China's New Silk Road: Troubled River Waters and More

Reuters reports China's Silk Road push in Thailand may founder on Mekong River row:

China's plan to blast open more of the Mekong River for bigger cargo ships could founder on a remote outcrop of half-submerged rocks that Thai protesters have vowed to protect against Beijing's economic expansion in Southeast Asia.

Dynamiting the Pi Long rapids and other sections of the Mekong between Thailand and Laos will harm the environment and bring trade advantages only to China, the protesters say.

"This will be the death of the Mekong," said Niwat Roykaew, chairman of the Rak Chiang Khong Conservation Group, which is campaigning against the project. "You'll never be able to revive it."

Niwat said blasting the Mekong will destroy fish breeding grounds, disrupt migrating birds and cause increased water flow that will erode riverside farmland.

Such opposition reflects a wider challenge to China's ambitious "One Belt, One Road" project to build a modern-day Silk Road through Asia to Europe.
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The Mekong River originates in the Tibetan plateau and cascades through China and five Southeast Asian countries.

China has built a series of dams along its stretch of the river that Thai campaigners say has impacted the water flow and made the regional giant hard to trust.

You can read that "modern-day Silk Road" stuff as China seeking routes around its "first island chain" problems and sea lines of communication issues in addition to seeking new markets for Chinese made goods.

China seems convinced that problems can be ironed out if enough money is thrown into the project.

Backgrounder from the Council on Foreign Relation on the "new Silk Road" - Building the New Silk Road:

China has multiple reasons for pursuing the New Silk Road. Xi has promoted a vision of a more assertive China, while the "new normal" of slowing growth puts pressure on the country’s leadership to open new markets for its consumer goods and excess industrial capacity. Promoting economic development in the troubled western province of Xinjiang, where separatist violence has been on the upswing, is another major concern, as is securing long-term energy supplies.

China's strategy is conceived as a two-pronged effort. The first focuses on overland infrastructure development through Central Asia—the "Silk Road Economic Belt"—while the second foresees the expansion of maritime shipping routes through the Indian Ocean and the Persian Gulf—the "Maritime Silk Road."
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In 2013, Xi told an audience in Kazakhstan that he wants to create a vast network of railways, energy pipelines, highways, and streamlined border crossings, both westward—through the mountainous former Soviet republics—and southward, toward Pakistan, India, and the rest of Southeast Asia. Such a network would also expand the international use of Chinese currency, the renminbi, in transactions throughout the region, while new infrastructure could "break the bottleneck in Asian connectivity," according to Xi. The Asian Development Bank, highlighting the need for more such investments, estimates that the region faces a yearly infrastructure financing shortfall of nearly $800 billion.

Xi subsequently announced plans for the maritime silk road at the 2013 summit of the Association of Southeast Asian Nations (ASEAN) in Indonesia. To accommodate expanding maritime trade traffic, China will invest in port development throughout the Indian Ocean, in Bangladesh, Sri Lanka, the Maldives, and Pakistan.

And a look at the expensive project from Joshua Eisenman and Devin Stewart at Foreign Plolicy China’s New Silk Road Is Getting Muddy:

But rather than hand-wringing over TPP’s ignominious failure, Asia watchers should turn their attention to China’s unprecedented $1 trillion strategic gambit: the Silk Road Economic Belt and the 21st-Century Maritime Silk Road, aka “One Belt, One Road” (OBOR). Launched in 2013 as President Xi Jinping’s signature initiative, OBOR holds great promise, as well as potential pitfalls, for both China and its neighbors.

