地缘贸易博客This blog considers how ideas and events framed by geography and trade shape our world, while sharing observations and analysis on discovery, transport, industry and much more.

Thursday 30 June 2011

México – a new regional power in the Américas

México in the 21st Century

The stereotypical image of México, particularly the steady flow of security-related stories in the international media, is not flattering. However the numbers tell a different story.

México is roughly the size of Western Europe. It is the world's 14th largest economy, producing 2.2pc of global GDP and the world's 10th largest producer of oil. Goldman Sachs and The Economist predict that México has the potential to become the 7th largest economy within the next 40 years. It has a young and urbanised population. Around 50pc of the population are under 25 and around 77pc live in urban areas.

México is a trading nation with more Free Trade Agreements than any other country (13 agreements with 44 countries including the US and the EU). Around 80pc of Mexican exports have a US destination. Nearly 1million people and $1bn in trade travel between the US and México border everyday – making it the world's busiest border.

It shares similar values to Europe and the US: political openness, free trade and a willingness to debate and act on key 21st century challenges. México is a member of the G20 and was previously a co-ordinator of the G5 major emerging economies.

Position in the world in 21st century

However México does not yet project a clear strategy for its long-term development. It remains uncertain about its role and position in the world – now and in the future. It has yet to work out whether it is serious about challenging Brazilian regional leadership, and about becoming a global power too.

It appears that within México there are still conflicting views on how much it should aspire to play a wider regional role. It has a strong history of non-interventionism in the region. But México could do so much more in light of its economic weight. It could position itself as a convening power and deal-maker in the Americas. It could also be much more demanding of other neighbouring countries in the region if it wanted to.

Relations with the US have never been better

The importance that the US attaches to its bilateral relationship with México was illustrated in President Calderón's first State Visit to Washington in May 2010. President Calderón was granted generous access to President Obama, a one-on-one meeting, a press conference and he was granted only the second State Dinner to be celebrated under the Obama Administration at the White House. As a result both President Calderón and President Obama have built a genuinely strong and productive relationship.

During the State Visit, President Calderón became the first Mexican President to lay a wreath at Arlington National Cemetery's Tomb of the Unknown Soldier. Previously Mexican presidents had declined this request, not wanting to dwell on US military incursions into México, but President Calderón's visit to Arlington represented the 21st relationship between México and the US, in which Calderón used the opportunity to recognise the role of Mexican Americans in the US military.

The State Visit showed that México-US relations were on a good footing with the US characterising the relationship as: “The United States is proud to be México's friend, partner and neighbour...we will succeed or fail as one...”

Mexican innovations for the north

The US economy has been undergoing a massive economic structural shift over recent decades with those at the bottom feeling the pinch of stagnating wages and even more so after the 2007 financial crisis. Mexican companies, seeing an opportunity, a growing demographic of increasingly poorer people in the US, have begun to export their own emerging economy innovations. For example, MedicallHome, a Mexican company that provides medical advice over the phone for $5 a month, as well as access to its network of 6,000 doctors has expanded north of the border with great sucess. Similarly, a subsidary of Carlos Slim's América Móvil, has also been selling pre-paid mobile phones popular in México. More than 3 million phones have already been sold in the US.

So what role should México play

México appears to be punching below its weight in the region in the 21st century. Even though it has only half the population of Brazil, geographically it is the US' closest neighbour and in many ways its most like-minded “ally” in the Americas, where more countries are increasingly becoming hostile to free trade and political openness. If México is serious about becoming a major emerging regional player, it needs to begin to act like one in the eyes of the other players on the world stage.

To do this, México needs to gain momentum across bilateral and multilateral issues to win it influence with the other big players like the EU and China. If this were to happen, México would be in a position to become a strong regional player with the ability to shape the outcomes on some of the big questions of the 21st century. The key challenge is, will México and its leaders step up to the fray?

Thursday 23 June 2011

Water for the North of China – 南水北调

Map of the three routes for the South-to-North Water Transfer Project to
alleviate the lack of water in the north of China

