The Emperor’s New Road: China and the Project of the Century Read online

  Two challenges run through this history to the present, and technology is at the center of both. Great powers face the challenge of improving connectivity while maintaining control. For most of history, physical distance and terrain shaped communication possibilities. The time to send a message from one town to another was the time it took to travel, on foot or horseback, between those towns. Transportation and communication infrastructure were one and the same. The emergence of the telegraph broke that relationship, leapfrogging communication ahead of transportation for the first time. But far from resolving the tension between connectivity and control, the telegraph and its successors have only further complicated it.

  Weaker states face the challenge of developing economically while maintaining their independence. Infrastructure projects hold out the promise of growth, connecting communities and serving as the backbone of modern economies. Foreign powers can offer financing, expertise, and technology that would otherwise be unavailable. But foreign assistance rarely comes without strings attached, and the construction of a project is not the same as transferring the knowledge required to build and operate it. The promise of new infrastructure is almost universally attractive, but for states courting foreign investment, the benefits are easy to exaggerate, while the true costs and risks are often downplayed.

  The most striking change is that China, having played the role of the weaker state, is now grappling with the challenges that accompany its rising power and expanding global footprint. The script has been flipped, although as with all historical comparisons, there are important differences. New technologies open avenues for influence, while international institutions and norms moderate today’s global connectivity competition.

  To understand these challenges, there is no better year to begin than 1869, when three megaprojects shrank the world. The U.S. transcontinental railway, the Suez Canal, and the Indo-European Telegraph leveraged new technologies to carry people, goods, and information faster than ever before. In the West, these projects are popularly remembered as symbols of progress. In hindsight, the story looks very different, not only from the perspective of the weaker states, which often sacrificed political autonomy for relatively little economically, but also from the vantage point of the great powers themselves, whose overwhelming drive to build and expand concealed risks lurking beneath the surface. Every connection brings disruption, and no one foresaw how these projects, and the new technologies they harnessed, would unfold.

  “A Province Conquered”

  Cannons erupted on November 17, 1869, as a French imperial yacht L’Aigle (the Eagle) was scheduled to begin the first journey through the newly created Suez Canal. Empress Eugenie, the wife of Napoleon III, was sitting aboard. Behind the French yacht, a flotilla of forty ships carried European diplomats and royalty, including the emperor of Austria, the crown prince of Prussia, and the princes of the Netherlands and Hanover.7 The idea of linking the Mediterranean and the Red Sea had captivated rulers from the pharaohs to Napoleon, but the former considered it impossible and the latter too costly. The project became the world’s most expensive infrastructure project after a decade of deal making, construction delays, and cost overruns. Finally, the moment had arrived.

  The Suez was so historic that a representative from the Vatican blessed the canal a day before its opening. “A time has arrived which is not just one of the most solemn of the century,” he began, “but also one of the greatest and most decisive that mankind has seen since the beginning of its history here.” The canal was bringing the West and the East closer together, and he speculated that political harmony could follow. He concluded by urging, “let us turn our thoughts not just to the image of each country but to the grandeur of the whole of humanity.”8

  That message evaporated literally overnight. Under the cover of darkness, a British naval ship, the HMS Newport, maneuvered out of its assigned spot. When the sun rose, it was sitting at the front of the line, ahead of even the imperial French yacht, and positioned so it was impossible for other ships to pass. Empress Eu-genie was forced to watch the British ship glide into the canal first. The ship’s captain, George Nares, was officially reprimanded but privately praised by his superiors and later promoted. From the moment the canal opened, rather than moderating the global competition for influence, the Suez only intensified it.

