A ceremonial dragon greets the first train from Yiwu, China, as it arrives in Britain. Photo / Bloomberg
A ceremonial dragon greets the first train from Yiwu, China, as it arrives in Britain. Photo / Bloomberg
China is building a 21st century empire — one where trade and debt lead the way, not armadas and armies.
If President Xi Jinping's ambitions become a reality, Beijing will cement its position at the centre of a new world economic order spanning more than half the globe.
The most tangible sign of Xi's designs is the new Silk Road he proposed in 2013. That became the "Belt and Road" initiative, a mix of foreign policy, economic strategy and charm offensive, all nurtured by a torrent of Chinese money.
Xi calls it "a road for peace". Other world powers such as Japan and the US remain sceptical about its stated aims and even more worried about unspoken ones, especially those hinting at military expansion.
To check the reality of Belt and Road from the ground up, Bloomberg reporters visited five cities on three continents at the forefront of China's grand plan.
What emerges is a picture of mostly poor nations that jumped at the promise of Chinese-financed projects.
China has already outspent the post-World War II US Marshall Plan, measured in today's dollars. Within a decade, Morgan Stanley estimates, China and its local partners will spend as much as US$1.3 trillion ($1.98t) on railways, roads, ports and power grids.
"It's not for today. It's for mid-21st century China," says Nadege Rolland, Washington-based senior fellow for political and security affairs at the National Bureau of Asian Research.
Most of the proposed plans are infrastructure-based, such as a new deep-sea port in Myanmar and power lines in the Maldives.
But almost any overseas investment gets tagged as being part of the initiative: a train carrying Chinese sunflower seeds to Tehran, a new courthouse in Papua New Guinea, an irrigation system in the Philippines.
The growing web of trade routes, including the Silk Road Economic Belt and the Maritime Silk Road Initiative, now extends into at least 76 countries, mostly developing nations in Asia, Africa, and Latin America, plus a handful of countries on the eastern edge of Europe.
China's plans to build or rebuild dozens of seaports have sounded alarm bells in Washington and New Delhi: how many of those docks will end up hosting Chinese warships?
China has said it has no intention of using Belt and Road to exert undue political or military influence and that the initiative is designed only to enhance economic and cultural understanding between nations.
If that's the case, Xi will need to persuade the people who live along the length and breadth of his new Silk Road.
Yiwu, China
Nestled in the mountains of Zhejiang province, Yiwu is a marketplace like no other. A vast complex of five-storey buildings houses 75,000 booths selling 1.8 million kinds of goods across an expanse the size of 650 soccer fields.
Most of the thousands upon thousands of stalls specialise in single items — scissors, for example: scores and scores of different kinds of scissors.
A city of 1.2 million people, Yiwu got a big boost from Belt and Road. People from Beirut to Seoul and beyond have come to start businesses. Some 13,000 traders from around the world now live here.
Back in 2013, Yiwu's vast halls were almost deserted. Wholesalers and producers struggled with soaring manufacturing costs and the rise of online marketplaces.
Then came the railway. The first Europe-bound train pulled out of here in November 2014, heading to Kazakhstan and Russia, then through eastern Europe and on to Madrid — an 12,870km journey.
More routes have since opened to destinations including London, Amsterdam and Tehran.
Trains have cut the time to Europe by a third or more compared with ships. The return journeys bring European goods such as wine, olive oil and vitamin pills.
Rail freight accounts for less than 1 per cent of China's overall exports, is more expensive than seaborne trade and slower and less flexible than air cargo. But for cities such as Yiwu, and especially for those in western China even farther away from seaports, the train that Xi built has injected new life into their economies.
Hambantota, Sri Lanka
In a southern Sri Lankan jungle, Dharmasena Hettiarchchi plucks green chilli peppers. His grandfather tended the same patch of land when this island was the British colony of Ceylon.
Hettiarchchi says, "if a jeep with Chinese characters comes down the road, the whole village will gather in protest."