Water scarcity in Chinese history is a big issue. China has suffered from water scarcity in the north since ancient times. Summer monsoon winds originating in the Indian Ocean sweep into China. When the summer monsoon is stronger, the moisture-laden winds push the rains farther northwest into China. But when the monsoon is weak, the rains fall farther south and east, depriving northern and western parts of China of summer rains.
Recent research on the strength of monsoon rains over the last two millenia has thrown up some interesting results. The research was based on the layers of stone in a 118-mm-long stalagmite dating from 190 AD found in a cave in Gansu Province in China. It has allowed researchers to match, the amounts of uranium and thorium throughout the stalagmite, to tell the date each layer was formed with the “oxygen signature” in the stalagmite that shows the amounts of rainfalla measure of summer monsoon strengthto those dates. The researchers discovered that periods of weak summer monsoons coincided with the final years of the Tang (618-906AD), Yuan (1279-1368AD) and Ming (1368-1644AD) dynasties, which are known to have been times of popular unrest and social upheaval. In contrast, strong summer monsoons prevailed during one of China's "golden ages," the Northern Song Dynasty (960-1279AD).
Without the strong rains, food becomes scarce causing social problems and unrest. Hence it is no coincidence that China's most successful dynasties all fell in times of water scarcity. In the 20th century Mao was greatly aware of the need to keep the north watered, in 1952, he called for a scheme that would divert water from the southern Chinese rivers to the north to ease the growing water shortages in the cities of Beijing and Tianjin and the northern provinces of Hebei, Henan and Shandong.
The South-to-North Water Transfer Project
In the 21st century, the mammoth task of transferring water to the north has begun. The South-to-North Water Transfer Project is an incredible feat of engineering on a very grand scale, the aim of the project is to transfer at least 44.8bn cubic metres of water each year from the the Yangtze River in the south, to counter the thirst of the north China plain and its 440 million people. It is the largest project of its kind ever undertaken in the world. The rapid growth of megacities — around 22 million people in Beijing and 12 million in Tianjin alone — has put considerable strain on the ground water aquifiers in the north. In recent years, urban and industrial development has often been supplied with water at the expense of agriculture leading to severe water shortages in rural areas.

Map of the the three routes of South-to-North Water Diversion Project

The project will link China's four main rivers – the Yangtze, Yellow River, Huaihe and Haihe – and requires the construction of three transfer routes, stretching south-to-north across the eastern, central and western parts of the country. In August 2002, the project was approved  and work began on the eastern route of the project in late 2002, and on the central route in 2003. The Central route is due to be completed shortly. Work on the western route is more complicated and is not due to be completed until 2050.
But not everyone is in favour
The project has been criticised for its lack of concern for the environmental impact and the human impact on people being relocated to make way for the canal on the central route. Questions about the cleanliness of some of the water being transferred have also been raised. In the US, the New York Times said the project was like "...channeling water from the Mississippi River to meet the drinking needs of Boston, New York and Washington." 

The below video report provides some further opinions on the the South-to-North Water Transfer Project:

Nevertheless, it is clear, that if China is to continue its growth and development in the 21st century, it must resolve the problem of water scarcity in the north. With 22pc of the world's population, China has only 8pc of the world's fresh water which adds to the challenge. Its per capita availability of fresh water is barely a quarter of the world average. Furthermore, the north accounts for around 37pc of the country's total population, but has only 12pc of the country's total water resources. Yet, in the south, about 1,000bn cubic meters of water from the Yangtze River empties into the sea each year. There is no easy solution to this geographical conundrum and the scale of the problem is huge.

The Geo-Trade Blog believes the South-to-North Water Transfer Project provides a practical solution to a tricky geographical problem that goes back thousands of years. The water transfer project appears to be a logical trade-off as long as the north continues to play fair and does not take advantage of the arrangement to develop further at the south's expense by taking a greater share of the water from the Yangtze River. Although if water remains at present levels, there appears to be enough water for all.

Thursday 16 June 2011

Turkey, the 'European BRIC'– a new regional power in 21st century

An aerial view of Istanbul - the Bosphorus

At the beginning of the 21st century Turkey is once again rising to become an economic and political power, both in its region and in the world. The rise of Turkey is one of the last decade’s most important stories. Last year it grew faster than any other big economy except China and India. As the world’s 17th-biggest economy, Turkey has become a leading member of the G20 club. It has NATO’s largest army after the US.

The reach of Turkish companies is also spreading. They operate not just across the region but around the globe. Many construction projects in the Middle East involve Turkish firms and workers. Turkish Airlines, has turned into a global force as Istanbul, now Europe’s biggest city by far (at around 15m), has become an aviation hub.

A new canal linking the Black Sea and the Sea of Marmara

Map showing where the proposed new Canal Istanbul
will be built by 2023

In the run up to the latest Turkish elections, the ruling AK party which won a new mandate on 12 June 2011, pleged to build another bridge across the Bosphorus and more spectacularly a new canal linking the Black Sea and the Sea of Marmara that would be a match for the Panama Canal. This project was first proposed by Sultan Suleiman the Magnificent in the 16th century.

The new canal will be called 'Canal Istanbul', it will link the Black Sea to the Sea of Marmara, which leads to the Aegean Sea. The new waterway will be located on the European side of the Bosphorus. Its main purpose is to reduce the heavily congested tanker traffic through the Bosphorus Strait and to minimise the risk of accidents. The proposed Canal will have a length of around 48km with a depth of 25m, a width of 150m on the surface and 120m at the canal bed. This will allow the largest vessels to pass.