  The Suez was also a massive bet on technological trends. When the project began, most of the world’s ships were powered by wind. Twenty years after its completion, steam power was dominant on the world’s seas, a trend the canal both harnessed and accelerated.9 It was also steam power that carved the canal out of the desert. Specially designed dredges pumped mud out of the canal, barges shuttled heavy equipment, and locomotives replaced camels and mules. Much of the work was carried out in previously inaccessible areas and sweltering heat. “The Suez Canal is not only a waterway, it is a province conquered from the desert,” bragged a former general counsel of the Suez Canal Company, which built and operated the canal until the 1956 Suez Crisis.10

  Few projects in history have bent geography as the Suez did. Previously, a ship sailing from Asia to Europe was required to go around the Cape of Good Hope, a distance the canal cut in half. As a correspondent for the New York Times noted, “It is to Europe what a new Pacific Railroad . . . is to the United States.”11 The canal was many things: a marvel of modern engineering, a giant shortcut for commerce in a flattening world, and a fast lane for European powers to push farther into Asia.12

  The canal brought the world closer together, but it delivered surprisingly little for Egypt, the country at its center. In the 1850s, to finance a modernization push, the Egyptian government ventured deeply and dangerously into international capital markets. If Egypt’s rulers were aware of the risks, the outside money was too tempting to refuse, and they basked in the attention that came with announcing new projects. Mohamed Sa’id Pasha, the khedive of Egypt and Sudan when the canal was started, arranged for Egypt’s first loans and spent lavishly. When he died in 1863, the government’s debt had risen to five times its tax revenue.13 His nephew and successor, Isma’il Pasha, continued the spending spree, including borrowing $1 million for the canal’s opening celebrations.14

  Both Sa’id and Isma’il had promised that the canal belonged to Egypt, but the deal to build the canal was designed to extract local value rather than create it.15 The ninety-nine-year concession agreement was slanted toward the Suez Canal Company, which assumed all costs but gained the lion’s share of future earnings. Under the deal, Egypt received 15 percent of the company’s annual profits, the company’s founders received 10 percent, and its shareholders received 75 percent. The route for the canal had not been decided, but the agreement gave the Suez Company expansive land rights and twenty thousand unpaid laborers each year.16 The company was assuming a great risk, pioneering the largest infrastructure project in history; but its powers were vast, and the potential rewards were far from equitably shared.

  Nor was the technology that created the canal meaningfully diffused among the greater Egyptian population. The Suez Company complained that local staff lacked essential skills, and rather than train them, it preferred to recruit workers from Europe.17 At the canal’s blessing, the Vatican representative claimed, “Egypt, destined to reap the first of the fruits of this great labour, will call you the one who brought about her renaissance, and history will reserve a glorious and truly earned page for the Khedive Ismail.”18 Egyptians benefited from improved water systems but gained only a fraction of the human capital they had been promised. Like the canal itself, the technological “renaissance” ran through Egypt, but it was not diffused throughout it.

  Meanwhile, Egypt’s infrastructure binge was eroding its sovereignty. Its external debt increased twenty-three-fold between 1862 and 1875, when Egypt was forced to sell its 45 percent stake in the Suez Canal to Britain.19 After Egypt went bankrupt the following year, representatives from Britain and France were put in charge of the government’s revenue an
d expenditures. In 1882, Britain invaded and colonized Egypt.

  The canal’s impact on global trade was unexpected. To the horror of the canal’s French backers, British ships captured most of the gains. As steamships became dominant, Britain had the ship-building capabilities and capital to expand its fleet. France and other European governments, including Italy, Russia, and Austria-Hungary, all expected that their proximity to the canal would come at Britain’s expense. But Britain’s distance from the canal proved a boon. Its ships had better-balanced flows of goods, especially to the East, where they carried manufactured goods and textiles from India. British ships carried 60 percent of the canal’s total tonnage during its first year of operation and 80 percent in 1880. The canal was “cut by French energy and Egyptian money for British advantage,” the Economist quipped.20

  The Suez intensified foreign competition in China. Thanks to the canal and the rise of steamships, Western merchants were able to reach China faster and fill their ships with greater volumes of goods, putting pressure on the existing system of treaty ports.21 That commercial pressure, which brought more steamships and foreigners to China’s shores, and subsequent military action expanded the number of ports in the following decades. Fifty years later, there were thirty-two ports open to foreign trade, and by 1917, the number had ballooned to ninety-two, including sixty-nine formal treaty ports.22 Naturally, foreign competition did not stop at the water’s edge.