Hettiarchchi's village and the surrounding town of Hambantota have become a cautionary tale for Xi's Belt and Road aspirations. The idea was to take a quiet harbour visited by less than one ship a month and turn it into a modern, bustling seaport. It hasn't turned out so well.
After Sri Lanka elected Mahinda Rajapaksa as President in 2005, he began sprinkling development projects across the region. Long before Belt and Road was officially Chinese Government policy, Beijing was eager to lend a hand with loans.
Hambantota (population at the time 11,200) got a new port, international conference centre, cricket stadium and an airport that, despite all the staff on show, doesn't service a single scheduled flight.
Making anti- elephant fences in Hambantota, Sri Lanka. Photo / Bloomberg
To fund the projects, Sri Lanka's Government fell deep into debt. By the time Rajapaksa was voted out of office in 2015, more than 90 per cent of Government revenue was going towards servicing debt.
Last year, a new Sri Lankan Government basically handed the seaport over to China in return for US$1.1b. Under a 99-year lease, the Government gave 70 per cent ownership of the port to China Merchants Group, a state-owned company.
China Merchants has promised to turn the port into a major regional trading hub. But some local people have had enough of promises.
"All these huge projects are a waste," says Sisira Kumara Wahalathanthri, a local politician who opposes the current Sri Lanka Government. "No ships are coming to the port. No flights are coming to the airport."
At an ancient Buddhist temple, head monk Beragama Wimala Buddhi Thero says the area is "becoming a Chinese colony".
Chilli farmer Hettiarchchi is wary of the surveyors who've begun to appear in his neighbourhood.
He says the plan is for him to be relocated to make way for development.
But what Hettiarchchi could be losing can't be replaced easily or quickly.
Gesturing to a towering teak tree, the 52-year-old says, "a tree like this cannot grow within my lifetime".
Surrounded by desert in southwest Pakistan there's a stone arch bearing a single name, Al-Noor. Farther along a desolate road, a black shipping container has been painted to tell you where you are: Gwadar Creek Arena.
Al-Noor and Gwadar Creek are planned housing developments — emphasis on "planned". There's nothing here yet. The same goes for White Pearl City, Canadian City, Sun Silver City and other residential tracts on the drawing boards.
What you see are lots of billboards, as speculators and developers carve out future projects on the sun-blasted outskirts of an old fishing village named Gwadar.
Gwadar is a city of dreams made in China. Beijing is pouring money into highways and roads, a hospital, a coal-fired power plant, a new airport, a special economic zone along the lines of Shenzhen and, crucially, the port.
A redevelopment project was begun in the 2000s, under then-military ruler Pervez Musharraf, but it foundered. In 2013 the Chinese arrived. Beijing is financing the lion's share of the US$1b in spending on the port and infrastructure elsewhere in the area.
Gwadar is so remote that its electricity comes from Iran, 100km down the coast. In recent years, the village has become a city of 100,000 or so, although it is still mostly a gigantic building site.
It's hard to imagine Gwadar as the sea terminus of a road-and-rail trade link stretching 4800km to eastern China. Most of the route would traverse some of the world's most inhospitable — and economically barren — mountains and deserts.
A sign welcomes the Chinese at Gwadar, in Pakistan. Photo / Bloomberg
Some say that military expansion is the real driver of the activity in and around Gwadar.
Zahid Ali sees things very differently. Desperate to find a way to pay off his debts, he asked a client if there was any job in Pakistan that paid 50,000 rupees ($615) a month. Go to Gwadar, the customer replied.
That's what Ali did. He started as a labourer, learned steel work and was soon earning 55,000 rupees a month. Now, having learned a little Chinese, he's been promoted to supervisor.
"It's good that the Chinese came here," he says. "A lot of people have gotten jobs who were jobless."
One of the first things a visitor to Gwadar notes is that there are more soldiers on the streets than police — an added precaution against the threat of terrorism across Pakistan.
