The Return of the Great Game and Infrastructure
The Great Game was a geopolitical contest for influence and dominance in Central Asia between Tsarist Russia and the British Empire that occurred in the 19th and early 20th centuries. The game was played out over vast distances, with a mix of spies, money and armies. Central Asia is now in the midst of another round of the Great Game, with China as the major driver and other countries reacting. Beijing’s Belt and Road Initiative is a pan-Eurasian vision, reviving the old Silk Road and linking Europe and East Asia by rail, air and sea, supported by other pieces of infrastructure like power and telecommunications. One of the fiercest areas of competition will be over contracts for building the inter-connecting infrastructure and financing it. The Asian Development Bank has put Asia’s infrastructure needs at $26 trillion (from 2016 to 2030) and in 2015 gave out a record of $27.7 billion in loans. In contrast, China’s Asian Infrastructure Investment Bank lent out $2 billion since its opening. While Chinese companies expect to benefit hugely from this gold rush of infrastructure spending, they should not expect to have it all their way. Russia, India, Japan, Turkey and Iran all have their own aspirations for parts of Asia, either to contain Chinese influence, carve out their own sphere of influence, or gain business for their companies. This means Chinese companies will face tough competition from their Japanese, Indian, Korean, Turkish, and Russian counterparts. While this can create healthy competition with good end results, there is a risk that political gamesmanship becomes more important than the commercial viability of projects. The new Great Game is on; China is the major force in rewriting the Eurasian map, but there is going to be considerable competition and Chinese companies should be ready for a bumpy ride.