  Greater activity at China’s ports increased the demand for access to its interior. Chinese authorities sought to limit foreign access to the treaty ports, but as foreign trade increased, so did requests for better infrastructure to support the ports. Western traders wanted railways to shuttle cargo and raw materials, especially coal to fuel their ships and telegraph lines to communicate with the mainland and receive orders from home.23 Both technologies were popular in the West, but the Chinese government rightfully viewed its foreign backers with suspicion. In London, a Chinese diplomat was alarmed to discover a public report with a map that included a proposed railway network running through his country. “Then I first realized that their ambitions were not limited to occupying the treaty ports,” he later wrote.24

  China’s ambitions are now being questioned as it pushes into ports around the world. In Greece, China has used its checkbook to take the port of Piraeus, as Chapter 5 details, accomplishing what the Persian King Xerxes failed to do with overwhelming force twenty-five hundred years ago. China’s projects in Pakistan, Kenya, and Sri Lanka—mentioned earlier and examined in greater detail in Chapters 7, 8, and 9—illustrate its growing reach and associated risks. In Djibouti, China has built a shipping terminal next to its first military base on foreign soil, and U.S. officials worry it will take control of another shipping terminal, as Chapter 9 also explains. China does not “occupy” these ports in the same way colonial powers did, of course, but the BRI’s aims are even more expansive.

  “The People Insist”

  Six months before the Suez Canal bridged two seas, a connection forged of steel caught the world’s attention. On May 10, 1869, Leland Stanford, a California business magnate, drove a golden stake into the ground at Promontory Summit, Utah, connecting the Union Pacific and Central Pacific railways and completing the world’s first transcontinental railway. For a country that had been at war with itself four years earlier, the railway was a potent symbol. The United States was healing divisions, racing west to fulfill its destiny, and conquering time and space with new technologies. Only later would the railway’s true costs become clearer.25

  The United States’ transcontinental railways were not kind to those who lived in their path or to those who built them. Carrying troops and settlers, the railways expedited the breakup and deaths of western Native tribes. Railway workers endured long hours and dangerous conditions for little pay. Many of them were foreign, including thousands of Chinese workers, who were discriminated against and forced to pay for their own lodging, food, and tools. Hundreds of them died.26 Chinese workers even partially drove the final spike into the ground so that Leland Stanford and the other VIPs taking ceremonial swings would not lose any dignity, and after the ceremony, they replaced the golden spike with standard equipment.27

  Like China’s BRI, the expansion of the railroad was made possible in the first place by cozy relations between government and large corporations. In 1862, President Abraham Lincoln signed the Pacific Railway Act, which issued land grants directly to corporations for the first time. Among other subsidies, the government provided a series of land grants that, if combined today, would be larger than California.28 But lacking transparency and effective oversight, this cooperation led to corruption. Most infamously, the construction company Credit Mobilier inflated its fees and bribed American politicians with cash and discounted stock. Among those paid were the secretary of the treasury, the vice president, and four senators. Kickbacks also secured the support of state legislators and judges, who had threatened to hold up projects.

  Speed was prized above safety. U.S. land grants and loans required completing projects, which incentivized using temporary wooden structures and other short-term solutions. Railway executives publicly challenged their competitors to see who could build fastest. In 1869, the head of the Central Pacific Railroad company won a bet by pushing his workers to lay ten miles of track in a single day.29 It was not long before the emphasis on quantity over quality showed. Bridges failed, engine boilers exploded, and trains derailed. Mismanaged timetables and single-tracked routes led to deadly train collisions.30 During the same period in Britain, railway engineers painstakingly ensured that tracks were as close to level as possible. The process was slower and more expensive in the short term; but these projects lasted longer, and many of the bridges and tunnels that were built in Britain then remain in use today.

