BRI’s im­age be­ing tarred by false claims

China Daily (Canada) - - VIEWS -

The huge pro­duc­tion ca­pac­ity formed in China dur­ing its rapid eco­nomic de­vel­op­ment over the past decades has been closely watched since the 2008 global fi­nan­cial cri­sis, and es­pe­cially since China launched the Belt and Road Ini­tia­tive in 2013, with some Western me­dia and schol­ars try­ing to es­tab­lish a con­nec­tion be­tween them.

In Fe­bru­ary 2015, an ar­ti­cle pub­lished in The Diplo­mat mag­a­zine claimed that China’s Belt and Road Ini­tia­tive not only aims to re­vi­tal­ize its econ­omy by pro­vid­ing an out­let for its do­mes­tic ex­cess ca­pac­ity, but also aims to cre­ate a ma­te­rial guar­an­tee for its ef­fort to be a world power cen­ter through ex­pand­ing its in­flu­ence in ma­jor emerg­ing mar­kets or de­vel­op­ing coun­tries. Like­wise, an opin­ion piece car­ried in The Fi­nan­cial Times on Oct 12, 2015, pro­posed that the Belt and Road Ini­tia­tive is China’s road to a new em­pire and its re­turn to the cen­ter of Asia, while call­ing it a means for China to ex­port its ex­cess ca­pac­ity. Many Western ob­servers still view the Belt and Road Ini­tia­tive as Bei­jing’s means of shift­ing its ex­cess ca­pac­ity and in­flu­ence out­ward.

But is there any truth in such ar­gu­ments?

Chi­nese com­pa­nies’ out­bound in­vest­ment is un­nec­es­sar­ily linked to the coun­try’s ex­cess ca­pac­ity. Some do­mes­tic en­ter­prises started to set up pro­cess­ing and man­u­fac­tur­ing in­dus­tries in other coun­tries through out­bound in­vest­ment far ear­lier than 2013 when the Belt and Road Ini­tia­tive con­cept was pre­sented. As early as 1999, the Chi­nese house­hold ap­pli­ance man­u­fac­turer Haier in­vested in a fac­tory in Cam­den, South Carolina, the United States. Since then, a num­ber of in­dus­trial parks or eco­nomic co­op­er­a­tion de­mon­stra­tion ar­eas have been suc­ces­sively set up by Chi­nese en­ter­prises in Thai­land, Pak­istan, Cam­bo­dia, In­done­sia, Egypt, and Ethiopia.

Ex­cess pro­duc­tion ca­pac­ity varies dur­ing dif­fer­ent times and across dif­fer­ent re­gions. Ac­cord­ing to the World Bank, there were more than 1 bil­lion peo­ple with­out ac­cess to elec­tric­ity world­wide in 2014, about one-third of whom were in the ru­ral ar­eas of South Asia. Due to a lack of roads, ports, air­ports, elec­tric power, telecom­mu­ni­ca­tion and other in­fra­struc­ture, Cen­tral Asian, South Asian, South­east Asian coun­tries find it dif­fi­cult to at­tract out­side cap­i­tal, tech­nol­ogy and tal­ent, mak­ing them un­able to turn their lo­cal re­source ad­van­tages into in­dus­trial ad­van­tages. In this con­text, many coun­tries have made in­fra­struc­ture con­struc­tion a pri­or­ity in their na­tional de­vel­op­ment strate­gies, which has cre­ated a huge de­mand for steel, ce­ment, glass, elec­trolytic alu­minum and other prod­ucts. The over­sup­ply of such prod­ucts in China does not nec­es­sar­ily mean there is an ex­cess in other coun­tries.

