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 ♪