Chinese Association for International Understanding

Three years after the “Belt and Road” (OBOR) Initiative was proposed, more than 100 countries and international organizations have participated. China has signed cooperation agreements to jointly promote OBOR with nearly 40 countries along the route, and has started international industrial capacity cooperation with nearly 30 countries. Meanwhile, international organizations such as the United Nations have been active, as financial cooperation represented by the Asian Infrastructure Investment Bank, Silk Road Fund moves forward and a series of influential landmark projects gradually materialize. The development of OBOR started from scratch and grows from dots to dimensions, with both progress and fruits exceeding expectations.

During the past three years, trade volume between China and countries along the route has amounted to 3.1 trillion dollars, 26.1% of the total foreign trade value; China’s direct investment in countries along the Silk Road has reached 49.3 billion dollars, 12% of China’s overall FDI; 12,000 project contracts have been signed, with cumulative contract value amounting to 271.5 billion dollars; Chinese companies have set up 56 overseas economic and trade cooperation zones in 20 countries along the route, with 17.9 billion dollars of aggregated investment, creating 960 million dollars of tax revenue and 163 thousand jobs locally. Moreover, China has accelerated interconnectivity and industrial capacity cooperationwith countries along the Silk Road. Construction of the Jakarta-Bandung high speed railway has started; building of China-Laos railway and China-Thailand railway is soon to begin; a Chinese company has won contracts of Kyaukpyu Deep Sea Port and its industrial zone project; operation of the Gwadar Port has officially kicked off; Colombo Port City project has completely resumed; a Chinese company has won the bid of the Greek Piraeus Port Authority; business agreement of the Hungary-Serbia railway has been signed; Addis Ababa-Djibouti Railway, which was constructed with Chinese equipment and under Chinese standard, has formally been put to use; the first group of investment programs of the Silk Road Fund has been smoothly launched; China-Gulf Cooperation Council and China-Israel FTA negotiations have been making constant progress.

In a broad sense, faced with various anti-globalization tides including protectionism, isolationism and populism, the Belt and Road initiative is saving globalization by helping it land and become more inclusive, sustainable, just and reasonable. With connectivity in policies, infrastructure, trade, fund and people-to-people communication, as well as coordination between land and sea, between internal and external and between politics and economy, the Belt and Road is able to rebalance inland-coastal, domestic and overseas, and political-economic development. This initiative has also changed the structure of dual economy in a good number of developing countries. With joint efforts to build a green, sound, wisdom-sharing and peaceful Silk Road, the greatest common divisor—development—is thus seized, which benefits people not only in China, but also in countries along the route.

Since modern times, developed countries in the West have become the engine of globalization, and globalization has been the West’s expansion in the world in the contemporary period. Nowadays, developed economies in the West only account for less than 40% of the world’s total, instead of the engine for globalization, they are now hotbeds breeding anti-globalization. Since the outbreak of international financial crisis, China has become the supply-side of the global industrial layout and forerunner of globalization. As put by General Secretary Xi, the development of the Belt and Road is a process where China welcomes all parties to take the free and fast ride of China’s development, and welcomes countries and international organizations to participate in cooperation, as China’s experience for modernization is the most recent and vivid, with both the scale and difficulty surpassing any other country.

As TTIP, TPP and reindustrialization, among others, have ceased fruitlessly or been prolonged indefinitely, the Belt and Road initiative has thus become the most feasible and influential international cooperation initiative since international financial crisis. It has not only set the course for promoting global economic growth and reinvigorating international and regional cooperation, but also brought hope for investors around the world.

From the perspective of China, the Belt and Road initiative has demonstrated the charm of the Chinese model, and reflected the international community’s disappointment towards the model of the US and the west. The Belt and Road as an expression is of distinct Chinese characteristics, with rich content about China’s model and Chinese culture. First, “Belt” represents the economic belt, economic corridor and economic development belt, which showcases the experience of China’s reform and opening-up mode. The “Silk Road Economic Belt”, which is “to mobilize facets with dots, to extent to dimensions with lines and gradually form pan-regional cooperation”, is extension of the domestic reform mode in China. Second, the “Road”. There is a saying in China: to become rich, one country has to construct roads; to realize rapid development, one country has to build high ways. Therefore, infrastructure interconnectivity is the focus of OBOR. In China, “road” is not a random reference, rather, it is regarded as means to realize “Dao”. As to “Dao”, according to Chapter 42 of Dao De Jing, “Dao gives birth to One. One gives birth to Two. Two give birth to Three. Three give birth to ten-thousand things.” The “Dao” for today is the community of shared destiny. Therefore, the Belt and Road initiative actually contains plural roads instead of just one, and everyone has a share of it as this initiative is open and inclusive.

