If you looked on a globe and found the most
remote, landlocked point, this is where you'd end up. And it's near this spot where Kazakhstan and China have built a giant,
multi-million dollar landport, economic zone and border
towns entirely from scratch. Their goals: to lure
manufacturers to the area that might want to take advantage of an overland shipping route to Europe, establishing Kazakhstan as a logistics and manufacturing hub. And to strengthen an economic partnership that's been decades in the making. But on the China side, in the heavily policed Xinjiang province, known for its detention of Muslim Uighurs, it isn't proving to be the
ideal business environment. In the early '90s people
could travel without visas. Yeah, but very quickly it finished. And now it's difficult for Chinese to get visas to Kazakhstan, and it's difficult for
Kazakhstanis to get visas to China. And now with what's happening in Xinjiang, it's becoming, you know,
even more problematic. So can money alone attract businesses to a route so far from the
beaten track of global trade, where geopolitical tensions run high? Khorgos is on the Chinese-Kazakh border near an area that geographers refer to as the Eurasian point of inaccessibility. This is literally the middle of nowhere by definition. It's one
of the furthest places from any major ocean. We have satellite imagery
of that area in 2010 and there's nothing there. It's barren steppe. You flash forward seven years, and you see this gleaming
infrastructure that's there. If everything goes to plan, it will be the largest
dry port in the world, but the port itself is only
a small piece of the puzzle. They have not only new train track but also facilities that
are set up to transfer cargo from the Chinese gauge
track, which is more narrow, to the former Soviet
track, which is broader. They also have a special economic zone, and they've set out an area that they hope will be developed into manufacturing facilities. And they even have a town
that they're building near this that is
supposed to house workers. On the China side, a
town of 100,000 people, called Korgas, has been
built in just six years. These new towns, train routes and facilities are what
China and Kazakhstan hopes is the start of
a major rush out west. But so far, it's not attracting
clients as they'd hoped. Although there has been a steady increase, experts say it's due to heavy subsidies given by the Chinese government to companies that use
the new train routes. And were those subsidies to be taken away, I think you would see
some of the usage go down in those routes. We also haven't talked about the fact that there's a lot less
coming back from Europe just given the trade imbalance. And that's a structural
challenge that these routes face. Because China exports so much more than it imports, trains
often return empty. And with border crossings,
different rail gauges and political issues not
encountered on maritime routes, the majority of companies using sea or air are unlikely to switch to less predictable and significantly more expensive
overland freight shipping. So, I think last year,
Khorgos had 160,000 TEU, which are, you know,
think of it as containers that are moving through there. And to put that into perspective, Shanghai, which is the
world's busiest port, had 43.3 million. 270 times what Khorgos is doing. Although it doesn't appear to be a great investment by China, that's not the whole picture. Khorgos has become a highly
publicized flagship project of Xi Jinping's One Belt,
One Road initiative. Promoted as a reopening
of the ancient Silk Road that transported goods
overland from China to Europe starting from the 2nd century BCE. Including Khorgos, the initiative promises to
invest over US$1 trillion dollars in nearly 140 countries and organizations. Xi hopes that by extending credit and creating a network of
economic dependencies around Asia, Africa, Latin America and Europe, China will also be able
to punch at its weight in terms of global influence. Critics call this method "infrastructure imperialism" but it's also been called
"infrastructure diplomacy" and it's not the first
time it's been used. The Roman Empire famously
built roads and highways spiraling out from Rome
as a conduit for military and commercial activity. The U.S. Marshall Plan, in
the years after World War II, was an attempt to shore up
Europe to create a bulwark against the threat of Soviet imperialism and a big part of that was U.S. financing for the reconstruction of Europe after the devastation of World War II. Working together with the aid of the Marshall plan, the nations of Europe have come
a long way toward recovery. And some would argue, it worked. The countries were rebuilt, and in return sided with the U.S., limiting the influence
of the Soviet Union. Where China differs, I think, is on the pace and the
scale of the activity. The Marshall Plan was big, but $15 billion in spending, even back in 1948 wasn't that significant. China, on even the most modest estimate is spending hundreds
of billions of dollars and building not just in
Europe, but around the world. There's also an economic dimension. China has the world's leading
construction companies. It has enormous capacity to
produce steel and cement. China hopes to export
its production capacity, creating new markets and new
profits for its businesses. The main question on economists' minds, will China's strategy of building first and finding demand later
ever lead to real growth? China follows a "field of dreams" strategy on infrastructure building. If we build it, they will come. If we go back in time
around 10 or 12 years and we think about one of
the main stories in China, it was the ghost town narrative. China had built enormous
amounts of real estate and there was no one living in it. And journalists in China traveled around and they saw cities in the
desert that were unoccupied, tower blocks where new
lights came on at night. What happened, though, was
that over a period of years with policy support, with incomes rising and
with continued urbanization, a lot of these ghost towns filled up. I think about Zhengzhou, for example, a ghost town 10 years ago,
now a thriving urban center. Beijing's hope for its
Belt and Road projects is that a similar dynamic will play out. They built early. They provided supply ahead of demand. Demand will catch up. And China is set to get something else out of all this, the development of Xinjiang, the country's largest
