February 16, 2017 12:00 pm JST

Peter Gordon: China's 'silver way' around US trade impediments

By evoking its old Latin American ties, Beijing can expand its options

It can, on occasion, seem that no country takes the Shakespearean dictum "what's past is prologue" as much to heart as China, steeped in history. One of the most fertile periods has been that of the ancient Silk Road, now rooted in the popular and political imagination. Less well-known is the trans-Pacific route between Asia and what was then Spanish America.

The historic Silk Road has morphed into, first, a "new Silk Road" and then recently into a series of economic and development programs known as the "Belt and Road Initiative," spanning most of Asia and Europe.

This evocation of distant history to inform the present is not just nostalgia: The Silk Road -- created in a time of mutual and symbiotic prosperity between China and its trading partners in Central Asia -- provides a politically attractive paradigm for international relations. There is no need to rely on Western-dominated institutions such as the World Trade Organization, the World Bank and the International Monetary Fund: China and the region then had their own solutions and will again, as seen with new institutions like the Asian Infrastructure Investment Bank.

The Silk Road finally declined with the end of the pax Mongolica of Genghis Khan's successors and the conquest of Constantinople by the Ottoman Turks. It was the consequent constriction of trading opportunities, in particular for spices, that spurred what came to be known, without irony, as the European "voyages of discovery."

Until 1565, no fleet had succeeded in sailing east from Asia to the Americas. But that year, as part of an expedition that also saw the establishment of the Spanish colony of the Philippines and the founding of Manila, the Spanish navigator Andres de Urdaneta, a survivor of earlier expeditions, worked out the right winds and currents to make it from Acapulco to Asia and back. His discovery was called the tornaviaje, or "return trip."

The trading route connected China with wealthy Spanish America. Silver from seemingly bottomless American mines provided the money supply for China's economy. So important was this one commodity that one might call the trans-Pacific trade routes la ruta de la plata, or the "silver way."

Commerce between China and Spanish America formed the lynchpin of trade routes spanning four continents. This marked the first time that the entire world had been knitted together by the worldwide trade and financial networks.

Elements that characterize globalization -- trade networks, shipping lines, integrated financial markets, flows of cultures and peoples -- could be seen by the early 17th century. A global currency arose that predated the dollar's similar role by two centuries: The Spanish milled dollar, the "piece of eight," became the first currency accepted more or less on every continent. It spawned the U.S. dollar, the Chinese yuan and the Japanese yen.

China's role as manufacturer to the world dates to this time. Sailors, merchants, professionals and entrepreneurs streamed east across the Pacific. Chinese and Filipinos went to the Americas by the tens if not hundreds of thousands. This was a time of trade, wealth and learning. Mexican universities and printing presses predate those in what became the U.S. by close to a century. All of this transpired before London and New York were financial capitals, and before the U.S. even existed.

BACK TO THE FUTURE China would not be starting from scratch if it were to build substantive relationships in Latin America. Given the U.S. withdrawal from the Trans-Pacific Partnership, and the consideration at the Asia-Pacific Economic Cooperation summit in Lima last November of alternatives favored by the Chinese, this is no longer theoretical.

China could call upon a shared history that predates the current economic and political order. Equally, the Philippines might reach back to when it served as the primary commercial and cultural link between the Americas and Asia.

On his way back from Lima, Chinese President Xi Jinping stopped off on his own tornaviaje at the Canary Islands to meet Spanish Deputy Prime Minister Soraya Saenz de Santamaria. They discussed the possibility of joint projects in Latin America. Back to the future, indeed.

American leadership in the Western hemisphere may seem rooted in history, but history -- as China well knows -- stretches back beyond that. There is in la ruta de la plata a competing narrative, one that is historically valid, and may prove both emotionally appealing and politically convenient. It is also a narrative that completely sidesteps the U.S.

Peter Gordon is co-author of "The Silver Way: China, Spanish America and the Birth of Globalisation, 1565-1815" (Penguin, 2017) and editor of the Asian Review of Books.

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