Belt & Road trade set to jump in next decade
China’s trade with economies participating in the Belt and Road Initiative is likely to deliver double-digit growth in the next five to 10 years, if institutional hurdles are gradually removed, said a leading international trade expert.
“The estimated growth would be five to six percentage points higher than China’s trade volume with other countries and regions,” said Wei Jianguo, former vice-minister of commerce.
“That would be accompanied by a shift from traditional sectors such as textiles, machinery manufacturing, agriculture and infrastructure to industries like information technology, aerospace, highspeed rail and tourism,” said Wei, who is also vice-president of the China Center for International Economic Exchanges, a major government think tank.
Mutual investment would also enjoy double-digit growth, he added.
In the first three quarters of this year, trade between China and economies involved in the initiative amounted to $785.9 billion, up 15 percent year-on-year, according to the Ministry of Commerce.
So far, Chinese enterprises promoted the construction of 75 overseas economic and trade cooperation zones in 24 countries and regions, and created more than 209,000 jobs for the local people, according to the ministry.
Currently, institutional hurdles present the largest barrier to trade between China and economies participating in the initiative, Wei warned.
“To overcome the barrier, more bilateral or multilateral agreements, such as bilateral investment treaties and free trade agreements, should be signed as soon as possible between China and economies involved in the initiative,” he told China Daily.
“Information exchange is also necessary. More job opportunities should be created to promote local eco- nomic development.”
In addition, there are still many challenges for China and the other economies involved, such as “rough terrain, persistent regional conflicts, and corruption in some countries”, Yeroen van der Leer, senior manager of accounting firm PricewaterhouseCoopers Netherlands, wrote in a report.
A review by PwC shows a decline in the number of mergers and acquisitions in volume and US dollar value in 2016.
“This reflects a shift to quality and a renewed focus on project economics,” said Christopher Tan, PwC China corporate finance capital projects & infrastructure partner.
In China, the average project size increased by 14 percent — largely driven by public expenditure on infrastructure as a central pillar of economic policy, it said.
The review also shows there is potential for significant growth in power utilities in a number of middle-income Belt and Road countries and regions. Particularly, an aging population, a high birthrate and an insufficient number of inpatient beds should boost healthcare investment.