China's new Silk Road of openness should extend to the internet
Winston Mok says China's revitalisation of its Silk Road will surely benefit its less developed northwest region, especially if it can welcome all avenues of opening up, including the internet
Beyond the hype, what economic impact will China's revived Silk Roads have? In promoting the Silk Road economic belt, which extends westwards over Central Asia, Beijing may have more than geopolitical and energy considerations in mind. It may be seeking to revitalise China's northwest - among its least economically developed regions.
Importantly, it is apt that China's renaissance aspirations include reviving the Silk Road on the global stage. The original route began at Changan - now Xian - the imperial city of the Tang dynasty that epitomised the zenith of China's civilisation. At the height of the Tang era, Changan was the world's largest city, followed by Constantinople and Baghdad - with the Silk Road linking them. But changing economics and new technologies have dramatically altered the geography of nations since then.
Today, it is of course shipping lanes that connect China's commercial centres of Shanghai and Guangzhou with world cities such as New York and London. Despite the legend of the Silk Road, the Maritime Silk Road was more important economically. After the Tang dynasty, China's economic centre shifted southeast to the coastal region. Since then, maritime trade has replaced land trade as the dominant mode of commerce.
Centuries before the Europeans, the Song dynasty was the greatest maritime power - with larger ports and bigger ships - whose trade reached the Persian Gulf and beyond. Although much weaker than the Tang dynasty in military strength, Song-era rulers achieved greater heights in global economic dominance.
China has once again reclaimed its role as the world's leading trading nation through maritime trade. Of the world's top 10 container ports, seven are on China's coast. The Pearl River and Yangtze River deltas contain the leading clusters of container ports - a similar pattern to that of seven centuries ago when China dominated the world's long-distance ports. Singapore and Hong Kong have been the modern-day Samarkand and Bukhara, although they have been surpassed by Shanghai, the world's busiest container port.
Looking at the fate of Malacca to the north, Singapore long ago realised it could not rely solely on its role as a shipping hub - and diversified into other sectors. A new Maritime Silk Road through the proposed Thai Canal bypassing the Malacca Strait will challenge Singapore's strategic position. Unlike the British city of Liverpool, which suffered a long decline from the days when it handled 40 per cent of world trade two centuries ago, Boston and Baltimore - once key Atlantic ports - remain vibrant through the knowledge economy. Thus, a top priority for a 21st-century Maritime Silk Road should be preparing Shanghai and Guangzhou for such a transition - when high-value products and services are transported via planes and undersea cables.
Although only 1 per cent by weight, air cargo represents more than one-third of global trade's value. Ranked first and third respectively, Hong Kong and Shanghai are the world's leading air cargo hubs. Beijing's new airport, currently under construction, could compete with Korea's Incheon (ranked fourth globally). Dominant in ports, China's next challenge is to position its airports to compete as air hubs, where inland cities like Chengdu and Xian are unconstrained by a lack of ocean access. Infrastructure development in Indochina can also provide Kunming with ocean access through Myanmar's ports.
While even the powerful Chinese state cannot change the compelling geographic advantages of its coastal region, air transport and information technology are giving inland regions another chance. Atlanta is the leading air hub, and Memphis the world's second in air cargo, while Austin and Bangalore are key centres of innovation. There is a much less expensive way to revitalise Xian than building transport links to central Asia along the old Silk Road. Xian is a top university city. Designating part of Xian a free information zone, with minimum internet filtering and generous international bandwidth, can make it China's Bangalore.
As the flow of information and money is critical to trade, the most important routes in the 21st century are the information superhighways. In this, China is distinctly disadvantaged by its Great Firewall. Low international bandwidth, coupled with filtering delays, make international internet access slow and cumbersome. Thus, China is handicapped in the intense race of the global knowledge economy.
More important than trade routes are the traded goods. Much of the value of China's exports are captured by foreign brand owners like Apple and Gap. And the critical components embedded in China's hi-tech exports are often imported from Korea and Japan.
Thus, China's top priority has to be upgrading the value-added in its trade. But such upgrades need innovation, and innovation requires openness.
To achieve prosperity, now as in the Tang and Song eras, silk must come before the road. China's silk in the 21st century is weaved in the minds of its educated youth. With more than seven million graduates every year, China will dominate this sphere. Their creative initiatives, shaped by the degree of openness in China's information highways to the world, will drive its path to resurgence.
