The Maritime Silk Road: China's Belt and Road at Sea

The Maritime Silk Road

China’s Belt and Road at Sea

RICHARD T. GRIFFITHS

Copyright © 2020 Richard T. Griffiths.

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ISBN: 978-9-0823-8105-4 (sc)

ISBN: 978-9-0823-8103-0 (hc)

ISBN: 978-9-0823-8104-7 (e)

Library of Congress Control Number: 2020911939

Publisher Name: International Institute for Asian Studies

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Publisher Phone Number:+31715272227

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Lulu Publishing Services rev. date:  07/27/2020

LIST OF FIGURES

1.1    The Maritime Silk Road at the time of Admiral Zheng He

1.2    Overlapping Claims in the South China Sea

2.1    Development of Global Seaborne Trade and the World Merchant Fleet, 2008-2018

2.2    The Baltic Dry Index for Leasing Rates for Bulk Carriers, 2000-2019

2.3    Prices for New-build ‘Capesize’ Bulk Carriers, 2003-2018

2.4    The Value-Chain of International Shipping

2.5a    Network of Merchandise Trade among countries of the Maritime Silk Road, 2018

2.5b    China’s Merchandise Trade among countries of the Maritime Silk Road, 2018

2.6a    Composition of World Exports, 2018

2.6b    Composition of Maritime Trade, 2018

2.6c    Composition of the Merchant Fleet, 2018

3.1a    Developments of Dry Bulk Trade and Shipping, 2008-2018

3.1b    Average Daily Time Charter Rates for Capesize and Panamax, 2008-2018

3.2    Network of Iron Ore Trade, 2018

3.3    Selected Iron Ore Ports on the Maritime Silk Road

3.4    Network of Coal Trade, 2018

3.5    Selected Coal Ports on the Maritime Silk Road

4.1a    Developments in Oil Trade and Shipping, 2008-2018

4.1b    Crude Tanker One Year Freight Charter Rates 2008-2018

4.2    Network of Crude Oil Trade, 2018

4.3    Selected Crude Oil Ports on the Maritime Silk Road

4.4    Developments in LNG Trade and Shipping, 2008-2018

4.5    Network of LNG Trade, 2018

4.6    Selected LNG Ports on the Maritime Silk Road

5.1     Developments in Motor Car Trade and Shipping, 2008-2018

5.2    Network of Motor Car Trade, 2018

5.3    Selected Car Ports on the Maritime Silk Road

5.4a    Developments in Container Trade and Shipping, 2008-2018

5.4b    Average Price for Containers shipped from China, 2008-2018

5.5    Network of World Container Trade, 2017

5.6    Regular World Container Shipping Lines, 2017

5.7    Selected Container Ports on the Maritime Silk Road

LIST OF TABLES

2.1 Top Ten Countries for Ship Ownership and Registration, January 2019

5.1 Top Seven Carrier Operators, 2018

5.2 Top Eight Container Shipping Companies and their Alliances, 2018

5.3 Top Seven Container Port Operators, 2018

5.4 Actual or Planned Container Port Expansion, 2014-2023

ADVANCE PRAISE OF THE BOOK

‘What makes the book engrossing and different from other publications on the subject is that it discusses future challenges for international trade and shipping against the backdrop of 2008 financial crash. It also places the rhetoric surrounding China’s role against the reality of seaborne trade. The book raises many questions for discussion and debate, such as whether the time has come to impose individual responsibility to save human kind from the tragedy of Commons.’ Prof. Amita Agarwal, Professor and Principal. Government College, Todaraisingh, Rajasthan, India.

‘Relying alternatively on trustful enthusiasm or alarmist criticism, the study of the Maritime Silk Road has widely lacked well-grounded, evidence-based contributions founded on actuality rather than expectations. The work of Richard Griffiths plays a substantial role in filling this vacuum: framing the Maritime Silk Road in all its complexity, this book is as honest as it is accurate in examining its characteristics, development and functioning from a comprehensive perspective. Griffiths departs from common engagements in the prediction of prospective scenarios, focusing instead his analysis on the actual reality of maritime commerce, the significance of ships and shipping and the role of ports and maritime facilities. The result is a much-needed account on one of the most critical global initiatives of contemporary times. Dr. Alessandro Albana, Assistant Coordinator of the EU-Asia Politics and Markets Studies Platform, University of Bologna, Italy.

