The Belt and Road Initiative: A New Model for Regional Cooperation _ Qiushi Journal

The Belt and Road Initiative: A New Model for Regional Cooperation

By: Xu ShaoshiFrom:English Edition of Qiushi Journal April-June 2016|Vol.8,No.2,Issue No.27 | Updated: 2016-Jun-7 09:13
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The Belt and Road Initiative, which comprises a Silk Road Economic Belt and 21st Century Maritime Silk Road (known as the “Belt and Road”), represents a grand vision proposed by President Xi Jinping. By stepping up our efforts to advance the Belt and Road Initiative, we will be able to help promote economic prosperity in the countries involved, push forward regional economic cooperation, enhance exchanges and mutual learning among cultures, and contribute to world peace and development, thereby accomplishing a great undertaking that will benefit people all over the world.

I. The backdrop of the Belt and Road Initiative

1. The initiative aims to promote global economic recovery and the reform of the global economic governance system. 

Currently, the global economy is undergoing a deep transformation, the global governance system is witnessing profound changes, and the trend towards multi-polarity is gaining momentum. Against this backdrop, China has taken prompt steps to introduce and implement the Belt and Road Initiative as a national strategy. In addition to bringing China’s economy closer to the world economy, this initiative will not only tap potential for economic growth on the Eurasian continent, thereby providing a boost for the global economic recovery; but will also guide the global governance system in the direction of greater fairness and equity, thereby earning a greater say for China and other developing countries in international affairs.

2. The initiative aims to create a favorable environment for the creation and sharing of development opportunities. 

China shares borders with 14 countries over land and looks out towards 6 countries over sea. In addition to their close geographical proximity and similar natural environments, China and its neighbors also share a close human and cultural bond. For this reason, strengthening cooperation is a matter of great strategic significance to all these countries. In carrying out the Belt and Road Initiative, we are in essence upholding the principles of “affinity, sincerity, mutual benefit, and inclusiveness,” which guide China’s diplomatic interactions with its neighbors, and forging a closer bond of interests with the countries in question. This will not only create a peaceful and stable neighboring environment to underpin China’s development, but will also allow China’s development to benefit neighboring countries, thus enabling common development.

A container ship prepares to unload its cargo at the Colombo South Port in Sri Lanka (Photograph taken on May 23, 2015). The Colombo South Port is the flagship project in cooperation between China and Sri Lanka under the initiative to build a 21st Century Maritime Silk Road. PHOTO BY XINHUA REPORTER HUANG HAIMIN

3. The initiative aims to promote international industrial cooperation and optimize the global industrial chain. 

Most countries located along the “Belt and Road” are in the midst of active efforts to industrialize and urbanize, as demonstrated by their accelerated industrial restructuring and robust infrastructure development. Hoping to receive a boost from China’s rapid development, these countries are eager to expand cooperation with China. In recent years, China has witnessed robust growth in the scale of its industrial sector, and also in its technological capabilities and international competitiveness. Having formed advanced production capacity with comparative advantages, China now boasts enormous potential for cooperation and coordination with the countries located along the “Belt and Road.” Under the Belt and Road Initiative, we will seek to enhance cooperation with these countries in the exploitation of energy resources, thereby providing a boost for their infrastructure development and industrialization and bringing benefit to all involved.

4. The initiative aims to promote the balanced development of different regions. 

As a weak link in the country’s overall development, China’s western region meanwhile represents a key priority and challenge in our effort to complete the building of a moderately prosperous society in all respects by 2020. The Belt and Road Initiative will not only accelerate connectivity between China and countries in Central Asia, Southeastern Asia, and even Europe in terms of transportation, trade, and finance, but will also push China’s vast western region from the fringes to the front line of its opening up drive, thus injecting new vitality into China’s comprehensive, large-scale efforts to develop this region. By turning western China into a new growth pole, we will create a fresh pattern of regional development in which China’s western and eastern regions develop in unison.

II. The main tasks of the Belt and Road Initiative

Traversing the continents of Asia, Europe, and Africa, the Belt and Road Initiative will link the vibrant East Asian economic circle on one end with the developed European economic circle on the other, passing through a large number of inland countries that boast huge potential for economic growth. The fundamental goals of the initiative are to promote the orderly and free flow of factors of production; facilitate the highly efficient allocation of resources and in-depth integration of markets; encourage relevant countries to coordinate their economic policies; and promote broader, deeper, and more advanced regional cooperation, so as to form a concerted effort to establish an international community of common interests, common future, and common responsibility characterized by mutual political trust, economic integration, and cultural inclusiveness. With regard to cooperation, we need to accurately identify points at which China’s interests converge with those of relevant countries; broaden the scope of cooperation, enrich the content of cooperation, develop new patterns of cooperation, enhance the level of cooperation; and gradually create an overall framework for regional cooperation in which the interests of relevant countries are more closely knit. 

