The Belt and Road Initiative: Injecting Positive Energy into the World Economy
Injecting Positive Energy into the World Economy
Since a raft of memoranda of cooperation was signed between China and certain nations to jointly build the Belt and Road, it has become a reasonable belief that the initiative will bring about new means of mutually-beneficial cooperation for the world economy.
SINCE the Belt and Road Initiative was proposed, construction across the area has steadily progressed. China has signed memoranda of cooperation with certain nations to jointly build the Belt and Road, and has also signed memoranda with some neighboring countries to promote regional and frontier cooperation. A raft of major cooperative projects has driven development in such areas as infrastructure connectivity, industrial investment, resource development, economic and trade cooperation, financial cooperation, cultural exchanges, ecological conservation, and maritime cooperation. That more countries and enterprises will engage in the construction of the Belt and Road in order to craft new means of mutually-beneficial cooperation for the world economy is thus now becoming a reasonable belief.
Cooperation, Mutual Benefit and Win-Win Results
On September 7, 2013, in a speech delivered at Nazarbayev University in Kazakhstan, Chinese President Xi Jinping expounded the strategic Belt and Road Initiative for the first time. He called for policy consultation, road connections, unimpeded trade, monetary circulation, and understanding between peoples. In his October 3, 2013 speech to the People’s Representative Council of Indonesia, President Xi remarked that China is committed to greater connectivity with ASEAN countries and is willing to develop a maritime partnership with them to jointly build the 21st Century Maritime Silk Road. This initia-
tive honors the principles of consultation, joint efforts and benefits for all. With the goal of promoting economic cooperation and prosperity in countries straddling the Belt and Road, the initiative is committed to promoting connectivity in Eurasia and its adjacent seaways, and establishing and enhancing partnerships among countries in the area, so as to realize diversified, independent, balanced and sustainable development.
According to preliminary estimates, there are over 60 countries abutting the Belt and Road, with an aggregate population of 4.4 billion; this accounts for 63 percent of the world’s total. Geographically, the Belt (short for the Silk Road Economic Belt) focuses on bringing China, Central Asia, Russia and Europe together, and linking China with the Persian Gulf and the Mediterranean Sea through Central and Western Asia, and linking China with Southeast Asia, South Asia and the Indian Ocean. The 21st Century Maritime Silk Road is projected to go from the Chinese coast to Europe via the South China Sea and the Indian Ocean along one route, and from China’s coast through the South China Sea to the South Pacific on the other. The Belt and Road will become the world’s major economic corridor, and stretch across the longest distances. Revitalization of the world’s economy will be less difficult if nations along the Belt and Road strengthen their cooperation and enhance their connectivity.
Based on China’s ancient Silk Road and Maritime Silk Road, the Belt and Road has a profound historical and cultural background. It enriches the Silk Road spirit of “openness and cooperation, harmony and inclusiveness, and mutual benefit.” In the present age, international competition is becoming ever fiercer, but the cooperative competition endorsed by China is bound to yield win-win results. The Belt and Road is open to all countries, economic entities, international organizations, regional cooperation mechanisms, non-governmental organizations, and market players in the area without any restrictions or interest alliances. While furthering its opening up to the outside world, China is willing to help promote greater openness among markets in the area and facilitate trade and investment, while lowering the costs of engaging in trade and investment.
Some countries lining the Belt and Road are developed, while others are developing. Considering their varying economic foundations and development phases, the spirit of harmony, inclusiveness and mutual respect must be observed in the course of cooperation and exchanges, so as to alleviate each one’s concerns and achieve common prosperity. If the essence of economics is competition, the core of the competition endorsed by the Belt and Road is cooperative rather than confrontational.
Injecting Impetus into the Recovery and a New Round of Growth of the World Economy
As the world’s second largest economy, China has been promoting the world economic recovery. This aim also provided the prompt for China’s leadership to propose the Belt and Road Initiative. Through enhanced coopera- tion with countries along the Belt and Road, China hopes to share the bounty of its opening-up and the fruits of its economic development, build new channels leading to mutually-beneficial global economic cooperation, and galvanize the economic recovery with a new energy, while triggering a new round of global economic growth.
Estimates indicate that the dependence on foreign trade by countries along the Belt and Road is 36 percent – much higher than the world average of 25 percent. From January to August 2015, the volume of tangible goods trade between China and the countries along the Belt and Road stood at US $485.37 billion, and this is estimated to exceed US $2.5 trillion by 2025. From January to August 2015, Chinese enterprises had invested a total of US $10.73 billion in this area, with a year-on-year growth of 48.2 percent. The construction of the Belt and Road will exert positive influence on all countries concerned. They may then integrate their own development plans with the construction of the Belt and Road, increase trade and investment, promote linking of industries, markets and projects, give greater play to the comparative advantages of each, foster new points for cooperation, and build a new platform for collaboration.
