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Mr. Sebastian Webel
Mr. Sebastian Webel

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Pictures of the Future
The Magazine for Research and Innovation
 

Belt and Road Initiative

High Tech, Not Silk

Skyline of Chongqing: The Belt and Road Initiative is one of the largest projects of the century – building a network of railroads and shipping lanes across Asia, Africa, Europe, and Oceania.

China’s “Belt and Road Initiative” is reviving the concept behind the ancient Silk Road. The Initiative’s goal is to develop cross-border trade corridors that benefit around 90 countries. Siemens is supporting this gigantic infrastructure project with internationally proven solutions and local know-how.

For 2,000 years, the network of routes known as the Silk Road linked Europe and Asia. Along caravan trails totaling more than 6,400 kilometers, merchants, scholars, and soldiers transported silk, wool and gold, as well as religions, cultures, and inventions, from Xi’an in China to the Mediterranean Sea. Today only ruins and a few paved highways between Pakistan and Xinjiang still testify to the course of these trade routes. The Silk Road lost its economic significance a long time ago – but five years ago the legend was revived.

In October 2013 the President of China, Xi Jinping, unveiled an initiative called “One Belt, One Road” during his state visit to Kazakhstan. He was referring to the construction of a land corridor running from China through Central Asia to Europe (the Economic Belt) and a sea route (the Maritime Road) connecting the up-and-coming economies of Southeast Asia. Since then, China’s central government and almost all of the country’s provinces, as well as the mainly state-owned Engineering, Procurement, and Construction companies (EPCs), which specialize in major projects, have been developing strategies for implementing the initiative. Nine Chinese sovereign wealth funds are among the sources financing the megaproject.

Mixed Responses

Today, around 90 countries already join the Belt and Road Initiative (BRI) so that they can participate in the planned investments and thus realize their own overdue infrastructure projects, as well as gaining greater access to increasingly globalized markets. East Africa was part of the Silk Road in antiquity, and it has been obvious – at least since Latin America’s official entry into the BRI during the World Economic Forum in Davos in January 2018 – that in the 21st century the narrative of the Silk Road will become broader, more inclusive, and more comprehensive.

Around 90 countries already join the initiative so that they can gain greater access to increasingly globalized markets.

Nevertheless, international reaction has been divided. Major regional powers such as the EU, Russia, and India regard the BRI critically or reject it completely because they suspect China of having geopolitical and industrial-policy goals. But many recipient countries welcome the initiative – and this attitude is reflected in the more than 80 bilateral agreements known as government-to-government Memorandums of Understanding (MoUs), for example.

Connecting the world – step by step: Bridge construction across the Indus River along the Karakorum Highway in Pakistan.

A Model for a New Global Trade Order

However, political agreements and statements of intent are only a framework of the emerging Silk Road project. For China as well as the third-party countries that are being supported by Chinese investments, the real key to success for the Belt and Road Initiative is the concrete projects that are transforming ideas into reality. If these projects have been planned sustainably, they will create urgently needed infrastructures for the partners’ mutual advantage.

Siemens is one of the companies that has committed itself to this goal. In September 2017 it established a company-wide Belt and Road Task Force. This step was preceded in May 2017 by the first official Belt and Road Forum in Beijing, to which China’s President Xi invited high-ranking representatives of governments and companies. One of the invited guests was Siemens CEO Joe Kaeser. In his presentation, Kaeser outlined how Siemens can act as a builder of bridges between different worlds. That’s because it is a renowned partner of China and has operated there for 145 years. In addition, it possesses an unequaled understanding of the local markets that are part of the BRI. After returning from Beijing, Kaeser expressed his belief that the BRI initiative has the potential to become a model for a new world trade order. He added that Germany and companies such as Siemens must become actively involved in it so that they can move along this path to the future together with China – rather than against it, as many have declared.

One Trillion Euros

The Belt and Road Initiative offers Siemens tremendous opportunities. After all, the countries that are included in the initiative are home to around 70 percent of the world’s population and generate more than 50 percent of the global gross domestic product. With the help of the new Silk Road initiative, global GDP can be expected to substantially increase. Research by the Siemens BRI Task Force has revealed that approximately €1 trillion in investments will flow into many major infrastructure projects from China alone by 2025. And that’s “only a conservative estimate,” comments Cedrik Neike, the Siemens Managing Board member responsible for Asia and the global Belt and Road Task Force.

After all, the countries that are included in the initiative are home to around 70 percent of the world’s population.

Neike adds that the construction of physical connections such as roads and railroad lines, which many people associate with the BRI, is only the beginning. “The initiative becomes really interesting mainly when new or growing cities, airports, and industrial centers are built along these new trade routes,” he explains. “That’s because they then have to be sustainably electrified, efficiently automated, and provided with medical services. Siemens can help them in all of these areas.” Last year, when he spoke of a digital Silk Road with smart cities and artificial intelligence, Xi Jinping nurtured the hope that a digital ecosystem will be generated around the project’s physical infrastructures. Siemens believes that this area, where it regards itself as a technological pioneer, represents the real future of the Belt and Road Initiative.

Witness of passing time: Turpan, the hottest city in China, is an oasis in the desert and was an important stop on the ancient Silk Road.

A Builder of Bridges Between Worlds

On the map, the “new Silk Road” winds its way through many countries that have a great deal of catching up to do in terms of building their infrastructure. Investors from the West often ignore such countries for many reasons. As a result, these countries are at risk of failing to connect with the globalization process. Financing through the Belt and Road Initiative can help them in this regard, but it must be implemented in a way that offers genuine long-term added value for everyone involved.

According to Neike, that can happen only through cooperative partnerships between equals. Siemens has an excellent reputation in all of the BRI countries, he adds – not only because of its state-of-the-art technology but also, and above all, because of its ongoing local involvement in them, which in some cases stretches back over more than a century. “This is a big advantage that only a few companies possess, because these countries know that Siemens also cares about sustainability, environmental protection, training programs for local employees, and long-term service,” he says. “We often hear people say that if Siemens is there making sure that sustainable added value is being generated in the country, that’s okay.”

In order to play its role as a builder of bridges between different worlds even more effectively, Siemens will soon open its own Belt and Road office in Beijing. In addition, in early June it will stage its own Belt and Road International Summit in Beijing, where representatives of the Chinese government and economy will talk for the first time with their partners from BRI countries about models for future cooperation along the new Silk Road. “Connect, Create, Collaborate” will be the motto of the event – a fitting credo for an initiative that is truly global in scope.  

Bernd Müller
Picture credits: from top: 1. Picture Getty Images/iStockphoto/onlyyouqj, 2. Getty Images/iStockphoto/pulpitis; Picture gallery: Picture 1: Getty Images/Visual China Group, 2: Getty Images/China Span RM, 3: Getty Images AsiaPac; 3. Getty Images/Moment Editorial/Francois-Olivier Dommergues