Eurasia Silk Road Economic Transformation – F. William Engdahl

TND Guest Contributor: F. William Engdahl |

Over recent months I have often written about the potential of China’s strategic One Belt, One Road Eurasian and Asian infrastructure Great Project to act as a global economic transformer toward positive, sustained economic growth. It’s becoming clear by the day that strategic economic planners in Beijing have been working out specific details of how best to use the new high-speed rail infrastructure project spanning the vast space of Eurasia from Beijing across Russia and the states of the Russia-led Eurasian Economic Union including Kazakhstan, Armenia, Belarus and on to the west to include, so far, states of eastern and central Europe. A series of recent agreements by Chinese companies in Kazakhstan gives a hint of the economic boom being planned.

As I have written in previous posts, China’s One Belt, One Road project, currently the largest real economy infrastructure project in the world, is not merely about building faster rail pathways from China across Eurasia’s vast landmass to Europe to hasten freight delivery times. It’s about transforming one of the previously most forgotten regions of the world into a vibrant and growing new economic space, about bringing technology and industry into some very backwater parts of Central Asia that also happen to be blessed with some of the world’s richest minerals concentrations. Without modern transportation infrastructure, those mineral and other riches lay dormant.

For China, the One Belt, One Road is also referred to as the New Silk Road, a reference to the ancient Eurasian overland trade routes and sea routes linking China trade to that of all Eurasia, the now-Middle East and on to Venice and Europe some two thousand years ago initiated by China’s Han Dynasty. At that time, the Silk Road routes went from China through India, Asia Minor, up through Mesopotamia to Egypt, the African continent, Greece, Rome, and even Britain. The northern Mesopotamian region, today Iran, became China’s closest partner in trade.

China, whose civilization was then far more advanced than that of Europe, sent to Europe paper, an invention of China during the Han Dynasty. They sent gunpowder, and increasingly, silk, along with the rich spices of the east. To date, the New Economic Silk Road project encompasses some 60 countries from Central Asia, Russia, Iran and on to Serbia and eastern European markets.

China’s ancient silk road enabled contact between Han China and the west and a flourishing trade and culture exchange some two thousand years ago

Earlier I commented on Chinese plans to route the rail projects of the Silk Road to enable more economic mining and export of gold, the world’s historically most beautiful of all metals.

By the time of the Roman Emperor Augustus, 27 BC – 14 AD, trade between China and the west was firmly established; silk, whose origins the Chinese kept a state secret, was the most sought commodity in Egypt, Greece, and, especially, in Rome. More than the mere trade in goods from East to West and back, the original Silk Road made possible a vast cultural exchange between peoples in art, religion, philosophy, technology, language, science, architecture. Every aspect of civilization was exchanged through the Silk Road along with the trade goods the merchants carried from country to country.

Today’s One Road

The historical reference is important to better understand that the Chinese leadership has drawn deeply into their cultural heritage in conceiving the new Silk Road, the One Belt, One Road. Few, even in today’s China, as I realized during a conference this year in Beijing, where I was invited to speak on the significance of China’s new Great Infrastructure Project, realize the deeper importance of this initiative, not only for the economy of China. A few examples indicate the economic transformation of Central Asia which the One Belt,One Road project has catalyzed in its first months.

Earlier I commented on Chinese plans to route the rail projects of the Silk Road to enable more economic mining and export of gold, the world’s historically most beautiful of all metals.

A recent sketch (above top) of the various land and sea routes for the New Silk Road indicates its enormous scope, though the current version (bottom) adds a direct rail link through Russia from Kazakhstan following the May, 2015 agreement between Putin and China’s XI

In May, 2015 China set up a state-run Gold Investment Fund to create a pool, initially of $16 billion, making it the world’s largest physical gold fund. It will support gold mining projects along the Economic Silk Road. China stated that the aim is to enable the Eurasian countries along the Silk Road to increase the gold backing of their currencies. The countries along the Silk Road contain most of the world’s people and natural and human resources utterly independent of any the West has to offer.

China’s Shanghai Gold Exchange has formally established the “Silk Road Gold Fund.” The two main investors in the new fund are China’s two largest gold mining companies. The fund will invest in gold mining projects along the route of the Eurasian Silk Road railways, including in the vast under-explored parts of the Russian Federation.

The China gold mining cooperation extends to Russia, today rapidly becoming the closest strategic partner of China. China National Gold Group Corporation has signed an agreement with the Russian gold mining group, Polyus Gold, Russia’s largest gold mining group, and one of the top ten in the world, to explore the gold resources of Russia’s largest gold deposit at Natalka in the far eastern part of Magadan’s Kolyma District. While it is not widely known outside the gold mining industry, China is today the world’s largest gold mining country having passed the declining South African output several years ago. Russia is number three in the world. Kazakhstan and other Central Asian countries now on the Silk Road have large untapped gold reserves that will become economical with the link of rail infrastructure.

Copper too

China has also targeted the vast untapped copper reserves of the countries along the Silk Road. Mining experts estimate that China’s investments for strategic Silk Road copper supply will run into the tens or even hundreds of billions. In 2014 China was the largest importer of copper for its industry, drawing an impressive 40% of all world copper imports. Now the country clearly looks for more secure–Australia is a prime USA military partner for the Obama ‘Asia Pivot’ aimed at China–and more economical sources along the Silk Road.

Kazakhstan, whose President Nursultan Nazarbayev proposed the idea of a new Economic Silk Road in a 2013 meeting with Xi Jinping, has been a significant focus for China copper agreements and joint projects. Kazakhstan has high-grades of copper in the east-central part, similar to Africa’s famous Copperbelt. It’s also technically easy to exploit. China Development Bank has provided $4.2 billion in credit to KAZ Minerals, a major Kazakh mining company.

Kazakhstan’s eastern region and bordering parts of northern Kyrgyzstan have a number of copper- bearing rock or porphries, estiumated at billions of tons. That same porphyry belt extends into Mongolia, a new addition to China’s Silk Road. recently Mongollia confirmed a huge copper discovery, the Oyu Tolgoi mega-discovery with some 6.5 billion tons total resource. Other Silk Road copper prospects lie in Iran, Turkey should things calm there, and Serbia.

And it’s not only development of Eurasia’s vast untapped gold and copper resources that interests Chinese companies. On December 17, a group of Chinese companies visiting Kazakhstan signed a number of major agreements with the world’s largest uranium producer. CGN Mining, a listed subsidiary of China General Nuclear Power Corporation, took a minority stake in Kazakh uranium deposits, in a deal that includes construction of a nuclear fuel assembly production plant. The entire fuel supply will go to fuel China’s growing nuclear power construction to offset coal power.

During the same talks in Kazakhstan, China’s CEFC Energy bought a 51% share in a subsidiary of Kazakh state oil and gas firm KazMunayGaz, which operates refineries and gas stations, as well as fertilizer plants, across Europe. And China National Chemical Engineering agreed to construct a natural gas-fueled chemical complex in Kazakhstan.

This is but the first of what will ultimately be a market spanning the largest land expanse in the world, Eurasia, with the world’s largest population, educated manpower, world-class scientists and engineers and a desire to build, not to destroy. It’s heartening that such peaceful initiatives are growing. It damn sure beats the war agenda of Washington and NATO.

F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine “New Eastern Outlook”.  This work was published at the New Eastern Outlook and is reprinted with permission.