Speed bumps on Silk Road to China

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The geography is hostile. Desert with little vegetation and even less rainfall. Sandstorms. Temperatures of 104 degrees in the summer and 4 degrees in the winter. To the north lies another desert, and on three sides, the highest mountains in the world, traversed only by icy passes.

Locals call the area separating China from Europe and western Asia, the “Land of Death.”

The Silk Road braved this barren region. Its routes were traveled in the days before Christ and its demise was at least 600 to 700 years ago, but today, China’s land route to the West is being renewed, much like the rekindling of China itself.

Economic autobahn. China’s current appetite for economic growth matches the curiosity of Marco Polo who traveled the southern branch of the Silk Road with his merchant family in 1271.

However, much of what Polo subsequently wrote about the mysterious land was designed more for entertainment than for education, and perhaps China’s hype is also riddled with inaccuracies.

Foreign investors, the United States included, are enamored with dreams of China’s potential. No doubt, some dreams will become realities; others may not. According to Asia Times, more than $1 billion (U.S. dollar) of foreign direct investments enters China every week. One investment bank predicts China will become the world’s biggest economy by 2040.

New road. The USDA trumpeted news last week of a “very significant trading relationship in food and agriculture with China.”

U.S. Agriculture Secretary Ann Veneman said U.S. exports to China have tripled in two years, and she estimates that exports to China will soon total 10 percent of our overall agricultural exports.

“Clearly, China is a very important export market for American agriculture and it will continue to be so in the future,” Veneman said at a news conference April 21.

Speed bumps. Not so clear is whether the economic engine is running on solid fuel or fumes. After all, China remains a totalitarian state system.

“Unchecked overinvestment could easily fuel deflation down the line,” observes Manjit Bhatia, writing in Asia Times Online and drawing parallels to the Southeast Asian boom-then-bust in the late 1990s. Add accumulating debt and declining output and you hit a pothole.

Hidden bandits. An expert on China says this: “There are many distinctive worlds in one China.”

This is a road worth traveling, yes, but just as the Silk Road was lined with hidden bandits, this path is besieged by an opaque legislative, social and political climate. We can’t ignore the risks.

At its peak, explorers along the Silk Road selected the best route depending on the political climate of the time, writes Oliver Wild, a research scientist based in Japan who has written an extensive history of China’s trade route to the West.

It is that same shifting political climate that makes me a hesitant economic traveler to China today. It still requires crossing the “Land of Death.”

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