GRAND CANALS

While the US, Europe and Russia are occupied with the confrontation in Ukraine, China quietly and consistently implements its strategy to redraw the global transportation system as part of the new Silk Road initiated by Xi Jinping in 2013. So, during an international forum in Quanzhou City on 12 February, it was announced that China has begun to implement the concept of the 21st Century Maritime Silk Road, the starting point of which will be Fujian Province. It is known that the main routes of this road cross the waters of the South China and East China Seas, and according to the intention of Beijing, it must become "a great canal for economic, trade and cultural exchange".

The scale of the plan is shown by the fact that China is now actively discussing with Thailand the construction of a canal from the South China Sea to the Andaman Sea, which will significantly shorten the way from the Pacific to the Indian Ocean. We are talking about the Kra Isthmus - the narrowest part of the Malacca Peninsula, at the junction of Thailand and Myanmar. At the narrowest point the distance between the coasts is just 44 km. Back in the 17th century, Thai kings were going to dig a channel on this site to secure the fast relocation of the navy from the west coast to the east. But since then, plans have remained plans and Thais have limited themselves only to the intention to build a railway between the two coasts. But now, it seems, China wants to build the Thai Canal and is ready to invest up to 25bn dollars in this project.

The new 50-km canal with a capacity of up to 200 ships a day would have reduced the sea route from Southeast Asia to Europe, the Middle East and Africa by 1,000-1,200 km (as it will no longer be necessary to pass through the Strait of Malacca), which takes 48-64 hours. 

In principle, the canal is of benefit to all countries of the region - from Japan and India to Cambodia and Vietnam. The thing is that most of the oil passing through the Strait of Malacca is further processed at the terminals of Singapore and Malaysia and moves to the final consumer in the form of more expensive refined petroleum products, which, of course, is not too profitable, but for the time being they have no choice. This is exactly why together with the canal, Beijing is also going to lay an oil pipeline across the isthmus, as well as build an oil refinery, two ports at the opposite ends of the canal and infrastructure. All nearby territory should become a free economic zone.

If the construction of the canal is bad news for someone, this is Singapore, which, we can say, lives at the expense of navigation through the Strait of Malacca. But Beijing may substantiate its position very well as the Strait of Malacca is not quite capable of coping with its responsibilities. It is expected that by 2025, thanks to the growth of the economies of Asia and international trade as a whole, about 140,000 ships will pass through the narrow "neck" between Malaysia and Indonesia, while the maximum capacity of the Strait is no more than 122,000. In addition, the Strait of Malacca has many "weaknesses". Firstly, it is not wide enough - in the area close to Singapore, its width is 2.5 km and the depth in some places does not exceed 25 m. There are frequent forest fires, which significantly reduce visibility due to smoke. A big problem, surprisingly, is piracy - attacks have increased by almost 10 times and reached 200 attacks per year over the past two decades. All these factors make the strait a very vulnerable place in the face of natural disasters and terrorism. After all, any emergency might paralyze this commercial artery, which now accounts for almost one-third of marine oil transportation (mainly from the Persian Gulf and Africa) and one-fourth of all freight traffic in the world. With the advent of the Thai Canal, the Strait of Malacca would be freed up by at least a third.

But profitability and benefits for all are not essential arguments, since the main thing is control, and it is clear that behind Singapore is the United States, which does not really like Chinese ambitions not just near China, but around the world. For example, literally at the end of last year it became known that the Chinese are going to invest up to 50bn dollars in the construction of a canal in Nicaragua, which should be an alternative to the Panama Canal, an important economic and military facility under the full control of Washington. Each year, about 14,000 ships go through the Panama Canal, carrying about 300m tonnes of cargo (5 per cent of world ocean freight). It is hardly necessary to tell the story of 1989, when the Americans "restored democracy in Panama and protected the lives of more than 30,000 American citizens" in five days. But this story shows the importance of the canal for the United States and the amount of the stakes. However, China is not afraid of American reaction - the new canal, according to estimates, should be built in five years, and it will be deeper and wider than the Panama Canal and will be rented to the Chinese for 50 years after its construction. For the time being, the Americans are responding by actively expanding the Panama Canal - building new shipping locks, deepening the canal and wanting to double its capacity - up to 600m tonnes of cargo per year.