OBOR is a game-changing plan to bring about the next stage of globalization, a Sinocentric vision that harks back to the ancient Silk Roads — but this time on Beijing’s terms. The goal is to create a new economic “belt” of connective infrastructure westward into Eurasia and a new maritime “road” connecting China to Southeast Asia, South Asia, the Middle East, and Africa. Examples of OBOR projects include a railway linking China to Laos and another one through Mongolia and Kazakhstan; gas and oil pipelines through Turkmenistan and Myanmar; road and port development in Sri Lanka; and the cornerstone $46 billion China-Pakistan Economic Corridor (CPEC), which encompasses highways, pipelines, coal-based electricity generation, and the Chinese-operated Gwadar port.
OBOR is primarily a “build it and they will come” initiative. Rather than improving the host country’s industrial or productive capacity, it expands and strengthens transportation and energy arteries, including ports, rails, communications, electricity, and pipelines. It promises to stimulate the ailing Chinese economy in the short and medium terms through construction and telecoms contracts and capital goods provision while in the long term opening new trade routes so Chinese products can fill store shelves in OBOR countries for decades to come.
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OBOR presents significant domestic economic and political risks for China. There is real tension between the Chinese government’s drive to invest in riskier developing countries via OBOR and private capital’s flight to safety amid a domestic economic slowdown and growing protectionist fears. Just as Beijing is pushing OBOR on its state-owned enterprises, private Chinese investors are finding ever more ingenious ways to offshore their resources in safer assets, particularly U.S. real estate. Beijing has responded with increasingly pervasive capital controls, but technology has made these difficult to enforce.

More than a decade ago, the United States called on China to be a “responsible stakeholder,” both in its neighborhood and beyond. The years since have seen the rise of a new, and increasingly assertive, Chinese foreign policy. OBOR is a big part of Beijing’s new approach and a potential harbinger for a new stage of Sinocentric globalization. It is a grand vision with wide-reaching political consequences both at home and abroad. If it succeeds, China will become the unquestioned Eurasian hegemon. But Beijing’s efforts likewise carry enormous economic and political risks that Chinese policymakers know they must mitigate if President Xi’s initiative is to live up to its billing. The question is whether OBOR can overcome the logistical, political, security, and financial challenges identified above — or be thwarted by them, losing hundreds of billions of dollars and creating a slew of disgruntled debtor neighbors with landscapes scarred by white-elephant projects. Only time will tell.

From 2016, Alexandra Viers at Cipher Brief Evaluating China's New Silk Road:

Below these surface level gains, Beijing hopes the land based Silk Road Economic Belt will lessen China’s dependence on South East Asian shipping lanes for access to energy and raw materials from the Middle East and Africa. Beijing knows that these shipping lanes will play a critical role in any U.S. led military strategy towards China.

The China-led Asian Infrastructure Investment Bank (AIIB) will serve as the funding arm of OBOR, which has a projected investment of $1.4 trillion. Spanning from Europe to Australia, 57 countries signed on as Potential Founding Members of the AIIB in September 2015, with Japan and the United States refusing to join.(emphasis added)

From 2015, Anthony Kleven at the Diplomat, Is China's Maritime Silk Road A Military Strategy?:

Did Xi Jinping just acknowledge that the Maritime Silk Road has, in fact, a strong military dimension?

That seems to be the case, following a joint declaration made with his Djibouti counterpart, Ismail Omar Guelleh (IOG), on the sidelines of the Forum on China Africa Cooperation (FOCAC) in Johannesburg. According to Xinhua, the usually guarded Xi welcomed “Djibouti’s participation in developing Beijing-proposed 21st-century Maritime Silk Road in proper ways.”

However, in light of last week’s bombshell that China has chosen this sleepy East African nation to house its first military base, giving such a warm embrace to Djibouti’s “proper” participation in the Maritime Silk Road is, quite frankly, startling.

So, yes.

The Chinese have been reading Mahan:

Mahan was one of the foremost proponents of the “vigorous foreign policy” referred to by Turner. Mahan believed that the U.S. economy would soon be unable to absorb the massive amounts of industrial and commercial goods being produced domestically, and he argued that the United States should seek new markets abroad. What concerned Mahan most was ensuring that the U.S. Government could guarantee access to these new international markets. Securing such access would require three things: a merchant navy, which could carry American products to new markets across the “great highway” of the high seas; an American battleship navy to deter or destroy rival fleets; and a network of naval bases capable of providing fuel and supplies for the enlarged navy, and maintaining open lines of communications between the United States and its new markets.