‘This is a book about the maritime dimension of China’s New Silk Road. Combining high academic proficiency with long personal experience, Griffiths portrays the makings and workings of China’s assertive new global approach. Drawing on a wide variety of sources, the author has assembled a myriad of pieces that brings coherence to the otherwise fuzzy and mystifying bigger picture and allows the reader to zoom-in for a closer in-depth look. Prof. Griffiths provides a rare bird’s-eye view on this subject, enabling China- watchers, businesspeople, policymakers, lecturers, students, and everybody else to understand China’s current role in global maritime trade and its global ambitions for the 21st century.’ Prof. Alexander B. Alexiev, Professor of Chinese Philology, Department of Sinology, Center for Eastern Languages and Cultures, Sofia University ‘St.Kliment Ohridski’, Bulgaria.

‘The 21st Century Maritime Silk Road (MSR) has attracted far less attention than the land-borne traffic within the larger Belt and Road Initiative. Professor Griffiths has now in his third book on the grand and spectacular BRI successfully filled this information gap with a thorough and pertinent description of the shipping operators and the string of pearls of seaport terminals along the MSR. It is an impressive and detailed work with a lot of insightful and thought-provoking remarks. The book covers both the bulk products (iron ore, coal, oil and liquefied natural gas) which dominate the physical volumes and the car and container traffic which account for the largest values. With well-chosen and thought-provoking illustrations of separate vessels and ports, he manages to describe the nuts and bolts of the Asia-Europe trade without losing the big picture. It is in that respect a powerful contribution to a more balanced geopolitical debate whether China will rule the waves in the near future, or whether these concerns are greatly exaggerated.’ Prof. Claes G. Alvstam, Professor Emeritus of Economic Geography, University of Gothenburg, Sweden.

‘This is an eye-opening account that clearly addresses the policies, challenges, and controversies surrounding China’s ‘Belt and Road initiative’ as it relates to the maritime Silk Road. Griffiths untangles much of the hype surrounding the initiative with a concise, fact-driven analysis of the current and potential political, economic, and strategic outcomes for China and the rest of the world. This book is important reading for policy makers, academics and anyone interested in China’s new maritime Silk Road.’ Prof. Robert Antony, Emeritus Professor Chinese Maritime History, Guangzhou University, Visiting Scholar, Institute for Advanced Studies, Princeton University, USA.

‘Once again, Dr. Griffiths has made a major contribution to the scholarship on China’s Belt and Road Initiative. The Maritime Silk Road is much less studied than the overland trade and transportation routes or Belt, but Griffiths makes a convincing case for the crucial importance of the seaborne aspects of the Belt and Road. Illuminating and deeply researched, avoiding both hyperbole and demonization, The Maritime Silk Road offers a detailed and balanced perspective on China’s major and growing role in global maritime trade.’ Prof. Charles K. Armstrong, Professor of History, Colombia University, USA.

‘This book depicts the diversity of market forces, including ports, ships and the many stakeholders of seaborne trade, that construct a Chinese MSR in the making. By analyzing the movement of representative goods and energy traded along the sea routes, the author illustrates the complexity of those dynamics between producers and markets, and the importance of maritime governance in the inter-national trade realm. It is a refreshing view that leads us to think of the MSR as an economic reality through time and subject to important obstacles, well beyond the narratives that prevail in some western political circles - the Chinese benign, win-win solution of connectivity, and the geopolitical construction stressing the China threat, from port to naval base.‘ Dr. Ulises Granados, Associate Professor of International Studies, Mexico Autonomous Institute of Technology (ITAM.)

‘This book offers a fresh perspective on China’s Maritime Silk Road through a study of its three components: goods, ships, and ports. It expands readers’ horizons through a mapping of global ports’ competitions and buildings. It is truly eye-opening and thought-provoking!’ Prof. Baogang He, Professor of International Relations, Deakin University, Australia.