The project is intended to be completed in time for the 100th anniversary of the Turkish Republic in 2023.

A new regional player

Turkey's location between Europe and the Middle East lends it huge geo-trade significance, not least as an energy and pipeline corridor. Over the last decade, it has developed closer relations with Georgia and with Iran, Iraq, Syria and other Middle Eastern countries, to the consternation of its traditional allies, the US and Israel.

Azerbaijan provides Turkey with access to the energy-rich Caspian Sea states of Kazakhstan, Turkmenistan and Uzbekistan. Turkey is also a strong supporter of the 1,768km Baku-Tbilisi-Ceyhan pipeline that runs from Baku to its Mediterrenean port of Ceyhan.

The EU accounts for 75pc of foreign investment in Turkey and roughly half its exports and inward tourism. Turkey is Europe’s third-biggest producer of televisions. Likewise, Europe's energy security depends on the transit of oil and gas from Central Asia and the Middle East through Turkey.

Europe and Istanbul relations

Europe in its history has had an uneasy relationship with Istanbul during the Ottoman Empire, in fact, some might say that Europe has been almost defined, through the centuries, by a tension between Christian and Islamic boundaries and by Muslim encroachment in Europe from the East and the South. To some extent, in some European countries, this view still pervades policy makers today when considering Turkey's accession to the EU.

Today the EU needs to ensure that it does not turn inwards and become fixated on internal questions. There is a real danger that Islamic identity is defined as 'the other' and while this debate ensues, Europe misses the bigger picture of what is happening in the world in the 21st century. The EU – with 330m people alone in the Euro-zone area has a key role to play in the 21st century. But it needs to remain outward-looking to understand the changes taking place in emerging economies and in the greater world in Asia-Pacific to become an active global player.

In the 21st century, Turkey is the closest thing Europe has to a BRIC. The EU must find ways to enhance its relations with this important new emerging regional power. Perhaps through a Special Economic Zone to provide access to the EU internal market, the EU's greatest success to date. Then maybe with the option for Turkey to join the Euro too if it meets the fiscal criteria. Turkey could also be invited to join the Schengen agreement to enable free movement of persons through the Schengen Member States. Europe needs badly to embrace Turkey, it needs the fresh perspective and energy of the Turk people and to harness the economic firepower of an important emerging economy on its dooorstep.

Thursday 9 June 2011

The InterOceanic Highway between Brazil and Perú connecting the Atlantic and Pacific Oceans

InterOceanic Highway between Perú and Brazil that connects the Atlantic
and Pacific Oceans

The InterOceanic Highway (Carretera Interoceánica is the official Spanish name and Estrada do Pacífico is the Brasilian name) will have a total distance by road of 5440kms from the Atlantic to the Pacific.

The road is one of the biggest construction projects ever undertaken in América Latina. The highest point is 4850m or 42m higher than Mont Blanc, Europe's highest mountain. Twenty two bridges are being built including a spectacular new bridge of 722m across the Madre de Dios River at Puerto Maldonado in Perú.

 The InterOceanic Highway got off the ground due to the support from three Presidents Lula da Silva (Brazil), Alan García (Perú) and Evo Morales (Bolivia). All were key supporters of the project through which they sought the further integration and development of the three countries: Brazil – the giant of América Latina with its huge area of the Amazon, Perú with its Pacific coast and also with more than half its land area in the Amazon and the land-locked Bolivia with massive energy resources in need of infrastructure to transport them to the sea ports.

Over 4650km are complete and fully asphalt covered. Work is progressing on the final section 736kms from the Amazon basin and over the Andes mountains. The cost has been budgeted at 1.3 billion dollars.

The InterOceanic Highway will open up the Pacific Ocean to Brazil and Bolivia. It will connect América Latina's biggest mega-city São Paulo with Perú's three ports on the Pacific Coast; San Juan, Mataraní and Ilo. América Latina has benefited from the boom in the world price for mineral resources. Perú is the world’s largest silver producer, second largest producer in copper and zinc and sixth in gold.

Peru has advanced considerably over the last five years. Since 2006 growth has accelerated, averaging 7% despite the world recession. The share of Peruvians living in poverty has fallen from 49% in 2004 to 35% in 2009. Social indicators have improved immensely - between 2005 and 2010 Perú climbed 24 places in the United Nations Human Development Report.

Much of the Pacific coast, where farmers export asparagus, grapes and other products enjoys almost full employment in 2011. Though many parts of the Andean highlands remain poor, the arrival of the InterOceanic Highway has cut journey times meaning that many farmers there too have joined the export boom. Much of this succes is due to the vision of outgoing Peruvian President Alan García and his predecessor Alejandro Toledo. Both pursued policies of price stability, fiscal rigour, foreign investment, open trade and investment in major civil works infrastructure.

