Implementing the joint construction of the “One Road, One Belt” initiative can be said to be of immediate and long-term benefit to China and the countries along the route. At the same time, this grand undertaking will inevitably face various difficulties and resistance.
From the perspective of economic logic, the “Belt and Road Initiative” is expected to bring many positive impacts. First, it will create an open pattern with more all-round characteristics for China’s economic development. In the early days, China was at the low end of the industrial chain. In the era of intra-product division of labor in globalization, China participated in the international division of labor through processing trade, which mainly manifested itself in undertaking labor-intensive industries or industrial segments in developed countries and exporting processed products to developed countries. After decades of experience in open development, China has successfully transformed into a middle-income country. Economic development and structural improvement have put forward higher requirements for an open pattern. In the future, China will still have a lot of room to expand economic cooperation with developed countries. At the same time, the importance of economic cooperation with emerging economies and developing countries will increase significantly. The joint construction of the “Belt and Road” is China’s major deployment to “build a new pattern of all-round opening up and deeply integrate into the world economic system”. , inclusive regional economic cooperation architecture” strategic initiative.
Second, create and cultivate new economic growth points at domestic, regional and even global scales. As China’s macro-economy faces downward pressure from cyclical adjustments, appropriate additional supporting investments in relevant domestic regions and industries in conjunction with the joint construction plan will contribute to the short-term stable growth goal of the domestic economy and play a positive role in long-term growth. Countries along the “Belt and Road” are restricted by hardware conditions such as lack of infrastructure and software conditions such as imperfect institutional policies, and their development potential has not been fully unleashed. The joint construction of the “Belt and Road” and the implementation of targeted policies will help China and the countries along the route to better achieve the goals of rapid and sustainable economic development, and contribute to cultivating new growth points for the global economy.
Third, improve the international economic and financial governance structure. The current global economic governance structure does not match the requirements for deepening globalization. To elevate economic globalization in the 21st century to a higher level, the global governance structure needs to be improved. In a situation where the IMF’s quota adjustment is blocked and the conservative powers are passively delaying the “stock reform” of the global governance structure, it is of great significance for emerging economies and developing countries to actively carry out “incremental reform” in a constructive manner. China advocates the joint construction of the “Belt and Road” to explore new paths of cooperative development, which itself has the meaning of questioning and remedying the limitations of the existing governance structure in effectively solving contemporary development problems. Relying on the “One Belt and One Road” initiative to create new financial institutions such as the AIIB as a key measure of “incremental reform” will have a profound impact on improving and improving the existing system.
Fourth, promote the historical process of the international use of RMB. As the global economic landscape and the relative strength of major economies evolve, the international monetary system and the international status of specific sovereign national currencies will be adjusted accordingly. Although the changes in the relative importance of the economies and currencies of emerging powers are not proportionally and precisely consistent at every point in time, they will eventually achieve their internal consistency requirements in a non-linear manner. As China’s open economy grows in size and its relative status in the global economic system improves, it should be a general trend to gradually increase the use of RMB in international transactions. The internationalization of local currency is a natural historical process of economic opening and growth of a large country, and it means responsibility and responsibility for the country that issues the currency. Therefore, it should not be a short-term policy goal, nor even an optional policy tool. The joint construction of the “Belt and Road” will explore ways to use regional currencies for financial and monetary cooperation such as trade settlement and bond issuance financing. As a country advocating the joint construction of the “Belt and Road”, China will have unprecedented opportunities for the international use of its local currency, the renminbi.
Fifth, improve the external asset and liability structure and revenue and expenditure status. With the acceleration of economic catch-up and deepening integration into the global economic system, China’s external balance sheet has expanded rapidly. International investment position data show that China’s external assets increased from US$929.1 billion in 2004 to US$6,408.7 billion in 2014, its external liabilities increased from US$652.7 billion to US$4,632.3 billion during the same period, and its net assets rose from US$276.4 billion to US$1,776.4 billion. However, the structure of China’s external assets and liabilities is unsatisfactory. Although it has huge net assets, it suffers from negative net returns. For example, data from 2014 show that 61% of China’s external assets are official foreign exchange reserves with low returns, and 58% of China’s external liabilities are foreign direct investment with higher returns. The investment income in the balance of payments is a deficit of US$59.9 billion. The difference in investor yields was negative 2.7 percentage points. Given the appreciation trend of the RMB real exchange rate, the final net income measured in RMB may be even more negative. The joint construction of the “Belt and Road” will expand China’s space for holding external equity and claims in the form of non-foreign exchange reserves, and will help improve the efficiency of China’s savings allocation abroad to benefit the economic development and improvement of people’s livelihood in countries along the route. It will also help improve China’s external asset and liability structure. .
