Abstract: The Belt and Road Initiative (BRI) is significant also because it contributes to the profound transformation of the world economic and trade patterns dominated by the marine economy, which was developed through nearly 3000 years of industrial civilization and helps start a new chapter of the marine and land economies jointly developing hand-in-hand. BRI enables inland cities to become the first tiers of opening up. With thriving industries, population concentration, and cultural integration, new land port cities will be established. The rise of land port cities promotes the quality and efficiency of opening up along the border. In the future, the 21st Century Maritime Silk Road will continue to drive the further development of seaport cities, and the Silk Road Economic Belt will promote the formation of land port cities. In this way, they will create a new landscape with a strong synergy between the marine economy and the land economy and the shared prosperity of coastal and inland cities.
Distinguished guests,
Ladies and gentlemen,
Good morning!
I am glad to attend the 3rd CF40 Qujiang Forum. I want to share my understanding under the theme “The BRI has profoundly changed global trade patterns and will promote the high-quality development of China’s Western region”.
Belt and Road development has profoundly changed global economic and trade patterns. For nearly 300 years, ocean transportation, as a significant driving force of economic globalization, has been the dominant way to carry out global trade. Therefore, a global labor division and an economic and trade order were established based on the ocean transportation system. During the past 300 years, the land trade corridors across the Eurasian continent, where goods were delivered by camels and horse caravans for thousands of years, had been gradually replaced by ocean transportation, and the land exchange between Europe and Asia almost came to a halt.
However, this pattern has been changing since the BRI was put forward by President Xi Jinping in 2013. In particular, the operation of the China-Europe Railway Express has transformed the almost interrupted Eurasian Continental Bridge into a Silk Road by land, featuring “policy exchanges, facility connectivity, smooth trade flows, financial integration, and people-to-people connection” among the countries along the route, enabling the land economy to regain its splendor.
In this sense, I think the great significance of the BRI goes beyond enabling China and the countries along the route to leverage their extensive complementarities, deepen cooperation, and promote the building of a community of shared future. The BRI is significant also because it contributes to the profound transformation of the world economic and trade patterns dominated by the marine economy, which was developed through nearly 3000 years of industrial civilization and helps start a new chapter of the marine and land economies jointly developing hand-in-hand.
The land economy driven by the BRI will produce four in-depth economic values.
Firstly, the changes in transportation and logistics will promote major changes in the trade distribution system. In the past, it took 7 to 8 procedures to organize export trade by ocean transportation. Since the operation of the China-Europe Railway Express, trade procedures have been streamlined, enabling products from countries along the route to directly reach each other’s end market.
Secondly, global transport services will be enriched, and more economic and convenient hidden benefits will be brought to the industrial and supply chains along the route. The operation of the China-Europe Railway Express has shortened journeys to one-third of that of sea transport and reduced costs to one-fifth of that of air transport. For example, the express from Zhengzhou, China to Duisburg, Germany is suitable for goods of 50,000 to 1000,000 USD per TEU because the savings from the reduction of enterprise inventory and capital occupation are enough to cover the extra freight costs, and many costs for short-haul transfer are also saved.
Thirdly, a system of rules and standards for land-based trade will be developed. In the past centuries, global trade had been dominated by ocean transportation, based on which a maritime trading system of rules and standards had been formed. Today, the operation of the China-European Railway Express provides a crucial test platform where rules and standards for land-based trade will be explored and practiced.
Fourthly, the land economy will adapt better to the innovation and development of various trade modes. Trade activities based on ocean transportation are mainly port-to-port, which means, the processing trade and trade-related service trade take place mainly in hub ports, so it is hard to cover somewhere else. In contrast, land transportation, represented by the China-Europe Railway Express, features trade carried out in a row, where new trade flows are generated between stations along the route. While ocean transportation brings the hub economy to major ports, land transportation brings the hub economy to railway hub cities and the channel economy along the route.
A railway network will be built on Eurasia, the “World Island,” and thus, new trade patterns will be created. Geographically, Asia and Europe are an integral whole, also known as the “World Island,” according to some geographers. The essence of ocean transportation is to connect the world’s five continents, but it cannot directly change the mode of transportation within the five continents. The rise of land transportation represented by the China-Europe Railway Express is, in nature, a systematic reconstruction of the transport system within Eurasia, shaping a global transport map featuring the mutual connection and support between land and ocean transportation.
From this perspective, in the global transport map, China should not only continue to cement and upgrade the westward route, further expand the northward route of the China-Europe Railway Express and encrypt the physical connections with Central Asia and Western Europe but also accelerate the construction of the southward route connecting South Asia and Southeast Asia, including the southward channel of China-Singapore connectivity and the southwest channel facing the Indo-China Peninsula based on the three major channels, namely, China-Laos, China-Vietnam, and China-Myanmar railways. In this way, the vast land will be connected, with Hamburg on the western end, Siberia on the northern end, and South Asia, Southeast Asia, and Singapore on the southern end. A well-connected railway network on this “World Island” will effectively facilitate the high-quality development of the Silk Road Economic Belt and the 21st Century Maritime Silk Road.