administrative region that borders Kazakhstan. One of the expressed goals for the Belt and Road
expressed by Chinese officials, was to develop Western China, and it was also to try to address some of the inequality that exists between Eastern China
and its coastal cities and Western China inland. That economic disparity, along with the government's
repressive policies against religious and cultural practices, has lead to clashes between the
local Muslim Uighur majority and the more well-off Han
Chinese who live in the area. By developing the economies
of Xinjiang and Kazakhstan, which share many cultural similarities, Chinese policy makers hope
to put an end to unrest in the region. The same communities live
on both sides of the border. We have a lot of Uighurs in Kazakhstan, we have a lot of Kazakhs, one million Kazakhs living in Xinjiang. So there are these connections. And Uighurs in Xinjiang, they have family links
with Kazakh citizens. We are Muslims. We eat the same food. So there are important and deep linkages. Xinjiang has a large Kazakh community, about 1.6 million people, while Kazakhstan has a
large Uighur diaspora with a population of around 261,000. This link could be an incentive for China to develop the region
and calm ethnic tensions by investing money in Kazakhstan. The main goal is to become one of the 30 most developed countries, which implies modernizing the economy, upgrading the economy,
diversifying it for sure. I would say quite a few
projects wouldn't be possible without China. Not only without Chinese money, but Chinese kind of belief in the usefulness of these projects. A year after the program was announced, President Nursultan Nazarbayev, announced their own infrastructure project called "Bright Path." This project works in tandem with the Belt and Road Initiative, a $9 billion domestic
economic stimulus plan to develop and modernize
roads, railways, ports, IT infrastructure, education
and civil services. And is necessary to lessen the
country's dependence on oil, which has seen a sharp decline since 2014. It has this natural resource wealth that is not going to exist forever. And I think in order to
make the most of that, they need to make investments
with an eye toward the future and what kind of economy
do they want to have? And I think they want more services, a little more manufacturing. All of those are goals
that you see in small ways in the planning around Khorgos. But it hasn't come without resistance. The shift towards China,
and away from Russia, has played into deep
anti-Chinese sentiments and fears of China that
date back hundreds of years. Kazakh nationalists
complain that their country, having gained independence from Moscow, now risks becoming a satellite of Beijing. And these fears, they are linked to the
territorial disputes that we had historically. In some Chinese textbooks, parts of the territory of Kazakhstan are considered part of
like historical China. And in fact, there was kind of this dual
jurisdiction of Kazakh lands. When the Kazakh government announced legislation in 2017 to let foreigners rent
land for long periods, protesters took to the streets to denounce what many saw as the start of a Chinese land grab. To make matters worse, worries
have grown in recent years as China has built a
sprawling surveillance state and internment-camp system to target its Turkic-Muslim
population, especially Uighurs. But now, over the past couple of years, Kazakhs also found themselves
inside these camps. So the public opinion got even more concerned with
what's happening in China and what they're doing to our co-ethnics. It's unclear how many people are in some sort of detention, but the U.S. State Department estimates more than 1 million people have been detained since 2017. China, who at first denied
the existence of the camps, is now doubling down on the need for them, and beginning to defend them as a vital weapon against terrorism. This has led the U.S. and EU to increase sanctions on companies who operate in the region. I do think that Western China exposes what is really a big contradiction in the Belt and Road. You know, the Belt and Road is advertised as something that's supposed
to increase connectivity between China and the world. ♪ The Belt connects the land ♪ ♪ The Road moves on the sea ♪ ♪ The promise that they hold ♪ ♪ Is joint prosperity ♪ You go into Western China and there are security
checkpoints everywhere. And, you know, you have
minorities who are being detained. It's abhorrent from an ethical standpoint, but it's also, in very practical terms, a horrible business environment. And so, you know, China has talked about
increasing connectivity and yet in this area, it's putting up barriers not only for the flow of goods and people, but also for data. The difficult business environment may be why Khorgos hasn't been met with the enthusiasm
governments had hoped for. And with the China-U.S. trade war, a controversial security law in Hong Kong and the global pandemic, China is signaling a
tougher stance elsewhere on the Belt and Road. The $62 billion Chinese-Pakistan
Economic Corridor has been scaled back amid Pakistan's increasing debt problems, while a major port deal in Myanmar was slimmed down from roughly
$7 billion to $1.3 billion. I think we're not really going to know how many white elephants are roaming along the Belt
and Road, until a bit longer. But we are now increasingly
in an economic environment where some of that, I expect, is gonna start bubbling to the surface. At this point it's unclear how much China is willing to spend to make the Khorgos dream a reality. Twenty years ago, it was
America, it was Europe, it was the World Bank that was funding infrastructure
development spending around the world. As the West has been rocked
by a series of crises and shifted the focus
of their economic policy back towards problems in
their domestic economy, a huge gap has been opened up, a huge infrastructure
funding and expertise gap. China is now moving into that space and on a project-by-project basis, there are successes
and there are failures. The larger picture, though, is that as China's
dollars continue to flow, as China's concrete continues to pour, China's influence continues to increase. ♪ The Belt and Road is how ♪ ♪ The Belt and Road is how ♪ ♪ The Belt and Road is how ♪ ♪ The Belt and Road is how ♪
