Belt and Road golden chance for global growth

People's Review - - COMMENTARY - BY WANG HONGJIANG

The Belt and Road Ini­tia­tive has brought tremen­dous trade and in­vest­ment op­por­tu­ni­ties that the world can­not af­ford to ig­nore. In the first seven months, China signed 78.09 bil­lion U.S. dol­lars of con­tracted projects along the Belt and Road, up 32.6 per­cent year on year, ac­cord­ing to the Min­istry of Com­merce. "Its con­cepts, such as in­clu­sive­ness and strate­gic con­nec­tion, con­form with the com­mon in­ter­ests of the world, and there­fore have at­tracted global at­ten­tion. The ini­tia­tive has be­come the world's largest growth ini­tia­tive, liveli­hood project and pub­lic good so far," said Wang Yi­wei from Ren­min Univer­sity of China. The Silk Road Eco­nomic Belt and the 21st Cen­tury Mar­itime Silk Road ini­tia­tive, known as the Belt and Road Ini­tia­tive, was pro­posed by China in 2013 with the aim of build­ing a trade and in­fra­struc­ture net­work con­nect­ing Asia with Europe and Africa along the an­cient trade routes.

IN­VEST­MENT ON FAST LANE

China's out­bound in­vest­ment to coun­tries in­volved in the Belt and Road Ini­tia­tive stood at 6.61 bil­lion U.S. dol­lars in the first half of 2017, ac­count­ing for 13.7 per­cent of the coun­try's non-fi­nan­cial out­bound di­rect in­vest­ment (ODI), up 6 per­cent­age points from the same pe­riod in 2016. In con­trast, the coun­try's to­tal ODI dropped 45.8 per­cent year on year to 48.19 bil­lion U.S. dol­lars in the H1, Min­istry of Com­merce (MOC) data showed. In­vest­ment growth be­tween China and Belt and Road coun­tries is mu­tual. As a case in point, in the first seven months, the Euro­pean Union (EU) di­rect in­vest­ment on the Chi­nese main­land in­creased 5.4 per­cent year on year. The EU is China's big­gest trad­ing part­ner, while China is the EU's largest source of im­ports and sec­ond largest two-way trad­ing part­ner. Enor­mous po­ten­tial for fur­ther in­vest­ment co­op­er­a­tion still lies ahead given the EU's in­vest­ment in China only ac­counts for about 4 per­cent of its to­tal over­seas in­vest­ment, while Chi­nese in­vest­ment in the EU only takes up about 2 per­cent of all for­eign di­rect in­vest­ment (FDI) flow­ing to the EU. Be­sides trade and in­vest­ment, in­ter­ac­tions have also in­creased in cul­ture, ed­u­ca­tion, science and tech­nol­ogy, tourism and other ar­eas. On Aug. 18, a Belt and Road high level meet­ing for health co­op­er­a­tion was held in Bei­jing. China has launched 38 key projects in the health sec­tor along with the Belt and Road coun­tries, cov­er­ing fields in­clud­ing in­fec­tious dis­ease con­trol, emer­gency med­i­cal as­sis­tance and tra­di­tional medicine. As of Fe­bru­ary, 25 projects had been com­pleted, ac­cord­ing to the meet­ing.

IN­FRA­STRUC­TURE NET­WORKS

China has been ex­port­ing high-speed trains and re­lated tech­nolo­gies to the Belt and Road coun­tries. In 2014, China com­pleted the con­struc­tion of its first over­seas high-speed rail in Turkey. In June 2015, China and Rus­sia inked deals for 770 km of track con­nect­ing Moscow and Kazan. China's rail ser­vices are stretch­ing all the way to the west along the an­cient Silk Road. In Au­gust this year, China and Egypt signed a 1.24 bil­lion-U.S.-dol­lar light rail con­tract. The 66-km 11-sta­tion line will con­nect Cairo with ad­ja­cent cities. Thanks to the China-Europe rail link in par­tic­u­lar, mer­chan­dise trade wit­nessed ro­bust growth be­tween China and Euro­pean coun­tries in­clud­ing Ger­many, Spain and Bri­tain. Since May last year, over 64 mil­lion yuan worth of Ger­man prod­ucts have been im­ported via the Chi­naEurope rail link, data showed. The num­ber of transcon­ti­nen­tal cargo rail lines via China's north­ern Manzhouli port alone had in­creased to 35 as of Aug. 9 this year. "The Belt and Road Ini­tia­tive is key to solv­ing the prob­lem of slug­gish re­cov­ery and has seized the cru­cial link of world eco­nomic growth -- in­fra­struc­ture," Wang Yi­wei said.

