals show the sheer scale of cargo ships and other marine activity in these strategic targets for investment.

Gwadar Port in Pakistan, owned by the China Overseas Port Holding Company since 2016, is also central to the BRI. Since its acquisition, $1.62 billion in infrastructural investments have been pledged to increase regional connectivity and trading relationships between China and Central Asia. However, the alternative trade routes in Gwadar have only been fully operational since May 2021. 

Establishing a strong port presence in Gwadar feeds into the overland routes established through Western China and the Middle East. If the Malacca Strait activity comes to halt, the Pakistan investments would, in theory, allow for continued access from any goods entering Pakistan by sea into China through the land belt. 

The comparison between the ancient Malacca Strait and the Pakistani port is stark. Port information on MarineTraffic shows remarkably little activity at Gwadar, indicative of how transformational the long-term results of Chinese investment will have to be to reshape established trade routes.

Gwadar port

The projects which have advanced the most for the BRI are existing maritime trade routes, such as in Greece, Djibouti and the Suez Canal. Chinese investments at these strategically situated locations pre-date the initiative but continue to facilitate international trade. 

The multipurpose Port of Djibouti has gone under major expansions in recent years as part of the MSR in Africa. Image: marinetraffic.com
The multipurpose Port of Djibouti has gone under major expansions in recent years as part of the MSR in Africa. Image: marinetraffic.com

China is intensifying its diversity of regional interests. Most prominent has been its investment and upgrade of Greece’s port of Piraeus through COSCO in 2009, which has seen Piraeus grow into a major transhipment hub for goods destined for Mediterranean and Black Sea ports. 

Other port involvement includes investment in Spain through the terminal portfolio of Noatum, in Valencia, Bilbao and Barcelona. The procurement of European sites highlights the BRI’s geographical and developmental ambitions are equally long.

All belt, no road?

Despite huge investments in maritime links, one impact of the BRI on shipping routes could be a retraction. The overland “belt” half of the project is the nucleus of Chinese President Xi Jinping’s long-term foreign strategy and involves huge investments from Central Asia to Europe.

Freight corridors, rail and transport infrastructure, bridges, airports, and tunnels all serve to interlock the entire Eurasian plate. Traders of high-value or time-sensitive goods could see this as a more appealing alternative to ocean transport because transit times are significantly higher while shipping is generally cheaper.

Centre Fujian

Fujian has become foundational for the development of the MSR. The national Five-Year economic plans highlight Fuzhou, Xiamen and Quanzhou as strategic pivot cities. 

The Fujian provincial administration aims to expand investment channels, promote foreign investment into Fujian’s leading industries, and support domestic enterprises to establish economic cooperation and sites for logistics, production and raw material processing.

According to reports from The Load Star last year, Mediterranean Shipping Company (MSC) CEO Soren Toft said the world’s second-largest liner operator had seen increased cargo volumes as a result of MSR cooperation.

“MSC’s throughput at Fujian’s ports is growing strongly, with container volumes increasing by more than 40% in the first half of this year,” Toft said.

Globalisation with Chinese characteristics

In 2015, China announced, “Made in China 2025”. An industrial strategy which aims to shift the national economy from labour intensive to capital intensive. Beijing seeks to advance the productive and technological capacity to such a degree that the People’s Republic no longer serves as a global factory of cheap goods and instead supplants the US as the world’s high-tech manufacturer.

The BRI is essential to establishing China as the core of a new globalisation. The development of new ocean supply chains, including port development in developing regions, raises questions about how shipping routes will look in the future. Just as Chinese mariners laid the foundation for the silk road 1000s of years ago, the modern MSR could change the nature of trade routes for centuries to come.

 

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Jason Dunn
Senior Account Executive at London-based public relations agency, Navigate PR