For a double landlocked country like Uzbekistan, it is difficult to be granted loan by international financial agencies according to market economy laws. But with Chinese President Xi Jinping’s visit, Uzbekistan had the access to a large amount of loans from China National Development Bank. The strength of the Chinese mode---in which infrastructure is the top priority, followed by nurturing of external demand environment needed by the market economy---is thus witnessed by the Belt and Road initiative! Driven on two wheels, namely government and market, Uzbekistan was able to get loans from both China National Development Bank and Asian Infrastructure Investment Bank.

Nowadays, many people set beautiful expectations on China and on the Belt and Road initiative. An Arab scholar used to say this at the 6th World Forum on China Studies: for a good number of years, western countries export weapons and upheavals to the Middle East for seizure of petroleum, whereas only China brings initiatives for economic development and cooperation, to which we are more than grateful! The reason for such comment is that on one hand, China’s success in poverty alleviation and livelihood improvement is appealing to them, on the other hand, the US and other western countries have proven to be delusional for them, for instance the degradation of “Arab Spring” into “Arab Winter” in Western Asia and Northern Africa. Another example is Djibouti. When the US noted that China was to construct a military logistics base in Djibouti, it sent the ambassador to obstruct this plan, but the President of Djibouti responded firmly, “we have been giving the West opportunities for more than 100 years—the US and France have long leased Djibouti as a military port, yet has this country developed as a result?! In the 1950s, per capita GDP was not much smaller than that of Singapore (1700 vs. 2300 dollars/person), nowadays this figure of Singapore is nearly 60,000 dollars, while Djibouti was announced by the UN as one of the least developed countries!”

In the pragmatic sense, the success of the Belt and Road is because of it grasped the opportunity to invest in real economies after the international financial crisis. The re-industrialization proposed by developed countries is more easily said than done. Investment in infrastructure could create jobs and create demand in the short term, and promote economic growth in the long run. There are some investment chances in developed countries as the infrastructure shows wear and tear, yet real opportunities lie in the developing ones. The annual investment needed for infrastructure is about 800 billion dollars in Asia, 500 billion dollars in African countries, and 2 trillion dollars worldwide. For every dollar put in infrastructure in developing countries, it will increase importation by 0.7 dollars, among which 0.35 dollars are from developed countries. Infrastructure investment in the world will also promote exportation of developed countries, creating space for structural reforms.

1. Poverty:As the old saying goes, “Thieves are born out of poverty”. An important reason why the world today is in turmoil is poverty. The Chinese mode is of wide international appeal regarding poverty alleviation and welfare improvement—after more than 30 years of reform and opening up, 700 million Chinese people have been lifted out of poverty, contributing 70% of the world’s total. Before the 17th century, the human society was in theage of horse/camel + ship, then the age of steam in the 18th century, followed by the age of railway in the 19th century, and then the era of plane in the 20th century. In the 21st century, the society is in the age of high-speed railway. The scene that “ten thousand taels of gold will be earned once the train roars” will be performed again. High speed railway is leading the “second great geographical discovery”, pushing forward the new type of urbanization and new layout of people’s production and life.

2. Wealth gap: the concerns lie in inequality rather than shortage—mutual support between the East and the West, interconnectivity between inland and coastal areas. The maritime globalization created by Europeans made the oceans carry more than 80% of the total trade volume and located most industries in coastal areas; this has not only entailed huge wealth gap between the inland and coastal areas as well as between landlocked countries and coastal countries, but also led to immense differentiation among various industries. The Belt and Road Initiative is removing such wealth gap by promoting mutual support of the East and the West, equality between the South and the North, and interconnectivity between land and sea.

3. Governance: the governance of a big country is like cooking little fish and shrimps—treatment on both symptoms and root causes as well as coordination. As global governance is growing more fractioned and globalization shows such trends as fraction, polarization and popularization, measures are urgently needed to be taken to enhance coordination as well as to treat both symptoms and root causes. Therefore, it has become an important mission in the Belt and Road Initiative to improve shortcomings in economic development, enhance security with development, as well as coordinate and integrate globalization with policy consultation, interconnectivity, impeded trade, financial integration and people-to-people communication.

In 2014, the guideline of Belt and Road development was completed in China. On February 1st of 2015, the Leadership Group for Building the Belt and Road, headed by Zhang Gaoli, Vice Premier of the State Council, made its first debut. The office of the Leadership Group is stationed in the National Commission on Development and Reform (NDRC), with four sub-groups on general management, Silk Road, Maritime Silk Road and international cooperation respectively; thus, the national leadership and coordination mechanism was initially launched to implement the top-level design of the OBOR. On March 28th, the NDRC, Ministry of Foreign Affairs and Ministry of Commerce jointly issued the Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road (Vision and Actions), proposing the top-level design framework of the Belt and Road Initiative in major principles, development guidelines and development priorities.

