History and Reality of the Belt and Road Initiative | JD Insight
With the Belt and Road Initiative (hereinafter referred to as “the Initiative”) drawing global attention, the Belt and Road Forum for International Cooperation (BRF) was held in Beijing on May 14 and 15. It was another important diplomatic event hosted by China that demonstrated the historical continuity between the ancient Silk Road and the Initiative.
Historical Origin of the Initiative
On the BRF, China’s top leader reminisced about the two thousand-odd years of history of the Silk Road. In his opening speech, President Xi Jinping said, “the ancient silk routes embody the spirit of peace and cooperation, openness and inclusiveness, mutual learning and mutual benefit. Along these major arteries of interaction, capital, technology and people flowed freely, and goods, resources and benefits were widely shared”. A review of history can showcase our confidence in Chinese culture.
Since when did different regions and civilizations start to interconnect? Where did the globalization begin? It is a common understanding in the West that it was from the Age of Discovery at the end of 15th Century that the globalization started, yet China is giving a different answer. We believe the trans-regional and trans-continental exchanges, or more straightforward, the globalization, originated from the land and maritime silk roads. As put forth by President Xi, “These pioneers won their place in history not as conquerors with warships, guns or swords. Rather, they are remembered as friendly emissaries leading camel caravans and sailing treasure-loaded ships”. This is the culture root for China to lead the mutually beneficial cooperation of the Initiative. In history, China’s cultural exchanges with the East and West were all based on peace and cooperation, instead of colonization and invasion like the way it was in the Age of Discovery.
Hence, the Initiative is deemed as China’s macro-strategy aimed at rebalancing the global economy. It is a “road” featuring wide consultation, joint contribution, shared benefits, and win-win outcome, which reflects China’s core value in promoting a new round of globalization.
The globalization has long lost its balance over past centuries, with the gap between developed and developing economies (namely the South and the North) increasingly widened. As a result, it became unlikely for economies at different development stages to all enjoy the fruits of economic prosperity. Moreover, the existence of laggards in infrastructure and financial capability further exacerbated the imbalance.
With the developed economies losing their momentum, the Initiative gives priority to enhancing the fundamental capabilities of developing economies via highly-efficient world trading system (unimpeded trade), high-standard infrastructure system (facility connectivity) and new development-oriented financial system (financial integration), so as to bridge the gap between the South and the North and create investment opportunities for both developed economies and emerging economies which boast relatively high incomes.
The Initiative cooperation agenda started with developing countries since the year of 2013 and has been expanded gradually to cover more developed economies. It embodies China’s strategic intention to be a leading player in the cooperation.
Actual Progress in the Initiative
Before wrapping up the first BRF, China announced to hold the second forum in 2019, marking its determination to make it an annual routine and an important part of China’s diplomacy in the future.
The World War II is a critical point in the history of global economic governance and coordination. After that, the GATT (General Agreement on Tariffs and Trade, WTO's predecessor), IMF (International Monetary Fund) and World Bank came into being, laying a foundation for trade liberalization and development financing. In the following decades, more free trade zones, economic communities (e.g. North American Free Trade Area, European Union and Association of Southeast Asian Nations) and regional development financing agencies (e.g. Asian Development Bank) were set up based on ideas and principles of free trade and development financing.
While learning from the experience in trade liberalization and development financing in the past decades, the Initiative and its cooperation framework also present new ideas. Its core lies in policy coordination, facility connectivity, unimpeded trade, financial integration, and people-to-people bond.
After the global economic turbulences over the past few decades, especially the one in 2008, the global coordination of economic policies has become a universal consensus in the sector of global governance. The bi-/multi-lateral economic entities featuring closer trade ties need more of the transnational coordination in financial and monetary policies, so as to avert the instant impact of spillover effect on other economies or the world economy as a whole. The Initiative cooperation requires the priority of policy coordination over other issues, effective connectivity of mid- to long-term strategies, and sufficient communications concerning short- to mid-term governance tactics, so as to stabilize expectations for global growth and reduce sharp volatility.
With infrastructure at the core, the facilities connectivity tops the agenda of the Initiative. It not only gives full play to China’s existing strength in infrastructure to achieve the global landscape of China’s production capacities, but also reflects China’s views of the economic momentum. The investment is long positioned as a key driver of the economic growth. Hence, to invest more in infrastructure in less developed regions is China’s solution to rebalance the world economy as well a lesson learned from several decades of experience.
The supply-side structural reform, which advocates the boost to real economy, has been the key focus for China in 2016. In a way, China is also sending out a message in the construction of the Initiative: it is not only a route of trade, but also a path of investment. The normalization of the Initiative cooperation mechanism requires financial cooperation guided by institutions like Asian Infrastructure Investment Bank (AIIB) and Silk Road Fund, as well as transnational strategic cooperation in real economy. The Initiative showcases the multiple driving forces of China’s economy (the models of “industry plus finance” and “investment plus trade”), and improve the thinking about the global economic momentum.
The Initiative Brings World-Class Opportunities
The Initiative is an ambitious strategy aiming to rebalance and reshape the world economy.
In this fast-changing world, the Initiative would connect the past and usher in the future. It will bring such huge opportunities that all market participants including investment institutions and entrepreneurs cannot afford to miss.
Mapping out the prospects of the upgrading of the world economy, it involves a wide range of issues, such as infrastructure development, innovation economy, financial platform, and ecological improvement. On the JD Capital · Forum of Future to be hosted on May 25, President Cai Lei will, together with guests, talk about “Global Landscape and China’s Future” and look into the major trends in the 21st century.
People thinking alike shall see no distance even with the most remote mountains and seas in between. We will also invite scholars here to elaborate on the background of international operation involved in Initiative and great opportunities that lie ahead for Chinese companies.
A great era calls for great visions. The JD Capital ·Future Forum in Xiamen will bring the FUTURE to the PRESENT for you.