1. Prioritizing infrastructure connectivity 

At present, infrastructure connectivity between China and the countries along the “Belt and Road” is still lagging behind. Most major routes of transportation have sections missing, and many existing routes are hindered by low standards of construction. In the period ahead, we need to bring our transportation development plans into alignment with those of other countries and regions, jointly prioritize the construction of major transportation routes and the completion of their missing sections, ensure smooth passageway on bottlenecked sections, and enhance road connectivity, in an effort to create a safe, unimpeded comprehensive transportation network that links China with relevant countries.

2. Tapping into potential for economic and trade cooperation 

In recent years, trade has grown rapidly between China and the countries along the “Belt and Road.” However, this trade is still poorly balanced, with the proportion of trade in services being too small and further trade facilitation still needed. For this reason, we must bolster traditional trade with relevant countries, actively foster new drivers of trade growth, develop new modes of trade, and raise the level of trade facilitation. We need to deepen multilateral and bilateral cooperation in customs, product standards, inspection, and quarantine, and improve customs clearance facilities in border entry ports.

3. Expanding cooperation in industrial investment 

Cooperation in industrial investment represents an important approach to promoting deep economic integration among the countries along the “Belt and Road.” In line with the trend of accelerated industrialization in relevant countries, we will continue to encourage Chinese enterprises to invest and launch business ventures in these countries and participate in the development of local industrial parks. In addition, we will encourage eligible enterprises to establish R&D centers in regions with strong scientific and technological capabilities, where they will be able to upgrade industries, create jobs, and strengthen themselves by tapping into local scientific and technological resources and human resources.

4. Deepening cooperation in energy resources 

In keeping with the principle of mutual benefit, we need to improve mechanisms for energy cooperation, establish a stable relationship between supply and demand, and deepen cooperation in the production, transportation, and processing of energy resources. Meanwhile, we should enhance cooperation in the fields of energy efficiency and new energy sources, raise our ability in deep-processing energy resources, and open up new spheres and avenues of cooperation.

5. Expanding financial cooperation 

In order to ensure sufficient financing for connectivity projects and industrial cooperation between the countries along the “Belt and Road,” we need to deepen practical cooperation between the SCO (Shanghai Cooperation Organization) Interbank Consortium and the China-ASEAN Interbank Association, actively advance preparations for the establishment of the SCO Development Bank, and give play to the role of the Silk Road Fund and Asian Infrastructure Investment Bank (AIIB). In addition, we need to expand the scale and scope of bilateral currency swaps, and increase local currency settlement in cross-border trade, in order to reduce exchange rate risk and lower the cost of cross-currency settlement in regional trade and investment.

6. Strengthening people-to-people and cultural exchanges 

We need to carry forward the spirit of friendly cooperation that the Silk Road represents in order to build up public support for deepening cooperation. In the education sector, we will continue to increase the number of government scholarships to fund the study and training of personnel from relevant countries in China. In the cultural sector, we will work actively to hold culture years and art festivals in collaboration with relevant countries, and encourage the private sector to engage in a diverse range of cultural exchanges. In the tourism sector, we will expand investment cooperation, and join hands with relevant countries to create premium international tourism routes and tourism products with Silk Road characteristics. At the same time, we will continue to cooperate in science and technology, health care, and poverty alleviation.

7. Enhancing cooperation in ecological conservation and environmental protection 

Countries along the “Belt and Road” face the common mission of responding to climate change and achieving sustainable development. We need to raise awareness of ecological progress, develop effective mechanisms for dialogue and coordination, plan and implement a number of major projects with the participation of all sides, and coordinate initiatives in ecological development and environmental protection on a regional basis, in a concerted effort to build a “Green Silk Road.”

8. Actively promoting maritime cooperation 

We will continue to expand and make full use of the China-ASEAN Maritime Cooperation Fund, in a bid to further cooperate in agriculture, fishery, connectivity, marine environmental protection, sea route security, maritime search and rescue, and disaster prevention and mitigation. Focusing on mariculture, deep-sea fish processing, marine biopharmaceuticals, environmental protection industries, and maritime tourism, we will work together with relevant countries to establish demonstration zones for the marine economy, cooperation parks for marine science and technology, overseas economic and trade cooperation zones, and training centers for marine personnel.