Key directions, areas, countries and programs were determined. The Vision and Actions makes clear the geographical areas covered by the Belt and Road. The Silk Road Economic Belt mainly aims at the connection from China to Europe (the Baltic Sea)through the Central Asia and Russia; from China to Persian Gulf and the Mediterranean via Central Asia and the Western Asia; from China to the Southeastern Asia, Southern Asia and the Indian Ocean. The 21st Century Maritime Silk Road focuses on two routes: from coastal ports in China to Europe via South China Sea and the Indian Ocean; from coastal ports in China to southern Pacific through South China Sea.

In the meantime, depending on international pass ways, supported by focal cities along the Belt and Road, China will work with countries along the route to build six international cooperative economic corridors on such platforms as energy and resources areas as well as key economic and trade industrial parks. The China Pakistan Economic Corridor started early and has been enjoying rapid progress, and a series of major projects have been kicked off concretely; Plan to build China-Mongolia-Russia Economic Corridorwas signed officially, marking another breakthrough in building multilateral economic corridors; steady progress has been made in building the New Eurasian Land Bridge Economic Corridor and Bangladesh-China-India-Myanmar Economic Corridor; intensive efforts are being made in planning and constructing economic corridors linking China, Central Asia and Western Asia, as well as China and the Indochina Peninsula.

Second, improvement of economic and trade collaboration.Broad cooperation will be carried out between China and countries and regions along the route in machinery equipment, electronic products, high-tech products, energy and resource products and agricultural produce. Moreover, further efforts will be made to innovate means of trade and improve trade facilitation.

Fifth, exploration in areas of financial cooperation. China will accelerate development of the AIIB and Silk Road Fund. There will be more cooperation in bilateral policy funds, and the dominant role of social fund will be given full play. There will also be larger scale of bilateral currency swap and more settlements in local currencies.

Seventh, more collaboration in ecology.China will join hands with countries and regions along the route to build and optimize mechanisms for communication and coordination, plan and construct a series of major projects with wide involvement, and push forward regional ecological development and environmental protection in a coordinated manner.

Eighth, better maritime cooperation. Further cooperation will be realized in agricultural and fishery interconnectivity, maritime environmental protection, navigation route security, maritime rescue and disaster prevention and relief. Focusing on industries such as maritime nursery, maritime fishery processing, new energy and renewable energy, sea water desalination, maritime biological pharmacy, environmental protection and maritime tourism, joint efforts will be made to build a series of maritime economic demonstration zones, maritime cooperation science parks, overseas economic and trade cooperation zones and maritime talent training bases.

In terms of connectivity, the Belt and Road Initiative not only contains hardware projects such as energy, infrastructure and industrial capacity cooperation, but also covers software projects like culture, education, standards and people-to-people communication. The Belt and Road Initiative does not just aim at alliance in strategies, plans and projects, it also targets at integration in wisdom, public opinion and actions.

Since the proposal of the Belt and Road Initiative, China has carried out policy consultation with countries along the route at different levels. By June 30th 2016, China has issued joint declarations on the Belt and Road Initiative with 56 countries and regional cooperative organizations, and signed relevant MOUs or agreements. From September 2013 to August 2016, the Chinese President Xi Jinping visited 37 countries (18 in Asia, 9 in Europe, 3 in Africa, 4 in Latin America and 3 in Oceania). He proposed to jointly build the Belt and Road at multiple occasions, winning positive responses locally.

Infrastructure interconnectivity is a prioritized area in building the Belt and Road. From October 2013 to June 2016, there were 38 large-scale transportation infrastructure projects tendered for by Chinese SOEs, involving 19 countries along the route. In the meantime, telecommunications companies led by China Unicom, China Telecom and China Mobile are accelerating cross-boarder transmission system projects in countries along the route, actively completing the layout of international basic network.

Smooth trade is the “gold key” to each other’s market. In the last three years, China has been working with countries along the route to push forward trade and investment facilitation. From June 2013 to June 2016, trade in goods between China and countries along the Belt and Road amounted to 3.1 trillion dollars, 26% of China’s total FDI. China’s accumulated investment in countries along the route was 51.1 billion dollars, 12% of the total FDI in the same period. Moreover, 52 economic and trade cooperation zones have been proposed in 18 countries along the Belt and Road, among which 13 have passed examination with 15.6 billion dollars of investment completed.