Excellent Read: "China and Asian Maritime Security" Testimony of Heritage's Dean Cheng Before the HouseSubcommittee on Asia and the Pacific Committee on Foreign Affairs

You ought to read this testimony on China and Asian Maritime Security, which combines Chinese history and current strategy. Some good excerpts:

The rise of Chinese maritime capabilities makes it the first new maritime power to take to the seas since the end of the 19th century. Unlike Wilhelmine Germany or the Soviet Union, both of which fielded substantial navies, the People’s Republic of China (PRC) actually relies upon the oceans for much of its economic activity. This dependence upon the sea also constitutes a radical break from that country’s millennia of history; the imperial treasure fleets of Admiral Zheng He were not nearly as central to Chinese power and livelihood. Thus, the transformation of the PRC from a land power to a maritime one constitutes one of the more fundamental changes in the international scene, certainly since the end of the Cold War, and arguably over the past century.
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This growing dependence on the sea to operate various parts of its economy and maintain its society makes China unique. China is arguably the first continental power that is truly dependent upon the sea. Unlike Napoleonic France, Wilhelmine Germany, or the Soviet Union, China cannot look upon the sea as an optional area of operation, but as a vital area of national interest.
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By contrast, since the rise of Deng Xiaoping in the 1980s and the diversification of China’s manufacturing base, China’s economic center of gravity has shifted toward the the coast. This has allowed such economic centers as Shenzhen, Shanghai, and Pudong to more easily access global trade routes for both imports of raw materials and exports of products. This has meant, however, that China’s recent economic development is also more vulnerable to potential attack from the sea.
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An essential part of political warfare is legal warfare. From the Chinese perspective, legal warfare is not the “misuse” of the law, but rather, the exploitation of the law in support of broader political ends.
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Such efforts also exploit not only the law, but also law enforcement agencies. For example, the use of the China Coast Guard (CCG) to enforce Chinese claims over the Senkakus, the Spratlys, and Scarborough Shoal not only serves to limit the potential for escalation, but also is a political statement. China is using law enforcement vessels to enforce its laws over its territories, reinforcing its claim to these various features.
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As important, China’s conception of naval operations has steadily expanded. From “near-shore operations,” which roughly equate with coastal and brown-water duties, it has shifted emphasis to “near-sea” and now “far-sea” operations, roughly comparable to green water and blue water activities, respectively. These operations are not necessarily power projection–oriented, however.

The shift of China’s economic center of gravity to its coast, as noted earlier, means that Beijing is at least as interested in keeping foreign air and naval forces away from China’s shores. Indeed, Chinese anti-access/area denial (A2/AD) activities should be seen at least partly in this light. Given the range of modern precision-guided munition weapons, however, keeping an adversary away from China’s shores means being able to undertake A2/AD activities at ranges of a thousand miles or more.

To this end, China is likely to employ not only traditional naval forces, but civilian and commercial assets, in unorthodox ways that embody “hybrid” approaches to warfare. China’s fishing fleets, for example, include a substantial number of naval militia assets, essentially civilian vessels that respond to government (including military) assignments as necessary. Such forces could be exploited to provide everything from intelligence gathering to early warning for China’s navy.[16] CCG vessels, some of which were cascaded from the PLAN, can do the same. More disturbingly, China has reportedly installed radars typically found on patrol vessels on some of the oil rigs in the East China Sea.[17] This further blurs the line between military and civilian assets, and suggests a new means by which oil rigs can serve as “mobile national territory,” while further expanding China’s maritime situational awareness envelope.
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The physical space of the South China Sea region itself is an invaluable resource, as it provides a strategic buffer. This is especially important as the PRC has built up the island of Hainan in the northwest corner of the South China Sea. Chinese military engineers have constructed a dock to handle its aircraft carriers, dedicated port facilities, including tunnels, for submarines, and a number of military airfields.[20] (The American EP-3 that collided with a Chinese fighter in 2001 crash-landed at one of these airfields.) In addition, China’s newest spaceport is located on Hainan Island, where it will be lofting future manned Chinese space missions. It is clearly not in the Chinese interest to allow foreign, and especially American, naval capability to make close approaches to Hainan.