Perhaps Alan García's vision for Perú and América Latina is best summed up in his own words:

"We will be a first-world country soon, but we need to keep the goal in sight, and the goal is work, effort, execution of public works. We don’t live on words, we don’t live on promises, we live on concrete works.”

Unfortunately Alan García was not able to choose a sucessor in the same way that Brazil’s Luiz Inácio Lula da Silva and Colombia’s Álvaro Uribe had managed to do in 2010. His party, did not even have a candiate in the first round of presidential elections held in April 2011. None of the three centrist moderate candidates made it to the second round of voting on 5 June 2011. Instead the Peruvian electorate was presented with Ollanta Humala, an ex-army officer with affiliatons with Hugo Chavéz and Keiko Fujimori, the daughter of the former president now serving a 25 year prison term for human rights abuses. Ollanta Humala, prevailed by a narrow 3% margen with a manifesto programme that looks unlikely to deliver the growth rates needed to continue to lift peruvians out of poverty and at best reads like a recipe of missed opportunities for the next five years.

Friday 3 June 2011

Cities in the 21st century — a city-dominated world

Picture of Beijing in the 21st century

The 18th and 19th centuries were the last centuries of empire in the world. The idea of the nation-state took hold in the 19th century. The Wesphalian idea of nation-state sovereignty that basically says that a nation's affairs are its own, and no other state has the right to act within its borders has been the basic diplomatic template since the 17th century. The limits to the nation-state were shown by European rivalries at the beginning of the 20th century while growth in cities began to flourish from the mid-20th century across the world. As a consequence the 21st century looks set to become the 'century of the cities'.
By the year 2030, three out of five people will live in cities. The UN forecasts that today's urban population of 3.2 billion will rise to nearly 5 billion by then. The top 25 cities in the world account for more than half of the world's wealth. And the five largest cities in China and India account for 50pc of those countries' wealth.
This increase will be most dramatic on the least-urbanised continents, Asia, América Latina and Africa. Surveys and projections indicate that most urban growth in coming years will be in emerging economies as the map below indicates.

Map of Growth in Cities since 1950s, 2000s and projected to 2015

A new concept has recently arisen in the growth of cities known as the 'mega-region'. A mega-region occurs when growth in cities in a particular region is accelerated. Research shows that the world's largest 40 mega-regions cover only a tiny fraction of the habitable surface of the planet and are home to fewer than 18pc of the world's population but account for 66pc of all economic activity and about 85pc of technological and scientific innovation. The mega-regions, rather than countries, are becoming the key driver behind economic development and wealth creation.

The largest of these is the Shenhzen-Guangzhou region in China, home to about 120 million people. China is planning to create the world's biggest 'mega-region' by merging nine cities to create a metropolis twice the size of Wales with a population of 42 million.
Map of new Chinese mega-region
The new mega-region will cover a large part of China's manufacturing heartland, stretching from Guangzhou to Shenzhen and including Foshan, Dongguan, Zhongshan, Zhuhai, Jiangmen, Huizhou and Zhaoqing. Together, they account for nearly a tenth of the Chinese economy.
By 2015, around 150 major infrastructure projects will mesh the transport, energy, water and telecommunications networks of the nine cities together, at a cost of some 2 trillion yuan (£190 billion). An express rail line will also connect the hub with nearby Hong Kong.

A new concept 'Aerotropolis'

In a new book titled “Aerotropolis: The Way We’ll Live Next” by Kasarda and Lindsay, the authors develop a vision of the 'aerotropolis' as a symbol of a city-dominated world. The aerotropolis is “glocal,” a place that draws on local competitive advantages (like cheap labor) as it plugs into the  21st century global on-demand-production supply chains. Therefore it makes sense to affix cities to airports on the model of the aerotropoli for air transport companies such as Fedex and UPS. Hence an airport, having begun life as an outlying curiosity, on the edge of the city, becomes the heart of the mega-region or mega-city, its raison d’être.

The book illustrates this new concept through a series of compelling numbers. While world GDP rose 154pc between 1975 and 2005, world trade grew 355pc. Meanwhile, the value of air cargo climbed an astonishing 1,395pc. More than a third of all the goods traded in the world, some $3 trillion worth - but barely one percent of its weight! - travels via air freight.
If the book is right and Aerotropoli do take off, then, this has the potential to further push international trade relations between mega cities and mega-regions into the foreframe and leave the country relationship as a minor detail. For example, when New Songdo, an aerotropolis near Seoul, does business with São Paulo, the South Korean-Brazilian relationship is of little interest. Likewise the new Chinese Shenhzen-Guangzhou mega-region is likely to pay little attention to what the UK thinks, but will be very interested in London.