SOLID DRIVER

China's growth will con­tinue to be a key driver for a firm­ing re­cov­ery of the world econ­omy, ac­cord­ing to the In­ter­na­tional Mon­e­tary Fund chief econ­o­mist Mau­rice Ob­st­feld. Global in­vestors, in­clud­ing the EU, con­tinue to be op­ti­mistic about China's eco­nomic growth prospects. In the first seven months, 17,703 new for­eign-funded com­pa­nies were es­tab­lished in China, up 12 per­cent year on year, ac­cord­ing to the MOC. Ex­press­ing their con­fi­dence in the econ­omy, in­ter­na­tional fi­nan­cial heavy­weights have raised their fore­casts for China's eco­nomic growth. For ex­am­ple, the In­ter­na­tional Mon­e­tary Fund in July raised its fore­cast of China growth to 6.7 per­cent for 2017. "Strong Chi­nese growth drives growth par­tic­u­larly in Asian re­gion but also through­out the world," said Ob­st­feld. China's econ­omy ex­panded 6.9 per­cent for the first half of 2017, with con­sump­tion and ser­vices, as well as new in­no­va­tion-driven eco­nomic sec­tors, tak­ing up larger roles in the econ­omy. As China is trans­form­ing its econ­omy from tra­di­tional man­u­fac­tur­ing sec­tor to ser­vice and con­sump­tion ori­ented sec­tor, its struc­tural trans­for­ma­tion and the re­bal­anc­ing of its econ­omy should lower the growth rate and put growth on a firmer ba­sis over time, the chief econ­o­mist said. WIN-WIN SCE­NARIO Claims that the Belt and Road Ini­tia­tive is a tool by China to ex­pand its eco­nomic in­ter­ests and dom­i­nance abroad ig­nore the key el­e­ment un­der­pin­ning the ini­tia­tive -- win-win re­sults. Since China launched the ini­tia­tive in 2013, it has in­vested more than 50 bil­lion U.S. dol­lars in coun­tries in­volved in the Belt and Road as of May. Mean­while, a to­tal of 56 eco­nomic and trade co­op­er­a­tion zones have al­ready been built by Chi­nese busi­nesses in these coun­tries, gen­er­at­ing nearly 1.1 bil­lion U.S. dol­lars in tax rev­enue and cre­at­ing 180,000 lo­cal jobs. In May this year, China an­nounced at the Belt and Road Fo­rum for In­ter­na­tional Co­op­er­a­tion that it will con­trib­ute an ad­di­tional 100 bil­lion yuan to the Silk Road Fund to scale up fi­nanc­ing sup­port for the Belt and Road Ini­tia­tive. A to­tal of 29 for­eign heads of state and gov­ern­ment lead­ers at­tended the fo­rum. Other del­e­gates in­clude of­fi­cials, en­trepreneurs, fi­nanciers and jour­nal­ists from over 130 coun­tries, and rep­re­sen­ta­tives of key in­ter­na­tional or­ga­ni­za­tions. Thanks to the fo­rum, Belt and Road coun­tries had reached many agree­ments, in­clud­ing 76 items com­pris­ing more than 270 con­crete re­sults in five ar­eas. Ap­pre­ci­at­ing that China has en­tered the de­bate of glob­al­iza­tion in a pos­i­tive way, Ob­st­feld be­lieved the Belt and Road Ini­tia­tive is "very im­por­tant" in the con­text. China has been striv­ing to open up wider, in­stead of erect­ing trade and in­vest­ment bar­ri­ers. In Au­gust, the coun­try an­nounced more mea­sures to at­tract for­eign in­vest­ment, in­clud­ing eas­ier ac­cess and bet­ter pro­tec­tion of in­tel­lec­tual prop­erty rights. China could take con­crete ac­tions to pro­mote the global sys­tem, Ob­st­feld said.

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