The Modern Silver Way
Image by Taco Witte on Flickr

The history between East Asia and Latin America is rich but often forgotten. The Silver Way marked the emergence of the global economy, with trade routes between Manila, Acapulco, and Seville. While China’s westward Silk Road is grabbing headlines, it aims to revive another ancient route to the East. Today, we are witnessing the rebirth of the Modern Silver Way.

Observations

  • In The Silver Way, Gordon and Morales explore the history of the Ruta de La Plata (or Silver Way), which characterized a period (1565-1815) when commerce between China and Spanish America formed the lynchpin of global trade. The Silver Way marked the first time the entire world had been knitted together through global trade and financial networks that form the basis of our modern globalized world.
  • The “Alianza del Pacífico” is a Latin American trading bloc founded by four member states: Peru, Colombia, Chili, and Mexico. This group of nations would be the 6th largest economy in the world in terms of PPP GDP. Its goal is to further free trade and economic integration, especially with Asia.
  • Between 2000 and 2013, trade in goods between Latin America and the Caribbean and China increased 22-fold, from just over $12bn to nearly $275bn. By way of comparison, the region’s trade with the world grew just three-fold over the same period. Trade between Latin America and East Asia is still largely commodity-driven (in 2013, commodities made up 73% of Latin America’s exports to China).
  • In 2015, Beijing convened with the Community of Latin American and Caribbean States (CELAC). During the China-CELAC forum, Xi announced China’s goal of boosting bilateral trade to $500bn by 2025.

Analysis

In the West, the map of the world that is centered upon ourselves is somewhat deceiving: in the middle lie Europe and the Atlantic Ocean, separating East Asia from Latin America. Indeed, Asia uses a very different map: in the center lie East Asia and the Pacific Ocean, revealing the close proximity between East Asia and Latin America. The mutual history between these regions is rich. In 1565, Antonio de Urdaneta discovered the return route from East Asia back to Latin America. Urdaneta established the emergence of the global economy: all the maritime routes—Atlantic, Pacific, and the Indian Ocean—were now operational in both directions.

The Silver Way was, besides an engine for development, a conduit for culture, philosophy, and religion.

Upon Urdaneta’s return, the people of Mexico City came to believe that they would become the center of the world. Indeed, for two centuries, Mexico was the place where Asia, Europe, and the Americas met. The Mexican overland route from Acapulco to Mexico City was known as the “Camino de China. China itself was transformed by crops introduced from Latin America: in the 18th century, the “Columbian Exchange”, which arrived more by agricultural diffusion than by trade, allowed the Chinese population to explode. The first bestseller on China is a historical account written in Mexico by Juan González de Mendoza. Indeed, the Silver Way was, besides an engine for development, a conduit for culture, philosophy, and religion.

Today, we can witness the early signs of the rebirth of a Modern Silver Way. Similar to the Silver Way of old-age, China focuses on transportation infrastructure and natural resources. The Twin Ocean Railroad Connection for instance is a 5000km high-speed rail project that connects the Atlantic coast of Brazil to the Pacific coast of Peru, a modern-day “Camino de China”.  China will also dig a new canal connecting the Pacific and Atlantic oceans via Nicaragua. For several years, China has established mining and agricultural projects in Latin America. Indeed, as the increasing importance of the Sino-Mexican alliance shows, Latin America will become of great importance to China’s strategic ambitions.

Moreover, the Silk Road is China’s westward expansion, while the Silver Way is China’s eastward expansion. While Central Asia will benefit from the Silk Road, Latin America will benefit from the Silver Way. Chinese FDI into Latin America has increased significantly since 2010: from a total of $14bn in 2010, it has been increasing annually by $10bn (official data is lower since Chinese companies usually channel investments through third countries). Furthermore, the institutionalization of the Modern Silver Way is being explored by CELAC. All in all, the history of the Silver Way shows that renewed interaction between East Asia and Latin America could spark the emergence of dynamic hubs of globalization.