China’s remarkable contribution to the world economy in the construction of the Belt and Road
The Asian Infrastructure Investment Bank and the Silk Road Fund advocated by China will provide financial support for international routes over land and sea. In the meantime, the Chinese government is also encouraging enterprises to invest in infrastructure construction in countries along the Belt and Road, and to help countries in need build highspeed railways and overseas post stations. According to a research report by the World Bank in 2014, the cost of China building high- speed railways is only two- thirds that of developed countries. In addition, countries along the Belt and Road may enhance harmonization of their infrastructure construction plans and technical standards, jointly push forward the construction of international trunk routes, and jointly advance the construction of cross-border optical cables and other communications trunk line networks, improve international communications connectivity, and create an Information Silk Road.
Cooperation modes for the Belt and Road can be flexible. Multilateral and bilateral, regional and cross-border, financial, trade and project cooperation in various areas and at different levels must all come under consideration. Platforms provide the medium for cooperation. Various cooperative platforms have already been estab-
China hopes to share the bounty of its opening-up and the fruits of its economic development, build new channels leading to mutually-beneficial global economic cooperation, and galvanize the economic recovery with a new energy.
lished between China and countries along the Belt and Road. Transportation, oil and gas pipelines between China and Russia, Central Asia and Myanmar having already been built, more cooperative approaches will be explored on the basis of the existing freight train routes between China and the rest of Eurasia, highways between Western China and Western Europe, and shipping lanes between Lancang and Mekong. International economic corridors such as the New Eurasian Continental Bridge will be jointly built by taking advantage of international transport routes, relying on core cities along the Belt and Road, and using key commercial and industrial parks as cooperative platforms. In terms of international industrial chain cooperation, overseas economic and trade cooperation zones, cross-border economic zones, and various types of industrial parks will be established. Cooperative platforms for financial regulation and supervision, science and technology and personnel exchanges will also be erected for countries along the Belt and Road.
Expanding the scale of trade and investment of countries along the Belt and Road and realizing facilitation of trade and investment are crucial to the construction of the Belt and Road. In September of this year, China submitted its acceptance of the Trade Facilitation Agreement to the WTO, becoming the 16th member to accede to it. China will actively boost facilitation of trade, investment and flow of personnel, enhance exchanges of information, and the functions of customs, certification and accreditation. Countries along the Belt and Road should promote customs cooperation such as information exchanges, mutual recognition of regulations, and mutual assistance in law enforcement. They should meanwhile improve bilateral and multilateral cooperation in the fields of inspection and quarantine, certification and accreditation, standardization of measurements, and statistical information, and further improve customs clearance facilities at bor- der ports, establish a “single-window” in border ports, reduce customs clearance costs, and improve customs clearance capability. Investment facilitation must also accelerate, investment barriers be eliminated, and negotiations on bilateral investment protection agreements and double-taxation avoidance agreements advanced so as to protect the legitimate rights and interests of investors. With enhanced trade and investment facilitation and an improved trade and investment environment, both the scale and level of trade and investment between countries along the Belt and Road will greatly increase, thus benefitting residents throughout the entire area.
Achievements and Prospects of Cooperation between China and Countries along the Belt and Road
Achievements in project cooperation between China and countries along the Belt and Road have already become manifest. Last April, construction of a hydropower project by a Chinese company in Pakistan, and financed by the Silk Road Fund finished. Its installed capacity is 720 megawatts, with an annual generating capacity of 3.213 billion kwh. This project may help relieve the power shortages in Pakistan that have long retarded economic development and improvement of living standards. China has signed currency swap agreements with nations along the Belt and Road, including Kazakhstan, Uzbekistan, Pakistan, Russia and Mongolia in Asia, and Russia, Ukraine, Albania and Hungary in Europe. China is now working with countries in the area to actively plan construction of six major economic corridors: China-Mongolia-Russia, the New Eurasian Continental Bridge, China-Central Asia-West Asia, China-Indochina Peninsula, China-Pakistan and Bangladesh-China-India-Myanmar. With further construction of the Belt and Road, cooperation at more levels and in more areas between China and countries along the Belt and Road will unfold very soon, bringing more trade and investment opportunities. Priority areas of cooperation should not be limited to infrastructure construction. In light of economic complementarity, different strategies and plans should be applied to different countries and regions based on their resource endowment.
