Experts optimistic about Kashi's role in new Silk Road

China's westernmost city Kashi, with a population of around 4 million, has a historic opportunity to become a shining pearl in the Silk Road economic belt.

Billed as the International Forum on Silk Road Economic Zone, the experts at the Global Times Leader Roundtable held on Sunday explored the opportunities and challenges for Kashi, the renowned Silk Road city in Northwest China's Xinjiang Uyghur Autonomous Region, against the backdrop of China's enhanced regional cooperation with Central Asian countries.

In May, the central government rolled out plans to further open Xinjiang and forge it into a core area of the Silk Road economic belt.

Inclusive in nature, the Silk Road economic belt blankets over 40 countries and regions, as well as three billion people, across Asia.

Why Kashi?

Long Yongtu, chief negotiator for China's WTO accession, said it is no surprise that the Silk Road economic belt has gained worldwide attention.

"Over the past decades, the global trade regime, heralded by the World Bank, IMF, and WTO has been eclipsed, while regional economic cooperation, headed by the EU and other entities, prospered," Long said.

Ma Xiuhong, chairwoman of China Foreign Trade Center, emphasized the importance of establishing an overland trade route that matches seaborne trade routes.

"As the world's second-largest economy and the largest goods trading country, 86 percent of China's trade is conducted through sea trade routes. An over-reliance on seaborne trade is both unhealthy and brings potential risk to China," she said.

Zeng Cun, Secretary of Communist Party of China Kashi Prefectural Party Committee, said Kashi's unique geographic position means it faces a unique opportunity with development of the Silk Road economic belt.

"Kashi is the closest city to Europe among all Chinese cities, and it has five State-level trade routes connecting a number of neighboring countries. The city is closer in distance to most capitals in central and southern Asia than to Urumqi, the capital of Xinjiang," Zeng said.

The city enjoys preferential policies from the central government and receives substantial aid from Shanghai, Shenzhen, and Guangdong and Shandong provinces, four economic powerhouses in coastal China.

With a special economic zone established in 2010, Zeng further revealed the city's plans to expand railway links to nearby cities and Kyrgyzstan and Pakistan, set up a joint stock local airline, a free trade zone and build a pipeline that stretches to Pakistan.

How to improve?

Experts at the roundtable suggested Kashi improve its infrastructure to better assume prime position in the Silk Road economic belt.

"Kashi's unique geographic position is its core competitiveness. Kashi needs to further its infrastructure in transportation and communication, especially the air link," Long said. "The city should also pilot trade mechanisms to facilitate trade and to make it a regional hub of connection and communication."

Thomas J. Sargent, Nobel Laureate in economics and professor with New York University, said that the beautiful thing about the Silk Road label is that it refers to the ancient institution that knocked down trade barriers.

"The aim of the new Silk Road initiative is to do the same thing - taking advantages of opportunities provided by modern technologies, create places and ways of moving goods and ideas, and diminish dangers," he said.

According to experts, connectivity, whether that be of traffic or communication, will lay the cornerstone for Kashi's prominent position.

Auh Jae Hyuck, managing director with CJ Korea Express, suggested Kashi could build itself into a regional transportation hub and distribution center, citing successful examples of South Korea's air and sea ports.

"Fifty percent of passengers and air freight flying into Incheon International Airport have nothing to do with South Korea. And 50 percent of seaborne goods and commodities shipped to the Port of Pusan have nothing to do with South Korea," he said.

Xiang Feng, president of Shanghai YTO Express (Logistics) Co, a private express delivery giant, said his company operates 20 branches and employs about 100 locals in Kashi, the westernmost point of YTO's network.

"Companies like us connect Kashi with the rest of the country. In recent years, business in Kashi has increased by 50 percent," Xiang said.

Zheng Xiaofeng, chairman of Outland International Logistics Co, who has been doing business in Kashi for years, said roads to the capitals of Pakistan, Kazakhstan, Kyrgyzstan, and Uzbekistan are not good.

"Usually the roads within Chinese borders are completed in good shape but the connecting sections in foreign countries are poor," Xiang said.

"Air links should be the first to take off. Let international air routes be opened between Kashi and Islamabad, Bishkek, and Dushanbe, and we could get the ball rolling by kick-starting the air freight cargo business, then Kashi stands a good chance to be the regional logistic hub," Zheng noted.

To benefit from the linguistic abilities of the locals, who are able to communicate with people of eight neighboring countries in basic terms, Howard Xia, general manager of Vodafone China Ltd, suggested setting up a regional call center, learning from his company's experience in Egypt.

"The call center could provide hundreds of thousands of locals with decent jobs, while the company enjoys low labor cost," Xia said.

To nurture more local talent, a university project, authorized by the State Council with an allocated fund of 1.5 billion yuan ($0.24 billion), is already underway, according to local media reports.

For funding, Geoff Raby, former Australian Ambassador to China and vice-chairman of Macquarie Group China, said Kashi could also consider enlisting private foreign capital in its financing plan.

"Given the issue of piling local debt and the central government's decision to let the market play a decisive role in allocating resources, these funds could play a constructive role in building roads, wastewater treatment plant, solar power, and logistic depots," he said.

Experts also advised that the development should fully involve the locals, with 80 percent of them being ethnic minority groups.

David Schlesinger, managing director of Tripod Advisors and former chairman of Thomson Reuters China, warned the city not to lose its focus on infrastructure to the property market.

"People should think horizontally not vertically - roads, air links, rail links - and [not be seduced] by building towers, monuments, and things that will only build a vertical pile of debt," he noted.

"You can start a project with vision and but to make it successful it has to have internal logic and sustainability," he said.