Follow the Silk Road

Column - Robert Joseph 

Robert Joseph
Robert Joseph

Last year, I was invited to attend a conference and judge wines at a competition just outside Beijing. The event was intended to promote a brand new wine region called Fangshan (‘Funhill’ in English), but it was not called the Fangshan or Funhill Wine Challenge as I might have expected; it was the Belt & Road Wine and Spirit Competition, or BRWC.

To my shame, despite my frequent trips to China over recent years, I had not been paying enough attention when President Xi launched the One Belt One Road (Obor) initiative in 2013, so the name had little resonance for me. But it did not take long for a Chinese friend to set me straight.

At a time when Donald Trump’s America First doctrine directs the US gaze firmly towards its own navel, China is very deliberately looking beyond its borders, both towards the regions once traversed by travellers on the ancient Silk Road to Europe, and the ones a ship would pass on a journey from China to Africa. No fewer than 65 countries have been identified as targets for inclusion in the concept, and the sums allocated to Silk Road projects are staggering. 

The $40bn that went into a Silk Road Fund launched by China’s sovereign wealth fund in 2014 was the tip of the iceberg. In 2015, three state banks were given $82bn to use on Obor projects, while the Asian Infrastructure Investment Bank (AIIB) launched by China along with a few neighbouring countries, has a further Obor-focused $100bn. A total of $900bn has already been earmarked by the Chinese government for infrastructure projects such as ports, railways and gas pipelines. China has looked at the Marshall Plan the US launched in the 1940s, and decided that it can do something even more ambitious today.

Alongside Obor, there’s another Chinese effort that has gone largely unnoticed. Launched in 2012, the 16+1 initiative brings together five Balkan countries and 11 EU member states as targets for economic cooperation with China on infrastructure and a wide range of technologies.

What has this to do with wine? Well, in just five years, between 2010 and 2015, China has gone from buying 7% of the world’s wine to more than 15%. As the list of countries invited to participate in the Fangshan event illustrated, it is taking an unprecedented interest in stocking its cellars from a number of Obor wine producing countries, including: Hungary, Bulgaria, Romania, Slovenia, Moldova, Lebanon, Turkey, Greece, Georgia, Israel and Armenia. All of these would no doubt be delighted to be included in the $2trn of imports Chinese Commerce Minister Zhong Shan said China planned to buy between 2017 and 2022 from ‘countries participating in the Belt and Road initiative.’ 

Over 40 Cypriot wineries have already exported to China; Turkey and Bulgaria respectively shipped 238,000 and 419,000 bottles there in 2016, while Georgia’s sales rose to nearly 5.3m, over twice as many as the previous year.

China is already the world’s biggest export market for Georgian wine, as well as for the most premium wines of the Purcari winery in Moldova, so there is no denying the potential of the Chinese market for countries that have not always found it easy to sell their wines profitably in places like the US and UK.

Israeli producers are also apparently finding China a receptive market for bottles whose prices often meet with resistance in the UK, for example, and Israel’s fifth largest wine company, Arza, was recently reported – in the Hebrew language newspaper, The Marker – to be discussing the construction of a joint venture winery near Jingmen in central China.

All of these countries need to hurry up, however. President Xi takes a very broad view of the world and has said that the initiative is “open to all”, including regions like the Americas which were neither on the original silk route nor close enough to be encompassed by the Asian ‘belt’. Over a third of the $23.7bn cost of the Hinkley Point C nuclear power plant in the UK, for example, has been earmarked by China as an Obor project. Maybe the Silk Road bandwagon might even have some space for some English sparkling wine producers.

As for wine traders elsewhere, the news that China is already buying nearly one in every six bottles of internationally traded wine ought to offer just a little sobering food for thought – as should the fact that it is sometimes paying higher prices than traditional markets.

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