Chinese Railway Diplomacy: Fostering Regional Change With Global Implications

Courtesy of STRATFOR (subscription required), a very interesting look at China’s railway diplomacy

One of the highlights of Chinese Premier Li Keqiang’s visit to Latin America has been the continued discussion of a proposed transcontinental railway linking the east coast ports of Brazil to the west coast ports of Peru. The ambitious project, which in earlier proposals included spur lines from Bolivia, is driven first and foremost by outbound Chinese investment trends and not by a major Chinese move to dominate Latin America.

China signed memorandums of understanding with Brazil and Peru in 2014 to participate in a rail link between Brazil’s Acu Port and Peru’s Ilo Port. The project, which has drawn criticism from environmental groups, would be the first major transcontinental infrastructure project to breach the Amazon River and Andes Mountains to link the two coasts of South America. Historically, the Amazon River and Andes Mountains have proved to be impassable, strategically disadvantageous obstacles that have divided Atlantic and Pacific trade routes. The two geographic obstacles are reinforced by the continent’s fractured political history originating with the Treaty of Tordesillas. The transcontinental railroad is the first step in connecting South America’s coasts, bridging political powers and further facilitating global trade.

Although Peru, Chile and Bolivia are all among the world’s historic innovators of high-altitude rail, many of their past Andean lines were short, disjointed efforts that relied on a hodgepodge of different gauges and cars. An ambitious endeavor in the 19th century to lay track on the Peruvian Andes switchback routes took almost 40 years to complete and was plagued by funding problems and many worker fatalities. British capital was necessary to finance the completion of that project as well as the large Antofagasta Railway, which would eventually cover more than 1,800 miles in Bolivia, Peru and Argentina.

Brazil’s Amazon River has proven an equally impressive barrier. The remote Madeira-Mamore rail project to cross the river began in the late 19th century, but was abandoned five times and took 30 years to complete.

Although a single rail line is not going to fundamentally alter the evolution of power in South America, it can erode the continent’s east-west division and allow Brazil to exert greater influence along the Pacific coast. In addition, the rail line would provide a new, independent and faster transport route for Brazilian agricultural exports to China, allowing trade to bypass the Panama Canal and run a shorter route than that taken via the Atlantic and Indian oceans, through the Cape of Good Hope and the Strait of Malacca.

Whether or not the plan comes to fruition, China’s interest demonstrates the intersection of several strategic issues for Beijing. On the most tactical level, the proposal keeps Chinese industry busy. Like Japan and South Korea before it, China’s economy can no longer be sustained by low-end manufacturing exports. China is seeking to move up the value chain and has recently accelerated its attempts to export rolling stock, from urban subway and light rail to heavy freight locomotives and high-speed trains. In 2014, exports of railway equipment totaled some $4.36 billion, a 22.6 percent increase from a year earlier.

As China has increased investment in its domestic rail systems, the country has taken the logical step of funding and encouraging rail projects around the globe, creating a market for its technology and rolling stock. China can sell its rail products abroad and is looking to invest in new production facilities in Latin America to service long-term demand. Like its economic predecessors, China is seeking large-scale overseas infrastructure development projects to keep its construction industries active and exert some soft-power influence around the globe. Expanding electricity and transportation infrastructure also helps China expand future export markets.

On the strategic level, China’s interest in rail, port and other transportation infrastructure projects reflects a deeper concern: the continuity of China’s maritime supply routes. China is dependent on maintaining robust global trade, but much of that trade takes place over maritime routes, many of which pass through strategic choke points. Although this is a reality for most nations, other countries are content to accept the United States as the seas’ predominant protector. China, on the other hand,considers itself a rising peer power that is equal to the United States, and it fears the United States’ ability to disrupt Chinese trade. Furthermore, even if the United States itself does not interfere with maritime trade, China is not certain the United States has the capacity to ensure that neither state nor non-state actors interfere along Chinese trade routes and choke points.

Having laid the groundwork for a series of regional trade routes, China is now expanding abroad and protecting itself by establishing a diverse array of channels. The “belt and road initiative,” the revival of both the land-based Silk Road and the maritime Silk Road, is a key example of China attempting to protect its future interests through diversification. When fully enacted, the initiative provides a web of routes for the movement of goods in and out of China through Central, Southeast and South Asia. The variety of routes creates a robust trade network and offers China the ability to minimize the length of any single critical maritime leg of trade. By constructing and establishing new land and maritime trade routes, China is not only expediting its trade, but also ensuring the security and viability of the country’s influence for years to come. 

This entry was posted on Tuesday, May 26th, 2015 at 5:21 am and is filed under Brazil, China.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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