Instead, it is in China’s interest to make the South China Sea as forbidding as possible, especially for American submarines, which remain qualitatively superior to their Chinese counterparts. It is therefore not surprising that there appears to be an effort to create a massive sonar surveillance network that would cover the region.[21] Indeed, military bases on the artificial islands China has built in the Spratlys, as well as in the Paracels and perhaps at Scarborough Shoal and Macclesfield Bank in the future, could provide convenient sites for processing data, and also for basing anti-submarine warfare aircraft and helicopters. Such deployments would make the deployment of American submarines into those waters far riskier.

Really, read it all.


Hat tip to James Kraska

U.S. Navy Office of Naval Intelligence Worldwide Threat to Shipping (WTS) Report 16 August - 14 September 2016

U.S. Navy Office of Naval IntelligenceWorldwide Threat to Shipping (WTS) Report 16 August - 14 September 20... by lawofsea on Scribd

The Great Nicaragua Canal Project: "On Hold"

Blue line is proposed canal, red line is Costa Rica border

That great big alternative to the Panama Canal seems to have run into some trouble, as reported here:

Construction work on a controversial canal that would link the Pacific Ocean with the Caribbean via an overland route across Nicaragua and through Central America’s largest lake has been postponed until late 2016, says the company behind the project.

China-based HKND Co. issued a statement Wednesday saying that “the construction of locks and the big excavations will start toward the end of 2016,” adding that “the canal’s design is currently being fine-tuned.”
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The project has drawn sharp criticism from scientists over its potential impacts on Lake Nicaragua and delicate coastal ecosystems. Local communities concerned about their farmland have also protested the project, while some policy experts have raised doubts about its financial viability. China’s economic downturn and the worldwide collapse in commodity prices, have further undercut enthusiasm for the project.

It does have, on the other hand, an Nicaraguan government "environmental permit" so it has that going for it.

Not to be too cynical, but a $50 billion project would seem to offer potentially large opportunities for, shall we say, "kickbacks" for such permit approval. Follow the money, as they say.

Of course, there is also this "$50bn Nicaragua canal postponed as Chinese tycoon's fortunes falter" as the UK Guardian headline reads:

The mega-project – which would be the world’s biggest earth-moving operation – has proved controversial since it was agreed by Nicaraguan president Daniel Ortega and Wang Jing, the Chinese telecoms mogul who subsequently registered HKND.

Nicaraguan officials say the investment will boost the economy and raise living standards in the second-poorest nation in Latin America. But conservationists have warned that the 178-mile canal will damage Lake Nicaragua – the biggest freshwater source in Central America – and infringe upon protected areas and indigenous territory.

Well, I suspect some people's living standards might be raised, but unless they practice "trickle down" economics in Nicaragua, it might not be those of the displaced proletariat.

At any rate there are some real questions, some raised in this Journal of Commerce article "Consulting firm exit raises Nicaragua Canal feasibility questions":

Nicaragua’s government has long claimed that an economic feasibility study by blue-chip U.S. consultancy McKinsey & Co. is crucial to enticing Western investors to its $40 to $50 billion canal project. However, it has been confirmed that McKinsey has not worked on the Nicaragua Canal project since 2014, raising new questions about the Nicaraguan government’s public statements as well as the project’s chances of attracting Western investors.
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A confidential source who claimed to have inside knowledge of McKinsey’s work with HKND told a very different story about the economic feasibility study. McKinsey did initially consult on the project, made repeated requests for payment, and ultimately received payment from HKND around June 2014, the source said. Shortly after being paid, McKinsey informed HKND in writing that it would discontinue working on the project, said the confidential source.

Maybe if they had a 5-year plan.

And it is a nice strategic location. See the above map.

Of course there is that volcano issue in Nicaragua. You know, like the one that may have caused the U.S. to develop the Panama Canal. See here. Of course, the 5 active (out of 50) Nicaraguan volcanoes make for a nice tourist attraction, including "Volcanic Obsession" tours.

Viva.

UPDATE: Report of volcanic activity in early December 2015 "Nicaragua volcano belches ash, causes fears of eruption":

A large volcano in western Nicaragua, Momotombo, yesterday belched ash and gas up to a kilometre (3,000 feet) in the sky, sparking fears that the giant could be waking from a fitful 110-year-old slumber.

Perfect.