By Chen Chenchen Source:Global Times Published: 2017-5-17
The Belt and Road Forum for International Cooperation (BRF), which just concluded in Beijing has sparked heated discussion on prospects for global and regional development induced by the Belt and Road initiative (B&R). In his speech on Monday, Chinese President Xi Jinping said the B&R would help promote rebalancing economic globalization without drawing ideological lines and will never seek to develop political camps. This marks the first time Xi has signaled the B&R`s direction.
Since the B&R officially debuted in late 2013, there has been suspicion about the strategic intention behind the initiative. This is especially evident in some countries along the 21st Century Maritime Silk Road (MSR). One view is that the ongoing construction of maritime facilities along the MSR is for China`s maritime strategic expansion. In some countries, such views have directly caused hesitancy or reluctance to join the B&R.
In such context, the clear and direct positioning of the B&R by President Xi during the forum is both significant and necessary. While strategic insight is key to any development initiative, the philosophy behind the B&R is fundamentally economy-oriented and trade-centered. For both Belt and Road countries and China itself, this is the only way for interconnectivity cooperation to develop.
Xi`s speech highlighted that prioritizing interconnectivity among countries in terms of policy, infrastructure, trade, as well as financial and cultural development will be the driving force for growth in the time of economic stagnancy. Xi shared his insight on global deficits in peace, prosperity and governance, and shared his personal thoughts on possible solutions. It is exactly in such a global context that the Chinese policy of jointly consulting, building and sharing growth is widely accepted. This has been mirrored in proactive responses and efficient collaboration by dozens of Belt and Road countries.
The BRF focused on two things: reviewing past progress and next-step actions for economic cooperation. Reviewing existing projects along the B&R in the past three and half years, one would see a process of seeking economic cooperation models that can best satisfy interests of the relevant parties. The B&R follows a methodology of case-by-case exploration, rather than having a deliberate framework or strategic roadmap first.
Despite debates among Chinese experts, one consensus is that B&R is not development aid. Each project has to go through strict and scientific assessment procedures before financing, and ultimately should be market-oriented and profit-generating. This is the only way for B&R programs to sustain and grow.
Looking into the future, with the accumulation of successful cases, more countries and regions are expected to join. At the end of the two-day forum, President Xi announced that the mechanism of the Belt and Road Forum for International Cooperation would be continued, and the second forum would be held in 2019. If we see the past three and half years as the transformative stage of the B&R from concept to action, the next two years are set to witness more efficient launching and implementation of projects on the ground.
Three things would be decisive for B&R to be effective in the future. First, whether China is able to foresee the risks and handle them well through cooperation with B&R countries, especially risks brought on by administration shifts. Countries with stable domestic politics are more favorable to Chinese investors. China should be better prepared in taking precautions regarding potential political turbulence that might hinder cooperation projects. There are already existing lessons.
Second, how effectively B&R countries can coordinate their development priorities or development initiatives. Different countries have different economic structures and it`s crucial to define mutually compensating points and use them to best satisfy various development needs.
Third, whether relevant projects truly follow market-oriented principles. Most of these projects started from a top-down approach, even if private companies participated since the very beginning. Ultimately, as the Chinese government has repeatedly emphasized, the vigor of social capital has to be stimulated, and private capital from both China and B&R countries should be channeled in.
BRF marks a new beginning. In 2015, China vocally announced its plan to find new potential for global and regional growth. Leaders` gathering in Beijing to review past progress and discuss next-step actions will be followed by more solid collaboration in terms of policies, trade, technical standards, and information sharing, all aimed at long-term economic yields from colossal B&R investments.
The author is deputy director of Macroeconomics and research fellow with Chongyang Institute for Financial Studies, Renmin University of China.