  As more track appeared than the market needed, the value of everything the railways carried was distorted. New land was eagerly exploited, and wheat, cattle, coal, and silver production skyrocketed. Towns like Dodge City, Kansas, grew rapidly as they were connected to markets in the east of the country. Later, as the railways moved farther west and closer to sources of cattle and other commodities, many boom towns went bust. The Dakotas became a natural experiment in state support, as the historian Richard White recounts in Railroaded.31 In South Dakota, railways emerged more gradually to meet demand, and farmers settled in areas that were more naturally advantageous for their crops. But in North Dakota, land grants and subsidies encouraged rapid construction, driving up land prices and oversettling less fertile land.

  Early signs suggest that China’s BRI will suffer from similar excesses. Between one-third and half of Chinese transportation projects in Eurasia generate little value, according to a World Bank study.32 Another World Bank study cautioned that Azerbaijan, Mongolia, and Tajikistan, all early supporters of the BRI, stand to lose because infrastructure costs are likely to exceed the potential gains.33 New railway services from China to Europe, as Chapter 3 explains, often win positive headlines for China’s BRI, but they are heavily subsidized and face structural challenges. In Southeast Asia, covered in Chapter 6, China is building massive railways with troubling social costs and questionable economic value.

  The United States’ railway misadventure shows how economic missteps can give way to environmental disasters. Land was overfarmed and overgrazed. Mining companies dammed rivers, dynamited mountains, and poisoned soil and water. Hunters killed buffalo for their hides and meat and merely for sport, driving them almost to extinction. The destruction that U.S. railways wrought was not ignored as much as celebrated. During an eighteen-month stretch, a Kansas Pacific Railway contractor, William Cody, killed 4,280 buffaloes to feed workers, earning him the nickname “Buffalo Bill.”

  Just as Chinese officials dare not challenge the BRI, the United States’ westward expansion was rarely questioned after it began. As Harper’s reported in 1867, “The work is now one of such national importance that the people insist upon its
vigorous prosecution as positively as they insisted on the prosecution of the last war.”34 There could be no turning back or slowing down. Main lines branched into trunk lines, which gave way to local lines. During the 1860s alone, twenty-two thousand miles of new track were built in the United States, a feat that was nearly doubled the following decade. Construction begat construction. Few people, if anyone, understood how all the pieces fit together.

  Even fewer noticed the financial risks that were accumulating. U.S. railway excesses brought the U.S. economy to its knees—not once but twice. In 1873, a European stock-market crisis led investors to dump U.S. railway bonds. With railway companies unable to find more buyers for their bonds, many of them failed, as did one of the nation’s largest banks. The railway bubble burst again in 1893, leading to the deepest depression up to that point in U.S. history.

  Chinese workers completed the world’s first transcontinental railway in the United States, but it would take another decade before China began to build its first railway, let alone a national railway network. During the 1860s, several foreign companies proposed building new lines in China, but the Qing government rejected all of them. Frustrated, some Western officials took the rejections as evidence of China’s backwardness. But the Qing government’s caution was much more rational, and strategic, than Western officials realized. Chinese authorities were more concerned about foreign influence than about the technology itself.

  Chinese officials understood that the railways would bring economic disruptions and could allow foreign powers to expand their access and influence into mainland China. “If ever a railroad exists on Chinese territory, it must be a Chinese and not a foreign undertaking,” a provincial governor explained in 1865.”35 They also worried that any damage to foreign projects within China would be used to justify intervention and to extract additional concessions. As one Chinese official wrote, “It will ruin the field and destroy the livelihood of our people. The people’s anger will be aroused and they will band together and fight. . . . If the foreigners claim they can look after and protect railways, we must reply that Chinese officials cannot forbid the people [to attack the railways] and will not pay indemnities.” Those very fears would be realized decades later during the Boxer Rebellion, when foreign powers took further territorial concessions at the expense of Chinese sovereignty.36