Belt and Road Initiative can cure pains of globalisation

The Belt and Road Forum for International Cooperation will be held from May 14 to 15 in Beijing. Heads of state or government from 28 countries and top officials from the UN, the World Bank, and International Monetary Fund have confirmed their participation in the forum's round-table summit. Its high-level meeting will be attended by officials, scholars, entrepreneurs, bankers, and journalists from 110 countries. Jamaica will be represented by Karl Samuda, minister of industry, commerce, agriculture and fisheries.For such a large number of heavyweights to gather, there must be something special about the occasion. Then what's so special about the Belt and Road Forum?

What is the Belt and Road Initiative?

The Belt and Road Initiative (B&R) is China's economic vision launched by President Xi Jinping in late 2013. “Belt” refers to the Silk Road Economic Belt linking China with countries in central Asia and Europe. “Road” refers to 21st Century Maritime Silk Road connecting China with Southeast Asia, South Asia, and Africa to the west, and Southeast Asia, South Pacific and Latin America to the east.

The B&R upholds the principles of extensive consultation, joint contribution and shared benefits. It stresses jointly developing the programme through consultation with all interested parties and utilising existing bilateral and multilateral cooperation mechanisms to promote the integration of the development strategies of the countries along the route.

Five key areas of cooperation will be the focus:

1. Policy coordination: Countries along the route will, via consultation on equal footing, jointly formulate development plans and measures for advancing cross-national or regional cooperation; resolve problems arising from cooperation through consultation; and jointly provide policy support to practical cooperation and large-scale project implementation.

2. Facilities connectivity: Priority will be given to removing barriers in the missing sections and bottleneck areas of core international transportation passages, advancing the construction of port infrastructure facilities, and clearing land-water inter-modal transport passages. The connectivity of infrastructure facilities, including railways, highways, air routes, telecommunications, oil and natural gas pipelines, and ports will also be promoted.

3. Unimpeded trade: Steps will be taken to resolve investment and trade-facilitation issues, reduce investment and trade barriers, lower trade and investment costs, as well as to promote regional economic integration. Efforts will be made to broaden the scope of trade, propel trade development through investment, and strengthen cooperation in the industry chain.

4. Financial integration: Action will be taken to enhance coordination in monetary policy, expand the scope of local currency settlement and currency exchange in trade and investment between countries along the route, deepen multilateral and bilateral financial cooperation, set up regional development financial institutions, strengthen cooperation in monitoring financial risks, and enhance the ability of managing financial risks through regional arrangements.

5. People-to-people bonds: Efforts will be made to promote exchanges and dialogues between different cultures, strengthen friendly interactions between the people of various countries, and heighten mutual understanding and traditional friendship.

Who will benefit

China and the economies along the Belt and Road. China owes its past growth to reforms and opening. To guarantee further growth China has to initiate more reforms at home, which we are doing, and have closer interaction with the world. The B&R helps China by opening more trade and investment opportunities. Closer trade ties and badly needed investment in infrastructure, manufacturing, agriculture, and other sectors generate growth and create more jobs for countries participating in the B&R Initiative.

Statistics show 2016 trade between China and these economies totalling US$954 billion. By the end of 2016 China has constructed 56 trade and economic cooperation zones in 20 Belt and Road countries and invested US$18.5 billion. These investments have generated US$1.1 billion in tax revenue and created 1.8 million jobs, at the same time adding zero to the relevant countries' national debts. It is estimated that one dollar of such investment could generate as much as five dollars in the host economy. The Asian Infrastructure Investment Bank, another Chinese initiative, has also loaned US$5.3 billion to projects related to the Belt and Road Initiative.

Who dominates the B&R?

No one does. The B&R is a Chinese initiative, but China does not 'own' it. The basic principles of the B&R tell everything: Extensive consultation means ideas and actions must be an outcome of extensive consultation between parties concerned and no one should impose anything on others.

Projects require cooperation with B&R countries which must be conducted with joint contribution. Even projects with 100 per cent Chinese investment have the contribution of the local country in the form of government endorsement, land and labour.

The “piper” is jointly called, therefore no single party will be able to “set the tune”. Shared benefits go against any form of owner-member relationship. China is ready to share its capital and expertise with other countries but does not impose her wills or political conditions on the recipients. As a matter of fact, China does not mind herself benefiting less than her partners as long as all are benefiting.

Will the B&R replace the WTO?

No. A defining feature of the B&R is its openness. The B&R is not a trade bloc. Any country agreeing to the principles of the B&R will be regarded by China as a development partner. There is neither an organisational structure nor a charter, let alone exclusive arrangements. China has neither ability nor intention to topple the World Trade Organization (WTO) or the existing international trade regime. The B&R will only complement the WTO by empowering small and weak countries in their international bargaining and domestic development.

Can the B&R cure the pains of globalisation?

There is no such thing as a panacea, but the B&R can help cure some pains caused by globalisation. Globalisation, while ensuring global growth through more effective allocation of resources, has caused disparity of benefits among different countries and sectors. Some sectors in some countries are even worse off. Hence, black-goose events, where politicians win by resorting to anti-globalisation populism. The B&R empowers disadvantaged countries and promotes investment in infrastructure through which jobs are created for people who badly need them.

In other words, the B&R, while continuing to make a larger cake, helps more just sharing of the cake. And, economic development is a cure to many social scourges, such as religious extremism, ethnic splittism and terrorism and is the key to social stability. The B&R, therefore, cures some pains caused by globalisation and helps consolidate support for globalisation.

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