Security is tight because Chinese wouldn't come otherwise, says a Pakistani army officer who declined to be named because he's not authorised to talk to the news media.
Good, says Naseem Ahmed, 25, who works for the provincial government. "Security is great here. You can be out at 3am in the morning, and there is no fear."
Mombasa, Kenya
Astride his boda boda, or motorcycle taxi, in Mombasa, Simon Agina is counting containers on a passing train heading to Nairobi: "... 82, 83, 84."
There are plenty of containers back where those came from — and much more besides.
The port of Mombasa, Kenya's import lifeline, is a heaving mass of traffic of all sorts.
In 2011, with the ancient British colonial-era Mombasa-to-Nairobi narrow-gauge railway falling into disrepair and Beijing in the market for African investments, Kenya made its move. It agreed to let China finance and build a standard-gauge railway at a cost of US$3.8b.
Atanas Maina, managing director of Kenya Railways, says more than 30,000 Kenyans were employed directly on the project, run by China Road and Bridge; an additional 8000 worked for subcontractors.
The first paying passengers rode the 470km line in June last year.
Like any major infrastructure project, the rail line has its detractors. The economist and Government critic David Ndii says it's not commercially viable, while a Kenyan newspaper, the Standard, accused China Road and Bridge of "neo-colonialism, racism and blatant discrimination" in its treatment of local employees.
The train that pulls out of Nairobi Railway Station each morning at 8am, with noteworthy punctuality, is called the Madaraka Express. In Swahili, "madaraka" means power or responsibility; Madaraka Day, a national holiday, celebrates self-rule.
China financed 90 per cent of the railway's cost. And the giant Chinese Communications Construction will operate it for its first decade.
The area around the station thrums with activity as construction pushes ahead on houses, container yards and warehouses.
Along the route to Mombasa, gleaming steel-and-glass stations stand out against clusters of tiny houses with rusty corrugated iron roofs and mud walls.
The new track, the trains, the stations — "you don't see that kind of infrastructure development in this part of the country," says Agina, the boda boda driver. "This is amazing."
Piraeus, Greece
It was 2016. Greece was in the vice-grip of the European sovereign debt crisis. Its neighbours and creditors were pressuring the Government to enforce austerity. So Greece sold control of the Piraeus seaport to China Cosco Shipping, a Chinese state-owned enterprise.
The deal began years before the Belt and Road project was announced — in 2009, Cosco won a contract to run part of Piraeus' container business — and was then folded into the initiative.
The port deal marked China's gradual takeover of one of Europe's oldest and most important sea gateways. Piraeus has been Athens' port and shipyard for about 2500 years.
From his office, Ioannis Kordatos, managing director of the Hellenic Welding Association, can see the wall of containers stacked high at Pier II, Cosco's original beachhead here.
"If Cosco magically disappeared tomorrow, it would be a huge loss," says Kordatos.
"What matters isn't that they are Chinese, but that they are a private company doing serious business in the area."
Very serious business.
The 2016 deal gave Cosco a 67 per cent share of Piraeus Port Authority for €368.5m.
Since Cosco became involved, Piraeus has risen to be Europe's seventh-busiest container port; 10 years ago, it wasn't in Europe's top 15.
Cosco plans to upgrade the ferry and cruise ship terminals, adding a shopping mall and new hotels. Farther away, Cosco's investments could help revive Greece's rust-belt industrial heartland.
A planned logistics centre, linked to the port by rail, could become a staging area for goods headed north through the Balkans.
Giorgos Gogos, general secretary of the Piraeus Dockworkers Union, says he's worried about the impact of a Chinese state-owned enterprise on labour relations and the local community.
"We think it's a mistake for infrastructure like this to leave the state," he says.
"The Chinese have their own way of operating."
For all the concern about the potentially corrosive effects on Greece's economy and sovereignty — and about Beijing's ulterior motives — Cosco's incursion into Piraeus has something in common with Beijing's other investments along the vast Belt and Road: China put its money where others wouldn't.
