How can po­ten­tial of B&R be fully re­al­ized?

Global Times - - Biz Comment -

China’s Belt and Road (B&R) ini­tia­tive could prompt a pro­found shift in the global order to­ward a new mul­ti­lat­er­al­ism. The strate­gic planning and de­liv­ery of scal­able in­fra­struc­ture for power gen­er­a­tion, trans­port, wa­ter and telecom­mu­ni­ca­tions will bring much­needed eco­nomic and so­ci­etal con­nec­tiv­ity to all the coun­tries along the route of the this new net­work.

The B&R ini­tia­tive has five ma­jor goals within a broad frame­work of con­nec­tiv­ity and col­lab­o­ra­tion: pol­icy co­or­di­na­tion; fa­cil­i­ties’ con­nec­tiv­ity; unim­peded trade; fi­nan­cial in­te­gra­tion; and peo­ple-to-peo­ple ex­change.

In a nar­rower sense, the B&R ini­tia­tive is pri­mar­ily a strate­gic in­fra­struc­ture ini­tia­tive of his­toric pro­por­tions. Be­yond the ini­tial com­mit­ment by the Chi­nese gov­ern­ment of about $1 tril­lion in in­fra­struc­ture de­vel­op­ment, which con­ser­va­tive es­ti­mates be­lieve to be vi­able, the B&R ini­tia­tive will re­quire roughly an ag­gre­gate of $6 tril­lion for the next 15 years to fi­nance in­fra­struc­ture projects fu­elling the coun­tries along the routes. Dur­ing that pe­riod, China plans to cu­mu­la­tively in­vest $4 tril­lion in to­tal.

Some of the in­vest­ments are al­ready un­der­way, such as var­i­ous pipe­lines. For in­stance, a 3,666-kilo­me­ter gas pipe­line be­tween Turk­menistan and China is be­ing built, re­quir­ing in­vest­ment of $7.3 bil­lion.

To un­lock the ini­tia­tive’s full po­ten­tial, a sen­si­tive ap­proach to in­fra­struc­ture de­liv­ery will be re­quired. A re­cent study by re­searchers at Ox­ford univer­sity found that low-qual­ity in­fra­struc­ture in­vest­ments pose sig­nif­i­cant risks to the global econ­omy. There­fore, we pro­pose a frame­work that is able to put the fo­cus on few but higher-qual­ity in­fra­struc­ture in­vest­ments, im­prove China’s project man­age­ment track record, de­liver pos­i­tive risk-ad­justed re­turns, and thus avoid over­in­vest­ment in un­pro­duc­tive projects, build-up of debt, mone­tary ex­pan­sion, in­sta­bil­ity in fi­nan­cial mar­kets, and eco­nomic fragility.

In the light of this ini­tia­tive and build­ing on the B&R’s di­men­sions of con­nec­tiv­ity high­lighted above, we an­tic­i­pate eight trans­for­ma­tion fac­tors that have the po­ten­tial to pro­vide high-level stew­ard­ship for the New Silk Road and re­vive the spirit of shared pros­per­ity.

Shared vi­sion: achiev­ing transna­tional and in­ter­na­tional sup­port for a shared vi­sion for strate­gic in­fra­struc­ture de­vel­op­ment that pro­motes well-be­ing and a na­tional sense of pur­pose to the com­mu­ni­ties be­yond na­tional bor­ders.

Mul­ti­lat­er­al­ism: cu­rat­ing an open and mul­ti­lat­eral pol­icy di­a­logue that ad­dresses pub­licpri­vate-civic co­op­er­a­tion,

early-stage project fi­nanc­ing, stan­dard­ized pro­cure­ment, and trans­parency to level the play­ing field and build trust­ing re­la­tion­ships.

Project-prepa­ra­tion fa­cil­ity: cre­at­ing an in­fra­struc­ture project-prepa­ra­tion fa­cil­ity to en­sure a pipe­line of bank­able projects and a transna­tional cen­ter of ex­cel­lence to de­liver the largest port­fo­lio of projects ever.

Risk mit­i­ga­tion: proac­tively mit­i­gat­ing po­lit­i­cal and reg­u­la­tory risk to boost stake­holder en­gage­ment and con­fi­dence in the plan by in­vestors and op­er­a­tors.

Sus­tain­able de­vel­op­ment: com­mit­ting to sus­tain­abil­ity, in­clu­sion and af­ford­abil­ity prin­ci­ples to gen­er­ate value for fu­ture gen­er­a­tions. In­no­va­tion: en­hanc­ing tech­no­log­i­cal and busi­ness model in­no­va­tion for sus­tained value cre­ation, en­sur­ing readi­ness for the fu­ture. Peo­ple-to-peo­ple ex­change: gov­ern­ing do­mes­tic and cross­bor­der mi­gra­tion and pro­mot­ing mu­tual learn­ing and un­der­stand­ing to en­able and deepen peo­pleto-peo­ple ex­change and transna­tional cul­tural co­op­er­a­tion to en­sure tran­scen­dent growth and uni­ver­sal pur­pose. Hu­man-cen­tric and fu­ture-ready: de­liv­er­ing the new hu­mane in­fra­struc­ture her­itage be­yond the cur­rent in­fra­struc­ture us­age for the next mil­len­nium. The B&R ini­tia­tive has at­tracted a lot of at­ten­tion. This may have some­thing to do with the fact that today’s in­creas­ing lack of global gover­nance has re­sulted in the ab­sence of in­ter­na­tional de­vel­op­ment plans that are com­pa­ra­ble to the scope and vi­sion of the ini­tia­tive. To date, the B&R ini­tia­tive in­volves over 60 coun­tries that ac­count for 60 per­cent of the world’s pop­u­la­tion and 33 per­cent of global GDP. With this ini­tia­tive, China is will­ing to share its im­mense fi­nan­cial and in­dus­trial re­sources and ca­pa­bil­i­ties as well as its own ex­pe­ri­ence of four decades of re­form and open­ing-up, and, at the same time, se­cure its own long-term de­vel­op­ment.

Il­lus­tra­tion: Peter C. Espina/GT

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