The joint construction of the “Belt and Road” will inevitably face various difficulties and risks. First, the joint construction of the “Belt and Road” will always face the difficult problem of how to deal with relations with major countries. For example, the United States, as the main founder and leading country of the existing international order, will obviously�With effective cooperation between relevant international financial and development institutions, and how to combine voting and consultation mechanisms in internal operations to achieve both efficient decision-making and full brainstorming, there are problems that need to be gradually solved through practical exploration.
Fifth, how to ensure the safety and profitability of China’s large-scale investments in countries along the route. Having massive national savings is one of the key supporting conditions for China to advocate and promote the joint construction of the “Belt and Road Initiative”. China’s early overseas allocation of national savings was mainly in the form of official foreign exchange reserves. The joint construction of the “Belt and Road” means that China’s surplus savings will be transformed into more productive investments and corresponding debt and equity in countries along the route in the future. Compared with the foreign exchange reserves that mainly invest in financial assets such as high-grade bonds in major developed countries, compared with the main investment objects in countries along the “Belt and Road”, which mainly use physical assets such as production systems and infrastructure or large-scale projects, the investment income, There may be contrasting changes in indicators and attributes of different dimensions such as risk and security. Facing a new and more heterogeneous investment environment, how to control risk coefficients, obtain reasonable returns, and reduce financial losses will be a long-term challenge for the joint construction of the “Belt and Road”.
Finally, there may also be cognitive risks in how to correctly view the relationship between the implementation of the “Belt and Road” strategy and the deepening of domestic reforms and the promotion of institutional transformation. The impact of the AIIB shows China’s achievements and increased influence in its reform and development phase. Feeling elated and happy when the domestic media is hotly discussing it is a normal and reasonable mentality in the stage of the rise of a great power. However, it is also necessary to guard against public excitement and relief that may lead to a potential biased understanding, which is to interpret the impact of the AIIB as the success of the “China Model” and blind optimism, and to regard the smooth start of the joint construction of the “Belt and Road” as the so-called “Beijing Consensus” The victory of the “Washington Consensus” has been completely forgotten, but the great cause of domestic reform still faces the challenge of climbing over hurdles and breaking the neck of a strong man. The activation of creativity by reform and opening up is the fundamental reason for China’s development achievements. China is also a participant and beneficiary of the construction of the post-war economic globalization system and order. Advocating the “One Belt, One Road” is not intended to subvert the existing economic order, nor is it only to pursue China Instead of pursuing their own interests, we must work with countries along the route to reform and open up based on their respective national conditions and explore a path of common development and mutual benefit.
China’s response to challenges, overcoming difficulties, and striving for the success of the Belt and Road Initiative is a test of China’s enterprising new diplomatic policy in the new era and a test of China’s ability to lead the development trend as the largest emerging economy. Whether the joint construction of the “Belt and Road” can achieve the expected success depends on whether China can solve the challenges of building and improving the domestic market economic system through comprehensively deepening reforms, whether it can build a modern national governance structure and capabilities through comprehensive rule of law, and whether it can achieve the expected success of the joint construction of the “Belt and Road” initiative. Whether China’s economy can continue to catch up can provide a vital impetus for the “Belt and Road” cooperation and dynamically enrich its connotation. In this sense, the conditions for success of the Belt and Road Initiative lie outside the strategy itself.
It is necessary to adhere to the basic policy of “amity, sincerity, mutual benefit and inclusiveness” and win-win cooperation for a long time, and gradually achieve the planned goals through sustained cooperation efforts, thereby gaining wider and sincere recognition from the international community. When Chinese enterprises go global, they need to find their correct positioning, plan before taking action, give full play to their core competitiveness, and avoid rushing in all at once. Project design and implementation need to pay attention to both market profitability and social responsibility goals, and avoid short-term behavior and fishing for the best. We must pay attention to the orderly transfer of labor-intensive manufacturing industries and give full play to the positive role and special impact of such transfers on employment and economic development in the receiving country. Project design and implementation should strengthen pragmatic cooperation with international institutions and relevant institutions in developed countries, and learn from effective international experiences and methods. It is necessary to effectively combine training, degree teaching and practice, and vigorously cultivate talents of all types at all levels.
In short, there is no shortcut to jointly building the “Belt and Road”. Only through sustained and correct efforts can China and the countries along the route work together to achieve the vision of development. (Lu Feng, a professor at the National School of Development at Peking University, writes for the Chinese website of the Financial Times)
The Impact and Risks of “One Belt, One Road”
Implementing the joint construction of the “One Road, One Belt” initiative can be said to be of immediate and long-term benefit to China and the countries along the route. At the same time, this grand undertaki…
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