III. Systems and mechanisms geared towards the Belt and Road Initiative

Covering a wide range of countries and fields, the Belt and Road Initiative requires the establishment of new systems to underpin a more open economy. For this reason, we must step up our efforts to put in place systems and mechanisms that are geared towards new requirements for comprehensive opening up.

1. We need to give play to the principal role of enterprises and develop new means of “going global.” 

In advancing the Belt and Road Initiative, we need to give play to the principal role of enterprises, respond to the needs of the market, and adopt innovative means of “going global,” encouraging enterprises to relocate abroad in chains, develop in clusters, and operate from industrial parks. Leveraging the guiding role of leading enterprises, we should encourage relevant upstream and downstream enterprises to relocate abroad as part of the same industrial chain and establish R&D, production, and marketing systems overseas, with a view to increasing their comprehensive competitiveness and influence in the market. We should also encourage the development of overseas industrial clusters, so as to achieve the concentrated layout and development of Chinese enterprises in these countries.

2. We need to promote investment and trade facilitation as an anchor and booster. 

We need to step up investment facilitation, increase the number of sectors open to mutual investment, remove barriers to investment, and actively explore a new model for foreign investment management that revolves around pre-establishment national treatment (PENT) on the basis of a negative list. We will continue to implement and improve existing bilateral agreements on investment protection, and step up negotiations with countries that have yet to sign such agreements with China. We also need to strengthen cooperation with relevant countries in customs, inspection, and quarantine, and sign various supplementary agreements on trade or memorandums of cooperation in order to increase the efficiency of customs clearance and reduce costs in this regard. In addition, in a vigorous effort to implement a free trade zone strategy, we will upgrade the China-ASEAN Free Trade Zone, promote negotiations on the Regional Comprehensive Economic Partnership (RCEP), and push for new progress in the Asia-Pacific Trade Agreement (APTA), with a view to forming a high-standard network of free trade zones that has its foundations in the local region, stretches across the “Belt and Road,” and aims to meet international needs.

3. We need to step up outward strategic investment to serve the Belt and Road Initiative.

We need to give play to the role of the China-ASEAN Maritime Cooperation Fund, the China-Central and Eastern Europe Investment Cooperation Fund, and dedicated funds for Asian regional cooperation in providing support for infrastructure connectivity, the exploitation and utilization of energy resources, the development of key industrial clusters, the promotion of key national standards abroad, and the R&D of core technologies for key industries. We need to exert the advantages of policy-based finance in linking the government and the market to support the development of major projects; expand the use of the RMB in cross-border trade and investment and encourage the denomination of bulk commodities and the settlement of their trade in RMB; enhance cooperation with development-oriented international financial institutions in order to support infrastructure development in relevant countries; and introduce new complementary insurance mechanisms to encourage insurance companies to appropriately expand their insurance coverage in relevant countries and regions along the “Belt and Road” provided that risks remain controllable and certain requirements are met.

4. We need to properly handle foreign relations in an active effort to promote strategic coordination. 

The Belt and Road Initiative represents a grand economic vision for open cooperation between countries along the “Belt and Road,” requiring that these countries work together towards the goals of mutual benefit and common security. Therefore, in line with the principles of mutual consultation, joint development, and shared benefits, we need to enhance communication with relevant countries on policy issues; actively push for the coordination of development strategies among these countries; jointly formulate plans and measures to promote regional cooperation; resolve differences that emerge in cooperation through negotiation; and make concerted efforts to provide policy support for practical cooperation and the implementation of large projects. Laying emphasis on cooperation, openness, inclusiveness, and mutual benefit, we will adopt a highly flexible approach to handling relations with major powers such as the US, Russia, and the EU, promote coordination between the Belt and Road Initiative and the Eurasian Economic Union, and support and participate in the EU’s Juncker Plan, in an active effort to seek convergence in interests and common ground in cooperation. In an effort to make good use of platforms for international exchanges, we will draw up overall plans for the establishment of the “Belt and Road” International Summit Forum, continue to exert the constructive role of the Boao Forum for Asia, and actively participate in various activities carried out by relevant countries and important regional and sub-regional organizations. 

Xu Shaoshi is Minister and Secretary of CPC Leadership Group, National Development and Reform Commission. 

(Originally appeared in Qiushi Journal, Chinese edition, No.19, 2015)