‘Professor Griffiths’ landmark study on the economic consequences of China’s ambitious project –MSR—just cannot be sidelined. This book is very eloquent, well-researched, and high spirited, and it indeed provides a provocative account of China’s soft power in relations to its foreign policy. The book is a primer for those seeking to understand China’s yearning for a perfect future through economic development.’ Prof. Mohd Aminul Karim, Professor and Dean School of Business, Independent University, Bangladesh (IUB).

‘In this sustained and well-supported study, R.T. Griffiths argues that it is time to move away from the China-centric accounts of the MSR, and to show the real world of different ships, ports and cargoes. This book stimulates an interest in the complex world of trade and shipping that carries so much of the world’s commerce. Griffiths is to be commended for encouraging us to reconsider the wider issues of ocean governance and challenge of the externalities created by the industry, now and in the future.’ Prof. Michael Kaeding, Professor of European Union Politics, University of Duisburg-Essen, Germany.

‘Unorthodox and attention catching books about transport, trade and economics are difficult to find. This unique, well-documented and scientific work, deeply rooted in today’s practical challenges of global supply chains reality, is an important effort to address and unravel the mystery of the President Xi’s Maritime Silk and Road concept. Prof. Griffiths combines strict logic and investigative imagination in a fact-based, easy to read, multidisciplinary analysis of China’s maritime activities in 21st century. His innovative idea - to analyze the Maritime Silk Road separately from a perspective of ports, vessels, trade, and supply chains history - has produced many unexpected and fascinating conclusions. This books book has a profound and stimulating impact on readers and creates atmosphere for deeper intellectual and practical reflection on the present and future of the Maritime Silk Road. It will help all the interested parties to better assess, prepare and accommodate China’s reentering the World economy. It is a great college book which should be read also by politicians and logistics executives.’ Prof. Adam K. Prokopowicz, President Institute of Global Innovation, Economics, and Logistics; Associate Director, US National Ports and Waterways Institute (ret).

‘This is a publication that adopts a longitudinal look at maritime trade, centered upon the chronological evolution of a historical pre-modern global trading route that reached most parts of the known world to China’s ambitious Belt and Road Initiative (BRI). Comprehensive in covering both cooperation and tensions/conflicts, the volume details topics ranging from maritime disputes to cooperation for a free and open Indo-Pacific region. It also includes technical aspects like shipping capacities, cargo trade and port activities/facilities. The eclectic diversity of sub-topics and comprehensive coverage makes this volume a useful reference guide to understanding the maritime component of BRI contextualized within global maritime trade.’ Dr. Tai Wei LIM, Associate Professor, Singapore University of Social Sciences.

‘This book provides a very relevant combination of current issues and historical developments, which allow the reader, also the non-specialised one, to get a good grip on the interests behind and motivations for the core maritime silk road elements. It divides the material well according to the relevant sub-trade markets that feature the Eurasian shipping business, so that the reader that is only interested in specific markets and commodities, can easily focus on those. All together, these individual chapters provide a rather holistic view on the opportunities and challenges surrounding the maritime silk road. It is a valuable addition to the scarce volume of publications on the modern silk road, and one of the very few that makes an in-depth analysis of individual trades, beefing it up with a lot of real-life facts and events., which makes the book very easy to read.’ Dr. Thierry Vanelslander, Professor of Transport, Logistics and Ports, Antwerp University, Belgium.

‘Departing from the standard treatment of the Maritime Silk Road (MSR) as a preconceived geopolitical/geo-economic strategy, this book treats the MSR as part of a real but complex and multifaceted world of different ships, ports and cargoes. It provides a comprehensive and insightful account of the many different contexts, issues and dilemmas associated with international seaborne commerce in general and with MSR in particular. It will be an indispensable source for all students of MSR and China’s Belt and Road initiative.’ Dr. Zhu Guichang, Professor of International Politics, Shandong University, China.

