Caixin on line

China has recently sought to organize its international, commercial and to some extent political relations with the countries to its West under a "Silk Road Economic Belt." This is underpinned in some practical sense by large investments in the physical infrastructure of trade, especially rail. However, by evoking the first-millennium "Silk Road" period, China is also establishing a paradigm for relationships whose reference pre-dates the current dominance of the West and what are perceived as Western ideas and institutions.

It was the disintegration of trade routes following the collapse of the pax mongolica and, ultimately, the Ottoman conquest of the Levant that drove the European powers to find new trade routes. One of these, and arguably the most transformative, was the route across the Pacific that brought Mexican silver to fuel the economies of East Asia starting in the second half of the 16th century.

The Silk Road, which as a concept is a modern invention, has had good propagandists and has been fixed in popular and political imagination. But the Pacific route, which we might call "La Ruta de la Plata," or the "Silver Way," also has both historical validity and potential for offering China a non-Anglo-Saxon paradigm for arranging its relations to the East.

The Manila Galleon: Trans-Pacific Trade Routes 1565-2015

This year marks the 200th anniversary of the last sailing of the "Manila Galleon" in 1815 – otherwise known as the "Nao de China" or "Nao de Acapulco." This was the name given to a trade route and the ships sailing it, that brought goods from China and wider Asia across the Pacific in exchange for silver from mines in "New Spain" – Nueva España, Spain's meso-American colonies – going the other way.

This may seem like an obscure or specialist anniversary, but this trade, which lasted for 250 years – the first such voyage was in 1565 – played a huge role in the global economy of the time. Indeed, it can be argued that this trade – through commerce spanning three continents and a standard currency – ushered in the global economy that remains with us today.

The trans-Pacific trade route connected Acapulco and Manila – both points serving as entrepots for their wider regions, Asia and Spanish America – connected across what is now Mexico to Veracruz on the Caribbean via the so-called Camino de China or "Road of China." At Veracruz, goods were shipped on the Flota de Indias, or West Indies Fleet, all the way to Seville or Cadiz in southern Spain, with Havana, Cuba, a stop along the way.

Chinese silk, ivory, porcelain and jade were joined in Manila by spices from the Moluccas, lacquerware from Japan, and cinnamon and cotton textiles from the Philippines for the journey east. In the other direction, Spanish wines, olive oil and manufactured goods were transported by land from the Caribbean to the Pacific for shipment to Asia, particularly the Philippines.

This combined route connected Asia via the Americas to Spain and Europe, making it not only the longest trade route in history up to that time, its 15,000 mile extent exceeding the length and scope of the Silk Road, but also the world's first truly global trade route, connecting both the New World and the Old World with Asia and with each other.

The ships that were built for this purpose were the largest ever constructed, reaching some 2,000 tons (although there is some dispute whether Zheng He's ships had the same displacement or perhaps a bit larger), when most large ships were only a quarter of the size. The Manila Galleons, built of Philippine hardwoods, were the super-container ships of their day.

The Peso: The World's First Global Currency

During this period, about 85 percent of the world's silver was produced in the Spanish colonies of the New World – notably Mexico and Peru – and one-third or perhaps more of it ended up in China as a result of this trade. The British, of course, came to know all about silver and the China trade; it was silver, or rather Britain's unwillingness to part with it, that led to the importation of opium, the subsequent eponymous wars, and a legacy that still roils Sino-Western relations.

Most significantly, however, although it was such goods as silk, porcelain and spices that were, much as in the previous millennium during the heyday of the Silk Road, the foreign traders' objectives, this latter-day trade was defined not so much by silk as by silver. One consequence was that the coin known variously in English as the Spanish or Mexican dollar or peso became, insofar as there was one, the standard currency in Asia. This coin emerged as a global currency, arguably the world's first, predating the similar role of the U.S. dollar (which is, in fact, derived from it) by several centuries. The word "dollar" comes from the names of coins that began to be minted in 16th century central Europe knowns as "thalers," hence our word. But it was the Spanish version –"real de a ocho" –worth 8 reales, that became common in the New World and Asia. This coin, also known as the "peso de ocho (reales)," whence "piece of eight," was the basis for the later U.S. dollar. Indeed, the slang term "two bits" for 25 cents, comes from the practice of cutting Spanish dollars into quarters to make change.

Although China invented paper money, rampant overprinting in previous centuries had led to a decline in confidence; by this period, the huge Chinese economy ran on metal coinage, silver and copper. Although imports of New World silver began slowly, demand exploded in the second-half of the 18th century as the Chinese economy boomed on the back of exports. By the three-quarter point in the century, it seems that Latin America was supplying essentially all of China's money demand.

The silver coins circulating in China came largely from mints in Spanish Mexico. These coins, standardized in weight and purity, were accepted if not preferred and required worldwide, much as the U.S. dollar is today. Known colloquially as "Buddha Head" coins (fotou) due to some apparent resemblance with the Spanish monarchs portrayed on the obverse, they became so popular that the Dutch minted (or, more exactly, counterfeited) them long after any given king's death. Contracts in local or some other currency often had annotations with the amounts in these silver coins. Silver mined and minted in Spain's American colonies was critical to the Chinese economy because it formed the basis of the monetary supply.

The effects are still with us: the Japanese yen and Hong Kong dollar were both derived from, and set equivalent to, what was by then the Mexican dollar. More important still, the Chinese yuan was in 1889 set at par to the Mexican dollar. If the yuan develops into a global reserve currency accepted worldwide, it will to some extent merely be restoring the status quo ante of the 16th to 18th centuries.

