Who's Poised to Benefit from China's Silk Road Revival Plans?
Plans to make a modern version of the historic Silk Road are under way in China. On June 26, Chinese officials kicked off an international meeting in the western city of Urumqi to pitch stronger trade ties, a modernized infrastructure, and cohesive marketing of an 18-country zone that would include China and Central Asian countries such as Turkmenistan, Kazakhstan, and Uzbekistan. According to China Central Television, representatives from Russia, Poland, and other countries outside the Silk Road zone also attended.
Re-branding a legendary and enormous trade route
The proposal represents an opportunity for regional business and tourism growth -- and a chance for American and international companies to help develop the area. Overland trade between Europe and China has a long and storied history -- the stuff of Marco Polo tales and years-long spice-and-silk journeys from the Mediterranean to the Far East. China hopes to revive the Silk Road "brand" for modern economic development, and the region is definitely having a moment.
Earlier this month, UNESCO declared the Silk Road a World Heritage Site and launched an online platform dedicated to the region's culture, history, and landscapes. With Samsung and the Discovery Channel, UNESCO launched a series of mini travel videos designed to kindle traveler interest -- and promote Samsung's tablets.
While the region is fairly fragmented now, with Iran isolated from the West and former Soviet republics working toward modernization, Chinese officials said that a unified Silk Road economic region would directly or indirectly affect 40 countries that are home to some 3 billion people. In 2013, officials said, Silk Road countries accounted for 15% of China's foreign trade, or about $600 billion.
Western hoteliers are already getting into Central Asia
Global hotel corporations are already setting up shop. Hilton Worldwide opened it seventh Turkish DoubleTree property earlier this month in the Anatolian city of Malatya. Hyatt announced in May that its Hyatt Regency Almaty will open near the Kazakhstan Stock Exchange in 2017 as part of the company's Central Asia expansion plans.
In Kazakhstan, 2017 is shaping up to be a big year for tourism. Marriott International's Ritz-Carlton brand announced last week that it will open Astana's first major luxury hotel that year, which is also when the city will host 100 countries for Expo 2017.
Ritz-Carlton already has a presence in the country. It opened its first Kazakh property in 2013 in Almaty. At the far end of the old Silk Road, Marriott is opening hotels on China's Pacific coast at a rapid clip. But with some 2,000 miles between Beijing in the east and Urumqi in the west, getting business and leisure travelers inland is a challenge -- one that China is working to overcome.
Infrastructure and stability issues
Industry publication TravelPulse reported in early June that China is spending $23 billion to finish the Lanxin Railway through Xinjiang, China's vast Uighur Autonomous Region that borders Russia, Mongolia, Kazakhstan, and several other Central Asian nations. Scheduled for completion next year, the 1,000-mile, high-speed line is expected to cut travel time by two-thirds between the central Chinese city of Lanzhou and Urumqi, Xinjiang's capital.
Apart from the challenges of vast distances, the old Silk Road region has its share of unrest. Xinjiang, in particular, has seen violence against police and the general public by Islamist separatists. The Chinese government has responded with stepped-up security and plans to culturally assimilate the largely Muslim Uighur population, which has created concerns about human rights and the preservation of the region's cultural heritage.
China has a political interest in Central Asia's former Soviet republics, as well, especially in light of Russia's recent retaking of the Crimean peninsula from Ukraine. Tensions rose again when Ukraine signed a European Union trade agreement that drew sharp criticism from Russia. Former republics Moldova and Georgia have followed Ukraine's path toward Western economic alliances, which could leave Russia hunting for more alliances in the region. China's outreach to former Soviet holdings farther east is a way to ally with them politically, as well as economically.
New money from an old route?
If the Silk Road Economic Belt develops a modern infrastructure and a stable political situation, it could be a strong draw not only for business, but also for leisure travelers who want to see historic central Asian architecture and ancient Silk Road trade cities during their China travels. With 2 million American travelers visiting China last year and the number expected to rise, Central Asia's ancient trade route may be a path to modern-day economic growth.
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The article Who's Poised to Benefit from China's Silk Road Revival Plans? originally appeared on Fool.com.Casey Kelly Barton has no position in any stocks mentioned. The Motley Fool recommends Hyatt Hotels. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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