Initiative provides win-win fruits for all
The two-day Belt and Road Forum for International Cooperation, which concluded on Monday, has produced concrete results in the shape of a 76-item checklist, from memorandums of intent to collaborate to agreements on specific connectivity projects in the five key areas of policymaking, infrastructure, trade, finance and people-to-people connectivity. Seven experts share their views with China Daily’s Wu Zheyu on the forum’s achievements. Excerpts follow:
At the opening ceremony of the forum, President Xi Jinping announced that China will increase its financial support for the Belt and Road Initiative with an additional contribution of 100 billion yuan ($14.51 billion) to the Silk Road Fund. Since the Silk Road Fund is aimed more at providing equity financing for corporations, the additional financial support will enable them to borrow more funds based on their credibility.
The Belt and Road Initiative will need enormous amounts of funding, but projects under the initiative are not constrained on that front because of the financing available from the Asian Infrastructure Investment Bank and the Silk Road Fund. Projects along the Belt and Road can also turn to their respective regional multilateral or local financial institutions for financing. By the same token, the AIIB, for instance, will have many other projects that are not necessarily linked to the Belt and Road Initiative, as it is an investment bank and therefore seeks various opportunities. But, of course, given that the Belt and Road Initiative envisages infrastructure investment, which is the specialty of the AIIB, there will likely be tight collaboration between them.
The Belt and Road Initiative is not and should not be a foreign aid project; it is more about integration, coordination and harmonization in a large number of areas not limited to trade and investment but covering innovation, agriculture and the environment, just to mention a few. It is a project that goes beyond initial expectations of promoting trade and investment with neighboring and other countries. By envisaging harmonization of regulations in various areas of economic activity, enormous productivity gains can be reaped through cost savings. For instance, if innovators face the same conditions to register their innovations, they can access more markets and spread their ideas faster, thereby boosting efficiency.
There are 14 items in the field of deepening cooperation for infrastructure connectivity, from international transportation, environmental protection to industry parks.
President Xi Jinping has said that we should build the Belt and Road into a road for peace, prosperity, opening-up, innovation and connecting different civilizations. And the path to achieve the vision of innovative, coordinated, green, open and inclusive development raises hopes of China providing more productive public goods and services for countries involved in the initiative.
Industrial capacity cooperation is vital to implementing the initiative, but it shouldn’t be misread as China’s plan to export its excess production capacity to the economies along the Belt and Road. Overcapacity is a relative term in a certain period and certain fields. And overcapacity doesn’t mean low-quality capacity.
China’s capacity is concentrated mainly in the middle-end industrial chain that can be easily transferred to developing countries, which in turn can use it to effectively transform their productive forces in accordance with their domestic demand and create jobs. They can also use it to fur-
ther build their comparative strengths to help establish a more balanced and inclusive global industrial chain.
Take Chinese enterprises’ investment in Kazakhstan as an example. On the one hand, the manufacturing and extraction industries can use their competitive edge in the oil and natural gas sector to reduce their production costs. On the other hand, these industries can use their production capacities to meet Kazakhstan’s domestic demand and, hence, reduce imports and increase exports, which will improve the country’s economic competitiveness in the global market. Two countries have already signed cooperation projects worth $27 billion, set up a 2-billion-dollar cooperation fund for the purpose.
The industrial capacity cooperation has made achievements in other areas as well, such as highspeed railways, electrical and electronics products, construction machinery and shipping.
The Silk Road Fund is more directly related to the Belt and Road Initiative while the Asian Infrastructure Investment Bank also has other broader goals and missions. For long, emerging economies have tried, unsuccessfully, to increase their voting shares in international financial organizations such as the International Monetary Fund so that they more accurately reflect the global economic reality. In addition, there remain many other problems with the established development banks such as their inefficiency.
As such, the AIIB’s formation was necessitated by the weaknesses of the existing international financial and development institutions, and its functions go beyond collecting and offering funds for Belt and Road projects. For example, the AIIB works with other institutions like the World Bank and the Asian Development Bank to jointly finance development projects. Overall, there is a cooperative relationship between China-led institutions such as the AIIB and the Belt and Road Initiative — the AIIB contributes to the initiative through infrastructure financing, and such project financing for the initiative is an important, but not the exclusive focus of the AIIB.
China has made it clear that the goal of the Belt and Road Initiative is not to set up an alternative system, nor is it directed against any countries. Rather, it is an initiative to make improvements to the existing system. In addition, rather than aiming to seek hegemony, it is to create mutual cooperation for the benefit of all. And there is little reason to doubt this rhetoric regarding the initiative’s intentions.
