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Belt and Road golden chance for global growth
2017/09/26

By Wang Hongjiang (China Features)

The Belt and Road Initiative has brought tremendous trade and investment opportunities that the world cannot afford to ignore.

In the first seven months, China signed 78.09 billion U.S. dollars of contracted projects along the Belt and Road, up 32.6 percent year on year, according to the Ministry of Commerce.

"Its concepts, such as inclusiveness and strategic connection, conform with the common interests of the world, and therefore have attracted global attention. The initiative has become the world's largest growth initiative, livelihood project and public good so far," said Wang Yiwei from Renmin University of China.

The Silk Road Economic Belt and the 21st Century Maritime Silk Road initiative, known as the Belt and Road Initiative, was proposed by China in 2013 with the aim of building a trade and infrastructure network connecting Asia with Europe and Africa along the ancient trade routes.

INVESTMENT ON FAST LANE

China's outbound investment to countries involved in the Belt and Road Initiative stood at 6.61 billion U.S. dollars in the first half of 2017, accounting for 13.7 percent of the country's non-financial outbound direct investment (ODI), up 6 percentage points from the same period in 2016.

In contrast, the country's total ODI dropped 45.8 percent year on year to 48.19 billion U.S. dollars in the H1, Ministry of Commerce (MOC) data showed.

Investment growth between China and Belt and Road countries is mutual. As a case in point, in the first seven months, the European Union (EU) direct investment on the Chinese mainland increased 5.4 percent year on year. The EU is China's biggest trading partner, while China is the EU's largest source of imports and second largest two-way trading partner.

Egyptian Prime Minister Sherif Ismail (4th R, Rear) attends the signing ceremony between Egypt's National Authority for Tunnels (NAT) and the joint coalition of China's AVIC International and China Railway Group Limited in Cairo, Egypt, on Aug. 15, 2017. The Egyptian Ministry of Transport and a coalition of Chinese firms signed an agreement worth 1.24 billion U.S. dollars to build a light rail transit in new districts around Cairo. (Meng Tao/Xinhua)

Enormous potential for further investment cooperation still lies ahead given the EU's investment in China only accounts for about 4 percent of its total overseas investment, while Chinese investment in the EU only takes up about 2 percent of all foreign direct investment (FDI) flowing to the EU.

Besides trade and investment, interactions have also increased in culture, education, science and technology, tourism and other areas.

On Aug. 18, a Belt and Road high level meeting for health cooperation was held in Beijing. China has launched 38 key projects in the health sector along with the Belt and Road countries, covering fields including infectious disease control, emergency medical assistance and traditional medicine.

As of February, 25 projects had been completed, according to the meeting.

INFRASTRUCTURE NETWORKS

China has been exporting high-speed trains and related technologies to the Belt and Road countries. In 2014, China completed the construction of its first overseas high-speed rail in Turkey. In June 2015, China and Russia inked deals for 770 km of track connecting Moscow and Kazan.

China's rail services are stretching all the way to the west along the ancient Silk Road. In August this year, China and Egypt signed a 1.24 billion-U.S.-dollar light rail contract. The 66-km 11-station line will connect Cairo with adjacent cities.

Thanks to the China-Europe rail link in particular, merchandise trade witnessed robust growth between China and European countries including Germany, Spain and Britain.

Since May last year, over 64 million yuan worth of German products have been imported via the China-Europe rail link, data showed.

The number of transcontinental cargo rail lines via China's northern Manzhouli port alone had increased to 35 as of Aug. 9 this year.

"The Belt and Road Initiative is key to solving the problem of sluggish recovery and has seized the crucial link of world economic growth -- infrastructure," Wang Yiwei said.

SOLID DRIVER

China's growth will continue to be a key driver for a firming recovery of the world economy, according to the International Monetary Fund chief economist Maurice Obstfeld.

Delegates pose for photo as they issue the Beijing Communique of the Belt and Road Health Cooperation at the "Belt and Road High-level Meeting for Health Cooperation: towards a Health Silk Road" in Beijing, capital of China, on Aug. 18, 2017. (Zhang Yuwei/Xinhua)

Global investors, including the EU, continue to be optimistic about China's economic growth prospects. In the first seven months, 17,703 new foreign-funded companies were established in China, up 12 percent year on year, according to the MOC.

Expressing their confidence in the economy, international financial heavyweights have raised their forecasts for China's economic growth. For example, the International Monetary Fund in July raised its forecast of China growth to 6.7 percent for 2017.

"Strong Chinese growth drives growth particularly in Asian region but also throughout the world," said Obstfeld.

China's economy expanded 6.9 percent for the first half of 2017, with consumption and services, as well as new innovation-driven economic sectors, taking up larger roles in the economy.

As China is transforming its economy from traditional manufacturing sector to service and consumption oriented sector, its structural transformation and the rebalancing of its economy should lower the growth rate and put growth on a firmer basis over time, the chief economist said.

WIN-WIN SCENARIO

Claims that the Belt and Road Initiative is a tool by China to expand its economic interests and dominance abroad ignore the key element underpinning the initiative -- win-win results.

A China-Europe cargo train was waiting to leave Qingdao station in east China's Shandong Province on June 24, 2017. The international rail freight line will leave China at Manzhouli port in north China and head for Moscow. (Yu Fangping/Xinhua)

Since China launched the initiative in 2013, it has invested more than 50 billion U.S. dollars in countries involved in the Belt and Road as of May. Meanwhile, a total of 56 economic and trade cooperation zones have already been built by Chinese businesses in these countries, generating nearly 1.1 billion U.S. dollars in tax revenue and creating 180,000 local jobs.

In May this year, China announced at the Belt and Road Forum for International Cooperation that it will contribute an additional 100 billion yuan to the Silk Road Fund to scale up financing support for the Belt and Road Initiative.

A total of 29 foreign heads of state and government leaders attended the forum. Other delegates include officials, entrepreneurs, financiers and journalists from over 130 countries, and representatives of key international organizations.

Thanks to the forum, Belt and Road countries had reached many agreements, including 76 items comprising more than 270 concrete results in five areas.

Appreciating that China has entered the debate of globalization in a positive way, Obstfeld believed the Belt and Road Initiative is "very important" in the context.

China has been striving to open up wider, instead of erecting trade and investment barriers. In August, the country announced more measures to attract foreign investment, including easier access and better protection of intellectual property rights.

China could take concrete actions to promote the global system, Obstfeld said. Enditem

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