Financial integration is a strong pillar to guarantee the smooth progress of the Belt and Road. On June 25th, the AIIB approved its first batch of loans amounting to 509 million dollars with four projects. On April 21st, the BRICS New Development Bank issued the first batch of loan projects with a total volume of 811 million dollars. By June 2016, the China Development Bank has built a Belt and Road project portfolio with more than 900 projects involving more than 60 countries. The Export-Import Bank of China has more than 1000 Belt and Road projects with extra loans; these projects are located in 49 countries along the route, and more than 500 national projects have been newly signed. In the meantime, the development of Belt and Road also promoted internationalization of the RMB business, and more than 2.63 trillion yuan has been settled undercurrent account.

People-to-people communication is the social foundation to build the Belt and Road. For three years, China has been actively inheriting and promoting the Silk Road spirit featuring friendship and cooperation, carrying out wide cooperation with countries along the route in culture and education, tourism, healthcare, science and technology, youth, political parties and think-tanks, laying a solid foundation of public opinions for building the Belt and Road.

The success of the Belt and Road Initiative also reflects problems of our time--- the lack in supply of world public goods is increasing, while the ability, will and sincerity in America’s leadership are all deteriorating, which has been fully demonstrated in the reaction to the AIIB. The Belt and Road Initiative is China’s proposal for human peace and development and China’s solution to global governance, it responds to the time’s call and showcases inclusiveness and openness, reflecting the world’s voice. At the China-Europe High-level Political Parties Forum hosted on May 19th 2016, former Prime Minister of Romania, Mr. Ponta, said that “Europe needs to open its eyes to see the world! For us, it’s even hard to say what will happen five months later, but Chinese people are designing something fifty years later!” Mr. Potapokin, president of Latvia-China Friendship Association, said that “There has never been such a grand cooperative initiative in history. It is beyond imagination of us Europeans, and I hope European people do not waste such a good will of China!”

The contradiction between growing demand for international public goods and backward supply capability is the driving force to build the Belt and Road; it is also the fundamental reason why the progress and results of Belt and Road Initiative have both exceeded expectations. The Belt and Road Initiative proposes the principle of joint consultation, common efforts and benefits for all and the concept of community of shared interests, responsibility and destiny, thus it has transcended the colonial system after World War I and alliance system after World War II; it guides the development of a new type of international relations featuring win-win cooperation in the 21st century, makes up for shortcomings of globalization, pushes forward the evolution of partial globalization towards inclusive globalization, and demonstrates the sense of international responsibility of an emerging China.

Nevertheless, we should be sober-minded that the development of the Belt and Road also faces economic, political, security, legal and moral risks; most countries simply want to attract the Chinese investment, and there is even misunderstanding that China is “transferring redundant industrial capacity”. In China, concerns are most about the large quantity of overseas investment and security challenges. All these potential problems call for careful pre-judgment, assessment and measures. In the meantime, we need to attach great importance to various doubts and boycott (soft and hard) home and abroad, and give effective and timely responses.

In conclusion, the Belt and Road Initiative helps to realize the shared dream of various countries to eliminate poverty, grow economy and revive civilizations. It also helps to promote the 2030 Sustainable Development Goals of the United Nations. The Belt and Road Initiative has become an important endeavor for China to push forward global economic governance. It is intriguing to note that the success of the Belt and Road Initiative has been predicated 100 years ago: “It is no exaggeration to say that this line of communications was the longest road ever to traverse the entire old world. From a cultural and historic point of view, it was the most significant link between nationalities and continents on earth…… If the Chinese government could revive the Silk Road and apply modern transportation means, it will surely contribute to humankind and thus build a monument for itself.” In his book Connectography, the American strategist ParagKhanna has also said that interconnectivity determines competitiveness in the 21st century. The progress of Belt and Road Initiative is therefore in line with aspiration of various countries, setting the new course for international cooperation.

(Wang Yiwei, professor and doctoral supervisor of School of International Studies of the Renmin University of China. He is also head of Research Institute of International Affairs, research fellow and director of Research Centre on European Affairs/Research Centre on EU Affairs) Research areas: Belt and Road Initiative, Chinese diplomacy, European integration and China-Europe relations, public diplomacy, and theory of international relations. Major publications:The World is Connected: Logic behind the Belt and Road, Belt and Road: Opportunities and Challenges, End of Maritime Powers?—Apocalypse of European Civilization, Transcending Balance of Power: Global Governance and Cooperation between Major Countries. Mr. Wang has also been the chief editor of “Series of Books on China-NATO Research” and China-Europe Relationship from Global Perspective.