And the over­seas in­vest­ment of Chi­nese en­ter­prises is not only in tra­di­tional in­dus­tries but also in new in­dus­tries and prod­ucts. Also many of the in­dus­trial parks that have been es­tab­lished in other coun­tries are home to both Chi­nese en­ter­prises and those from the United States, Ja­pan and Eu­ro­pean coun­tries. The more than 80 eco­nomic and trade co­op­er­a­tion ar­eas jointly set up by China and the coun­tries along the Belt and Road routes have cre­ated more than 244,000 jobs for lo­cal peo­ple. There is no es­sen­tial dif­fer­ence be­tween Chi­nese en­ter- prises’ out­bound in­vest­ment and the in­dus­trial distri­bu­tions of Eu­ro­pean and US coun­tries around the world. Since the 1980s, multi­na­tion­als have laid out their pro­duc­tion and sales net­works on a global scale, be­com­ing an im­por­tant driv­ing force for eco­nomic glob­al­iza­tion. De­spite be­ing a late­comer, China has in­creas­ingly in­te­grated it­self into the global in­dus­trial sys­tem and its en­ter­prises have made ev­er­grow­ing in­vest­ment in­roads, but these are com­pletely based on mar­ket rules and are a re­sult of glob­al­iza­tion.

Ca­pac­ity co­op­er­a­tion is an ef­fec­tive way to re­duce over­pro­duc­tion. But the slug­gish world eco­nomic re­cov­ery af­ter the global fi­nan­cial cri­sis has served to cause ex­cess ca­pac­ity. In re­sponse to this, China has made great ef­forts to cut its over­ca­pac­ity in steel, coal, glass and elec­trolytic alu­minum on a large scale, and in­creased its ef­fec­tive sup­plies to host coun­tries through in­vest­ment in fac­to­ries based on their needs on the other hand. In a speech de­liv­ered to a fo­rum hosted by the club of Chi­nese en­trepreneurs in Bei­jing on Au­gust 19, Malaysian Prime Min­is­ter Ma­hathir Mo­hamad spoke highly of the Belt and Road Ini­tia­tive, say­ing Malaysia hopes more Chi­nese en­trepreneurs will in­vest and set up fac­to­ries in his coun­try, as it can en­hance Malaysia’s in­de­pen­dent pro­duc­tion and ex­port ca­pa­bil­ity through knowl­edge and tech­nol­ogy shar­ing.

Over the five years since the Belt and Road Ini­tia­tive was launched, pro­duc­tion ca­pac­ity co­op­er­a­tion has been one of the ar­eas wit­ness­ing the fastest co­op­er­a­tion be­tween China and coun­tries along the Belt and Road routes, and the model of co­op­er­a­tion dom­i­nated by in­fra­struc­ture con­struc­tion and pro­cess­ing and man­u­fac­tur­ing sec­tors has been widely wel­comed by host coun­tries. Now, more and more coun­tries and in­ter­na­tional or­ga­ni­za­tions are ex­tend­ing their en­dorse­ment to the ini­tia­tive’s role in pro­mot­ing di­ver­si­fied eco­nomic de­vel­op­ment of the host coun­tries while ad­vanc­ing their in­fra­struc­ture con­struc­tion.

This shows that no mat­ter how wor­ried Eu­ro­pean and US me­dia might be about the pro­duc­tion ca­pac­ity co­op­er­a­tion be­tween China and Belt and Road par­tic­i­pants, it is un­likely to dampen the en­thu­si­asm of the Belt and Road for such co­op­er­a­tion. Only the wearer knows whether the shoes fit, and in the words of for­mer Tan­za­nian pres­i­dent Jakaya Kik­wete, “African peo­ple are very aware of their needs and very sat­is­fied with the cur­rent sit­u­a­tion of China-Africa re­la­tions”.

... pro­duc­tion ca­pac­ity co­op­er­a­tion has been one of the ar­eas wit­ness­ing the fastest co­op­er­a­tion be­tween China and coun­tries along the Belt and Road routes ...

The au­thor is a re­search fel­low with the Na­tional De­vel­op­ment and Re­form Com­mis­sion’s Academy of Macroe­co­nomics Stud­ies.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.