China is one of the greatest beneficiaries and also one of the countries with the greatest stakes in the current global system, and it is not looking for any fundamental changes to the status quo. Thus, China would rationally avoid any moves that have even a hint of hegemonism, because it would only create more enemies in the region and around the globe. The Belt and Road Initiative is about generating the type of global connectivity that both China and the world benefit from, and it is about making friends along the Belt and Road, instead of gaining enemies.
Beyond its intentions, the initiative in practice has focused on infrastructure, an approach that goes back to the basics of development. However, China’s influence may almost inevitably rise along the Belt and Road routes, and likely spread to the cultural and soft power sphere more broadly.
The increasing influence will be a natural and inevitable result of China’s growing role in shouldering more international responsi- bilities. The Belt and Road Initiative proposed by China does not have any strong ideological associations, and China positions itself as a part of the developing world that it is investing in, rather than from a position of ideological superiority.
China encourages financial institutions to conduct business in renminbi, providing financing support for the Belt and Road Initiative. However, such investment or loans are not aids.
“Aid” is a technical term and usually refers to official development assistance, which is different from loans or investments. Since many countries along the Belt and Road routes are developing or relatively less developed, sometimes investments or loans from China might be developmental in nature.
Public finance must play a model role in attracting private financing for Belt and Road projects, and cooperation between governments could help build a better environment for investors. If coordinated efforts are made to make sure public finance and private capital work efficiently together to improve the infrastructure in the countries involved in the initiative, the costs of operating business could sharply decline. In this sense, infrastructure is not limited to facilities such as roads, railways and power plants but extends to “soft” areas such as the legal system, consumer service, commercial data collection and capacity training. Once hard and soft infrastructure improves, private investment will start flowing in. And the increase in official loans will in turn facilitate more private investment. Chinese enterprises investing in Belt and Road projects in other economies are driven by the government’s favorable policies as well as their own motivation to seize the opportunity to expand their businesses overseas.
The government’s preferential polices provide a broader platform for many Chinese enterprises. At the Belt and Road Forum for International Cooperation, China signed business and trade cooperation agreements with more than 30 countries and held talks on free trade agreements with related countries. And hopefully, that will build a favorable policy environment for companies to branch out and/or expand their businesses.
The Belt and Road Initiative relies on China’s existing bilateral and multilateral mechanisms with countries along the two routes, by ensuring that the present cooperation platform functions more efficiently and fruitfully. Since the initiative’s aim is to promote political trust, economic cooperation and cultural exchanges along the two routes, it will help achieve shared prosperity and development.
As President Xi Jinping said, China will not export its values or social systems, or intervene in other countries’ internal affairs. Based on the principle of mutual respect and fair cooperation, the rights of all countries to choose their development paths shall be fully respected, as the Belt and Road Initiative’s emphasis is on building multi-level international cooperation systems on the premise of respecting each country’s core benefits.
The road connectivity, trade and investment, and mutual understanding between China and its partner countries are fast improving. In the Belt and Road Initiative, which embodies responsibility, win-win cooperation and genuine pursuit of common development, the world can find a Chinese answer — in the form of balanced, equitable and
The Belt and Road Initiative has brought solid benefits for people in the economies along the two routes, as the total trade between China and those economies in the 2014-16 period exceeded $3 trillion, and China’s investment there crossed $50 billion. Chinese enterprises have set up 56 economic cooperation zones in more than 20 countries, generating some $1.1 billion in tax revenue and creating 180,000 jobs in the host countries.
In the more than three years since President Xi Jinping proposed the initiative, comprising the Silk Road Economic Belt and the 21st Century Maritime Silk Road, some people have misinterpreted it as China’s version of the Marshall Plan. They are wrong.
After World War II, the United States used the Marshall Plan to not only rebuild Western European economies but also to expand its influence in Europe and counter the socialist camp led by the Soviet Union. However, the Belt and Road Initiative is devoid of any political overtones as its intention is not to counter any parties. Instead, it brings economies together to share the benefits of economic growth.
Under the Marshall Plan, European countries lowered their tariff barriers, and the US expanded its market share and established the hegemony of the US dollar while the Belt and Road Initiative focuses on promoting policy coordination, infrastructure connectivity and development, unimpeded trade, financial integration, and closer people-to-people ties.
China is endeavoring to foster economic growth and transform its economic development model to move toward sustainable and eco-friendly growth, and the Belt and Road Initiative is its contribution to the development of the global economy.