Op­ti­miz­ing over­seas in­vest­ment through Belt & Road Ini­tia­tive

China Daily (Hong Kong) - - BUSINESS - By QI BIN

Since the out­break of the global fi­nan­cial cri­sis in 2008, Western de­vel­oped coun­tries have long been trapped in a slow eco­nomic re­cov­ery and high lev­els of debt. Pro­tec­tion­ism, pop­ulism and anti-glob­al­iza­tion have be­gun to emerge, cast­ing a shadow over world eco­nomic progress.

Break­ing trade bar­ri­ers, seek­ing a win-win sit­u­a­tion and pro­mot­ing growth are the ma­jor chal­lenges posed for these coun­tries. As for China, the Belt and Road Ini­tia­tive paves the way for cop­ing with these chal­lenges through pro­mot­ing eco­nomic co­op­er­a­tion and mu­tual ben­e­fit.

The Belt and Road Ini­tia­tive pro­poses a new ver­sion of eco­nomic glob­al­iza­tion un­like the one tra­di­tion­ally led by some de­vel­oped coun­tries.

First of all, it is backed by China’s 1.3 bil­lion con­sumers. They have formed the world’s largest and most promis­ing con­sump­tion force, which is the key driver to the eco­nomic growth of China and the rest of the world. Such mar­ket de­mand is fun­da­men­tal to the Belt and Road Ini­tia­tive’s roll­out.

Fur­ther­more, it en­tails an open, in­clu­sive and sus­tain­able process of glob­al­iza­tion. The tra­di­tional model we have wit­nessed is some­what un­bal­anced, un­co­or­di­nated and un­sus­tain­able, caus­ing a se­ries of co­nun­drums. For ex­am­ple, re­gional economies in­te­grate while the global econ­omy frag­ments, and global wealth surges while the gap be­tween rich and poor widens. The Belt and Road Ini­tia­tive main­tains the prin­ci­ple of achiev­ing shared growth through dis­cus­sion and co­op­er­a­tion, strives to con­nect with each par­tic­i­pat­ing econ­omy’s de­vel­op­ment roadmap, and com­mits to be open and practical in its ap­proach.

Also, the Belt and Road Ini­tia­tive is ded­i­cated to bring­ing equal co­op­er­a­tion and mu­tual ben­e­fits to all economies in­volved. Tra­di­tional eco­nomic glob­al­iza­tion has been more of a zero-sum game where de­vel­op­ing coun­tries are drained of re­sources, and it might pose threats to the health of the world econ­omy. The Belt and Road Ini­tia­tive, in com­par­i­son, is based on the no­tion of China and par­tic­i­pat­ing economies each play­ing to their dif­fer­ent kinds of ad­van­tages, and it there­fore can shape a more vi­brant, open and sus­tain­able global econ­omy.

The Belt and Road Ini­tia­tive was pro­posed and launched as China’s econ­omy en­ters the new nor­mal. As China car­ries out sup­ply-side struc­tural re­form and sees grow­ing over­seas in­vest­ment, we should es­tab­lish a sci­en­tific in­vest­ment strat­egy, and en­sure ef­fec­tive im­ple­men­ta­tion, and op­ti­mize in­vest­ment through Belt and Road Ini­tia­tive projects to pro­mote the new ver­sion of eco­nomic glob­al­iza­tion whilst ac­cel­er­at­ing China’s eco­nomic trans­for­ma­tion and struc­tural up­grade.

China’s over­seas in­vest­ment vol­ume is grow­ing as a re­sult of in­creased eco­nomic strength. Since 2015, the tide of over­seas merg­ers and ac­qui­si­tions has been turn­ing from re­sources and en­ergy to the high-tech, man­u­fac­tur­ing and con­sumer sec­tors — re­flect­ing a vast shift of eco­nomic fo­cus, now on do­mes­tic de­mand as op­posed to ex­ports.

De­vel­op­ing coun­tries typ­i­cally have an edge in terms of abun­dant re­sources and low pro­duc­tion costs, while China has a pal­pa­ble ad­van­tage in in­fra­struc­ture and man­u­fac­tur­ing. Op­por­tu­ni­ties for co­op­er­a­tion in these as­pects are surely worth ex­plor­ing.

For in­stance, China can sup­port de­vel­op­ing coun­tries in build­ing rail­ways, high­ways and bridges and profit from of­fer­ing added value to these coun­tries’ eco­nomic growth. Turn­ing to South­east Asian coun­tries which are known for low pro­duc­tion costs, China can move over cer­tain man­u­fac­tur­ing fa­cil­i­ties and in turn pro­vide cheaper prod­ucts for other mar­kets — a clas­sic win-win move which struc­turally up­grades China’s econ­omy while boost­ing these coun- tries’ do­mes­tic growth.

As for de­vel­oped coun­tries, China can fo­cus on in­vest­ing in ad­vanced tech­nolo­gies, prod­ucts, ser­vices and busi­ness models. A suc­cess­ful over­seas in­vest­ment should be grounded in do­mes­tic strengths cre­at­ing syn­ergy with the do­mes­tic mar­ket; be able to up­lift do­mes­tic tech­nolo­gies and eco­nomic growth, en­hanc­ing in­dus­trial up­grad­ing; ben­e­fit the in­vest­ment des­ti­na­tion coun­tries to yield win-win re­la­tion­ships. In­vest­ment sec­tors that are in line with the afore­men­tioned as­pects re­fer to both cut­tingedge in­dus­tries and cer­tain tra­di­tional man­u­fac­tur­ing sec­tors.

For in­stance, the mid­west­ern United States has tra­di­tional man­u­fac­tur­ing in­dus­tries in­clud­ing au­to­mo­tive and agri­cul­tural ma­chin­ery, as well as emerg­ing in­dus­tries such as health­care and bio-phar­ma­ceu­ti­cals, all of which have big prospects in terms of co­op­er­at­ing with re­lated in­dus­tries in China. In­vest­ment in these ar­eas will ben­e­fit China’s in­dus­trial up­grad­ing and im­ple­ment the Made in China 2025 ini­tia­tive, while cre­at­ing job op­por­tu­ni­ties for the in­vest­ment des­ti­na­tion coun­tries’ lo­cal mar­kets.

In the mean­time, we shall lever­age our tech­no­log­i­cal strengths in high-speed rail and nu­clear power, among oth­ers, en­cour­age Chi­nese en­ter­prises to go abroad to seek in­vest­ment op­por­tu­ni­ties, pro­mote in­dus­trial co­op­er­a­tion, and work to move the Belt and Road Ini­tia­tive for­ward.

Qi Bin, China In­vest­ment Corp’s ex­ec­u­tive vice-pres­i­dent

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