Author: Meng Yaping
Posted on: CGTN | January 9th, 2017
The battle to boost a weak global economy and adapt to major structural changes in the trade and investment landscape has taken many forms since the world financial crisis. Could China’s revival of ancient Eurasian trade routes be the answer?
New models of international cooperation and global governance are in the demand, and the Belt and Road Initiative seeks to inject fresh energy into global development. But how does the initiative work, and who benefits?
What is the Belt and Road Initiative?
The Belt and Road Initiative, comprising the New Silk Road Economic Belt and 21st Century Maritime Silk Road, is a development strategy and framework based on the ancient Silk Road concept and routes. It was proposed by Chinese President Xi Jinping in late 2013.
The New Silk Road Economic Belt runs westward from China, crossing central Asia and finally reaching Western Europe, while the 21st Century Maritime Silk Road loops south from China, linking Southeast Asian countries, Africa and Europe. Neither the belt nor the road follows any clear line geographically speaking, but both serve as roadmaps for how China wants to further integrate itself into the world economy and strengthen its influence in these regions.
China works with countries along the routes on infrastructure construction and advanced equipment manufacturing by taking advantage of the cooperation mechanism.
Who will benefit? And how?
Connecting the Asia-Pacific economic circle in the east and the European economic circle in the west, the Belt and Road is the longest economic corridor with the greatest potential in the world, with more than 100 countries and international organizations participating in the initiative.
As of July 2016, Chinese enterprises had established 52 economic cooperation zones in more than 20 countries while paying one billion US dollars in taxes and creating nearly 160,000 jobs. Business opportunities lie in sectors such as infrastructure construction, finance, trade and logistics, distribution and retail. During the first 11 months of 2016, China’s trade volume with countries along the Belt and Road reached 848.9 billion US dollars, accounting for 25.7 percent of China’s total foreign trade volume over the same period.
Developing countries, with comparatively poor infrastructure construction and economic capability, play a key role in the initiative. Populations with per capita GDP of between 1,046 and 4,125 US dollars, considered a moderate and low income group, constituted 55.2 percent of the total population within the relevant regions. This is also the group that benefits most from the strategy.
With multiple railways, highways and ports built and scheduled along the routes, regional industrial cooperation will be stepped up and individuals will have greater opportunities to travel and trade. Unimpeded trade and money circulation among countries under the new framework is set to bring a greater choice of foreign commodities and at lower prices. Those who run businesses which cooperate across borders may pay less tax while getting more opportunities, under a standardized regulation system.
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