Similarities to the Silk Road

Both the Silk Road and this latter trade were largely defined by one commodity, so much so that we might name the latter "la Ruta de la Plata" or the "Silver Way." It can in some ways be seen as the successor to the Silk Road, for it was the disintegration of the Silk Road following the demise of the pax mongolica – a period of trans-continental stability that allowed Marco Polo to travel all the way to China – and, ultimately, the Ottoman conquest of the Levant and finally Constantinople, closing off the Mediterranean, that drove the European powers to find new trade routes by sea. These went both East around Africa and West to and beyond the New World, but it was the latter which was arguably the most transformative, for it was the route across the Pacific which brought Mexican silver to fuel the economies of East Asia starting in the mid-16th century.

Both the Silk Road and the Ruta de la Plata were engines of development. Much of Central Asian prosperity owed its existence to the Silk Road trade; in the latter period, much the same could be said of Manila and the Philippines. Both New Spain and the Viceroyalty of Peru owed much of their importance to the mines that produced the silver that was in so much demand.

Spanish America became a developed and sophisticated place, with cities, universities, printing presses, writers, artists and other elements of high civilization – all a century or perhaps two before Harvard or New York got much traction. Spanish America was a product of the high Renaissance; the Renaissance was well over before English North America got going.

It was not only silk that travelled along the Silk Road: religions (Buddhism, Manicheism, Christianity), and technology (e.g. paper-making) did too. Culture similarly travelled over the Ruta de la Plata. The Manila shawl (mantón de Manila), for example, has its origins in Asia. Chinese art influenced ceramics, textiles and sculptures on the other side of the Pacific.

Through the period of both the Silk Road and Ruta de la Plata, China was the world's largest polity and economy, so much so that it dominated the economy of the continent and, in the case of the later period, drove the development of the world's first standard currency.

The Silk Road and La Ruta de la Plata as Modern Paradigms

The Silk Road, which as a concept is a modern invention, provides an attractive paradigm for the arrangement of China's relations with its neighbors and beyond. It is not just nostalgia that led Chinese President Xi Jinping to propose a "Silk Road Economic Belt," for the Silk Road conjures a set of relationships that were based on something other than the legalistic principles of the Treaty of Vienna, or the so-called "Washington Consensus." China, as it has made clear many times, prefers face-to-face relationships rather than formal, especially multi-party, negotiations and the use of what it considers Western-dominated international institutions.

The Silk Road provides an attractive paradigm for the arrangement of China's relations with its neighbors and beyond. It evokes a time when China was economically dominant but not hegemonic; Chinese interests were well-defined, but allowed other parties to prosper, as some – notably the Sogdians from what is now Central Asia – did mightily. The Silk Road was a time of shifting and overlapping alliances and hierarchical relationships, when a well-placed gift or the granting of a privilege could allow China to keep its place at the center of the political firmament.

Today, as in the past, there is also room for mutual benefit; China aims to be the dominant player, surely, but – goes the paradigm – dominance is to come, as it did a millennium ago, through trade routes and markets rather by direct projection of power. There is no need, the paradigm continues, for Western-dominated institutions such as the World Trade Organization, the World Bank and the International Monetary Fund: China and the region will have their own.

These paradigms matter in international relations where "shared values" and "shared history" are often touted as being essential to underpin trust and cooperation. The "Silk Road Economic Belt" is very much China's attempt to establish these shared values and history as a basis for relations with its neighbors. For the target countries – initially those in Central Asia, but ultimately in the wider region – the Silk Road competes as a concept with the Russia's proposed "Eurasian Union," which hearkens back to the Soviet Union and Tsarist Empire, when these countries and peoples were held in subjugation. One does not have to think long to work out which paradigm is likely to prove more attractive.

La Ruta de la Plata

The "Silk Road" – ironically a Western-initiated concept – has had good propagandists and has been fixed in popular and political imagination. But the Pacific route, "La Ruta de la Plata," also has both historical validity and potential to offer China a non-Anglo-Saxon, if not quite non-Western, paradigm for arranging its relations with the countries to its East. The Silk Road went West from China over land; La Ruta de la Plata went East by sea. But they are fundamentally similar.

These global maritime trade routes pre-dated British and then American global dominance; insofar as the English-speaking world had anything to do with La Ruta de la Plata, it was subservient to it. This paradigm allows China and Latin America to develop commercial and political relationships that also evoke a status quo ante, when China had the largest economy in the world, when its demand for silver drove the world's financial markets and its manufactured goods dominated global markets. It also hearkens back to a time when the West was led – politically and culturally – not by English-speaking countries but by those speaking what are now known as the Romance languages, a time when the world's most important trade link was that between a Spanish America and China.

One can already see the beginnings of a modern "Ruta de la Plata" taking shape. China is now one of the largest investors in Latin America with particular emphasis on resources and transportation infrastructure – ports, a major project to dig a new canal through the Central American isthmus to allow the trade routes to expand, as they once did, to the Atlantic, and a first albeit abortive attempt, to duplicate its railway successes. The role of the yuan – a modern-day incarnation of the Mexican silver Peso – to settle trade is due to increase.

Although the United States need not be left out of the rubric – after all, during the period, the West Coast of what is now the United States, the major ports of San Diego, Los Angeles and San Francisco, were all part of Spanish Mexico as their names attest – the United States is unlikely to have played quite the central role it has heretofore claimed.

Finally, "La Ruta de la Plata" offers China, as does the "Silk Road," a paradigm that is not so much in opposition to the so-called "Washington Consensus," but one that ignores it, by evoking periods and relationships that pre-date the current world order, a time when – China might argue and many countries might for their own purposes agree – the world was a better place.

Peter Gordon is editor of the Asian Review of Books. His commentary has also appeared in the South China Morning Post, Hong Kong Standard and other publications.

This essay was first published on Global Asia, which features a version complete with footnotes.