China / View

Initiative promotes 'go global' policy

(China Daily) Updated: 2017-04-26 07:04

Editor's note: Three researchers share their views with China Daily's Cui Shoufeng on the Belt and Road Forum for International Cooperation scheduled for May 14 and 15 in Beijing, which will be attended by 28 heads of state and government leaders. Excerpts follow:

The focus is squarely on interconnectivity

Zhao Minghao, a research fellow at the China Center for Contemporary World Studies of the International Department of CPC Central Committee

The Belt and Road Initiative (the Silk Road Economic Belt and 21st Century Maritime Silk Road) was proposed by China, but its dividends belong to all the countries and organizations that are part of it. The grand

multinational program is endorsed but not unilaterally funded by China, and it is supposed to motivate all participants to pitch in and enjoy their share of the fruits.

The Belt and Road Initiative "starts from within" China; it is part of the country's pursuit to better interact with the rest of the world. In other words, the initiative matters a great deal to China for its economic transition, especially to the less-developed provinces and regions in West China, which are likely to be at the forefront of the reform and opening-up if they manage to capitalize on it.

The implementation of the Belt and Road Initiative focuses on economic growth and interconnectivity. It, as President Xi Jinping has emphasized, is aimed at facilitating transnational trade and investment cooperation, as well as creating fresh demand to achieve global economic balance.

To a large extent, infrastructure connectivity, capacity cooperation and trade exchanges will serve as a linchpin of the initiative's construction. For the local governments in China, they should be careful not to overstep the boundaries as their job is to guide enterprises, be they State-owned or private, to participate in the projects.

Capacity cooperation involves capital flows

Xu Weihong, a member of the academic committee of Pangoal Institution, and chief economist with AVIC Securities

Cross-border capacity cooperation has always been about optimizing the allocation of the global factors of production through the market. On the one hand, "Made in China" products remain competitive in the global market, allowing the country to have surpluses against my trading partners. On the other hand, Chinese investors have shown unprecedented keenness for overseas markets, laying the foundation for China's capacity cooperation with the economies along the Belt and Road routes.

Capacity cooperation will inevitably involve two-way capital flows, thus highlighting the need for modern financial services. The inter-connectivity of capital is supposed to include Chinese enterprises' procurement of overseas mineral resources and/or establishment of branches and seeking of mergers abroad. Procuring overseas mineral resources marks the expansion of industrial chains driven by the rising labor cost and scarcity of certain resources in China, while establishing branches and seeking mergers abroad often enjoy policy support but can be susceptible to geopolitical risks.

As the overseas promotion of the Belt and Road Initiative begins to bear fruit, it is vital to reduce unnecessary financing support to Chinese enterprises, be they State-owned or private. Unreasonably low financing costs will disrupt global market pricing, which may create trouble for Chinese investors aspiring to become global competitors.

At the heart of the Belt and Road capacity cooperation is the upgrade of Chinese enterprises' "go global" practice, as well as expanded allocation of the factors of production.

Not inconsistent with security needs

Chu Yin, an associate professor at the University of International Relations, and a research fellow at the Center for China and Globalization

The security risks embedded in the promotion of the Belt and Road Initiative cannot and should not be ignored. The continuing unrest in some economies along the two routes, and the rise of regional terrorism and sectarian clashes, to some extent, have hampered the initiative's overseas operations, and even halted some projects. Key regions where major players like Russia and Ukraine, for example, are in dispute, can pose a challenge to the regional integration pursued by the Belt and Road Initiative.

The initiative's pursuit of shared economic prosperity hinges on an overall secure environment, which calls for China to better protect Chinese citizens and assets in the economies along the Belt and Road routes, even though China's pursuit is to recalibrate the global security order by cooperating with other countries, instead of seeking hegemony.

The Shanghai Cooperation Organization is a case in point, with China's security cooperation with ASEAN members being another. Security mechanisms like these are based on mutual respect and are becoming a cornerstone of regional stability and global peace. For Beijing, securing the operation of the Belt and Road projects is not inconsistent with its cautious approach to security cooperation; instead, it is part of the efforts to provide public goods needed by other participants.