ACKNOWLEDGEMENTS

My thanks go first and foremost to my friends and colleagues at the International Institute for Asian Studies for providing such a stimulating context for my research. I would especially like to thank Chris Crellin, Nynke van der Heide, Tzy Jiun Tan and Violet Xiong who, at various times, have all helped me in my research. I have also benefitted from insights and data access from Alistair McConnachie from ASX Marine, Aris Christodoulou from the European Commission, Daniel Schäfer from DS Research, Fotis Poulides from BRS, Geoffrey Hureau from Cedigaz, Matthieu Neering from Dynamar B.V., Peter Sand from BIMCO and, finally, the staff of Drewry for access to their annual reports on Global Container Operators.

I would also like to thank the universities of Sichuan and Shandong and the Ocean University, Qingdao for allowing me to try out my ideas on their students. I also thank the authorities of the ports of Rotterdam and Shenzen for the tours of their harbours. Joyce and Wendy undertook the unenviable task of proof-reading my texts. Finally, I suppose, I should thank the diverse bunch of reprobates that I call my friends for stopping me from acquiring too many airs and graces.

Leiden, April 2020

ABBREVIATIONS

GLOSSARY

INTRODUCTION

The ‘maritime Silk Road’ (MSR) does not exist, and it probably never did. Ships had traded between Europe and Asia, and all ports in between, for at least two thousand years but, until the arrival of Portuguese, Dutch and English in the fifteenth and sixteenth centuries, no ships ever made the entire journey. It was the goods that travelled, passing through various entrepot ports that stretched along the coasts of Asia and into the Mediterranean. Moreover, it is also highly unlikely that much silk was involved in these transactions. Bolts of silk made their way to Europe overland and, even then, it was rarely the main object of trade. So why use it as the title for this book?

The main reason is that the memory of the Silk Road, with all the myths and legends associated with it, was revived by China’s President Xi Jinping in order to encapsulate the scope and range of a new policy initiative aimed at creating a more just, balanced, prosperous and peaceful world order in which China would commit its diplomatic and financial capital, as well as its engineering and construction skills. The initiative has become known as the ‘Belt and Road initiative’ (BRI) and it would be no exaggeration to say that it has subsequently framed China’s foreign policy. This branding of Chinese infrastructural investments as the embodiment of the spirit of the Silk Road has been pursued with relentless efficiency. Scarcely a speech by Chinese politicians and administrators passes without some reference to it…. Not a stretch of road or railway, nor power plant nor port could be financed or built without it being part of the BRI.

The BRI was also an initiative that seemed to invite a response from other nations, and to frame the nature of that response. This is especially true of policy-makers in the USA who have interpreted ‘China’s rise’ as a threat to its global hegemony. The amounts involved are mind-boggling, with Western estimates ranging from $1 trillion to $8 trillion.¹ Not surprisingly a debate began about the BRI’s true intentions. The kindest views ascribe the motivation to economic considerations, whether the need to find a vent for the national overcapacity in heavy industry, the need to secure a more profitable outlet for China’s large foreign-exchange reserves, a need to upgrade the value-added within the economy by exporting labour-intensive, low-value industries or a need to promote markets for Chinese goods abroad. The less generous academics view the BRI in terms of a strategic response by China designed to fill the void left by the diminution of US influence in Asia or a thrust to translate China’s growing economic power and reach into real political influence abroad.² Few observers seem ready to accept Chinese claims that the BRI was intended to promote global peace and prosperity.

One thing that is interesting in the debate is that it is almost exclusively formulated in terms of national government policy. Implicit in this assumption is that an ostensibly authoritarian regime actually controls all the instruments of the policy it espouses. Scholars assume that somewhere in the computers of the National Development and Reform Commission that oversees the BRI there would be a list of projects. Faith in this assumption faded somewhat when, at the second international forum on the BRI in April 2019, it was announced that in future there would be more control and vetting of ‘BRI projects’.³ At a conference in October 2019, a researcher from the Chinese Academy for Social Sciences (CASS), China’s leading think-tank, announced that the CASS has a database of 1,169 projects. This is lower than many had expected, but what he said next stunned the audience – the data-base had been compiled using web-crawler technology.⁴ If CASS has to trawl the internet like the rest of us, there is no central list!

In his address to the Indonesian Parliament in October 2013, President Xi recalled the famous