However, the Chinese are the most serious about their own region, where, under the banner of the New Silk Road, they are investing huge amounts of money (about 40bn dollars) in the construction of new railways, highways, ports, hubs, naval bases, airfields, communications and energy facilities, thereby creating alternatives to land and sea routes controlled by the West. Beijing is threading "strings of pearls" (a term first used in the report "Energy Futures in Asia" prepared for US Secretary of Defence Donald Rumsfeld in 2005), trying to gain a foothold in the Indian Ocean - from South Asia to the African coast, along the main routes for transporting goods, especially hydrocarbons. Also, ports of "strings of pearls" link to China by land - via pipelines and railways. Recently an agreement was signed to finance the construction of the Trans-Asian Railway, which will pass through the countries of Southeast Asia and connect Southern China with Singapore. China is seeking access to Pakistan and Afghanistan through Burma and Bangladesh. Through Central Asia, Afghanistan, Iran and Turkey, the Celestial Empire is looking for shorter access to the markets of Europe. For example, the Khorgos logistics centre is under construction on the border with Kazakhstan, from which routes will diverge across Eurasia. By the way, on 29 January the first freight train headed from Xinjiang to Georgia, going through Russia, Kazakhstan and Azerbaijan and covering almost 5,500 km in 25 days. Chinese plans are giving a new impetus to important regional projects - the Kazakhstan-Turkmenistan-Iran railway and, of course, the Baku-Tbilisi-Kars transport corridor. The latter route significantly reduces interaction between Europe, Central Asia and China.

And that's not to mention China's penetration into other continents - Africa, where the Chinese presence is becoming more and more important, and Latin America. This is done primarily for access to cheap raw materials. But to do this, China needs bases on major sea routes and access to strategic straits - Malacca, Hormuz and Panama - or alternatives to them. Beijing is actively modernizing and creating an ocean fleet that can provide reliable support for Chinese merchant ships in order to prevent their possible blocking in the event of any geopolitical problem. Currently, China can not only be blocked, but also cut off from its ships from behind in the South China and East China Seas due to its geographical location and the balance of forces in the region. For example, East China and its waters were included in the operating area of the Pacific Joint Command of the US Armed Forces. No one is likely to attack China, but they can harm the energy security of Beijing. For example, the Strait of Malacca is currently patrolled by US and Indian navies.

In this respect, one of the most important ports for China should be the port of Gwadar in Pakistan's Baluchistan Province, which worries the US again because China is really seeking a strategic, if not advantage yet, then certainly solid counterweight. Suffice it to mention that Baluchistan has 85 per cent of gas produced in Pakistan and 65 per cent of coal and other minerals such as copper, chromite and lead. Gwadar is only 250 miles from the strategically important Strait of Hormuz. Moreover, China plans that tankers will be unloaded at Gwadar and then fuel will be delivered to the country by pipelines or tanker trucks. Iran is interested in the possibility of building an oil refinery near the port. China is building such hubs in Sri Lanka, Myanmar, Bangladesh, the Paracel Islands, Seychelles, North Korea and Africa. It is noteworthy that the Chinese already have a support base in Greece - the major port of Piraeus. Given the political turn of Athens recently, Beijing clearly made the right choice and its ambitions could be an additional argument in the disputes between the Greeks and Brussels.

It is clear that the Chinese initiatives cannot proceed smoothly and meet no resistance. On the one hand, the neighbours of "the Celestial Dragon" can also enhance their economies following the Chinese economic miracle, but investments and jobs will tie them to Beijing politically. The exacerbation (including artificial) of various regional problems is possible. For example, as far as the Thai Canal is concerned, Thailand fears separatist sentiment in the south, mainly populated by Muslims, ethnic Malays. It is precisely this region - 5 districts - that the canal will cut off. However, China, responding to obstacles with Eastern equanimity, is steadily moving forward and apparently the key to its success is the magnitude of its projects and economic opportunities. It is almost impossible to respond to such a storm of activity in many regions of the world, and it is clear that the main lines of counteraction will take place precisely for the key points. If China is really able to create alternatives to the Panama Canal and the Strait of Malacca, it will mean one thing - its Western rivals conceded a significant portion of their positions.