The BRI promotes the formation of land port cities in the inland regions. Throughout history, the Silk Road, as a major land route connecting Europe and Asia, contributed to the success of many hub cities, including Chang’an, Kashgar, Bukhara, and Balkh. Though these cities were inland ones, all were highly prosperous commercial, trade, cultural, and religious centers. Since the Age of Discovery in the 15th century, ocean transportation emerged and gradually replaced land transportation and became the main channel for trade between East and West, driving many seaport cities to flourish, including London, New York, Antwerp, Rotterdam, Hong Kong, and cities in Singapore.
Since the reform and opening up, China’s economic takeoff has been achieved largely thanks to the marine economy. By the end of 2022, China has occupied 29 of the top 50 ports in the world, and coastal cities such as Shanghai, Guangzhou, Shenzhen, Ningbo, and Qingdao have taken the lead in driving China’s economic development. With these cities as centers, coastal city clusters and metropolitan areas were gradually formed, such as the Yangtze River Delta, Guangdong-Hong Kong-Macao area, and Beijing-Tianjin-Hebei area. Today, if you look down on the earth at night from the satellite map, you will find that most of the light-filled city clusters and metropolitan areas are located along the coastline, while the inland regions are relatively dull.
This is the result of the in-depth development of ocean transportation in the past centuries, which fully demonstrates that inland cities, thousands of kilometers away from the coastline, are often among the “second tiers” speaking of marine economic development. From this perspective, it is not enough for inland cities to rely solely on the radiation-driven role of coastal city clusters and metropolitan areas and the gradient transfer of industries; instead, they should act as open frontiers and play a pivotal role in the land economy.
BRI enables inland cities to become the first tiers of opening up. Some important hub cities such as Chongqing, Chengdu, Xi’an, and Zhengzhou have witnessed more flows of people, business, capital, and information due to the logistics convergence of land ports, thus facilitating the rise of processing trade, advanced manufacturing, insurance logistics, financial services, and other industries. The rise of these industries then drives the enterprises in the upstream and downstream industrial chains to follow up and settle down, forming large-scale industrial clusters. With thriving industries, population concentration, and cultural integration, the city’s economic development speeds up and prospers and helps establish new land port cities.
Furthermore, the rise of land port cities promotes the quality and efficiency of opening up along the border. Specifically, the border trade, which has developed for many years, will transform from a single-level stall-type bazaar where residents of both sides exchange for needed goods to multi-level port trade, processing trade, service trade, and so on. This transformation will promote the rapid development of the channel economy, port economy, and hub economy along the border and facilitate the development of regional land port cities and form a new pattern of opening up along the border.
In 2022, of the $6.31 trillion trade in goods between China’s mainland and the rest of the world, nearly $4 trillion was generated by “6+1” regions connected to China by land or across the sea, namely, $975.34 billion with ASEAN, $847.3 billion with the EU, $720 billion with Japan and Republic of Korea, nearly $200 billion with CIS countries, close to $200 billion with South Asian countries, nearly $300 billion with the Middle East countries, and close to $630 billion with Hong Kong, Macao, and Taiwan.
In the marine economy, 85% of the trade is transported by sea and 15% by air. In the future, with the promotion of BRI, an railroad network and a multi-modal transport system that are efficient and convenient will be established between China’s mainland and these six regions. It’s likely that close to half of the goods, with a value of nearly $2 trillion, will be traded along China’s 22.8-thousand-kilometer border by rail northwards, southwards, and westwards.
The $2 trillion trade volume will directly drive the development of China’s inland cities, namely, Xi’an, Zhengzhou, Lanzhou, Urumqi, Shenyang, and Shijiazhuang along the northward and westward routes, and Kunming, Dali, Guiyang, and Nanning along the southward route. Among them, the Chengdu-Chongqing Economic Circle connects the southwest and northwest. It is the central metropolitan area of the land port on the Eurasian Continental Bridge, which makes it the fulcrum of the China-Europe Railway Express heading north and west. It is also the starting point of the new land and sea channel in the west, the hub of the southward channel of China-Singapore connectivity, and the hinterland of the southward channel of the Trans-Asian Railway, which makes it the key support for China’s economic and trade exchanges China with South Asia and Southeast Asia.
In the future, the 21st Century Maritime Silk Road will continue to drive the further development of seaport cities, and the Silk Road Economic Belt will promote the formation of land port cities. In this way, they will create a new landscape with a strong synergy between the marine economy and the land economy and the shared prosperity of coastal and inland cities.
That’s all, thank you!
This article is the keynote speech delivered by the author at the 3rd CF40 Qujiang Forum on June 10th, 2023. It is translated by CF40 and has not been reviewed by the authors. The views expressed herewith are the author’s own and do not represent those of CF40 or other organizations.
