Chinese Provinces Aim to Find Their Place Along New Silk Road

Li Xueyong, Party Secretary of Jiangsu province, giving a speech at the 2015 Boao Forum on Jiangsu's role in the New Silk Road.

As Chinese President Xi Jinping’s New Silk Road initiative continues to build momentum, provincial governments are looking for ways to integrate their own economic plans with the national strategy and thus provide local companies and workers the benefits touted by Beijing. Xi’s promotion of the Silk Road Economic Belt and 21st Century Maritime Silk Road, also known as the “One Belt, One Road,” has been met with the rollout of the $40 billion Silk Road Fund and $50 billion Asian Infrastructure Investment Bank, plus many other smaller mechanisms for financial support. Capitalizing on this funding and related trade and business opportunities is on the minds of provincial leaders as they work to ensure continued economic growth and employment during China’s economic slowdown.

The long-awaited official plan for the “One Belt, One Road”—Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road—was released on March 28 by the National Development and Reform Commission (NDRC), the Ministry of Foreign Affairs and the Ministry of Commerce with State Council approval (NDRC, March 28). The nearly 9,000-word document had a specific section detailing the role to be played by China’s regions, listing 18 provinces and assigning them a specific title while also providing some examples of how their economic projects fit within the overall New Silk Road framework. Furthermore, CCTV coverage of the report showed the first official map that included the southern part of the MSR to Southeast Asia (Guancha, April 13).

The biggest winners are clearly Xinjiang and Fujian provinces, which are referred to as “core areas.” Both draw upon their historical roles in the ancient Silk Road and natural geographic advantages to assert their leading status in the current initiative. Whereas Fujian is a natural choice with its strong economy, especially with its ties to President Xi, Xinjiang stands to benefit considerably from the central government’s desire to ensure to project’s success, on top of preexisting development assistance for the province. One expert said “Xinjiang strives to transform itself into a transport hub, a center of trade and logistics, culture and technology, as well as financial and healthcare services. Infrastructure construction will be carried out to achieve the goal.” Returning to the prime concern about Xinjiang, he further added that “Strengthening anti-terrorism cooperation is also a major task for Xinjiang and the Central Asian countries along the Silk Road Economic Belt” (Global Times, April 2). In 2014, Fujian’s government embarked on a strong public relations campaign, with its Party secretary writing in Seeking Truth that the province’s connections with countries along the route, trade, maritime cooperation and overseas population would drive its participation (Seeking Truth, September 1, 2014). This February, Chinese media revealed the province would fund its own $10 billion Renminbi ($1.6 billion) MSR Fund (China Securities, February 2). Now that Fujian has claimed leadership of the MSR—defeating Hainan, Guangdong and Guangxi who were also vying for the title—its biggest advantage, according to one Chinese expert, is not central government support but “cash flow” and “credit flow,” and Fujian is still negotiating with the central government to determine the specifics of being a “core area” (Economic Observer, April 9).

Other provinces have had to be creative in their involvement when they have little new to offer for the country’s overall development. Shaanxi, home to Xi’an, the terminus of the ancient Silk Road and current SREB, touts its Bonded Logistics Center, Export Processing Centers and Xi’an National Aviation Town Experimental Area (Shaanxi Daily, December 29, 2014). Gansu, a waypoint on the road out of China, aims to “build the province into a ‘golden passage’ along the Silk Road Economic Belt, an important platform for opening to the West, a regional trade and logistics hub, a demonstrative base for industrial cooperation, and a bridge for cultural exchanges.” In tangible terms, this includes its Lanzhou New District, tourism to Dunhuang, a China Silk Road Expo and serving as an ecological protection screen—not much compared to the manufacturing and innovation centers in China’s richer provinces (China Daily, March 17). Hong Kong officials have said they can be an “investor, mediator and supporter” of the initiative and draw on their overseas network of citizens, which Fujian has also mentioned (China News, May 8).

Reflecting the Xi administration’s effort to include all parts of the country in the plan, the Northeast provinces of Liaoning, Jilin and Heilongjiang were included despite the official “One Belt, One Road” route not transiting the region. Handicapped by its geographic fate, the official “One Belt, One Road” plan mirrors the Northeast’s development focus on Russia’s Far East, Mongolia and occasionally North Korea (which was finally invited to join the New Silk Road in April) and is linked to the second attempt at the region’s revitalization, suggesting an uphill battle for relevance and success (Yonhap, May 5). In April, a senior Liaoning official detailed how the province foresees its participation: the MSR can connect to the rest of the region through Dalian port and on to the Russian Far East, and the SREB’s Beijing-Moscow high-speed transportation corridor transits the region (China Entrepreneur Club, March 1). Yet local experts realize these official plans do not bode well for the region’s development and have begun exploring trade opportunities outside the SREB and MSR, demonstrating the flexibility of the New Silk Road. A Jilin University professor said that Russia’s Zarubino port, which blocks Jilin’s access to the sea but is part of SREB cooperation with Russia through its economic cooperation zone with border city Hunchun, allows goods to reach the United States in five fewer days (Xinhua, April 1). A Heilongjiang expert suggested the New Silk Road will support the region’s growing trade with Japan and South Korea (Global Times, April 2). The Northeast’s predicament reveals the challenges some outlying regions face in straining to find a role in the New Silk Road.

Some Chinese provinces fear being left out of this potential economic bonanza. 13 provinces went unmentioned in the March plan, including Jiangsu, whose Party secretary gave a major speech on Jiangsu’s contribution to the “One Belt, One Road” at this year’s Boao Forum a mere two hours before the report’s release (Jiangsu News, March 29). Yet Jiangsu was nowhere to be found, leading one commentator to say the Forum’s spotlight made its non-selection even more “awkward,” since the Forum has traditionally been a platform for provinces to advance their agenda with the central government since provincial leaders began speaking in 2012 (Takungpao, March 31). While this would appear to suggest Jiangsu was blindsided by its exclusion, it is unlikely that the province would have been kept in the dark over such an important document that is rumored to have been completed six months earlier. Chinese experts contend that Jiangsu’s role as an “intersection” of the New Silk Road, which President Xi himself coined on a visit to the province in December 2014, hasn’t changed. They add that there will likely be more guidance documents released as the decades-long plan unfurls and that Jiangsu is included tangentially through the report’s mention of the New Eurasian Land Bridge, which already incorporates the province’s Lianyun Port. Other provinces were not named directly but their cities and/or projects were—Shandong’s Qingdao and Yantai ports—while Beijing and Tibet have no assigned role, though Tibet is listed for its trade with Nepal and tourism.

Although the New Silk Road is clearly a central government strategy, many operational details will fall to provincial authorities and local companies to adopt, adapt and execute. Chinese provinces have always had to fight for their own interests abroad under the guise of central government initiatives, but as part of the increasing proliferation of actors in China’s external relations, especially in foreign policy but also in trade, Chinese provinces are angling to carve out a role amidst heavy competition for central government resources. The dual nature of the New Silk Road as part economic policy and part foreign policy means provincial governments will continue to increase their influence over how China, as a whole, acts abroad. This in turn means Western analysts should watch how the provinces approach their role in the New Silk Road and if they are ultimately satisfied that the reality meets their expectations.