Between China and Russia and between China and Other Asian Countries: The China-Belarus Industrial Park is now under construction. Covering a total area of 91.5 square kilometers, the park will become an industrial manufacturing zone containing such industries as electronic information, bio-pharmacy, fine chemicals, high-end manufacturing and warehousing logistics. In the China-Pakistan Corridor, a series of projects in hydropower, thermal power, and solar and wind energy are pressing forward to meet Pakistan’s urgent needs, and have already yielded economic and social benefits. China
Priority areas of cooperation should not be limited to infrastructure construction.
will strengthen cooperation with Russia and Central Asian countries in areas such as oil-gas exploration and development, petrochemicals, deep processing of agricultural products, logistics and transportation, and tourism and telecommunications. It may even consider forging a cross-border agricultural industrial chain, encompassing the entire gamut from research and development, exploration, technical services, to production, pipeline construction to marketing, and oil and gas transmission.
Between China and European Countries: Last June, China and Hungary signed the Memorandum of Understanding between the Government of the People’s Republic of China and the Government of Hungary to Jointly Promote the Construction of the Silk Road Economic Belt and the 21st Century Maritime Silk Road, and these two countries will push forward major projects such as the Hungary-Serbia Railway. China has signed documents for peaceful utilization of nuclear power with Romania and the Czech Republic. Central European trains linking China and Poland, Germany and Spain will reduce the transportation cycle by 15 days as against maritime transportation, and are very likely to become a new major commodity transport artery from East Asia to Europe. Industries in China and Europe are highly complementary, and the two sides may also promote cooperation in intelligent equipment, mechanical equipment, nuclear power equipment, rail transit equipment and the Internet. New energies, and the iron and steel industry may also serve as magnets for cooperation. Enterprises from the two sides may join hands to promote technology, brand and marketing cooperation in order to develop a third-party market.
Between China and Arab Countries: The concept of mutual benefit, and the openness and cooperation of the Belt and Road offers a new way of thinking to resolve Middle East issues. If Middle Eastern countries join the project in concert, they will increase negotiation and cooperation out of common interest and will thereby achieve common development. China and Arab nations enjoy a very good foundation for cooperation. Arab countries represent the largest crude oil exporters to China, and China is also the biggest consumer market for their crude oil. The China-Arab States Expo has become an important platform for promoting economic, trade and cultural exchanges. Construction of the Belt and Road will draw all these countries more closely together. They may also further cooperation in finance, technology, resources, energy and markets. Breakthroughs must be made in the three high and new industries of nuclear energy, space satellites, and new energies in order to advance levels of cooperation. Chinese enterprises will invest more in energy, petrochemicals, agriculture, manufacturing and service industries in Arab lands, transfer competitive capacity to these countries, and help them speed up industrialization. Exploiting the advantages of Islamic finance, Arab countries can explore more cooperative opportunities with China in offshore finance, Islamic bonds, and cross-border RMB settlement. Moreover, there is a huge cooperative potential for halal food. To be specific, the two sides can enhance cooperation in standard certification and accreditation, marketing information, financing and technology. Chinese enterprises may learn from the halal food standards of Arab countries to improve their production capacity and product quality, while for their part Arab nations may avail themselves of China’s e-commerce platform to expand their halal food trade with China.
African Countries: Africa is a major constituent of the Belt and Road. Cooperative relations between China and African countries began half a century ago. As an important platform for the two sides to conduct exchanges and cooperation, the China-Africa Cooperation Forum has held six ministerial-level sessions and attained abundant results. During his visit to Africa in May 2015, Chinese Premier Li Keqiang proposed to help Africa build high- speed railway network, expressway network and regional aviation network, and to enhance cooperation in the areas of production capacity, financial cooperation, poverty reduction, ecological protection, cultural exchanges, and security. China is willing to aid Africa in infrastructure construction to promote its economic development capacity. China is now a major consumer of petroleum, natural gas, metal ores and other bulk commodities, while Africa abounds in natural resources, but is weak in deep processing. This provides huge room for the two sides to boost levels of cooperation, and to contribute to reasonable and efficient utilization of the world’s resources, at the same time avoiding the “resource curse” phenomenon.
Furthermore, measures that have proved mature and practical in pilot free trade areas – such as financial innovation, negative lists, and opening-up of service industries – could be replicated in the FTAs along the Belt and Road to achieve greater connection between countries, enterprises, projects, and standards.
Certain scholars believe that the fundamental reason why it is so hard for the world economy to extricate itself from crisis lies in the absence and backwardness of economic theory. The Belt and Road Initiative has injected new impetus into the world’s economic development and cooperation. Its philosophy will enrich the traditional thinking of economic cooperation and add more positive energy to the world’s economy. Just as President Xi Jinping said, the Belt and Road is by no means a solo act by China, but a chorus in which all countries along the Belt and Road join. China hopes more countries will participate in this chorus, and that more enterprises and residents share the fruits and bounty of cooperation. He believes that the construction of the Belt and Road will add more Chinese motive force to global economic growth, and that more countries will gain new growth energy when sharing China’s economic development achievements. Thus, great synergy will be formed to promote new growth for the world’s economy.