The Silk Road: Rebuilt And Reborn

Via CNN, a brief analysis of the “new” Silk Road:

It is a trade link dating back half a century – spreading from the far reaches of Asia to Africa.

From caravans carrying loads of goods across the deserts of the Middle East to ships sailing precious cargo to Europe, the ancient Silk Road is now being reborn and rebuilt.

One man who is following the progress of its growth is Ben Simpfendorfer – author of the Silk Road Economy.

CNN’s John Defterios met with him in the financial heart of the Middle East, Dubai, and asked him about the significance of these new trade links.

“The new silk road is more about sea routes rather than land routes, so its containership between Guangzhou and Dubai,” Simpendorfer said. “At the same time, it’s very much about oil. China is now is Saudi Arabia’s largest buyer of oil. It’s also about consumer goods and the 200,000 Arab traders in the small city of Yiwu in the south of Shanghai. So it does differ to the old silk route.”

The regional unrest in the Middle East in the wake of the Arab Spring may in short run dampen trade, but could prove a long-term boom for the new Silk Road, Simpendorfer said.

“In the short term the Arab uprisings make it more difficult to do business in some countries in this region but in so far that they accelerate the pace of economic reform and make it easier for Chinese entrepreneurs to build factories in this region,” he said.

“(That) is very encouraging because costs in China are rising. Chinese entrepreneurs are already looking to other low cost alternatives and it’s often not well understood but Egyptian wages are already lower than Chinese wages today … so it makes sense to be building factories in Egypt.”

Still, dark clouds hover along the road – Yemen remains a hotbed of piracy, and unrest there could menace the 22,000 ships that pass each year en route to and from the Suez Canal. “So if China’s trade routes with Europe were challenged because of Yemen’s collapse it would be a serious economic threat to China,” he said.

Tensions between Iran and Saudi Arabia – which together account for 35% of China’s oil imports – are “unhelpful to the region and to China in particular,” Simpendorfer said. “So (trying) to solve the Iranian problem is crucial to the stability of the rise of the new Silk Road.”



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